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Article 75 of the Saudi Companies Law

المادة 75 من نظام الشركات · الفرع الأول: مجلس الإدارة

The article requires the general assembly's approval to sell assets exceeding 50% of the company's total assets, even across several transactions counted from the first transaction within the preceding 12 months.

Official text (Arabic)

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

يشترط حصول مجلس الإدارة على موافقة الجمعية العامة عند بيع أصول للشركة تتجاوز قيمتها (خمسين في المائة) من قيمة مجموع أصولها سواء تم البيع من خلال صفقة واحدة أو عدة صفقات، وفي هذه الحالة تعتبر الصفقة التي تؤدي إلى تجاوز نسبة (خمسين في المائة) من قيمة الأصول هي الصفقة التي يلزم موافقة الجمعية العامة عليها، وتحسب هذه النسبة من تاريخ أول صفقة تمت خلال (الاثني عشر) شهرًا السابقة. وللجهة المختصة أن تستثني بعض الأعمال والتصرفات من حكم هذه المادة.

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 75 explained in plain English

This article places an important restriction on the board's power to sell the assets of a joint stock company, to protect shareholders from having the company emptied of its assets without their knowledge.

The rule: The board must obtain the general assembly's approval when selling assets worth more than (50%) of the value of the company's total assets.

Preventing evasion by splitting transactions:

  • The provision applies whether the sale is made in one transaction or several transactions.
  • The transaction that causes the 50% threshold to be exceeded is the one that must be submitted to the general assembly for approval.
  • The percentage is calculated from the date of the first transaction made within the preceding (12) months.

The exception: The competent authority may exempt some acts and dealings from the provision of this article; the article does not specify these exceptions.

Relation to Article 74: Article 74 gives the board the power to sell and mortgage the company's assets unless the articles of association or the general assembly restrict it. Article 75 then sets a legal limit on the power of sale when what is sold exceeds half of the company's assets.

Calculating the percentage and identifying the transaction that requires approval may call for a careful estimate of asset values and transaction dates, so it is advisable to consult a lawyer specialized in companies before completing large transactions.

Practical example

The board of a joint stock company in Riyadh sold a warehouse representing 20% of its assets in January, then land representing 25% in May, and then wanted to sell a building representing 10% in September of the same year. The total of the transactions within 12 months of the first one would reach 55%, so the September transaction is the one that requires the general assembly's approval.

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 75 of the Saudi Companies Law

When does the board need the general assembly's approval to sell assets?

When selling assets worth more than 50% of the value of the company's total assets, whether in one transaction or several.

Can approval be avoided by splitting the sale into several transactions?

No. The percentage is calculated from the date of the first transaction within the preceding 12 months, and the transaction that causes 50% to be exceeded is the one that requires approval.

Are there exceptions to this provision?

The competent authority may exempt some acts and dealings from the provision of this article.

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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.