A leading Kuwaiti banker has called for increased adoption of good corporate governance to promote Middle East business transparency and boost international investment in the region’s stock exchanges.
Tariq Mohammed AbdulSalam, vice chairman of Kuwait Project Company (KIPCO) affiliate Burgan Bank – a regional bank committed to innovative corporate governance policies and procedures - made his call in a keynote address on the opening day of the Arab Economic Forum in Beirut.
He proposed a new regional concept of “First-Tier Listing with Enhanced Governance,” which would require companies to demonstrate higher standards of governance as a condition for reciprocal listing on a number of regional stock exchanges.
Mr. AbdulSalam said if this system was implemented, regional stock exchanges already granting listing reciprocality would harmonise on standards of highest realistic disclosure and governance standards – enhancing securities transaction transparency between regional investors, and creating transparency standards to stimulate demand for
regionally-quoted securities from international investors
Acknowledging recent statements by the Commerce ministers of Lebanon and Kuwait on effective standards acceptable to users of regional exchanges, Mr. AbdulSalam said: “In my opinion, the starting point should be for key regional stock exchanges to require companies seeking multiple quotation to meet common governance and disclosure requirements to obtain additional quotations on any of the other affiliated core exchanges.”
He also outlined Burgan Bank’s innovation in adopting in-house corporate governance, in line with best international practice, and proposed three innovative governance requirements, based on Burgan Bank’s corporate governance experience.
These were: a Board of at least seven directors, with at least three independent directors; all listed companies to have both Board Audit and Risk Committees, on which independent directors both chair and hold majority; and a requirement to have a Board Nominations, Appointments & Remuneration Committee where independent directors also chair and hold majority.
“I am aware of problems these three requirements could cause, but I do not think securities quoted on regional stock exchanges will become widely accepted internationally unless these governance steps are taken,” he said.
Burgan Bank, Kuwait’s fourth-largest bank with assets of KD 1.7 billion
(US$ 5.8 billion) is one of the first regional banks to publicly detail its corporate governance in its Annual Report.
These policies and procedures – designed with guidance from supervisory authority the Central Bank of Kuwait - includes a “Beta” organisation chart, which outlines
well-defined management through a network of formally constituted and documented Board Committees.
Burgan Bank is KIPCO’s “pacesetter” in its on-going Group-wide initiative to create and codify governance policies and procedures, and implement them fairly and transparently in line with relevant laws and regulations.
KIPCO is Kuwait’s largest private sector company with more than US$ 15 billion under management or control, and a portfolio of some 55 companies with major activities in financial services and media & telecommunications, as well as real estate, industry, management advisory, medical services and aviation throughout the Middle East and North Africa (MENA) region. KIPCO also has substantial ownership interests in the U.S. and Europe, employs more than 10,000 people internationally, and its shares are one of the most actively traded on the Kuwait Stock Exchange.
KIPCO’s core operating companies are Burgan Bank, Kuwait’s leading technology-driven commercial bank; United Gulf Bank (UGB), its investment banking subsidiary; Gulf Insurance Company (GIC), a regional leader in commercial and personal insurance; Wataniya Telecom, the dynamic and fast-growing regional mobile telephone services provider; and Showtime, the hugely-popular digital pay-TV service spanning the Middle East and North Africa.
