Leading industry experts in corporate governance highlighted the importance of diversity and the independence of boards in the Middle East and North Africa (Mena) region at a recent summit held in Dubai.

The Corporate Governance Forum organised by UAE-based Hawkamah, a leading centre for corporate governance, at Dubai International Financial Centre (DIFC) drew corporate governance practitioners, drivers and regulators from across the region.

The event kicked off with opening remarks from Dr Ashraf Gamal El Din, CEO of Hawkamah, who facilitated the discussion on enhancing corporate governance through independent Boards and highlighted key areas where boards play an important role, such as accountability, foresight, strategy and supervision.

“The board is responsible to the shareholders for the proper management of the company and meets regularly to set the overall direction and strategy of the organisation, to review scientific, operational and financial performance, and to advise on management appointments. All key operational and investment decisions are subject to Board approval. As such, it is important that the Board is independent,” remarked Dr Ashraf.

According to him, adequate and effective corporate governance is considered by many to be a critical component in supporting boards and management to navigate uncertainty and deliver long term sustainable value to shareholders and stakeholders.

Accentuating the importance of an independent board as a benchmark to judge the performance of a corporate entity and its contribution to the national economy, the forum facilitated discussions on the independence of boards in the region, the value created by independent board members and regional challenges.

Dr Ashraf also outlined and explored the four important pillars of corporate governance including accountability, fairness, transparency and responsibility which serve as a catalyst for the continuous improvement of the Board and business.

The discussion, which featured distinguished speakers such as Omar Al Shunnar, the co-founder and chairman of Aquagas Group of Companies, Tarek Fadlallah, the chief executive of Nomura Asset Management (Middle East), and Johan Brand, an experienced leadership professional and the owner of a leadership advisory firm, explored how corporate governance in the Mena region has been directed by promoters and owners of family owned businesses.

In view of the emerging and growing nature of the corporate world, the experts stressed the importance of increasing diversity and the significance of balancing the skills and experience of Board members to ensure stronger governance practices.

“Boards in the Mena region comprise known members and while this makes them quite comfortable and enhances the trust, there can also be some negative implications. As such, independent Boards should be encouraged in order to facilitate a stronger and more concrete business model,” remarked Brand.

As the board’s role is to oversee the management and governance of the company and to monitor the performance of senior management, experts suggested that it should be independent from the management allowing them to be objective without any conflict of interest or the influence of interested parties.

The experts also highlighted the importance of diversity across age, ethnicity and gender in order to manage the goals of the company and meet the expectations of the shareholders.

Al Shunnar pointed out that the Mena region has significantly less women serving on boards.

"However, strides have been made to provide women with the opportunity to showcase their skills and talent. The government of Dubai has been very progressive and has introduced a number of processes and regulations in an effort to increase the number of women in senior positions," he noted.

The recent status in the UAE indicates that female board members amount 1.9 per cent despite the fact that there is an increased value for the company by having female board members.

A recent report by Hawkamah on Gender Diversity also highlighted that women feel a constant pressure to prove themselves capable of being on Boards. It was therefore suggested to mandate gender quota, but this could lead to ‘trophy hunting’. Thus, there was the call to ensure the qualification of women becoming Board members.

The forum also highlighted the global trends adopted by companies to make Boards as diverse as their operating environments. They highlighted that Boards built on diversity in regard to age, language, ethnicity, gender, education and experience provide a different dimension to the decision making process which has the potential to ensure greater business opportunities.

At the close of the event, experts accentuated the need for boards that have a majority of independent members, who are neither members of the family, employees of the company, advisors, customers or suppliers, to add greater value to the business.-TradeArabia News Service