SICO’s corporate governance framework comprises Board and Committee Charters; the Directors’ Handbook; Code of Business Conduct; operational policies and procedures; internal controls and risk management systems; compliance procedures; internal and external audits; effective communications and transparent disclosures; and measurement and accountability.
Code of Business Conduct
SICO conducts itself in accordance with the highest standards of ethical behavior. A Code of Conduct for SICO Staff has been developed to govern the personal and professional conduct of all employees. The Code of Conduct outlines areas of conflict of interests; confidentiality; fair and equitable treatment; ethics and acting responsibly, honestly, fairly, and ethically; and managing customer complaints. SICO’s Whistleblowing Policy and Procedures are included within the Code of Conduct for SICO Staff.
Compliance and Anti-Money Laundering
As a licensed conventional wholesale bank and listed company, SICO has comprehensive policies and procedures in place to ensure full compliance with the relevant rules and regulations of the Central Bank of Bahrain and the Bahrain Bourse. The Bank has an independent Compliance unit in keeping with Basel and central bank guidelines. The Compliance unit acts as the central coordinator for all matters relating to regulatory reporting and other requirements.
In 2014, the Kingdom of Bahrain’s government signed Intergovernmental Agreement Model 1 with the United States of America. SICO registered as a Registered Deemed-Compliant Financial Institution (including a Reporting Financial Institution under a Model 1 IGA) with the Internal Revenue Service and obtained a Global Intermediary Identification Number for the Bank and its subsidiaries.
Anti-money laundering measures are also an important area of the Compliance unit, which includes having a designated Money Laundering Reporting Officer (MLRO) and Deputy MLRO. The Bank has documented its anti-money laundering and combating of the financing of terrorism procedures in conformity with regulatory requirements in the Kingdom of Bahrain. SICO has implemented a risk-based automated transaction monitoring system that further enhances the Bank’s anti-money laundering measures in line with central bank regulations.
SICO conducts all communications with its stakeholders in a professional, honest, transparent, understandable, accurate, and timely manner. Main communication channels include an annual report, corporate website, and regular announcements in the appropriate local media. To ensure disclosure of relevant information to all shareholders on a timely basis, the Bank publishes its annual report and the previous ten years’ financial statements on the corporate website.
Payment to External Auditors
The Directors make every practicable effort to arrange their personal and business affairs to avoid a conflict of interest situation with the Bank. The Directors disclose their interests in other entities or activities to the NRCG committee on an annual basis, inform the Bank of any conflict of interest whenever it arises, and abstain from voting on any related matter. The Bank reviewed all such transactions during 2017, and there were no transactions involving potential conflicts of interest that need to be brought to shareholders’ attention. The related party transaction details are disclosed in Note 25 to the Consolidated Financial Statements.
Remuneration of Board Members and Senior Management, and Fees Paid to External Auditors
The remuneration paid to Board members and senior management personnel are disclosed in Note 25 to the Consolidated Financial Statements. The information on fees paid to External Auditors for audit and other services will be available to the CBB and shareholders upon request, provided such disclosure does not impact the interest of Bank.
Compliance with the CBB’s High Level Controls Module
Every conventional bank licensee is expected to comply with rules and guidance mentioned in the High Level Control Module issued by the CBB under Rulebook Volume 1. Any non-compliance with the HC Module must be explained by disclosures in the annual report to shareholders and the CBB.
SICO is in compliance with HC Module except for the following:
HC-1.4.6 & HC-1.4.8, which stipulate that the chairman of the Board of Directors should be an independent director, SICO Chairman Shaikh Abdulla bin Khalifa Al Khalifa is considered an Executive Director as he represents SICO’s major shareholder. However, this does not compromise the high standards of corporate governance as the Bank follows strict policies to manage conflict of interest in Board decisions.
HC-1.8.2 & HC-4.2.2, which states that both the Corporate Governance Committee & Nomination Committee must include
only three independent directors. The chairman of the Nomination, Remuneration and Corporate Governance Committee
is an Independent Director, however the remaining two members are Executive Directors. The Bank is of the
opinion that this does not compromise the high standards of corporate governance as the Bank has implemented
measures to manage potential conflict of interest.