Riyadh, Saudi Arabia–Saudi Arabia’s Capital Market Authority’s has approved the Implementing Regulations of the New Companies Law for listed joint stock companies to be effective from 19 Jan 2023.
The approval is based on the authority the Law granted to the CMA to regulate the matters and subjects stipulated in the law related to joint stock companies listed on the exchange and come as part of the CMA’s objectives to regulate and develop the Capital Market, SPA reported.
It is also aimed at achieving the CMA’s strategic objectives by enhancing confidence and raising the level of governance in the capital market and to stipulate the necessary rules to implement the provisions of the law and contribute to realizing its goals, it added.
The CMA Board’s resolution included amending six implementing regulations, which are: the Implementing Regulation of the Companies Law for Listed Joint Stock Companies; the Corporate Governance Regulations, the Merger and Acquisition Regulations; the Rules on the Offer of Securities and Continuing Obligations; the Procedures and Instructions related to Listed Companies with Accumulated Losses Reaching 20 percent or more of their Share Capital and the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority.
The main elements of the Implementing Regulations included renaming “the Regulatory Rules and Procedures issued pursuant to the Companies Law relating to Listed Joint Stock Companies” to become “the Implementing Regulation of the Companies Law for Listed Joint Stock Companies”.
It also included stipulating the provisions that aim to raise the level of governance of the board of listed joint stock companies, including: provisions related to board members’ duty of care and duty of loyalty; determining the method of voting in the election of board members; stipulating the requirements related to a shareholder reserving a seat on the board pursuant to the company’s bylaws.
The other ingredients of the law are regulating the period in which board members shall continue in their capacity after the end of the Board tenure or the resignation of its members and until the election of a new board; setting the controls on the general assembly’s delegation to the Board to authorize a board members’ participation in any businesses that may compete with the Company or any of its activities; and developing the provisions related to the formation of the Audit Committee and stipulating which of those provisions apply to companies listed in the Parallel Market.
The main elements also included setting out the maximum period for the external auditor’s term; regulating the distribution of dividends to shareholders and what constitutes distributable profits; stipulating the provisions related to the issue and conversion of the types and classes pf shares; regulating the forward split or reverse split of shares; regulating the Squeeze-out and Sell-out provisions stipulated in Article 230 of the Law, including the relevant disclosure requirements and conditions for the offer price; and stipulating the provisions governing a company’s demerger; and other matters.