UAE Revises Corporate Governance Code

On 12 November the UAE Ministry of Economy/UAE Securities and Commodities Authority issued a decree amending certain aspects of the previously issued April 2007 Code which will come into effect on 1 May 2010 after a period of voluntary compliance.  Here is the Arabic press release.  The English translation is here.

The new measures are include the following:

1. Definition of material transactions as 5% of capital or AED 5 million, whichever is less.  Definition applies to the total of transactions.
2. All such transactions with Board Members must be scrutinized to ensure their appropriateness.
3. The Board Remuneration Committee must set compensation policies for the Board and staff, review these annually, and as well review the compensation of senior managers to ensure that it is appropriate/reasonable given the performance of the company.
4. Existence of a robust functioning internal control/risk monitoring group whose full independence of management is to be guaranteed by a mandated direct reporting by the committee to the Board of Directors.  Its areas of responsibility include risk management, review of compliance with internal policies and as well with various external regulations and laws.
5. Steps to ensure the full independence of external auditors.  The decree itself contains warnings against specific practices which might compromise an auditor's independence.

The decree applies to all listed companies in the UAE except for those owned by the Federal Government or one of the individual Emirates.