Corporate Governance climate in Jordan Conference
JIoD in partnership with IFC successfully conducted a conference on “Corporate Governance climate in Jordan” on December 8, 2016. More than 130 business professionals and officials representing diverse types of companies and sectors in Jordan attended this event.
Formal representations from the major regulatory organisations and governance bodies in Jordan is what made this event unique, given that it is the first time to have the Central Bank of Jordan, Jordan Securities Commission, Amman Stock Exchange and Companies Control Department in one session in a public event.
The conference featured four sessions: opening keynote session by JIoD and IFC describing the importance of having sustainable environment for corporate governance in Jordan; it was followed by the first discussion panel on “Investors’ Concerns and Needs – Sustainable Corporate Governance”; Mr. Laith Al Qasem - JIoD chairman was the moderator of this session. He managed a rich discussion with three remarkable investors’ represented by Mr. Bilal Rabah Al Sughayer, investment officer at IFC, Mr. Ennis Rimawi, Chairman of Millennium Energy Industries and the founder and Managing Director of Catalyst Privet Equity and Mr. Nidal Qubbaj from the Social Security Investment Fund (SSIF).
Investors’ representatives highlighted the main concerns when decisions should be taken for new investments; and corporate governance was one of those main concerns. For the International Finance Corporation (IFC) – member of the World Bank - Mr. Al Sughayer mentioned that, for any potential client, beside the due diligences process they do, they check the status of corporate governance at the company. There aim is to determine the corporate governance maturity level of the company reach, so as to identify the next steps they should take with this company up to. Commitment to corporate governance; board effectiveness; disclosure and transparency; internal control environment and protecting shareholders’ rights are the five main key dimensions IFC use to assess this.
Mr. Rimawi Considered that corporate governance is a fundamental pillar for economic growth, he also added that from his experience one of the challenges they face in the investment industry is the lack of corporate governance implementation. Ensuring that there is effective corporate governance in any potential investment is an essential decision-making step. Good corporate governance is simply one of our main conditions we put forward before entering any partnership.
Mr. Qubbaj emphasized that SSIF’s main concern is to find investments that have profitable return on investments and stable growth. They would like to see stronger mandatory regulations with regards to corporate governance to protect investors especially in Amman Stock Exchange, otherwise he believes that enhancing business environment will be difficult. He further added that there is no doubt that corporate governance is one of the critical requirements for administrative reform.
Dr. Ahmad Attiga - the Resident Representative and Country Manager of the (IFC) in Jordan & Iraq - indicated how IFC can demonstrate the effectiveness and positive impact of corporate governance implementation through their investments in Al Hikma and Nuqul group. Corporate governance is one of IFC’s preconditions to investing or guaranteeing loans for companies. Dr. Attiga acknowledged that sometimes IFC is faced with high resistance by some of the company owners to adopt and implement corporate governance, especially in the private hospitals sectors, where it is still considered the sector that has made the least improvement in corporate governance implementation.
Mr. Al Qasem closed the session by highlighting the importance of corporate governance for SMEs; and explained that SMEs do not sufficiently recognize that corporate governance is suitable for all companies regardless of its type, sector or size.
The second discussion panel was on “Corporate Governance Regulations Reform”. This session was moderated by Dr. Ahmad Attiga with the participation of four distinguished panelists representing the Central Bank of Jordan, Jordan Securities Commission, Amman Stock Exchange and Companies Control Department. Lively and engaging discussion was managed by Dr. Attiga about Jordanian corporate governance regulation reform process and gave brief history about the evolving corporate governance legislative framework in Jordan.
Mr. Mazen Wathaefi from Jordan Securities Commission (JSC) explained how JSC began with modest beginnings in 2009 with the corporate governance code that is not obligatory and based on a “comply or explain” model, which is one of the reasons behind the slow up take of increased corporate governance implementation at public listed companies in Jordan. Mr. Wathaefi stated that the JSC face a lot of resistance from company boards; therefore, there is an on going need for continued awareness raising regarding the benefits and the value of corporate governance. In addition, he indicated that one of the main obstacles for attracting foreign investment is lack of corporate governance in the Jordanian market; hence having a mandatory corporate governance code is a critical need.
Mr. Nader Azar from Amman Stock Exchange (ASE) supported Mr. Wathaefi’s opinion to have a mandatory corporate governance code, in view of ASE’s close collaboration with the JSC and its reliance on their CG code. ASE pay close attention to the disclosure and transparency requirements and ASE takes affirmative action against companies that do not disclose the required information transparently or in a timely manner. Mr. Azar also talked about the importance of corporate governance implementation to protect all shareholders’ rights regardless whether they are major or minor shareholders, which will have a positive impact on the Jordanian economy.
Moving to Mr. Arafat Al Fayoumi from the Central Bank of Jordan (CBJ); he presented how corporate governance in the banking sector was gradually developed by the CBJ. The CBJ corporate governance code came to protect depositors, investors and minor shareholders rights in banks in Jordan. Particular attention was given to separate ownership from management to increase and enhance accountability.
Mr. Ramzi Nuzha from Companies Control Department (CCD) focused on the importance of awareness raising sessions for different types of companies about the importance and values of corporate governance, laws and regulations.. The importance of having a unified national regulatory framework is very important to ensure consistency and strength in the application of corporate governance in Jordan.
The last session of our conference was a graduation ceremony for a distinguished group of businesswomen and businessmen who successfully completed our flagship program “The Board of Directors Certification Program” in corporate governance.