SCA's New Rules: A Roadmap for Enhanced Corporate Governance

The UAE's corporate landscape is undergoing a significant transformation with the recent amendments to the corporate governance rules by the Securities and Commodities Authority (SCA). These changes underscore the nation's commitment to global best practices in governance and risk management.

Understanding the SCA Amendments

In January 2024, the SCA introduced pivotal amendments to its corporate governance rules, marking a significant step towards strengthening internal controls, corporate governance, and risk management across listed public joint-stock companies (PJSCs) in the UAE. These changes aim to foster a regulatory environment conducive to sustainable corporate growth and resilience.

Key Areas of Focus

The SCA's amendments encompass several key areas:

• Internal Controls: The mandate for listed PJSCs to establish a robust internal control framework, aligned with the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework, is a significant development. This includes the requirement for external auditors to issue separate reports on the effectiveness of internal control systems.
• Governance Structure: The amendments emphasize the role of the board of directors and audit committees in overseeing governance and risk management.
• Reporting and Compliance: Enhanced reporting requirements and stricter compliance obligations are introduced to ensure transparency and accountability.

Implications for Listed PJSCs

The new regulations necessitate a comprehensive evaluation of existing governance frameworks and internal control mechanisms by listed PJSCs. Key considerations include:

• Alignment with COSO Framework: Assessing the current internal control framework against the COSO principles and identifying gaps.
• Enhanced Board Oversight: Strengthening the role of the board and audit committee in overseeing governance and risk management.
• Robust Reporting Infrastructure: Implementing systems to effectively manage and report on governance-related metrics and disclosures.
• Talent and Expertise: Building a competent team with the necessary skills to navigate the regulatory landscape.

Navigating the Path to Compliance

Achieving compliance with the SCA amendments requires a strategic approach. Key steps include:

• Gap Assessment: Conducting a thorough assessment of the current governance framework against the new requirements.
• Roadmap Development: Creating a detailed implementation plan to address identified gaps.
• Stakeholder Engagement: Involving key stakeholders in the implementation process.
• Continuous Monitoring and Improvement: Establishing a mechanism to monitor compliance and identify areas for enhancement.

The Role of BOT Advisory

At BOT Advisory, we understand the complexities of navigating the evolving regulatory landscape. Our team of experts can provide tailored guidance and support to help your organization achieve compliance with the new SCA amendments. We offer a range of services including:

• Governance Framework Assessment: Evaluating your existing governance structure against the SCA requirements.
• Internal Control Evaluation: Assessing the effectiveness of your internal control system.
• Compliance Roadmap Development: Creating a customized implementation plan.
• Training and Awareness: Building internal capabilities through training programs.

By partnering with BOT Advisory, you can ensure that your organization is well-prepared to meet the challenges and opportunities presented by the new SCA amendments.

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