The Role of Corporate Governance Saudi Arabia

Corporate governance Saudi Arabia is considered one of the essential elements that enhance transparency and integrity in financial operations, especially amid the growing challenges facing global financial markets. In Saudi Arabia, the Capital Market Authority (CMA) has issued a set of regulations aimed at organizing the management of publicly listed companies and strengthening the rights of shareholders and investors.

Understanding these regulations requires consulting a specialized legal advisor to ensure accurate comprehension of the legal and regulatory requirements related to governance, helping companies comply with the law and achieve their objectives efficiently.

The Concept of Corporate Governance Saudi Arabia

The Corporate Governance Saudi Arabia Regulations issued by the Saudi Capital Market Authority represent a regulatory framework and practical reform aimed at enhancing the integrity of financial operations by establishing clear controls that protect the public interest and safeguard shareholders’ rights.

These regulations comprise a set of principles and rules that guide the company’s operations and organize the interactions between the Board of Directors, the executive management, shareholders, and other stakeholders.

They also provide specific procedures to facilitate decision-making and ensure transparency and credibility, with the goal of preserving the rights of all concerned parties, achieving fairness, promoting competitiveness, and ensuring a transparent and stable working environment within the financial market.

Read also: Joint Stock Company: History & Types in Saudi Arabia

The Importance of Corporate Governance in Saudi Arabia

Corporate governance Saudi Arabia plays a crucial role across several dimensions, including the following:

1. The Economy

Corporate governance significantly contributes to enhancing the efficiency of the Saudi economy. It helps stabilize financial markets, improve transparency, and attract both domestic and foreign investments while reducing capital flight. Moreover, it minimizes systemic economic risks and enhances the quality of goods and services, ultimately increasing competitiveness and promoting integration into global markets.

2. Companies

Implementing governance principles enables companies to create a healthy work environment that supports better performance and effective management, thereby increasing the company’s economic value. Sound governance also facilitates access to financial markets and makes it easier for companies to secure funding at lower costs, which in turn helps them expand operations, reduce risks, and build trust with stakeholders.

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3. Investors and Shareholders

The primary goal of corporate governance in Saudi Arabia is to protect investments from losses resulting from the misuse of power or decisions that are not in the best interest of investors. It also aims to maximize returns on investment, safeguard shareholder rights, and enhance investment value while reducing conflicts of interest. By adhering to governance standards, companies empower shareholders to participate in key decision-making processes and remain fully informed about matters affecting their investments.

4. Other Stakeholders

Corporate governance seeks to foster strong relationships between company management and other stakeholders, including employees, suppliers, and creditors. Good governance practices build confidence among all parties involved, contributing to improved company performance and the achievement of strategic goals.

CMA Corporate Governance Regulations

The Corporate Governance Regulations issued by the Capital Market Authority are a set of legal and regulatory rules issued by the Capital Market Authority (CMA) in Saudi Arabia, aimed at regulating the management of listed joint-stock companies and ensuring their compliance with the principles of transparency, fairness, and accountability.

Key Objectives of These Regulations

• Protect the rights of shareholders and stakeholders.
• Enhance confidence in the Saudi capital market and attract investments.
• Ensure disclosure and transparency in corporate operations.
• Establish effective mechanisms for internal control and risk management.

Read More: Why Every Company in SA Needs a Corporate Governance Framework Lawyer?

Topics Covered by the Regulations

• Formation of the Board of Directors, its powers, and members’ duties.
• Shareholders’ rights to access information and participate in decision-making.
• Specialized committees such as the Audit Committee, Nomination and Remuneration Committee, and Risk Management Committee.
• Managing conflicts of interest and rules for disclosing material information.
• Remuneration policies and corporate social responsibility.

These regulations were first issued in 2006, substantially updated in 2017, and further amended in 2023 to align with the new Companies Law and international best practices in corporate governance.

Corporate Governance and Risk Disclosure Evidence from Saudi Arabia​

Corporate governance Saudi Arabia is considered one of the fundamental tools that directly contribute to enhancing business transparency and ensuring the long-term sustainability of companies. Therefore, many entrepreneurs and investors often ask how governance can impact a company’s success. The answer lies in the extent to which a company effectively implements governance systems, which is clearly reflected in companies that adopt a strategic approach based on the values of integrity and responsibility.

A practical example of corporate governance Saudi Arabia application can be seen in major companies that have adopted an integrated governance framework involving all stakeholders in key decision-making processes.

This framework has helped improve operational efficiency and reduce potential risks through the establishment of independent oversight committees and the implementation of clear policies for conflict management. As a result, these companies have successfully achieved a balanced alignment between shareholders’ objectives and customer needs, thereby enhancing trust and contributing to sustainable growth.

The clear impact of corporate governance Saudi Arabia also manifests in increased transparency and investor confidence. When all companies comply with governance standards, they become better positioned to improve their financial and managerial performance and to compete effectively in both local and international markets.

Learn about: The New Companies Law Saudi Arabia Regulations​ in 2025

Conclusion

Corporate governance Saudi Arabia is a fundamental pillar for enhancing financial and economic stability in the Kingdom of Saudi Arabia. Moreover, continuously updating regulations and aligning with global best practices, while relying on specialized legal support such as the expertise of Etqan Law Firm, provides a strong guarantee for the successful implementation of governance and the achievement of sustainable economic development for companies in particular and for the Kingdom in general.

The Etqan Al Mutamayza Law Firm is ready to provide the essential support you need. You can reach their team at the following mobile numbers: +966550600204, +966551020060.

Additionally, feel free to visit our branches located at:

• Jeddah: Al-Aziziyah District, Mohammed bin Abdulaziz Street (Tahlia)
• Riyadh: King Abdulaziz Street, across from the Kingdom Tower
• Dammam: Al-Ashri’a Street, Al-Badeea, Dammam 32415.

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