Board of Managers Resolutions in a Saudi LLC: When They Are Issued and How to Write Them

Board of managers or partners assembly: whose decision is it

The practical rule is simple: the partners own the company and the managers run it. Decisions that touch the company itself, such as amending the articles of association, increasing the capital, distributing dividends, or appointing and removing managers, belong in principle to the partners. Decisions about conducting the company's business and carrying out its activity belong to the managers, within the powers granted to them by the articles of association or by a partners resolution.

The difficulty is that the dividing line is not the same in every company. Some articles of association require the partners' approval for any contract above a set amount, while others leave it to the managers with no ceiling. So do not rely on a generic list. Open the articles of association before every significant decision and ask two questions: does this decision fall within the managers' competence, and does it need a special majority or the signature of specific managers? If the decision belongs to the partners, its place is the general assembly minutes. If it belongs to the managers, its place is a board of managers resolution.

Decisions usually issued by the board of managers

The following examples are the decisions most often issued at the managers level in small and medium companies, provided the articles of association do not reserve them for the partners:

• Opening bank accounts, naming the authorised signatories and the limit of each, whether signing alone or jointly, and changing them when needed.
• Approving contracts and leases that exceed the limit a single manager may sign alone, as set by the articles of association or the authority matrix.
• Hiring senior staff, such as a finance manager or a branch manager, and setting their authority.
• Opening a new branch and naming the person responsible for it, where this falls within the managers' powers.
• Approving the annual operating budget and spending plan before presenting to the partners whatever must go to them.
• Delegating specific powers to one manager or an employee to carry out a particular act or acts on the company's behalf.

How the board meets or decides by circulation

The Companies Law expressly regulates partners assembly meetings, the use of technology and resolutions by circulation at the partners level, while the details of board of managers meetings are left to the articles of association or a partners resolution. Who calls the meeting, the notice period, the quorum, the majority, whether members may attend remotely and whether the board may decide by circulation are all governed by your company's articles of association. We do not state a quorum or majority figure here, because it differs from one set of articles to another, and the correct figure is the one your articles set.

1. Check the articles of association for the method of calling the meeting, the quorum and the majority, and whether a meeting by technology or a resolution by circulation is allowed.
2. Send the invitation to all managers in the way the articles set, with the agenda and the draft resolution, and keep proof of sending.
3. At the meeting, record the names of those present and how each attended, and confirm the quorum before deliberating.
4. If deciding by circulation, send the same resolution text to every manager and collect each one's approval in writing, with its date.
5. Record the voting result, then the managers sign the resolution or approve it in the way the articles allow.

What a written board of managers resolution states, field by field

The resolution a bank accepts without later questions is one that answers on its own every question that may be put to it: who issued it, when, with what quorum, what it decided, with what result, and who may act on it. These are the fields it should contain:

• The company name as in the commercial register and the register number, so there is no confusion with similarly named companies.
• The date of the resolution and the place of the meeting, or a statement that it was held by technology or issued by circulation.
• The names of the managers present and absent and how each attended, and a statement that the quorum set by the articles of association was met.
• The wording of the decision, precise enough to leave no room for interpretation: what the board decided, for what amount, and with which party.
• The voting result: those in favour, against and abstaining, with any conflict of interest that was disclosed.
• Any delegated authority and its limits: the delegate, the scope of the act, the financial ceiling and the term.
• The signatures of the managers, or of whoever the articles require to sign, with names and capacities.

Delegating to one manager: how to set the limits

Many companies that appoint more than one manager need, in practice, a single manager to sign routine transactions. The right way to achieve this is a clear delegation resolution, not an open-ended one. An open-ended delegation, such as a phrase granting all powers, cancels the protection the partners sought when they chose several managers, and makes it hard to object to an act that went beyond what was agreed.

A well drafted delegation names the delegate, the type of acts delegated, the financial ceiling per transaction, the term of the delegation, what is expressly excluded, and how the board is informed of what was done. The Companies Law allows a manager to delegate some of their powers to others to carry out a particular act or acts, which means a delegation is by nature tied to specific acts and is not unlimited.

Keeping the resolution and presenting it to a bank or a government portal

A signed resolution does not take full effect merely by being signed. It is part of the company's records and must be available when a partner, an auditor or a bank asks for it. The Companies Law also provides that a decision appointing a manager, changing a manager or restricting a manager's powers does not have effect against third parties until it is entered in the commercial register, so if your resolution restricts a manager's authority, do not stop at signing it internally.

1. Number the resolution and keep the signed original in the board of managers resolutions register in date order, with an electronic copy.
2. Attach proof of the invitation and attendance, or the circulation approvals, so the quorum can be shown if questioned.
3. Before presenting to a bank, ask the bank what form of resolution and what authentication it requires, because requirements differ between banks.
4. If the resolution concerns appointing a manager, changing one or restricting their powers, update the commercial register data through the Ministry of Commerce's competent platform.
5. Present the resolution in its Arabic text, attach the English translation where needed, and state that the Arabic text prevails.

Common mistakes that weaken the resolution

Most resolutions that a bank rejects, or that are later challenged, do not fail because of their substance but because of a gap in form that could easily have been avoided:

• No quorum record: a resolution that does not say who attended and does not show that the quorum in the articles was met is hard to defend.
• Open-ended delegation with no financial ceiling, term or exclusions, which turns one manager into a sole manager contrary to the articles.
• Managers issuing a resolution on a matter the articles reserve for the partners, such as major borrowing or disposing of company assets.
• A missing Arabic text, or an English text only, even though official bodies work in Arabic.
• Vague decision wording that does not name the amount, the counterparty or the bank account, so the bank asks for a new resolution.
• Not updating the commercial register after changing a manager or restricting their powers, so the change has no effect against third parties.

Template F-03 puts all of these fields into a single bilingual form, filled through a smart questionnaire in minutes, certified by a licensed Saudi lawyer and kept current as the law changes. When a decision needs the partners' approval, Template F-04, the General Assembly Minutes, is its companion. The templates are certified drafts and a strong starting point, not a substitute for advice on a specific dispute, and the Arabic text prevails.

Frequently asked questions