1 Nov 2025

What Committees Are Required in Listed Companies in the Saudi Capital Market?

Board members in listed companies often face numerous complex responsibilities. To help them perform effectively, they rely on specialized committees that provide detailed reports to the board, which retains ultimate decision-making authority.

However, these committees also serve a broader purpose: ensuring transparency between shareholders and the board. For this reason, the Corporate Governance Regulations were issued by the CMA pursuant to Resolution No. 8-16-2017 dated 13 February 2017, based on the Companies Law, to regulate the structure and functions of these committees.

In this article, Salamah Law Firm outlines the types and functions of these key corporate committees.

What Are the Four Mandatory Committees in Listed Companies?

As per the Corporate Governance Regulations, every listed company must establish the following four committees:

Audit Committee
Remuneration Committee
Nomination Committee

Risk Management Committee

Who Is Responsible for Forming These Committees?

According to Article 47 of the Regulations, the Board of Directors is responsible for forming these committees based on the company’s needs and circumstances. The board must also set out general procedures for each committee, including:

Its purpose
Duration
Assigned powers
Oversight mechanism

Committees must report their decisions and findings transparently to the board, which must regularly monitor the committees to ensure they are fulfilling their duties.

What Is the Audit Committee?

Formed by the board, the Audit Committee must consist of 3 to 5 members, none of whom may be executive board members. At least one member must be an expert in finance or accounting, and at least one must be an independent member.

Meetings: Minimum of four times per fiscal year.

Key Responsibilities (Article 52):

Monitor the company’s operations
Ensure integrity of financial statements and internal control systems

In case of conflict with the board—such as in appointing or dismissing external or internal auditors—its recommendation must be documented in the board’s report, along with the reasons for non-compliance.

What Is the Remuneration Committee?

This committee is formed by the board and must consist solely of non-executive directors, with at least one independent member.

Meetings: At least once per year or as needed.

Key Responsibilities (Article 58):

Develop a clear policy for remunerating board members, committees, and executive management
Review and align compensation with performance
Report deviations from policy and evaluate its effectiveness periodically

What Is the Nomination Committee?

Also appointed by the board, the Nomination Committee is made up of non-executive directors, with at least one independent member.

Meetings: At least once per year or as needed.

Key Responsibilities (Article 62):

Recommend policies and standards for board and executive appointments
Recommend candidates for board membership and renewal
Ensure nominees have no criminal history involving dishonesty
Handle other tasks as defined in the regulations

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What Is the Risk Management Committee?

Appointed by the board, this committee must be chaired and majority-staffed by non-executive directors with adequate knowledge in risk management and finance.

Meetings: At least every 6 months or as needed.

Key Responsibilities (Article 68):

Develop a comprehensive risk management strategy
Ensure policies are reviewed and updated regularly
Assess the company’s viability and identify risks that could affect continuity in the coming 12 months
Perform additional tasks as specified in the regulations

Common Legal Questions About Committees:

Is the Audit Committee responsible for reviewing related-party transactions?

Yes. Per Article 52(d)(3), the Audit Committee must review proposed contracts and transactions with related parties and submit its view to the board to ensure regulatory compliance.
Can the board refuse the Audit Committee’s request to convene a general assembly?

No. Under Article 56(3), the board may not reject such a request.
Can a board member serve on multiple committees or chair any of them?

Yes, with conditions:

Only independent members may chair the Remuneration and Nomination Committees
The board chair may not serve on or lead the Audit Committee or any of the mandatory committees

Can the Remuneration and Nomination Committees be merged?

Yes, a company may merge the two into a single Remuneration and Nomination Committee, provided that the committee complies with the rules and performs all duties from Articles 58 and 62. It must meet at least every six months.

Forming specialized committees is a cornerstone of effective corporate governance in the Saudi capital market. To ensure your company’s committees are compliant with the Companies Law and CMA regulations, it is essential to engage a qualified legal advisor.

At Salamah Law Firm, we offer expert legal support for all types of commercial entities. Our team leverages deep knowledge of corporate governance and financial regulations to protect your company’s long-term success and shareholder interests.