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Article 79 of the Saudi Companies Law

المادة 79 من نظام الشركات · الفرع الأول: مجلس الإدارة

The article makes the chairman the representative of a joint stock company before the courts, arbitration and third parties, allows this to be given to the managing director or chief executive, and regulates delegation and the vice chairman's substitution.

Official text (Arabic)

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

1- دون إخلال باختصاصات مجلس الإدارة المبينة في النظام ونظام الشركة الأساس، يمثل رئيس مجلس الإدارة شركة المساهمة أمام القضاء وهيئات التحكيم والغير، ويجوز أن ينص نظام الشركة الأساس على أن يكون للعضو المنتدب أو الرئيس التنفيذي صلاحية تمثيلها، ويجوز لأي منهم تفويض الغير في تمثيل الشركة.

2- لرئيس مجلس إدارة شركة المساهمة أن يفوض -بقرار مكتوب- بعض صلاحياته إلى غيره من أعضاء المجلس أو من الغير لمباشرة عمل أو أعمال معينة، ما لم ينص نظام الشركة الأساس على غير ذلك.

3- يحل نائب رئيس مجلس الإدارة محل رئيس مجلس الإدارة عند غيابه في الحالات التي يكون فيها لمجلس الإدارة نائب للرئيس.

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 79 explained in plain English

This article sets who speaks in the name of a joint stock company before others.

1- Representation: Without prejudice to the board's powers set out in the Law and the articles of association:

  • The chairman of the board represents the company before the courts, arbitration bodies and third parties.
  • The articles of association may provide that the managing director or the chief executive has the power of representation.
  • Any of them may delegate others to represent the company.

2- The chairman's delegation of some of his powers: The chairman of the board may, by written decision, delegate some of his powers to other board members or to third parties to carry out a particular act or acts, unless the articles of association provide otherwise. Note that the delegation here is of some powers and for particular acts.

3- The vice chairman: He takes the chairman's place in his absence, in cases where the board has a vice chairman.

This article is linked to Article 78, which requires a vice chairman to be appointed in a company listed on the capital market and permits it in an unlisted one, and which regulates the appointment of the managing director and the chief executive. It comes before Article 80, which regulates board meetings and their quorum. Anyone dealing with a joint stock company in a contract or dispute should verify who has the power to represent it, and where needed consult a lawyer specialized in companies and commercial cases.

Practical example

A contracting business in Riyadh filed a lawsuit against a joint stock company. A lawyer whom the chairman of the board had authorized to represent it appeared for the company, which is permitted under the article. Had the company's articles of association given the chief executive the power of representation, the chief executive could also have represented it or delegated someone else.

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 79 of the Saudi Companies Law

Who represents a joint stock company before the courts?

The chairman of the board represents it, and the articles of association may give the power of representation to the managing director or the chief executive.

May the chairman delegate a lawyer to represent the company?

Yes. Whoever has the power of representation may delegate others to represent the company.

Who takes the place of the chairman of the board in his absence?

The vice chairman takes his place in cases where the board has a vice chairman.

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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.