Establishing a Simple Limited Partnership

A Simple Limited Partnership is one of the legal forms of companies stipulated under the New Companies Law and is among the most commonly established company types in Saudi Arabia on a daily basis. In this article, we at Al-Salamah Law Firm & Legal Consultations explain how to establish a Simple Limited Partnership in Saudi Arabia.

Table Of Cntent

Definition of a Simple Limited Partnership

Article (51) of the New Companies Law issued in 1443 AH defines a Simple Limited Partnership as a company composed of two categories of partners:

At least one partner, whether a natural or legal person, who is personally and jointly liable for all the company’s debts and obligations with all of his assets; and
At least one partner, whether a natural or legal person, acting as a limited partner, who is liable for the company’s debts and obligations only to the extent of his share in the company’s capital.

A limited partner does not acquire the status of a merchant.

Accordingly, a Simple Limited Partnership in Saudi Arabia consists of two types of partners, whose liabilities differ as follows:

Types of partners in a limited partnership

General Partners

A general partner may be a natural or legal person and bears personal and joint liability for all the company’s debts and obligations with all of his assets. General partners are subject to the provisions applicable to partners in a general partnership.

Limited Partners

A limited partner may be a natural or legal person and is not liable for the company’s debts and obligations except to the extent of his share in the capital. A limited partner does not acquire merchant status.

Simple Limited Partnership in Saudi Arabia

To establish a Simple Limited Partnership in Saudi Arabia, the Articles of Association must, in particular, include the following information:

Names and details of the partners.
Company name.
Head office of the company.
Company objectives.
Company capital and its distribution among the partners, with sufficient identification of each partner’s contribution and its due date.
Company term, if any.
Company management.
Partners’ resolutions and the quorum required for their issuance.
Method of distributing profits and losses among the partners.
Start and end dates of the fiscal year.
Company dissolution.
Any other provisions, conditions, or information agreed upon by the partners, provided they do not conflict with the Law.

Procedures for Establishing a Simple Limited Partnership via the Investment Authority

The Ministry of Commerce provides an electronic service through the Saudi Business Center platform for establishing a Simple Limited Partnership. Through this service, the following can be completed:

Registration of the commercial record and Articles of Association / bylaws.
Publication of the contract in A’amali newspaper.
Opening a facility file with the Ministry of Human Resources and Social Development.
Registration with the Zakat, Tax and Customs Authority.
Registration with the General Organization for Social Insurance (GOSI).
Subscription to the approved business address with Saudi Post (SPL).
Membership in the Chamber of Commerce based on location.

When using this service, the following data must be completed:

Determining the number of partners.

Determining the company status (optional).
Submitting the application.
Duration of the commercial registration, headquarters, company activities, and objectives.
Partners’ information.
Commercial registration details.
Company details.
Company management details.
Articles of Association details.
Application summary.

Are you considering setting up a limited partnership in Saudi Arabia?

Contact us now and let our legal team handle all the incorporation procedures for you.

Removal of a Partner from a Simple Limited Partnership

The removal of a partner from a Simple Limited Partnership refers to the termination of the partner’s legal status as a partner and his entitlement to receive his rights in the company as of the date of withdrawal. The Law sets specific conditions for a partner’s exit from a Simple Limited Partnership, as follows:

First: Conditions for the Withdrawal of a General Partner

Article (51) of the Companies Law provides that general partners in a Simple Limited Partnership are subject to the provisions applicable to partners in a general partnership. Accordingly, the provisions governing withdrawal from a general partnership, as stipulated in Article (46) of the Law, apply, as follows:

Unless otherwise provided in the Articles of Association, a partner may withdraw from the company by unilateral will, provided that the remaining partners are notified at least sixty (60) days prior to the date specified for withdrawal.
The Articles of Association may provide procedures for expelling partners. If the Articles do not address this matter, a numerical majority of the partners may apply to the competent judicial authority to expel one or more partners for legitimate reasons, while the company remains in existence among the remaining partners.
The withdrawal or expulsion of a partner must be registered and published in the Commercial Register, and such withdrawal or expulsion shall not be effective against third parties except after registration and publication.

Second: Conditions for the Withdrawal of a Limited Partner

A limited partner may exit the Simple Limited Partnership by assigning all or part of his shares to any of the other partners in the company.
A limited partner may also assign all or part of his shares to a third party, subject to the approval of all general partners and the holders of the majority of the capital of the limited partners, unless the Articles of Association provide otherwise.

Simple Limited Partnership Contracts

If you wish to obtain:

A Simple Limited Partnership contract,
A contract for the dissolution of a Simple Limited Partnership, or
A contract for the sale of a partner’s share in a Simple Limited Partnership,

our firm has a professional and experienced team specializing in Simple Limited Partnership contracts.

For contracts required by the Investment Authority, we prepare the necessary documentation and represent you before the Ministry of Commerce to obtain an official copy of the Simple Limited Partnership contract, ensuring the protection of all partners’ rights.

Simple Limited Partnership Contract – Ministry of Commerce

The Ministry of Commerce provides a standard template for a Simple Limited Partnership contract. You may contact Al-Salamah Law Firm & Legal Consultations, as we represent our clients in obtaining an official copy of this contract.

Simple Limited Partnership Contract – Investment Authority

Al-Salamah Law Firm & Legal Consultations provides templates for Simple Limited Partnership contracts that are accepted by the Investment Authority.

Questions & Answers

What is a Simple Limited Partnership in Saudi Arabia?
It is a legal form of company consisting of two types of partners: general partners and limited partners.

What are the conditions for establishing a Simple Limited Partnership in Saudi Arabia?

The commercial registration must not be cancelled or suspended if one of the partners is a legal person.
Partners must be at least 18 years old; if a partner is a minor, a legal guardianship deed must be submitted.
Partners must not be government employees.
If the company is professional in nature, the following must be verified:
- Valid professional licenses for the partners;
- The licensed Saudi partner’s share in a mixed company must not be less than 25%;
- The percentage of licensed partners must not be less than 70%.

What documents are required to establish a Simple Limited Partnership in Saudi Arabia?

A legal instrument authorizing establishment or participation in a company, if one of the partners is a government entity, non-profit organization, charitable association, or endowment.
A license from the Saudi Central Bank if the business activity so requires.

Do not risk the beginning of your company or the incorporation procedures. Contact us today to receive an assessment of your legal needs, and we will assign the most suitable lawyer to ensure a sound launch fully compliant with Saudi law.