Based on the principles of participation and transparency, MCI and the Capital Market Authority calls on the public and those interested to express their opinions and suggestions on the draft regulation of corporate governance and the draft of controls and regulatory procedures for corporate law, through the two websites of MCI & CMA, before Thursday, 19.08.1437 AH corresponding to 26.05.2016 AD.
MCI & CMA confirmed that the draft regulation of corporate governance aims to achieve the optimal investment of the corporate capabilities and resources through creating a work environment based on responsibility, control and commitment, taking into account the principles of clarity and transparency in determining the company's goals and strategic and trading plans, as well as stating the rights and obligations of each party, besides managing its relationship with suppliers, financiers, consumers and control authorities, also the activities carried on by such company.
The above mentioned draft contributes in the interaction with the national legislation system, through which the corporate work and integrate to achieve its objectives effectively and impartially. Meanwhile, the corporate governance not only benefits the companies, but it does affect the national economy directly, taking into consideration the continuity and growth of the companies, in accordance with the rules of corporate governance, in boosting the economy and increasing the GDP.
The new implementing regulation is keen on developing effective governance arrangements in the joint-stock companies to ensure clear relationship between shareholders and the company's Board of Directors on the one hand, and the Board of Directors and the executive management on the other hand, it takes also great concern with the shareholders rights in joint- stock companies, such as the right of fair treatment without discrimination, access information transparently, and thus enabling them to exercise their statutory rights perfectly, besides taking care of the third party`s rights in these companies.
The said regulation also takes great concern to include detailed provisions for the formation of the boards of directors in the joint-stock companies and their committees, as well as their competences, responsibilities, meetings, the rights of their members and duties. These provisions and regulations come to ensure the principle of effective participation in decision-making within the boards of directors, since they limit the interest conflict cases between the members and the company, and they come to establish honesty, care and attention as a principle and a direct approach to these boards.
The said regulations also include detailed provisions on auditors and internal control procedures in a way to compel the boards of directors to disclose all the information needed by shareholders and dealers, so that to enable them to build their investment strategy and to give them a chance to deal with the company in a systematic and fair way.
MCI would like to refer to the guiding nature of the said regulation for the joint-stock companies not included in the CMA, and its main goal to present a model governance document as a guide towards sound and effective governance practices that would contribute in the growth and development of such corporate, as well as to improve their competitive capabilities and give them chances for getting fund sources. Concerning the mandatory provisions, they have been derived from the text of the corporate law, and that the obligations and commitment with some provisions in the future would be gradual, taking into account the nature of the joint-stock companies activities non-listed in the CMA and their size.
The Capital Market Authority would like to refer to the mandatory nature of most articles, and that the guiding provisions for companies listed in the CMA are represented in the articles shown in the following table:
|
Serial
No.
|
Articles
from the draft of corporate governance regulation
|
|
01
|
3
|
|
02
|
20
|
|
03
|
34 (paragraph 2)
|
|
04
|
40
|
|
05
|
41
|
|
06
|
43
|
|
07
|
59
|
|
08
|
65
|
|
09
|
69
|
|
10
|
73
|
|
11
|
74
|
|
12
|
75
|
|
13
|
77
|
|
14
|
78
|
|
15
|
79
|
|
16
|
80
|
|
17
|
81
|
|
18
|
90
|
|
19
|
91
|
|
20
|
98
|
Regarding the draft of the controls and regulatory procedures related to the corporate law, it comes in accordance with the authority and power granted by the new corporate law to MCI & CMA, regarding the organization of some issues and topics that have changing nature, taking into consideration the flexibility and the ability to keep abreast with developments in terms of efficient rules and regulations, and through which the development of joint-stock companies would be effected, as well as taking into account the interests of shareholders in those companies.
The controls and regulatory procedures draft consists of a number of chapters organizing a number of issues, such as the control and procedures of remuneration for the board of directors members in the joint-stock companies, which set the standards and the payment procedures, in addition to the controls and procedures for holding meetings of the general and ordinary assemblies for the shareholders, and the participation of shareholders through the modern technology in the joint- stock companies, which aims to facilitate the participation of the shareholders and give them access for voting on relevant decisions. The draft also includes the controls and procedures for the joint-stock companies to purchase their shares, which aims to organize the purchasing process and to use the shares in accordance with the purposes specified in the regulations. The draft includes as well the controls and procedures to mortgage the shares of joint-stock companies in order to develop general procedures for the mortgage of stocks and to be recorded and implemented accordingly.
The said draft organizes as well the issuance, purchase and transfer of excellent stocks by joint-stock companies, and whatever related to the rights of the shares owners. The said draft included as well the controls and procedures for the stock sale at auction or in the stock market if the shareholder fails to pay the value of the stock at the due date, in order to clarify the procedures to be followed by the company in this case. The draft also includes the controls and procedures for distributing the profits among the shareholders of the joint- stock companies, which determines the maximum period through which the Board of Directors must distribute the profits to the shareholders, in addition to the provisions governing the distribution of interim profits (quarterly and semi-annual). In addition, the draft includes the controls and procedures for the issuance and sale of priority rights resulting from the capital increase. The draft also includes the power of attorney procedures for attending the general and ordinary assemblies, which identifies the requirements needed by the shareholder to send someone to attend on his behalf.
During the preparation of the controls and procedures draft, MCI & CMA take into account the appropriateness of such regulation to be applied on joint-stock companies, both listed and unlisted in the CMA, where they had been formulated to suit both types, as well as identifying the provisions that would apply on one particular type .
The work on both drafts was effected according to the continuous coordination between MCI & CMA, on purpose of reviewing and updating the regulations governing the work of the joint-stock companies in light of the provisions of the new corporate law, and to ensure compatibility and consistency among the provisions applied on listed and unlisted companies in the CMA.
MCI & CMA would like to introduce the draft texts of the corporate governance regulation and the draft of controls and procedures relevant to the new corporate law, and call on those interested and the public to participate and express their views and opinions, that will be treated with full attention and care.
You can submit your views on the draft of the corporate governance regulation through the following link:
click here.
And for your opinions on the draft of controls and procedures, through the following link:
click here.