• HC-1 HC-1 The Board

    • HC-1.1 HC-1.1 Principle

      • HC-1.1.1

        All licensees must be headed by an effective, collegial and informed Board of Directors ('the Board').

        May 2011

    • HC-1.2 HC-1.2 Role and Responsibilities

      • HC-1.2.1

        All directors must understand the Board's role and responsibilities under the Commercial Companies Law and any other laws or regulations that may govern their responsibilities from time to time. In particular:

        (a) The Board's role as distinct from the role of the shareholders (who elect the Board and whose interests the Board serves) and the role of officers (whom the Board appoints and oversees); and
        (b) The Board's fiduciary duties of care and loyalty to the licensee and the shareholders (see HC-10.2).
        May 2011

      • HC-1.2.2

        The Board's role and responsibilities include but are not limited to:

        (a) The overall business performance and strategy for the licensee;
        (b) Causing financial statements to be prepared which accurately disclose the licensee's financial position;
        (c) Monitoring management performance;
        (d) Convening and preparing the agenda for shareholder meetings; and
        (e) Monitoring conflicts of interest and preventing abusive related party transactions.
        May 2011

      • HC-1.2.3

        When a new director is inducted, the chairman of the Board, assisted by company legal counsel or compliance officer, should review the Board's role and duties with that person, particularly covering legal and regulatory requirements and Module HC.

        May 2011

      • HC-1.2.4

        The licensee should have a written appointment agreement with each director which recites the directors' powers and duties and other matters relating to his appointment including his term, the time commitment envisaged, the committee assignment if any, his remuneration and expense reimbursement entitlement, and his access to independent professional advice when that is needed.

        May 2011

      • HC-1.2.5

        The Board should adopt a formal Board charter or other statement specifying matters which are reserved to it, which should include but need not be limited to the specific requirements and responsibilities of directors.

        May 2011

    • HC-1.3 HC-1.3 Composition

      • HC-1.3.1

        The Board should have no more than 15 members, and should regularly review its size and composition to assure that it is small enough for efficient decision-making yet large enough to have members who can contribute from different specialties and viewpoints. The Board should recommend changes in Board size to the shareholders when a needed change requires amendment of the licensee's Memorandum of Association.

        May 2011

      • HC-1.3.2

        Potential non-executive directors should be made aware of their duties before their nomination, particularly as to the time commitment required. The Board should regularly review the time commitment required from each non-executive director and should require each non-executive director to inform the Board before he accepts any Board appointments to another company. One person should not hold more than three directorships in public companies in Bahrain with the provision that no conflict of interest may exist, and the Board should not propose the election or reelection of any director who does.

        May 2011

    • HC-1.4 HC-1.4 Decision Making Process

      • HC-1.4.1

        The Board should be collegial and deliberative, to gain the benefit of each individual director's judgment and experience.

        May 2011

      • HC-1.4.2

        The chairman should take an active lead in promoting mutual trust, open discussion, constructive dissent and support for decisions after they have been made.

        May 2011

      • HC-1.4.3

        The Board must meet frequently but in no event less than four times a year. All directors must attend the meetings whenever possible and the directors must maintain informal communication between meetings.

        May 2011

      • HC-1.4.4

        Individual board members must attend at least 75% of all Board meetings in a given financial year to enable the Board to discharge its responsibilities effectively (see table below). Voting and attendance proxies for Board meetings are prohibited at all times.

        Meetings per year 75% Attendance requirement
        4 3
        5 4
        6 5
        7 5
        May 2011

      • HC-1.4.5

        The absence of Board members at Board and committee meetings must be noted in the meeting minutes. In addition, Board attendance percentage must be reported during any general assembly meeting when board members stand for re-election (e.g. Board member XYZ attended 95% of scheduled meetings this year).

        May 2011

      • HC-1.4.6

        In the event that a Board member has not attended at least 75% of Board meetings in any given financial year, the licensee must immediately notify the CBB indicating which member has failed to satisfy this requirement, his level of attendance and any mitigating circumstances affecting his non-attendance. The CBB shall then consider the matter and determine whether disciplinary action, including disqualification of that Board member pursuant to Article 65 of the CBB Law, is appropriate. Unless there are exceptional circumstances, it is likely that the CBB will take disciplinary action.

        May 2011

      • HC-1.4.7

        The chairman should ensure that all directors receive an agenda, minutes of prior meetings, and adequate background information in writing before each Board meeting and when necessary between meetings. All directors should receive the same Board information. At the same time, directors have a legal duty to inform themselves and they should ensure that they receive adequate and timely information and should study it carefully.

        May 2011

    • HC-1.5 HC-1.5 Directors' Communication with Management

      • HC-1.5.1

        The Board should encourage participation by management regarding matters the Board is considering, and also by management members who by reason of responsibilities or succession, the CEO believes should have exposure to the directors.

        May 2011

      • HC-1.5.2

        Non-executive directors should have free access to the licensee's management beyond that provided in Board meetings. Such access should be through the Chairman of the Audit Committee or CEO. The Board should make this policy known to management to alleviate any management concerns about a director's authority in this regard.

        May 2011