HC-10.1 HC-10.1 The Board
HC-10.1.1
With respect to
CMSPs , the applicable guidance paragraphs are included in Chapter HC-10. The Comply or Explain Principle (see paragraph HC-A.1.10) applies to the content of Chapter HC-10. Notwithstanding this paragraph, the CBB may at any time provide notice to aCMSP that it must meet some or all of the requirements of this Module.July 2011HC-10.1.2
All
CMSP's should be headed by an effective, collegial and informed Board of Directors ("the board") and comply or explain its adherence to the provisions of this Chapter.July 2011Role and Responsibilities
HC-10.1.3
All directors should 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.
(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 theCMSP and the shareholders (see HC-10.2).July 2011HC-10.1.4
The board's role and responsibilities include but are not limited to:
(a) The overall business performance and strategy for theCMSP ;(b) Causing financial statements to be prepared which accurately disclose theCMSP's financial position;(c) Monitoring management performance;(d) Convening and preparing the agenda for shareholder meetings;(e) Monitoring conflicts of interest and preventing abusive related party transactions; and(f) Assuring equitable treatment of shareholders including minority shareholders.July 2011HC-10.1.5
The directors are responsible both individually and collectively for performing these responsibilities. Although the board may delegate certain functions to committees or management, it may not delegate its ultimate responsibility to ensure that an adequate, effective, comprehensive and transparent corporate governance framework is in place.
July 2011HC-10.1.6
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.
July 2011HC-10.1.7
The
CMSP 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, hisremuneration and expense reimbursement entitlement, and his access to independent professional advice when that is needed.July 2011HC-10.1.8
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.
July 2011Composition
HC-10.1.9
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
CMSP's Memorandum of Association.July 2011HC-10.1.10
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 eachnon-executive director and should require eachnon-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 re-election of any director who does.July 2011Decision Making Process
HC-10.1.11
The board should be collegial and deliberative, to gain the benefit of each individual director's judgment and experience.
July 2011HC-10.1.12
The chairman should take an active lead in promoting mutual trust, open discussion, constructive dissent and support for decisions after they have been made.
July 2011HC-10.1.13
The board should 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.
July 2011HC-10.1.14
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.
July 2011Directors' Communication with Management
HC-10.1.15
The board must 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.
July 2011HC-10.1.16
Non-executive directors should have free access to theCMSP'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.July 2011
