“The GCC financial markets spearheaded the adoption of institutional governance controls,” Dr. Maryam Al Suwaidi.

The webinar stressed the importance of establishing an investor relations section in promoting the relationship between investors and the senior management of the company.

The UAE legislation permits companies to convene general meetings and enhances shareholder engagement and voting on resolutions using modern electronic means.

In her opening speech at a webinar titled “Recent approaches of corporate governance of Public Joint-Stock Companies”, held by the Securities and Commodities Authority (SCA) in collaboration with the General Secretariat of the Gulf Cooperation Council (GCC) as part of the Gulf Investment Awareness Program dubbed “Mulem”, H.E. Dr. Maryam Al Suwaidi, Acting CEO of SCA, emphasized the importance of governance and its role in strengthening the foundations of development and economic growth, creating an active investment environment, and promoting the principle of wise governance by enhancing confidence in markets and attracting more foreign investments.

Efforts by the GCC markets and regulators

Dr. Al Suwaidi noted that the GCC markets and financial market regulators spearheaded their global counterparts in adopting corporate governance controls, taking into consideration their paramount importance not only as the first line of defense for public joint-stock companies against potential crises, but also for financial markets in general given that corporate governance contributes to the creation of a favorable business environment.

Guide to the governance of public joint-stock companies

In her speech, Dr. Al Suwaidi reviewed the key efforts and actions that SCA has been taking from the very beginning to promote the implementation of governance rules; establish institutional discipline; and enhance transparency, justice, autonomy, and sound business practices by introducing a range of controls and regulations that are in line with the best international practices developed by the International Organization of Securities Commissions and the Organization for Economic Cooperation and Development and those outlined in the World Bank’s Ease of Doing Business Report and the World Economic Forum’s Competitiveness Report. She also shed light on the decisions previously issued as part of SCA’s efforts to implement governance standards and the developments that ensued.

Obligations of board members at public joint-stock companies

In the first session of the webinar, which discussed duties and obligations of board members at public joint-stock companies, Ibtihal Al Shamali, Director of Corporate Governance Department at Kuwait’s Capital Markets Authority, addressed the role of the board in maintaining balance between realizing shareholder objectives and monitoring the executive management. She also said that the board should have the tools and instruments that enable it to exercise effective supervision and that the responsibilities of the board and the executive management should be clear. Al Shamali indicated that the key responsibilities of the board and the executive management must be provided for under the articles of association, most notably approving corporate plans and strategies and ensuring the establishment of an effective governance system whose implementation is overseen by the board.

For his part, Ali Sharif Al Marzooqi, Vice President of Human Resources and Procurement and Secretary of the Nomination and Remuneration Committee at Deyaar, said that the first step in the establishment of a board of directors is to attract expertise that helps meet the aspirations of shareholders and enhance corporate performance, which is done through the Nomination Committee.

Omran Al Zamani, Senior Legal Counsel and Board Secretary at Dana Gas, explained that the Commercial Companies Law is seen as the primary legislation that outlines the duties and obligations of boards of directors, saying that this law provides for general duties that apply across all companies, regardless of their legal form, whether joint-stock or otherwise, including but not limited to the duty to comply with the law and legislation, to exercise due diligence, to prepare the annual budget, and to comply with the articles of association and the general meeting resolutions.

Rights of shareholders in relation to general meetings

The second session of the webinar addressed the rights of shareholders in relation to general meetings and was opened by Ali Al Ali, Board Secretary at the Emirates Integrated Telecommunications Company (du), who said that the rights of shareholders are underpinned by governance regulations and basic principles outlined in various legislation—namely, transparency, disclosures, fairness, responsibility, accountability, and supervision. Al Ali explained that the general meeting of shareholders can be divided into three stages, each of which involves a player that performs a key role in terms of governance. According to him, the key player in the first stage is the board of directors for its role in monitoring shareholder disclosures (the principles of transparency and responsibility are evident at this stage). The key player in the second stage are shareholders for their role in making decisions that serve the interests of the company (the principles of accountability and justice are evident at this stage) whereas the key player in the third and final stage is SCA for its role in overseeing the implementation of the decisions made by shareholders (the principles of justice and supervision are evident here).

For his part, Mohammed Junaid, Head of Governance Section at SCA, shed light on the key changes that have been made to the controls associated with general meetings in line with the recent updates to existing legislation and regulations, which are intended to make it easier for shareholders to exercise their rights. The notice to the general meeting must now be given no less than 21 days prior to the specified date compared to the previous 15 days to allow shareholders to better manage their time or appoint a representative to attend on their behalf.

ESG

In the third session of the webinar, which focused on environmental, social, and corporate governance (ESG), Dr. Rami Al Nsour, Corporate Affairs Advisor and Listing Manager at the Abu Dhabi Securities Exchange (ADX), pointed to the role that the ADX plays in promoting ESG-related concepts across listed companies. He said that the ADX introduced general guidelines concerning ESG disclosures, explaining that it has taken into consideration multiple aspects related to the sustainable development criteria, which includes a set of 16 criteria on health, society development, spreading education, sustainability, etc.

For his part, Ahmed Al Mukhaini, Governance and Public Policy Expert at Oman’s Capital Market Authority, said that the new governance charter of Omani public joint-stock companies intends to provide consistent, reliable, comparable, and verifiable information, and that it is strongly related to corporate values, sustainable development goals, and expectations of the local society. Al Mukhaini provided examples to illustrate the need to incorporate the four elements in corporate operational strategies: economic conditions, new and young investors, political and global pressures, and the coronavirus pandemic.

The role of investor relations department within joint-stock companies

In a session that shed light on investor relations, Raneem Al Essa, Manager of Corporate Governance Development Unit at the Saudi Capital Markets Authority (CMA), highlighted the Saudi CMA keenness to ensure that listed companies foster an investor relations culture through multiple initiatives, saying that it organized awareness-raising workshops dedicated to these companies. Tadawul has also cooperated with the Saudi CMA to release a toolkit about best practices in investor relations.

Alya Omran, Research and Investor Protection Head at the Central Bank of Bahrain, said that having an investor relations section plays an instrumental role in ensuring effective governance. She highlighted the importance of an investor relations section in all companies, particularly public joint-stock companies, and explained that one of the key responsibilities of this section is to foster the relationship between the investor and the company.

Souad Al Serkal, Vice President of Strategic Communications at Tabreed, talked about the roles played by Tabreed’s investor relations department and the actions taken to reassure shareholders and preserve their trust and financial rights under the COVID-19 pandemic, in addition to its efforts to maintain business continuity. She also shed light on the main objectives of the investor relations department in terms of creating clear and straightforward media messages and spreading them in a consistent manner as part of a communication plan that uses various media outlets, including social media platforms.