Saudi Business Attorneys Specialize in Corporate Governance

Middle East Law Firm With Offices in Riyadh and Jeddah

Corporate governance refers to the rules and laws that govern how businesses operate. Corporate governance issues include a need to comply with regulations affecting corporate formation and operation, as well as an understanding of liability to shareholders, and full knowledge of the obligations of corporate management.

At The Law Firm of Dr. Khalid Alnowaiser, we have extensive experience advising clients both in Saudi Arabia and from abroad on corporate governance rules. We can provide you with detailed information on management liability, regulatory compliance and best practices so you will be fully informed of corporate governance obligations under Saudi law.

Corporate Governance Challenges in the Middle East

One of the biggest challenges for companies within Saudi Arabia is that the majority of companies are family owned and controlled. Unfortunately, many of these family businesses do not survive through second and third generations. Further, family businesses have begun to face increased struggles as more foreign entities begin to do business in Saudi Arabia.

To combat these problems, many Saudi businesses have begun to restructure themselves as joint-stock companies. While restructuring as a joint-stock company can ensure continued business growth and can make a company more attractive to outside investors, it also requires that the company make a certain percentage of its shares available for public trade. When shares are traded on the public market, the company then becomes subject to a number of regulatory requirements and control becomes decentralized from the family structure, creating issues of corporate governance.

Outside investors and businesses that wish to operate in Saudi Arabia or to partner with Saudi businesses also face corporate governance challenges. While many foreign companies are now permitted under Saudi investment laws to establish a business in the Kingdom of Saudi Arabia without a Saudi investment partner, these business are still subject to a number of requirements associated with corporate governance, including regulations passed by the Capital Market Authority.

Corporate Governance Rules

The Capital Market Authority in Saudi Arabia passes rules and requirements that impact corporate governance and that are designed to protect investors and shareholders in public companies. Among the requirements is a mandate that publicly held companies disclose information on business strategies, salaries paid to executives, compensation arrangements, and financial results.

Companies that are publicly traded must also release both proxy statements and periodic financial reports and executives of such companies must receive approval from boards of directors before making decisions that can affect the company.

Getting Help

Because of the myriad of rules associated with both forming a business and operating a company, it is essential that any local or international business wishing to run a corporate entity in Saudi Arabia seek proper legal assistance.

The attorneys at The Law Firm of Dr. Khalid Alnowaiser have extensive experience advising clients on company organization, compliance with regulations, business structure and corporate governance. We can help protect your business and ensure that you operate in full compliance with Saudi and Sharia’a law.