Limited liability companies According to the Companies Law issued in 1443 H / 2022 AD

What are limited liability companies

Limited Liability Company: A company established by one or more natural or legal persons, its liability shall be independent of the financial liability of each partner or owner. The company shall be solely responsible for the debts and obligations arising from it or arising from its activity. Neither the owner nor the partner shall be responsible for these debts and obligations except to the extent of his share in the capital.

What is the consequence if the limited liability company consists of one person?:

A- This person shall have the powers and authorities of the director, the company’s board of directors and the general assembly of partners. his decisions shall be issued in writing and recorded in a special register with the company.

b- This person may appoint one or more directors who will represent the company before the courts, arbitration entities and others. He shall be responsible for its management before the partner owning the company’s shares.

2- A limited liability company owned by one person shall have a memorandum of Association. Every reference to the articles of association in the provisions that apply to the limited liability company means the company’s articles of association.

What data must be provided when establishing a limited liability company?

What should be included in the company's articles of incorporation?

Can the company's articles of incorporation be amended?

Yes, it is permissible in these cases:

How to determine the capital of a limited liability company according to the new company’s law?

The partners determine the amount of the company’s capital in its articles of incorporation. it shall be divided into shares of equal value and the share shall be indivisible and negotiable. If the share is owned by multiple persons, the company may suspend the use of the rights related to it until the owners of the share elect from them who is considered a Sole Proprietor against the company. The company may set a date for this election for them, otherwise, it may sell the share to its owner’s account after its expiry. In this case, the share shall be offered to the other partners and then to third parties.

What are the required procedures if the losses of the limited liability company amount reach half of its capital?

The director of the company must call the general assembly of the partners to a meeting within (sixty) days from the date of knowledge of the loss to consider the continuity of the company and take the required procedures to remedy or dissolve such losses.

Is it possible to extend the term of the limited liability company?

Yes, the term of the company can be extended if:

What are the cases of limited liability companies’ termination according to the new companies’ law?

The Limited Liability Company shall not terminate upon the death of a partner, nor by the disability of his financial activity, nor by taking any liquidation procedures against him in accordance with the bankruptcy system, nor by his insolvency, nor by his withdrawal, unless the company’s articles of incorporation stipulate that.

We can refer to the difference between a one-person company and a sole proprietorship for Not to be confused:

Difference between

One-person company

Sole proprietorship

Limited Liability Company

Individual trader



It is independent of the partner’s liability and the financial claim is separate from his own funds

It is non-independent from its owner and the financial claim shall incur on his own funds

It consists of one natural or legal person and he may appoint another director

Its owner is a natural person and he may appoint another director other than himself 

It requires publishing to the public when adjusting the capital

It does not require publishing to the public when adjusting the capital

Do not turn into a sole proprietorship

It turns into a One-person company

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