Financial Crime World

Yemen Struggles to Improve Corporate Governance Compliance

Aden, Yemen - Despite its economic importance, corporate governance remains a slow-moving process in Yemen compared to other Middle East and North African (MENA) countries. In this article, we will explore the challenges faced by Yemen in improving corporate governance compliance and the impact it has on the country’s economy.

The Corporate Governance Guide

In 2010, Yemen issued its Corporate Governance Guide aimed at improving the business and investment climate by encouraging companies to adhere to governance principles. However, experts say that Yemen’s lack of attention to economic change has resulted in a weak ability to attract private investment and low competitiveness in the private sector.

Challenges Faced by Yemen

According to the World Bank’s Doing Business 2020 report, Yemen ranked 162nd out of 190 countries in terms of minority investor protection, with a score of 26.0. The country’s lack of a stock exchange market remains a major obstacle to corporate governance compliance.

  • Weak Minority Investor Protection: Yemen’s low ranking in the World Bank’s Doing Business report highlights the need for improvement in protecting minority investors.
  • Limited Transparency: Lack of transparency in business operations hinders investor confidence and trust.

Efforts to Improve Corporate Governance

The government has taken steps to simplify the process of LLC registration and establish LLCs with 100% foreign ownership, making it a preferred form of business for foreign companies and individuals. However, more needs to be done to strengthen corporate governance compliance and attract foreign investment.

  • Simplifying LLC Registration: The government has simplified the process of registering an LLC, making it easier for foreign entities to enter the Yemeni market.
  • Establishment of Free Zones: The creation of free zones aims to improve the business climate and attract foreign investment.

The Way Forward

Experts agree that addressing corporate governance issues is crucial for Yemen’s economic growth and development. To achieve this, the government needs to:

  • Implement a Comprehensive Corporate Governance System: A comprehensive system would provide better protection for investors and increase transparency in business operations.
  • Strengthen Investor Protection: Improving investor protection scores will attract more foreign investment and boost confidence in the country’s economy.

In conclusion, despite efforts to improve corporate governance compliance in Yemen, much remains to be done. The country’s failure to implement effective corporate governance practices is likely to continue to hinder its economic development and competitiveness.