Article 64: Controls for a Company Purchasing its Interests
A limited liability company may purchase its interests if its articles of incorporation so stipulate, in accordance with the following controls:
a. That the purpose of the purchase is to reduce or maintain the company’s capital. In which latter case, the interests purchased in the name of the company shall be the common property of all partners in proportion to the respective number of interests held thereby. The purchased interests shall not be entitled to a share in the profits or assets of the company, and if sold, the sale proceeds thereof shall be paid to the company and added to its reserves.
b. Obtain partner approval to purchase the company’s offered interests and waiver of their right to redeem them, while authorizing the company’s manager to complete the purchase within a maximum period of (thirty) days from the date of the partners’ approval, unless the articles of incorporation provide for a longer period.
c. That the percentage of purchased interests held by the company shall not, at any time, exceed 10% of its total interest capital.
Article 65: Controls for the Company Accepting its Interests as Pledges
Companies may accept their interests as pledges in accordance with the following controls:
a. The pledge is made to guarantee a debt owed to the company.
b. The company's articles of incorporation so permit.
c. The pledge shall be in the interest of the company and partners, at the discretion of the company’s manager.
d. Partner approval of the pledge in accordance with the quorum prescribed for amending the company’s articles of incorporation. Prior approval may be obtained for more than one transaction.
e. The pledge shall not result in a violation of the Law and other relevant laws and regulations.
Article 66: Partners Pledging their Interests
A company partner may pledge interests held thereby in accordance with the following controls:
c. Obtaining the regulatory approvals necessary for pledging, if any.
d. The interestpledge agreement between the pledger partner and pledgee creditor fulfills the terms and conditions set forth in this Chapter.
Article 67: Pledge Agreement Data
A interestpledge is established by virtue of a written agreement that includes the following data:
a. The name of the pledger partner, the name of the pledgee, the name of the beneficiary creditor if other than the pledgee, their ID numbers and addresses.
b. The number of pledged interests, value thereof, and commercial registration number of the company.
c. The amount of debt secured by the pledge, and the maximum limit thereof, if any.
d. The date of the pledge agreement.
e. Pledge redemption terms and conditions.
f. Any other conditions agreed upon by the parties.
Article 68: Controls for Recording the Pledge Agreement
Recording, registering and releasing an interest pledge shall be in accordance with the following:
a. The pledgee and pledger partner shall submit the pledge application to the company’s manager, provided that the signature of the applicant is attested by the Chamber of Commerce, or a licensed bank, or a notary, or a person authorized to engage in notarial work, or is duly certified by one of the Kingdom’s representations abroad if the pledgee or pledger partner are established outside the Kingdom, according to Form No. (5) and Form No. (6) annexed hereto.
b. The pledge shall be recorded in the Partners Register stipulated under Article (99) hereof.
c. The pledge shall be released upon the expiry of its term, if any, or by virtue of a request for the redemption of a pledge according to Form No. (7) annexed hereto, directed by the pledgee to the company’s manager, indicating the consent thereof to the release of interests pledged thereto, provided that the signature of the applicant of the form is duly certified by one of the entities or persons stipulated in Paragraph (a) of this Article.
Article 69: Recording the Pledge Agreement
The pledge shall not be effective vis-à-vis third parties until it is recorded in the Partners Register stipulated under Article (99) hereof.
Article 70: Foreclosure on Pledged Interests
Foreclosing on pledged interests shall be done in accordance with applicable laws and regulations.
Article 71: Laws Governing the Pledge Agreement
The registration of more than one pledge on any of the pledged interests shall be subject to the provisions of the Commercial Pledge Law and the Securing Rights on Movable Assets Law.