Under the Saudi Companies Law, a LLC is bound by the acts of a manager who is acting in accordance with the company’s objects. The authority of the manager may, however, be restricted by the articles of association or by a resolution of the shareholder. A manager who acts outside of his authority may be personally liable to compensate the company, the shareholders and third parties for damages arising from such breach.
In the case of a JSC, the company is bound by the acts of the board of directors within the limits of their authority. The chairman of the board is the company’s legal representative before courts, arbitral tribunals and third parties and he may delegate such authority by written resolution. Again, directors may be personally liable if they exceed their authority.
Powers of attorney are also used in certain cases, such as litigation before the Saudi courts.