The most common corporate forms in Saudi Arabia are the Limited Liability Company (LLC), Joint Stock Company (JSC), Simplified Joint Stock Company (SJSC), and branch of a foreign company. An LLC is the simplest incorporated vehicle, offering limited liability, flexible management (a manager or board of managers), and no fixed minimum capital except where sector‑specific requirements apply. A JSC and SJSC provide a more sophisticated structure with the ability to issue various classes of shares and debt instruments, mandatory governance bodies, making them more suitable for larger or regulated projects. Compared to LLCs, JSCs/SJSCs also allow easier transfer of shares and greater access to capital markets.

A branch of a foreign company is not a separate legal entity but allows the foreign head office to operate directly in Saudi Arabia. Its formation is simpler than establishing a company because no bylaws are required. Unlike other types of companies, the branch exposes a foreign parent entity to full liability for in‑Kingdom activities. Overall, LLCs offer simplicity and control, JSCs/SJSCs provide greater fundraising and structural formality, and branches offer ease of setup but with higher liability exposure.

Corporate governance in Saudi Arabia continues to develop quickly, reflecting the authorities’ strong focus on transparency, clarity and creating an attractive environment for investment. Recent reforms have strengthened the governance framework and encouraged companies and boards to adopt clearer structures, stronger oversight and improved disclosure practices, supported by the increasing use of digital government platforms.

In practice, companies are placing greater emphasis on regulatory monitoring, internal governance controls and board‑level oversight to ensure alignment with updated laws and regulations. The wider use of electronic government systems has also led companies to strengthen coordination between legal, compliance and administrative teams to support accurate and timely filings.

Several important legal developments have influenced the current corporate governance landscape. Updates to the Foreign Investment Law have expanded permitted activities and provided clearer regulatory pathways for foreign investors. Amendments to the Commercial Registration regime have simplified market entry and ongoing compliance by allowing companies to conduct business across the Kingdom under a single commercial registration, without the need to establish multiple branches. In parallel, updates to the Commercial Trade Names Law have provided greater clarity and flexibility in relation to trade name selection, use and protection. In addition, the introduction and continued development of Ultimate Beneficial Ownership requirements have enhanced transparency and improved the quality of ownership information, with boards and management playing an active role in ensuring that disclosures are complete and up to date. These reforms are supported by the continued easing of foreign investment restrictions across a number of sectors.

Market trends reflect these developments. There has been growing foreign investment in technology‑related sectors, including data centers, cloud services, artificial intelligence and digital infrastructure, which often require governance oversight and clear compliance arrangements. At the same time, local content and localization considerations have become an important part of board‑level decision‑making, particularly for companies operating in regulated sectors.

Overall, companies and boards remain focused on maintaining effective governance and compliance, supporting the smooth implementation of regulatory developments and ensuring timely and accurate compliance with requirements relating to UBO disclosures and the annual confirmation of commercial registration.

The key persons involved in the management of Saudi entities vary depending on the legal form of the entity and whether it is subject to regulation by the Capital Market Authority (the “CMA”).

By way of example, Limited Liability Companies offer a high degree of flexibility in determining their management structure, whereas Joint Stock Companies are subject to more prescriptive statutory governance requirements and must be managed by a board of directors.

Limited Liability Company (LLC)

An LLC may be managed by one or more managers or by a board of managers, who may be shareholders or third parties. Where the company is managed by a board of managers, the number of members must not be less than three. In such cases, the shareholders may appoint a chairman, who may have a casting vote in the event of a deadlock, as well as an executive manager responsible for the day to day operations of the company.

Managers may act jointly (requiring collective action) or severally (allowing individual action), as determined in the company’s Articles of Association/Bylaws. Notwithstanding the delegation of management authority, the shareholders’ general meeting retains ultimate competence over fundamental matters, including amendments to the articles of association, appointment and removal of managers, or any other matter the shareholders wish to decide upon. In practice, the day‑to‑day management of the business is carried out by the executive manager or the managers, subject to any internal delegation of authority framework adopted by the company.

Joint Stock Company (JSC) – Closed or Listed

A JSC must be managed by a board of directors composed of no fewer than three members, which has overall responsibility for the management and supervision of the company. Each shareholder has the right to nominate himself or herself, or one or more other shareholders or non‑shareholders, for membership on the board.

