Responsibilities of the Board
The Board is accountable to shareholders for the creation and delivery of strong sustainable financial performance and long-term shareholder value. The Board works as a team to provide strategic leadership to staff, ensure the organization’s fitness for purpose, set organizational values and standards, and ensure the availability of sufficient financial and human resources.
The Board’s role and responsibilities are outlined in the Board Charter of the Bank. The Board maintains a formal schedule of matters for its review to ensure that direction and control of the Bank rests with the Board. Matters for Board review include 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; appointment of auditors and review of 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 the 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 step has been taken to ensure sound decision-making and facilitate the conduct of business without unnecessary impediment, as the speed of decision-making in the Bank is crucial. Where a Committee is formed, a specific Charter of the Committee has been established to address matters such as the purpose, composition, and function of the Committee. The Board has three new Committees to assist it in carrying out its responsibilities: the Investment Committee; Audit Committee; and Nomination, Remuneration, and Corporate Governance Committee. The Internal Audit function reports directly to the Board through the Audit Committee. The Board receives reports and recommendations from Board Committees and Management from time to time on matters it considers significant to the Bank.
Board Composition and Elections
The Board’s composition is guided by the Bank’s Memorandum of Association. As at 31 December 2017, 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 recognizes the need for the Board’s composition to reflect a range of skills and expertise. 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 Central Bank of Bahrain’s HC Module, the Bank has put in place Board-approved criteria to determine ‘Test of Independence’ using formal requirements as specified in the central bank's 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 2017, 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 an annual self-evaluation to review its Charter and its own effectiveness and initiate suitable steps for any amendments. The Board also reviews self-evaluations of the individual Board members, the Chairman, and Board Committees, and considers any recommendations arising from these evaluations.
Remuneration of Directors Policy
The Board of Directors’ remuneration is governed by provisions of the Commercial Companies Law 2001 and the Central Bank of Bahrain. Directors’ remuneration is approved by the shareholders at the Annual General Meeting. In addition, members are paid sitting fees for participating in the Board’s various subcommittees. Board remuneration is reviewed by the Nomination, Remuneration, and Corporate Governance Committee as per the remuneration policy. Directors’ remuneration is counted as an expense as per international accounting standards and central bank 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 percent of all Board meetings within a calendar year. At least five Directors, including the Chairman or the Vice-Chairman, must attend each Board meeting. During 2017, five Board meetings were held in Bahrain, and the members’ attendance is noted in the table below: