They emphasized the importance of auditing corporate governance reports by experts and specialists

Two experts call for tighter fines for violations of public shareholding companies

• Dubai Financial Market started October with transactions worth 151 million dirhams.

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• Walid Al-Khatib: “There are concerns that affect the psyche of investors in the markets related to companies' exposure to losses.”

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Two experts in financial markets called for the need to tighten penalties for violations of public shareholding companies, and to hold their boards of directors accountable in the event that the company's capabilities and funds are not disposed of in an efficient manner to avoid losses or exposure to liquidation and bankruptcy.

They confirmed to "Emirates Today" that the governance reports issued by public joint-stock companies need to be audited and reviewed by experienced and specialized people, noting that the companies themselves prepare governance reports to make them not neutral. Therefore, external committees must be used to make the reports to ensure their transparency.

Investor psychology

In detail, the expert in financial markets, Walid Al-Khatib, said that there are concerns that affect the psyche of investors in local markets related to companies' exposure to losses as a result of mismanagement, and that the details were not disclosed until late.

Al-Khatib stressed that there is importance for tightening penalties and fines for corporate violations and holding their boards of directors accountable for how resources are managed periodically by supervisory authorities and general assemblies to preserve shareholders ’funds.

He added that public shareholding companies that announce their financial impact undoubtedly affect the borrowing banks from them, as well as shareholders and dealers who take loans for trading alongside intermediaries, indicating that this is an interconnected and complex system, so it is important that losses be remedied early, accountability for negligent and changing boards of directors. Inefficient.

Serious actions

Al-Khatib stated, “The (Corona) pandemic has undoubtedly affected negatively in all sectors, but the problems of many public shareholding companies go back years before (Corona).” He said: “Unfortunately, no serious measures have been taken against negligence or violations early in order to protect Shareholder funds ».

He stressed that our markets need listings in vital sectors beside real estate and services, such as industry, health and technology, to stimulate investors to enter and inject liquidity to restore the upward path and confidence to the markets.

Experience and vision

In turn, the financial and accounting expert, Dr. Muhammad Maher, said that the boards of directors of companies must take into account that they work for the benefit of the shareholders of companies and their shareholders, and that they must have experience and a vision that embraces good management of resources.

He added that the governance reports that are currently being prepared to ensure transparency of performance need to be reviewed in the way they are prepared, as those who are currently preparing them are the company’s management itself.

Maher stated that this may not guarantee the impartiality of these reports, so it is better to assign external committees to make governance reports, in addition to the importance of being reviewed by specialists and experts to find out any weaknesses or defects in the company's management, calling for tighter fines for violations. Public joint-stock companies.

Commissions

Maher stated that there is a system in place in advanced economies that guarantees the formation of internal committees for public joint-stock companies that include neutral and independent members of the company’s management and specialists in their field of work, whose task is to prepare governance reports, believing that this is better for shareholders and the companies themselves, as it guarantees good performance in addition to developing alternative plans. In times of crisis, it protects shareholder funds.

Dubai Market

In addition, the Dubai Financial Market index began trading in October with a decrease of 0.34%, to close its losses at 2,265 points, with trades totaling 151 million dirhams.

Of the 31 companies whose shares were traded yesterday, shares of 19 companies declined, while the shares of seven companies rose, while five remained steady.

And because of the suspension of trading in the shares of "Arabtec" and the news of its liquidation and dissolution, the shares of the losing companies fell for more than half of their capital (with a red flag) sharply.

"Union Properties" shares also fell by 2%, at 0.29 dirhams, with 50.5 million shares traded.

Abu Dhabi Market

For his part, the Abu Dhabi Stock Exchange ended yesterday's transactions, down by 0.6% at 4492 points, and with a total value of 259 million dirhams.

The banking sector witnessed declines, such as First Abu Dhabi Bank, which decreased by 1%, which contributed to deepening losses.

15.4

The value of Arab investors' transactions in the local capital markets amounted to about 15.4 billion dirhams, both bought and sold, during the first nine months of this year, with a growth rate of 48% compared to the same period in 2019, according to the figures issued by the markets.

And it became clear from the numbers that Arabs began to tend to invest in the medium and long terms, which contributed to their net investment since the beginning of this year until the end of last September, about 200 million dirhams.

The transactions of Arab investors accounted for about 8.3% of the total trades recorded in the financial markets, which amounted to 184 billion dirhams, both bought and sold during the period from January to the end of September of this year.

The total value of purchases by Arab investors in the Dubai Financial Market amounted to 13.089 billion dirhams, of which 6.6 billion dirhams were purchases, while the value of their sales reached 6.48 billion dirhams, thus their net investment reached 120 million dirhams.

As for the Abu Dhabi Stock Exchange, the value of Arab trades amounted to 2.317 billion dirhams, of which 1.199 billion dirhams were purchases, and about 1.119 billion dirhams were sales. Thus, their net investments reached 80 million dirhams.

Mohammed Maher:

“The boards of directors of companies must take into account that they work in the interest of the shareholders of the companies and their shareholders.”

- Suspending trading in Arabtec shares, which lost the losing companies' shares.

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