The Ministry of Commerce and Industry and CMA seek the comments and observations of the public and interested parties in the projects of the Corporate Governance Regulations and the regulatory procedures related to the Companies Law

​As part of transparency and cooperation principles, the Ministry of Commerce and Industry ("MCI") and the Capital Market Authority ("CMA") asked the public and those interested for their comments and observations on the Draft Corporate Governance Regulations and the Draft Regulatory Rules and Procedures issued pursuant to the Companies Law  through their websites before the end of Thursday 19/8/1437 corresponding to 26/5/2016.

MCI and CMA both emphasized that  the Draft Corporate Governance Regulations sought achieving the best investment opportunities for companies through the creation of a work environment based on responsibility, control and commitment, taking into account the principles of clearness and transparency in determining the company's objectives,  commercial strategic plans, and identify the rights and obligations of each entity of its entities, in addition to its relationship with suppliers, financiers, consumers, supervisory entities and their activities.

The Draft Corporate Governance Regulations contributes to the national legislation system in which the companies operate and integrate with it to achieve its objectives effectively and impartially. The benefits of governance is not limited to companies alone, but expand directly to the national economy where the companies' continuity and growth, in accordance with the rules of corporate governance, would boost the economy and increase GDP.

The new Regulations set effective governance arrangements in joint stock companies to ensure a clear relationship between the shareholders and the Board of Directors on one hand and the Board of Directors and the executive management team on the other. It also focuses on the shareholders' rights in joint stock companies such as: fair treatment without discrimination, transparency in finding information to exercise their rights properly, in addition to the rights of other stakeholders.

Detailed provisions on the formation of boards of directors in joint stock companies, its committees, competencies, responsibilities, meetings, and the rights and duties of its members .  Those provisions underline the principle of effective participation in decision-making within the boards of directors, set out rigorously the events of conflicts of interest between its members and the company, and determine truth, honesty, care and diligence principles and approaches of these boards.

Moreover, detailed provisions on the joint stock companies auditors and detailed internal audit procedures to oblige the board of directors to disclose all the information needed by the shareholders to base their investment decisions or to their dealings with the company in a methodical and fair manner for all related parties.

The Ministry points out to the guiding nature of the Regulation for non-listed joint stock companies. The regulations aim to present a governance model for those companies to help them grow and develop. The mandatory provisions of the regulations are based on the Companies Law and it must be noted that some of the provisions would gradually be mandated in the future, taking into consideration the nature of the non-listed companys' activities and their size.

The Authority emphasizes on the mandatory nature of most of the regulations' articles. The guiding provisions for listed companies are represented in the table below:


the Draft Regulatory Rules and Procedures issued pursuant to the Companies Law  is based on the authority given to both MCI and CMA by the new Companies Law to regulate some issues and topics with a changing nature to be more flexible to keep up with the developments with efficient regulations that help in developing joint stock companies and look after the shareholders' rights in those companies.

As for the draft Rules and Procedures, it consists of several chapters that regulate the topics including the remunerations of board members which include standards to be followed when determining and paying board members remunerations in addition to the conditions relating to paying such remunerations. Additionally, the draft Rules and Procedures  include provisions governing the holding of general and special assembly meetings of joint stock companies and shareholders’ participation therein through contemporary technology which aims to facilitate the contribution of shareholders in general and special assembly meetings and provide them with greater opportunity to vote in decisions. The draft Rules and Procedures also include the, buy-back of Joint Stock Companies’ Shares which regulate the companys' shares buy-backs and the uses of shares bought-back as specified in the draft. The draft Rules and Procedures also include provisions related to, the pledge of joint stock companies’ shares which set out general procedures to pledge shares, the registration, and enforcement of those shares.

The draft includes the rules and procedures for the issuance, buy-back and conversion of preferred shares by joint stock companies which regulates the issuance of these shares and the rights of their holders. In addition, the draft Rules and Procedures include provisions for the sale of shares through public auction or the exchange in case of failure of a shareholder to pay the value of the shares on time which clarify the procedures that the company should follow in this case. The draft Rules and Procedures regulates the dividends distribution to shareholders of joint stock companies in which it specify the maximum period to distribute such dividends beside setting out provisions for distributing  interim dividends. Further more, the draft Rules and Procedure includes rules on the issuance and sale of rights issues resulting from capital increase which specify the subscription, trading, and assignment mechanisms.

Besides, the draft Rules and Procedures includes procedures for the   . proxy for attending general or special assemblies which specify the requirements related to issuing a proxy for another person to attend the shareholders assemblies on behalf of the shareholder.
When preparing the project for the regulatory procedures, both CMA and MCI took into account the appropriateness of applying the draft Rules and Procedures on both  listed and non-listed  joint stock companies and specifying which provisions that apply to each one in particular.

The two draft projects  are a result of the continuous coordination between the MCI and CMA to review and update the regulations to regulate the work of joint stock companies under the new companies law, and to ensure the harmony between the  implemented provisions on the listed and non- listed joint stock companies.

The Ministry and the CMA seek the concerned and interested parties comments and observations on the drafts and all comments and observations will be studied and considered.

Comments and observations on the Draft Corporate Governance Regulations can be submitted here:
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Comments and observations on the Draft Regulatory Rules and Procedures issued pursuant to the Companies Law   can be submitted here: