Simple Recommendation Companies

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Simple Recommendation Companies

Types

You may be wondering about what is a simple recommendation company? A limited partnership company is one of the types of companies in Saudi Arabia and it consists of two teams of partners, one team that includes at least one general partner who is responsible in all his funds for the company’s debts and obligations, and another team that includes at least one silent partner who is not responsible for the company’s debts and obligations except within the limits of his share in the company’s capital. The limited partner does not acquire the status of a merchant.

Characteristics of Simple Recommendation Companies

The name of the limited partnership company consists of the names of all the general partners, or the name of one or more of them, with the addition of the word “and partners” or something that indicates this meaning. The name must be associated with what indicates the existence of a limited partnership company.
If the name of the company includes the name of a limited partner or the name of a person who is not a partner - with his knowledge of that - he is considered a joint partner vis-à-vis third parties who dealt with the company in good faith on this basis.
The silent partner may not interfere in the company's external management business, even if based on a power of attorney.
If he intervenes, he is jointly liable in all his funds for the company’s debts and obligations that resulted from the work he performed. And if the actions he has undertaken are such as to lead others to believe that he is a joint partner, he shall be considered - vis-à-vis that third party - jointly liable in all his money for all the debts of the company. Nevertheless, the silent partner may participate in the internal management of the company in accordance with what is stipulated in its Memorandum of Association, and this participation does not create any obligation on his part.
The silent partner may assign his share to any of the other partners in the company. He may also assign his share to a third party after the approval of all the joint partners and the silent partners who own the majority of the capital of the silent party, unless the company’s articles of incorporation stipulate otherwise.
A limited partnership company does not expire with the death of one of the silent partners, or his interdiction, or his declaration of bankruptcy, or his insolvency, or his withdrawal, unless the company’s memorandum of association stipulates otherwise.

Advantages of Simple Recommendation Companies

The non-responsibility of the founders of the limited partnership company for management operations makes it one of the simplest and easiest companies to convene as incorporation (individual company - partnership companies).
The continuous increase in the number of partners within the company increases the investment opportunities for the funds, especially since the limited partners do not have the right to manage.
Leniency in managing the company by the joint partners works to increase the completion of tasks faster.
The responsibility of the joint partners for management increases the implementation of the agreements concluded by the company in an easier and faster manner.

Disadvantages of Simple Recommendation Companies

The share of the partner is not permitted to be traded

A limited partner may not assign shares without the consent of the other partners.
The event of the death of the silent partner, the heirs do not enter the company unless the company contract provides for this.

Conflict and conflict between partners to each other

In the event that there is more than one joint partner within the company.
They may suffer from manifestations of conflict between partners.
This is a result of personal differences in skills and differing views on many business decisions.