corporate governance

corporate governance stat​ement

corporate governance is the system by which business corporations are directed and controlled. the corporate governance structure specifies the roles of different participants in the corporation, such as the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. by doing this, it also provides the structure through which the entity’s objectives are set, measured and monitored.

the board of directors of bank muscat SAOG is committed to the highest standards of corporate governance. the bank is committed to raising the bar even further so as to set a leading example of the letter and spirit of the code of corporate governance laid out by the capital market authority (CMA) and the regulations for corporate governance of banking and financial institutions issued by the central bank of Oman (CBO). this commitment was reflected in the bank being awarded first place in the CMA corporate governance excellence awards in the financial sector for the year 2011. In addition, the bank won the overall CMA award which included participation from listed companies across financial, industrial and services sectors. these two prestigious accolades were a follow on from being awarded second prize in the Middle East and North Africa (MENA) region for corporate governance excellence by the hawkamah institute in 2010. following on from this success, the bank also took first place in the hawkamah corporate governance awards in 2012 and won a further hawkamah award in 2013, demonstrating continued excellence in this area.

board of directors

the roles of the chairman of the board of directors (the board) and chief executive officer (CEO) are separated with a clear division of responsibilities at the head of the bank between the running of the board and the executive management responsibility for running bank muscat’s business. the board is responsible for overseeing how management serves the long-term interests of shareholders and other key stakeholders.

committees of the board and their functioning

there are three committees of the board which provide able and effective support to the full board in carrying out its responsibilities. the three committees and their primary responsibilities were as follows:

1) board risk management committee

the board risk management committee (BRMC) at bank muscat oversees the risk management function and provides recommendations to the board of directors on the risk-reward strategy, risk appetite and policies, capital management and framework for managing all applicable risks. the board reviews and approves the risk management strategy and defines its risk appetite. the BRMC supervises the risks the bank operates in to ensure compliance with the risk appetite set by the board of directors in the achievement of its business plans.

its key responsibilities are as follows:

  • formulates risk policy including credit, market, operational risks and protective service with a view to achieving the strategic objectives of the bank.
  • ensures that the bank maintains a good quality risk portfolio.
  • oversees risk policy implementation to ensure these policies are in compliance with the relevant laws and regulations.
  • fosters transparency and integrity in stakeholder reporting relating to risk assets
  • embrace and spread awareness in improved risk management practices and risk governance in the bank.
2) board audit committee

the primary responsibilities and functions of the audit committee are to provide assistance to the board of directors in fulfilling its responsibilities of monitoring/overseeing the financial reporting process, the adequacy and effectiveness of the systems of internal control, the effectiveness of the audit process and the bank’s process of complying with the relevant laws and regulations. the audit committee meets frequently to review the work of the internal audit department, challenge the bank’s management and to assess the overall control environment prevailing in the organization. it reviews the reports presented by internal audit and other bodies in its deliberations and offers guidance and direction in the area of risk management including fraud and related controls.

the audit committee reviews on an annual basis the audit committee charter, management control policy, internal audit activity charter and has approved a code of ethics policy for all internal auditors within the department. these are key to reinforce the organizational independence of internal audit and to establish their rules of engagement throughout the bank. the audit committee has adopted a risk based approach and accordingly reviews and approves the annual audit plan on that basis. the audit plan contains sufficient flexibility to adapt to new and emerging risks, changing circumstances, business strategy, products and services.

the audit committee views a robust fraud management framework as a priority and has sponsored a number of initiatives in this area including the requirement for all staff to complete a fraud awareness programme and successfully complete the associated examination. additionally, bank muscat is one of a few entities in the sultanate to have approved a whistle blower protection policy and encourages all employees to report wrongdoing wherever they see it.

3) board nomination and compensation committee

the board nomination and compensation committee is responsible for:

  • leading the process for board and management appointments, through the identification and nomination of relevant candidates for board approval.
  • setting the principles, parameters and governance framework of the bank’s compensation policy.​