Rules of Companies in Special Economic Zones

Chapter One: General Provisions

Article (1): Definitions

The following words and phrases shall have the meanings assigned thereto unless the context requires otherwise:

Definitions

KSA: Kingdom of Saudi Arabia.

ECZA: Economic Cities and Special Zones Authority.

Board: ECZA Board of Directors.

Law: The Law of ECZA issued by Royal Order No. (A/19) dated 10/3/1431 AH corresponding to (24/2/2010) and any amendments thereto.

Regulations: The Regulations for the Special Economic Zone in Jazan, Ras Al-Khair, King Abdullah Economic City, Cloud Computing and Information Technology, issued pursuant to the Council of Ministers' Resolution No. (468) dated 10/7/1447 AH corresponding to (30/12/2025) and any amendments thereto.

Rules: Rules of Companies in Special Economic Zones.

Relevant Entity: The entity stipulated in Council of Ministers' Resolution No. (233) dated 29/3/1444 AH corresponding to (25/10/2022) which established the zone.

Competent Authority: The government authority with jurisdiction, as required by the context of the rules.

SEZ/SEZs: The Special Economic Zone in Jazan, Ras Al-Khair, King Abdullah Economic City, Cloud Computing and Information Technology, established pursuant to Cabinet Resolution No. (233) dated 29/3/1444 AH corresponding to (25/10/2022).

Other Regions of the Kingdom: All regions of the Kingdom other than the Special Economic Zones.

Activities: Activities qualifying for the exemptions, incentives, and exceptions approved for the zone.

Licensed Establishment/Establishment: Any company or company branch licensed to practice a qualifying activity in the zone in accordance with the Special Economic Zones legislation, excluding supporting activities.

License: An approval document issued by the Relevant Entity permitting the Establishment to practice a qualifying activity in the SEZ after meeting the controls specified for that purpose.

Company: Any company incorporated in the Zone pursuant to the Rules.

Branch: A branch of a Saudi company, or branches of GCC or foreign companies registered in the Zone as a company branch and having the same legal form as that adopted by the parent company.

Companies Register: A register containing the data on companies in the SEZ through a centralized electronic database dedicated to the Special Economic Zones in KSA under ECZA's supervision, in which Commercial Registration certificates issued in the Zone are documented.

Registrar: ECZA’s competent department entrusted with managing and supervising the Companies Register.

General Assembly: The general meeting of the Company partners, held in accordance with Article (47) of the Rules.

Day: A calendar day, whether a business day or not.

Bankruptcy Law: The Bankruptcy Law issued pursuant to Royal Decree No. (M/50) dated 28/5/1439 AH corresponding to (14/2/2018), and its amendments.

Committee: The committee competent to examine company-related violations, as designated pursuant to the Companies Register Rules, and the Trade Names Rules in the zones.

In matters for which no specific provision is made in the Rules, the same meanings set forth in the Law and Regulations shall apply to the words and phrases used in the Rules.

Article (2): Objective of the Rules

The Rules aim to regulate all matters relating to the incorporation of companies, their management, finances, partner rights, merger and liquidation mechanisms, in order to protect the rights of partners, protect those dealing with the companies, and ensure the governance of companies operating in the Zone.

Article (3): Scope of Application

The provisions of the Rules shall apply to each of the following:

Companies incorporated in the Zone.

Saudi companies incorporated in the other regions of KSA whose branches are registered in the Zone.

Branches of GCC companies registered in the Zone.

Branches of foreign companies registered in the Zone.

Chapter Two: Incorporation of the Company

Article (4): Form of the Company

A company incorporated in the Zone shall take the form of a limited liability company.

Article (5): Definition of the Company

A limited liability company is a company incorporated by one or more natural or legal persons, and its financial liability shall be separate from that of each of its partners or its owner. The Company alone shall be liable for the debts and obligations incurred by it or arising from its activities, and neither its owner nor its partner shall be liable for such debts and obligations except to the extent of their respective share in the capital.

Article (6): Company Nationality

A company incorporated in the Zone pursuant to the provisions of the Rules shall be deemed a Saudi company, and its head office shall be located within the Zone.

Article (7): Acquisition of Legal Personality

The Company shall acquire legal personality upon its registration with the Companies Register. However, during the incorporation period, the Company shall have legal personality to the extent necessary for its incorporation, provided that the incorporation process is completed.

Registration of the Company in the Companies Register shall result in the transfer to the Company of all contracts and transactions performed by the founders for its account, and the Company shall bear all expenses incurred by them for the purpose of incorporating the Company.

If the Company incorporation procedures are not completed as set forth in the Rules, persons who have dealt or acted in the name of the Company or for its account shall be personally liable to third parties with all their assets, jointly and severally, for acts and transactions performed by them during the incorporation period.

Article (8): Company Name

Without prejudice to the provisions of the Regulations, companies shall observe the following requirements:

Each company shall have a trade name in Arabic or another language. The name may be derived from its purpose, a distinctive name, or the name of one or more of its current or former partners, or a combination thereof, provided that it does not violate the Trade Names Rules in the SEZ.

If the trade name includes the name of any former partner in the Company, that partner's written consent shall be obtained, or that of their heirs if deceased, without giving such consent.

The trade name shall be accompanied by an indication of the legal form of the Company.

The trade name of the Company may be amended in accordance with the procedures prescribed for amending the Company MoA or AoA; such amendment shall not prejudice the Company's rights or obligations, or any statutory actions initiated by or against the Company prior to the amendment.

Article (9): Application for Incorporation of the Company

Without prejudice to the provisions of the Regulations, the following shall be observed:

Any person who has effectively participated in the incorporation of the Company and contributed to its capital with cash or in-kind shares shall be deemed a founder.

The founders shall submit the application for company incorporation and registration to the Companies Register, accompanied by the Memorandum of Association or Articles of Association, and the required data and documents according to the Company’s legal form.

The license of the Relevant Entity required to practice activities in the SEZ shall be obtained.

The Registrar shall decide on an application that satisfies the required data and documents in accordance with the provisions of the Rules.

In the event of rejecting the application, the rejection shall be reasoned, and the founders shall have the right to file a grievance with ECZA within sixty (60) days from the date of being notified of the application rejection.

In the event that the grievance is rejected or is not decided upon within thirty (30) days from the date of its submission, the applicants for incorporation shall have the right to file a grievance with the competent judicial authority.

Verification of the identity of founders or partners upon company incorporation or amendment of its Memorandum of Association or Articles of Association shall be conducted through data verified with the National Information Center, through the Companies Register, or through the Competent Authority for notarization in cases determined by ECZA in coordination with the Ministry of Justice.

Article (10): One-Person Limited Liability Company

In the event that a limited liability company is incorporated by a single person, or if all its shares devolve upon a single person, the following shall apply:

The person shall have the powers and authorities of the manager, the Company board of managers, the Company board of directors, and the General Assembly; the person's resolutions shall be issued in writing and recorded in a dedicated register maintained by the Company.

The person may appoint one or more managers, a board of managers, or a board of directors to represent the Company before the competent judicial authority, arbitral tribunals, and third parties; the person shall be responsible for its management to the partner owning the Company.

Article (11): Company Incorporation Documents

Every limited liability company established in accordance with the provisions of the Rules shall have a "Memorandum of Association (MoA)", and a limited liability company owned by a single person shall have "Articles of Association (AoA)".

The MoA or AoA of the Company shall include the provisions, terms, and data required by the Rules, in a manner commensurate with the legal form of the Company.

The MoA or AoA of the Company shall be in the Arabic language and may be accompanied by a translation into another language.

ECZA shall prepare model templates for companies' Memoranda of Association and Articles of Association, in a manner commensurate with the legal form of the Company.

Article (12): Particulars of the Memorandum of Association or Articles of Association

The MoA or AoA of a limited liability company shall include the following particulars:

Names and particulars of the partners.

Company name.

Company headquarters.

Company’s purpose.

The capital and its distribution among the partners.

The partners’ undertaking to pay the value of their shares.

Company term, if any.

Company management.

Assignment of shares.

Means of serving notices that may be addressed by the Company to the partners.

Partners’ resolutions.

Methods of distributing profits and losses to the partners.

Commencement and end dates of the fiscal year.

Company dissolution.

Any other provisions, terms, or particulars agreed upon by the partners to be included in the Memorandum of Association or Articles of Association, provided they do not conflict with the provisions of the Rules.

The following shall be attached to the MoA or AoA upon submission of the application for incorporation of the Company:

An undertaking by the founders to comply with all requirements of the Rules relevant to company incorporation.

A statement or report prepared by one or more accredited valuers in KSA, setting out the fair value of the in-kind contributions, if any, and an acknowledgment by the remaining founders approving the consideration determined for such contributions.

Data submitted by the registration applicant shall not conflict with data submitted by the applicant to the Concerned Authority for the purpose of obtaining the license.

Article (13): Registration of Company Incorporation Documents

The MoA or AoA of the Company, and any amendment thereto, shall be in writing; otherwise, the MoA, AoA or amendment shall be null and void. The incorporation of the Company or amendment of its MoA or AoA shall be subject to fulfilling all the necessary requirements as stipulated by the Rules.

The founders, partners, company manager, board of managers, or members of the board of directors, as applicable, shall register the Company MoA or AoA and any amendments thereto in the Companies Register.

