Oman's market regulator unveils new draft code of corporate governance

05/04/2015 00:38 AST

A new draft code of corporate governance was unveiled by the market watchdog Capital Market Authority (CMA) in a move to further enhance transparency, fairness, accountability and responsibility of listed companies and their boards.

Major changes in the new code of corporate governance include mandatory change of auditors within three years (instead of four years now), strengthening rules related to related party transactions, introducing appointment of a compliance officer and formation of a remuneration committee.

Corporate governance is a set of rules to ensure that the listed firm is governed in the most possible fair and ethical manner in an apparent move to protect the interest of all stakeholders.

Oman's 130 listed companies have been given two weeks to give feedbacks/views on the new draft code of corporate governance, which will be considered if needed, before making it as a CMA administrative decision. It is expected that the new code of corporate governance will become mandatory before the end of the year.

Strengthening transparency

The market regulator is aiming at further strengthening transparency, investor confidence and trust, which will help attract more foreign investment to the local bourse.

The new code stipulates on appointment of an external auditor to be replaced after every three years and strengthens related party transactions of companies, which are owned by the directors of listed firms.

Also, annual general meeting will have to appoint a consultant to review the effectiveness of the board, which is mandatory in the new code. The consultant can be an independent agency, different from external or internal auditor of the company. This appointment will be done by the annual general meeting.

Besides, agenda of board meeting will have to be communicated to board members at least one week in advance. As of now, there is no time period stipulated in the corporate governance code.

The new draft code also talks about appointing a compliance officer, which is currently applicable for only entities regulated by the Central Bank of Oman.

Further, the listed company's board secretary needs to have a legal background.

Another major step in the new code is that the chairman of audit committee cannot be a member in any other committee constituted by the board and the audit panel will also focus on compliance aspects.

Remuneration committee

Apart from talking about corporate social responsibility, the new code of corporate governance focuses on formation of a remuneration committee, which will fix salaries for the executive management.

Sources said that the existing code of corporate governance was introduced in 2003 and later amended subsequently. "The new code elaborates in detail on transparency, responsibility, accountability and fairness," said a source.

Times of Oman