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Find out moreThe first Law Update of 2024 is here, and our first focus of the year spotlights Healthcare and Lifesciences, a sector that is undergoing significant growth and development across the MENA region.
Our focus provides an insight into some of the most important regulatory updates across the region, such as the UAE’s groundbreaking law on the use of human genome, Kuwait’s resolution on nuclear and radioactive materials, the new regulations for healthcare services in Qatar, Egypt’s healthcare regulatory framework, and the impact of the Saudi Civil Transactions Law on the healthcare and life sciences sector … and there is so much more!
Beyond the healthcare pages our lawyers share with you multi-sector insights where you will discover articles on Dubai’s DIFC regulatory framework for startups, Bahrain’s commercial agencies law, and we also shed light on Kuwaiti civil code and the advantages of setting up a joint stock company in Saudi Arabia.
Read the full editionThe United Arab Emirates (“UAE”) Securities and Commodities Authority (“SCA”) has issued new corporate governance rules under the Chairman of SCA Board Decision No. (03 R.M) of 2020 concerning adopting the Corporate Governance Guide for Public Joint Stock Companies (“Corporate Governance Rules” or “New Rules”) to regulate public joint stock companies in the UAE (“PJSCs”).
The New Rules were published on 27 February 2020 and came into force on 28 April 2020. They repeal the previous corporate governance rules No. (7 R.M) of 2016 concerning the Standards of Institutional Discipline and Governance of Public Shareholding Companies (“Old Rules”).
The New Rules specifically set out and describe the principles and objectives of corporate governance which are centred around the key pillars of: accountability; fairness; disclosure; transparency; and responsibility. They also confirm the key corporate governance principles initially provided for under the Old Rules (including, but not limited to: the constitution and operation of the Board; the management of conflicts of interest and related parties; the use and operation of the general assembly; Board committees; risk management; compliance; and audit).
In addition, the New Rules provide, among other changes, for innovative solutions in relation to the management of a PJSC. For example, the New Rules enable a PJSC to adopt a dual governance structure under which the management functions are separated from the supervisory functions. This is achieved through establishing two board committees: (i) a supervisory or oversight committee; and (ii) an executive committee. These committees should work together to achieve the PJSC’s objectives.
The New Rules also encourage the establishment of two non-mandatory committees: (i) a risk committee; and (ii) a technology committee. A risk committee would be responsible for setting out the risk management strategy of the PJSC and its implementation. A technology committee would be responsible for reviewing and approving the PJSC’s technology plans and strategy and their implementation. Also new is the requirement for the General Assembly to adopt a policy for corporate social responsibility (“CSR”) in order to balance the objectives of the PJSC and the wider community in which it operates.
The New Rules are complimentary to the Old Rules although there are some new requirements. Thus, if a PJSC’s constitution and corporate governance framework (and accompanying policies) are in compliance with the Old Rules, then a review of the New Rules should not elicit material structural changes to the PJSC’s existing corporate governance architecture. However, there are likely to be additional requirements. PJSCs are recommended to undertake an internal audit of their existing articles of association and corporate governance framework (and policies) in order to confirm compliance with the New Rules and to assess any additional requirements for their corporate governance framework highlighted in the New Rules.
In the ever increasing fight to attract capital, particularly in emerging markets and in this distressed pandemic scenario, adopting features required or recommended in the New Rules could be advantageous to a PJSC compared to its peers in terms of attracting new investors and growing existing ones. It would certainly add ammunition to a PJSC’s investor relations officer when communicating the PJSC’s equity story to relevant stakeholders.
Further, the New Rules present an opportunity for PJSCs to enhance their ESG (environmental, social and governance) credentials which is an increasingly important weapon in the battle to maximise shareholder value in this rapidly changing investing age.
Al Tamimi & Company have the appropriate knowledge and experience to assist PJSCs in this helpful exercise.
Andrew Tarbuck
Partner, Head of Capital Markets
a.tarbuck@tamimi.com
Carla Saliba
Senior Associate, Corporate Commercial
c.saliba@tamimi.com
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