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Sharaco's Memorandum of Association
First chapter: Sharaco's incorporation
| Article 1 |
Sharaco was incorporated according to the companies' act, and its current status is a Saudi joint stock company according to the following: |
| Article 2 |
Company name: Saudi Hotels & Resort Areas Company. |
| Article 3 |
Company's Purpose:
- Construction, ownership, operation, investment, purchase, participation, renting of hotels, restaurants, motels, rest houses, recreational centers, travel & tourism agencies and beaches of whatever type or size, in cities or public roads and the resorts.
- Ownership, development and division of land and erecting building on it or renting it.
- Provision of services to the Umrah (minor pilgrimage) makers and to the visitors of the Holy Mosque in Medina.
- Conduct of all basic and intermediate works required for the execution, preparation and proceeding of the various activities of the above-mentioned works in accordance with its purpose.
- Realization of high level of the services provided in the facilities and furnishing them with what is suitable with their level, according to what is approved by the board of directors.
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| Article 4 |
Sharaco's head office is situated in Riyadh city and the boardd of directors may establish branches, offices or agencies of it inside the Kingdom or abroad. |
| Article 5 |
Extension of Sharaco's duration for 200 years as of the expiry of the current period in 17/12/1425H, and it is always possible to renew Sharaco's period by a decision issued by the extraordinary general assembly before the expiry of its term by three years at least. |
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Second Chapter: Capital & stock
| Article 6 |
Sharaco's capital is SR 690,060,970, divided into 69,006,097 equal value shares, each share being SR10. |
| Article 7 |
Sharaco's founders subscribed in 1,800, 000 ordinary shares, and paid up 25% of its total value. This amount was deposited in Riyad Bank, and the National Bank, in the name of Sharaco, and the rest of the shares will be offered to public subscription. In this case, 25% of the share value was paid during the subscription. Moreover, the deposit of the amount of subscription will be in the name of the company under establishment with one bank or more of the banks specified for this purpose. The value of rest of the subscribed shares will be paid in the times set up by Sharaco's board of directors. |
| Article 8 |
If the subscriber fails to pay the rest of the share at the specified date, the board of directors, after notifying the subscriber by a registered letter, may sell the share at a public auction, although the defaulting subscriber may pay the payable share value along with Sharaco's expenses. Then, Sharaco will deduct the amount payable to it, and pay back the remainder to the owner of the share.
However, if the amount of sale does not meet the required amount, then Sharaco may get the remainder from the subscriber's money.
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| Article 9 |
The shares shall be of nominal value, and may not be issued below its nominal value, but it may be issued above this value, and in this last case, the difference of amount will be added to the statuary reserve, even if it has reached its maximum. The indivisible share of Sharaco, if owned by a group of people, they shall choose one of them to represent them in using the rights related to this share, and they shall be jointly responsible for the obligation resulting out of the ownership of the share. |
| Article 10 |
Shares are tradable, even though, in addition to the other limitations stipulated in this law, it is not allowed to trade the cash shares which the founder have subscribed with before the publication of the budget, and loss and profit account for two full fiscal years, each one of them shall be less than twelve months as of the date Sharaco's incorporation. These share (Sukuks) shall be marked with a mark identifying their type, and the date of the Company's incorporation and the period during which they will be barred from being traded. However, it is allowed during the ban period to transfer the ownership of these cash shares from one founder to another or to a member of the board of directors to present them as a collateral for the management or from the heirs of one of the founders in case of his death, to other party.
