This principle mainly addresses the independence from the executive management. It has been stated although the dominant in the kingdom is that all the board members are not company employees. In limited cases the GM or CEO becomes member due to the reasons stated in the introduction.
This should be noted when the phrase (independent members) is encountered. This is the principle intended unless otherwise stated. See principle 6. Percentage of independence members should be sufficient so that their views can carry significant weight in board decision-making. The appropriate decision should be made in relation to size, complexity and specific nature of the sector.
7.1 Rationale for independent Directors
7.1.1 The board of directors must be objective, vigilant and independent when dealing with the company matters. 7.1.2 Having independent Directors is an important way to strengthen the independence of the board.
Percentage of independence members should be sufficient so that their views can carry significant weight in board decision-making. The appropriate decision should be made in relation to size, complexity and specific nature of the sector.
7.2 Responsibilities of independent Directors:
7.2.1 The independent Directors share the same membership responsibilities and obligations with all other Directors.
7.2.2 The board should assign a sufficient number of independent Directors to areas where there is a potential conflict of interest, including:
A- Integrity of financial and non-financial reporting; B- Review of related party transactions; C- Nomination of Directors and key executives; D- Evaluation and compensation of key executives; E- Board evaluation and remuneration; F- Significant transaction proposals
7.2.3 Independent Directors should also: A- Constructively challenge and help develop company’s strategy; B- Scrutinize the performance of management in meeting agreed goals and objectives; C- Monitor the reporting of performance.
