We assist joint stock companies and other companies in structuring their governance by regulating the relationship among shareholders or partners, the board of directors, executive management and stakeholders, and by defining powers and committees, in accordance with the Companies Law and its Implementing Regulations and, for listed companies, the Corporate Governance Regulations issued by the Board of the Capital Market Authority. This helps build shareholder confidence, attract investors, clarify the obligations of the parties concerned, promote fairness and transparency, and raise performance in pursuit of the company’s objectives.
Frequently Asked Questions
The management of companies is generally governed by the Companies Law, issued by Royal Decree No. M/132 dated 1/12/1443H, and its Implementing Regulations, Part Two of which is devoted to joint stock companies not listed on the capital market. Listed joint stock companies are also subject to the Corporate Governance Regulations issued by the Board of the Capital Market Authority and to the Implementing Regulation of the Companies Law for Listed Joint Stock Companies.
Under Clause (Second) of Royal Decree No. M/132, the Companies Law does not prejudice the provisions and powers of the Saudi Central Bank and the Capital Market Authority under their respective laws.
Under Article 1, the Corporate Governance Regulations apply to joint stock companies listed on the market. Paragraph (b) of Article 2 makes them mandatory for companies listed on the Main Market, except for provisions marked as guiding. Companies listed on the Parallel Market must comply with the provisions listed in paragraph (c) of the same Article, and the remaining provisions are guiding for them.
Paragraph (1) of Article 67 of the Companies Law requires the board of a joint stock company to have at least three members, and Article 68 requires them to be natural persons and limits the term of membership to four years.
For listed companies, Article 16 of the Corporate Governance Regulations requires the majority of the board to be non-executive members and the number of independent members to be at least two or one third of the board, whichever is greater, and paragraph (b) of Article 23 prohibits combining the position of chairman with any executive position in the company.
Yes. Article 51 of the Corporate Governance Regulations requires an audit committee to be formed by a resolution of the board, with no executive member among its members, with no fewer than three and no more than five members, at least one of whom specializes in finance and accounting, and with at least one independent member.
Article 11 of the Companies Law permits a family charter regulating family ownership in the company, its governance and management, the policy for employing family members, the distribution of profits, the disposal of shares or interests, and the mechanism for settling disputes. The charter is binding and may form part of the company’s articles of association or by-laws, provided it does not contradict the Law or those constitutional documents.