Start with the decision that keeps getting stuck

An owner may also manage the business, or family members may work in different roles. Here, separating ownership from management means distinguishing roles and approval routes, rather than treating family relationships as a substitute for authority or accountability.

Choose a decision that repeatedly causes disagreement: recruitment, purchasing, withdrawals from the company, or dealing with a business owned by a relative. Ask who proposes it, who reviews it, who approves it, and where the decision can be found afterwards. Conflicting answers provide a practical starting point for governance before writing a lengthy manual nobody uses.

Which statutory duties should you build on?

The Companies Law requires managers and board members to act within their powers, in the company's interests and with expected care, while avoiding conflicts and disclosing direct or indirect interests in company transactions and contracts. It also details authorization for interests and competing activities and the relevant exceptions. Do not reduce these rules to a claim that disclosure alone permits any transaction.

The Law also requires accounting records and supporting documents, financial statements prepared under standards approved in the Kingdom, and filing within six months of the financial year end. The Ministry of Commerce explains that an LLC's manager or board of managers is responsible for preparation and filing. Outsourcing preparation does not change the party with statutory responsibility.

Make management reports, approval records and interest disclosures part of actual operations, not files stored at incorporation and forgotten. This is an organizational recommendation for implementing responsibilities, not a universal document checklist imposed in this exact form on every company.

Where does a family charter help?

The Companies Law permits a family charter covering ownership, governance and management, family members' work and employment, profit distribution, disposal of interests or shares, and dispute settlement. A charter is binding and may form part of the incorporation document, provided it does not conflict with the Law or that document. It is a recognized organizational option, not a universal obligation for every family.

Distinguish the charter as an agreement between parties from the company's incorporation document and the policies employees use. Propose operating rules first, then review their placement, wording and legal effect with a lawyer before adoption.

What is a suitable starting point for a small company?

As a practical starting point, prepare:

  • A map of owner and management roles, with clear follow-up responsibility.
  • An authority matrix connecting each decision type with its approver and escalation route.
  • A policy for disclosing interests and handling related situations.
  • A decision register and concise reports that support implementation follow-up.
  • A list of matters requiring owner agreement or legal review.

These are suggested tools to adapt to the company's size and incorporation document, not a claim that every small company needs the same board and committee structure. Test the tools on an actual decision before expanding them.

Your next step with Aleem

Request Aleem's Corporate governance service to organize roles, authority, policies and procedures within an agreed scope. Legal documents are drafted with a licensed partner lawyer. Governance design is not presented as regulatory approval or a guarantee that disagreements will end.

Aleem Consultations