Article 53 of the Saudi Companies Law
المادة 53 من نظام الشركات · الفصل الثالث: الشركاء في شركة التوصية البسيطة
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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 المالية من واقع هذه السجلات والوثائق.
2- لا يجوز للشريك الموصي التدخل في أعمال الإدارة الخارجية ولو صدر له توكيل، فإن تدخل كان مسؤولًا شخصيًّا في جميع أمواله وبالتضامن عن ديون الشركة والتزاماتها التي ترتبت على ما أجراه من أعمال. ومع ذلك، يجوز للشريك الموصي الاشتراك في أعمال الإدارة الداخلية للشركة وفق ما ينص عليه عقد تأسيسها، ولا يرتب هذا الاشتراك أي التزام في ذمته إلا إذا كانت الأعمال التي أجراها تدعو الغير إلى الاعتقاد بأنه شريك متضامن فيعد -في مواجهة ذلك الغير- مسؤولًا شخصيًّا في جميع أمواله وبالتضامن عن ديون الشركة والتزاماتها.
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 53 explained in plain English
This article defines the role of the limited partner in a simple limited partnership company, the partner whose liability is ordinarily confined to their share.
1- Right of oversight: the limited partner may, themselves or through someone they delegate, do the following twice during the financial year:
- Inspect the progress of the company's business.
- Examine its records and documents.
- Obtain a brief statement of the company's financial position from these records and documents.
2- Bar on external management: they may not interfere in external management acts, even if given a power of attorney. If they do, they are personally liable with all their assets and jointly for the company's debts and obligations resulting from the acts they carried out.
3- Internal management: they may take part in the company's internal management acts as its formation contract provides, and that creates no obligation on them, unless the acts they carried out lead third parties to believe they are a general partner, in which case they are considered, toward that third party, personally liable with all their assets and jointly for the company's debts and obligations.
The article does not define external and internal management; what is understood from its context is that the risk lies in appearing to third parties as a general partner. This connects to Article 52, which requires the formation contract to state the company's management.
To determine what you may do as a limited partner in a particular case, it is advisable to consult a lawyer specialized in company and commercial matters.
Practical example
Hind is a limited partner in a simple limited partnership selling devices in Riyadh, and the general partner asked her to negotiate with suppliers and sign contracts in the company's name under a power of attorney from him. This is interference in external management that she may not do even with a power of attorney; if she does, she is personally liable with all her assets and jointly for the debts resulting from these contracts.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
How we write and review contentA question about Article 53 of Companies Law?
Describe what happened and specialist lawyers answer. You can write in English.
- Completely free
- Lawyers from the directory answer
- Your name stays hidden
Commercial & Corporate Law lawyers: ask a specialist about your case
Describe your situation briefly and we'll suggest a lawyer who specialises in this law
Commercial & Corporate Law lawyers
Lawyers who handle this kind of case
شركة امتداد النظام للمحاماة والاستشارات المهنية
- Labour & Employment Law
- Criminal Law
- Criminal Law
- Commercial & Corporate Law
Frequently asked questions about Article 53 of the Saudi Companies Law
Does a limited partner have the right to manage the company?
They may not interfere in external management even with a power of attorney, and may take part in internal management as the formation contract provides.
When does a limited partner become liable with all their assets?
If they interfere in external management they are liable for the debts resulting from what they did, or if their acts in internal management lead third parties to believe they are a general partner they are liable toward that third party.
How often may a limited partner inspect the company's books?
Twice during the financial year, themselves or through someone they delegate.
More articles on Simple Limited Partnership
- Article 51
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.
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 و
- 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 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.