DEFINITIONS & GENERAL PROVISIONS
Upon application of the provisions of this Law, each of the following words and phrases shall have the meanings identified next to each, unless the context requires another meaning:
The Minister: The Minister of Economy and Commerce;
The Administration: The relevant administrative unit at the Ministry;
The Authority: The Qatar Financial Markets Authority;
The Financial Market: The market licensed by the Authority to deal in financial securities;
The Company’s Contract: The Articles of Association;
Governance: The system through which the commercial companies are managed and controlled. The rules of governance shall determine the distribution of rights and liabilities among the companies’ stakeholders such as the Board of directors, the managers, the shareholders, and the other stakeholders. Such system shall state the rules and procedures relevant to the decision-takings vis-à-vis the Company’s affairs;
The Underwriter: An accredited bank in the State, or one of the companies licensed for the undertaking purpose.
The Commercial Company is a Contract by which two or more natural or artificial persons commit that each participates in a project that seeks profit by offering a share of money or work and partaking the profits and losses of the project.
The Company may be composed of one person in accordance with the provisions of the Part 8 of the present Law.
The Company that will be established in the State should take any of the following forms:
1- Joint Liability Company;
2- Limited Partnership;
3- Particular Partnership Company;
4- Public Joint-stock Company;
5- Private Joint-stock Company;
6- Partnership Limited by Shares;
7- Limited Liability Company;
Except for the Particular Partnership, the Company’s Contract, and any of the amendments thereto, shall be written in Arabic and legalised; otherwise, such Contract or the amendments thereto shall be nullified.
The legalisation procedures of the Companies’ Contracts shall be specified through a resolution by the competent authority in coordination with the Minister.
The Company’s Contract and any of the amendments thereto may be accompanied with a translation of another foreign language. In case of differences, priority shall be given to the copy written in Arabic.
Either the partner’s share shall be an amount of money (money share) or in kind (in-rem share) serving the Company’s objectives and it can also be a work done by the partner himself. However, the partner’s share could not be the reputation or power he enjoys.
Only the cash and in-rem shares shall form the capital of the Company.
If the partner’s share is an ownership right or other in-rem rights, the partner shall be considered responsible – in conformity with the rules applied to the sale Contract – for the share warranty in case of utter destruction, maturity, or the existence of a defect or fault therein.
If the share is only for making use of money, the applicable rules on lease Contracts shall be applied on the matters stated in the previous paragraph.
If the partner’s share included third-party rights, the partner’s liability towards the Company shall not be cleared until these rights are fulfilled, or unless otherwise agreed on.
If the partner’s share is his work, then any earning from this work shall be of the Company’s right, unless the partner has gained such earning by a Patent Right, unless otherwise agreed on.
The partner whose share is his work could not practice the same work for his private account or third party account unless otherwise agreed on.
The personal creditor of any partner may not claim his right from his debit share of the Company’s capital; however, he may claim it from the mentioned debit share of the profit, in accordance with the Company’s balance sheet. If the Company is dissolved, the creditor’s right shall be transferred to his debtor’s share of the Company’s financial surplus after paying up its debts.
If the partner’s share is represented in given shares, his personal creditor shall be entitled, in addition to the rights indicated in the previous paragraph, to initiate a lawsuit before the competent court in order to have these shares sold and to have his right from the proceeds of such sale fulfilled, and may request the imposition of precautionary attachment thereon in order to ensure his rights owed by the debtor.
The Company’s Contract may not include a provision that deprives any of the partners from his right in profit or exempts him from loss or otherwise it shall be nullified.
Nevertheless, it may be stipulated to exempt the partner, whose share is his work, from sharing the loss.
If the Company’s Contract does not determine the partner’s quota of profit or loss, his quota will be inasmuch as his share in its capital.
If the Contract is limited to determining the partner’s quota of profit, his quota of loss will be equivalent to that of profit, so is the case if the Contract is limited to determining his quota of loss.
If the partner’s share is limited to his work and his quota of profit or loss is not determined in the Company’s Contract, the Company will value his work as a basis to determine his quota of profit or loss with respect to the preceding controls.
In case of multiple partners, offering their work and the quota of each is not determined; those quotas shall be deemed equal unless proved otherwise.
If the partner offers a cash or in-rem share in addition to his work, he shall be entitled to a quota in profit or loss for his share of work and another for his share in cash or in-rem.
All Contracts, correspondences, clearances, notices, and other papers issued by the Company must include its name and declare its form, headquarter, and registration number in the commercial register.
Except for the Joint-Liability Company and the Limited Partnership, such information shall include the value of the Company’s share capital and the amount paid up thereof.
If the Company is undergoing liquidation, this should be mentioned in the papers issued.
Except for the companies being subject to Qatar Central Bank’s control, the Minister shall render decrees to regulate the private joint-stock companies’ governance. As for the public joint-stock companies listed in the Financial Market, the Authority shall render the decrees regulating their governance.
In all circumstances, the Company’s Board of directors shall be required to enforce the decrees governing the aforementioned governance, taking into consideration the companies’ incorporation documentations shall not include any articles being in contradiction with such decrees.
THE JOINT-LIABILITY COMPANY
The name of the Joint-Liability Company consists of the names of all the partners. Its name may be limited to the name of one partner or more with the addition of the word “and Co.” The name of the Company should match reality, so if it includes the name of a non-partner person with his knowledge, this person will be jointly responsible for the Company debts. Nevertheless, the Company’s name may keep the name of a partner who has withdrawn or died if agreed by the withdrawing partner or the heirs of the late partner.
The Company may have a specific trade name provided that it is associated with what identifies it as a Joint-Liability Company.
The Joint-Liability Company’s Contract shall include the following:
1- The Company’s name, object, headquarter, and branches (if available);
2- Each partner’s name, profession, title, and surname, nationality and his date and place of birth;
3- The Company’s capital and the share each partner is committed to submit, whether in cash, in kind, or rights with third parties. The estimated value of these shares, mode of submission and date of maturity;
4- The date of establishing the Company and its term;
5- Method applied in managing the Company and a statement of the names of those who are authorised to sign for the Company and the extent of their powers.
6- The beginning and ending date of the Company’s fiscal year.
7- The procedure applied in distribution of profit and loss.
The Company’s Contract as well as any amendments thereto should be declared through registration at the commercial registry. A summary of the Company’s Contract and any amendments thereto should be published, on the Company’s expense, in any of the daily local newspapers issued in Arabic.
Third parties shall not be alleged for the presence of the Company except as from the date of fulfilling the registration and publishing requirements. Lawsuits filed by the Company against third parties shall be refused if these procedures were not fulfilled.
Nevertheless, third parties could hold firmly to the existence of the Company even though it did not fulfil the requirements of registration and publishing.
Shares of a Joint-Liability Company could not be relinquished unless all the partners agree or in consideration of the conditions cited in the Company’s Contract, in which case, the Contract is to be amended and the relinquishment is to be declared in conformity with the provisions of Article 25 hereof.
Any agreement that decrees the unconditional relinquishment of shares shall be deemed void. Nevertheless, the partner may relinquish to third party the rights related to his shares in the Company. This agreement will not have any effect except between its two parties.
The Company creditors have the right to claim on the Company’s money, and also have the right to claim on any of the partners’ private money.
All the partners are jointly committed towards the Company’s creditors.
It is not permissible to levy execution on the partner’s moneys owing to the Company’s obligations unless after obtaining a peremptory judgment against the Company, and noticing it of clearance and its abstention of settlement in the appropriate time.
The judgment passed on the Company is considered an allegation against the partner.
If one of the partners settled a debt for the Company, then he may claim on the Company for what he settled, and he may claim on the other partners each inasmuch as his share of debt be. If one of the partners was insolvent, the partner who settled the debt and all the rest solvent partners will bear the consequences of this insolvency each according to his share.
Without other partners’ consent, the partner my not practice – to his or to others’ benefit – any activity similar to the Company’s activities or be a partner in a competing Company of a Joint-Liability Company, a Limited Partnership By Shares, a Limited Liability Company, or a Private Joint-Stock Company.
If this is breached by any of the partners, the Company may claim him for compensation, and the transactions he executed for his benefit will be considered as executed for the Company’s benefit.
Resolutions in a Joint-Liability Company are issued by the unanimous vote of the partners, unless it is stipulated otherwise in the Company’s Contract.
Nevertheless, the resolutions pertaining to amending the Company’s Contract shall not be valid unless the partners issue them unanimously.
If case of multiple directors, where each is assigned to practice a certain specialty, each director shall be only liable for the works under his specialty.
If case of multiple directors, and it was stipulated that they collectively perform the administrative works, their decisions are invalid unless they were made unanimously or by the majority stipulated in the Company’s Contract.
Nevertheless, every director may single-handedly carry out the urgent works, which if missed, might inflict significant damages to the Company or the loss of a significant profit.
If case of multiple directors where the Contract does not determine the specific specialty of each and it was not stipulated that they co-jointly work, each may carry out any of the administration works provided that third parties have the right to object the work before being accomplished. In this case, the decisive criterion shall be by the majority of the directors’ opinions. If opinions were equal, the issue is to be raised to the partners.
If the director was a partner appointed in the Company’s Contract, he could not be dismissed except by partners’ unanimity, or by a court sentence upon the request of the majority of partners.
The dismissal of the director in any of these two cases shall result in the Company’s dissolution, unless it is stipulated otherwise in the Company’s Contract.
If the director is a partner appointed in a Contract separate from the Company’s Contract or is a non-partner, being appointed in the Company’s Contract or by a separate Contract, he may be dismissed by a resolution of the majority of the partners. In which case the Company shall not dissolve.
If the director is a partner appointed in the Company’s Contract, he could not leave off administration for unacceptable reasons otherwise he will be responsible for the compensation. His resignation will result in the appointment of a new partner in his stead unless it is stipulated otherwise in the Company’s Contract.
If the director is a partner appointed in a separate Contract, or he is a non-partner who is assigned either in the Company’s Contract or in a separate Contract, he could leave off administration provided that he chooses the right time for quitting and notifies the partners before a reasonable period of time not less than sixty days unless it is stipulated otherwise in the Company’s Contract. Otherwise, he will be responsible for the compensation.
The director may practice all the regular works conforming to the Company’s object, and may reconcile the Company’s rights or demand arbitration if for the Company’s interest, unless the Company’s Contract restricts his power in this respect.
The Company shall be committed by each work done by the director in its name within the limits of his powers, even if the director used the Company’s signature to his account, unless the one he Contracted with is ill intentioned.
The director could not perform works that are beyond the ordinary works of administration unless he obtains the partners’ consent or by virtue of an explicit clause stipulated in the Contract. This ban is particularly effective in the following cases:
1- Donations, except those small regular donations;
2- Selling the Company’s real estates, unless the disposal is included within the Company objectives;
3- Mortgaging the Company’s real-estates even if he is authorised by the Company’s Contract to sell the real estates;
4- Selling or mortgaging the Company’s store;
5- Warranting others’ debts.
The director is not permissible to Contract with the Company to his own account unless with a written permission from all the partners on a case-by-case basis.
He is also not permissible to practice an activity similar to the Company’s unless by a written consent by all the partners.
