Board of Directors

At the foundation of a well governed company is an effective Board that provides good leadership and oversight, within a framework of prudent and effective controls that enable risk to be assessed and managed.

The Nasdaq Dubai Board is committed to the highest standards of corporate governance and business integrity. The Board continues to ensure that we adhere to good governance principles and practices.

The Nasdaq Dubai Board represents and acts on behalf of its shareholders, Dubai Financial Market and Borse Dubai, and is committed to strong corporate governance policies, practices and procedures designed to make the Board more effective in exercising its oversight role for achieving the Company’s strategic objectives and for the stewardship of the Company’s resources. The Board adopts the view that corporate governance should promote good performance and integrity as well as conformance with legislation and that effective governance practices enhance the Company’s ability to achieve its strategy and long-term success.

While the Board does not have responsibility for day to day management of the company, it stays informed about the company’s business and provides guidance to company management through periodic meetings and other interactions. In accordance with good governance practice, the roles of Chairman and Chief Executive are distinct and separate with a clear division of responsibilities. This separation of roles promotes more effective communication channels for the Board to express its views on Management. The Chairman presides over meetings and is responsible for the running and leadership of the Board and ensuring its effectiveness. The Chief Executive has delegated authority from and is responsible to the Board for managing the Company’s business. We believe that this separation of roles and allocation of distinct responsibilities to each role facilitates communication between senior management and the full Board about issues such as corporate governance, succession planning, executive compensation and company performance.

The Board has adopted a formal schedule of matters specifically reserved for its decision-making, which includes the annual budget, strategy and long term business objectives, major projects and contracts and significant capital expenditure. The Board has created three Committees to ensure effective and efficient Board operations in accordance with their respective Charters.

During the financial year, the Board met on 4 occasions in person in Dubai. The Board has continued to oversee the Group’s strategy, risk framework and financial performance. The Board uses Nasdaq’s online board portal, Directors Desk for its meetings, which makes make the board process efficient and has the benefit of considerable savings in resources, paper and printing.

The Nasdaq Dubai Board comprises 7 Non-Executive Directors including the Chairman, Abdul Wahed Al Fahim. Biographical details of the Directors and the Committees on which they serve are set out below. The biographies demonstrate a wide range of experience and skills, including leadership and knowledge of corporate governance requirements and practices, enabling the Board members to discharge their responsibilities and to bring independent judgment on matters of strategy, performance and standards of conduct which are important to the success of the exchange.

Board Charter

Nasdaq Dubai’s governance framework is set out in its Board Charter. The Charter details the corporate governance framework, coordinates and aligns supporting policy documents and establishes an environment that enables the Board and officers of Nasdaq Dubai to meet their responsibilities under the prevailing law and to demonstrate good governance practices.

NON-EXECUTIVE DIRECTORS / INDEPENDENCE

In accordance with Dubai Financial Services Authority (DFSA) Authorised Market Institution regulation and the Articles of Association, a sufficient number of Board members should be Independent Non-Executive Directors. The Non-Executive Directors, four of whom are Independent, bring wide and varied commercial experience to the deliberations of the Board and its Committees.

An assessment of Directors’ independence is carried out on an ongoing basis and at appointment for new Directors. Each Director discloses their status i.e. independent or connected and has the opportunity to disclose changes in external directorships and other potential conflicts of interest. The Board ensures that there are sufficient number of Independent members at all times. The assessment was reviewed by the Nomination and Remuneration Committee and its recommendations were made to the Board for its approval.

A third of the Non-Executive Directors are subject to annual re-election by the shareholders at the Annual General Meeting. In relation to Board remuneration, they receive an annual retainer together with meeting attendance fees for Board and Committee meetings.

Board & Committee Meetings 2018

The Board held four scheduled meetings. A table of Board and Committee meeting attendance is set out below. Comprehensive Board and Committee papers, comprising an agenda and formal reports and briefing papers are sent to Directors in advance of each meeting. Each meeting includes a wide-ranging report from the Chief Executive, a report on the Nasdaq Dubai’s financial performance and reports from the committee chairmen.

During the year the Board considered the following matters: the review and approval of year 2017 results, review of the Board, Audit and Risk Management Committee Charters, Personal Trading policy for Board members, AML Policy, Risk Policy, Risk Management Framework, amendments to transaction limits and signing authority matrix and Budget 2019. When Directors have not been able to attend meetings due to conflicts in their schedule, they received the relevant meeting papers.

Board Committees play an important role in the governance process and assist the Board in discharging its duties.

