International Cooperation
Liability of board members examined View Presentation 1 - 2
The Corporate Governance Committee hosted guest speakers Ahmed Abou Ali, partner at Hassouna & Abou Ali Law Offices, and Tarek Mansour, country senior partner at Mansour & Co. PricewaterhouseCoopers, on February 26, to address the topic “Your liabilities as a board member – legal and audit requirements for corporate governance.”
Abou Ali informed the audience that the Ministry of Investment, Capital Market Authority (CMA) and Cairo & Alexandria Stock Exchanges (CASE) have developed a draft corporate governance code, based on the principles released by the Organization for Economic Cooperation & Development (OECD) in 2004. While the Egyptian code is mandatory for all publicly traded, joint stock companies listed on the CASE, Abou Ali recommended that all companies adhere to it.
The code outlines the key functions and responsibilities of board members, which include monitoring management, as well as reviewing and guiding the company’s risk policy, annual budget, overall corporate strategy and any major plans of action. The board is accountable to the company and the shareholders and must be nominated and elected through a formal and transparent process.
Mansour pointed out that from an audit perspective, there is a bit of an overlap between the functions of a company’s management and its board of directors, as they are both ultimately responsible for assuring the company’s internal control over financial reporting. He explained that the board of directors sets the tone for the rest of the organization. If the board members adhere to principles of good corporate governance, this spirit will permeate through to the rest of the company.
Mansour concluded by stating that he believes audit requirements in Egypt will become stricter, board members will take their governance role more seriously and audit committees will play a more active role.
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Corporate governance in the banking sector
On February 15, the Corporate Governance Committee hosted Hala El Said, executive director of the Egyptian Banking Institute, and Mohamed Ozalp, deputy chairman of Banque Misr, for a meeting entitled “Corporate governance in the banking sector.”
El Said opened by stating that corporate governance involves both internal players, such as the board of directors, upper management, shareholders and auditors, as well as external actors, such as regulatory bodies and legislators. The latter has now widened to include credit rating agencies, financial analysts, NGOs and the media. She emphasized that it is the public that ultimately ensures market discipline.
Corporate governance in banking is important due to its susceptibility to market failure, making it vital that the industry is properly supervised. Egypt’s banking legislation assures the central bank’s independence and has improved corporate governance standards.
Mohamed Ozalp gave an outline of the corporate governance of Banque Misr, which recently underwent a major restructuring. The bank’s board of directors is comprised equally of executives and non-executives, who include a lawyer, an ICT professional and a former politician. Banque Misr also has an audit committee comprised of non-executives who serve as a link between external auditors and the board.
According to Ozalp, Banque Misr has also issued a code of ethics for bank employees, which also applies to bank managers. He concluded by saying that corporate governance cannot be imposed on people, but must be taught and instilled.
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