Profits, losses, and each partner’s share therein shall be determined at the end of the Company’s fiscal year based on the Company’s balance sheet, and the profit and loss statement.
Every partner is considered a creditor of the Company in his share of profits as soon as this share is identified upon balance sheet approval.
What has been decreased of the Company’s capital due to the loss shall be compensated by the profits of the following years unless it is agreed otherwise. Other than that, the partner could not be obliged to compensate the decreased amount in his share of capital, resulting from the losses, unless with his consent.
THE LIMITED PARTNERSHIP COMPANY
The Limited Partnership is a Company that consists of two kinds of partners:
1- The active partners, those who run the Company, and will be jointly responsible, in their own money, for all its obligations;
2- The dormant partners, those participating in the Company’s capital without being responsible for the Company’s obligations except up to the value of the money they offered or to the extent of funds they are committed to pay to the Company.
The name of the Limited Partnership should only include the names of the active partners, with an addition of what indicates the existence of other partners.
It could have a private trade name provided that it is associated with what indicates that it is a Limited Partnership.
The name of the dormant partner should not be included in the Company’s name. If included, with his knowledge, he will be jointly responsible for its obligations with respect to the bona fide parties.
The dormant partner could not interfere in the Company’s administration even by virtue of a power of attorney. Otherwise, he will be jointly responsible for the obligations resulting from his administrative works, and he may commit to all or some of the Company’s obligations in accordance with the magnitude and frequency of works and in accordance with others’ confidence in him due to these works.
However, observing the behaviour of the Company’s directors, presenting opinions, or permitting them to act beyond their authorities, is not considered as an interference.
The resolutions of the Limited Partnership are passed by the unanimity of opinions of active partners, unless it is stipulated otherwise in the Company’s Contract.
The resolutions pertaining to the amendment of the Company’s Contract are considered void unless they were passed by the unanimity of opinions of all active and dormant partners.
THE PARTICULAR PARTNERSHIP
The Particular Partnership’s Contract determines its objective, the partners’ rights and obligations, method of distributing profits and losses among them, method of running the Company, in addition to other basic elements.
The Particular Partnership Contract could be proved by all means including evidence and proof.
Every partner remains the owner of the share he committed to offer, unless it is stipulated otherwise in the Company’s Contract.
If the share is a specific share in-rem, and its owning partner was declared bankrupt, then its owner has the right to redeem it from the bankruptcy after settling his share in the Company’s losses.
However, if it was a money share or non-partitioned fungibles, its owner may not share the bankruptcy being a creditor for the share’s value after deduction of his quota of losses.
Third parties could only recourse to the partner or partners whom they dealt with.
However, if a partner performed a work that reveals the existence of the Company, it may be considered, in his respect, as a real Company where all partners are jointly responsible towards him.
The resolutions at the Particular Partnership are issued by partners’ unanimity unless it is stipulated otherwise in the Company’s Contract.
The resolutions pertaining to the amendment of the Company’s Contract are considered void unless they were made by the unanimity of partners’ opinions.
PUBLIC JOINT-STOCK COMPANY
Every Public Joint-Stock Company shall have a name that indicates its objectives. Its name might not be of that of a natural person unless the Company’s objective is an exploitation of a Patent registered in the name of that person, or if the Company owned a commercial establishment and used the name of that establishment as its name.
In all circumstances, the phrase: “Qatari Public Joint-Stock Company” is to be added to its name.
The Public Joint-Stock Company should be of a limited period to be mentioned in its Contract and Articles of Incorporation. The Company’s period may be extended by virtue of an extraordinary General Assembly’s resolution.
If the Company’s objective is to fulfil a certain task, the Company will expire by its completion.
The Company’s capital must be sufficient to accomplish the objective behind its establishment.
In all cases, the capital of the Company should not be less than ten million Riyals.
ESTABLISHING THE COMPANY
The Public Joint-Stock Company shall be established by not less than five founders.
The Company shall subscribe its shares for initial public offering (IPO) within sixty days as from the date of its establishment. Should the Company not offer its shares with this prescribed period, it shall be terminated by the rule of law; and it is so if its founders do not amend the Company’s Contract and Articles of Incorporation and transform it into another type of the companies provided for in the Law within thirty days as from the expiration date of the period of IPO subscription, the founders shall bear the costs of such transformation, including the fees and monetary penalties to be imposed by the Ministry. The founders shall be liable in all their monies for the Company’s liabilities for such period.
In pursuance of the provisions of Article 66 hereof, the founders should conclude, among each other, the Company’s Contract and its Articles of Incorporation in accordance of the two forms to be decreed by the Minister, and where these two forms shall not be contradicted unless for serious reasons to be sanctioned by the administration.
They should include the following information:
1- The Company’s name and headquarter thereof;
2- The Company goal of its establishment;
3- The names, nationalities, addresses, and professions of the founders and the number of shares underwritten by each of them;
4- The value of the Company’s authorised capital (if any);
5- The value of the Company’s issued capital, and the number, kind and at-par value of shares it is divided to, and the paid-up value thereof;
6- The Company’s duration;
7- A statement of each non-monetary share, and the name of its presenter, all the conditions pertaining to presenting it, and the rights in-rem imposed on this share;
8- An approximate report about the amount of expenses, fees, and costs the Company pays or is committed to pay due to its establishment.
The request for Company establishment is to be submitted to the Ministry attached with copies of the Company’s Contract and Articles of Incorporation drafts.
The Administration may ask for any additional statements it deems necessary, and the supporting documents of these statements; it may also request to examine the economic feasibility study of the project.
The Administration is permissible to request amendments to the drafts of Company’s Contract and Articles of Incorporation so that they comply with the provisions of this Law and the two forms indicated in Article 69 herein.
In case the request for establishment is refused or the expiration of the period stipulated in the previous article without having a reply, the founders may complain before the Minister within thirty days effective on the date of being notified about the refusal decision or the expiration of the duration indicated accordingly.
The Minister shall consider the complaint within thirty days as of the date of its submission. Those whose request is refused shall be notified via any means of knowledge. The lapse of this duration without a reply shall be deemed an implicit refusal thereof. The decision in this respect is considered peremptory.
The resolution of establishing the Company must be published in the official gazette annexed with the Company’s Contract and Articles of Incorporation. The Company does not acquire its artificial personality unless after being declared.
Declaration is completed by registration in the commercial register and publishing in the official gazette altogether.
The founders shall subscribe for shares, not less than 20%, nor more than 60% of the Company’s capital.
However, none of the founders shall have the right to subscribe for the shares being underwritten in the IPO during the establishment phase. Before calling the public to subscribe for the Company’s shares, the founders shall submit to the Administration a certificate from the bank proving that they have already deposited, in the Company’s account, the amounts equal to the percentage to be paid by the public for each share upon subscription, along with the draft subscription prospectus, which will be prepared by the founders in accordance with the provisions of Article 77 hereof.
After satisfying the above-mentioned conditions, the Administration shall authorise to publish the subscription prospectus in two daily local newspapers, where one of which shall at least be in Arabic and on the Company’s website if any.
The invitation for public underwriting will be through publishing an advertisement in two daily local newspapers, one of which shall at least be issued in Arabic before at least one week from the beginning of the underwriting. The underwriting circular should include the following information:
1- The names and nationalities of the founders;
2- The name of the Company, its objective and headquarter;
3- The value of the Company’s authorised capital (if any);
4- The value of the Company’s issued capital, the paid-in amount thereof; the kind, at-par value, and number of shares offered for the public underwriting or the amount of shares underwritten by founders and the restrictions imposed on the share trading;
5- The stocks in-rem, and related information and its decided rights if available;
6- The particular peculiarities granted to the founders or to third parties if available;
7- Mode of allocating profits;
8- Estimation of the Company’s establishment expenses;
9- The founders’ settlement of the required percentage of the value of shares they underwrote;
10- Minimum number of shares a person may underwrite in, and the maximum with what does not exceed the percentage determined for the founder;
11- Date, duration, place, and conditions of underwriting;
12- Date of issuing the resolution that permits the establishing of the Company;
13- Mode of allotment of shares on underwriters in case the underwriting exceeds the number of floated shares;
14- Any other issues that affect the rights and obligations of shareholders;
15- Any other data for the determination of which a decree by the Minister will be rendered;
The founders or their representatives shall sign the invitation to underwriting. They will be jointly responsible for the authenticity and fulfilment of the above-mentioned information.
The announcement shall be annexed with a report signed by the auditor stating that he has examined the announcement, and has reviewed and certified the information it includes.
In case of the existence of a website for the Company, the data of underwriting shall be posted thereon, where the website domain address shall be listed in the announcement provided for in this article.
The subscription of the shareholder should be undertaken by a declaration he signs on the subscription application where he mentions the number of the shares he underwrote and his acceptance to the Company’s Contract and Articles of Incorporation and his chosen domicile in the state provided that it is in Qatar, and any other needful information as viewed necessary by the underwriter.
The underwriting should be absolute and not conditional; any condition made by the underwriter is considered invalid.
The subscriber shall submit the subscription application to the underwriting bank and pays the required instalments against a receipt signed and approved by the underwriting bank showing the name of the subscriber, his chosen address, the date of underwriting, the number of underwritten shares, and the paid instalments.
The underwriting shall be considered peremptory upon the subscriber’s takeover of this receipt.
A printed copy of the Company’s Contract is given to every subscriber and this is affixed in the receipt of underwriting.
Any concerned party may obtain during the period of underwriting a printed copy of the Company’s Articles of Incorporation free of charge, or for a reasonable fee determined by the underwriting prospectus.
In case of the existence of a website for the Company, a copy of the Company’s Contract and Articles of Incorporation shall be posted thereon.
The subscription shall remain open for a period neither less than two weeks nor more than four weeks.
In the event that no offered shares are sold within the period set for subscription, the founders shall have the right, after obtaining the Administration’s approval, to extend the period for not more than two weeks. However, in the event the offered shares are not sold at the end of the said period, the founders shall abstain from establishing the Company or reduce its capital by the amount that is not subscribed for, in compliance with the provisions of Article 65 hereof.
In the event it appears, after closing the subscription period, that the number of the subscribed shares exceeded the number of the offered shares, the shares shall then be distributed to the subscribers in accordance with the content provided for in the subscription prospectus.
In all cases, the exceeding funds resulting from the subscription and the proceeds realized shall be returned to the shareholders through the underwriting banks in which they had subscribed within a period not exceeding two weeks as from the date of closing the subscription.
During the period stipulated in the previous article, the founders shall invite the subscribers to hold a Constituent General Assembly, in pursuance of the statuses established for the invitation of the General Assembly after taking the Administration’s approval, given that the date of holding the meeting shall be within thirty days as of the date of addressing the invitation. A copy of the invitation shall be sent to the Administration in order to dispatch a representative thereof to attend the meeting.
This assembly shall be appropriately held upon the presence of shareholders representing at least half of the capital. The meeting shall be chaired by the person, who is elected by the founders.
The founders shall submit to the Constituent General Assembly a report that includes sufficient information about the incorporation process with all the supporting documents.
The Constituent Assembly shall look particularly into the following matters:
1- Determination of those selected from the founders about the process of incorporation and the expenses it required;
2- Ratification of the Company’s Articles of Incorporation;
3- Election of the members of the first Board of Directors and the appointment of the auditors and determining their fees;
4- Legalizing the assessment of shares in-rem if available;
5- Announcing the final establishment of the Company.
