Saudi Capital Market Authority proposes new disclosure rules for major shareholders

The Capital Market Authority has called on all stakeholders and participants in the financial market to submit their feedback on a draft project aimed at enhancing the governance of listed companies and empowering shareholders. The consultation period will last for 30 days, ending on November 28, 2026 (corresponding to 18/06/1448H).

The project seeks to improve governance practices in listed companies, strengthen the effectiveness and responsibilities of their boards of directors, and increase shareholder participation in decisions affecting the companies they invest in. It also aims to raise transparency, accountability, and protect the interests of companies and their shareholders by developing regulatory provisions related to general assemblies, board nominations, companies with accumulated losses, and transactions with related parties.

Key proposed amendments include strengthening shareholder rights at general assemblies by enabling shareholders holding at least 5% of voting shares to request that the general assembly be held in person alongside virtual participation. The board of directors would be required to comply with such requests. The Authority would also be empowered to require companies to hold in-person general assemblies when deemed necessary.

The draft also aims to enhance shareholder rights in companies whose accumulated losses reach 50% or more of their capital. It introduces additional governance and disclosure requirements, most notably the obligation to disclose on the Saudi Exchange (Tadawul) the names and ownership percentages of shareholders holding 1% or more of the company’s shares, or the top 20 shareholders, whichever is greater. Shareholders holding at least 5% would be entitled to request the inclusion of an item to prepare a loss recovery plan, which must be disclosed on Tadawul within 60 days of the general assembly’s decision. The board would be required, upon disclosing the corrective plan, to publish periodic (monthly or quarterly) reports on the plan’s progress within five days of the end of each period on Tadawul, detailing progress against targets, reasons for any deviations, corrective actions taken, and any amendments to the plan with justifications. These requirements would remain in effect until accumulated losses fall below 20% of capital.

Additionally, regarding related party transactions, the project expands the scope of parties subject to regulatory provisions and enhances the responsibilities of audit committees and boards of directors to ensure the fairness of such transactions and their terms, helping to mitigate conflicts of interest and strengthen shareholder protections.

The draft also includes improvements to the procedures for nominating board members, requiring nomination committees to document reasons for rejecting candidates and allow them to address deficiencies within a specified timeframe, promoting fair competition and equal opportunity for board membership in listed companies. Further proposed amendments include enhancing the independence of audit committees by requiring the committee chair to be an independent member, and developing rules governing conflicts of interest and dealings with stakeholders, thereby strengthening internal controls and governance practices in listed companies.