The Companies Register shall publish necessary data or documents in accordance with the provisions of the Rules and the Regulations; the person causing the failure to register documents in the Companies Register shall be jointly and severally liable for compensation for damages incurred by the Company, partners, or third parties due to non-registration.

Third parties shall be permitted to access data and documents set forth in Paragraph (2) of this Article, and data and documents extracted from the Companies Register shall constitute evidence against the Company and third parties.

The MoA or AoA of the Company, or any amendment thereto, may not be invoked against third parties until they have been registered with the Companies Register. If one or more particulars have not been registered, such particulars alone shall not be effective against third parties.

The Registrar shall notify the Relevant Entity of any amendment or change made to the MoA or AoA.

The company shall be registered in the Companies Register under the trade name proposed by the founders and approved by the Authority pursuant to the conditions and controls set forth in the Regulations and the Trade Names Rules in Special Economic Zones; the trade name shall be directly followed by the letters (م. إ. خ) or (SEZ).

ECZA may grant an exemption from including the letters (م. إ. خ) or (SEZ) in the trade name of companies and their branches, as it deems appropriate.

Founders or partners shall undertake to deposit the specified capital in a bank licensed in KSA.

Article (14): Company Purposes

The company shall pursue its objectives in accordance with the activities specified in the license of the Relevant Entity issued to it, following its registration in the Companies Register.

Article (15): Partners' Agreement and Family Charter

The founders or partners, whether during or after the Company incorporation period, may do the following:

Enter into one or more agreements regulating the relationship among themselves or with the Company, including exit provisions according to the method they deem appropriate and how their heirs may join the Company, whether in person or through a company incorporated for this purpose, among other matters.

Enter into a Family Charter that includes the organization of family ownership in the Company, its governance, management, work policy, family employment policy, dividend distribution, disposal of shares, dispute resolution mechanism, among other matters.

The agreement or Family Charter shall be binding upon registration with the Companies Register and may form part of the Company MoA or AoA. Without prejudice to the relevant legislation of KSA, the agreement must not conflict with the Rules or the Company MoA or AoA. Such agreement or Family Charter shall be binding on the parties and shall prevail over the Company AoA or MoA. The quorum required to amend the Partners’ Agreement or Family Charter, if it forms part of the Company MoA or AoA, shall be in accordance with the procedures prescribed for amending the Company MoA or AoA according to the legal form of the Company. The liability of a partner under the agreement or Family Charter shall be limited to the amount of their share in the Company’s capital only

Following its registration in the Companies Register, the Partners' Agreement or Family Charter shall constitute evidence for and against the Company as of the date of its registration, shall be binding on it to the extent of the provisions contained therein, and may be invoked against third parties from that date, without prejudice to third-party rights.

Article (16): Particulars Required to Be Included in the Company’s Documents

The following particulars shall be stated on contracts, receipts and other documents issued by the Company:

The trade name of the Company in all its transactions, correspondence, and publications, the legal form of the Company, the address of its head office, its email address, and its registration number in the Companies Register.

The Company’s capital and the amount thereof that has been paid.

The phrase "Under Liquidation" appended to the Company name during the liquidation period.

Article (17): Partner's Share

A partner’s share may be in cash or in kind, or both.

In limited liability companies with multiple partners, a partner’s contribution may consist of work in return for a percentage of the profits, the amount of which shall be specified in the Company MoA. A partner's share may not consist of their reputation or influence.

Cash and in-kind contributions alone shall constitute the capital of the Company.

The partners may grant shares in the Company’s capital to a person in consideration for that person performing work or providing services that benefit the Company and achieve its objectives, without prejudice to the provisions of the Rules.

In the case of a one-person company, the shares shall be either cash or in kind, or both.

Article (18): Contribution of the Share

If a partner's share is an ownership right, usufruct right, or any other real right, the partner shall be liable pursuant to the provisions of the contract of sale for warranty of the share in case of loss, warranty against disturbance or eviction, or the emergence of a defect or deficiency in the share; if the share consists merely of the use of a personal right over property, the provisions of lease contracts shall apply, unless agreed otherwise.

If a partner's share consists of work, they shall perform the work undertaken, and all earnings resulting from such work shall belong to the Company; the partner may not perform such work for their own account. However, they shall not be obligated to assign to the Company any intellectual property rights acquired as a result of this work, unless agreed otherwise.

Article (19): Delay in Contributing the Share

Every partner shall be deemed a debtor to the Company for the share they undertook to contribute.

If a partner delays contributing their share in the Company’s capital beyond the deadline specified therefor, the Company may demand performance of their undertaking or suspend the exercise of rights attached to their shares, such as the right to receive dividends or voting rights in the General Assembly or on partners' resolutions, while the Company reserves in all cases the right to claim compensation for damages resulting therefrom.

Article (20): Valuation of In-Kind Shares

If in-kind shares are contributed upon company incorporation or capital increase whose aggregate value does not exceed half of the Company’s capital, they need not be valued by an accredited valuer in KSA, unless the founders or partners agree otherwise.

If the value of in-kind shares contributed upon company incorporation or capital increase exceeds half of its capital, they shall be valued by one or more accredited valuers in the Kingdom; the valuer shall prepare a report stating the fair value of such shares, and the report shall be presented to the founders for deliberation; contributors of in-kind shares may not participate in voting on the resolution concerning the report prepared thereon; if the founders decide to reduce the consideration determined for the in-kind shares, the approval of the contributors of such shares for such reduction shall be obtained.

The period between the issuance of the accredited valuer's report assessing the fair value of in-kind shares and the issuance of the corresponding shares shall not exceed six (6) months.

If in-kind shares are not valued by an accredited valuer pursuant to the provisions of this Article, or if valued at an amount other than that determined by the appointed accredited valuer, the founders shall be personally liable, jointly and severally with all their assets, to third parties for the fairness of the valuation of such shares and for paying the difference in cash to the Company; no lawsuit shall be heard in this case after the lapse of five (5) years from the date of registering the Company in the Companies Register or increasing its capital, as applicable.

Chapter Three: Finances of the Company

Article (21): Company Fiscal Year

The Company’s fiscal year shall be twelve (12) months, as specified in its MoA or AoA. However, the first fiscal year may be specified to be not less than six (6) months and not more than eighteen (18) months, commencing from the date of registration of the Company with the Companies Register.

Article (22): Accounting Records and Financial Statements

The Company shall maintain accounting records and supporting documents clarifying its operations, contracts, and financial statements at the Company head office or at any other location designated by the Company manager, its board of managers, or its board of directors.

Companies incorporated in the SEZ shall prepare financial statements for the Company at the end of each fiscal year in accordance with accounting standards approved in the Kingdom, and deposit such statements as determined by the Rules within six (6) months from the end of the fiscal year, pursuant to the provisions set forth in the Rules.

If preparing interim or annual financial statements requires the controlling company or a company holding shares in another Company’s capital to obtain information from the controlled company or the investee company, the latter shall provide such information to the extent that enables the controlling or owning company to prepare its financial statements in accordance with accounting standards approved in KSA.

Article (23): Appointment, Dismissal, and Resignation of the Company Auditor

The Company shall have one or more auditors from among licensed auditors in the Kingdom, who shall be appointed by the partners or the General Assembly, as applicable. The partners or the General Assembly shall determine their remuneration, duration of engagement, and scope of work; the auditor may be reappointed.

Subject to the periods set forth in relevant laws and regulations and the provisions of the Code of Professional Conduct and Ethics for the Accounting Profession approved in the Kingdom, the partners or the General Assembly shall appoint one or more auditors, taking into account the following:

The term of engagement of an individual auditor shall not exceed ten (10) consecutive fiscal years.

The term of engagement of an audit firm shall not exceed ten (10) consecutive fiscal years; after the lapse of this period, it may be reappointed based on a recommendation from the audit committee (if any) or the availability of other audit bids, provided that the total term of engagement of the audit firm does not exceed twenty (20) consecutive fiscal years, and the term of the supervising audit partner does not exceed ten (10) consecutive fiscal years.

An auditor who has ceased auditing for less than two (2) fiscal years may be reappointed for the remainder of the maximum periods set forth in Paragraphs (A) and (B) of this Article.

An auditor who has exhausted the maximum periods stipulated in Paragraphs (A), (B) and (C) of this Article may be reappointed after the lapse of two (2) fiscal years from the date of termination of their service.

The partners or the General Assembly, as applicable, may dismiss the auditor without prejudice to the auditor’s right to compensation for damages incurred if justified. The manager, Company board of managers, or chairman of the board of directors shall notify ECZA of the dismissal resolution and its reasons within a period not exceeding five (5) days from the date of the resolution.

The auditor may resign from their mission pursuant to a written notice submitted to the Company; their mission shall terminate as of the date of submission or on a subsequent date specified in the notice, without prejudice to the Company's right to compensation for damages incurred if justified. The resigning auditor shall submit to the Company—upon submitting the notice—a statement of the reasons for resignation; the Company manager, board of managers, or board of directors shall invite the partners to a meeting or call the General Assembly to convene, as applicable, to consider the reasons for resignation and appoint another auditor.

Article (24): Obligations of the Company Auditor

The Company auditor shall be independent in accordance with the professional standards adopted in KSA.

