Article 49 of the Saudi Companies Law
المادة 49 من نظام الشركات · الفصل الرابع: الحصص والشركاء في شركة التضامن
Article 49 sets how a partner's share is valued on withdrawal, removal, bankruptcy, or death without heirs joining, by an accredited valuer's report, unless the value or valuation method was agreed.
Official text (Arabic)
This article has not been amended since the law was issued.
1- ما لم يُتفق على قيمة الحصص أو ينص عقد تأسيس الشركة على طريقة تقييمها، تقدر قيمة حصة الشريك في الشركة إذا انسحب أو أُخرج منها، أو في حال افتتاح أي من إجراءات التصفية تجاهه وفقًا لنظام الإفلاس، أو وفاته وعدم دخول الورثة في الشركة؛ وفقًا لتقرير يعد من مقيم معتمد أو أكثر يُبين فيه القيمة العادلة لنصيب كل شريك في أموال الشركة في تاريخ حدوث الواقعة، ولا يكون للشريك أو ورثته نصيب فيما يستجد بعد ذلك إلا بقدر ما تكون هذه الحقوق ناتجة من عمليات سابقة على تلك الواقعة.
2- ما لم ينص عقد تأسيس الشركة على طريقة تقييم حصة الشريك إذا تنازل عنها، تقدر حصته وفقًا للقيمة المتفق عليها مع المتنازل له.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 49 explained in plain English
This article answers a question: how much is a partner or their heirs entitled to when leaving a general partnership company?
1- Cases covered: the first paragraph applies if:
- The partner withdraws or is removed from the company.
- Any of the liquidation procedures under the Bankruptcy Law is opened against them.
- They die and their heirs do not enter the company.
In these cases, unless the value of the shares is agreed or the formation contract provides a valuation method, the share is valued according to a report prepared by one or more accredited valuers, stating the fair value of each partner's share in the company's assets on the date the event occurred.
The partner or their heirs have no share in what arises after that date, except to the extent that these rights result from operations preceding the event. So if a deal was concluded before the withdrawal and its profits came after it, they have a share in it.
2- Assignment: if a partner assigns their share, it is valued according to the value agreed with the assignee, unless the formation contract provides a method of valuing it.
The article connects to Article 50, which provides that the company, unless the formation contract provides otherwise, does not end on a partner's death, interdiction, bankruptcy, removal, or withdrawal, and continues among the remaining partners, with the partner or their heirs having only their share valued under this article.
To review or challenge the valuation of a share, it is advisable to consult a lawyer specialized in company and commercial matters.
Practical example
Ibrahim, a partner in a general partnership company in Riyadh, died and his heirs did not enter the company; the formation contract sets no valuation method and they did not agree on a value. His share is valued by a report from an accredited valuer stating its fair value on the date of death, and the heirs are entitled to nothing arising afterward except what results from operations preceding the death.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 49 of the Saudi Companies Law
How is the share of a partner who withdraws from a general partnership valued?
According to the agreed value or the valuation method in the formation contract; if none exists, by a report of one or more accredited valuers stating the fair value on the date of withdrawal.
Are a partner's heirs entitled to the company's profits after the death?
They have no share in what arises after the death except to the extent it results from operations preceding it, if they have not entered the company.
How is a share valued when it is assigned?
According to the value agreed with the assignee, unless the formation contract provides a method of valuing it.
More articles on General Partnership
- Article 19
The article exempts micro and small companies and the general partnership company from the requirement to appoint an auditor in Article 18, with specified exceptions, and allows holders of 10% of voting rights to request that one be appointed.
1- لا يسري على الشركة متناهية الصغر والصغيرة الحكم المتعلق بإلزامية تعيين مراجع الحسابات الوارد في المادة (الثامنة عشرة) من النظام، عدا الشركة متناهية الصغر وال
- Article 35
Article 35 defines the general partnership company as one formed by two or more persons, each personally and jointly liable with all their assets for its debts, and in which the partner acquires the status of a merchant.
شركة التضامن: هي شركة يؤسسها شخصان أو أكثر من ذوي الصفة الطبيعية أو الاعتبارية يكونون فيها مسؤولين شخصيًّا في جميع أموالهم وبالتضامن عن ديون الشركة والتزاماتها،
- Article 36
Article 36 sets out the data the formation contract of a general partnership company must contain in particular, from the partners' names and capital to management, profits, and dissolution.
يجب أن يشتمل عقد تأسيس شركة التضامن بصفة خاصة على البيانات الآتية: أ- أسماء الشركاء، وبياناتهم. ب- اسم الشركة. ج- المركز الرئيس للشركة. د- غرض الشركة. هأ- رأس م
- Article 37
Article 37 regulates a general partnership company's management: by the partners or a manager they appoint, with rules on multiple managers, their powers, and the company's commitment to their acts within its purpose.
1- يتولى إدارة شركة التضامن الشركاء فيها، ويحدد الشخص ذو الصفة الاعتبارية ممثله في الإدارة. ويجوز أن يتفق الشركاء في عقد تأسيس الشركة أو في عقد مستقل، على تعيين
- Article 38
Article 38 makes partners' resolutions in a general partnership company by numerical majority and requires their unanimity to amend the formation contract unless the contract provides otherwise.
تصدر قرارات الشركاء بالأغلبية العددية، إلا إذا كان القرار متعلقًا بتعديل عقد تأسيس الشركة فيجب أن يصدر بإجماع الشركاء، ما لم ينصّ في عقد التأسيس على غير ذلك.
- Article 39
Article 39 bars a general partnership's manager from acts beyond the company's purpose unless the partners resolve otherwise or the formation contract expressly allows it, and lists acts to which the bar applies in particular.
يحظر على المدير أن يباشر الأعمال التي تتجاوز غرض الشركة إلا بقرار من الشركاء أو بنصّ صريح في عقد تأسيس الشركة. ويسري هذا الحظر بصفة خاصة على الأعمال الآتية: أ-
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.