Contracts in companies are one of the basic steps in establishing any company, regardless of its activity or type. Therefore, it is important to know the types of contracts in companies. The contracts aim to preserve all the rights of any of the contracting parties, and they also regulate the joint working relationship. Between them and the partnership that binds them together, contracts also play a major role in resolving disputes that are expected to occur in the future.
contracts in companies
The contract in the company is a contract that compels two or more parties to contribute and participate in a project, and the contribution is made through work or money, and the profits or losses are divided among the contracting parties, and contracts are considered the most widespread legal concepts because of its great importance in arranging life relationships, whether Be it economic or social.
Contracts are one of the most important things on which companies are built, and the terms of the contract are applied to all companies, whether they are companies with a large capital exceeding one million riyals, or an individual company with a small capital, and the contract is what regulates the relationship within each company and obliges both parties to implement the contract and adhere to the required tasks Also, the contracts clarify the legal punishment that will be exposed to those who do not abide by the contract.
The system in the Kingdom made it clear that it should include the contracts of any company, regardless of its type:
Company Name.
The purpose of its creation.
The location of the company.
branches, if any.
The names of the partners, their date of birth, nationalities, addresses, and the profession in which they work.
The company’s capital, the percentage of each partner, and the maturity date of the capital funds.
The date on which the company was incorporated.
The start date of the fiscal year, as well as the closing date of the company’s fiscal year.
Types of companies within the Kingdom of Saudi Arabia
According to the Saudi system, it is important that companies in the Kingdom of Saudi Arabia be one of the following types:
Shareholding company.
Limited liability company.
joint venture company.
Solidarity Company.
Simple Recommendation Company.
Types of contracts in companies in the Kingdom
There are many types of contracts in companies within the Kingdom of Saudi Arabia, the most important of which are:
Joint stock company contracts
It is a company in which the capital is divided into a group of shares, and these shares have an equal value. Its main role is to manage the debts and obligations that result from the exercise of its activity.
Among the most important items that must be included in the contract for this company are the name of the company, its location, the purpose of its establishment, the company’s capital, the number and types of shares, the number of board members, the start and end date of the fiscal year.
Limited liability company contracts
It is a company in which the number of partners is not less than two and their number does not exceed fifty partners, and it is also a company that bears full responsibility for its debts and obligations required of it, as well as the financial disclosure of the company that is completely independent of the financial disclosure of the partner.
It is necessary for the basic clauses of any company in the Kingdom, and among the most important other clauses that must be present in the contract for this company is the main goal of establishing the company, the names of all employees who work in the company such as the manager, accountants, employees and workers, how to organize the company and the convening of the general assembly, whether ordinary Or unusual, how decisions are taken in the company, the value of the company’s capital, the number and value of shares in the capital, and the manner in which the capital will be distributed among the partners.
Joint venture contracts
It is a company that does not have a legal personality and does not appear to others, nor is it subject to the procedures of the civil registry and notarization. The partners have the right not to appear and declare themselves, and they also have the right to agree among themselves on the way the company operates.
In addition to the basic provisions of any company in the Kingdom, one of the most important clauses that must be present in the contract for this company is the share of each partner, regardless of whether this percentage is financial, in-kind, or a share of the work, how profits are distributed, the method of arranging and organizing the decisions of the partners, the way in which Problems and disputes are resolved in the event of their existence in the future, the method of liquidation and closure of the company, the signature of the partners.
Partnership contracts
It is a company that is established by two or more persons and its main objective is profit and trade. In this type of company, the contract must not be written in Arabic and can be translated into any other language. The partners are jointly involved in all transactions, debts and obligations of the company.
According to the Saudi system, one of the most important clauses in the contracts of this type of company is the name of the company and its main headquarters, the aim of building the company, the capital and the method of distributing it among the partners, the data of the partners, the method of managing the company, the method of distributing profits and losses to the partners, the method of terminating the company and closing it in The future, the agreements that occur between the partners, provided that they do not violate all provisions related to the corporate law in the Kingdom of Saudi Arabia.
Limited Partnership Contracts
It is a company consisting of two teams of partners, the first party includes a testamentary partner who is not responsible for the company’s obligations and debts to me with regard to his share of the capital, while the second party includes a general partner who is responsible for all the company’s debts and obligations with his money.
The items that must be included in the contract according to the Saudi system are the name of the company, its headquarters, the capital of the company, the profits and losses of the company, and the method of resolving disputes between partners.
Other types of contracts in companies in the Kingdom
Joint venture agreements
They are agreements between two or more partners, and the main objective is to establish a commercial entity, and this agreement can be used to penetrate foreign abuse. The following are the most important items that must be present:
The method of appointing the work team, as well as the method of managing the project.
The number of shareholders in the project, and the contribution of each party.
The geographical area of the project and the structure of the project.
Employment contracts
Contracts that specify the terms of employment between an employer and an employee, and often include information about the employee’s job title, duties, salary, benefits, and terms of termination of service.
Sales contracts
It governs the sale of goods, commodities, or services between the seller and the buyer, and often includes information about the goods and services being sold, the price of the goods, and terms of payment and delivery.
Distribution contracts
They are contracts concluded between two parties, one of whom is a producer and the other a distributor, in which the distributor is given the right to sell the product in a specific area, and he is also entitled to promote the commodity in exchange for a profit that is specified in the contract.
The contract includes information about the goods and products that will be distributed, the geographical area in which the distribution will take place, the method of transferring the goods and products from the producer to the distributor, and the term of the contract between the two parties.
in conclusion
There are many corporate contracts that can be used in the Kingdom of Saudi Arabia, and when drafting the contract it is important to look carefully at the terms of the agreement and make sure that they are clear and unambiguous, also it is important to review the contract by a lawyer to ensure that it is legally sound, and that there is no deception in it And injustice to one party at the expense of another party.
