Takeovers of publicly traded companies in KSA : a critique of regulations and minority shareholders protection rules in the takeover context

Abstract

Takeovers are relatively new strategies and are still developing in the Kingdom of Saudi Arabia (KSA), which explains the lack of sufficient studies in this area. This work will attempt to explore the KSA system of takeover from a legal perspective. It is expected that this research will contribute to the body of knowledge in the sphere of takeovers and minority shareholders’ protection in takeovers in KSA and will serve as a major reference point in this area of concern. This thesis will provide a general critique of the takeover system of listed companies in the KSA. It will begin by providing an understanding of the KSA’s corporate governance system and ownership structure. It will then provide an insight into the KSA’s takeover system and the stock market. The thesis will examine the role of authorities that are concerned with takeovers, such as the Capital Market Authority (CMA) and the General Authority for Competition (GAC). The research will question the efficiency of the current KSA regulations in protecting minority shareholders’ and directors’ duties in takeovers. The thesis argues that the existing laws in KSA are not effective in protecting minority shareholders in takeovers, while considering influential factors in the KSA environment, such as the concentrated ownership structure. The research also argues that the regulations governing directors’ roles and duties in takeovers and the litigation actions to hold them accountable are unclear and vague and require reform. The UK takeover system will be used as a benchmark for this thesis in recommending reforms to address these issues and at the same time to fit into the KSA’s legal environment. The primary objective of this research is to suggest reforms to the KSA takeover system of publicly traded companies to improve certain areas that the researcher found to have issues, especially minority shareholders’ protection and directors’ roles and duties. From the researcher’s point of view, the suggested reform would contribute to the promotion of a sound takeover system and, more generally, to the development of the corporate governance system and commercial environment in the KSA.