Directors and chief executives have a fiduciary duty to their investors, customers, employees and the general public, said an expert in corporate governance.

Former Harvard Professor Nabil El Hage was speaking at a corporate governance workshop organised by the Waqf Fund for research, education and training in Islamic finance for more than 20 chief executives and board members of Islamic banks.

Prof El Hage discussed several real life cases to highlight the issues, followed by a discussion by participants.

He pointed out that business owners can no longer afford to ignore the ethical dimension of their decisions, in addition to the economic and legal aspects.

"This is true for all businesses but even more so in case of Islamic banks that have to fulfil the additional requirements of Sharia compliance," he said.

"It inevitably means more ambiguity and board members should be prepared to give their judgment on such matters by exercising sound judgment while fulfilling the duties of loyalty, care and candor," he added.

Fund chairman Khalid Hamad emphasised the importance of good corporate governance for sustainable business in good times and bad.

He said the decision-makers of Islamic financial institutions need to understand clearly their responsibility as board members, especially in line with the code of corporate governance introduced recently in Bahrain.

The workshop also highlighted some of the global corporate governance issues which are also relevant for Bahrain and the region.

The fund has been serving the Islamic finance industry in Bahrain since 2006.

It offers several programmes targeted at Islamic finance practitioners and organises roundtable discussions on topics of importance to the industry.

It has 20 member institutions, including the Central Bank of Bahrain. – TradeArabia News Service