Ministry of Commerce and Industry

Companies Law

1437 H./2015 G.
Table of Contents

Companies Law
Part 1 General Provisions
Part 2 General Partnership
Part 3 Limited Partnership
Part 4 Joint Venture
Part 5 Joint Stock Company
Chapter 1 General Provisions
Chapter 2 Incorporation of the Joint Stock Company
Chapter 3 Management of the Joint Stock Company
Subchapter 1 Board of Directors
Subchapter 2 Shareholders Meetings
Chapter 4 Audit Committee
Chapter 5 Bonds Issued by the Joint Stock Company
Subchapter 1 Shares
Subchapter 2 Debt Instruments and Financial Bonds
Chapter 6 Financial Position of the Joint Stock Company
Subchapter 1 Company Accounts
Subchapter 2 Auditors
Chapter 7 Change of Company’s Capital
Subchapter 1 Increase of Capital
Subchapter 2 Reduction of Capital
Chapter 8 Dissolution of the Joint Stock Company
Part 6 Limited Liability Company
Chapter 1 General Provisions
Chapter 2 Incorporation
Chapter 3 Capital and Shares
Chapter 4 Management
Chapter 5 Dissolution
Part 7 Holding Company
Part 8 Conversion & Merger of Companies
Chapter 1 Conversion of Companies
Chapter 2 Merger of Companies
Part 9 Foreign Companies
Part 10 Liquidation of Companies
Part 11 Penalties
Part 12 Concluding Provisions
 Companies Law

Part 1 – General Provisions

Article 1
Wherever mentioned herein, the following words and phrases shall have the meanings set forth in
front of each, unless the context otherwise requires.

“Ministry”: the Ministry of Commerce & Industry

“Minister”: the Minister of Commerce & Industry
“CMA”: The Capital Market Authority
“CMA Board”: the Board of Capital Market Authority
“Chairman”: the Chairman of CMA Board
“Competent Authority”: the Ministry of Commerce & Industry, except for such matters as
related to such Joint Stock Companies as listed in the Capital Market,
whereupon “Competent Authority” shall mean the Capital Market
Authority

“Law” The Companies Law

Article 2
A company is a contract under which two persons or more undertake to take part in a certain
enterprise targeted at achievement of profit by way of making a contribution in the form of
money and / or services with a view to share profits or losses generating from such
enterprise.

Article 3
1. A company to be incorporated in the Kingdom shall take either one of the following
forms:

a. General Partnership;
b. Limited Partnership
c. Joint Venture;
d. Joint Stock Company; or
e. Limited Liability Company
2. Subject to the provisions of Paragraph 3 of this Article, any company that does not
take either one of the above forms shall be a nullity. Persons entering into contracts
in the name of such company shall be personally and jointly liable for all obligations
arising from such contracts.

3. The provisions of the Law shall not apply to companies that are known in Islamic
Jurisprudence, unless otherwise such companies take either one of the above forms.
Article 4
Except for Joint Ventures, a company incorporated in accordance with the provisions of the
Law shall be considered to be of a Saudi nationality and having its head office in the
Kingdom. Nonetheless, such nationality does not necessarily entail that the company will
enjoy such rights as limited to Saudis.

Article 5
1. A partner’s contribution can be in cash or in kind. It can also take the form of
services, but it cannot be based on the partner’s reputation or influence.

2. Cash and in kind contributions only shall form the company’s capital. The capital may
not be changed except in accordance with the provisions of the Law and the
provisions of the company’s articles of association or bylaws inasmuch as these are
not inconsistent with the provisions of the Law.

Article 6
1. If a partner’s contribution is an ownership interest, usufruct, or any other right in kind,
the partner shall, pursuant to the provisions of the sale agreement, be responsible for
securing such contribution in case of its impairment or maturity or in case of the
appearance of any defect or shortage therein. If a partner’s contribution is no more
than a personal beneficial interest in a property, the provisions of the lease
agreement shall apply to the above-mentioned matters.

2. If a partner’s contribution is a right owing to such partner from a third party, he will be
relieved from his liability toward the company only after he has recovered such right
and put it at the disposal of the company within such timeframe as specified.

3. If the partner’s contribution is in the form of services, such partner shall render the
services he has declared to render, and any gains generating from those services
shall inure to the benefit of the company. Such partner may not render those services
for his own benefit. Nonetheless, he is not obliged to surrender the proceeds he has
earned from any patent right, unless otherwise agreed.

Article 7
Each partner shall be indebted to the company to the extent of the contribution he has
declared to make. If he fails to make such contribution in a timely manner, he shall be liable
to the company for any damages arising from such failure.

Article 8
1. A personal creditor of a partner may not recover his right out of an indebted share or
stock in the company’s capital. Nonetheless, such creditor may, after having obtained
a judgment from the competent judicial authority, recover such right out of the debtor
partner’s share in such net profits as distributed in accordance with the financial
statements of the company. If the company ceases to exist, the creditor’s right shall
be transferred to the share of his debtor in any such properties as would become
surplus after settlement of the company’s debts.

2. In addition to such rights as contemplated in Paragraph 1 of this Article, a personal

creditor of a partner may request the competent judicial authority to sell such
 partner’s shares in order to recover his right out of the proceeds of such sale,
provided that shareholders in listed joint stock companies shall have the priority right
to purchase such shares.

Article 9
1. Without prejudice to the provisions of Paragraph 2 of this Article, all partners will
share the profits and losses. If it is agreed that a certain partner be deprived from the
profits or exempted from the losses, such agreement shall be null and void,
whereupon the provisions of Article 11 of the Law shall apply.

2. A partner whose contribution is limited to services shall be exempted from the losses.

Article 10
1. Other than distributable dividends, no profits may be distributed.

2. If fictitious profits are distributed to the partners, the company creditors may request
all partners, including bona fide partners, to refund the sums the partners have
received from the company.

3. A partner shall not be obliged to refund the true profits he received, even if the
company suffers losses in the subsequent years.

Article 11
1. A partner’s share in the profits or losses shall be to the extent of his share in the
capital. Nonetheless, it may be agreed in the company’s articles of association on the
variation of the partners’ respective shareholdings to the extent of the Shariah
controls.

2. Where a partner’s contribution is limited to his services and his share in the profit or
loss is not specified in the company’s articles of association, such partner’s share
shall be to the extent of his contribution as assessed upon incorporation of the
company. If there are more than one partner rendering services to the company and
their individual contributions have not been assessed, such shares shall be equal,
unless otherwise proven. If, in addition to his services, a partner makes contributions
in cash or in kind, he shall have a share in the profit and loss to the extent of his
services and another share to the extent of his cash or in kind contribution.

Article 12
1. Except for Joint Ventures, the articles of association and all amendments thereto
must be reduced to writing and authenticated by the legally authorized authentication
department, failing which the articles of association or its amendments shall be null
and void.

2. Any partners, managers, or members of the board of directors of the company – as

the case may be – due to whom the company’s articles of association or any
amendment thereto remained unauthenticated contrary to the provisions of
Paragraph 1 of this Article shall be jointly to pay compensation for the damage
sustained by the company, the partners, or third parties as a result thereof.
Article 13
1. The partners, managers, or members of the board of directors of the company – as
the case may be – shall publish the company’s articles of association and the bylaws
of the joint stock company including any amendments thereto through the Ministry’s
website. The Ministry shall have the right to collect fees for publication of the
company’s articles of association and bylaws and any amendments thereto and for
issuance and certification of any extracts thereof. The Ministry shall provide the
company certified copy/copies of the articles of association and bylaws in proof of
such publication.

2. The documents set forth in Paragraph 1 of this Article shall be made available for
review by third parties. Extracts issued and certified by the Ministry shall constitute
evidence vis-à-vis third parties based on the contents thereof.

3. Any partners, managers, or members of the board of directors of the company – as

the case may be – due to whom the documents set forth in Paragraph 1 of this Article
remained unpublished shall be jointly liable to pay compensation for the damage
sustained by the company, the partners, or third parties as a result thereof.

4. The provisions set forth in this Article shall not apply to Joint Ventures.

Article 14
1. Except for Joint Ventures, a company will acquire legal personality upon its
registration in the Commercial Register. Nonetheless, a company under incorporation
will have legal personality to such extent as required for incorporation thereof,
provided the incorporation process be completed.

2. The company’s articles of association or bylaws as published in accordance with the

provisions of the Law will be valid vis-à-vis third parties only if the company is
registered in the Commercial Register. Nonetheless, if only certain particulars of the
articles of association or the bylaws are not published, such particulars are the only
particulars that shall not be valid vis-à-vis third parties.

Article 15
1. The company’s name, type, head office, and commercial registration number must
be printed on all such contracts, settlements, and other documents as issued by the
company.

2. Except for General Partnerships and Limited Partnerships, the amount of the
company’s capital as well as the amount paid-up shall be added to the details
mentioned in Paragraph 1 of this Article.

3. During the liquidation phase, the words “under liquidation” shall be added to the
name of the company.

4. The provisions of this Article shall not apply to Joint Ventures.

Article 16
Taking into consideration the reasons of dissolution of each type of company, a company
shall be dissolved due to either one of the following reasons:
 a. Expiration of the specified term of the company, unless otherwise such term is
renewed in accordance with the provisions of the Law;

b. Achievement or the impossibility of achievement of the objects for which the

company was incorporated;

c. Transfer of all shares or stocks to one partner or shareholder, unless such partner or
shareholder wants the company to continue in accordance with the provisions of the
Law;

d. If the partners agree upon the premature dissolution of the company;

e. If the company merges into another company; or

f. Issuance of a judicial judgment to dissolve or nullify the company upon the request of
any partner or interested party. Any condition depriving such partner or party of such
right shall be null and void.

Part 2 – General Partnership

Article 17
A General Partnership is a partnership established between legal persons who are jointly
liable for the partnership’s debts and obligations to the extent of their property. A partner in a
general partnership shall acquire the same capacity of a merchant.

Article 18
1. The name of a general partnership shall include one or more names of the partners
in addition to the words “and Co.” or any other words of a similar meaning, combined
with an indication of the existence of a general partnership.

2. Where the partnership’s name includes the name of a person who is not a partner
and such person is aware of such inclusion, he shall be personally and jointly liable
for the partnership’s debts and obligations to the extent of his own property.
Nonetheless, the partnership may retain in its name the name of any partner who
dies or withdraws from the partnership, subject to the consent of the withdrawing
partner or the heirs of the deceased partner.

Article 19
1. The shares of the partners may not be represented in negotiable bonds.

2. Absent the consent of all other partners, or subject to such restrictions as set forth in
the partnership’s articles of association, no partner may transfer his share. Further,
such transfer must be published in such manner as set forth in Article 13 of the Law.
Any agreement under which transfer of shares is unconditionally permissible shall be
null and void. Nonetheless, a partner may transfer to a third party the rights attached
to his share, but such transfer shall be binding only on the parties to such transfer.

Article 20
1. Where a partner joins the partnership, he shall be liable, to the extent of his own
property, for the partnership’s past and future debts jointly with the other partners.
Nonetheless, an agreement may be reached to relieve that partner from past debts,
 provided such agreement be published in such manner as set forth in Article 13 of
the Law.

2. Where a partner withdraws or is expelled from the partnership pursuant to such final
judgment as issued by the competent judicial authority, he shall not be liable for such
debts and obligations as sustained by the partnership after his withdrawal or
expulsion, provided such withdrawal or expulsion be published in such manner as set
forth in Article 13 of the Law.

3. If a partner transfers his share, he shall not be liable towards the creditors of the
partnership for the partnership’s debts, unless those creditors object to such transfer
within thirty (30) days from the date of receiving the partnership’s notice to that effect.
In case of any such objection, the transferee shall be liable for such debts jointly with
the transferor.

Article 21
A partner may not be required to pay out of his own property a debt that is due from the
partnership unless such debt is proved to be a debt that is due from the partnership pursuant
to an acknowledgement by the officers responsible for managing the partnership or pursuant
to a final judicial judgment or a writ of execution and only after service of a notice onto the
partnership to repay such debt and provided that the partnership be given such reasonable
time as estimated by the creditor.

Article 22
Within thirty days from the date of notarization of the partnership’s articles of association, the
manager of or the partners in the partnership must have the articles of association published
in accordance with the provisions of the Law and they must also have the company
registered in the Commercial Register, which requirement extends to any amendment to the
partnership’s articles of association.

Article 23
The partnership’s articles of association must be signed by all partners and such articles
must include the following information in particular:

a. The partnership’s name, object, and head office as well as its branches, if any;

b. The partners’ names, domiciles, occupations, nationalities, and birth dates;

c. The partnership’s capital including proper indication of the contribution each partner
has declared to make and the date on which such contribution becomes payable;

d. The names of the partnership’s managers, if any, as well as the names of persons
authorized to sign on behalf of the partnership, without prejudice to the provisions of
Article 25 of the Law;

e. The date of incorporation of the partnership and its term; and

f. The beginning and end of the partnership’s fiscal year.

Article 24
Absent the consent of the other partners, no partner may carry on, for his own account or for
the account of a third party, any activity similar to that of the partnership. Nor may any
partner be a partner in or a manager or a member of the board of directors of a competitor of
the partnership or a holder of controlling shares in any company carrying on the same
activity, failing which the partnership shall have the right to request the competent judicial
authority to consider the activities carried on for the account of such partner as activities
carried on for the account of the partnership, in addition to the partnership’s right to claim
compensation from such partner.

Article 25
The partners shall appoint manager/managers from among the partners or third parties
whether in the partnership’s articles of association or in a separate contract. Where several
managers are appointed without determining the respective powers of each manager and in
the absence of any provision authorizing either one of them to manage the partnership on an
exclusive basis, either one the partners may individually carry on any management
business, provided the other partners have the right to object to such business before
completion thereof, in which case consideration will be given to the majority vote of the
managers, and, in case of a tie vote, the matter shall be brought before the partners in order
for them to pass a resolution in that regard in accordance with Article 27 of the Law.

Article 26
A partner who is not a manger may not interfere in the management of the company.
Nonetheless, he or his authorized designate may, at the head office of the company, verify
the progress of the partnership’s operations; examine its books and documents; extract a
summary of the partnership’s financial position as contemplated in its books and documents;
and give advice to the manager of the partnership. Any agreement to the contrary shall be
null and void.

Article 27
The partners’ resolutions shall be passed by the numerical majority vote of the partners,
unless the relevant resolution is related to an amendment to the articles of association,
whereupon such resolution shall be passed by the unanimous vote of the partners, unless
the partnership’s articles of association provide otherwise.

Article 28
If the partners do not determine how the partnership will be managed, either one of them
may manage the partnership on an exclusive basis, provided that the other partners have
the right to object to any transaction before completion thereof. The majority of the partners
shall have the right to reject such objection.

