Responsibilities of the Board
The Board is accountable to the shareholders for the creation and delivery of strong sustainable financial performance and long-term shareholder value. The Board works together as a team to provide strategic leadership to staff, ensure the organisation’s fitness for purpose, set the values and standards for the organisation, and ensure that sufficient financial and human resources are available.
The Board’s role and responsibilities are outlined in the Board Charter of the Bank. The Board reserves a formal schedule of matters for its decision to ensure that the direction and control of the Bank rests with the Board. This includes strategic issues and planning; review of management structure and responsibilities; monitoring management performance; acquisition and disposal of assets; investment policies; capital expenditure; authority levels; treasury policies; risk management policies; the appointment of auditors and review of the financial statements; financing and borrowing activities; reviewing and approving the annual operating plan and budget; ensuring regulatory compliance; and reviewing the adequacy and integrity of internal systems and controls framework.
The Chairman is responsible for leading the Board, ensuring its effectiveness, monitoring the performance of the Executive Management, and maintaining a dialogue with the Bank’s shareholders. The Chairman also ensures that new Directors receive a formal and tailored induction to facilitate their contribution to the Board.
The Board has delegated certain responsibilities to Board Committees, without abdicating its overall responsibility. This is to ensure sound decision-making, and facilitate the conduct of business without unnecessary impediment, since speed of decision-making in the Bank is crucial. Where a Committee is formed, a specific Charter of the Committee has been established to cover matters such as the purpose, composition and function of the Committee. The Board has three Committees to assist it in carrying out its responsibilities: The Investment Committee, the Audit & Risk Committee, and the Nominations, Remuneration and Corporate Governance Committee. The Internal Audit function reports directly to the Board through the Audit and Risk Committee. The Board receives reports and recommendations from Board Committees and Management, from time to time, on matters it considers to be of significance to the Bank.
Board Composition and Elections
The Board’s composition is guided by the Bank’s Memorandum of Association. As at 31 December 2018, the Board consisted of nine Directors, three of whom are Independent directors, and six are Executive directors including the Chairman and Vice-Chairman. The Bank recognises the need for the Board’s composition to reflect a range of skills and expertise. Profiles of Board Members are listed later in this Review. The Company Secretary is Matthew B. Hansen. The appointment of Directors is subject to prior approval by the CBB. The classification of ‘Executive’ Directors, ‘Non-executive’ Directors and ‘Independent’ Directors is per the definitions stipulated by the CBB. Directors are elected by the shareholders at the AGM, subject to the approval of the CBB, for a period of three years, after which they shall be eligible for re-election for a further three-year period.
Independence of Directors
In line with the requirements of the CBB’s HC Module, the Bank has put in place Board-approved criteria to determine ‘Test of Independence’ using formal requirements as specified in the CBB rule book and other relevant requirements as assessed by the Board of SICO. The purpose of the Test is to determine whether the Director is: ‘Independent of management, and any business or other relationships, which could materially interfere with the Director’s ability to exercise objective, unfettered or independent judgement; or the Director’s ability to act in the best interests of SICO’. Based on an assessment carried out in 2018, the Board of Directors resolved that the three Non-executive Directors of SICO met the relevant requirements of the ‘Test of Independence’; and accordingly, they were classified as ‘Independent’ directors and Committee members of SICO’s Board of Directors.
Board and Committee Evaluation
The Board performs a self-evaluation on an annual basis. The Board periodically reviews its Charter and its own effectiveness; and initiates suitable steps for any amendments. The Board also reviews self-evaluations of the individual Board members, Chairman and the Board Committees, and considers appropriately any recommendations arising out of such evaluation.
Remuneration of Directors Policy
The Board of Directors’ remuneration is governed by provisions of the Commercial Companies Law 2001 and the CBB. The Directors’ remuneration is approved by the shareholders at the annual general meeting. In addition, the members are paid sitting fees for the various sub committees of the Board. The Board’s remuneration is reviewed by the Nomination, Remuneration and Corporate Governance Committee as per the remuneration policy. Directors’ remuneration is accounted as an expense as per international accounting standards and CBB regulations.
Board Meetings and Attendance
According to the Bahrain Commercial Companies Law and CBB rules, Board meetings will be conducted at least four times a year (on a quarterly basis). All Board members must attend at least 75% of all Board meetings within a calendar year. At least five Directors must attend each Board meeting, including the Chairman or the Vice-Chairman. During 2018, four Board meetings were held in Bahrain, and the members’ attendance is noted in the table below: