The new Saudi Corporate Governance Framework: a comparative legal study with the UK and Delaware

Bin Hagshah, Abdulaziz Farraj (2022) The new Saudi Corporate Governance Framework: a comparative legal study with the UK and Delaware. PhD thesis, University of Glasgow.

Full text available as:
[img] PDF
Download (2MB)


In 2017 the Capital Market Authority in Saudi Arabia issued long-awaited new Corporate Governance Regulations which brought significant changes to the previous corporate governance framework of 2006. The CMA stressed that the new framework provides appropriate solutions to domestic governance challenges and that it is consistent with the best international practices. However, to date, the framework has not been subject to any detailed and comprehensive study seeking to ascertain its suitability and alignment with best international practices. Therefore, this thesis evaluates the appropriateness of the new Saudi framework through comparative study and critical analysis supported by the available empirical evidence. In doing so, the thesis uses the legal models of the UK and Delaware to evaluate the Saudi framework in respect to 1) the design and approach of the framework; 2) the structure and operations of the board of directors; and 3) the role and representation of shareholders. The thesis evaluates the Saudi approach towards such aspects from two perspectives: the regulatory mode of the framework (i.e., either mandatory or voluntary), and the substance of the rules. As to the regulatory mode of the Saudi framework, the thesis concludes that despite the global popularity of the voluntary approach and notwithstanding the typical challenges associated with the mandatory approach, the current conditions and market-specific characteristics in Saudi Arabia justify the preservation of the existing mandatory regime, and mean that replacing it with a voluntary one would be a futile endeavour as such a shift would be likely to do more harm than good. These local conditions and market characteristics comprise highly concentrated ownership of the Saudi capital market, the absence of stewardship obligations, an inactive market for corporate control, modest shareholder activism, a strong influence of informal relationships, and the absence of an independent investigative financial media. As to the substance of the rules, the thesis concludes that while the new framework is in line with the best international practices in many respects, the framework suffers from significant deficiencies in several fundamental areas best exemplified by the excessive regulations, undefined role of NEDs, the notably low level of representation of independent directors, and the uncertainty surrounding both the content and scope of directors’ duties, and shareholders’ proposal right. The thesis therefore proposes legal reforms for these specific areas which, if adopted, would bring greater clarity and certainty to the framework, reconcile it with the empirical evidence, and bring it into closer alignment with the best international practices, all of which would significantly enhance its effectiveness.

Item Type: Thesis (PhD)
Qualification Level: Doctoral
Subjects: K Law > K Law (General)
Colleges/Schools: College of Social Sciences > School of Law
Supervisor's Name: Esser, Prof. Irene-Marie and MacNeil, Prof. Iain
Date of Award: 2022
Depositing User: Theses Team
Unique ID: glathesis:2022-83009
Copyright: Copyright of this thesis is held by the author.
Date Deposited: 28 Jun 2022 09:08
Last Modified: 28 Jun 2022 09:09
Thesis DOI: 10.5525/gla.thesis.83009

Actions (login required)

View Item View Item


Downloads per month over past year