زلزال تنظيمي.. طرد أعضاء بمجالس إدارات الشركات السعودية واسترداد الملايين!

In a historic step to protect investors and regulate the market, the Saudi Capital Market Authority has issued new and stringent executive regulations that put an end to violations within the corridors of listed joint-stock companies. The new decisions have shifted the balance, as they include strict measures that can lead to immediate dismissal and the recovery of financial bonuses from board members, granting minority shareholders unprecedented power.

No place for slackers.. Dismissal and recovery of funds

The new regulations have placed a sword over the necks of board members to ensure their absolute dedication to work and protect the company's funds. The most notable decisions are as follows:

• Dismissal for multiple absences: Membership will be terminated for any member who misses 3 consecutive meetings or 5 separate meetings during their term without a legitimate excuse.
• Recovery of millions: If the Capital Market Authority or the Audit Committee finds that bonuses were paid based on misleading information or inaccurate profits, the member will be legally compelled to return every riyal to the company and will be deprived of any bonuses following their absence.
• Complete independence: It is strictly prohibited to link the bonuses of "independent" members to a percentage of the company's profits or profitability, to ensure their complete neutrality in making crucial decisions.

Ironclad controls to prevent stock manipulation

To eliminate any attempts to artificially influence stock prices, the authority has restricted companies' purchases of their own shares (treasury shares) with strict conditions that prevent harming public ownership:

• The company is allowed to purchase a maximum of only 10% of the class of shares being bought.
• The purchase price must not exceed 5% of the stock's closing price on the day prior to execution.
• Companies are completely prohibited from buying their shares during the 15 days preceding the announcement of quarterly results and 30 days before annual results, to prevent the exploitation of "insider information".
• Purchases must not lead to a decrease in public ownership below 30% of the relevant class of shares.

The end of the monopoly of auditing and accounting firms

To ensure absolute financial integrity and transparency and to prevent collusion, the regulations have ended the era of auditors remaining for long years, setting mandatory terms for change that break any monopoly. The maximum duration for an auditing firm to operate has been set at 7 consecutive or separate financial years, and its duration cannot be recalculated or allowed to return until at least 3 consecutive financial years have passed.

These restrictions also apply to the supervising partner of the auditing work within the firm, with a maximum working period of 7 financial years, and a prohibition on returning to the same company before 5 consecutive financial years have passed.

A digital revolution.. General assemblies from your phone!

In a technological leap that serves millions of investors, the authority has mandated companies to provide automated voting and participation in general and private assemblies through modern technology with real-time audio-visual transmission.

It has become mandatory to open the electronic voting door for shareholders at least 3 days before the assembly convenes. More importantly, these remote votes and participations are officially counted and legally recognized as part of the necessary quorum for the assembly's validity, thus undermining the dominance of direct attendance and giving every investor, regardless of the number of shares they hold, a voice that is heard and impactful at the click of a button.