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…