Hawkamah, the Institute for Corporate Governance in the region, and Emirates Securities and Commodities Authority (ESCA) have signed a groundbreaking memorandum of understanding (MoU) to develop the first ever corporate governance code for listed companies in the UAE. The MoU was signed by Abdulla Al Turaifi, CEO of ESCA and Dr Nasser Saidi, Executive Director of Hawkamah.
ESCA is the first capital market authority in the region which will develop and introduce corporate governance codes for listed companies consistent with international standards and best practice. The framework for the codes will include the principles of transparency, disclosure, protection of investors and shareholders rights, responsibilities of the board and the importance of independent directors as well as financial reporting in accordance with international accounting and auditing standards. Introducing and implementing good corporate governance principles and practice will contribute to building investor confidence in financial markets and listed companies.
The signing of the MOU aims to produce governance tools and procedures to develop sound practices where high performance will be achieved by companies in addition to credibility.
According to the respective interests and objectives of both parties, ESCA & Hawkamah- the institute for corporate governance can attain on integration mechanism through adoption of governance codes and rules.
The three pivotal roles of the MOU are as follows:
- Highlighting of public awareness as regards corporate governance in securities and commodities markets of UAE.
- The exchange of information concerning corporate governance in such markets between the parties concerned.
- Customizing training programmes to accommodate the relevant cadres in the markets, brokerage companies, and listed companies in the field of corporate governance applications.
On the heels of the MOU signing, His Excellency, Mr. Abdullah Al-Turaifi commented; “ESCA is pleased to cooperate and work with Hawkamah on developing corporate governance codes for companies listed in the capital markets in UAE . These codes will help build confidence in business organizations and its host economy and provide strong incentives for international trade and investment in both”
Moreover, he added that “signing of this MOU came into effect to combat current challenges met by both capital markets and regulating authorities. Furthermore, corporate governance is a complementary catalyst to the prevailing and existing regulations and legislations in compliance with international standards laid down by “IOSCO”. Such agreement will be a further tool to ensure justice and transparency in capital markets.”
Dr Omar Bin Sulaiman, Governor, Dubai International Financial Centre, commented: “This is a very significant move for the UAE and the region. Not only will the MoU help establish the first ever corporate governance code for capital markets in the UAE, but will also catalyse the need for reform in other regional markets.
“This MoU is also very significant for the DIFC because it marks a major step forward in achieving our key objective – working towards regional development and economic diversification and growth. The best way to achieve this growth and diversification is through improving the performance and health of our corporations. It is achievable only by implementing sound governance practices.”
Dr Saidi commented: “This signing is in line with the objective of developing robust capital markets in the UAE so they can play their full role in building the UAE economy and attracting investment on a sustainable basis. This is also the first step towards bridging the corporate governance gap between international and regional capital markets and moving towards economic and financial integration through the alignment and harmonization of corporate governance standards.”
About the DIFC: The Dubai International Financial Centre (DIFC) is an onshore hub for global finance. It bridges the time gap between the financial centres of Hong Kong and London and services a region with the largest untapped emerging market for financial services.
In just over one year, more than a hundred top international institutions have joined the DIFC as members. They operate in an open environment complemented with world-class regulations and standards. The DIFC offers its member institutions incentives such as 100 per cent foreign ownership, zero tax on income and profits and no restrictions on foreign exchange. In addition their business benefits from modern infrastructure, operational support and business continuity facilities of uncompromisingly high standards.
The DIFC is made up of the following core bodies:
1. The DIFC Authority (DIFCA) - Responsible for the Companies and Security Registries and attracting financial as well as non-financial institutions to set up in the DIFC. The DIFC Authority is also responsible for developing the financial services industry. (www.difc.ae)
2. The Dubai Financial Services Authority (DFSA) - An independent, unitary regulatory authority, responsible for the regulation of all DIFC operations. Its principle-based primary legislation is modeled on that used in London and New York, and its regulatory regime operates to standards that meet or exceed those in major financial centres. (www.dfsa.ae)
3. The DIFC Courts - An independent court system set up to uphold the provisions of DIFC laws and regulations, the courts provide comprehensive legal redress in civil and commercial matters within the DIFC. The DIFC Courts system is especially designed to deal with all of sophisticated transactions that will be conducted within DIFC. The DIFC Court laws, based on the common law, not only sets out the jurisdiction of the court but also provides for a dispute resolution services, including arbitration and mediation, thus allowing for the independent administration of justice in the DIFC. ( www.difccourts.ae )
4. DIFC Investments- The creation of DIFC Investments will result in the allocation to it of all non public administration activities previously carried out by DIFC Authority. This will include amongst other things all commercial and other activities such as the operation and management of any current and future subsidiaries, the development of the centre’s investment strategy and relevant policies and any other strategic investments or alliances which will further the goals and objectives of the Dubai International Financial Centre and contribute to the fulfillment of the Centre’s vision. Some of the companies and organizations that DIFC Investments owns include:
1. The Dubai International Financial Exchange (DIFX) The DIFX is the region’s first international financial exchange for equities, bonds, Islamic products, funds, index products and (subject to regulatory approval) derivatives. The target areas of the DIFX for seeking issuers include the Middle East and North Africa, as well as South Africa, Turkey and the Indian sub-continent. The regulator of the DIFX is the Dubai Financial Services Authority. The DIFX is located in the Dubai International Financial Centre (DIFC) and its owner is the DIFC Authority. (www.difx.ae)
2. Hawkama- the first Institute for Corporate Governance in the region is being set up by a group of international institutions, including the Dubai International Financial Centre (DIFC), Organisation for Economic Cooperation and Development (OECD), UAE Ministry of Finance and Industry, Centre for International Private Enterprise (CIPE), International Finance Corporation (IFC), the Union of Arab Banks (UAB), Dubai School of Government (DSG), Young Arab Leaders (YAL), and the Institute of Management Development (IMD). (www.hawkamah.org)
