118 Questions
Joint stock company must have a minimum authorized capital of 500k riyals.
True
The liability of the shareholder in a joint stock company is unlimited.
False
The authorized capital of a joint stock company is the total value of shares owned by shareholders.
False
The issued capital of a joint stock company can exceed the authorized capital.
False
The AOA of a joint stock company must include the company's term.
True
The paid up amount of a joint stock company must be at least one quarter of the authorized capital.
False
The management and the number of board members must be mentioned in the AOA of a joint stock company.
True
True or false: A shareholder representing at least 3% of the company’s capital can ask the court to inspect the company if the conduct of board members or auditor is suspicious.
False
True or false: Shares can only be issued at a higher value than their nominal value.
True
True or false: The majority shareholder has the right to force the minority to accept an offer from a serious buyer for purchasing all the company’s shares for the same price given to the majority & under the same conditions.
True
True or false: The company losses if the losses reach half of the issued capital.
False
True or false: In a Limited Liability Company, the liability of the owners or partners is independent of the financial liability of the company.
False
True or false: If the company is established by one person, the owner will not have the power & authorities of the manager and board of directors.
False
True or false: The Memorandum of Association (MOA) must include the names of the company's employees.
False
Partners can authorize other partners to attend on their behalf unless if the AOA states otherwise
True
The company is liable for the manager’s acts that fall within the company’s objectives
True
The GA will be held based on the MOA, at least once a year, 6 months before the company’s financial year ends
False
If the equity shares are held by several people, the company can suspend their rights until they choose one to be the sole holder
True
Non-managing partners can submit opinions to partners, and can request documents and records twice a year
True
The partners holding all the shares may hold the GA regardless of the prior conditions
False
Partners have the right to participate in discussions and voting, and have a number of votes based on the number of shares he has
True
The GA will determine how profits are distributed to the partners after deduction if needed
True
Managers or auditor or partners can request the meeting, the notification must be sent 21 days before the meeting
True
Board members can serve for up to 6 years without re-election unless specified in the AOA.
False
Board members are not required to disclose their interest in business transactions.
False
Board members can be held liable for damages from business transactions even if they explicitly object during the meeting.
False
Shareholders are not allowed to assign someone to represent them at GA meetings.
False
Extraordinary GA meetings have the power to amend AOA without exceptions.
False
Decisions at extraordinary meetings require a two-thirds majority vote.
True
75% of shareholders with voting rights are required for all capital decisions.
False
What is the minimum amount that the paid up capital of a joint stock company must be?
One quarter of the authorized capital
Which of the following must be mentioned in the Articles of Association (AOA) of a joint stock company?
The authorized and issued capital
What is the minimum authorized capital required for a joint stock company?
$500,000$ riyals
How often must the General Assembly (GA) be held according to the text?
At least once a year
What is the liability of a shareholder in a joint stock company?
Limited
What can be done with the issued capital of a joint stock company if it's paid in full?
It can be increased within the limits of the authorized capital
What should be included in the AOA of a joint stock company according to the text?
The objectives of the company
In a Limited Liability Company (LLC), who can be appointed as a manager?
One or more managers, who can be either partners or third parties
When can the partners appoint a new manager in an LLC if a vacancy arises?
Within 15 days of knowledge of the vacancy
What is the frequency requirement for holding the General Assembly (GA) meeting in an LLC?
At least once a year, 6 months before the company’s financial year ends
What rights do non-managing partners have in an LLC?
Submit opinions to partners and request documents and records twice a year
How is capital mentioned in an LLC?
In the Memorandum of Association (MOA)
What happens if equity shares in an LLC are held by several people?
The company can suspend their rights until they choose one to be the sole holder
Who determines how profits are distributed to partners in an LLC?
The General Assembly (GA)
What is required for calling a General Assembly meeting in an LLC?
Notification must be sent 21 days before the meeting by managers, auditor or partners
Who has the right to represent an LLC Infront of courts and third parties?
The manager appointed by MOA or Independent Contract
What is the maximum term of office for board members in a joint stock company?
4 years
Under what conditions can board members be dismissed in a joint stock company?
By the General Assembly (GA)
What is the quorum requirement for ordinary General Assembly (GA) meetings in a joint stock company?
$rac{1}{2}$ of shareholders
What percentage of shareholders with voting rights is required for certain capital decisions in a joint stock company?
