22/12/2015 08:29 AST
The new code of corporate governance that was issued by the Capital Market Authority (CMA) in Oman will be effective from July 2016 and is applicable to all public companies listed in MSM.
The Code that was issued July this year will be effective in July 2016, except for the new Independence rule for directors, which are applicable upon next election.
Speaking at a seminar organised by KPMG, Shaikh Abdullah bin Salim al Salmi, (pictured) executive president, CMA, said during an interaction on the subject that the English translation of the code is ready and the authority is ready to discuss any issues related to the subject.
As CMA continues to drive good corporate governance, the new code brings many changes that include all board members should be Non-Executive Directors (NEDs) — previously board members comprise majority NEDs.
It also suggests that a nomination and remuneration committee to be formed, comprising board members to assist in appointment and remuneration of executive management and the performance of the board to be measured by a third party (other than external or internal auditors).
The General Meeting has the authority to remove one or all board members; the chairperson of audit committee cannot be a member of any other board sub-committee.
The chairperson of a board committee or sub-committee cannot be the Chairperson of any other board sub-committee (the chair of risk committee cannot be chair of investment committee).
The secretary of the board cannot be senior management or a related party and should have a legal, accounting, auditing or secretarial background. For example, CFO cannot act as board secretary.
The audit committee will directly invite proposals for external auditor (not through CFO, CEO.) Auditors can now report any suspected material fraud directly to respective regulators, such as CMA, CBO, AER, TRA) without an approval from the company’s board.
Comprehensive definition of Independent Director included (audit committee chair and majority of audit; committee members continue to be independent; no relationship with the company, parent company, subsidiaries or associates as defined below: • holds 10 per cent shares or more • represents juristic person who owns ten per cent shares or more.
Employee or senior executive during past two years or first degree relative to any senior executive Director or first degree relative to any of the directors.
The independent director should notify the board within 30 days when any of the aforesaid conditions are applicable to him due to change in circumstances and provide annual confirmation of being independent to the board.
Restriction on board remuneration not changed (lower of RO 200,000 or five per cent of net profit); no changes affecting internal audit (e.g. no requirement for Quality Assurance Review of internal audit, as required by the Institute of Internal Auditors). No requirements for Directors’ Liability insurance and code of conduct for directors (to be developed by each company). Only up to two board meetings a year by video conference.
Board to approve a formal succession plan for executive management and CEO of a listed company cannot hold the same position at subsidiaries and no guidance on directors’ qualification and age.
Paul Callaghan, partner, KPMG, said, “The new code of corporate governance prescribes that all Board Members should be non-executives. Some of the key highlights of the new code are: performance of the Board to be measured by a third party; Chairperson of Audit Committee cannot chair any other Board Committee; and formal code of conduct for Directors to be developed. The new code also raises some questions for Boards to consider including: what should the required code of conduct for Directors include? What criteria will the third party use to assess Board performance?
Oman Daily Observer
Please wait...
