The Board of the Capital Market Authority (Authority) issued its resolution on 15/09/1440H corresponding to 20/05/2019G adopting the Amended Corporate Governance Regulations in light of the amendment of the Companies Law issued by Royal Decree number (M\79) dated 25/07/2018G. The amended Regulations will be effective upon their publication date. These amendments come in continuance to Authority's objectives to regulate and develop the Capital Market and contribute to achieving its strategic objectives by enhancing confidence and raising the level of governance in the Capital Market.
Among the most prominent amendments on Corporate Governance Regulations are the amendment of paragraph (3) of Article 46 which states after the amendment the following: “the chairman of the Board informing the Ordinary General Assembly, once convened, of the competing businesses that the member of the Board is engaged in, after the Board assesses the board member's competition with the company's business or if he/she is in competition with one of the branch activities that it conducts in accordance with the standards issued by the Ordinary General Assembly upon a proposal from the Board and published on the company's website, provided that such businesses are assessed on annual basis." This amendment aims to clarify the General Assembly's power in approving the issuance of standards for the competition of the Board Member with the company's businesses or with any of its activity branches, proposed by the Board of Directors.
Mr. Bader Balghonaim, CMA Deputy of Legal Affairs & Enforcement, has stated that these amendments came in line with the amendments made to Article 72 of Companies Law issued by Royal Decree number (M/79) dated 25/07/2018G, which granted the competent authorities to establish rules for the authorisation of a Board Member's engagement in any business that may compete with the company or with one of its activity branches.
He also pointed out that the Authority, upon the amendment of Article 46 of the Regulations, took into account the protection of shareholders' rights and the powers of the General Assembly. The amendment has granted the General Assembly the right to issue competition standards for the competition of the Board Member with the company's businesses or with any of its activity branches, based on the Board of Directors proposal. That is in order for the General Assembly to ensure and review these standards and their suitability to the Company's activities.
The Authority clarified that it has carefully studied all the opinions and observations received during the public consultation period from the public and concerned people to Governance Regulations, in which the Authority has received between period 19\11\2018 – 19\12\2018G. The Authority would also like to thank all those who contributed their views and observations during the period of public consultation.
The amended Corporate Governance Regulations can be viewed on the Authority's website via the following link:
Corporate Governance Regulations