In 2007, the Securities and Commodities Authority (SCA) issued the Corporate Governance Code expanding the governance rules and regulations to any company, domestic or foreign, whose shares are listed on UAE stock exchanges.
Two years later, the Minister of Economy issued a resolution (No 518) amending SCA’s code and providing a more comprehensive set of corporate governance regulations for publically traded companies in the UAE.
However, the new code doesn’t include unlisted private companies such as family-owned enterprises (FOEs) and state-owned enterprises (SOEs) are not affected by it.
Recently some SOEs, such as DP World, have started to partially list their shares on local and international stock markets to fund their expansion projects.
For them, raising corporate governance practices to match those of international standards becomes a key enabler.
In the future, as the government starts to tighten the purse strings, SOEs will have to further tap capital markets, where companies with good corporate governance structures receive higher valuations.
According to a survey by McKinsey, about 80 per cent of institutional investors said they would pay a premium for a well-governed company.
Since SEOs have a particular significance to the UAE economy, it’s very important to regulate the corporate governance practices across the whole market.
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