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Corporate Governance

Effective corporate governance fosters an environment of trust, transparency, and accountability, leading to enhanced business integrity and improved financial growth.
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Corporate governance in Dubai

In the past decade, the Middle East has seen a significant rise in awareness regarding corporate governance, driven by a rapidly growing economy. While the sophistication of governance laws and frameworks varies across the region, there is a strong emphasis on their implementation.

Corporate governance advisory services are increasingly essential as companies seek to attract more foreign direct investment. With globalization intensifying competition, many businesses in the Middle East are now focusing on enhancing their corporate governance practices, professionalizing their operations to stay competitive in the market.

What is corporate governance?

Corporate governance encompasses the practices, processes, and structures that empower a business to achieve its financial, operational, and strategic objectives while ensuring long-term sustainability and performance.

Companies that adhere to strong governance principles mitigate risks, enhance transparency, and implement effective monitoring practices.

Sound corporate governance not only reflects a company’s ethical standards but also delivers practical advantages, increasing operational efficiency and contributing to a higher valuation of the company’s shares.

What are the essential elements for effective corporate governance implementation?

Corporate governance firms adhere to the following key elements for effective implementation:

Qualified board

A board composed of experienced directors and shareholders is essential. The majority should be independent and not involved in day-to-day management, ensuring diverse and impartial perspectives on governance.

Roles and responsibilities

When seeking corporate governance advisory services in Dubai, it’s crucial to clarify roles and responsibilities. Managers, directors, and general managers are accountable for the daily operations of the business. With appropriate qualifications and experience, they ensure compliance with the Memorandum of Association (MoA) and other applicable laws.

Some of the key responsibilities of manager include,

  • Prepare balance sheet and audited accounts
  • The audited accounts must be prepared within 3 months from the end of company’s fiscal year.
  • The balance sheet and other documents must be presented to the shareholder for approval
  • Responsible for VAT submissions

Ensure ethical behavior

Under corporate governance, managers must uphold their duties without exception. According to commercial law, it’s essential for the Memorandum of Association (MoA) to include provisions reinforcing this obligation. A robust code of conduct is vital for fostering a business culture that aligns with both the company’s policies and UAE regulations.

Performance Evaluation

When implementing corporate governance, prioritize measurable performance targets and conduct regular evaluations. These targets should be linked to compensation and, if necessary, potential termination for inadequate performance.

Risk-management

Corporate governance firms assist businesses in identifying risks and establishing effective risk management procedures. These include financial, reputational, operational, legal, and supplier risks. It’s essential to recognize both long-term and short-term risks and assess their potential impact on business performance. Utilizing a robust risk management framework can significantly mitigate these risks.

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