Board members may not have any direct or indirect interest in the company’s business or contracts unless prior approval of the ordinary general assembly is obtained and renewed annually, subject to certain statutory exceptions.

Directors are elected by the ordinary general assembly using cumulative voting for a term not exceeding four years. The ordinary general assembly may remove all or any of the directors at any time, even if the company’s bylaws provide otherwise.

Simplified Joint Stock Company (SJSC)

The simplified joint stock company (SJSC) offers greater flexibility than a traditional JSC. Management may be vested either in a board of directors or in one or more managers, as determined in the company’s bylaws. Shareholders have significant discretion to tailor the governance structure, combining features of both LLCs and JSCs. Executive officers may be appointed to manage the company’s daily operations, subject to the governance framework adopted by the shareholders.

Under the Companies Law, the company’s manager or board of directors, as applicable, is granted the broadest powers to manage the company in a manner that achieves its objectives, except for matters expressly reserved by law or the bylaws to the shareholders.

Foreign Company Branch

A foreign company operating in Saudi Arabia through a branch is managed by a branch manager appointed by the parent company. The branch manager is responsible for the day to day operations of the branch within the scope of authority granted by the parent company. Ultimate management and control remain with the foreign parent entity.

Under Saudi law, responsibility and management powers are generally divided between the entity’s management body (managers or board of directors) and its economic owners (shareholders), with the precise allocation depending on the legal form of the entity and the provisions of its constitutional documents.

Allocation of management powers

As a general principle, the manager(s) of an LLC or the board of directors of a joint stock company are granted the broadest powers to manage the company’s business and affairs and to represent the company vis‑à‑vis third parties, except for matters that are expressly reserved by law or the company’s articles of association or bylaws to the shareholders or general assembly. These reserved matters typically include fundamental corporate actions such as amendments to the constitutional documents, changes to share capital, mergers, dissolution, and the appointment or removal of key officeholders, including directors, managers and auditors.

Role and powers of economic owners

The shareholders, as economic owners, exercise their rights primarily through the general assembly (or shareholders’ meetings as applicable). The general assembly has exclusive competence over key matters prescribed by the Companies Law and the company’s constitutional documents, including, among other things:

i. Distribution of profits;

ii. Appointing and removing directors, managers and auditors;

iii. Approving related‑party transactions where required; and

iv. Approving major structural or capital transactions.

Certain resolutions require enhanced approval thresholds such as 75% or, in some cases, unanimous consent.

Decision‑making and approval mechanisms

Decisions of the shareholders are generally made at general assembly meetings, held in accordance with the procedures, quorum and voting thresholds set out in the Companies Law and the company’s articles of association or bylaws.

In addition, the Companies Law permits written resolutions by circulation, provided that this mechanism is expressly allowed in the company’s constitutional documents. In such cases, the proposed resolution and supporting documents are circulated to all shareholders, and approvals may be given in writing or by electronic means, without the need to convene a physical meeting, subject to the quorum and procedural requirements specified in the bylaws.

For listed JSCs, decisions and approvals of the shareholders of JSCs listed on Tadawul are made by way of resolutions adopted at duly convened meetings of the shareholders, in accordance with the Companies Law and the company’s bylaws.

Shareholders exercise their voting rights on the matters presented to the relevant general assembly either:

• by attending and voting at the general assembly meeting in person or by proxy; or
• by voting remotely through the electronic voting system made available to shareholders via Tadawul’s electronic voting system (Tadawulaty), in advance of or during the meeting.

For JSCs listed on Tadawul, shareholder resolutions may not be passed by way of written resolutions.

Corporate governance requirements and practices in Saudi Arabia are derived from a combination of statutory legislation, regulatory rules, and constitutional documents of the relevant entity, with the applicable framework varying depending on the legal form of the entity and whether it is listed on the Saudi capital markets.

In addition, an entity’s articles of association or bylaws constitute a key source of governance rules. Internal governance instruments, such as board charters, committee terms of reference and delegation of authority matrices, are also commonly adopted, especially by larger or regulated entities, although these are not statutory requirements.

Principal sources of corporate governance requirements

The primary source of corporate governance obligations for all Saudi companies is the Companies Law and its implementing regulations, which set out the core governance framework applicable to each form of entity, including the allocation of powers between shareholders and management, the duties and liabilities of directors and managers, shareholder rights, and approval thresholds for fundamental corporate actions.

