The Capital Market Authority (CMA) called upon relevant and interested persons participating in the capital market to share their feedback on enhancing the governance of procedures for removing members and boards of directors of listed companies, and on regulating the distribution of distributable profits, in accordance with the Implementing Regulation of the Companies Law for Listed Joint Stock Companies. The consultation period will last for 30 calendar days, ending on 21/06/1447H, corresponding to 12/12/2025.
The proposed draft aims to enhance investor protection in the Saudi capital market by enabling shareholders to exercise their rights and monitor the performance of boards of directors, thereby contributing to improved governance standards and market stability. It also aims to increase regulatory flexibility in determining distributable profits, which are considered among the key indicators and tools used to measure the performance efficiency of listed companies.
According to the draft, an individual shareholder or a group of shareholders holding 10% or more of the company's shares with voting rights may submit a request to the company's board of directors to remove all board members, provided that the request is made no earlier than six months after the beginning of the board's term. They may also, if holding the same percentage, request the removal of one or more board members.
The proposed draft also requires a board member to notify the board if a judicial ruling is issued convicting him or her of a crime involving breach of trust. The board shall, upon becoming aware of the ruling, submit a recommendation to the general assembly for the member's removal, even if the member has not notified the board of the ruling.
According to the proposed provisions, if the removal of all or some board members results in the board no longer meeting the minimum number of members required under the Companies Law or the Company's bylaws, the removed members must continue to perform their duties until the general assembly approves the election of their replacements. The period between the approval of the removal and the election of replacements must not exceed 60 days from the date of approval of the removal request.
As for distributable profits, the proposed draft grants listed companies greater flexibility in the mechanism for calculating them by eliminating the requirement to link their determination to audited or reviewed annual financial statements. The mechanism is amended to allow the use of the most recent financial statements preceding the distribution decision, enabling listed companies to rely on their latest financial statements, whether interim or annual, when determining the value of distributable profits.
The CMA emphasized that the comments of relevant and interested persons shall be taken into full consideration for the purpose of approving the final proposed amendments, which in turn shall contribute to the aim of enhancing and developing the regulatory environment.
Opinions and comments can be received through any of the following:
•The Unified Electronic Platform for Consulting the Public and Government Entities (Public Consultation Platform), affiliated with the National Competitiveness Center through the following link: (istitlaa.ncc.gov.sa ).
•The prescribed form through the following email: (Laws.Regulations@cma.org.sa).
The Draft can be viewed via the following links:
The Draft amendment of the Implementing Regulation of the Companies Law for Listed Joint Stock Companies
Prescribed form for providing comments