Board Membership Limits and Efficiency
The article addresses the issue of multiple board memberships and their impact on members' effectiveness and their ability to perform their duties efficiently. Studies have shown that 77% of members in Saudi company boards hold between one and five memberships, while 23% hold six or more, sometimes exceeding twenty memberships. This raises questions about their capacity to allocate sufficient time to each board. Excessive multiple memberships can lead to deteriorated performance and oversight, although diversification of expertise through multiple memberships can sometimes be beneficial. Therefore, regulations in Saudi Arabia and Oman have set limits on the number of memberships to balance the benefits of diverse experience with maintaining efficiency, emphasizing the importance of individually assessing the workload, especially given the differences in company sizes and sector types. The article underscores the need to revise the current regulations to be more flexible, combining maximum limits with other criteria such as the nature of commitments and expertise, aiming to enhance the effectiveness of boards and support a competitive investment environment.
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