Corporate Governance

The corporate Governance Code:

On 19^th March 2018, the Ministry of Industry and Commerce issued the Decree No. (19) for 2018 concerning the issuance of the Corporate Governance code, which was published in the official gazette No. 3360 on Thursday 5^th of April 2018, which is applicable to all joint stock companies incorporated in Bahrain expect for joint stock companies licensed by the Central Bank of Bahrain.

The purpose of the Corporate Governance Code:

The Code aims to provide guidance to companies on the best ways to manage, lead, organize and monitor their businesses through a series of transparent, clearly defined policies, processes and procedures.

Purpose of Governance:

Governance aims to establish a system that governs and controls the companies’ businesses and practices in order to create efficient institutions which contribute to building a strong, transparent and competitive national economy for the purpose of reducing any adverse effects on the national economy, acting parties and local community due to not committing to the best practices in managing joint stock companies.

Key Pillars of Governance:

The key pillars of corporate governance are:

a- Ensuring that the information required by regulators, shareholders and investors, as well as related parties is provided in a timely and appropriate manner to enable these parties to take decisions and run their businesses properly, while the matters of interest to shareholders and various related parties are transparently disclosed by the company and its BoD, which would help attract more businesses to the company, including various investors within the Kingdom of Bahrain.

b- Accountability, which means that the board of directors are aware that they are responsible for their decisions and actions in relation to the management and leadership of the company before the shareholders and are held accountable to them, and they shall subject themselves to evaluation in accordance with best practices.

c- Justice, which means that all shareholders, employees and related parties shall enjoy fair and equitable treatment by the directors and Executive Management, without bias or any concealed interests.

d- Responsibility, which means that the directors shall perform their duties with honor, integrity, impartiality and sincerity towards the economy and society in general, and the company in particular, exercise caution, care and due diligence in the performance of their duties, put the company’s best interest ahead of their own self-interests and take into account the corporate social responsibility.

the companies which apply the code:

The Code is applicable to all joint stock companies incorporated in the Kingdom of Bahrain and registered pursuant to the Commercial Companies Law.

In the application of this Code to the joint stock companies of a family nature, the provisions thereof that suit to their financial, administrative conditions and capacities shall be observed, in order to achieve the results which this code is aiming for.

Structure of the Code:

The code contains eleven fundamental principles of corporate governance, each of which contains several guidelines and directives to be applied and considered by every company when declaring its compliance with the provisions of the Code pursuant to the Comply or Explain Principle. And The principles of corporate governance are as follows:

1. The company shall be headed by an effective, qualified and expert Board.

2. The board and the executive management shall have the full loyalty to the company.

3. The board shall have rigorous control for financial audit and reporting, internal control and compliance with the law.

4. The Company shall have effective procedures for the appointment, training and evaluation of Board members.

5. The company shall remunerate directors and officers fairly and responsibly.

6. The board shall establish a clear and effective management structure for the Company, and define job titles, powers, roles and responsibilities.

7. The company should communicate with shareholders, encourage them to participate and respect their rights.

8. The company shall disclose its corporate governance.

9. Companies which offer Islamic services shall adhere to the principles of Islamic shari’a.

10. The board shall ensure the integrity of the financial statements submitted to shareholders, through the use of external auditors.

11. The company must seek social responsibility to exercise its role as a good citizen.

The requirement of the Ministry of Industry and Commerce for the corporate governance:

1. Appointment of a corporate officer.

2. A written guide and procedures for corporate governance shall be existed within the company.

3. An independent corporate governance report shall be included in the company’s annual report.

4. Separate item for governance shall be included in the company’s general assembly agenda.

Companies and business owners can view and obtain a copy of the Corporate Governance code, the Corporate Governance Officer Form and Guidelines for evaluating the performance of the Board of Directors by click on the following links: Corporate Governance Code

Ministry of Industry, Commerce and Tourism