 |
 |
A. Corporate Governance
1. VC Bank’s Corporate Governance Framework
· Summary of VC Bank’s CG (PDF)
· VC Bank CG Policy
The enhancement of corporate governance standards is vital towards achieving the objectives of transparency, accountability and effective performance for Venture Capital Bank B.S.C. (c)
(the “Bank”). It is with the aim of enshrining concepts of good governance as promulgated in the Central Bank of Bahrain’s rulebook - High-Level Controls Governance that this Board Charter is established.
Board of Directors Charter
The Charter serves as a reference point for Board activities and should not be construed as a blueprint for Board operations. Just as each organization has its own corporate culture, the dynamics of each Board is unique. The dynamics shift as the composition of the Board changes, and the directors of the Bank should always be open to new opportunities and ready to confront new challenges brought about by change.
The purpose of the Charter is to outline the principal role of the Board of Directors the demarcation of the roles, functions, responsibilities and powers of the Board, various board committees of the Bank and matters reserved for final decision-making or pre-approval by the Board and the policies and practices of the Board in respect of matters such as conflicts of interest and convening of Board meetings.
The Board is responsible for the stewardship of the Bank’s business and affairs on behalf of the shareholders with a view to enhancing long term shareholder value whilst taking into account the interests of other stakeholders and maintaining high standards of transparency and accountability. The Board constitution will be based on the Bank’s Memorandum and Articles of Association. The Board of the Bank recognizes the importance of independence and objectivity in the decision making process. At least 3 of the Board is to comprise independent non-executive directors.
Shariah Supervisory Board Charter
The Shari’a Supervisory Board (SSB) shall be appointed by the shareholders in the annual general meeting (AGM) based on the recommendation of the Board of Directors, to assist the Board in fulfilling its oversight responsibilities. The dismissal of a member of the SSB shall require the recommendation of the Board of Directors and approval of the shareholders in a general meeting. The purpose of the SSB is to direct, review and supervise the activities of the Bank to ensure that they are in compliance with Islamic Shari’a Rules and Principles. The fatwas, rulings and guidelines issued by the SSB shall be binding on the Bank. Members include specialized jurists in fiqh almua’malat (Islamic commercial jurisprudence). The SSB members must be specialized jurists in fiqh almua’malat but may include a member who is an expert in the field of Islamic financial institutions and, with knowledge of fiqh almua’malat, directors or significant shareholders cannot be members of the SSB.
Board Committees Charter
The Bank’s Board Committees charters, which are in accordance with the recommended Bank’s governance structure, serve to document the constitution, principal role and responsibilities of each Committee as well as the administrative requirements of the Committees’ functions such as meeting agendas and reporting. A detailed charter was produced as part of the overall Bank’s corporate governance policy during 2006 and was reviews and reapproved by the Board of Directors during 2008 and 2009.
1. Audit Committee
The Board established a committee of the Board, to be known as the Audit Committee (AC), to assist the Board in fulfilling its oversight responsibilities. The purpose of the AC is to assist the Board of Directors in ensuring and maintaining oversight of the integrity of the Bank’s financial reporting system; The adequacy of the Bank’s internal control and risk management processes; The performance of the independent auditors and the Bank’s internal audit function; and The independent auditor’s qualifications and independence. Members must be at least 3 independent non-executive directors which are independent from the other Committees. A shareholder who is not a director of the Bank may sit on this Committee. It is recommended that Members have sufficient technical expertise (Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards and Islamic Shari’a rules and principles). All members must be financially literate and at least one member is a qualified accountant.
2. Corporate Governance Committee
The Board established a committee of the Board, to be known as the Corporate Governance Committee (CGC), to assist the Board in fulfilling its oversight responsibilities. The purpose of the CGC is to assist the Board of Directors in fulfilling its responsibilities of corporate governance as outlined in this Charter. However, all members of the Board have group accountability and equal responsibility for the good governance of the Bank. Good governance should be fully embedded in the Bank's corporate culture. Oversight over the Bank’s compliance with legal and regulatory requirements and Sharia’a rules. The above would be carried out with due regard to local regulations (Bahrain Commercial Companies Law 2001, Bahrain Labour Law and Central Bank of Bahrain Regulations – CBB) and any other applicable law and regulation. The CGC will also monitor the adequacy of the Bank’s policies and practices on corporate governance including the Corporate Governance Guidelines of the Bank. Majority of members of the CGC should be independent non-executive directors. The Chairman should be an independent non-executive director and the CEO should not be a member of this Committee.
