BMA launches consultation on corporate governance
The Bahrain Monetary Agency (BMA) has issued a consultation paper on corporate governance requirements for Bahraini banks.
The paper lays down specific rules to be followed by boards of directors and senior management in managing the business and affairs of their institutions. As such, the paper provides guidance and sets minimum requirements for board meetings, board composition, checks and balances and the role of committees, reported a press release.
Also covered are the role of external auditors and public disclosure requirements. The overall objective is to enhance the safety and soundness of Bahraini banks by ensuring they implement international best practices related to corporate governance.
"Bahrain's banks are, by and large, well managed," said Executive Director of Banking Supervision at the BMA, Khalid Abdulla Ateeq. However, the BMA, through its on-site inspections of banks, has noticed that there is a wide divergence of awareness and application of good corporate governance practices by some banks."
The new rules emphasize the role of the board of directors, which must play a leadership role in overall strategy and business plans of the institution, as well as monitoring the performance of the management, which is responsible for the day-to-day running of the bank.
The proposals are based on the principles of fairness for all stakeholders; accountability of decision-makers within the institution; responsibility for management to take corrective active and for penalizing mismanagement, as well as enhancing transparency.
The new rules will require boards to meet at least four times a year, with individual board members being required to attend at least 50 percent of the board meetings. Board members of banks will not be allowed to hold more than three directorships of financial institutions, whether in or outside Bahrain.
The current consultation period for banks runs until end June 2004. The consultation paper will be available for public comment after April 1, 2004. The consultation is part of an ongoing review of existing regulations to ensure that banks in Bahrain continue to adhere to the highest international standards. Consultations by the BMA are also ongoing in the area of consumer finance and enforcement procedures. — (menareport.com)
© 2004 Mena Report (www.menareport.com)