As part of the efforts made by the Securities and Commodities Authority (SCA) concerning corporate implementation of the governance procedures relating to the rules of wise management and sound business practices, SCA issued Board Chairman's Decision No. (3/Chairman) of 2019 amending Board Chairman's Decision No. (07/Chairman) of 2016 relating to Institutional Discipline Standards and Governance of Public Joint-Stock Companies.
Dr. Obaid Al Zaabi, CEO of SCA, said that this complements SCA's efforts to keep up with the blockchain technologies and to employ such technologies to strengthen procedures, save costs, improve the environment, support sustainable development, and meet the requirements for developing standards for the governance of public joint-stock companies. Dr. Al Zaabi indicated that SCA's keenness to employ the blockchain technology is a top priority in its 2017-2021 strategy.
He said that the decision introduces amendments to certain articles to improve and strengthen procedures. It also introduces other amendments to governance-related provisions, thus enabling shareholders to actively participate in the voting procedure and take material decisions that impact corporate outcomes.
Electronic Voting
Dr. Al Zaabi stressed that the amendment added a new clause (d) to Article 23, thus allowing shareholders to vote electronically at the general meetings of a company. According to this amendment, shareholders who cannot attend general meetings may register attendance online and cast electronic votes on the announced agenda items and on some corporate matters such as the election of members to the board.
He explained that this amendment fulfills the wishes of small shareholders to attend general meetings and vote on agenda items since it may be difficult for them to bear travelling expenses to attend these meetings, especially in case of few or no dividends. This also enables such shareholders to vote on the election of members to the board and the selection of their representatives. It helps to save expenses by more than 50 percent of a company's capital by increasing attendance percentage as the company will not have to convene a second meeting in case that the required quorum was not met in the first meeting.
Sending Notices of General Meetings to Shareholders Electronically
Dr. Al Zaabi added that the new decision included an amendment to Article 24 of the Board Chairman's Decision No. (07/Chairman) of 2016 relating to Institutional Discipline Standards and Governance of Public Joint-Stock Companies to enable companies to notify shareholders of their general meetings by sending them text messages and emails instead of doing it the traditional way—by registered mail, which is considered costly and does not ensure that the notices reach all shareholders because their residence address was changed and the exchange or the company has not been informed of that change. This method will encourage more shareholders to attend general meetings since notices will reach a larger number of them. It will also help to minimize use of paper, in line with the country's objectives to maintain a safe environment, preserve the ecological balance, and support sustainable development.