Article 81 of the Saudi Companies Law

المادة 81 من نظام الشركات · الفرع الأول: مجلس الإدارة

The article bars a board member from appointing someone else to attend and vote, except another member if the articles of association allow it, and makes a resolution effective from its date of issue as a general rule.

Official text (Arabic)

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

1- لا يجوز لعضو مجلس إدارة شركة المساهمة أن ينيب عنه غيره في حضور اجتماعات المجلس ولا في التصويت على قراراته. واستثناء من ذلك، يجوز لعضو مجلس الإدارة أن ينيب عنه أيًّا من الأعضاء إذا نص على ذلك نظام الشركة الأساس، على ألا يكون للعضو النائب أكثر من إنابة واحدة.

2- يسري قرار مجلس إدارة شركة المساهمة من تاريخ صدوره، ما لم ينص فيه على سريانه بوقت آخر أو عند تحقق شروط معينة.

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 81 explained in plain English

This article deals with two matters: proxy at board meetings and when resolutions take effect.

1- Proxy:

The rule: A member of a joint stock company's board may not appoint someone else to act for him in attending meetings or in voting on resolutions.
The exception: A member may appoint any of the members to act for him, that is, another board member and not a person from outside, if the articles of association so provide.
A restriction: The member acting as proxy may not hold more than one proxy.

So, for example, a member may not send his financial manager or his lawyer to attend for him, and one member may not collect the proxies of several members.

2- Effect of a resolution: A board resolution takes effect from the date of its issue, unless the resolution itself provides that it takes effect at another time or when certain conditions are met.

This article is linked to Article 80, which counts attendance and voting "in person or by proxy" in the meeting quorum and the majority for resolutions, so a proxy that is valid under Article 81 is the one counted there. It comes before Article 82, which allows the board to issue its resolutions on urgent matters by circulation to all the members. To know whether your company's articles of association allow proxies, it is advisable to review them or consult a lawyer specialized in companies.

Practical example

Nawaf, a board member of a joint stock company in Riyadh, had to travel on the day of the meeting, and the company's articles of association allow proxies. He appointed a fellow board member who held no other proxy, so the proxy was valid. Had he wished to appoint his private adviser from outside the board, that would not have been permitted.

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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