How to Update Your Company’s Articles of Association in Saudi Arabia

A step-by-step guide to updating your Articles of Association in Saudi Arabia under the New Companies Law.

Under Saudi Arabia's Company Law, all companies operating in the Kingdom must have an up-to-date Articles of Association (AoA). Therefore, any changes to your company's Commercial Registration must be reflected in both the Memorandum of Association (MoA) and Articles of Association (AoA).

For companies operating or in the process of setting up a business in Saudi Arabia, the process of updating your Articles of Association must be formalized and completed through the Saudi Business Center (SBC) platform, in alignment with the New Companies Law.

What are the Articles of Association?

The Articles of Association are a legal document that governs your company's internal management and defines the relationship between the business and its shareholders. It establishes internal rules, procedures, and governance mechanisms that guide day-to-day operations.

Most importantly, this document forms a crucial part of your business setup process in Saudi Arabia.

Why the AoA Matters for Your Business

The Articles of Association serve critical functions throughout your company's lifecycle:

Business Setup Required for attestation by the Ministry of Commerce before incorporation. Without an approved AoA, you cannot complete company registration.

Bank Account Opening Banks use the AoA to verify the General Manager's powers and capital structure before activating corporate accounts. Insufficient GM authority in the AoA can delay or prevent account opening.

Visa Processing Government bodies reference the AoA to validate company details during visa approvals for your employees.

Future Business Changes Any modifications to General Manager authority, shareholding structure, or company organization must be reflected in the AoA. Operating without updated documentation risks regulatory penalties.

Key Considerations for Drafting the Articles of Association

General Manager Powers

The most common mistake companies make is defining overly restrictive General Manager powers. Best practice is granting broad authority to the GM to facilitate smooth operations, then implementing limitations through internal policies if needed.

Why This Matters: If GM powers are too restricted in the AoA, your company may face delays or complete blockages in critical functions, including

• Opening and operating bank accounts
• Hiring staff and processing work permits
• Signing contracts with vendors and customers
• Managing day-to-day operations
• Making purchasing decisions

Before commencing on drafting their AoA, CEOs and company executives must understand that overly restrictive powers increase noncompliance risk across different business areas.

Capital and Shareholding Structure

This section specifies your company's invested capital and outlines profit distribution among shareholders.

Critical Requirements:

• Minimum capital: SAR 25,000
• Capital must be declared in Saudi Riyals
• Once you establish a corporate bank account, the parent company must transfer the declared capital into the Saudi entity's account within one month
• Ownership structure directly affects decision-making authority and profit-sharing arrangements

10% Legal Reserve (Optional)

Companies may include a clause allocating 10% of annual profits into a legal reserve until it reaches 30% of the company's capital. This provides an additional financial safety buffer and is considered good practice, though not mandatory.

When to Update Your AoA

You must amend your Articles of Association when:

Expanding Business Activities: Adding new product lines or services

Structural Changes: Modifying shareholding percentages or adding/removing shareholders or adjusting capital structure (increasing or decreasing capital)

Legal Compliance: Aligning with the New Companies Law provisions when implementing regulatory changes mandated by authorities

Updating Your Company’s Articles of Association in Saudi Arabia: A Breakdown of the Process

Prerequisites

Before initiating amendments, verify you have:

• Valid Commercial Registration (CR) certificate
• Current MISA license
• No pending amendment requests with the Ministry of Commerce

Amendment Steps

1. Internal Approval: Secure board or shareholder approval for the proposed amendments according to your company's governance structure. Document this approval formally.

2. SBC Submission: Upload the revised Articles of Association through the Saudi Business Center's digital platform. Ensure all information matches your Commercial Registration exactly.

3. Regulatory Review: The regulator reviews your submission to ensure compliance with the New Companies Law.

4. Formal Registration: Once approved, amendments are officially recorded in your company's commercial registration. You'll receive updated documentation reflecting the changes.

5. Additional Notifications: Depending on your company's legal structure, notify other relevant authorities as required. This may include updating records with GOSI, ZATCA, or sector-specific regulators.

Whether you're establishing a new entity or updating existing documents, ensuring your AoA is up-to-date, compliant, and practical sets the foundation for successful business growth in Saudi Arabia.

Related reads

MoA and AoA Requirements in Saudi Arabia: Handbook for Global Businesses

Understanding Harmonization When Setting Up a Business in Saudi Arabia

Key Duties and Responsibilities of General Managers in Saudi Arabia