Article 29
The manager shall undertake all management affairs and transactions to the extent of the
partnership’s objects and he shall represent the partnership before judicial authorities,
arbitration panels, and third parties, unless the articles of association explicitly provide that
the manager’s powers are restricted. In all events, any transactions carried out by the
manager in the name of the partnership and to the extent of its objects shall be binding upon
the partnership, unless the counterparty to such transactions is of bad faith.
Article 30
Absent a resolution by the partners or absent an explicit provision in the partnership’s
articles of association, the manager may not undertake any transactions that are beyond the
scope of the partnership’s objects. This prohibition shall, in particular, apply to:

a. Donations, other than ordinary small donations;

b. Sponsorship by the partnership of third parties;

c. Resorting to arbitration;

d. Entering into reconciliation arrangements in respect of the partnership’s rights;

e. Sale or mortgage of the partnership’s real estates, unless such sale forms part of the
company’s objects; and

f. Sale or mortgage of the goodwill of the partnership.

Article 31
The manager may not enter with the partnership into any agreement for his own benefit
absent special authorization from the partners, which authorization is issued in respect of
each separate case. Absent the unanimous consent of the partners, the manager may not
carry on any activity that is identical to that of the partnership, nor may the manager be a
partner in or a manager or a member of the board of directors of a competitor of the
partnership or a holder of controlling stocks or shares in any company carrying on the same
activity, failing which the partnership shall have the right to claim compensation from such
manager.

Article 32
The manager shall be liable for any damages to the partnership, the partners, or third parties
due to his failure to comply with the provisions of the partnership’s articles of association or
due to his failure to perform his duties. Any agreement to the contrary shall be null and void.

Article 33
1. If the manager is a partner and he is appointed in the articles of association, such
manager may be dismissed only pursuant to a decision by the competent judicial
authority upon the request of the majority of the partners. Any agreement to the
contrary shall be null and void. If the manager is so dismissed, the partnership must
be dissolved, unless the articles of association provide otherwise.

2. If the manager is a partner and he is appointed in a separate contract, or in case the

manager is not a partner, be he appointed in the articles of association or in a
separate contract, such manager may be dismissed pursuant to a resolution by the
partners, without such dismissal giving rise to the dissolution of the partnership.

Article 34
1. A manager who is a partner and is appointed in the partnership’s articles of
association may not resign from his managerial position without cause, failing which
he shall be responsible for payment of compensation, and such resignation will give
 rise to the dissolution of the partnership, unless the articles of association provide
otherwise.

2. A manager who is not a partner and is appointed in the partnership’s articles of

association may resign from his managerial position, provided such resignation be
submitted in a timely manner and be notified to the partners in amble time before the
effective date thereof, failing which such manager will be responsible for payment of
compensation, without such resignation giving rise to the dissolution of the
partnership, unless the articles of association provide otherwise.

3. A partnership’s manager who is appointed in a separate contract, be he a partner or

no partner may resign from his managerial position provided such resignation be
submitted in a timely manner and be notified to the partners in amble time before the
effective date thereof, failing which such manager will be responsible for payment of
compensation, without such resignation giving rise to the dissolution of the
partnership, unless the articles of association provide otherwise.

Article 35
1. At the end of the fiscal year of the partnership, the profits and losses and the
respective shares of the partners in such profits and losses shall be determined
based on such financial statements as prepared in accordance with the generally
accepted accounting standards as audited by an accredited external auditor in
accordance with the generally accepted auditing standards.

2. Each partner is considered to be a creditor of the partnership to the extent of his

share in the profits as soon as such share is determined.

3. Any shortage in the partnership’s capital arising from losses shall be covered by the
profits of the next years, and, other than that, a partner may not, absent his consent,
be required to cover the shortage in his share in the capital due to such losses.

Article 36
1. A partner may not withdraw from a partnership of a specified term without such
cause as acceptable to the competent judicial authority. Where the partnership is of
unspecified term, the withdrawal of the partner shall be in good faith and it must be
notified in a timely manner by the withdrawing partner to the other partners, failing
which the competent judicial authority may issue a judgment ordering the
withdrawing partner to remain a partner in the partnership and to pay compensation,
if necessary.

2. The numerical majority of the partners may request the competent judicial authority
to expel partner(s) from the partnership based on valid reason justifying such
request, in which case the competent judicial authority may decide that the
partnership shall continue to exist after expulsion of such partner(s), if, according to
its discretion, such expulsion would lead to the continuation by the partnership of its
operations in such normal manner that would serve the interests of the partnership
and those of the other partners and protect the rights of third parties. Nonetheless, if,
upon discussion by the judicial authority of the request of expulsion, the continuation
of the partnership among the partners turns out to be impossible, such judicial
authority may decide that the partnership be dissolved.
Article 37
1. A general partnership shall be dissolved upon the death, interdiction, or withdrawal of
any partner or upon declaration by any partner of his bankruptcy or insolvency.
Nonetheless, the articles of association of the partnership may provide that in case of
death of a partner, the partnership will continue to exist with any of the heirs who
desire so even if they are underage or even if they are prohibited by law from doing
business, provided such heirs be not liable for the debts of the partnership in case it
continues to exist except to the extent of their respective shares in their testator’s
shareholding in the capital of the partnership, whereupon the partnership must within
a period of time no greater than one year from the date of their testator’s death be
converted into a Limited Partnership in which such heirs shall become dormant
partners, failing which the partnership shall be deemed to be non-existent by
operation of law, unless the underage heir reaches the age of maturity during that
period or the reason why the heir is prohibited from doing business ceases to exist.

2. The articles of association of the partnership may provide that in case of death,
interdiction, withdrawal, bankruptcy, or solvency of a partner, the partnership shall
continue to exist among the other partners, in which case neither such partner nor his
heirs shall have any right other than the right to receive their share in the assets of
partnership, which share shall be estimated in accordance with a special report to be
made by a licensed appraiser specifying the fair value of the share of each partner in
the partnership’s assets as at the date of the withdrawal of either partner, unless
another estimation method is set forth in the articles of association of the partnership
or is agreed upon by the partners, and such partner or his heirs will not be entitled to
any share in any newly acquired rights except to the extent that such rights are
consequent upon operations preceding that incident.

Part 3 – Limited Partnership

Article 38
1. A Limited Partnership is a partnership comprising two parties of partners: one party
comprising at least one (1) general partner who shall be liable, to the extent of all of
his property, for the partnership’s debts and obligations, and the other party
comprising at least one (1) dormant partner who shall not be liable for the
partnership’s debts and obligations except to the extent of his share in the capital. A
dormant partner will not acquire the capacity of a merchant.

2. The general partners in a limited partnership shall be subject to such provisions as

are applicable to the partners in a general partnership.

3. Unless otherwise provided in this Part, a limited partnership shall be subject to the
provisions governing a general partnership.

Article 39
1. The name of a limited partnership shall include all of the names of the general
partners or the name of either one them in addition to the words “& Co.” or any other
words having a similar meaning, combined with an indication of the existence of a
limited partnership.

2. Where the partnership’s name includes the name of a dormant partner or the name
of a person who is not a partner in the partnership and such person is aware of such
 fact, he shall be considered as a general partner vis-à-vis a bona fide third party
dealing with the partnership on this basis.

Article 40
The dormant partner may not interfere in the external managerial affairs of the partnership
even if by virtue of a power of attorney, and if he interferes, he shall be jointly liable to the
extent of all of his property for the partnership’s debts and obligations arising from such
transactions as made by him. If the transactions made by such partner would cause a third
party to believe that such partner is a general partner, he shall be considered, vis-à-vis such
third party, to be jointly liable for all of the debts of the partnership to the extent of his own
property. Nonetheless, a dormant partner may participate in the internal managerial affairs of
the partnership in accordance with the provisions of the partnership’s articles of association,
without such participation giving rise to any liability on his part.

Article 41
A dormant partner may transfer his share to any of the other partners in the partnership.
Further, he may transfer his share to a third party, subject to the consent of all general
partners and dormant partners who are the owners of the majority of the capital of the
dormant party, unless the partnership’s articles of association provide otherwise.

Article 42
Unless its articles of association provide otherwise, a limited partnership may not be
dissolved upon the death, interdiction, or withdrawal of any dormant partner or upon
declaration by him of his bankruptcy or insolvency.

Part 4 – Joint Venture

Article 43
A Joint Venture is a partnership that: hides itself from third parties; does not have a legal
personality; is not subject to the publication provisions; and is not registrable in the
Commercial Register.

Article 44
A Joint Venture may be proven by all methods of evidence.

Article 45
The Joint Venture Agreement shall include the objects of the Joint Venture, the partners’
rights and obligations, the method of management, and distribution of profits and losses to
the partners, in addition to other terms and conditions.

Article 46
Unless the Joint Venture Agreement provides otherwise, no new partner may join the
partnership without the consent of all partners.

Article 47
A Joint Venture may not issue negotiable bonds.
Article 48
A third party shall not have the right of recourse except to the partner with whom he has
dealt. If the partners do any act that would disclose the existence of the Joint Venture to a
third party, such party may consider the partnership to be a de facto General Partnership,
provided that the terms and conditions of Joint Venture Agreement remain binding on the
partners.

Article 49
1. A partner in a Joint Venture shall remain the holder of his share, unless otherwise
agreed by the partners.

2. If the share is in kind and the holder thereof is declared bankrupt, the holder of such
share shall have right to redeem it out of the proceeds of bankruptcy after payment of
his share in the Joint Venture’s losses.

3. If the share is represented in cash or in unclassified fungible items, the holder thereof
shall have the only right of sharing the bankruptcy proceeds in his capacity as a
creditor to the extent of the value of such share less his share in the partnership’s
losses.

Article 50
A Joint Venture shall be dissolved upon the death, interdiction, or withdrawal of any partner
or upon declaration by him of his bankruptcy or insolvency, unless the Joint Venture
Agreement provides that the partnership among the other partners will continue to exist.

Article 51
The provisions of Articles 24, 27, and 35 relating to general partnerships shall apply to Joint
Ventures.

Part 5 – Joint Stock Company

Chapter 1 – General Provisions
Article 52
A joint stock company is a company whose capital is divided to negotiable shares of equal
value, and it will be solely liable for the debts and obligations arising from the carrying on of
its activities.

Article 53
Each joint stock company shall have a name that reflects its object. Such name may not
include the name of a natural person, unless: the object of the company is an investment of
a patent registered in the name of that person; the company has acquired a commercial
enterprise and taken the name of that enterprise as a name for it; and the name of the
company was the name of a company that was converted into a joint stock company and its
name included a name of a natural person. If the company is owned by one person, its name
must indicate that it is a One Person Joint Stock Company.

Article 54
Upon incorporation of the company, the capital must be sufficient to achieve its objects. In
no event may the capital be less than Five Hundred Thousand Saudi Riyals. Further, the
paid-up capital as at the date of incorporation must not be less than one quarter.

Article 55
Notwithstanding Article 2 of the Law, the state, public legal persons, wholly state-owned
companies, and companies whose capital is not less than Five Million Saudi Riyals may
incorporate a One Person Joint Stock Company, and such Person shall have all of the
powers and authorities of the shareholders assemblies including the constituent assembly.

Chapter 2 – Incorporation of a Joint Stock Company

Article 56
Any person who: has signed the articles of association of the company; has made a
contribution in kind upon the incorporation of the company; or has actually participated in the
incorporation of the company with the intention to enter in the company as a founder shall be
considered to be a founder. A founder who has made a contribution in kind shall be
responsible for the accuracy of the assessment of such contribution.

Article 57
The incorporation application shall be filed with the Ministry, duly signed by the person(s)
filing the same and it must be accompanied with the company’s articles of association and
bylaws.

Article 58
In case subscription for the entire shares is limited to the founders themselves, the founders
must offer the shares that have not been subscribed for by them for subscription in
accordance with the Law of the Capital Market Authority.

Article 59
The paid-up portion of the value of the shares that have been subscribed for shall be
deposited in the name of the company under incorporation into a licensed bank in the
Kingdom, which portion may be put at the disposal of the board of directors only after
announcing the incorporation of the company.

Article 60
1. A joint stock company’s incorporation licence as well as licences of companies that
are incorporated by or in whose incorporation the state or other public legal persons
participate will be issued pursuant to a decision by the Ministry. Where the activity of
the company requires that a certain authorization or licence be obtained from the
competent [government] agency prior to the issuance of the incorporation licence of
the company, the incorporation licence decision will be issued only after such
authorization or licence has been obtained.

2. The company may carry on its activity only after consummation of the incorporation
procedures and upon procurement from the competent [government] agency of such
final licence, if any, as required for such activity.
 3. If the application for incorporation of a joint stock company which is formed by or in
whose formation the state or other public legal persons participate includes an
exemption from certain provisions of the Law, such application and exemption shall
be brought before the Council of Ministers for approval.

Article 61
1. Where there are in kind contributions, the incorporation application shall be
accompanied with such report as prepared by certified expert(s) or appraiser(s)
including an estimate of the fair value of such contributions.

2. The founders must file a copy of the assessment report of the in kind contributions
with the head office of the company not less than fifteen days before the date set for
the meeting of the constituent assembly. Each concerned party shall have the right of
access to such report.

3. The above-mentioned report shall be brought before the constituent assembly for
deliberation thereon. If such assembly decides to reduce the consideration for the in
kind contributions, the contributors of such contributions must agree upon such
reduction at a meeting of the constituent assembly, failing which the articles of
association of the company shall be null and void in relation to all parties thereto.

Article 62
1. The founders shall call all subscribers to a meeting of the constituent assembly within
forty five days from the date of the ministerial decision authorizing the incorporation
of a closed joint stock company or from the date of closing subscription for the shares
of a public joint stock company, depending on such terms and conditions as set forth
in the company’s bylaws, provided that the period between the invitation notice and
the date of meeting be not less than three days, for closed joint stock companies,
and not less than 10 days, for public joint stock companies.

2. Each subscriber, irrespective of the number of his shares, shall have the right to
attend the meeting of the constituent assembly. For such meeting to be valid, it must
be attended by a number of subscribers representing not less than one half of the
company’s capital. If such quorum is not present, another invitation notice shall be
sent for a second meeting to be held fifteen days at least after such invitation notice.
Nonetheless, the second meeting may be held one hour after the end of the period
specified for the first meeting, provided that there be an indication in the invitation
notice for the first meeting that it is possible to hold such second meeting. In all
events, the second meeting shall be valid, regardless of the number of subscribers
represented thereat.

3. The constituent assembly shall elect a chairman, a secretary, and a vote sorter.
Resolutions of the constituent assembly shall be adopted by the absolute majority
vote of shares represented thereat. The chairman of the assembly, the secretary,
and the vote sorter shall sign the minutes of meeting, and the founders shall send a
copy of such minutes to the Ministry, in addition to another copy to CMA, if the
company is a public joint stock company.