The Constituent General Assembly shall issue its resolutions by the absolute majority of the shares that are correctly represented in conformity with the provisions hereof.
The first Board of Directors shall undertake the procedures of declaring the Company in conformity with the provisions hereof. The members of the first Board of Directors shall be jointly responsible for the damages resulting from not fulfilling the procedures of declaration indicated.
As soon as it is declared, the sequels of actions done by the founders for its account before declaration shall be transferred to the Company.
The Company bears all the expenses paid by the founders in this respect.
If the Public Joint-Stock Company is illegally established, any concerned party, within six months since its establishment, may give it notice of the necessity for rectification within one month since the date of notice. If the Company has not initiated the required rectification during this period, such party may request the judgment of nullifying and liquidating the Company assuming it as a de facto Company.
However, the shareholders could not allege against third parties with the invalidity of the Company.
THE BOARD OF DIRECTORS
An elected Board of Directors shall manage the Public Joint-Stock Company. The Company’s Articles of Incorporation shall determine the mode of its election, the number of its members, and duration of its membership provided that the number of its members shall be not less than five and not more than eleven.
The duration of membership should not be for more than three years except for the first Board of directors, whose membership may be five years.
A member of the Board of directors may be re-elected more than once unless the Company’s Articles of Incorporation stipulate otherwise, or if the member fails to reserve any condition of those provided for in Article 97 hereof.
The member of the Board of Directors may withdraw from the Board provided that it is done in a suitable time; otherwise, he will be responsible before the Company.
The General Assembly elects the members of the Board of Directors by secret ballot. With an exception of that, the first Board of Directors may be appointed by the founders. Upon voting for the election of the Board of Directors, each share shall have one vote, which to be given by the shareholder to the favourable candidate. The shareholder may allocate his voting vis-à-vis his shares amongst more than one candidate. He may not vote vis-à-vis one share for more than one candidate. Voting for electing the members of the Board of directors in the Public Joint-Stock Companies listed in the financial market shall be conducted in accordance with the governance system drawn up by the Authority.
In case of the expiration of the duration of the Board of directors prior to ratifying the Company’s financial statements by the General Assembly, the duration of the Board shall be extended until the date whereat the ordinary general assembly is convened.
The member of the Board of Directors is conditioned:
1- to be not less than twenty-one years old, and to possess the full capacity;
2- not to be previously convicted of a criminal penalty, or in a dignity or honesty beaching crime, or any of the crimes stipulated in Articles 334 and 335 hereof, or to be adjudicated bankrupt unless he was rehabilitated;
3- to be a shareholder, and holds a number of the Company’s shares determined by its Articles of Incorporation. These shares should be deposited within sixty days since the membership, in any of the accredited banks. Its deposit should continue without being subject to trading, mortgage, or seizure until the end of the membership duration and the ratification of budget of the last fiscal year during which the member was fulfilling his work.
The shares mentioned earlier in the foregoing Paragraph shall be allocated for warranting the rights of the Company, shareholders, creditors and third parties for the responsibility lying on the members of the Board of Directors. If the member did not submit the guarantee in the way mentioned, his membership is invalid.
One-third of the members of the Board of directors may be amongst the experienced non-shareholding dependent members, who shall be relieved from the condition of holding the shares provided for in Clause No 3 hereof.
If the member of the Board of directors is disqualified from any of such conditions, the capacity of membership shall be deprived as from the date of the deprivation of such condition.
Except for the state representatives in the Public Joint-Stock Companies, or the persons owning capital shares of at least 10% of these companies, none in his personal capacity or in the capacity of being the representative of any artificial person, could either be a member in the Board of Directors of more than three Joint- Stock Companies whose headquarters located in the state, nor the Chairman or the deputy chairman of the Board of Directors in more than two companies whose headquarters located in the state.
In all cases, none, whether in his personal capacity or in the capacity of being a representative of any artificial person, could be a managing director to more than one Company whose headquarter located in the state; or to conjoin the membership in the Board of Directors of two companies of similar activity.
The membership of the Board of Directors of companies that exceed the quorum determined in this Article shall be invalid with respect to the historic sequence of this membership. Accordingly, the member should return all payments to the Company or companies of which his membership is invalid.
The Board of Directors elects by secret ballot the Chairman and the deputy chairman for one year, unless the Company Articles of Incorporation determines another duration, yet the duration should not exceed three years.
The Board of Directors may elect by secret ballot a member or more managing directors, who have the right to sign for the Company jointly or severally depending on the Board resolution.
If the position of the Board of Directors member becomes vacant, it will be occupied by the person who got more of the shareholders’ votes and did not obtain the Board of Directors membership. If he had obstacles not to occupy it, then it will be occupied by the subsequent; and the new member only completes the period of the previous member.
In case there is no person to occupy the vacant position, the Board of Directors shall remain with the remaining number unless this number is less than five members.
However, if the vacant positions make up one fourth of the original positions or if the number of the remaining members is less than five ones, then the Board of Directors has to call for a meeting of the General Assembly within two months since the vacancy of the last position to elect who will occupy the vacant positions.
The Chairman of the Board of Directors is the head of the Company, and he represents it before third parties and before the courts. He should execute the resolutions of the Board and abide by recommendations thereof. The Chairman of the Board of Directors could delegate some of his powers to another member of the Board.
At the absence of the Chairman, the deputy chairman shall substitute for him.
The Board of Directors shall meet by an invitation from its Chairman as per the conditions stipulated in the Company’s Articles of Incorporation. The Chairman has to call for a meeting upon the request of at least two of the members.
The meeting is not valid unless at least half of the members attend it, provided that the attending members should not be less than three, unless the Company Articles of Incorporation stipulate a greater number or proportion.
The Board of Directors should meet at least six times during the Company’s fiscal year unless the Articles of Incorporation stipulate a higher number of meetings. Participation in the meetings of the Board of Directors may be conducted via secured means of the generally-accepted modern technologies; that enable the participant to actively hear and take part in the Board’s agenda.
A period of more than three months may not elapse without holding the Board meeting.
Another member of the Board could represent an absent member, in writing, in presence and voting, while any member cannot represent more than one member.
The majority of the present and represented members shall make the Board resolutions. When the votes are equal, the party, which is favoured by the Chairman, shall predominate.
The member, who did not agree on any resolution made by the Board, could record his objection in the meeting minutes.
The Board of directors may, in case of exigency or urgency reasons, issue a circular resolution provided that all the members of the Board of directors approve in writing, given such resolutions shall be presented in the Board’s successive meeting and shall be noted down in the meeting minutes.
The minutes of the Board of Directors meetings shall be recorded in a particular register, and shall be signed by each of the Chairman, the managing director (if any), and the member or employee carrying out the works of the Board Secretariat.
The meetings’ minutes are regularly affixed in the register after every meeting on consecutive pages.
The Company shall abide by the works done by the Board of Directors within the limits of its competencies.
The Company is accountable for compensation for damages resulting of the illegal works practiced by the Board members.
The General Assembly may dismiss the Chairman of the Board of Directors or any of its members by virtue of a suggestion made by the absolute majority of the Board of Directors, or upon a request signed by a number of shareholders who own not less than one fourth of the capital underwritten.
In the latter case, the Chairman of the Board should call for the meeting of the General Assembly within ten days effective on the date of submitting the request for dismissal; otherwise, the Administration would call the for the meeting itself.
Every fiscal year, the Board of Directors shall prepare the Company’s balance sheet and profit and loss statement and cash flow statement and the notes in comparison with the previous fiscal year: all of which shall be approved by the Company’s auditors who shall prepare a report about the Company’s activities and financial position throughout the bygone year, and the future plans for the coming year.
The Board shall prepare these reports and documentations within an utmost period of three months since the end of the Company’s fiscal year. They are to be submitted to the meeting of the shareholders’ General Assembly that should be held within an utmost period of four month since the date of the ending of the Company’s fiscal year.
The Board of directors shall invite all the shareholders to the General Assembly meeting by publication of the invitation in two local daily newspapers, one of which shall at least be issued in Arabic and on the website of the Financial Market and the Company’s website (if any).
Such invitation shall be published at least 15 days prior to the date of the General Assembly meeting. The invitation shall also contain an adequate summary of the agenda of the general assembly meeting, together with all the documents and data as set forth in the preceding Article and the auditor’s report.
A copy of the invitation shall be sent to the Administration at the same time such invitation is sent to the newspapers.
The Board of Directors annually shall put, at the shareholders’ disposal, for their own examination before the convention of the General Assembly, which is called to look into the Company’s balance sheet and the Board of Directors’ report before at least one week, a detailed statement that includes the following information:
1- All the money obtained by the Chairman and every Board member of the fees and salaries and the attendance consideration for the Board of Directors sessions and the incurred-expense allowances and any other funding with whatsoever capacity;
2- In-rem and cash perquisites for the Chairman of the Board or each Board member during the fiscal year;
3- The remunerations that the Board of Directors suggests to be distributed among the Board members;
4- Amounts to be earmarked for every present Board member;
5- Transactions in which any of the Board members or the directors have interest that opposes that of the Company;
6- Amounts actually spent for any kind of advertisement with the details related to each amount;
7- Donations with a report about the donated parties and justifications and details.
Concerning banks and other financial institutions, this statement should be annexed with the auditors’ report certifying that the monetary loans, credits, or guarantees submitted to the Chairman or Board members during the fiscal year that have been done without breaching the provisions of Article 110 of this law.
The Chairman of the Board of Directors and any of the members should sign the indicated detailed statement. The Chairman and the members of the Board of Directors are responsible for executing the provisions of this Article and for the authenticity of information mentioned in all its papers.
THE GENERAL ASSEMBLY
The General Assembly shall be held by an invitation for meeting by the Board of Directors at least once per annum at the place and date to be specified by the Board of Directors after the approval of the Administration. The meeting should be held within the four months following the end of the Company’s fiscal year.
The Board of Directors may invite for the assembly convention whenever necessary.
The Board of Directors should invite the General Assembly for convention when requested by the auditor. If the Board did not call for a meeting within fifteen days since the submission of the request, the auditor has the right to call for a meeting directly after the approval of the Administration, which shall give its say in the request within fifteen days as from the date of its receipt.
The Board of Directors also has to call the General Assembly for convention upon the request, for serious reasons, of a shareholder or shareholders who own at least 10% out of the capital within a period not less than fifteen days since the date of request submission. Otherwise, the Administration will approve the request of the shareholders through calling for this meeting on the Company’s expense within fifteen days since the date of receiving the request. In both cases, the agenda is limited to the request issue.
Taking into consideration the provisions of both Articles 88 and 124 of this law, the Administration shall call for the convention of the Company’s General Assembly in the following cases:
1- If thirty days have elapsed since the date determined in Article 123 hereof and the General Assembly has not been called for convention;
2- If the number of the Board of Directors members became less than the least number stipulated in Article 101 hereof and the General Assembly has not called for convention;
3- If it revealed at any time that the law or the Company’s Articles of Incorporation are breached or in case of a great fault is taking place in its management.<
In all these cases, all procedures required for the convention of the General Assembly should be adopted and to the Company’s expense.
