Meet the financial guardian: An interview with Ham...

Meet the financial guardian: An interview with Hamad Al Hosani, group company secretary at Emirates NBD

About Hamad Al Hosani – Emirates NDB Bank, Group Company Secretary

With more than 13 years professional experience in the Middle East, Hamad is able to draw on his skills working as a lead in various organisations. In an exclusive interview, he speaks to the GCC BDI about the challenges and rewards of his current role at Emirates NBD.

1- What do you enjoy most about your role?

In my capacity as the Group Company Secretary of Emirates NBD Bank, for which I am proud and honoured to work, I feel this role adds a great deal of experience to my career, namely in the field of work and market. The continuous challenges associated with the latest progress and development of regulations, laws and procedures relating to companies and bank affairs, make me feel happy and excited to do and achieve more. Furthermore, harnessing all of these regulations and laws for the benefit and welfare of the Group gives strength and stability, and here comes my role that I practice and enjoy, enabling me to achieve the desired results.

2- What are the biggest challenges of your role?

There are many significant challenges, among which is governance. Federal Law No. (2) of 2015 on Commercial Companies includes corporate governance in the United Arab Emirates. In turn, our prudent government is keen on keeping abreast of the rapid global development as, in our present days, it is necessary to spread the concept of corporate governance and to implement it properly in line with best global practices.

I am also required to verify the proper application of the policies, procedures and governance of our subsidiaries, despite the fact that banks in the country are not obliged to apply governance to date based on Article  (2)/b of the Chairman of Authority’s Board of Directors’ Resolution No. (7 R.M) of 2016 Concerning the Standards of Institutional Discipline and Governance of Public Shareholding Companies which provides for “B. The provisions “Corporate Governance” shall be applied to local public shareholding companies listed on the Market, the chairmen and members of their Boards of Directors, managers, and auditors except banks, finance companies, financial investment companies, money changers, and monetary intermediaries who are subject to the supervision of the Central Bank”. However, we are already implementing the Group’s governance systems and are fully prepared to implement them as soon as they enter into force under the instructions of the Central Bank of the UAE.

There are also other difficulties represented by encountering challenges relating to the implementation, formulating regulations and improving corporate governance practices that comply with best practices in the light of local laws and regulations.

3- How would you say the role of board secretary has evolved over the last few years?

Corporate secretaries have an important role to play as governance professionals in all types of organizations in the private, public, and not-forprofit sectors. Governance is more than just complying with laws, regulations, standards, and codes; it is also about creating cultures of good practice. This means that corporate secretaries need more than the technical skills and experience to know what corporate governance practices are needed in an organization and why. They also need the emotional intelligence, skills, and experience to ensure that they know how the practices typically would be implemented to work effectively. The modern corporate secretary is no longer a “mere servant,” as often implied in earlier job descriptions and early legal text, but is now expected to provide professional guidance to shareholders, boards, individual directors, management, and other stakeholders on the governance aspects of strategic decisions. The corporate secretary typically would act as a bridge for information, communication, advice, and arbitration between the board and management and between the organization and its shareholders and stakeholders. To fulfill this role, the corporate secretary needs to be fully aware of the powers, rights, duties, and obligations of all of these groups. In addition to providing advice and communication, the corporate secretary often called on to create and manage relationships between these different players in the corporate governance system. To carry out this role effectively, a corporate secretary needs to act with the highest integrity and independence in protecting the interests of the organization, its shareholders, and others with a legitimate interest in the organization’s affairs. This level of responsibility calls for a thorough knowledge of the business environment in which the organization operates as well as of the laws, rules, and regulations that govern its activities. Corporate secretaries also typically would provide practical support to the chairman of the organization to ensure that board meetings are managed effectively. This typically would entail assisting the chairman with agenda development, ensuring that meetings are conducted in line with good vi The Corporate Secretary: The Governance Professional governance and statutory and regulatory requirements, drafting minutes, and following up on implementation of decisions made by the board. This Handbook offers a concise and practical description of how corporate secretaries might carry out their role to improve governance in their organizations. It can also serve as a guidance tool for both IFC clients and advisory staff to clarify the potentially expansive duties of corporate secretaries and to help them assist corporate secretaries in understanding what skills they require to fulfil their roles.

4- How much of a role does the board secretary play in monitoring and improving the board’s corporate governance practices?

Corporate governance aims at optimizing and rationalizing its capabilities and resources by creating a business environment based on responsibility, control, commitment, transparency and clarity, both in defining the company’s strategic objectives and business plans, in defining the rights and obligations of each of its entities, or in managing its relationship with suppliers, financiers, consumers and regulatory bodies to which they are subjected and the activity they operate. This environment interacts with the norms of national legislation within which companies operate and integrate to achieve their objectives effectively and impartially.

The benefits of corporate governance are not only limited to companies, but go far beyond to the national economy, as the continuity and growth of companies in line with the rules of governance, plays a vital role in boosting the economy and increasing GDP.

The need for corporate governance in joint stock companies is highlighted by the fact that they are money companies whose shareholders do not grow by running their daily business directly, unlike individual companies. Setting up corporate governance arrangements in joint stock companies are therefore the most important and vital to ensure a clear relationship between the company’s shareholders and the board of directors, on one hand, and the board of directors and executive management team on the other hand. This is in addition to the fact that the joint stock companies are prepared in their legal and institutional framework to embrace large commercial projects more than any other form of commercial companies, not only in the UAE but in many countries around the world.

The UAE’s shareholding companies have been, and continue to be, one of the most important pillars of the UAE’s trade boom since its inception.