For JSCs listed on Tadawul, governance requirements are supplemented by the Capital Market Law and the rules and regulations issued by the CMA, including disclosure, transparency, and shareholder protection requirements. The CMA is the competent authority for supervising companies listed on Tadawul and is expressly empowered to issue governance‑related regulations for such companies.

Companies listed on Tadawul are required to comply with the mandatory provisions of the Corporate Governance Regulations. These regulations address matters such as board composition, independence, board committees, related‑party transactions, risk management, internal controls and disclosure obligations. Certain provisions are expressed as guiding provisions, and while not mandatory, companies are expected to comply with such provisions or disclose the reasons for any non-compliance in their annual board report.

By contrast, most of the Corporate Governance Regulations provisions do not mandatorily apply to companies listed on the Parallel Market (Nomu). However, many Nomu‑listed companies voluntarily adopt certain elements of the CMA governance framework as a matter of best practice, investor expectations or preparation for a potential transition to the Main Market.

For non‑listed companies, there is generally no mandatory corporate governance code beyond the requirements of the Companies Law and the entity’s constitutional documents. Governance practices for such entities are largely shaped by shareholder arrangements, commercial considerations and, where relevant, sector‑specific regulatory requirements.

Companies operating in regulated sectors (such as banking, finance or insurance) are subject to sector-specific corporate governance requirements issued by the relevant competent supervisory authority (for example, the Saudi Central Bank (SAMA) in respect of banks and finance companies, or the Insurance Authority in respect of insurance and reinsurance companies). In such cases, companies would be required to comply with the applicable governance frameworks issued by such sectoral regulators (in addition to the requirements prescribed by the CMA, if the company is listed).

Constitution of the governing body

For limited liability companies (LLCs), the governing body may consist of one or more managers or a board of managers, as determined in the company’s articles of association or bylaws. Where a board of managers is established, it must comprise at least three members. LLCs do not have more than one governing body, although additional oversight mechanisms (such as a supervisory board or controllers) may be required in limited circumstances under the Companies Law or agreed contractually between shareholders.

By contrast, joint stock companies (JSCs), whether closed or listed, must be governed by a board of directors composed of no fewer than three members. The board constitutes the company’s primary governing body and may establish internal committees (such as audit, nomination, and remuneration committees), particularly in the case of listed companies, where such committees are mandated under the Corporate Governance Regulations. A JSC does not generally have more than one governing body, but governance functions are divided between the board, its committees and executive management.

The simplified joint stock company (SJSC) offers greater flexibility. Its bylaws may provide for governance by either a board of directors or one or more managers, depending on the structure adopted by the shareholders. As with LLCs, the SJSC has a single governing body, although internal committees or advisory bodies may be established by agreement.

A foreign company branch does not have a board or governing body at the Saudi level. Instead, it is managed by a branch manager appointed by the foreign parent company, with overall governance and strategic control remaining with the parent entity.

Allocation of day‑to‑day management and oversight

In LLCs and SJSC, oversight is exercised by the manager(s) or the board of managers, whereas day‑to‑day operations are commonly delegated to an executive manager pursuant to a delegation of authority approved by the shareholders or the managers. However, it should be noted that such an arrangement is not expressly provided for under the law, as the law does not distinguish, in LLCs, between the powers of the executive manager (if any) and those of the board or the chairman (if any). Notwithstanding this, most companies clearly regulate the management of the company and the allocation of authorities in a manner whereby the executive manager is responsible for the day‑to‑day operations, while the board and the chairman are vested with broad powers enabling them to regulate the company and oversee its activities, as a higher authority than the executive manager.

In JSCs, the board of directors is responsible for the overall management and supervision of the company and for setting its strategy, policies and risk framework. The board typically delegates day‑to‑day operational authority to senior executive management, including the chief executive officer and other executive officers, while retaining ultimate oversight responsibility. For listed companies, this separation between board oversight and executive management is reinforced by the Corporate Governance Regulations.

In all cases, the governing body retains ultimate responsibility for the company’s management and supervision, even where operational authority is delegated, and remains accountable to the shareholders or partners through the general assembly.

The appointment and removal of board members in Saudi Arabia are primarily driven by the entity’s economic owners (shareholders), with the applicable procedures and approval thresholds determined by the legal form of the entity, the Companies Law, and the entity’s constitutional documents.

