Reforming directors' duties in Saudi Arabia :Suggestions based on the UK company law

Abstract

Saudi Arabia has strengthened its commercial and economic ties with the UK by creating a conducive investment environment and encouraging British enterprises to expand their business activities within Saudi Arabia. The primary aim of this study was to identify and compare the key distinctions between the Saudi Companies Law (SACL) (2022) and the UK Companies Act (CA) (2006) regarding directors’ duties. This study involved a comparative analysis of the legal texts and related legal issues within both legislations. Furthermore, it critically discussed the prominent problems and shortcomings present in the SACL (2022) and the CA (2006) in this regard. Ultimately, this research proposed recommendations for enhancing the effectiveness and robustness of Saudi Companies Law. Following the comparison, two primary differences were identified in the duties of a director: (1) the duty of a director to be a liquidator, and (2) the duty to report wrongdoing. In order to successfully achieve the primary aims of the 2030 Vision, it is imperative to address the existing shortcomings in the duties of directors and undertake necessary reforms aligned with the principles of corporate governance to ensure the long-term sustainability of these entities. This study has suggested that the use CA 2006 laws may effectively remedy the deficiencies identified in SACL 2022 by removing the directors’ duty to be a liquidator during the liquidation period and by requiring directors to disclose wrongdoing as an independent duty.