Understanding Directors' Duties in the Legal Systems of Saudi Arabia and the United Kingdom: A Comparative Study of Corporate Governance Systems.

Abstract

Abstract:

This dissertation compares the new Saudi Companies Law director obligations to the UK Companies Act 2006. The study is driven by the Saudi government's efforts to attract international investment and boost the private sector's economic influence. The Saudi Companies Law is compared to the UK Companies Act due to UK legislation's historical impact on company governance and the similarity of directors' obligations in both nations.

A detailed literature analysis explores the historical evolution of corporate governance in Saudi Arabia and the UK, covering significant events, legislative reforms, and regulatory measures. This study analyses legal and regulatory environments to identify directors' distinctive tasks and responsibilities in each country, providing insights into the history and logic behind their roles. Stakeholder theory, which recognises organisations' more significant responsibility beyond shareholder value maximisation, is also explored in the dissertation. The research uses stakeholder theory to examine directors' duties to stakeholders and their effects on corporate decision-making.

Enlightened shareholder value emphasises sustainable long-term value generation for shareholders over short-term benefits. The paper examines how this idea corresponds with directors' obligations in Saudi Arabia and the UK, emphasising the need for directors to consider long-term interests and company sustainability.

Chapter 4's comparative study is the research's core. It compares and contrasts each nation's legislative frameworks for directors' obligations. The research seeks to clarify directors' roles in supporting good governance by assessing the regulatory frameworks' efficacy and suitability. In addition to explaining the reasons that made the Saudi government add the business judgment rule in the new company law.

This research aims to inform policymakers, regulators, and business stakeholders, especially in light of the new Saudi Companies Law. By comparing regulations in Saudi Arabia and the UK, this study provides a foundation for further research. It enhances the current discourse on corporate governance and board members' vital role in corporate success, transparency, and accountability.