Directors’ and Officers’ Liability Insurance in the MENA Region : Some Considerations for Directors
While the use of Directors and Officers (D&O) Liability Insurance has not grown as fast companies in the region,recent headlines should cause many directors and officers to think about directors and officers liability insurance.
Hawkamah partnered with Clyde & Co to organize a workshop designed to highlight the need for regional directors and officers to critically look at their potential liabilities as officers of companies. The articles in this White Paper came from presentations made by experts examining the following:
- Directors Duties and Liabilities in the UAE Corporate Governance Code
- Some of the Lessons Learned from the Crisis on Directors Duties and Liabilities
- An Insurance Advisor’s Perspective on why Directors should be considered
- Various Considerations on Insurance Coverage
Incentives and Remuneration in the New UAE Corporate Governance Law
The new corporate governance law for publicly listed companies in the United Arab Emirates came into force in April 2010 which will apply to public joint stock companies established in the UAE and companies listed in any securities market in the UAE and to their Boards of Directors.
The provisions of the UAE Code that have a bearing on remuneration can be summarized as the following. It mandates the setting up of a Nominations and Remuneration Committee, which is tasked with the formulation and review of remuneration policies. The Code states that this Committee should comprise at least three Nonexecutive Directors of whom at least two should be independent. The Chairman of the Board cannot be a member.
The Code also refers to Article 118 of Law No 8 of 1984 which stipulates that remuneration must not exceed 10% of the company’s
net profit. In addition, the Code calls for the issuance of a Corporate Governance Report by the company which should, among other things, set out the “means of remuneration fixation as well as the remuneration of the general manager, executive director or chief executive officer”.
This White Paper lays out some of the options that Remuneration Committees should consider as they carry out their duties as set out within the UAE Code.
White Paper 3:
Brief on the United States’ Dodd-Frank Wall Street Reform and Consumer Protection Act
On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act). The Act is a complex bill spanning 2,323 pages focusing mainly on the financial service industry , but the Act also includes a number of corporate governance and executive compensation provisions that apply to all publicly traded companies (subject to exemptions for smaller issuers). This White Paper focuses on these changes affecting all listed companies in the United States.
The Act requires the US Securities and Exchange Commission (SEC) and the stock exchanges to adopt rules implementing the various new corporate governance and executive compensation provisions. A round of regulatory implementation is just starting and more rounds of legislative action should be expected. In other words, many of the specific requirements are yet to be formulated by the SEC and other relevant authorities, but this Brief will highlight the areas where substantive corporate governance rules now are in the pipeline
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