The auditor's work may not be combined with participation in incorporating the Company whose accounts they audit, its management, or membership of its board of directors; the auditor may not be a partner of any of the Company founders, the Company manager, members of its board of managers, or members of its board of directors, or an employee or relative thereof. The auditor may not purchase or sell shares in the Company whose accounts they audit during the audit period.

The Company auditor may not perform technical, administrative, or advisory work in or for the benefit of the Company whose accounts they audit, except for work permitted for the Company auditor pursuant to the Code of Professional Conduct and Ethics for the Accounting Profession approved in KSA and instructions issued by the Saudi Organization for Chartered and Professional Accountants (SOCPA) in this regard.

The auditor may at any time access the Company’s documents, accounting records, and supporting documents, and may request data and explanations deemed necessary to verify the Company’s assets, liabilities, and other matters within their scope of work. The Company manager, board of managers, or board of directors shall enable the auditor to perform their duty. If the auditor encounters difficulty in this regard, they shall document it in a report submitted to the manager, board of managers, or board of directors. If the manager, board of managers, or board of directors does not facilitate the auditor's work, the auditor shall request them to call the partners to a meeting or convene the General Assembly, as applicable, to consider the matter. The auditor may issue such invitation if the manager, board of managers, or board of directors fails to issue it within thirty (30) days from the date of the auditor's request.

The auditor shall submit to the partners or the General Assembly at its annual meeting a report on the Company’s financial statements prepared in accordance with auditing standards approved in KSA, including the position of the Company management regarding enabling them to obtain the requested data and explanations, any violations of the Rules or the Company MoA or AoA identified within their competence, and their opinion on the fairness of the Company’s financial statements. The auditor shall read their report or present a summary thereof at the annual General Assembly meeting, or present the report by circulation, as applicable and pursuant to the provisions of the Rules.

The auditor may not disclose to the partners outside the General Assembly or to third parties any Company secrets that come to their knowledge by reason of performing their work; otherwise, they may be subject to claims for compensation in addition to dismissal.

The auditor shall be liable for the contents of their report and for all damages incurred by the Company, partners, or third parties due to errors committed in the performance of their duties. If the Company has more than one auditor, they shall be jointly and severally liable, except for those who prove non-participation in the error giving rise to liability.

Article (25): Oversight of Company Accounts

Partners shall have the right to oversee the Company’s accounts in accordance with the provisions set forth in the Rules and the Company MoA or AoA.

Article (26): Distribution of Profits

Annual or interim dividends may be distributed from distributable profits to partners in limited liability companies.

If profits are distributed to partners in violation of the provision of Paragraph (1) of this Article, the Company creditors may claim them from the Company, and the Company may claim from each partner—even if acting in good faith—the refund of what was received from it.

A partner shall not be required to refund profits distributed to them pursuant to the provisions of Paragraph (1) of this Article, even if the Company incurs losses in subsequent periods.

Article (27): Controls on Distribution of Profits

The Company may distribute interim profits to partners if its MoA or AoA so provides, after satisfying the following:

The partners or the General Assembly shall authorize the Company manager, board of managers, or board of directors to distribute interim profits pursuant to a resolution issued annually.

The Company has reasonable liquidity and is able to forecast the level of its profits.

The Company has distributable profits according to the latest financial statements sufficient to cover the profits proposed to be distributed, after deducting what was distributed and capitalized from such profits after the date of those statements.

Distributable profits shall consist of the balance of retained earnings shown in the statement of financial position prepared at the end of the period immediately preceding the period during which the distribution resolution is adopted, in addition to the balance of any distributable reserves.

Distributable reserves shall include reserves constituted from profits that were not allocated for specific purposes, or for which it was decided to cancel the purpose for which they were constituted.

Article (28): Sharing of Profits and Losses

All partners shall share profits and losses according to the proportion of each partner's share in the capital; if it is agreed to deprive any of them of profit or exempt them from loss, such agreement shall be deemed void. Nevertheless, it may be agreed in the Company MoA to vary the partners' proportions in profits and losses.

It may be agreed to exempt a partner whose contribution consists solely of work from contributing to losses, provided that no remuneration has been determined for their work.

Article (29): Share of the Working Partner in Profits and Losses

If a partner's share is limited to their work and the MoA does not specify their share in profit or loss, their share in both shall be equal to the share of the partner holding the smallest share in the Company’s capital. If the partner contributes—in addition to their work—a cash or in-kind share, they shall have a share in the profit or loss in respect of their work contribution and another share in respect of their cash or in-kind share.

Article (30): Transfer of Share Ownership

Ownership of shares in a limited liability company shall be transferred by registration in the Companies Register, and the transfer of share ownership shall not be effective against the Company or third parties except from the date of such registration.

Article (31): Increase of Company Capital

Upon increasing the Company’s capital through issuing new shares, each partner shall have the right to acquire new shares in proportion to their holding in its capital; if a partner requests to acquire new shares below the proportion they are entitled to acquire, other partners may acquire the remaining shares in proportion to the number of shares they own; the partners shall submit a draft amendment to the Company MoA, including the capital increase and a declaration of payment for the new shares, to the Companies Register; the capital increase resolution shall become effective upon its registration and publication in the Companies Register.

Article (32): Providing ECZA with a Report on Company Activities

The Company manager, board of managers, or board of directors must provide ECZA with a report on the Company activities, the auditor’s report, and financial statements at least twenty-one (21) days prior to the date scheduled for convening the annual General Assembly.

Chapter Four: Company Management

Article (33): Duties of Care and Loyalty

The Company manager, member of its board of managers, or member of its board of directors shall comply with the duties of care and loyalty, including:

Exercising their duties within the powers granted pursuant to the Rules, the Company MoA or AoA, and other relevant laws, to achieve the purposes for which such powers were granted.

Acting in the best interests of the Company and promoting its success, and acting in good faith to achieve the Company's interest, while making every effort to enhance its success, growth, value maximization for the benefit of partners, and sustainability.

Making or voting on resolutions independently and impartially, exercising their duties objectively and neutrally regarding managing the Company and making resolutions therein, and avoiding situations that affect their impartiality when making or voting on resolutions.

Exercising reasonable and expected care, attention, diligence, and skill.

Avoiding conflict-of-interest situations and disclosing any direct or indirect interest in the businesses and contracts concluded for the Company’s account, pursuant to the provisions of Article (35) of the Rules.

Refraining from accepting any benefit granted by third parties in connection with their role in the Company.

Performing their duties and responsibilities with the standard diligence of a prudent person, and with the general knowledge and experience they possess and that is expected of someone holding such position.

Not exploiting their position, duties, or powers held in their capacity as the Company manager, member of its board of managers, or member of its board of directors in any manner whatsoever to obtain benefits from third parties.

Article (34): Appointment of Company Management

The Company shall be managed by one or more managers, a board of managers, or a board of directors whose members shall not be less than three (3), with one member serving as chairman of the board; a managing director or chief executive officer may be appointed from among the members, from partners, or from other natural persons; the partners shall appoint the manager, board of managers, or board of directors in the Company MoA or AoA, or in a separate contract, determining who manages it, their dismissal, the limits of their authorities and powers, and their method of operation, for a specified or unspecified term, provided that their age is not less than eighteen (18) years and that they enjoy full legal capacity.

Article (35): Conflict of Interest, Competition, and Exploitation of Assets

The Company manager, member of its board of managers, or member of its board of directors may not have any direct or indirect interest in transactions and contracts concluded for the Company’s account, except with authorization from the partners, the General Assembly, or their delegate.

The Company manager, member of its board of managers, or member of its board of directors may not participate in any activity that would compete with the Company or compete with the Company in any branch of activity it conducts, except with authorization from the partners, the General Assembly, or their delegate.

The Company manager, member of its board of managers, or member of its board of directors may not exploit the Company’s assets, information, or investment opportunities presented to them in their capacity as manager, member of its board of managers, or member of its board of directors, or presented to the Company, to achieve a direct or indirect interest.

The Company manager, member of its board of managers, or member of its board of directors may not exploit investment opportunities presented to them in their capacity as manager or member of its board of directors, or presented to the Company, if any of the following applies:

If the investment opportunity falls within the Company's normal business activities.

If the Company wishes to benefit from the investment opportunity or is expected to benefit therefrom.

The provision of Paragraph (1) of this Article shall not apply to the following:

Businesses and contracts concluded pursuant to a public tender.

Businesses and contracts that are aimed at meeting personal needs if concluded under the same terms and conditions applied by the Company to the public of clients and contractors, and that fall within the Company's customary activity.

Any other businesses or contracts in a manner not conflicting with the Company's interest.

In the event of a violation by the Company manager, member of its board of managers, or member of its board of directors of Paragraph (1) of this Article, the Company shall have the right to claim before the competent judicial authority the annulment of the contract and obligate them to disgorge any profit or benefit gained therefrom.

In the event of a violation by the Company manager, member of its board of managers, or member of its board of directors of Paragraph (2) of this Article, the Company shall have the right to claim appropriate compensation before the competent judicial authority.

Article (36): Management Liability

The Company manager, board of managers, and members of the board of directors shall be jointly and severally liable for compensating the Company, partners, or third parties for damages arising from violating the provisions of the Rules, the Company MoA or AoA, or from errors, negligence, or default in performing their duties; any condition providing otherwise shall be deemed void.

