Our summary
These regulations set the corporate governance rules for companies listed on the Saudi stock market. The CMA Board issued them in February 2017 under the Companies Law, and last amended them in January 2023. Some of the changes took effect on 1 January 2024. Their aim is to protect the rights of shareholders and other stakeholders and to make company management clear and accountable.
The rules are mandatory for companies on the Main Market, except for articles marked as guiding. For companies on the Parallel Market, only a short list of articles is mandatory and the rest are guidance. The regulations cover shareholder rights and general assemblies, the board of directors and its independence, board committees (audit, remuneration, nomination and risk), internal control, the external auditor, stakeholders, ethics, disclosure, conflicts of interest and document retention. On internal control, the board must approve an internal control system with clear accountability. The company must have units for risk management and internal audit, and the internal auditor reports to the audit committee. The audit committee must have three to five members, include at least one independent director, have at least one member with finance and accounting expertise, and must not include executive directors.
How auditors use it: Internal auditors and audit committee members in Saudi listed companies can use these regulations to check that the governance structure meets the legal minimum. Typical checks are: Is the internal control system formally approved by the board? Does internal audit report to the audit committee, and are its staff independent and free of conflicting duties? Does the audit committee’s makeup follow the rules? Are related party transactions and conflicts of interest controlled and disclosed? The rules also help auditors write an audit charter and an annual plan that match what the regulator expects.