| 1. | A Company’s Board must be comprised of individuals with a balance of skills, diversity and expertise, who collectively possess qualifications commensurate with the size, complexity and risk profile of the Company. In assessing its collective suitability, the factors a Board should take into account include, but are not limited to:
| | | a. | Whether members of the Board have a range of knowledge and experience in relevant areas and varied backgrounds to promote diversity of views;
| | b. | Relevant individual areas of competence which may include, but are not limited to, capital markets, financial analysis, financial stability, financial reporting, information technology, strategic planning, risk management, compensation, regulation, Corporate Governance, management, accounting, underwriting, actuarial, reinsurance, investment, audit and Shari`ah rules and principles in the case of a Takaful Company;
| | c. | Whether the Board collectively has a good understanding of local, regional and global economic and market forces and of the legal and regulatory environments applicable to the Company’s operations; and
| | d. | Whether individual members of the Board can contribute to effective communication, collaboration and critical debate at the meetings of the Board and its committees.
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| 2. | The Board must have well-defined powers, including the ability to obtain timely information from Senior Management and key persons in Control Functions, in order to manage the Company.
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| 3. | The Board must have documented procedures for its own internal governance which must be periodically reviewed and assessed for their effectiveness. These may be included in organisational rules or by-laws, and should set out how the Board will carry out its roles and responsibilities, the nomination process, selection and removal of Board members, a specified term of office and succession planning.
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| 4. | The Board must be adequately funded and have access to resources, staff and facilities in order to carry out its responsibilities effectively. The Board must have documented procedures to access external, independent experts including procedures related to their appointment and dismissal.
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| 5. | Where the Board makes any delegations, it should ensure that:
| | | a. | The delegation does not hinder the Board from discharging its roles and responsibilities effectively.
| | b. | The scope of delegation is well defined in terms of the powers, accountabilities and procedures related to the delegation.
| | c. | There is no undue concentration of powers, giving anyone inappropriate levels of power capable of affecting the Company.
| | d. | It has the ability to monitor and obtain reports on whether the delegated tasks are properly carried out.
| | e. | It retains the ability to withdraw the delegation if it is not properly discharged, and to have contingency plans in this regard.
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| 6. | Members of the Board, individually and collectively, must be and continue to remain qualified for their positions. Members of the Board must understand their oversight and Corporate Governance role and be able to exercise sound, objective judgement about the affairs of the Company. Members of the Board must not have any Conflict of Interest that may impede their ability to perform duties independently and objectively, or be subject to any undue influence from:
| | | a. | Other persons/business;
| | b. | Previous or current positions held; or
| | c. | Personal, professional or other economic relationships with other members of the Board or Senior Management, or
| | d. | Other entities within the Group.
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| 7. | A member of the Board shall lose his/her independence in the following cases:
| | | a. | If his/her tenure as an Independent Member of the Board in the same Company exceeds twelve (12) consecutive years from the date of his or her appointment. This provision applies equally to persons appointed by a Government shareholder;
| | b. | If he/she, or any of his/her Relatives, has worked as Staff of the Company, or its Subsidiaries during the past two (2) years;
| | c. | If he/she has worked for, or is a partner, in a company that performs consulting works for the Company or its Group or he/she has acted in such capacity during the past two (2) years;
| | d. | If he/she has had any personal services contracts with the Company or its Group during the past two (2) years;
| | e. | If he/she has been affiliated with any non-profit organisation that receives significant funding from the Company or its Group;
| | f. | If he/she, or any of his/her Relatives, has been a partner or employee of the Company’s auditor during the past two (2) years;
| | g. | If he/she, or any of his/her Relatives, has or had a direct or indirect interest in the contracts and projects of the Company or its Subsidiaries during the past two (2) years, and the total of such transactions exceeds the lower of 5% of the Company’s paid capital or of the amount of five million Dirhams or its equivalent amount in a foreign currency, unless such relationship is part of the nature of the Company’s business and involves no preferential terms; and
| | h. | If he/she and/or any of his/her Relatives (individually or collectively) own directly or indirectly 10% or more of the Company’s capital or is a representative of a shareholder who owns directly or indirectly more than 10% of the Company’s capital.
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| | The provisions in items b to h above do not apply to members of the Board appointed by a Government shareholder.
