Professors Call for Saudi Appraisal Rights Along with Other Companies Act Reforms
We have previously covered (thanks to a guest post) that Saudi Arabia does not have appraisal rights, though its Companies Law provides for a number of other shareholder rights. Is it time for a change?
Professors Alhasani and Hassan of Prince Sultan University say “yes.” In a comprehensive paper in the International Journal for Scientific Research, the two professors call for the Saudi Companies Law to add explicit appraisal rights, along with a number of other suggested changes. Get the Article Here [.pdf]
The Professors write about appraisal: “appraisal serves to protect shareholders who oppose a fundamental corporate action by establishing a way out for them if the new fundamental change does not align with their investment approach” and urge that “it is important that The Companies Law explicitly states [an appraisal right] because it will provide shareholders who oppose the merger or acquisition decision a way out while
receiving a fair value for their shares.”
This echoes what some US academics and market participants have said – appraisal is pro-investor and holds social utility, and joins others who have explicitly called for an appraisal remedy in their relevant jurisdictions law.
Whether future reforms will include an appraisal remedy is uncertain, but strengthening shareholder protections certainly seems to be on the table.