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Corporate Governance Central Bank of Bahrain (Presented By Isa Al Motawaj) Director of Wholesale Banking Supervision 25

Corporate Governance Central Bank of Bahrain (Presented By Isa Al Motawaj) Director of Wholesale Banking Supervision 25 th May 2011.

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Corporate Governance Central Bank of Bahrain (Presented By Isa Al Motawaj) Director of Wholesale Banking Supervision 25

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  1. Corporate GovernanceCentral Bank of Bahrain(Presented By Isa Al Motawaj) Director of Wholesale Banking Supervision25th May 2011

  2. During 2010 the Ministry of Industry and Commerce and the Central Bank of Bahrain (CBB) have introduced new Corporate Governance framework reflecting the international best practice . Accordingly, banks were asked (in December 2010) to assess their Corporate Governance framework and submit the CBB adetailed assessment of actions needed to be taken to address any shortfalls in compliance. Corporate Governance framework must be part of banks’ AGM agenda held after 01/01/2011 The main changes

  3. Decision making process: • Increasing the role and responsibilities of Board • Board must meet frequently (not less than 4 times a year) • Each Director must attend at least 75% of Board meetings • Absentees must be reported in the AGM if the member stand for election. • Banks required to submit a report recording the meetings during the year. • One directorship of a Retail Bank or a Wholesale Bank (max two directorships of financial institutions inside Bahrain and 3 in public entities.

  4. Independence of Judgment & Representation of shareholders: • Expanding the definition of “executive director” • Half of the board should be non-executive directors and at least three of those persons should be independent directors. • In a bank with a controller, at least one-thirdof the board must be independent directors. • The chairman must not be an executive director (should be an independent) . • Board should review the independence of each director annually. • Prohibition of proxies.

  5. Other areas: • Personal accountability (can be sued by stakeholders) • Audit Committee: at least three directors of which the majority must be independent including the Chairman. • Every committee must have a formal written charter. • Board training (each new director receives a formal and tailored induction). • Controlled functions (CEO, CFO, IA, CRM, etc.) must be approved and interviewed by the CBB prior to their appointments. • Banks must disclose their Corporate Governance.

  6. Thank You

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