Article 38 of the Saudi Cooperative Societies Law
المادة 38 من نظام الجمعيات التعاونية · الباب الثامن: حل الجمعية وتصفيتها
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.
Official text (Arabic)
This article has not been amended since the law was issued.
في حالة حل الجمعية، تُعيِّن الوزارة مُصفي أو أكثر لتصفيتِها. ويقوم المُصفي بإجراء كافة التصرُفات النِظامية اللازِمة لاستيفاء حقوق الجمعية والوفاء بديونِها ، لتحقيق فائض موجوداتِها. ويجب أنَّ يُقصِر المُصفي عملُه على إنهاء أعمال الجمعية التي بدئ فيها فعلاً، وأنَّ يمتنع عن الشروع في أعمال جديدة. ويضع المُصفي حساباً ختامياً، وتتم مُراجعتُه طِبقاً لأحكام المادة (العشرين) من هذا النِظام.
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 38 explained in plain English
This article regulates the liquidation stage after a cooperative society is dissolved.
First: appointing the liquidator
If a society is dissolved, the Ministry appoints one or more liquidators to liquidate it.
Second: the liquidator's task
- He carries out all the legal acts necessary to collect the society's rights, meaning to collect what others owe it.
- He pays its debts, meaning he settles what it owes.
- The aim is to realize the surplus of its assets.
Third: limits on the liquidator's work
- He must limit his work to finishing the society's business that has already been started.
- He must refrain from starting new business.
The liquidator is therefore not a manager who continues the society's activity; his task is to close its files.
Fourth: the final account
The liquidator prepares a final account, which is reviewed in accordance with the provisions of Article 20. That article concerns the accounts the board of directors presents at the end of the financial year, comprising the final account and the profit and loss account, and submitting them with the supporting documents to the auditor, and making them available with the reports to the members at the society's premises, with each member entitled to inspect them.
The dissolution on which liquidation rests occurs in the cases listed in Article 37, such as not starting work for two years or a general assembly decision by a majority of three quarters of the shareholders. Linked to this is Article 39, which requires a summary of the liquidation account to be published in a local newspaper and allows any member to challenge it before the Minister within thirty days of publication.
Anyone with a claim against a society in liquidation may consult a lawyer specializing in commercial and corporate cases.
Practical example
A decision is issued to dissolve a cooperative society in Riyadh, and the Ministry appoints a liquidator. The society has an existing supply contract and sums owed by some customers. Under this article, the liquidator collects these sums, pays the society's debts and finishes the existing supply contract, but he may not enter into new supply contracts.
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 38 of the Saudi Cooperative Societies Law
Who appoints the liquidator of a cooperative society?
The Ministry appoints one or more liquidators when the society is dissolved.
May the liquidator start new business for the society?
No. He must limit his work to finishing the business that has already been started and refrain from starting new business.
How is the liquidation account reviewed?
The liquidator prepares a final account, which is reviewed in accordance with the provisions of Article 20.
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 37
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.
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
- 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.