CMA seeks feedback on corporate governance, investor protection proposals

The proposed rules introduce additional disclosure requirements for listed companies

Saudi Arabia's Capital Market Authority (CMA) invited all stakeholders and capital market participants to submit feedback on proposed amendments to strengthen listed companies’ corporate governance and empower shareholders.

The 30-day consultation period ends on November 28, 2026.

In a statement, the CMA said the proposals aim to improve governance practices at listed companies, strengthen the effectiveness and responsibilities of boards, increase shareholder participation in corporate decision-making and enhance transparency, accountability, and the protection of companies' and shareholders' interests.

This will be achieved by revising regulations governing general meetings, board nominations, companies with accumulated losses, and related-party transactions.

Key proposed amendments include strengthening shareholders' rights at general meetings by allowing shareholders representing at least 5% of a company's voting shares to request that a general meeting be held in person alongside its virtual proceedings, with the board of directors required to comply. The proposals would also empower the CMA to require companies to hold in-person general meetings whenever it deems necessary.

The proposals also seek to strengthen shareholder rights at companies whose accumulated losses reach 50% or more of their capital. Additional governance and disclosure requirements include publishing on the Saudi Exchange (Tadawul) website the names and ownership stakes of shareholders holding at least 1% of the company's shares, or those of its 20 largest shareholders, whichever results in a greater number of shareholders being disclosed.

In addition, shareholders holding at least 5% would be entitled to request the inclusion of an agenda item to prepare a plan to address accumulated losses. The plan must be disclosed on Tadawul within 60 days of the general meeting resolution.

When disclosing the corrective plan, the board would also be required to publish periodic reports (monthly or quarterly) on its progress within five days of the end of each reporting period.

These reports must detail implementation progress against specified targets, explain any deviations and the measures taken to address them, and disclose any amendments to the plan and their justifications. The requirements aim to strengthen board accountability and transparency toward shareholders and would remain in effect until accumulated losses fall below 20% of capital.

Regarding related-party transactions, the proposals would expand the scope of parties covered by the regulations and strengthen the responsibilities of audit committees and boards of directors in verifying the fairness of such transactions and their terms. This is intended to mitigate conflicts of interest and enhance the protection of shareholder rights.

The proposals also include improvements to board nomination procedures, requiring nomination committees to document the reasons for rejecting candidates and allow them to rectify deficiencies in their applications within a timeframe set by the committee so their nominations can be considered.

These measures aim to promote fair competition and equal opportunities for board membership at listed companies. The proposed amendments also seek to strengthen audit committee independence by requiring companies to appoint an independent director as audit committee chairman, while enhancing regulations governing conflicts of interest and transactions with interested parties to improve internal oversight and corporate governance practices.

The CMA expects the proposals to improve governance standards, strengthen board accountability, broaden shareholder participation in key corporate decisions, and enhance disclosure and accountability, supporting investor protection and confidence in the capital market.

The CMA confirmed that it will carefully review all public feedback and comments before adopting the final version of the proposed amendments to strengthen corporate governance at listed companies and empower shareholders.