Towards legal reform of Saudi law of directors’ duties and of enforcement by derivative action

K Law (General)

Aleshaikh, Abdullatif Mohammed ; MacNeil, Iain

University:University of Glasgow

Department:School of Law

关键词: Directors' duties, derivative action, corporate governance, legal transplant, comparative law, Saudi company law, UK company law.;   

Others  :  http://theses.gla.ac.uk/30630/1/2018abdullatifphd.pdf

来源: University of Glasgow

【 摘 要 】

Directors’ duties of care and loyalty and their enforcement by derivative action, areimportant elements in the company law system. Such mechanisms are introduced to ensurethat directors are subject to a satisfactory level of accountability and control whilemanaging a company. This research employed the comparative law approach to identifyingproblems in, and to proposing reform for, the Saudi Arabian law of directors’ duty to actwith care and in good faith in the company’s general interests, and to avoid conflicts ofinterest, with particular focus on the corporate opportunities and self-dealing transactionsand the Saudi law of derivative actions.The main objective of this study was to propose a reform of Saudi law of directors’ dutiesand of derivative actions. By using the company law of the United Kingdom (UK) asbenchmark, this study evaluates the clarity, certainty and accessibility of Saudi law andidentifies weaknesses and deficiencies. The feasibility of transplanting selective legal ideasand rules from the UK company law to its Saudi counterpart in order to develop aframework for legal reform in Saudi Arabia is examined.The argument here is that the Saudi law of directors’ duties of care and loyalty andderivative actions suffers from serious deficiencies, despite the introduction of the newCompanies Law of 2015. While the new Saudi Corporate Governance Regulations 2017have tackled some issues in the areas of directors’ duties, there is still room forimprovement. The uncertainty in the law of directors’ duties and enforcement is sufficientin itself to justify the reform of law. Moreover, the limits of other legal and non-legalmechanisms of accountability in the Saudi context suggest that alternative mechanismswould not adequately ensure the accountability of directors.Throughout the examination of the feasibility of reform by way of legal transplantation, thestudy takes into account that the UK legal model is only transferable if it can be adapted tofit within the institutional structure and legal environment in Saudi Arabia. This isnecessary to ensure proper reception of foreign rules by the new environment of the hostcountry. The finding is that transferability of most UK legal models and rules is feasible.Throughout this consideration of a reform agenda for the Saudi law of directors’ duties andderivative actions, the research has been guided by a policy that requires striking a balancebetween the need to increase directors’ accountability and the need to protect the directors’exercise of their managerial authority.