Corporate Governance

Philosophy

Corporate Governance practices are integral part of our business activities at Markaz. The Company’s Board of Directors has set a conservative policy that was transformed into a governance system prior to the issuance of related laws and legislation.

The executive management implemented this policy with great efficiency, thus turning Markaz into one of the few Kuwaiti companies to develop an official corporate governance structure with voluntary compliance. Markaz also took the necessary steps to determine the level of risks and set adequate internal controls and administrative systems for risk mitigation in line with the best international practices.

Markaz works within a corporate governance framework, aligning all of our activities to applicable regulatory requirements including corporate governance standards, best practices, internal policies, systems and controls. We are committed to defining, following and practicing the highest level of corporate governance across all our business functions. Our corporate governance is a reflection of our value system encompassing our culture, policies, and relationships with our stakeholders. Integrity and transparency are key to our corporate governance practices and performance and ensure that we serve and protect the interests of our stakeholders.

Governance structure

Our governance structure comprises of the Board, Board Committees and Management Committees.

We have aligned our organizational structure to embed sound corporate governance practices within the reporting lines, providing clear segregation of duties and independence of executive management and key functions such as Compliance, Risk Management and Internal Audit. Our Corporate Policies clearly distinguish the role of the Board and Executive Management and there are clear descriptions of the roles of the Board, Chairman, Board Members, Board Committees, Chief Executive Officer, Chief Financial Officer, Board Secretary, Head of Risk Management, Head of Compliance, Internal Auditor and Management Committees.

The Board has overall responsibility to govern the Company and its role includes setting, overseeing and monitoring the implementation of the Company’s strategic objectives, risk management policy and governance systems.

The Board is composed of seven members per the Memorandum and Articles of Association of the Company.

The Board is currently composed of:

  • Mr. Diraar Yusuf Alghanim (Chairman – non-executive)

  • Mr. Faisal AbdulAziz Al-Jallal (Vice Chairman – non-executive)

  • Mr. Ayman Abdullatif Alshaya (Non-executive Director)

  • Mr. Fahad Yaqoub Al-Jouan (Non-executive Director)

  • Mr. Adel Mohammed Alghannam (Independent Director)

  • Mr. Omran Habib Hayat (Independent Director)

  • Mr. Fahad Sulaiman Aldalali (Independent Director)

The principal responsibilities of the Board include the following:

  1. Approving the objectives, strategies, business plans and essential policies of the Company.
  2. Approving the annual budgets, interim and annual financial statements.
  3. Monitoring the major capital expenditures of the Company and the process of acquiring and disposing of assets.
  4. Ensure compliance with the company’s articles and memorandum of association, internal policies and procedures and applicable laws and regulations.
  5. Setting up effective channels of communication for shareholders in order to enable them to be informed continuously and on a periodic basis of the various activities of the Company and any significant developments.
  6. Developing a corporate governance system for the Company and monitoring the level of its effectiveness.
  7. Ensuring that the Company’s policies and procedures are transparent and clear to allow the decision making process, achievement of mature corporate governance principles and the segregation of authorities amongst the Board of Directors and Executive Management.
  8. Defining the authorities that are delegated to the Executive Management, the decision making procedures, and the delegation period.
  9. Supervising and monitoring the performance of the Executive Management.
  10. Determining the remuneration categories given to employees
  11. Appointing or terminating Executive Management members
  12. Markaz Board members participate in a range of training programs. In addition to a formal induction program, Board members receive regular updates designed to keep them abreast of the matters relating to their duties and responsibilities as Board members.
Markaz's internal management and control system is based on the directives and regulations issued by the Capital Markets Authority, Central Bank of Kuwait, Boursa Kuwait, the Company's Articles and Memorandum of Association and its own internal policies. The board of directors has the ultimate responsibility for the operations of the company, and delegates some of its authority to the Board Committees. The Board has formed four committees to help it oversee Markaz’s decision making and oversight functions. Each Board committee performs its duties in compliance with its own charter as determined in the Board Policies pursuant to the applicable regulations.
 

1.    Board Steering Committee (BSC):

The BSC is responsible to efficiently monitor the execution and progress of the strategy and budget by the management and to expedite and streamline the decision making process, and monitor the performance of the various business activities. The BSC comprises of three members:
  • Mr. Diraar Yusuf Alghanim (Chairperson)
  • Mr. Ayman Abdullatif Alshaya
  • Mr. Fahad Yaqoub Al-Jouan

2.    Board Audit Committee (BAC)

The BAC is responsible to assist the Board in the effective discharge of its responsibilities with respect to financial reporting, internal controls, internal and external audit; and to establish the compliance culture of the Company by ensuring the independence of the external auditors and the fairness and integrity of the Company’s financial reports and ensuring that the internal controls within the Company are sufficient and efficient.

