Saudi Companies Law (Royal Decree No. M/132 of 2022)

المادة 1

Definitions 1. In this Law, the following words and phrases shall have the meanings assigned thereto, unless the context requires otherwise: Kingdom: Kingdom of Saudi Arabia. Law: Companies Law. Regulations: Regulations issued for the implementation of the provisions of this Law. Ministry: Ministry of Commerce. Minister: Minister of Commerce. CMA: Capital Market Authority. Competent Authority: The Ministry, except for joint-stock companies listed in the capital market, where the Competent Authority is the CMA. Relatives: a) Parents and grandparents and their ascendants. b) Children and grandchildren and their descendants. c) Spouses. Day: A calendar day, whether a business day or not. 2. Without prejudice to the provisions of this Law, the Regulations shall include the definitions of other words and phrases provided for in this Law.

المادة 2

Definition of a Company A company is a legal entity incorporated in accordance with the provisions of this Law pursuant to articles of incorporation or articles of association under which two or more persons undertake to participate in a for-profit enterprise by contributing property or work, or both, to share any profit realized or loss incurred from such enterprise. As an exception, a company may, under this Law, be incorporated by a single person, and a non-profit company may be incorporated pursuant to the provisions of Part 7 of this Law.

المادة 3

Nationality of a Company A company incorporated in accordance with the provisions of this Law shall have the Saudi nationality, and its headquarters shall be in the Kingdom. Chapter 1: Incorporation of a Company

المادة 4

Forms of Companies A company incorporated in accordance with the provisions of this Law shall take one of the following forms: a) General partnership. b) Limited partnership. c) Joint-stock company. d) Simplified joint-stock company. e) Limited liability company.

المادة 5

Name of a Company 1. A company shall have a tradename in Arabic or in any other language. The name may reflect the company’s purpose or may be a distinctive name or the name of one or more of the company’s current or former partners or shareholders, or a combination of the above. The name shall not be inconsistent with the Law of Tradenames and other laws and regulations applicable in the Kingdom. 2. If a company’s tradename includes the name of a former partner or shareholder, the consent of such partner or shareholder must be obtained. If said partner or shareholder dies without providing his approval, the consent of his heirs must be obtained. 3. The form of a company must be included in its tradename. 4. A company’s tradename may be amended in accordance with the conditions prescribed for amending articles of incorporation or articles of association. The amendment shall not affect the company’s rights or obligations nor the validity of legal measures taken by the company or against it prior to such amendment.

المادة 6

Application for Incorporation 1. A person who participates in the incorporation of a company and contributes to its capital with cash or in-kind contributions shall be deemed an incorporator. 2. Incorporators shall file the company’s application for incorporation and registration with the Commercial Register, along with the articles of incorporation or articles of association and any required information and documents. 3. The Commercial Register shall decide on applications that include the required information and documents in accordance with the provisions of this Law. 4. If an application is rejected, the rejection must be reasoned; incorporators may appeal the decision before the Ministry within 60 days from the date of notification of the rejection decision. 5. If the appeal is rejected or if no decision is rendered within 30 days from the filing date, incorporators may appeal before the competent judicial authority.

المادة 7

Incorporation Documents 1. A company incorporated under this Law shall have articles of incorporation while a joint-stock company, simplified joint-stock company, and limited liability company owned by a single person shall have articles of association. 2. A company’s articles of incorporation or articles of association shall include the terms, conditions, and information required under this Law, according to the form of the company. 3. A company’s articles of incorporation or articles of association shall be in the Arabic language and may be accompanied by a translation into another language. 4. The Ministry shall prepare articles of incorporation and articles of association templates for all company forms.

المادة 8

Registration of Incorporation Documents 1. A company’s articles of incorporation or articles of association, and any amendments thereto, shall be made in writing; otherwise, they shall be deemed null and void. The incorporation of a company or the amendment of its articles of incorporation or articles of association shall be made upon satisfying the necessary requirements as provided for in this Law and its Regulations. 2. A company’s incorporators, partners, managers, or board members, as the case may be, must register the company’s articles of incorporation or articles of association and any amendments thereto with the Commercial Register. The Commercial Register shall publish any necessary information or documents in accordance with this Law and its Regulations. If any of the aforementioned persons fail to register the documents with the Commercial Register, they shall be jointly and severally liable for any damage sustained by the company, partners, shareholders, or third parties as a result of nonregistration. 3. The information and documents stipulated in paragraph (2) of this Article shall be made available to others. The information and documents retrieved from the Commercial Register shall be deemed evidence against the company and third parties. 4. A company’s articles of incorporation or articles of association or any amendments thereto may not be used as evidence against third parties prior to registration with the Commercial Register. Any information not registered shall not be valid against third parties.

