Article 18 of the Saudi Cooperative Societies Law
المادة 18 من نظام الجمعيات التعاونية · الباب الثاني: إدارة الجمعيات التعاونية
The article gives the board continuous supervision of the society's work and oversight of those who manage it, and gives its chairman the right to sign for and represent the society before others and the courts, with the right to delegate and appoint agents.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يقوم مجلِس الإدارة بالإشراف على سير العمل بالجمعية بصِفة مُستمِرة، ومُراقبة من يقوم بالإدارة ، ومن يُمثِلون الجمعية والمُفوضين لأعمال مُعيِّنة .
2 - لرئيس مجلِس الإدارة حق التوقيع عن الجمعية و تمثيلِها لدى الآخرين و أمام القضاء، وله بموجب ذلك حق تفويض غيره وتوكيله .
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 18 explained in plain English
This article divides two roles: a supervisory role for the board of directors, and a representative role for its chairman.
Paragraph 1: supervision and oversight
The board of directors does the following continuously:
- Supervises the conduct of work in the society.
- Oversees those who carry out management.
- Oversees those who represent the society and those delegated for specific tasks.
The board therefore does not merely issue decisions but follows up their implementation and oversees everyone who acts in the society's name.
Paragraph 2: the chairman's powers
- The chairman of the board has the right to sign for the society.
- And the right to represent it before others, such as the bodies and people it deals with.
- And the right to represent it before the courts.
- Under this, he has the right to delegate others and appoint agents.
In practice this means that anyone who contracts with or sues the society deals with the chairman of the board or whoever he has delegated or appointed as agent.
This article is linked to Article 17, which regulates the quorum for board meetings and how decisions are made by an absolute majority of those present, so the supervision provided for here is exercised by the board through its meetings and decisions. It is also linked to Article 19, which gives the Minister, subject to the laws on accountants, the power to issue ministerial decisions regulating the audit process, a financial oversight that complements the board's oversight.
Anyone dealing with a cooperative society who wants to verify the capacity of the person signing for it can consult a lawyer who specializes in commercial and corporate cases.
Practical example
A supplier filed a case against a cooperative society in Riyadh over a dispute about the value of supplies. Under this article, the chairman of the society's board represents the society before the courts, and he may appoint a lawyer to follow the case on its behalf.
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 18 of the Saudi Cooperative Societies Law
Who represents the cooperative society before the courts?
The chairman of the board of directors, who has the right to delegate others and appoint agents.
Who signs for the cooperative society?
The chairman of the board has the right to sign for the society and represent it before others.
What is the board of directors' oversight role?
It supervises the conduct of work in the society continuously, and oversees those who carry out management, those who represent the society and those delegated for specific tasks.
More articles on Cooperative Society Board of Directors
- Article 13
The article requires every society to have a board of directors of at least five members elected by the general assembly to manage it within its purposes and regulations, with the founders appointing the first board for three years.
يكون لكُل جمعية مجلِس إدارة، يقوم بكافة الأعمال اللازِمة لإدارتها في حدود أغراضِها ولائحتِها، ويتكون مِن خمسة أعضاء على الأقل، تنتخِبُهم الجمعية العمومية من بين
- Article 14
The article sets the board of directors' term at four years, renewable, bars pay for its members, and allows the general assembly to grant a bonus of up to 10% of annual profits after the statutory deductions.
مُدة عضوية مجلِس الإدارة أربع سنوات، ويجوز للجمعية العمومية التجديد للمجلس لفترة أخرى أو أكثر ، ويستمر المجلس في ممارسة مهامه وصلاحياته إلى أن يتم تعيين المجلس
- Article 15
The article requires the board, when a member's seat falls vacant for any reason, to add the reserve member who obtained the most votes in the general assembly's ballot, to complete the board's remaining term.
إذا خلا مكان أحد أعضاء مجلِس الإدارة لأي سبَّب، فعلى المجلِس أنَّ يضُم العضو – من بين الأعضاء الاحتياطيين - الذي حاز على أكثر الأصوات في إقتراع الجمعية العمومية
- Article 16
The article requires the board of directors of a cooperative society to elect from among its members, at its first meeting, a chairman, a vice-chairman, a board secretary and a treasurer.
ينتخب مجلِس الإدارة من بين أعضائه رئيساً ، ونائباً للرئيس ، وأميناً للمجلس ، وأميناً للصندوق في أول اجتماع له .
- Article 17
The article requires a majority of the board's members to attend for its meeting to be valid, with decisions made by an absolute majority of those present and the side the chair of the meeting voted with prevailing in a tie.
لايكون انعقاد المجلس صحيحا إلا بحضور أغلبية أعضائه ، وتصدر قراراته بموافقة الأغلبية المطلقة لعدد الأعضاء الحاضرين ، فإذا تساوت الأصوات يرجح الجانب الذي صوت معه
- Article 21
The article requires the board of directors to appoint an executive manager to conduct the society's affairs and to set his powers, duties and rights, and makes the board answerable for his work to the general assembly.
يعين مجلس الإدارة مديرًا تنفيذيًا يقوم بتصريف شؤون الجمعية، ويحدد المجلس اختصاصاته، وواجباته، وحقوقه، ويكون مجلس الإدارة مسؤولاً عن أعمال المدير في مواجهة الجمع
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.