Directors Agreement Template for Saudi Arabia

A Directors Agreement is a comprehensive legal contract that formalizes the appointment and responsibilities of company directors in Saudi Arabia. This document ensures compliance with the Companies Law 2015, Corporate Governance Regulations, and other applicable legislation while establishing clear expectations for board governance and director conduct.

When do you need this document?

You need a Directors Agreement when appointing new directors to your company's board, whether for startups, established businesses, or subsidiaries of international corporations operating in Saudi Arabia. This agreement is essential when formalizing existing directorship arrangements, particularly during corporate restructuring or when bringing in external directors with specific expertise. Listed companies on the Saudi Stock Exchange (Tadawul) require comprehensive director agreements to meet Capital Market Authority requirements and ensure proper governance disclosure. The document is also crucial when appointing executive directors who will have dual roles as both board members and senior employees, requiring careful delineation of responsibilities and compensation structures.

Key legal considerations

Your Directors Agreement must clearly define fiduciary duties and responsibilities under Saudi Companies Law, including duty of care, loyalty obligations, and specific requirements for conflict of interest disclosure. The agreement should address remuneration structures, including fixed fees, performance bonuses, and any equity compensation arrangements, ensuring compliance with Shariah principles where applicable. Confidentiality and non-disclosure provisions are critical, particularly for directors with access to sensitive commercial information or strategic plans. The document must include proper indemnification clauses protecting directors from personal liability while performing their duties in good faith, balanced against anti-corruption compliance requirements. Termination procedures should be clearly outlined, including notice periods, grounds for removal, and post-termination obligations such as return of company property and ongoing confidentiality requirements.

Legal requirements in Saudi Arabia

Saudi Arabian law requires directors to meet specific eligibility criteria under the Companies Law 2015, including Saudi nationality requirements for certain board positions and professional qualifications for specialized roles. Your agreement must comply with Corporate Governance Regulations issued by the Capital Market Authority, particularly regarding board composition, independence requirements, and disclosure obligations for listed companies. The document should address mandatory training requirements and continuing education obligations for directors, especially in sectors with specific regulatory oversight. Anti-Corruption Law compliance is essential, requiring clear policies on gifts, entertainment, and conflict of interest management. For companies with foreign ownership or international operations, the agreement must navigate dual compliance requirements while ensuring primacy of Saudi law in director-company relationships.