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| 8. | All nominated members of the Board must have sufficient competence, knowledge and experience to effectively carry out their duties and be subject to the Fit and Proper Process.
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| 9. | An ex-ante review and approval process must be completed before a member of the Board accepts nomination to serve on another board as permitted by the Corporate Governance Regulation and these Standards, so as to ensure that the activity will not create a Conflict of Interest. In addition, each member of the Board must confirm annually that he/she has sufficient time available to manage the time commitments required from the role on the Board.
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| 10. | The chair of the Board must provide leadership to the Board and is responsible for its overall effectiveness. The chair must ensure that Board decisions are taken on a sound and well-informed basis, encourage and promote critical discussion, and ensure that dissenting views can be freely expressed during the decision-making process. The chair must:
| | | a. | Ensure that the Board acts efficiently, fulfils its responsibilities and discusses all issues on a timely basis;
| | b. | Approve the agenda of each Board meeting, ensuring that the content, organisation, quality of documentation and time allocated to each topic allows for sufficient discussion and decision making;
| | c. | Encourage all Members of the Board to fully and efficiently participate in Board meetings in order to ensure that the Board acts in the best interests of the Company;
| | d. | Adopt suitable procedures to ensure efficient communication with the shareholders, and the communication of their views to the Board; and
| | e. | Facilitate the effective participation of Independent Members of the Board and the development of constructive relations between individual Board members.
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| | A Takaful Company must safeguard an effective independent oversight of Compliance with Islamic Shari’ah within the organisational framework.
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| 11. | The majority of the members of the Board must be present at each Board and its committees’ meetings to establish a quorum. Attendance at meetings must be by physical presence or via audio or audio-videoconferencing subject to appropriate safeguards to preserve confidentiality and accuracy of deliberations.
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| 12. | The Board’s and its committees’ resolutions must be approved by the majority of votes. In the case of parity, the Chair shall have a casting vote.
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| 13. | There must be effective communication and coordination between the audit committee and the risk committee to facilitate the exchange of information and effective coverage of all risks, including emerging risks, and any needed adjustments to the Company’s Risk Governance Framework. The risk committee must, without prejudice to the tasks of the compensation committee, examine whether incentives provided by the remuneration system take into consideration risk, capital, liquidity and the likelihood and timing of earnings.
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| 14. | The Board must ensure that new members of the Board participate in an appropriate induction programme that must include an introduction to the strategy, structure, codes of conduct, main policies and material businesses of the Company. In addition, the induction programme must include an overview of the regulatory environment applicable to the Company, including the requirements of all relevant laws and Regulations.
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| 15. | The Board must dedicate sufficient time, budget and other resources to an ongoing training and development programme for its members and draw on external expertise, as needed. The Board must review annually its programme for ensuring that its members acquire, maintain and enhance knowledge and skills relevant to their responsibilities.
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| 16. | The Board, or the Board nomination committee, must carry out, at least annually, an assessment of the Board as a whole, its committees, and individual members. The Board must also ensure that an independent assessment is carried by an external third party at least once every five (5) years.
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| 17. | Annual assessments of the Board must include, but are not limited to:
| | | a. | Reviewing the structure, size and composition of the Board as a whole and its committees;
| | b. | Reviewing the effectiveness of Board governance procedures, determining where improvements are needed and making any necessary changes; and
| | c. | Assessing the ongoing suitability of each member of the Board, taking into account the fit and proper criteria and his/her performance on the Board.
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| 18. | Factors to be considered in the assessment of the Board as a whole include, but are not limited to:
| | | a. | Has the Board set clear performance objectives, and how well has it performed against these objectives?
| | b. | Has the Board been effective in the strategy development process?
| | c. | What has been the Board’s contribution to ensuring effective risk management?
| | d. | Is the membership of the Board appropriate with the right mix of skills and knowledge?
| | e. | Is the organisational structure and interaction between the Board and Senior Management working effectively?
| | f. | How well has the Board responded to problems and challenges?
| | g. | Is the Board dealing with the right issues?
| | h. | Is the relationship between the Board and its committees working effectively?
| | i. | Is the Board taking the necessary steps to stay up to date with regulatory and market developments?
| | j. | Is the Board taking the necessary steps to acquire timely information of the right depth and quality?
| | k. | Are Board meetings of the right frequency and length to enable proper consideration of issues?
| | l. | Is the content of the agenda appropriate for the size, nature and complexity of the Company?
| | m. | Are Board procedures adequate for effective performance?
