Saudi CMA OK’s rules on listed joint stock company

01/11/2016 05:24 AST

The Saudi Capital Market Authority›s board approved Monday the Regulatory Rules and Procedures pursuant to the Companies Law Relating to Listed Joint Stock Company which took effect on May 2, 2016. The regulatory Rules and Procedures aim to apply the provisions of the law regarding listed companies on the stock exchange so as to achieve the requirements of the law. This is part of CMA efforts to enhance governance and disclosure in listed companies.

In addition, the CMA board has issued the guidance note for these Regulatory Rules and Procedures which is intended to assist listed joint stock companies and its boards of directors; shareholders; and any related party in implementing the Regulatory Rules and Procedures, and should help them in achieving a higher degree of compliance with the requirements of these Regulatory Rules and Procedures as well as the related provisions of the Companies Law.

The Rules and Procedures include remuneration of Board members in joint stock companies, holding of general and special assemblies› meetings and shareholders participation therein through contemporary technology, sale, pledge and buy-back of shares, pledge of joint stock companies› shares, issuance , buy-back and conversion of preferred shares by joint stock companies, sale of shares through the exchange in case of failure of shareholder to pay the value of the shares on time, dividend distribution to shareholders of the company, issuance and sale of pre-emptive rights resulting from capital increase, and proxy procedures for attending general or private assemblies.

In regard to the remuneration of Board members of joint stock companies, the Rules and Procedures require that the Board takes into account the Companies Law and the Corporate Governance Regulations when determining and paying Remunerations of each board member. In addition, the remuneration must be and proportionate to the board member’s experience, expertise and independence, the activities carried out and responsibilities borne by each board member. It should be reasonably sufficient to attract and retain highly qualified and experienced board members. The Rules and Procedures said the board members will not vote on the agenda item relating to the remuneration of board members at the general assembly’s meeting.

Furthermore, the Rules and Procedures include the terms, conditions and cases for the buy-back of joint stock companies› shares and whether it is to reduce the company›s capital, to acquire treasury shares or to allocate the shares to the company›s employees. The company cannot buy-back unless it has the general assembly›s approval specifying the maximum number of shares subject of the buy-back and its purposes.

In addition, the Rules and Procedures state that the company›s Board of directors should implement the decision by the general assembly in regard to the dividends distribution on the registered shareholders in 15 days from the maturity date. A company with good and systematic profitability, has reasonable liquidity and can reasonably predict its profits can have interim dividends distribution to its shareholders on a semi-annual or quarterly basis.

Saudi Gazette