Company Limited By Guarantee Memorandum Of Association Template for Saudi Arabia

A Company Limited By Guarantee Memorandum Of Association is the constitutional document that establishes your non-profit organization, professional body, or charitable institution in Saudi Arabia. Unlike traditional companies with shareholders, this structure limits member liability to a specific guarantee amount, making it ideal for organizations focused on social, educational, or charitable objectives rather than profit generation.

When do you need this document?

You need this memorandum when establishing any company limited by guarantee in Saudi Arabia, particularly for non-profit organizations, professional associations, trade bodies, educational institutions, or charitable foundations. It's required during the initial company formation process before you can obtain commercial registration from the Ministry of Commerce. You'll also need it when foreign investors want to participate in Saudi non-profit activities within permitted sectors, or when converting an existing organization to a company limited by guarantee structure. The document becomes essential if you're establishing a professional body that requires regulatory oversight or when creating foundations that need formal legal recognition under Saudi law.

Key legal considerations

Your memorandum must clearly define the company's objects and purposes, ensuring they align with permitted activities under Saudi law and comply with Shariah principles. The guarantee amount each member commits to must be specified, typically ranging from SAR 1,000 to SAR 100,000 depending on the organization's scope and regulatory requirements. You must establish proper governance structures including board composition, member voting rights, and decision-making procedures that comply with both Companies Law 2015 and any sector-specific regulations. The document should address membership criteria, admission procedures, and termination conditions while ensuring transparency in financial management and reporting obligations. Consider including clauses for asset distribution upon dissolution, which must align with the company's non-profit objectives and cannot benefit members personally.

Legal requirements in Saudi Arabia

Under the Saudi Companies Law 2015, your memorandum must be drafted in Arabic and authenticated by a notary public before submission to the Ministry of Commerce. The document requires approval from relevant regulatory bodies depending on your sector, such as the Ministry of Human Resources for professional bodies or the Ministry of Education for educational institutions. You must demonstrate compliance with the Foreign Investment Law if foreign nationals are involved, ensuring activities fall within permitted sectors for foreign participation. The memorandum must include specific clauses addressing anti-money laundering requirements and financial transparency obligations. Registration fees vary based on the guarantee amount and company type, and you'll need to maintain the registered office address specified in the memorandum throughout the company's existence. The Capital Market Authority may require additional approvals if your organization plans any regulated financial activities.