Dubai: Investors should look at corporate governance of companies they are planning to invest even before financials, Jane Valls, Executive Director, GCC Board Directors Institute (BDI) told Gulf News.
As a general health check, the investors should look at company’s track record, their future strategy, and also look at who’s managing the company and study about the board of directors, skills and expertise, the mix of skills, and also look if they have an ethics committee, risk committee. The investors should also look if the company has a related party transactions, conflict of interest, the presence of independent directors, and look at their international reporting standards.
“If you are putting your money in a company or buying shares, then you would certainly want to know that your money is in safe hands. In today’s world for investors corporate governance is and should be number one on the agenda, if they are not satisfied with that, they don’t look at the rest,” Valls said, adding “without good corporate governance in place, companies fail and we have seen that time and time again.”
The BDI run several workshops and tailor them according to the needs of GCC companies so be it top tier companies and family owned business, and that can be anything from one hour presentation to the board of directors to 2-3 workshops for their directors or board evaluation. The companies are committed in improving corporate governance and improving the skills of directors.
“There are new business models, new regulations and new laws, board has four clear roles. One is to look at the past managing financials, overseeing management, also ensure that they have clear strategy, and a plan and a vision for the future,” said Valls.
Connected:
“We live in a world of fast change. The markets are connected these days, and that means there are global standards, and if countries want to be a player in those markets, they have to implement those international standards. So I think it is more important in current economic context, where every country needs foreign direct investments. It’s not a business case for implementing effective compliance it is far beyond that. I really believe that effective corporate governance can drive performance, not just a compliance issue. It is important for the country and jurisdiction to have good principles of corporate governance to have transparency, accountability, responsibility, fairness among others,” Valls said.
In the GCC, the UAE has been leading in terms of ease of doing business, even beating some advanced European and Asian economies.
“The country needs to a lot better in terms of corporate governance standards for it to become a developed market from the current emerging market. Going ahead, we could see the regulators getting stronger and stricter, and there will be more regulations,” she said.
