Types of Commercial Companies in Saudi Arabia

 Types of Commercial Companies in Saudi Arabia

Types of Commercial Companies in Saudi Arabia

Types of commercial companies and the system of companies in Saudi Arabia .. Where many businessmen wonder about the types of commercial companies in Saudi Arabia approved in the Kingdom, in order to open a project commensurate with the nature of the systems and systems of Saudi companies. Where companies are defined as a contract between one or two persons to open a project, through which profits and losses are shared together. Here are the details of the types of companies in the Kingdom of Saudi Arabia.

The new corporate system in the Kingdom of Saudi Arabia

The new Saudi Companies Law and Regulations is one of the regulations issued by Royal Decree No. 3 issued on 1/28/1437 AH. Where the Kingdom of Saudi Arabia announced a new draft corporate law to stimulate the business environment and support investment within the lands of the Hijaz, and to integrate each of the small and medium companies into this system, perhaps the main goal of the companies system is to attract large capitals to invest in the Kingdom, and this system includes all legal rules related How to establish companies, merge or liquidate partnerships, and determine the type of company with which to work, and it also includes penalties for violating the system. And other things that promote investment and trade in the Kingdom.

Types of companies in Saudi Arabia

The Saudi Companies Law defines the types of companies in the Kingdom of Saudi Arabia, where the company incorporated in the Kingdom must take one of the following forms: a joint venture company, a limited partnership company, a joint venture company, a joint stock company, and a limited liability company, and if the company does not take any form of these types they will be void. Here are the details of the types of companies in the Kingdom of Saudi Arabia as follows:

Solidarity Company in the Kingdom of Saudi Arabia

A partnership company is a company between natural persons in which they are personally responsible for all their money and jointly responsible for the company’s debts and obligations, and the partner in it acquires the status of a merchant.

*. The name of the company consists of the names of all the partners or the names of one or more of them; With the addition of the word (and associates) or something indicating this meaning. The name must be accompanied by evidence of the existence of a joint venture.

*. In the event that the name of the company contains the name of a person who is not a partner with his knowledge of that, this person shall be personally responsible for all his money and jointly for the debts and obligations of the company.

*. The company may retain its name in the name of the partner who has withdrawn from it or the deceased, if the withdrawing partner or the heirs of the deceased partner accept this.

*. Shares of partners may not be represented in negotiable instruments.

*. A partner is not entitled to waive the value of his share except with the consent of all the partners or taking into account the restrictions stipulated in the company’s Memorandum of Association.

*. A general partnership ends with the death, interdiction, declaration of bankruptcy, insolvency, or withdrawal of one of the partners.

*. The Memorandum of Association of the company must be signed by all the partners, and it must include the following:

*. Company name, purpose, head office and branches, if any.

*. The names of the partners, their places of residence, occupations, nationalities and dates of birth.

*. The capital of the company and the appropriate determination of the share that each partner undertakes to provide and its maturity date.

*. The names of the company’s managers – if any – and those who have the right to sign on behalf of the company, without prejudice to what is stated in Article (25) of the law.

*. The date and period of incorporation of the company.

*. The beginning and end of the fiscal year.

Simple recommendation company in the Kingdom of Saudi Arabia

The simple partnership company is one of the types of Saudi companies, and it consists of two teams of partners. A team that includes at least one general partner who is responsible in all his funds for the company’s debts and obligations, and another team that includes at least one limited partner who is not responsible for the company’s debts and obligations; Except within the limits of his share in the capital of the company, but the silent partner does not acquire the capacity of a merchant, and this type is characterized by the following:

The name of the limited partnership company consists of the names of all the general partners, or the name of one or more of them, with the addition of the word “and partners” or anything like that, and the name must be associated with evidence of the existence of a simple partnership company.

*. The general partners in a simple partnership company are subject to the provisions applicable to the partners in a general partnership company.

*. The provisions of the general partnership company shall apply to the limited partnership company in matters not stipulated in a special provision in this chapter.

*. A limited partnership company does not end with the death, interdiction, declaration of bankruptcy, insolvency or withdrawal of one of the silent partners. Unless the company’s memorandum of association stipulates otherwise.

The joint venture company in the Kingdom of Saudi Arabia

A joint venture company is a company that hides from others, does not have a legal personality, is not subject to publicity procedures, and is not registered in the commercial register. It enjoys the following advantages:

*. The joint venture may be proven by all means of proof.

