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THE LAW FIRM OF HAZIM AL MADANI ATTORNEYS AND LEGAL CONSULTANTS

Inheritance Provisions in Companies

Regulating the rules and provisions for the transfer of ownership and assets of companies to heirs after the death of one of its owners or partners is an important matter to ensure the continuity of business operations and the protection of the rights of both investors and heirs.
Therefore, the Kingdom has shown great interest in regulating the rules and provisions of inheritance in companies through the Companies Law. The law clearly stipulates how the ownership of different companies and their assets should be transferred to the heirs of partners or owners upon death. Additionally, we would like to highlight the key points regarding the regulation of inheritance in companies, including:
  • Ensuring the continuity of business operations after the death of one of its owners or partners.
  • Protecting the rights of heirs in the assets and properties they inherit from the companies.
  • Preserving the rights of the remaining partners and avoiding harm to their interests.
  • Facilitating the process of ownership transfer through clear and defined procedures.
Here, we will briefly highlight the key provisions and rules of inheritance stated in the Companies Law for various types of companies.

First: Joint Stock Company

  • The share of a deceased partner is transferred to their heirs unless the Articles of Association state otherwise.
  • Partners have the right of preemption for the shares of the deceased partner within six months of their death.
  • Heirs have the right to appoint a representative to manage the company within six months of the death.

Second: Limited Partnership

  • The company does not terminate upon the death of the recommended partner unless the Articles of Association state otherwise.

Third: Limited Liability Company

  • The company is not affected by the death of one of the partners, and ownership is transferred to the heirs.

Fourth: Joint Venture Company

  • The company is not affected by the death of a shareholder, and their shares are transferred to their heirs. Additionally, it should be noted that shares in joint venture companies are not divisible against the company. Therefore, if a partner passes away, their heirs must choose one representative to act on their behalf regarding the associated rights.
In this way, the Companies Law has clearly regulated the provisions of inheritance to ensure the continuity of companies and protect the rights of heirs according to the different types of companies. This allows for a variety of company structures that cater to the needs of investors while establishing clear rules for the transfer of shares of deceased partners to ensure the continuity of business operations and drive economic development.