Joint Stock Companies (JSCs) – Closed and Listed

In a joint stock company, members of the board of directors are appointed by the shareholders through the ordinary general assembly. Directors are elected for a term specified in the company’s bylaws, which may not exceed four years, and may be re elected unless the bylaws provide otherwise. Election of directors is carried out using cumulative voting, which enables shareholders, particularly minority shareholders, to concentrate their votes on one or more board candidates and thereby enhance their representation on the board. Under the cumulative voting mechanism, each shareholder has voting rights equal to the number of shares held, by which the shareholder is entitled to either exercise all of their votes towards one nominee or to divide their votes towards several nominees, without any duplication of such votes.

With regards to JSCs listed on Tadawul, the nomination process for board membership is not restricted to candidates proposed by management or controlling shareholders; rather, listed companies announce the opening of the nomination period for board membership in advance of the general assembly at which the board will be elected. Candidates are required to submit nomination applications together with supporting documentation evidencing their qualifications, experience and independence status. The nomination and remuneration committee is responsible for reviewing applications received from candidates, assessing whether nominees satisfy the applicable legal and independence requirements and submitting recommendation to the board for inclusion in the list of nominees to be presented to shareholders at the general assembly.

Shareholders of JSCs (whether listed or closed) retain a decisive influence over board composition, as the ordinary general assembly has the statutory right to remove all or any directors at any time, even if the company’s bylaws provide otherwise. This power may be exercised without the need to establish cause, subject to compliance with applicable procedural requirements and without prejudice to any contractual rights that may exist between the company and the affected director.

Limited Liability Companies (LLCs) and Simplified Joint Stock Companies (SJSCs)

LLCs do not have a board of managers unless they are structured with a board of managers. Managers are appointed and removed by the shareholders. in accordance with the articles of association. The articles may specify the term of appointment, the number of managers each shareholder have the right to appoint, and whether managers act jointly or severally.

Given the contractual flexibility afforded to LLCs, shareholders typically exercise a high degree of control over management appointments and removals. In practice, this often results in direct alignment between ownership and management control.

Foreign Company Branch

Branch manager is appointed and removed by the foreign parent company.

Influence of the entity’s owners

Across all Saudi corporate forms, the economic owners exercise ultimate control over board composition through their voting rights at the general assembly or shareholders’ meeting. This influence is strongest in LLCs and SJSCs, where ownership and management are often closely aligned, and is moderated in JSCs by statutory governance rules designed to balance shareholder rights, board independence and minority protection.

In addition to appointment and removal rights, shareholders may influence board composition through approval of board remuneration, adoption of governance policies, and, in certain circumstances, through court action to seek the removal of directors or managers for misconduct or breach of duty.

In general, and regardless of the legal form of the entity, board members or managers must be aware of the statutory requirements imposed upon them. The Companies Law sets out certain conditions, duties, and prohibitions with which a board member or manager, as the case may be, must comply. These include, by way of example:

i. Performing their duties within the scope of the powers granted to them;

ii. Acting in the best interests of the company and promoting its success;

iii. Making decisions or voting thereon independently;

iv. Exercising reasonable and expected care, attention, diligence, and

v. Avoiding situations of conflict of interest.

Accordingly, it should be noted that the acts of a board member or a manager are binding on the company. Therefore, in all cases, due care must be exercised when appointing board members or managers.

Independence and board composition requirements

The Companies Law itself does not impose detailed independence or composition requirements across all entities. However, for JSCs listed on Tadawul, the Corporate Governance Regulations prescribe specific rules governing board composition. These include two key requirements: (i) the majority of board members must be non-executive directors; and (ii) the number of independent directors must not be less than two members or one-third of the board, whichever is greater.

Independence is assessed against specific criteria prescribed by the CMA, including absence of material financial or business relationships with the company or its management, and not engaging in business that competes with the company.

Qualifications, experience and tenure

Under the Companies Law, board members must have the legal capacity to serve and must not be subject to statutory disqualifications. Beyond these baseline requirements, qualification criteria are generally left to the company’s shareholders.

For companies listed on Tadawul, boards are expected to be composed of members who collectively possess appropriate experience, skills and knowledge relevant to the company’s activities. Board tenure is determined by the company’s bylaws, subject to a statutory maximum term of four years, with the possibility of re‑election unless the bylaws provide otherwise.

