A board of directors shall be composed of a minimum of three members and a maximum of 11 members, provided the number of members is always an odd number.
The board may be composed of executive, non-executive, independent and non-independent members, provided that the majority of board members shall be non-executive independent board members. A recent amendment to the Corporate Governance Framework in the UAE made it mandatory by 2022 for all listed companies to have 20% female representation on the board.
Roles of Board Members
The roles of boards of directors are as follows.
Taking the necessary procedures to ensure compliance with applicable laws, regulations and resolutions, as well as the requirements of the supervisory authorities.
Adopting the strategic approaches and main objectives of the company, and supervising implementation thereof. This includes:
- setting the company’s comprehensive strategy and main work plans and reviewing thereof constantly;
- setting risk management strategy and reviewing thereof constantly;
- specifying the best capital structure, strategies and financial objectives of the company, and approving the annual budgets;
- supervising the company’s main capital expenses and ownership and disposal of assets;
- setting performance objectives and monitoring implementation and the overall performance of the company;
- conducting periodic reviews of the company’s organisational and occupational structures and adopting these structures.
Taking the necessary procedures to ensure efficient internal auditing of the work flow in the company, including:
- setting a clear policy approved by the board to ensure efficient internal auditing of the work flow in the company;
- setting written and detailed regulations and procedures for internal auditing, which determines the duties and responsibilities in compliance with the policy approved by the board and the general requirements and objectives stipulated in the applicable legislations.
Establishing an internal auditing department to follow up compliance with the applicable laws, regulations, resolutions and requirements of the supervisory bodies, the internal policy, regulations and procedures set by the board.
Setting written procedures to manage and address conflict of interests and dealing with potential cases of such conflict for board members, the senior executive management and shareholders, and setting the procedures to be taken in cases of misuse of the company assets and facilities or misconduct resulting from transactions with related parties.
Ensuring the soundness of administrative, financial and accounting systems, including the systems related to preparation of financial reports.
Ensuring the use of appropriate regulatory systems for risk management by outlining potential risk and discussing it with transparency.
Setting clear and precise standards and procedures for board membership and putting them in force subsequent to approval by the general assembly.
Setting a clear delegation policy in the company to determine delegated persons and the powers assigned thereto.
Setting a policy regulating the relationship with stakeholders in a manner ensuring the company’s fulfilment of its obligations towards them, preserving their rights, providing them with required information, and establishing sound relations with them. Such policy shall cover the following aspects:
- mechanisms for indemnifying stakeholders in the event of violation of their rights approved by laws and protected by contracts;
- mechanisms for settling complaints or disputes that may arise between the company and stakeholders;
- maintaining confidentiality of the information related to them;
- the company policy towards the local community and environment.
Setting a code of conduct for the board members, the staff, auditor and persons to whom some of the company works are assigned.
Setting procedures to apply governance rules in the company, review of such procedures and assessment of compliance thereto on annual basis.
Establishing appropriate development programmes for all board members to develop and update their knowledge and skills, ensure effective involvement in the board and ensure implementing any training or qualification programmes as determined by the Authority or the market.
Familiarising a newly appointed board member with all the company departments and sections and providing them with all the information required to ensure correct understanding of the company activities and works and full realisation of their responsibilities, all that enables them to perform their duties duly in accordance with the applicable legislations, all other regulatory requirements and the company policies in its field of business.
Setting procedures to prevent insiders in the company from using the confidential internal information to make tangible or intangible gains.
Setting a mechanism for receiving shareholders’ complaints and proposals, including their proposals to add particular issues in the general assembly agenda in a manner that ensures studying such proposals and making the right decisions about them.
Adopting criteria for granting incentives, bonuses and privileges to board members and senior executive management in a manner that serves the company interest and realises its objectives.
Setting the company disclosure and transparency policy and following up its implementation in accordance with the requirements of the supervisory authorities and applicable legislations. Such policy shall include the following:
- a commitment to disclose periodic reports, material information, insiders and their relatives’ ownership of securities issued by the company, related parties transactions performed with the company, and the benefits of the board members and senior executive management;
- providing information to shareholders and investors precisely, clearly and punctually so as to enable them to make their decisions;
- using the company website to enhance disclosure and transparency;
- setting a clear policy for distribution of the company profits in a manner that serves the interests of both the shareholders and the company; such policy shall be displayed to shareholders in the general assembly meeting and mentioned in the board report.
Ensuring the availability of resources required to achieve the company’s objectives.
Ensuring the protection of shareholders’ interests and the company’s assets.
Ensuring the establishment of a compliance function to follow the compliance with applicable laws, regulations and decisions, as well as regulatory requirements, internal policy, regulations and procedures established by the board.
Determining the extent of the company-wide risk appetite, including specific targets, maximum limits or indicators of risk appetite.
Supervising the company’s human resources polices.
Ensuring the accuracy and validity of the disclosed data, statements and information according to the applicable policies and regulations in relation to disclosure and transparency.
Determining and recommending potential new board members for election by shareholders.
Recommending the remuneration policy of the board for approval by shareholders.
Evaluating the overall performance and effectiveness of the board, its committees and members and taking corrective actions as appropriate.
Ensuring that the board communicates with stakeholders through the investor relationships function.
Forming specialised committees from the board according to the resolutions that determine the duration of these committees and their powers, functions and responsibilities, as well as the method used by the board for monitoring these committees. Such resolutions shall determine names, duties, rights and obligations of the members.
Evaluating the performance and works of the board and its members.