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| Article 11 |
The nominal shares will be traded by registering them in the subscribers' registry set up by the Company, which include the names of the shareholders, their nationalities, places of their residence, occupations, shares' numbers, and the amounts paid up for these shares, and the share shall be marked on this registry. The transfer of the nominal share ownership shall be disregarded against the Company or others except as of the date of registration on the said registry. The subscription in the shares or their ownership means that the shareholder has accepted the Company's law, and his commitment by the decisions issued by the shareholders' meetings in accordance with the provisions of the law, whether he is present or absent or whether he agreed or disagreed with these decision. |
| Article 12 |
Sharaco will issue shares' certificates whereby the shares have serial numbers and signed by the chairman of Sharaco's board of directors or by a member of the board of directors authorized by him and stamped by the seal of Sharaco. The share shall in particular contain the number and the date of the Royal Decree issued licensing the incorporation of Sharaco, and the number and date of the ministerial resolution issued declaring the incorporation of Sharaco and its capital, the number of shares in which it is divided into, the nominal value of the share, the amount paid up, the purpose of the Company in brief, it head office, and its term. However, the shares may have coupons of serial numbers including the share number attached to it. |
| Article 13 |
The capital may be raised, once or several times, by a decision from the extraordinary general assembly provided that the original capital shall paid up fully. The decision states the method of increasing the capital, and the shareholders are entitled to have the priority in subscribing in the new cash shares. The shareholders announce their priority by publishing it in a daily newspaper regarding the decision to increase the capital and the conditions of the subscription. Each shareholder shall show his desire in writing to use his right in the priority within 15(fifteen) days as of the date of the said publication. These shares shall be distributed to the shareholders who requested more than their share according to the percentage they own of the new shares, and the rest of the new shares shall be distributed to the original shareholders who requested the subscription with the rate of what they own in original shares provided that what they get shall not exceed what they have asked for from the new shares. The rest of the new shares shall be distributed to the shareholders who requested more than their portion according to the rate of what they own in original shares provided that what they receive shall not exceed what they have requested from the new shares. The rest of the shares shall be listed on public offering. |
| Article 14 |
The capital of Sharaco may be decreased by a decision from the extraordinary general assembly, if its capital exceeded its needs or if Sharaco suffered losses. The decision shall be taken except after reading the report of the auditors stating the reasons behind this decision and Sharaco's commitments, the impact of decrease on these commitments, and the decision shall explain the method of decrease. On the other hand, if the decrease was a result of Sharaco's capital exceeding its needs, then, the creditors shall be called to raise their objections within 60 (sixty) days as of the date of publishing the decrease decision in a daily newspaper distributed in the country in which Sharaco has its headquarters. Hence, if someone of the creditors objected and handed down to Sharaco his documents on the said date, then, Sharaco shall pay him his debt, if it is due, or to give him a sufficient security to pay it, if it is deferred. |
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Third Chapter: Sharaco's Management
| Article 15 |
Sharaco is managed by a board of directors consisting of 9 members appointed by the ordinary general assembly for a period of three years. This provision shall take effect as of 01/01/1995.td>
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| Article 16 |
The member of the board of directors shall own a "number of shares not less than 200(two hundred) shares and these shares shall be placed within 30(thirty) days" from the date when the member assigns a bank specified by the minister of commerce for this purpose. These shares shall be allotted to ensure the responsibility of the members of the board of directors, and shall remain non-tradable until the expiry of the specified duration of hearing the case of responsibility stipulated in article (77) of the companies' act or until the case is settled. If the member of the board of directors does not place the security shares on the specified time, then, his membership shall be cancelled. |
| Article 17 |
The membership of the board of directors shall expire upon the end of the appointment duration or by the abstention of the member from attending the sessions of the board or by his absence for more than three consecutive sessions without acceptable excuse accepted by the board of directors or by resignation. However, in all these cases, the member shall not be discharged of responsibility of his membership except after the acceptance of the general assembly for that. On the other hand, if the number of the board of directors decreased to five members, then, the ordinary general assembly shall be called as soon as possible to appoint the required number of members. The general assembly may, at all times, dismiss all the members of the board of directors or some of them. |
| Article 18 |
without prejudice to the prescribed power of the general assembly, the board of directors shall have the broadest authorities in managing the Company. Moreover, the board, as it may be within its authority, may delegate one or more of its members or from others, to carry out a job or a specified jobs, and the board of directors may conclude loans, buy or sell properties or mortgage them, if these acts fall, by their nature, within Sharaco's purposes. |
| Article 19 |
The remuneration of the members of the board of directors consists of what is stated in article (42) of this law, in addition to attendance allowance for the board of directors' sessions for each session as allowed by the instructions issued by the concerned authorities. The board of directors' report to the ordinary general assembly includes a full statement about what the board members got in terms of salaries, dividends, attendance allowance, expenses and other benefits during the fiscal year. Moreover, the said report stated what the board members got in their capacity as assciates or managers or what they got against technical, managerial or consultation works. |
| Article 20 |
The board of directors shall appoint one of its members to be the chairman of the board and another one to be the vice chairman of the board, and it may appoint one of its members to be a managing director. A member of the board of directors may serve as the chairman of the board of directors and as the managing director. The chairman of the board of directors and the vice chairman of the board of directors are entitled to sign on behalf of Sharaco individually, and the board of directors is entitled to may give the right to sign to any other member or more of the board of directors jointly or separately. Furthermore, the board may delegate some managers, who are not members of the board of directors, to do certain work(s) jointly or separately. The board of directors determines the remuneration of the chairman of the board of directors and the managing director as well as the remuneration entitled to them as members of the board of directors. Moreover, the board of directors appoints a secretary to do the secretarial functions of the board, and determine his remuneration and duration. |
| Article 21 |
The board of directors convenes by a call from its chairman, and the call shall be in writing and its receipt shall be signed. The chairman of the board shall call to a meeting upon request of two members of the board. |
| Article 22 |
The meeting of the board will be legal if attended by half of the members at least, provided that the number of attendees shall not be less than 5 members. The board decision shall be taken by the majority of the attendees and the representatives, and in case of a tie, the opinion of the chairman of the board shall prevail. This provision shall be in force as of 01/01/1995. |
| Article 23 |
The deliberations and decisions of the board shall be written down in minutes signed by the chairman of the board and the secretary. These minutes shall be written in a special registry signed by the chairman of the board and the secretary. |
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Fourth Chapter: Shareholders' Meetings
| Article 24 |
Every subscriber is entitled, regardless of the number of his shares, to attend the general assembly on his own behalf or on behalf of other subscribers. |
| Article 25 |
The founders' meeting is concerned with the following matters:
- Ensuring the subscription by all the capital and to fulfill "in accordance with the rules of company's act" the minimum of the capital equal to the due share value.
