Saudi Arabia takes steps to close legal loopholes in company law

Jan 05, 2003 01:00 AM

The Commerce Ministry of Saudi Arabia will shortly issue new regulations that will close legal loopholes which presently allow joint stock companies to tamper with their budgets and accounts, thus ensuring financial transparency.
According to a source at the ministry, the new regulations will boost confidence in the financial statements, auditing and accounting which in turn will protect the interest of the shareholders.

Commerce Minister Osama Faqeeh issued an order stipulating that financial statements of joint stock companies should accompany an undertaking guaranteeing that they supply correct information and accepting responsibility for any inaccuracies that come to light afterward.
According to the new legislation, directors and executives will not conceal information from the shareholders or give them misleading information.

The move also aims to protect Saudi companies against heavy losses and their eventual closure because of the manipulations in the financial statements by the company officials. The ministry hopes that the new regulations will increase the credibility of management and boards of directors among the general public.
Supervising agencies such as the Commerce Ministry and the Saudi Bureau for Certified Accountants will check whether the companies and auditors adhere to the new regulations. The ministry recently sent a circular to all joint stock companies and boards of directors ordering them not to engage in insider trading.

Source: Arab News
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