Du CGReport 28 April 2010

8/8/2019 Du CGReport 28 April 2010

1/12

1

Emirates Integrated Telecommunications Company PJSC

(the Company)

Corporate Governance Report for financial year ending 31 December 2009

1. Governance Practices

1.1 Introduction

The Companys board of directors (the Board) is committed to promoting good corporate

governance within the Company. Consistent with its aim of being a leader in corporate

governance in the UAE and the region, in 2008 the Company commenced a pro-active

review of its corporate governance framework and has voluntarily adopted extensive

corporate governance guidelines (the Corporate Governance Manual) in line with the

principles set out in the UAE Securities and Commodities Authority (SCA) Decision R/32

of 2007 on Corporate Governance and international best practice.The Company recognises the benefit of good corporate governance for all shareholders,

and the Corporate Governance Manual is designed to ensure efficient, dynamic and

entrepreneurial management throughout the Company.

This is the Companys first Corporate Governance Report and is published in anticipation

of the mandatory application of Resolution 518 of 2009 of the UAE Minister of Economy on

Corporate Governance (the Resolution) with which listed public joint stock companies

are required to comply with by 30 April 2010. The report reflects the Companys corporate

governance systems at the date of this report.

1.2 Overview of the Corporate Governance Manual

The Corporate Governance Manual sets out requirements in relation to the appointment

and composition of the Board and the role of the chairman of the Board (the Chairman)

and the Chief Executive Officer (CEO). Furthermore, the Corporate Governance Manual

contains a list of matters reserved for the Board and requirements in relation to Board

meetings and voting procedures and the maintenance and monitoring of internal control

systems.

The Board has also established various supervisory committees, whose terms ofreference are set out in the Corporate Governance Manual, as follows:


2/12

2

Audit and Compliance Committee

The principal roles of the Audit and Compliance Committee are to monitor the Companys

financial statements, to renew and recommend changes to the Companys financial and

control systems, to oversee the Internal Audit & Risk Management function, to review the

share dealing policy and to maintain an appropriate relationship with the Companys

external auditors. The Committees members are Mr Ziad Galadari (chairman), Mr Fadel

Al Ali and Mr Younis Al Khoori, all of whom are independent directors.

Nomination and Remuneration Committee

The role of the Nomination and Remuneration Committee is to set the policy for

remuneration of the executive management, determine targets for performance-related

pay and determine the total individual remuneration package of each executive director (if

any), including salary, bonuses, pensions and incentive schemes. The Nomination andRemuneration Committees members are Mr Waleed Al Muhairi (chairman), Mr Abdulla Al

Shamsi and Mr Abdulhamid Saeed.

Investment Committee

The role of the Investment Committee is to review and approve the Company s investment

strategy in relation to core and non-core business. The Committees members are Mr

Eissa Al Suwaidi (chairman), Mr Ahmed Bin Byat, Mr Fadel Al Ali and Mr Jassem Al Zaabi.

The Corporate Governance Manual contains a code of ethics, to which all of the Companys

directors, members of senior management and employees are expected to adhere. The

code of ethics focuses on areas of ethical risk and places a requirement on members of

the Board to report unethical conduct in order to help foster a culture of honesty and

accountability.

The Corporate Governance Manual contains a number of other policies including:

A Corporate Social Responsibility Policy (which encompasses its commitment to

contributing to the quality of life of its workforce and the local community).

A Share Dealing Policy (described further at paragraph 2.1 below).

A Related Party Transactions Policy (setting out special approval requirements for

transactions between the Company and its related parties).

A Whistle Blowing Policy (described further at paragraph 6.5 below).

An Anti-Harassment & Bullying Policy (which provides a framework designed to

ensure that the Companys employees are treated with dignity and respect, free from

harassment or bullying at work).

2. Transactions Of The Directors In Securities

2.1 Share Dealing Policy

.

.

.

.

.


3/12

3

The Share Dealing Policy sets out the procedures that dus directors and employees must

follow when dealing in dus shares. The objectives of this Policy are to clarify the

Companys position in respect to the Companys directors and employees dealing in the

Companys shares as well as to implement controls, reduce any potential risks that could

contravene the regulators requirements and avoid any conflicts of interest.

Any non-compliance with this Policy will be regarded as serious misconduct.

2.2 Prohibitions under the Share Dealing Policy

The Share Dealing Policy applies to the Companys directors and employees at all levels

and contains prohibitions on insider trading and tipping.

It also sets out certain closed periods, within which directors, key executive officers and

all employees are not allowed to deal in the Companys shares at all.

The closed periods are the 20 day periods prior to the Companys general assemblies, the

announcement of any unpublished price sensitive information and the announcement of

the Companys yearly, half-yearly and quarterly financial results.

