Corporate Governance

Corporate Governance

Corporate governance is key to investor confidence and attracting foreign direct investment (FDI) in the Saudi capital markets. The Kingdom of Saudi Arabia has some of the most prescriptive corporate governance regulations in the Middle East region, reflecting international best practices and acting as a testament to the importance with which the relevant authorities treat such matters.

The new Companies Regulations issued by the Ministry of Commerce and Investment in 2016 have a very strong corporate governance element, particularly for joint stock companies, and they cover matters such as minority shareholder protection and general board and shareholder governance requirements. Alongside these regulations, the CMA and MoCI have both recently issued or updated specific corporate governance regulations for joint stock companies. The CMA’s regulations are mandatory for listed companies, whilst MoCI’s regulations set out a recommended but optional regime for unlisted joint stock companies. These regulations cover a wide range of areas, such as the requirements for the audit, remuneration, nomination, compliance, and risk management board committees, board training, responsibilities and competencies, managing conflicts of interest, internal controls, the appointment and duties of external auditors, and disclosure policies. Disclosure of information to the market is also covered extensively in the CMA’s Rules on the Offers of Securities and Continuing Obligations. For example, listed companies must comply with a detailed regime for disclosure to the market that includes both a requirement to announce specific events as well as a general obligation to keep investors aware of relevant developments.

The combined Z&Co. and Magic Circle law firm Linklaters team has significant experience advising local and international clients in the corporate governance space, including:

  • Drafting board governance and compliance manuals;
  • Developing comprehensive regulatory documentation for directors’ duties;
  • Advising listed companies on corporate governance requirements in transactions;
  • Board and executive training programmes;
  • Advising unlisted companies, including family groups, on best practices for corporate governance arrangements;
  • Working with foreign stock exchanges to undertake comparative studies for regulation in Saudi Arabia and other jurisdictions; and
  • Advice on board committees, including their formation, powers, and responsibilities.