The evolving role of corporate governance

Corporate governance constitutes a framework of rules, practices and processes by which an organisation is directed and controlled. It represents the relationships among an organisation’s shareholders, board of directors, management and other stakeholders, ensuring transparency and accountability in decision-making. This framework builds trust and integrity, which are essential for enhancing corporate performance and profitability. In adhering to high standards of governance, organisations can align their strategic goals with stakeholder interests, thereby establishing a solid foundation for sustainable success.

From oversight to strategy
Previously, serving as a board member was often regarded as a distinguished role and a recognition of a successful professional career. The composition of the board was not a major topic of discussion, and it was common for individuals to hold multiple board memberships, sometimes serving as board members and chairpersons for numerous organisations, at times exceeding 10 organisations. This practice was driven by the belief that experienced professionals could offer useful advice and connections to many organisations at the same time.

Gradually, boards began to function as supervisory bodies, focusing on governance and compliance and serving primarily as a required oversight function. They fulfilled regulatory requirements rather than actively contributing to the strategic direction of the organisation.

Today, the role of the board has evolved significantly. Boards are now instrumental in defining the future and strategy of organisations. The qualifications of board members aim to facilitate meaningful contributions. The board’s composition is now closely scrutinised to ensure it includes the skills and expertise needed for long-term success, effective oversight of compliance and governance and appropriate delegation of operations to management. This shift reflects a forward-looking approach that prioritises the strategic and sustainable growth of organisations.

Boards are expected to help shape an organisation’s vision and strategy by guiding management, aligning with long-term goals, and tackling new challenges and opportunities. This requires board members to have a broad range of skills, such as strategic thinking, financial knowledge, industry expertise, and the ability to understand complex regulations and market trends.

Organisations now look for members who offer fresh perspectives and specialised knowledge to handle diverse issues. A diverse board is better equipped to make smart decisions, manage risks and identify opportunities, offering purposeful oversight and strategic direction.

Overall, the evolution of the board’s role reflects a broader shift towards more dynamic and proactive corporate governance. Boards are no longer merely fulfilling regulatory requirements. They are driving long-term value creation and ensuring that the organisation remains resilient in the face of changing market conditions.

This transformation highlights the importance of having qualified, diverse, and engaged board members who can navigate the complexities of modern business and contribute to the organisation’s success.

What makes a board truly effective?
An effective board is characterised by key traits that drive good governance and the achievement of strategic goals. This starts with a healthy balance of executive, non-executive and independent directors, who together offer the right mix of skills, knowledge and experience to enable better decision-making and governance. Each board member must clearly understand their roles and responsibilities, including their fiduciary duties. Ongoing professional development is essential to keep directors up to date with industry trends and best practices. Independent oversight is critical and should be supported by regular assessments of each director’s independence to ensure objectivity.

Regular performance evaluations of the board, its committees and individual directors, help identify areas for improvement and reinforce alignment with governance objectives. Ultimately, effective boards are made up of the right people, equipped with timely and accurate information, who use their time wisely, lead with purpose, collaborate well, and maintain strong, constructive relationships with executive management.

Advancing practices in the UAE
Corporate governance in the United Arab Emirates (UAE) has transformed significantly in recent years, driven by evolving regulations and the UAE’s commitment to transparency, accountability and ethical conduct. As a seasoned practitioner in the field of corporate governance, I have had the privilege of witnessing dynamic changes and proactive measures implemented to elevate corporate governance practices.

Boards are now instrumental in defining the future and strategy of organisations

These initiatives have ensured that organisations operate with enhanced transparency and accountability, aligning with both local and international standards. The adoption of international standards has attracted foreign investment, helping to drive economic growth. Proactive measures such as stringent reporting requirements, regular audits and the establishment of dedicated governance committees have strengthened corporate governance across various sectors.

These initiatives have further created a culture of accountability, where organisations focus on long-term sustainability, risk management, stakeholder engagement and creating long-term value for stakeholders. Overall, the UAE’s dedication to a transparent, accountable, and ethically sound business environment has positioned it as a leader in corporate governance, promoting sustainable growth and attracting investment.

Excellence in governance at CBD
Commercial Bank of Dubai (CBD) is committed to enhancing its governance framework to ensure unparalleled transparency, accountability and ethical conduct across all operations. This steadfast dedication secures our integrity while driving sustainable, long-term value for our stakeholders. Our governance practices are continuously evolving to align with the latest regulations and trends, ensuring that we remain at the forefront of corporate governance excellence.

This focus has driven our success in promoting transparency, accountability and ethical conduct across all operations, reinforcing our position as a regional leader in governance. The board of directors at CBD collectively possess the requisite skills, knowledge, and experience to effectively govern and steer the bank.

Further, the board actively enhances its members’ expertise through ongoing professional development. This approach enables the creation of a diverse and well-rounded skill set, addresses gaps, and prepares members to navigate a dynamic and evolving environment.

The bank has established five board committees to ensure effective delegation and oversight across key areas of its operations. These include specialised committees focused on strategy, business growth, compliance and risk management, and board composition and succession. This structure allows for targeted attention to critical functions, ensuring that specialised tasks are addressed efficiently and with the appropriate expertise. It reflects modern governance principles that prioritise strategic leadership, diverse capabilities and proactive management of emerging challenges and opportunities.

As corporate governance continues to evolve, CBD remains firmly committed to the highest standards of transparency, accountability, and ethical leadership. The bank encourages a strong governance culture, reinforced by ongoing development, rigorous oversight, and a forward-looking board. As such, the bank is well-positioned to navigate emerging challenges, drive strategic growth, and deliver long-term value to its stakeholders. These purpose-driven efforts underscore the bank’s leadership in corporate governance across the region.