Company Director Agreement Template for Saudi Arabia

A Company Director Agreement is a comprehensive legal contract that formalizes the appointment and governs the relationship between a company and its board directors in Saudi Arabia. This document serves as the foundation for director obligations, establishing clear terms for governance, compensation, and legal compliance under Saudi corporate law.

When do you need this document?

You need a Company Director Agreement whenever appointing new directors to your board, whether for newly incorporated companies or existing entities adding board members. This applies to all company types in Saudi Arabia, from private family businesses to publicly listed corporations. Foreign investors appointing international directors must use this agreement to comply with Ministry of Investment regulations and establish proper corporate sponsorship arrangements. Listed companies require this document to meet Capital Market Authority disclosure requirements and demonstrate compliance with Corporate Governance Regulations 2017. You'll also need updated agreements when renewing director terms, modifying compensation structures, or adapting to new regulatory requirements.

Key legal considerations

Your agreement must clearly define director duties under the Companies Law 2015, including fiduciary responsibilities, conflicts of interest management, and decision-making authority. Include specific clauses addressing compliance with anti-corruption laws and ethical business conduct requirements. For foreign directors, incorporate provisions for corporate sponsorship arrangements and visa compliance under Saudi immigration regulations. Establish clear termination procedures, including circumstances for removal and notice requirements. Include comprehensive confidentiality clauses protecting company information and trade secrets. Define compensation structures, benefits, and expense reimbursement policies in compliance with Saudi Labor Law provisions. Address liability limitations and indemnification terms to protect directors acting within their lawful authority.

Legal requirements in Saudi Arabia

Under Saudi Companies Law 2015, director appointments must comply with specific qualifications, including Saudi nationality requirements for certain board positions and minimum shareholding thresholds where applicable. Listed companies must ensure board composition meets independence requirements under Corporate Governance Regulations, with at least one-third independent directors for most entities. The agreement must incorporate mandatory disclosure obligations under Capital Market Law, including related party transactions and conflict of interest declarations. Foreign directors require proper work authorization and corporate sponsorship arrangements complying with Ministry of Investment guidelines. Include provisions addressing Zakat and tax obligations for director compensation under Saudi tax regulations. Ensure the agreement aligns with company articles of association and any specific sector regulations applicable to your business. Document signatures must comply with Saudi commercial documentation requirements, with proper attestation for foreign parties where necessary.