3. Nominations & Remunerations
The Board established a committee of the Board, to be known as the Nominations & Remunerations Committee (NRC), to assist the Board in fulfilling its oversight responsibilities. The purpose of the NRC is to assist the Board of Directors in establishing a fair and transparent nominations process for the appointment and remuneration of directors, other Board Committees and the Chief Executive Officer and remuneration of executive management team. This includes making recommendations to the Board on the composition of the Board of the Bank, appropriate criteria for Board membership and performance, the tenure of directors, the remuneration framework for directors and, where required, the suitability of nominations for the position of director as well as removal of directors. The above would be carried out with due regard to local regulations (Bahrain Commercial Companies Law 2001, Bahrain Labour Law and Central Bank of Bahrain Regulations – CBB) and the Bank’s Memorandum and Articles of Association. Majority of NRC members should be independent non-executive directors. A shareholder who is not a director of the Bank may not sit on this Committee. The Chairman should be an independent non-executive director.
4. Risk Committee
The Board established a committee of the Board, to be known as the Risk Committee (RC), to assist the Board in fulfilling its oversight responsibilities. The purpose of the RC is to assist the Board of Directors, through co-ordination with the Audit Committee, Finance & Investment Committee and Executive Management Committee, in ensuring and maintaining oversight of the Bank's risk management framework, including its Basel II framework and to review at least on an annual basis, the effectiveness of this risk management framework; the capital at risk and major credit, market, profit margin, liquidity, operational, and sensitivity/sustainability risk exposures and the steps Management has taken to monitor and control such exposures, including the Bank’s risk assessment and risk management policies and; the Bank’s control environment. Members of the RC must at least be 2 independent non-executive directors, 1 senior member of the Risk management function. It is recommended that members of the Committee should be independent from the Board Committees in particular the Audit and Finance & Investment Committee. A shareholder who is not a director of the Bank may sit on this Committee.
5. Finance & Investment Committee
The Board hereby resolves to establish a committee of the Board, to be known as the Finance and Investment Committee (FIC), to assist the Board in fulfilling its oversight responsibilities. The purpose of the FIC is to assist the Board of Directors, through co-ordination with the Risk Committee and Executive Management Committee, in maintaining oversight of financing requirements including raising capital and co-ordination with bankers and other financial advisors; investment strategies and decisions; cash management and other financial related matters such as procurement; institution deals and transactions as per the delegation of authority; and assets and liabilities management in co-ordination with the Executive Management Committee. 2 independent non-executive directors. CEO. The Chairman should be an independent non-executive director. Members should have working knowledge of basic finance practices and majority of the members shall have financial and investment management expertise. A shareholder who is not a director of the Bank may not sit on this Committee. Members of the F&IC must at least be 2 independent non-executive directors and the CEO. The Chairman should be an independent non-executive director. Members should have working knowledge of basic finance practices and majority of the members shall have financial and investment management expertise. A shareholder who is not a director of the Bank may not sit on this Committee.
6. Executive Management Committee
The Board hereby resolves to establish a committee comprising senior management, to be known as the Executive Management Committee (EMC), based on a recommendation from the CEO to assist the CEO in fulfilling his duties and responsibilities. The purpose of the EMC is to assist the CEO in conducting Investment decisions as delegated by the Board of Directors under the Discretionary Authority Limits (DAL); overseeing day-to-day implementation of strategy, limits, operations, investments and procedures of the Bank; monitoring the day-to-day performance of individual business lines and departments relative to targets, limits and policies; and assets and liabilities management in co-ordination with the Finance & Investment Committee. Members of the ExCom should at least comprises of key management personnel, the CEO and relevant Head of Departments to ensure that all critical areas of the Bank’s operations are represented.
Job description of Key personnel
Job descriptions for the main key positions in the Bank including the Chairman, the CEO, the Head of Risk Management, the Head of Internal Audit, the Head of Financial Control and the Head of Compliance are part of the Bank’s Corporate Governance Policy. In addition the job description for all position in the Bank has been formulated as the bank’s HR policy.
DAL
The principles of delegation of authority are detailed in the Discretionary Authority Limits (DAL) list, as part of the Bank’s Corporate Governance Policy and is the benchmark for the bank’s business and operations. The purpose of DAL is to cover pertinent matters requiring proper delegation of authority to authorized personnel to hold them responsible and accountable. Accordingly, the DAL outlines the authority levels of the respective Board and Management Committees and key management personnel. Approving limits for the Board and Management committees are incorporated into the DAL in line with the Committee’s scope of duties and established terms of references. The incorporation of limits is the responsibility of the Management and must be approved by the Board/or one or more of the Board Committees, where applicable. Those limits are being reviewed by the Management and submitted to the Board/Board Committees on regular basis, and when necessary.
