The UAE Tourism Industry is seeing a significant increase in Corporate Governance as there is keen interest from business owners and investors to increase accountability from management. Corporate Governance is essential in helping local businesses manage succession planning by giving family members greater flexibility in continuing with the business or selling their stake.
3 Key corporate governance trends
First is Accountability Across the Board. Traditionally, each board member would be tasked to be responsible for an area of the business, take for example finance. Given the increasing complexity of global businesses, International Financial Reporting Standards have called for greater transparency in reporting numbers across the organisation. It is important that all members of the board work together in helping prepare a report that talks beyond historical financial data.
Second key trend is the need for greater transparency. A financial statement or report is not just for the Shareholders or management, but an increasing wider stakeholder audience. Given the rapid pace of climate change, Environmental Reporting is a key component calling for great transparency.
Third and perhaps, most important in my opinion, is Independent Assurance. It not only helps validate numbers but helps investors make smart decisions, which in turn aid organisations in bringing lasting value.
Leading by example
A significant improvement has been made. There is a marked improvement in the amount of interaction between board members and regulators. Often independent Auditors or Advisors are a key part of this. The key reason for that is that corporative governance is only effective if it is as independent as possible. One of the key issues facing businesses today is independence. Several issues that arise within an organisation may already be known to Board members. It is important that clear Corporate Governance helps board members effectively address these issues and ensure the organisation can operate as a going concern.
Leading by example
The Government of Dubai is committed to open transparency in customer service, as part of good corporate governance. There should be nothing stopping other companies, following suit. Regular oversight helps set minimum standards but also, help organisations benchmark.
The journey continues
I firmly believe that the Gulf has come a long way in terms of developing sound corporate governance and a lot of that goes to the credit on how governments operate, which inspire private organisations.
Corporate governance is the foundation of a stable economic growth and imperative to today’s growing business landscape. Building a transparent structure will ensure that business failures are few and far between. This would automatically improve investor confidence, bringing stability to businesses not only during challenging economic times, such as an oversupply of hotel rooms but testing times when pandemic events force occupancies far below break-even levels.
The views expressed are the author’s and not ICAEW’s.