Saudi Arabia continues to rapidly transform the corporate regulatory environment, ushering in a new era of shareholder-centric governance aligned with global standards. As the Kingdom advances its Vision 2030 agenda, enhanced shareholder rights, transparency, and accountability are taking centre stage, marking a strategic pivot in investor protection and corporate responsibility.
A Strengthened Legal Framework for Shareholders
The amended Companies Law (2022) is at the heart of this transformation, further reinforced by 2023–2025 ministerial regulations and Capital Market Authority (CMA) updates. These reforms are designed to deepen corporate transparency, reduce conflicts of interest, and empower shareholders, particularly minority stakeholders, with stronger governance tools.
A notable update includes the mandatory implementation of the “One Share, One Vote” principle across all closed joint-stock companies, reinforcing equitable voting rights and reducing the dominance of majority shareholders in decision-making.
New CMA regulations (2024) require enhanced disclosure standards for general assemblies, including digital access to voting platforms and mandatory pre-disclosure of agenda items, ensuring all shareholders have fair and informed participation.
Expanded Rights and Legal Remedies
Minority shareholders in Saudi Arabia now enjoy significantly enhanced legal protections, marking a pivotal shift in the country’s corporate governance landscape. The updated Corporate Governance Regulations (2024) provide shareholders with expanded rights to safeguard their interests and hold corporate leadership accountable. These include the right to initiate legal proceedings against board members and executives for breaches of fiduciary duty, negligence, or abuse of authority. In cases where financial irregularities or concerns over related-party transactions arise, shareholders may also request external auditor reviews or independent assessments of board performance.
The reforms further empower shareholders to convene Extraordinary General Assemblies (EGAs) with a reduced ownership threshold—now set at just 5% in many instances—allowing minority stakeholders to bring forward critical issues or propose new strategic directions with greater ease. Additionally, while the Tadawul Listing Rules (2025) have emphasised the disclosure of environmental, social, and governance (ESG) practices, such reporting remains largely voluntary for non-listed entities. Nonetheless, the direction of travel is clear: transparency and accountability are becoming central pillars of Saudi Arabia’s evolving corporate framework.
Increased Scrutiny on Related-Party Transactions
Updated guidelines mandate board-level review and public disclosure of related-party transactions to mitigate conflict-of-interest risks. These include:
- Full disclosure in annual reports.
- Mandatory shareholder approval for high-value or recurring transactions.
- External fairness opinions for intra-group asset transfers.
Failure to comply now results in personal liability for directors under the revised penalties introduced in Ministerial Resolution No. 228 (2024).
Strategic Implications for Corporates
These developments demand that companies, particularly family-owned and privately held firms, reassess governance structures. Key action areas include:
- Strengthening internal audit and compliance functions to ensure real-time monitoring of shareholder obligations and transparency benchmarks.
- Upgrading digital governance platforms to facilitate secure and inclusive shareholder participation, including voting and resolutions.
- Training boards and executives on evolving fiduciary duties and regulatory enforcement mechanisms.
Corporate boards must now operate with heightened diligence. Failure to comply risks legal action and reputational harm that could limit access to capital markets or strategic investors.
Unlocking Investment and Growth Potential
While compliance is more rigorous, the reforms significantly enhance Saudi Arabia’s attractiveness to institutional investors, private equity, and venture capital funds. By enforcing fair play and elevating shareholder protections, the Kingdom is sending a clear message: it is open for business, on investor-friendly terms.
For family businesses, these reforms also provide an institutional pathway to succession planning, IPO readiness, or strategic partnerships with foreign investors, who now have greater confidence in Saudi corporate governance.
To stay ahead in this evolving landscape, companies should:
- Review governance charters in light of new shareholder participation rights.
- Adopt digital platforms for real-time disclosures and shareholder communication.
- Conduct board evaluations to align with CMA’s performance expectations.
- Audit related-party transaction policies and update documentation procedures.
- Engage legal counsel on liability risks, fiduciary duties, and dispute mechanisms under the updated law.
Saudi Arabia’s bold pivot towards shareholder empowerment reflects a broader push to position the Kingdom as a transparent, rule-based, and globally integrated economy. For corporates, this marks both a compliance challenge and a competitive opportunity.
By embedding these new standards into corporate governance’s DNA, businesses can build trust, attract capital, and play a leading role in realising Vision 2030’s ambitions. In this new era, governance excellence is not optional—it is essential.