CMA Strengthens Regulatory Framework for Listed Companies with Key Amendments
The Capital Market Authority (CMA) has approved significant amendments to the Implementing Regulation of the Companies Law for Listed Joint Stock Companies. This decision aims to enhance the regulatory framework concerning the removal of board members and the mechanisms for determining and distributing profits in listed companies.
Enhancing Governance through Board Member Removal Procedures
The newly approved amendments establish specific controls for the General Assembly regarding the removal of board members. This initiative is designed to empower shareholders, allowing them to exercise their rights more effectively and monitor the performance of boards of directors. By increasing transparency and strengthening investor protection, these changes are expected to bolster the stability of the capital market.
Under the new regulations, shareholders holding at least 10% of the voting shares can request the removal of all board members after a minimum of six months from the commencement of the board’s term. Additionally, shareholders can seek the removal of individual board members if it is determined that they are unable to fulfill their duties as mandated by law.
Obligations Following Judicial Rulings
The amendments also impose a requirement on board members to promptly inform the board if they are convicted of a crime involving breach of trust or if a decision by an authority affects their ability to perform their duties. In such cases, the board is obligated to recommend the removal of the member to the General Assembly, even if the member does not notify the board.
Furthermore, if the removal of board members leads to a breach of the minimum quorum necessary for valid board meetings, the General Assembly’s resolution must stipulate that the removal will not take effect until a new board or replacement member is elected. The board of directors is required to convene the General Assembly to facilitate this election within 75 days from the approval of the removal request.
Flexibility in Distributable Profits Calculation
In terms of profit distribution, the amendments provide listed companies with increased flexibility. The requirement to link the determination of distributable profits to audited annual financial statements has been removed. Companies can now base their calculations on the latest reviewed or audited financial statements prior to the distribution decision. This change allows companies to utilize their most recent financial data, whether interim reviewed or annual audited, when determining the amount of distributable profits.
Ongoing Efforts to Develop the Capital Market
These regulatory amendments are part of the CMA’s continuous efforts to enhance the regulatory environment of the capital market. The goal is to improve governance in listed companies while balancing the protection of shareholders’ rights and the efficient management of businesses. This approach is intended to support the growth and sustainability of the Saudi capital market.
Previously, the CMA had published a draft amendment of the Implementing Regulation of the Companies Law for Listed Joint Stock Companies in November. This draft was made available for public consultation on the Unified Electronic Platform for Consulting the Public and Government Entities, affiliated with the National Competitiveness Center, for a period of 30 calendar days.
For further details, the Implementing Regulation of the Companies Law for Listed Joint Stock Companies can be accessed here.
Source: www.zawya.com
Read all the latest developments and breaking updates in the Latest News section.
Published on 2026-04-02 20:33:00 • By the Editorial Desk
