Emerging regulatory trends: board evaluations in the UAE

In the current landscape of uncertain macroeconomic conditions characterized by inflation, geopolitical instability and sweeping regulatory changes, organizations are increasingly recognizing the importance of having a sound and resilient board.

A comprehensive board evaluation process is imperative for the sustainable success of any organization. The key benefits of conducting board evaluations include:

• Enabling stakeholders to hold individual board members accountable for their actions and decisions, building more trust within the organization
• Identifying improvement opportunities in board operations leading to more effective decision-making, improved strategic planning and organizational performance
• Addressing gaps in diversity on the board (skill sets, gender, nationality, age, etc.) to support decision-making and improve stakeholder engagement
• Enhancing transparency amongst board members and management and exchanging constructive feedback to establish a favorable board culture and dynamics

Various regulators in the UAE, including the Securities and Commodities Authority (SCA), the Central Bank of the UAE (CBUAE), and the Ministry of Cabinet Affairs, have issued corporate governance regulations and guidelines that require listed entities, banks, insurance companies, and UAE federal government entities to conduct annual board evaluations.

These requirements are in line with leading global practices and support the long-term sustainability of organizations.

In this report, we highlight:

• The importance of board evaluations in enhancing overall corporate governance
• Key regulatory requirements
• Critical elements to consider when performing board evaluations
• Overcoming board evaluation challenges in UAE-based organizations
• How KPMG can help