The difference between regular and jurisprudential companies 

The difference between regular and jurisprudential companies 

The legal system in the Kingdom of Saudi Arabia distinguishes between two types of companies in terms of legal personality and organization 

Legal is a fundamental distinction for understanding the nature of “jurisprudential companies.”

 Or companies in their concept in the civil transactions system. 

Companies in the civil transactions system (contract companies) 

The traditional concept of company as stated in Islamic jurisprudence, which focuses on the contract concluded between partners, is the equivalent of regulation in the transaction system 

Civil. These companies are essentially partnership contracts that govern the relationship between their parties without creating a legal entity independent of them. 

The decisive point in this regard is what the opinion settled on and which was issued by Royal Order No. (68845) dated 11/19/1445 AH ‍‍, which included approval of what the Council saw

 Ministers in not providing companies included in the transaction system 

Civil, personal, legal. 

This entails important things: 

• Lack of independent financial liability: The company does not have a separate financial liability from the partners. Company debts are debts on 

The partners themselves, and their assets are the property of the partners on the basis of communism.

•Personal and joint liability: Partners are responsible with their own funds for the company’s obligations. 

•Ineligibility to litigate: The company cannot be a plaintiff or defendant in its independent capacity, but must direct claims directly to and from the partners. 

These companies are merely a contractual relationship that regulates how to participate in a project and share its profits and losses, and they are closest to companies of persons in jurisprudence 

As a company of joy, speculation, business and faces. 

Regular companies (legal entities) 

In complete contrast, companies organized under the Companies Law issued by Royal Decree No. (M/132) dated 12/01/1443 AH. These companies are independent legal entities that aim to conduct business. 

• Definition of a regular company: Article Two of the Companies Law states that: “The company is a legal entity established in accordance with 

For the provisions of the system based on 

Incorporation contract or articles of association…. This definition defines a company’s distinct legal entity.

• Acquiring legal personality: The essential element that separates it from civil transaction companies is what it stipulates

Article Nine of the same system:

 The company acquires legal personality after being registered in the commercial registry. 

Once the incorporation and registration procedures are completed in the commercial registry, a new legal personality is born with independent financial status and eligibility to contract 

And litigation, and its liability is (mostly) limited by its capital and separate from the personal liability of its founders 

Or its shareholders.

Summary: 

The term “jurisprudential companies” does not exist as an official classification in the texts of Saudi regulations, but it can be said 

Companies organized in the civil transactions system

They are closest to this concept, as they are merely partnership contracts that do not have legal personality ‍‍, unlike companies 

Regularity (such as joint stock, limited liability, etc.) regulated by the Companies Law and considered fully-fledged legal entities once registered in the commercial registry.

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