The standing Committees of the Board include: the Audit and Risk Management Committee, the Market Oversight Committee and the Nomination and Remuneration Committee. The Chair of each Committee reports to the Board on actions taken at each meeting. Each Committee has the authority to retain independent advisers. Each Committee has its own Charter, providing written terms of reference that define its authorities, duties and membership. In line with good practice, membership of the Committees is entirely non-executive and the majority are independent Directors.

AUDIT AND RISK MANAGEMENT COMMITTEE

The Audit and Risk Management Committee is chaired by Jamal Nasser Lootah. The other members are Abdul Wahed Al Fahim and George Möller. The company secretary acts as secretary to the Committee. The Committee is responsible for the independent and objective oversight of internal control and risk management, internal compliance, governance issues, financial reporting, external and internal auditors and financial controls.

During the year, the Committee met on 4 occasions. The Committee reviewed the annual budget, regular finance reports and the annual financial statements. The Committee recommended the annual budget and the annual financial statements to the Board for approval. The Committee met with the independent auditors, PricewaterhouseCoopers, to consider the results of the annual audit and to review the annual financial statements for year 2017. The Committee reviewed the risk management reports from Market Operations and approved the Annual AML Return. The Internal Audit function, which is provided by Dubai Financial Market, met regularly with the Committee which received the Annual Internal Audit Plan, progress on Internal Audit together with the Internal Audit reports following the completion of each audit. The Committee reviewed and recommended the amendments to the Board and Audit and Risk Management Charters, Personal Trading policy for Board Directors, Risk Policy, Risk Management Framework and transaction limits and signing authority matrix to the Board.

MARKET OVERSIGHT COMMITTEE

The Market Oversight Committee is chaired by George Möller. The other members are Abdul Wahed Al Fahim and Edward Knight. The company secretary acts as secretary to the Committee. The Committee is responsible for the independent oversight of Market Regulation which includes Issuer & Market Surveillance and Anti Money Laundering & Compliance functions. It also supervises the regulatory functions carried out by other areas of Nasdaq Dubai, including the application of the exchange’s Rules, Members' conduct of business and the clearing and settlement function.

During the year, the Committee met on 4 occasions. The Committee met on each occasion with Compliance and received updates on regulatory and compliance matters, including feedback on regular meetings with the DFSA. The Committee also received reports on any market incidents as part of its regulatory oversight function. The Committee reviewed and recommended for Board approval the extension of term of Practitioner Committee members. The Committee received the annual audit report for the Nasdaq Dubai Company Announcements and News Disclosure System. The Committee reviewed the annual budget and resources for Compliance team.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee is chaired by Rashid Al Shamsi. The other members are Abdul Wahed Al Fahim and Jamal Nasser Lootah. The company secretary acts as secretary to the Committee. The Committee is responsible for new appointments to the Board, succession planning for the Board and executive management, and reviewing the independence of Directors. It is also responsible for recommending Non-Executive Directors remuneration for Board approval, approving performance measures and target setting for the Chief Executive and broad policies and programs for employee benefits.

During the year, the Committee met on 4 occasions. The Committee reviewed and recommended for Board approval amendments to the Human Capital Policy. It reviewed Director Independence, the Human Capital annual budget and set the targets and objectives for the Chief Executive. The Committee received regular reports from Human Capital on key matters.

Internal control aims to ensure that processes are in place to achieve a company’s business objectives. Internal audit provides assurances that these processes and controls are effective and being complied with. Through risk management, the company is able to identify, understand and manage risks to the business by reducing the probability that those corporate objectives are jeopardised by unforeseen events.

INTERNAL CONTROL

The Board has overall responsibility for ensuring that Management maintains an effective system of internal control and for reviewing its effectiveness. Such a system is designed to support the identification and management of risks affecting Nasdaq Dubai and the business environment in which it operates. Nasdaq Dubai operates a system of internal control which provides reasonable assurance of effective and efficient operations covering all controls, including financial and operational controls and compliance with laws and regulations. Processes are in place for identifying, evaluating and managing the significant risks facing the exchange. The Board, through the Audit and Risk Management Committee, regularly reviews these processes. The effectiveness of controls is periodically reviewed within the business areas. Regular reports are made to the Audit and Risk Management Committee by Management, Internal Audit, Risk Management and Compliance covering matters such as financial controls, compliance and operational controls. The Audit and Risk Management Committee monitors resolution of any identified control issues of significance through to a satisfactory conclusion.

Management is responsible for establishing and maintaining adequate internal control over financial reporting. In accordance with International Financial Reporting Standards (IFRS), the internal control over financial reporting is a process designed under the supervision of the Chief Executive and the Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes.

