CME-1 Corporate Governance

Question 1

What is the primary regulation governing corporate governance of listed companies in Saudi Arabia?

Accepted Answer

Corporate Governance Regulations issued by the CMA

Answer

The Corporate Governance Regulations (CGR) issued by the CMA establish governance requirements for companies listed on Tadawul, covering board composition, committees, disclosure, and shareholder rights.

Question 2

What is the minimum number of independent directors required on the board of a Saudi-listed company?

Accepted Answer

At least two independent directors or one-third of the board, whichever is greater

Answer

CMA Corporate Governance Regulations require that independent directors constitute at least one-third of the board or a minimum of two directors, whichever is greater, to ensure adequate independent oversight.

Question 3

Which committees are mandatory for Saudi-listed companies under CMA governance regulations?

Accepted Answer

Audit committee, remuneration committee, and nomination committee

Answer

Saudi-listed companies must establish at least three mandatory committees: an audit committee, a remuneration committee, and a nomination committee. Each has specific composition and responsibility requirements under the CGR.

Question 4

What is the role of the audit committee in a Saudi-listed company?

Accepted Answer

Overseeing financial reporting, internal controls, and the external audit process

Answer

The audit committee oversees the integrity of financial statements, reviews internal control systems, recommends appointment of external auditors, and reviews compliance. It must have at least one member with financial expertise.

Question 5

Under Saudi corporate governance, what disclosure obligations apply to board members regarding conflicts of interest?

Accepted Answer

Board members must disclose any direct or indirect interest in transactions with the company

Answer

Board members must disclose any direct or indirect interest in contracts or transactions with the company. The interested director must not participate in voting on such matters, and these transactions require shareholder approval.

CME-1 Practice Test

CME-1 Practice Test

CME-1 Corporate Governance