Liability shall be either personal, attaching to a particular manager or member individually, or joint among all managers or all members of the board of directors if the resolution was adopted unanimously; if the resolution was adopted by majority vote, dissenting managers or members shall not be held liable provided they explicitly record their dissent in the meeting minutes. Absence from the meeting at which the resolution is adopted shall not constitute a basis for exemption from liability unless it is proven that the absent manager or member was unaware of the resolution or was unable to object to it after becoming aware thereof.

The Company may provide insurance coverage for its manager, member of its board of managers, or member of its board of directors during their term of employment or membership against any liability or claim arising by reason of such capacity.

Article (37): Lawsuits by the Company and the Partner

The Company may file a liability lawsuit against the manager, members of the board of managers, or members of the board of directors for violating the provisions of the Rules, the Company MoA or AoA, or for errors, negligence, or default in performing their duties resulting in damage to the Company; the partners or the General Assembly shall resolve to file this lawsuit and appoint a representative of the Company to pursue it; if the Company is in liquidation, the liquidator shall file the lawsuit; if any liquidation proceeding is opened against the Company pursuant to the Bankruptcy Law, filing such lawsuit shall be initiated by the person legally representing the Company.

One or more partners representing five percent (5%) of the Company’s capital, unless the Company MoA or AoA provides for a lower percentage, may file the liability lawsuit prescribed for the Company in the event that the Company fails to file it, provided that the primary objective of filing the lawsuit is to serve the Company’s interests, that the lawsuit is based on valid grounds, that the claimant acts in good faith, and is a partner in the Company at the time of filing the lawsuit.

To file the lawsuit referred to in Paragraph (2) of this Article, the Company manager, board of managers, or board of directors, as applicable, shall be notified of the intention to file the lawsuit at least fourteen (14) days prior to the date of its filing.

A partner may file a personal lawsuit against the manager, members of the board of managers, or members of the board of directors if the error committed by them causes specific damage to that partner.

Article (38): Inadmissibility of Lawsuits

The approval of partners or the General Assembly, as applicable, to discharge the manager, members of the board of managers, or members of the board of directors from liability shall not preclude filing lawsuits pursuant to Article (37) of the Rules.

Except in cases of forgery and fraud, a liability lawsuit shall not be heard after the lapse of five (5) years from the date of the end of the Company’s fiscal year in which the harmful act occurred, or three (3) years from the termination of the manager's service, membership on the board of managers, or the relevant member's membership on the board of directors, whichever is later.

Article (39): Resolution Evaluation Rule

The Company manager, members of its board of managers, or members of its board of directors shall be deemed to have performed their duty in a resolution adopted or voted on in good faith if the following conditions are met:

They have no interest in the subject matter of the resolution.

They comprehended and familiarized themselves with the subject matter of the resolution to an appropriate extent under the surrounding circumstances based on their reasonable belief.

They firmly and rationally believed that the resolution serves the best interests of the Company.

The burden of proving otherwise shall rest with the claimant; for the purposes of this Article, "resolution" means acting or refraining from acting on a matter related to the Company’s business.

Article (40): Expenses of Filing a Liability Lawsuit

The competent judicial authority may, upon request of a partner, order the Company to bear the expenses incurred in filing a liability lawsuit regardless of its outcome, if the lawsuit was filed in good faith and it was in the Company's interest to file it.

Article (41): Enforcement Against the Partner’s Profits

A partner's personal creditor may request the competent judicial authority to collect their claim from the debtor partner's share in net distributed profits. If the Company is dissolved, the creditor's right shall transfer to the debtor's share in surplus assets remaining after settling the Company’s debts.

Article (42): Enforcement Against Shares

Subject to the provisions of the Law of Securing Rights over Movable Property and other relevant laws, a partner's personal creditor—in addition to the right referred to in Article (41) of the Rules—may request the competent judicial authority to sell the necessary shares of that partner to satisfy their claim from the sale proceeds; the remaining partners shall have the right to redeem such shares pursuant to the provisions of the Rules.

Article (43): Method of Company Management

The Company MoA or AoA, or a separate contract, shall determine the method of company management and the majority required for adopting resolutions when appointing more than one manager or constituting a board of managers or board of directors.

Article (44): Representation of the Company and being Bound by the Manager’s Acts

Without prejudice to the Company MoA or AoA, a limited liability company shall be represented by its manager, chairman of its board of managers, or chairman of its board of directors before the competent judicial authority, arbitral tribunals, and third parties; they may delegate to third parties certain powers to perform a specific act or acts.

No resolution issued to appoint, replace, or restrict the powers of the manager, board of managers, or board of directors shall take effect against third parties except after registration in the Companies Register.

The Company shall be bound by acts of the manager, board of managers, or board of directors that fall within the Company's purpose.

Article (45): Vacancy of Management Position

If the Company has a single manager, the partners shall, upon vacancy of the position, appoint a new manager for the Company within fifteen (15) days from the date of becoming aware thereof; the Company auditor or any partner shall have the right to convene the General Assembly to appoint a new manager for the Company.

If the Company has a board of directors, the board must call the Ordinary General Assembly to convene sufficiently prior to the expiration of its term to elect a board of directors for a new term. If the election cannot be held and the term of the current board expires, its members shall continue to perform their duties until a board of directors is elected for a new term, provided that the period of continuation of the expired board members does not exceed the period specified in the Company MoA or AoA.

If the chairman and members of the board of directors resign, they must call the Ordinary General Assembly to convene to elect a new board of directors; the resignation shall not take effect until the new board is elected, provided that the period of continuation of the resigning board does not exceed the period specified in the Company MoA or AoA.

A member of the board of directors may resign from board membership by a written notice addressed to the chairman of the board; if the chairman of the board resigns, the notice must be addressed to the remaining board members and the board secretary; the resignation shall be deemed effective in both cases as of the date specified in the notice.

Unless otherwise provided in the Company MoA or AoA, if the position of a board member becomes vacant due to death or resignation and such vacancy does not result in a breach of conditions required for the valid convening of the board due to the number of members falling below the minimum prescribed in the Company MoA or AoA, the board may temporarily appoint to the vacant seat a person possessing experience and competence, provided that the Companies Register is notified thereof within fifteen (15) days from the appointment date, and that the appointment is submitted to the Ordinary General Assembly at its first meeting; the appointed member shall complete the term of their predecessor.

If conditions required for the valid convening of the board of directors are not met due to the number of its members falling below the minimum prescribed in the Company MoA or AoA, the remaining members shall call the Ordinary General Assembly to convene within sixty (60) days to elect the required number of members.

In the event of failure to elect a board of directors for a new term or complete the required number of board members pursuant to Paragraphs (2), (3), and (6) of this Article, any interested person may request the competent judicial authority to appoint experienced and specialized person(s) in such number as it deems appropriate to supervise the management of the Company and call the General Assembly to convene within ninety (90) days to elect a new board of directors or complete the required number of board members, as applicable, or request the dissolution of the Company.

Article (46): Dismissal of the Manager

Partners may dismiss the manager, board of managers, or board of directors, whether appointed in the Company MoA, AoA, or in a separate contract; the partners shall appoint a manager, board of managers, or board of directors to succeed those dismissed. If the manager is a partner in the Company, they may not participate in voting on the resolution concerning their dismissal.

One or more partners representing at least (one-quarter) of the Company’s capital may apply to the competent judicial authority requesting the dismissal of the manager, board of managers, or board of directors.

Subject to the Company MoA, the resolution to dismiss the Company manager, board of managers, or board of directors—even if the manager is a partner in the Company and was appointed under its Memorandum of Association or a separate contract—shall be made in accordance with the quorum prescribed for the valid adoption of partners' resolutions set forth in the Rules.

Article (47): General Assembly

The Company shall have a General Assembly consisting of all partners.

The General Assembly of partners shall convene upon call of the manager, its board of managers, or board of directors in accordance with procedures specified in the Company MoA or AoA, provided that it convenes at least once a year during the six (6) months following the end of the Company’s fiscal year.

The General Assembly of partners may be called to convene at any time upon request of the manager, board of managers, board of directors, auditor, or upon request of one or more partners representing at least ten percent (10%) of the capital; the invitation shall be addressed to all partners by registered letters, modern technological means, or any other means provided for in the MoA or AoA, at least twenty-one (21) days prior to the date scheduled for convening the General Assembly.

Partners representing all shares of the Company’s capital may convene a General Assembly without observing the procedures and timeframes prescribed for the invitation.

Deliberations and resolutions of the General Assembly of partners or partners' resolutions by circulation shall be recorded in minutes entered in a dedicated register maintained by the Company for this purpose; the Company may use modern technological means to document and record deliberations and resolutions.

Meetings of the General Assembly of partners may be held, and a partner may participate in deliberations and vote on resolutions, via modern technological means.

Article (48): Issuance of Partners' Resolutions

Partners’ resolutions shall be issued in the General Assembly. However, partners’ resolutions may be issued by circulating them to the partners without the need to convene the General Assembly. In such case, the Company manager, its board of managers, or the board of directors shall send each partner the proposed resolutions and related documents for the partner to vote on them in writing.

Unless the Company MoA provides for another means of notification, the proposed resolutions and related documents may be sent by any of the following means:

Sending them to the partners by registered mail.

Personal delivery to the partners or their legal representatives.

Sending them by email or via any modern technological means.

In all cases, the resolutions shall not be valid unless approved by one or more partners representing at least more than half of the capital, unless the Company MoA or AoA stipulates a higher majority.

