What is Corporate Governance? In the face of increasing economic challenges, it has become essential for all companies, whether government or private, to implement corporate governance to ensure the sustainability of their business and achieve transparency and accountability. Corporate governance serves as the framework that organizes the relationships between the board of directors, management, and shareholders, contributing to strengthening trust in the market and supporting the making of sound strategic decisions. In Saudi Arabia, with its ambitious Vision 2030, the importance of applying governance principles is growing to ensure effective performance and enhance the efficiency of various sectors. In this article, we will learn about the meaning of corporate governance, its objectives, the governance rules for unlisted joint-stock companies, the best governance courses, and the Saudi corporate governance regulations. We will also discuss the types of governance and explain how Bader Technology Center contributes to training professionals in this field. Keep reading for more.

What is Corporate Governance?

What does governance mean? We begin our article with the question "What is corporate governance?" by explaining the concept of governance. In Saudi Arabia, governance includes a set of regulations and laws aimed at achieving transparency and fairness, including the Saudi Corporate Governance Rules, which seek to organize how companies operate and enhance internal auditing. The role of internal auditing in activating corporate governance is a key factor in ensuring compliance with regulations and protecting shareholders' rights.

Among the institutions that seek to provide specialized training programs in this field, Bader Technology Center stands out as a leader in offering governance courses aimed at qualifying individuals and equipping them with the necessary skills to understand and practically apply governance principles. This helps companies improve their internal systems and achieve sustainable success.

Corporate governance is one of the fundamental concepts in today's business world, as it refers to the system through which the relationship between various parties in the company, such as the board of directors, management, and shareholders, is organized. The goal of corporate governance is to ensure transparency, accountability, and fairness among all stakeholders, which enhances investor and public trust in companies, elevating their financial and operational performance.

Through governance principles, laws and regulations specify how decisions are made within companies, ensuring effective oversight and fair application of rights. In Saudi Arabia, the Saudi Corporate Governance Rules are among the key regulations aimed at enhancing transparency and accountability, helping to improve the business environment and ensure companies' adherence to local and international laws.

Corporate governance is not limited to the private sector only, but extends to the public sector, reflecting the importance of applying these systems correctly to achieve sustainability and progress. As global attention increases on implementing governance principles, it has become crucial for companies to be fully aware of governance in Saudi Arabia, including the regulations that activate the role of internal auditing to ensure continuous compliance with governance rules.

With Saudi Vision 2030 and governance playing a role in this vision, the importance of these concepts is increasing in enhancing the investment environment in the kingdom, posing new challenges for institutions to develop governance systems that meet the needs of the digital age and align with global developments.

Core Principles of Corporate Governance

After learning what corporate governance is and its meaning, we move to the core principles of corporate governance, which are fundamental in any company striving for sustainable success. These principles include four key areas: transparency, accountability, fairness, and responsibility. These principles contribute to defining the role of each party in the company, from the board of directors to the shareholders, ensuring fair and effective decision-making that supports the company's stability and long-term success.

Transparency: Aims to provide necessary information to all stakeholders in a clear and regular manner. This helps build trust between investors and the public.
Accountability: Ensures that everyone in the company is responsible for their decisions and actions, protecting against legal and financial risks.
Fairness: Means that all shareholders and customers are treated equally based on their interests, contributing to business sustainability.
Responsibility: Emphasizes that each party in the company is accountable for the decisions made and their outcomes.

Understanding corporate governance, the Saudi Corporate Governance Rules serve as a prime example of applying these principles in Saudi Arabia, where the government is committed to promoting governance in both the public and private sectors to ensure a transparent and effective business environment.

Corporate Governance Rules: The Legal Basis for Implementing Principles

After learning about what corporate governance is and its meaning, we explain that the corporate governance rules are an essential part of the legal system aimed at regulating company management and ensuring transparency and accountability in their operations. The Saudi Corporate Governance Rules represent a legal framework that defines how companies in the kingdom are managed and ensures the effective application of governance principles. Through these regulations, roles and responsibilities between the board of directors, management, and shareholders are clearly defined, enhancing fairness and equality in dealing with all parties.

Objectives of Corporate Governance Rules

The corporate governance rules in any country are fundamental tools for organizing work within companies and ensuring the implementation of transparency and accountability principles. Here are the main objectives of corporate governance rules:

