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Yearly Archives: 2014

Spotlight On SOEs In The MENA Region

Governance of state-owned enterprises is an issue of increasing importance to policymakers in the region, as well as to the wider public. This is unsurprising considering the important contribution of SOEs to economic and social objectives, including their role as providers of goods and services, employment and key infrastructure (OECD, 2013). Although specific figures on the contribution of SOEs to national GDP (Gross Domestic Product), employment or investment are not generally disclosed, it is estimated that as much as 30 per cent of the regional GDP originates from SOEs (OECD, 2012).

Searching For Accountability In Corporate Governance

Accountability for business performance appears to be shifting irrevocably, albeit more slowly than that desired by the investor community. Historically, the performance of the enterprise rested at the feet of the CEO. Boards reported the performance of the business to shareholders and, on occasions, their broader stakeholder community. They rewarded or dismissed their CEOs on the basis of that performance. It was the CEO who was held accountable for performance by their board

The Africa Challenge: Finding Clarity Amid The Storm

Uncertainty is the enemy of investors and of the businesses in which they invest. This is true not just in Africa, but in markets the world over. However, the African business environment arguably poses more risks than other regions. The challenges are deep, daunting and complex - Ebola, technology and skills gaps, disenfranchised youth, economic and political instability, food insecurity - just to name a few.

Sovereign Investors And The Problem Of Deadweight Shareholders

This is the era of the activist investor. Although investors prize different things - a hedge fund may seek to force a spin-off or reduce cash reserves, while a public pension fund may seek corporate governance changes - as a group, shareholders have never been more active and aggressive in seeking to influence change. It is perhaps because of this activism that the relative lethargy of other shareholders becomes more pronounced.

Corporate Governance Is Essential Before Going Public

Attending to a firm’s corporate governance is critical to its long-term growth and success. Good governance plays a particularly important role for firms preparing for an initial public offering (IPO) of shares. At the International Finance Corporation (IFC), an increasing amount of our corporate governance work with some clients takes place as part of their pre-IPO preparation because of this connection.

Reconciling Sales Strategy With FCPA Compliance

This article aims to raise organisational and strategic issues that need to be addressed in the context of corruption risk. If we want to address how to reconcile sales strategy with FCPA compliance, any effort that does not take into account organisational culture across divisions, locations and levels of seniority will never be ‘owned’ by the organisation. It cannot take root or succeed.

Striking a balance: Offence v Defence

In the minds of many stakeholders, an organisation has a corporate responsibility to defend its stakeholders’ interests. This responsibility includes safeguarding, protecting and valuing the interests of all of its stakeholders, with a view to ensuring the long-term sustainability of stakeholder value. This responsibility begins with the board.

A Global Perspective on Minority Shareholder Rights

Earlier this year, London’s Financial Conduct Authority responded to concerns across the investment community about the position of smaller investors in large companies, with a recent change in rules to allow greater powers for minority shareholders. The move had been designed to strengthen and protect the voice of small investors, equipping them with increased voting rights and a larger scope of influence over important decisions.

Boardroom independence: Is it really advantageous?

The climate of uncertainty and turmoil that has afflicted the financial system in recent years led to urgent calls for greater boardroom independence and a shift in regulation has seen an increasing trend in the division between the roles of CEOs and directors, falling closer in line with the corporate governance code of the UK and other countries. Greater independence in the boardroom, with a clear separation of the most important executive roles in the organisation, is regarded as a positive practice, emerging often as a response to shareholders’ demand for greater responsibility and accountability from board members, and a concern with a lack of managerial foresight and direction.

Board Training in the MENA Region: Perceived Challenges and Practical Solutions

Company boards in the Middle East and North Africa (MENA) region are in some way reluctant to embrace training. In fact, for years consultants and governance professionals have tried to crack into this potentially lucrative market but often were unsuccessful. In this post, I will attempt to discuss the underlying causes that stand behind boards’ hesitation to undergo training and I will also touch upon ways to overcome such problems. Below are a number of explanations and pretexts that contribute to this unfortunate phenomenon in the MENA region.