Corporate Governance and Compliance in United Arab Emirates: Requirements Tightened

The United Arab Emirates (UAE) has taken significant steps to strengthen corporate governance and compliance in the country, particularly for public joint stock companies (PJSCs). The move aims to boost investor confidence, reduce corruption and mismanagement risks, and enhance the reputation of PJSCs.

Importance of Corporate Governance

Effective corporate governance is essential in achieving a balance among the interests of shareholders, senior management, the broader community, and other stakeholders. Good corporate governance emphasizes compliance with the rule of law, transparency, responsiveness, efficiency, inclusivity, equity, accountability, and participation. This helps to clarify the roles and obligations of stakeholders.

Regulatory Framework

The UAE’s Securities & Commodities Authority (SCA) has issued a guide on corporate governance for PJSCs. The Central Bank of UAE has established regulations for corporate governance practices in banks and insurance companies operating within the country. Additionally, Abu Dhabi Global Market’s Rule Book and Dubai International Financial Centre’s Rulebook have also been implemented to standardize corporate governance practices.

Regulations for Federal Government Boards and Private Companies

The UAE Cabinet and Ministry have issued regulations specifically for federal government boards and private companies. Federal Decree Law No. (32) of 2021 on Commercial Companies has imposed statutory duties on directors of companies incorporated in the UAE, including PJSCs.

Benefits of Tightened Corporate Governance Requirements

The tightened corporate governance requirements are expected to contribute to a more stable and transparent business environment, ultimately benefiting investors and stakeholders alike. As the UAE continues to attract foreign investment and strengthen its position as a global business hub, these measures are seen as crucial in maintaining investor confidence and promoting economic growth.

Key Takeaways

• Effective corporate governance is essential for achieving a balance among the interests of shareholders, senior management, the broader community, and other stakeholders.
• The UAE has implemented regulations to standardize corporate governance practices across PJSCs, banks, insurance companies, federal government boards, and private companies.
• Tightened corporate governance requirements aim to boost investor confidence, reduce corruption and mismanagement risks, and enhance the reputation of PJSCs.