Empowering Shareholders and Facilitating Their Rights: Corporate governance rules aim to enable shareholders to effectively exercise their rights, enhancing their role in making strategic decisions within the company.
Defining the Roles and Responsibilities of the Board and Management: The Saudi corporate governance rules clarify the roles of the board of directors and management, improving coordination within the company and minimizing overlapping responsibilities.
Enhancing the Performance of the Board and Improving Decision-Making: The rules seek to enhance the efficiency of the board of directors by improving decision-making processes and performance, helping to increase the effectiveness of the company's internal organization.
Ensuring Transparency, Integrity, and Justice in the Financial Market and Promoting Disclosure: One of the goals is to achieve full transparency in financial transactions, enhancing trust between investors and increasing market integrity.
Providing Effective Tools for Dealing with Conflicts of Interest: The rules set mechanisms for handling conflicts of interest, ensuring neutral and unbiased decision-making in all aspects of the company's work.
Strengthening Oversight and Accountability for Employees: Through internal oversight and accountability, the rules seek to improve employee management and ensure compliance with the established governance policies.
Creating a Framework for Dealing with Stakeholders and Ensuring Their Rights: The rules aim to establish a legal framework for handling all stakeholders, such as employees, suppliers, and customers, ensuring their rights are fairly considered.
Increasing the Efficiency of Company Oversight: By setting appropriate oversight and review mechanisms, the rules help increase the effectiveness of entities overseeing company performance and compliance with laws.

Key Components of Governance

After understanding what corporate governance is, corporate governance includes several core components that work together to ensure strong and effective performance within companies. The most important of these components and governance characteristics include:

The Board of Directors: The board should be competent and independent, with clear roles and responsibilities, ensuring effective strategic decision-making that contributes to company growth.
Executive Management: The qualifications and competencies of the executive management should be clearly defined to ensure they have the necessary experience and abilities to lead the company and execute its strategies successfully.
Stakeholders: The rights and obligations of stakeholders (such as shareholders, employees, and customers) should be clearly defined and managed in line with governance standards, enhancing the company's long-term stability.
Transparency and Disclosure: By publishing the company's governance policies and procedures regularly and publicly, transparency and disclosure are enhanced, contributing to building trust between investors and stakeholders.
Oversight and Accountability: Corporate governance rules should include strong internal and external oversight mechanisms, ensuring accountability for violations and applying appropriate sanctions when violations occur.

The Importance of Corporate Governance in the Saudi Economy

Corporate governance plays a crucial role in enhancing the stability of the Saudi economy and supporting the business environment in the kingdom. Below are some reasons that highlight the importance of corporate governance in Saudi Arabia and its objectives:

Enhancing Transparency and Accountability: Applying governance principles helps improve transparency within companies and strengthens accountability between management and shareholders, building trust with investors and customers.
Improving Companies' Financial Performance: By applying Saudi corporate governance rules, companies can enhance their financial performance, ensuring effective oversight of financial and administrative operations.
Attracting Foreign Investments: Implementing corporate governance in Saudi Arabia enhances the kingdom's reputation as a safe investment destination, contributing to attracting foreign investments, a key element in achieving Saudi Vision 2030.
The Role of Internal Auditing in Activating Governance: Internal auditing plays a key role in ensuring compliance with legal standards, protecting companies from financial risks, and enhancing the implementation of good governance practices.
Supporting Saudi Vision 2030: Governance in the public sector plays a significant role in implementing Saudi Vision 2030, enhancing the efficiency of the public sector and improving the business environment.
Promoting Fairness Among Stakeholders: By applying governance principles, companies ensure fairness and equality in dealing with all stakeholders, whether shareholders, employees, or customers, which supports business sustainability.

The Role of Internal Auditing in Corporate Governance

Internal auditing and the role of internal auditing in activating corporate governance are fundamental tools that contribute to implementing governance within companies. Internal auditing ensures that governance principles are applied effectively. It provides regular and independent oversight of company processes and procedures to ensure compliance with approved policies and procedures, improving performance and increasing transparency.

Ensuring Compliance with Legal Standards: Through internal auditing, companies ensure adherence to the Saudi corporate governance rules, helping avoid legal violations and enhancing the company's reputation in the market.
Promoting Transparency and Accountability: Internal auditing plays a central role in enhancing transparency within companies, helping uncover any illegal or unethical practices, promoting accountability, and preserving integrity.
Improving Financial and Administrative Performance: Through internal auditing, potential risks can be identified and minimized, improving the company's financial performance and enhancing the effectiveness of corporate governance.
Supporting Strategic Decision-Making: With accurate and detailed internal audit reports, decision-makers in companies can make informed strategic decisions, improving growth strategies and enhancing business sustainability.
Building Investor Confidence: Internal auditing greatly contributes to building trust between shareholders and investors, ensuring the consistent and ongoing application of governance principles, making companies more attractive for investment.

In conclusion, applying effective governance principles is essential for enhancing transparency, accountability, and fairness within companies, positively impacting the stability of the Saudi economy and aligning with Saudi Vision 2030.

In this context, Bader Technology Center stands out as one of the leading institutions offering specialized training programs aimed at developing human resources and enhancing their skills in various fields. The center offers:

Certified training courses in fields such as management, human resources, and information technology.
Recognized professional certifications that enhance employment and career development opportunities.
Personal empowerment and coaching programs aimed at developing personal and leadership capabilities.
Specialized consultancy services to help companies improve their performance and implement best governance practices.

Through these services, Bader Technology Center contributes to equipping individuals and companies with the knowledge and skills necessary to effectively apply governance principles and Saudi corporate governance regulations, helping them adapt to contemporary challenges and achieve sustainable success.