Is Your Board Evaluation SCA-Compliant?
Is Your Board Evaluation SCA-Compliant?
Here's What Every UAE Listed Company Must Know.
The UAE's Securities and Commodities Authority (SCA) has made it clear - Board performance evaluation is a regulatory mandate.
Under the SCA Corporate Governance Code (Decision No. 2/R.M of 2024), effective January 16, 2024, all Public Joint-Stock Companies (PJSCs) listed on the UAE stock markets are required to:
- Conduct mandatory annual evaluations of the Board's performance
- Engage an external consultant to conduct this evaluation at least once every three years
- Establish annual governance reports offering comprehensive insights into governance practices and board effectiveness
- Assess compliance with governance procedures on a regular basis
- Develop training programmes for all board members to strengthen knowledge, skills, and effective board involvement
Why does this matter?
A Board Evaluation is not merely a tick-box exercise. It is a strategic tool that:
- Identifies gaps in Board composition, independence, and skills
- Strengthens oversight of risk management and internal controls
- Enhances accountability between the Board, management, and shareholders
- Supports companies in aligning with international governance best practices
Non-compliance is not without consequences. The SCA has authority to issue warnings, impose financial penalties, and even refer violations to the public prosecutor.
What a Robust Board Evaluation Covers:
- Board composition & independence assessment
- Committee effectiveness (Audit, Risk, Nomination & Remuneration, Governance)
- Board dynamics, decision-making quality & leadership
- Individual Director performance & contribution
- Strategic alignment & shareholder value creation
Let's connect and explore how we can support your compliance journey.
