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27 May 2022

26 Shawwaal 1443

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Law No. 5 of 2002, promulgating the Law of Commercial Companies

Law Summary Record Type: LawNumber: 5Date: 25/05/2002 Corresponding to 14/03/1423 HijriNumber of Articles: 348Status: In force

Official Gazette :Issue: 7Offcial Journal Issue Publication Date: 03/08/2002 Corresponding to 25/05/1423 HijriPage from: 17

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Company Finance

180 Article

As specified in its Articles of Association, the company shall have a fiscal year of not less than twelve months except for the first fiscal year.

181 Article

At least two months prior to the annual general meeting of the company, the Board of Directors shall show, in each fiscal year, the balance sheet of the company, statements of profits and losses, and a report on the company activities during the previous fiscal year and its financial status during that year to the accounts auditor.

The Chairperson of the Board of Directors and one of the members shall sign these documents.

182 Article

The company shall publish biannual financial reports in the local Arabic daily newspapers for the reference of the shareholders. The accounts auditor shall verify these reports and the same shall not be published without the approval of the concerned authority

183 Article

Unless a higher rate is specified by the Articles of Association of the company, 10% of the net profit of the company shall be deducted annually to create the legal reserve.

The general assembly may stop making such deduction whenever the legal reserve reaches one half of the paid-up capital.

The legal reserve may not be distributed among the shareholders. However, the excess beyond one half of the paid-up capital may be used for the distribution of dividends among the shareholders up to 5% in years where the company does not attain sufficient net profit to distribute this rate.

184 Article

Upon a proposal by the Board of Directors, the general assembly may decide to annually deduct a portion of the net profits for an optional reserve.

The optional reserve shall be used for any other purposes as decided by the general assembly.

185 Article

A percentage specified by the Articles of Association of the company or the Board of Directors shall be deducted annually from the gross profit of the company for the depreciation of the company assets or as a compensation for their devaluation. This percentage shall be used to repair or purchase the necessary material and equipment for the company and shall not be distributed among the shareholders.

186 Article

The general assembly shall decide to deduct part of the profits for compensating the company obligations arising out of the labour laws.

The company Articles of Association may provide for the formation of a special fund to assist the company employees.

187 Article

The Articles of Association of the company shall stipulate the minimum part of the net profits to be distributed among the shareholders after the deduction of the legal and optional reserves.

The shareholder shall be entitled to his share of profits once a decision is issued by the general assembly. The Board of Directors shall implement this decision within thirty days from the date of its issue.

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