Sheikh Ahmad Bin Saeed Al Maktoum, Chairman of the Economic Sector Committee, President of Dubai Civil Aviation and Chairman and Chief Executive of Emirates airline and Group launched the first-ever Code of Corporate Governance for SMEs, in the presence of H.E Sultan Bin Saeed Al Mansoori, the UAE Minister of Economy; His Excellency Mr Sami Al Qamzi, Director General of the Department of Economic Development (DED); and H.E Abdul Baset Al Janahi, Chief Executive Officer of Dubai SME.
The launch came during the first-ever Conference for Corporate Governance for SMEs held by Dubai SME, the agency of DED, Government of Dubai, entrusted with the development of the small and medium enterprise (SME) sector.
The conference and the Code of Corporate Governance have great significance in the ongoing evolution of corporate governance as a differentiator and enabler in organisational growth and overall economic development.
The primary aim of the conference is to create awareness among Dubai’s SMEs the importance of embracing corporate governance early and now so as to be bankable and investable for sustainable growth.
Conference on Corporate Governance for SMEs
Financial governance, corporate transparency and enterprise risk management have become even more important, and in many cases, critical in building and sustaining competitiveness. For SMEs in particular, embracing corporate governance has become a key enabler to make them more bankable and investable for a sustainable future. It is about greater access to finance, talent and management expertise for growth. Previously, corporate governance was seen as something “good to have” and for the embrace of larger organizations. Now, all organizations – large, small and even micro firms – must embrace some degree of corporate governance to be accountable and transparent to their stakeholders.
The primary aim of the conference is to create awareness among Dubai’s SMEs the importance of embracing corporate governance early and now so as to be bankable and investable for sustainable growth.
It is also about building a professional and quality organization. This is the broad theme of the conference. Based on the aim and theme of the conference, there will be 2 streams structured by panel discussions as follows: (1) Trends, Principles and Common Sense Practices of Corporate Governance for SMEs, and (2) Preparing Growing SMEs and Family-run businesses for Investors.
Expert Speakers from the OECD, IFC, IASB/IFRS will speak on various facets of corporate governance. A local SME, e-Home, will share its experiences on its corporate governance journey (Please refer to program and speaker profiles).
Code of Corporate Governance for SMEs
At the conference, A Corporate Governance Code for SMEs will be launched to help SMEs and Family-based businesses in Dubai and the UAE understand the basic pillars or principles of good corporate governance. Dubai SME has engaged Hawkamah – The Regional Institute for Corporate Governance – to develop the code to help SMEs understand better the broad principles on Corporate Governance. The code will cover the following: Corporate Governance Policies and Procedures, Transparency and Shareholder Relations, Board of Directors, Control Environment and Stakeholder Relations.
This first-ever code will be supplemented at a later date with a Guide Book on how to implement the various principles taking into account the SMEs’ stage of growth, and in accordance with the UAE/Dubai’s business regulatory and compliance framework. To help SMEs start or position themselves in the CG journey, the Guide Book will contain a diagnostic checklist/tool. More details will be released when the guidebook is completed and launched.
Corporate Governance Plan for Dubai SMEs
Under Dubai SME’s Corporate Governance Plan for SMEs, a two-fold the strategy– (1) Promotion & Awareness Creation and (2) Capability Development have been adopted to enable change and development for SMEs.
Promotion and Awareness Creation
Under promotion and awareness creation, Dubai SME will work with key stakeholders to promote corporate governance to the general SME population. A key tool will be the Code on Corporate Governance for SMEs, which will cater to micro, small and medium sized SMEs. The message is start early, start now. For the medium and growing SMEs that aim to expand through new external capital, more complex aspects of corporate governance will be promoted such as awareness on board structures and composition, share ownerships and listing preparation in the Equity Markets. Other promotional projects and activities include Awards for SMEs with Best Practices in Corporate Governance.
Capability Development
Under capability development, Dubai SME will work with partners to run CG capability development seminars and workshops. For a start, it has tied up with the International Accounting Standards Board (IASB) for a train-the-trainer progamme on International Financial Reporting Standards (IFRS) for SMEs. The first such training will be held in Dubai, 27- 29 Sep. Subsequently, more IFRS training sessions will be organized for SMEs.
For more advanced SMEs that wish to consider listing, a listing preparation programme will be implemented with key stakeholders to help the SMEs prepare robustly for listing. This would cover training in company secretary-ships, directors’ training, enterprise risk management, financial governance, remuneration and other key dimensions for listing companies. Special development sessions will also be organized for family-run businesses that are in the SME category that will give them skills as they prepare the company in its evolution from a private to a public company, with external shareholders.
H. E Sami Dhaen Al Qamzi remarked “the subject of corporate governance has become a necessity for enterprise growth and development. Without proper governance practices, companies are unable to function optimally, especially in this new world order. This Corporate Governance Code for SMEs contains “9 Pillars” or Principles that our SMEs should be aware of, and adopt them in line with their readiness and stage of development. It is not prescriptive. It serves as a reference and framework for understanding and practicing corporate governance. I congratulate Dubai SME on the launch of the Corporate Governance Code for SMEs and look forward to more such initiatives to further develop the SME sector in Dubai”.
H.E Abdul Baset Al Janahi, Chief Executive Officer of Dubai SME said “Corporate governance opens new doors for SMEs who embrace it willingly”. He added “good governance lays the foundation for a quality SME that focuses on building long-term sustainability. It will ensure that the SME is bankable and investable to all key stakeholders such as the banking and finance community, private equity firms, and corporate buyers of businesses”.
He added: “Corporate Governance is ultimately concerned with the decision-making processes, procedures, and attitudes that assist the company in achieving its objectives. The understanding and implementation of a good corporate governance framework presents SMEs a structured path to better management practices, effective oversight and control mechanisms which lead to opportunities for growth, financing and improved performance.
Dr Nasser Saidi, Director if Hawkamah and Chief Economist of the DIFC remarked: “The theories of corporate governance have largely evolved in the realm of listed companies. However, the importance of corporate governance for unlisted and of Small and Medium-sized enterprises (SMEs) is becoming increasingly recognized across the world. Corporate governance plays a significant role in the growth and sustainability of SMEs. Good corporate governance can add value to the quality of operations and management, adding a layer of checks and balances and strategic thinking. Good practices also increase a company’s access to financing and lower the cost of capital.
He added” This Code can also be used by various stakeholders in SMEs such as regulators, creditors and investors. It offers banks and investors a tool or criteria to incorporate corporate governance criteria in their lending and investment processes. Hawkamah would like to congratulate Dubai SME for this pioneering initiative and showing leadership in advancing corporate governance reform”.
“We believe this is an important step in development and sustainability of SMEs in Dubai and we believe this should be complemented with a regular review of the regulatory landscape for SMEs ensuring the most efficient allocation of resources. Hawkamah also recognizes that the issuance of the Code is only the beginning of the corporate governance journey for many SMEs. We are committed to working with Dubai SME and to supporting the implementation of the corporate governance by the individual companies” added Dr. Saidi.