The regulation also emphasized the importance of establishing a policy of professional conduct and ethical values ​​by the boards of directors of the listed companies in order for the companies listed in the Financial Market to be a model of discipline and professional and ethical commitment. The regulation also decided to establish a policy in each company to ensure attaining balance between the company’s goals and community objectives, strengthening the social responsibility of the listed joint stock companies and to encourage them to develop pioneering and effective social programs. The regulation also includes detailed provisions on the auditors of the joint stock companies and their internal control procedures, all within the framework of detailed provisions obliging the boards of directors to disclose all the information needed by the shareholders of the companies and their clients enabling them to set their investment strategy or deal with the company systematically and fairly for the welfare of all concerned parties.

Therefore, corporate governance aims at creating a system whereby the company can be run and directed. This system includes procedures for regulating the various relationships within the company between the board of directors, executives, shareholders and stakeholders by establishing rules and procedures to facilitate the decision making process on the company’s affairs, and to add transparency and credibility to these, to protect the rights of shareholders and stakeholders, and achieve justice, competitiveness and transparency in the financial market. While governance does not provide detailed mechanisms for daily decision making, each company has its own distinctive character and objectives. These companies must develop their own governance regulations guided by this regulation to ensure that they maintain competitiveness in the changing business world.

The Board then monitors the performance and evaluation of the level of implementation by the executive management, and here comes the role of the Board in ensuring the availability of the competent and qualified people who have the experience and know-how to manage the company. In this sense, the shareholders have delegated the members of the Board to run the company and they delegate the detailed daily management powers to the executive directors, and this delegation does not mean the lack of the Board’s role, but the Board shall remain the primary responsible before the shareholders and the third party with regards to the management of the company, and Board cannot evade this responsibility. Board has the duty to ensure that the executive management performs its duties in full, and it is subject to accountability, in addition to its other regular responsibilities.

Disclosure should also be seen as the price to be paid by corporate owners in order to enjoy the advantage of limited liability for their debts. But with the development of financial markets and the entry of many investors in the joint stock companies, disclosure requirements have increased, so that it has become an effective way to monitor the performance of companies and to discover the default within them. When the board of directors and senior executives know that they are required to disclose many financial and non-financial matters of the company, this will prompt them to work seriously because all participants in the financial markets, be it investors, analysts and others, monitor their performance and compare it with other companies. Disclosure also serves as a guarantee and encourages potential investors to provide support and financing to the company.

Thus, companies then disclose their financial statements on a regular basis, and they must audit their financial statements through an external auditor and to publish the audit report. Financial statement reflect the company’s performance in the past period, and the companies must disclose their operational performance, by providing the Board of Directors’ valuation to the commodities or services market in which the company operates. The company must also disclose the nature of the competition faced by it, and the strategy adopted by the company to achieve growth through its relations with stakeholders. This information on operational activity is as important as the financial statement information, especially that it relates to the future period of the company. Disclosure of governance practices and the company’s implementation of it, in addition to the excuses provided by the Company in the event of non-compliance with the implementation of non-mandatory provisions, all of that require information about the Board of directors, Board committees, senior executives and their remuneration. Disclosure of the risks facing the Company is one of the most important non-financial disclosures; it helps to assess the future of the company.

A conflict of interest is that when the person has an interest or a direct or indirect relationship with the subject matter under consideration by such person for the purpose of taking a decision about it whereby, such interest or relationship prevents him or leads to the belief that it prevented him from expressing his opinion or making his decision independently without taking thsi interest or relationship into account. Some of the conflicts of interest events include:

  1. Between members of the Board of Directors when voting in the Board Meeting or General Assembly.
  2. In the company’s operations and contracts.
  3. In the directors’ remuneration and allowances report.
  4. In providing and guaranteeing loans to directors.
  5. In exploiting the company’s investment opportunities, information and assets.
  6. in being engaged in businesses that would compete with the company.
  7. In accepting gifts from a third party who has dealings with the company.
  8. In conflict with the duties of one director who is a member of the board of directors of two competing companies.
  9. In the work of executives and other staff and labour.

This regulation has created the mechanisms to deal with cases of conflict of interest, in addition to what is stated in the system, which reduces the impact of that on the conflict of interest to the maximum level.

These are, in my opinion, some of the most important factors that I greatly focus and work on when monitoring and implementing the corporate governance practices in the Board of Directors, and the methodology I follow to enhance and implement them.

5- In your opinion, what factors contribute to a high performing board?    

According to me, a strong and effective board is clear about its role in relationship to management and understands the difference between managing and governing. A board’s principal duty is to provide oversight; management’s duty is to run the company. A good board also understands that it, not management, has ultimate responsibility for directing the company’s affairs as defined by law.

Therefore, to meet these obligations, a board must take responsibility for its own agenda, or it will not be independent. Management cannot be responsible for directors’ skills and processes and should not have more than a consultative role in decisions, such as choosing new directors. Boards can no longer be just “advisers” who wait for management to come to them. As fiduciaries, they must be active monitors of management.

More about Hamad Al Hosani:

Hamad’s education began with gaining a Bachelor of Law at Sharjah University in 2005. He continued his studies at the Judicial Institute achieving his UAE Licensed Advocate Lawyer Certification in 2008 and graduated with a Master’s Degree in Public Law at Sharjah University in 2014.

Hamad developed his business development and networking skills through his career as an advocacy lawyer and legal counsel to a managing director for a reputable UAE law firm for eight years and then as legal counsel director at National Bank of Abu Dhabi.

He later moved to a position as Assistant Vice President – Legal Counsel at Emirates NBD Bank. Hamad has since become Group Company Secretary at the bank.