Article 60 of the Saudi Companies Law
المادة 60 من نظام الشركات · الفصل الأول: أحكام عامة
Article 60 states that a joint stock company has an issued capital representing subscribed shares and may have an authorized capital, within which the board may increase the issued capital once it has been paid in full.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يكون لشركة المساهمة رأس مال مصدر يمثل الأسهم المكتتب بها، ويجوز أن يحدد نظام الشركة الأساس رأس مال مصرحًا به.
2- يجوز بقرار من مجلس إدارة الشركة زيادة رأس المال المصدر في حدود رأس المال المصرح به، على أن يكون رأس المال المصدر قد دُفع بالكامل.
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 60 explained in plain English
This article distinguishes two kinds of capital in a joint stock company:
- Issued capital: it is mandatory, and represents the shares actually subscribed.
- Authorized capital: it is optional, since the company's bylaws may set it, as a ceiling within which the issued capital can be increased.
Increasing capital by a board resolution: the issued capital may be increased by a resolution of the company's board of directors within the authorized capital, provided the issued capital has been paid in full.
The practical benefit of authorized capital is that it gives the company flexibility to increase its capital when needed by a board resolution within the set ceiling, provided the current issued capital is fully paid. This article does not address other ways of increasing capital or their detailed procedures.
The article connects to Article 59, which requires the issued capital to be not less than SAR 500,000, with not less than a quarter paid at formation; if the issued capital has not been paid in full, the board has no power to increase it under this article.
To organize authorized capital in your company's bylaws, it is advisable to consult a lawyer specialized in company and commercial matters.
Practical example
A joint stock company in Dammam has an issued capital of SAR 1,000,000 paid in full, and its bylaws set an authorized capital of SAR 3,000,000. Its board of directors may resolve to increase the issued capital to SAR 2,000,000, for example, because the increase is within the authorized capital and the issued capital is fully paid.
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 60 of the Saudi Companies Law
What is the difference between issued capital and authorized capital?
Issued capital represents the shares subscribed, whereas the company's bylaws may set an authorized capital as the limit within which the issued capital can be increased.
Can the board of directors increase a joint stock company's capital?
It may increase the issued capital within the authorized capital, provided the issued capital has been paid in full.
Must an authorized capital be set?
No. The article makes setting it permissible in the company's bylaws.
More articles on Joint Stock Company
- Article 58
Article 58 defines the joint stock company as formed by one or more persons, with capital divided into tradable shares, liable alone for its debts, with a shareholder's liability limited to the value of the shares subscribed.
شركة المساهمة: هي شركة يؤسسها شخص واحد أو أكثر، من ذوي الصفة الطبيعية أو الاعتبارية، ويكون رأس مالها مقسمًا إلى أسهم قابلة للتداول، وتكون الشركة وحدها مسؤولة عن
- Article 59
Article 59 requires a joint stock company's issued capital to be at least SAR 500,000, with not less than one quarter paid at formation.
يجب ألا يقلّ رأس مال شركة المساهمة المصدر عن (خمسمائة ألف) ريال، ويجب ألا يقلّ المدفوع منه عند التأسيس عن (الربع).
- Article 61
The article lists what the articles of association of a joint stock company must contain and the documents attached to them when applying to incorporate the company.
1- يجب أن يشتمل النظام الأساس لشركة المساهمة بصفة خاصة على البيانات الآتية: أ- اسم الشركة. ب- المركز الرئيس للشركة. ج- غرض الشركة. د- رأس مال الشركة المصرح به -
- Article 62
The article requires the founders, if they do not subscribe to all the company's shares themselves during incorporation, to offer the remaining shares for subscription in accordance with the Capital Market Law.
إذا لم يقصر المؤسسون خلال مرحلة التأسيس الاكتتاب بجميع الأسهم على أنفسهم، وجب عليهم طرح الأسهم التي لم يكتتبوا بها للاكتتاب وفقًا لنظام السوق المالية.
- Article 63
The article gives the Ministry and the Authority the power to set the controls, procedures, documents and approvals for incorporating a joint stock company whose shares are offered for public subscription during incorporation or which is listed on the capital market.
للوزارة والهيئة وضع الضوابط والإجراءات وتحديد الوثائق والموافقات اللازمة لتأسيس شركة مساهمة تطرح أسهمها للاكتتاب العام خلال مرحلة التأسيس أو تدرج في السوق المال
- Article 64
The article requires the paid portion of the share price to be deposited with a licensed bank in the name of the company under incorporation, and regulates the refund of amounts and the founders' liability if the company is not registered.
1- يودع المدفوع من قيمة الأسهم المكتتب بها باسم الشركة تحت التأسيس لدى أحد البنوك المرخص لها في المملكة، ولا يجوز أن يتصرف فيه إلا مجلس الإدارة بعد قيد الشركة ل
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.