Corporate Governance
"Companies with a professional and positive commitment to corporate governance are stronger and have a greater record of achievement"
Corporate governance is about the way in which boards oversee the running of a company by its managers, and how board members are in turn accountable to shareholders and the company. This has implications for company behaviour towards all stakeholders, especially customers, employees, shareholders, financial institutions and strategic partners.
Zain believes effective corporate governance will in the long term improve our performance, thus benefiting all stakeholders and ultimately serving the public interest. Every mature corporation needs to develop a culture that defines the role of its people positively and drives perception of the organisation externally. Companies with a professional and positive commitment to corporate governance are stronger and have a greater record of achievement.
The benefits are tangible. For example, rating agencies now look at corporate governance practices, and companies with sound practices, such as full financial disclosure and across-the-board corporate transparency, can benefit from lower borrowing costs. This benefit was evident in Zain’s case (supported by our relatively debt-free and excellent cash-flow situation at that time), when financial institutions provided the company with US$2.4 billion bridging loan in May 2005 to enable our acquisition of Celtel. Since then Zain, international financial institutions have extended Zain in excess of US$6 billion as of 31 December 2007.
Additionally, research shows that investors will pay large premiums for companies with effective corporate governance (up to 30%), and that companies with better corporate governance have higher price-to-book ratios. A key part of our vision is in instilling and promoting a culture of uncompromising integrity and the highest professional and ethical standards across our entire spectrum of companies and operations.
One component of Corporate Governance is to have an effective and independent Internal Audit Function. This function in Zain is to cover our entire group and is outsourced to a world-class big ten audit firm Moore Stephens International (MSI) Al-Nisf and Partners. Another component of Corporate Governance is the issuance of financial results in a timely and transparent manner.
As the largest publicly traded company on the Kuwait Stock Exchange, Zain strictly abides by the standards required by the KSE and all regulatory authorities through full transparency and the timely issuance of both Quarterly Reviewed and Annually Audited Financial Statements which are reviewed by our two external auditors, Bader & Co. PricewaterhouseCoopers, and Al-Ahli Bureau.
But this is just the beginning. Here at Zain, we are in the process of fully adopting a system of corporate governance based on the principles endorsed by the Organisation for Economic Cooperation and Development (OECD). These principles are extensive, and we invite you to read about them at: http://www.oecd.org
By taking these principles to heart, we are continually striving to implement professional world-class standards, practices and policies that will result in a corporate governance environment that reinforces our corporate values and assists us in making our vision a true reality.
