Exclusive interview with Muhammed Subaie, GCC BDI ...

Exclusive interview with Muhammed Subaie, GCC BDI Ambassador KSA

Q1 How does it feel to be chosen as GCC BDI Ambassador for Saudi Arabia?

It gives me great pride and I feel honored to be the GCC BDI Ambassador to Saudi Arabia. This also poses a personal challenge to live up to expectations and support the Institute and the corporate governance (CG) community, mainly board directors, but also shareholders, executive management, and government and regulators.

Mainly due to my background in Internal Auditing (IA) , which is one of the cornerstones of CG, I relate more to the importance of good effective governance and the need to bridge the knowledge gap especially at the top of the pyramid  at the board level. Additionally, if we go to the basics of IA we find that the main objectives of IA are improving the effectiveness of CG, improving the internal control system and risk management in the organization.

Being part of the GCC BDI family also gives me great satisfaction, especially given that GCC BDI is a non-profit organisation established to develop and improve board directors’ knowledge of their fiduciary responsibility and therefore, to have effective boards and effective governance for the organizations that they serve.

Q2 Saudi Arabia is in the process of transforming its economy – what recommendations do you have for strengthening the region’s corporate governance framework?

Because of this transformation in Saudi Arabia’s economy, we have seen transformation on many different support facets, including CG. I believe that we in Saudi Arabia went through a major transformation in the corporate governance arena, as a result Saudi Arabia has one of the most robust CG regulation frameworks, since it took CG best practices from different countries  around the world. However, we have to be also careful that the road map to realize the benefits and compliance with regulations is not easy. It doesn’t only require enforcement, but also it takes education and collaboration especially from the regulators’ side. This poses a great opportunity for GCC BDI to fill a big gap, on the need for corporate governance education and competency, not only in Saudi Arabia but in the GCC market. As the  damage that some corporate governance failures bring to the economy is huge and has an overarching impact on the stock market as a whole, this is why I think that board director training is very important and should be institutionalized gradually in the CG regulations. Also, board director certification programs to help ensure director competency, like the one GCC BDI has started which is endorsed by the Capital Markets Authority, is a great step in that direction.

Q3 What role will corporate governance play in boosting Saudi Arabia’s private sector as the kingdom works towards its 2030 plan?

One of the most important strategies for the Kingdom’s 2030 Vision is to minimise reliance on oil as a source of revenue and to develop and increase the private sector contribution to the economy. In addition, to be attractive to outside investment, so that those investments will be the engine to move our economy forward. This can be achieved only through the existence of mature capital markets that work efficiently. Thus, this is where the role of governance comes into play through improving the quality, effectiveness and confidence in the local capital markets. Good CG will support companies to achieve their objectives and be successful. Also the availability and accuracy of marketing information will encourage foreign investors to come and take calculated risks.

Q4 How can effective corporate governance policies improve the bottom line for Saudi companies?

Corporate governance simply means having a framework to achieve the company’s goals and objectives. CG sets, controls, and balances the relationship between the different stakeholders and sets their responsibilities to accomplish company objectives. Hence, good CG helps companies to be profitable and sustain their business on the long run. CG in any company makes sure that the proper components for running the company are present, such as whether there are the policies and and procedures, checks and balances, and a proper internal control system. Also it ensures that tools to set targets,  plan, monitor performance, and manage risks are there. CG helps organizations to comply with the regulation, use resources efficiently, safeguard assets, and produce reliable information for the market. Thus, improving its bottom line and increasing investors’ confidence.

Q5 What guidelines do you have for putting together a high performance board?

In order to fulfill their responsibilities it is very important for board directors to first be familiar with what is expected from them, through knowing the regulatory framework governing companies. One of the major challenges for boards is that members are not aware of their responsibilities, the role of the board, and board best practices.

No longer is board membership only honorary, it comes with a big responsibility and if the board members are not familiar with what is expected from them, they will not be able to deliver. This is why I am a true advocate of having formal training for current board members or prospective ones. Training for directors is like training in any other field or discipline, it will help directors to become competent and to excel in what they do. Directors have to be familiar with corporate governance essentials, how to be an effective member and player within the team, learn about board dynamics and how the board can be more effective. Directors have to be familiar with finance and financial reporting. One other important factor in order to be an effective and a contributing member – board members have to be familiar with business of their company and the risk and challenges that their company faces. One preferred point for boards, is for the board to be versatile, with members of different backgrounds and skills but most importantly as mentioned to be familiar with the business of their company.