16. Corporate Governance Regulation: The Experience of Saudi Arabia

Corporate governance used to be a nascent subject in the MENA region including Saudi Arabia until the last decade. In 2005, the Organization for Economic Cooperation and Development (“OECD”) established a Working Group on Improving Corporate Governance in the Middle East and North Africa within the framework of the MENA-OECD Initiative on Governance and Investment for Development. The involvement of the OECD is not a coincidence since it is recognized as the international standards-setter best practices in corporate governance. The Working Group is comprised of representatives of 18 countries of the MENA region including Saudi Arabia and serves as a platform for the exchange of views among the participants and their OECD counterparts. A trend of regulating corporate governance began in Oman 2002 by establishing institutions spreading awareness and training on the importance of corporate governance and most significantly the Hawkamah Institute for Corporate Governance in Dubai (Koldertsova 2010). The six GCC member states signed the Dubai Declaration on Corporate Governance in 2006 which confirmed their conviction of the importance of corporate governance for their economic development and financial stability and their pledge to strengthen the underlying regulatory framework. Countries in the region also embarked on regulating corporate governance including Saudi Arabia, which issued for the first time its corporate governance regulation also in 2006.