Saudi's PIF, GOSI urged to enforce governance in subsidiaries

Zawya

17-02-2025

Saudi Arabia's top institutional investors need to strictly enforce governance in the appointment of board of directors in their affiliated companies, a member of the Gulf Kingdom's appointed parliament has urged.
Faisal bin Mansoor Al-Fadil, a prominent Saudi intellectual, said visiting the websites of the Public Investment Fund (PIF) and the General Organisation for Social Insurance (GOSI) reveals no specific policies for nominations in boards of their subsidiaries.
Writing in the Saudi Mal (money) daily last week, Al-Fadil said experiences show that companies which rely on clear and objective selection criteria achieve stronger financial and administrative performance, while those which lack transparency suffer from weak accountability and declining project performance.
Al-Fadil called on the PIF to copy strong governance rules in the SWFs of Norway, Canada and Singapore.
'When visiting their websites, no announced policies were found specifying the mechanisms for nomination and application or selection criteria among candidates for membership in the boards of companies owned by these two funds,' he said.
'The absence of such policies poses a fundamental challenge, as it leaves the door open to individual interpretations that may lack objectivity, leading to risks including weak governance and the possibility of excluding qualified nationals in those companies…this contradicts the principles of transparency and integrity that the Kingdom seeks to establish within Vision 2030.'
Al-Fadil, who heads Shura (parliament) economy committee, said PIF and GOSI should establish an independent nomination and selection committee, which should include independent experts in law, governance and financial management, adding that its members must be picked at 'the highest administrative level.'
'To ensure transparency and fairness in appointments, these criteria should be clearly published on the funds' websites, along with an annual report explaining the names of the selected members and the reasons for their selection…the process should also include a periodic evaluation of the performance of board members to ensure their continued effectiveness,' Al-Fadil said.
According to Saudipedia, an online data platform launched by the Saudi Information Ministry, PIF was founded in 1971 and since 2017, it has created 87 companies inside the Kingdom and abroad.
According to the US-based SWF Institute, PIF is the world's sixth largest SWF by assets, estimated at around $925 billion.
(Writing by Nadim Kawach; Editing by Anoop Menon)
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