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Article 68 of the Saudi Companies Law

المادة 68 من نظام الشركات · الفرع الأول: مجلس الإدارة

The article gives the ordinary general assembly the election of a joint stock company's board, requires members to be natural persons, caps membership at four years, and allows the assembly to remove them.

Official text (Arabic)

This article has not been amended since the law was issued.

1- تنتخب الجمعية العامة العادية أعضاء مجلس إدارة الشركة، ويشترط في جميع الأحوال أن يكون أعضاء مجلس الإدارة أشخاصًا من ذوي الصفة الطبيعية.

2- تحدد اللوائح أسلوب التصويت في انتخاب أعضاء مجلس إدارة شركة المساهمة.

3- يجوز أن يحدد نظام الشركة الأساس طريقة تكوين مجلس الإدارة وفق الضوابط التي تحددها اللوائح.

4- يحدد نظام الشركة الأساس مدة عضوية مجلس الإدارة، على ألا تتجاوز (أربع) سنوات. ويجوز إعادة انتخاب أعضاء مجلس الإدارة، ما لم ينص نظام الشركة الأساس على غير ذلك.

5- يبين نظام الشركة الأساس كيفية انتهاء العضوية في مجلس الإدارة أو إنهائها بطلب من المجلس. ومع ذلك، يجوز للجمعية العامة العادية عزل جميع أعضاء مجلس الإدارة أو بعضهم ولو نص نظام الشركة الأساس على غير ذلك، وعلى الجمعية العامة العادية في هذه الحالة انتخاب مجلس إدارة جديد أو من يحل محل العضو المعزول -بحسب الأحوال- وذلك وفقًا لأحكام النظام. وللجهة المختصة وضع ضوابط عزل أعضاء مجلس الإدارة من قبل الجمعية العامة العادية.

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 68 explained in plain English

This article regulates how the board of a joint stock company is formed, how long its membership lasts, and how it ends.

  • Who elects? The ordinary general assembly elects the board members.
  • Who may be elected? In all cases the members must be natural persons, that is, individuals rather than companies or other legal entities.
  • Voting method: It is set by the regulations; the article does not state it.
  • How the board is formed: The articles of association may specify it in accordance with the controls set by the regulations.
  • Term of membership: The articles of association set it, provided it does not exceed (4) years. Members may be re-elected unless the articles of association provide otherwise.

End of membership and removal: The articles of association state how membership ends or is terminated at the board's request. Nevertheless, the ordinary general assembly may remove all the members or some of them even if the articles of association provide otherwise, and it must then elect a new board or a replacement for the removed member, as the case may be, in accordance with the provisions of the Law. The competent authority may set controls for this removal.

This article follows Article 67, which sets the minimum number of board members at three and opens the right of nomination to every shareholder, and precedes Article 69, which regulates what happens when the board's term ends or its members resign. To know the voting method and the detailed controls on removal, the regulations must be consulted, and it is advisable to consult a lawyer specialized in companies.

Practical example

The articles of association of a joint stock company in Jeddah provided that board members cannot be removed before their term ends. Nevertheless, when the shareholders lost confidence in two members, the ordinary general assembly decided to remove them and elected replacements, because the article allows removal even if the articles of association provide otherwise.

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 68 of the Saudi Companies Law

Who elects the members of a joint stock company's board?

The ordinary general assembly elects them.

What is the maximum term of board membership?

The articles of association set it, provided it does not exceed four years, and members may be re-elected unless the articles of association provide otherwise.

Can a company be a member of the board of a joint stock company?

No. In all cases the board members must be natural persons.

Can a board member be removed if the articles of association prohibit it?

Yes. The ordinary general assembly may remove all the members or some of them even if the articles of association provide otherwise, and must elect a replacement in accordance with the provisions of the Law.

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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.