المادة 9

Acquisition of Legal Personality 1. A company shall acquire a legal personality upon registration with the Commercial Register. However, a company during the incorporation period shall have a legal personality to the extent necessary for its incorporation, provided that said company completes the incorporation process. 2. Registration of a company with the Commercial Register shall entail the transfer of all contracts and transactions concluded on behalf of the company by the incorporators to the company, which shall bear all incorporation expenses incurred by the incorporators. 3. If a company fails to satisfy the incorporation procedures as prescribed in this Law, the persons who act or conclude transactions in the name of the company or on its behalf shall be jointly and personally liable vis-à-vis third parties for their acts and dispositions during the incorporation period.

المادة 10

Purposes of a Company A company shall conduct all operations necessary to realize its purposes upon registration with the Commercial Register and obtaining the necessary licenses, if any, from the relevant authorities.

المادة 11

Partnership Agreement and Family Charter 1. Incorporators, partners, or shareholders may, whether during or after the company’s incorporation period, carry out the following: a) Conclude one or more agreements regulating their relationship with each other or with the company, including the manner in which their heirs join the company, whether personally or through a company incorporated for such purpose. b) Conclude a family charter that includes the regulation of family ownership in the company; governance and management; work policy; employment policy of family members, distribution of dividends, and disposition of interests or shares; procedures for the settlement of disputes or disagreements; and other matters. 2. A partnership agreement or family charter shall be binding and may be part of a company’s articles of incorporation or articles of association, provided it does not violate this Law nor the company's articles of incorporation or articles of association.

المادة 12

Information Required in Company Documents Contracts and clearances, as well as other documents issued by the company shall include the following information: a) Company’s name, form, headquarters address, e-mail (if any), and commercial registration number. b) Company's capital and the amount of paid-up capital. This shall not apply to general partnerships and limited partnerships. c) The phrase “under liquidation”, added to the company's name during the liquidation period.

المادة 13

Contributions of Partners or Shareholders 1. The contribution of a partner or shareholder may be in cash or in-kind, or both. 2. With the exception of joint-stock companies and simplified joint-stock companies, the contribution of a partner may be in the form of work in return for a percentage of the profits determined in the company’s articles of incorporation. A partner’s reputation or influence shall not be considered a contribution. 3. A company’s capital shall be composed only of cash and in-kind contributions. 4. Incorporators, partners, and shareholders may provide interests or shares in the company’s capital to a person in return for work or services that benefit the company and help realize its purposes, without prejudice to the provisions of this Law.

المادة 14

Provision of Contribution 1. If the contribution of a partner or shareholder is a right of ownership or usufruct or any other in-kind right, he shall, in accordance with the terms of the sales contract, be liable for his contribution in case of loss, defect, or shortage in the contribution, and in case the warranty of title and against infringement is breached. If the contribution is solely in the form of a personal usufruct right to a property, the terms of the lease contract shall apply, unless agreed otherwise. 2. If a partner’s contribution is in the form of work, he must perform such work for the benefit of the company and not his own; any earnings arising therefrom shall belong to the company. However, he shall not be under any obligation to surrender to the company any intellectual property rights he may have obtained as a result of his work, unless agreed otherwise.

المادة 15

Failure to Provide Contributions 1. A partner shall owe the company the contribution he pledges. 2. If a partner fails to provide his contribution in the company’s capital within the specified period, the company may demand that he honors his pledge, or it may suspend the enforcement of rights related to his contribution, such as the right to receive dividends or the right to vote in the general assembly or on partner decisions. In all cases, the company shall have the right to seek compensation for any damage arising therefrom. Chapter 2: Company Finances

المادة 16

Fiscal Year A company’s fiscal year shall be 12 months to be specified in its articles of incorporation or articles of association. As an exception, the first fiscal year may cover a period not less than six months and not more than 18 months beginning from the date of the company’s registration with the Commercial Register.

