Companies Law

Disclosure of Interest in Transactions and Contracts 1. Subject to the provision of Article 27 of this Law, a board member shall immediately disclose to the board of directors any direct or indirect interest he may have in company transactions or contracts. Such disclosure shall be recorded in the minutes of the board meeting. Said member may not vote on a decision by the board of directors and the general assemblies relating to such transactions and contracts. The board shall notify the general assembly, when it convenes, of the transactions and contracts in which such board member has direct or indirect interest; the notice shall be accompanied with a special report prepared by the company auditor in accordance with auditing standards approved in the Kingdom. 2. If a board member fails to disclose his interest as provided for in paragraph (1) of this Article, the company or any person with interest may petition the competent judicial authority to invalidate the contract or obligate the member to return any profit or benefit realized therefrom. 3. Liability for damages arising from the transactions and contracts referred to in paragraph (1) of this Article shall be borne by the board member having interest in such transactions or contracts; liability shall also be borne by other board members for their omission or negligence in the performance of their duties in violation of said paragraph, or if it is established that the transactions and contracts are unfair or involve a conflict of interest and shareholders sustain damage therefrom. Companies Law 4. Board members who object to the decision shall not be liable if their objection is explicitly recorded in the meeting minutes. Absence from the meeting at which the decision is issued shall not exempt the absentee from liability, unless it is established that he was not aware of the decision or was unable to object to it after becoming aware thereof.