The Capital Market Authority Approves the Corporate Government Regulations
CMA board has issued its resolution approving the new Corporate Governance Regulations.
The new Regulations have paid heed to setting effective governance arrangements for the joint stock companies listed in the Saudi Stock Exchange to ensure the clarity of the relationship between shareholders and the company's board from one side, and between the board and the executive management team on the other side. The regulations also took care of the shareholders' rights in these companies, such as the right of fair and equal treatment of shareholders without discrimination and the right of accessing the information transparently to enable them to fully exercise their statutory rights. Moreover, the Regulations cover the rights of stake holders in these companies.
The Regulations have set detailed provisions on the composition of Board of Directors and committees in terms of competencies, responsibilities, meetings, members' rights and duties. These provisions emphasize the principle of active participation in decision making within the Board of Directors as they deal with the issues of conflicts of interest between board members and the company, and adopt honesty, truthfulness and care as a foundation and methodology for these boards.
The Regulations also included detailed provisions regarding companies' external auditors and internal control procedures compelling Boards of Directors to disclose all information the shareholders and dealers need to build their investment strategies or perform any transaction with the company in a fair and systematic manner for all parties.
The Regulations contribute to interacting with the set of national legislations under which companies operate and integrate to fulfil their objectives with efficiency and integrity. The benefits of Corporate Governance are not confined to companies, rather they directly outreach the national economy for the role played by governance-based companies' growth and continuity in boosting the economy and increasing the GDP in line with the Saudi Vision 2030. These Regulations were prepared in cooperation between the CMA and the Ministry; and come as part of the continuous coordination between them under the singed memorandum of cooperation to harmonise policies and procedures adopted for the implementation of the Companies Law to ensure integration and harmony in achieving the sough objectives; and in completion of the legislations issued by CMA in light of the new Companies Law such as the Regulatory Rules and Procedures issued pursuant to the Companies Law relating to joint stock companies listed in the Saudi Stock Exchange that regulates the Remunerations of board members in these companies, the Holding of general and special assembly meetings of shareholders and their participation therein through contemporary technology, Buy-back, sale and pledge of shares, Pledge of company's shares, Issuance, buy-back and conversion of preferred shares by the company, Dividend distribution to shareholders of the company, Issuance and sale of pre-emptive rights resulting from capital increase, and proxy procedures for attending general and special assemblies.