How can Saudi Arabia address conflicts of interest arising from controlling shareholders to strengthen board independence, and what lessons can be drawn from the UK corporate governance model to support this reform?’

Abstract

Abstract This dissertation examines how Saudi Arabia can address conflicts of interest arising from controlling shareholders in order to strengthen board independence, drawing targeted lessons from the United Kingdom’s corporate governance framework. Concentrated ownership in Saudi Arabia creates horizontal agency conflicts that enable controlling shareholders to influence board composition, related party transactions, and strategic decision making. Although the Companies Law 2022 and the Corporate Governance Regulations introduce formally robust protections, these measures often result in cosmetic compliance rather than substantive governance due to structural imbalances, information asymmetries, and limited enforcement capacity. To analyse these challenges, the study adopts a qualitative comparative method grounded in agency theory, institutional analysis, and functional legal comparison. It evaluates Saudi Arabia’s ownership structures, board dynamics, and regulatory safeguards, and contrasts them with the UK’s integrated system of statutory duties, market based oversight, and historically strong minority protections. The analysis demonstrates that while direct transplantation of UK rules would be ineffective without institutional compatibility, selected mechanisms such as independent shareholder approval for related party transactions, enhanced stewardship expectations, and stronger minority enforcement tools offer valuable guidance. The dissertation proposes a tailored framework for Saudi Arabia focused on improving related party transaction oversight, strengthening institutional investor stewardship, and developing independent enforcement mechanisms capable of constraining dominant shareholder influence. The study concludes that meaningful reform depends not on formal convergence with international standards but on designing governance tools that address the structural realities of concentrated ownership in the Saudi context.