*. The company contract defines its purpose, the rights and obligations of the partners, how to manage it, the distribution of profits and losses among the partners, and other conditions.

*. It is not permissible to add a new partner to the company without the approval of all the partners, unless the company contract stipulates otherwise.

*. The joint venture company is not allowed to issue negotiable instruments.

*. A third party has no right to refer only to the partner with whom he dealt, and if the partners issued an act revealing to others the existence of the company, it may be considered for him an actual partnership.

*. The partner in the joint venture remains the owner of his share unless the partners agree otherwise.

*. If the share is in-kind and specific, and the partner who acquired it has been declared bankrupt, then its owner has the right to recover it from bankruptcy after paying his share in the company’s losses.

*. If the share is for money or for undivided gays, its owner has no choice but to subscribe to bankruptcy as a creditor of the value of the share less his share in the company’s losses.

*. The joint venture ends with the death, interdiction, declaration of bankruptcy, insolvency, or withdrawal of one of the partners, unless the partnership contract provides for its continuity among the rest of the partners.

Joint stock company in Saudi Arabia

A joint stock company is a type of Saudi company, a company whose capital is divided into shares of equal value and negotiable. The company is solely responsible for the debts and obligations resulting from the exercise of its activity, and usually every joint-stock company has a name that indicates the purpose of its establishment, and it is not permissible to include this name based on the name of a natural person, unless the purpose of the company is to invest a patent registered in the name of that The person, or if the company owns a commercial facility and takes the name of the company from his name. It should be noted here that sufficient capital must be provided for the company upon its establishment; So that it is not less than five hundred thousand Saudi riyals, and the paid-up capital at the start and incorporation is not less than a quarter.

Limited liability company in the Kingdom of Saudi Arabia

The limited liability company is among the types of commercial companies in Saudi Arabia, in which the number of partners does not exceed fifty. Its responsibility is independent of the financial responsibility of each partner. The company shall be solely responsible for the debts and obligations arising therefrom. The owner or partner in it is not responsible for these debts and obligations, and in the event that the number of partners exceeds the number specified for it, it must be converted into a joint stock company within a period not exceeding one year, and if this period passes without transferring then it expires by force of the Saudi Companies Law, unless the increase is resulting from inheritance or will.

holding companies

A holding company is a joint-stock company or limited liability company, which aims to control other joint-stock companies or limited liability companies called subsidiaries. In order to own more than half of the capital of these companies or to control the formation of their board of directors from the members of the board of directors. The name of this company is usually associated with the phrase (holding), and the purposes of establishing this type of company are as follows:

*. Manage the companies associated with it or participate in the management of other companies in which it contributes and provide the necessary support to them.

*. Investing its money in stocks and other securities.

*. Owning real estate and movables necessary to carry out its activities.

*. Granting loans, guarantees and financing to its subsidiaries.

*. Owning industrial property rights such as patents, trademarks, industrial rights, franchise rights and other intangible rights, and exploiting and leasing them to its subsidiaries or others.

Foreign companies in the Kingdom of Saudi Arabia

Foreign companies are companies subject to the laws and regulations in force in Saudi Arabia. Without prejudice to the special agreements concluded between the state and some foreign companies. These companies are as follows:

*. Foreign companies that carry out their activities and businesses inside the Kingdom, whether through a branch, office, agency, or any other method.

*. Foreign companies headquartered in the Kingdom to represent, direct or coordinate business outside the Kingdom.

Corporate Transformation and Mergers in Saudi Arabia

The company may be transformed into another type of company mentioned above. This is according to a decision issued regarding the conditions prescribed for amending the company’s Memorandum of Association or Articles of Association. Taking into account and fulfilling the conditions of incorporation, publicity, and registration in the commercial register prescribed for the type of company to which it is converted.

Saudi companies regulations pdf

You can view the Saudi Companies Law in PDF format “from here”. To view the details of this system that regulates the work of Saudi companies and to know the terms and conditions for each type of company.

And here we come to the end of our article, in which we got acquainted with the types of commercial companies in Saudi Arabia. The Kingdom embraces many types of companies, and each type is characterized by its own terms and conditions. We also showed you the Saudi Companies Law.