The Central Bank of Egypt (CBE) has issued amendments to some provisions of the bank governance instructions issued on 23 August 2011.
The amendments dealt with the formation of boards of directors, taking into account diversity in capabilities, skills, experience, and knowledge, as well as achieving balance and independence between the executive and non-executive members of the board, bearing in mind that the majority of the board members are non-executives.
The CBE said, in a statement on Sunday, that this comes in an effort to strengthen the governance practices followed by banks in line with the best international practices to ensure that the banks’ boards of directors monitor the work of executive management.
These amendments included that the bank’s board of directors should consist of an appropriate number of members who are qualified for their positions as members of the board of directors and have sufficient understanding of their tasks with the appropriate diversity in abilities, skills, experience, knowledge, and age group. There should be board members who represent the minority of shareholders if their total contributions represented 5% or more of the total contributions. Women must also be represented on the bank’s board of directors and at least two members should be included.
The amendments also included forming a board with two executive members at most, and the rest of the members shall be non-executive, provided that at least two independent non-executive members are among them. The membership of the board of directors for a non-executive member lasts two terms, with a maximum period of six consecutive or separate years, and it may be extended for one additional term (three years) with the approval of the CBE.
The CBE directed banks to take into account that the chairmanship of the committees of the board of directors should be assumed by non-executive members, preferably from the independent non-executive members. This means that one independent member may assume the presidency of more than one committee, except for the audit committee, so that the independent non-executive member may not assume the chairmanship of the audit committee or chair another committee.