The study of banks and listed companies reveals weaknesses and recommends changes to help companies achieve best practices and improve performance and returns.
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Hawkamah - the Institute for Corporate Governance and the International Finance Corporation, the private-sector arm of the World Bank Group, have issued the most comprehensive study of corporate governance in the Middle East and North Africa (MENA).
The study reveals that a majority of participating banks and listed companies are unable to properly define corporate governance. What's more, only 3% follow good practice and none follow best practice, while 56% of boards have no more than one independent director, a situation that makes proper oversight difficult, according to the study.
The report outlines several ways that good corporate governance can benefit companies, including achieving a higher long-term return on investment, better protection of shareholder rights and greater access to capital at a lower cost.
Among the most significant findings and recommendations:
- The 42.3% of companies that still combine the function of chairman and CEO should separate these roles to comply with best practice.
- According to the study, only 25% of banks and listed firms provide information on their dividend policies online, and just 12% have online information on key executives remuneration.
- Most respondents view disclosure from a compliance point of view, rather than see it as an effective tool for managing stakeholder relations and adding value to their business.
- Only 50% of listed family-owned enterprises (FOEs) had adopted a family constitution, while only 25% had family councils in place. Three-quarters of FOEs said their boards are composed of a majority of family members.
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