Is corporate governance an important issue in your country?

Legislators and regulators within United Arab Emirates (UAE) recognise that, for UAE's markets and businesses to be competitive, standards of corporate governance need to be high. UAE has generally avoided high profile scandals and business collapses of the nature of those which have occurred in other emerging market jurisdictions. High standards of corporate governance should help to avoid such events.

Since 2006 most of the major regulators and markets have issued corporate governance rules or encouraged corporate governance initiatives. In 2006 the Central Bank of UAE sponsored a corporate governance initiative and the Abu Dhabi Stock Exchange issued a corporate governance code. In 2007, the Emirates' Securities & Commodities Authority issued corporate governance rules, which will become obligatory during 2010. Although the new rules set out minimum compliance standards for listed companies, most companies will try to exceed these standards.

Why have these changes come about so rapidly?

As a result of the recent oil boom, the UAE`s economy and businesses have been growing extremely rapidly. Recently UAE investors, including sovereign wealth funds, banks and other businesses, have been prominent outbound investors throughout the world. The UAE's regulators recognise that high standards of governance will ensure that its companies are attractive for inbound investment and partnerships, and also that UAE is an acceptable partner for outbound investments.

Although ADCB's business has traditionally been largely domestic, early in 2008 the bank bought a 25 per cent stake in a Malaysian Bank, RHB. It was important to ADCB to demonstrate to RHB, and to the Government of Malaysia, that ADCB is a responsibly governed partner.

Are their any other aspects of corporate governance that are specific to your region?

Although UAE is growing fast, the business environment is dominated by several large family-run businesses. As such, many business transactions are struck on the basis of close relationships. This means that within the UAE we have to work harder than in some other jurisdictions to maintain independence and avoid conflicts.

How is your company adapting to this increased emphasis on corporate governance?

ADCB believes that strong internal governance will enhance ADCB's stability, improve its ability to respond to opportunities and serve its clients, protect the interests of stakeholders, and create additional value for shareholders.

ADCB has a two-year plan to implement corporate governance across the bank. The guiding principles of the Bank's corporate governance policies are fourfold:

•   Responsibility - the clear division and delegation of authority.
•   Accountability - in the relationships between the bank's management and the board, and between the board and the shareholders and other stakeholders.
•   Transparency - and disclosure to enable stakeholders to assess the bank's financial performance and condition.
•   Fairness - in the treatment of all stakeholders.

Operationally, the bank has avoided circulating detailed guidance notes, policies and procedures. Instead, ADCB intends to make certain changes to its internal governance and decision making structures and to encourage directors and managers to address issues by reference to the guiding principles.

Are there any other local institutions who offer guidance on this issue?

The Abu Dhabi Stock Market and the Emirates Securities and Commodities authority are important sources of best practice.

The bank has also worked with the International Finance Corporation, a division of the World Bank, and Hawkamah, the regional institute for corporate governance.