Women's representation on government company boards has been made mandatory during the recent Cabinet meeting chaired by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai. Although the details of the new policy are yet to emerge, Hawkamah, the corporate governance institute of which I am director, believes this is a positive and welcome step for the nation.
Beyond important issues such as fairness and equality, Hawkamah believes that gender diversity makes good business sense, both from the national perspective as well as the company perspective.
Countries across the globe are starting to debate the issue of women in boardrooms. Some markets have advanced coercive action and created quotas, such as Norway. Some have encouraged voluntary commitments (as in the United States and Canada), while others, such as the United Kingdom, have adopted a collaborative approach.
This is because it is now recognised that to remain competitive, economies cannot afford to ignore half of their labour pool.
The efficient use of human capital is the most important determinant of an economy's competitiveness, and women now constitute a substantial portion of highly talented labour. This is particularly important in a region where female graduates outnumber male graduates, as World Bank studies have shown.
Gender diversity makes good business sense for individual companies as well. Several studies have shown that gender equality in senior management and at the board level brings many tangible benefits. An August study by Credit Suisse's research institute looking at 2,360 global companies showed that companies with female board representation outperformed those with no women on the board in terms of share price.
Additionally, the study showed that stocks with greater gender diversity on their boards tended to perform better in falling markets and exhibited less volatility.
Hawkamah has been a long-time advocate for diversity, including gender diversity, in the region's boardrooms. For example, the Mudara Institute of Directors - the sister institute of Hawkamah - is leading the way with its Women in Boards Initiative.
The initiative focuses on capacity building and empowerment through a special director development programme with a coaching and mentoring component as well as board referral services.
Hawkamah has also conducted studies with our partners, both in the past and forthcoming, on women's representation in the boards of GCC-listed companies, and conducted workshops exploring barriers and identifying best practices in this important area.
These have shown us that gender diversity at the board level is an important element of good corporate governance as an overly homogeneous board can provide an insufficiently challenging environment for decision making.
A board has responsibility for oversight of the performance of a company's business and operations and it needs to constantly challenge itself to keep pace with the changing dynamics a company faces. Diversity means that a board is more capable of seeing and understanding risks and of conceiving robust solutions to address them.
Diversity should not sacrifice competence. The issue of diversity should also be accompanied with parallel discussions and review on competence, commitment, and character of potential board members.
The challenge now is to ensure that directors, whether women or men, are supported in fulfilling their roles. On the most basic level this means that boards have clear mandates with clear responsibilities and liabilities, but it should also provide tools for individual directors to fulfil their duties effectively.
As announced in the Conference Declaration of the 3rd Arab Women Leadership Forum - which was organised by the Dubai Women Establishment last month - there is a need for capacity building of female directors and leaders to be able to serve in regional boardrooms
Quotas are an easy target for criticism in any setting, but what is clear is that this new policy sends a strong political message of the Government's and society's vision for more diversity in leadership.
Government companies are setting an example for the private sector to follow. But it should not be forgotten that the new policy is a testament of the trailblazing role that current female leaders have taken on in order to open further opportunities for the next generation.
Nick Nadal is the head of the Hawkamah Institute for Corporate Governance and Mudara Institute of Directors.
The stats
Ship name: MSC Bellissima
Ship class: Meraviglia Class
Delivery date: February 27, 2019
Gross tonnage: 171,598 GT
Passenger capacity: 5,686
Crew members: 1,536
Number of cabins: 2,217
Length: 315.3 metres
Maximum speed: 22.7 knots (42kph)
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Key changes
Commission caps
For life insurance products with a savings component, Peter Hodgins of Clyde & Co said different caps apply to the saving and protection elements:
• For the saving component, a cap of 4.5 per cent of the annualised premium per year (which may not exceed 90 per cent of the annualised premium over the policy term).
• On the protection component, there is a cap of 10 per cent of the annualised premium per year (which may not exceed 160 per cent of the annualised premium over the policy term).
• Indemnity commission, the amount of commission that can be advanced to a product salesperson, can be 50 per cent of the annualised premium for the first year or 50 per cent of the total commissions on the policy calculated.
• The remaining commission after deduction of the indemnity commission is paid equally over the premium payment term.
• For pure protection products, which only offer a life insurance component, the maximum commission will be 10 per cent of the annualised premium multiplied by the length of the policy in years.
Disclosure
Customers must now be provided with a full illustration of the product they are buying to ensure they understand the potential returns on savings products as well as the effects of any charges. There is also a “free-look” period of 30 days, where insurers must provide a full refund if the buyer wishes to cancel the policy.
“The illustration should provide for at least two scenarios to illustrate the performance of the product,” said Mr Hodgins. “All illustrations are required to be signed by the customer.”
Another illustration must outline surrender charges to ensure they understand the costs of exiting a fixed-term product early.
Illustrations must also be kept updatedand insurers must provide information on the top five investment funds available annually, including at least five years' performance data.
“This may be segregated based on the risk appetite of the customer (in which case, the top five funds for each segment must be provided),” said Mr Hodgins.
Product providers must also disclose the ratio of protection benefit to savings benefits. If a protection benefit ratio is less than 10 per cent "the product must carry a warning stating that it has limited or no protection benefit" Mr Hodgins added.
THE SPECS
Engine: 3.5-litre V6
Transmission: six-speed manual
Power: 325bhp
Torque: 370Nm
Speed: 0-100km/h 3.9 seconds
Price: Dh230,000
On sale: now
