Bahrain issues new corporate governance rules

by Trade Arabia, November 14th, 2010.

The Central Bank of Bahrain (CBB) has issued the new requirements incorporating the corporate governance code of the Kingdom in line with the code issued earlier this year by the Ministry of Industry and Commerce. The new rules issued last month for banks include both the new corporate governance code requirements (formally announced, the existing CBB requirements and new Board attendance rules).

The new rules incorporate the nine fundamental principles of corporate governance stipulated in the code for financial institutions, their boards and management to follow, said a CBB statement. As Islamic finance is considered an increasingly important market segment, one of the principles of the code is targeting Islamic institutions in relation to the implementation of Islamic Shari’a principles, the statement added.

The CBB corporate governance rules focus on the Board’s roles and responsibilities, the decision-making process and independence of judgment. The CBB corporate governance rules focus on the Board’s roles and responsibilities, the decision-making process and independence of judgment.

The CBB rules clearly state that the Board’s role and responsibilities should include:
•Monitoring the overall business performance and strategy for the bank;
•Causing financial statements to be prepared which accurately disclose the bank’s financial position;
•Monitoring conflicts of interest and preventing abusive related party transactions; and
•Assuring equitable treatment of shareholders including minority shareholders.

The review of the strategy process requires the Board to review the bank’s business plans and the inherent level of risk in these plans as well as assess the adequacy of capital to support the business risks of the bank. (continue reading… )

 

 

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