B. Corporate Governance Related Policies
1. Board of Directors and Senior Management Code of Conduct & Ethics and Conflict of Interest
A code of conduct is the single most important element of the board member ethics and compliance program Its communicates VCBank values and principles,
and summarizes the most significant rules and policies that impact VCBank culture. All in all, it will promote ethical behavior, reinforce legal compliance, and re enhance corporate reputation. This policy was adopted by VCBank Board of Directors and is intended to provide guidance to Board members, Board Committee members, Officers and VC Bank’s representatives setting on VC Bank’s Investment Companies, Subsidiaries and SPVs. Venture Capital Bank B.S.C. (c) (“VCBank”) is a Bahrain-based Islamic investment bank regulated by the Central Bank of Bahrain.
VCBank operates in a competitive environment where it is essential to safeguard proprietary information relating to its business and operations, its shareholders, customers, and business partners. As a result, it is the responsibility of the Board of Directors, officers and Board committee members of VCBank to safeguard any proprietary information related to the business and affairs of VCBank. Such responsibilities include the requirement of loyalty and fidelity, of administering VCBank’s affairs honestly and ethically, and exercising best care, skill, and judgment for the benefit of VCBank. In some instances, these responsibilities also include specific action or behavior established by law.
VC Bank and its Board of Directors have established this Code of Conducts & Ethics and Conflict of Interest Policy for Directors, officers and Board Committee members to provide them with policies on standards for conduct of the business of the Bank, the protection of the rights of the Banks and others, and compliance with all laws and regulations applicable to the Bank and those Directors, officers and Committee members. The Board of Directors is committed to ensuring that the Bank operates under the highest standards of ethical behavior and fiduciary duties. Further, the Board of Directors intends to comply with the applicable laws and regulations of the Central Bank of Bahrain (CBB) and the Ministry of Industry and Commerce (MOIC) and any other applicable law, which require the Board of Directors to approve a code of conduct for itself and senior management, including procedures for dealing with conflicts of interest, and a prohibition on insider trading. The purpose of this Policy is to help the Bank:
· To outline policies on standards for conduct of business of the Bank;
· To protect the rights of the Banks and its shareholders and investors;
· To Ensure compliance with all laws and regulations applicable to the Bank
· and those Directors, officers and Committee members;
· To ensure appropriate identification, disclosure, handling, and recording of instances in which a director, officer or Board committee member may be presented with a conflict of interest; and
· To provide guidance with respect to the confidentiality of VCBank matters.
2. Whistle Blowing
Most of us may have at sometime or the other had concerns about what is happening at work. It is possible that most such concerns are easily resolved. However, when the concerns specifically relate to inappropriate practices such as (but not limited to) unlawful conduct, financial irregularities, behavior that has the potential to damage Venture Capital Bank’s (VCB) reputation or cause some form of damage to an individual, a set of individuals or the community at large, it may be difficult to determine the appropriate course of action.
Employees may be worried about raising such issues if they feel that your position within VCB may be at stake or feel that it is not their duty to point out such matters, or out of a misplaced sense of loyalty towards a colleague. All employees need to be clear that the Board and management of VCB are committed to
creating a culture of openness within the organization. To this end, we have formulated a whistle blowing policy to enable the airing of genuine concerns regarding suspected malpractice within VCB, enhance transparency within VCB and safeguard its integrity. If something is troubling you that you think we should be aware about or look into, please use this procedure. We would rather you raised your concerns at an early stage than when you have obtained proof when it may be too late to raise such a concern. If however, the concern is specifically related to your own position, it may be more appropriate to use the Grievance Procedure embedded in the Human Resources Manual. This Whistle Blowing policy is to be used primarily when the interests of VCB or of others are atrisk. The thumb rule that you may use is “IF IN DOUBT – RAISE IT”.
3. Investors’’ Complaints
The Chief Placement Officer will be responsible for supervising, monitoring and maintaining the record of the investor complaints/quires answered and turnaround time. Procedure for Handling Investors Complaints:
1. The complaints/enquires will be received either by the placement officer or any other party in the bank; of which he/she should then forward the complaint to the concerned placement officer/relationship manager and/Chief Placement Officer for action.
2. On receiving complaints from investors, the following procedure should be strictly followed:
3. The respective placement/relationship manager should record the complaint/queries in a client complaint call report (document it), report and forward the same to Chief Placement Officer for review/comments, place a copy of the report in the customer file, and most importantly, acknowledge receipt of the complaint to the client promptly.
4. The Chief Placement Officer, once informed and upon receiving the call reports adds his/her comments as to how the matter should be dealt with and forwards the report to the relevant departments for immediate action and responses, as and when required and evaluate the nature and seriousness of complaints/enquiries and decides which other higher level of management should be involved.