$75 ext{%}$
Who chairs shareholder General Assembly (GA) meetings in a joint stock company?
Chairman or vice chairman
What must board members disclose regarding business transactions in a joint stock company?
Both direct and indirect interests
What percentage of shareholders with voting rights is required for amending the Articles of Association (AOA) in extraordinary General Assembly (GA) meetings?
$80 ext{%}$
Which type of shares must be registered to the holder’s name in a joint stock company?
Ordinary shares
What happens if the losses of a joint stock company reach half of the issued capital?
The board of directors must call for an extraordinary meeting to consider the continuation of the company
In a joint stock company, what can be done to lower the capital?
The company buys and then gets rid of some of its own shares
What is required in the Memorandum of Association (MOA) of a Limited Liability Company (LLC)?
Names of partners and headquarters
What rights do non-managing partners have in an LLC?
$75 ext{%}$ share in profits after deduction if needed
What is required before lowering the capital in a joint stock company?
The board of directors has to prepare a statement explaining why they’re doing it, what the company’s obligations are, and how the lowering might affect those obligations.
In a Limited Liability Company (LLC), who has the power & authorities of the manager and board of directors if it's established by one person?
Owner will have power & authorities of manager and board of directors.
What is the minimum required capital for a joint stock company?
500k riyals
What is the minimum required paid up amount for the capital of a joint stock company?
One quarter of the value
Which of the following must be mentioned in the Articles of Association (AOA) of a joint stock company?
Details of commencement
What is the maximum term for board members in a joint stock company?
$10$ years
What percentage of shareholders with voting rights is required for certain capital decisions in a joint stock company?
$75%$
True or false: The company losses if the losses reach half of the issued capital.
True
What can be done with the issued capital of a joint stock company if it's paid in full?
It can be increased within the limits of authorized capital.
What is the maximum term of office for board members in a company?
4 years
In a joint stock company, what percentage of shareholders with voting rights is required for certain capital decisions?
80%
When can board members and members with interests be held liable for damages from business transactions?
If they fail to disclose interest
What is the quorum requirement for ordinary General Assembly (GA) meetings in a joint stock company?
$rac{1}{2}$ of shareholders
What is the liability of board members and members with interests for damages from business transactions?
Unlimited liability
Who chairs shareholder General Assembly (GA) meetings in a joint stock company?
Chairman or vice chairman
What is the minimum authorized capital required for a joint stock company?
$500,000
In a joint stock company, what can be done to lower the capital?
Cancel some shares equal to the amount they want to lower
What is required before lowering the capital in a joint stock company?
Board of Directors has to prepare a statement explaining the reasons for lowering the capital
What happens if the losses of a joint stock company reach half of the issued capital?
The company must call for an extraordinary meeting to consider continuation of the company and take measures to resolve the losses or terminate the company
What rights do non-managing partners have in a Limited Liability Company (LLC)?
They can request documents and records twice a year
Which type of shares must be registered to the holder’s name in a joint stock company?
'Ordinary' shares
What is required in the Articles of Association (AOA) of a joint stock company?
Nominal value of each share
What is required for calling a General Assembly meeting in an LLC?
Notification sent 21 days before meeting
In a Limited Liability Company (LLC), who can be appointed as a manager?
Any partner or third party
What must be mentioned in the Memorandum of Association (MOA) of a Limited Liability Company (LLC)?
All of the above
What is required for calling a General Assembly meeting in an LLC?
Notification sent 21 days before the meeting
What happens if equity shares in an LLC are held by several people?
The company can suspend their rights until they choose one to be the sole holder
What is required in the Articles of Association (AOA) of a joint stock company?
All of the above
Who chairs shareholder General Assembly (GA) meetings in a joint stock company?
The partner holding majority shares
What is the maximum term of office for board members in a joint stock company?
5 years
What rights do non-managing partners have in an LLC?
They can call for GA meetings
What is the minimum required capital for a joint stock company?
500k riyals
What is the minimum amount that the paid up capital of a joint stock company must be?
One quarter of the authorized capital
What must be mentioned in the Articles of Association (AOA) of a joint stock company?
Name of the company, headquarters, objectives, authorized & issued capital, number and classes of shares, management and number of board members, company’s term, details of commencement, other provisions
What happens if the losses of a joint stock company reach half of the issued capital?
The company losses
What is required before lowering the capital in a joint stock company?
Approval from extraordinary General Assembly (GA) meeting and court approval
What is the maximum term for board members in a joint stock company?
6 years without re-election unless specified in AOA
Which type of shares must be registered to the holder’s name in a joint stock company?
Registered shares
What is the maximum term of office for board members in a joint stock company?
4 years
In a joint stock company, what percentage of shareholders with voting rights is required for certain capital decisions?
75%
What happens if board members and members with interests explicitly object during the meeting regarding damages from business transactions?
They are still held liable
What must board members disclose regarding business transactions in a joint stock company?
Both direct and indirect interests
What is required for calling Extraordinary General Assembly (GA) meetings?
Procedures for calling meetings and setting quorum
What is the liability of board members and members with interests for damages from business transactions?
Unlimited liability
What is the quorum requirement for ordinary General Assembly (GA) meetings in a joint stock company?
Simple majority of shareholders present or represented
What must the board of directors do if the company's losses reach half of the issued capital?
Announce the losses within 60 days of their knowledge and call for an extraordinary meeting within 180 days.
What can a majority shareholder do in a joint stock company?
Force the minority to accept an offer from a serious buyer for purchasing all the company’s shares.
What is required before lowering the capital in a joint stock company?
Preparation of a statement explaining the reasons for lowering capital and its impact, to be read out at the General Assembly Meeting.
What is true about shares in a Joint Stock Company (JSC)?
Shares can be split & merged into lower & higher nominal value.
What is true about a Limited Liability Company (LLC)?
The liability is independent of the financial liability of each partner.
'Redeemable' shares in a Joint Stock Company (JSC) refer to shares that:
'Redeemable' means they can be bought back by the company at a future date or under certain conditions.
Which statement regarding the appointment of LLC managers is most accurate?
Managers can be appointed by one or more managers, partners, or third parties, and the appointment is under the Memorandum of Association (MOA) or Independent Contract.
When can partners appoint a new manager in an LLC if a vacancy arises?
Within 15 days of knowledge of vacancy
What rights do non-managing partners have in an LLC?
Non-managing partners have the right to participate in discussions and voting, and can request documents and records twice a year.
What is required for calling a General Assembly meeting in an LLC?
Managers, auditors, or partners can request the meeting, and the notification must be sent 21 days before the meeting.
What happens if the equity shares are held by several people in an LLC?
The company can suspend their rights until they choose one to be the sole holder.
What is mentioned in the Memorandum of Association (MOA) regarding management of an LLC?
The MOA or the partners will determine the method of management, and the manager will represent the LLC in various legal matters.
What is determined by the General Assembly (GA) in an LLC?
The GA will determine how profits are distributed to the partners after deduction if needed.
When can board members dismiss managers in an LLC?
Partners can dismiss managers, but if a manager is one of the partners, he cannot vote when it comes to his dismissal. Partners can go to court to request removal of a manager.
What rights do managing partners have in terms of appointment and dismissal of managers in an LLC?
Managing partners have authority to appoint and dismiss managers based on majority vote during General Assembly meetings.
Study Notes
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Board Members: Elected by Ordinary General Assembly (GA), term of office cannot exceed 4 years, can be dismissed by GA, re-election allowed unless specified in AOA, AOA specifies method of forming board and voting.
-
Termination of Board Members: GA can terminate membership for repeated absenteeism, notification of interest in business transactions required, failing to disclose interest can result in legal action.
-
Disclosure of Interest: Board members must disclose direct or indirect interests in business transactions, cannot vote on resolutions regarding their interest, company can take legal action for breach of contract or unlawful profit.
-
Liability: Board members and members with interests can be held liable for damages from business transactions, unless they object explicitly during the meeting.
-
Shareholder GA Meetings: Chaired by chairman or vice chairman, shareholders can attend and assign someone to represent them, meetings can be held using technology, quorum requirements.
-
Extraordinary GA Meetings: Powers to amend AOA with exceptions, procedures for calling meetings and setting quorum.
-
Quorum and Decisions: Different quorum percentages for ordinary and extraordinary meetings, decisions passed by majority and two-thirds votes respectively.
-
Capital Decisions: Validity and registration requirements for capital decisions, 75% of shareholders with voting rights required for certain decisions.