The Corporate Governance Regulations encourage listed companies to adopt policies that promote diversity of skills, experience and background at board level.

For non‑listed companies (LLCs, non-listed JSCs, and SJSCs) there are no mandatory rules on board independence, diversity or succession.

The board of managers of an LLC does not have an inherent strategic mandate. Their powers depend entirely on what is delegated to them by the shareholders through the articles of association or specific shareholder resolutions. Accordingly, LLC boards/managers have no default authority to set or change the company’s strategy unless such powers are expressly granted by shareholders. Strategic direction and major decisions remain reserved to the shareholders.

In contrast, JSC boards are normally empowered to lead and oversee strategy. General Assembly approval may be required for certain strategic matters, typically those involving changes to constitutional documents, capital increases/decreases, dissolution, or transactions reserved for shareholder approval.

For listed JSC, pursuant to the Corporate Governance Regulations, the board of directors of a JSC listed on Tadawul is the body with ultimate authority and responsibility for the company’s strategic direction. The regulations position the board as the central decision‑making entity that defines, approves, and oversees the company’s strategy, ensuring it aligns with the long term interests of shareholders and the broader governance expectations of the capital market.

The board must maintain effective communication with shareholders to ensure a shared understanding of the company’s strategic objectives. This does not mean shareholders set strategy, rather, the board articulates strategic direction and ensures transparency in how the company intends to create long term value. Shareholders may express views, but their role is supervisory through the general assembly, not managerial.
The board is expected to maintain oversight over the executive management, monitoring whether the strategy is being executed effectively and responsibly.

The board does not involve itself in day‑to‑day operations; instead, it ensures that the executive team’s activities are consistent with the company’s strategic plan and governance standards. This oversight also includes evaluating performance, ensuring compliance, and addressing deviations when necessary.

Given that the board owns strategic oversight, it is also the body empowered to reassess and modify strategy when conditions change. Whether due to economic shifts, regulatory developments, competitive pressures, or internal performance, the board must evaluate whether the current strategic direction remains appropriate and make adjustments when necessary to protect shareholder value and ensure sustainable growth.

For LLCs and SJSCs, the Companies Law does not prescribe a specific mechanism for the remuneration of managers or board members, where applicable. Accordingly, the determination of remuneration is largely left to the shareholders, as set out in the company’s articles of association or any relevant contractual arrangements.

In the case of JSCs, the Companies Law provides that the company’s bylaws must specify the manner in which members of the board of directors are remunerated. Board remuneration may consist of a fixed amount, attendance fees for board meetings, in kind benefits, or a specified percentage of the company’s net profits, or any combination of these. The bylaws may also prescribe a maximum limit for such remuneration. The ordinary general assembly is responsible for approving the amount of board remuneration, which must be fair, incentivising, and commensurate with both the director’s performance and the company’s overall performance, subject to the applicable regulatory controls.

The board of directors’ report submitted to the ordinary general assembly at its annual meeting must include a comprehensive disclosure of all remuneration, attendance fees, allowances, and other benefits received or accrued by each board member during the financial year. It must also disclose any amounts paid to board members in their capacity as employees or executives, as well as the number of board meetings held and attended by each member.

For listed companies, board remuneration is subject to additional governance and disclosure requirements under the Corporate Governance Regulations, including review by a nomination and remuneration committee and enhanced transparency in the company’s annual reports.

Members of a board of managers or directors in a Saudi entity owe statutory fiduciary-type duties primarily to the company, its shareholders, and in certain cases third parties. As set out in the Companies Law, managers are jointly liable for damages suffered by any of these stakeholders when harm results from violations of the Companies Law, breaches of the articles of association or bylaws, or other wrongful acts committed in the performance of their duties. These duties include acting within their authority, exercising care and loyalty, avoiding conflicts of interest, disclosing personal interests in company transactions, and refraining from accepting improper benefits. Breaching these duties can expose managers to significant civil and criminal consequences, including personal liability for damages, imprisonment, substantial fines ranging up to SAR 5 million depending on the violation, disqualification from management roles, and where misconduct relates to financial distress, liability under the Bankruptcy Law. Importantly, exoneration by shareholders does not bar future liability claims within statutory limitation periods, and penalties under Shariah principles may also apply in parallel.

