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Illustrative photograph by Jakub Żerdzicki Unsplash
The legal and commercial perspective
Article 156 of the Saudi Companies Law addresses the company’s separate estate and the general allocation of company and partner liability, subject to other applicable cases.
Capital is neither a ceiling on company debt nor a guarantee of recovery. Exceeding capital is not generally prohibited. an internal prudential limit should be presented as policy, not law.
Consider suitable guarantees, advances or reduced exposure. Check a guarantor’s solvency, authority and commitment. ownership alone does not create a personal guarantee.
Fictional example for illustration
A fictional buyer seeks credit beyond declared capital. The supplier reviews cash flow, payment history and security before approving an appropriate limit.
Practical steps
- Assess entity, solvency and payment history.
- Set and regularly review credit exposure.
- Review guarantees and authority where needed.
Key takeaway
Credit decisions need information and suitable security, not capital alone.
Legal references
General educational content, not a substitute for advice on your facts and documents, and not a guarantee of any outcome.
Translations refer to Saudi law, consult the official legal text when applying it.
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