المادة 17

Accounting Records and Financial Statements 1. A company shall maintain accounting records and supporting documents relating to its activities, contracts, and financial statements at the company’s headquarters or at any other location designated by the company’s manager or board of directors. 2. A company’s financial statements shall be prepared by the end of each fiscal year in accordance with accounting standards approved in the Kingdom, and said statements shall be deposited as provided for in the Regulations within six months from the date on which the fiscal year ends, in accordance with the provisions of this Law. 3. If a company requires information from a company it controls or owns interests or shares therein in order to prepare its preliminary or annual financial statements, said company shall provide the information necessary for preparing such statements in accordance with accounting standards approved in the Kingdom. 4. The CMA may set the rules governing the provision of the information referred to in paragraph (3) of this Article by joint-stock companies listed in the capital market.

المادة 18

Appointment, Removal, and Resignation of Company Auditor 1. A company shall have one auditor, or more, licensed to practice in the Kingdom. His appointment, fees, term, and scope of work shall be determined by the partners, general assembly, or shareholders, as the case may be, and he may be re-appointed. The Regulations shall determine the maximum term for an individual auditor or an auditing firm and the partner therein supervising the audit. 2. The partners, general assembly, or shareholders, as the case may be, may remove the auditor, without prejudice to his right to compensation for any damage he incurs, if justified. The manager or the chairman of the board of directors shall notify the Competent Authority of the removal decision and the grounds therefor within a period not exceeding five days from the decision date. 3. The auditor may resign pursuant to a written notice submitted to the company. His assignment shall terminate from the date of submitting the resignation notice or at a later date as specified therein, without prejudice to the company’s right to compensation for any damage it incurs, if justified. The resigning auditor shall, upon submission of the notice, provide the company and the Competent Authority with the reasons for his resignation. The company’s manager or board of directors shall call the partners or shareholders to meet or the general assembly to be held, as the case may be, to review said reasons and appoint another auditor.

المادة 19

Inapplicability of Auditor Appointment Requirement 1. The provision stipulated in Article 18 of this Law relating to the appointment of an auditor shall not apply to micro and small companies, except in the following cases: a) If the articles of incorporation or articles of association stipulate the appointment of an auditor. b) If it is listed in the capital market. c) If it issues debt instruments, traded financing sukuk, preferred stock, or redeemable stock. d) If relevant laws require the appointment of an auditor. e) If it is a foreign company. f) If it owns another company or is a subsidiary of another company, unless the description of a micro or small company applies to all such companies. For purposes of application of this paragraph, the Regulations shall set the criteria upon which a company is deemed a micro company or small company. 2. For the application of paragraph (1) of this Article, a company shall be deemed a micro company or small company during the first fiscal year of its registration with the Commercial Register, or for two consecutive fiscal years. 3. One or more partners or shareholders of a company to which paragraph (1) of this Article applies who represent at least 10% of its interests or voting shares may request in writing the appointment of an auditor in accordance with the rules specified in the Regulations. 4. The provision of Article 18 of this Law, which provides for the appointment of an auditor, shall not apply to a general partnership, except in the following cases: a) If all of the partners in the company are companies in a form other than a general partnership. b) If all of the partners in the company are companies in the form of a general partnership and the partners in such companies are companies in a form other than a general partnership. c) If the company’s articles of incorporation provide for the appointment of an auditor.

