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Article 89 of the Saudi Companies Law

المادة 89 من نظام الشركات · الفرع الثاني: جمعيات المساهمين

The article makes a general assembly resolution that amends the rights of a particular class of shareholders effective only if those with voting rights in that class ratify it in a special assembly under the extraordinary assembly's rules.

Official text (Arabic)

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

إذا كان من شأن قرار الجمعية العامة تعديل حقوق فئة معينة من المساهمين، فلا يكون القرار نافذًا إلا إذا صدّق عليه من له حق التصويت من هؤلاء المساهمين المجتمعين في جمعية خاصة بهم وفقًا للأحكام المقررة لانعقاد الجمعية العامة غير العادية وإصدار قراراتها.

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 89 explained in plain English

A joint stock company may issue shares of different types or classes, each with special rights. This article protects the holders of each class from having their rights amended by a resolution taken by a majority that does not belong to them.

The provision: If a resolution of the general assembly would amend the rights of a particular class of shareholders:

  • The resolution does not take effect unless it is ratified by those of these shareholders who have voting rights.
  • The ratification is made in an assembly of their own.
  • This special assembly is held and issues its resolutions in accordance with the provisions set for holding the extraordinary general assembly and issuing its resolutions.

The resolution is not void merely because it was issued, but it remains ineffective until the class concerned ratifies it. For the quorum and majority of this special assembly, the article refers to the provisions on the extraordinary assembly without stating them.

Note that ratification is limited to those of the class who have voting rights.

This article is linked to Article 90, which provides that general and special assemblies are held on the call of the board in accordance with the procedures in the articles of association. It is preceded by Article 88, which regulates the annual ordinary general assembly. If you hold a special class of shares and believe a proposed resolution affects your rights, it is advisable to consult a lawyer specialized in companies.

Practical example

A joint stock company in Riyadh issued a class of shares giving its holders priority in profits. The general assembly decided to cancel this priority. The resolution does not take effect until the holders of this class who have voting rights meet in an assembly of their own and ratify it, under the provisions set for the extraordinary general assembly.

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 89 of the Saudi Companies Law

Can the general assembly amend the rights of a class of shareholders?

It can issue the resolution, but it does not take effect unless those of that class who have voting rights ratify it in an assembly of their own.

What is a special assembly of shareholders?

An assembly made up of the shareholders of a particular class, which is held and issues its resolutions in accordance with the provisions set for the extraordinary general assembly.

Who calls the special assembly?

Article 90 provides that general and special assemblies are held on the call of the board in accordance with the procedures in the articles of association.

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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.