Corporate governance in onshore UAE companies

Investing in developing consumer markets and less developed economies comes with its own particular risk. A significant consideration is the parlous state of corporate governance that is often the norm in companies that otherwise would represent prime investment opportunities.

A company that is well run, with its officers working within a well considered and appropriate set of rules, with appropriate shareholder engagement and a regulatory environment that provides sufficient oversight, can considerably lessen the risks to profitability arising through bad management, or actions that might amount to fraud or criminality.

However, if such processes and procedures are not in place, if the officers of a company do not act impartially or with the interests of the company in mind, or if the regulatory framework in which the company operates does not provide a solid basis for good governance, then the result could be a company that operates outside the boundaries of what is legal, and in a way that is not in the best interests of stakeholders.

The United Arab Emirates (UAE) has progressively put in place a system of corporate governance that seeks to impose standards that are recognizable from an international perspective.

Richard Catling is a senior associate at Al Tamimi & Company