5. On completing the investigation of the complaint/enquires the investor should be informed both verbally and in writing by the relevant placement /relationship.
6. Turnaround time for responding to a client’s complaint/enquiry shall be mentioned and recorded on the initial call report / complaint by the respective placement officer. The response time of any complaint should be promptly and in any case should not exceed 21 days from the date of receiving the original complaint.
7. The Placement Division will maintain a record of all complaints received and how they were dealt with the persons who handled them and the responses dates of those which have been notified as well as the status of outstanding ones.
4. Directors Remunerations Policy
The principles of VC Bank’s remuneration policy reflect the Bank’s overall objectives of having a sound corporate governance framework, which targets the creation of a long-term value for the Bank’s shareholders. Since inception, VC Bank’s Board of Directors was keen to put in place a robust and transparent framework to ensure that the remuneration is fair and reasonable to enhance the Bank’s shareholders value and at the same time sufficient to attract, retain and motivate high quality calibers required to lead and manage the Bank in this competitive environment.
To meet the above objectives, VC Bank’s Board of Directors has established a Committee, to be known as the Nominations & Remunerations Committee to assist the Board in establishing a fair and transparent nominations and remunerations process for the appointment and remuneration of its Directors, other Board Committee Members, the Chief Executive Officer and Executive Management Team. This Committee is guided by the Nomination & Remunerations Committee Charter, being part of the Bank’s overall Corporate Governance Framework. The Committee comprises of at least three members, of which the majority being independent non-executive directors (where the Chairman of the Board and Deputy Chairman should both be independent non executive directors).
5. Board of Directors, Board Committees and Directors Evaluation
In today’s environment, Banks are under more and more pressure to demonstrate that they are meeting the highest ethical, regulatory, supervisory, and governance standards. Although Board’s self assessment is not mandatory and very few institutions implement them regionally, VC Bank Board of Directors commit them self to conduct a comprehensive self assessment that is designed to help them in identifying where there is room for improvement and to reinforce their responsibilities and to help the Bank to achieve even greater success. During 2009 the Bank successfully implemented the first phase of the Board Evaluation program by conducting its first self assessment on the Board level, the next phase will be a self assessment on Boards Committee Level (expected to be implemented by end of 2010) and the final phase will be on Directors Individual Level (to be implemented during 2011).
6. Board of Directors and Senior Management Development
VCBank Board Members and Executive Management attended two risk Management, Compliance & Corporate Governance training workshops during the second half of 2009. This reflected Board and Management’s keenness to be updated with the latest risk management and corporate governance developments in international markets especially during the current financial crisis.
Furthermore, all newly elected Directors of the Bank have completed the Mandatory Induction Program. The Directors are also encouraged to attend seminars and briefings in order to keep themselves abreast with the latest developments in the business environment and to enhance their skills and knowledge. The Induction program highlights, amongst others, the major duties and responsibilities of a director vis-à-vis various laws, regulations and guidelines governing the same. The Directors received briefings and updates on the Bank’s financials, businesses, operations, risk management, internal controls, corporate governance, and all changes relevant to legislation, rules and regulations from the bank executive management and professionals.
7. Staff Training
In order to fully develop staff members’ potential, the Bank offers a wide range of training program that help in equipping them self to meet future challenges and work requirements in the area of Compliance with the Bank internal policies and procedures and the regulatory requirements and the latest developments in the fight against money laundering. The continuous educational development is provided to staff through In-House Training, Online Training and Real life Case Simulations. New staff joining the Bank attends an induction program that provides them with a better understanding of Anti Money Laundering and Combating the Financing of Terrorism.
8. Shareholders/stakeholders Communications
The Board acknowledges the importance of regular communication with shareholders and investors via a number of means to promote greater understanding and dialogue with stakeholders through the Annual General Meeting, annual reports, circulars to shareholders and quarterly financial reports and the various announcements made during the year, through which shareholders and investors can have an overview of the Bank’s performance and operation.
Furthermore, since establishment VC Bank was keen to issue its Newsletters to provide awareness to its shareholders and investors (all stakeholders) about the banks activities, projects, investments, businesses developments, up to this day the bank successfully lunched 8 Issues, as the bank continuously utilized all its resource to improve the content of its newsletter, the board of directors decided to launch an educational program to enhance the awareness toward corporate governance which will start in the first issue during 2010. The Newsletter can be found on http://www.vc-bank.com/newsletter.html
C. Related Links
1. Bahrain Corporate Governance Code
4. Islamic Financial Service Board Guidelines