Nasdaq Dubai’s internal control over financial reporting includes policies and procedures to provide for the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS and that receipts and expenditures are being made only in accordance with authorisations of Management and the Board; and provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

Management assesses the effectiveness of internal controls to satisfy itself that the processes followed are effective. The system of internal financial and operational controls is also subject to regulatory oversight by the DFSA.

INTERNAL AUDIT

The purpose of the Internal Audit function is to assist the Board and Management in the effective discharge of their fiduciary and administrative responsibilities by providing independent, objective assurance and consulting services with respect to evaluating risk management, control, and governance process. To ensure independence and objectivity, Internal Audit reports directly to the Audit and Risk Management Committee. For administrative matters the Head of Internal Audit has a secondary reporting line to the Chief Executive Officer. The Internal Audit function adopts standards issued by the Institute of Internal Audit (IIA). Internal Audit services are provided by Dubai Financial Market which follows a risk based audit approach. An annual risk based internal audit plan is prepared based on risk factors identified within the Enterprise Risk Management Framework, the extent of change in people, systems/technology (internal/external), processes, and regulations, top risks in the industry highlighted in the external reports, time since last audited and complexity of processes and systems.

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The input is derived from internal audit, Management and other stakeholders. All key areas subject to high and medium risk such as compliance, financial, information technology and operations are included in the plan while the non-priority and low risk areas are excluded or to be considered later depending on circumstances. During the planning process key business areas and operational risks are identified, compiled, risk rated and ranked to draw a final risk assessed audit scope of work that factors in high and medium risk areas. The audit plan, submitted to the Audit and Risk Management Committee for approval, provides information about the risk assessment, the current order of priority of audit projects and how they are to be carried out. The audit plan outlines the key departments, activities and processes to audit and estimated start dates and completion timelines as well resources dedicated for the audit. The Internal Audit submits regular activity reports to the Audit and Risk Management Committee and Management summarising the results of the audit assignment including significant risk exposures and control issues and follow up on the issues raised in the audit report. Internal Audit liaises regularly with internal stakeholders to maintain and uphold communication and relationship to a high level. The key internal stakeholders include compliance, company secretariat and risk management functions.

RISK MANAGEMENT

Risk management is a systematic and continuous process that revolves around defining and identifying risks in each department, measuring, monitoring, managing and reporting significant risks to which Nasdaq Dubai may be exposed. Nasdaq Dubai has established a Risk Management Framework to ensure that the exchange continues to be a stable, credible, and reliable organisation that manages all potential risks to its stakeholder. Nasdaq Dubai has a Risk Officer with overall responsibility for the risk management function in relation to financial services carried out by the exchange and for overseeing the implementation of the Risk Management Framework. Management within each unit and function are responsible for establishing and maintaining pertinent risk management. The functions and systems for internal control and internal audit are part of the overall risk management process.

Nasdaq Dubai’s Exchange, Clearing and Central Securities Depository operations place significant emphasis on managing risk, including business continuity and default management. Nasdaq Dubai’s RMF is subject to specific regulation and supervision by the DFSA. In operating a Clearing House, Nasdaq Dubai acts as the Central Counterparty (CCP) to transactions executed on the Exchange between Member firms. As a CCP, Nasdaq Dubai is exposed to various clearing related risks, including Counterparty Risk, Credit Risk and Liquidity Risk. The Head of Market Operations in consultation with the Risk Officer, is responsible for implementing the Board’s strategy for identifying, monitoring, managing and mitigating these risks. One primary risk management tool is the requirement placed on Clearing Members to provide margin payments and collateral to Nasdaq Dubai in accordance with its Business Rules. In addition to the collateralisation of obligations, other risk management tools adopted by the Board include rigorous Clearing Membership standards, dedicated clearing capital, netting arrangements and advanced risk management monitoring techniques.

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Corporate responsibility has become embedded in the mainstream of corporate governance thinking. Nasdaq Dubai is committed to the highest ethical standards of professional conduct and integrity. The Board continues to ensure that we adhere to good governance principles and practices. In order to meet this objective, employees are required to comply with the spirit and letter of the company’s Code of Ethics and Conduct. Our people are at the heart of what we do and drive the success of our business. Attracting, developing and retaining the skills we need to deliver on our strategy is important to Nasdaq Dubai.

From an economic and social perspective, Nasdaq Dubai enables companies to access funds for growth and development. Due to the nature of its business, Nasdaq Dubai does not have a high environmental impact. Its principal impact arises from energy, paper and water consumption. In an effort to responsibly manage this impact, we encourage a reduction in energy wastage and focus on recycling.

In order to take advantage of technology and the benefits of the internet, Nasdaq Dubai continues to publish its Annual Review online. This provides convenient access to information about the Company and reduces our consumption of paper in line with our corporate responsibilities.