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Instructions to Firms on Transparency Welcomed

The chartered accountants said that such instructions will bring fundamental changes to the way businesses are done. It will also safe guard minority shareholders’ interest.

Dr Qaiser Anis, managing partner at Hadi, Shahid & Company, a chartered accountant firm, said that the measures should have forcefully implemented long ago. He said that for many firms there is no need for board meetings and AGMs, but accountability of the management and directors would bring fundamental change in the 
business culture. Atul Shukla, a partner with chartered accountant firm Jitendra Management Consulting, said the circular by Ministry of Economy for timely conducting annual general meetings, or AGMs, with full business agenda is a message from the government side that it is serious about fiscal discipline and transparency in corporate governance.

The PJSCs will definitely improve the efficiency in these matters and it will do tremendous benefit to shareholders in particular and 
economy in general.

The emphasis on holding an AGM with full agenda within four months after the closure of financial year will bring good financial discipline and accountability among private 
sector companies.

They UAE Companies Law does have provisions to regulate the business entities as per local needs and business traditions, but it requires the mechanism and machinery to implement the rules strictly and bring defaulters to the books. The law needs to be amended and updated so as to bring in line with corporate laws of advanced economies, to meet the challenge of 21^st century and also brace with defaulting companies in present recessionary global conditions to create an exemplary and transparent corporate regime where justice is not only done to the grieving parties but it is also seen!

In UAE three things need to be strengthened in order to bring it in par with advanced economies of USA, Europe, Japan etc.

1. Thoroughly revise the present company law. At present most of the LLCs are not getting their books of accounts audited because they are not required to do so at the time of renewal of licence. Only banks are asking audited financials from the businesses they are financing. This situation needs to be changed.

2. Create an Apex accounting body, which can be entrusted with audit, due diligence, assurance and surveillance of corporate & financial activities.

3. Establish a fast track corporate tribunal to address and settle all corporate disputes.

These steps will enhance the business confidence of corporate world in UAE economy and will attract more foreign investments and business establishments to open their offices in the country.

B.R. Sudhir, a partner at Pannell Kerr Forster, said: “The UAE, though a very young country, has moved quickly to adopt international best practices. I point out the following in particular: Directions regarding the composition of the board of directors including appointing of independent directors; conflict of interest situations involving directors; constituting board audit.

Other best practices adopted by the UAE include nomination and remuneration committees; regulating the different services the company’s auditors are permitted to offer; and requiring the board to prepare and circulate a governance report.

haseebhaider@khaleejtimes.com

—ramaavarman@khalejtimes.com