Article 37 of the Saudi Cooperative Societies Law
المادة 37 من نظام الجمعيات التعاونية · الباب الثامن: حل الجمعية وتصفيتها
The article gives the Minister the right to dissolve a society and liquidate it in six cases, including not starting work for two years, losing more than half the paid-up capital, too few members, and a general assembly decision by three quarters of the shareholders.
Official text (Arabic)
This article has not been amended since the law was issued.
للوزير الحق في حل الجمعية وتصفية أعمالِها في أي من الحالات الآتية:
1 - إذا مضت سنتان على تاريخ نشر تسجيلها وإشهارها ولم تباشر عملها .
2 - إذا بلغ مجموع خسائرِها في سنة ما أكثر مِن نصف رأس مالها المدفوع.
3 - إذا نقص عدَّد المُساهمين عن العدد المحدد في المادة (الثالثة) من هذا النظام .
4 - إذا خرجت عن أهدافها التي أنشئت من أجلها .
5 - إذا تعذر استمرارها لإضطراب أعمالها بصفة مستمرة ، أو لتكرار إخلالِها بأحكام هذا النظام ولائحته واللائحة الأساسية للجمعية .
6 - إذا قرَّرت الجمعية العمومية حلها بأغلبية (ثلاثة أرباع) المُساهمين على الأقل.
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 37 explained in plain English
This article sets out the cases in which the Minister may dissolve a society and liquidate its affairs. There are six:
- Not starting work: if two years pass from the date its registration was published and announced and it has not started work.
- Heavy losses: if the total of its losses in any one year exceeds half of its paid-up capital.
- Too few members: if the number of shareholders falls below the number set in Article 3, which is twelve persons, or five members in the exceptional cases the Minister assesses.
- Departing from the objectives for which it was established.
- Impossibility of continuing: because its business is persistently disrupted, or because it repeatedly breaches the provisions of the Law, its regulations and the society's bylaws.
- A decision of the members: if the general assembly decides to dissolve it by a majority of at least three quarters of the shareholders.
Note that the text says "the Minister has the right", so dissolution in these cases is a power of the Minister. Note also that the majority in the sixth case is counted from the shareholders, not only those present.
In the second case, the test is one year's losses compared with the paid-up capital, not the subscribed capital.
This article is linked to Article 36, which places societies under the Ministry's oversight and gives the Minister the right to suspend violating general assembly decisions. It is also linked to the liquidation provisions in Article 38: on dissolution the Ministry appoints one or more liquidators, who collect the society's rights and pay its debts and limit their work to finishing what has already been started.
Anyone whose society faces a dissolution decision may consult a lawyer specializing in administrative cases.
Practical example
A cooperative society in Tabuk has been registered and its registration published, but it carries out no activity for two years. Under this article the Minister has the right to dissolve it and liquidate its affairs. The same applies if its general assembly decides to dissolve it with the approval of at least three quarters of the shareholders.
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 37 of the Saudi Cooperative Societies Law
When may the Minister dissolve a cooperative society?
In six cases: not starting work two years after publication; losing more than half the paid-up capital in a year; shareholders falling below the number set in Article 3; departing from its objectives; impossibility of continuing; or a general assembly decision by three quarters of the shareholders.
Can members dissolve their cooperative society?
If the general assembly decides to dissolve it by a majority of at least three quarters of the shareholders, that is one of the cases of dissolution the Minister holds.
What level of loss allows a society to be dissolved?
If the total of its losses in any one year exceeds half of its paid-up capital.
Articles this article refers to
More articles on Dissolving and Liquidating the Cooperative Society
- Article 25
The article governs the extraordinary meeting of the general assembly: who can call it, its cases such as amending the regulations, disposing of real estate, dissolution, merger and division, and its quorum of a majority of the contributing members.
تعقد الجمعية العمومية اجتماعا غير عادي بدعوة من مجلس الإدارة، أو من مراجع الحسابات، أو بطلب من ثلث أعضائها على الأقل، أو بدعوة من الوزارة، وذلك لبحث إحدى الحالا
- Article 38
The article provides that on dissolution of a society the Ministry appoints one or more liquidators, who collect its rights and pay its debts, limit their work to finishing existing business, and prepare a final account reviewed under Article 20.
في حالة حل الجمعية، تُعيِّن الوزارة مُصفي أو أكثر لتصفيتِها. ويقوم المُصفي بإجراء كافة التصرُفات النِظامية اللازِمة لاستيفاء حقوق الجمعية والوفاء بديونِها ، لتح
- Article 39
The article requires a summary of the liquidation account to be published in a local newspaper, allows any member to challenge it before the Minister within 30 days, and requires the Minister to decide within 30 days.
ينشر ملخص حساب التصفية في إحدى الصحف المحلية ، ويجوز لأي من أعضاء الجمعية الطعن فيه أمام الوزير خِلال ثلاثين يوماً من تاريخ النشر ، وعلى الوزير الفصل في الطعن خ
- Article 40
The article provides that liquidation proceeds are distributed to members up to what they actually paid for their shares plus profits realized, with the remainder deposited toward a new society or transferred by the Minister to a similar society.
يوزع ناتج التصفية على الأعضاء، بحيث لا تتجاوز قيمة ما دفعُه الأعضاء فعلاً ثمناً لأسهُمهم وماتحقق من أرباح ، ويودع الباقي في أحد المصارِف على ذمة إنشاء جمعية تعا
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.