-
Meeting Minutes: Content and purpose of meeting minutes, including attendance, share ownership, votes, decisions, and a brief summary of discussions.
-
Board Members: Elected by Ordinary General Assembly (GA), term of office cannot exceed 4 years, can be dismissed by GA, re-election allowed unless specified in AOA, AOA specifies method of forming board and voting.
-
Termination of Board Members: GA can terminate membership for repeated absenteeism, notification of interest in business transactions required, failing to disclose interest can result in legal action.
-
Disclosure of Interest: Board members must disclose direct or indirect interests in business transactions, cannot vote on resolutions regarding their interest, company can take legal action for breach of contract or unlawful profit.
-
Liability: Board members and members with interests can be held liable for damages from business transactions, unless they object explicitly during the meeting.
-
Shareholder GA Meetings: Chaired by chairman or vice chairman, shareholders can attend and assign someone to represent them, meetings can be held using technology, quorum requirements.
-
Extraordinary GA Meetings: Powers to amend AOA with exceptions, procedures for calling meetings and setting quorum.
-
Quorum and Decisions: Different quorum percentages for ordinary and extraordinary meetings, decisions passed by majority and two-thirds votes respectively.
-
Capital Decisions: Validity and registration requirements for capital decisions, 75% of shareholders with voting rights required for certain decisions.
-
Meeting Minutes: Content and purpose of meeting minutes, including attendance, share ownership, votes, decisions, and a brief summary of discussions.
-
Board Members: Elected by Ordinary General Assembly (GA), term of office cannot exceed 4 years, can be dismissed by GA, re-election allowed unless specified in AOA, AOA specifies method of forming board and voting.
-
Termination of Board Members: GA can terminate membership for repeated absenteeism, notification of interest in business transactions required, failing to disclose interest can result in legal action.
-
Disclosure of Interest: Board members must disclose direct or indirect interests in business transactions, cannot vote on resolutions regarding their interest, company can take legal action for breach of contract or unlawful profit.
-
Liability: Board members and members with interests can be held liable for damages from business transactions, unless they object explicitly during the meeting.
-
Shareholder GA Meetings: Chaired by chairman or vice chairman, shareholders can attend and assign someone to represent them, meetings can be held using technology, quorum requirements.
-
Extraordinary GA Meetings: Powers to amend AOA with exceptions, procedures for calling meetings and setting quorum.
-
Quorum and Decisions: Different quorum percentages for ordinary and extraordinary meetings, decisions passed by majority and two-thirds votes respectively.
-
Capital Decisions: Validity and registration requirements for capital decisions, 75% of shareholders with voting rights required for certain decisions.
-
Meeting Minutes: Content and purpose of meeting minutes, including attendance, share ownership, votes, decisions, and a brief summary of discussions.
-
Board Members: Elected by Ordinary General Assembly (GA), term of office cannot exceed 4 years, can be dismissed by GA, re-election allowed unless specified in AOA, AOA specifies method of forming board and voting.
-
Termination of Board Members: GA can terminate membership for repeated absenteeism, notification of interest in business transactions required, failing to disclose interest can result in legal action.
-
Disclosure of Interest: Board members must disclose direct or indirect interests in business transactions, cannot vote on resolutions regarding their interest, company can take legal action for breach of contract or unlawful profit.
-
Liability: Board members and members with interests can be held liable for damages from business transactions, unless they object explicitly during the meeting.
-
Shareholder GA Meetings: Chaired by chairman or vice chairman, shareholders can attend and assign someone to represent them, meetings can be held using technology, quorum requirements.
-
Extraordinary GA Meetings: Powers to amend AOA with exceptions, procedures for calling meetings and setting quorum.
-
Quorum and Decisions: Different quorum percentages for ordinary and extraordinary meetings, decisions passed by majority and two-thirds votes respectively.
-
Capital Decisions: Validity and registration requirements for capital decisions, 75% of shareholders with voting rights required for certain decisions.
-
Meeting Minutes: Content and purpose of meeting minutes, including attendance, share ownership, votes, decisions, and a brief summary of discussions.
Test your knowledge of corporate governance and shareholder rights with this quiz. Learn about the responsibilities of board members, auditors, and shareholders in ensuring transparency and accountability within a company.
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