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25 June 2022

26 Thul-Qi'dah 1443

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Law No. 5 of 2002, promulgating the Law of Commercial Companies

Law Summary Record Type: LawNumber: 5Date: 25/05/2002 Corresponding to 14/03/1423 HijriNumber of Articles: 348Status: In force

Official Gazette :Issue: 7Offcial Journal Issue Publication Date: 03/08/2002 Corresponding to 25/05/1423 HijriPage from: 17

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Section Name

General Partnership

19 Article

A general partnership is a company which comprises two or more natural persons, who shall be jointly liable for the company obligations to the full extent of all their property.

20 Article

The title of the general partnership shall be composed of the names of all partners. However, the company's title may be restricted to one or more partners followed by the term “and partners” wherever it appears.

The name of the company shall be complying with the reality. Where a name of an individual, who is not a partner therein, is knowingly embodied in the name of the company, such person shall be jointly liable for the company's obligations. However, the company may maintain in its name a name of a partner who withdrew from the partnership or died, if the withdrawn person or the heirs of the deceased partner so agree. The company may have a special trade title provided that it is associated with an indication that it is a general partnership.

21 Article - Amended

All partners in a general partnership must be natural persons

22 Article

The Memorandum of Association of a general partnership must be drawn up in writing and signed. In particular the Memorandum shall comprise the following:

Name, purposes, headquarters and branches (if any) of the company.
Name, family name and surname (if any) of every partner and his nationality, date of birth and place of residence.
Company capital and shares contributed by each partner, whether paid in cash or in kind, or rights with third parties, the estimated value of such shares, their submission method and due dates.
Date of incorporation and term.
Management of the company and name of the persons who are authorized to sign on behalf of the company and their respective authorities.
Commencement and end of the fiscal year of the company.
Rate of distribution of profits and losses.

23 Article

Partners may adopt written Articles of Association for the company that include the detailed provisions agreed upon for the management of the company. A copy of this Articles of Association shall be attached to the Memorandum of Association.

24 Article

The Memorandum of Association of the company and all the amendments made thereto shall be entered and published in the Commercial Registry according to rules pertaining to this Registry. A summary of the Articles of Association and all the amendments made thereto shall also be published in a local daily Arabic newspaper at the company's expense.

Unless the registration and announcement procedures are complete, the existence of the company shall not be asserted in defences against third parties in good faith. The failure in the fulfilment of the registration and announcement procedures shall lead to the rejection of any claims asserted by the company against others.

Nevertheless, third parties in good faith may assert the existence of the Company in claims placed against partners thereof even though such registration and announcement procedures are not complete.

25 Article

A partner in a general partnership shall have the status of merchant. He shall be deemed as conducting commercial business under the name of the company. The bankruptcy of the company shall lead to the bankruptcy of all partners.

26 Article

The share of the partners in the general partnership may not be in the form of negotiable instruments.

27 Article

in a partnership company, assignment of shares shall not be permitted except with the consent of all partners or in accordance with the terms stipulated in the company's Memorandum of Association. In this case, the Memorandum shall be amended and the assignment shall be published in accordance with Article 24 herein.

Any agreement whereby non-conditional assignment of the shares is allowed shall be null and void. Nevertheless, the partner shall be entitled to assign to a third party the rights related to his share in the company. Such agreement shall have no impact upon any other one except the parties thereto.

28 Article

The creditors of the company shall have the right of recourse against the company and any partner's personal property.

All partners of the Company shall be jointly liable to creditors of the

Company.

Eexecution against assets of a partner for the liabilities of the company shall not be permitted except where a final judgment against the company has been obtained, notice has been served and settlement has not been made on time.

The execution judgment issued against the company shall be evidence against the partner.

Where any partner settles any liability against the company, he is entitled to recourse against the company. He is also entitled to recourse against the other partners each according to his share in the debt.

Where any of the partners is insolvent, the responsibility of the insolvency shall be borne by the partners who settled the debt, each according to the amount of his share.

29 Article

Except with the partners' approval, it shall not be permitted for a partner, to conduct on his own account or on the account of any third party, any activity of the kind the company is practising, or to be a partner in a competing company if this company is a joint company or a limited partnership or a company having limited liability.

Where any of the partners violates this rule, the company shall be entitled to claim compensation from him and consider all the operations performed for his own account as having been done for the account of the company.

30 Article

Where a partner joins the company, such partner shall become responsible collectively with the other partners in all his property for the liabilities existing before and after joining the company. Any agreement between the partners to the contrary shall not be asserted against third parties.

