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The practical applications of the Bahrain Corporate Governance Code

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A talk to the Bahrain Management Society introducing the new Corporate Governance Code and its practical application and implications.

A talk to the Bahrain Management Society introducing the new Corporate Governance Code and its practical application and implications.

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The practical applications of the Bahrain Corporate Governance Code The practical applications of the Bahrain Corporate Governance Code Presentation Transcript

  • director development centre
  • Corporate Governance Code The practical applications of the Corporate Governance Code Richard Winfield Brefi Group Limited, UK
  • Brefi Group “ Releasing Human Potential” We help individuals and teams in organisations discover and achieve their potential so that they can become more effective with less stress
  • Brefi Group Vision and purpose World class processes Competent people
  • Journey to Governance Investors in People Management Charter Initiative Standards for the Board Corporate Governance Code
  • Corporate Governance Code
    • Purpose and background
      • Establish best practice
      • Protect investors and stakeholders
      • Attract investment
      • Enhance company value
  • Application
    • All operating Joint Stock Companies incorporated under the Bahrain Commercial Companies Law
    • Introduction – 1/1/2011
    • Model for all other companies
    • (Revisions for other types of companies)
  • Comply or Explain
    • Minimum standard
    • Written governance guidelines
    • Report annually to shareholders
    • “ Comply or explain”
  • UK guidance
    • In the UK, the Code is seen as: -
    • a guide to principles, structure and processes
    • which gives freedom within the framework
    • it is to be adopted in spirit as well as the letter
    • boards should think deeply, thoroughly, on a continuing basis
  • Principle 1 The company shall be headed by an effective, collegial and informed board 1.8 At least annually the board shall conduct an evaluation of its performance and the performance of each committee and each individual director
  • Principle 2 The directors and officers shall have full loyalty to the company
  • Principle 3 The board shall have rigorous controls for financial audit and reporting, internal control, and compliance with law
  • Principle 4 The company shall have rigorous procedures for appointment, training and evaluation of the board 4.5 Induction and training of directors
  • Principle 5 The company shall remunerate directors and officers fairly and responsibly 5.5 Officer’s remuneration refers to performance-based incentives
  • Principle 6 The board shall establish a clear and efficient management structure 6.2 At least annually the board shall review and concur in a succession plan … both in emergencies and in the normal course of business
  • Principle 7 The company shall communicate with shareholders, encourage their participation, respect their rights Recommendation: all directors should attend and be available to answer questions from shareholders at any shareholders meeting
  • Principle 8 The company shall disclose its corporate governance 8.1 the board shall adopt written corporate governance guidelines … referring to the principles and numbered directives of the Code. Recommendation: The board shall establish a corporate governance committee.
  • Principle 9 Companies which refer to themselves as “Islamic” must follow the principles of Islamic Shari’a
  • Aspirations of the Code “ Application of the nine principles and directives of the Code will ensure that companies achieve long-term success in terms of their mission and objectives – and that they maintain the confidence of investors and other stakeholders.”
  • Independent directors At least half of a company’s board should be non-executive directors and at least three of those persons should be independent directors. The chairman of the board should be an independent director, and should not be the CEO.
  • Select’n, appointment, induct’n Nominations committee independent Limit of 15 directors per board Limit of three directorships per person Regularly review time commitment Three year term, six year review Formal tailored induction Continuing orientation, education
  • Roles and responsibilities
    • Board role v. shareholders v. officers
    • Board’s fiduciary duty of care
    • Understanding of Governance Code
    • Personal written agreement
    • Formal board charter
  • Relations with shareholders Each director represents all shareholders All directors attend shareholder meetings Shareholders approve incentives Web site details shareholders’ rights
  • Good practice behaviour Independent chairman Separation of chairman and CEO At least half directors independent Conflict of interest/personal interest All directors same board information Right to independent advice Succession planning/emergencies
  • Evaluation of the Board “ The evaluation process is a mechanism to improve board effectiveness, maximise strengths and tackle weaknesses, leading to an immediate improvement of performance throughout the organisation.”
  • Evaluation of performance
    • Annual review of performance
    • Board operation/practice
    • Committee performance
    • Director performance
    • Board composition
    • Help of external experts, when appropriate
  • Corporate Governance Program
    • Briefing and process audit
    • Shadow attendance at meeting/ introduction to corporate governance
    • Director profiles and360° feedback
    • Individual director appraisals
    • Collective board compliance report
    • Continued training and development
  • Impact of the Code?
    • Roles and responsibilities of directors
    • Selection, appointment and induction of directors
    • Good practice board behaviour
    • Relations with investors and stakeholders
    • Evaluation of performance
  • Free report Visit our web site: - www.CorporateDirector.co.uk
  • Richard Winfield Director Development Centre Brefi Group Limited www.CorporateDirector.co.uk Contact: Hussain Redha Estisharat    [email_address]
  • director development centre
  • Impact of the Code? Establish best practice Protect investors and stakeholders Attract investment Enhance company value
  • Evaluation of the Board Recommendation: While the evaluation is a responsibility of the entire board, it should be organized and assisted by an internal board committee and, when appropriate, with the help of external experts. UK: “Evaluation of the board of FTSE 350 companies should be externally facilitated a least every three years.”