Intra-Group Guarantees (Upstream / Downstream / Cross-Stream)
Legal advisory structuring upstream, downstream, and cross-stream guarantees in compliance with the Companies Law and board governance requirements.
Overview & Legal Definition
When a subsidiary guarantees the parent company’s obligations (upstream), or vice versa (downstream), or a sister company guarantees another entity within the same group (cross-stream), precise legal and governance considerations arise beyond the drafting of the guarantee itself.
Governance Requirements Under the Companies Law
- 1Article 27 of the Companies Law and related regulations set thresholds for board or general assembly authorization when issuing guarantees to related parties. Exceeding these thresholds may expose the guarantee to nullity or impose personal liability on board members.
- 2Additional Considerations Corporate benefit of the guarantor company itself, not merely the group’s interest, must justify the guarantee.
- 3Regulatory disclosure: certain guarantee structures may require disclosure to SAMA or ZATCA depending on their nature.
- 4Guarantee limits permitted under the guarantor’s articles of association.
Additional Considerations
- Corporate benefit of the guarantor company itself, not merely the group’s interest, must justify the guarantee.
- Regulatory disclosure: certain guarantee structures may require disclosure to SAMA or ZATCA depending on their nature.
- Guarantee limits permitted under the guarantor’s articles of association.
Our Services
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Frequently Asked Questions
Our Standards
Licensed Firm
Formally licensed by the Ministry of Justice under License No. 48189.
Banking Pedigree
Led by a former Vice President of Riyad Bank's Legal & Compliance division.
PDPL Compliance
Full alignment with Saudi Personal Data Protection Law regarding communications.
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اطلب استشارة قانونية
املأ النموذج المرفق وأرفق المستندات المطلوبة، وسيقوم فريقنا بدراسة الطلب والتواصل معكم خلال 24 ساعة.