Saudi cabinet prohibits ministers from joining, heading companies’ boards
RIYADH: Saudi Arabia is prohibiting ministers from heading boards of companies or being members unless directed by the head of the cabinet, in a move that would limit the conflict of interest in companies and improve governance, Arab News reported.
The new resolution was announced in the Saudi official gazette, Umm Alqura.
The gazette said: Saudi Cabinet decided to amend resolution No. 27/A, dated May 1, 2000, to be as follows: “[No] minister is allowed to chair the board of any company or even serve as a member. This does not include those whose chairmanship or membership is by order of the prime minister.”
Commenting on the new rule, London-based independent analyst Mohamed Ramady said: “These appointments by the prime minister seem to me that they will be done on a very selective basis, as there are key sectors and national priority industries where the government still needs to ensure that a government representative is fully aware of the developments in those companies and sectors.”
“The government has taken many steps to improve the corporate governance in the country as it seeks to attract more investors to invest in key sectors such as mining, logistics and energy, as well as listed companies, where there are clearly-defined corporate rules and committees’ functions,” said Ramady, also a former economics and finance professor at King Fahad University for Petroleum and Minerals.
The recent crackdown on corrupt officials has led the government to be stricter on any potential conflict of interest in awarding government contracts, he added.
Osama Al-Obaidy, advisor and professor of law at the Institute of Public Administration in Riyadh explained that the Saudi Cabinet’s decision will promote the soundness and integrity of the Saudi business environment to foreign investors.
“This will provide Saudi companies with the necessary independence to operate independently from ministries,” he added.
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