JEDDAH/RIYADH, 7 July 2006 — The Saudi Capital Market Authority (CMA) has announced a new draft of regulations to inject greater transparency into the functioning of the private sector and the prevention of CEOs from taking arbitrary decisions.

While spelling out the new guidelines, CMA Chairman Abdul Rahman Al-Tuwaijeri has invited comments from the public. The last date for sending comments is Aug. 4.

Custodian of the Two Holy Mosques King Abdullah appointed Al-Tuwaijeri in May, replacing Jammaz Al-Suhaimi after the Saudi bourse, the largest in the Arab world, made an approximate 40 percent loss this year.

The CMA chief said the whole thrust of the exercise is to streamline the company’s administration, safeguard the shareholder’s rights, and prevent the misuse of power by the company’s chairman or board members. The draft regulations also lay down a set of criteria that seek to streamline the company’s administration.

To this end, it has asked experts to provide input on what more needs to be done to inject greater discipline into the corporate sector, especially at the administrative level.

The draft regulations cover five chapters including 19 subjects. The first chapter covers the previous regulatory code; the second deals with shareholders’ rights; the third chapter is on the subject of transparency in the functioning of a company; the fourth chapter is related to the chairman’s duties and responsibilities; the fifth section highlights the need for publicizing a company’s activities and keeping the shareholders informed at every stage.

Regarding the rights of shareholders, the draft guidelines point out that they are entitled to know everything that is in their interest. They also have a right to get their share in the profit when distributed. When a company goes into liquidation the shareholders have a right to attend the annual general meeting and vote on decisions. They also have a right to see the company’s documents and to file a case against the board of directors at times when where their right has been infringed upon.

Regarding remuneration to the board members, the draft regulation says that there should be clear guidelines in the company’s rules regarding payment, which can be given either as a salary or a special allowance for attending board meetings. A board member can also claim a certain percentage from the company’s profit. He can either have a salary and an allowance or a salary with a fixed percentage of the company’s profit with the provision that the percentage should not exceed ten percent of the company’s overall profit.

The chairman should not be allowed to give loans that require three years to repay. He should also not sell or mortgage a company’s assets or forgive debt to the company unless the board’s annual general meeting votes on such a measure.

The stock market, however, edged higher on Wednesday. The Tadawul All-Share Index (TASI) closed 125.44 points higher at 13,053.19. Out of 81 companies trading, shares for 54 went up while shares of 18 companies saw a decrease.

The Insurance index was down while all other indexes increased on Wednesday. The major Banking and Industrial indexes closed at 35,422.26 points and 28,615.93 points, respectively.

Over SR20 billion worth of shares changed hands on Wednesday.