If the majority prescribed in Paragraph (3) of this Article is not obtained in the first deliberation or consultation, the partners shall be called to a meeting, and resolutions in this case shall be issued with the approval of the majority of shares represented therein, regardless of the percentage they represent in the capital, unless the Company MoA or AoA provides otherwise.

The Company MoA or AoA may specify any other method for calling the meeting or notifying of resolutions.

Article (49): Financial Statements and a Report on the Company Activities

The Company manager, its board of managers, or the board of directors shall prepare, for each fiscal year, the financial statements of the Company, a report on its activities and financial position for the preceding fiscal year, and their proposals regarding profit distribution, if any. The manager, board of managers, or board of directors shall place these documents at the disposal of the auditor at least forty-five (45) days prior to the date set for convening the General Assembly in its annual meeting.

The Company manager, its board of managers, or the board of directors shall provide the partners with the Company’s financial statements, a report on its activities, and the auditor's report, whether through modern technological means or by any other means stipulated in the Company MoA or AoA, at least twenty-one (21) days prior to the date set for convening the annual General Assembly. The Company manager, chairman of its board of managers, or chairman of its board of directors shall deposit the Company’s financial statements and the auditor's report with ECZA.

Article (50): Agenda of the General Assembly of Partners

The agenda of the General Assembly of partners at its annual meeting shall include the following items:

Reviewing the report of the Company manager, its board of managers, or its board of directors on the Company activities and financial position for the preceding fiscal year.

Reviewing and discussing the financial statements for the preceding fiscal year.

Discussing the auditor’s report for the preceding fiscal year and adopting a resolution in respect thereof.

Deciding upon the proposal of the Company manager, its board of managers, or its board of directors regarding the distribution of profits, if any.

Article (51): Matters Included in the Agenda

The General Assembly of partners may not deliberate on matters other than those listed on the agenda, unless facts arise during the meeting that require deliberation thereon. However, if a partner requests the inclusion of a specific matter in the agenda, the Company manager, its board of managers, or its board of directors shall grant the request; otherwise, the partner shall have the right to refer the matter to the General Assembly.

Each partner shall have the right to discuss the topics included in the agenda of the General Assembly of partners. The Company manager, its board of managers, or its board of directors shall be obligated to answer the partners' questions. If any partner deems the answer to their question insufficient, they may refer the matter to the General Assembly.

Article (52): Objection to the General Assembly’s Resolution

Without prejudice to the rights of bona fide third parties, each partner may apply to the competent judicial authority to request the invalidation of a resolution of the General Assembly of partners issued in violation of the provisions of the Rules, the Company MoA, or its AoA. However, invalidation of the resolution may only be requested by partners who objected to it in writing or who were unable to object after becoming aware of it. The declaration of invalidity shall result in the resolution being deemed null and void ab initio with respect to all partners.

The invalidation lawsuit shall not be heard after the lapse of ninety (19) days from the date of issuance of the resolution referred to in Paragraph (1) of this Article.

To file the lawsuit referred to in Paragraph (1) of this Article, the claimant shall be a partner in the Company at the time of filing the lawsuit and throughout all its proceedings.

Article (53): Partners' Rights and Obligations

Each partner shall have the right to participate in deliberations and in voting, and shall have a number of votes equal to the number of shares they own. Any agreement to the contrary shall be impermissible.

Each partner may authorize in writing another partner to attend and vote at the partners’ meetings on their behalf, unless the Company MoA or AoA provides otherwise. The MoA may provide that a partner may authorize in writing whomever they see fit from among non-partners to attend and vote at partners’ meetings on their behalf.

A non-manager partner may submit opinions to the manager, the board of managers, or the board of directors. Such partner, or any person authorized by them, may request to inspect the Company’s business and examine its records and documents at its head office twice during the Company’s fiscal year, and the Company shall comply with this request within 15 (fifteen) days from the date of the request. Any provision to the contrary shall be deemed null and void.

Any person who obtains any information pursuant to this Article shall maintain its confidentiality, shall not use it for any purpose that may harm the Company or any of its partners, and shall be liable to pay compensation for any damage arising from non-compliance therewith.

Article (54): Amendment of the Company Memorandum of Association or Articles of Association

The Company MoA or AoA, including increasing or reducing its capital, may be amended with the approval of one or more partners representing at least (three-quarters) of the capital, unless the MoA provides for a higher percentage.

Upon approving an increase in the Company’s capital by issuing new shares, a partner shall have priority in acquiring the shares issued against cash contributions in proportion to what they own in the Company's capital, in accordance with what is determined by the Rules.

The capital may not be increased by raising the nominal value of the partners’ shares or by suspending the pre-emptive right, except with the unanimous consent of the partners.

Article (55): Dispute Resolution

Except for criminal acts, the Company MoA or AoA may provide for the settlement of disputes or disagreements of whatever nature that may arise between the partners or between the Company and its managers or its board of directors by recourse to arbitration or other alternative dispute resolution methods.

Chapter Five: Capital and Shares

Article (56): Amount of Capital

The partners shall determine the amount of the Company’s capital in its MoA or AoA. It shall be divided into shares of equal value, and each share shall be indivisible and non-negotiable. If a share is owned by multiple persons, the Company may suspend the exercise of the rights attached thereto until the owners of the share choose from among themselves someone to be deemed the sole owner thereof vis-à-vis the Company. The Company may set a deadline for them to make this choice; otherwise, upon the expiry of such deadline, it may sell the share for the account of its owners. In this case, the share shall be offered to the other partners and then to third parties, in accordance with Article (60) of the Rules, unless the Company MoA or AoA provides otherwise.

Article (57): Distribution of Profits to Partners

Shares shall confer equal rights to net profits and liquidation surplus, unless the Company MoA or AoA provides otherwise.

The General Assembly shall determine the percentage to be distributed to the partners from the net profits after deducting reserves, if any.

A partner shall be entitled to their share of the profits in accordance with the resolution of the General Assembly or the partners issued in this regard, and the resolution shall state the entitlement date and the distribution date.

Article (58): Capital Reduction

The General Assembly of partners may resolve to reduce the capital if it exceeds the Company’s needs or if the Company suffers losses. In this case, the reduction resolution shall only be issued after reading out a statement at the General Assembly of partners, prepared by the Company manager, its board of managers, or its board of directors, stating the reasons justifying the reduction, the Company’s obligations, and the impact of the reduction on fulfilling them. A report from the Company auditor shall be attached to this statement. It shall suffice to present the said statement to the partners in cases where the partners’ resolution is issued by circulation.

If the reduction of capital is due to it exceeding the Company's needs, each manager in the Company, its board of managers, or its board of directors shall prepare a statement of the Company’s financial solvency containing the following:

That, upon examining the Company’s status as of the date of preparing the statement, they confirm that there is nothing that would render the Company unable to pay its debts and obligations.

That the Company is capable of paying its debts and obligations that fall due within the twelve (12) months following the date of preparing the statement.

Each manager in the Company shall sign the statement referred to in Paragraph (2) of this Article, state the date of its preparation therein, and provide it to the partners at least fifteen (15) days prior to the date set for adopting the reduction resolution.

The partners shall submit a draft amendment to the Company MoA or AoA including the reduction of the Company’s capital to the Companies Register within fifteen (15) days from the date of issuance of the reduction resolution, accompanied by the documents referred to in Paragraphs (1) and (2) of this Article, as applicable. The reduction resolution shall be effective upon its registration and publication with the Companies Register, provided that the reduction does not decrease the capital below the minimum capital specified for the activity under the license of the Relevant Entity.

Article (59): Formation of Reserves

The Company MoA or AoA may provide for setting aside a specific percentage of net profits to build a reserve allocated for the purposes specified in the MoA.

The partners—when determining the dividend share of net profits at the annual General Assembly meeting—may resolve to form reserves to the extent that achieves the Company’s interest or ensures the distribution of stable dividends, as far as possible, to the partners. Such assembly may also deduct amounts from the net profits to achieve social purposes for the Company employees.

Article (60): Assignment of Shares

A partner may assign their share to any of the partners or to third parties, unless otherwise provided in the MoA or AoA.

If a partner wishes to assign their share to a person other than a partner in the Company—whether with or without consideration—they shall notify the remaining partners through the Company manager, its board of managers, or the board of directors of the name of the assignee or buyer and the terms of the assignment or sale. The manager, board of managers, or board of directors shall notify the remaining partners as soon as the notification is received. Each partner may request the redemption of such share and pay its value, or request that the Company purchase it, within thirty (30) days from the date of notifying the manager or board of managers, at the agreed-upon price. If more than one partner requests the redemption of this share or shares, it shall be divided among them in proportion to the share of each in the capital. In case of disagreement on the value of the share, its value shall be estimated at the expense of the redemption applicant or the Company, as applicable, by one or more accredited valuers who shall prepare a report showing the fair value of the share of the partner wishing to make the assignment. If the period specified for exercising the redemption right expires without any partner requesting redemption of the share, or if the applicant for redemption fails to pay its value, or if the Company does not purchase it within that period, the owner thereof shall have the right to assign it to third parties.

The Company MoA or AoA may provide for other procedures for notifying the share assignment, another valuation method, or a longer period for exercising the redemption right and paying the value, or for the Company to purchase it.