The agenda of the annual General Assembly should include the following issues:
1- Hearing out and approving the Board of Directors’ report about the Company’s activities and its financial position throughout the year, and to the auditor’s report;
2- Discussing and approving the Company’s balance sheet and profit and loss statement;
3- Discussing and approving the governance report;
4- Considering the Board of Directors’ suggestions pertaining to the allocation of profits;
5- Considering the Board of Directors clearances and estimating their remunerations;
6- Proffering the tender and assigning the auditors and determining their fees;
7- Electing members of the Board of Directors when necessary.
1- Every shareholder has the right to attend the General Assembly meetings. He has a number of votes equivalent to the number of his shares. The resolutions are made by the absolute majority of shares represented in the meeting;
2- The minor and legally incompetent persons are represented by their legal guardians;
3- Authorisation for attendance of the meetings of the General Assembly may be granted provided that the proxy is a shareholder and the authorisation should be a written proxy. The shareholder may not authorise any of the Board members to attend the meetings of the General Assembly on his behalf. In all cases, the number of shares held by the proxy in this capacity should not exceed (5%) of the Company’s capital;
4- Excluding the artificial persons, none of the shareholders, whether being in the capacity of a constituent or on the behalf of another, could have a number of votes that exceeds (25%) of the number of votes decided for the shares represented in the meeting.
Without prejudice to the provisions of Article 137 hereof, the General Assembly shall be competent, in particular, for the following:
1- Discussing the Board of Directors’ report about the Company’s activities and financial position during the year and the future plan of the Company. The report should include adequate explanation of the income and expense items, detailed statement about the method suggested by the Board of Directors for annual net profit allocation and assigning the date of profits disbursement;
2- Discussing the auditors’ report about the Company’s balance sheet and end-period accounts submitted by the Board of Directors;
3- Discussing and approving the annual balance sheet and the profit and loss statement and adopting the profits to be allocated;
4- Considering and approving the governance report;
5- Considering the clearance of the Board members;
6- Electing the Board members and assigning the auditors and determining the fees intended for the coming fiscal year in case it is not determined in the Company’s Articles of Incorporation;
7- Discussing any other proposal the Board of Directors includes in the agenda to be decided upon. The General Assembly may not discuss any other issues not listed in its agenda. Nevertheless, the Assembly has the right to discuss serious issues revealed during the meeting.
If a number of the shareholders which represent at least 10% of the Company’s capital request listing specific issues in the agenda, the Board of Directors should abide to the request; otherwise, the Assembly has the right to decide discussion of these issues.
The Chairman of the Board, his deputy or whoever is delegated by the Board of directors for this purpose shall chair the General Assembly, If those mentioned fails to attend the meeting, the Assembly assigns, from among the members of the Board of Directors and the shareholders, who chairs this meeting and a rapporteur of this meeting.
If the Assembly is discussing an issue related to the chairman of the meeting, it should choose the meeting chairman from the shareholders.
The General Assembly’s meeting validity is conditioned as follows:
1- Sending an invitation to the Administration to delegate its representative in the meeting;
2- The quorum shall be present if a number of shareholders representing at least 50% of the share capital of the Company are present in the meeting, unless the Articles of Incorporation of the Company provides otherwise. If such quorum is not present at such meeting, a second general assembly meeting shall be invited to be held within fifteen days from the date of the first meeting, in accordance with the provisions of Article 121 of this Law;
3- The Company’s auditor shall attend the meeting.
The invitation to the meeting shall be sent at least three days prior to the date of the meeting. The second meeting shall be deemed valid irrespective of the number of the shares represented thereat.
The General Assembly shall issue its resolutions by the absolute majority of the shares that are correctly represented unless the Company’s Articles of Incorporation stipulate a higher percentage.
Every shareholder has the right to discuss the issues listed in the General Assembly’s agenda and to submit questions to the members of the Board of Directors, and the members of the Board of Directors should answer the questions as long as this does not inflict any damage to the Company’s interest.
The shareholder has the right to appeal to the General Assembly if he deems the response to his question is insufficient, and the execution of the General Assembly’s decision is obligatory.
Any contradicting condition in the Company’s Articles of Incorporation is void.
Voting in the General Assembly shall be conducted with the method specified in in the Company’s Articles of Incorporation.
Votes shall be cast through secret ballot if the resolution pertains to electing, dismissing or taking legal action against Board members or if the Chairman of the Board or a number of the shareholders that represent at least one tenth of the votes present in the meeting. The members of the Board could not participate in voting for the resolutions of the General Assembly pertaining to their clearance from responsibility.
The resolutions issued by the General Assembly in conformity with the provisions of law and the Company’s Articles of Incorporation shall be binding to all shareholders whether they were present or absent in the meeting during which those resolutions were made and whether they approve or disapprove those resolutions. The Board of Directors should execute the resolutions as soon as they are made and notify the Administration with a copy of them within fifteen days since their issuance.
The minutes of the General Assembly meetings shall be recorded in a special register.
The provisions stipulated in Article 106 hereof shall apply to the registers and minutes of meetings of the Board of Directors shall also be applied to the registers and minutes of meetings of the General Assembly.
A copy of the minutes of meeting of the Company’s General Assembly is to be sent to the Administration within an utmost period of one month since the date of its convention.
Without prejudice to the rights of those well intentioned, any resolution issued in violation to the provisions hereof or the Company’s Articles of Incorporation shall be void.
Any resolution made for the benefit of or against a specific category of the shareholders or that brings benefits to the Board members or others without taking into consideration the benefit of the Company can be nullified.
Nullifying the resolution shall entail the resolution before all shareholders as if not issued. The Board of Directors should publish the verdict of nullity in two local daily newspapers, one of which shall be at least published in Arabic, or shall be posted on the Company’s website (if any). The nullity claim shall not be heard out after the lapse of one year since the issuing of the contested verdict. Filing the lawsuit does not result in halting the executing of the resolution unless the court adjudicates otherwise.
The nullity could only be requested by shareholders who objected the resolution and affixed their objection in the minutes of meeting or those who did not attend the meeting for an acceptable reason.
THE EXTRAORDINARY GENERAL ASSEMBLY
The following matters are only resolved by the General Assembly held as an Extraordinary Assembly:
1- Amending the Company’s Contract or Articles of Incorporation;
2- Increasing or decreasing the Company’s capital;
3- Extending the duration of the Company;
4- Dissolving, liquidating, transforming, acquiring or merging the Company with another Company;
5- Selling or disposing the entire project for which the Company was established. In case any of these issues were adopted, it has to be indicated in the commercial register.
Nevertheless, this assembly may not make amendments to the Company’s Articles of Incorporation that would increase the burdens of the shareholders, amend the main objective of the Company, change its nationality, or translocate the headquarter of the Company established in the state to another country. Any other contradicting clause is considered invalid.
The Extraordinary General Assembly shall be held only by virtue of an invitation for convention from the Board of Directors. The Board has to address such invitation if this is requested by a number of shareholders representing at least 25% of the Company’s capital.
If the Board of Directors does not address for the Extraordinary General Assembly convention within fifteen days since the submission of the request, the requestors may request from the Administration to call for a meeting on the Company’s expense.
The Extraordinary General Assembly meeting shall be valid only if shareholders representing at least 75% out of the Company’s capital attend it.
If this quorum is not achieved, the assembly shall be called for another meeting to be held within the thirty days following the first meeting.
The second meeting shall be deemed valid if shareholders, representing 50% out of the Company’s capital, attend it.
If this quorum is not achieved in the second meeting, the assembly has to be called for a third meeting to be held after the lapse of thirty days since the date has been determined the second meeting. The third meeting shall be deemed valid regardless of the number of attendants.
If the matter pertains to taking the resolution concerning any of the issues mentioned in Clause (4) & (5) of Article 137 hereof, the meeting shall be considered valid only if it is attended by shareholders representing at least 75% out of the Company’s capital.
The Board of Directors should declare the resolutions of the Extraordinary General Assembly if it included the amendment to the Company’s Articles of Incorporation.
The Company’s auditor may not, in any capacity, participate in the Company’s establishment or its Board of Directors membership, or perform any of its technical, administrative, or advisory works. Moreover, he may not be a partner, a proxy, or an employee of any of the Company’s founders or Board members, or any of their relatives up to the fourth degree.
Any contradicting appointment shall be considered invalid.
The auditor shall be responsible to carry out the following:
1- Auditing its accounts according to the adopted auditing rules, the requirements of the profession and its scientific and technical principles;
2- Examining the balance sheet and the profit and loss statement;
3- Observing the compliance with the law and the Company’s Articles of Incorporation;
4- Examining the Company’s financial and administrative regulations and the internal financial surveillance, checking its appropriateness for the good running of the Company’s business, and preserving its money;
5- Examining the Company’s assets and its ownership and the lawfulness and validity of the Company’s liabilities;
6- Examining the resolutions of the Board of Directors and the instructions issued by the Company;
7- Any other tasks assigned to the auditor by virtue of this law and the law of organizing the profession of auditing and other common regulations applied to auditing.
The auditor raises a written report to the General Assembly about his job, and he or whoever is delegated thereby, recite the report before the General Assembly. The auditor has to send a copy of the report to the Administration.
The auditor’s report mentioned in the previous Article shall include the following:
1- That he obtained the information, statements, and declarations he deems necessary to perform his job;
2- That the Company keeps regular accounts and registers with respect to common international standards, which could reveal the financial position of the Company and the outcome of its work; and that the balance sheet and the profit and loss statement comply with the registers and books;
3- That, in his opinion, the auditing procedures he carried out on the Company’s accounts make a sufficient basis to express his opinion about the Company’s financial position, the outcome its works, the Company’s cash flow, in conformity with common international standards;
4- That the financial statements mentioned in the Board of Directors’ report addressed to the General Assembly comply with the registers and records of the Company;
5- That the stocktaking was made with respect to the operative principles;
6- The breaches to the provisions hereof and of the Company’s Articles of Incorporation that took place during the year and that are under examination and have an essential influence on the outcome of the Company’s works and its financial position, and whether these breaches still exist, and that is within the limits of the information available to him.
If, for any reason, the Company’s auditor could not perform the tasks and obligations, assigned to him by virtue of the provisions hereof, he has to submit a written report to the Administration, a copy thereof to the Board of Directors including the reasons that hinder or stand against performing his jobs, before excusing himself for not auditing the Company’s accounts. The Administration shall discuss these reasons with the Board of Directors. In case of default within thirty days as from the date of receiving the Company’s auditor’s report referred to in this Article, the Administration shall call General Assembly for the convention to discuss the issue.
If the Administration is able to deal with the reasons for the auditor’s excuse, the Company shall incorporate with its annual report a description of the issues, on which the auditors has relied in asking for excuse.
The auditor should keep the Company’s secrets. He may not disclose to the shareholders, except during the General Assembly or to third parties, any of the Company’s secrets he obtained due to his performance of tasks; otherwise, he shall be investigated and dismissed.
The auditor shall be liable for compensating the damage inflicted on the Company, shareholders, or third parties, due to his mistakes. If multiple auditors committed such mistakes, they will be jointly responsible.
