Knowledge gap and capabilities are the most significant barriers for achieving effectiveness in management boards and strong corporate governance in the GCC.
This is according to "Embarking on a Journey", a report published by the GCC Board Directors Institute (BDI) this week, that reviewed effectiveness of board directors in the region. The biennial report is based on a survey conducted by BDI of the top 200 publicly-listed companies in the GCC, combined with a survey involving over 200 board members in the region. This edition charts GCC trends and opinions in corporate governance in comparison to the 2009 edition, entitled 'Building Better Boards'.
The report explores various aspects the company boards surveyed, ranging from board composition and structure, and directors' capabilities, duties and accountabilities, to the effectiveness of board dynamics and performance evaluations. In addition to knowledge and capabilities, the report found that board effectiveness in the GCC could also be improved by better preparation and involvement of directors in board meetings. Almost 15 percent of directors surveyed found that their roles and responsibilities as board members were becoming increasingly ambiguous compared to two years ago. On the other hand, the report found that GCC boards have indeed improved on several fronts in the past two years, such as a 40 per cent increase in board independence and 22 per cent of board members being overcommitted from 34 per cent in 2009. These improvements have been identified by the report as being important progresses in strengthening the accountability and commitment of directors to their board responsibilities.
The 2011 report on board effectiveness will enable companies in the region to review priority improvement opportunities in GCC versus global benchmarks, identify key strengths and potential areas for development and discuss key issues and means to improve. The publication was sponsored by Omran Al Omran, The Saudi Investment Bank and Al-Abdulkarim Holding. Mr. Abdullatif Al Othman, senior vice president, Finance at Saudi Aramco and Chairman of BDI, expressed his gratitude for the generous support of the publication's sponsors in launching the report: "We are very grateful for their generous contribution to helping us remain committed to BDI's mission of disseminating high quality corporate governance knowledge and supporting the GCC in building better boards. As the world turns the page on the most severe financial crisis since the 1930s, the necessity to understand and implement robust corporate governance mechanisms has emerged stronger than ever."
The BDI was launched in 2007 by the combination of leading regional corporations: Saudi Aramco, SABIC, Emirates NBD and Zain. It resulted from an initiative by four leading advisory institutions: Allen & Overy, Heidrick & Struggles, McKinsey & Company and PricewaterhouseCoopers. Along with the Emirates Security and Commodities Authority of the UAE, the BDI has had the full support of the regional regulatory authorities including the Capital Market Authorities of both Saudi Arabia and Oman, the Central Bank of Bahrain and the Qatar Financial Centre Regulatory Authority since its inception.
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About the GCC Board Directors Institute (BDI)
The GCC Board Directors Institute (BDI) was launched in 2007 by a group of large corporations and professional advisory firms with the explicit goal to support better corporate governance primarily through building board members' capabilities.
BDI was set-up as a not-for-profit institution with the objective of making a positive impact on the economies and societies of the region by promoting professional directorship and raising the level of board effectiveness. Its principle objectives are:
- To build GCC board member capabilities and enhance their understanding of best practice board governance;
- To create a regional network of board members;
- To forge links between GCC board members and their international counterparts;
- To create a forum for discussion on regional governance issues amongst the business community, thereby placing corporate governance higher on the region's agenda.
BDI has delivered eight workshops so far that have gathered over 145 senior board members representing over 300 boards of major GCC companies. BDI now counts over 200 members from the GCC region who have gained access to a wide network of other regional board directors and business leaders through the Institute.
In early 2009, BDI published its first biennial report, the first of its kind, on board effectiveness in the GCC. The second is due out in early 2011 and will enable companies in the region to review priority improvement opportunities in the GCC versus global benchmarks.
For more information on BDI or to attend an upcoming workshop, please visit the Institute's website at: www.gccbdi.org or contact the Institute directly at +971 (04) 312 4594.
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© Press Release 2011