Under Saudi Companies Law, indemnification of managers is limited. Companies may not indemnify managers for breaches of law, articles of association, or wrongful acts, and any indemnity covering illegal or bad faith conduct is itself unlawful. Indemnification is permitted only for liabilities arising from lawful actions, such as reimbursement of reasonable legal expenses incurred in successfully defending against allegations of misconduct. While the law does not expressly provide for broad indemnification, it does allow companies to purchase directors’ and officers’ (D&O) insurance, which is widely adopted among listed and multinational entities as a standard governance practice; indemnities, by contrast, remain narrowly confined and must not undermine director accountability or conflict with statutory duties.

Board members of a Saudi company are primarily overseen and evaluated by the shareholders/stakeholders, who hold formal authority under the Companies Law to appoint, remove, and hold managers accountable for their performance.

First, the board must call and convene the general assembly at least once annually within six months of the end of each financial year. This obligation ensures regular communication and provides a formal platform for shareholders to review financial performance and key business decisions. Managers are also required to prepare and present to the shareholders a balance sheet, profit and loss statement, and a detailed report on the company’s operations and financial position, as well as their proposals for the allocation of profits as applicable.

Second, active engagement is mandated when the company’s financial position deteriorates. If losses reach half of the company’s capital, the board must disclose this immediately and convene a general assembly meeting to decide whether to continue the company or dissolve it. This requirement ensures that economic owners are promptly involved in major risk‑related decisions.

Managers engage with owners throughout the year by maintaining proper records, disclosing conflicts of interest, and reporting on any transactions in which they have a direct or indirect interest. These statutory duties impose an ongoing obligation of transparency. In sum, the board’s interaction with economic owners occurs primarily through mandatory annual and extraordinary meetings, structured financial and operational reporting, and continuous disclosure obligations, making engagement not only required, but fundamental to compliance with Saudi laws and regulations.

For listed JSCs, under the Corporate Governance Regulations, the board of a listed company is required to ensure effective communication with shareholders, who are the company’s economic owners. This takes place primarily through regulated communications and disclosure, comprising periodic financial reports, board reports, and public announcements on Tadawul, as well as directly through the general assembly – being a mandatory forum for shareholder engagement.

The Saudi Companies Law permits Simplified Joint Stock Companies and Joint Stock Companies to have different classes of shares and rights associated with each accordingly. This may be common among private companies, especially where founders/investors need differentiated rights. If a general assembly adopts a resolution to amend the rights of a certain class of shares, such resolution shall not be valid unless approved by those entitled to vote from among the shareholders of that same class. The Companies Law also mentions some details on the classes of stocks in case of listed Joint Stock Companies and the transfer or issuance of new ones.

In accordance with the Companies Law, LLCs, CJSCs, and branches of foreign companies are required to prepare financial statements for each fiscal year. These statements must be submitted to the Ministry of Commerce via the Saudi Business Center and, in the case of foreign-owned entities, to the Ministry of Investment. The submitted information is not accessible to the public.

Joint Stock Companies (JSCs) – Listed

Tadawul listed companies are subject to strict disclosure obligations under the Rules on the Offer of Securities and Continuing Obligations and the Corporate Governance Regulations. Saudi listed companies must publicly disclose annual audited financial statements and interim financial statements, within specific timeframes. These financial statements must be reviewed by the audit committee and approved by the board before publication. In addition, the board of directors must prepare and publish an annual report that is required to include financial performance information and key financial indicators.

Listed companies must further disclose non-financial information to the public, including board and committee composition and meeting attendance, governance framework and policies, general assembly meeting dates, agendas, procedures, and voting results.

Issuers are further required to publicly disclose the occurrence of specified and material events on a timely basis, reflecting an event‑driven disclosure regime rather than a purely periodic one. Disclosure is triggered where an event arises that affects the issuer, its securities, or the rights of investors, including matters relating to the issuer’s business, governance, capital structure, securities issuances, material contracts, or other developments that a reasonable investor would consider relevant. The rules impose liability for incorrect, misleading, or incomplete disclosure and require that information be disseminated promptly and publicly through the prescribed channels, ensuring equal access to information and market transparency throughout the life of the securities.

Yes. Under Saudi law, an entity’s economic owners have the right to propose matters for a vote and, in certain circumstances, to request the convening of a general assembly meeting.

Shareholders may also propose matters to be included on the agenda of a general assembly meeting, and each shareholder has the right to discuss agenda items and raise questions during the meeting. General assembly meetings may be held in person or through modern technological means, subject to the company’s bylaws or articles of association.

Across all entity types (except listed JSCs), shareholder resolutions may also be passed by circulation (in writing) if this is permitted under the company’s articles of association, without the need to convene a physical meeting.

Under Saudi law, investors (shareholders) have statutory rights to take enforcement action against both the entity itself and its managers or board members for breaches of law, the company’s constitutional documents, or duties owed to the company or the investors.

Investors may bring a company action on behalf of the entity against managers or board members where losses are suffered by the company as a result of mismanagement, violations of the Companies Law, or breaches of the articles of association or bylaws. Such claims are typically approved by the shareholders through a general assembly resolution, although shareholder approval to discharge directors from liability does not prevent liability claims from being brought.

Any shareholder representing (five percent) of the company’s capital, unless the company’s articles of incorporation or bylaws stipulate a lower percentage, may file a liability claim against the manager if the company fails to do so, provided that the primary objective of filing the claim is to achieve the company’s interests.

In addition, any shareholder may bring a personal claim directly against a manager or board member if the wrongful act causes specific personal harm to that investor, distinct from the harm suffered by the company. These rights apply across all company forms, including LLCs, JSCs and SJSCs.

Joint Stock Companies (JSCs) – Listed

Investors in a Saudi listed company have multiple enforcement avenues under the Capital Market Law, and the CMA’s implementing regulations, including the Resolution of Securities Disputes Proceedings Regulations. These mechanisms allow investors to pursue regulatory, civil, and collective (class action) remedies against the company itself and / or individual board members and senior executives, where legal thresholds are met.

Any investor may file a complaint or report to the CMA alleging, inter alia, violations of disclosure obligations, market manipulation and misrepresentation. The CMA has investigative and enforcement powers and may refer cases for prosecution.

In addition, class action lawsuits represent a significant evolution in investor protection within Saudi Arabia’s capital markets. Introduced through amendments to the Resolution of Securities Disputes Proceedings Regulations, the regime allows groups of investors who have suffered harm from the same violation, such as misleading disclosures, market manipulation, or other breaches of the Capital Market Law, to pursue collective compensation through a single coordinated claim. Class actions are administered under the oversight of the CMA, which plays a gatekeeping role by assessing the validity of claims and filing qualifying actions before the Committee for the Resolution of Securities Disputes. This mechanism reduces procedural barriers, lowers litigation costs for individual investors, and enhances accountability for listed companies and their boards. While still developing in practice, the availability of class actions has materially increased enforcement and reputational risk for issuers, reinforcing the importance of robust disclosure controls, governance discipline, and board‑level oversight in the Tadawul listed company environment.

Shareholder activism has become increasingly common, with investors more willing to challenge management and influence key corporate decisions. Recent trends include shareholder‑initiated requests to replace or remove board members, block or amend proposed transactions, and oppose disposals of significant assets requiring general assembly approval. Shareholders typically exert influence through voting at general meetings, requisitioning shareholder meetings, submitting proposals, and engaging directly with the board to push for governance or strategic changes.

Yes. Under Saudi law, shareholders meetings are required to be held annually, with additional meetings convened as necessary.

For JSCs, LLCs, and SJSCs, an ordinary general assembly (or shareholders meeting) must be held at least once every financial year to consider the company’s financial performance and key corporate matters. Extraordinary general assemblies may be convened at any time when required to consider matters reserved to shareholders under the Companies Law or the company’s constitutional documents.

At the annual general assembly (or shareholders meeting), the following information and documents must be presented and discussed:

i. the management or board report on the company’s activities and financial position for the relevant financial year;

ii. the company’s audited financial statements;

iii. the auditor’s report; and

iv. proposals relating to the distribution of profits or dividends, if any.

These documents must be made available to shareholders in advance of the meeting, in accordance with the Companies Law.

There is no large domestic proxy‑advisory industry issuing public voting recommendations. However, global proxy advisors such as Institutional Shareholder Services (ISS) and Glass Lewis are commonly used by foreign and institutional investors in relation to Saudi listed companies.

Corporate governance of entities is usually driven by shareholders and board of managers or directors. Other stakeholders do not hold direct governance powers but are formally recognized as stakeholders whose interests must be protected. Companies are required to act fairly and transparently toward all stakeholders.