The Lawsuit of the responsibility mentioned in the previous paragraph will not be accepted after one year since the convention of the General Assembly during which the auditor’s report was recited. If the act attributed to the auditor is a criminal offense, the Responsibility Lawsuit exists as long as the public summons exist.
THE COMPANY CAPITAL
The share of the Joint-Stock Company is indivisible while confronting the Company. If multiple persons own the share, they have to select one of them to act on their behalf in using the rights pertaining to the share.
Those persons will be jointly responsible for the liability resulting from the ownership of the share.
The shares may not be issued for less than their nominal value; however, they may be issued for a higher value if this was stipulated by the Company’s Articles of Incorporation or approved by the Extraordinary General Assembly. In this case, the difference in value shall be added to the legal reserve.
The share value is paid in cash, by full amount or in instalments; and the instalment to be paid upon underwriting shall not be less than 25% of the share value.
At any case, the entire value must to be paid within five years since the date of publishing the Resolution of Establishment in the official gazette. If the remaining instalments were not paid, the capital shall be decreased without prejudice to the provisions of Article 65 hereof.
If there are in-rem stocks or perquisites, which are belonging to the founders or others, the Administration shall appoint, on the request of the founders, an expert or more from those certified thereat or from those bodies that have technical and financial knowhow vis-à-vis the matters of evaluation and that are certified by the Ministry in order to verify that such stocks or perquisites are duly evaluated.
The expert shall submit his report to the Administration within thirty days as from the date of his deputation. The Administration may, upon the expert’s request, grant him another grace period not exceeding thirty days.
The Administration shall send a copy of the expert’s report to the founders after being approved thereby, given they distribute such copies on the subscribers before the convention of the Constituent Assembly by at least ten days. The said report shall be kept at the Company’s headquarters where every stakeholder shall have the right to review it.
The said report shall be propounded onto the Constituent Assembly for deliberation. If the Assembly resolved the decrease of the consideration designated for the in-rem stocks or reduction of the special perquisites, the in-rem stocks presenters and the special perquisite beneficiaries shall approve such decrease or reduction during the convention of the assembly. Upon disapproval thereby, the stock presenters may withdraw from the Company.
The in-rem stocks may be represented only by fully paid shares.
The shares representing the in-rem stocks shall be handed in only after the ownership of these stocks is fully transferred to the Company.
The Company shall keep a special register called the “shareholders’ record” that includes the names, nationalities, and addresses of shareholders and the shares owned by each shareholder and the paid-in amount of the share value. The Administration and the Authority may review such information and obtain a copy thereof.
Promptly after the Company has its shares listed in the financial market, the Company shall keep a copy of this register with a depositary, licensed by the Authority, for the sake of following up the shareholders’ affairs, and to authorise it to keep and organize this register. Any shareholder may review this register free of charge.
Every stakeholder has the right to ask for correcting the information included in the register, particularly when a person is registered therein, or erased therefrom without justification.
A copy of the information included in the register and any changes that takes place shall be sent to the Administration before two weeks at most since the date determined to disburse profits to the shareholders.
The ownership of the Company’s listed shares is to be transferred in accordance with the controls in force at the Authority, the financial market wherein such stocks are listed.
The ownership of the Company’s unlisted shares shall be transferred by registration in the shareholders’ record where the share registration is officially endorsed. Demurring against the Company or third parties could not take place until the date of its registration in the register. Nevertheless, the Company may not restrict freehand disposal of the shares in the following cases:
1- If the disposal breaches the provisions hereof or the Company’s Articles of Incorporation;
2- If the shares are mortgaged or seized by court order;
3- If the shares are missing and in-lieu replacements were not issued.
The General Assembly’s resolutions shall be applicable to the seizer and the mortgagee creditor in the same way they are applicable to the shareholder, whose shares are seized, or the mortgager.
Nevertheless, the seizer or the mortgagee creditor could not attend the General Assembly, participate in its discussions, or ratify its resolutions; he has no membership rights in the Company.
The founders may not dispose of their shares unless after two years since the Company is categorically founded.
During the close period, such share may be mortgaged, or the ownership thereof may be transferred from one of the founders to another founder, or to the government, or from a one heir of the founder in case of his heath to third parties or from the bankrupt’s estate to third parties or as per a final court judgment.
After the General Assembly’s approval, the Company may issue tradable bonds, whether they are transformable or not to shares in the Company with equal values for each issuance. The General Assembly has the right to entitle the Board of Directors in determining the loan amount and conditions.
No bonds may be transformed into shares unless provided for in the prospectus. If transformation is endorsed, the bondholder in solo shall have the right to accept such transformation or collect the nominal value of the bond.
The bonds or any other instruments shall be issued in compliance with the regulations and rules rendered by the Authority.
The bonds could not be issued unless under the following conditions:
1- It is permitted by the Company’s Articles of Incorporation;
2- The Company’s capital is fully paid;
3- The value of the bonds shall not exceed that of the available capital with respect to the last approved balance sheet, unless the bonds were not guaranteed by the state or any of the banks operating therein.
If the bonds are underwritten for IPO, this shall take place through one or more of the banks accredited in the state, or through the companies being licensed for this respect. The public shall be called for subscription prior to the lapse of fifteen days at least through publishing the invitation in two local daily newspapers, one of which shall at least be issued in Arabic, or through posting it on the Company’s website (if any). It shall be signed by the members of the Board of Directors, and shall include the data resolved by Administration’s decision. Such data shall include the following information:
1- The General Assembly’s resolution of issuing the bonds and the date of resolution;
2- Number and value of bonds resolved to be issued;
3- The subscription beginning and ending dates;
4- The Bonds maturity date and settlement conditions and guarantees;
5- Value of bonds previously issued and their guarantees and its unpaid value at the time of issuing the new bonds;
6- The Company’s capital;
7- The Company’s headquarter, its date of establishment and duration;
8- The value of the in-rem stocks;
9- A summary of the last balance sheet of the Company certified by the auditor.
If a certificate of shares or bonds is lost or ruined, its holder may request the Company for a new certificate in lieu of the lost or ruined certificate.
The holder should publish the numbers of the shares’ certificates or the lost or ruined bonds in one local daily newspaper issued in Arabic.
If no objection is submitted to the Company within thirty days since the publishing date, it has to publish a new certificate citing it is in lieu of the lost or ruined certificate. This certificate grants its holder all rights and imposes on him all the obligations related to the lost or ruined certificate.
THE COMPANY’S FINANCE
Every fiscal year, the Board of Directors shall present to the auditor, at least two months before the convention of the General Assembly, the Company’ balance sheet and the profit and loss statement and a report about the Company’s activities during the ending fiscal year and its financial position.
The Chairman of the Board of Directors or any of its members shall sign all these documents.
Annually, a 10% of the Company’s net profits is deducted to form the legal reserve unless the Company’s Articles of Incorporation does not determine a higher percentage.
The General Assembly may stop this deduction as soon as this reserve reaches half of the paid capital.
The legal reserve may not be distributed on shareholders, yet what is in excess of half the paid capital could be used in allocating dividends on shareholders up to 5%, and that in the years when the Company would not accomplish net profits sufficient to allocate this percentage.
Based on the proposal of the Board of Directors, the General Assembly may resolve to cut-down part of the net profits for the optional reserve account.
The optional reserve shall be used in the ways resolved by the General Assembly.
The General Assembly should decide to cut a part of the profits to meet the requirements imposed on the Company by virtue of the Labour Law.
The Company’s Articles of Incorporation may stipulate the foundation of a fund for the assistance of the Company’s personnel.
The Company’s Articles of Incorporation shall determine the minimum percentage of dividends to be distributed on shareholders after the deduction of the legal and optional reserves.
The shareholder shall be entitled to his dividends in pursuance of the laws, regulation being applicable for the Authority and the financial market, in which the shares are listed.
AMENDING THE COMPANY’S CAPITAL
INCREASING THE CAPITAL
By virtue of a resolution of the Extraordinary General Assembly and after the approval of the Administration, the capital of the Company may be increased. The resolution shall reveal the amount of increase and the issue price of the new shares.
The Extraordinary General Assembly may authorise the Board of Directors in determining the date of executing this resolution, provided that it does not exceed one year since the date of issuance.
The capital shall be increased in any of the following ways:
1- Issuance of new shares;
2- Capitalization of the reserve or a part thereof or the profits;
3- Transference of the bonds into shares;<
4- Issuance of new shares in return for the in-rem shares or assessed rights.
The distribution of the new shares among subscription-applying shareholders shall be in the rate of shares held by each provided that this does not exceed what each applied for. The remainder of shares is to be distributed among the shareholders that applied for shares more than the rate of what they hold, and the remaining shares are underwritten for the IPO, or would be disposed of by the approval of the Administration.
If the increase in the capital includes offering in-rem stocks, then the provisions pertaining to the in-rem stocks’ evaluation shall be applied, while the Extraordinary General Assembly acts as the Constituent Assembly.
If new shares were floated for the public underwriting, an underwriting should be issued containing in particular the following:
1- Reasons of increasing the capital;
2- The Extraordinary General Assembly’s resolution concerning the increase of capital;
3- The Company’s capital at the time of issue of the new shares, the amount of the suggested increase, the number of new shares, and the share premium if available;
4- A list of the in-rem stocks or the assessed rights, if available;
5- A report of the dividends the Company allocated during the past three years with respect to the resolution of increasing the capital;
6- The auditor’s consent to the authenticity of the information included in the prospectus.
The prospectus shall be signed by the Board Chairman and the auditor who are jointly responsible for the authenticity of the information included.
DECREASING THE CAPITAL
The capital may not be reduced unless by a resolution issued by the Extraordinary General Assembly after recital of the auditor’s report; provided that the approval of the Administration is obtained and this would be in one of the following two cases:
1- The capital is in excess of the Company needs.
2- If the Company was afflicted with loss.
The capital shall be decreased in one of the following ways:
1- Decreasing the shares’ number in order to cancel a part thereof, being equivalent to the value to be decreased;
2- Decreasing the shares’ number by an amount equal to the loss that afflicted the Company;
3- Buying and cancelling a number of shares equivalent to the amount of decrease;
4- Reducing the nominal value of each share.
If the capital is decreased through buying and cancelling a number of the Company’s shares, an invitation should be addressed to all the shareholders to set forth their shares for sale. The invitation should be published in two daily local newspapers, one of which shall at least be issued in Arabic, or on the Company’s website if any.
The shareholders could be notified by registered letters of the Company’s intension to buy the shares. If the number of shares presented for sale is more than the amount the Company decided to buy, the sale requests should be scaled down accordingly. The provisions stipulated in the Company’s Articles of Incorporation shall be adopted in the determination of the shares’ purchase price. If the Articles of Incorporation did not include a clause in this respect, the Company has to pay the fair price determined by the Company’s auditor set as per the applicable assessment rules or the market price, whichever is higher.
THE PRIVATE JOINT-STOCK COMPANY
One Private Joint-Stock Companies or more than one may be established by the government and other public organizations and establishments and the companies in which the state’s contribution is at least 51%, or by a percentage less than that upon the approval of the Council of Ministers, by itself or with collaboration of another or more Qatari or foreign founders, whether he was a natural or artificial, public or private person. Those companies are not subject to the provisions hereof unless to the extent that did not contradict with the conditions and agreements concluded under its framework or during their establishment, and with the provisions stipulated in the Company’s Articles of Association and Articles of Incorporation.
