Article 51 of the Saudi Companies Law
المادة 51 من نظام الشركات · الفصل الأول: أحكام عامة
Article 51 defines the simple limited partnership company as having two groups of partners: general partners liable with all their assets and limited partners liable up to their shares, with general partnership rules applying where there is no provision.
Official text (Arabic)
This article has not been amended since the law was issued.
1- شركة التوصية البسيطة: هي شركة تتكون من فريقين من الشركاء، فريق يضم على الأقل شريكًا من ذوي الصفة الطبيعية أو الاعتبارية يكون مسؤولًا شخصيًّا في جميع أمواله وبالتضامن عن ديون الشركة والتزاماتها، وفريق آخر يضم على الأقل شريكًا من ذوي الصفة الطبيعية أو الاعتبارية موصيًا لا يكون مسؤولًا عن ديون الشركة والتزاماتها إلا في حدود حصته في رأس مال الشركة. ولا يكتسب الشريك الموصي صفة التاجر.
2- يخضع الشركاء المتضامنون في شركة التوصية البسيطة للأحكام المطبقة على الشركاء في شركة التضامن.
3- تطبق على شركة التوصية البسيطة أحكام شركة التضامن فيما لم يرد به نص خاص في هذا الباب.
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 51 explained in plain English
This article explains the meaning of the simple limited partnership company, which rests on two groups of partners:
- General partners: a group of at least one partner, natural or legal persons, who are personally liable with all their assets and jointly for the company's debts and obligations.
- Limited partners: a group of at least one partner, natural or legal persons, who are not liable for the company's debts and obligations except up to their share in the capital. A limited partner does not acquire the status of a merchant.
The minimum for a simple limited partnership company is therefore two partners: one general and one limited.
The article sets two rules of reference:
- The general partners in a simple limited partnership are subject to the provisions applying to partners in a general partnership company.
- The provisions of the general partnership company apply to the simple limited partnership company where no special provision exists in this Part.
This form suits someone who wants to invest money in a commercial activity without bearing risks beyond their share, with a partner who bears full liability and does the work.
A related provision is Article 50 on the general partnership, which requires, if the contract provides for continuing with minor heirs, converting it within a year into a simple limited partnership in which the minor becomes a limited partner. Article 52 follows to specify the data of the formation contract of a simple limited partnership.
To choose the right form for your partnership, it is advisable to consult a lawyer specialized in company and commercial matters.
Practical example
Mishal has experience in running restaurants, and his friend Badr has money he wants to invest without working full time. They formed a simple limited partnership in Riyadh, with Mishal as a general partner liable with all his assets for the company's debts, and Badr as a limited partner liable only up to his share in the capital and not acquiring the status of a merchant.
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 51 of the Saudi Companies Law
What is the difference between a general partner and a limited partner?
A general partner is personally liable with all their assets and jointly for the company's debts, whereas a limited partner is liable only up to their share in the capital.
Does a limited partner become a merchant?
No. The article provides that a limited partner does not acquire the status of a merchant.
Which provisions apply to a simple limited partnership where there is no provision?
The provisions of the general partnership company apply where no special provision exists in the Part regulating it.
More articles on Simple Limited Partnership
- Article 52
Article 52 sets out the data a simple limited partnership's formation contract must contain in particular, such as the partners' names, capital, management, resolutions, profits, and dissolution.
يجب أن يشتمل عقد تأسيس شركة التوصية البسيطة بصفة خاصة على البيانات الآتية: أ- أسماء الشركاء، وبياناتهم. ب- اسم الشركة. ج- المركز الرئيس للشركة. د- غرض الشركة. ه
- Article 53
Article 53 gives a limited partner the right to inspect and examine records twice a year, bars them from external management on pain of full liability, and allows internal management as the formation contract provides.
1- يجوز للشريك الموصي -أو من يفوّضه- أن يطلع مرتين خلال السنة المالية على سير أعمال الشركة، وأن يفحص سجلاتها ووثائقها، وأن يستخرج بيانًا موجزًا عن حالة الشركة ا
- Article 54
Article 54 allows the general and limited partners to agree in the formation contract that a simple limited partnership will have a general assembly and to set its competences and meeting procedures.
يجوز للشركاء المتضامنين والموصين الاتفاق في عقد تأسيس الشركة على أن يكون للشركة جمعية عامة، وتحديد اختصاصاتها، وإجراءات انعقادها.
- Article 55
Article 55 sets how partners' resolutions are issued in a simple limited partnership unless the contract provides otherwise, and bars a limited partner from requesting dissolution or voting on appointing or removing the manager.
1- ما لم ينص عقد تأسيس الشركة على غير ذلك، تصدر قرارات الشركاء وفق الآتي: أ- القرارات المتعلقة بتعديل عقد التأسيس: بإجماع الشركاء المتضامنين وموافقة مالكي أغلبي
- Article 56
Article 56 regulates assignment of shares by limited and general partners in a simple limited partnership, the consent needed to assign to third parties, the assignee's duty to contribute an unpaid share, and admitting new partners.
1- يجوز للشريك الموصي أن يتنازل عن كل حصصه أو بعضها لأي من الشركاء الآخرين في الشركة. 2- يجوز للشريك الموصي أن يتنازل عن كل حصصه، أو بعضها، للغير؛ بعد موافقة جم
- Article 57
Article 57 provides that a simple limited partnership does not end on a limited partner's death, interdiction, insolvency, bankruptcy, or withdrawal unless the formation contract so provides.
لا تنقضي شركة التوصية البسيطة بوفاة أي من الشركاء الموصين، ولا بالحجر عليه، ولا بإعساره، ولا بافتتاح أي من إجراءات التصفية تجاهه وفقًا لنظام الإفلاس، ولا بانسحا
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.