The Securities and Commodities Authority (SCA) took part in the Annual Corporate Restructuring Summit held yesterday in Dubai. SCA’s CEO, H.E. Dr. Obaid Al Zaabi, delivered the keynote address in which he highlighted the role of corporate governance in promoting financial market growth and pointed to SCA’s efforts in improving governance regulations.
He talked about the role that corporate governance plays in successful restructuring to manage insolvency and its effectiveness in creating a favorable investment environment that promotes growth in the region. Dr. Al Zaabi added that successful corporate governance can mitigate risks of insolvency resulting from mismanagement and financial crimes.
He stressed the importance of urging private companies to adopt corporate governance standards that keep pace with the remarkable development in the adoption of such standards among listed companies, especially in countries with large capital markets. “The implementation of governance practices across private companies in the MENA region varies significantly. While some have adopted a better culture of governance, others are still implementing practices that do not suit the rapidly evolving, increasingly complex, and globally integrated economic environment”, Dr. Al Zaabi said. “Financing, legal, and ownership structures; board composition; and transparency and disclosure standards all challenge the implementation of sound corporate governance”, he added.
Dr. Al Zaabi talked about the corporate governance reports filed by listed companies and said that they use the XBRL format and provide disclosures on various governance parameters, including board composition, women’s representation on corporate boards, and remunerations. He said that, as part of its efforts to enhance the participation of small investors, SCA obliged listed companies to appoint an investor relations manager and to have the relevant contact details posted on their website. It also required these companies to send invitations to general meetings of shareholders via email or SMS in Arabic and English.
In his address, Dr. Al Zaabi stressed the importance of enhancing women’s representation on corporate boards. He said that the World Economic Forum’s Global Gender Gap Report 2018 ranked the UAE among the top countries in the region when it comes to wage equality and the number of women in ministerial positions.
Dr. Al Zaabi added that SCA is examining the possibility of obliging listed companies to appoint one female at least on their boards (with 20% as the target percentage). SCA also intends to introduce standards concerning the expertise, knowledge, and independence of board members.
“We are currently considering proposals to form risk and technical committees; specify internal control and audit procedures; and define the role of internal auditors, risk officers, and compliance officers”, Dr. Al Zaabi said.
He explained that SCA conducts detailed investigations to evaluate the financial standing of companies and to verify reasons for mismanagement practices that resulted in corporate insolvency. It also carefully considers applications by companies wishing to have their shares listed on the country’s markets. Dr. Al Zaabi said that SCA is considering a proposal to establish a secondary platform that host unprofitable companies, which will have to provide a restructuring plan.
He talked about the Financial Restructuring Committee, formed by the Ministry of Finance, and its vital role in maintaining economic growth and enhancing the country’s competitiveness on global indices, such as the World Bank’s Ease of Doing Business Report and the Global Competitiveness Report.