Overview
The Saudi Companies Law sets a general governance framework for each legal structure, but that framework needs additional detail reflecting each company's actual reality, from board size and authority to how major strategic decisions get made.
Companies growing quickly or bringing in new investors need regular review of their governance structure, since authority suited to a small company may need reconsidering as operations expand or new parties enter ownership.
Regulatory Basis
Corporate governance falls under the Companies Law and its implementing regulations issued by the Ministry of Commerce, which set the minimum governance requirements for each legal structure.
Listed companies or those planning a listing are subject to additional governance requirements issued by the Capital Market Authority, beyond the minimum required for unlisted companies.
How the Review Proceeds
The review begins by assessing the company's current governance structure against what the bylaws state and what's actually practiced on the ground, since there's often a gap between the two.
From there, we prepare specific recommendations to update the bylaws or internal governance regulations reflecting the company's actual needs, not a generic template lacking customization.
Who Needs This Service
A company bringing in new investors that needs its governance structure updated to reflect the new balance between partners or shareholders.
A board needing its authority and responsibilities reviewed under the Companies Law to confirm its decisions issue within the correct regulatory authority.
A company planning a future public listing that needs its current governance aligned with Capital Market Authority requirements before starting listing procedures.
A common mistake is relying on a standard set of bylaws copied from a generic template without tailoring it to the company's actual activity, leaving certain authorities effectively undefined until the moment they're actually needed, such as signing a major contract or approving a new investment, when the gap in who holds decision-making authority becomes apparent.
Additional Considerations
This work often connects with updating founding documents when the original bylaws no longer reflect the current ownership or management structure.
For companies preparing for a funding round, this connects with our private equity and venture capital service, since most investors expect clear governance before completing any investment.
Common Questions
Do we need to review our bylaws every year?
There's no annual requirement, but we recommend a review whenever there's a material change in ownership structure or operational scope.
Do governance requirements differ for a listed company?
Yes, listed companies are subject to additional requirements from the Capital Market Authority beyond the general minimum under the Companies Law.
Do you review existing meeting minutes or only draft new ones?
We review the company's current practice in documenting minutes and suggest improvements, alongside drafting new minutes documented more thoroughly.