Limited Partnership Agreement Template for Saudi Arabia

A Limited Partnership Agreement in Saudi Arabia creates a unique business structure that allows you to combine active management with passive investment, while ensuring compliance with Islamic law principles and the Companies Law of 2015. This specialized partnership format enables you to attract investors who want limited liability exposure while maintaining clear management control through designated general partners.

When do you need this document?

You'll need a Limited Partnership Agreement when establishing investment funds, family business structures, or professional service partnerships where some partners want to remain passive investors. This document is essential for real estate development projects, private equity ventures, and manufacturing businesses seeking capital from silent partners. You'll also require this agreement when foreign investors want to participate in your Saudi business while limiting their operational involvement, or when expanding existing businesses through limited partner contributions while maintaining management control.

Key legal considerations

Your agreement must clearly define the roles and responsibilities of general partners who have unlimited liability and management authority, versus limited partners who cannot participate in daily operations but enjoy liability protection. You need to structure profit and loss sharing mechanisms that comply with Sharia principles, avoiding interest-based returns in favor of profit-sharing arrangements. The document must address capital contribution requirements, withdrawal restrictions, and transfer limitations that protect the partnership's stability. You should also include dissolution procedures, dispute resolution mechanisms through Saudi commercial courts, and compliance with anti-money laundering requirements for financial transparency.

Legal requirements in Saudi Arabia

Under Saudi Companies Law 2015, your Limited Partnership must register with the Ministry of Commerce and obtain necessary commercial licenses before commencing operations. The partnership requires a minimum capital contribution as specified by regulatory authorities, and you must maintain detailed records of all partner contributions and profit distributions. Your agreement must comply with Foreign Investment Law requirements if involving international partners, including obtaining SAGIA approval and meeting nationality restrictions. You're also obligated to register for VAT purposes under Saudi tax law, maintain Zakat compliance for Saudi partners, and ensure all partnership activities align with Sharia principles and Saudi commercial regulations.