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Corporate governance rules are represented in the principles, systems and
procedures which achieve the best protection and balance between the Company’s
interests, its shareholders and other stakeholders related to it. The fundamental
objective of implementing the corporate governance rules is underlined by the
Company’s being in line with the shareholders’ goals which promotes the investors’
confidence in the efficiency of the Company’s performance and its ability to face
crises, as the corporate governance rules regulate the methodology of taking all
decisions within the Company and motivate the existence of transparency and
credibility for such decisions.
Among the most significant corporate government rules are the protection of
shareholders and separating the executive authority which directs the Company’s
businesses from the board of directors which prepares and reviews the Company’s
plans and policies, and thus adds assurance and promotes the feeling of confidence
in dealing, as well as enable shareholders and stakeholders to efficiently control the
Company.
On 27 June 2013, the Capital Markets Authority issued decree No.25 of 2013 in
connection with issuing the governance rules for companies subject to its
supervision. The issuing of such rules comes under the framework of the provision
of article No.(40) of the executive regulation of law No.7 of 2010 in connection
with establishing the Capital Markets Authority and Regulation of Securities Activity,
that the Authority issues a special system for governance. This is in addition to the
provisions of article No.217 of the decree law No.25 of 2012 promulgating the
Companies Law and its amendments, which stipulated that “the concerned
regulatory bodies shall lay down the corporate governance rules for companies
subject to their control, in order to achieve the best protection and balance between
the interests of the Company’s management, its shareholders and other related
stakeholders. Further, it illustrates the requirements which should be available in the
independent members of the board of directors.)
Such rules were amended by decree No.48 of 2015 passed on 30/6/2015, which
have been re-enacted within Part Fifteen of the executive regulation of law No.7 of
2010 in connection with establishing the Capital Markets Authority and Regulation
of Securities Activity. These rules have been applied on 30/6/2016.
The corporate governance rules addressed a number of fundamental principles and
requirements upon which the principles of corporate government are established, as
well as the methodology of implementing such rules and principles. The
methodology illustrates the guideline methods for the mechanism of proper
activation of the governance principles, including the existence of a balanced
structure of the board of directors which comprises non executive and independent
members, outlining the responsibilities and terms of reference of the members of
both the board of directors and executive management, method of selection of
candidates to the membership of the board of directors and executive management,