Consent requirement

Any proposed dealings in the Companys shares at any time by a director or employee

requires the prior consent of the Chairman (for directors) or the Chief Financial Officer

(for employees other than the directors). If any of the Chairman or the Chief Financial

Officer wish to deal in the Companys shares, he or she must seek consent from the other.

In deciding whether consent should be given, regard will be had to the following:

(A) the actual existence of unpublished price sensitive information regardless of

whether the applicant is aware of such information or not; and

(B) whether it is fair and appropriate under the circumstances to allow the applicant to

carry out the proposed transaction.

An applicant cannot proceed with a proposed transaction in the Companys shares until he

or she receives written confirmation of such consent through the Company Secretary.

Furthermore, directors must, on an annual basis, inform the Company Secretary of their

shareholding in the Company.

The Audit and Compliance Committee is responsible for reviewing the Share Dealing

Policy annually.


4/12

4

3. Board of Directors

3.1 Composition

The Board is comprised of the following persons each of whom are Non-Executive

Directors and Independent:

Name Board

Position

Committee

Membership

Representative

of

Date of

Appointment

Tenure

Ahmad Bin Byat Chairman

Independent

Investment ECT 10 March 2009 3 years

Younis Al Khoori Vice

ChairmanIndependent

Audit and

Compliance

EIA 10 March 2009 3 years

Eissa Al Suwaidi Member

Independent

Investment

(chairman)


Abdulhamid

Saeed

Member

Independent

Nomination

and

Remuneration


Waleed Al

Muhairi

Member

Independent

Nomination

and

Remuneration

(chairman)

Mubadala 10 March 2009 3 years

Jassem Al Zaabi MemberIndependent

Investment Mubadala 10 March 2009 3 years

Fadel Al Ali Member

Independent

Audit and

Compliance

Investment

ECT 10 March 2009 3 years

Ziad Galadari Member

Independent

Audit and

Compliance

(chairman)

Public 10 March 2009 3 years

Abdulla Al

Shamsi

Member

Independent

Nomination

and

Remuneration

Public 10 March 2009 3 years

**'EIA' refers to Emirates Investment Authority, 'ECT' refers to Emirates Communications

and Technologies Company LLC.

Set out below is a short biography of each director:

Ahmad Bin Byat

Chairman

His Excellency Ahmad Bin Byat is the Chairman of the Company. He has held several high

profile positions in the UAE, including holding the position of chief executive officer of

Dubai Holding and the director general of the Dubai Technology and Media Free Zone


5/12

5

Authority. His Excellency is also the executive chairman of Tecom Investments FZ-LLC

and Dubai Real Estate Corporation, as well as being a member of the board of trustees for

both Zayed University and the Dubai School of Government.

Younis Al Khoori

Vice Chairman

His Excellency Younis Al Khoori is the Vice Chairman of the Company. He is

undersecretary at the UAE Ministry of Finance and Industry and is on the board of

directors of the Central Bank of the UAE and Al Hilal Bank PJSC. He is also vice chairman

of Emirates General Petroleum Corporation.

Eissa Al Suwaidi

Board Member

Eissa Al Suwaidi is an executive director of the Abu Dhabi Investment Council and on the

board of directors of Arab Banking Corporation Bahrain BSC, Abu Dhabi National Oil

Company for Distribution, International Petroleum Investment Company PJSC, Abu Dhabi

Fund for Development and Emirates Investment Authority. In addition to his directorships,

Eissa Al Suwaidi also serves as the vice chairman of Arab Banking Corporation - Egypt

SAE and as chairman of Abu Dhabi Commercial Bank PJSC.

Abdulhamid Saeed

Board Member

Abdulhamid Saeed performs various roles in respect of UAE governmental bodies and is

on the board of directors of the Abu Dhabi Securities Exchange and Emirates Investment

Authority. He is also chairman of Aseel Islamic Finance PJSC and First Gulf Financial

Services LLC, managing director of the board of First Gulf Bank PJSC, vice chairman of

First Gulf Libyan Bank managing director of Reem Investments PJSC and a director of

Green Emirates Properties Co PSC.

Waleed Al Muhairi

Board Member

Waleed Ahmed Al Mokarrab Al Muhairi is the chief operating officer of Mubadala. In

addition, Waleed Al Muhairi is chairman of the board of directors of Al Yah Satellite

Communications Company PJSC, Mubadala Infrastructure Partners, Advanced Technology

Investment Company, Cleveland Clinic Abu Dhabi Hospital, The Medical Holding Company

and Abu Dhabi General Services PJSC. He is the vice chairman of Tabreed PJSC and on

the board of directors of Advanced Micro Devices Inc., Piaggio Aero Industries S.p.A., Abu

Dhabi Future Energy Company PJSC, Injazat Data Systems LLC, Dolphin Investments,

Liwa Energy LLC and Taswan Investments. He is also a trustee of Sheikh Khalifa

University, director general of the Abu Dhabi Council for Economic Development and a

member of the Khalifa Fund for Small and Medium Enterprises.