Article 63
The Constituent Assembly shall have the following powers:
 a. Ensure subscription for the entire shares of the company and payment of the
minimum limit of the capital and of the payable amount of the shares value in
accordance with the provisions of the Law;

b. Deliberate on the assessment report regarding in kind contributions;

c. Ratify the final provisions of the company’s bylaws. Nonetheless, the assembly may
not introduce substantial changes to the bylaws brought before it without the consent
of all subscribers represented thereat;

d. Appoint the first Board of Directors for a term not exceeding five (5) years and the
first auditor in case they have not been appointed in the company's articles of
association or bylaws; and

e. Deliberate on and ratify the founders’ report regarding such transactions and
expenses as required for the incorporation of the company.

The Ministry - and CMA, in case of public joint stock companies - may delegate
representative(s) acting as controllers in order to attend the meeting of the company’s
constituent assembly with a view toward ensuring compliance with the provisions of the Law.

Article 64
Within fifteen days from the date on which the meeting of the constituent assembly ends, the
founders shall submit to the Ministry an application to announce incorporation of the
company accompanied with:

a. Declaration that the entire shares of the company have been subscribed for,
including the value of shares paid-up by the subscribers;

b. Minutes of meeting and resolutions of the constituent assembly; and

c. The company’s bylaws as ratified by the constituent assembly.

Article 65
1. Upon ascertaining that all requirements set forth in the bylaws of the joint stock
company have been met, the Ministry will issue a decision announcing the
incorporation of the company, which decision will be posted on the Ministry’s website.

2. Within fifteen days from the issuance date of the decision contemplated in Paragraph
1 of this Article, the members of the board of directors shall apply for registration of
the company in the Commercial Register, provided such registration include the
following information:

a. The company’s name, object, head office, and term;

b. The founders’ names, domiciles, occupations, and nationalities;

c. Type, value, and number of shares in addition to the amount of the paid-up
capital;

d. Number and date of the Ministry’s decision authorizing the incorporation of

the company; and
 e. Number and date of the Ministry’s decision announcing the incorporation of
the Company.

Article 66
1. Once the Ministry’s decision announcing the incorporation of the company is
published and the company is registered in the Commercial Register, the company
will be considered to be duly incorporated, and, thereafter, no action for annulment of
the company due to any violation of the provisions of the Law or the provisions of the
company’s articles of association or bylaws will be heard.

2. Once the Ministry’s decision announcing the incorporation of the company is

published and the company is registered in the Commercial Register, all transactions
made by the founders on behalf of the company shall be transferred to the company,
and the company shall bear all such expenses as spent by the founders in the course
of incorporation of the company.

Article 67
If the company is not formed as set forth in the Law, the subscribers shall have the right to
recover the amounts they have paid-up, and the banks where the subscription took place
must – on an urgent basis – refund to each subscriber such amount as paid up by him. The
founders shall be jointly responsible for satisfaction of this obligation and for compensation, if
necessary. Further, the founders shall bear all expenses that have been spent in the course
of incorporation of the company, and they shall be jointly responsible toward third parties for
such acts and transactions as made by them during the incorporation phase.

Chapter 3 – Management of a Joint Stock Company

Subchapter 1 – Board of Directors

Article 68
1. A joint stock company will be managed by a board of directors comprising such
number of members as set forth in the company’s bylaws, provided such number be
no less than three and no more than eleven.

2. Each shareholder shall have the right to nominate himself or other person(s) for
membership to the board of directors, to the extent of his shareholding in the capital.

3. The ordinary general assembly shall elect the members of the board of directors for
such term as set forth in the company’s bylaws, provided such term be no greater
than three years. Unless the company’s bylaws provide otherwise, the members of
the board of directors may be re-elected. The company’s bylaws shall indicate how
membership will expire or be terminated upon the request of the board of directors.
Nonetheless, the ordinary general meeting may, at all times dismiss, all or any of the
members of the board of directors even if the company’s bylaws provide otherwise,
but without prejudice to the dismissed member’s right to compensation if such
dismissal has taken place in an untimely manner or is without cause. Further, a
member of the board of directors may resign office, provided that such resignation be
not in an improper time, failing which such member shall be liable to pay
compensation to the company for any damage arising from such resignation.
Article 69
If the chairman and members of the board of directors submit their resignations, or if the
general assembly is unable to elect the company’s board of directors, the Minister - or the
CMA Board, in case of listed companies - must form an interim committee comprising such
number of experts and specialists as determined by the Minister (or the CMA Board),
including a chairman and a vice-chairman, to undertake the management of the company
and to call a meeting of the general assembly within a period no greater than three months
from the date of formation of the above-mentioned committee to elect a new board of
directors for the company. The committee chairman and members shall be paid, at the
expense of the company, such remunerations as the Minister (or the CMA Board) may
decide, as the case may be.

Article 70
1. Unless the company’s bylaws provide otherwise, if the office of any member of the
board of directors becomes vacant, the board shall have the right to appoint on a
temporary basis a member to fill such vacancy in accordance with the arrangement
of votes casted, provided that such member be from among persons who are
experienced and qualified, and provided further that the Ministry - and the CMA
Board, in case of listed companies - be informed accordingly within five business
days from the date of such appointment and that such appointment be brought
before the ordinary general assembly in its first meeting. The new member shall
complete the unexpired term of his predecessor.

2. If the number of members of the board of directors falls below the minimum quorum
required for its valid meetings as set forth in the Law or in the company’s bylaws, the
other members must call a meeting of the ordinary general assembly within sixty
days to elect such number of members as required.

Article 71
1. A member of the board of directors may not have any direct or indirect interest in the
transactions or contracts made for the account of the company without prior consent
from the ordinary general meeting, which consent must be renewed every year. A
member of the board of directors must disclose to the board any direct or indirect
interest he may have in any transactions and contracts that are made for the account
of the company, and such disclosure must be recorded in the minutes of the meeting.
Such member may not vote on the resolution issued in this regard at the meetings of
the board of directors and shareholders assembly. The chairman of the board of
directors shall disclose to the ordinary general assembly, when convened, the
transactions and contracts in which a member of the board of directors has a direct
or indirect interest, which disclosure shall be accompanied with a special report to be
issued by the company’s external auditor.

2. If a board member fails to disclose his interest as contemplated in Paragraph 1 of this

Article, the company or any interested party may request the competent judicial
authority to nullify the contract or to obligate such member to pay any profit or benefit
he has gained from such interest.

Article 72
A board member may not participate in any business that is competing with that of the
company, nor may he compete against the company in any of the sub activities the company
is carrying on, failing which the company may, before the competent judicial authority, claim
from that person such compensation as sufficient, unless such member has obtained a prior
authorization from the ordinary general meeting permitting him do so, which authorization is
renewed annually.

Article 73
1. A joint stock company may not grant any loan whatsoever to any of the members of
its board of directors or the shareholders in it, nor may it provide security for any loan
that is entered into by and between either one of them and a third party.

2. The provisions of Paragraph 1 of this Article shall not apply to banks and other
fiduciary companies which may - to the extent of their objects and based on such
terms and conditions as they apply to their transactions with the public -: grant a loan
to any of the members of their boards of directors or to any of the shareholders in
them; open letters of credit for such members or shareholders; or provide security for
the loans entered into between and by such members or shareholders and third
parties.

3. The provisions of Paragraph 1 of this Article shall not apply to such loans and
guarantees as granted by the company based on such employee incentive schemes
as acceptable under the provisions of its bylaws or under a resolution by its ordinary
general assembly.

4. Every agreement that is made in violation of the provisions of this Article shall be null
and void; and the company shall have the right to claim compensation from the
violator before the competent judicial authority for any damage that it may sustain.

Article 74
In other than the meetings of the ordinary general assembly, the members of the board of
directors may not disclose the company’s secrets that may have become known to them, nor
may they use any information known to them by reason of their position as members with a
view toward achieving any benefit for themselves or for their relatives or third parties, failing
which they must be dismissed and compensation must be claimed from them.

Article 75
1. With due observance of the powers vested in the general assembly, the board of
directors shall have the broadest powers to manage the company with a view toward
achieving the objects thereof, except for matters that have been excluded pursuant to
a special provision in the Law or in the company’s bylaws including transactions or
dispositions forming part of the powers of the general assembly. Further, the board
may, to the extent of its jurisdiction, authorize one or more of its members or a third
party to carry out a certain assignment or assignments.

2. The board of directors may: enter in loan agreements irrespective of the terms
thereof; sell or mortgage the company’s assets; sell or mortgage the company’s
goodwill; or relieve the debtors of the company from their obligations, unless the
company’s bylaws or the ordinary general assembly’s resolutions include a provision
imposing restrictions on the board of directors’ powers in this regard.
Article 76
1. The company’s bylaws shall specify the method of payment of the board members’
remuneration. Such remuneration may consist of: a specified sum; an attendance
fee; benefits in kind; a certain percentage of the net profits; or a combination of two
or more of those benefits.

2. Where the remuneration represents a certain percentage of the company’s profits,

such percentage may not be greater than 10 % of the net profits after deduction of
such reserves as determined by the general assembly pursuant to the provisions of
the Law and the company’s bylaws and after distribution to the shareholders of
profits representing not less than 5 % of the company’s paid-up capital, provided that
the entitlement to such remuneration be in proportion to the number of meetings
attended by the board member. Any determination in violation of said provisions shall
be null and void.

3. In no event may the total amount of any remuneration and cash or in kind benefits
received by a board member be greater than Five Hundred Thousand Saudi Riyals
annually, in accordance with such controls as established by the Competent
Authority.

4. The board of directors’ report to the ordinary general assembly shall include a
comprehensive statement of all the amounts received by the members of the board
of directors during the fiscal year including remunerations, allowances, expenses,
and other benefits, as well as all the amounts received by the members in their
capacity as employees or executives, or in consideration of such technical,
administrative, or advisory services. Such report shall also include a statement of the
number of the board meetings and the number of meetings attended by each
member beginning from the date of the last meeting of the ordinary general
assembly.

5. Upon the recommendation of the board of directors, the general assembly may
terminate the membership of board members who fail to attend three consecutive
board meetings without a valid reason.

Article 77
The company shall be bound by all such contracts and transactions as made by the board of
directors even if they are beyond their powers, unless the counterparty is of bad faith or
knows that such transactions are beyond the powers of the board.

Article 78
1. The members of the board of directors shall be jointly liable to pay compensation to
the company, the shareholders, or third parties for any damage arising from their
mismanagement of the company’s affairs or from their violation of the provisions of
the Law or the company’s bylaws. Any provision to the contrary shall be null and
void. All members of the board of directors shall be held jointly liable in case the
wrongful act is arising from a unanimous resolution passed by them. Nonetheless,
the dissenting members will not be answerable for resolutions adopted by the
majority vote if such members explicitly record their dissent in the minutes of
meeting. Absence from the meeting at which such resolution is adopted shall not
constitute cause for relief from liability, unless it is proven that the absent member
 was not aware of such resolution or was unable to object to it upon becoming aware
of it.

2. The consent of the ordinary general meeting to relieve the members of the board of
directors from liability may not forfeit the institution of an action for liability.

3. No action for liability will be heard after three years from date of discovery of the
wrongful act. Apart from cases of fraud or forgery, in no event may an action for
liability be heard after five years from the end of the fiscal year during which the
wrongful act occurred or after three years from expiration of the membership of the
concerned board member, whichever is the later.

Article 79
The company shall have the right to institute an action for liability against the members of the
board of directors if the wrongful act committed by them caused harm to the shareholders in
their entirety. The resolution to institute such action shall be passed by the ordinary general
assembly which shall appoint one person (or more) to pursue such action. Where the
company has been announced bankrupt pursuant to a judgment, the institution of such
action shall be within the jurisdiction of the receiver. If the company ceases to exist, the
liquidator shall pursue such action, subject to the consent of the ordinary general meeting.

Article 80
Each shareholder shall have the right to institute an action for liability against the members
of the board of directors if the wrongful act committed by them caused personal harm to said
shareholder. Nonetheless, the shareholder may institute such action only if the company’s
right to institute it is still valid and after notifying the company of his intention to do so,
provided his claim be limited to compensation for such harm as sustained by him.

Article 81

1. The board of directors shall appoint from among its members a chairman and a vice-
chairman and it may appoint a managing director. A member of the board of directors
may not jointly hold the office of the chairman and any other executive office in the
company. The company’s bylaws shall specify the respective powers of the board
chairman and the managing director and their respective special remunerations in
addition to such remunerations as payable to the board members.
2. If the company’s bylaws do not include the provisions set forth in Paragraph 1 of this
Article, the board of directors shall distribute the powers and determine the special
remuneration.
3. The board of directors shall appoint a secretary from among its members or others
and determine his powers and remuneration if the company’s bylaws do not include
any provisions to that effect.
4. The term of office of the chairman, vice-chairman, managing director, and secretary
shall not exceed the term of their respective memberships; and they may be
reappointed, unless the company’s bylaws provide otherwise. The board shall at all
times have the right to dismiss any or all of them, but without prejudice to their right
to receive compensation if such dismissal has taken place in an untimely manner or
is without cause.
Article 82

1. The chairman of the board of directors shall represent the company before the
judicial authorities, arbitration panels, and third parties. The board chairman may,
pursuant to a resolution in writing, delegate any of his powers to any member(s) of
the board of directors or to a third party in order to carry out a certain assignment or
assignments.

2. The vice-chairman of the board of directors shall replace the chairman of the board of
directors in case of the latter’s absence.

Article 83
1. The board of directors shall convene two times a year upon an invitation by the board
chairman in accordance with the terms and conditions set forth in the company’s
bylaws. Irrespective of any provision set forth in the company’s bylaws to the
contrary, the board chairman shall call a meeting of the board whenever the board
chairman is requested to do so by two board members.

2. For a board meeting to be valid, it must be attended by not less than one half of the
members thereof, provided that the number of members present be not less than
three, unless the company’s bylaws require a greater percentage or number.

3. A board member may not delegate any other person to attend the meeting on his
behalf. Apart from that, a board member may delegate other board member, if the
company’s bylaws provide so.

4. Resolutions of the board shall be passed by the majority vote of the members
present or represented thereat. In case of a tie vote, the side with which the chairman
votes shall prevail, unless the company’s bylaws provide otherwise.

Article 84
In respect of urgent matters, the board of directors may pass resolutions by circulation,
unless any member calls a meeting of the board in writing for deliberation. Such resolutions
shall be brought before the board at its first subsequent meeting.

Article 85
Deliberations and resolutions of the board shall be recorded in minutes to be signed by the
meeting chairman, the board members present, and the secretary. Those minutes shall be
entered in a special register to be signed by the board chairman and the secretary.

Subchapter 2 – Shareholders Meetings

Article 86
1. Meetings of the general assembly shall be presided over by the board chairman, or if
absent, by the vice-chairman, or by any such member as delegated by the board in
case the board chairman and vice-chairman are absent.

2. Each shareholder shall have the right to attend the meetings of the shareholders
general assembly even if the company’s bylaws provide otherwise. A shareholder
shall have the right to delegate another person to attend the meeting of the general
 assembly, provided such person be neither a member of the board of directors nor
an employee of the company.

