Corporate Lawyer in Dammam Corporate and Companies Law

An ordinary general assembly handles a company's regular business, such as electing board members and reviewing and discussing the financial statements, with a lighter quorum and majority. An extraordinary general assembly handles fundamental matters like amending the articles of association or changing share capital, and requires a higher quorum and majority under the Companies Law.

A company's articles of association may add requirements above the Companies Law's own minimums in areas the law allows it to regulate internally, but they cannot lawfully contradict a mandatory provision of the law itself. Working out the exact position on a specific question requires reviewing both documents together.

A company's manager and board members are jointly liable to compensate the company, partners, shareholders, or third parties for damage caused by violating the law or the company's articles of incorporation or association, or by error, negligence, or default in performing their duties. Any condition to the contrary is void.

Amending the articles of association is a matter for the extraordinary general assembly, not the ordinary one. Its first meeting is valid only if shareholders representing at least half of the voting shares attend, and its resolutions require two thirds of the voting rights represented at the meeting, or three quarters for decisions such as increasing or reducing capital.

Shareholders representing at least one quarter of the company's voting shares must attend, unless its articles of association set a higher percentage not exceeding one half. If the first meeting does not reach this quorum, a second meeting is valid regardless of the number of voting shares represented.

In a joint stock company, the notice is sent at least 21 days before the meeting. Convening the assembly begins with notice to the partners or shareholders in the manner the company's articles of association and the Companies Law require.

A company usually seeks this advice before taking a decision or proceeding with a transaction, to know its position under the Companies Law, or when a particular statutory obligation is unclear. This includes questions about whether an internal decision or procedure is consistent with the Companies Law and the company's articles of association, or about the duties of board members or managers and conflict of interest situations.

They typically include the company's articles of incorporation and articles of association and any amendments to them, and the minutes of the board or general assembly meetings relevant to the matter. They also include the Commercial Registration certificate and any license relevant to the company's activity, and the documents or correspondence about the decision or transaction under review.