Article 15 of the Saudi Privatization Law
المادة 15 من نظام التخصيص
If a project company's losses reach the limit set by the laws during the contract term, it need not increase or reduce its capital or dissolve. The executing entity submits proposals to the Council of Economic and Development Affairs to decide on its continuation.
Official text (Arabic)
This article has not been amended since the law was issued.
إذا بلغت خسائر شركة مشروع التخصيص الحد الذي تقرره الأنظمة في أي وقت خلال مدة العقد، فلا يترتب على ذلك وجوب زيادة رأس مالها، أو تخفيضه، أو حلّها، أو اعتبارها منقضية بقوة النظام، وعلى الجهة التنفيذية -بعد التنسيق مع شركة مشروع التخصيص- تقديم مقترحاتها إلى المجلس؛ لاتخاذ ما يراه في شأن استمرار شركة مشروع التخصيص. وإذا لم تُوفّق شركة المشروع أوضاعها وفقًا لقرار المجلس باستمرارها ضمن المهلة المحددة فيه، فتخضع لما تقضي به الأنظمة من أحكام.
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 15 explained in plain English
The laws, including the Companies Law, provide certain consequences if a company's losses reach a certain limit, such as increasing the capital or dissolving the company. But applying these consequences automatically to a privatization project company could stop a public service. This article therefore sets a special rule:
- No automatic consequences: if the company's losses reach the limit the laws set at any time during the contract term, that does not require increasing the capital, reducing it, dissolving the company, or treating it as expired by operation of law.
- Proposals: the executing entity, after coordinating with the company, submits its proposals to the Council of Economic and Development Affairs.
- The Council's decision: the Council takes what it sees fit regarding the company's continuation.
- Failure to rectify: if the Council decides it should continue and the company does not rectify its position within the period set in its decision, it is subject to the provisions of the laws.
The text does not state the amount of the limit or the length of the period: the limit is set by other laws, and the period by the Council's decision. The reason is to keep the public service going and not have it stop because of a financial situation that may be temporary. A company in this situation should consult a lawyer who specializes in commercial and company matters.
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 15 of the Saudi Privatization Law
Is a privatization project company dissolved if its losses reach the statutory limit?
It is not dissolved by operation of law. The executing entity submits its proposals to the Council, which decides on its continuation.
What happens if the company does not rectify its position?
If it does not rectify it within the period set in the Council's decision to continue, it is subject to the provisions of the laws.
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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.