New corporate governance code for SMEs
Dubai, September 28, 2011
The first-ever code of corporate governance for small and medium enterprises (SME) was launched at a conference hosted by Dubai SME, a unit of Department of Economic Development (DED) Dubai.
The code is aimed at helping the SMEs and family-based businesses in Dubai and the UAE understand the basic pillars or principles of good corporate governance, said a statement from Dubai SME.
It will cover the corporate governance policies and procedures, transparency and shareholder relations, board of directors, control environment and stakeholder relations.
Sheikh Ahmad Bin Saeed Al Maktoum, chairman of the Economic Sector Committee, president of Dubai Civil Aviation and chairman and CEO of Emirates airline and Group launched the code at the inaugural conference for corporate governance for SMEs.
Minister of Economy Sultan Bin Saeed Al Mansoori, DED director general Sami Al Qamzi and Dubai SME chief executive officer Abdul Baset Al Janahi took part in the summit.
The primary aim of the conference is to create awareness among Dubai’s SMEs the importance of embracing corporate governance early and now so as to be bankable and investable for sustainable growth, said the organisers.
Dubai SME had engaged Hawkamah, the regional institute for corporate governance – to develop the code to help SMEs understand better the broad principles on corporate governance.
Al Qamzi pointed out that the subject of corporate governance has become a necessity for enterprise growth and development.
'Without proper governance practices, companies are unable to function optimally, especially in this new world order. This Corporate Governance Code for SMEs contains “9 Pillars” or Principles that our SMEs should be aware of, and adopt them in line with their readiness and stage of development,' he noted.
'It is not prescriptive. It serves as a reference and framework for understanding and practicing corporate governance,' the official said.
Lauding Dubai SME on the launch of the corporate governance code for SMEs, Al Qamzi said, 'I look forward to more such initiatives to further develop the SME sector in Dubai.'
Al Janahi said corporate governance opens new doors for SMEs who embrace it willingly.
'A good governance lays the foundation for a quality SME that focuses on building long-term sustainability. It will ensure that the SME is bankable and investable to all key stakeholders such as the banking and finance community, private equity firms, and corporate buyers of businesses,' he added.
Dr Nasser Saidi, director of Hawkamah and chief economist of Dubai International Financial Centre said the theories of corporate governance have largely evolved in the realm of listed companies.
However, the importance of corporate governance for unlisted and of SMEs is becoming increasingly recognized across the world, he noted.
According to Dr Saidi, corporate governance plays a significant role in the growth and sustainability of SMEs.
'Good corporate governance can add value to the quality of operations and management, adding a layer of checks and balances and strategic thinking. Good practices also increase a company’s access to financing and lower the cost of capital,' he stated.
This code, he said, can also be used by various stakeholders in SMEs such as regulators, creditors and investors.
'It offers banks and investors a tool or criteria to incorporate corporate governance criteria in their lending and investment processes, Dr Saidi added.-TradeArabia News Service