Article 9 of the Saudi Companies Law
المادة 9 من نظام الشركات · الفصل الأول: تأسيس الشركة
Article 9 provides that a company acquires legal personality upon registration, with limited personality during formation, transfers the founders' acts and expenses to it, and makes those who acted in its name liable if formation is not completed.
Official text (Arabic)
This article has not been amended since the law was issued.
1- تكتسب الشركة الشخصية الاعتبارية بعد قيدها لدى السجل التجاري، ومع ذلك تكون للشركة خلال مدة التأسيس شخصية اعتبارية بالقدر اللازم لتأسيسها، بشرط إتمام عملية التأسيس.
2- يترتب على قيد الشركة لدى السجل التجاري، انتقال جميع العقود والأعمال التي أجراها المؤسسون لحسابها إلى ذمتها وتحمُّل الشركة جميع المصروفات التي أنفقوها في سبيل تأسيس الشركة.
3- إذا لم تستوفَ إجراءات تأسيس الشركة على النحو المبين في النظام، يكون الأشخاص الذين تعاملوا أو تصرفوا باسم الشركة أو لحسابها مسؤولين شخصيًّا في جميع أموالهم وبالتضامن في مواجهة الغير عن الأفعال والتصرفات التي صدرت عنهم خلال مدة التأسيس.
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 9 explained in plain English
This article answers an important question: when does a company become an independent legal person?
- After registration: the company acquires legal personality after it is registered with the commercial register.
- During the formation period: the company has legal personality only to the extent necessary for its formation, provided that formation is completed.
- Transfer of acts: registration results in all contracts and acts that the founders carried out for the company's account passing to its liability, and the company bears all expenses they incurred in forming it.
- If formation is not completed: if the formation procedures are not met as set out in the Companies Law, those who dealt or acted in the company's name or for its account are personally liable with all their assets and jointly toward third parties for their acts during the formation period.
The practical message for founders is that what they conclude before registration, such as renting premises or buying equipment, passes to the company if it is registered, whereas if the procedures are not met they may bear it from their own funds. This article complements Article 8, which requires the formation documents to be registered with the commercial register, and Article 10, which ties the company's pursuit of its purposes to registration and licenses.
Anyone who contracts in the name of a company under formation and wants to assess their liability would do well to consult a lawyer specialized in companies.
Practical example
Majid rented an office in Khobar in the name of a company that had not yet been registered. If the company is registered with the commercial register, the lease passes to it and it bears its expenses. If the formation procedures are not met, Majid and anyone who acted with him in the company's name are personally and jointly liable to the landlord.
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 9 of the Saudi Companies Law
When does a company acquire legal personality?
After it is registered with the commercial register. During the formation period it has legal personality to the extent necessary for its formation, provided formation is completed.
Does the company bear its formation expenses?
Yes. Once the company is registered, it bears all the expenses the founders incurred in forming it.
Who bears the obligations of a company whose formation was not completed?
Those who dealt or acted in the company's name or for its account are personally liable with all their assets and jointly toward third parties.
More articles on Company Formation
- Article 1
This article defines the key terms of the Companies Law, such as the Ministry, the Authority, the competent authority, relatives and day, and leaves the definition of other terms to the regulations.
1- يقصد بالكلمات والعبارات الآتية -أينما وردت في هذا النظام- المعاني الموضحة أمام كل منها، ما لم يقتضِ السياق غير ذلك: المملكة: المملكة العربية السعودية. النظام
- Article 2
Article 2 defines a company as a legal entity in which two or more persons contribute to a profit-seeking venture to share its profit and loss, and allows a company to be formed by one person or as a non-profit.
الشركة كيان قانوني يؤسس وفقًا لأحكام النظام بناء على عقد تأسيس أو نظام أساس يلتزم بمقتضاه شخصان أو أكثر بأن يساهم كل منهم في مشروع يستهدف الربح بتقديم حصة من ما
- Article 3
Article 3 provides that every company formed under the Companies Law is of Saudi nationality and must have its principal center in the Kingdom.
تعد الشركة التي تؤسس وفقًا لأحكام النظام سعودية الجنسية، ويجب أن يكون مركزها الرئيس في المملكة.
- Article 4
Article 4 sets out the five forms, one of which every company formed under the Companies Law must take.
تتخذ الشركة التي تؤسس وفقًا لأحكام النظام أحد الأشكال الآتية: أ- شركة التضامن. ب- شركة التوصية البسيطة. ج- شركة المساهمة. د- شركة المساهمة المبسطة. هـ- الشركة ذ
- Article 5
The article regulates a company's trade name: its language and sources, the former partner's consent to the use of his name, the indication of the company's form, and amendment of the name without affecting its rights and obligations.
1- يكون لكل شركة اسم تجاري باللغة العربية أو بلغة أخرى، ويجوز أن يكون الاسم مشتقًا من غرضها، أو اسمًا مميزًا، أو اسم واحد أو أكثر من الشركاء أو المساهمين فيها ا
- Article 6
Article 6 states who counts as a founder, regulates submitting the formation application to the commercial register, and gives founders the right to appeal a refusal to the Ministry and then to the competent judicial body.
1- يعد مؤسسًا كل من اشترك فعليًّا في تأسيس الشركة وساهم في رأس مالها بحصة نقدية أو عينية. 2- يقدم المؤسسون طلب تأسيس الشركة وقيدها إلى السجل التجاري، مرافقًا له
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.