Review of Saudi Arabia company law reforms and its implications on corporate governance framework- an evidence from emerging market

Abstract

Purpose This paper aims to review the literature of CG regime in Saudi Arabia, an emerging market for several compelling reasons. Most of the earlier literature on corporate governance subjects mainly aimed at large emerging economies. To date, there is a lack of studies examining the following: authorities and obligations, subcommittees and the regulatory system in Saudi Arabia. Therefore, this paper is an attempt to bridge this gap by reviewing the current laws, regulation, trends and key reforms in corporate governance framework in the country as the current amended laws focused to offer more competence and precision to the regulatory setting in line with the development of the Saudi Arabian stock market and the influx of foreign reserves. Design/methodology/approach The current paper has espoused a content analysis approach in which relevant literature was deliberated and studied. Findings The amended CG rules include some developments into corporate governance and substitutes the earlier version of the long overdue regulation of 1965. The new 2017 implemented Code will reinforce the implication of good governance as a condition model for accomplishing good financial management in the country. This study has provided an overview of the evolution and development of corporate governance in Saudi Arabia by highlighting the key reforms. Research limitations/implications This study has implications for the policymakers and institutional bodies to review the current developments and progress in the country’s overall corporate governance framework in an attempt to attract more foreign direct investment. Saudi Arabia is among the nations that have a potential for huge foreign investments due to its plan of expanding its economy “Vision 2030.” Therefore, this paper will aid foreign investors in deciding to invest in the country after reviewing the current developments in an attempt to implement vision 2030. Originality/value This study contributes to existing literature by examining the current trends in CG, with the discussion on the development of company law in Saudi Arabia which emphasizes on sections that borders on corporate governance.