A bulletin from Marsh’s London office warns that “firms in the United Arab Emirates (UAE) could fall foul of new corporate governance rules and corporate discipline regulations unless they adopt a more systemic approach to managing risk
The new regulations, set out in “Ministerial Resolution No.(518) of 2009 Concerning Governance Rules and Corporate Discipline Standards,” were created by the Emirates Securities and Commodities Authority. They will come into force on April 30 in the UAE.
Marsh noted that “after that date, companies listed on the Abu Dhabi Securities Exchange and Dubai Financial Market will have to comply with new regulations, which are designed to establish new corporate governance standards in the UAE. The regulations, which include fines for non-compliance, will also apply to listed companies that are partially government owned.”
Some of the more important requirements mandated by the new regulations will require UAE firms to implement the following:
— An effective risk management system with procedures in place to determine, assess and manage major risks
— Basic control elements in place to manage these risks
— A system whereby the board of directors has ongoing control over the risks, the effectiveness of the risk management system and its annual reporting
— A Compliance Office and an internal-control specialized department to ensure compliance
— A designated Compliance Officer and Director of the Internal Control Department
Domenic Antonucci, a Senior Risk Analyst with Marsh Risk Consulting in Abu Dhabi, commented: “For the first time all listed UAE companies, and those aspiring to that standard, have been given a clear legislative driver to implement effective risk management systems across their organizations to promote better corporate governance.
“Good risk management delivers benefits far beyond compliance, such as competitive advantage and influencing an organisation’s total cost of risk and cost of capital. These new regulations will ensure that greater emphasis is placed on risk management and improving corporate governance in UAE in the long term.”
Source: Marsh – www.mmc.com or www.marsh.com
Topics Legislation Risk Management
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