REFLECTIONS ON GULF CORPORATE GOVERNANCE
Across the world there is great diversity in corporate
governance arrangements, with their respective strengths
and weaknesses. At best they are tailored responses to
local circumstances designed and evolved to ensure that
generally accepted corporate governance principles are
applied. While the principles have wide acceptance, the
means to apply these principles vary according to local
culture, laws and regulations. At worst, in some parts of
the world, corporate governance is so light touch that it is
largely or partially ineffective.
In this article we examine some of the characteristics
of boards of quoted companies in the Gulf region in
comparison with elsewhere, attempting to identify
their strengths and weaknesses, and having regard to
local circumstances.
Composition of Boards
A significant difference of approach is between countries
that rely on unitary boards, usually comprising non-
Reflections on Gulf Corporate Governance
‘There
is
a
growing
recognition that the world
is complex, and cultural
diversity creates a need to
deal with people on their own
terms. In earlier times, many
decision makers, embracing
neoclassical
principles,
believed that economic
reactions are universal and
rational. …Today, however,
the ability of culture to
trigger unique responses is
being recognised …’
1
executive as well as executive directors, and those with
two-tier board structures. One example of the latter is the
German supervisory board above the management board
where the supervisory board comprises at least twenty
non-executive members including worker representatives
on the principle of ‘co-determination’. In other countries
where there is no requirement for two-tier boards, they
may be optional.
If a company has a single, unitary board, the CEO is
nevertheless likely to make use of an executive committee
(EXCO) to assist in running the business, resulting
informally in an arrangement which resembles a two-tier
structure in some respects. This may be an important
part of the CEO’s approach to managing the business.
In many companies across the world with unitary boards,
the CEO uses the EXCO prior to each board meeting to
ensure that the executive is ready for the board meeting
and that all of the executive board members ‘sing
from the same hymn sheet’ at the board meeting. The
Article by Professor Andrew Chambers
1Walle,
33
A.H. (2013) Rethinking Business Anthropology, Greenleaf Publishing, UK.
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