RIYADH: Saudi Arabia has fined board members of Saudi Chemical Co. (SCC) for allegedly approving an acquisition in which the chairman had a vested interest but failed to consult shareholders, according to a bourse statement.
The move is the latest action by the Saudi Capital Market Authority (CMA) to crack down on irregularities and improve transparency in the Kingdom following debt defaults at two family owned companies.
CMA fined SCC chairman and the other six board members SR50,000 ($13,330) each, according to a bourse statement published late on Sunday.
According to the CMA, SCC bought a 15 percent stake in Mawarid Trading Co. through a unit called Saudi International Trading Ltd. (SITCO Pharma) without obtaining shareholders’ approval.
“(The fine) is because they have accepted a deal for their subsidiary to buy 15 percent of the shares in Mawarid — although the chairman of the (SCC’s) board had an interest in the transaction — without authorization from the general assembly,” CMA said.
SCC’s board did not reveal in a stock market disclosure dated July 2, 2008 that the chairman had an interest in the transaction, CMA added. The group said in a statement posted on the SCC website in May the chairman had shares in Mawarid Holding Group, which owns Mawarid Trading Co., adding Mawarid stakeholders did not benefit directly from the transaction.
The amount paid to Mawarid amounted to SR135 million ($36 million), the statement posted in May said.
Mohamed Alsogayeh, SCC’s deputy managing director, declined to comment on the issue and told Reuters the only people who could comment were the board members. “I am not involved in this matter whatsoever,” he said.