Corporate Governance

The concept of corporate governance has become widely discussed recently, with a focus on its importance for companies of all sizes and types. So, what does governance mean, what are its characteristics and objectives, and how can you obtain legal services in this field? This article provides comprehensive answers to these questions and more details.

Corporate Governance Concept in Saudi Arabia
Corporate governance in Saudi Arabia is defined as a set of rules and regulations that guide a company and ensure that its assets are used in a way that protects the interests of stakeholders, such as the board of directors, shareholders, employees, customers, suppliers, and others. It aims to achieve fairness, transparency, and competitiveness in the market.

Corporate governance aims to include both explicit and implicit contracts made between the company and its stakeholders, which define responsibilities, rights, rewards, and reconcile conflicting interests according to their duties, privileges, and roles, as well as oversight procedures, control measures, and information disclosure to act as a regulatory system.

The Five Principles of Corporate Governance in Saudi Arabia
There are five key principles that corporate governance in Saudi Arabia is based on, as follows:

Shareholder Rights: Ensuring trust in investing in the company through information disclosure, participation in meetings, voting rights, etc.
Fairness: Protecting the equity of all shareholders and ensuring fair compensation in case of rights violations.
Respect for Stakeholder Rights: Providing the opportunity for all stakeholders to participate and access relevant information.
Transparency: Full disclosure about the company’s activities, objectives, projects, and related financial and administrative matters.
Board of Directors’ Responsibilities: Outlining the duties of the board, including overseeing and monitoring the company’s performance and responding to shareholder inquiries if it fails in its responsibilities.

6 Characteristics of Corporate Governance
You might wonder how to distinguish between the corporate governance system and other systems. Here are several points summarizing the characteristics of governance as follows:

Protection of stakeholders' rights and minimizing exposure to various risks.
Providing safeguards to prevent different types of corruption, such as financial and administrative corruption.
Activating internal oversight within the company.
Enhancing the board’s role in monitoring and executing tasks.
Institutional discipline and adherence to the structures, procedures, and processes established by the company.
Ease of examining actions taken by institutions and relevant authorities.

In other words, the corporate governance code in Saudi Arabia ensures the principles of discipline, transparency, independence, responsibility, fairness, and social responsibility.

Corporate Governance: The Shortest Path to Success
Companies that aim to achieve strong performance should implement a corporate governance system that includes regulations and policies to organize relationships between all parties within the company. This system ensures fairness, transparency, trust, and helps make the right decisions to protect the company from various financial, administrative, operational, and other risks, thus ensuring sustainability and growth.

The importance of applying corporate governance in Saudi Arabia can be summarized as follows:

Minimizing economic risks that the company may face.
Improving the quality of products and services.
Maximizing investment returns and reducing costs.
Protecting investor rights.
Prioritizing the company’s overall interest over personal interests of its management.
Building fruitful relationships between all stakeholders.
Facilitating monitoring, development, and correction of errors within the company.
Preventing both financial and administrative corruption.

Key Standards for Corporate Governance
The governance system differs from one company to another depending on the company’s size and field of work. While there is no unified model for all companies, there are essential standards that all companies should follow, which include:

Preparing and drafting a governance code for the company, serving as an organized document.
Ensuring that the governance code complies with approved rules and regulations.
Including a brief overview of the company, its goals, responsible supervisory bodies, potential risks, and ways to minimize them.
Providing appropriate safeguards to ensure the best possible service for all stakeholders such as shareholders, clients, contractors, etc., and offering legal protection.

We also clarify to our clients some of the key documents related to governance, including the company’s structure, shareholder rights and general meeting policies, the board's operational policies, auditor duties, etc.

At Sahl Law Office, we strive to provide the required standards for corporate governance from a legal perspective in the best possible manner, under the supervision of a team of specialized lawyers in this field.

Contact Us for the Best Corporate Governance Services
Our office has a team of experts specializing in corporate governance, qualified to provide the best services in this field, including:

Building the company’s organizational structure.
Drafting company contracts, focusing on clauses that legally protect its rights.
Evaluating corporate governance systems for different types and sizes of companies.
Reviewing annual reports and disclosures.
Assisting in decision-making to minimize potential company risks.
Working with financial officers to address current and potential financial issues.
Representing the company in any legal cases raised against it by internal or external parties.
Developing the company’s governance code in Saudi Arabia to match its activity.

We provide legal advice to companies of all types and their boards on all governance-related matters, taking shareholder suggestions into account. We also contribute to developing awareness initiatives and communication plans to strengthen the relationships between shareholders and stakeholders, working closely with our clients through evaluating proposals, plans, and strategic alternatives, as well as representing companies in governance-related cases.

Specialized Lawyers in Corporate Governance
When seeking a specialized lawyer to resolve a legal issue, it is essential to ensure their expertise and proven success in this field. At Sahl Law Office, we have a team of lawyers who specialize in corporate governance in Saudi Arabia and provide legal advice on governance-related matters for both public and private sector companies, regardless of their activities or sizes.

Corporate governance is an evolving and increasingly complex field. We strive to help you keep pace with its developments, ensuring your company’s success and sustainability through identifying the best practices for managing it, particularly in risk management, crisis management, business integrity, and transparency.

Engaging a lawyer specialized in corporate governance is a preferred legal action for many businesspeople, company owners, and investors looking to establish their companies on a sound legal foundation that protects their rights and the rights of all stakeholders, including employees, clients, suppliers, and others.

Why Choose Our Office for Corporate Governance Services
Simply because you want success, growth, and sustainability for your company, but lack the time or expertise to draft the appropriate governance code that suits your company’s size and nature in line with all applicable regulations and principles in Saudi Arabia.

So, you can rely on a specialized lawyer in corporate governance from our team, who can assist you in achieving your goals, meeting your needs, and discovering any forms of corruption or mismanagement by company executives, ensuring transparency in dealing with all stakeholders, whether internal or external.

Don’t hesitate to contact us once you have sufficient background on the importance of corporate governance, especially with your company’s growth, increasing administrative burdens, and the potential entry of new investors or shareholders. This requires further rules and regulations to govern the work and ensure the rights of all parties involved.

Remember, when your company has a strong governance system, it signals to the market that it is well-managed, and that management’s interests align with those of the stakeholders, giving your company a significant competitive advantage.