The BAC comprises of three members:
  • Mr. Faisal AbdulAziz Al-Jallal (Chairperson)
  • Fahad Yacoub Al Jouan
  • Mr. Fahad Sulaiman Aldalali

3.    Board Risk Management Committee (BRMC)

The BRMC is responsible to assist the BOD in fulfilling their oversight responsibilities for the risk management function of the Company such as identification, evaluation, monitoring and mitigation of all risks that the Company is exposed to. The Committee assists the Board in setting the Company’s risk strategy and appetite, the overall Risk Management Framework, and oversees the Executive Management’s application of such strategy.

The BRMC comprises of three members:

  • Fahad Yacoub Al Jouan (Chairperson)
  • Mr. Adel Mohammed AlGhannam
  • Mr. Omran Habib Hayat

4.    Board Nominations and Remunerations Committee (BNRC)

The BNRC is responsible to formulate policy and make recommendations to the Board on nominations of Board members and Executive Management members, remunerations systems and policies. The BNRC comprises of four members:
  • Mr. Diraar Yusuf Alghanim (Chairperson)
  • Mr. Faisal AbdulAziz Al-Jallal
  • Mr. Ayman Abdullatif Alshaya
  • Adel Mohammed AlGhannam

The Board has formed four main Management committees (with four sub-committees) to help it oversee Markaz’s decision- making and oversight functions.  Each Management committee performs its duties as assigned by the Board in compliance with its own charter.

Assets and Liability Committee (ALCO)

The ALCO Approves borrowings and loans; and monitors the cash and loans positions and the various risk aspects associated with the assets & liabilities of the company. Sub-committee: Loans Classification Committee.

Management Executive Committee (MEC)

The MEC discusses strategic issues (strategy, budgets and business plan, asset allocation), and approves products and services recommended by the various business units, and the 2 sub-committees the Investment Committee (IC) and Real Estate Committee (REC).

Governance, Risk Management and Compliance Committee (GRC)

The GRC reviews the Governance, Compliance and Risk Management framework; monitors IT, legal and compliance aspects; approves software and performs the role of the Governance and Ethics Committee. Sub-Committee: Efficiency & Digitization Committee (EDC).

New Product (NPC)

The NPC accelerates the development and streamlines the execution of new products.

Internal control

The integrity and reliability of the internal control systems are achieved through policies and procedures, process automation, careful selection of employees, bringing awareness to the staff, and an organizational structure that segregates responsibilities. Control procedures have been established to safeguard the Company’s assets and to ensure that decisions and actions are properly authorized, and financially recorded. Risk Control Self Assessments (RCSA), compliance testing and reviews are conducted periodically by the Risk Management Department and Compliance Department respectively.
The internal audit function has been outsourced to Ernst & Young Consultancy Company W.L.L – Ahmed Al Aiban and Partner and the function is overseen by the Internal Audit Officer at Markaz who is registered with the CMA. The Internal Audit function independently reports to the Board Audit Committee (“BAC”). The audits are performed by the outsourced internal auditors according to the internal audit plan approved by the BAC and comprehensive reports are submitted by the internal auditors directly to the BAC. Necessary corrective policies and measures are adopted, wherever required. The Internal Audit plan is implemented through evaluating controls over significant risks and the effectiveness of risk management, control and governance processes.
Markaz has a comprehensive risk management and control framework in place to ensure that the Company and its related entities are appropriately governed. The Board directs the policy and process framework and is responsible for risk management and for all risk control systems that are implemented in Markaz, as well as related entities. The Markaz Board ensures that risk management is embedded into the Company’s culture, policies and processes. Officers at the Risk Management Department are independent from the Business Units in order to perform their roles objectively The Risk Management Department identifies, measures, evaluates and reports on all critical risks to which Markaz is exposed, through defined key risk indicators under relevant risk buckets. It carries out periodic risk control and monitoring activities and reviews all the policies, procedures and controls constantly. The department is continuously enhancing its risk monitoring abilities through appropriate automation. The Risk Department submits periodic reports to the Board Risk Management Committee and the Board.
The Company has a Compliance department that reports to the CEO. The Compliance department ensures that the Company is committed to the laws and regulatory requirements and to follow up on the Company’s disclosure to regulatory authorities. As part of its mandate, the Compliance Department coordinates with regulatory auditors and compliance service providers. The department ensures implementation of appropriate AML policy and internal controls and is responsible for receiving and addressing client complaints.
“Markaz Code of Conduct” and “Standards of Professional Conduct” set the key principles underlying business ethics. These principles are in line with industry best practice standards and emphasize professionalism in the asset management and investment banking business. These include specific rules against insider trading and our commitment to preserving the integrity of the capital markets, our fiduciary duties to our clients and confidentiality requirements among others. The “Markaz Code of Conduct” and the “Standards of Professional Conduct” are disseminated widely and shared with relevant stakeholders and apply to all employees, Board members, subsidiaries, managed funds.
The Board has established a “Whistle-blower policy” that allows a stakeholder to report concerns of malpractices, unlawful conduct/misconduct, financial mismanagement, accounting irregularities, illegal acts/violation of legal or regulatory provisions etc. in good faith. Adequate mechanisms are implemented to allow conducting a fair and independent investigation concerning such issues, along with ensuring confidentiality for the reporting person to ensure protecting such person against any negative effect that may result due to reporting

External audit

The BAC provides recommendations to the BOD for the appointment and re- appointment of the external auditor and verify their independence and that they do not engage in any additional work that may affect their independence.