المادة 20

Auditor Obligations 1. The company’s auditor shall be independent, in accordance with professional standards approved in the Kingdom. 2. The auditor may not, while serving as an auditor of a company, participate in its incorporation or management or serve as a member of its board of directors, nor may he purchase or sell interests or shares thereof. He may not be a partner, employee, or relative of any of the company’s incorporators, managers, or board members. 3. The company’s auditor may not carry out any technical, administrative, or advisory work in the company or for its benefit, except as provided for by the Regulations. 4. The auditor may, at any time, access the company’s files, accounting records, and other supporting documents, and he may request any information and clarifications he deems necessary to verify the company’s assets and liabilities as well as any other matters falling within his scope of work. The company’s manager or its board of directors shall enable the auditor to carry out his assignment. If the auditor encounters any difficulty in carrying out his assignment, he shall submit a report to this effect to the manager or board of directors. If the manager or board of directors fails to facilitate the auditor’s work, the auditor shall submit a request thereto to call for a meeting of the partners, shareholders, or general assembly, as the case may be, to review the matter. If the manager or board of directors fails to call for a meeting within 30 days from the date of the auditor's request, the auditor himself may call for a meeting. 5. The auditor shall submit to the partners or shareholders or to the general assembly at its annual assembly meeting a report on the company’s financial statements to be prepared in accordance with auditing standards approved in the Kingdom. The auditor’s report shall indicate the extent to which the company’s management enabled him to obtain the information and clarifications he requested. The report shall include any violations of this Law or the company’s articles of incorporation or articles of association that are within the scope of his work as well as his opinion on the integrity of the company’s financial statements. The auditor shall present his report or a summary thereof at the annual general assembly meeting or present the report by circulation, as the case may be, in accordance with the provisions of this Law. 6. The auditor may not disclose to the partners or shareholders, except in the general assembly, or to third parties any confidential information he becomes privy to in the course of carrying out his assignment. If he fails to do so, he may be held liable for compensation and removed. 7. The auditor shall be held liable for the information included in his report and for any damage incurred by the company, partners, shareholders, or other parties arising from any mistake he makes in the course of carrying out his assignment. In case of multiple auditors, they shall be jointly and severally liable, except for those established not to have been involved in the commission of the mistake subject of the liability.

المادة 21

Monitoring Company Accounts Partners and shareholders may monitor company accounts in accordance with this Law and the company’s articles of incorporation or articles of association.

المادة 22

Distribution of Dividends 1. Annual or interim dividends may be distributed from distributable dividends to partners or shareholders in joint-stock companies, simplified joint-stock companies, and limited liability companies. 2. If dividends are distributed to partners or shareholders in violation of paragraph (1) of this Article, the company’s creditors may demand repayment of their debts from the company, and the company may demand each partner or shareholder, including a bona fide partner or shareholder, to return any dividends he received. 3. A partner or shareholder shall not be obligated to return dividends he received pursuant to paragraph (1) of this Article, even if the company incurs losses in subsequent periods. 4. The Regulations shall determine the rules necessary for the implementation of this Article.

المادة 23

Sharing Profits and Losses 1. All partners shall share profits and losses in proportion to their interests in the capital. If an agreement is made to deny any partner of profit or exempt him from losses, such agreement shall be deemed null and void. However, the company’s articles of incorporation may provide for a profit and loss sharing ratio. 2. A partner whose contribution is solely in the form of work may be exempted from sharing losses, provided that he is not paid a wage in exchange for such work.

المادة 24

Partner’s Interests in Profits and Losses If a partner’s contribution is limited to his work and the company’s articles of incorporation do not provide for his inclusion in the profit and loss sharing ratio, the partner’s interest in the profits and losses shall be equal to that of the partner who contributes the least to the company’s capital. If a partner makes, in addition to work, cash or in-kind contributions, he shall have an interest in the profits or losses for his work contribution and an interest for his cash or in-kind contribution.

المادة 25

Transfer of Interest Ownership and Trading of Shares 1. Ownership of interests in general partnerships, limited partnerships, and limited liability companies shall be transferred upon registration with the Commercial Register. Transfer of ownership of interests shall not be valid against the company or third parties except from the date of registration. 2. Shares of unlisted joint-stock companies and simplified joint-stock companies shall be traded upon registration with the shareholders’ register stipulated in Article 112 of this Law. Transfer of ownership of shares shall not be deemed valid against the company or third parties except from the date of registration. 3. Shares of joint-stock companies listed in the capital market shall be traded in accordance with the Capital Market Law and its implementing regulations. Chapter 3: Management of a Company

المادة 26

Duty of Care and Duty of Loyalty A company’s manager or board member shall exercise duty of care and duty of loyalty, particularly in: a) carrying out his duties within the scope of his powers; b) acting in the interest of the company and promoting its success; c) making decisions or voting independently thereon; d) exercising reasonable and expected due diligence, skill, and care; e) avoiding conflict of interest; f) disclosing any direct or indirect interest he has in the transactions conducted and the contracts concluded for the company’s account; and g) not accepting any benefit granted thereto by third parties in relation to his role in the company. The Regulations shall determine the provisions related to this Article.

