Effective from Jan 2024, the Capital Market Authority (CMA) in Saudi Arabia introduced amendments to the Corporate Governance Regulations, aiming to enhance transparency, accountability, and the overall governance framework of publicly listed companies. These amendments focus on several key areas, particularly Article 75, which governs the responsibilities and structure of board committees, including the Audit and Nomination & Remuneration Committees. Amendments in Article 75

Paragraph (A) of Article 75:

The internal audit unit or department shall prepare a written report on its work and submit it to the Board of Directors and the Audit Committee at least quarterly. This report must include an assessment of the company’s internal control system and the unit’s or department’s findings and recommendations, and a statement of the actions taken by each department to address the findings and recommendations of the previous audit and any comments thereon.

Paragraph (B) of Article 75:

The internal audit unit or department shall prepare a general written report and submit it to the Board of Directors and the Audit Committee regarding the audit operations conducted during the fiscal year and comparing them with the approved plan, and shall state the reasons for any breach or deviation from the plan – if any – during the quarter following the end of the year.

Importance of the Amendments:

Enhanced Transparency: By ensuring that specialized committees operate independently, the amendments help improve decision-making processes within companies, fostering trust among investors.

Strengthened Oversight: The focus on regular reports from the audit committees increases the scrutiny on financial reports, reducing the risk of corporate mismanagement or fraud.

Improved Governance: These changes are in line with international best practices, allowing Saudi companies to align with global governance standards, thus making the market more attractive to foreign investors.