Shareholders’ General Assemblies in the Joint-Stock Company .
The shareholders’ assemblies (ordinary and extraordinary) represent the backbone of shareholder participation in key company decisions. The new Companies Law, issued under Royal Decree (M/132) dated 1/12/1443 AH, outlines the regulatory framework for these assemblies to ensure governance, transparency, and the protection of shareholders’ rights.
Types of General Assemblies: .
Ordinary General Assembly (Articles 87–88):
It is held annually within six months following the end of the financial year, and may be convened at any other time whenever necessary. It is responsible for making decisions related to operational management and oversight, such as:
- Electing and removing members of the Board of Directors.
- Appointing or dismissing the auditors and determining their fees.
- Discussing and approving the Board of Directors’ report and the financial statements.
- Deciding on dividend distributions and the formation of reserves.
Extraordinary General Assembly (Articles 85–86):
It is convened as needed to make strategic decisions and major structural changes, such as:
- Amending the Articles of Association.
- Dissolving or continuing the company.
- Merging, splitting, or increasing/decreasing the capital.
- The company’s purchase of its own shares.
The Extraordinary General Assembly may also exercise the powers of the Ordinary General Assembly if convened under the same legal conditions (Article 86).
Quorum and Voting: .
Ordinary:
- Convene: In the presence of shareholders representing at least 25% of the voting shares (Article 92).
- Second Meeting: Valid regardless of the number of attendees.
- Decisions are issued by a majority of the represented voting rights.
Extraordinary:
- Convene: In the presence of at least 50% of the shares (Article 93).
- Second Meeting: Valid with at least 25% of the shares.
- Third Meeting: Valid regardless of the number of shares represented.
- Decisions are issued by a two-thirds majority of votes, rising to three-quarters for sensitive matters (such as capital increase, merger, or company dissolution).
Invitation and agenda:
- The invitation must be sent 21 days before the meeting, including the agenda, the type of association, and the shareholder’s right to attend, vote, and act as a proxy (Article 91).
- The invitation is made through recorded letters or modern technological means.
- The Board of Directors shall call for a general meeting within 30 days if requested by the auditors or shareholders owning 10% of the shares (M90).
Shareholders' rights: Each shareholder has the right to:
- Attendance, participation and voting (M84).
- Power of attorney through a third party who is not a member of the council.
- Discussing the listed topics and posing questions to the council and the references (M96).
- Request to include items on the agenda (if he owns at least 10% of the shares).
The validity of the Assembly's decisions:
The decisions of the associations shall be effective from the date of their issuance, unless the regulations or the decision stipulate otherwise (Article 94).
