Albrahim, Mohammed and Milman, David and Lawton, Philip (2016) The enforcement of directors' duties in the context of shareholders' rights protection : a comparative study between UK and Saudi law. PhD thesis, Lancaster University.
2016albrahimphd.pdf - Published Version
Available under License Creative Commons Attribution-NoDerivs.
Download (2MB)
Abstract
Corporate governance has been the topic of intense research and policy debates over the past two decades. Clearly, the duties that directors owe to their company are a key component of corporate governance. These duties were introduced in an attempt to create a fair and balanced relationship between shareholders and directors. This balance is needed to regulate tensions between ownership and control of companies. Nonetheless, if directors’ duties are not enforced effectively then these obligations will probably have no real impact on corporate management. The key objective of the current thesis is to analyse and assess the enforcement actions under Saudi law that can be taken against directors in breach of their duties compare to their counterparts in UK. This is done in the hope of benefiting from other countries’ more advanced political, financial and legal institutions and avoiding any shortcomings identified in existing legal systems. The newly enacted Companies Law 2015 substantially reformed and modernised company law in the country, yet it has not made any significant inroads in regards to enforcing the duties of directors. It was found that the new legislation requires further amendment and revision. The study found that the text stipulating the duties of directors in Saudi law that directors' substantive responsibilities are observed, though certain aspects are clearly ignored or neglected. What is required henceforth is for directors under Saudi law to have a broader way of covering director actions and behaviour. Also, it was argued that if directors are in breach of their duty in Saudi Arabia then there is no effective legal course by which private actions can be initiated to punish or reprimand the wrongdoers. On the other hand, the author found that public enforcement actions are not only sufficient but more efficacious compared to private actions and enforcement. Therefore, this study proposes to a number of changes to existing Saudi Law and argues that the legal system in Saudi Arabia would benefit as a result.