Corporate governance is about how to point a company in the right direction and make sure it stays on the right track to achieve its long-term goals.
This maximises the value of the company to its shareholders, employees, creditors and the economy at large. For companies to achieve long-term success, they must take care of all the stakeholders they deal with. And, while management is busy with the day-to-day operations, the board is responsible for corporate governance.
Therefore, if the company does not have the right board, then it cannot do well in corporate governance.
Governance of the public sector is more tricky than in the corporate world. Companies ultimately have profit as their key benchmark. Of course there are other objectives, but in the long term, profit is the key indicator of the company’s success.
If it is owned by the state, then it may have developmental, social and political roles to play. This makes it more difficult for boards to develop good key performance indicators (KPIs) for the management and for the owner to develop KPIs to assess the success of the board.
Some of the public-sector organisations do not even have boards of directors, which means that the classical set up of governance is missing. In such cases, we need to create a non-traditional governance structure and benchmarking system.
For companies, having the right board is in the heart of corporate governance. That means two things: first, board members must collectively possess the right mixture of knowledge and skills relevant for the specific company on which they serve as board members. Second, each board member must be committed and have enough time to do his or her job as a member of the company’s governing body.
__________
Governance in focus
■ Awareness: UAE companies increasingly aware of gains to be had
■ Management: Know your requirements before you set up a board
■ AGMs: When annual meetings become forums for confrontation
■ Virtual AGMs: When the AGM is everything but personal
■ Editor's letter: An issue important to our well-being
■ History: Be good, because investors are watching more closely
■ Poll: Corporate governance in the UAE - have your say
■ Gender equality: 30% Club GCC chapter to boost women numbers on company boards
__________
When selecting board members, we do not usually select individual board members in isolation from the rest of the board – we select the entire board. There is a minimum knowledge that must be possessed by the board, topmost of which is financial knowledge.
Probably one of the most important responsibilities of the board is to ensure the integrity of financial statements. The board, therefore, must be able to read, understand and thoroughly analyse and review financial statements.
The board is also made up of the key governing bodies of the company, therefore some of the board members must have deep knowledge of corporate governance, including the functioning of the board and its committees.
The board is also responsible for discussing and approving company strategy, so some board members must have good knowledge of strategy. Furthermore, regulators now place the function of risk oversight as one of the key responsibilities of boards. Hence, some board members must have good knowledge of risk in general and of the specific business risks facing t he company.
It goes without saying that some of the board members must have good knowledge of the industry in which the company is operating. Knowledge of other disciplines may be needed as per specific company needs.
But a board is not only about knowledge and expertise, it is also about the culture and attitude.
But what if the board member is knowledgeable and experienced but does not have enough time to devote to the company? If the board member cannot read the board packs well, then they cannot add much value to board meetings and to the company itself. The same goes for board committees, which are key tools in the function of any good board.
Despite that, we usually suggest that board members should not sit on more than three to five boards. In some cases, one or two companies are enough, if they are going through crises or restructuring. Serving on more boards may be possible if the companies are operating in stable environments.
Ashraf Gamal El Din is the chief executive of Hawkamah, the Institute for Corporate Governance.
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How to become a Boglehead
Bogleheads follow simple investing philosophies to build their wealth and live better lives. Just follow these steps.
• Spend less than you earn and save the rest. You can do this by earning more, or being frugal. Better still, do both.
• Invest early, invest often. It takes time to grow your wealth on the stock market. The sooner you begin, the better.
• Choose the right level of risk. Don't gamble by investing in get-rich-quick schemes or high-risk plays. Don't play it too safe, either, by leaving long-term savings in cash.
• Diversify. Do not keep all your eggs in one basket. Spread your money between different companies, sectors, markets and asset classes such as bonds and property.
• Keep charges low. The biggest drag on investment performance is all the charges you pay to advisers and active fund managers.
• Keep it simple. Complexity is your enemy. You can build a balanced, diversified portfolio with just a handful of ETFs.
• Forget timing the market. Nobody knows where share prices will go next, so don't try to second-guess them.
• Stick with it. Do not sell up in a market crash. Use the opportunity to invest more at the lower price.
BORDERLANDS
Starring: Cate Blanchett, Kevin Hart, Jamie Lee Curtis
Director: Eli Roth
Rating: 0/5
Greatest of All Time
Starring: Vijay, Sneha, Prashanth, Prabhu Deva, Mohan
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The 24-man squad:
Goalkeepers: Thibaut Courtois (Chelsea), Simon Mignolet (Liverpool), Koen Casteels (VfL Wolfsburg).
Defenders: Toby Alderweireld (Tottenham), Thomas Meunier (Paris Saint-Germain), Thomas Vermaelen (Barcelona), Jan Vertonghen (Tottenham), Dedryck Boyata (Celtic), Vincent Kompany (Manchester City).
Midfielders: Marouane Fellaini (Manchester United), Axel Witsel (Tianjin Quanjian), Kevin De Bruyne (Manchester City), Eden Hazard (Chelsea), Nacer Chadli (West Bromwich Albion), Leander Dendoncker (Anderlecht), Thorgan Hazard (Borussia Moenchengladbach), Youri Tielemans (Monaco), Mousa Dembele (Tottenham Hotspur).
Forwards: Michy Batshuayi (Chelsea/Dortmund), Yannick Carrasco (Dalian Yifang), Adnan Januzaj (Real Sociedad), Romelu Lukaku (Manchester United), Dries Mertens (Napoli).
Standby player: Laurent Ciman (Los Angeles FC).
Donating your hair
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The specs
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BEETLEJUICE BEETLEJUICE
Starring: Winona Ryder, Michael Keaton, Jenny Ortega
Director: Tim Burton
Rating: 3/5
Jawan
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Director: Manuel Calvo
Stars: Yassir Al Saggaf and Fatima Al Banawi
Rating: 2/5
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Klopp at the Kop
Matches 68; Wins 35; Draws 19; Losses 14; Goals For 133; Goals Against 82
- Eighth place in Premier League in 2015/16
- Runners-up in Europa League in 2016
- Runners-up in League Cup in 2016
- Fourth place in Premier League in 2016/17
RESULTS
Bantamweight: Jalal Al Daaja (JOR) beat Hamza Bougamza (MAR)
Catchweight 67kg: Mohamed El Mesbahi (MAR) beat Fouad Mesdari (ALG)
Lightweight: Abdullah Mohammed Ali (UAE) beat Abdelhak Amhidra (MAR)
Catchweight 73kg: Mosatafa Ibrahim Radi (PAL) beat Yazid Chouchane (ALG)
Middleweight: Yousri Belgaroui (TUN) beat Badreddine Diani (MAR)
Catchweight 78KG: Rashed Dawood (UAE) beat Adnan Bushashy (ALG)
Middleweight: Sallah-Eddine Dekhissi (MAR) beat Abdel Enam (EGY)
Catchweight 65kg: Yanis Ghemmouri (ALG) beat Rachid Hazoume (MAR)
Lightweight: Mohammed Yahya (UAE) beat Azouz Anwar (EGY)
Catchweight 79kg: Souhil Tahiri (ALG) beat Omar Hussein (PAL)
Middleweight: Tarek Suleiman (SYR) beat Laid Zerhouni (ALG)
The five pillars of Islam
The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
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