Author(s): Khawlah Mohammed Nasser Al-Obaid
This paper aims at determining the responsibility of the members of the board of directors of companies contributing to the Saudi system. To achieve the objective of this research study, the range of civil responsibility has been identified by reviewing the legal adaptation of the members of the board of directors and highlighting the most important reasons for the establishment of contractual or default responsibility and determining its scope. Descriptive approach has been applied by collecting information from the research and other studies on the responsibility of the members of the board of directors, civil lawsuits which have been instituted against them and some criminal texts and the penalties imposed upon them in the case of violations. In addition, the study also adopted the analytical approach by describing the study problems and analyzing the legal texts which regulated the responsibility of the members of the board of directors in various Saudi systems. Along with highlighting the most important issues, which have emerged in the Kingdom of Saudi Arabia (KSA) in the previous years, this study identifies how legal proceedings are instituted against members of the board of directors. It further moves to criminal responsibility and highlights the most important cases by referring to several systems. In addition, the study concluded that civil responsibility was contractual, default, or criminal if any of the regulations enacted in KSA were violated by the company in general or the individual as a member of the board of directors. Further, the member of the board of directors is borne to errors, so the Saudi system must follow the course of English law by the need to insure the members of the board of directors from civil responsibility. Furthermore, the shareholder's action against the members of the board of directors should involve greater guarantees, such as owning a certain percentage of the shares in addition to the conditions he has earlier set. The Ministry of Commerce, in cooperation with the FMA, should conduct seminars to educate the shareholders and explain all related issues to the joint-stock companies, including their most important right of the possibility of suing members of the board of directors when they mismanage or violate the corporate system or bylaws.