3. Meetings of the shareholders general assembly and participation by shareholders in

the deliberations and voting on resolutions thereof may be conducted via modern
technological communication media, subject to such controls as established by the
Competent Authority.

4. The Ministry - and CMA, in case of listed companies - may delegate representative(s)
acting as controllers in order to attend the meetings of the companies general
assembly with a view toward ensuring compliance with the provisions of the Law.

Article 87
Except for matters falling within the jurisdiction of the extraordinary general assembly, the
ordinary general assembly shall have jurisdiction over all matters related to the company and
it shall hold a meeting at least once a year within six months of the end of the company’s
fiscal year. Other meetings of ordinary general assembly may be held whenever needed.

Article 88
1. The extraordinary general meeting shall have the power to amend the company’s
bylaws, except for the following matters:

a. Deprivation of a shareholder of his basic rights which are vested in him in his
capacity as a partner or any alternation of such rights, namely the right to:

1. Receive a certain percentage of the profits to be distributed whether in cash

or by issue of bonus shares to persons other than the employees of the
company or of the company’s subsidiaries;
2. Receive a certain share of the company’s assets upon liquidation.
3. Attend the general or special meetings of the shareholders assembly and
participate in their deliberations and vote on their resolutions;
4. Transfer his shares in accordance with the provisions of the Law;
5. Request to have access to the company’s books and documents; scrutinize
the transactions of the board of directors; institute an action for liability against
the members of the board of directors; and object to resolutions passed at the
general and special meetings of the shareholders assembly; and
6. Have priority of subscription for the new shares issued in return for in kind
contributions, unless the company’s bylaws provide otherwise.

b. Any amendments that would increase the financial burdens of the shareholders,
unless such amendments are approved by all shareholders;

c. Moving the company’s head office to a foreign country; and

d. Changing the company’s nationality.

2. In addition to such powers as vested in it, the extraordinary general assembly may
pass resolutions falling primarily within the jurisdiction of the ordinary general
 assembly, subject to the same conditions and in the same manner as prescribed for
the latter.

Article 89
Where a resolution of the ordinary general assembly would alter the rights of holders of a
certain class of shares, it will be valid only if approved by shareholders from among the
holders of that class of shares who have the right to vote in the special meetings of the
holders of that glass of shares, in accordance with the same provisions related to the
extraordinary general assembly.

Article 90
1. General or special meetings of shareholders shall be held upon an invitation by the
board of directors in accordance with the provisions set forth in the company’s
bylaws. The board of directors must call a meeting of the ordinary general assembly
upon the request of the auditor, the audit committee, or shareholders representing at
least 5% of the capital. The auditor may call a meeting of the ordinary general
assembly if the board of directors fail to call that meeting within thirty days from the
date of the auditor’s request.

2. Pursuant to a decision issued by the Competent Authority, the ordinary general

assembly may be called to a meeting in the following cases:

a. If the period specified in Article 87 of the Law for such meeting expires without it
being held;
b. If the quorum required for the meeting of the board of directors is not present,
subject to the provisions of Article 69 of the Law;
c. If the provisions of the Law or the company’s bylaw are violated, or if the
management of the company is defective; and
d. If the board fails to send an invitation notice for a meeting of the general
assembly within fifteen days from the date of the request of the auditor or the
audit committee or shareholders representing at least 5% of the capital.

3. A number of shareholders representing not less than 2 % of the company’s capital

may submit a request to the Competent Authority to call a meeting of the ordinary
general assembly if any of the cases set forth in Paragraph 2 of this Article applies, in
which case the Competent Authority must call a meeting of the ordinary general
assembly within thirty days from the date of such request, provided the invitation
notice include the meeting agenda and the items that need to be approved by the
shareholders.

Article 91
Invitation notices addressed to the general assembly shall be published in a daily newspaper
circulated in the area where the company’s head office is situated at least ten days prior to
the date scheduled for its meeting. Nonetheless, it may be sufficient to send the invitation
notice in a timely manner to all shareholders by registered mail. A copy of such notice along
with the meeting agenda shall be sent to the Ministry - and one copy to CMA, if the company
is listed in the Capital Market - within such timeframe as specified for publication.
Article 92
Shareholders desiring to attend an ordinary or special meeting shall register their names at
the head office of the company prior to the time specified for such meeting, unless other
place or manner is set forth in the company’s bylaws.

Article 93
1. For the meeting of the ordinary general assembly to be valid, it must be attended by
shareholders representing at least one quarter of the company’s capital, unless the
company’s bylaws require a greater percentage provided such percentage be no
greater than one half.

2. If the quorum required for the meeting of the ordinary general meeting as set forth in
Paragraph 1 of this Article is not present, an invitation notice shall be sent for a
second meeting to be held within the thirty days following the first meeting, which
notice shall be published in such manner as set forth in Article 91 of the Law.
Nonetheless, the second meeting may be held one hour after the end of the period
specified for the first meeting, provided the same is permitted under the company’s
bylaws and provided further that there be an indication in the invitation notice for the
first meeting that it is possible to hold such second meeting. In all events, the second
meeting shall be valid, regardless of the number of shares represented thereat.

3. Resolutions of the ordinary general meeting shall be passed by the absolute majority
vote of the shares represented thereat, unless the company’s bylaws require a
greater percentage.

Article 94
1. For the meeting of the extraordinary general assembly to be valid, it must be
attended by shareholders representing at least one half of the company’s capital,
unless the company’s bylaws require a greater percentage provided such percentage
be no greater than two thirds.

2. If the quorum required for the meeting of the extraordinary general meeting as set
forth in Paragraph 1 of this Article is not present, an invitation notice shall be sent for
a second meeting in accordance with the same conditions and in the same manner
as set forth in Article 91 of the Law. Nonetheless, the second meeting may be held
one hour after the end of the period specified for the first meeting, provided the same
is permitted under the company’s bylaws and provided further that there be an
indication in the invitation notice for the first meeting that it is possible to hold such
second meeting. In all events, the second meeting shall be valid if attended by a
number of shareholders representing at least one quarter of the capital.

3. If the quorum required for the second meeting is not present, an invitation shall be
sent for a third meeting which shall be held in accordance with the same conditions
and in the same manner as set forth in Article 91 of the Law. The third meeting will
be valid, irrespective of the number of shares represented thereat, subject to the
consent of the Competent Authority.

4. Resolutions of the extraordinary general assembly shall be passed by two thirds

majority vote of the shares represented thereat, unless such resolution is related to:
capital increase or reduction; extension of the company’s term; premature dissolution
of the company; or merger of the company into another company, in which case such
 resolution will be valid only if it is passed by three fourths majority vote of the shares
represented thereat.

5. The board of directors shall publish, in accordance with the provisions of Article 65 of
the Law, resolutions of the extraordinary general assembly if they are related to any
amendments to the company’s bylaws.

Article 95
1. The company’s bylaws shall outline the method of voting in the meetings of the
shareholders assembly. The accumulative voting method shall be used for election of
the board of directors, whereby the voting right attached to each share is not
exercised more than once.

2. Members of the board of directors may not vote on the assembly’s resolutions that
would relieve them from their liabilities toward undertaking the management of the
company or resolutions that are related to any direct or indirect interest they may
have.

Article 96
Every shareholder shall have the right to discuss the matters listed on the agenda of the
assembly meeting and to pose questions to the company’s directors and the auditor. Any
provision in the company’s bylaws that would deprive a shareholder of such right shall be
null and void. The board of directors or the auditor shall answer those questions to such
extent as would not jeopardize the company’s interests. If, according the shareholder, the
answer to his question is unsatisfactory, he may appeal to the assembly whose decision in
this respect shall be binding.

Article 97
Minutes of meeting of the shareholders assembly shall be prepared, which minutes shall
include: the names of shareholders present or represented including the number of shares
held by them and the number of votes attached to such shares; the resolutions adopted; the
number of votes supporting or opposing such resolutions; and an appropriate summary of
the deliberations. Such minutes shall be systematically recorded after each meeting in a
special register to be signed by the chairman, secretary, and vote sorter.

Article 98
Subscription for or title to shares shall be interpreted as an acceptance by the shareholder of
the bylaws of the company and as a commitment by the shareholder that the resolutions
issued by the shareholders assembly pursuant to the provisions of this Law and the
company’s bylaws shall be binding on him, whether such resolutions are passed in his
presence or absence, and whether he has voted in favour of or against them.

Article 99
Without prejudice to the rights of bona fide third parties, any resolution that is passed by the
shareholders assembly in violation of the provisions of the Law or the company’s bylaws
shall be a nullity. Shareholders who have objected to such resolution at the meeting of the
shareholders assembly that has passed such resolution or shareholders who have been
absent from such meeting based on a valid excuse shall have the right to apply for the
annulment of such resolution. If such resolution is declared nullified, it shall be null and void
inasmuch as all shareholders are concerned. No action for the annulment of such resolution
will be heard one year after the issuance of the same.

Article 100
1. Shareholders representing at least 5 % of the capital may request the competent
judicial authority to make inspection of the company in case they have good reasons
to believe that the acts of the members of the board of directors or the auditor in
respect of the affairs of the company are suspicious.

2. The competent judicial authority may order that the inspection process be made at
the expense of the complainants after hearing the statements of the board of
directors and the auditor at a special session, and it may require the complainants to
submit security, if necessary.

3. If the competent judicial authority is satisfied that the complaint is true, it may instruct
that precautionary measures be taken as it may deem appropriate, and it may call
upon the general assembly to pass such resolutions as necessary. Further, it may
dismiss the members of the board of directors and the auditor and appoint and
determine the authorities and term of office of a manager on a temporary basis.

Chapter 4 – Audit Committee

Article 101
Pursuant to a resolution to be passed by the ordinary general assembly of the joint a stock
company, an audit committee shall be formed comprising members from among persons
other than the executive members of the board of directors, whether from among the
shareholders or others, provided its members be no less than three and no greater than five
and provided further that such resolution shall outline the committee’s tasks, the procedures
to be followed by the committee, and the members’ remuneration.

Article 102
For the meeting of the audit committee to be valid, it must be attended by the majority of its
members. Its resolutions shall be passed by the majority vote of the members present, and
in case of a tie vote, the side with which the meeting chairman votes shall prevail.

Article 103
The audit committee shall have the power to supervise the business of the company. To this
end, it may have access to the company’s records and documents and request any
clarifications or statements from the members of the board of directors or the executive
management. Further, it may request the board of directors to call a meeting of the
company’s general assembly if the board of directors obstructed its tasks or if the company
suffered severe loss or damage.

Article 104
The audit committee shall review the company’s financial statements and the auditor’s
reports and notes and give its comments thereon, if any. Further, the audit committee must
prepare a report including its opinion regarding appropriateness of the company’s internal
control system as well as the tasks it has carried out to the extent of its powers. The board of
directors shall file sufficient copies of such reports with the company’s head office at least
ten days before the scheduled meeting of the general assembly with a view to deliver a copy
of such report to those shareholders who desire to obtain the same. The report shall be
recited at the meeting of the assembly.

Chapter 5 – Bonds Issued by the Joint Stock Company

Subchapter 1 – Shares
Article 105
1. The shares of the company shall be of a nominal value and indivisible vis-à-vis the
company. If a share is jointly held by a number of persons, such joint holders shall
elect one person from among themselves to represent them in exercising the rights
attached to such share, provided that they be jointly responsible for all obligations
arising from the acquisition of such share.

2. The nominal value of a share shall be Ten Saudi Riyals. Upon agreement with the
Chairman, the Minister may alter such value.

3. A share may not be issued in an amount that is less than the nominal value thereof.
Nonetheless, a share may be issued in an amount greater than the nominal value
thereof, if the company’s bylaws provide so or subject to the consent of the general
assembly, in which case, the difference in value shall be carried to an independent
item within the shareholders equity, provided that such difference be not distributed
as profits to the shareholders.

4. The above provisions shall apply to the temporary certificates that were delivered to
the shareholders prior to issuance of shares.

Article 106
1) The shares of the company shall be issued in return for cash or in kind contributions.

2) The paid-up amount of the value of shares issued in return for contributions in kind
may not be less than one quarter of the nominal value thereof. The share certificate
shall indicate the amount paid up. In all events, the outstanding value shall be paid
up within five years from the date on which such share is issued.

3) Shares representing contributions in kind shall be issued upon payment of the full
value thereof, and they may be delivered to the holders thereof only after ownership
of such contributions is fully transferred to the company.

Article 107
1. Shares subscribed for by the founders will be negotiable only after publication of
financial statements for two consecutive fiscal years each consisting of at least
twelve months from the date of incorporation of the company. An annotation shall be
made on the certificates of such shares indicating their type, date of incorporation of
the company, and the period during which they shall remain non-negotiable (the
Prohibition Period).

2. During the Prohibition Period, title to shares may, in accordance with the provisions
governing sale of rights, be transferred from one subscriber to another or from the
heirs of a subscriber to a third party in case of the death of such subscriber or in case
 of attachment on the property of a bankrupt or insolvent founder, provided that
priority of acquisition of such shares be given to the other founders.

3. The provisions of this Article shall apply to shares subscribed for by the founders in
case of any capital increase before expiration of the Prohibition Period.

4. CMA may lengthen or shorten such Prohibition Period as set forth in Paragraph 1 of
this Article inasmuch as the companies intending to list their shares in the Capital
Market are concerned.

Article 108
The company’s bylaws may set forth restrictions on share dealings, provided that such
restrictions would not prohibit such dealings entirely.

Article 109
1) Shares of unlisted companies will be traded by way of entering them into a
shareholders register which the company prepares or cause to be prepared. Such
register shall include: the shareholders’ names, nationalities, professions, domiciles,
and addresses; the shares numbers; and the value paid up on such shares. An
annotation to that effect shall be made on the share certificate. Transfer of title to the
share shall be binding on the company or third parties only from the date of its entry
into said register.

2) Shares of listed companies will be traded in accordance with the provisions of the
Capital Market Law.

Article 110
Shares confer equal rights, coupled with equal obligations. All rights attached to a share
shall be recorded in the name of the shareholder including in particular the right to: receive a
certain percentage out of the net profits to be distributed and out of the company’s assets
upon liquidation; attend, participate in the deliberations of and vote on resolutions of the
shareholders meetings; transfer his shares; have access to the company’s books and
documents; monitor the tasks of the board of directors; institute an action for liability against
the members of the board of directors; and object to resolutions of the shareholders
assembly, all in accordance with such conditions and restrictions as set forth in the Law or in
the company’s bylaws.

Article 111
1. Where the company is a business concern that is gradually depreciable or is based
on interim rights, the company’s bylaws may provide for depreciation of shares
during the company’s lifetime,. Depreciation of shares can be recovered only from
the profits and the reserve that can be disposed of. Depreciation must be effected on
a consecutive basis by way of using the annual lottery method or any such other
method as would maintain equality between the shareholders.

