Dr. Obaid Al Zaabi:

• The new governance regulations incorporate standards and requirements on ESG considerations.
• The new regulations improve aspects related to monitoring, money laundering, and internal control systems in public joint-stock companies.

 H.E. Dr. Obaid Al Zaabi, CEO of the Securities and Commodities Authority (SCA), said that the forum “organized in collaboration with the GCC Board Directors Institute (GCC BDI) under the title, “Latest Trends and Best Practices in Effective Corporate Governance” comes as part of efforts to keep listed public joint-stock companies updated on new developments in financial markets”. In his opening speech, Al Zaabi said that as part of its strategic plan, SCA is planning to update the governance and disclosure regulations and to hold workshops and awareness-raising programs for listed joint-stock companies as part of the National Project for Financial Inclusion and Investor Awareness.   

He said that the forum, held under the patronage of H.E. Eng. Sultan bin Saeed Al Mansoori, Minister of Economy and Chairman of the SCA Board, brought together representatives of board members at public joint-stock companies listed in the country and abroad. Al Zaabi explained that the forum complements SCA’s efforts to introduce its new governance regulations (“Guide on Institutional Discipline Standards and Governance of Public Joint-Stock Companies”) developed in line with the best international practices and scheduled to come into force in the coming period after being published in the official gazette. Among the main features of the regulations is the incorporation of new standards and requirements on environmental, social, and governance (ESG) considerations. Al Zaabi explained that the new governance regulations improve aspects related to monitoring, money laundering, and internal control systems in public joint-stock companies.  

For her part, Jane Valls, Executive Director at GCC BDI, said that the “GCC BDI is delighted to be supporting SCA in its mission to promote effective corporate governance in the UAE. The board is a strategic asset to any organization and, therefore, board effectiveness is vital to the success of the whole organization. Shareholders are better protected when effective corporate governance practices are in place”.  

 At the forum, specialists from the GCC BDI spoke about the latest trends and best practices in corporate governance and director duties and liabilities. SCA’s specialists, on the other hand, gave an overview of the main features of the new governance regulations and talked about the requirements for conducting valid general meetings.

In her presentation, Valls highlighted the pressures and the ever-changing dynamics facing boards in the present time. She said that regulatory authorities worldwide urge the implementation of more uniform corporate governance standards while raising expectations about the role of boards of directors in representing shareholders in a responsible manner. Valls explained that global uncertainty requires that boards play a more active role in planning scenarios and assisting the management in overcoming the increasing risk costs, taking into consideration that corporate tendency to adopt a long-term approach has gained additional momentum as many institutional investors continue to push boards for active participation in directing the corporate strategy to achieve long-term value. Accordingly, boards of directors need to deal with new pressures, challenges, and risks and to keep pace with the latest trends and best practices in this field.

In his presentation, Khalid Garousha said that corporate governance obligations in the UAE and the region as a whole bring along stricter legal obligations and other obligations on directors in addition to expectations that board members will implement the best corporate governance practices. The presentation focused on director roles, duties, and obligations as well as the challenges directors face in specific scenarios. Garousha gave an overview of the legislation and regulations in place in the UAE concerning director duties and liabilities to ensure that board members are aware of the latest developments in governance rules and regulations. 

For his part, Ahmad Al Naqbi, Financial Analyst at SCA’s Corporate Governance and Auditors Section, talked about the general requirements for valid general meetings, board member election procedures, and online voting at general meetings in light of the updates made to the governance and disclosure regulations. He said that companies should publish disclosures in Arabic and English and should provide means for simultaneous translation during general meetings. Al Naqbi added that invitations to general meetings may be sent vis SMS or email if the articles of association provide for that. As to board member election, Al Naqbi stressed the need to announce the opening of nomination for board membership and said that the nomination and remuneration committee must ensure that one-third of the members are independent and that the majority of the members are non-executive.

Dr. Yousef Al Tal, Senior Legal Specialist at SCA, reviewed the internationally-recognized corporate practices embedded in the Guide on Institutional Discipline Standards and Governance of Public Joint-Stock Companies. Al Tal said that the guide defined board obligations and the fit and proper criteria for board members (integrity, transparency, and accountability). He added that board members are obliged to submit a deceleration of interest form in which they disclose all interests and relationships that may hinder their ability to perform their functions. Al Tal said that the guide also includes new provisions on the committees that the board may form, including the technical committee and the IT committee. He also gave an overview of the other provisions that are intended to regulate stakeholder relationships, related-party transactions, corporate social responsibility, and functions of risk managers and compliance officers.

It is worth noting that the GCC BDI was founded in 2007 as a not-for-profit organization that aims to guide the boards of directors of organizations, from family-owned businesses to listed companies, to acquire the know-how and the tools to achieve and sustain effective governance.