6/12


7/12

7

Development P.J.S.C. have the right to appoint, remove and re-elect certain 7 members of

the board of directors.

Board Meetings

The Board is required to meet at least once every two months and the quorum for a

meeting of the Board is a majority of its members.

During the financial year ended 31 December 2009 (the Financial Year) there were 8

meetings of the Board, 7 meetings of the Investment Committee, 6 meetings of the Audit

and Compliance Committee, and 2 meetings of the Remuneration and Nomination

Committee.

3.2 Remuneration of Directors

The Company does not have any executive directors appointed to its Board. The

remuneration of non-executive directors is proposed by the Nomination and

Remuneration Committee for approval by the Board. Once approved at board level the

proposed remuneration is submitted to the general assembly for approval.The current level of remuneration of the directors of the Company was approved at the

Companys last Annual General Assembly on 10 March 2009. In 2009 the Company

retained Mercer, a leading international consultant on human resource management to

report on remuneration policy in comparable international and local companies. Theremuneration proposed at the 2010 Annual General Meeting will be benchmarked against

this report.

3.3 Delegation of Authority and Powers to Executive Management

Subject to the Companys articles of association, a resolution of its shareholders and any

applicable laws, the Board has the powers necessary to achieve the Companys objectives.

Reserved Matters

The Corporate Governance Manual contains a list of matters reserved for the

determination of the Board. These include certain specific powers and authorities related

to the following (Reserved Matters):

(A) Strategy and management;

(B) Board membership and other appointments;

(C) Remuneration;

(D) Structure and capital;

(E) Financial reporting and controls;


8/12

8

(F) Internal controls;

(G) Contracts and expenditure;

(H) Communication;

(I) Delegation of authority

(J) Corporate governance matters; and

(K) Policies (not including matters of procedure).

All other powers and authorities of the Board are, pursuant to the Corporate Governance

Manual, deemed delegated to executive management. The Board has delegated certain

Reserved Matters to committees established under the Corporate Governance Manual.

The Board may also delegate Reserved Matters to executive management, by specific or

general delegation.

4. External Auditors Fees

The Companys Annual General Assembly held on 10 March 2009 resolved to appoint

KPMG International (the Auditor) as auditor of the Company for the Financial Year.

The Auditor received fees of AED 660,000during the Financial Year for audit services. TheAuditor did not perform any other services for the Company during the Financial Year.

5. Audit Committee

5.1 Composition of the Audit and Compliance Committee

The Composition of the Audit and Compliance Committee is stated in paragraph 1 above.

5.2 Duties of the Audit and Compliance Committee

The principal duties of the Audit and Compliance Committee are:

To oversee the relationship with the external auditors and monitor their independence.

To review and report to the Board on the Companys annual and quarterly financial

statements.

To review and monitor the application of the Companys financial, internal control and

risk management activities

To review the Companys Share Dealing Policy.

To review and report to the board on the Companys accounting policies and practices.

To review, monitor and report to the Board on the remit and effectiveness of theinternal audit function and review and approve the annual internal audit plan.

.

.

.

.

.

.


9/12

9

To review the Companys Whistle Blowing Policy, described in greater detail in

paragraph 6.5 below.

To consider such other matters as may be requested by the Board.

5.3 Authority of the Audit and Compliance Committee

The Audit and Compliance Committee is authorised by the Board to examine any activity

within its terms of reference, to have unrestricted access to the Company's external

auditors and to obtain, at the Company's expense, professional advice on any matter

within its terms of reference. The Audit and Compliance Committee is authorised to seek

any information it requires from any employee or director, and all employees and

directors will be directed to co-operate with any request made by the Audit and

Compliance Committee.

6. Internal control and risk management6.1 Overview

The Board has overall responsibility for ensuring the application, review and efficiency of

the Companys internal control systems. The Board has delegated certain of those

responsibilities to the Audit and Compliance Committee, as described in greater detail in

paragraph 5 of this report. The system of internal controls is designed to manage risksassociated with the conduct of the Companys business rather than eliminate the risk of

failure to achieve the Companys business objectives and can only provide reasonable and

not absolute assurance against material misstatement or loss.The Company, through its

training and management standards and procedures, aims to develop a disciplined and

constructive control environment in which all employees understand their roles and

obligations.

