Article 95 of the Saudi Companies Law
المادة 95 من نظام الشركات · الفرع الثاني: جمعيات المساهمين
Article 95 refers the method of voting in a shareholders' assembly to the company's bylaws and bars board members from voting on business and contracts in which they have an interest or a conflict of interest.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يبين نظام الشركة الأساس طريقة التصويت في جمعية المساهمين.
2- لا يجوز لأعضاء مجلس الإدارة الاشتراك في التصويت على قرارات الجمعية التي تتعلق بالأعمال والعقود، التي لهم فيها مصلحة مباشرة أو غير مباشرة أو التي تنطوي على تعارض مصالح.
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 95 explained in plain English
This article deals with two matters relating to voting in the shareholders' assembly:
First: the method of voting
The Companies Law did not impose a single method of voting but left it to the company's bylaws to set out. It is therefore advisable for every shareholder to read their company's bylaws to know how votes are counted and how to exercise their right in them.
Second: barring board members from voting in certain cases
Board members may not take part in voting on assembly resolutions relating to:
- Business and contracts in which they have a direct or indirect interest.
- Business and contracts that involve a conflict of interest.
The purpose of this bar is to protect the company and the other shareholders, so that a board member does not use their votes as a shareholder to approve a transaction that benefits them at the company's expense. The bar also covers an indirect interest, so it is not limited to contracts to which the member is themselves a party.
This rule is complemented by Article 96, which requires the board of directors not to place business and contracts in which any member has an interest under a single item for the purpose of voting on them as a whole, so that shareholders vote on each independently. If a shareholder suspects a conflict of interest in a transaction put to the assembly, it is advisable to consult a lawyer specialized in company and commercial matters.
Practical example
A joint stock company in Khobar put to its general assembly a supply contract with an establishment owned by the brother of one of the board members, and that member owned shares in the company. Because he has an indirect interest in the contract, he may not take part in voting on the assembly's resolution on it, and the remaining shareholders decide whether to approve or reject.
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 95 of the Saudi Companies Law
Who sets the method of voting in the general assembly?
The company's bylaws set out the method of voting in the shareholders' assembly.
Can a board member vote on a contract in which they have an interest?
No. Board members may not take part in voting on assembly resolutions relating to business and contracts in which they have a direct or indirect interest.
Does the bar include cases of conflict of interest?
Yes. Board members are barred from voting on resolutions relating to business and contracts that involve a conflict of interest.
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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.