Riyadh: The Capital Market Authority (CMA) has invited stakeholders and participants in the capital market to provide their feedback on proposed enhancements to the governance of procedures for removing members and boards of directors of listed companies, as well as on the regulation of profit distribution. This initiative is part of the Implementing Regulation of the Companies Law for Listed Joint Stock Companies, with the consultation period open for 30 calendar days, concluding on December 12, 2025.
According to Saudi Press Agency, the proposed draft is designed to bolster investor protection within the Saudi capital market. The draft aims to empower shareholders to assert their rights and oversee the performance of boards of directors, thereby promoting improved governance standards and market stability. Additionally, it seeks to increase regulatory flexibility in determining distributable profits, a crucial tool for assessing the performance efficiency of listed companies.
The draft outlines that an individual shareholder or a group holding at least 10% of the company’s voting shares can request the removal of all board members. However, such a request must be made no sooner than six months after the board’s term begins. Shareholders with the same percentage can also request the removal of specific board members.
The draft also mandates that board members must inform the board if they receive a judicial ruling convicting them of a crime involving breach of trust. Upon learning of such a ruling, the board is required to recommend the member’s removal to the general assembly, even if the member fails to notify the board.
Furthermore, if the removal of members results in the board falling below the minimum required number of members as per the Companies Law or the company’s bylaws, the removed members must continue their duties until the general assembly elects replacements. This transition period cannot exceed 60 days from the approval of the removal request.
Regarding distributable profits, the draft provides listed companies with greater flexibility by removing the requirement to base profit calculations on audited or reviewed annual financial statements. Instead, companies can use the most recent financial statements, whether interim or annual, prior to making distribution decisions.
CMA has assured that all feedback from relevant parties will be thoroughly considered in finalizing the proposed amendments, aimed at enhancing and developing the regulatory environment.
The draft is available for public viewing through provided links.