2. Depreciation shall be effected by the company by way of purchasing its shares,

provided the purchase price be less than or equal to the value shares. The company
shall write off the shares so purchased.

3. Each shareholder whose shares have been depreciated shall be granted jouissance
shares. Shares that have not been depreciated shall be granted a percentage of the
 annual net profit greater than that given to the jouissance shares as set forth in the
company’s bylaws.

4. If the company ceases to exist, the holders of shares not depreciated shall have the
priority right to receive out of the assets of the company such amount as equal to the
nominal value of their shares.

Article 112
1. The company may purchase its shares or lodge them as security in accordance with
such controls as established by the Competent Authority. Shares so purchased by
the company shall have no votes in a shareholders meeting.

2. Shares may be pledged in accordance with such controls as established by the

Competent Authority. A secured creditor shall have the right to receive profits and
exercise such rights as attached to the share, unless otherwise agreed under the
pledge agreement. Nonetheless, a secured creditor shall not have the right to attend
or vote in the meetings of shareholders assembly.

Article 113
1. A shareholder shall exercise his voting rights in ordinary or special meetings in
accordance with the provisions of the company’s bylaws. Each share shall have one
vote in the shareholders meetings.

2. The company’s bylaws may determine the maximum limit of the votes of persons
holding several shares on behalf of third parties.

Article 114
The company’s extraordinary general assembly may - based on a certain provision set forth
in the company’s bylaws and in accordance with such principles as established by the
Competent Authority -: issue or decide to purchase preferred shares; convert ordinary
shares into preferred shares; or convert preferred shares into ordinary shares. Preferred
shares do not carry voting rights in the meetings of shareholders general assembly. Those
shares entitle their holders to receive a certain percentage out of the company’s net profits
after setting aside the statutory reserve, which percentage shall be greater than that given to
holders of ordinary shares,.

Article 115
Where there are preferred shares, no new shares having priority over preferred shares may
be issued, without the consent of a special committee comprising, according to Article 89 of
the Law, holders of preferred shares who are prejudiced by such issue, in addition to the
consent of a general assembly comprising holders of all classes of shares, unless the
company’s bylaws provide otherwise. This provision shall also apply upon any alteration or
cancellation of such priority rights as attached to preferred shares pursuant to the company’s
bylaws.

Article 116
1. If no profits are distributed for any fiscal year, profits for the next year will be
distributed only after payment of such percentage as set forth in Article 114 of the
Law to the holders of preferred shares in respect of that year.
 2. If, for three consecutive years, the company fails to pay out of the profits such
percentage as set forth under Article 114 of the Law, the special meeting of the
holders of such shares duly held in accordance with the provisions of Article 89 of the
Law may decide whether such holders can attend the meetings of the company’s
general assembly and participate in voting or appoint representatives to represent
them in the board of directors in proportion to the value of their shares in the capital
until such time when the company is able to pay all priority profits that are payable to
the holders of such shares for the preceding years.

Article 117
1. The shareholder shall pay the share value on such dates as set for payment thereof.
If the shareholder fails to pay such value on the maturity date, the board of directors
may, after serving a notice onto that shareholder in such manner as set forth in the
company’s bylaws or after notifying such shareholder by a registered letter, sell such
share at a public auction or in the Capital Market, as the case may be, all in
accordance with such controls as determined by the Competent Authority.

2. The company shall recover, out of the sale proceeds, such amounts as are due to it
and shall refund the balance to the holder of the share. If the sale proceeds fall short
of the amounts that are payable to the company, the company may recover the
unpaid balance out of the entire property of the shareholder.

3. Within a period ending on the auction day, a defaulting shareholder may pay such
amount as due from him plus such expenses as incurred by the company in this
regard.

4. The Company shall cancel the share so sold, issue the purchaser a new share
bearing the serial number of the cancelled share, and make an annotation in the
shareholders register reflecting such sale as well as the name of the new holder.

Article 118
The company may not request any shareholder to pay any amount exceeding the
contribution he, at the time when the share was issued, declared to make, even if the
company’s bylaws provide otherwise. No shareholder may apply for redemption of his
contribution in the capital. The company may not relieve any shareholder from his obligation
to pay the outstanding balance of the share value, and such obligation may not be set off
against any such entitlements as payable to the shareholder by the company.

Article 119
If a share certificate is lost or damaged, the holder thereof may request the company to
issue a duplicate certificate. The holder of such certificate must publish the number of the
lost or damaged certificate in a daily newspaper. If within thirty days from the publication
date no objection is filed, the company shall issue a new certificate indicating that such
certificate is a duplicate one. The holder of a duplicate share certificate shall have the same
rights and obligations that were attached to the lost or damaged certificate.

Article 120
1. Any person who objects to the issuance of a duplicate certificate must institute a
summary proceeding before the competent judicial authority within thirty days from
date of filing his objection, failing which such objection shall be null and void.
 2. The company must deliver the duplicate certificate to the rightful holder thereof, if the
summary proceeding is not instituted within the period set forth in the Paragraph 1 of
this Article or if a judicial judgment is issued to the effect that the objection is untrue.

Subchapter 2 – Debt Instruments and Financial Bonds

Article 121
Upon issuance of or when trading in debt instruments, the company must comply with the
rules of Islamic Law that are applicable to debts.

Article 122
1. A joint stock company may - in accordance with the Capital Market Law - issue
negotiable debt instruments or financial bonds.

2. A company may issue debt instruments or financial bonds that are convertible to
shares only after adoption by the extraordinary general assembly of a resolution
setting forth the maximum number of shares that can be issued in return for such
instruments or bonds, whether the company has issued such instruments or bonds
concurrently, or through a series of issues, or through certain scheme(s) for issuance
of debt instruments or financial bonds. The board of directors will, without the need to
obtain new consent from the extraordinary general assembly, issue - in return for
instruments or bonds whose holders want them to be converted - new shares at the
end of the conversion request period as specified for the holders of such instruments
or bonds. Further, the board will have the company’s bylaws amended to reflect the
number of the shares so issued as well as the capital.

3. The board of directors must publish an announcement regarding completion of

procedures relating to each capital increase in such manner as set forth in the Law
regarding publication of resolutions of the extraordinary general assembly.

Article 123
Subject to the provisions of Article 122 of the Law, the company may convert debt
instruments or financial bonds into shares in accordance with the Capital Market Law. In no
event may such instruments or bonds be converted in the following two cases:

1. If it is not permitted under the provisions governing the issue of debt instruments and
financial bonds to convert them into shares by increasing the capital of the company;
and

2. If such conversion is not acceptable to the holder of such instrument or bond.

Article 124
Every interested party may request the competent judicial authority to revoke any disposition
made in violation of the provisions of Articles 122 and 123 of the Law in addition to
compensating the holders of debt instruments and financial bonds for any damage sustained
by them.
Article 125
Resolutions adopted at meetings of the shareholders assembly shall be binding upon the
holders of debt instruments and financial bonds. Nonetheless, the shareholders assembly
may not alter the rights that are established for those holders absent such consent as issued
by them in a special meeting of their own, which meeting must be held in accordance with
the provisions of Article 89 of the Law.

Chapter 6 – Financial Position of the Joint Stock Company

Subchapter 1 – Company Accounts
Article 126
1. The fiscal year of the company shall be twelve months and such year must be set out
in the company’s bylaws. Apart from that, the first fiscal year shall be no less than six
months and no greater than eighteen months commencing on the date of registration
of the company in the Commercial Register.

2. The board of directors shall, at the end of each fiscal year, prepare the company’s
financial statements and a report on the company's activities and financial position
for the fiscal year then ended including such method as proposed for distribution of
profits. The board of directors shall put those documents at the disposal of the
auditor at least forty five days before the date set for the meeting of the general
assembly.

3. The chairman of board of directors, chief executive officer, and chief financial officer
shall sign the documents contemplated in Paragraph 1 of this Article. A copy of such
documents shall be filed with the company’s head office to be put at the disposal of
the shareholders at least 10 days before the date set for the meeting of the general
assembly.

4. The chairman of the board of directors shall provide the shareholders with the
company’s financial statements, the board of directors’ report, and the auditor’s
report, unless such documents have been published in a daily newspaper circulated
in the area where the company’s head office is situated. The board chairman must
send a copy of such documents to the Ministry - and a copy to the CMA, if the
company is listed in the Capital Market - at least fifteen days before the date set for
the meeting of the general assembly.

Article 127
Classification of the annual data of the financial statements for each fiscal year must be in
accordance with the same classification that was followed in the preceding years. Without
prejudice to the generally accepted accounting standards, the principles for assessment of
assets and liabilities shall remain unchanged.

Article 128
Within thirty days from date of approval by the general assembly of the financial statements,
the board of directors’ report, and the auditor’s report, the board of directors shall file copies
of such documents with the Ministry (and the CPA, if the company is listed in the Capital
Market).
Article 129
1. Subject to the provisions of such other laws as are relevant, an amount representing
10 % of the net profits shall be set aside for the formation of the statutory reserve.
The ordinary general assembly may resolve to discontinue such setting aside at such
time when the statutory reserve shall have reached an amount representing 30 % of
the paid-up capital. The company’s bylaws may provide for the setting aside of a
certain percentage of the net profits for the formation a contingent reserve to be
allocated for such purposes as set forth in the company’s bylaws.

2. Upon determination of dividends to be paid for each share out of the profits, the
ordinary general assembly may decide to form other reserves to such extent as
would serve the interests of the company or would ensure distribution to
shareholders of fixed profits as far as possible. The ordinary general assembly may
deduct from the net profits such amounts as required for the setting up of or providing
aid to social institutions for the company’s employees.

Article 130
1. The statutory reserve is used to cover the company’s losses or to increase its capital.
When such reserve exceeds 30 % of the paid-up capital, the ordinary general
assembly may decide to distribute the surplus to the shareholders in the years in
which the company does not realize such profits as sufficient for distributions of such
proportions as established for the shareholders under the company’s bylaws.

2. The contingent reserve may be used only pursuant to a resolution by the

extraordinary general assembly. Where such reserve is not intended for a specific
purpose, the ordinary general assembly may upon a proposal by the board of
directors decide to expend it in such manner as would inure to the benefit of the
company and the shareholders.

3. The ordinary general assembly may use the distributable retained earnings and
contingent reserves for repayment of the outstanding balance of the value of the
share or a fracture thereof, but without prejudice to equality between the
shareholders.

Article 131
1. The company’s bylaws shall set out the percentage to be paid to the shareholders
out of the net profits after the setting aside of the statutory reserve and other
reserves.

2. A shareholder will be entitled to his share in the profits in accordance with such
resolution as passed in this regard by the general assembly, which resolution shall
set the maturity date and distribution date. Shareholders registered in the
shareholders registers shall be entitled to the profits as at the end of the maturity
date. The Competent Authority shall determine the maximum limit of the period
during which the board of directors must implement the resolution of the ordinary
general assembly regarding distribution of profits to the shareholders.
 Subchapter 2 – Auditors
Article 132
The shareholders will monitor the company’s accounts in accordance with such provisions
as set forth in the Law and in the company’s bylaws.

Article 133
1. The Company shall have one auditor or more from among such auditors as licensed
to do business in the Kingdom. The ordinary general assembly will appoint the
auditor and determine his remuneration and term of appointment and it may re-elect
him, provided that the term of his appointment be no longer than five consecutive
years. Auditors who have completed such term may be reappointed two years after
the expiration of such term. The ordinary general meeting may at all times replace
the auditor without prejudice to his right to compensation if such replacement has
taken place in an untimely manner or is without cause.

2. The auditor may not be a founder of or a member of the board of its directors of the
company, nor may the auditor carry out any technical or administrative tasks in the
company or for its benefit, even if for sake of provision of advice. Further, the auditor
may not be a partner with or an employee of a founder of or a member of the board
of the directors of the company nor he may be a relative, to the fourth degree of
kinship, of such founder or member. Any act in violation of this provision shall be null
and void, and the auditor shall be obligated to refund to the Ministry of Finance any
amounts that were received by him.

Article 134
The auditor shall at all times have the right of access to the company’s books, records, and
other documents, and he may request such statements and clarifications as he may deem
necessary with a view toward verifying the company’s assets and liabilities including all
matters that are within the scope of his duties. The chairman of the board of directors must
enable the auditor to perform his duties. If the auditor encounters any hindrances in this
regard, he shall make mention of the same in a report to be submitted to the board of
directors and if the board fails to facilitate the auditor’s tasks, the latter must request the
former to call a meeting of the ordinary general meeting to discuss that matter.

Article 135
The auditor shall submit to the annual ordinary general assembly such report as prepared in
accordance with the generally accepted auditing standards including the company’s position
toward enabling him to obtain such information and clarifications as he requested as well as
such violations of the provisions of the Law and the provisions of the company’s bylaws as
discovered by him in addition to his opinion on to the fairness of the company’s financial
statements. Further, the auditor shall read his report in the meeting of the general assembly.
If the general assembly passes a resolution approving the board of directors’ report and the
financial statements without hearing the auditor’s report, such resolution shall be null and
void.

Article 136
1. The auditor may not disclose to any shareholders other than those attending a
meeting of the general assembly nor to a third party the company’s secrets that may
 become known to him by reason of his position as an auditor, failing which he must
be dismissed, in addition to claiming compensation from him.

2. The auditor shall be liable for pay compensation to the company, the shareholders,
or third parties for any damage arising from such errors as made by him in the course
of performance of his duties. Should there be more than one auditor and if they took
part in such errors, those auditors shall be held jointly responsible.

Chapter 7 – Change of the Company’s Capital

Subchapter 1 – Increase of Capital
Article 137
1. The extraordinary general meeting may pass a resolution to increase the company’s
capital, provided such capital has been fully paid-up. Nonetheless, it is not a
condition that the capital must have been paid-up if the unpaid portion of the capital
is related to shares that are issued in return for conversion of debt instruments or
financial bonds into shares and if the period specified for such conversion has not
expired.

2. In all events, the extraordinary general assembly may allot all or any of the shares
issued upon increasing the capital to the company’s employees and/or to the
employees of all or any of the company’s subsidiaries. In case such shares are
issued, the shareholders may not exercise their priority rights.

Article 138
The capital is increased in either one of the following ways:

a. Issuance of new shares in return for cash or in kind contributions;

b. Issuance of new shares for settlement of debts of specified amounts, which debts
have reached final maturity, provided that such issuance be at such value as
determined by the extraordinary general assembly after obtaining the opinion of an
accredited expert or appraiser and after preparation by the board of directors and the
auditor of a statement outlining the source and amount of such debts, which
statement must be signed by the board of directors and the auditor who must also be
responsible for the accuracy thereof;
c. Issuance of new shares to the extent of such reserve as the extraordinary general
assembly may decide to integrate in the capital, which shares must be issued in the
same form and manner of the outstanding shares and be distributed to shareholders
free of charge in proportion to the initial shares held by each one of them; or
d. Issuance of new shares in return for debt instruments or financial bonds.

