SCA’s 2025 Governance Amendments: What UAE Listed Companies Need to Know

The UAE Securities and Commodities Authority (SCA) has issued important amendments to the Chairman of the Authority’s Board of Directors’ Resolution No. (3/Chairman) of 2020 Concerning the Approval of the Joint Stock Companies Governance Guide, through Resolution No. (24/Chairman) of 2025.

These changes, effective from 26 August 2025, introduce new rules around the combination of the roles of Chairman and CEO and strengthen oversight requirements for listed joint stock companies.

1. Combining the Roles of Chairman and CEO

Previously, combining the position of chairman with any executive role was strictly prohibited. These amendments now allow for an exception, whereby the roles of chairman and CEO may be held by the same person. In order to rely on this exemption, certain strict conditions must be observed:

Key Conditions:

• Articles of Association must allow it:

The company’s constitutional documents must explicitly permit the combination. This therefore means that there are a number of practical considerations and timing issues for companies that pursue this route, as any amendment to the Articles requires advance shareholder approval and regulatory filings.

• Board independence is paramount:

At least 75% of board members must be independent. For a company preparing to list, this means that the board must be structured with independence in mind from day one. All permanent board committees must consist entirely of independent directors. This threshold is high and may require some boards to rethink their current composition and succession planning well in advance to ensure they remain compliant moving forward.

• General Assembly approval:

A special resolution is required, supported by a board report explaining the justification, risks, and safeguards. Boards will need to prepare a clear and well-documented case to put before shareholders, which means drafting the report in advance of the meeting date. Approval is time-limited to the board’s term and must be renewed via another resolution if continued.

2. Mandatory Governance Committee

A Governance Committee is now required whenever the chairman and CEO positions are combined. Beyond this committee’s standard duties, it must also:

• Oversee the CEO’s performance evaluation using independent benchmarks.
• Conduct an annual review of whether the combined role remains justified, and whether it affects board independence.
• Recommend whether to renew or terminate the combination arrangement.
• Define and enforce circumstances where the chairman must recuse himself from discussions or votes (e.g., executive compensation, performance evaluations, restructuring, or audit findings affecting management).

Where sensitive matters are being discussed (such as senior management performance, CEO remuneration, audit findings, shareholder complaints regarding executive management), the chairman must recuse himself and may not participate in voting. In such cases, the vice-chairman (who must now also be independent) will preside over the meeting.

3. Practical Considerations for Listed Companies

This amendment clearly signals SCA’s attempt to balance flexibility (allowing dual roles in exceptional cases) with strong safeguards for independence and accountability, as well as showing its responsiveness to feedback from the market.

Accordingly, listed companies should now consider:

• Reviewing their Articles of Association: Amendments may be required if they do not currently permit role combination.
• Assessing board composition: Companies must ensure they meet the 75% independence threshold and reconfigure committees if necessary.
• Preparing for General Assembly engagement: Boards will need to provide detailed reports to shareholders justifying the combination and its safeguards.
• Setting up or strengthening a Governance Committee: Clear procedures must be established for CEO evaluations, annual reviews, and recusal triggers.
• Ongoing compliance monitoring: Annual reassessments mean this is not a “one-time” approval — companies must be ready to justify the arrangement year after year.

Conclusion

SCA’s governance amendments mark a significant step in shaping how boards in the UAE operate. By opening the door to combining the Chairman and CEO roles, the regulator has introduced new flexibility — but wrapped it in strict safeguards to protect independence and accountability. For listed companies, the message is clear: governance cannot be treated as a static exercise. It requires ongoing planning, regular reassessment, and meaningful engagement with shareholders.