The Dubai Financial Services Authority (DFSA) recently concluded a thematic review of the corporate governance of firms licensed to provide financial services in the Dubai International Financial Centre (DIFC). The review focussed on twelve themes fundamental to good corporate governance including management structures and practices, systems and controls, internal audit and management information flows.
While the DFSA routinely reviews the quality of governance in regulated businesses in the DIFC, this review is the first full scale corporate governance review and is the first occasion on which the DFSA has issued a Report on this subject.
The DFSA generally found a good level of compliance by institutions and that governance structures and arrangements generally reflected the nature, scale and complexity of the businesses reviewed. However, the practices of some institutions fell short of their own stated policies. The DFSA noted that governance arrangements and responsibilities often did not align to business plans and strategies and that those institutions need to comply with their stated polices or amend them to reflect current practices.
A significant finding of the review, documented in the Report, was that firms often did not carry out structured, periodic reviews of their Governing Bodies and their committees, or their effectiveness. The Governing Body is generally a company’s Board of Directors.
Mr Ian Johnston, Chief Executive Officer of the DFSA said: “The findings of the review provide a benchmark and reference that should be used by institutions to assess their corporate governance frameworks and practices. The DFSA is working to enhance the quality of governance of regulated businesses in the DIFC and where we detect governance failures we will rectify them through supervisory methods or enforcement action.”