المادة 27

Conflict of Interest, Competition, and Exploitation of Assets 1. A company’s manager or board member may not have any direct or indirect interest in the transactions conducted and contracts concluded for the company’s account without the authorization of the partners, general assembly, or shareholders or their designees. 2. A company’s manager or board member may not engage in any business that may compete with the company or with any of its activities without the authorization of the partners, general assembly, or shareholders or their designees. 3. A company’s manager or board member may not exploit the company’s assets or information or any investment opportunity offered to the company or to him in his capacity as a manager or board member for his benefit whether directly or indirectly. 4. The Regulations shall specify the rules necessary for the implementation of paragraphs (1), (2), and (3) of this Article. 5. Paragraph (1) of this Article shall not apply to the following: a) Transactions conducted and contracts concluded pursuant to public tenders. b) Transactions and contracts that aim to meet personal needs if they are carried out under the same terms and conditions the company applies to all persons and contractors it deals with and are within the company’s regular activities. c) Any other transactions or contracts specified by the Regulations which are not inconsistent with the company’s interest. 6. If the company’s manager or a board member violates paragraph (1) of this Article, the company may petition the competent judicial authority to invalidate the contract and order him to return any profit or benefits realized from such violation. 7. If the company’s manager or a board member violates paragraph (2) of this Article, the company may petition the competent judicial authority for appropriate compensation.

المادة 28

Liability of Company Management 1. The company’s manager and board members shall be jointly and severally liable for any damage incurred by the company, partners, shareholders, or third parties resulting from the violation of this Law or the company’s articles of incorporation or articles of association or from a wrongful act, negligence, or omission in the performance of their duties. Any condition contrary to this provision shall be deemed null and void. 2. Liability of company managers or board members shall be either personal or joint. Joint liability shall be incurred by all managers or board members if the decision subject of the liability is unanimously voted thereon; if, however, the decision is passed by majority vote, objecting managers or board members shall not be held liable if their objection is explicitly recorded in the meeting minutes. Absence from the meeting at which the decision is issued shall not exempt the absentee from liability, unless it is established that he was not aware of the decision or was unable to object to it after becoming aware of it. 3. The company may provide liability insurance coverage for its manager or a board member during the term of service or membership against any claim made against him in his capacity as a manager or board member.

المادة 29

Legal Action Initiated by Companies, Partners, or Shareholders 1. A company may initiate a derivative action against a manager or board members for any damage incurred by the company resulting from the violation of this Law or the company’s articles of incorporation or articles of association or from a wrongful act, negligence, or omission in the performance of their duties. The decision to initiate the action and to designate a representative on behalf of the company to pursue such action shall be made by the partners, general assembly, or shareholders. If the company is under liquidation, the liquidator shall initiate the action. If any liquidation proceedings are initiated against the company under the Bankruptcy Law, the action shall be initiated by its legal representative. 2. A single partner or shareholder, or more, representing 5% of the company’s capital, unless the company’s articles of incorporation or articles of association stipulate a lower percentage, may initiate a derivative action on behalf of the company if such action is not initiated by the company, provided the action serves the interests of the company and is based on valid grounds, and the plaintiff is acting in good faith and is a partner or shareholder in the company at the time of initiating the action. 3. To initiate the action referred to in paragraph (2) of this Article, the company’s manager or board members, as the case may be, shall be notified of the intent to initiate the action at least 14 days prior to the initiation date. 4. A partner or shareholder may initiate a private right of action against the manager or board members if the wrongful act attributed thereto results in a damage personally affecting him.

المادة 30

Hearing of a Lawsuit 1. The approval of the partners, general assembly, or shareholders, as the case may be, to relieve the manager or board members from liability shall not preclude the initiation of the legal actions referred to in Article 29 of this Law. 2. Except for cases of forgery and fraud, a derivative action shall not be heard upon the lapse of five years from the end of the fiscal year in which the act resulting in damage was committed, or upon the lapse of three years from the end of the manager’s term of service or board member’s term of membership, whichever is later.

