Saudi Arabia’s Capital Market Authority (CMA) has launched a 30-day public consultation on proposed amendments to strengthen governance standards for listed companies, including new rules on removing board members and revising the mechanism for determining distributable profits.
The proposed changes aim to reinforce investor protection, enhance board oversight and increase regulatory flexibility for companies operating in the Saudi capital market.
According to the CMA, the draft amendments seek to give shareholders stronger tools to monitor board performance.
Saudi Arabia shareholder rights
Under the proposal, an individual shareholder or a group of shareholders holding 10 per cent or more of a listed company’s voting shares may submit a request to remove all board members after the first six months of the board’s term.
The same threshold would also allow shareholders to request the removal of one or more members individually.
The draft also introduces tighter accountability requirements for board members. If a court convicts a board member of a crime involving breach of trust, that member must notify the board.
Once the board becomes aware of the ruling, it must submit a recommendation to the general assembly for the member’s removal, even if the individual fails to disclose the ruling.
Saudi Capital Markets Authority
To ensure continuity of corporate governance, the proposed rules require removed members to continue performing their duties if their departure leaves the board below the minimum number of members mandated by the Companies Law or the company’s bylaws.
They must continue until the general assembly elects replacements, with a maximum period of 60 days from the approval of the removal request.
On distributable profits, the draft aims to give listed companies greater flexibility by removing the requirement to rely solely on audited or reviewed annual financial statements.
Instead, companies may use the most recent financial statements—whether interim or annual—preceding the profit distribution decision.
The CMA said that all feedback from relevant and interested parties will be fully considered as it finalises the amendments, which are intended to support the development of a more robust and adaptable regulatory environment.
