The family charter under Article 11 of the Companies Law

Since the Companies Law (Royal Decree No. M/132) came into force on 19 January 2023, Saudi family businesses have had something few jurisdictions offer: a statutory family charter. Article 11 allows partners or shareholders, during or after incorporation, to conclude a charter covering the family's ownership of the company, its governance and management, work policy, the employment of family members, the distribution of dividends, the disposal of shares and the procedure for settling disputes.

The charter is binding and may form part of the company's articles of association, provided it does not conflict with the law or with the articles themselves. The same article lets shareholders agree how their heirs will join the company, in person or through a company formed for that purpose, which is where many family disputes begin.

A charter does not replace corporate governance. The holding company still needs a board with clear authority, committees and a delegation matrix that separates ownership from management. The charter governs the family's relationship with the business; the articles and governance framework govern the business itself. Drafting them together avoids conflicts between the two.

The best time to write a charter is before it is needed, while the founding generation can still settle questions of entry, exit and employment by agreement. Companies had until January 2025 to bring their articles into line with the new law; groups that did so without a charter can still adopt one now.