Event Partner Content: “Corporate governance is a journey, not a destination.”

GAMALELDIN: “CORPORATE GOVERNANCE IS A JOURNEY, NOT A DESTINATION”

Join Dr. Ashraf Gamaleldin, CEO, Hawkamah Institute for Corporate Governance, United Arab Emirates, in the 3-day MEA General Counsel & Board Secretary event to gain more insights on reinforcing corporate governance to ensure integrity and stability

“The Board Secretary plays a crucial role in governance in modern companies,” says Dr. Ashraf Gamaleldin, CEO, Hawkamah Institute for Corporate Governance, United Arab Emirates. “A good Board Secretary is key to a well-performing board, and boards are the ones responsible for corporate governance in companies.” As the forefront of good governance, Board Secretaries should not only need to fully understand corporate governance, but should also have the right personality to keep good relationships with all parties. For Dr. Gamaleldin, the ideal General Counsels and Board Secretaries should be abreast of all the changes taking place in the industry and economy. They need to work close with the management and know their boundaries. In other words, they are not executives and they do not make decisions, they only give recommendations and raise ideas. They need to be politically correct and sensitive to make sure that they are not offending certain parties nor stepping on someone’s toes creating negative responses to their proposals. Before putting an idea on the table, they need to do their homework; do enough research and fact-finding activities so that their ideas make sense. He narrows it down to 4 crucial characteristics that every General Counsel and Board Secretary should possess:

1. An effective communicator, as they facilitate the communications between various boards.
2. Diplomatic in following up with the management for reports.
3. Well-organized, as they are in charge of files of the board.
4. Discreet, as they have access to sensitive information about the company and its people.

The role of the Board Secretary in the MEA region has grown massively in the past couple of years. To put it in a logical statement: the performance of the board is largely affected by the performance of the Board Secretaries. It has once been considered that corporate governance and Board Secretaries were just an afterthought before it was taken seriously. As of 2018, they have proven their relevance to the corporate world.

THE EVOLUTION OF CORPORATE GOVERNANCE AND BOARD SECRETARIES IN THE MEA REGION

Dr. Gamaleldin shares that global corporate governance came to the forefront for regulators after the first wave of corporate scandals and collapses during the Asian crisis late 1980s and early 1990s. Then, the focus was on audit and control systems. When the financial crisis hit in 2008, the focus of regulators then shifted to board composition, committees, independence, strategy and risk management issues. The latest set of corporate scandals that took place over the last few years resulted in yet another shift in governance. Now, the focus is more on corporate values, ethics and culture.

Africa and the MENA region somehow have a different evolution path. Governments and regulators focused on governance as a means to attract foreign direct investment (FDI). The interest in governance has started quite late. It was in 2002 when Oman, the first country of the MENA region, issued a code of corporate governance, and then countries followed one by one. While some countries started caring for governance as a cosmetic procedure, others were serious about it. Currently, most governments realize the importance of governance to grow their economies, protect wealth and attract long-term investors. With its aim to be a global financial and business hub, the UAE has long worked on improving its governance rules both for listed companies as well as state owned ones. It is fair to say that the UAE is the only government in the region to strongly push towards better governance practices within the government sector itself.

HOW TO IMPROVE UAE’S CORPORATE GOVERNANCE

Dr. Gamaleldin assures that the UAE is doing quite well in the area of corporate governance. However, he reiterates that there’s always more that can be done. “Corporate governance is a journey, not a destination,” he says.

For example, a large portion of the UAE economy is controlled by large, family-owned, non-listed companies. Such companies are not subject to any serious governance regulations. With the well-known challenges that such companies face, especially on the 2nd and 3rd generations, this puts a considerable amount of wealth and jobs in danger. The UK has recently issued a code of corporate governance for large, non-listed companies and the UAE should do the same.1

Another example is on the area of minority shareholder rights. Small shareholders in listed companies still feel that they are not well-protected, nor that their opinion matters to boards and majority shareholders. If this phenomenon continues, it will negatively affect the ability of UAE stock markets to attract foreign and local investors alike. Another issue is board effectiveness. While many UAE companies have international best practices, other companies have poor performing boards. It is therefore about time that the UAE mandates annual board evaluations, something that is already mandated in a couple of neighboring countries.

CORPORATE GOVERNANCE IN LARGE ORGANIZATIONS

When Dr. Gamaleldin began his role as Chairman and CEO of the Egypt Post back in 2013, he had two main tasks: a) to reform the management and; b) to introduce corporate governance for the first time. Not to mention, this is a hundred-year-old organization with roughly 50,000 employees. He describes this as perhaps his biggest professional challenge yet.

“The best way to handle such situation was to establish teams from within the organization itself, speak to all levels of employees at various geographic locations all the time, and reform the incentive structure to reflect the new organizational values and targets.” Dr. Gamaleldin shares. The main challenge is to handle to the resistance to change. This is due in large part to human nature of fearing for something new, hence being boxed in the old traditions of the former system. “Good communication is a key in facing such resistance,” he says. “The use of modern communication technology and platforms come really handy. They help you reach a large number of your target audience efficiently. Modern communication tools also help you respond to negative campaigns and rumours fast, reducing the effectiveness of disruptive groups.”

Learn more about Dr. Ashraf Gamaleldin and his thoughts on the modern role of General Counsels and Board Secretaries in our MEA General Counsel & Board Secretary event in Dubai, United Arab Emirates, on the 29th – 31st of October 2018.

“My presentation will focus on the challenges faced by regional companies and their boards and discuss how regional boards can become more effective. Among the issues I will focus on will include the value of gender diversity on boards and the vital role that Board Secretaries play in establishing good governance systems in companies.”

Text by: Dennis Buckly

Should you be interested to attend the MEA General Counsel & Board Secretary in Dubai, United Arab Emirates on the 29th – 31st of October 2018, please contact Didi Jaafar at didi.jaafar@managementevents.com  or read more here.

FOOTNOTES

1 The Family Business Council published the first GCC Governance Code Guidelines for Family Businesses in 2016.