Article 139
A shareholder who is the holder of the share shall, upon adoption by the general assembly
of a resolution approving a capital increase, have the right of priority to subscribe for such
new shares as issued in return for cash contributions. Such shareholders shall be notified of
such priority by publishing an announcement in a daily newspaper or by notifying such
shareholders, by registered letters, of the increase resolution and of the subscription terms
and conditions, as well as the subscription period and the dates of commencement and
expiry of subscription.
Article 140
If so provided in the company’s bylaws, the extraordinary general assembly may: suspend
the exercise by the shareholders of their priority rights to subscribe for the capital increase in
return for contributions in cash; or give priority to non-shareholders in such cases as, in the
opinion of such assembly, would serve the interests of the company.

Article 141
A shareholder may sell or waive the priority right during the period from the issuance date of
the general assembly’s resolution approving the capital increase to the last day of
subscription for the new shares that are related to such rights in accordance with such
controls as established by the Competent Authority.

Article 142
Subject to the provisions of Article 140 of the Law, the new shares shall be distributed to the
holders of priority rights who requested to subscribe to the extent of the priority rights they
hold out of the total priority rights arising from the capital increase, provided however that the
number of shares they will acquire be no greater than the new shares they have subscribed
for. The remaining balance of the new shares shall be distributed to the priority right holders
who have subscribed for shares exceeding their proportions, to the extent of the priority
rights they hold out of the total priority rights arising from the capital increase, provided
however that the number of shares they will acquire shall not exceed the number of shares
they have subscribed for. The remaining balance of the new shares shall thereafter be
offered for public subscription, unless otherwise determined by the extraordinary general
assembly or unless otherwise provided for in the Capital Market Law.

Article 143
The provisions governing assessment of in kind contributions that are made upon
incorporation of the company shall apply to such shares as issued in return for in kind
contributions that are made upon a capital increase, and the ordinary general assembly shall
replace the constituent assembly in this regard.

Subchapter 2 – Capital Reduction

Article 144
The extraordinary general assembly may pass a resolution to reduce the capital if it is in
excess of the company’s needs, or if the company incurs losses. It is in the latter case only
that the capital may be reduced to an amount below the amount set forth in Article 54 of the
Law. The reduction resolution shall be passed only after a reading of the auditor’s report
indicating the reasons necessitating such reduction, the obligations undertaken by the
Company, and the effect of that reduction on those obligations.

Article 145
If the capital reduction is due to the capital being in excess over the company’s needs, the
creditors must be invited to raise their objections thereto within sixty (60) days from the date
of publication of the reduction resolution in a daily newspaper circulated in the area where
the head office of the company is situated. If any creditor raises an objection and submits to
the company, within the above timeframe, the documents substantiating his claim, the
company must pay him his debt if it has reached final maturity or submit adequate security
for payment of that debt if it will reach maturity in the future.

Article 146
The capital is reduced in either one of the following ways:

1. Cancellation of a number shares equal to the amount to be reduced; or

2. Purchase by the company of a number of its shares equal to the amount to be
reduced, and cancellation of the shares so purchased.

Article 147
If the capital is reduced by way of cancellation of a number of shares, equality among
shareholders must be maintained, and the shareholders must submit to the company at such
time as determined by the company the shares to be cancelled, failing which such shares
shall be considered to be cancelled.

Article 148
1. If the capital is reduced by way of purchasing a number of shares for the purpose of
cancellation, the shareholders must be invited to offer their shares for sale. The
invitation notice must be sent by registered mail or be published in a daily newspaper
circulated in the area where the head office of the company is situated and such
notice must reflect the company’s desire to purchase such shares.
2. If the number of shares offered for sale is in excess of the number of shares to be
purchased by the company, the sale requests shall be reduced to the extent of such
excess.
3. The purchase price of the shares of unlisted companies shall be estimated at the fair
value of such shares. Shares of listed companies will be purchased in accordance
with the provisions of the Capital Market Law.

Chapter 8 – Dissolution of the Joint Stock Company

Article 149
If all of the shares of a joint stock company are passed to a sole shareholder who does not
meet the conditions set forth in Article 55 of the Law, the company solely shall be liable for
its debts and obligations. Nonetheless, such shareholder must align the position of the
company so that it be in harmony with the provisions set forth in this Part or he must convert
the company into a One Person Limited Liability Company during a period of time no greater
than one year, failing which the company shall be dissolved by operation of law.

Article 150
1. If at any time during the fiscal year the company’s losses reach an amount equal to
one half of the paid-up capital, any of the company’s executives or the auditor must,
as soon as such losses become known to them, notify the board chairman, who on
his turn must promptly notify the members of the board of directors of the same. The
board of director must within fifteen days from the date on which such losses become
known to them call a meeting of the extraordinary general assembly to be held within
forty five days from the date on which such losses become known to them in order to
resolve whether to increase or reduce the capital in accordance with the provisions of
the Law or to dissolve the company prematurely.
 2. The company will be deemed dissolved by operation of law if the extraordinary
general assembly: fails to hold a meeting during the period set forth in Paragraph 1 of
this Article; holds a meeting but it fails to pass a resolution regarding that matter; or
resolves to increase the capital in such manner as set forth in this Article but the
entire increase of the capital has not been subscribed for within ninety days from the
date of such increase resolution as adopted by extraordinary general assembly.

Part 6 – Limited Liability Company

Chapter 1 – General Provisions
Article 151
1. A limited liability company is a company in which the number of partners in it is no
greater than fifty. The financial liability of such company shall be independent from
that of each partner in it. The company alone will be liable for its debts and
obligations, and the owner of the company or a partner in it shall not be liable for
such debts and obligations.

2. If the number of partners becomes in excess of the number set forth in Paragraph 1
of this Article, the company must be converted into a joint stock company within a
period no greater than one year, failing which the company shall be dissolved by
operation of law, unless such excess is the result of inheritance or bequest.

Article 152
1. Each limited liability company shall have a name derived from its objects or an
innovative name. Such name may not include the name of a natural person, unless
(1) the object of the company is the investment of a patent that is registered in the
name of such person, (2) the company has acquired a commercial enterprise and
taken the name of that enterprise as a name for it, and (3) the name of the company
was the name of a company that was converted into a limited liability company and
its name included a name of a natural person. If the company is owned by one
person, its name must indicate that it is a One Limited Liability Company, failing
which Paragraph 2 of this Article shall be applied.

2. The managers of the company shall be held personally and jointly responsible for the
obligations of the company if the words “Limited Liability Company” are not written
down or if the amount of capital is not mentioned beside the name of the company.

Article 153
1. The objects of a limited liability company may not be the carrying on of any banking,
financing, saving, insurance, or funds investment activities for the account of third
parties.

2. A limited liability company may not resort to public subscription in order to raise,
increase, or reduce its capital or in order to procure a loan, nor may it issue any
negotiable bonds.

Article 154
1. Notwithstanding the provisions of Article 2 of the Law, a limited liability company may
be formed by a one person or all of its shares may inure to the benefit of one person,
in which case the liability of such person shall be to the extent of the amount he has
allocated for the formation of the company’s capital. Such person shall have such
 powers and authorities of the manager, the board of directors, and the partners
general assembly as set forth in this Part, and he may appoint one manger or more
to represent the company before judicial authorities, arbitration panels, and third
parties, which manager(s) will be responsible for the management of the company
toward the partner who is the owner of the company’s shares.

2. In no event may a natural person form or own more than a One Person Limited
Liability Company, nor may such company form or own another One Person Limited
Liability Company.

Article 155
The owner of a limited liability company shall be liable to the extent of his own property for
the obligations of the company toward third parties with whom such owner has dealt in the
name of the company in the following cases:

a. If such owner has, in bad faith, liquidated the company or suspended its activities
before expiration of the company’s term or before achievement of the objects for
which the company was formed;

b. If he makes no separation between the activities of the company and his other
activities;

c. If he carried on business for the account of the company before it has acquired its
legal personality.

Chapter 2 – Incorporation

Article 156
The articles of association of a limited liability company must be signed by all partners, and
such articles must include the following in particular:

a. Type, name, object, and head office of the company;

b. Partners’ names, domiciles, occupations, and nationalities;

c. Names of members of the supervisory board, if any;

d. Amount of capital and amount of cash and in kind contributions as well as a detailed
description of in kind contributions including their value and names of contributors
thereof;

e. Statement by the partners that all capital shares have been allocated and paid-up in
full;

f. Method of distribution of profits and losses;

g. Dates of commencement and expiration of the term of the company; and

h. Form of notices to be served by the company onto the partners.

Article 157
 1. Subject to the provisions of Article 14 of the Law, a limited liability company may be
incorporated only after distribution of all cash and in kind contributions to all partners
and after payment by the partners of the entire value of such contributions. The cash
contributions shall be deposited into an accredited bank, which bank may pay such
contributions only after consummation of the publication procedures and registration
of the company in the Commercial Register.

2. For assessment of in kind contributions, the provisions set forth for the assessment
of such contributions in respect of a general partnership shall be observed.
Nonetheless, the partners who have made such contributions shall be jointly
responsible, to the extent of their property, vis-à-vis third parties, for the fairness of
the assessment of such contributions as made by them, in which case no action for
liability that is instituted five years after the date on which the incorporation of the
company is announced and the company is registered in the Commercial Register in
accordance with Article 58 of the Law may be heard.

Article 158
Within thirty days from the incorporation of the company, the managers of the company shall
have the articles of association posted on the Ministry’s website, at the expense of the
company; and they must register the company in the Commercial Register. The same shall
also apply to any amendments to the articles of association.

Article 159
Any limited liability that is formed in violation of the provisions of Articles 153, 154, 156, and
157 of the Law shall be deemed to be a nullity. Nonetheless, the partners may not invoke
such nullity vis-à-vis third parties. If the annulment of the company is declared accordingly,
the partners who have caused the company to be a nullity must be jointly liable toward the
other partners and third parties for any damages sustained as a result to such annulment.

Chapter 3 – Capital & Shares

Article 160
The company’s capital as at the date of the incorporation of the company must be in such
amount as sufficient to achieve the objects of the company. The partners shall specify the
amount of capital in the company’s articles of association. The capital shall be divided into
shares of equal value. A share will be neither divisible nor negotiable. Where a share is
jointly held by a number of partners, the company may suspend the rights attached to such
share until such time when the partners elect one person from among them to be the sole
holder of such share vis-à-vis the company. The company may set a date for such election,
otherwise the company shall after that date sell such share for the account of the holders
thereof, in which case such share will be offered first to the other partners and then to third
parties in accordance with the provisions of Article 161 of the Law, unless the articles of
association provide otherwise.

Article 161
1. A partner may transfer his share to another partner or to a third party in accordance
with the provisions of the company’s articles of association. Nonetheless, if a partner
desires to transfer his share to another partner, whether for consideration or for no
consideration, he must notify the other partners, via the manager of the company, of
the terms and conditions of such transfer, in which case any partner shall have the
right to apply for redemption of that share at its fair value within thirty days from date
 of receiving a notice to that effect, unless the articles of association specify a certain
method of assessment or another period of time. If the redemption right is exercised
by more than one partner, the share(s) will be divided among the applicants for
redemption in proportion to their respective capital shareholdings. The redemption
right set forth in this Article shall not apply to transmission of shares by inheritance or
bequest.

2. If the period specified for exercising the redemption right lapses without any partner
having exercised such right, the holder of that share shall have the right to transfer it
to a third party.

Article 162
Unless the company’s articles of association provide otherwise, the company shall maintain
a special register including the names of partners, the number of shares held by each
partner, and transactions involving transfer of shares. Transfer of shares will be binding on
the company or third parties only if the cause necessitating such transfer is recorded in such
register. Further, the company must notify the Ministry of such transfer in order to record it in
the company’s registration.

Article 163
Unless the company’s articles of association provide otherwise, the shares shall carry equal
rights to the net profits and to the liquidation surplus.

Chapter 4 – Management

Article 164
1. The company shall be managed by a manger or managers from among the partners
or third parties. The partners shall appoint the manager or managers in the
company’s articles of association or in a separate contract of a specified or
unspecified term. Where more than one manager is appointed, a board of directors
may be formed.

2. The company’s articles of association or the partners’ resolution shall set out the
board of directors’ proceedings as well as the majority vote required for their
resolutions. The company shall be bound by the transactions of the managers to the
extent of the company’s objects.

Article 165
1. The partners may dismiss the manger or managers whether appointed in the
company’s articles of association or in a separate contract, without prejudice to their
right to compensation if such dismissal is without cause or has taken place in an
untimely manner.

2. The managers shall be jointly liable to pay compensation to the company, the
partners, or third parties for damage arising from any violation by the managers of
the provisions of the Law or the company’s articles of association or from their
mismanagement. Any provision to the contrary shall be null and void.

3. The consent of the partners to relieve the managers from liability shall not forfeit the
company’s right to institute an action for liability.
 4. Apart from cases of fraud or forgery, in no event any action for liability will be heard
after five years from the end of the fiscal year during which the wrongful act occurred
or after three years from expiration of the term of office of the concerned manger,
whichever is the later.

Article 166
A limited liability company shall have one auditor or more in accordance with the same
provisions that are applicable in this regard to a joint stock company.

Article 167
1. A limited liability company shall have a general assembly comprising all partners.

2. Meetings of the general assembly will be called by the manager or managers in such
manner as set forth in the company' articles of association, provided they be held at
least once a year during the four months following the end of the company’s fiscal
year.

3. A meeting of the general assembly may be called at any time upon the request of the
managers, the supervisory board , the auditor, or a number of partners representing
at least one half of the capital.

4. Minutes of meetings shall be prepared including a summary of the general assembly

deliberations. Such minutes as well as the general assembly’s resolutions or the
partners’ resolutions shall be recorded in a special register to be prepared for this
purpose by the company.

Article 168
1. Partners’ resolutions will be passed in the meetings of the general assembly.
Nevertheless, partners in a company where their number is more than twenty may
give their opinions separately, in which case the manager of the company will send to
each partner a registered letter including the proposed resolutions in order for such
partner to vote on them in writing.

2. In all cases, resolutions will be valid only if passed by the majority vote of the
partners representing at least more than one half of the capital, unless the company’s
articles of association require greater majority.

3. If during the first deliberation or consultation the quorum set forth in Paragraph 2 of
this Article is not present, the partners must be called to a meeting by way of
registered letters, unless the company’s articles of association provide otherwise.

4. Resolutions at the meeting referred to in Paragraph 3 of this Article shall be passed

by the majority vote of the shares represented thereat irrespective of the percentage
such shares represent in the company’s capital, unless the company’s articles of
association provide otherwise.

