Business · Companies · 9 hrs ago
Saudi regulator proposes mandatory qualifications for listed-company board members
Saudi Arabia’s Capital Market Authority proposed mandatory qualifications for main-market board members that were previously guidance.
The proposal would require companies to apply standards including leadership, professional competence and financial knowledge, and to make nomination processes more transparent.
Financial knowledge is defined as being able to read and understand financial statements and reports.
The change comes as 145 of 206 non-financial companies had returns below their cost of capital in an analysis based on Bloomberg data.
That measure suggests many companies did not earn enough from invested capital to cover the return expected by lenders and shareholders, though it is not a final judgment on company or board performance.
Board members oversee investment and financing decisions that can affect a company’s long-term value for shareholders.
The Authority has put the proposed changes out for public comment; the available information does not say what happens after that.
Saudi Arabia’s Capital Market Authority has proposed making board-member qualification rules mandatory for companies listed on the main market.
The proposal would turn Article 18 of the Corporate Governance Regulations from guidance into a requirement.
The rules include leadership, professional competence, guidance ability, financial knowledge and physical fitness.
The proposal also calls for more transparent nomination procedures and objective criteria suited to each company.
An Al Eqtisadiah analysis found that about 70% of the non-financial TASI companies it examined had returns on invested capital below their average cost of capital.
- Who
- Saudi Arabia’s Capital Market Authority proposed the changes. They apply to companies listed on the main market.
- What
- The authority proposed making board-member qualification requirements mandatory and strengthening transparency in director nominations.
- When
- The proposal was reported on October 29, 2026.
- Where
- Saudi Arabia’s main market.
- Why
- The changes aim to strengthen board selection standards and oversight of company decisions.
This story does not have two clearly opposing sides.
The article says interest rates were exceptionally low for most of this period.
A monetary tightening cycle began, changing the cost-of-capital environment.
A study covering 97 Saudi non-financial companies from 2013 to 2022 was published and found a positive relationship between board members’ financial expertise and companies’ financial sustainability.
Al Eqtisadiah reported the authority’s proposal to make board qualification rules mandatory for main-market listed companies.
- Proposed regulation
- Make Article 18 of the Corporate Governance Regulations mandatory for main-market listed companies
- Board qualifications
- Leadership, professional competence, guidance ability, financial knowledge and physical fitness
- Companies below cost of capital
- 145 of 206 non-financial companies analysed, or about 70%
- Companies meeting or exceeding cost of capital
- 61 of 206 non-financial companies analysed