New CMA Governance Code of Oman

Code of Corporate Governance

Issued by the Capital Market Authority (CMA) in Oman

Derek Hendrikz Consulting

derek hendrikz

http://www.derekhendrikz.com/


Effective from July 2016 and applicable to all public companies

listed in the MSM (Muscat Securities Market).



Changes introduced by the code…

1. All board members should be Non-Executive Directors (NED’s);

2. Formation of a ‘Nomination and Remuneration’ committee;

3. The general meeting has the authority to remove one or all board

members;

4. The chairperson of the audit committee cannot be a member of any other

board sub-committee;

5. The chairperson of a board committee or sub-committee cannot be the

chairperson of any other board sub-committee (e.g. the chair of risk

committee cannot be chair of investment committee).Derek Hendrikz Consulting


Changes introduced by the code (cont.)…

6. The secretary of the board cannot be a EXCO member or senior

manager and should have a legal, accounting, auditing or

secretarial background;

7. The audit committee will directly appoint an external auditor

(not through the CFO, CEO, etc.)

8. Auditors can now report any suspected material fraud directly to

respective regulators, such as CMA, CBO, AER, TRA) without an

approval from the company’s board.Derek Hendrikz Consulting



9. Comprehensive definition of independent director included;

10. Audit committee chair and committee members must be independent

• No relationship with the company, parent company, subsidiaries or

associates;

• May not hold 10% shares or more or represent a juristic person who owns

10% shares or more;

• May not be a employee or senior executive during past two years or first

degree relative to any senior executive director or first degree relative to

any of the directors.




11. An independent director should notify the board within 30 days

when any of the aforesaid conditions are applicable to him due to

change in circumstances and provide annual confirmation of being

independent to the board;

12. Only up to two board meetings a year by video conference;

13. Board to approve a formal succession plan for executive

management and CEO of a listed company

14. EXCO cannot hold the same position at subsidiaries.



Nomination and Remuneration Committee

1. Comprises of board members;

2. Must assist in appointment and remuneration of

executive management;

3. Must ensure that the boards performance is

measured by a third party (other than external or

internal auditors).Derek Hendrikz Consulting


What did not change…

1. Restriction on board remuneration not changed (lower of RO

200,000 or five per cent of net profit);

2. No changes affecting internal audit (e.g. no requirement for

Quality Assurance Review of internal audit, as required by the

Institute of Internal Auditors).

3. No requirements for Directors’ Liability insurance and code of

conduct for directors (to be developed by each company).



Boards will now have to consider the following questions…

1. What should the required code of

conduct for Directors include?

2. What criteria will the third party use to

assess Board performance?




Leadership & Management

New CMA Governance Code of Oman