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During this stage, the draft charter will be examined and reviewed to identify the views of companies and understand the impacts of such charter on the market prior to putting the final touches on the implementation mechanism before approving the final draft. This phase will also see the enrollment of companies' staff in training courses at DREI, starting from November 2011 and continue throughout 2012 to infuse knowledge about the charter implementation. The second phase, which continues throughout 2012, allows ample time for preparations by companies to meet the charter's requirements and implementation mechanism. The third phase of obligatory implementation will be effective January 2013. Bin Ghalita added that the Dubai Land Department has no doubt that the real estate will promptly respond to this charter that benefits all parties in the sector. The charter is expected to enhance foreign investments in the local real estate sector, enhance transparency and corporate confidence while dealing with financial institutions and other relevant official and semi-official entities. "Developing and strengthening corporate governance practices is a prerequisite for protecting property rights, attracting and ensuring the loyalty of investors, developers, brokers, lawyers and managers of property owners' association in addition to residents, consultants and stakeholders from other entities. This will surely boost confidence in Dubai's real estate sector," bin Ghalita said. Mahmoud El Buri, DLD Senior Director of Real Estate Development Department expressed confidence that the implementation of corporate governance best practices on the companies and projects level will result in promoting confidence in Dubai's real estate market. "Mature markets require professional development and implementation of the principles of corporate governance. This has motivated the Dubai Land Department to develop frameworks and infrastructure of the regulatory framework for corporate governance to enhance the sector and meet global best practices in this area," he said. "We are fully aware of the needs of real estate companies, property developers and evaluation companies to follow a more transparent approach and to commit to honesty in the reports and the prices they offer. Given the importance of the real estate sector internationally, the corporate governance plays an important role in attracting local and international investors," El Buri added. He pointed out that an extensive education campaign is being prepared to promote the development of the regulatory framework for corporate governance in the real estate sector through induction sessions aimed at informing all stakeholders on the latest developments and how to apply corporate governance framework standards. "Real estate corporate governance in Dubai focuses on seven standards or criteria developed by a team of professionals who organized several meetings with senior officials in major real estate companies operating in the emirate's market in order to communicate and conduct in-depth discussions and dialogues to enrich the process of drafting such criteria," El Buri said. "Along with this draft, the team also prepared a charter of honor for real estate companies. Signing this charter will be the first step in applying the standards of corporate governance," he concluded. The seven criteria, on which the corporate governance charter is based on, are: 1- The existence of a board of directors in the companies tasked with running the company. Also, the availability of clear details about the shares of board members. In addition to clarifying the mechanism of electing them and their approach to run the company and its resources. 2- Companies must have quarterly audited financial reports to clarify the financial position at a specified date and to provide financial information about the company summarized in the certified financial reports to help shareholders, investors and policymakers in receiving such information. The most important of these financial reports that must be provided by the company's accounting system within the corporate governance framework are: financial statements, specialized reports for board members who are running the company, in addition to special reports of projects undertaken by the company and the reports related to regulatory responsibilities or controls related to investment, capital, manpower and others. 3- Best practices for transparency in announcing the company's activities in the real estate market and the size of projects and details of its contracts with partners or investors or contractors, or other related parties. This requires the company to be fully transparent in announcing sales, progress and other related news or dealings. 4- Company's commitment to the Charter of the ethics of the real estate development. 5- Company's ability to manage, measure and evaluate risks and develop management strategies in this regard. Such strategies shall identify, measure, control and reduce risks facing the company or the organization. 6- Company's ability to manage the quality and commit to management approach to recognize and meet the needs of the investor as well as the acquiring the means to manage the company to enhance its effectiveness, flexibility and competitive position on the scope of work as a whole 7- Company's requirement to allow DLD to audit its accounts and conduct technical auditing. The Dubai Land Department and its educational arm DREI signed agreement of cooperation with the Hawkamah Institute for Corporate Governance aimed at improving corporate governance within the real estate industry in the UAE. The agreement reflects the commitment of signatories towards improving the corporate governance regulatory framework and implementation of the same in real estate sector. Leading governance standards include: - Requiring companies to disclose details regarding the size of their projects, progress, contracts and market sales. - The ability of the developer to compete and manage the quality. In addition to recognizing and meet the investor's needs. - Provision of quarterly financial and accounting reports to reflect the financial position of the company and its under construction projects - Enabling DLD to financially audit the company's accounts. - Election of company's boards and provision of lists of members' quotas - The company's ability to measure, evaluate and develop risk management strategies.Copyright Emirates News Agency (WAM) 2011.
