Key code in Bahrain forum focus
Manama, September 28, 2010
The Corporate Governance Code for Bahrain comes into effect from January next year. A timely conference aims to demystify the code and unravel issues surrounding ethics and investor relationships.
The conference on The Role of Corporate Governance in Enhancing Organisational Sustainability and Growth is being held at the Crowne Plaza hotel from November 1 to 4.
It is organised by the Bahrain Accountants Association under the patronage of Industry and Commerce Minister Dr Hassan Fakhro.
The code has been developed to help clarify what good corporate governance is and to encourage it in all companies that do business in Bahrain.
It is based upon nine core principles of corporate governance that adhere to international best practices.
It is issued in a 'comply or explain' framework, which means companies will have to comply with the recommendations or give an explanation in case of non-compliance.
The code will initially apply to public companies, but it is intended, in due course, to apply to all operating joint stock incorporated under Bahraini law.
The role of independent non-executive directors, as custodians of the governance process, has been recognised, with the code requirements that 50 per cent of the board of directors in a company should be non-executive.
'This is an important element of the code, but it might be something new to companies in the region because of the culture, especially in the family-owned businesses,' said Gulf Air internal audit senior manager Khalil Jaafar, one of the speakers at the event.
While the intention is to apply the code for all operating joint stock companies, resistance is likely to come from family-owned businesses because of information confidentiality concerns, he said.
Disclosure and transparency are the underlying principles of the code as disclosure is crucial in order to allow any outside monitoring to function effectively.
The event will focus on the regulatory requirements for corporate governance and the codes individually.
It will also highlight the role of internal auditing, legal implications of the codes and case studies of companies in Europe, Middle East, Asia and North America, including success stories.
'The role of corporate governance has been in the spotlight for quite some time since the collapse of major businesses in 1980s and 1990s, but more recently, due to the US housing crisis and the collapse of major financial institutions leading to the global economic crisis,' said Information Systems and Audit Control Association Bahrain chapter president Khalifa Al Jowder.
'Experts over the last four years have dwelt on what went wrong leading to the financial crisis. We should now consider what should be done to avert such large-scale business failures from occurring in future,' he added.-TradeArabia News Service