Saudi Arabia’s bourse regulator said on Tuesday that listed firms will have to comply next year with corporate governance rules on disclosures in reports by board of directors.
Rules of the corporate governance law have been voluntary since they were issued in 2006. Rules on disclosures in reports by boards of directors mainly require firms listed on the largest Arab bourse to publish names of any companies to whose board of directors their own board members belong.
The Capital Market Authority (CMA) made the decision as part of the “gradual process of making some corporate governance regulations compulsory” to enhance transparency and protect shareholders’ rights, it said in a statement.
CMA in August allowed non-resident foreign investors to sign swap agreements with Saudi intermediaries, permitting indirect ownership of shares, in one of the boldest moves taken by the kingdom to open up its exchange to foreigners.
The transparency rules also call for the publication of compensation and remuneration paid to the chairman, board members and the highest-paid five executives.
The chief executive and chief finance officer should also be included if they are not among the top five executives.
The regulations also require the board report to include any punishment, penalty or restriction imposed on the company by any watchdog or legal body.
They also call for the results of the annual audit of the company’s internal controls to be published.
Like others in the Gulf Arab region, Saudi Arabia’s stock exchange has been tainted by allegations of insider trading and manipulation of stock prices, and CMA has slapped hefty fines on many investors and executives found guilty of manipulation. (Reuters)
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