5. The company’s articles of association may specify any other method for invitations to
meetings or for service of resolutions.
Article 169
The agenda of the annual meeting of the shareholders general assembly must include the
following items:

a. Hear the managers’ report on the company’s activities and financial position during
the fiscal year, the auditor’s report, and the report of the supervisory board, if any;

b. Discuss and approve the financial statements;

c. Determine the percentage of profits to be distributed to the partners;

d. Appoint and determine the remuneration of the company’s managers and members
of the supervisory board, if any;

e. Appoint and determine the remuneration of the auditor; and

f. Such other matters as are within the powers of the assembly pursuant to the Law or
pursuant to the company’s articles of association.

Article 170
1. The partners general assembly may not deliberate on any matters other than those
listed in the meeting agenda, unless certain facts are disclosed during the meeting,
which facts need to be discussed.

2. If a partner wants a certain matter to be included in the agenda, the managers of the
company must grant such request, failing which such partner shall have the right to
appeal to the assembly.

Article 171
Each partner shall have the right to discuss the items included in the meeting agenda of the
partners’ general assembly, and the company’s mangers must reply to questions by the
partners to such extent as would not jeopardise the interests of the company. If a partner
believes that the reply to his question is insufficient, he may appeal to the assembly.

Article 172
1. If the number of partners is in excess of twenty, the company’s articles of association
must stipulate that a supervisory board comprising not less than three partners be
appointed for a certain term of office. If such excess occurs after incorporation of the
company, the partners general assembly must as soon as possible arrange for such
appointment.

2. The general assembly may reappoint the members of the supervisory board upon
expiration of the term of their office or it may replace them by members from among
the partners. Further, the assembly may at any time dismiss such members for
cause. In no event may the managers of the company vote on the election or
dismissal of the members of the supervisory board.

3. The supervisory board shall supervise the activities of the company and give advice
regarding matters brought before them by the company’s manager(s) as well
 transactions that may not be made without the prior consent of the supervisory
board.

4. At the end of each fiscal year, the supervisory board must submit to the partners’
general assembly a report reflecting the results of their supervision of the company’s
activities.

5. Members of the supervisory board shall not be answerable for the acts or
consequences of the acts of the manager(s), unless such members were aware of
any misconduct and failed to notify the general assembly of the names of parties
involved in such misconduct.

Article 173
1. Each partner shall have the right to take part in the deliberations and in voting and to
have a number of votes equal to the number of shares held by him. No agreement to
the contrary may be made.

2. Unless the company’s articles of association provide otherwise, each partner may
give a written authorization to another partner to attend and vote in the partners
meetings on his behalf.

3. A non-manager partner in companies having no supervisory boards may give advice

to the managers, and he or his authorized representative may request to have
access, in the company’s head office, to the company’s transactions and examine its
books and documents during fifteen days preceding the date set for bringing the
annual final accounts of the company before the partners. Any provision to the
contrary shall be null and void.

4. Any person who receives any information, pursuant to this Article, shall maintain
confidentiality of such information and he may not use the same for any purpose that
would cause damage to the company or to any of the partners in the company and
he shall be liable for any damages arising from his failure to comply with the same.

Article 174
1. Subject to consent of all partners, the nationality of the company may be changed or
the capital be increased by increasing the nominal value of the partners shares or by
issuing new shares and obligating the partners to pay the value of such increase in
proportion to their respective shareholdings in the capital.

2. In respect of matters other than those set forth in Paragraph 1 of this Article, the
company’s articles of association may be amended by the majority vote of partners
representing at least three fourths of the capital, unless such articles provide
otherwise.

Article 175
1) Within three months from the end of each fiscal year, the company’s managers shall
prepare financial statements for the fiscal year then ended and a report on the
company’s activity and financial position and their proposals regarding distribution of
profits.
 2) The company’s managers shall send to the Ministry and to each partner a copy of the
documents contemplated in Paragraph 1 of this Article, a copy of the report of the
supervisory board, if any, and a copy of the auditor’s report within one month of the
date of preparation of such documents. Each partner may call a meeting of the
partners’ general assembly to deliberate on the documents referred to in this Article.

Article 176
A limited liability company shall in each year set aside at least 10 % of its net profits for
formation of a statutory reserve. The partners may resolve to discontinue such setting aside
at such time when the statutory reserve shall have reached an amount representing 30 % of
capital.

Article 177
The partners’ general assembly may pass a resolution to reduce the capital if it is in excess
of the company’s needs, or if the company sustains losses representing less than one half of
the capital, in accordance with the following conditions:

a. Within sixty (60) days from date of publication of the reduction resolution in a daily
newspaper circulated in the area where the head office of the company is situated,
the company’s creditors must be invited to raise their objections to such resolution. If
any creditor raises an objection and submits to the company, within the above
timeframe, the documents substantiating his claim, the company must pay him his
debt if it has reached final maturity or submit adequate security for payment thereof if
it will reach maturity in the future.

b. The partners shall submit to the Ministry a draft amendment to the company’s articles
of association regarding capital reduction accompanied with a detailed statement to
be certified by the company’s auditor including names and addresses of the creditors
of the company including those who have opposed to the capital reduction and those
whose debts have reached final maturity and been paid up in addition to those to
whom adequate security for payment of their debts that will reach final maturity in the
future have been submitted. Such statement shall also be accompanied with a
declaration by the partners reflecting their joint liability for debts not appearing in said
statement.

c. If no debts are due from the company, the partners may submit to the Ministry a
declaration certified by the auditor reflecting their joint liability for any debts that may
appear, in which case the partners will not be required to invite the creditors, and the
procedures for capital reduction can be carried out.

Article 178
1. Without prejudice to the rights of bona fide third parties, any resolution passed by the
partners general assembly in violation of the provisions of the Law or the company’s
articles of association shall be a nullity. Nevertheless, the right to apply for annulment
may be exercised only by such partners who have objected to such resolution or
have been unable object to it after becoming known to them. If such resolution is
ruled a nullity, it shall be null and void inasmuch as all partners are concerned.

2. No action for annulment will be heard one year after issuance of the resolution
referred to in Paragraph 1 of this Article.
 Chapter Five – Dissolution

Article 179
Unless otherwise provided in its articles of association, a limited liability company will not be
dissolved upon the death, interdiction, or withdrawal of any partner or upon declaration by
him of his bankruptcy or insolvency.

Article 180
1. Unless otherwise provided in the company’s articles of association, the term of the
company may be extended before its expiration to another term pursuant to a
resolution passed at the general assembly by any number of partners holding one
half of the shares representing the company’s capital, or by the majority of the
partners.

2. If no resolution to extend the term of the company is passed and the company
continues its operations, the term of the company shall be extended for a new similar
term pursuant to the provisions set forth in the articles of association.

3. A partner not desiring to remain a partner in the company may withdraw from the
company. The shares of such partner will be assessed in accordance with the
provisions set forth in Article 161 of the Law, in which case extension of the term of
the company will be effected only after sale of such partner’s share to the other
partners or to a third party, as the case may be, and after payment to the withdrawing
partner of the value of that share, unless such partner and the other partners agree
otherwise.

4. A third party having an interest in the non-extension of the term of the company may
object to and insist that such extension will not be binding on him.

Article 181
1. Where the losses of a limited liability company become equal to one half of its
capital, the managers of the company must record this development in the
commercial registration and call the partners to a meeting within a period no greater
than ninety days from the date on which the managers become aware that the losses
have reached that percentage in order to determine whether the company shall
continue to exist or be dissolved.

2. The partners’ resolution regarding continuation or dissolution of the company shall be

published in such manner as set forth in Article 158 of the Law.

3. The company shall be deemed to be non-existent by operation of law if the

company’s managers fail to invite the partners or if the partners fail to pass a
resolution regarding continuation or dissolution of the company.
 Part 7 – Holding Company

Article 182
1. A holding company is a joint stock company or a limited liability company targeted at
controlling other joint stock companies or limited liability companies (called
subsidiaries) by acquiring more than one half of the capital of or having control over
formation of the board of directors of such subsidiaries.

2. The type of the company and the word “Holding” must be added to the name it takes.

Article 183
The objects of a holding company are:

a) Mange its subsidiaries or participate in the management of other companies in which

it is a shareholder and provide such support as necessary to such subsidiaries or
companies;

b) Invest its properties in shares and other financial instruments;

c) Acquire such real estates and moveable properties as required for the carrying on of
its activity;

d) Provide loans, guarantees, and funds to its subsidiaries;

e) Acquire and utilize industrial property rights including patents, trade and industrial
marks, franchises, and other intangible rights and lease the same to its subsidiaries
or to other companies; and

f) Any other lawful object that is in harmony with the nature of that company.

Article 184
No subsidiary may acquire stocks or shares in the holding company. Any transaction for
transfer of shares or stocks from a holding company to its subsidiary shall be a nullity.

Article 185
A holding company shall at the end of each fiscal year prepare consolidated financial
statements covering such company and its subsidiaries in accordance with the generally
accepted accounting standards.

Article 186
A holding company shall be governed by the provisions set forth in this Part and by other
provisions of the Law that are consistent with the provisions of this Part depending on the
type of the company.
 Part 8 – Conversion & Merger of Companies
Chapter 1 – Conversion of Companies
Article 187
1. A company may convert into a company of another type pursuant to a resolution to
be passed in accordance with the provisions governing amendments to such
company’s bylaws or articles of association, subject to satisfaction of all requirements
of incorporation, publication, and registration in the Commercial Register applying to
the type to which the company will be converted. The provisions of Article 107 of the
Law shall apply to the shareholders in the company if it is converted into a joint stock
company, provided that the Prohibition Period commence on the date of the
resolution approving the conversion of the company. Nonetheless, if the conversion
of the company coincides with any increase to its capital by way of public
subscription, such prohibition will not apply to the shares so subscribed for.

2. Partners or shareholders who have objected to the conversion resolution may apply
for withdrawal from the company.

3. Without prejudice to such requirements of incorporation, publication, and registration

as are applicable to a joint stock company, any general partnership, limited
partnership, or limited liability company may convert into a joint stock company if
such conversion is requested by partners who hold more than one half of the capital,
unless a lesser percentage is set forth in the articles of association of such
partnership or company, provided that the shares in the company applying for
conversion be held by relatives even if to the fourth degree of kinship. Any provision
to the contrary shall be null and void.

Article 188
The conversion of the company may not lead to the creation of a new legal person, and the
company shall maintain the rights and obligations existing before such conversion.

Article 189
Conversion of a general partnership or a limited partnership shall not constitute cause for
relieving the general partners from their liability to the partnership’s debts existing before
such conversion, unless the creditors explicitly agree to such relief or unless no creditor
objects to the conversion resolution within thirty days from date on which such creditor is
notified of such resolution by a registered letter.

Chapter 2 – Merger of Companies

Article 190
Subject to the provisions of relevant laws, a company may, even if still under incorporation,
merge into another company of a similar or different type.

Article 191
1. A merger is accomplished when one company or more join with another existing
company or when two companies or more are mixed to form a new company. The
merger agreement shall include: the terms and conditions of such merger; the
method for assessment of the merged company’s property; and the number of the
 merged company’s shares or stocks in the capital of the merging company or the
company originating from the merger.

2. A merger will be effective only after assessment of the net assets of the merged
company and the merging company, in case the full or partial valuable consideration
for the stocks or shares of the merged company takes the form of stocks or shares in
the merging company.

3. In all cases, a merger resolution must be passed by each party to the merger in
accordance with the same requirements to be met in respect of any amendment to
the articles of association or bylaws of each party to the merger.

4. A partner who is a holder of shares or stocks in the merging company as well as in

the merged company may only vote on the merger resolution that is passed by one
of these two companies.

Article 192
All rights and obligations of the merged company shall pass to the merging company or to
the company originating from the merger upon completion of the merger procedures and
registration of the company in accordance with the provisions of the Law. The merging
company, or the company originating from the merger, shall be deemed to be the successor
of the merged company to the extent of such assets as transferred to the merging company
or the company originating from the merger, unless otherwise agreed in the merger
agreement.

Article 193
1. The merger resolution will be effective thirty days after publication thereof.

2. The creditors of the merged company may within the above timeframe object to the
merger pursuant to registered letters addressed to that company, in which case the
merger shall be suspended until such time when the objecting creditor waives his
objection or when such company pays the debt in case it has reached final maturity
or submits sufficient security to pay that debt in case it will reach final maturity in the
future.

Part 9 – Foreign Companies

Article 194
Without prejudice to agreements between and by the government and certain foreign
companies, and apart from the provisions governing incorporation of companies, the
provisions of this Law shall apply to the following foreign companies:

1. Companies doing business inside the Kingdom, whether through branches, offices,
agencies, or any other forms; and

2. Companies having their seats in the Kingdom for representation of business carried
on, administered, or coordinated by them outside the Kingdom.

Article 195
Foreign companies may establish branches, agencies, or offices for them inside the
Kingdom only after issuance to them of a licence by the Saudi Arabian General Investment
Authority as well as by the competent [government] agency having the authority to organize
and supervise the type of activity or business carried on by foreign companies inside the
Kingdom. Further, foreign companies may issue or offer financial instruments for
subscription or sale inside the Kingdom only pursuant to the Capital Market Law.

Article 196
The Saudi Arabian General Investment Authority shall provide the Ministry a copy of the
licence issued by it and a true copy of the company’s articles of association and bylaws.

Article 197
A licensed foreign company may carry on its activities and operations only after it has been
registered in the Commercial Register.

Article 198
Each branch, agency, or office of a foreign company must print, on all of its papers,
documents, and printed matter, its address in the Kingdom in addition to the company’s full
name, address, and head office and the name of the agent, in Arabic.

Article 199
The branch, agency, or office of a foreign company must prepare financial statements
covering its activity in the Kingdom in accordance with the generally accepted accounting
standards in addition to the external auditor’s report thereon and it must file those
documents with the Ministry within six months from date of the end of the fiscal year of the
activity of such branch, agency, or office.

Article 200
The branch, agency, or office of a foreign company inside the Kingdom shall be deemed to
be the domicile for such company in respect of its activities and operations in the Kingdom
and all applicable laws shall apply to such branch, agency, or office.

Article 201
If a foreign company carried on its activities and operations before completion of its license
procedures or before its registration in the Commercial Register; or it carries out activities
that are beyond the scope of the licensed ones, the foreign company as well as the persons
who have carried on such activities shall be jointly answerable for that.

Article 202
Where a foreign company is existing in the Kingdom for the purpose of execution of specific
works within a specified time, its licence and registration in the Commercial Register shall be
on a temporary basis and such licence and registration shall expire in conjunction with the
completion of such works, and such company will be deregistered upon settlement of its
entitlements and obligations in accordance with the provisions of the Law and other
applicable laws.

Part 10 – Liquidation of Companies

Article 203
1. Once dissolved, a company will enter into the phase of liquidation and it will retain its
legal personality to such extent as required for its liquidation.
 2. The powers of the company’s managers shall cease upon the dissolution of the
company. Nevertheless, such managers will continue to manage the company. They
shall be deemed, as regards third parties, to be the liquidators of the company until
such time when a liquidator is appointed.

