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Article 88 of the Saudi Companies Law

المادة 88 من نظام الشركات · الفرع الثاني: جمعيات المساهمين

The article requires the annual ordinary general assembly to be held within the six months following the end of the financial year, sets its agenda items, and allows an extraordinary assembly with the same items to satisfy this.

Official text (Arabic)

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

1- تنعقد الجمعية العامة العادية السنوية مرة على الأقل خلال الأشهر (الستة) التالية لانتهاء السنة المالية للشركة. ويجوز دعوة جمعيات عامة عادية أخرى كلما دعت الحاجة إلى ذلك.

2- يجب أن يشتمل جدول أعمال الجمعية العامة العادية في اجتماعها السنوي على البنود الآتية:

أ- الاطلاع على تقرير مجلس الإدارة للسنة المالية المنقضية ومناقشته.

ب- الاطلاع على القوائم المالية للسنة المالية المنقضية ومناقشتها.

ج- مناقشة تقرير مراجع الحسابات للسنة المالية المنقضية -إن وجد- واتخاذ قرار بشأنه.

د- البت في اقتراحات مجلس الإدارة بشأن توزيع الأرباح، إن وجدت.

3- يتحقق متطلب انعقاد الجمعية العامة العادية السنوية بانعقاد جمعية عامة غير عادية خلال الأشهر (الستة) التالية لانتهاء السنة المالية للشركة وباشتمال جدول أعمالها على البنود الواردة في الفقرة (2) من 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 88 explained in plain English

This article regulates the annual meeting of the ordinary general assembly of a joint stock company, the occasion on which shareholders hold the board to account for the past year.

1- Timing:

  • The annual ordinary assembly is held at least once within the (6) months following the end of the financial year.
  • Other ordinary assemblies may be called whenever needed.

2- The mandatory agenda of the annual meeting:

  1. Reviewing and discussing the board's report on the financial year that has ended.
  2. Reviewing and discussing the financial statements for the year that has ended.
  3. Discussing the auditor's report for the year that has ended, if any, and taking a decision on it.
  4. Deciding on the board's proposals on profit distribution, if any.

3- The alternative: The requirement of an annual assembly is met by holding an extraordinary general assembly within the same six months, provided its agenda includes the four items above.

This article is linked to Article 87, which makes it a power of the ordinary assembly to review the board's report and the financial statements, discuss the auditor's report and decide on profit distribution, whereas Article 88 sets when these matters must be presented. It is also linked to Article 89, which requires, where a general assembly resolution amends the rights of a particular class of shareholders, the approval of those with voting rights in that class in an assembly of their own. If a company is late in holding the annual assembly, a shareholder should consult a lawyer specialized in companies.

Practical example

The financial year of a joint stock company in Riyadh ends on 31 December. It must hold the annual ordinary general assembly before the end of the following June, and its agenda must include the board's report, the financial statements, the auditor's report and the proposal on profit distribution. Had it held in May an extraordinary assembly including these four items, the requirement would have been met.

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 88 of the Saudi Companies Law

When must the annual ordinary general assembly be held?

At least once within the six months following the end of the company's financial year.

What are the mandatory items on the annual assembly's agenda?

The board's report, the financial statements, the auditor's report if any, and the proposals on profit distribution if any, all for the financial year that has ended.

Does an extraordinary assembly replace the annual assembly?

Yes, if it is held within the six months following the end of the financial year and its agenda includes the items listed in paragraph 2.

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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.