The redemption right provided for in this Article shall not apply to the transfer of share ownership through inheritance, will, or pursuant to a judgment by the competent judicial authority.

Article (61): Issuance of Debt Instruments and Financing Sukuk

A limited liability Company may issue negotiable debt instruments or financing sukuk in accordance with the Capital Market Law.

Debt instruments or financing sukuk shall be issued with the approval of the partners in accordance with the conditions and procedures prescribed for amending the Company MoA.

Article (62): Purchase, Acceptance of Pledge, and Pledging of Shares

The Company may purchase or pledge its own shares if its MoA or AoA so provides. Shares purchased by the Company shall carry no voting rights in the General Assembly.

Shares may be pledged, and the pledgee creditor shall have the right to collect dividends unless agreed otherwise in the pledge contract. All pledge and mortgage contracts and their enforcement for investors within the Zone shall be in accordance with the relevant laws and regulations and under the supervision of the Competent Authority.

Article (63): Controls on the Company Purchase of Its Shares

A limited liability Company may purchase its own shares if its MoA or AoA so provides. It is required to obtain the partners’ approval for the Company purchase of the shares and their waiver of the redemption right, and to authorize the Company manager, board of managers, or board of directors to consummate the purchase within a maximum period of thirty (30) days from the date of the partners’ approval, unless the MoA provides for a longer period.

Article (64): Controls on the Company Accepting a Pledge over Its Shares

The Company may take a pledge over its own shares in accordance with the following controls:

The Company MoA or AoA provides for the permissibility thereof.

The pledge is taken as security for a debt owed to the Company.

The pledge is in the interest of the Company and the partners.

The partners approve the pledging transaction in accordance with the quorum prescribed for amending the Company MoA or AoA, and prior approval may be obtained for more than one transaction.

Article (65): Partner's Pledge of their Shares

A partner in the Company may pledge their shares in accordance with the following controls:

Obtain the necessary statutory approvals for creating the pledge, if any.

The pledge contract between the pledgor partner and the pledgee creditor shall comply with the provisions of this Article and Articles (61), (63), and (65) of the Rules.

Article (66): Particulars of the Pledge Contract

The pledge on shares shall be created pursuant to a written contract containing the following particulars:

Name of the pledgor partner and name of the pledgee, their identification numbers, and addresses.

Number of pledged shares and their value, and the Company’s commercial license number.

Amount of the debt secured by the pledge and the maximum limit thereof, if any.

Name of the debtor (if other than the pledgor), their identification number, and address.

Date of the Pledge Contract.

Terms and conditions of the release of pledge.

Any other terms agreed upon by both parties.

Article (67): Compulsory Sale of Shares

The Company MoA or AoA may provide—upon the approval of one or more partners representing at least ninety percent (90%) of the Company’s capital—for the following:

The majority of partners may obligate the minority to accept an offer from a bona fide purchaser to purchase all shares of the Company at the same price, terms, and conditions applicable to the purchase of the majority’s shares.

The minority of partners may obligate the majority to guarantee the sale of the minority’s shares in cases where the majority sells its shares, at the same price, terms, and conditions applicable to the sale of the majority’s shares.

Article (68): Company Losses

If the Company losses reach half of its capital, the Company manager, its board of managers, or its board of directors shall call the General Assembly of partners to convene within sixty (60) days from the date of becoming aware that the losses have reached this amount, in order to consider the continuation of the Company while taking any necessary measures to remedy such losses, or dissolve it.

Chapter Six: Merger of Companies

Article (69): Merger Proposal

Mergers shall be effected by the absorption of one or more companies into another existing Company, or by the consolidation of two or more companies to establish a new Company, provided that all such companies are existing in the Zone and registered in the Companies Register of the Zone. A Company existing in other regions of KSA may merge with a Company existing in the Zone, but a Company existing in the Zone may not merge with a Company existing in other regions of KSA.

A merger proposal shall be prepared for approval by each Company party thereto in accordance with the procedures prescribed for amending its MoA or AoA. The merger proposal shall determine its terms and state the nature and value of the consideration, including the number of shares allocated to the merged Company in the capital of the merging Company or the Company resulting from the merger, and a statement regarding the ability of each Company party to the merger to satisfy its debts.

Subject to the provisions of relevant laws and regulations, a Company—even if it is in the liquidation phase pursuant to the provisions of the Rules—may merge into another Company of the same legal form.

A merger shall not be valid except after evaluating the assets of each Company party thereto.

The consideration in the merger shall be shares in the merging Company or the Company resulting from the merger.

ECZA shall have the right to determine the controls and procedures for implementing the provisions of this Article, including the cash consideration for purchasing fractional shares or compensating a partner who objects to the merger resolution, as well as the controls governing the partner’s voting in the event that they have an interest other than their interest as a partner in the Company.

Without prejudice to the provisions under the Rules, the approval of the Competent Authority shall be obtained for the merger application.

Article (70): Merger of a Company that Wholly Owns It

The merger of one or more companies into another Company that wholly owns them shall be effected by a resolution issued by the merging Company, without the need for a merger resolution from the merged Company or companies. Each manager in the Company, board of managers, or board of directors shall prepare a financial solvency statement for each Company party to the merger confirming the ability of the merging Company to settle the debts and obligations related to the merged Company or companies upon the merger taking effect.

In the case referred to in Paragraph (1) of this Article, the requirement to prepare a merger proposal and evaluate the assets of each Company party thereto, as referred to in Article (69) of the Rules, shall not apply.

The merger of two or more companies owned by the same partners shall be effected by a resolution issued by each company party thereto. In this case, the provisions governing mergers stipulated in the Rules shall apply, with the exception of the evaluation of the assets of each Company party to the merger.

Article (71): Objection to the Merger Resolution

Each Company party to the merger shall announce it in writing at least thirty (30) days prior to the date set for deciding on and voting on the merger proposal.

Any creditor of the merged Company shall have the right to object to the merger by a registered letter sent to the Company or by any other means specified in the announcement referred to in Paragraph (1) of this Article, within fifteen (15) days from the date of the announcement. The Company shall satisfy the debt of the objecting creditor if it is due, or provide sufficient security to satisfy it if it is deferred.

A creditor who has notified the Company of their objection to the merger pursuant to Paragraph (2) of this Article, and the Company has not satisfied the debt if due, or provided sufficient security if deferred, may apply to the competent judicial authority at least ten (10) days prior to the date set for adopting the merger resolution. In this case, the competent judicial authority may order satisfaction of the debt if due, or provision of security if deferred. If it determines that the merger will cause grave damage to the objecting creditor and neither the merged nor the merging Company can satisfy the debt or provide security, it may order the suspension or postponement of the merger, provided that its resolution is issued prior to the merger resolution taking effect. If the competent judicial authority does not rule on the creditor's objection before the merger resolution becomes effective, and subsequently establishes the validity of the objecting creditor's claim, it may issue a resolution compensating them for damages incurred as a result of such merger.

Article (72): Effectiveness of the Merger Resolution

The merger resolution shall take effect and be deemed in force from the date of registering the particulars of the merged Company in the record of the merging Company with the Companies Register; otherwise, the merger resolution shall take effect and be deemed in force from the date of registering the Company resulting therefrom with the Companies Register.

Article (73): Rights, Obligations, Assets and Contracts of the Merged Company

Upon the merger resolution taking effect, all rights, obligations, assets, and contracts of the merged Company or companies shall transfer to the merging Company or the Company resulting from the merger, and the merging Company or the Company resulting from the merger shall be deemed the successor to the merged Company or companies.

If the merger results in the creation of a new Company, the new Company shall obtain the license of the Relevant Entity and register with the Companies Register.

Chapter Seven: Branches of Companies

Article (74): Practicing Activities Within the Zone

Saudi companies incorporated in other regions of KSA, GCC companies, and foreign companies may practice their activity and business within the Zone through a branch, in accordance with the Rules.

Article (75): Particulars required to Be Included in the Company Branch Documents

Every Company branch shall place on all its papers, documents, and printed materials its address in the Zone, in addition to the full trade name of the branch, which shall be accompanied by the commercial name of the Company in all its transactions, correspondence, and printed materials, as well as its address and head office in the Zone, its registration number with the Companies Register, and an indication that it is a branch.

Article (76): Finances of the Company Branch

The application for registering a Company branch shall include the start and end dates of the branch's fiscal year.

The Company branch shall prepare separate financial statements for its activity within the Zone in accordance with the accounting standards approved in KSA, and deposit these documents and the auditor’s report thereon within six (6) months from the end date of the fiscal year pertaining to the activity of that branch, as specified by the Rules.

The appointment of the auditor may be made by a resolution of the manager or board of managers of the Company branch pursuant to authorization from the Company.

The branch shall submit financial statements specific to its activity within the Zone, independent of the financial statements of the parent Company.

Article (77): Domicile of the Company Branch

The Company branch within the Zone shall be deemed the Company’s domicile regarding its activity and business inside the Zone, and all legislation in force in the Zone shall apply to it.

Article (78): Liquidation of the Branch

The liquidation of a foreign Company branch shall be conducted in accordance with the liquidation procedures prescribed under the Bankruptcy Law or relevant laws.

Chapter Eight: Dissolution and Liquidation of the Company

Article (79): Grounds for Dissolution of the Company

Company shall be dissolved for any of the following reasons:

Expiry of its specified term if it was established for a fixed term, unless extended pursuant to the provisions of the Rules.

