Article 87 of the Saudi Companies Law

المادة 87 من نظام الشركات · الفرع الثاني: جمعيات المساهمين

The article gives the ordinary general assembly all matters relating to the company except those for the extraordinary assembly, including electing and removing the board, appointing the auditor, discussing reports and financial statements, and profit distribution and reserves.

Official text (Arabic)

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

فيما عدا ما تختص به الجمعية العامة غير العادية، تختص الجمعية العامة العادية بجميع الأمور المتعلقة بالشركة، وعلى الأخص ما يأتي:

أ- انتخاب أعضاء مجلس الإدارة، وعزلهم.

ب- تعيين مراجع حسابات أو أكثر للشركة، وفقًا لما يقتضيه النظام، وتحديد أتعابه، وإعادة تعيينه، وعزله.

ج- الاطلاع على تقرير مجلس الإدارة ومناقشته.

د- الاطلاع على القوائم المالية للشركة ومناقشتها.

هـ- مناقشة تقرير مراجع الحسابات -إن وجد- واتخاذ قرار بشأنه.

و- البت في اقتراحات مجلس الإدارة بشأن طريقة توزيع الأرباح.

ز- تكوين احتياطيات الشركة وتحديد استخداماتها.

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 87 explained in plain English

This article sets the powers of the ordinary general assembly, the assembly that handles the regular affairs of a joint stock company.

The general rule: The ordinary assembly has power over all matters relating to the company, except what is within the powers of the extraordinary general assembly. The remaining power is therefore its own.

In particular:

Electing and removing board members.
Appointing one or more auditors as the Law requires, setting his fees, reappointing him, and removing him.
Reviewing and discussing the board's report.
Reviewing and discussing the financial statements.
Discussing the auditor's report, if any, and taking a decision on it.
Deciding on the board's proposals on the method of distributing profits.
Forming the company's reserves and specifying their uses.

Note that profit distribution starts with a proposal from the board, and the decision on it is for the ordinary assembly. The phrase "in particular" means the list is examples and not exhaustive.

This article is linked to Article 86, which allows the extraordinary assembly to issue resolutions on the ordinary assembly's matters on the same conditions, and to Article 88, which requires the annual ordinary assembly to be held within the six months following the end of the financial year and makes its agenda include the board's report, the financial statements, the auditor's report and profit distribution. Anyone who objects to an assembly resolution should consult a lawyer specialized in companies.

Practical example

The board of a joint stock company in Jeddah proposed distributing part of the year's profits to the shareholders and forming a reserve for expansion. The proposal was presented to the ordinary general assembly with the financial statements and the auditor's report, and the assembly discussed them, decided the method of distributing profits and specified the uses of the reserve.

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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