The Saudi Market Authority approves the executive regulations for the new corporate law
The Board of the Saudi Capital Market Authority has approved the executive regulations of the new companies’ system for listed joint-stock companies, to be implemented from today, Thursday, January 19, 2023.
A statement by the Authority stated that the adoption of the regulations came in implementation of the new Companies Law, and based on the authority granted by the Law to the Authority in regulating issues and topics related to companies listed in the financial market as stipulated in the new Law.
These regulations also come in the context of the Authority’s role in regulating and developing the financial market and contributing to achieving its strategic objectives by enhancing confidence and raising the level of governance in the financial market.
It is scheduled to implement the new corporate law in the Kingdom today, Thursday, after it was approved by the Council of Ministers in the middle of last year.
The Authority’s Board’s decision included approving the amendment of 6 executive regulations issued by the Authority, namely: the executive regulations of the companies’ system for listed joint-stock companies, the corporate governance regulations, and the merger and acquisition regulations.
It also included the rules for offering securities and continuing obligations, procedures and instructions for companies whose shares are listed on the market, whose accumulated losses amounted to 20% or more of its capital, and a list of terms used in the regulations and rules of the Capital Market Authority; In which the provisions necessary to implement the provisions of the system were taken into account, in addition to making the necessary amendments in line with its provisions.
Major modifications
The most prominent elements of the main amendments to the executive regulations included amending the title (Regulatory Controls and Procedures issued in implementation of the Companies Law for Listed Joint Stock Companies) to become the name (Executive Regulations for Companies Law for Listed Joint Stock Companies).
In addition to clarifying the provisions that aim to raise the level of governance of the board of directors of the joint-stock company listed in the market, including the detailed provisions for the duties of care and loyalty for the members of the board of directors of the company, determining the method of voting in electing the members of the board of directors, and clarifying the controls related to the shareholder’s right to appoint one or more members in The Board of Directors in accordance with the company’s articles of association.
In addition to regulating the duration of the members of the Board of Directors at the end of the Board’s term or the retirement of its members until the election of a new Board of Directors, and controls to authorize the General Assembly of the Board of Directors the authority to authorize a member of the Board of Directors to participate in business competing with the company or in one of its activities’ branches, in addition to developing the provisions for forming a committee Review and clarify what applies to companies listed in the parallel market.
The most important main elements also included determining the period of appointment of the company’s auditor, regulating the controls for distributing profits to shareholders and what is considered distributable, stating the provisions for issuing and transferring types and categories of shares, regulating the division and merging of shares, and regulating cases of obligation to buy or sell shares mentioned in Article 30 after The two hundred articles of the system, including the conditions and requirements related to disclosure to shareholders and the purchase price, and a statement of the provisions related to the operations of dividing the company, and other topics.
Auditor
With regard to the upper limit for the appointment of the auditor mentioned in Article Three of the executive regulations of the Companies Law for listed joint-stock companies, and where the aforementioned upper limit is included in the calculation of the auditor’s work on auditing the company’s accounts since the date of entry into force of the Companies Law issued by Royal Decree No. (M). /3) On 01/28/1437 AH, the Authority’s Council’s decision stipulated that the listed joint-stock companies must reconcile their positions in accordance with Article 3 of the executive regulations of the Companies Law for listed joint-stock companies within a period not exceeding two financial years from the date the regulations came into force on 6/26 / 1444 AH corresponding to 19/1/2023 AD.
corporate governance
The Authority’s Board of Directors’ decision stipulated that the following amendments to the provisions of the Corporate Governance Regulations shall be implemented starting from the date of 6/19/1445 AH corresponding to 1/1/2024:
– Amending Articles (73, 74 and 75) of the Corporate Governance Regulations from being guiding articles to mandatory ones.
– Amendments to paragraph (4) of Article 24, subparagraph (3) of paragraph (b) of Article 52, paragraph (b) of Article 54, and paragraph (11) of Article 87 of the Corporate Governance Regulations.
Provided that the above articles of the Corporate Governance Regulations issued by the Council’s decision (8-16-2017) dated 05/16/1438 AH corresponding to 02/13/2017 AD, will continue to be implemented until the date of implementation of the aforementioned amendments.
The adoption of the executive regulations comes after the authority published the draft executive regulations for the new companies’ system for joint-stock companies listed on the unified electronic platform for public opinion polls and government agencies affiliated with the National Competitiveness Center (a survey platform) and the authority’s website for public consultations about it, and after the authority held a workshop for companies Listed, it included defining and discussing these amendments, exploring the participants’ observations and suggestions regarding them, as well as answering their questions and inquiries regarding them.