Agreement of the partners to dissolve it.

Issuance of a final judicial judgment for its dissolution or invalidation.

A limited liability Company shall not be dissolved by the death of a partner, interdiction placed upon them, opening of any liquidation proceedings against them under the Bankruptcy Law, their insolvency, or their withdrawal, unless the Company MoA or AoA provides for that.

Article (80): Extension of the Company Term

The term of the Company, if established for a fixed term, may be extended prior to its expiry for another period by a resolution issued by the General Assembly of partners by any number of partners owning half of the shares representing the capital, unless the Company MoA or AoA provides for a greater majority.

If no resolution is issued to extend the Company term and it continues to perform its business, its term shall be extended for a similar period under the same terms set out in its MoA or AoA.

A partner who does not wish to continue in the Company may exit therefrom, and their shares shall be appraised in accordance with the provisions set forth in Article (59) of the Rules. The extension shall not take effect until this partner’s share is sold to the partners or third parties, as applicable, and its value is paid to them, unless the withdrawing partner and the remaining partners agree otherwise.

Any third party who has an interest in not extending the term may object thereto and assert that it is ineffective against them.

Article (81): Examination of the Company’s Financial Position

The Company manager, its board of managers, or its board of directors shall—prior to the partners or the General Assembly adopting a resolution to dissolve the Company—prepare a statement confirming that they have examined the Company’s status, including an assurance that the Company’s assets are sufficient to pay its debts by the end of the proposed liquidation period and that the Company is not in default under the Bankruptcy Law. This statement shall be presented within thirty (30) days from the date of its preparation to the partners or the General Assembly to adopt a resolution to dissolve the Company.

If it appears from the statement referred to in Paragraph (1) of this Article that the Company’s assets are insufficient to pay its debts or that the Company is in default under the Bankruptcy Law, the partners or the General Assembly may not adopt a resolution to dissolve the Company; otherwise, they shall be jointly and severally liable for any remaining debt owed by it.

Article (82): Liquidation of the Company

If the Company is dissolved, it shall enter into liquidation in accordance with the provisions of the Rules. The partners or the General Assembly shall undertake liquidation proceedings, and the Company shall retain its legal personality to the extent necessary for liquidation.

If the Company is dissolved for any of the dissolution causes stipulated in the Rules, the partners, the Company manager, its board of managers, or its board of directors, as applicable, shall prepare the statement referred to in Paragraph (1) of Article (81) of the Rules, unless it was prepared prior to its dissolution and the period from the date of its preparation has not exceeded thirty (30) days.

If the Company is dissolved and its assets are insufficient to pay its debts, or if it is in default under the Bankruptcy Law, it shall apply to the competent judicial authority for opening any of the liquidation procedures under the Bankruptcy Law.

If the Company is liquidated in violation of the provisions of this Article, the partners, the Company manager, its board of managers, or its board of directors, as applicable, shall be jointly and severally liable for any remaining debt owed by it.

Article (83): How to Conduct Liquidation

Unless the Company MoA or AoA provides, or the partners or General Assembly agree, as applicable, on how to liquidate the Company upon its dissolution, liquidation shall be conducted in accordance with the provisions stipulated in the Rules, the Bankruptcy Law, and relevant laws.

Article (84): Management of the Company During the Liquidation Period

The authority of the Company manager, Board of Managers, or Board of Directors shall terminate upon the Company dissolution. However, they shall continue to manage the Company and shall, in relation to third parties, be deemed to have the status of liquidators until a liquidator is appointed.

The Company general assemblies shall remain in place throughout the liquidation period, and their role shall be limited to exercising their competencies that do not conflict with those of the liquidator.

During the liquidation period, a partner shall retain the right to inspect the Company’s documents granted to them under the Rules or the Company MoA or AoA.

Article (85): Number of Liquidators and Liquidation Period

Liquidation shall be carried out by one or more liquidators from among the partners or non-partners.

The liquidation period shall not exceed three (3) years and may not be extended except by order of the competent judicial authority.

Article (86): Resolution to Appoint the Liquidator

The liquidator shall be appointed by a resolution of the partners or the General Assembly in accordance with the procedures prescribed for amending the Company MoA or AoA depending on the Company’s legal form, within a period not exceeding sixty (60) days from the date of the Company’s dissolution. If it is not possible to appoint the liquidator within said period, the appointment shall be made by a resolution of the competent judicial authority based on an application submitted by any partner or interested party.

By way of exception to the provision of Paragraph (1) of this Article, if the dissolution of the Company is the result of its dissolution or invalidation by a final judicial judgment, the liquidator shall be appointed by a resolution of the judicial authority that issued said judgment.

Prior to issuing the resolution to appoint the liquidator pursuant to the provision of Paragraphs (1) and (2) of this Article, the competent judicial authority shall request from the partners, the Company board of managers, or its board of directors, as applicable, to submit the statement referred to in Paragraph (1) of Article (81) of the Rules or necessary data, accounting records, or financial statements proving that the Company’s assets are sufficient to settle its debts by the end of the liquidation period as stipulated in this Chapter and that the Company is not in default under the Bankruptcy Law, within a period not exceeding thirty (30) days from the request date. If the competent judicial authority finds that the Company's assets are insufficient to pay its debts, it shall take necessary measures to open any of the liquidation procedures under the Bankruptcy Law.

In all cases, the resolution appointing the liquidator shall include the determination of their powers, fees, restrictions imposed on them, if any, and the period required for liquidation.

Article (87): Registration and Publication of the Liquidator's Appointment Resolution

The liquidator shall register and publish their appointment resolution with the Companies Register, and their appointment or the liquidation proceedings shall not be invoked against third parties except from the date of registration and publication in accordance with the Bankruptcy Law and its Implementing Regulations.

Article (88): Dismissal of the Liquidator

The liquidator shall be dismissed in the same manner in which they were appointed. In all cases, the competent judicial authority may, based on a request from any partner or the Company creditors for acceptable reasons, rule to dismiss them.

The resolution or judgment dismissing the liquidator shall include appointing a replacement and determining their powers and fees.

Article (89): Multiple Liquidators

If there are multiple liquidators, they shall act jointly, and their actions shall not be valid except by their unanimous agreement, unless their appointment resolution provides or the authority appointing them authorizes otherwise.

Article (90): Powers of the Liquidator

Subject to the restrictions set out in the resolution appointing the liquidator, the liquidator shall represent the Company before the competent judicial authority, arbitration tribunals, and third parties, and shall perform all acts required by the liquidation, in particular converting the Company’s assets into cash, including selling movable or immovable property by public auction or by any other method ensuring obtaining the best possible price.

The liquidator may sell the Company’s assets in bulk, or contribute them as an in-kind share in another Company, if authorized to do so by the authority that appointed them.

The liquidator may not initiate new business unless necessary to complete prior operations.

The Company shall be bound by the acts of the liquidator that fall within the scope of their powers.

The powers of the liquidator shall terminate upon the completion of liquidation proceedings or the expiry of the liquidation period, whichever is earlier, unless extended in accordance with the provisions of the Rules.

Article (91): Inventory of Assets and Liabilities

The Company manager, its board of managers, or members of its board of directors shall provide the liquidator upon their appointment with the Company records, documents, and any clarifications and data they request.

The liquidator shall, within ninety (90) days of commencing their duties, prepare an inventory of all the Company’s assets, rights, and obligations, and request the Company auditor to issue a report on said inventory. The entity that appointed the liquidator may extend this period where necessary.

At the end of each fiscal year, the liquidator shall prepare financial statements and a report on the liquidation proceedings, including a statement of their notes and reservations on the liquidation proceedings, the reasons leading to obstructing or delaying them, if any, and their proposals to extend the liquidation period. They shall provide the Companies Register with a copy of these documents and present them to the partners or General Assembly for approval pursuant to the provisions of the Company MoA or AoA.

Article (92): Insufficiency of Assets

If it appears to the liquidator at any time during the liquidation that the Company’s assets are insufficient to pay its debts, they shall immediately notify the partners and the Company creditors, and apply to the competent judicial authority to open any of the liquidation procedures under the Bankruptcy Law.

Article (93): Settlement of Debts

The liquidator shall pay the Company’s debts if due according to priority, and set aside the necessary amounts to pay them if deferred or disputed.

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

After paying the debts, the liquidator shall refund to the partners the value of their shares or stocks in the capital, and distribute the surplus among them thereafter pursuant to the provisions of the Company MoA or AoA; if the MoA or AoA contains no provisions in this regard, the surplus shall be distributed to the partners or shareholders in proportion to their shares or stocks in the capital.

If the Company’s net assets are insufficient to cover the value of the partners’ shares, the loss shall be distributed among them according to the ratio prescribed for the distribution of losses.

Article (94): Completion of Liquidation

Upon completion of the liquidation proceedings, the liquidator shall submit a detailed financial report on the acts they performed. Liquidation shall terminate upon approval of this report by the entity that appointed the liquidator.

The liquidator shall register and publish the completion of liquidation with the Companies Register, and the completion of liquidation shall not be recognized vis-à-vis third parties except from the date of striking off the Company registration from the Companies Register.

Article (95): Liability of the Liquidator

The liquidator shall be liable to compensate for damage suffered by the Company, partners, or third parties as a result of exceeding the limits of their powers or as a result of errors committed in performing their duties.

