Non Executive Director Agreement Template for Saudi Arabia

A Non Executive Director Agreement is a legally binding contract that formalises the appointment of independent directors to your Saudi Arabian company's board. This document establishes clear terms for the director's role, responsibilities, and relationship with your organisation while ensuring compliance with local corporate governance standards and regulatory requirements.

When do you need this document?

You need this agreement when appointing any non-executive director to your company's board, particularly if your business is incorporated in Saudi Arabia or operates under Saudi jurisdiction. This includes situations where you're expanding your board with independent directors to meet corporate governance requirements, appointing industry experts to provide strategic guidance, or complying with regulatory mandates for board composition. Listed companies on the Saudi Stock Exchange (Tadawul) must have independent directors comprising at least one-third of board members, making this agreement essential for public companies. Financial institutions and other regulated entities often have additional requirements for board independence that necessitate formal director agreements.

Key legal considerations

Your agreement must clearly define the director's fiduciary duties, including their obligation to act in the company's best interests and maintain confidentiality of sensitive information. Time commitment clauses should specify expected attendance at board and committee meetings, while remuneration terms must comply with Saudi compensation regulations and disclosure requirements. The agreement should address potential conflicts of interest and establish procedures for managing them in accordance with Anti-Corruption Law provisions. Insurance and indemnification clauses are crucial to protect directors from personal liability while performing their duties in good faith. You must also include termination provisions that comply with both contractual obligations and regulatory requirements for director removal or resignation.

Legal requirements in Saudi Arabia

Under the Companies Law 2015, your non-executive directors must meet specific independence criteria and cannot have material relationships with the company that might compromise their judgment. The Corporate Governance Regulations issued by the Capital Market Authority mandate detailed disclosure of director qualifications, experience, and any potential conflicts of interest. For listed companies, directors must comply with insider trading restrictions under the Capital Market Law, requiring specific provisions in your agreement about handling material non-public information. The agreement must reflect sector-specific regulations, particularly for financial services companies subject to Saudi Central Bank oversight, which may impose additional governance requirements. Your document should also address the director's role in risk management and compliance oversight, as mandated by current corporate governance standards, and include provisions for ongoing training and development to ensure directors stay current with evolving regulatory requirements.