Regulators will have to disclose financial stake

Dubai: A new decree on corporate governance aiming for the independent regulation of companies will ensure that regulators are not wearing multiple corporate hats — a move to avoid any corruption issues, business leaders said.

The decree issued on Saturday by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, will set a benchmark of governance standards within government-owned companies, WAM reported.

The new corporate governance structure will put the onus on members of regulatory bodies to disclose their financial or management stakes in companies where they sit on the board of directors, business leaders said.

"If you put the correct corporate governance, the onus is not on the government. The government is keen to check how institutions are run. If there is a coporate governance standard implemented in all government-owned companies, then that standard itself would make sure that board members disclose or reveal any conflicts of interest," Eisa Kazim, Chief Executive of Dubai Financial Market, told Gulf News.

Novel concept

"When you have proper corporate governance, there's a self-check, because there is an independent audit committee."

Ideally, this would avoid situations where there is conflict of interest, he noted. "It's a good structure for government-related companies. It brings them in line with public listed companies, which is more than what's required."

The new corporate governance rules — which will improve transparency and discipline — will avoid any corruption problems, Abdullah Al Turaifi, Chief Executive of Securities and Commodities Authority, said.

"The decree undoubtedly increases the management performance because applying corporate governance in these institutions protects them from sliding into any corruption," he said.

"Corporate governance is a rather novel concept in the region. The perception was that it was for listed companies. Now governments and policymakers understand the benefits of good corporate governance and that it should extend to public governance. Let us not forget that 10 years ago, there was no Arabic word for "corporate governance". We were the first to widely use ‘Hawkamah'. And it is only last year that the UAE corporate governance regulations became mandatory for listed companies. The region is gradually progressing on its corporate governance journey. We cannot deny that this is an important milestone," said Dr. Nasser Saidi, chief executive of Hawkamah Institute for Corporate Governance and chief economist of DIFC.