GOVERN CENTER

Pleasure to be back in the UAE last week for ADFW 2024. A fantastic gathering of #globalleaders and industry experts under the theme "Welcome to the #CapitalofCapital." #ADFW2024 #GovernCenter #governance #GRC #CapitalOfCapital #GlobalFinance #InvestmentOpportunities #EconomicGrowth #FutureOfFinance

Exactly four years ago, the Financial Times reached out asking me to comment on governance regulatory frameworks in the Gulf and on weaknesses in national systems that have led to failures such as NMC Health, Abraaj andArabtec. (https://lnkd.in/dCq3qHC) The question that begs itself is what has changed since? How have the pain points shifted and what are some of the lessons learned? Clearly, the role of #Gulfcapitalmarkets in the global sphere has increased significantly since I published this FT piece. And with that, their consequence for global institutional investors has also grown. So, what is the balance sheet? Fortunately, the frequency of large-scale governance failures has declined in my view for two reasons - the growing capacity of banking and security regulators to enforce but also the greater involvement by the #SWFs and state oversight bodies in government-invested companies. Especially banking regulators such as Saudi Central Bank – SAMA are conducting detailed assessments examining not only board-level governance but also at internal governance mechanisms, the compliance of policies with its #GRCstandards and the structure of the governance function itself. Security regulators on the other hand remain focused on board-level governance, investor relations issues, and insider trading type issues. Yet, while regulators have become more sophisticated and nuanced, in my view we risk losing sight of the view of the bigger picture objectives - what are #governanceregulations there for? What is the right balance between regulatory powers and investor pressure? And last but not least, what is the role of the board vs management in ensuring and going beyond - where relevant - regulatory compliance prerogatives? For any questions on GOVERN's support on regulatory compliance or other GRC support please contact [email protected]. And perspectives are welcome as always. #GOVERNCenter #CorporateGovernance #GulfMarkets #GovernanceReform #NMCHealth #Abraaj #Arabtec #SAMA #InvestorRelations #BoardGovernance #GRC #RegulatoryCompliance #SWFs #FTAnalysis #GovernanceInsights

Wishing our clients and colleagues a joyful UAE National Day and look forward to visiting next week. #UAE #NationalDay #GOVERN #Governance

📆 Save the date! GOVERN's next workshop, in collaboration with Euromoney Learning, the leading global provider of executive education, will be held in Milan: Governance of State-Owned Enterprises: January 27-28, 2024 Governance of Banks: January 29-30, 2024 These courses aim to equip directors and senior executives of #SOEs and #banks with practical governance tools and insights, covering global standards for board and internal governance. Participants will gain updated theoretical and practical knowledge through sector-specific guidelines, case studies, and interactive learning methods. 📌 Secure your spot here: https://lnkd.in/dKMK-gG4 #GOVERNCENTER #Governance #StateOwnedEnterprises #EuromoneyLearning #Milan #LeadershipDevelopment #Training #Italy #KSA

This photo just popped up on my phone. It was taken exactly 20 years ago on one of my first, or perhaps the very first trip, to the Gulf. It was taken in Bahrain where I was invited to speak at an Entrepreneurship Conference, representing the OECD - OCDE. Having launched the Middle East regional initiative a few years ago, we were building relationships with government partners. In the coming ten years, I would go on to establish a first-ever regional corporate governance initiative, collaborating with central banks, capital market regulators, state audit bodies and ministries. Many of the first codes of governance and institutes of directors were developed with our support at that time. With a thriving banking sector and a sovereign wealth fund - at the time I sat behind that podium - Bahrain was widely seen as a success story. In parallel, next door, Dubai was “coming of age” and another decade later, the same would happen to Riyadh. Conferences I attend and speak at in Saudi Arabia are no longer those intimate roundtables I moderated for the OECD two decades ago, instead attracting thousands of local and international participants. Sometimes it feels like Wall Street has shifted to #OlayaStreet. The financial sector hub has shifted out of Bahrain to Dubai and increasingly to Riyadh. There are too many lessons, both personal and regional for a short post, but perhaps the common denominator of all of these - personal and regional stories - is a lesson not to take anything for granted. Political winds blow in different directions, sectoral dynamics change, and international organisations’ roles mutate. I look at that person behind the podium twenty years ago and think how much has changed in just two decades. Many questions beg themselves. What will the competition for a regional economic hub look like in the next 20 years? How will some GCC countries continue to innovate without petroleum resources? And last but not least, what role will regional leader(s) play in the global economy? #GCC #MiddleEast #CorporateGovernance #OECD #EconomicInnovation #Bahrain #Dubai #Riyadh #GCCEconomy #GlobalPolitics #RegionalDevelopment #SovereignWealthFunds #BankingSector #Governance #EconomicTransformation #FutureOfTheGulf #LessonsLearned #EconomicHubs #Sustainability

In the past decade, the role of #boardsecretaries has been crystalised within the Saudi legal framework but also in practice, with a growing recognition that this responsibility is anything but secretarial. In most regulated #Saudicompanies, boards prefer for their secretaries to be legal professionals in order that the conduct of board meetings reflect the Companies Law and any sector-specific requirements (including Saudi Central Bank – SAMA and Capital Market Authority requirements, for example).    At the same time, it needs to be recognised not all lawyers have a background in governance. Furthermore, requiring the Head of the legal function to act as a secretary to the board entails a double hatting that can, depending on the size and complexity of the company and frequency of #boardmeetings, place excessive pressure on the said individual.    In large listed or regulated companies, an independent board secretary who does not have a reporting relationship to the #CEO is, in most cases, recommended. Likewise, in most Saudi companies, the Committee secretaries are often the C-suite reports, such as CHROs for the GNRC committee, which can have its conflicts of interest.  CIAs who frequently act as the Secretaries of the #AuditCommittees and CROs who act as Secretaries of the #RiskCommittees can be likewise conflicted, even if their reporting line is principally to the Board. As an alternative model, and one practiced globally, a single board secretary may be in a position to serve the board and all of its committees, except in giga projects or other large entities which have a particular organisational complexity. Connect with GOVERN to discuss how we can support your governance needs and enhance board and committee effectiveness through [email protected] #CorporateGovernance #SaudiArabia #OECD #boards #BoardCommittees #ExecutiveRemuneration #CorporateLaw #GovernanceEvolution #SaudiBusiness #BoardLeadership

How Saudi Corporate Governance Has Evolved Over the Last Two Decades In her latest article published by Columbia University today, our Managing Director Alissa Kole reflects on the past two decades of corporate governance transformation in Saudi Arabia. Tracing evolutions from the establishment of the Capital Market Authority over 20 years ago, she shares her thoughts on recent developments and what can be done by regulators and companies to continue raising the bar. Read the article through: https://lnkd.in/dZBw5ce4 #CorporateGovernance #SaudiArabia #OECD #boards #stateownedenterprises #GOVERN #Columbia #CMA

Since the #financialcrisis, significant attention has been paid to the structure of executive and board remuneration to align it with long-term corporate objectives. 94% of leading global jurisdictions have introduced criteria on the structure of #executiveremuneration, generally subjected to board and/or Nomination and Remuneration Committee review and/or approval. In parallel, the prevalence of NRC committees has grown with over 60% of countries now recommending the establishment of an #NRCcommittee of the board. This focus on board and executive compensation has, however, played out differently in other markets such as #SaudiArabia. GOVERN’s work on remuneration in KSA has highlighted important nuances: ⏺ While in many markets excessive board and executive compensation has led to shareholder revolts, Saudi Arabia along with India has placed a legal limit on board remuneration. ⏺ While 88% of leading jurisdictions have binding or advisory shareholder votes on remuneration policy, KSA does not require such vote in all circumstances. ⏺ For instance, SAMA has since 2023 required for two remuneration policies to be approved: by the shareholders for board members, and by the board for bank executives and staff. ⏺ NRC committees or equivalent are required for listed companies and banks. In some companies, they also have a broader governance mandate. ⏺ While the CMA requires all NRC members to be non-executive and one to be independent, in many companies retain directors on the NRC are not board members. The Chair of the NRC is however in most cases a board member. Questions on how to design your Organisation’s remuneration framework? Please contact us at [email protected] to organise a discussion. #GovernCenter #CorporateGovernance #Numerationremuneration #GovernanceFramework #KSA Ahmed AlHakbani Adnan Soufi Sheikha Aljubair Alwaleed Alsenani #BoardCommittees #ExecutiveRemuneration #CorporateLaw #GovernanceEvolution #SaudiBusiness #Compliance #BoardLeadership #OversightFramework

In our work in #SaudiArabia, whether in banks, listed companies or state-owned enterprises, the oversight of subsidiaries appears to be a frequent challenge for boards and executives. Reasons for this include the fast-paced establishment of certain companies, the importance of sectoral holding companies, and the legacy of diversified family-owned conglomerates in the Kingdom. In specific sectors such as #financialservices, additional complexities relate to the fact that banks are principally regulated by SAMA whereas their investment subsidiaries are principally regulated by the CMA. At the same time, specific regulations such as SAMA requirements on variable remuneration, require the cascading of the framework from the parent to subsidiary companies. In establishing a robust oversight framework over subsidiaries, the cascading of the governance framework including the Code of Conduct, Conflict of Interest Policy, Related Party Transactions Policy and others is indeed a critical matter. Other, not less critical questions need to be asked, not least around: · the constitution of shareholder assemblies of subsidiary companies · the nomination and appointment of board members of subsidiary companies · the role of parent company executives as board members in subsidiary companies  · the process of review and approval of financial statements of subsidiary companies  · the key shareholder prerogatives to be addressed in bylaws or other founding documents · the presence of independent and/or non-executive directors in subsidiary boards · and last but not least, the need for each subsidiary to have a formal board of directors. To organize a discussion on how GOVERN can assist your organization in establishing a subsidiary governance policy or related arrangements, please contact us at [email protected] #GovernCenter #CorporateGovernance #SubsidiaryGovernance #GovernanceFramework #SaudiCMA Ahmed AlHakbani Adnan Soufi Maryam Ficociello Sheikha Aljubair Alwaleed Alsenani #BoardCommittees #ExecutiveRemuneration #CorporateLaw #GovernanceEvolution #SaudiBusiness #Compliance #BoardLeadership #OversightFramework

Since I began to work in Saudi Arabia 15 years ago, the corporate governance framework has undergone watershed change, with the introduction of first corporate governance rules in 2007 by the Capital Market Authority and the subsequent revisions of Saudi Central Bank – SAMA regulations, as well as the revision of the Corporate Law which became effective last year. When I discuss the Saudi legal and governance rules with our clients outside the region, they are surprised of the extent of change that has occurred. There is in fact little awareness of the fact that, unlike European corporate governance rules, most of the Saudi regulatory framework (#CMA and #SAMA) is mandatory, as opposed to comply-or-explain. Other salient differences between the #Saudigovernanceframework and international practices including the following: • Board committee members in Saudi Arabia are not always full board members  • A Board Executive Committee is required in banks but not in listed companies • Some Board committees are shareholder, not Board nominated • Some management committees require to be Board approved in banks  • Board remuneration in Saudi Arabia is capped by legislation  • The role of the Corporate Secretary is often joined with Head of Legal  • One share one vote structure is legally mandated in all types of companies To discuss the implications of these differences and their relevance to your organisation, contact GOVERN at [email protected] #GovernCenter #CorporateGovernance #SaudiRegulations #GovernanceFramework #SaudiCMA Ahmed AlHakbani Adnan Soufi Maryam Ficociello Sheikha Aljubair Alwaleed Alsenani #LegalReforms #BoardCommittees #ExecutiveRemuneration #CorporateLaw #GovernanceEvolution #SaudiBusiness #Compliance #BoardLeadership #GovernStrategy