The issuance of a partners’ resolution does not necessarily end a partner’s right to object. A partner may be entitled to seek the annulment of a resolution before the competent court if it was issued in violation of the Saudi Companies Law or the company’s Articles of Association. In a limited liability company, the law requires the partner to have objected to the resolution in writing, or to have been unable to do so after becoming aware of it. A claim for annulment may also be subject to a 90-day limitation period from the date on which the resolution was issued.
Why Should an Objection Be Documented?
A documented objection provides clear evidence of the partner’s position and the date on which the objection was made, demonstrating that the partner did not approve the resolution in question. The Saudi Companies Law also provides that the deliberations and resolutions of the general meeting of partners, including resolutions passed by circulation, must be recorded in minutes and maintained in a dedicated register, with modern technological means permitted for documenting and recording them.
What Should Be Documented?
The objection should ideally identify the resolution being challenged, explain the reasons for the objection, and state the date on which the resolution was issued. The partner should also retain evidence showing that the objection was submitted to and received by the company.
Proper documentation becomes particularly important where there is a dispute concerning the validity of the resolution, the procedures followed in adopting it, or its compliance with the company’s Articles of Association or the applicable law.
Do Not Delay Your Objection
Documenting the partner’s position promptly helps preserve evidence and clearly establish their position, particularly where the law links the right to seek annulment of a general meeting resolution to a written objection and provides a specific period within which an annulment claim may be brought.
Where a dispute arises over a resolution that may materially affect the rights of the partners or the interests of the company, obtaining a legal review of the resolution and the procedures through which it was adopted can help determine the applicable legal position and the appropriate course of action.