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CMA issues new norms for MSM firms

by A E James
January 20, 2013 , 10 : 52 pm

Abdullah bin Salem bin Abdullah Al Salmi, Executive President, Capital Market Authority

Muscat: Market watchdog Capital Market Authority (CMA) has asked listed companies to take only unrelated parties as independent directors to the company's board. This is aimed at enhancing transparency, professionalism and good corporate governance among the Sultanate's 136 listed companies.

"We have changed the definition of independent directors. The independent directors have to be completely independent from the shareholders and executive directors of the company, its subsidiaries or associates," Abdullah bin Salem bin Abdullah Al Salmi, Executive President of CMA told Times of Oman.

Regulation
"The companies are required to comply with the regulation when they elect new directors in their next annual general meeting," he said. A listed company can take independent directors to a maximum of one third of the strength of the board.

Al Salmi said the regulators would like the board to be more professional and would like to see more representation from the shareholders on the board. Market sources said that presently, there are a lot of related parties on company boards in Oman. There are two ways in which a stakeholder can control a company � having a controlling stake or by directly controlling the board.

If the independent director is related to majority stakeholders, it is easy for them to take board decisions in favour of them and implement their agenda. "Most developed markets have the same condition for taking independent directors," noted a source, who did not want to be named. Some companies take independent directors only from the shareholders, while others do not have such a condition. It varies from company to company, depending on the articles of the company.

The CMA chief also said that the authorities are reviewing and developing new regulations to enhance transparency and efficiency of both the stock market and the corporate sector.

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