The governing body of a corporate entity owes its primary duties to the company and its shareholders as a whole, and the Companies Law does not impose a general obligation to represent or prioritize non-shareholder stakeholders as separate constituencies. Nevertheless, the interests of non-shareholder stakeholders, such as employees, creditors, regulators, customers, suppliers, and the wider community, are factored into board decisions indirectly through statutory duties, Corporate Governance Regulations, and sector-specific laws. These frameworks require boards to safeguard stakeholder rights, promote fair treatment, and comply with labor, environmental, health and safety, and other regulatory obligations, reflecting a broader approach to long-term value creation and sustainability.

ESG considerations are increasingly integrated into corporate strategy, risk management, disclosure, and board oversight, particularly among larger, regulated, and listed companies. While there is no single, comprehensive ESG legal framework, ESG issues are addressed through a combination of statutory obligations, regulatory requirements, sector-specific laws, and evolving market practice. For example, companies engaged in industrial activities are subject to environmental licensing and oversight by the National Center for Environmental Compliance, while listed companies are encouraged—though not strictly required—to disclose material ESG information in line with Tadawul’s ESG Disclosure Guidelines and to align with international standards such as GRI and SASB.

Recent regulatory developments further support ESG adoption: in 2025, the Capital Market Authority (CMA) approved voluntary Guidelines for Issuing Green, Social, Sustainability, and Sustainability-Linked Debt Instruments, which set expectations for use of proceeds, sustainability objectives, and disclosure. Although these guidelines are non-binding, they have become influential benchmarks for market behavior, shaping corporate practice and investor expectations. As a result, companies seeking to access sustainable finance or attract institutional and foreign investors are strongly incentivized to comply with these guidelines, even in the absence of a formal legal obligation.

Saudi law does not impose a formal “stewardship code” equivalent to those found in some other jurisdictions. However, the regulatory framework implicitly encourages active and responsible investor engagement, particularly for institutional and substantial shareholders. Investors are expected to exercise voting rights in an informed manner at general assemblies; engage with boards and management through lawful channels; and avoid conduct that could distort governance or prejudice other shareholders.

Institutional investors and fund managers authorized by the CMA are subject to fiduciary and conduct of business obligations, including acting in the best interests of their clients or unit holders. This effectively embeds stewardship principles into their governance practices, even in the absence of a standalone stewardship regime.

The most significant investor responsibilities arise in relation to disclosure of ownership and changes in ownership. Under the CMA’s rules, any person who becomes the owner of, or acquires an interest in, 5% or more of any class of voting shares or convertible debt instruments of a listed company must notify Tadawul within the prescribed timeframe. Further disclosures are required for any subsequent changes to such holdings. These obligations are designed to promote transparency, allow the market to assess influence and control, and support sound corporate governance.

All investors, regardless of size, are subject to the Market Conduct Regulations. These include prohibitions on insider trading, market manipulation, misleading conduct or abusive practices.

Under the Rules on the Offer of Securities and Continuing Obligations, directors, audit committee members, and members of senior management of the issuer are subject to blackout and dealing restrictions during specified periods connected to securities offerings and the disclosure of material information. These restrictions are designed to preserve market integrity and ensure equal access to information. Compliance with blackout periods forms part of investors’ broader stewardship and conduct responsibilities under the CMA framework, requiring investors to refrain from trading, tipping, or otherwise exploiting informational advantages that could undermine fair corporate governance and investor confidence.

Investors with board representation or access to non public information are subject to heightened scrutiny and must ensure that trading and engagement activities comply with disclosure and confidentiality rules.

In Saudi Arabia, the prevailing perspective strongly favours long‑term value creation over purely short‑term returns. This approach is anchored in Vision 2030, whose core long‑term objective is to reduce dependence on oil by diversifying the economy and expanding non‑oil sectors. As the Vision moves into its final phase, the focus has shifted from planning and implementation to maximising sustainable economic impact and ensuring that investments deliver durable value beyond the immediate term.

Within this framework, the Saudi government has identified five strategic sectors that continue to represent the Kingdom’s investment priorities: financial services; industry and mining; transport and logistics; energy and electricity; and tourism. Investment in these sectors is intended to support long‑term growth, job creation and economic resilience, with short‑term objectives pursued in a manner that contributes to these broader and longer‑term goals.