Upon the approval of the Council of Ministers, private institutions with public benefit may establish Private Joint-Stock Companies in pursuance of the provisions of the foregoing Paragraph.
The Private Joint-Stock Company may transform into a Public Joint-Stock Company if the following conditions were met:
1- The nominal value of the issued shares is fully paid;
2- At least two of the Company’s fiscal years should elapse;
3- The Company has accomplished throughout practicing the objective of its foundation, and within the two previous fiscal years effective from the date of the transformation request, a distributable net profit of an average not less than ten percent of its capital;
4- The resolution of transforming the Company is issued by the Company’s Extraordinary General Assembly by the majority of three quarters of the Company’s capital;
5- A resolution announcing the transformation of the Company to a Joint-Stock Company is issued by the Minister; published on the Company’s expense in attachment with the Company’s Contract and its Articles of Incorporation.
PARTNERSHIP BY SHARES COMPANY
The name of the Company consists of one or more of the names of the joint partners and may include an innovated name or another derived from its objective.
The name of the shareholding partner may not be added to the name of the Company. If his name was included with his knowledge, the partner is considered joint with respect to the well intentioned.
At any case, the phrase Partnership by Shares should be added to the Company’s name.
The Partnership by Shares shall have a General Assembly consisting of all the joint partners and the shareholders.
The General Assembly in the Partnership by Shares is subject to the provisions pertaining to the General Assembly in the Joint-Stock Company concerning its formation, meetings, and decisions voting.
The director of the Partnership by Shares Company shall substitute for the Board of Directors in calling for the General Assembly.
The General Assembly represents the shareholders in confronting the directors.
The Supervisory Council should ascertain the accomplishment of the Company’s foundation procedures in conformity with the provisions of law, and supervise its works. It may request the directors to submit an account of their administration and check the Company’s books, documents and records and perform money count.
The council has to submit its opinion toward the issues presented by the Company’s directors, and to give the permission to perform the acts for which the Company’s Articles of Incorporation stipulate prior permission.
The Supervisory Council has the right to call for the convention of the General Assembly if it realizes that gross breaches have taken place in the Company’s administration.
The council shall present to the shareholders’ General Assembly a report about the results of his surveillance at the end of every fiscal year. The council members shall not be liable for the works of the directors or its results unless they were acquainted with these mistakes and ignored notifying the General Assembly of it.
In compliance with the provisions mentioned in this Part, the provisions of the Public Joint-Stock Company shall be applicable to the Partnership by Shares Company in the following issues:
1- Provisions of founding and registering the Company;
2- Provisions pertaining to the Company’s finance.
If the position of the Company director is vacant, the Supervisory Council should assign a provisional director who takes the responsibility of the urgent management works until the convention of the General Assembly.
The provisional director shall call the General Assembly for convention within fifteen days since the date of his appointment in conformity with the procedures determined in the Company’s Articles of Incorporation. If this date elapses without calling for the convention of the General Assembly, the Supervisory Council should promptly call for convention.
The provisional director shall be only responsible for executing the works assigned to him.
THE LIMITED LIABILITY COMPANY
ESTABLISHING THE COMPANY
The Limited Liability Company is a Company composed of one person or more, and the number of partners shall not exceed fifty people.
No partner shall be asked except for the amount of its share in the capital, and the shares of the partners shall not include negotiable securities.
The Limited Liability Company shall have a name derived from its objective or from the name of one or more partners. The Company’s name can also include in both cases an innovated name provided that it is not misleading to its objective or identity.
The phrase “Limited Liability Company” should be added to the name of the Company. If the directors neglected this mentioned provision, they will be jointly responsible in all their money for the Company’s commitments in addition to the compensations.
The Limited Liability Company is established on the basis of Company’s Articles of Association signed by the partner or partners containing the information being determined by virtue of the Minister’s resolution and including the following:
1- The Company’s type, name, objective, and headquarter;
2- The partners’ names, nationalities, domiciles, and addresses;
3- The capital amount and each partner’s share and a statement of the in-rem shares, its value, and the names of its presenters, if available;
4- The names of Company’s directors and nationalities thereof, whether they were of the partners or others if their names were mentioned in the Company’s Articles of Association;
5- The names of the Supervisory Council members, if available;
6- The Company’s duration;
7- The mode of allocating profit and loss;
8- The conditions of shares relinquishment;
9- The form to be considered in the Company notifications addressed to the partners. The Company’s Articles of Incorporation may include special provisions with respect to organizing the right of the partners’ redemption of shares and the way to assess its value at exercising this right, and creation of the optional reserve, organizing the Company’s finance and accounts, and the reasons of its dissolution.
The Limited Liability Company shall not be established unless all the monetary and in-rem shares are allocated to all partners and they were fully paid.
The Company monetary shares shall be deposited at one of the accredited banks in the state and may only be disbursed to the Company’s directors after presenting what verifies the registration of the Company in the commercial register.
If what the partner offered is an in-rem share, the Articles of Association then has to include its kind, value, price agreed upon by the other partners, the partner’s name and the capital stock value in return for what he offered.
The in-rem share presenter is liable before third parties for the difference between its real value and the value assessed in the Company’s Articles of Association, and the other partners will be jointly liable for settling this difference unless they proved they were not aware thereof .
Nevertheless in this case, the Lawsuit of Responsibility quashes after the lapse of three years since the date of registering the Company in the Commercial Register.
The Company’s director should submit a request for registering the Company in the commercial register, and the request should be attached with the Company’s Articles of Association and the documents indicating the allocation of shares among the partners and its full payment and that it has been deposited at an accredited bank in the state. In addition to the documents indicating the delivery of the in-rem shares to the Company, if available. The request shall be determined during fifteen days from the day of submitting the request combined with the necessary documents.
The Company may not undertake any of its activities unless being registered in the commercial register.
SHARES AND CAPITAL
The Company should set a special register for the partners at the headquarter thereof, and which includes the following:
1- The partners’ names, domiciles, nationalities, and professions;
2- The number and value of shares owned by each partner;
3- The actions taking place on shares showing its date, reason for ownership transfer, the name of the transferor and the transferee and their signatures;
4- The total shares owned by the partner after the transference.
The Company directors are jointly responsible for this register and the authenticity of its data. Partners and every concerned has the right to examine this register.
The partner may waive its share under an official document to any of the partners or others in accordance with the Company’s Articles of Association conditions. The waiver may not be used as an allege in confronting the Company or others unless after its registration in the partners register and in the commercial register.
The Company may not abstain from registering the assignment in this register unless it breaches what is stipulated in the Company’s Articles of Association or the provisions of this Law.
Unless it is otherwise stipulated in the Company’s Articles of Association, if any of the partners waived its share to someone other than the partners in return for compensation, he should notify the other partners of the waiving conditions through the Company’s director.
The director should notify the partners as soon as it receives the notification and every partner may ask to redeem the share in its original price and in the same waiving conditions. In case of disagreement on the price, the Company’s auditor shall assess the price on the date of redemption. If thirty days passed since the date of notification and none of the partners used the right of redemption, the partner shall be free to dispose his share.
If a partner’s creditor carried out execution procedures on his debtor’s share, he can agree with the debtor and the Company on the mode and conditions of the sale, otherwise, the share should be offered for public auction, and the Company could redeem the share sold in favour of one or more partner for the same conditions of the public within fifteen days since the date of public sale adjudication.
These provisions shall be applied in case of the partner’s bankruptcy.
THE COMPANY’S MANAGEMENT
The Company’s director shall have the absolute authority in administrating it, unless its authority is determined by the Company’s Articles of Association.
The director’s acts are binding to the Company provided they are accompanied with the characterization of capacity he dealt with. Any decision made to replace the directors or restrict their authorities is not effective against others unless it is registered in the commercial register.
The Company’s director shall represent the Company before the judiciary and third parties.
If the number of partners exceeded twenty, the Company’s Articles of Association must assign a Supervisory Council of at least three of them for a certain period.
The General Assembly could reassign them after the elapse of this period or to assign other partners, and it could also dismiss them.
The directors, partners or third parties, do not have a reckoned vote in the election or dismissal of the members of the Supervisory Council.
The Company shall have a General Assembly that consists of all the partners. The Assembly shall be held by directors’ invitation at least once a year within the four months following the end of the Company’s fiscal year, and that is on the time and at the place determined in the Company’s Articles of Association. The invitation letter should include determination of the meeting place and time, and to be attached with the agenda and copies of the balance sheet.
The directors should call the General Assembly for session upon the request of the Supervisory Council, the auditor, or a number of partners owning not less than 20% of the capital. The call for the General Assembly’s session takes place by virtue of registered letters addressed to every partner at least twenty-one days before its session. The letter should specify the place and date of the meeting, and should be attached with the session agenda and copy of the balance sheet.
If the General Assembly was not held during the specified time in this article, the Administration should have the right to send the invitation during fifteen days from the day of the end of the mentioned period. The directors shall be responsible jointly for any injury affects the partners or others resulting from failure of convening the General Assembly or delay of such convention.
The annual General Assembly’s agenda should include the following activities:
1- Discussing the director’s report about the Company’s activities and financial position during the year, and the auditor’s report;
2- Discussing and approving the balance sheet and the profit and loss statement;
3- Determining the percentage of profit to be distributed to the partners;
4- Appointing the directors, Board of Directors, or the members of the Supervisory Council, if available, and determining their bonuses;
5- Appointing an auditor and specifying his fees;
6- Other issues under its competency by virtue hereof or the Company’s Articles of Association.
The General Assembly may not deliberate issues outside the agenda unless serious issues require discussion during the meeting were revealed.
If any of the partners requests to include a specific issue to the agenda, the directors should consent to its request. Otherwise, the partner has the right to appeal to the General Assembly, the decision thereof should be enforced.
The General Assembly’s decisions shall only be valid if they were made by the consensus of a number of partners that represents half of the capital at least, unless the Company’s Articles of Association stipulates a higher majority.
If this majority was not reached in the first meeting, the assembly should be called for another meeting to be held within the twenty-one days following the first meeting. The decisions in this meeting are made by the majority of the represented votes; unless the Company’s Articles of Association stipulates otherwise.
Without prejudice to the rights of third parties acting in good faith, any resolution, made by the General Assembly or the partners in violation of the provisions hereof or the Company’s Articles of Association, shall be invalid. Nevertheless, nullity could only be requested by partners who objected to the resolution in writing or those who were not able to object thereto after being aware thereof.
The resolution of invalidation shall result in considering such resolution as if it did not exist with regard to all partners, and the suit of nullity shall not be heard after the lapse of one year from the date of issuing the mentioned resolution. While, filing the lawsuit shall not result in halting execution of the resolution unless the court of competent jurisdiction decrees otherwise.
The Limited Liability Company consists of one person shall comply with all the provisions stipulated in this chapter except for whichever contradict with the capital thereof being owned by one person.
The Limited Liability Company shall be managed by the owner of the capital. One director or more representing it with third parties and before the judiciary may be appointed therefor, and shall be responsible for managing thereof before the owner.