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| 19. | Factors to be considered in the assessment of the performance of individual members of the Board include, but are not limited to:
| | | a. | Does the member of the Board continue to meet the requirements of the Fit and Proper Process, and in the case of Independent Members of the Board, independence?
| | b. | Has the member of the Board actively contributed to the work of the Board, and if applicable, Board committees?
| | c. | If newly appointed, has the member of the Board participated in the Board’s induction programme?
| | d. | Has the member of the Board participated in ongoing training on relevant issues?
| | e. | Is the member of the Board taking the necessary steps to stay up to date with regulatory and market developments?
| | f. | Has the member missed meetings of the Board without an excuse acceptable by the Board?
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| 20. | COMMITTEES:
| a. | The Board elects the audit committee and sets its mandate and responsibilities, including, but not limited to:
| | | 1. | Assessing the adequacy of Senior Management, and the extent of their application of the Board’s directions.
| | 2. | Assessing and following up on the efficiency of the internal controls, through:
| a. | Holding regular meetings with persons who are primarily responsible for internal controls over financial reporting, including but not limited to the heads of internal audit, risk management and accounting functions.
| | b. | Mitigating key financial reporting risks through discussing controls with Senior Management, including fraud risks.
| | c. | Understanding how Senior Management plans to assess internal controls and what role internal audit and other Related Parties will play.
| | d. | Understanding the external auditors' scope and plan to test the controls.
| | e. | Conducting regular meetings with Senior Management, internal and external audit to discuss findings and relevant action plans.
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| | 3. | Assessing the extent of compliance with relevant laws and Regulations.
| | 4. | Nominating external auditors to be selected by the general assembly; terminating their services, when required; and determining their fees.
| | 5. | Effectively overseeing and supporting the internal audit function, that incudes, but is not limited to:
| a. | Understanding internal audit resources.
| | b. | Being involved in hiring the head of internal audit, evaluating his/her performance, and verifying the sufficiency of his/her compensation.
| | c. | Reviewing the internal audit's charter annually, and approving any changes to the charter.
| | d. | Approving the annual internal audit plan and reviewing the recommendations issued by the internal auditor.
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| | 6. | Approving the appointment and dismissal of the head of internal audit.
| | 7. | Following up on the recommendations made by internal and external audit and the Central Bank.
| | 8. | Overseeing the integrity and accuracy of the financial statements and related disclosures, that includes:
| a. | Taking an active role in overseeing annual and interim financial statements and related disclosures.
| | b. | Assessing whether the significant accounting policies the company uses are reasonable and appropriate. This includes discussions with the chief financial officer and external auditors about the impact on the results and financial disclosures of any new accounting development.
| | c. | Assessing and making submissions to the Board regarding the suitability of the Company’s accounting policies. This includes discussions with the chief finance officer or equivalent and the external auditors about the impact on the results and financial disclosures of any changes to accounting standards and policies.
| | d. | Reporting to the Board, any limitations in the reliability of accounting and financial processes, including management information systems.
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| | 9. | Meeting with internal and external auditors and appointed actuaries at least twice a year, without the presence of representatives from Senior Management.
| | 10. | Enabling Staff to report in confidentiality, any violation concerning the financial statements or internal controls, and producing a report to the Board in this regard.
| | 11. | To report to shareholders by preparing a report to be included in the annual financial statements describing how the committee carried out its functions, confirming the independent nature of the audit, and commenting on the financial statements, accounting practices and internal financial control measures of the Company.
| | 12. | Ensuring integrated reporting to the Central Bank (integrating financial and sustainability reporting, to the extent that it is relevant). At a minimum, the audit committee should provide the following information in the integrated report:
| a. | A summary of the role of the audit committee;
| | b. | A statement on whether or not the audit committee has adopted a formal terms of reference that has been approved by the Board, and if so, whether the committee satisfied its responsibilities for the year in compliance with its terms of reference;
| | c. | The names and qualifications of all members of the audit committee during the period under review, and the period for which they served on the committee;
| | d. | The number of audit committee meetings held during the period under review and members’ attendance at these meetings;
| | e. | A statement on whether or not the audit committee considered and recommended the internal audit charter for approval by the Board;
| | f. | A description of the working relationship with the chief audit executive;
| | g. | Information about any other responsibilities assigned to the audit committee by the Board;
| | h. | A statement on whether the audit committee complied with its legal, regulatory and/or other responsibilities; and
| | i. | A statement on whether or not the audit committee has reviewed the integrated report and submitted the report to the Board with a recommendation for approval.
