CMA seeks public input on board member dismissal, dividend governance

Logo of The Capital Market Authority (CMA) 

The Capital Market Authority (CMA) called upon relevant and interested persons participating in the capital market to share their feedback on enhancing the governance of procedures for dismissing board members of listed companies, and on regulating the distribution of distributable profits, in accordance with the Implementing Regulation of the Companies Law for Listed Joint Stock Companies.

The consultation period will last for 30 calendar days, ending on Dec. 12, 2025.

The proposed draft aims to enhance investor protection in the Saudi capital market by enabling shareholders to exercise their rights and monitor the performance of boards of directors, thereby contributing to improved governance standards and market stability. It also aims to increase regulatory flexibility in determining distributable profits, which are considered among the key indicators and tools used to measure the performance efficiency of listed companies, the regulator said, in a statement.

According to the draft, an individual shareholder or a group of shareholders holding 10% or more of the company's shares with voting rights may submit a request to the company's board of directors to remove all board members, provided that the request is made no earlier than six months after the beginning of the board's term. They may also, if holding the same percentage, request the removal of one or more board members.

The proposed draft also requires a board member to notify the board if a judicial ruling is issued convicting him or her of a crime involving breach of trust. The board shall, upon becoming aware of the ruling, submit a recommendation to the general assembly for the member's removal, even if the member has not notified the board of the ruling, the statement added.

As for distributable profits, the proposed draft grants listed companies greater flexibility in the mechanism for calculating them by eliminating the requirement to link their determination to audited or reviewed annual financial statements. The mechanism is amended to allow the use of the most recent financial statements preceding the distribution decision, enabling listed companies to rely on their latest financial statements, whether interim or annual, when determining the value of distributable profits.

Opinions and comments can be received through any of the following:

The Unified Electronic Platform for Consulting the Public and Government Entities (Public Consultation Platform), affiliated with the National Competitiveness Center through the following link: (istitlaa.ncc.gov.sa ).

The prescribed form through the following email: (Laws.Regulations@cma.org.sa).

The Draft can be viewed via the following links:

The Draft amendment of the Implementing Regulation of the Companies Law for Listed Joint Stock Companies

Prescribed form for providing comments