المادة 31

Business Judgment Rule The company’s manager or a board member shall be deemed to have fulfilled his duty in a decision he made or voted on in good faith if he: a) has no personal interest in the subject matter of the decision; b) understands and is familiar with the subject matter of the decision to an extent he deems reasonable according to the circumstances of the decision; and c) believes firmly and rationally that the decision serves the company’s interests. The burden of proving otherwise shall rest with the plaintiff. For the purposes of this Article, a decision shall refer to an action or omission relating to the company’s business.

المادة 32

Expenses of Initiating Derivative Action The competent judicial authority may, at the request of a partner or shareholder, order the company to pay the expenses he incurred in the initiation of a derivative action, regardless of its outcome, if he initiates the action in good faith and such action is in the interest of the company.

المادة 33

Enforcement against Partners or Shareholders Profits A personal creditor of a partner or shareholder may petition the competent judicial authority to satisfy the debt using the interests of the indebted partner or shareholder in the net profit distributed. Upon termination of the company, the creditor’s claim shall be satisfied using the debtor’s interests in the remainder of the company’s assets after settling the company’s debts.

المادة 34

Enforcement against Interests and Shares Subject to the Movable Property Security Law and other relevant laws, the personal creditor of a partner or shareholder may, in addition to the rights provided for in Article 33 of this Law, petition the competent judicial authority to: a) sell a sum of the partner’s interests enough to satisfy his debt. The other partners may recover such interests in accordance with the provisions of this Law; and b) sell a sum of the shareholder’s shares enough to satisfy his debt. The shareholders in an unlisted joint-stock company and a simplified joint-stock company shall, if provided for in the company’s articles of association, have a preemptive right to purchase the shares within 15 days from the date they are offered for sale. Part 2: General Partnerships Chapter 1: General Provisions

المادة 35

Definition of a General Partnership A general partnership is a company incorporated by two or more natural or legal persons who are jointly and personally liable for the company’s debts and liabilities. A partner in such company shall acquire the capacity of a merchant. Chapter 2: Incorporation of a General Partnership

المادة 36

Articles of Incorporation Information The following information shall be included in the articles of incorporation of a general partnership: a) Partners’ names and particulars. b) Company’s name. c) Company’s headquarters. d) Company’s purpose. e) Company’s capital and its distribution among partners, together with sufficient details on the contribution pledged by each partner and its due date. f) Company’s term, if any. g) Company’s management. h) Issuance of partner decisions and the quorum required for their issuance. i) Distribution of profits and losses among partners. j) Dates on which the company’s fiscal year commences and ends. k) Termination of the company. l) Any other terms, conditions, or information the partners agree to include in the company’s articles of incorporation that are not inconsistent with the provisions of this Law. Chapter 3: General Partnership Management

المادة 37

Management Powers 1. A general partnership shall be managed by its partners, and a partner of legal personality shall designate his representative in the management. The partners may, in the company’s articles of incorporation or in a separate contract, agree to appoint one or more managers from among themselves or others. 2. In case of multiple managers, whether from among partners or others, each manager may solely undertake any act of management if the managers’ powers are not specified and there is no stipulation denying any of them the sole management of the company. The other managers may object to any act of management prior to becoming valid against third parties; in such case, the majority vote of managers shall prevail. In case of a tie, the matter shall be referred to the partners to decide thereon in accordance with Article 38 of this Law. 3. The manager, or managers in case of multiple managers, shall manage the company in accordance with its purpose, and shall represent it before the judiciary, arbitration tribunals, and other parties, unless the company’s articles of incorporation explicitly restrict his powers. In all cases, the company shall be bound by any act carried out by the manager on behalf of the company and within its purposes, unless the other party involved in such activity acts in bad faith.

المادة 38

Decisions of Partners Partner decisions shall be passed by the majority vote of partners, except for decisions relating to amendments to a company’s articles of incorporation, which shall be passed by the unanimous vote of partners, unless the company’s articles of incorporation stipulate otherwise.

