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Main » 2017 » July » 7 » Corporate Governance Forum Shines Spotlight on the Importance of Independent Boards
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Corporate Governance Forum Shines Spotlight on the Importance of Independent Boards

Organised by Hawkamah, the conference aimed to build knowledge and underscored the importance of diversity and the independence of Boards in the MENA regionDubai, United Arab Emirates -Thursday, July 6th 2017 [ ME NewsWire ]

Corporate governance practitioners, drivers and regulators from the region gathered at the Corporate Governance Forum organised by Hawkamah recently, at Dubai International Financial Centre (DIFC).

Adequate and effective corporate governance is considered by many to be a critical component in supporting Boards and management to navigate uncertainty and deliver long term sustainable value to shareholders and stakeholders.

Accentuating the importance of an independent Board as a benchmark to judge the performance of a corporate entity and its contribution to the national economy, the forum facilitated discussions on the independence of Boards in the region, the value created by independent Board members and regional challenges.

Opening Session

The Conference commenced with opening remarks from Dr. Ashraf Gamal el Din, CEO of Hawkamah, who facilitated the discussion on enhancing corporate governance through independent Boards and highlighted key areas where Boards play an important role, such as accountability, foresight, strategy and supervision, “The Board is responsible to the shareholders for the proper management of the company and meets regularly to set the overall direction and strategy of the organisation, to review scientific, operational and financial performance, and to advise on management appointments. All key operational and investment decisions are subject to Board approval. As such, it is important that the Board is independent,” said Dr. Ashraf.

Dr. Ashraf also outlined and explored the four important pillars of corporate governance including accountability, fairness, transparency and responsibility which serve as a catalyst for the continuous improvement of the Board and business.

Independence of Boards in the Region and its Importance

The discussion, which featured distinguished speakers such as Mr. Omar Al Shunnar, Co-founder and Chairman of Aquagas Group of Companies, Mr. Tarek Fadlallah, Chief Executive Officer of Nomura Asset Management (Middle East), and Mr. Johan Brand, an experienced leadership professional and the owner of a leadership advisory firm, explored how corporate governance in the MENA region has been directed by promoters and owners of family owned businesses. In view of the emerging and growing nature of the corporate world, the experts stressed the importance of increasing diversity and the significance of balancing the skills and experience of Board members to ensure stronger governance practices.

“Boards in the MENA region comprise of known members and while this makes them quite comfortable and enhances the trust, there can also be some negative implications. As such, independent Boards should be encouraged in order to facilitate a stronger and more concrete business model,” said Mr. Johan.

As the Board’s role is to oversee the management and governance of the company and to monitor the performance of senior management, the discussion emphasised that the Board should be independent from the management allowing them to be objective without any conflict of interest or the influence of interested parties. The experts also highlighted the importance of diversity across age, ethnicity and gender in order to manage the goals of the company and meet the expectations of the shareholders, “The MENA region has significantly less women serving on Boards. However, strides have been made to provide women with the opportunity to showcase their skills and talent. The government of Dubai has been very progressive and has introduced a number of processes and regulations in an effort to increase the number of women in senior positions,” said Mr. Omar.

In addition, there was a call of the panelists to ensure the qualification of women to become Board members to prevent tokenism. The recent status in the UAE indicates that female Board members amount 1.9 per cent despite the fact that there is an increased value for the company by having female Board members. A recent report by Hawkamah on Gender Diversity also highlighted that women feel a constant pressure to prove themselves capable of being on Boards. It was therefore suggested to mandate gender quota, but this could lead to ‘trophy hunting’. Thus, there was the call to ensure the qualification of women becoming Board members.

The forum also highlighted the global trends adopted by companies to make Boards as diverse as their operating environments. They highlighted that Boards built on diversity in regard to age, language, ethnicity, gender, education and experience provide a different dimension to the decision making process which has the potential to ensure greater business opportunities.

In conclusion, the experts accentuated the need for Boards that have a majority of independent members, who are neither members of the family, employees of the company, advisors, customers or suppliers, to add greater value to the business.

The Value Created by Independent Board Members

Studies have shown that companies with a greater percentage of independent Boards can enhance the value for their shareholders and the discussion focused on the value independent board members can bring to businesses. “Independence is a global phenomenon and there has been a massive change over the years. In my opinion, even if a shareholder holds 100 per cent shares in the company, once the organisation reaches a maturity level, it is important to bring independent Boards to be able to add value to the company in the long-run. This not only facilitates the growth of the organisation, but also gives greater confidence to the investors in relation to company finances,” said Mr. Tarek.

The discussion also offered key insights on how independent Board members could provide real, strategic value to the company if they are carefully vetted and selected. From enabling long-term thinking to exercising effective control, the value that a Board can bring to the organisation is directly proportional to the level of diversity and independence of its members, providing they have been carefully selected for their role. “In the MENA region, most Boards lack industry knowledge. They should have access to the right education through induction and training programmes which will certainly add value to the team and their organisation. The past few years have witnessed a positive shift where independent Boards derive their value as much from operational performance as from enhanced governance practices,” said Mr. Omar.

The discussion recognised that independent Boards not only bring great value to the organisation and shareholders, but also create goodwill and credibility for the company.

Challenges in the Region

In the current economic landscape, businesses and companies often face reduced revenues, lower profit margins and pressures with respect to banking covenants. The discussion focused on key challenges in this regard and outlined solutions to ensure companies have robust Boards. “While the idea of corporate governance is well established, the key challenge reported by corporates is to find suitable independent candidates. To that end, it is important that Board retreats and briefings are facilitated to shed light on how to create truly independent and effective Boards,” said Mr. Tarek.

The corporate governance experts also highlighted other challenges including board members lacking the right skills, not preparing for board meetings, or seeking to dominate the proceedings as key factors that companies face in ensuring a robust Board structure. “Corporates must evaluate the Boards on a regular basis. This can be done through self-assessments, self-evaluation or by hiring the services of external members to evaluate. External evaluation is the most effective method as it focuses on both qualitative and quantitative changes, and companies who get external evaluators to evaluate the Boards have stepped up real high,” added Mr. Johan.

In conclusion, the experts agreed that robust Boards are the guiding force to ensure the sustainability and growth of companies and it is important that the tone is set to drive and encourage the independence of Boards.

Concluding Remarks

The conference concluded with an interactive discussion between the corporate governance experts and the audience, exploring some of the most acclaimed best practices to enhance independence of the Boards. This included:

•      Induction of Board members to foster growth of the organisation

•      Evaluation of Board on a regular basis to improve the performance of the organisation

•      Inclusion of quotas and regulations to encourage gender, age and ethnic diversity. However, mandating quota alone cannot be effective as it could become a box-ticking exercise. Induction and educational/training programmes are required to build a certain level of knowledge to enable board members to participate in discussions, which could be backed up by mentorship programmes for women

•      Education of the Board to help the organisation cope with the latest trends and movements

•      Implementation of mentorship programmes, which can help aspiring or new Board members to deal with challenges effectively

•      Introduction of a ‘Board Secretary’, which paves the way for aspiring candidates to undergo induction and training while at the same time having access to the direct activities of the Board

•      Implementation of a well-structured evaluation before a Board member is asked to leave

Through exploring several topics significant to the independence of Boards, the Corporate Governance Forum served as a treasure trove of ideas and thoughts for independent Boards in the region.


Fatima Baashar

Media Relations Executive

Tel : +97143298996, Mob: +971503686869

E-mail:, Website:

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