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Compliance with Corporate Governance Guidelines and Regulations

  • Governance is an important part of the values and practices of the Saudi Stock Exchange Company (Tadawul), which seeks to implement the best corporate governance practices for managing joint stock companies. In addition, the Company works towards raising the level of transparency and corporate integrity by maintaining the best governance practices based on the following: The Companies Law, the Capital Market Law and the Company’s By-laws.

In addition we draw guidance from the Corporate Governance Regulations issued by the Board of the Capital Market Authority.

Disclosure concerning the composition of the Board of Directors and Senior Executives

The formation of the Board of Directors of the Saudi Stock Exchange Company (Tadawul) was based on the Capital Market Law pursuant to Royal Decree No. (M/30) dated 2/6/1424 H. As Clause (b) of Article 22 states: “The Company shall be managed by a Board of Directors consisting of nine members, who shall be appointed by a resolution of the Council of Ministers upon nomination by the Chairman of Capital Market Authority. Members shall choose from among themselves a Chairman and a Vice-Chairman. Membership shall be as follows:

  1. A representative of the Ministry of Finance.
  2. A representative of the Ministry of Commerce and Industry.
  3. A representative of the Saudi Arabian Monetary Authority.
  4. Four members representing licensed brokerage companies.
  5. Two members representing the joint stock companies listed on the Exchange.”

Upon issuance of the latest amendments to the Capital Market Law on 17 September 2019, Clause (b) of Article 22 thereof stated that: “The Exchange, the Security Depository Center Company (Edaa) and the Securities Clearing Center Company (Muqassa) shall present the names of their respective Board members nominees to the Board of the Authority to obtain its approval of their nomination prior to them being elected by the General Assembly.”

Therefore, the Extraordinary General Assembly held its meeting on Thursday, 2 January 2020 in which amending the Company’s Bylaws was approved and Board members for the fifth term were elected and appointed starting from the date of the Extraordinary General Assembly and for a period of three years.

Roles and authorities of the Board of Directors

Subject to the functions reserved for the General Assembly in accordance with relevant laws, the Board shall have the widest authority to manage the business of the Company in order to attain its objectives, including:

  1. The overall strategy and business plan of the Company;
  2. Approval of the annual budget;
  3. Approval of the Company’s internal, financial, administrative, and technical regulations as well as employee-related policies and regulations and setting the Company’s performance indicators;
  4. Approval of establishment of companies, buying shares therein and mergers as well as obtaining and amending of commercial registers; and
  5. Investment of Company’s monies.

Governance structure in Tadawul

Statement of current Board members

No. Member Category Positions in Other Companies
1. Mrs. Sarah J. Al-Suhaimi Chairperson of the Board of Directors (Non-Executive)
  • Al Ahli Capital – CEO, Board Member
2. Mr. Yazeed A. Al-Humaid Vice-Chairman (Non-Executive)
  • Public Investment Fund – Chief of Staff
  • Saudi Arabian Airlines – Board Member
  • Flyadeal Company – Board Member
  • Saudi Civil Aviation Holding Company – Board Member
  • Samba Financial Group – Vice-Chairman
  • National Security Services Company – Chairman
3. Eng. Khalid A. Al-Hussan Chief Executive Officer
  • Securities Depository Center Company (Edaa) – Chairman
  • Securities Clearing Center Company (Muqassa) – Chairman
  • Tadawul Real Estate – Board Member and Chairman of the Audit Committee
4. Mr. Hashem O. Al-Hekail Non-Executive
5. Mr. Sabti S. Al-Sabti Non-Executive
  • Riyadh Capital – CEO
  • General Authority of Zakat and Tax – Board Membere
6. Mr. Yousef A. Al-Benyan Non-Executive
  • The Saudi Basic Industries Corporation (SABIC) – Vice-Chairman and CEO
  • The Saudi Arabian Fertilizers Company (SAFCO) – Chairman
  • The Yanbu National Petrochemical Company (Yansab) – Chairman
  • Saudi Information Technology Company – Board Member
  • General Authority for Foreign Trade – Board Member
7. Ms. Rania M. Nashar Non-Executive
  • Samba Financial Group – CEO
  • Samba Capital – Vice-Chairman
  • Samba Bank Limited Pakistan – Board Member
  • Samba Global Markets Group Limited – Board Member
  • Samba Capital Asset Management and Investment Management Company – Board Member
  • The Capital Market Authority – Member of the Advisory Committee
  • Saudi Space Authority – Board Member
8. Mr. Mark Makepeace Non-Executive
  • London Stock Exchanges Group (LSEG) – Chairman of Information Services
  • FTSE Russell – Chairman of the Information Services
9. Mr. Xavier Rolet Non-Executive
  • Shore Financial Markets Limited – Chairman

