The Corporate Governance Code’s Objective

Through a series of transparent, clearly defined policies, processes, and procedures, the Code aims to provide companies with guidance on the best ways to manage, lead, organise, and monitor their businesses. Governance aims to establish a system that governs and controls the businesses and practises of companies in order to create efficient institutions that contribute to the development of a strong, transparent, and competitive national economy in order to reduce any negative effects on the national economy, acting parties, and local community as a result of failing to commit to the best practises in managing joint stock companies.

Vital Governance Elements

1. Ensuring that the information needed by regulators, shareholders, investors, and related parties is provided in a timely and appropriate manner so that these parties can make decisions and conduct their businesses properly, while the company and its Board of Directors are transparent in disclosing matters of interest to shareholders and various related parties. This will help the company draw in more business, including various investors from the Kingdom of Bahrain.
2. Accountability refers to the fact that the board of directors is conscious of its responsibility for its decisions and actions concerning the management and leadership of the company before the shareholders and is held accountable to them. Additionally, the board of directors shall subject itself to an evaluation following best practices.
3. Justice refers to the fair and equal treatment of all shareholders, employees, and associated parties by the directors and Executive Management, free from bias or other hidden interests.
4. Directors have a responsibility to carry out their duties with honour, honesty, objectivity, and sincerity toward the economy, society, and the enterprise in particular. Additionally, they must do it with caution, thoroughness, and a commitment to the company’s interests over their own, while also taking corporate social responsibility into mind.

The architecture of the Code

Each of the code’s eleven fundamental principles of corporate governance have several recommendations and instructions that must be followed and taken into account by every firm when determining whether it conforms to the Code’s requirements.

1. The company will be led by a capable, knowledgeable, and experienced Board.
2. The board and executive management must be completely loyal to the business.
3. The board shall maintain strict oversight over internal control, financial audit and reporting, and legal compliance.
4. The Company must have efficient processes in place for the selection, training, and assessment of Board members.
5. The business must pay its officers and directors fairly and appropriately.
6. The board is responsible for establishing the Company’s management structure, including job descriptions, authority levels, and duties and responsibilities.
7. The business should interact with its shareholders, invite them to engage, and uphold their rights.
8. The business must provide information about its corporate governance.
9. The board shall engage external auditors to assure the integrity of the financial accounts presented to shareholders.
10. Businesses that provide Islamic services must abide by Islamic shari’a.
11. The business must pursue social responsibility in order to fulfil its obligations as a good citizen.

Relative Party Transactions Disclosure

A Company is required to provide the information requested below for the entire of the issuer’s most recent two financial years up to the date of the document, unless otherwise revealed in the audited financial accounts, concerning transactions or loans between the issuer and:

1. Individuals who control, are controlled by, or share control with, the issuer directly or indirectly through one or more intermediaries;
2. Associates, except for those deals, are made during normal business operations. An associate is an unconsolidated business that is significantly influenced by or controlled by the issuer. Types of associate businesses include those held by the issuer’s board, substantial shareholders, or businesses that share a member of key management. The ability to participate in the organization’s financial and operational policy decisions while retaining no direct control over those decisions has a significant effect on the enterprise. The issuer is deemed to be significantly influenced by shareholders who beneficially own 10% or more of the voting power of the issuer.
3. Close relatives of any such person who, directly or indirectly, owns a stake in the issuer’s voting rights that provides them considerable influence over the company. Close relatives of a person are individuals who might be anticipated to exert influence over or be influenced by that person in their interactions with the issuer.
4. Directors, senior management, and members of these individuals’ immediate families are considered key management personnel, or those with the power and obligation to plan, direct, and oversee the activities of the issuer; and
5. Businesses when any of the individuals listed in (2) or (3) owns, directly or indirectly, a major portion of the voting power or has considerable control over the company.
6. Describe the nature and extent of any past, present, or proposed transactions involving goods, services, intangible assets, or both that the issuer, its holding company, or any of its subsidiaries were a party to and that were material to the issuer or the related party, as well as any transactions that were unusual in nature or circumstances.
7. Count all current loans (including guarantees of any type) that the issuer, its holding companies, or subsidiaries have issued to or on behalf of any of the people in A above. The information provided should contain the biggest balance owing within the covered period, the balance owing as of the latest date that may be reasonably considered, the type of loan made, the transaction in which it was made, the type of loan’s interest rate, and other pertinent information.