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16 May 2022

15 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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Incorporation of Company

225 Article

A limited liability company means a company in which the number of partners is not more than fifty and not less than two. Each partner shall be liable only to the extent of his share in the capital, and the partners' shares shall not be in the form of negotiable instruments.

226 Article

A limited liability company shall have a name derived from its objectives or from the name of one or more partners. In both cases, the name of company may contain an inventive name provided that it is not misleading as to its objectives or identity.

The term “limited liability company” or acronym shall be annexed to the company's name. In the event of failure on the part of the managers to observe the above clause, they shall be held responsible to the extent of their private assets as well as collectively for the liabilities of the company apart from remunerations.

227 Article

The objective of a limited liability company shall never be the business of banks or insurance, or investment of funds for others in their own name or as agent.

228 Article

A limited liability company shall neither seek public subscription for its formation nor increase its capital by obtaining loans. It shall not be entitled to issue shares or transferable bonds.

229 Article

A limited liability company shall be established pursuant to the Memorandum signed by all partners, who shall include the following particulars, based on which a decision shall be issued by the Minister:

Type, name and objectives of the company and its headquarters.
Names of the partners, their nationalities, places of residence and addresses.
Amount of the capital and share of each partner and particulars of the shares in kind, their amounts and names of subscribers therein, if any.
Names and nationalities of the company managers and whether they are from partners or others, if their names are included in the Memorandum of Association.
Names of members of the supervisory Board, if any.
Term of the company.
Methods of distribution of profits and losses.
Conditions concerning the assignment of shares.
Methods to be followed for addressing notices to the partners.

The company Memorandum of Association may include provisions related to regularizing the right to recover the shares of partners, and method of evaluation when such right is exercised, as well as forming an optional reserve, organizing company finance and accounts and grounds for the company's dissolution

230 Article

A limited liability company shall not be established unless all cash shares and shares in kind are distributed among the partners and the value of each share is paid in full.

Cash shares of the company shall be deposited in one of the approved banks operating in the State. The bank shall not release the same except for the company managers and shall only do so upon the submission of documents proving the registration of the company in the Commercial Register.

Where a partner submits a share in kind, it shall be mentioned in the company Memorandum of Association along with its value, the price accepted by other partners as well as the name of the partner and the amount this share represents in the capital against what he offered.

The partner who offered the shares in kind shall be liable to others for the difference between the real and estimated value of such shares in the Memorandum. The remaining partners shall be jointly liable for the payment of such difference; unless it is proved that they are not aware of the same.

However, a liability claim shall not be heard in this case after the lapse of five years from the date of the company registration in the Commercial Register.

231 Article

The manager of the company shall apply for the registration of the company in the Commercial Register. Such application shall be annexed to the Memorandum of Association of the company along with other documents showing the distribution of shares among the partners, payment of their value in full and the deposit of the same in a bank operating in the State. Furthermore, all documents showing the delivery of shares in kind, if any, to the company shall be annexed.

The company shall not conduct any of its activities unless after it is registered in the Commercial Register.

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