Dec 2005 ADSM

GCGF- PEP MENADeveloping and Implementing Best Practice Developing and Implementing Best Practice

CG CodesCG Codes

Workshop 1: Adopting International Best Practice

The target and objectives of the UAE Code

Mr William Foster

COO, ADSM

14 March 2006

ADSMFeb 2006

From Theory to Best Practice

Drivers for stock exchanges

ADSM Initiative

Developing ADSM proposals

Using incentives

Responses to date

Views on encouraging good CG

ADSMFeb 2006

Drivers for stock exchanges

ADSM’s vision is to be a leading exchange with leading or international best practices.

Good Corporate Governance of listed companies attracts foreign and institutional investors, which the UAE needs to diversify and grow its economy.

Research shows good governance and good practice adds value and improves pricing for companies and shareholders.

ADSMFeb 2006

ADSM Initiative:

ADSM Review, e.g. against the OECD Code, showed a need for improvements to achieve “Best Practice”.

These involved a combination of improved shareholder rights and public listed market norms, and improved company and director performance in areas of good governance – and thus a combination of of mandatory and voluntary items.

ADSMFeb 2006

Self Regulation Advantages

Ethical standards Accountability to members Environment of willingness Sensitivity to adopt workable regulations Members participate in process Checks and balances Flexibility Expertise Incentives to minimise costs Govt.. focuses on main items Regulations reflect business sense

ADSMFeb 2006

Developing ADSM Proposals:

ADSM proposed three stages:

1.Improved transparency: New disclosures and Mandatory Audit Committees (we hope SCA will endorse most of these in Regulations)

2.Improved minority shareholder rights: Improved voting on director appointments and material and related party transactions (if not in the new Companies law, these need to be in Company Articles of Association)

3.Reduced restrictions on ownership: More open registers; AND

A voluntary Governance Code (covering Board composition, independence and procedures) throughout (for best practice).

ADSMFeb 2006

Using Incentives:

Promotion of better performing companies helps voluntary compliance.

Consultation has produced positive feedback from companies and professionals. We are currently reviewing these and making appropriate changes.

We are pleased to see SCA has proposed new CG listing rules for transparency and disclosure.

ADSMFeb 2006

Responses to date

24 initial responses 11 further responses 3 substantial Comments being reviewed Revisions to be published SCA to issue new listing regulations Seminars for companies planned

ADSMFeb 2006

Views on encouraging good CG

1. Take action don’t wait

2. Good Governance is about conduct not rules

3. Incentives not criticisms

4. Essential while markets are positive

5. Education essential

6. International obligations

7. Community/Peer pressure

ADSMFeb 2006

Thank You…