• Licensing enhances the governance of general assemblies and ensures that investors exercise their rights during them.
• There are specific criteria and conditions to be met for entities wishing to act as organizers of general assemblies when applying for a license.
• There are two obligations for companies to appoint the organizer of general assemblies and five conditions for the Authority’s approval of its license.
• Providing an integrated electronic system to secure and protect information and confront cyber risks.

The Securities and Commodities Authority (SCA) issued a new decision amending the provisions of the Public Joint Stock Companies Governance Guide by adding a new article entitled “The Organizer of General Assemblies”.

The decision aims to grant companies and entities providing general assembly organization services—appointed by public joint stock companies—the license needed to engage in this activity to enhance the governance of these assemblies and ensure that investors exercise their rights during the meeting.

The decision issued by H.E. Mohamed Ali Al Shorafa Al Hammadi, Chairman of the SCA’s Board of Directors, permitted public joint stock companies to appoint an “organizer of general assemblies” to organize their general assembly meetings as per the provisions contained therein, which stipulated that a company, when appointing an “organizer of the general assembly”, is obligated to verify that it is licensed by the SCA to engage in this activity.

The decision stated that those wishing to obtain approval to carry out the duties of the organizer of general assemblies may apply to the SCA from the date of entry into force of this decision, in accordance with the provisions contained therein, as the approval issued by the SCA will come into force in 2024 starting from January 1, 2025.

The appendix to the decision specified two obligations for the company to appoint the organizer of general assemblies and five conditions for the SCA’s approval. The obligations included that “the organizer of general assemblies must obtain the approval of the Authority in accordance with the provisions of the decision, and that the company must conclude with the organizer of general assemblies an agreement in which the duties and obligations related to the General Assembly for which it was appointed are stated”.

For the entity to be approved to carry out the duties of the organizer of general assemblies, it must take one of the following legal forms: “a legal person incorporated within a state or a branch of a foreign company incorporated in the State, and an entity licensed to operate in one of the financial free zones in the State, provided that it is committed to meeting the necessary legal requirements regarding practicing duties within the State, such as the approval of the Cabinet, carrying out the activity through its headquarters in the financial free zone or within the State, and providing proof of the non-objection of the regulatory authority in the financial free zone to its carrying out duties of the organizer outside the jurisdiction of the financial free zone, in addition to any other conditions or requirements set by the Authority”.

The conditions also included that it must “have no less than three years of experience in this field and four employees to manage one general assembly where one of them have no less than three years of experience in information technology and programming, have in place an integrated electronic system that includes information security and protection systems to confront and manage cyber risks, and submit an acknowledgment stating that it is aware of and committed to all provisions of the Commercial Companies Law, the Joint Stock Companies Governance Guide, and any instructions issued by the Authority regarding General Assembly meetings”.

Regarding the approval application, the appendix to the decision specified five items and standards, the most important of which are as follows: “The entity wishing to carry out the duties of the organizer of general assemblies shall submit an application to the Authority according to the form prepared by the Authority, accompanied by documents and information supporting the application and proof that the entity fulfills the approval conditions. The Authority shall issue its decision to approve or reject the application within a period not exceeding thirty working days from the date of submitting the complete application.” The approval term shall be one year, starting from the date of issuing the approval, and is renewed annually, at a maximum, within one month from the date of expiry of the approval term. The appendix also specified special requirements and standards for applications for approval revocation.

The appendix to the decision addressed all the duties and obligations of the organizer of general assemblies, notably: “bearing full responsibility for the undertaking party regarding any failure to perform duties or responsibilities, breach of obligations, or violation of the relevant applicable legislation; providing the Authority with the necessary information and documents immediately upon request; continuously updating the electronic systems used in organizing General Assembly meetings; preserving documents, information, papers, minutes, and agreements in their various hard and soft forms; ensuring that they are not lost or exposed to any violation for a period of not less than ten years with regard to each statement or information and that they may not be destroyed or disposed of except in accordance with applicable procedures for destroying papers and documents; keeping backup copies of those required documents and information during the same period; and maintaining the confidentiality of data and information”.