Corporate Governance Code to be implemented by end-April

The new Corporate Governance Code (CG Code) for the UAE is all set to be implemented, according to informed sources.

Securities and Commodities Authority (ESCA), the regulatory body for UAE stock markets, will start implementing the UAE CG Code by end-April, according to a top official of Hawkamah, the institute of corporate governance.

Explaining the shortcomings in the corporate space of the UAE, Nick Nadal Director at Hawkamah Institute for Corporate Governance, told Emirates Business that majority of companies in the UAE still do not disclose the details of the role of the board.

“With regards to the composition of the board, currently only about 40 per cent of the companies provide details of the board members beyond names and title,”  added Nadal. He said until last year, only 20 per cent of the companies used to provide details on the directors holding directorships in any other joint stock companies.

A Hawkamah study on the level of corporate governance observed by the GCC companies revealed that GCC practices still fall short of international standards. Capital market experts are of the firm belief that the companies that follow good disclosure standards attract better market valuations.

The UAE Central Bank had in June last issued a set of guidelines in a view to establishing world best practices in the country’s banking system. “Though the UAE banks generally follow good standards and adhere to international accounting standards, there are some areas where our banks need to do some cleansing, especially on the multi-directorship – one person representing on various boards,” said a banking analyst. Importantly, Central Bank guidelines also have highlighted this issue.

A Hawkamah study on GCC corporate some time back has found there is certain information the corporates are consistently reluctant to disclose through their annual reports. Information on areas such as share option policy, corporate governance policy, management discussions/analysis, details on beneficial owners, biographical details of the board, remuneration, dividend history, etc is hardly available in the annual reports, though there has been improvement on this during the last two years.

The main reason that prevents proper disclosure, according to Nadal, is the absence of legal requirement.

 

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