The articles of association are a company's internal constitution: who owns what, who manages, how decisions are made, and what happens on a dispute or when a partner leaves. Most partner disputes in Saudi Arabia trace back to articles written in a hurry from a ready template that never answered these questions.
Essential clauses
| Clause | What it sets |
|---|---|
| Name and legal form | Trade name and company type (LLC, simplified joint-stock...) |
| Objects | The activities the company may carry out |
| Capital and shares | Capital amount, split between partners, cash or in-kind contributions |
| Management | Manager or board of managers, powers, limits and term |
| Partners' resolutions | What needs a simple majority and what needs a special majority |
| Profits and losses | Distribution and reserves |
| Share transfers | Conditions for selling shares and partners' pre-emption right |
| Dissolution and liquidation | Grounds for dissolution and how liquidation works |
The minimum mandatory content is set by the law and updated regulations, and the articles are notarised electronically; check the latest official text. Read the Companies Law explained.
Clauses that protect you later
- Manager's powers in numbers: a cap on what the manager may sign alone.
- Deadlock mechanism: what happens when two 50/50 partners disagree.
- Partner exit: how the share is valued, who may buy first and within how many days.
- Non-compete: no competing business during the partnership.
- Death or incapacity: do heirs become partners or is their share bought out?
- Dispute resolution: settlement first, then arbitration or the competent court; see commercial arbitration.
What should not go in the published articles belongs in a shareholders' agreement; see the partnership agreement template.
Steps
- Agree shares, management and decisions before drafting.
- Draft according to the chosen legal form.
- Notarise electronically and sign.
- Issue the commercial registration and register with related bodies.
Frequently asked questions
Is a ready template enough?
For a one-person company or fully trusting partners with a simple activity, yes. With several partners or unequal shares, a template leaves the key questions unanswered.
Foreign partner?
Investment licensing requirements are added; see setting up a company as a non-Saudi.
Setting up a company with partners?
The Usus Law Firm team drafts articles and shareholders' agreements as part of company formation and corporate governance, in Riyadh and Tabuk.
This article is general legal information and is not a substitute for advice on your specific case. Court proceedings in Saudi Arabia are in Arabic; the official Arabic text of each law prevails.
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