Article 7 of the Saudi Companies Law
المادة 7 من نظام الشركات · الفصل الأول: تأسيس الشركة
Article 7 specifies the founding document for each form of company, requires it to contain what the Companies Law requires and to be in Arabic, and directs the Ministry to prepare guidance templates.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يكون لكل شركة تؤسس وفقًا لأحكام النظام عقد تأسيس، عدا شركة المساهمة وشركة المساهمة المبسطة والشركة ذات المسؤولية المحدودة المملوكة لشخص واحد، فيكون لكل منها نظام أساس.
2- يجب أن يشتمل عقد تأسيس الشركة أو نظامها الأساس على الأحكام والشروط والبيانات التي يتطلبها النظام وبما يتناسب مع شكل الشركة.
3- يجب أن يكون عقد تأسيس الشركة أو نظامها الأساس باللغة العربية، ويجوز أن يكون مقرونًا بترجمة إلى لغة أخرى.
4- تعد الوزارة نماذج استرشادية لعقود تأسيس الشركات وأنظمتها الأساسية وذلك بما يتناسب مع شكل الشركة.
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 7 explained in plain English
This article governs the company's founding documents, meaning the document on which the company rests and which governs its relationship with the partners:
- Formation contract or bylaws: as a rule, every company has a formation contract, except three forms, each of which has bylaws: the joint stock company, the simplified joint stock company, and the single-owner limited liability company.
- Content: the document must contain the provisions, conditions, and data required by the Companies Law, suited to the company's form; what is required for one form may differ from another.
- Language: the document must be in Arabic, and it may be accompanied by a translation into another language.
- Guidance templates: the Ministry prepares guidance templates for formation contracts and bylaws suited to each form.
This article connects to Article 6, which requires the formation contract or bylaws to be attached to the formation application submitted to the commercial register. Article 8 then requires the document to be in writing and registered in the commercial register.
The guidance templates are a useful starting point, but drafting the clauses specific to the venture, such as the distribution of powers and the transfer of shares, may need review by a lawyer specialized in companies.
Practical example
Abdullah decided to form a limited liability company that he owns alone. Under this article, his company's document is bylaws rather than a formation contract, it must be in Arabic, and he may use the guidance template prepared by the Ministry.
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 7 of the Saudi Companies Law
What is the difference between a formation contract and bylaws?
As a rule a company has a formation contract, but the joint stock company, the simplified joint stock company, and the single-owner limited liability company each have bylaws.
Can a company's formation contract be written in English?
It must be in Arabic, and it may be accompanied by a translation into another language.
Are there ready-made templates for company formation contracts?
Yes. The Ministry prepares guidance templates for formation contracts and bylaws suited to the company's form.
More articles on Company Formation
- Article 1
This article defines the key terms of the Companies Law, such as the Ministry, the Authority, the competent authority, relatives and day, and leaves the definition of other terms to the regulations.
1- يقصد بالكلمات والعبارات الآتية -أينما وردت في هذا النظام- المعاني الموضحة أمام كل منها، ما لم يقتضِ السياق غير ذلك: المملكة: المملكة العربية السعودية. النظام
- Article 2
Article 2 defines a company as a legal entity in which two or more persons contribute to a profit-seeking venture to share its profit and loss, and allows a company to be formed by one person or as a non-profit.
الشركة كيان قانوني يؤسس وفقًا لأحكام النظام بناء على عقد تأسيس أو نظام أساس يلتزم بمقتضاه شخصان أو أكثر بأن يساهم كل منهم في مشروع يستهدف الربح بتقديم حصة من ما
- Article 3
Article 3 provides that every company formed under the Companies Law is of Saudi nationality and must have its principal center in the Kingdom.
تعد الشركة التي تؤسس وفقًا لأحكام النظام سعودية الجنسية، ويجب أن يكون مركزها الرئيس في المملكة.
- Article 4
Article 4 sets out the five forms, one of which every company formed under the Companies Law must take.
تتخذ الشركة التي تؤسس وفقًا لأحكام النظام أحد الأشكال الآتية: أ- شركة التضامن. ب- شركة التوصية البسيطة. ج- شركة المساهمة. د- شركة المساهمة المبسطة. هـ- الشركة ذ
- Article 5
The article regulates a company's trade name: its language and sources, the former partner's consent to the use of his name, the indication of the company's form, and amendment of the name without affecting its rights and obligations.
1- يكون لكل شركة اسم تجاري باللغة العربية أو بلغة أخرى، ويجوز أن يكون الاسم مشتقًا من غرضها، أو اسمًا مميزًا، أو اسم واحد أو أكثر من الشركاء أو المساهمين فيها ا
- Article 6
Article 6 states who counts as a founder, regulates submitting the formation application to the commercial register, and gives founders the right to appeal a refusal to the Ministry and then to the competent judicial body.
1- يعد مؤسسًا كل من اشترك فعليًّا في تأسيس الشركة وساهم في رأس مالها بحصة نقدية أو عينية. 2- يقدم المؤسسون طلب تأسيس الشركة وقيدها إلى السجل التجاري، مرافقًا له
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.