Decree issued to boost corporate governance
Rules on board constitutions tightened
Dubai: A decree has been issued to strengthen transparency and corporate governance in the UAE.
The decree, issued by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, will tighten the regulation and constitution of boards of directors of profit and non-profit institutions as well as corporations owned by the federal government.
It prohibits members from serving on more than four company boards and or as presidents of more than three federal institutions at the same time.
It also forbids members of the boards of non-profit federal institutions that regulate or oversee UAE-listed companies, from serving on the boards of these public companies.
The members of the boards and executive managements in federal institutions working towards a profit should disclose on an annual basis the shares they hold.
The board members and executive management of non-profit federal institutions should comply with the resolutions issued by the Securities and Commodities Authority regarding trading, clearing and settlement, transfer of ownership and custody of securities.
The resolution obliges the boards of for-profit and non-profit federal institutions to form an audit committee to monitor the financial statements of the institution. The committee must also evaluate risk management policies, internal controls and the effectiveness of the internal audit department. It must also cooperate with the Audit Bureau in accordance with existing accounting principles.
Professional conduct
The resolution sets out the principles, ethics and rules of professional conduct to be adopted by federal institutions, especially board members. According to the resolution, the Federal Authority for Government Human Resources will prepare a special system to disclose all matters relating to the establishment of federal institutions, including their financial position, performance, ownership and governance, for submission to the Council of Ministers.