The Companys internal control systems include the following:

Consideration and approval by the Board of the Companys strategic objectives and the

risks associated with seeking to achieve them;

Review and approval by the Board of financial statements and forecasts, and regular

operational and financial reviews of performance against budgets and forecasts;

Monitoring by management and the risk management team of risks to achieving

business objectives and actions taken to mitigate them;

Review by the Audit and Compliance Committee of the scope and results of internal

audit work across the Company and of the implementation of the recommendations of

the committee;

Review by the Audit and Compliance Committee of accounting policies and practices,

the scope of the work of the external auditors and any significant issues arising from

that work; and

.

.

.

.

.

.

.


10/12

10

A Whistle Blowing Policy enabling employees to report possible wrongdoing in

confidence.

6.2 Internal Audit

The internal audit department provides independent, objective assurance and consulting

services designed to add value to the companys operations and develop a flexible annual

internal audit plan using an appropriate risk-based methodology. The internal audit

department provides the Companys management with findings, analysis, observations,

recommendations, counsel, and information concerning activities that are audited by the

department. Personnel of the internal audit department report to the head of internal

audit, who reports functionally to the Companys Audit & Compliance Committee andadministratively to the CEO. The head of internal audit meets with the Audit and

Compliance Committee at least once a year to discuss the remit of the internal audit

department and any issues arising from the internal audit.

The Internal Audit Department staff governs themselves by adherence to

The Institute of Internal Auditors' "Code of Ethics." The Institute's "International

Standards for the Professional Practice of Internal Auditing" (Standards) constitute

the operating procedures for the department.

6.3 Risk Management

The head of Internal Audit and Risk Management is also responsible for developing,

maintaining and implementing the risk management framework, strategy and policy. In

addition, communicating and reporting the key risk management issues and

recommendations for improvement where necessary.

The Company considers risk management as a core competency throughout the

organisation. It is committed to maintaining risk management systems and enhancing the

organisations ability to manage uncertainty by protecting its assets and safeguarding

shareholders interests whilst ensuring compliance with applicable laws and regulations.

The Companys risk Management framework was adopted in 2008 and is based on the

Enterprise Risk Management (ERM) Framework of the Committee of Sponsoring

Organizations of the Treadway Commission, consistent with international best practice.

The ERM framework was designed to ensure consistency in the application of ERM in

identifying, assessing, monitoring and reporting risks across the organisation. In addition,

a corporate risk assessment is undertaken annually with the CEO and Management

Committee to determine and evaluate the material exposures facing the Company;

ensuring risk management is closely aligned to the Companys strategic and business

objectives. Identified risks are reported to the Audit and Compliance Committee.

The CEO is responsible for reviewing the effectiveness of the risk management process,confirming the Companys risk appetite and ensuring risk management is embedded and

cascaded down to Senior Management and all staff.

.


11/12

11

The Board, an Executive Sponsor of Risk Management, through its Audit and Compliance

Committee is responsible for overseeing risk management activities. The Board, through

its Audit Committee also assesses the effectiveness of the overall process for identifying

and assessing risks, and providing its view to the CEO and Management Committee.

6.4 Audit and Compliance Committee Oversight

The Audit and Compliance Committee oversight responsibilities include reviewing the

financial, internal control and risk management systems, ensuring coordination between

internal and external auditors, monitoring the efficiency of internal controls and internal

audit function, approving the remit of the internal control function and ensuring that

adequate resources are devoted to it, reviewing and approving the annual internal audit

plan, reviewing the financial statements and reporting its findings to the board.

6.5 Whistle Blowing Policy

The Corporate Governance Manual contains a Whistle Blowing Policy which has been

formulated to provide opportunity to employees to access in good faith, to the Audit

Committee in case they observe any unethical or improper practices or wrongful conduct

in the Company. Responsibility for overseeing and implementing the policy has been

delegated to a designated whistle blowing officer. The Companys management also have

specific responsibility for facilitating the operation of the policy.

7. dus Governance Model

The sustainability of the governance model at du stems from the complementary

interplays between shareholders, supervisors (Board & Standing Committees) and

Management as demonstrated in the chart below:


12/12

12

8. General Information

The Companys Corporate Governance Manual was adopted in line with the principles set

out in the SCA Decision R/32 of 2007. The Company has undertaken a review of its

governance systems for compliance with the Resolution in advance of the Resolutions

mandatory application from 30 April 2010. Pursuant to Article 2(d) of the Resolution, the

Company has sought exemptions from the SCA from the application of certain provisions

of the Manual which are inconsistent with existing provisions of its Articles of Association.

Apart from the requested exemptions, the Company considers it is substantially compliant

with the Resolution and is in the process of reviewing and implementing certain changes

to its practices required for alignment with the Resolution.

Ahmad Bin Byat

Chairman

Documents

Du CGReport 28 April 2010