Personal Management Agreement Template for Saudi Arabia

A Personal Management Agreement is a specialized employment contract that governs the relationship between a company and its senior management personnel in Saudi Arabia. This document goes beyond standard employment agreements by defining executive authority, strategic responsibilities, and governance obligations while ensuring compliance with Saudi Labor Law and Islamic legal principles.

When do you need this document?

You need a Personal Management Agreement when appointing senior executives, general managers, or key leadership positions in Saudi companies. This includes situations where you're hiring a CEO for a subsidiary, appointing a regional director for multinational operations, or formalizing the role of family business successors. The agreement is particularly important for expatriate managers who require specific Iqama conditions and for positions involving significant decision-making authority or access to confidential business information. Companies listed on the Saudi Exchange (Tadawul) often require these agreements to meet corporate governance standards.

Key legal considerations

Your agreement must address several critical legal aspects unique to executive positions. Compensation structures should comply with Sharia principles, avoiding interest-based incentives while incorporating performance bonuses and equity arrangements where permitted. Confidentiality and non-compete clauses require careful drafting to balance business protection with employee rights under Saudi Labor Law. The agreement should define the scope of management authority, including spending limits, signing authority, and board reporting requirements. Termination provisions must address both voluntary resignation and dismissal scenarios, including notice periods, severance payments, and post-employment obligations. Additionally, the contract should include anti-corruption clauses aligned with Saudi Arabia's Anti-Corruption Law.

Legal requirements in Saudi Arabia

Saudi Labor Law governs all employment relationships, requiring specific provisions for working hours, leave entitlements, and termination procedures even for senior management. Your agreement must comply with Saudization requirements if applicable to the position and include provisions for mandatory social insurance contributions. For expatriate managers, the contract should address Iqama sponsorship responsibilities and renewal obligations. The agreement must incorporate Sharia-compliant dispute resolution mechanisms, typically through arbitration or Islamic commercial courts. Corporate governance regulations from the Capital Market Authority may impose additional requirements for publicly listed companies, including disclosure obligations and board approval procedures. All compensation and benefit structures must align with Islamic finance principles, avoiding prohibited elements such as excessive uncertainty (gharar) or interest-based arrangements.