Attendance at Board meetings

Number of meetings: 5

Name of member Position On
Mrs. Sarah Al-Suhaimi Chairperson of the Board of Directors
Mr. Abdulrahman M. Al-Mofadhi Vice-Chairman
His Excellency Suhail M. Abanmi Member
Mr. Tariq Z. Al-Sudairy Member
Mr. Ali A. Al-Gwaiz Member
Mr. Abdulaziz A. Bin Hassan Member
Mr. Rayan M. Fayez Member
Mr. Hashem O. Al-Hekail Member
Mr. Abdullah bin Nasser Al Dawood Member

Directors’ remuneration

The members of the Board of Directors do not receive an annual remunerations for their membership in the Board of Directors nor an attending allowance for Board meetings.

This is in line with the Company’s commitment to the provisions of Article (76) of the Companies Law issued pursuant to Royal Decree No. (M/3) dated 28/1/1437 AH, which regulates the remuneration of the members of the Board of Directors. The third paragraph of the same Article stipulates that “In all cases, the total amount of remuneration received by a member, whether financial or otherwise, shall not exceed SAR 500,000 annually, in accordance with rules prescribed by the Competent Authority.”

Rewards and benefits of Senior Executives

Statement Total
Salaries and allowances 9,181,360
Annual and other bonuses 8,125,000
Total 17,306,360

* Executives’ emoluments represent the top five executives, including the CEO and the CFO.

Committees of the Board of Directors

The Board of Directors has six committees composed of members of the Board and other independent members with the necessary expertise and specialist knowledge relevant to the function of each committee. Committees are composed in accordance with the general procedures set by the Board of Directors. Committees shall submit their results and decisions to the Board which shall supervise the committees’ activities regularly to ensure the proper performance of their duties and functions. Each of these committees shall have approved charters defining their authority and working procedures.

Remuneration of the Board of Directors members for their membership in the Board Committees

The members of the Board of Directors shall receive an annual remuneration of 200,000 SAR for their membership in the one committee or more from the Board committees. In addition, they shall receive 3,000 SAR for each committee meeting they attend.

A member of the Board of Directors who is a member in the regulatory policy and oversight committee shall be granted an additional amount of 200,000 SAR considering the nature of the work and responsibilities of the Committee.

Name of member For attending
committee meetings
Annual committees
membership remunerations

Mrs. Sarah J. Al-Suhaimi 24,000 200,000 224,000
Mr. Abdulrahman M. Al-Mofadhi 12,000 200,000 212,000
Mr. Ali A. Al-Gwaiz 30,000 200,000 230,000
Mr. Tariq Z. Al-Sudairy 18,000 200,000 218,000
His Excellency Mr. Suhail M. Abanmi 15,000 200,000 215,000
Mr. Abdulaziz A. Bin Hassan 39,000 400,000 439,000
Mr. Rayan M. Fayez 24,000 200,000 224,000
Mr. Hashem O. Al-Hekail 15,000 200,000 215,000
Mr. Abdullah bin Nasser Al Dawood 15,000 200,000 215,000
Total 192,000 2,000,000 2,192,000

Dividend policy

The Company‘s policy for distribution of annual net profits is based on the provisions of its Bylaws and the availability of liquidity to meet liabilities and strategic projects. Annual net profits (after deduction of all overheads and expenses) shall be distributed as follows:

  1. 10% of net profits are allocated to the statutory reserve. The Ordinary General Assembly may suspend this allocation once this reserve equals 30% of the Company‘s paid-up capital.
  2. The Ordinary General Assembly – at the Board of Directors’ recommendation – may allocate a percentage of net profits for other special reserves.
  3. The Ordinary General Assembly may decide to establish other reserves to the extent that such reserves are in the interest of the Company or ensure distribution of fixed dividends for shareholders. The Ordinary General Assembly may deduct amounts from net profits to establish social institutions for the Company’s employees or to support already existing ones.
  4. The Board of Directors may recommend that a certain percentage of the remainder of profits be distributed to shareholders. The Company may distribute quarterly or semi-annual dividends after fulfilling the requirements set by relevant entities.

