Corporate Governance
Many companies suffer from weak organisational structures or overlapping authorities between shareholders and the board of directors, which may lead to unclear decision-making or internal legal issues.
Corporate governance helps regulate business management, establish a clear framework for decision-making, and protect the rights of partners and shareholders. By engaging a commercial lawyer, companies can properly implement governance rules and ensure compliance with commercial regulations in the Kingdom.
What is corporate governance?
Corporate governance refers to a set of rules and systems that regulate how companies are managed and how decisions are made, with the aim of achieving transparency, accountability, and protecting the rights of shareholders and stakeholders.
It also helps organise the relationship between the board of directors, executive management, and shareholders, while improving managerial efficiency and reducing legal and administrative risks.
The role of a commercial lawyer in corporate governance
A commercial lawyer plays a key role in assisting companies to implement governance practices in compliance with Saudi commercial laws.
This includes:
- Reviewing internal company regulations
- Providing legal advice to improve management and organisational structure
- Ensuring compliance with applicable laws and regulations
Our services in this area include:
- Developing corporate governance policies
- Reviewing internal bylaws and regulations
- Providing legal advice to the board of directors
- Organising relationships between partners and shareholders
- Reviewing commercial contracts and agreements
Types of corporate governance
Corporate governance includes several organisational models that help improve company management.
Internal governance
Focuses on regulating the relationship between the board of directors and executive management within the company.
External governance
Relates to laws and regulations imposed by regulatory authorities to ensure companies comply with legal requirements.
These types contribute to enhancing company performance and building trust among investors and stakeholders.
What is a corporate governance resolution?
A corporate governance resolution refers to a set of internal regulatory rules adopted by a company to organise decision-making processes and define the powers of the board of directors and executive management.
What is the role of corporate governance?
The role of corporate governance is to improve company management, enhance transparency and oversight, and protect shareholders’ rights.
Key objectives include:
- Improving management efficiency
- Reducing legal and administrative risks
- Enhancing transparency and accountability
- Protecting shareholders’ rights
What is the difference between management and governance?
Many business owners seek to understand the difference between management and governance.
Management
Refers to executing daily operations and handling the company’s operational activities.
Governance
Refers to the system that establishes the rules governing management and how decisions are made within the company.
In other words, management executes the work, while governance sets the framework that regulates how the company is managed.
Common mistakes in corporate governance
There are several common mistakes that may weaken governance practices within companies.
- Lack of clarity in authorities between management and the board of directors
- Absence of written policies and procedures
- Weak internal controls
- Lack of transparency and disclosure
- Failure to comply with laws and regulations