THE LAW FIRM OF HAZIM AL MADANI ATTORNEYS AND LEGAL CONSULTANTS

Non-profit companies according to the new companies’ law

What is a non-profit company?

A company that takes the form of a shareholding company and does not have the right to take any other form and the profits generated from exercising its activities shall be spent in any of the banks and public non-profit fields that aim exclusively to serve the society in general. The Ministry of Commerce, in coordination with the National Centre for Non-Profit Sector Development, determines these banks and areas.

Can the shares of a non-profit company be offered for a public subscription?

No, a non-profit company is prohibited from offering its shares for public subscription.

What are the forms of a non-profit company?

Private Non-Profit Company: A company that takes the form of a limited liability company or shareholding company Or a simplified public limited company and has no other form.

What are the terms of the non-profit company's banks and fields?

1- For the approval of the establishment of a public non-profit company, it must provide for banks and public non-profit fields in its articles of association, a private non-profit company may stipulate in its memorandum of association or articles of association any non-profit banks and fields.

2- Subject to the relevant laws, the non-profit company may receive cash or in-kind returns in return for its business, products and services and it may practice any legitimate activity that enables it to achieve profits spend in banks and the fields stipulated in its memorandum of association or articles of association.

What are the necessary conditions for amending the articles of association of a public non-profit company?

There is no amendment in the assets or the powers of the board of directors or the banks and fields of the company without the approval of the Ministry.

What is the capacity of a partner in a non-profit company?

Each partner or shareholder of the nonprofit corporation shall be a member.

What may be stipulated in the memorandum of association of a non-profit company or its articles of association?

The memorandum of association of a non-profit company or its articles of association may state the following:

A- Determining the categories, terms and conditions of membership therein.
b- Determining the powers of the membership categories, the topics required to be approved by the approval of assembly of the company’s members, and the required quorum, including the right to control on the manager or the board of directors, and verify spending of the company’s profits on achieving its objectives in banks and the areas stipulated in its memorandum of association or its articles of association.
C- Granting a certain category of members the right to vote on the company’s decisions in a special assembly.
d- Granting a certain category of members the right to appoint one or more company managers or board members,
Note In this case, he may only be dismissed by the category that appointed him.
e- Issuance of non-negotiable membership certificates. As an exception, it may be provided that a member of the private non-profit corporation shall waive his membership.
F- Requirement to pay annual fees or cash or in-kind contributions to one or more categories of membership of the non-profit company.
g- Requirement to provide a business or service to the company in order to obtain its membership.

Who regulates the aspects related to membership in non-profit companies?

The Ministry of Commerce shall be responsible for regulating membership aspects in nonprofit corporations.

Who is allowed to establish non-profit companies?

1- Taking into account the relevant regulations and decisions, non-profit companies may be established by government entities, public bodies and institutions, universities and other public legal persons who are permitted to do so.

2- Public sector employees may establish or participate in public non-profit companies.

What are the exemptions for non-profit companies?

Non-profit companies are not subject to the provisions of Zakat collection and are not also subject to taxes, this is an exception set for this type of company. These regulations were decided by the Zakat, Tax and Customs Authority in coordination with the Ministry of Commerce.

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