Liability shall be either personal, attaching to a specific liquidator, or joint among all liquidators if they are multiple and the resolution was issued unanimously by them, unless each of them has the right to act individually pursuant to the provision of Article (88) of the Rules.

Article (96): Inadmissibility of Liability Lawsuit

Except in the cases of forgery and fraud, the lawsuit against the liquidator shall not be heard after the lapse of five (5) years from the date of striking off the Company registration from the Companies Register.

Article (97): Oversight of Companies

ECZA shall have the right of oversight over companies in the Zone regarding the application of the provisions set forth in the Rules and in the Company MoA or AoA, including the power to inspect the Company, audit its accounts, and request whatever data, records, documents, and minutes it deems fit from the Company manager, the Company board of managers, board of directors, or executive management, through one or more representatives from its personnel or from experts it selects for this purpose. It may also, at its discretion, dispatch one or more representatives as observers to attend companies' general assemblies to ensure the implementation of the provisions of the Rules.

Article (98): Access to Company Records and Documents

All officials in the Company shall allow ECZA’s representatives, in respect of the duties provided for in Article (97) of the Rules, access to all Company records and documents they request, and provide them with all related information and clarifications.

Chapter Nine: Final Provisions

Article (99): Liability for Violations

If the Company engages in its activity and business prior to completing licensing procedures by the Relevant Entity and its registration with the Companies Register, or carries out acts exceeding what it is licensed for, the Company and the persons who engaged in such activity and performed such acts shall be jointly and severally liable therefor.

Article (100): Company Failure to Conduct its Activity

The partners or the General Assembly may issue a unanimous resolution to dissolve the Company if it has not conducted any activity or performed any work. The resolution shall be submitted to ECZA, provided it includes the following particulars:

An acknowledgment by the partners that the Company has not practiced any activity and has not performed any work, that it has no assets or properties, that no due, deferred, or disputed debts or obligations to third parties have arisen against it, and that no taxes or fees are due from it to the State or the Relevant Entity or Competent Authority.

An undertaking by all partners, jointly and severally among themselves, to settle any debts or obligations towards third parties that may appear against the Company, from their own private funds. This undertaking shall be deemed in the nature of a completion of liquidation report and a financial report of its closing account, and shall also be deemed an application to strike off the Company registration from the Companies Register in application of the provisions of Article (81) of the Rules.

Article (101): Statement of Violations

Each of the following shall be deemed a violation of the provisions of the Rules:

Any manager, officer, board member, auditor, or liquidator who deliberately records false or misleading data or information in the Company’s financial statements, in reports prepared by them, in statements concerning the reduction of the Company’s capital, or in the sufficiency of its assets to pay its debts upon liquidation, and other reports and statements presented to the partners or the General Assembly pursuant to the provisions of the Rules, or who deliberately omits mentioning a material fact in any of the foregoing with the intent of presenting the financial position of the Company contrary to the truth.

Any manager, officer, or board member who uses the Company’s funds, the authorities they enjoy, or the votes they hold in that capacity, in a manner they know to be against the interests of the Company; to achieve personal purposes, favor a Company or person, or benefit from a project or transaction in which they have a direct or indirect interest.

Any liquidator who uses the Company’s funds, assets, or rights with third parties in a manner they know to be against the Company’s interests, or deliberately causes harm to the partners or creditors to achieve personal purposes, favor a Company or person, benefit from a project or transaction in which they have a direct or indirect interest, or favor one creditor over another in collecting their claim without a legitimate cause.

Any auditor who fails to notify the Company, through the bodies or persons responsible for its management, of violations discovered during their work that appear to them to be criminal offenses.

Anyone who obtains benefits, guarantees, or promises thereof in return for voting in a specific direction or abstaining from voting in order to harm the interests of the Company, as well as anyone who grants, guarantees, or promises such benefits.

Anyone who announces, publishes, or declares by any means, with the intention of falsely creating the impression of the registration of a Company that has not completed its registration procedures with the Companies Register.

Any employee who discloses Company secrets they became privy to by virtue of their job to parties other than the Competent Authorities. 8. Anyone who, for the purpose of paying up the value of shares, publishes names of persons contrary to the truth and treats them as linked to the Company, or that they will be linked to it in any way whatsoever.

Anyone who resolves to distribute dividends or returns, or distributes or receives them in bad faith in violation of the provisions of the Rules, the Company MoA, or its AoA, and any auditor who became aware of such violation and did not report it in their report.

Anyone, whether a partner or otherwise, who exaggerates or submits false acknowledgments, undertakings, or data regarding the valuation of in-kind shares, distribution of shares among partners, or payment of their full value while knowingly aware of that, whether at the time of the Company incorporation, upon increasing the capital, or upon modifying the distribution of shares among partners.

Any manager, officer, board member, or auditor who fails to call the General Assembly—or fails to take what is necessary therefor, as applicable—upon becoming aware that losses have reached the thresholds prescribed pursuant to the provisions of Article (68) of the Rules.

Any manager, officer, board member, auditor, or liquidator who exploits or discloses a secret of the Company with the intent of causing harm to it.

Anyone who deliberately obstructs the work of those who have the right—pursuant to the Rules—to inspect the Company papers, documents, accounts, registers, and records, or causes that, or refrains from enabling them to perform their duties.

Any person appointed to inspect the Company who deliberately establishes false facts in reports they prepare, or deliberately omits mentioning material facts that would affect the outcome of the inspection.

Article (102): The Committee

A committee shall be formed by a resolution from the Board to be competent to impose any of the penalties provided for in Article (104) of the Rules, and the Board shall have the right to specify the violations in respect of which administrative penalties may be directly imposed without submitting them to the Committee. The Committee shall also be competent to examine the following violations:

Anyone who causes disruption to the call for or convening of the General Assembly, and anyone who prevents a partner from participating in any partners' assembly or prevents them from enjoying the voting rights attached to their shares in the Company in violation of the provisions of the Rules.

Anyone who fails to perform their duty to call the General Assembly of partners to convene within the period prescribed for its convening pursuant to the provisions of the Rules.

Anyone who breaches their duty to maintain the Company’s accounting records and supporting documents to clarify its business and contracts, or to prepare financial statements in accordance with the accounting standards approved in KSA or deposit them pursuant to the provisions of the Rules.

Anyone who neglects their duty to provide the Competent Authority with the documents stipulated in the Rules.

Anyone who neglects their duty to place the necessary documents at the partner’s disposal pursuant to the provisions of the Rules.

Anyone who neglects their duty to prepare meeting minutes and record them pursuant to the provisions of the Rules.

Anyone who neglects their duty to include any of the data stated in Article (16) of the Rules.

Anyone who accepts an appointment to perform the duties of an auditor or continues to practice them while aware of the existence of reasons preventing them from performing such duties pursuant to the provisions of the Rules.

Anyone who neglects their duty regarding registering the Company with the Companies Register pursuant to the provisions of the Rules, and anyone who fails to register an amendment to the Company MoA or AoA with the Companies Register pursuant to the provisions of the Rules.

Anyone who deliberately enters untrue data or data violating the provisions of the Rules into the Company MoA, AoA, other Company’s documents, its incorporation application, or documents and records accompanying this application, and anyone who signs such documents or registers them with the Companies Register while being aware thereof.

Any liquidator who fails to perform their duty to register their appointment resolution or register and publish the completion of liquidation with the Companies Register pursuant to the provisions of the Rules.

Anyone who neglects to take the necessary corrective actions to rectify a committed violation after being notified thereof pursuant to the provisions of the Rules.

Any auditor who fails to perform their duties provided for in the Rules.

Any Company or officer therein who fails to observe the application of the Rules or fails to comply with controls or resolutions issued by ECZA or the Competent Authority, without providing a reasonable cause therefor.

Article (103): Detection of Violations

Employees assigned to detect the acts provided for in the Rules shall have the authority to detect and establish violations, and they may—to that end—seize whatever records and documents they deem related to the violation, and the resolution shall specify their powers.

The employees referred to in Paragraph (1) of this Article shall be appointed pursuant to a resolution issued by the Board, and the resolution shall specify their powers.

Article (104): Administrative Penalties

The Committee may take any of the following measures:

Warning the person concerned.

Compelling the person concerned to take necessary steps to prevent the occurrence of the violation, or to take necessary corrective steps to remedy its effects.

Article (105): Relevant Laws

The provisions under the Rules shall not prejudice the application of penalties provided for in other laws, nor the Public Prosecution's exercise of its roles within its mandates.

Article (106): Rectification of Status

ECZA shall coordinate with all relevant Competent Authorities and develop corrective plans and detailed mechanisms to address the effects resulting from the transition of companies to the application of what is stated under the Rules, in a manner ensuring a smooth transition of companies and preventing their operational processes from being affected, including, but not limited to, transferring to ECZA memorandums of association and equivalent documents, all documents and records related to the Company, its unified number, its subscriptions, and the like.

Establishments licensed in the Zone shall regularize their status in accordance with the time period specified under the Regulations, in a manner that ensures compliance with the provisions of the Regulations and the Rules.

Article (107): Periodic Review

The Rules shall be reviewed periodically, and amendments shall be approved by a resolution from the Board.

Article (108): Publication and Enforcement

The Rules shall enter into force as of the date of their publication in the Official Gazette.

Economic Cities and Special Zones Authority