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Article 76 of the Saudi Companies Law

المادة 76 من نظام الشركات · الفرع الأول: مجلس الإدارة

The article sets the forms of remuneration for the board members of a joint stock company, leaves the amount to the ordinary general assembly, and requires full disclosure of it in the board's annual report.

Official text (Arabic)

This article has not been amended since the law was issued.

1- يبين نظام الشركة الأساس طريقة مكافأة أعضاء مجلس الإدارة، ويجوز أن تكون هذه المكافأة مبلغًا معينًا، أو بدل حضور عن الجلسات، أو مزايا عينية، أو نسبة معينة من صافي الأرباح، ويجوز الجمع بين اثنتين أو أكثر مما تقدم، ويجوز كذلك أن يحدد نظام الشركة الأساس الحد الأعلى لتلك المكافآت. وتحدد الجمعية العامة العادية مقدار تلك المكافآت، على أن يراعى أن تكون المكافآت عادلة ومحفزة وتتناسب مع أداء العضو وأداء الشركة. وتحدد اللوائح الضوابط اللازمة لتنفيذ هذه الفقرة.

2- يجب أن يشتمل تقرير مجلس الإدارة إلى الجمعية العامة العادية في اجتماعها السنوي على بيان شامل لكل ما حصل عليه أو استحق الحصول عليه كل عضو من أعضاء مجلس الإدارة خلال السنة المالية من مكافآت وبدل حضور الجلسات وبدل مصروفات وغير ذلك من المزايا. وأن يشتمل كذلك على بيان ما قبضه أعضاء المجلس بوصفهم عاملين أو إداريين أو ما قبضوه نظير أعمال فنية أو إدارية أو استشارات، وأن يشتمل أيضًا على بيان بعدد جلسات المجلس وعدد الجلسات التي حضرها كل عضو.

This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers

Article 76 explained in plain English

This article regulates what board members receive in return for their work and imposes transparency on it.

1- Method of remuneration: The articles of association state the method of remuneration, which may be:

  • a fixed amount, or
  • an attendance allowance for sessions, or
  • benefits in kind, or
  • a certain percentage of net profits.

Two or more of these forms may be combined, and the articles of association may set a maximum limit on remuneration.

Who sets the amount? The ordinary general assembly, taking into account that remuneration must be fair, motivating, and proportionate to the member's performance and the company's performance. The regulations set the controls needed to implement this.

2- Disclosure: The board's report to the ordinary general assembly at its annual meeting must include:

  • A comprehensive statement of everything each member received or became entitled to during the financial year in remuneration, attendance allowances, expense allowances and other benefits.
  • A statement of what the members received as employees or administrators, or in return for technical or administrative work or consultancy.
  • A statement of the number of board sessions and the number of sessions each member attended.

This lets shareholders know what each member receives and compare it with his attendance. The article sits next to Article 77, which gives the board the widest powers in managing the company, subject to the general assembly's powers. To design a remuneration policy that complies with the Law, it is advisable to consult a lawyer specialized in companies.

Practical example

The articles of association of a joint stock company in Makkah provided that members' remuneration is an annual amount with an attendance allowance for each session. The ordinary general assembly decided the amount, and at the next annual meeting the board's report showed what each member had received, what one of them had received for consultancy he provided to the company, and the number of sessions each member attended.

Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.

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Frequently asked questions about Article 76 of the Saudi Companies Law

Who sets the remuneration of the board members of a joint stock company?

The articles of association state the method of remuneration, and the ordinary general assembly sets its amount.

What forms can board members' remuneration take?

A fixed amount, an attendance allowance for sessions, benefits in kind, or a percentage of net profits, and two or more of these may be combined.

Must board members' remuneration be disclosed?

Yes. The board's report to the ordinary general assembly at its annual meeting must include a comprehensive statement of what each member received or became entitled to, and the number of sessions he attended.

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The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.