Corporate Governance

Corporate Governance

The Bank is committed to upholding the highest standards of corporate governance, which it regards as a key factor in ensuring fairness for all stakeholders and achieving organisational efficiency. The Board's adherence to best corporate governance practices is underlined by various principles, such as integrity, transparency, independence, accountability, responsibility, fairness and social responsibility. Moreover, the Bank's Corporate Governance Policies are designed to lay a solid foundation for management and oversight, promote ethical and responsible decision making, safeguard integrity in financial reporting, make timely and balanced disclosures, respect the rights of shareholders, recognise and manage risk, encourage enhanced performance, remunerate fairly and responsibly, and recognise the legitimate interest of stakeholders.

Shareholder’s Rights

Recognising the importance of shareholders, it is Ithmaar’s policy to treat its shareholders equally and fairly in line with the laws of regulatory agencies. Basic legitimate rights of the shareholders include the right to participate in shareholders meetings, the right to appoint other persons as a proxy for participating in and voting at meetings, and the right to participate in the election or disqualification of a Director, individually. Their rights also include voting on the annual audit fees and appointments of independent auditors, voting for other businesses of Ithmaar, such as increases in, or reduction of capital, right to receive dividend payments, as well as the right to give opinions and the right to inquire during shareholders meeting. The Annual General Meeting of Shareholders shall be held within the first three months after the end of the Bank’s accounting year. The Bank will send out a notice to all shareholders at least 14 days in advance before the scheduled meeting of shareholders. Attached to the notice will be sufficient information for voting on every agenda item, each of which shall be identified clearly as either for acknowledgement or consideration, as the case may be, together with comments by the Board on particular issues. In addition, the notice will clearly inform all shareholders of all required documents to maintain their legitimate rights for participating in the meeting and a Proxy form to appoint proxies to the meeting. At least one hour before the meeting begins, the Bank will provide an opportunity for its shareholders to register for the meeting. At the meeting, the Bank will inform all shareholders of the voting and vote-counting procedures, and during the consideration of each agenda item, all shareholders will have equal rights for expressing opinion and asking questions at an appropriate time. The voting and vote-counting procedures will be conducted openly and efficiently, counting one share as one vote, and approval of a resolution will be based on the majority of votes. Each participant shall exercise his/ her votes on ballots only for opposition, abstention or split votes and the ballots will be kept for later inspection. In preparing the Minutes of a Meeting, the Bank will show total votes in approval, opposition or abstention on each agenda item. These totals will be recorded in writing, together with questions raised on every agenda item, together with clarification and comments by the Bank. The Bank also emphasises the disclosure of accurate, complete and transparent information to shareholders, and information updates will regularly be provided on the bank’s website and through the media.

Bank Administration

The Bank is administered by the Board of Directors, committees of the Board, and the Executive Management.


Bank Administrative Chart




Board’s Responsibilities

The Board of Directors is accountable to the shareholders for setting the broad policy guidelines and strategic direction, and the creation and delivery of strong, sustainable financial performance and long-term shareholder value. The Chairman is responsible for leading the Board, ensuring its effectiveness, monitoring the performance and supporting the Executive Management. The Board's role includes the task of monitoring management in such a manner as to ensure that appropriate policies and processes are in place, that they are operating effectively, and that the Bank is meeting its plans and budget targets.

Executive Committee

The main objective of this committee is to provide oversight of the company's strategic planning, approve transactions for which the Board has delegated authority to the committee within the parameters of the limits of authority, to make recommendations to the Board regarding transactions not falling within the limits of authority of the Executive Committee, and to evaluate the company's financial strategies and policies.

	Khalid Abdulla-Janahi, CHAIRMAN
	Michael P. Lee, MEMBER
	Mohamed Hussain, MEMBER

Audit Committee

The Audit Committee comprises three members from the Board of Directors and operates under the terms of reference set forth in a formal charter. The Audit Committee assists the Board through review of the Bank’s financial information, internal controls and internal audit functions. The Committee also oversees the internal audit function and evaluates the performance of the Bank’s external auditors. In addition, the Committee is charged with ensuring the Bank’s compliance with applicable laws and regulations

	Ziad H. Rawashdeh, CHAIRMAN
	Abdulhameed M. Aboumoussa, MEMBER
	Khalil Nooruddin, MEMBER

Remuneration and Nomination Committee

The main objective of this committee is to assist the Board in the effective discharge of its responsibilities in relation to the remuneration of directors and performance of the Board, ensure the appropriate board composition, ensure appropriate nomination of directors to the Board, and provide a formal forum for communication between the Board and the company's management on Human Resource issues.

	Tunku Dato’ Ya’acob Bin Tunku Abdullah, CHAIRMAN
	Shaikha Hissah Bint Saad Al-Sabah, MEMBER
	Sheikh Mohammed Youseef El-Khereiji, MEMBER
	Khalid Abdulla-Janahi, NON-VOTING MEMBER

Insider Trading Compliance Sub-Committee (of the Executive Committee)

This Committee is established by the Executive Committee and its main objective is to undertake the responsibility of ensuring that the company complies with the insider trading guidelines issued by the CBB and to review and investigate any matter within the scope of its charter, and to make recommendations to the Executive Committee in relation thereto.

