SABIC, which owns 31.5% of Clariant, asked for the new term limit, including for the chairperson, to be added to the agenda of the annual general meeting of shareholders scheduled for April 7.

Aramco-controlled SABIC also proposed a special dividend distribution of 2 Swiss francs per share, Clariant said in a statement, which would total roughly 670 million francs ($753 million).

That could drain the company's coffers that new CEO Conrad Keijzer might otherwise use to bulk up via acquisitions that he has said are a priority.

Kottmann, who became CEO and joined Clariant's board in 2008, has been at odds with SABIC since a proposed joint venture between the two companies collapsed in 2019 over disagreements over the price of the Saudi Arabian company's assets.

The sudden departure of Ernesto Ochiello, a longtime SABIC executive who quit as Clariant CEO in July 2019 after less than a year in the job, further signalled differences between Kottmann and his top shareholder.

Ochiello returned to SABIC after leaving Clariant.

A Clariant spokesman said the Swiss company and SABIC continued to have a "professional relationship", and the Saudi company remained an important customer.

He said Clariant's board would discuss SABIC's proposals at an upcoming meeting.

Clariant, which is selling its pigments unit and cutting 1,000 jobs amid plans to dispose of divisions that make up two-thirds of annual sales, confirmed adoption of the term limits at the shareholders meeting would force Kottmann out, though other board members have several years before they would be affected.

($1 = 0.8896 Swiss francs)

(Reporting by John Miller in Zernez, additional reporting by Silke Koltrowitz in Zurich; editing by Jason Neely)