Does a Saudi LLC use an operating agreement?

No. Under Article 7 of the Companies Law a limited liability company has articles of incorporation, and a single-person limited liability company has articles of association. Article 158(1) prescribes the information those documents must contain, from capital and its distribution through management, assignment of interests and the manner of distributing profits and losses.

Do the articles have to be in Arabic?

Yes. Article 7(3) of the Companies Law requires the articles of incorporation or articles of association to be in the Arabic language, and permits a translation into another language to accompany them. Article 8(1) separately requires them to be in writing, failing which they are null and void.

Can a partner sell his interest freely?

Article 178 of the Companies Law lets a partner assign to another partner on the conditions in the articles, but a transfer to a non-partner triggers a statutory pre-emption process. The partner must notify the others through the manager of the assignee's name and the terms of the assignment or sale, and the partners or the company have 30 days from the manager being notified to buy the interest, with an accredited valuer setting the value if it is disputed.

LLC Operating Agreement in Saudi Arabia

Saudi Arabia has no operating agreement. The constitutional document of a limited liability company is its articles of incorporation, or articles of association where a single person owns it, and the Companies Law prescribes their contents. They must be in Arabic, in writing on pain of nullity, and registered with the Commercial Register, which is when the company acquires legal personality.

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Governing law

Limited liability companies are governed by Part 6 of the Companies Law, Royal Decree No. M/132 of 30 June 2022, together with the general incorporation rules in Part 1; Article 281 brought the Law into force 180 days after publication in the Official Gazette.

Companies Law, Royal Decree No. M/132 of 30 June 2022, Arts. 4 to 15, 156 to 181 and 281 (Bureau of Experts official translation, Ministry of Investment)

What a llc operating agreement has to contain in Saudi Arabia

Article 156 allows a limited liability company to be formed by one or more natural or legal persons, treats its assets and liabilities as separate from the partners', and limits partner liability to their proportionate interests in the capital.
Companies Law, Royal Decree No. M/132 of 30 June 2022, Art. 156 (Bureau of Experts official translation, Ministry of Investment)
Article 158(1) requires the articles to state the partners' particulars, the company name, headquarters and purpose, the capital and its distribution, an acknowledgment that contributions are fully paid, the term if any, management, assignment of interests, notification of partners, issuance of partner decisions, distribution of profits and losses, the fiscal year and termination.
Companies Law, Royal Decree No. M/132 of 30 June 2022, Art. 158(1) (Bureau of Experts official translation, Ministry of Investment)
Article 158(2) requires the application to enclose an acknowledgment that all incorporation requirements are satisfied and, for in-kind contributions, an accredited valuer's report on fair value with the incorporators' acknowledgment of the consideration.
Companies Law, Royal Decree No. M/132 of 30 June 2022, Art. 158(2) (Bureau of Experts official translation, Ministry of Investment)
Article 160 requires one or more managers appointed from among the partners or others, in the articles or a separate contract, for a specified or unspecified period. Article 161 leaves the method of management and the decision majority to the articles or a partners' decision.
Companies Law, Royal Decree No. M/132 of 30 June 2022, Arts. 160 and 161 (Bureau of Experts official translation, Ministry of Investment)
Article 174 divides the capital into indivisible and untradeable interests of equal value.
Companies Law, Royal Decree No. M/132 of 30 June 2022, Art. 174 (Bureau of Experts official translation, Ministry of Investment)
Article 178 gives partners a right of first refusal on transfers to non-partners: the assignor notifies the others through the manager of the assignee and the terms, and the partners or the company may buy within 30 days, with an accredited valuer settling a disputed value.
Companies Law, Royal Decree No. M/132 of 30 June 2022, Art. 178 (Bureau of Experts official translation, Ministry of Investment)

Form, notarisation and registration

Article 7(3) requires the articles of incorporation or articles of association to be in the Arabic language, with any translation accompanying them.
Companies Law, Royal Decree No. M/132 of 30 June 2022, Art. 7(3) (Bureau of Experts official translation, Ministry of Investment)
Article 8(1) makes the articles and any amendment null and void unless in writing, and Article 8(2) requires registration with the Commercial Register, with joint and several liability for damage caused by failure to register. Article 9(1) gives the company legal personality on registration.
Companies Law, Royal Decree No. M/132 of 30 June 2022, Arts. 8(1), 8(2) and 9(1) (Bureau of Experts official translation, Ministry of Investment)

What catches drafters out

Article 8(4) provides that the articles or any amendment may not be used as evidence against third parties before registration, and that unregistered information is not valid against them.
Companies Law, Royal Decree No. M/132 of 30 June 2022, Art. 8(4) (Bureau of Experts official translation, Ministry of Investment)
Article 157 gives the owner of a single-person limited liability company the powers of the manager, board of managers and general assembly, and requires his decisions to be issued in writing and recorded in a special register kept at the company.
Companies Law, Royal Decree No. M/132 of 30 June 2022, Art. 157 (Bureau of Experts official translation, Ministry of Investment)
Article 11 makes a separate partners' agreement binding and allows it to form part of the articles, provided it does not violate the Companies Law or those articles.
Companies Law, Royal Decree No. M/132 of 30 June 2022, Art. 11 (Bureau of Experts official translation, Ministry of Investment)