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Main Page / Legislations / Law No. 5 of 2002, promulgating the Law of Commercial Companies / Chapter One / Dissolution of Company
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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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Dissolution of Company

  • 283 Article

     In accordance with the grounds for dissolution of each form of company provided for in this Part, a company shall be dissolved on one of the following grounds:
    1. Expiry of the period fixed therefore in the Memorandum of Association unless renewed in accordance with the provisions included in the Memorandum or the Articles of Association.
    2. Fulfillment of the objectives for which the company was established or if it proves impossible for them to be fulfilled.
    3. Transfer of all stocks or shares to a number of partners or shareholders that is less than the number specified by this Law.
    4. Depreciation of all or most of the company assets to an extent whereby the investment of the remaining is deemed infeasible.
    5. Unanimous approval of the partners to dissolve the company before the end of its term unless a certain majority is provided for in the Memorandum of Association.
    6. Amalgamation of the company into another.
    7. Judicial order to dissolve the company or declaration of its bankruptcy.

  • 284 Article

     The court may dissolve any general partnership or partnership limited by shares or joint venture companies at the request of one of the partners if reasonable grounds justify the same. Any provision depriving the partners of the right to exercise such right shall be null and void.
    If the grounds of the dissolution are attributed to the acts of one of the partners, the court may order his removal from the company, and in this case the company shall continue to exist between the remaining partners.
    The share of the partner who is ordered to be removed from the company as per the value on the day of removal shall be paid to him in cash. This partner shall not have a share in the remainder of the company entitlements unless the latter resulted from preceding operations before his removal.
    The court may also order the dissolution of the company at the request of one of the partners in the event of failure on the part of any partner to fulfil his duties.

  • 285 Article

     Joint liability companies or partnerships or limited partnerships shall be dissolved upon the death of a partner or the issuance of a judgment of sequestration, bankruptcy or insolvency against a partner.
    The Memorandum of Association may, however, include a provision for the validity of the company with the heirs of the deceased partner, even if such heirs are minors.
    Where the withdrawal of a partner is made mala fides or at an inappropriate time, judgment may be given for the continuation of the company in addition to indemnity, if necessary

  • 286 Article

     Where no provision is made in the Articles of Association of a joint liability company or partnership or limited partnership regarding the continuation thereof in the event of withdrawal or death of one partner, judgment of sequestration, bankruptcy or insolvency against him, the partners may, within sixty days from the occurrence of any of the above events, unanimously resolve to maintain the company by themselves. Such agreement may not, however, be invoked against third parties except after it is entered in the Commercial Register in the case of general partnerships and limited partnerships.
    In all cases where the company is maintained by the remaining partners, the share of the withdrawing partner shall be estimated on the basis of the recent valuation unless, in the company Memorandum of Association, any other valuation method is provided for.
    Neither the said partner nor his successors shall have the right to any part of the accrued entitlements of the company except if those entitlements arise from transactions carried out prior to his withdrawal from the company.

  • 287 Article

     Where a Joint Stock Company sustains loss amounting to one half of the capital, the Board of Directors shall convene an extraordinary general assembly to discuss whether the company shall be maintained or dissolved before the term fixed in its Articles of Association.
    Should the Board fail to convene the extraordinary general assembly or if it is impractical for the general assembly to adopt a decision on such matter, any interested party may request the court to dissolve the company.

  • 288 Article

     Where the shareholding company is dissolved due to the transfer of all its shares to one shareholder, this shareholder shall be liable for company debts to the extent of its assets.
    Should one year elapse after the reduction of the number of shareholders to less than the minimum level, any interested party may request the court to dissolve the company.

  • 289 Article

     A limited liability company shall not be dissolved upon the withdrawal or death of one of the partners or a judgment of sequestration, bankruptcy or insolvency against him unless otherwise stipulated in the Memorandum of Association.

  • 290 Article

     If a limited liability company sustains loss amounting to one half of the capital, the managers shall, within thirty days from the date of recording this loss, inform all partners of the need to replace the loss in capital or dissolve the company. It shall be a requirement that a valid decision of dissolution be adopted by the same majority required as for the amendment of the company Memorandum of Association.
    If the managers fail to extend the invitation to the partners or the partners  fail to reach a decision on the matter, the partners or shareholders, as the case may be, shall be liable for obligations of the company that arise out of their negligence.

  • 291 Article

     A partnership limited by shares shall be dissolved upon the withdrawal or death of a joint partner or a judgment of sequestration, bankruptcy or insolvency against him, unless otherwise stipulated in the Memorandum of Association.
    If there is no provision in the Memorandum of Association in this respect, the extraordinary meeting of the general assembly may decide the continuation of the company and follow the procedures required for the amendment of the company Memorandum of Association

  • 292 Article

     Where all joint partners are affected by withdrawal or death or a judgment of sequestration, bankruptcy or insolvency issued against all of them in the partnership limited by shares, the partnership shall be dissolved unless the company Memorandum of Association provides for possible transformation of the company into a different form.

  • 293 Article

     A sole proprietorship shall be dissolved upon the death of the owner of its capital, unless all shares of heirs are given to one person or if the heirs elect the continuation of proprietorship in another form within a maximum period of six months from the date of the death.
    The proprietorship shall be dissolved upon dissolution of the corporate body which is the owner of its capital.

  • 293 Article (bis)

     

  • 294 Article

     With the exception of joint ventures, the decision as to the dissolution of a company shall, in all cases, be declared in the Commercial Register and published in two local daily newspapers published in Arabic. The dissolution of a company may be invoked against third parties only from the date of its publication. The company managers or the Chairperson of the Board of Directors, as the case may, shall pursue the execution of this procedure.

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