The following are the proposed dividends for the year 2019, compared to dividends for 2018:

Dividend 2019
Net profit/loss for the year 153,293,786 148,186,665
Allocating 10% of net profit as a statutory reserve (15,329,379) (14,818,667)
Dividends (5% of capital) (60,000,000) (60,000,000)
Dividends (additional share) (60,000,000) (60,000,000)
Net 17,964,407 13,001,158

Tadawul’s subsidiaries

Name of subsidiary Capital Tadawul’s ownership percentage Activity The main country of operations Country of incorporation
Securities Depository Center Company (Edaa) 400,000,000 100% Depositing, registering,
transferring, settling, clearing
and recording the ownership
of securities.
Kingdom of
Saudi Arabia
Kingdom of
Saudi Arabia
Securities Clearing Center Company (Muqassa) 600,000,000 100% Securities clearing Kingdom of
Saudi Arabia
Kingdom of
Saudi Arabia

Transactions with related parties

The Company has entered into transactions with entities related to the Public Investment Fund (the Shareholder), as well as certain companies in which some members of the Board of Directors hold memberships. The terms of such transactions are similar to those with ordinary commercial debtors and creditors, and there is no preference or special treatment for the parties involved. The following are the significant transactions and amounts up to 31 December 2019:

Transactions with related parties 2019
Trading commission 317,830,780 321,711,062
Market information services 61,345,104 60,808,776
Depository services 123,287,116 137,834,096
Listing services 60,615,484 61,580,174
Other services 1,669,415 1,345,932
Subsidiaries 7,462,037 5,511,881
Board of Directors’ remuneration and allowances 5,437,049 5,963,239
Balance due from Tadawul Real Estate Company 130,000,000 130,000,000

The balances resulting from these transactions are included in the financial statements as at 31 December 2019 (in Saudi Arabian Riyals):

Description Nature of the relationship Balance at the
beginning of the year
Charged during the year Collected /Paid during the year Balance at the end of the year
Receivables Joint ownership and managers 12,682,167 341,807,541 344,353,443 10,136,265
Accounts payable Joint ownership and managers 6,953,881 18,105,521 16,552,925 8,506,477
Advances and other assets Associate company 130,000,000 130,000,000

In its transactions with related parties, the Company takes into account the procedures used to deal with cases of conflict of interest in accordance with the relevant regulations, in addition to the professional Code of Conduct of the Board of Directors, members of the Company, and approved by the Board of the CMA in its decision No. 02-20-2010 dated 27/08/1431 H corresponding to 8 August 2010.


The Saudi Stock Exchange (Tadawul) has no loans.

Company declarations

The Company’s Management declares the following:

  • The accounting records have been properly prepared.
  • The internal control system is well established and effectively implemented.
  • There are no substantive doubts about the Company’s ability to continue its operations.
  • There are also no deviations from the accounting standards issued by the Saudi Organization for Certified Public Accountants. There are no material comments from the Auditors on the Company’s financial statements for the fiscal year 2019.

Regulatory payments due

Statement SAR Mn Description
Distributed profits 120,000,000 What is paid or charged to the period as dividends to government entities (Public Investment Fund)
Social insurance contributions 14,739,317 What is paid or charged to the period, in accordance with the provisions of the Labour Law in the Kingdom of Saudi Arabia
Deduction tax 2,283,316 What is paid or charged to the period, in accordance with the provisions of the Zakat and Income Tax Authority
Total 137,022,633 Represents statutory amounts payable and paid to government entities.

Sanctions or penalties from regulatory or governmental bodies

There are no penalties or sanctions from regulatory or government agencies.

Results of the annual review of the effectiveness of the internal control system

The Internal Audit Division reports periodically to the Audit Committee on the results of the audits, which are designed to verify the effectiveness of the internal control system in protecting the Company’s assets and the assets of its subsidiaries (Edaa and Muqassa), assessing the business risks and measuring the efficiency and performance of the control procedures and systems in all respects (operational, administrative, and financial). The External Auditor performs an evaluation of this system as part of the audit of the final financial statements of the three companies, which includes the ability to review all the internal audit minutes and reports for the relevant financial period.

Based on the periodic reports submitted to the Committee in 2019 by the Internal Audit Division and External Auditors, the Audit Committee considers the financial and operational controls to be proper and efficient and believes that there are no control gaps or significant weakness in regard to the Company’s business during the fiscal year 2019 that could affect the integrity of the financial statements.

Although the Internal Audit Division has conducted a risk-based audit in accordance with the International Standards for the Professional Practice of Internal Auditing issued by the Institute of Internal Auditors (IIA), no internal audit system can give an absolute guarantee of the integrity of the control system in the Company.

Risk management policy and control

The Risk and Security Division of the Saudi Stock Exchange (Tadawul) company follows the “Three Lines of Defence” methodology, the best among international standards. It also helps to define the responsibilities of each of the Company’s Divisions, Executive Management and the Board Committees in a precise and effective manner with regard to risks. The important roles of Management are to approve and develop the standards and requirements of information security and business continuity for all Exchange members and data providers or vendors, in line with the ongoing changes within and relating to the market. This includes risk awareness, security and business continuity in line with market changes and the Company’s vision.

The following types of risks are defined and approved by Tadawul: