CORPORATE GOVERNANCE REFORMS TO ADDRESS FINANCIAL CRISIS RISKS IN THE MENA REGION
CORPORATE GOVERNANCE REFORMS TO ADDRESS FINANCIAL CRISIS RISKS IN THE MENA REGION
This website uses cookies in order to offer you the most relevant information. Please accept cookies for optimal performance. Find out more
×
DOHA DECLARATION  Business leaders and policy makers from the Middle East and North Africa, and international and regional experts convened for the Third Hawkamah Regional conference on corporate governance, "Is the Region Becoming a Global Player?: Corporate Governance & the Financial Crisis", held in Doha on 9-10 November 2008. The conference was organized in association with the Qatar Financial Markets Authority (QFMA) and in partnership with the Qatar Financial Centre, International Finance Corporation (IFC), the Financial Services Volunteer Corps (FVC), The World Bank, the Global Corporate Governance Forum and the Organisation for Economic Co-operation and Development (OECD). His Excellency Minister Yousef Hussain Kamal, Minister of Economy and Finance and Chairman of the QFMA delivered a keynote policy speech stressing the urgency of action in improving corporate governance in the GCC countries and the MENA region overall. Participants acknowledged the important progress achieved in Qatar in streamlining the financial regulatory authorities and developing a Corporate Governance Code in line with international standards and good practices. There is an increasing perception that contagion and spill-over effects from the global financial turmoil could undermine the economic achievements of the MENA region. As a result, participants focused on the interaction between corporate governance and the stability and soundness of the financial system. The following corporate governance issues emerging from the financial crisis need to be addressed globally and at the level of the MENA region: (a) The regulatory & supervisory powers of central banks should be cooperation instead of corporation with capital markets authorities to investment banking and related non-bank financial intermediation. (b) Risk management frameworks, processes, and implementation practices require reform in order to redress the shortcomings revealed by the turmoil. (c) The role and form of regulation of credit rating agencies needs to be addressed. (d) Executive remuneration and incentive structures need to be linked to long-term performance and risk profile of firms. More disclosure on executive remuneration schemes is required and companies should put their remuneration schemes to shareholder scrutiny and approval. (e) Corporate governance practices need to be strengthened, in particular by increasing board competence and responsibility. Board members need to have up-to-date knowledge on financial issues and risk management to fulfill their functions and training should be required when necessary. Boards should conduct annual evaluations of their performance and report to shareholders. (f) Governance and accountability of regulators are equally essential and the region should adopt and implement existing guidelines on good practices as promoted by the Bank for International Settlements and IOSCO. (g) Islamic finance is a viable and credible complement to conventional financing and has been resilient to date to banking and financial crisis, as a result of equity sharing arrangements and its focus on ethical investment practices. Islamic finance institutions should continue improving their corporate governance by focusing specifically on the disclosure rights of Investment Account Holders, the role of Shari'a boards, their integration within the corporate governance structure of the Islamic Finance Institution. The development and implementation of a harmonized Corporate Governance Framework Regulation and market oversight should fully cover these institutions. (h) Effective creditor rights and insolvency systems and the development of strong rescue and restructuring frameworks are important for the region. Based on the survey of existing frameworks and practices in the MENA, these should be modernized as a matter of priority to allow effective rescue and restructuring of viable enterprises facing temporary and potential distress. Countries in the region should avail themselves of international guidance, such as the World Bank Principles on Insolvency/ROSC Diagnostic programme and the UNCITRAL Legislative Guide on Insolvency for reforming domestic insolvency systems. (i) Good corporate governance is important not only for listed companies, but also for State and Family-Owned enterprises. To successfully address potential issues of succession of family-owned enterprises and preservation and protection of wealth, their progressive integration into capital markets should be encouraged. (j) Investments of Sovereign Wealth Funds (SWFs) taking a long-term perspective can contribute to financial stability. The "Santiago Principles" of the International Working Group (IWG) on SWFs coordinated by the International Monetary Fund provide a welcome contribution to improved transparency and sound management of these funds. They should be followed up by a continuous dialogue and review within the IWG. An open investment climate should be maintained by recipient countries in line with OECD guidance and instruments. (k) Private equity has recently emerged as a popular alternative asset class in the region supporting regional economic development and small and medium-sized enterprises. Private equity managers should play a critical role in diffusing corporate governance principles and best practices across their portfolio companies in terms of board structures, administrative procedures, disclosure requirements and minority interest protection. Next steps by Hawkamah and the MENA OECD Working Group will include:
  • Finalisation of the draft MENA Policy Brief on corporate governance of banks.
  • Preparation of a Policy Brief on corporate governance of State-Owned Enterprises.
  • Finalisation of the Policy Brief on corporate governance of insurance companies.
  • Recommendations on Insolvency frameworks and practices.
  • Establishment of a Task Force on Islamic Finance.
  • Undertaking pilot studies on corporate governance of family-owned enterprises.
A review of the response of the regulators to the financial crisis and progress with corporate governance measures will be conducted at the next annual meeting.

Testimonials

  • "The DDP provides a solid foundation of corporate governance for existing and aspiring directors."

    David Haglund - Senior Executive Director and Portfolio Manager of the Templeton Frontier and MENA Market strategies

  • “Thank you so much for sharing such insightful webinar. It was great and valuable to all participate”

    Shady Rashed - Senior Economic Researcher at The Ministry of International Cooperation of Egypt

  • “Good session and very well organized on the webinar about How to buffer and lessen the impact of the novel Covid – 19, to maintain business sustainability with Hawkamah - AUB / Makhzoumi” 

    Bilal Hamade - Executive Advisor

  • "One of the best webinars I attended. Well done OSB Makhzoumi and Hawkamah”

    Fida Kanaan – Director – Executive education  OSB AUB

  • "A journey full of knowledge, experience and professionalism . I have learned a lot and definitely enjoyed the time I spent with my colleagues."

    Ibtihal Al-Shamali- Director of Corporate Governance- Capital Market Authority of Kuwait

  • The breakfast meetings organised by Hawkamah provide attendees with a great opportunity to meet with peers from leading organisations and exchange ideas on current issues and challenges. A strong panel of industry experts discussing the challenges from different perspectives on ‘How to get the board more engaged’ was most insightful and engaging with enthusiastic audience participation especially in matters regarding diversity and quality of information that is  presented to the board for effective decision making. I look forward to more such events that are organised by Hawkamah

    Sunil Edwards- Group Head of Internal Audit  - Bank of Sharjah

  • The power breakfast on board engagement organized by Hawkamah in collaboration with Diligent was a successful event, very insightful and informative and well organized

    Mostafa Ibrahim Abdeltawab - Tax Agent & Consultant  - Skylines Tax Consultancy

  • There is absolutely no doubt that Hawkamah – as always – has done unmatchable effort in producing its most recent valuable report in association with Diligent about Board Best Practices in the MENA. The discussions that took place in the “Power Breakfast” was so important and insightful; the influx of questions by the quality participants and the valuable answers of the quality panelists is a clear proof of Hawkamah continued success in such events. 

    Yasser Al Dabach – Board Secretary – Ghobash Trading & Investment Group

  • The technical knowledge, insights, case studies and learning provided by the ‘Director Development Program’ are very useful and effective in framing the strategic planning, implementation and delivery phases of growth plans in the difficult economic and geo-political times that we are operating in.

    Hisham Dimashki – CEO - BAP LLC – (associated with GM Trading Companies - Washington DC)

  • The certified Board Secretaries Workshop provided by Hawkamah and Dubai Financial Market is an essential course for learning corporate governance, scope and responsibilities of the board secretary and understanding the governance and disclosure requirements of the Dubai Financial Market and the Securities and Commodities Authority. It is a practical course which combined recent best practices and key learning lessons. I would highly recommend it for people involved in corporate governance and in particular in a listed company.

    Omran Al Zamani - Senior Legal Counsel - Dana Gas PJSC

Latest tweets

Videos

Partners