• Dr. Omran: The new amendment to listing rules allows the inclusion of members from outside the company in the Audit Committees
FRA’s BOD agreed at its last meeting to make an amendment to listing and delisting rules to support the corporate governance process within companies , enhance the role of the companies’ BOD and help them in performing its oversight role more efficiently and effectively, after the amendment allowed the committee to include members from outside the company.
In this context, Dr. Mohammed Omran – FRA’s Chairman issued Decision No. 91 of 2020 on amending listing and delisting rules, so that the Audit Committee at listed companies shall include an odd number of members not less than three from non-executive directors (NEDs). Also, the Committee may include in its membership members from outside the company and the majority of the members must be independents, provided that its chairman is one of them. In all cases, the members of the Committee must be known for their competence and experience in the company’s field of work and at least one of them must have experience in financial and accounting affairs. In addition, the Committee may seek the assistance of an auditor or whoever it deems appropriate to attend its meetings other than its members.
FRA Chairman says that the Authority’s BOD has ensured that the amendment on governance process extends to brokerage companies, real estate financing companies, financial leasing and factoring companies, consumer finance companies and Microfinance companies based on international best practices in corporate governance. According to that amendment, companies’ boards are allowed to include members from outside the company upon forming the Audit and Risk Committees to ensure impartiality. This aims to maintain objectivity when considering and discussing issues presented to both committees, given that these members are independent and have no relationship with the company in a manner that supports opportunities for integrity and impartiality.
Dr. Omran adds that upon forming Risk Committee – brokerage companies, real estate financing companies, financial leasing and factoring companies, consumer finance companies and microfinance companies – shall include an odd number of members not less than three from non-executive directors and independent members. The committee may include members from outside the company and its chairman must be from non-executive or independent members.
Dr. Omran also noted that the Authority granted companies operating in non-banking financial activities and listed companies a period to settle their legal status up to 31 December 2020 in accordance with the decisions issued in that regard.
It is worth noting that corporate governance is the set of principles and systems that govern the relationship between the board of directors on the one hand and the company’s owners and the other parties dealing with it on the other hand. It aims at achieving the best protection and balance among all parties. Among the most important pillars on which the principles of corporate governance are based are the existence of committees emanating from the Board of Directors. These Committees shall help the BOD in accomplishing its tasks. On the other hand, the Board shall define the committee’s powers and competencies and follows up its work to ensure its effectiveness.