- Approval of the final provisions of the articles of association, however, it can not make material changes to the articles of association being considered except by the agreement of the all subscribers represented in it.
- Deliberating of the founders' report regarding the works and expenses required by incorporation.
- Appointing auditor for Sharaco. Its (founders' meeting) convening depends on the attendance of a number of subscribers representing half of the capital at least, and each subscriber has a vote in its meetings for a share he subscribed to or representing it.
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| Article 26 |
The ordinary general assembly, drawn up legally, represents all shareholders, and shall not convene except in Riyadh city. Every subscriber, regardless of the number of his shares, is entitled to attend the general assembly, and the subscriber can delegate another subscriber on his behalf, but not from members of the board of directors in attending the general assembly. |
| Article 27 |
Except with matters related to the extraordinary general assembly, the ordinary general assembly is concerned with all matters related to Sharaco. It convenes once at least a year during the six months following the fiscal year of Sharaco. Moreover, it is possible to invite other ordinary assemblies when needed. |
| Article 28 |
The extraordinary general assembly is entitled to modify Sharaco's articles of association, except the provisions that are banned from being modified legally, and "it is entitled to increase or decrease the capital or extension of the duration of the Company or winding it up before the expiry of the time specified in its articles of association or by merging Sharaco into another company or establishment". Furthermore, it is entitled to take decisions in matters related to the power of the ordinary general assembly by the same conditions and terms prescribed to the last assembly. |
| Article 29 |
The general assembly of shareholders convenes by a call from the board of directors, and the board shall call the ordinary general assembly if the auditor that or if a number of shareholders, representing 5% of the capital at least, called for a meeting. The call for the convening of the general assembly shall be published in the Gazette and in a daily newspaper distributed in Riyadh city before the date set for convening the assembly by 25 days (at least), and the call shall include the agenda. |
| Article 30 |
Upon the convening of the general assembly, a list containing the names of the attending shareholders and representatives shall be set up, stating their places of residence, the number of the shares they possess for themselves or on behalf of others, the number of votes assigned to them. Every stakeholder shall have the right to see this file. |
| Article 31 |
The ordinary general assembly shall not be valid "except when attended by shareholders representing 50% of the capital at least, and if this quorum is not available at the first meeting, a call shall be made for a second meeting to be held during thirty days following the date specified for the previous meeting, and the call will be announced by the method stated in article (29) of this articles of association, and the second meeting shall be considered legal "irrespective of the number of shares representing it". |
| Article 32 |
The meeting of the extraordinary general meeting shall not be valid unless it is attended by shareholders representing half of the capital at least, and if this quorum is not available at the first meeting, a call shall be made for a second meeting to be held during thirty days following the date specified for the previous meeting, and the call will be announced by the method stated in article (29) of this articles of association, and the second meeting will be valid, if attended by a number of shareholders representing quarter of the capital at least. |
| Article 33 |
The votes will be calculated in the ordinary and extraordinary general assemblies on the basis of each 20 shares as one vote, and even though the members of the board of directors may not participate in voting on the decisions of the assembly related to discharging themselves regarding the period of their administration. |
| Article 34 |
The decisions of the founders' meeting and the ordinary general assembly shall be taken by the absolute majority of the shares represented in the meeting. Moreover, the decisions of the extraordinary general assembly shall be taken by the two third majority of the shares represented in the meeting, unless the decision is related to "increasing or decreasing the capital or extending the duration of Sharaco or winding it up before the expiry of the specified duration in this articles of association or by merging the Sharaco into another company or establishment "then, the decision will not be valid unless it is taken by the two third majority of the shares represented in the meeting. |
| Article 35 |
Every subscriber has the right to discuss the issues listed on the agenda of the general assembly, and raise questions about that to the members of the board and to the auditors. The board, when preparing an agenda of the general assembly, shall take into consideration the issues that the shareholders desire to be listed on the agenda. The shareholders, who possess 5% of Sharaco's shares, may add one or more items to the agenda of the general assembly, when it is prepared. The board or the auditor shall answer the questions of the shareholders in a manner that does not endanger Sharaco's interests, and if the shareholder considers that the answer to his question was not convincing, then, the general assembly shall be consulted, and its decision shall be binding in this regard.