31 Article

A partner who retires from partnership shall be held harmless of such partnership liabilities as might arise after his retirement is proclaimed.
32 Article - Amended

A partner who assigns his share in the company, shall not be released of the liabilities of the company towards it creditors unless the creditors approve such assignment.

33 Article

A partner who is not a manager may not interfere in the management affairs of the company. However, such partner may have access to the core operations of the company, inspect its ledgers and documents and may obtain by himself or through his agent a summary of the financial status of the company and may provide advice to the manager of the company. Any agreement to the contrary shall be null and void

34 Article

Decisions of general partnership shall be made by the unanimous consensus of the partners, unless otherwise stipulated in the Memorandum of Association.

Nevertheless, resolutions pertaining to the amendment of the Memorandum of Association shall not be valid unless made by the unanimous agreement of the partners.

35 Article

The management of a general partnership shall be carried out by all the partners unless such management, by virtue of the Memorandum of Association or a separate contract, is assigned to one or more partners or to one or more persons other than the partners.

36 Article

Where the company is directed by more than one manager, and each of them is assigned a specific function, each manager shall be responsible only for the functions within his competence.

In the case of numerous managers who are collectively responsible for the management of the company, their decisions shall only be valid if reached by unanimity or by the majority of votes as stipulated in the Memorandum of Association. However, each manager may individually carry out urgent matters if omission thereof may cause substantial damage to the company or loss of sizeable profit thereto.

In the case of numerous managers and where no specific function was assigned to each manager and where it is not stipulated that they should work collectively, any of them may carry out any of the management operations, provided that other managers have the right of veto against any such operation before it is completed. In this case, the matter shall be decided according to the majority of votes. In the event of a tie, the matter shall be referred to the partners.

37 Article

Where the manager is a partner and appointed in the Memorandum of Association, he may not be removed except by the partners' unanimous vote or by virtue of a decision issued by the court upon the request of the majority of partners.

Unless otherwise stipulated in the Memorandum of Association, such expulsion in the event of partnership or appointment of the manager as mentioned above shall necessarily entail the dissolution of the company.

Where the manager is a partner appointed by a contract independent of the Memorandum of Association, or is not a partner, whether appointed in the Memorandum of Association or in an independent contract, such manager may be expelled by a majority of the partners' votes. This expulsion shall not cause the dissolution of the company.

38 Article

Where the manager is a partner and appointed in the Memorandum of Association, he may not decline management except for acceptable reasons, otherwise he shall be liable for the damages. Save as otherwise stipulated in the Memorandum of Association, the retirement of such partner shall result in the dissolution of the company.

Where the manager is a partner and appointed by a contract independent of the Memorandum of Association, or where the manager is not a partner, whether appointed by virtue of the Memorandum of Association or by an independent contract, such manager may resign from management, provided that he selects an appropriate time to resign his post by notice served to the partners before a reasonable time, otherwise he shall be liable for damages. Such resignation shall not lead to the dissolution of the company.

39 Article

Unless limited by the Memorandum of Association, the manager may conduct all normal management operations that comply with the objectives of the company. the manager may compound on the rights of the company or seek arbitration if the compounding and arbitration achieve the interest of the company.

The company shall be bound by any work carried out by the manager in the name of the company within his authority, even if the manager uses the signature of the company for his own account, unless the one with whom he contracted has acted in bad faith.

40 Article

Save as otherwise agreed by the partners or explicitly expressed in the Memorandum of Association, the manager may not exceed his normal dispositions. In particular such restriction shall apply to the following acts:

Donations, except for the ordinary small contributions.
Sale of real estates of the company, unless disposal of such real estate is part of the objectives of the company.
Mortgage of the real estates of the company, even if the manager is authorized to sell such real estate under the Memorandum of Association.
Sale or mortgage of the company premises.
Guarantee of third parties debts.

41 Article

The manager may not conclude contracts for his own account with the company except with the consent of all partners, to be issued for each case separately.

The manager may not be permitted to practise any of the activities similar to those of the company, except with the approval of the partners.

42 Article

A manager shall be held accountable for damages sustained by the company, the partners or third parties as a result of his violation of the provisions of the Memorandum of Association or for the mistakes committed by him in the performance of his duties. Any provision to the contrary shall be null and void.

43 Article

The profits, losses and shares of each partner shall be determined at the end of the fiscal year of the company as per the balance sheet and profit and loss account.

Each partner shall be deemed a creditor of the company with his share in the profits upon the determination of such share with the approval/endorsement of balance sheet.

Unless otherwise agreed upon, any shortfall in the capital of the company due to loss shall be made up from dividends of the following years. Notwithstanding the above, a partner may only make up the shortfall of his share in the capital due to losses by his own consent.

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