ARTICLE
19 February 2025

Allowing Corporate Partners In Joint Liability Companies

ER
Eyad Reda Law Firm LLP

Contributor

Eyad Reda Law Firm LLP (ERLF) is a full-service legal practice in Saudi Arabia, with a diverse team and strong expertise in the country’s regulatory and cultural environment. We strive to be leaders in providing high-quality legal services, focusing on effective communication and collaborative relationships to ensure cost-effective, outstanding legal support.
A joint liability Company is one of the partnership companies that are based on the personal consideration of the partners.
Saudi Arabia Corporate/Commercial Law

A joint liability Company is one of the partnership companies that are based on the personal consideration of the partners. Under the previous Companies Law, a joint liability company would expire upon the death of one of the partners. The partners in such a Company were personally and jointly liable for the company's debts. The previous law did not allow a partner to be a Corporate or a legal entity, and all these specifications made the personal identity of the partner highly important in joint liability companies.

However, the updates in the new Companies Law allowed a partner in the joint liability Company to be a Corporate or a legal entity, which is a significant qualitative leap and a positive impact on joint liability companies. Additionally, the death of one of the partners no longer leads to the dissolution of the joint liability company unless it is specifically stated in the Company Article of Association.

This series discusses the key updates issued in the new Companies Law issued by Royal Decree No. (M/132) dated 1443/12/014, which came into effect on 1444/06/074, approximately six years after the issuance of the previous law in 1437H

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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