Metin Mitchell & Company Provides Clarity Around Corporate Governance for Saudi Arabia Executives

This article was originally written by Metin Mitchell, Managing Partner at Metin Mitchell & Company

I have been honoured to interview a number of Saudi CEOs recently to hear their views on the skills needed to achieve Vision 2030. This is for a report we are producing, What makes an Outstanding Saudi chief executive? (You can read my views on the skills that Saudi chief executives will need in this blog)

One of the themes to emerge is the need for a corporate governance framework in the Kingdom. As one CEO said, “We need to have a conducive atmosphere for leadership to flourish, but under a robust corporate governance framework. Corporate governance starts at the top. Audit needs to be independent.”

Corporate governance is still a relatively new concept across the world. I was interested to read Lubna Qassim’s blog (she is on the leadership team and general counsel at Emirates NBD) where she cites the Cadbury report in 1992 as the start of governance in the UK.

What the Cadbury Report did was to introduce the concept of independence. And it is clear that if the Kingdom of Saudi Arabia is to become more open to the world, it will need its own corporate governance framework.  

Saudi Arabia has been pursuing corporate governance reforms, with the Capital Market Authority (CMA) in 2003 and the publication of the Saudi Corporate Governance Code (SCGC) in 2006. In the Saudi Organization for Certified Public Accountants (SOCPA), the accounting standards committee holds the responsibility of developing and reviewing accounting and auditing standards in the country. All of these will play a part in developing Saudi Arabia’s own corporate governance code.

The central components of the voluntary Cadbury Code, are

• a clear division of responsibilities at the top, primarily that the position of chairman of the board be separated from the chief executive, or that there be a strong independent element on the board
• the majority of the board to consist of outside directors
• remuneration committees for board members to have a majority of non-executive directors
• the board to appoint an audit committee including at least three non-executive directors

So what do I think would be the key ingredients of corporate governance for Saudi Arabia and the challenges and opportunities of this? (to read the full article, visit www.metin-mitchell.com/insights/item/56-will-a-corporate-governance-framework-create-a-clear-path-for-saudi-arabia