Article 62 of the Saudi Companies Law
المادة 62 من نظام الشركات · الفصل الثاني: تأسيس شركة المساهمة
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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.
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 62 explained in plain English
This article deals with a specific situation at the incorporation stage of a joint stock company: what happens to the shares the founders do not subscribe to themselves?
The founders have two options:
- Limit subscription to themselves, that is, subscribe to all of the company's shares without involving anyone else.
- Not limit subscription to themselves, in which case they must offer the shares they have not subscribed to for subscription, and this offering is made in accordance with the Capital Market Law.
The article does not itself set the offering procedures but refers to the Capital Market Law, so the founders may not offer the remaining shares to people in some way of their own outside that framework.
This article is connected to the ones before and after it:
- Article 61 requires that the incorporation application be accompanied by the founders' declaration that they have subscribed to all the company's issued shares and of the amount paid.
- Article 63 gives the Ministry and the Authority the power to set the controls and procedures and to specify the documents and approvals required to incorporate a joint stock company whose shares are offered for public subscription during incorporation or which is listed on the capital market.
Anyone considering incorporating a company that offers part of its shares to the public needs to know the requirements of the Capital Market Law and the controls issued under it, and should consult a lawyer specialized in securities and companies.
Practical example
Three businessmen in Jeddah wanted to incorporate a joint stock company to build a hospital. They subscribed to only half of the shares and wanted to involve the public in the other half. Under this article they cannot sell the remaining half privately to their relatives and acquaintances as though it were a public offering. They must offer it for subscription in accordance with the Capital Market Law.
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 62 of the Saudi Companies Law
Must the founders subscribe to all of a joint stock company's shares?
Not necessarily. If they do not limit subscription to themselves, they must offer the shares they have not subscribed to for subscription.
How are the remaining shares offered for subscription at incorporation?
The offering is made in accordance with the Capital Market Law. The article does not give the procedural details but refers to that Law.
Who sets the controls for incorporating a company whose shares are offered for public subscription?
Article 63 provides that the Ministry and the Authority may set the controls and procedures and specify the documents and approvals required for that.
More articles on Joint Stock Company
- Article 58
تعرّف المادة شركة المساهمة بأنها شركة يؤسسها شخص أو أكثر، رأس مالها مقسم إلى أسهم قابلة للتداول، تُسأل وحدها عن ديونها، وتقتصر مسؤولية المساهم على قيمة أسهمه.
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
توجب المادة ألا يقل رأس مال شركة المساهمة المصدر عن خمسمائة ألف ريال، وألا يقل المدفوع منه عند التأسيس عن الربع.
يجب ألا يقلّ رأس مال شركة المساهمة المصدر عن (خمسمائة ألف) ريال، ويجب ألا يقلّ المدفوع منه عند التأسيس عن (الربع).
- Article 60
تقرر المادة أن لشركة المساهمة رأس مال مصدرًا يمثل الأسهم المكتتب بها، وتجيز تحديد رأس مال مصرح به يزيد مجلس الإدارة المصدر في حدوده بعد دفعه بالكامل.
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 ال
- 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 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.