Saudi Arabia is known for its diversity of company forms that can be established in it, as well as for its many investment opportunities and systems that encourage the establishment of companies. In light of these promising economic conditions, limited liability companies have become the focus of many local and foreign investors, as the establishment of these companies in Saudi Arabia is one of the effective investment methods, as it provides job opportunities and achieves financial returns for investors and the economic sector in general. Due to the benefits provided by these companies, we have made sure in this article to clarify all the provisions governing the management of the limited liability company according to what is stated in the Companies Law.

Definition of the Limited Liability Company:

A limited liability company is a company established by one or more persons, whether an individual or an establishment, and its financial liability is independent of the liability of each partner in it, and the company alone is responsible for the debts and obligations arising from it, and the partner is not responsible for these debts and obligations except up to his share in the capital.

Management of the Limited Liability Company in Saudi Arabia

Saudi Arabia is known for its diversity of business structures that can be established in it, as well as for its many investment opportunities and regulations that encourage the establishment of businesses. In light of these promising economic conditions, limited liability companies have become a focus for many local and foreign investors. The establishment of these companies in Saudi Arabia is one of the most effective investment methods, as it provides job opportunities and generates financial returns for investors and the economy as a whole. Due to the benefits provided by these companies, we have made it a point in this article to clarify all the regulations governing the management of the limited liability company by the Companies Law.

Management Body in the Limited Liability Company

The management body in the limited liability company consists of one or more directors. The partners appoint the directors in the company’s articles of association or a general meeting of partners. The director is responsible for managing the company and implementing its decisions. He has the right to dispose of the company’s funds and represent it to third parties.

Decisions Issued by the General Assembly of Partners in the Limited Liability Company

The general assembly of partners is the supreme authority in the limited liability company. It is responsible for taking all decisions related to the company’s affairs, including:

  • Amending the company’s articles of association.
  • Increasing the company’s capital.
  • Reducing it.
  • Distributing profits.
  • Dissolving the company and liquidating it.
  • Decision-making methods

The general assembly of partners can make decisions in two ways:

Method 1: Meeting

The general assembly of partners shall be convened at the invitation of the company’s director. The director may convene the general assembly at any time, and he is required to convene the general assembly at the request of the board of directors, the auditor, or several partners who own at least 10% of the company’s capital.

The invitation to the meeting must include the location and time of the meeting and must be accompanied by the agenda and a copy of the budget.

Voting on decisions in the general assembly meeting is done by a majority of the shares represented therein, regardless of the percentage they represent in the capital unless the company’s articles of association provide otherwise.

Method 2: Circulation

Partners’ decisions may be issued by presenting them to them for circulation without the need for a general assembly meeting. In this case, the company’s director shall send to each partner the proposed decisions and the related documents for the partner to vote on in writing.

Objection to decisions

Without prejudice to the rights of a bona fide third party, any partner may apply to the competent judicial authority to annul a decision of the general assembly of partners issued in violation of the provisions of the system or the company’s articles of association.

The annulment shall be deemed to be as if the decision had never been made for all partners.

Financial statements and reports on the company’s activities

The director of the limited liability company shall prepare the company’s financial statements and a report on its activities and financial position for the past financial year, and his proposals for the distribution of profits, if any.

The director shall place these documents at the disposal of the auditor, if any, at least forty-five days before the scheduled date for the meeting of the general assembly at its annual meeting.

The company’s director shall also provide the partners with the company’s financial statements, a report on its activities, and the auditor’s report, if any, at least twenty-one days before the scheduled date for the annual general meeting.

Partner’s rights and obligations

Rights

The right to participate in deliberations and voting, and he has the number of votes equal to the number of shares he owns.

Each partner may appoint another partner -in writing- to attend partners’ meetings and vote for them.

The partner who is not a director has the right to provide opinions to the director, and he -or whoever he delegates- has the right to request to review the company’s work and inspect its records and documents twice during the company’s financial year.

Obligations

  • The obligation to pay his share in the company’s capital.
  • The obligation to implement the decisions of the general assembly of partners.
  • The obligation to exercise due care in the company’s affairs.
  • Not to disclose confidential information about the company.
  • Amendment of the company’s articles of association
  • The company’s articles of association may be amended, including increasing its capital or reducing it, with the approval of one or more partners representing at least three-quarters of the capital.
  • The partner -when approving an increase in the company’s capital by issuing new shares- has the priority to own the shares issued in exchange for cash shares in proportion to his ownership in the company’s capital.
  • It is not permissible to increase the capital by raising the nominal value of the partners’ shares or suspending the work of the priority right, except with the unanimous consent of the partners.

Dispute resolution

Except for criminal acts, it is permissible to provide in the company’s articles of association for the settlement of disputes or disagreements of any nature that may arise between the partners or between the company and its directors by resorting to arbitration or other alternative means of settling them.

To obtain more information about the company, Mithaq Limited Liability Company, you can contact us through the following:

Phone: +966570070053
Email: info@mithaq.com.sa
Visit our office at: [our location]