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The Kingdom of Saudi Arabia has recently witnessed great and remarkable development in all economic, social, and other fields, as the Kingdom is always keen to keep abreast of developments and updates all over the world that are going through faster than was previously. 

The Kingdom of Saudi Arabia has recently witnessed great and remarkable development in all economic, social, and other fields, as the Kingdom is always keen to keep abreast of developments and updates all over the world that are going through faster than it was previously. With all these changes, it was natural To be accompanied by multiple forms of human relations, whose role is to bring about a qualitative or quantitative change in all fields, especially the economic field, as over time both the trader and the investor play an effective role in the arena of economy, money and investment, and the practice of trade is not limited to an individual It is practiced by a group of individuals as well, and this happens within a legal framework, which is commercial companies, in which some individuals join hands and unify their efforts and money in order for them to carry out large projects, and one of the most important types of companies that have gained great interest in the Kingdom of Saudi Arabia in recent times is the company with responsibility Ltd., which is the key to this article as we will discuss what the limited liability company is in Saudi Arabia, and what are the most important controls and conditions approved by the Saudi regulator to establish the limited liability company in Saudi Arabia.

What is a limited liability company in Saudi Arabia?
Believing in the importance of companies in Saudi Arabia, we must first, and before clarifying what a limited liability company is in Saudi Arabia, explain the definition of the company, which Article 2 of the new Companies Law defines as the company is a legal entity established in accordance with the provisions of the system based on a memorandum of association or articles of association that adheres to According to which two or more persons, each of them contributes to a profit-oriented project by providing a share of money or work, or both together, in order to share the profit or loss arising from this project. As for the definition of a limited liability company, the Saudi Companies Law defines it as a company that can be established by a person. One or more, whether that person is an individual or an establishment, and its liability is independent of the financial liability of each partner or owner thereof, whereby the limited liability company is solely responsible for the debts and obligations arising from its activity, and its owner or partner is not responsible for those debts Or obligations except to the extent of his share in the capital, according to what was stipulated in Article 156 of the Saudi Companies Law, and the company acquires its legal personality once it is registered in the commercial register in Saudi Arabia.

What are the most important requirements for establishing a limited liability company in Saudi Arabia?
Among the statutory requirements included in the new Saudi Companies Law for the establishment of a limited liability company in Saudi Arabia are the following:

Memorandum of association of the limited liability company
The Saudi corporate law has clarified what must be included in the incorporation contract of a limited liability company in Saudi Arabia in terms of provisions, conditions, and data, as the contract must also be written in Arabic, otherwise, it is void, and it may be accompanied by a translation into another language. Commerce is the one that prepares the guiding forms for the articles of incorporation of companies and their articles of association, according to what is indicated in Articles Seven and Eight of the Saudi Companies Law.

Among the most important data and provisions that must be included in the articles of incorporation of a limited liability company in accordance with Article 158 of the new Saudi Companies Law are the following:

  1. Names of the partners and their information.
  2. Company Name.
  3. The company’s headquarters.
  4. Company purpose.
  5. capital, and distribute it among the partners.
  6. Acknowledgment of the partners to fulfill the value of the shares.
  7. Duration of the company, if any.
  8. company management.
  9. assignment of shares.
  10. The means of directing the notifications that the company may direct to the partners.
  11. Partner decisions.
  12. How to distribute profits and losses among partners.
  13. The start and end dates of the fiscal year.
  14. expiry of the company.
  15. Any other provisions, conditions, or data that the partners agree to include in the company’s memorandum of association and that do not conflict with the provisions of the system.

How to name a limited liability company
Whereas the Saudi Companies Law stated that each company must have a commercial name in Arabic or another language, and the name may be derived from its purpose, a distinguished name, or the name of one or more of its current or former partners or shareholders, or both of them, with Taking into account that it does not violate the Trade Names Law and other laws and regulations in force in the Kingdom, as the Saudi Companies Law has indicated that the company’s trade name can be modified in accordance with the conditions prescribed for amending the company’s Memorandum of Association or Articles of Association, and the amendment does not result in prejudice to the company’s rights, obligations or legal procedures In the event that the trade name includes any of the names of the partners or shareholders in the company, the consent of the partner or shareholder or his heirs must be obtained if he died and did not agree. The system also clarified that the trade name must be accompanied by what shows The form of the company, as stipulated in Article Five of the new Saudi Companies Law.

The capital and shares of the partners in the limited liability company
Article Thirteen of the new Saudi Companies Law made it clear that the share of the partner or shareholder in the limited liability company may be in cash or in kind, or both, as the system made it clear that cash and in-kind shares alone are the capital of the company, and the same article indicated that it is possible That the share of the shareholder or partner be an act that he performs in return for a percentage of the profits, the amount of which is specified in the Memorandum of Association of the limited liability company, and that this share may not be in return for the reputation or influence of the partner, in addition to that the founders, shareholders, or partners may, according to the fourth paragraph of the same article To offer stakes or shares in the capital of the company to a person in return for doing work or service that benefits or achieves desired goals for the company.

What are the procedures for establishing a limited liability company in Saudi Arabia?
First of all, it must be clarified that whoever actually participates in its establishment and everyone who contributed to its capital with a share, whether in cash or in kind, is considered a founder of the limited liability company. Here, the founders, partners, or shareholders must submit an application to establish the limited liability company and register it in the commercial register. Attached is the Memorandum of Association or the Articles of Association if the company is a limited liability company owned by one person, and the necessary data and documents, and that application must fulfill the necessary data and documents, according to what is decided by the commercial registry, and in the event that the application is rejected, this must be reasoned, and then the founders have the right Grievance before the Ministry within sixty days from the date of notifying them of the rejection of the application, and the system clarified that in the event that the grievance is rejected or if it is not decided upon within thirty days from the date of its submission, then the founders have the right to complain before the competent judicial authority, in accordance with what is indicated in Article Six of the Saudi Companies Law.

The second paragraph of Article 158 of the Companies Law stated that the contract of incorporation of the limited liability company must be accompanied when submitting the application for incorporation with a statement or report prepared by one or more accredited evaluators showing the fair value of the in-kind shares, if any, and an acknowledgment by the rest of the founders approving The amount specified for it, as well as a declaration from the founders or partners to comply with all system requirements related to the establishment of the company.

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