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Saudi: Man sentenced to 6 months in jail, fined over 3 million riyals for violating trading law

Two others were also found guilty of similar violations and were fined 200,000 riyals and 100,000 riyals each

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Web Desk

Published: Fri 8 Nov 2024, 11:13 AM

Last updated: Fri 8 Nov 2024, 11:34 AM

Fawaz bin Abdullah bin Abdul Mohsen Al-Khudari has been sentenced to six months in jail and fined 3.65 million riyals for violating Saudi Arabia's trading and exchange regulations, according to an announcement from the Makkah Region's official handle.

The sentencing includes a 3.25 million riyal fine for violating Paragraph A of Article 211 of the Companies Law, along with an additional 400,000 riyals for breaches of Paragraph A of Article 49 of the Financial Market Law and Article 7 of Market Conduct Regulations.

In a post on social media platform X, Makkah Region said that Al-Khudari is prohibited from working for publicly traded companies for the next three years.

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Another individual, Kailash Nath Sadangi, was also found guilty of similar violations, specifically under Paragraph A of Article 49 of the Financial Market Law and Article 7 of the Market Conduct Regulations. He has been fined 200,000 riyals and is likewise banned from employment with companies trading on the stock market for three years.

A third individual, Suhail bin Saeed bin Mohammed Saeed, was fined 100,000 riyals for breaching the same regulations and will also face a three-year ban from working in publicly traded companies.

Those affected by these violations are entitled to seek compensation by filing individual or collective lawsuits against the Securities Disputes Resolution Committee. However, they must first submit a complaint to the Capital Market Authority regarding any damages sustained.

What the law says

Article 211 of Saudi Arabia's Companies Law states:

Without prejudice to any harsher penalty stipulated in any other law, imprisonment for a period not exceeding five years and a fine of not more than 5,000,000 riyals, or either penalty, shall apply to:

  • a. any director, officer, board member, auditor or liquidator who provides false or misleading information in financial statements or in any of the reports submitted to partners or the general assembly, or omits material facts from these statements or reports with the intention to conceal the financial position of the company from partners or others;
  • b. any director, officer or board member who knowingly uses the company’s funds in a manner detrimental to its interest to achieve personal gain, favouring a company or person or benefit from a project or a deal in which he has direct or indirect interest;
  • c. any director, officer or board member who knowingly uses his powers or the votes he acquires in that capacity in a manner detrimental to the interest of the company for achieving personal gain, favouring a company or person or benefiting from a project or deal where he has direct or indirect interest;
  • d. any director, officer, board member or auditor who fails to call for a meeting of the general assembly or partners of the company, or who fails to take necessary action, as the case may be, upon becoming aware that the losses reached the limits set in Articles 150 and 181 of the Law, or if he fails to announce the same in accordance with the provisions of Article 181 of the Law; and
  • e. any liquidator who uses the company’s funds, assets or entitlements in a manner that contradicts the company’s interests or causes deliberate damage to partners or creditors, whether to achieve a personal gain, favour a company or person, benefit from a project or a deal in which he has a direct or indirect interest or favour a creditor over other creditors in satisfying his dues without a legitimate reason.

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Web Desk

Published: Fri 8 Nov 2024, 11:13 AM

Last updated: Fri 8 Nov 2024, 11:34 AM

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