16 April 2007 — Dr. Habib Al Mulla Chairman Calls for Effective Trade and Professional Bodies to Develop Standards for Professionals and Firms
Dubai, UAE, April, 16 2007: Today, at the Corporate Governance Forum, Dr Habib Al Mulla called for more commitment to corporate governance, stating ‘we need effective trade and professional bodies to develop standards for professionals and firms, better, and more critical, business reporting and we need stronger disclosure requirements’.
Dr Al Mulla was addressing the subject of corporate governance and the role of regulation in effectively dealing with the multiplicity of rules.
Dr. Al Mulla said, ‘according to the World Economic Forum report, the UAE is the most competitive economy and is number one in the Transparency International Report in the Arab world but we must establish a continuous improvement programme and further progress our position.’
In concluding Dr Al Mulla, stressed that, ‘we need effective trade and professional bodies to develop standards for professionals and firms; we need better, and more critical, business reporting and we need stronger disclosure requirements; this to ensure the UAE continues to close the gap with the leading economies and financial centres’.
In providing an insight into the OECD Principles on corporate governance, Dr. Al Mulla explained that while corporate governance is primarily about the protection of shareholders, there are other important stakeholders to be protected, ‘employees are often thought of, but creditors are also important,’ he said before adding ‘the basics of company law are so familiar that we sometimes forget that they involve a bargain in which shareholders gain limited liability but at the price of basic governance measures to protect creditors’. Dr Al Mulla expanded on this point explaining, there are the basics of company law designed to protect creditors commenting that, ‘those basics also deal with divergences of interest between shareholders, covering voting, oppression of minorities, and so on’.
Dr Al Mulla pointed out that supervisors put great weight on governance in their standards, explaining they do this because good governance is the only way of consistently delivering the outcomes that regulators want – to protect depositors, policyholders and investors.
Dr Al Mulla addressed the challenges facing shareholders, commenting, ‘as companies grow, it becomes increasingly difficult for shareholders to play an active part in their governance day by day, and their interests can easily diverge from those of management’.
In turning his attention to the DFSA he explained that the DFSA has a strong independent Board and its functions are clearly set out in law. He went on to explain, ‘we have adopted a strong Code of Values and Ethics for employees’. The DFSA is transparent in publishing rules for consultation, provides reasons for decisions, and there are rights of appeal to independent bodies, he added.