Legal Guidelines

Legal Prohibitions on General Partnership Managing Directors 

The Managing Director in a General Partnership shall assume all managerial functions and carry out all acts which fall within the company’s objectives. He shall represent the company before courts of law, arbitral tribunals and third parties, unless otherwise expressly provided for in the company’s Memorandum of Association to limit his authority. In all cases, the company shall abide by any act which its Managing Director performs in its name and within its objectives, except where the party with whom he dealt has acted in bad faith. (Article 29 of the Saudi Company Law)  

Article 30 of the Company Law defines certain prohibited tasks for the director of a General Partnership. He shall not conduct any act ultra vires to the business of the company, except pursuant to a resolution of the partners or pursuant to an express provision in the company’s Memorandum of Association.

Furthermore, Article  30 of the Law defines such restrictions which shall apply to certain activities such as:  (a) donations, except for minor ordinary donations; (b) the company’s suretyship of third parties; (c) referral to arbitration;  (d) effecting a compromise in respect of the company’s entitlements; (e) selling or mortgaging the company’s real estate, except where such selling is within the company’s objectives; and (f) selling or mortgaging  the place where the company conducts its commercial activities.