The Capital Market Authority required companies to form internal audit units or departments in order to enhance transparency, after this matter was previously optional. This came in the draft amendment to the Corporate Governance Regulations, announced by the Authority to seek public opinion about it for a period of 30 calendar days, ending on March 10, 2021.
According to a statement issued by the Authority, the proposed amendments in the project aim to strengthen the internal control of the joint stock companies listed on the financial market, and to develop the provisions regulating the symptoms of independence of the members of the Board of Directors in line with best practices and international standards in this regard. The most prominent of the main elements of the project are the transfer of Articles 76, 77 and 78 of the Corporate Governance Regulations relating to internal audit work from being guidance material to mandatory articles with the aim of strengthening internal control, and these articles relate to the formation of an internal audit unit or department and the internal audit plan. The regulations also include amending Article 39 of the Corporate Governance Regulations relating to the training of members of the Board of Directors and the Executive Management to include training and qualifying the members of the committees formed under the Corporate Governance Regulations and amending Paragraph (c) of Article 20 of the Corporate Governance Regulations by stating the cases related to the business and contracts that are made for the company’s account. Which is a violation of the independence of an independent board member, in addition to amending the scope of the definition of the term “relatives or kinship relationship” for the purpose of implementing Article Twenty of the Corporate Governance Regulations related to symptoms of independence, in line with best practices and international standards in this regard. The Authority receives the opinions and comments of interested persons and those concerned through the dedicated form via e-mail: ([email protected]). The Market Authority said that all opinions and observations will be subject to attention and study. For the purpose of approving the final version of the project.