If the owner of the Company’s capital liquidated or stopped activities thereof in bad faith before end of the term of the Company or before achieving the purpose of establishment thereof, he shall be responsible for liabilities thereof in his own money. The owner of the Company shall be responsible in his own money if he did not separate between its own interest and the Company’s interest.
THE HOLDING COMPANY
The objectives of the Holding Company shall be in conformity with the following:
1- Co-administrate the affiliate companies or those it participates therein;
2- Invest money thereof in shares, bonds, and securities;
3- Provide the necessary support for the companies belonging thereto;
4- Own the intellectual rights of patents, trademarks, industrial models, privileges and other incorporeal rights, exploiting and renting them out to the companies affiliated thereto or to others either inside or outside the country;
5- Own the movables and real estates needed to start carrying out its activities within the limits permitted by law.
COMPANIES TRANSFORMATION, MERGING, PARTITION, AND ACQUISITION
The Company may be transformed to another kind of companies by virtue of a resolution issued in conformity with the conditions adopted for the amendment of the Company’s Contract or Articles of Incorporation, and on the condition of fulfilling the requirements of incorporation and declaration resolved to the kind of Company to be transform thereunto.
The resolution of transformation shall be attached with a statement of the Company’s assets and liabilities and the approximate value of such assets and liabilities.
The endorsement of Company’s transform shall take place in the commercial register.
Transformation into a Joint-Stock Company requires that two years should have passed since its registration in the commercial register.
The Administration may issue at any time special conditions of transformation of a given type of companies into other kind if it deems necessary.
Merging takes place through either joining one or more companies into another existing Company or by mingling two or more companies in a new Company under establishment, and the Contract of Merging determines its conditions especially those pertaining to the assessment of the merged Company’s obligations and the number of stocks or shares in the capital of the merged Company or the Company arising from the merge.
Merging is invalid unless it was resolved by each Company according to the conditions determined to the amendment of the Company’s Contract or Articles of Incorporation.
This resolution shall be declared by the adopted ways with respect to the amendments in the Contract or Articles of Incorporation of the merged Company.
Merging is made through joining by following the procedures below:
1- A resolution of dissolution is issued by the merged Company;
2- Assets of the merged Company are assessed in conformity with the provisions of in-rem shares’ assessment stipulated herein;
3- The Company has been merged into issues a resolution of increasing its capital in accordance with the assessment of the merged Company;
4- Distribute the excess in capital on the partners of the merged Company in accordance with its shares therein.
All the rights and obligations of the merging Company are inevitably transferred to the Company being merged into or to the Company originating from merging after fulfilment of the merging procedures and the registration of the Company with respect to the provisions hereof.
The Company being merged into or originating from merging, is considered a legal successor for the merged companies and substitutes them in all the rights and obligations.
The Company may be divided into two or more companies upon termination or preservation of the Company subject to division. The merging procedures and conditions are applicable with respect to capital evaluation, while each of the companies arising from the partition shall have an independent artificial personality with all its respective effects.
The resolution of partition shall determine the number of shareholders or partners and names thereof, the quota of each in the companies originating from partition, the rights and obligations of each Company, and the mode of distributing the assets and liabilities there among.
ACQUISITION OF COMPANIES
The Company shall be considered an acquirer of an acquiree in the following cases:
1- If it owns directly or indirectly portion of the capital which gives it the majority of voting rights;
2- If it dominates the majority of voting rights according to an agreement with other partners or shareholders without contradiction with the interests and purpose of the acquire;
3- If it owns voting rights give such the ability of actual domination on the resolutions of the aquiree’s General Assembly. Ownership of 40% of shares shall be considered an evidence of acquisition if this percentage was the highest one owned in the Company;
4- If it owns voting rights which give the same the authority to appoint and dismiss majority of the Board of Directors members, Supervisory Council or directors as the case may be.
The following is required for the validity of acquisition:
1- Issuance of a resolution from the extraordinary General Assembly, for both the acquirer and acquire, to approve on acquisition and assignment of the priority rights prescribed to shareholders, and approval of the Administration on the two companies’ resolutions;
2- Issuance of a resolution by the Acquirer to increase its capital and distribute the increase of capital on the partners or shareholders by percentage of shares thereof in the Company according to the Company’s Contract and Articles of Incorporation;
3- Completion of the procedures of transfer of shares subject matter of acquisition to the Acquiree. This ownership shall not be taken into consideration except after listing the share according to the provisions hereof;
4- Payment by the Acquirer, in case of acquisition through purchase, of the value of shares subject matter of acquisition to the Acquiree, then putting such in a special account to be distributed on the shareholders or partners registered on the date of the approval of the Company extraordinary General Assembly to sell the shares.
In case of acquisition by submitting shares or bonds, the Acquiree should submit those shares or bonds to the Acquiree to distribute such on the partners or shareholders registered on the date of approval of the extraordinary General Assembly on acquisition.
5- Taking the necessary measures by the Acquiree to amend the Contract and Articles of Incorporation thereof, and election of a new Board of Directors according to the Company’s Contract and Articles of Incorporation thereof;
6- Taking the necessary measures by the Acquiree to protect the rights of minority including submission of offers, the period thereof is not less than thirty days to purchase the remaining shares in consideration not less than the value of shares subject matter of acquisition or the value determined by the appointed expert according to the provisions of Article 158 hereof.
THE COMPANY TERMINATION
THE COMPANY DISSOLUTION
Taking into consideration the causes of termination of each kind of the companies stated in this Chapter, the Company is considered dissolved for one of the following reasons:
1- The termination of the period determined in the Company’s Contract or Articles of Incorporation unless the duration is renewed with respect to the rules determined in any of them;
2- The fulfilment or the impossibility of achieving the Company objectives;
3- The transfer of all stocks or shares to a number of partners or shareholders less than the minimum lawfully determined unless the Company is transformed into another kind of companies during six months of transfer or the number of partners or shareholders was increased to the minimum limit;
4- The destruction of all or most of the Company’s capital where the rest could not be beneficially invested;
5- The partners’ unanimous agreement to dissolve the Company before the expiry of its duration unless the Company’s Contract stipulates dissolution thereof by a specific majority;
6- The merging of a Company into another;
7- A judgment of dissolving the Company is issued or if bankruptcy thereof is declared.
The court may decide to dissolve the Joint-Liability, Limited Partnership, or the Particular Partnership companies upon the request of any partner if it realized existence of serious justifying reasons. Any condition forbidding the partner of using this right is considered invalid.
If these justifying reasons were resulting from a partner’s actions, the court may judge the dismissal of the partner from the Company; and in this case, the Company will last between the other partners.
The partner’s allotment that determine dismissal thereof from the Company is assessed with respect to its value at the date of the dismissal judgment, and paid to him in cash. This partner shall not share in the Company’s rights that might occur afterwards, except those rights that are the outcome of transactions preceding the reasons of dismissal thereof.
The court may also decide the dissolution of the Company upon a partner’s request due to the unfulfillment of the other partner’s promises.
The Joint-Liability, Limited Partnership, or Particular Partnership Company is terminated if any partner deceased, placed under guardianship, his bankruptcy was declared, being insolvent, or withdraws from the Company. Nevertheless, it could be stipulated in the Company’s Contract that if any of the partners deceased, the Company could continue with its heirs even if they were minors.
If the partner’s withdrawal was ill-intentioned or occurred at an inappropriate time, the partner could be judged to remain in the Company in addition to compensations when necessary.
If the Contract of Joint-Stock, the Limited Partnership, or the Particular Partnership Company didn’t stipulate the continuation of the Company in case if a partner deceased, placed under guardianship, his bankruptcy was declared, or being insolvent, the partners could – within sixty days since the date of any of the cases mentioned took place – decide unanimously the continuation of the Company among them. With respect to the Joint-Liability and the Limited Partnership companies, this agreement could not be used as an allege against others except from the date of its declaration through registration in the commercial register.
In all cases of continuation of Company exists between the other partners, the allotment of the parting partner is estimated according to the latest inventory took place, unless the Company’s Contract stipulates assessment method. This partner, or its heirs shall not share in the Company’s rights that might occur afterwards, except those rights that are the outcome of transactions preceding to his departing.
If the Joint-Stock Company losses reached half the capital, the Board members must call the Extraordinary General Assembly for session to consider the continuation or the dissolving of the Company before its duration specified in Articles of Incorporation thereof.
If the Board of Directors did not call the Extraordinary General Assembly for session or a decision could not be issued in this respect, every concerned may request from the court to dissolve the Company.
If the number of shareholders in Joint-Stock Company became less than the required limit, it can be transformed into Limited Liability Company; the remaining shareholders therein shall be responsible for the Company’s debts within the limits of its assets.
If one whole year passed after the decrease of the number of shareholders to less than the minimum, every concerned could ask the court of jurisdiction to dissolve the Company.
If the losses of the Limited Liability Company reached half the capital, the directors should, within thirty days since reaching this loss limit, present to the General Assembly the matter of capital recovery or dissolving the Company. The majority needed to amend the Company’s Contract is required to issue the decision of dissolving the Company.
If the directors neglected calling the partners, or a decision could not be issued in this respect, the directors or partners, as per the case, are considered to jointly responsible for the Company’s obligations resulting from their neglect.
The Partnership by Shares Company dissolves if one of the partners withdrew, deceased, placed under guardianship, his bankruptcy was declared, or being insolvent unless the Company’s Articles of Incorporation stipulates otherwise.
If this issue was not stipulated in the Company’s Articles of Incorporation, the Extraordinary General Assembly could decide the continuation of the Company and thus the procedures determined for amending the Company Articles of Incorporation are adopted.
The authorities of the directors and the Board of Directors annul by the Company’s dissolution, nevertheless they shall still be in charge of the Company’s administration and are considered according to others in place of liquidators until a liquidator is appointed.
The Company’s divisions shall remain during the liquidation period and their powers shall be limited to liquidation affairs that are not of the liquidators’ competencies.
Liquidation is undertaken by one or more liquidators appointed by the partners or the General Assembly through the ordinary majority by which the Company’s decisions are made.
If the liquidation was based on a judgment, the court shall state the ways of liquidation and assign the liquidator.
At all cases, the liquidator’s work shall not terminated by the death of the partners, announcing bankruptcy thereof, insolvency, or placing them under guardianship even if he was appointed thereby. The liquidator shall get remuneration determined in the document of his appointment; otherwise, it will be determined by the court.
The liquidator shall declare the resolution of his appointment, the limitations imposed on his authorities, the partners’ agreement or the General Assembly’s resolution concerning the process of liquidation or the judgment issued in this respect by the process of declaration determined to amend the Company’s Contract or Articles of Incorporation.
The appointment of the liquidator or the mode of liquidation can only be used as an allege against others from the date of declaration.
The liquidator shall carry out all the works required for liquidation and particularly the following:
1-Collect the Company’s dues with third parties;
2- Settle the Company’s debts;
3- Sell the Company’s movables or real estates by public sale or in any other way that ensures obtaining the highest price, unless another specific way of sale is stipulated in the document of appointing the liquidator;
4- Undertake what is required to preserve the Company’s money and rights;
5- Represent the Company before the courts and accepting reconciliation and arbitration.
