The amendments grant listed companies greater flexibility in determining distributable profits and establish clear controls for the removal of board members by the general assembly.

By Salman Al-Sudairi, Basil Al-Jafari, and Hatem Abdulghaffar

Key Points:

• Shareholder removal of board members: One or more shareholders representing at least 10% of the company’s voting shares may request the removal of any or all board members, provided they demonstrate that such board member(s) are unable to perform their duties as prescribed by law.
• Board notification and announcement obligations: Upon receiving a removal request, the board must immediately notify the concerned member and announce the request within the notice calling for the ordinary general assembly.
• Board continuity: Where the removal would cause the number of board members to fall below the minimum required under the Companies Law or the company’s bylaws, the removal shall not take effect until the ordinary general assembly elects a replacement board or member.
• Board member notification obligations: A board member must immediately notify the board upon a judicial conviction for breach of trust or a competent authority decision affecting the member’s ability to perform duties; the board must then recommend the member’s removal to the ordinary general assembly.
• Re-nomination restriction: A person removed from a board, or who resigned after receiving a removal request, may not be re-nominated to the same company’s board until the end of the term from which they were removed or resigned.
• Greater flexibility on distributable profits: The determination of distributable profits is no longer linked exclusively to audited annual financial statements, as companies may now rely on the latest reviewed or audited financial statements when calculating distributable profits for interim dividend purposes.

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