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Federal agencies to boost transparency

posted on 30/10/2011: 875 views

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, has issued a decree setting unified governance criteria concerning the structure and functioning of the boards of directors of federal entities, including all profit and non-profit institutions and corporates.

The decree, which applies to all existing and future organisations, aims to strengthen transparency and set a benchmark standard of governance in agencies owned by the federal government, starting from the top of the administrative hierarchy. The decree follows Federal Law No. 5 for the year 2011, issued by the President, His Highness Sheikh Khalifa bin Zayed Al Nahyan, under which the Council of Ministers will take responsibility for the formation and organisation of the boards of directors, trustees and committees in all ministries, federal institutions and bodies. The Cabinet will determine the jurisdiction and control over their work, and determine or cancel their financial rewards. It can transfer the jurisdiction in cases it deems appropriate.

The decree includes articles concerning the composition of boards of directors, and the mechanism for selection of its members by the Council of Ministers based on their experience and competence. Under the decree, the board of directors will be the supreme authority of the federal institution and answerable to the Council of Ministers on accomplishment of policies and objectives for which the institution has been created.

The decree prohibits a board member from sitting on more than four boards and from serving as president in more than three federal institutions simultaneously. It is not permissible for members of the boards of non-profit federal institutions, who regulate or oversee companies with shares listed on the country's stock markets, to be board members of such companies.

The decree assigns the boards of profit and non-profit federal institutions to form an audit committee to monitor the financial health and risks of the institution, to evaluate risk management and internal control, implement effective internal auditing and cooperate with the Audit Bureau in accordance with the rules and accounting principles in practice.

The decree chalks out a code of professional conduct and ethics for public offices to be adopted by federal institutions, especially by the board of directors.

The members of the board and executive management of profitable federal institutions that regulate or oversee listed public sector companies should disclose their shares annually, while those of non-profit federal institutions should comply with laws issued by the Securities and Commodities Authority regarding trading, clearing and settlement, transfer of ownership and custody of securities.

According to the decree, the Federal Authority for Government Human Resources will set up a special system for the disclosure of all matters relating to the establishment of an institution, including its financial position, performance, ownership and style of governance, and submit it to the Council of Ministers. The authority will also develop a system to avoid conflict of interests in federal institutions, which must be followed by their board members, executives and employees.

The board must submit an annual report within a period not exceeding three months from the end of each calendar year to the Council of Ministers, including the names of its president and vice-president, board members and committee members, number of meetings and the copies of minutes of such meetings, summary on the activities of the board and committees, performance appraisals of the committees, and an annual financial and operational performance appraisal of the federal institution with regards to its budget and business plan.

For its part, the Council of Ministers will conduct an annual assessment of the board's performance in accordance with the performance standards specified by the Cabinet. - Emirates News Agency, WAM


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