The General Assembly of the shareholders has appointed following external auditors of the Company

  • Grant Thornton

    Al- Qatami Al-Aiban & Partners

  • Deloitte & Touche

    Al Wazzan & Co

Disclosure and transparency

The Company is committed to apply the highest standards of transparency, as the Board has approved policies and procedures for disclosure that guarantee the provision of accurate and timely information to shareholders and stakeholders. The Compliance Department and the Board Secretariat coordinate with all departments of the Company to disclose accurate information on a timely basis, to the Kuwait Capital Markets Authority, Boursa Kuwait and applicable stakeholders.

Shareholder & stakeholder rights

The Company is committed to protect the rights of shareholders, and the Board of Directors has approved policies that ensure the protection of the rights of all shareholders and that provides the shareholders to exercise their rights given in the Companies Law and the instructions of the Capital Markets Authority, which includes the following:

  • Right to be treated on par with other shareholders.
  • Right to record the value of shares owned in the Company’s records.
  • Right to transact in shares by assigning and/or transferring the ownership of shares.
  • Right to receive their share of dividend distribution and bonus shares
  • Right to receive their share of Company’s assets, in case of liquidation.
  • Right to receive information and data related to the Company’s activities and its operational and investment strategies on a regular and timely basis.
  • Right to participate in the General Assembly meetings of shareholders and voting on decisions.
  • Right to elect members to the Board of Directors.
  • Right to monitor the Company’s performance in general and the Board of Directors in particular.
  • Right to hold the Board of Directors and the Executive Management of the Company accountable and right to file claims, in case they fail to perform their entrusted duties.
  • Right to view the Company’s Articles and Memorandum of Association, General Assembly minutes, and the shareholder and bondholder registers at the registered address of the Company.
  • Right to dispose of the shares owned by the shareholder and to exercise pre-emption rights to subscribe for new shares and bonds or sukuks in accordance with the provisions of the Companies Law and the Company’s Articles and Memorandum of Association.

In addition to the above, the shareholders hold specific rights relating to General Assembly such as

  1. Right to request a general assembly meeting if the shareholder holds a minimum of 10% of the capital of the Company
  2. Right to grant power of attorney in writing to another shareholder to attend the meeting of the general assembly
  3. Right to discuss the matters listed in the agenda and to question the Board of Directors, External Auditors on the same
  4. Right to receive information on the voting rights, rules and procedures.

The Company shall not bar any of the aforementioned rights for any class of shareholders or lay down criteria which may discriminate between the classes of shareholders in order to establish such rights (currently, the Company has only one class of shares).

Investor Relations Unit

Markaz has established an “Investor Relations Unit” responsible for providing information and reports required by shareholders. For more information, please contact:

Ms. Deena Al Refai (Senior Vice President)
Address: Universal Tower, Mezzanine Floor, Ahmad Al-Jaber St, Sharq, Kuwait
Tel: 00965 2224 8055
Fax: 00965 2224 8200
Email: [email protected]

Stakeholder Rights

Markaz acknowledges stakeholders’ rights and works on encouraging the cooperation between the Company and the stakeholders in various areas.

Corporate Social Responsibility (CSR)

In our constant endeavour to actively participate in community service and contribute to building a strong and sustainable economy in Kuwait, we have adopted a corporate social and economic responsibility strategy aimed at fulfilling Markaz’s responsibilities to society and national economy.

The strategy is founded on three main pillars, namely:

Out of its belief that the sustainable future of Kuwait relies on individual skills and capabilities, Markaz is keen to cooperate with viable non-profit organizations and contribute to human capacity building programs, in order to provide for and maintain sustainable progress.

Below are some of non-profit organizations who are contributing in developing human capabilities:

  • Loyac
  • Kuwait University
  • kach
  • KRCS
  • cccl
  • coded
  • Injaz
In fulfilling its economic responsibility, Markaz was the first to publish research to broaden knowledge of the financial sector. A special department was dedicated to publish research. Markaz also collaborates with a number of global research institutes and experts in the field of economic policies to publish research addressing practical policies capable of implementation in Kuwait and the region, concerned with energy, manpower, economic structuring and the public sector, with emphasis on calling for the publication of such research. The research is disseminated to decision makers and stakeholders in Kuwait, and research findings are discussed with them to reach best practical solutions
The public sector plays a vital role in the allocation and utilization of economic resources in Kuwait, given the importance of public spending and the role government plays in economic development. Thus efforts must be combined to boost public sector performance and enhance economic development.