Dr. Ali Al-Ghamdi

 

Most Saudis have welcomed the recent directive by Minister of Commerce and Industry Tawfiq Al-Rabiah restricting the term of members of the board of chambers of commerce and industry across the Kingdom. The minister ruled that no one would be able to serve three consecutive terms on the board of any chamber of commerce. “Board members who have completed two consecutive four-year terms will not be elected or appointed to another term,” the minister said.



Okaz newspaper carried an extensive report by Aburaheem Hassan containing the reactions of several young Saudi businessmen and women to the minister’s directive. Speaking to the newspaper, Yasser Al-Suhaimi, a member of the National Contractors Committee at the Council of Saudi Chambers (CSC), emphasized that a board member should be permitted to serve only one term so as to provide an opportunity for others, especially youths, to become board members. “This is especially significant at a time when young businessmen and women have a growing conviction that there is no use in joining the chamber because of the delay in bureaucratic procedures prevailing there. It is evident from this that the vast experience as a board member has not been instrumental in making chambers more responsive to the requirements of the business community and keeping pace with global developments,” Hassan said, while noting that the ideas of young members have helped to energize some chambers.



Hailing the decision of the minister, Rania Salama, head of the Young Businesswomen’s Committee at the Jeddah Chamber of Commerce and Industry, said it would help put an end to the phenomenon of being elected or nominated to the board several times. “There is no logic in continuing as a board member for more than eight years. The bylaws for elections to the chamber’s board should be revamped comprehensively,” she said, while stressing the need for maintaining a balance between traders and industrialists at the board. At present, there are twice as many seats for traders as there are for industrialists. There should also be an allocation of seats for branch commercial sectors in each region.



According to Salama, young businessmen and women represent a major section of the business community and, therefore, their representation at the board should not be confined only to nomination. She underlined the need for restoring the trust of voters and ensuring the free exercise of their voting rights. Salama urged the Ministry of Commerce and Industry to undertake an evaluation of the performance of the chambers in serving various sections of the business community.



Wail Al-Aufi, a member of the national committee for young businessmen at CSC, proposed setting up a committee of experts or a consultative committee comprising those who served the chamber for two consecutive terms, and that their mission should be to advise youths who become members of the board for the first time. “The minister’s directive will give youths an opportunity to serve the national economy.” He praised the minister for taking a decision that would serve the national economy by taking advantage of the potential of youths.



Abdullah Al-Nazawi, a member of the committee for young businessmen at Madinah Chamber of Commerce and Industry, underscored the significant role being played by the chambers in serving the national economy in their capacity as the voice of the business community. “Therefore, it is essential to have young blood at these bodies,” he said while describing the minister’s decision as a step in the right direction.



Al-Nazawi said that this should not be restricted to the boards of chambers but should also be extended to joint stock companies whose boards are comprised of persons who continue to serve on them for many years. Some of these companies have been running at a loss ever since their inception from 10 to 15 or 20 years ago. As for some other companies, they are earning some profits but these amounts are being set aside to provide remuneration for board members. Some companies that are running at a loss take an amount from the company’s capital to pay board members. This results in losses for the company year after year until the Capital Market Authority swings into action to halt the activities of the company based on the regulation governing companies which only make losses.



I want to emphasize that there is logic in saying that those board members who fail to perform their duties properly should be relieved of their posts, making way for those who have new ideas and plans to overcome the problems that have resulted in the poor performance of the firm.



There are some joint stock companies that have registered only losses since they were founded more than 20 years ago. Despite their poor performance, the boards of these companies continue to remain at the helm. The poor performance of the company does not make members of the board feel ashamed  and cause them to tender their resignation. At the same time, the company’s regulations do not force these men to resign so as to enable young members to be appointed to the board. Injecting fresh blood by appointing new members who have new ideas and vision may help such firms turn losses into profits and failure into success.



Similarly, laws governing companies are not being implemented properly and there is some malpractice when holding general assemblies. Everyone knows that general assembly meetings are simply routine meetings in which shareholders normally do not express any opinion or raise any objection to matters included in the agenda. The role of shareholders is most often restricted to complying with and endorsing what has been prepared by board members in advance and that most often even includes a provision for absolving board members of any accountability.



Finally, I urge the Minister of Commerce and Industry to activate the existing rules and regulations, and make the necessary amendments in the law in order to protect the rights of shareholders, besides enacting a law restricting board members to only two terms.

 

— Dr. Ali Al-Ghamdi is a former Saudi diplomat who specializes in Southeast Asian affairs. He can be reached at algham@hotmail.com