3. All assemblies of the company shall remain active during the liquidation period and
their role shall be limited to exercising such powers as not inconsistent with those of
the liquidator.

4. A partner shall have the right of access to all of the company’s documents, which
right is vested in such partner under the Law or under the company’s articles of
association or bylaws.

Article 204
Unless the company’s articles of association or bylaws specify or unless the partners agree
on the method of liquidation of the company upon its dissolution, liquidation of the company
shall be accomplished in accordance with the provisions set forth in the Law.

Article 205
1. The Liquidation process shall be accomplished by one liquidator or more from among
the partners or from among third parties.

2. The judicial liquidation resolution will be issued by the competent judicial authority.
The voluntary liquidation resolution shall be passed by the partners or by the general
assembly. If the partners do not agree on any of the things contemplated in
Paragraph 3 of this Article, such things will be undertaken by the judicial authority.

3. The judicial or voluntary liquidation resolution shall include the appointment of the
auditor, determination of the auditor’s powers and remuneration in addition to any
restrictions on such powers, and the liquidation period. The liquidator shall publish
the resolution in the same manner as required for publication of amendments to the
company’s articles of association or bylaws.

4. The period of a voluntary liquidation shall be no more than five year and it may be
extended only by a judicial order.

Article 206
Where several liquidators are appointed, they must operate collectively. Their transactions
will be valid only if approved by all of them, unless they are authorized to operate individually
whether pursuant to the resolution under which they are appointed or by their appointers
They shall be jointly liable for damages sustained by the company, partners, or third parties
as a result to any transactions that are beyond the scope of their powers or as a result to
such wrongful acts as committed by them in the performance of their duties.

Article 207
1. Subject to such restrictions as set forth in the liquidation resolution, the liquidator
shall represent the company before judicial authorities and third parties and he shall
perform all such transactions as required for liquidation of the company, namely
conversion of the company’s assets into cash and sale of the company’s moveable
 or immoveable properties by public auction or in any other manner by which the best
available price can be achieved.

2. The liquidator may not sell the company’s properties in block, nor may he advance
such properties as a contribution in another company, unless authorized to do so by
his appointer.

3. The liquidator may not start new business unless such business is requisite for
completion of a previous one.

4. Transaction made by the liquidator to the extent of his powers shall be binding upon
the company.

5. The powers of the liquidator shall cease upon expiration of the liquidation period
unless such period is extended in accordance with the provisions of the Law.

Article 208
1. The liquidator shall be pay off the debts of the company, if such debts have reached
final maturity, and he shall set aside such amounts as required for payment of
disputable debts or debts that will reach final maturity in the future.

2. Debts arising from the liquidation process shall have priority over other debts.

3. Upon settlement of debts, the liquidator shall return to the partners the value of their
shares in the capital and, thereafter, distribute to them the surplus in accordance with
the provisions of the articles of association of the company. If no provisions in this
regard are set forth in such articles, the surplus shall be distributed to them in
proportion to their capital contributions.

4. If the surplus of the company’s assets is insufficient for payment of the value of the
partners’ shares, the losses will be distributed among them in accordance with such
percentages as determined for distribution of losses.

Article 209
1. In cooperation with the company’s auditor, if any, the liquidator shall make an
inventory of the company’s assets and liabilities within three months from the date of
commencement of his task, which period may be extended by the appointer of the
liquidator, when necessary.

2. The company’s managers or members of the board of directors shall provide the
liquidator such company’s books, records, documents, clarifications, and statements
as required by the liquidator.

3. At the end of each fiscal year, the liquidator shall prepare financial statements and a
report on the liquidation transactions including his notes and observations on such
transactions and the reasons why such transactions were hindered or delayed, if any,
in addition to his proposals for extending the period of liquidation. The liquidator shall
submit to the Ministry a copy of those documents and bring the same before the
partners or the general assembly for approval in accordance with the company’s
articles of association or bylaws.
 4. Upon completion of the liquidation process, the liquidator shall submit a detailed
financial report including such liquidation transactions as made by him. The
liquidation will cease upon ratification of such report by the appointer of the liquidator.

5. The liquidator shall publish a notice regarding completion of the liquidation process in
the same manner as required for publication of amendments to the company’s
articles of association or bylaws.

Article 210
Apart from cases of fraud or forgery, no action may be heard against the liquidator by reason
of the liquidation process OR against the partners by reason of the company’s business OR
against the company’s managers, members of the board of directors, or the auditor by
reason of their offices after lapse of five years from date of publication of the notice
regarding completion of the liquidation process in accordance with the provisions of Article
209 of the Law and after deregistration of the company in accordance with the Commercial
Registry Law or after three years from date of completion by the liquidator of the liquidation
process, whichever is the later.

Part 11 – Penalties
Article 211
Without prejudice to any such harsher penalty as set forth in other laws, a penalty of not
more than five years imprisonment and / or a fine of not more than Five Million Saudi Riyals
(SR 5,000,000) will be imposed on:

a. Any manager, executive, member of a board of directors, auditor, or liquidator who

has entered any false or deceptive details in the financial statements or in the reports
prepared by him for submission to the partners or to the general assembly OR who
has failed to include in such financial statements or reports substantial facts with the
intent to conceal the company’s financial position from the partners or others;

b. Any manager, executive, or member of a board of directors who uses the property of
the company with the intent to: achieve personal goals; act in favour of a certain
company or person; or gain benefit from a certain project or transaction in which he
has a direct or indirect interest, knowing that such use is in conflict with the interests
of the company;

c. Any manager, executive, or member of a board of directors who uses the powers he
enjoys or the votes he has by reason of his office with the intent to: achieve personal
goals; act in favour of a certain company or person; or gain benefit from a certain
project or transaction in which he has a direct or indirect interest, knowing that such
use is in conflict with the interests of the company;

d. Any manager, responsible officer, member of a board of directors, or auditor who

fails to call a meeting of the company’s general assembly or a meeting of the
partners, or fails to take such action as required therefor, as the case may be, upon
knowing that the losses have reached the percentages set out in the provisions of
Articles 150 and 181 of the Law OR who fails to publish a notice regarding such
development in accordance with the provisions of Article 181 of the Law;

e. Any liquidator undertaking the responsibility of liquidating the company who uses the
company’s property, assets, or receivables knowing that such use is in conflict with
 the interests of the company or will intentionally cause harm to the partners or the
creditors, whether with the intent to: achieve personal goals, favour a certain
company or person, or gain benefit from a project or transaction in which he has a
direct or indirect interest, or if his disposition of the company property is being made
with a view toward giving a preference to one creditor over another creditor for
collection of his entitlements unrightfully.

Article 212
Without prejudice to any such harsher penalty as set forth in other laws, a penalty of not
more than one year imprisonment and / or a fine of not more than One Million Saudi Riyals
(SR 1,000,000) will be imposed on:

a. Any company’s auditor who fails to notify the company, via bodies or persons in
charge of the company’s management, of any violations that are discovered by him
during performance of his duties, which violations appear to him as including criminal
violations;

b. Any government official who discloses to other than competent authorities the
company’s secrets that have become known to him by reason of his office;

c. Any person appointed for inspection of the company who intentionally mentions in his
reports false facts or intentionally fails to mention material facts that may impact on
the result of such inspection;

d. Any person who, for any reason whatsoever, announces, disseminates, or discloses,
via any means [of communication] whatsoever, [any information] that would mislead
others into believing that a company that is still unregistered has been registered;

e. Any person who, for the purpose of inducing subscriptions or for collection of the
shares values, disseminates, contrary to fact, names of persons under the pretext
that such persons are or will be correlated to the company in any manner
whatsoever;

f. Any person who intentionally records in the company’s articles of association,

bylaws, other documents, the application for incorporation licence, or in the
attachments to such application false information or any information in violation of the
provisions of the Law, in addition to any person who has signed or caused such
documents to be published despite his knowledge thereof;

g. In respect of any assessment of in kind contributions or any distribution of shares to

the partners or payment of the entire value thereof, any partner or third party who has
knowingly exaggerated or submitted false reports, whether at the time when the
company was formed, the capital was increased, or distribution of shares to partners
was adjusted;

h. Any person who falsely impersonates a shareholder or a partner; or who, as a result

to such impersonation, has voted in the meetings of shareholders or partners in
person or by proxy;

i. Any person who employs the company for any object other than the objects for which
the company has been licensed.
Article 213
Without prejudice to any such harsher penalty as set forth in other laws, a fine of not more
than Five Hundred Thousand Saudi Riyals (SR 500,000) will be imposed on:

a. Any person who in bad faith agrees upon the distribution of or distributes or receives
profits or proceeds in violation of the provisions of the Law or the company’s articles
or bylaws, including any auditor who ratifies such distribution despite his knowledge
of such violation;

b. Any member of the board of directors who intentionally hinders a meeting invitation
or the convening of the general assembly;

c. Any person who agrees to be appointed as a joint stock company’s board member or
managing director or who agrees to remain a board member in violation of the
provisions set forth in the Law, including any member of the board of directors of a
company in which such violations are committed, if such member has knowledge of
the same;

d. Any member of a joint stock company’s board of directors who receives from the
company any security or loan in violation of the provisions set forth in the Law, and
any chairman of the board of directors of a company in which such violations are
committed, if such chairman has knowledge of the same;

e. Any person who agrees to perform or to continue performance of the duties of an

auditor despite his knowledge of the reasons that would prevent him from
performance of such duties under the provisions of the Law;

f. Any person who intentionally and contrary to the provisions of the Law prevents a
shareholder or a partner from participating in a shareholders or partners assembly or
from exercising the voting rights attached to stocks or shares or from exercising such
rights in his capacity as a partner;

g. Any person who receives or is promised to receive or is given security to receive

benefits in return for voting in favour of a certain matter or for abstaining from voting
as well as any person who grants or promises or warrants to grant such benefits;

h. Any person who breaches his duty to call a meeting of the shareholders or partners
general assembly within such timeframe as set forth in the provisions of the Law;

i. Any person who breaches his duty to cause the financial statements of the company
to be published in accordance with the provisions of the Law;

j. Any person who does not make the required documents available to the shareholder
or the partner in accordance with the Law;

k. Any person who breaches his duty to provide the Ministry such documents as set
forth in the Law;

l. Any person who does not cause the minutes of meeting to be prepared and written
down in accordance with the provisions set forth in the Law;
 m. Any person who impedes or causes to be impeded the duties of persons who are
legally authorized to have access to the company’s papers, instruments, accounts,
and documents; or who refuses to enable such authorized persons to perform their
duties.

n. Any person who breaches his duty regarding dissemination of the company’s articles
of association or registration of the company in the Commercial Register, and any
person who fails to disseminate any amendment to the company’s articles of
association or bylaws or to amend the details of the company’s commercial
registration in accordance with the Law;

o. Any liquidator who fails to announce the liquidation or completion of the liquidation in
accordance with the provisions set forth in the Law;

p. Any person who breaches his duty to write down any of the details set forth in Article
15 of the Law;

q. Any auditor who violates any of the provisions of the Law;

r. Any company which - or any executive of a company who – does not comply with the
laws and decisions relating to the company’s business and activity and does not
comply with such instructions, circulars, or controls as issued by the Competent
Authority, without giving reasonable reasons for such non-compliance.

Article 214
In case of recidivism, the penalties prescribed for such crimes and violations as set forth in
Articles 211, 212, and 213 of the Law will be doubled. Within the meaning of the Law, a
“recidivist” is any person who recommits the crime or violation of which he was convicted
pursuant to a final judgment within three years from the date of that judgment.

Article 215
The Bureau of Investigation and Public Prosecution shall have the power to undertake the
task of investigation and prosecution in respect of such acts as punishable under Articles
211 and 212 of the Law.

Article 216
The Competent Authority may impose the penalties prescribed for the violations set forth in
Article 213 of the Law. Any person against whom a penalty decision has been issued may
appeal from such decision before the competent judicial authority.

Article 217
If no action is instituted against the person who commits the punishable acts set forth in
Articles 211 and 212 of the Law, the Bureau of Investigation and Public Prosecution may
institute an action against the company to obtain a judgment against the company for
payment of such fine as prescribed;

Article 218
Application of penalties set forth in this Part shall be without prejudice to the right of any
person to claim compensation from whoever causes any harm to him due to commission of
any of the crimes or violations set forth in this Part.
 Part 12 – Concluding Provisions

Article 219
Without prejudice to the provisions of the Law and to such powers as vested in the Saudi
Arabian Monetary Agency under the provisions of the relevant laws, namely the Banking
Control Law, Cooperative Insurance Control Law, and Finance Companies Control Law,
CMA shall have the power to supervise and scrutinize the listed joint stock companies and to
issue rules regulating their business, including organising merger transactions to which a
listed company is a party.

Article 220
Subject to the provisions set forth in Article 219, the Competent Authority shall have the
power to scrutinize companies inasmuch as implementation of the provisions set forth in the
Law or in the company’s articles of association and bylaws is concerned, including the power
to inspect the company and examine its accounts and to request from the company’s board
of directors or from its managers such information as the Competent Authority may deem
appropriate via one representative(s) from among its employees or via such expert as it may
elect for this purpose.

Article 221
Inasmuch as the tasks set forth in Article 220 of the Law are concerned, all executives of the
company must give the representatives of the Ministry - and of the CMA, where the company
is listed or seeks to be listed in the Capital Market - access to all such company’s books,
records, and documents as requested by them and provide those representatives all
information and clarifications related thereto.

Article 222
Employees in respect of whom a nomination decision is issued by the Competent Authority
shall act as criminal investigation officers to prove crimes that are committed in violation of
the provisions of the Law and they may, for this purpose, seize documents and records
which are, in their opinion, related to such crimes.

Article 223
The competent judicial authority shall determine all civil or criminal actions as well as
disputes arising from implementation of the provisions of the Law and impose such penalties
as prescribed for violations of the provisions of the Law.

Article 224
Companies existing as at the effective date of the Law shall adjust their positions to align
with the provisions of the Law within a period no longer than one year commencing on the
effective date of the Law. Apart from that, the Ministry and the CMA Board, each to the
extent of their jurisdiction, shall within that period determine the provisions governing such
companies.

Article 225
1. Pursuant to a decision by the Minister, guidance forms of articles of association and
bylaws for all types of companies shall be issued within one hundred and twenty
 days from the date of issuance of the Law. Such forms shall be posted on the
Ministry’s website and be applied with effect from the effective date of the Law.

2. The Minister and the CPA Board shall, each to the extent of their jurisdiction, issue all
that is required for implementation of the provisions of the Law.

Article 226
The Law shall replace the Companies Law promulgated by Royal Decree No. M/6 dated
22/03/1385 H and it shall supersede all provisions that are inconsistent therewith.

Article 227
The Law shall come into effect one hundred and fifty days following the date of its
publication in the Official Gazette.