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In 99% of organizations the approach to corporate governance is set by the board: the tone from the top. If it is important to the board, it is important to the organization. Two consequences flow from this. First, corporate governance codes place responsibility on the board for delivering an organization’s corporate governance. Secondly, Regulators seek to impose accountability on the board collectively and on individual directors for corporate governance failures.

In response to this global trend, a trend that is gathering rather than losing momentum, boards should focus on corporate governance, including:

  • Board composition; achieving the optimum balance between executive and independent non-executive directors
  • Robust board induction; clarity on role of board and each director linked to focused continuing development; how to improve on the job
  • Clarity on the role of the board, its committees and senior management; is there confusion between executive and the board?
  • Board assessment and evaluation including effectiveness of board meetings and individual directors; what can the board do better? i.e. appropriate rolling agendas and management information;
  • Board ethics and organizational values; prevent the problems arising;
  • Board’s own processes including identification and management of conflicts of interest, dealing in securities, misuse of confidential information,etc; understand the sensitive issues and respond in anticipation;
  • Measured and monitored delegation of authority; has board delegated appropriate to senior mangement? is this delegation monitored?
  • Role in enterprise risk management; cannot delegate risk management and internal control; how should a board respond to these responsibilities? And reflect recent remuneration guidelines.
  • Compensation for board and senior management; be sensitive to remuneration issues including balancing it with risk appetite.
Boards and directors will need expert assistance to fully understand their extensive range of duties, responsibilities and potential liabilities. Ignorance of the law or regulations is no excuse.

Majlis has the skills and experience to assist with board related corporate governance issues including recruitment of independent non-executive directors.

For more information please contact the Corporate Governance Department of Majlis Partners