Corporate Governance (CG) has attracted the general attention on local and international levels due to: its significant impact on maintaining a healthy and safe environment for the companies, its relationship with the concerned parties in particular and the economy in general, its material influence on companies shares prices and their liquidity status, its abilities to achieve its financial goals in a cost-effective manner and the direct link between the shortcomings of the CG principles, its implementations and large corporate collapses worldwide.
The idea of gathering all STC CG principles in one document was initiated in the beginning of 2004, where it covers worldwide generally accepted Corporate Governance requirements. STC issued resolutions related to corporate governance, laws and its related by-laws issued in Saudi Arabia, because most of principles have been covered one way or another in the company law, Capital Market law and related by-laws, regulation and resolution, and other related laws.
Nevertheless it has been detected that the majority of the principles are covered in the KSA regulations before being applied in the other countries, for example article 130 of the Company Laws has prohibited external auditors from providing consulting services to any company where they are appointed as external auditor of that company, and generally none of the Board of members are company employees (principal no 7).
To avoid duplication and get the most benefits (to the best effort), CG principles are linked with the relevant articles specified in the by-laws and resolutions, where they can be accessed by clicking the proper link that appears in the underlined blue color (if applicable).
Following what has been mentioned earlier, a thorough consideration for an ideal approach to implement CG practices was undertaken and different alternatives were considered. This has resulted in forming two teams: one of them; from inside the company, in charge of documenting and studying the company's current status, and preparing for the implementation, and the second one; outside (consultant), who is responsible for summarizing the CG practices in the GCC, three Arab countries, and three foreign countries. This also included international institutions issues, professional organizations within these countries and three trading companies.
A specific procedure was established to coordinate the two teams' efforts in order to benefit STC from international best practices, Saudi Laws and STC experience. In addition, the CG principles were linked as a pilot case with the related procedures and decision points in the company. This is considered to be a very important step in principles practical implementation.
STC Board of Directors has approved the CG Principles, and a plan was developed to implement and update the CG Principles in order to reflect the development that took place in this field. This includes the continuation of what has been started in the pilot case, together with the best practice of disclosing policy and procedures to all stakeholders and its implementation, code of ethics, and Succession Planning/Management Development.
It is worth noting that even though some principle are not important to the Saudi environment, for example, limited employees to be part of the Board of Directors, however they are included in the CG in order to match with the globally accepted best practice.
Further, some principles were focusing on some issues that are not critical to foreign countries such as the Definition of "Independence" when there are control shareholders (Principle 6). STC in the future endeavors to adopt the items that would match with the Kingdom's environment through the legal mechaniSMS that govern it. This includes reconsidering definitions that have been used terminologies, provided that these terminologies are of a foreign origin and have not been Arabized in a formal manner yet. The company wishes that the past efforts provide high benefits to the company which include: developed, strong and well-built CG to be implemented, to safeguard the achieved benefits in the short run and to enhance them to provide opportunities to the company for continuous growth.
Establishing CG authority:Since other country practices reveal that there is are great benefits of having a professional authority in charge of matters related to the corporate governance, STC has drafted a project to create a professional authority similar to the ones that exist in other countries. It will be submitted to the concerned authorities, specialist, concerned and related parties.