H.E. Eng. Sultan bin Saeed Al Mansoori, Minister of Economy and Board Chairman of the Securities and Commodities Authority (SCA), issued the Ministerial Resolution No. (225) of 2015 amending certain provisions of the Ministerial Resolution No. (518) of 2009concerning Governance Rules andCorporate Discipline Standards.
Article (1)
Items Nos. (1) of Article (3), (3) of Article (12) bis and (3) of Article (14) of Ministerial Resolution No. (518) of 2009concerning Governance Rules andCorporate Discipline Standards and amendments thereof shall be amended to read as follows:
{Item (1) of Article (3):
1. A Company shall be managed by a board of directors. The Articles of Association shall determine the method of formation of the board of directors, the number of board members and term of membership. It should be observed that the candidates for membership of the Board of Directors must include at least one female candidate. The company shall disclose the reasons for not having any female candidates for the Board, and shall also disclose the percentage of female representation in the Board of Directors in its Annual Report on Corporate Governance.
{Item (3) of Article (12) bis:
3. In the case of a company entering into transactions or deals with related parties, the shareholder(s) holding 5% or more of the company shares may:
a. Review and examine all documents and papers relating to such transactions or deals.
b. Appoint an auditor or an independent evaluator at the shareholder’s expense to examine the transaction or deal.
c. Submit an application to SCA to review the details of the transaction or deal in the event of any violation of the procedures set out in this Resolution, and to consider calling on the General Assembly for a meeting in case SCA becomes sure of the occurrence of violation against such procedures or a failure in the company's management.
d. Initiate a lawsuit before the competent court against the parties to the transaction or deal to compel them to submit the following:
- Information which the defendant has indicated his/her intention to invoke in his defense.
- Information and documents that directly substantiate specific facts in the claim filed by the Claimant with the Court.
- Information and documents relevant to the transaction or deal, without limitation.
- Information and documents that may lead to revealing relevant information.
Without prejudice to the provisions of the Federal Law No. (10) of 1992 promulgating the Law of Evidence in Civil and Commercial Transactions, a shareholder shall have the right, during the trial of the lawsuit, to address questions on the subject matter of the lawsuit to the parties to the transaction or deal, or to the witnesses without obtaining prior approval to address such questions. If it is proved that the transaction or deal was not fair or it involved a conflict of interest and was detrimental to the remaining shareholders, the competent civil court may rule to cancel the transaction or deal and force the related party to pay to the company any profit or benefit earned, as well as a compensation if a damage to the company is substantiated.
In the event of a case referred to a criminal court by the Public Prosecution if it is proved that the transaction or deal by the related party involved fraud in its value, nature, substance or type, or in the documents relating thereto, or other cases of fraud in commercial transactions, the competent Criminal Court may impose the penalty of imprisonment or fine set forth in Article (423) of the Federal Law No. (3) of 1987 promulgating the Penal Law.
e. Claim a refund of the legal fees of the lawsuit brought by the shareholder in accordance with the provision of Item (2) of Article (133) as well as Article (134) of the Federal Law No. (11) of 1992 concerning Civil Procedures in the following cases:
If the judgment is issued in favor of the shareholder to compel the judged related party to pay for the case expenses and the calculation of such expenses includes the attorneys' fees and if the judged parties are multiple, the court may rule to divide the expenses evenly or by the proportion of interest of each in the lawsuit, at the sole discretion of the court.
If the court assessed that the related party that won the lawsuit has caused the shareholder to incur unjustified expenses, or if the related party has kept the shareholder unaware of documents conclusive in the case or the content of such documents.
Formation of the Board of Directors
{Item (3) of Article (14):
3. The method of forming the Board of Directors as per its members and their term of membership, and the method of determining their remuneration, as well as the remunerations of the general director, executive director, or chief executive officer of the company and the staff appointed by the Board of Directors.
{Article (2)
A new Clause No. (6) shall be added to Article (6/1/b) and two new items Nos. (8) and (9) to Article (12) of the Ministerial Resolution No. (518) of 2009concerning Governance Rules andCorporate Discipline Standards as follows:
Clause (6) of Article (6/1/ b)
6. Development of a policy on nomination for membership of the Board of Directors to be aimed at taking into account gender diversification within the Board and encouraging women to run for membership of the company’s Board of Directors. SCA shall be provided with a copy of this policy and any amendments thereto.
{Items (8) and (9) of Article (12):
8. With the exception of the decisions that the Federal Law No. (8) of 1984 concerning Commercial Companies, as amended, require a special majority as a condition for their issuance, the resolutions of the Extraordinary General Assembly to amend the company's Articles of Association shall be issued by simple majority of the shares present at the meeting, which must represent 50% of the shares present plus one.
Quoted from: The Gulf Newspaper, May 13, 2015