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Company Law & Governance

Companies and governance

Corporate governance advisory in Saudi Arabia

Short answer

Corporate governance advice helps a Saudi company set up its board, management and shareholder decision-making so they comply with the Companies Law — and, for listed companies, the Capital Market Authority's Corporate Governance Regulations. Al-Fahal Law Firm in Jeddah reviews existing arrangements, drafts charters and policies, and advises boards when a decision carries legal risk.

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Situations we help with

  • Your company has grown and the board or managers still work informally, without written authority limits.
  • You are converting to a joint stock company and need a board that meets the Companies Law minimums.
  • A director has an interest in a contract the company is about to sign.
  • The founding family wants rules on ownership, succession and family employment before the next generation joins.
  • Investors are asking for governance documents as a condition of investment.
  • Shareholders disagree about how decisions are being made or how profits are distributed.

What the work covers

  • Governance health checks against the Companies Law, its Implementing Regulations and, where relevant, CMA rules
  • Board, audit committee and other committee charters
  • Delegation of authority matrices that say who can approve what, and up to what value
  • Conflict-of-interest and related-party transaction policies and disclosure procedures
  • Family charters under the Companies Law, drafted alongside the articles of association
  • Articles of association and shareholder agreement reviews to align governance with ownership
  • Board and general assembly procedure — notices, quorum, minutes and resolutions
  • Advice to directors on their duties and personal liability

The Companies Law that came into force on 19 January 2023 gave Saudi companies more flexibility — one-person joint stock companies, the new simplified joint stock company, share classes and family charters. It also made the people who run companies more clearly accountable. Managers and board members are jointly liable for damage to the company caused by breaches of the law or the articles, or by mismanagement.

Good governance is therefore not only a matter of best practice. It is how a company shows that decisions were taken by the right people, with the right information, and without undisclosed interests.

What applies to your company

Company type Main governance rules Mandatory or guiding
Listed joint stock company Companies Law, CMA Corporate Governance Regulations, listing rules Mixed — some CMA provisions are mandatory, others guiding
Unlisted joint stock company Companies Law and Implementing Regulations; Ministry of Commerce governance regulations for unlisted companies Companies Law minimums are mandatory; the Ministry's regulations are largely guidance
Simplified joint stock company Companies Law and the company's articles Flexible — management by a CEO, managers or a board, as the articles provide
Limited liability company Companies Law and Implementing Regulations; articles of association Mandatory rules on managers and partners' decisions; the rest depends on the articles

Guidance is not irrelevant. Regulators, banks and investors increasingly expect it to be followed, and courts may look at whether a board acted reasonably. But it should not be described to a board as a legal obligation when it is not.

Common governance documents

Board charter. Sets out the board's role, composition, meetings, decision-making and the relationship with management.

Committee charters. Define the remit of the audit committee and any nomination, remuneration or risk committees.

Delegation of authority. A matrix that states who may approve which decisions — contracts, spending, hiring, borrowing — and up to what limits. It is the document most often missing in growing companies.

Conflict-of-interest policy. Explains how directors and senior staff disclose interests and how related-party transactions are approved, in line with the Companies Law.

Family charter. For family-owned companies, a charter adopted under the Companies Law can set rules on ownership transfers, succession, family employment and dividends.

When to review your governance

A review is worth doing before a capital raise or sale, when converting to a joint stock company, when a new generation of a family business joins the board, after a dispute between shareholders, or when the company's activities expand into regulated sectors.

How a consultation works

  1. 1

    Tell us what you need

    Send a short enquiry or call the office. Describe the matter in general terms — no confidential documents yet.

  2. 2

    Conflict check and call-back

    The firm checks that it can act for you, then contacts you to understand the matter.

  3. 3

    Consultation

    You meet a lawyer in Jeddah or online. You get an initial view of your position and options.

  4. 4

    Scope and fees in writing

    If you instruct the firm, you receive the scope of work and fees in writing before work begins.

Questions clients ask

Is corporate governance mandatory for private companies in Saudi Arabia?
Some of it is. The Companies Law imposes binding rules on every company — for example, joint stock companies must have a board of at least three members who serve no more than four years per term, and the board must meet at least four times a year. The Ministry of Commerce's governance regulations for unlisted joint stock companies are mostly guidance, and there is no separate governance code for limited liability companies.
What is the difference between the CMA Corporate Governance Regulations and the Companies Law?
The Companies Law applies to all companies. The Capital Market Authority's Corporate Governance Regulations apply to companies whose shares are listed on the Saudi Exchange, and add requirements on board independence, committees, disclosure and related-party transactions. Some CMA provisions are mandatory and others are guiding.
Can a director vote on a contract in which they have an interest?
The Companies Law requires a board member to disclose immediately any direct or indirect interest in the company's business and contracts, and prohibits such interests without the required authorisation. The director should not take part in the vote. The exact authorisation route depends on the company type and its articles.
What is a family charter and is it binding?
The Companies Law allows shareholders to adopt a family charter that regulates family ownership, governance, management, the employment of family members and profit distribution. A charter adopted under the law binds the family members who are party to it, so it should be drafted together with the articles of association to avoid conflicts.
How long does a governance review take?
It depends on the size of the company and how many documents already exist. The firm will give you a scope and timetable in writing after the first consultation.

Official sources

Laws change. We cite the official text so you can check the current version.

This page is general information, not legal advice for your situation.

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Lawyers who handle this work

A question about your company, a contract or a dispute?

Send a short enquiry and a lawyer from Al-Fahal Law Firm in Jeddah will contact you. Please don't send confidential documents until the firm has confirmed it can act for you.

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