EFG Hermes’ judicious management and corporate governance frameworks are part and parcel of the Firm’s long-term growth and success. As such, it strives to align with global best practices and standards of governance throughout the organization.
Our leading position in the area corporate governance is a direct result of the rigorous guidelines and procedures set for staff group-wide and across our footprint. We are equally as prudent when it comes to the quality and nature of the documentation that we require from clients. Subsequently, EFG Hermes has succeeded in maintaining its reputation and market leadership as it expands into new geographies and launches a diverse new roster of products and services. Our solid foundations and the commitment of the board in providing the Firm with vital guidance and support inspire confidence throughout the organization that we are fortified with the rules, systems and procedures that will support our growth targets.
In 2017, EFG Hermes has implemented a new Corporate Governance Framework that addresses new country-specific policies and develops an overarching strategy for EFG Hermes and its subsidiaries. The framework, which is still in place this year, has roots in our clearly defined managerial processes, structures and policies, which serve to provide channels for adequate decision-making and accountability while assuring shareholders and clients that their investments are handled with the professionalism they have come to expect of EFG Hermes. The framework sets out the minimum standards expected group-wide while complying with local laws or regulations for an even higher level of stringency.
Based on the mandate of this framework, the Board of Directors continues to comply with the Egyptian Financial Regulatory Authority’s (FRA) corporate governance regulations released in 2016, stipulating the appointment of two independent board members for all regulated Egyptian subsidiaries. EFG Hermes is fully compliant with FRA regulations and EGX listing rules, which require companies to appoint new board members every three years.
Management and Control Structure
Board of Directors
EFG Hermes’ Board of Directors is responsible for providing the Firm with strategic leadership, financial soundness, governance, management supervision and control. The Board is comprised of 12 members, 11 of whom are non-executive.
Without exception, all EFG Hermes’ Directors possess a broad spectrum of experience and expertise, directly related to EFG Hermes’ expansive lines of business and divisions, with a strong emphasis on competence and integrity. Directors are selected based on the contributions they can make to the Board and Management in addition to their ability to represent the interests of shareholders. EFG Hermes welcomed two new board members in 2018: Mr. Timothy Collins and Ms. Elizabeth Crichley, both of whom represent RA MENA Holdings LLC and RA Holdings I LLC, EFG Hermes’ second-largest shareholder at 12.33%.
The Board of Directors met 5 times throughout 2018.
The following principles govern the conduct of the Board of Directors and the Firm:
Compliance with Laws, Rules and Regulations
Adherence to the law is the fundamental principle on which the Firm’s ethical standards are built. All directors must respect and obey all applicable laws, rules and regulations. The board complies with the internal best practices, rules and regulations of the Firm in addition to laws and regulations of the markets in which the Firm operates.
Conflicts of Interest
All members of the board abstain from participating in any discussions and decisions that might affect their own personal interests or those of a closely related person or company.
Safeguarding and Proper Use of Company Assets
All directors endeavor to protect the Firm’s assets and ensure their efficient use. All assets must be used for legitimate business purposes only.
Each director should deal fairly with the Firm’s clients, competitors, providers and employees. None should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice.
Code of Conduct
The Code of Conduct defines core values, principles and other requirements that all the Firm’s directors and employees are required to follow while conducting their regular daily duties.
Standards and Policies
The Firm’s standards and policies comply with Egyptian as well as international corporate governance guidelines.
Directors and officers must ensure the confidentiality of information entrusted to them by the Firm or its clients, except when disclosure is authorized or legally mandated. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Firm or its clients if disclosed.
Directors are prohibited from taking personal advantage of potential opportunities that are revealed through corporate information, property or position without the consent of the board. Directors are obliged to advance the Firm’s legitimate interests when the opportunity presents itself.
Auditing forms an integral part of corporate governance at EFG Hermes. Both internal and external auditors play a key role in providing an independent assessment of our operations and internal controls. Furthermore, to ensure independence, Internal Audit has a direct reporting line to the Audit and Risk Committee, a subcommittee of the board.
Corporate Governance Committees
The Audit Committee is comprised of 3 members*, all of whom are nonexecutive. The committee meets at least once per quarter or as required. In 2018 they met 4 times. The committee is responsible for oversight of financial statements and financial reporting, internal control and governance systems, compliance with laws and regulations, whistleblowing and fraud, the internal audit function and compliance with the Code of Conduct established by management and the board. The committee ensures free and open communication between the committee members, internal auditors, management and the external auditor once a year.
The Risk Committee is comprised of 3 members*, all of whom are nonexecutive. The committee meets at least once per quarter or as required. In 2018 they met 4 times. The committee oversees compliance, risk, legal, and operational issues across the Group, advising the board on risk appetite and tolerance in accordance to its strategic objectives. It is responsible for advising the board on risks associated with strategic acquisitions or disposals and to review comprehensive reporting on Group Enterprise Risk Management, including reports on credit, investments, market, liquidity and operational risks, business continuity and regulatory compliance.
Remuneration and Compensation Committee
The Compensation Committee is comprised of 4 non-executive board members. The committee meets once a year to study compensation within the Group as a whole (and for senior management in particular). This not only safeguards shareholder interests, but also ensures that management’s interests are fully aligned with those of the Firm. The committee directly manages the allocations within the Management Incentive Scheme for Senior Management as approved by the General Assembly. The committee met 1 times in 2018.
Corporate Governance and Nomination Committee
The Corporate Governance and Nomination Committee is comprised of the Chairperson, one non-executive director and the Group CEO. It oversees the appointment of Board Members, the Group CEO and Group Executive Committee members. It is their responsibility to make sure appointments, which must be approved by the Annual General Assembly, align with the Group’s strategic directives and ensure the independence of directors in accordance with applicable laws, regulations and international best practices. It also conducts regular assessments of the structure, size and composition of key executive positions at the Group level along with reviewing the Group’s overall corporate governance framework. The committee meets on an as-needed basis.
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