The liquidator pays up the Company’s debts after deducting the liquidation expenses including the liquidator fees according to the following order:
1- Amounts due to the Company’s workers;
2- Amounts due to the state;
3- Rent due to the owner of any real estate rented to the Company;
4- Other due amounts each in accordance to its preference with respect to applicable laws.
Within three months since commencing his work, the liquidator along with the Company’s auditor if available, prepares an inventory of all the Company’s assets and liabilities; the directors or members of the Board of Directors should provide the liquidator with the Company’s books, documents, requested clarifications and data. The liquidator shall state what the partners require to know concerning clarifications or information about the liquidation status.
If liquidation lasts for more than one year, the liquidator shall prepare a balance sheet and a profit and loss statement and a report about the liquidation works. These documents shall be submitted to the partners, General Assembly, or the court of jurisdiction, as per the case, to be approved in accordance with the Company’s Contract or Articles of Incorporation.
In all cases, the liquidation period should not exceed three years unless by virtue of a resolution of the court or the Minister.
After settlement of the Company debts, the liquidator should pay up the partners the value of his monetary shares of capital and to allocate the surplus among them in proportion to the profit quota of each.
The Company in-rem money is divided among the partners by partition division adopting the rules determined in dividing the common property unless it is stipulated otherwise in the Company’s Contract.
The liquidator shall be dismissed in the same way he is appointed; any resolution or judgment of dismissing the liquidator should include the appointment of a new liquidator.
The dismissal of the liquidator is to be declared and may not be used as an allege against others unless from its declaration date.
The Authority, according to legislations thereof, shall assume the following competencies with regard to Joint-Stock Companies listed or to be listed in the financial markets:
1- Approval on the prospectus issued by the Company, and accepted by the Ministry either upon incorporation or upon increase of the capital;
2- Determination of appointments through which the shares shall be offered for public underwriting, and follow up procession of underwriting during those appointments;
3- Follow up implementation of the resolutions issued by the Company’s General Assembly after approval thereof from the Ministry with regard to increase, decrease, or division of the value of the Company’s share or procedures of Company’s issuance of other securities or any other resolutions relate to the competencies of the Authority;
4- Set the procedures of organizing trading of the underwriting rights due to shareholders upon increase of the Company’s capital;
5- Set requirements, and controls of disclosure of the financial reports, the Company’s positions, and governance reports issued by the Company during the fiscal year, control of application thereof, and give notes thereon – if any- and approval on publication thereof;
6- Set the controls of domination, acquisition, merging, and partition of the Company, and controls of transformation into a public Joint- Stock Company;
7- Set the procedures of estimating the Company’s in-rem shares whether upon incorporation, increase of the capital, or transformation into a public Joint- Stock Company listed in the financial market.
Grievances from the Authority’s resolutions in this regard shall be filed according to the followed procedures in the Authority’s legislations.
In case of violation of the provisions hereof or the resolutions enforcing hereof by one of the companies, the Administration may, after notification to the violator and investigation therewith, impose all or part of the following penalties:
3- Preventing the violator from work as a member in the Board of Directors or a director of any of the companies permanently or for a limited period;
4- Imposing a monetary penalty not exceeding an amount of ten Thousand (10,000) Riyal daily for the continuous violation;
5- Imposing a monetary penalty not exceeding an amount of one Million (1,000,000) Riyal.
The Administration shall be responsible for informing the violating Company with the resolution issued to implement the penalty and it may publish the resolution by the way it considers as an appropriate one.
Grievance from the resolution issued from the Administration to implement the penalty against the Minister or whomever he delegates may be filed during thirty days from the day of notifying the Company thereof by any way of acknowledgment. The grievance shall be determined during thirty days from the day of submission thereof. Whomever the request thereof was rejected shall be notified with any way of acknowledgment. The elapse of this period without any reply shall be considered an implied rejection of grievance, and the resolution of determination shall be final.
The Administration may reconcile with the violating Company according to the procedures and controls therefor a resolution shall issue from the Minister.
In case of the occurrence of any of the crimes stipulated hereof, the judicial officers, cited in the previous article, compose a memo in accordance with the form issued by the Minister.
A copy of this memo is submitted to the competent police station to adopt the required procedures with respect to law.
The authorised administration employees enjoying the capacity of judicial officers, in conformity with Article 325 hereof, have the right to inspect the companies mentioned in Article 322 hereof, and examine accounts thereof.
In execution thereof, they could examine the records, books, documents and other papers at the Company headquarters or other places; and the members of the Board of Directors, the auditors, the directors, and other employers should provide thereof with the statements, extracts, and copies of documents they demand for this purpose.
The reports resulting from the preceding procedures of supervising and surveillance are submitted to the Minister to adopt the procedure he deems appropriate.
The shareholders or partners having 20% of the capital of the Joint-Stock Company, the Limited Liability Company, or the Partnership by Shares have the right to request the Minister to instruct an inspection of the Company with respect to what is attributed to the members of the Board of directors and the auditors of serious breaches in performing their duties that are determined by the law or the Articles of Incorporation whenever reasons are attributed to such breaches.
The request should include the evidences beneficial that certify the serious reasons the requesters have to justify adopting this procedure; the shares owned by the requesting partners should be filed with the request submitted and to be kept filed until the issue is decided upon.
The Minister refers the request to the Administration, which hears the testimonies of the requesters for inspection, the members of the Board of Directors, the auditors, and whoever it deems necessary, and prepares a report of its works results including views thereof to be submitted to the Minister.
After reviewing the report indicated in the previous article, the Minister may assign, by virtue of its resolution and on the expense of the requesters for inspection, an auditor from those registered in the auditors register to carry out inspection on the Company’s works and books.
The members of the Board of Directors and the Company employees should provide the appointed auditor with all that pertains to the Company affairs, of books and documents and papers that they file or they have the right to obtain.
The auditor appointed for inspection should submit a detailed report about his task to the Minister within the duration determined in the resolution of its appointment.
The General Assembly may decide the dismissal of the members of the Board of Directors or the auditors and file the lawsuit of responsibility against them. Its resolution is considered valid when approved of by the shareholders or the partners owning half of the capital after excluding the shares of the members of this Board whose dismissal is being considered.
The dismissed members could not be re-elected in the Board of Directors before the elapse of five years since the date of issuing the resolution pertaining to dismissal thereof.
PENALTIES AND FINAL PROVISIONS
Without prejudice to any severer penalty stipulated by another law, he would be put into jail for not more than two years with a fine not more than one million Riyals or any of these two penalties:
1- Whoever intentionally confirmed in the issuance of shares bulletins, bonds or other securities publications, false statements or statements breaching the provisions hereof, and whoever signs those bulletins while knowing its breaches;
2- Any founder who embodied in the Limited Liability Company’s Contract false attestations pertaining to the distribution of capital shares among partners or to the settlement of its value despite knowing such;
3- Anyone who deceitfully, fraudulently, assessed the value of real stocks for more than their actual value;
4- Every founder or director who invited people for underwriting in securities of any kind for the account of a Company other than Joint-Stock Companies or Partnership by Shares and whoever presented these securities for underwriting for the account of the Company;
5- Whoever ill-intentionally decided or distributed profits, interests, or returns in contrary to the provisions hereof or the Company’s Articles of Incorporation, and every auditor who ill-intentionally legalized such;
6- Every auditor, and whoever works at its office, who intended to set a false report about the result of his review; intentionally concealed or ignored essential events in the report submitted to the General Assembly with respect to the provisions hereof or speculated in the shares of the Company he audits or disclosed any of its secrets;
7- Any Board of directors member, director, or liquidator participates in preparation of the balance sheet, financial position, or data issued from the Company not conforming to reality with knowing such and with the intention to hide the reality of the Company’s financial position, or neglect intentionally essential facts with the intention to hide the real financial position of the Company or exploit ill-intentionally the Company’s money or shares to achieve personal interests for it or for third parties directly or indirectly;
8- Any liquidator who intended to inflict harm on the Company, partners, or creditors;
9- Any public employee who disclosed a secret pertaining to one of the commercial companies he achieved by virtue of its work, confirmed untrue events or intended to ignore, in his reports, events that influence its results;
10- Whoever forged the Company’s records; intentionally confirmed untrue events; prepared or presented to the General Assembly reports that included false or untrue statements that would influence the assembly’s resolutions;
11- Every chairman, Board member, or Company employee who disclosed any of its secrets, or intentionally tried to inflict harm on its activities; or had a direct or indirect interest with any party conducting transactions intended to influence the price of securities issued by the Company.
Without prejudice to any severer penalty stipulated by another law, he would be fined for not more than five hundred thousand Riyals:
1- Whoever disposed in the establishment stocks or shares in contrary to the rules stipulated hereof;
2- Whoever accepted to be appointed as a member in the Board of Directors of a Joint-Stock Company or its delegated member to its administration, or still enjoyed membership, or accepted to be appointed as an auditor in contrary to the provisions of bans stipulated by the law; and every member delegated to the administration in a Company where any of these violations occur with its knowledge;
3- Every member of the Board of Directors who failed to present the shares allocated for guaranteeing his membership in the way determined in the Company Articles of Incorporation within a period of sixty days effective on the date of being informed of the resolution of appointment , whoever failed to present the declarations he is committed to present or announced false statements or intentionally ignored any information the Board of Directors is committed to set a report thereabout, also any member of the Board of Directors who confirmed false statements in the Company’s reports or intentionally omitted its statements;
4- Whoever prevent intentionally the Administration’s employees, the auditor, Supervisory Council member or the liquidator to check the books and documents of the Company which they have the right to check according to provisions hereof, and whoever refrained from presenting the information, documents and clarifications requested in this regard;
5- Whoever of the members of the Board of Directors intended to cripple the invitation, or the session of the General Assembly;
6- Every member of the Board of Directors obtained a loan or a guarantee from the Company in violation of provisions hereof, and each agreed to grant such loan or guarantee.
Without prejudice to the right to request indemnification when necessary, every action, dealing or resolution issued on contrary of the provisions stipulated herein without prejudice to third parties acting in good will.
In case of diversity of whomever the cause of invalidation attributed thereto, the responsibility of indemnification shall be assumed jointly there among.
The action for invalidation shall not be accepted if it was filed after elapse of one year from the date of knowledge of concerned parties with the action violating the law.
Any resolution issued by the General assembly shall not result in the cancellation of the lawsuit of the civil responsibility against the members of the Board of Directors because of the faults they commit while carrying out their missions.
If the responsibility obliging act is presented to the General Assembly by a report from the Board of Directors or the auditor, this suit shall be cancelled after the elapse of three years since the issuance of the General Assembly resolution of ratifying the report of the Board of Directors. Nevertheless, if the act attributed to the members of the Board of Directors is a crime or offense, the suit shall not be voided unless the criminal case is voided.
The Administration and every shareholder may commence this lawsuit; and any condition in the Company’s Articles of Incorporation that stipulates waiving or suspending the lawsuit by a previous permission from the General Assembly or any other procedure is considered invalid.
In all the commercial companies, the lawsuits of the Company’s creditors against the partners are voided by prescription after the elapsing of three years since the termination of the Company, or after the dissociation of one of the partners – regarding the lawsuits filed against such partner.
In all cases that impose registration, the period of prescription is effective from the date of accomplishing the registration in the commercial register, and from the date of announcing liquidation in the lawsuits resulting from the liquidation itself.