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| Article 36 |
The general assembly shall be headed by the chairman of the board or his deputy in his absence, and the chairman shall appoint a secretary for the meeting and a (vote collector). A minute of the general meeting shall be written down including the names of the attending shareholders or representatives, the number of votes they possess for themselves or on behalf of others, and the number of votes prescribed for them, the decisions taken, the number of agreeing or disagreeing votes and the a summary of the discussions that took place in the meeting. The minutes of the meeting shall be written down in an orderly manner after each meeting in a special file signed by the head of the meeting, its secretary and the vote collector.
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Fifth Chapter: Auditor
| Article 37 |
The auditor at all times has the right to access Sharaco' books & records and other documents, and he is entitled to request any data or clarifications that he sees necessary. Moreover, he is entitled to investigate in Sharaco's liabilities and commitments. |
| Article 38 |
Sharaco's auditor has at all times the right to access the Company's books, records and other documents, and he may request any data or clarifications that he sees necessary. Furthermore, he is entitled to investigate Sharaco's assets and liabilities. |
| Article 39 |
The auditor shall deliver an annual report to the general assembly containing Sharaco's position, while providing him with the data and clarifications he requested. He shall also be enabled to discover any violations for the companies' act or violations of these articles of association, and his opinion on conforming Sharaco's accountings with the reality. |
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Sixth Chapter: Sharaco's accountings and distribution of dividends
| Article 40 |
Sharaco's fiscal year begins on the first day of January, and ends on December 31 of each year, while the first fiscal year includes the period which ends from the date of decision announcing the incorporation of Sharaco until the end of (Jumada 2) of the next fiscal year. |
| Article 41 |
The board of directors prepares at the end of every year an inventory for Sharaco's assets and liabilities at that date, as well as preparing Sharaco's budget, loss and profit accounting and a report about Sharaco's activities and its financial position of the past year. This report includes the method suggested by the board for distributing the dividends. The board shall provide the auditor's report with these documents before the date set for convening the general assembly by 45 days at least. The chairman of the board shall sign the said documents, and they shall be handed to the head office of Sharaco under the disposal of the shareholders before the date set for the convening of the general assembly by 25 days at least. The chairman of the board of directors shall publish the budget and the loss and profit accounting in a daily newspaper in Riyadh city, plus a summary of the board report, and the full report of the auditor's report before the convening of the general assembly by 25 days at least. |
| Article 42 |
Sharaco's net profits will be distributed after deducting the general expenses and other costs as follows:
- Setting aside the legal Zakat.
- Setting aside 10% of the net profits for making a statuary reserve, and the ordinary general assembly may stop this allocation when the said reverse reaches half of the capital.
- Setting aside 5% of the net profits for making an agreed upon reserve to be allocated for maintenance works and for the purposes set by the board of directors. This allocation could be stopped when the said reserve reaches tenth of the capital.
- From the remainder of that, a down payment shall be distributed to the shareholders equivalent to 5% of the paid up capital.
- A percentage of remaining amounts, after what was mentioned before, will be allocated to the remuneration of the board of directors according to the regulations issued by the relevant authorities. The rest (of the money) will be distributed to the shareholders partially or wholly as an additional share in the profits or be carried forward to the next years.
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| Article 43 |
The dividends that should be distributed to the shareholders shall be paid at the place and date set by the board of directors. |
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Seventh Chapter: Disputes
| Article 44 |
Every shareholder is entitled to file the responsibility case of Sharaco against the members of the board of directors, if the mistake committed by them could make him suffer, provided that Sharaco still has the right to file the case. Furthermore, the shareholder shall notify Sharaco by his intention to file the case. |
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Eighth Chapter: Dissolution & winding up of Sharaco
| Article 45 |
Upon the expiry of Sharaco's duration, or in case of its winding up before the specified period, the extraordinary general assembly shall decide, based on the board of directors suggestion, the method of winding up, and shall appoint one or more liquidator, and determine his(their) authority/authorities and fees. The authority of the board of directors ends with the winding up of Sharaco, even though the board of directors keeps managing Sharaco until the liquidator is appointed, and Sharaco's bodies keep their authorities in a manner that does not contradict with the jurisdictions of the liquidator(s). |
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Ninth Chapter: Final Provisions
| Article 46 |
يودع هذا النظام This memorandum of association shall be maintained and published according to the companies' act. |
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