(MENAFN- The Peninsula) Qatar Financial Markets Authority (QFMA) recently issued rules to regulate the functioning of Board of Directors (BoD) of listed companies on Qatar Exchange. The rules aim to enhance transparency in the functioning of BoD, eliminate conflict of interest and misuse of insider information.
The rules were compiled in the rulebook issued recently titled Board of Directors of Listed Companies. The book has 13 chapters which include sections on the legislations for BoD.
The rules stipulate that the members of board will be collectively responsible for fraudulent misuse of power or violation of laws. They will also be held collectively responsible for the wrong decision in case the decision was taken unanimously. If the decision was based on the majority, then the members opposing the wrong decision would not be held accountable.
In order to eliminate the conflict of interest between the BoD and the company, the rule stipulates that member of the board should not have any direct or indirect interest in the projects, contracts that would be awarded to other companies.
If a member has any interest in the project, then he should not attend the general meeting that will be convened to approve that project. Board members cannot participate in the competitive bidding against the company in which they are board members. If they are found competing with the company they will have to compensate the company. The rulebook said BoD will have the authority to carry out the necessary functions and they will have the power to assign one or more directors for any specific work of the company.
Regarding corporate governance, rulebook said the company should announce and approve the rules and procedures regarding signing the commercial deal. It should sign the deal following the policies of company and the policies should be transparent. The finalised deal should be approved by the company's general assembly.
Any matter that involves conflict of interest with a board member, he cannot attend the meeting convened to discuss the matter and the concerned member will not have right to vote on this matter. The deal should be finalised on the basis market price and it should not have any provision undermining the company's interest. The details of the all deals should be disclosed in the annual report and general meeting. The board will have to disclose all the details about the share trading. The company will have to frame the rules to regulate the share trading activities of board members and other employees.
The chairman will invite other member for the forthcoming meetings. The meeting will be valid if more than 50 percent of the members are present and there should be at least six meetings of the board in a year.
As per the rules, the board members will not be allowed to skip three meeting in a row and five meeting in a year without a valid reason which is acceptable to the BoD. Regarding eligibility of the members, the age of the member should be less than 21 years, and he should not have any criminal background. He must be shareholder of the company. The shares of the members should be deposited in QE or depository since the beginning. The board members will not be allowed to pledge their shares. If he pledges the shares during board membership, his membership will be cancelled. However, the member of board who is government representative will not be required to hold shares of the company. A person cannot be board member of more than three companies.
The chairman cannot hold the position of chief executive of the company so that he should hold absolute power and become sole decision maker.
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