February 1, 2023

The Council of the Capital Market Authority has approved the executive provisions of the new corporate law for listed joint-stock companies, provided that they come into force on 06/26/1444 AH, which corresponds to 01/19/2023 CE.
The adoption of the rules took place in pursuance of the new Companies Law and on the basis of the powers granted by the Law to the Office in regulating matters and topics related to companies registered on the financial market, as provided for in the new Law.
These provisions are also consistent with the Authority’s role in regulating and developing the financial market and contributing to the achievement of its strategic objectives by building confidence and enhancing governance in the financial market.
The Governing Council’s decision included approving amendments to six executive regulations issued by the Governance; These include: company system executive regulations for publicly listed companies, corporate governance regulations, mergers and acquisitions regulations, securities placement and continuing obligations rules, procedures and instructions for companies whose shares are listed on the market, whose accumulated losses are 20% or more of their capital, as well as a list of terms used in the provisions of the Capital Market Authority and its rules; Which took into account the provisions necessary to implement the provisions of the system, in addition to making the necessary amendments in accordance with its provisions.
The most notable elements of the major amendments to the implementing regulations included changing the title (Regulatory Controls and Procedures Issued pursuant to the Companies Law for Listed Joint Stock Companies) to the title (Executive Regulations for the Companies Law for Listed Joint Stock Companies). , in addition to a statement of provisions aimed at increasing the level of management of the Board of Directors of a listed joint-stock company On the market, including detailed provisions on the duties of care and loyalty in relation to members of the Board of Directors of the company, determining the method of voting when electing members of the Board of Directors, clarifying control over the right of a shareholder appoint one or more members of the board of directors in accordance with the internal documents of the company, as well as regulation of the duration of the members of the board of directors at the end of the session of the board or the retirement of its members until the election of a new board of directors, as well as controls to authorize the general meeting of the board of directors the power to authorize member of the board of directors to participate in a business that competes with the company or in one of its lines of business, in addition to developing provisions for the formation of an audit committee and specifying what applies to companies listed on the parallel market but.
The most important basic elements also included determining the period of appointment of the company’s auditor, regulating the control of the distribution of profits to shareholders and what is considered to be distributed, determining the provisions for the issuance and transfer of types and categories of shares, regulating division and merger. shares, as well as regulating cases of obligation to buy or sell incoming shares. Article 233 of the Law, including conditions and requirements related to the disclosure of information to shareholders and the purchase price, and a statement of the provisions relating to operations on the division of the company and other matters.
With regard to the maximum term for the appointment of an auditor referred to in Article 3 of the Executive Regulations of the Companies Law for Listed Joint Stock Companies, it includes the aforementioned upper limit on the duration of the auditor’s work to examine the accounts of a company from the date of entry into force of the Companies Law, issued by Royal Decree No. (M /3) On January 28, 1437 AH, the decision of the Governing Council provided that the listed joint stock companies must agree their positions in accordance with Article 3 of the executive regulations of the company law for listed joint stock companies within a period not exceeding two financial years from the date of entry into force of the decrees on 06/26/1444 AH, corresponding to 01/19/2023 AD.
The decision of the Council of the CMA provides that the following amendments to the provisions of the Corporate Governance Ordinance shall be implemented from 19/06/1445 AH, which corresponds to 01/01/2024 CE: Amendments to the Articles (seventy-third, seventy-fourth and seventy-fifth ) The Corporate Governance Provisions from the guidance material to the Mandatory Articles, as well as amendments to paragraph (4) of Article 24, subparagraph (3) of paragraph (b) of Article 52, paragraph (b) of Article 54, and Paragraph (11) of Article 87 of the Regulations on corporate governance, provided that the above articles of the Corporate Governance Regulations, issued by decision of the Board dated (8-16-2017) and dated 16.05.1438 AH, corresponding to 02/13/2017 AD, will be valid until the date of entry by the aforementioned amendments.
The adoption of the executive regulation takes place after the publication by the Agency of the draft executive regulation of the new system of companies for joint-stock companies registered on a single electronic platform for public opinion polls and government bodies affiliated with the National Center for Competitiveness (poll platform) and the website of the Office for public consultations on this matter, and after the Board held a seminar for listed companies, it included identifying and discussing these amendments, as well as studying the comments and suggestions of participants regarding them, as well as responding to their questions and requests about them. .
The amended executive provisions can be viewed through: the Company Law executive provisions for listed joint-stock companies, the amended mergers and acquisitions provisions, the amended corporate governance provisions, the procedures and instructions for publicly traded companies, the accumulated losses amounted to 20% or more from amended capital, as well as amended securities placement rules and continuing obligations, as well as a list of terms used in the amended regulations and rules of the Capital Market Authority.


Leave a Reply

Your email address will not be published.