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| | b. | The Board elects a risk management committee and sets its mandate and responsibilities including, but not limited to:
| | | 1. | Proposing the Company's risk management policies, risk tolerance and Risk Appetite to the Board for approval, and to follow up on their implementation and update them on an annual basis. The committee should ensure that risk assessments are performed regularly, monitor the whole risk management process, and receive assurance from internal and external assurance providers regarding the effectiveness of the risk management process.
| | 2. | Assessing and making submissions to the Board regarding the Company’s risk management through:
| a. | Satisfying itself with regard to the expertise, resources and experience of the risk management function;
| | b. | Meetings with individuals who are primarily responsible for the design, implementation and effectiveness of risk management, as well as continual risk monitoring; and
| | c. | Meeting regularly with management to discuss the controls in place to: assume and accept risk, avoid risk, control risk, transfer risk, watch and monitor risk, amongst other things.
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| | 3. | Proposing the Company's reinsurance strategy and ensuring appropriate oversight and consistent implementation of reinsurance programmes. The committee should consider the Company’s business objectives, levels of capital and business lines, with particular reference to the following:
| a. | Risk Appetite;
| | b. | Large exposures and frequency of perils;
| | c. | Level of diversification; and
| | d. | The ability of reinsurers to fulfill their obligations.
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| | 4. | Assessing the extent to which the Company applies the provisions contained in the Financial Regulations, and submitting reports to the Company’s Board in this regard.
| | 5. | Without prejudice to the tasks of the compensation committee, proposing a compensation policy for management that is aligned to the business strategy and risk levels.
| | 6. | Ensuring detailed job descriptions for the roles, duties, and responsibilities of each Board member, and that controls for measuring their performance are in place.
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| | c. | The Board elects from among its members an investment committee, and sets its mandate and responsibilities including, but not limited to:
| | | 1. | Preparing and reviewing the investment policy, reviewing its performance, implementation and managing its risks, on an annual basis.
| | 2. | Reviewing the performance of the Company's assets annually.
| | 3. | Submitting quarterly reports to the Board on the performance of the Company's investment portfolio.
| | 4. | Establishing the necessary controls to prevent investments in related companies, unless it is proven that this is in the interest of the Company; maintain relevant information, documents, restrictions and studies in this regard.
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| | d. | The Board elects from among its members a compensation committee, and sets its mandate and responsibilities including, but not limited to:
| | | 1. | Providing the Board with the design and oversight of the Company’s compensation system.
| | 2. | Periodically reviewing the compensation policies and determining if they are appropriate to each Board member and the Staff.
| | 3. | Preparing a policy for granting allowances and incentives to Senior Management.
| | 4. | Reviewing the performance of Senior Management.
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| | e. | The Board elects from among its members a nomination committee, and sets its mandate and responsibilities, including, but not limited to:
| | | 1. | Identifying, assessing fitness and propriety of candidates for the Board and Senior Management. Fit and proper criteria must ensure that selected candidates:
| a. | Possess the necessary knowledge, skills, and experience;
| | b. | Have a record of integrity and good repute;
| | c. | Have sufficient time to fully discharge their responsibilities;
| | d. | Provide for collective suitability and added value to the Board/ Senior Management;
| | e. | Do not have any Conflict of Interest; and
| | f. | Have a record of financial soundness.
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| | Before providing the non-objection for nominations, appointments or renewals, the Central Bank will conduct additional interviews and/or background checks to ensure that the candidates are fit and proper, including assessing their ability to manage the time commitments required for their role in the Company, and confirm the accuracy and completeness of the information and documentation provided by the Company.
| | | | | 2. | Establishing a policy to require at least 20% of candidates for consideration for the Board to be female. Information on the policy and actual numbers of female candidates’ consideration and representation on the Board must be disclosed in the Company’s annual Corporate Governance statement.
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