المادة 39

Prohibited Activities for Managers A manager shall not engage in any activities beyond the company’s purposes, except pursuant to a decision by the partners or an explicit stipulation in the company’s articles of incorporation. Such prohibition shall specifically apply to the following activities: a) Setting up or shutting down company branches. b) Making donations, except for usual small donations. c) Binding the company to act as a guarantor to another party. d) Conciliating the company’s rights. e) Selling or pledging the company’s real property, unless the sale falls within the company’s purposes. f) Selling or pledging the company’s place of business (store). g) Obtaining loans on behalf of the company.

المادة 40

Competing with the Company A partner may not, without the approval of the other partners, engage for his own account or for the account of others in any activity similar to that of the company, nor may he be a partner, manager, or board member in a competing company or a controlling owner of interests or shares in another company engaged in the same activity. If the partner fails to comply with such provision, the company may petition the competent judicial authority to deem the activities carried out for his own account as having been carried out for the company’s account, and the company may also seek compensation from him.

المادة 41

Powers of Non-Managing Partners A non-managing partner may not interfere in the company’s management. However, said partner, or his designee, may, twice during the fiscal year, have access to the company’s operations, examine its records and documents, obtain a summary of the company’s financial status from such records and documents, and may offer his opinion to the company’s manager. Any agreement to the contrary shall be deemed null and void.

المادة 42

Removal of Manager 1. If the manager is appointed as a managing partner in the company’s articles of incorporation, he may not be removed except pursuant to a unanimous decision issued by the other partners, and if he is appointed as such in a separate contract, he may be removed pursuant to a decision issued by the majority vote of partners, unless the company’s articles of incorporation stipulate otherwise. 2. If the manager is not a partner, whether appointed in the company’s articles of incorporation or in a separate contract, he may be removed pursuant to a decision issued by the majority vote of partners. 3. A manager appointed in the company’s articles of incorporation or in a separate contract, whether a partner or otherwise, may be removed from his position pursuant to a final judgment rendered by the competent judicial authority. 4. The removal of the manager shall not result in the dissolution of the company, unless stipulated in the company’s articles of incorporation.

المادة 43

Resignation of Manager 1. A company’s manager, whether a partner or otherwise, shall have the right to resign, provided that he notifies the partners in writing at least 60 days prior to the effective date of his resignation, unless stipulated otherwise in the company’s articles of incorporation or in the appointment contract; otherwise, he shall be liable for any damage arising from his resignation. 2. The resignation of the manager shall not result in the dissolution of the company, unless stipulated in the company’s articles of incorporation. Chapter 4: Interests and Partners in General Partnerships

المادة 44

Interests of Partners and Assignment Thereof 1. The interests of partners may not be in the form of tradable sukuk. 2. A partner may not wholly or partly assign his interests unless such assignment is carried out pursuant to the conditions provided for in the company’s articles of incorporation or upon obtaining the approval of the other partners. Any assignment agreement concluded to the contrary shall be deemed null and void. Said assignment shall be registered with the Commercial Register and published therein. 3. A partner may assign to other parties the financial rights associated with his interests in the company, and the effect of such assignment shall be limited to the parties thereto.

المادة 45

Partner’s Joining, Withdrawal, Removal, or Assignment 1. If a new partner joins the company with a new contribution, he shall be personally and jointly liable with the other partners for the company’s past and future debts. He may, however, be relieved from past debts if the other partners unanimously agree thereto. Such agreement shall be valid against creditors from the date it is registered with the Commercial Register and published therein. 2. If a partner withdraws from the company or is removed therefrom, he shall not be liable for the debts incurred by the company following the registration of his withdrawal or removal with the Commercial Register and its publication therein. He shall, however, remain liable for any debts incurred prior thereto, unless the other partners and the company’s creditors agree to relieve him from such debts. 3. If a partner assigns his interests, the assignee shall be liable to the company’s creditors for any debts incurred prior to becoming a partner or thereafter. The assignor shall not be liable for the company’s debts toward its creditors unless they object to his relief from liability within 30 days after being notified by the company of such assignment. In case of objection, the assignor shall be jointly and severally liable for the debts incurred prior to his assignment.

