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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

Capital Increase

188 Article

Company capital shall not be increased unless the value of shares is completely paid

189 Article

The company capital may be increased by a decision adopted by an extraordinary general assembly and the approval of the Ministry. The decision shall specify the amount of increase and issue rate of new shares.

The general assembly may authorize the Board of Directors to fix the date for the implementation of that decision not later than one year from its date of issue

190 Article

The company capital shall be increased by one of the following methods:

Issue of new shares.
Capitalization of the reserve or a part thereof or of the profits.
Conversion of debentures into shares.
Issue of new shares against shares in kind or evaluated right.

191 Article

Regulations pertaining to subscription in the original shares shall apply to subscription in the new ones.

192 Article

New shares shall be issued with a nominal value equal to the nominal value of the original shares. However, the extraordinary general assembly may decide a share premium to the nominal value of the share and determine its amount provided that approval of the Ministry is obtained. This share premium shall be added to the legal reserve.

193 Article

The shareholders shall have priority to subscribe to the new shares. The shareholder shall not be permitted to assign his right in such priority to other persons

194 Article

The Chairperson shall publish a statement in two local Arabic daily newspapers notifying the shareholders of their priority in subscription, opening date, closing date and price of the new shares.

195 Article

Distribution of shares to applicant shareholders shall be pro rata to the shares held by them provided that it does not exceed their respective applications. The remaining shares shall be distributed to the shareholders who applied for more than the percentage of shares held by them. The remaining shares may also be offered for public subscription or disposed of upon approval of the concerned authority.

Should shares in kind be included in subscription in such capital increase, evaluation of such shares shall be done in accordance with the provisions concerning the same, provided that the extraordinary general meeting shall stand for the general assembly of incorporation.

196 Article

In the event that new shares are offered for public subscription, a subscription prospectus shall be published specifically, containing the following particulars:

Reasons of capital increase.
Decision of capital increase taken by the extraordinary general assembly.
Company capital at the time of issuing new shares, amount of increase, number of new shares and premium, if any.
Particulars of shares in kind or evaluated right, if any.
A statement of profits distributed by the company during the three years prior to the date of the decision taken for the capital increase.
Certificate from the accounts auditor to certify that statements included in the prospectus are accurate.

This prospectus shall be signed by the Chairperson and the accounts auditor and they shall be jointly liable for the accuracy of particulars stated therein.

197 Article

In the event of increasing the capital by the capitalization of distributable reserves, gratis shares shall be issued and distributed among the shareholders pro rata to shares held by each of them, or by increasing the nominal value of the shares proportionate to the casual increase of capital. This shall not impose any financial burdens on the shareholders.

198 Article

Conversion of the debentures into shares shall be made by recovery of debentures, cancellation thereof, giving their holders shares in return and adding their value to the capital.