	Ahmed Abdul Rahim, CHAIRMAN
	Jassim A. Karim Salman, MEMBER
	Nayla Asgharali, INSIDER REPORTING OFFICER

Executive Management

The Executive Management is responsible for operating the Bank in an effective, ethical and legal manner designed to produce value for the Bank’s shareholders consistent with the Bank’s policies and standards. The Chief Executive Officer and the Co-Chief Executive Officer are appointed by, and report to, the Board of Directors. Senior management is responsible for implementing the Board’s strategic directions, and understanding the Bank’s income-producing activities and material risks faced by the Bank.

Investment Committee (Management)

The main objective of this Committee is to review, approve and ratify all investments within its authority, review risk management reports, and resolve all credit-related issues.

	Michael P. Lee, CHAIRMAN
	Mohamed Hussain, MEMBER

Asset-Liability Committee (ALCO)

The main functions of the ALCO are to develop and manage the Bank's assets and liabilities in accordance with the Strategic Plan and relevant banking regulations and laws, vis-à-vis acceptable liquidity risk, profit rate risk, foreign exchange exposure, portfolio concentrations, geographic concentrations, capital adequacy ratio and market conditions. The Committee will meet at least four times a year, or more frequently if needed.

	Mohamed Hussain, CHAIRMAN
	Ahmed Abdul Rahim, VICE CHAIRMAN
	Carolyn Prowse, MEMBER
	Abdul Hakim Khalil Al-Mutawa, MEMBER
	Tawfiq Al-Bastaki, MEMBER
	Ravindra Khot, MEMBER AND SECRETARY

Management Committee (MC) 

MC’s principal objectives are to improve communications and cooperation among the various divisions/departments of the Bank, and to optimise the Bank’s operational efficiency.

	Mohamed Hussain, CHAIRMAN
	Ahmed Abdul Rahim, MEMBER
	Carolyn Prowse, MEMBER
	Tawfiq Al-Bastaki, MEMBER
	Ravindra Khot, MEMBER
	Scott Creswell, MEMBER AND SECRETARY

Board and Management Conduct

Conflicts of Interest
Directors avoid any action, position or interest that conflicts with an interest of the Bank, or gives the appearance of a conflict. The Bank annually solicits information from directors in order to monitor potential conflicts of interest, and directors are expected to be mindful of their fiduciary obligations to the Bank. In the event of a situation involving a potential conflict of interest, directors are encouraged to seek advice from the Bank's Compliance Officer.

Code of Business Conduct and Ethics
The Bank's Code of Business Conduct and Ethics applies to members of the Board, as well as Executive Management, officers, employees, agents, consultants and others, when they are representing or acting for the Bank. The Board of Directors, as well as officers and employees, act ethically at all times and acknowledge their adherence to the Bank's policies. Any waiver of the Code of Business Conduct and Ethics for a director or executive officer may be granted only by the Board or the appropriate Board committee, and must be promptly disclosed to the stockholders.

Communication with Shareholders
The Bank conducts all communications with its stakeholders in a professional, honest, transparent, understandable, accurate and timely manner. Main communications channels include an annual report, quarterly publications of financial results, a corporate website and regular announcements in the appropriate local media.

Internal Audit 

The Bank's internal audit function monitors compliance with the policies and procedures and effectiveness of internal controls. The work of internal audit is focused on the areas of risk assigned through a risk assessment approach. Group's Chief Internal Auditor reports functionally to the Chairman of the Audit Committee and administratively to the Chief Executive Officer. The internal audit conducts its work independently of the Bank's senior management, in accordance with the internal audit plan approved by the Audit Committee.

Compliance 

In accordance with the directives of the CBB, the Bank employs a Compliance Officer, who also acts as a Money Laundering Reporting Officer (MLRO). The Compliance Officer acts as central coordinator for the group in respect of all matters relating to the CBB's regulatory reporting and other requirements, the Bahrain Stock Exchange, the Kuwait Stock Exchange and the Ministry of Industry and Commerce. The compliance function covers the broad areas of corporate governance, adherence to best practices, code of conduct, conflict of interest, compliance with Basel II and other issues. Each of Ithmaar’s operating subsidiaries also employs local compliance officers to ensure adherence to local requirements and regulatory issues. It is the duty of the MLRO in each subsidiary to ensure that sufficient information is obtained in all cases to enable the identity of every client to be satisfactorily established, failing which monies cannot be transferred, and to report any suspicions concerning a customer or account to their relevant regulator and senior management. The MLRO is also responsible for establishing and maintaining appropriate and effective systems, controls and records to ensure compliance with regulatory obligations in regard to money laundering. This responsibility of the Compliance Officer also includes the issue and implementation of policy and procedural manuals to all subsidiaries throughout the group, arranging in-house and external Anti-Money Laundering training for relevant officers and submission of group reports to the Board and the CBB.

Directors’ and Managements’ remunerations 

It is the Bank’s objective to attract and retain high quality directors and executive officers. One aspect of achieving this is by remunerating directors and executive officers in a manner consistent with employment market conditions. Directors and Board Committee members are entitled to an annual fixed fee plus a setting fee paid per meetings attended. Nonresident members are entitled for full travel expenses. These fees are recommended by the Remuneration and Nomination Committee and approved by the Board and are disclosed to the shareholders in the annual reports of the Bank. Dubai-based consultants, McLagan, conducted a salary and compensation survey for the Bank’s executive level positions. Recommendations were submitted to the Remuneration and Nomination Committee, based on which the salary scale was revised. The Remuneration and Nomination Committee is also responsible for approving the promotion of senior management members.