THE LAW FIRM OF HAZIM AL MADANI ATTORNEYS AND LEGAL CONSULTANTS
The Responsibilities of Board Members in Joint Stock Companies: A Comprehensive Guide
Joint stock companies are a type of corporation that consists of a number of individuals who contribute to a specified capital divided into shares. These shareholders bear the losses of the company in proportion to their contribution. Joint stock companies are among the most common corporate forms in Saudi Arabia due to numerous advantages such as:
- • Legal protection for shareholders, where their liability does not exceed their capital in the company.
- • Facilitation of attracting local and international capital by issuing company shares in the financial market.
- • Achieving managerial stability and company continuity, unaffected by the departure or death of any shareholders.
- • Encouraging innovation and development in the company by allowing shareholders to participate in strategic decision-making and supervising management performance.
According to the new Company Law, the issued capital of a joint stock company should not be less than five hundred thousand Saudi riyals, with at least a quarter paid up upon incorporation. The issued capital of a joint stock company represents the subscribed shares.
Key Responsibilities of Board Members in Joint Stock Companies
The new Company Law places certain responsibilities on the shoulders of the company director and board members:
- 1. Acting in good faith to achieve the company's interest and striving to promote its success, growth, and value for the benefit of the partners or shareholders and to achieve its sustainability.
- 2. Exercising their duties with objectivity and neutrality in relation to company management and decision-making, avoiding any situations that might affect their neutrality when making decisions or voting on them.
- 3. Performing their duties and responsibilities with the usual skill of a prudent person, along with the general knowledge and experience they possess and that which is expected from someone in their position.
- 4. Avoiding situations that might lead to a conflict of interests and disclosing them in accordance with the provisions of the law and regulations.
- 5. Not exploiting their position and the tasks and powers they have as a company director or board member under any circumstances to obtain benefits from others.
Guidelines for Termination or Resignation of Board Members
In the event of an inability to elect a new board and the current board’s term has ended, the members will continue their duties until a new board is elected, provided that this period does not exceed ninety days from the end of their term. The board must take the necessary steps to elect a replacement before the end of this period.
If the chairman and board members resign, they must call an ordinary general assembly to elect a new board. The resignation will not take effect until a new board is elected, provided that the duration of the resigning board’s continuation does not exceed one hundred and twenty days from the date of resignation.
In conclusion, the new Company Law determines the responsibility of partners in different companies in line with each company’s nature and the rights and duties of partners therein. This law aims to protect the legitimate interests of partners and third parties and enhance confidence in the Kingdom’s investment environment. Partners must respect the provisions of this law and assume responsibility for any violations or negligence in performing their duties.
If the chairman and board members resign, they must call an ordinary general assembly to elect a new board. The resignation will not take effect until a new board is elected, provided that the duration of the resigning board’s continuation does not exceed one hundred and twenty days from the date of resignation.
In conclusion, the new Company Law determines the responsibility of partners in different companies in line with each company’s nature and the rights and duties of partners therein. This law aims to protect the legitimate interests of partners and third parties and enhance confidence in the Kingdom’s investment environment. Partners must respect the provisions of this law and assume responsibility for any violations or negligence in performing their duties.
ونود ان نشير الي بعض الاستثناءات التي اضافها النظام الجديد للمسوؤولية التقصرية وهما :
- - إذا كان الخلل ناتجاً عن سبب خارج عن إرادة الطرف المخل، ولم يكن بإمكانه تجنبه أو منع حدوثه أو إزالة آثاره، مثل القضاء أو القدر أو الحالة القاهرة.
- - إذا كان الضرر ناتجاً عن سبب يعود إلى الطرف المتضرر، أو إلى طرف ثالث، أو إلى عيب في الشيء المتعاقد عليه.
- - إذا كان الطرف المتضرر قد وافق على تحمل الضرر أو تنازل عن حقه في المطالبة بالتعويض، ما لم يكن ذلك مخالفاً للنظام أو للأخلاق العامة.
إذن في النهاية ، يمكننا ملاحظة أن هناك فروق جوهرية بين انواع المسؤولية في نظام المعاملات المدنية الجديد، سواء من حيث مصادرها أو شروطها أو أغراضها. وتشكل هذه الفروق تحديات قانونية وممارسات قضائية جديدة .
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