المادة 46

Withdrawal and Removal Procedures 1. Unless the company’s articles of incorporation stipulate otherwise, a partner may unilaterally withdraw from the company, provided that he notifies the other partners at least 60 days prior to the date set for withdrawal. 2. The company’s articles of incorporation may provide for procedures for removal of partners. If the articles of incorporation do not provide for such procedures, the majority of partners may petition the competent judicial authority to remove a partner, or more, from the company if there are valid grounds therefor. In such case, the company shall continue to exist between the remaining partners. 3. A withdrawing partner, or the remaining partners in case a partner is removed from the company, shall register the withdrawal or removal with the Commercial Register and publish it therein. Said withdrawal or removal shall not be valid against third parties except upon its registration and publication. 4. The competent judicial authority may, upon a petition by a partner, or more, issue a decision to dissolve the company if its continuation between the partners is not feasible.

المادة 47

Partner’s Interests in Profits and Losses 1. Profits and losses and the interests of each partner therein shall be determined at the end of the company’s fiscal year pursuant to financial statements prepared in accordance with accounting standards approved in the Kingdom. Upon determination of partners’ interests in the profits, each partner shall be deemed a creditor of the company to the extent of his interests, unless the company's articles of incorporation provide otherwise. 2. Any decrease in the company’s capital arising from losses shall be made up from the profits of subsequent years. In any other case, a partner shall not be obliged to make up for any decrease in his interests in the capital due to losses without his consent.

المادة 48

Enforcement against a Partner’s Property 1. A partner may not be required to use his property to satisfy a company’s debt unless the debt is established pursuant to a final judgment or enforcement document and the company fails to satisfy the debt after a debt satisfaction notice is provided thereto. 2. A partner shall, upon satisfaction of the company’s debt, have the right of recourse against the other partners for the amounts he pays on behalf of the partners in proportion to their respective interests.

المادة 49

Valuation of a Partner’s Interests 1. Absent a specific agreement relating to the value of interests or a specific valuation method therefor in the company’s articles of incorporation, a partner’s interests shall be valuated pursuant to a report prepared by one or more accredited valuers upon his withdrawal or removal from the company, the initiation of any liquidation proceedings against him under the Bankruptcy Law, or upon his death and the decision of his heirs not to join the company. Said report shall indicate the fair value of each partner’s interests in the company’s assets at the time of the event. The partner or his heirs shall not have an interest in any future rights, unless such rights arise from transactions made prior to such event. 2. A partner’s interests in case of assignment shall be valuated according to the value agreed upon with the assignee, unless the company’s articles of incorporation provide otherwise. Chapter 5: Termination of a General Partnership

المادة 50

Cases of Termination 1. A general partnership shall not terminate upon a partner’s death, interdiction, removal, or withdrawal, or upon the initiation of any liquidation proceedings under the Bankruptcy Law against such partner, unless the company’s articles of incorporation stipulate otherwise. In such cases, the company shall continue to exist between the other partners and said partner or his heirs shall have only his interests in the company’s assets. Said interests shall be determined pursuant to Article 49 of this Law. 2. The company’s articles of incorporation may stipulate that, in case of the death of a partner, the company may continue to exist with heirs interested in joining the company as partners, even if they are minors or prohibited by law from engaging in commercial activities. If the company continues to exist, the partner’s heirs who are minors or prohibited by law from engaging in commercial activities shall not be liable for the company’s debts except to the extent of their respective inherited interests in the company’s capital. In such case, the company shall, within a period not exceeding one year from the date of the partner’s death, be converted into a limited partnership, whereby such heirs who are minors or prohibited by law from engaging in commercial activities become limited partners; otherwise, the company shall be deemed terminated by force of law upon the lapse of said period, unless the heirs reach the age of majority or cease to be prohibited from engaging in commercial activities during said period, and wish to become general partners. 3. If only one partner remains in the company upon the death, interdiction, withdrawal, or removal of the other partners or upon the initiation of any liquidation proceedings against them under the Bankruptcy Law, said partner shall be given a period of 90 days to rectify the company’s status whether by the joining of another partner or the conversion of the company into another form of company provided for in this Law. Otherwise, the company shall be deemed terminated by force of law upon the lapse of such period. Part 3: Limited Partnership Chapter 1: General Provisions