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Governance Rules

Report of Governance for Misr Iran Development Bank

2014

 

First: Introduction:-

 

Governance is the set of relations among the Bank Management and, Board of Directors, shareholders and other stakeholders, along with a clear determination for the authorities and responsibilities of each part. Governance tackles the method adopted by the Bank's Board of Directors to manage its daily activities and affairs, which affect the following:

 

- Developing strategies and setting objectives.

- Determining the Bank acceptable risk level.

- Practicing the Bank's daily activities and businesses.

- Striking balance between commitment with responsibility towards shareholders and protection of depositors' interests, taking into consideration interests of other stakeholders.

- Confirming that the Bank's business is managed through a safe and sound method within the framework of commitment with the applicable laws and regulations.

- Adopting active policies of disclosure and transparency.

 

Second: MIDB Shareholders:-

 

On May 27th, 1975, Misr Iran Development Bank"MIDB" was established as an Egyptian Joint Stock Company under the "Investment of Arab and Foreign Funds and the Free Zones" Law.

 

The Bank's initial share capital amounted to US$20 million fully paid-up. This was followed by successive increases in the Bank's share capital. At present, MIDB authorized capital amounts to US$ 300 million while issued and paid-up capital reached US$ 250 million distributed among the shareholders as follows:

 

National Investment Bank

29.93%

Misr Insurance Company

16.06%

Misr Life Insurance Company

13.87%

Iran Foreign Investment Company

40.14%

MIDB performs its banking operations through fourteen branches.

 

 

Third: MIDB Board of Directors:      

Name

Capacity

Mr. Ismail Hassan Mohamed

(For Misr Insurance Company)

Chairman & Managing Director

Mr. Ahmed Amr Tantawi

(For Misr Insurance Company)

Managing Director

Dr. Mir Saeid Nikzad Larijani

(Representative of Iran Foreign Investment Company)

Board Member

Dr. Dawood Danish Jaafari

(Representative of Iran Foreign Investment Company)

Board Member

Dr. Hossein Hassan Ghazavy Khorasgany (Representative of Iran Foreign Investment Company)

Board Member

Dr. Saman Ghasemi

(Representative of Iran Foreign Investment Company)

Board Member

Mr. Momtaz Mohamed Elsaid

(Representative of National Investment Bank)

Board Member

Mr. Atef Abd El-Salam Malash

(Representative of National Investment Bank)

Board Member

Mrs. Sanaa Abdel Monem Abbas

(Representative of National Investment Bank)

Board Member

Mrs. Neveen El-Shafei

(Representative of Misr Life Insurance Company)

Board Member

The Board Members are appointed by the Bank's shareholders while the Board of Directors includes two executive members namely;

 

- Mr. Ismail Hassan Mohamed        Chairman & Managing Director

- Mr. Ahmed Amr Tantawi               Managing Director

The remaining members (8 board members) are non-executive members. The aforementioned board composition shows a balance where most board members are non-executive members·, the matter which achieves independence and objectivity of Board of Directors.

 

Fourth: Board of Directors Responsibilities:-

 

The Governance Policy of Misr Iran Development Bank (MIDB) adopted by the Board of Directors on 24/10/2003 determined responsibilities of the Board of Directors as follows:

-        Approving MIDB strategy and organizational structure.

-        Selecting the chief executives and supervising the duties of MIDB Top Management and following up its performance.

-        Holding periodic meetings at the Top Management and the internal auditing department for reviewing and discussing MIDB strategies and policies.

-        Controlling and managing any event conflicts with the interests of MIDB Board of Director, its members and shareholders.

-        Ratifying the disclosure policy and the continuous periodic evaluation of the effectiveness of the internal control and governance. 

-        Approving and authenticating the strategies and policies of MIDB Risk Management.

-        Ratifying and reviewing the policies concerning information technology management, salaries and remunerations.

-        The persistent efforts exerted for achieving the interests of shareholders, depositors and other beneficiaries, while avoiding any conflict may occur.

 

Fifth: Board of Directors Meetings and performance evaluation:

-        As stated in the regulation organizing MIDB Board of Directors duties, the Board holds its sessions whenever it deems necessary,upon a call from the Chairman of the Board, its deputy or one-third of its members.

The Board of Directors shall meet–at least- four times during the one financial year. The Board must convene within a period less than four months, taking into account that the quorum shall not be reached unless more than half of the Board - at least- three members are attended including the Chairman of the Board or his deputy. Thus, the Board of Directors held four sessions during the year 2014 attended by all the Board members.

As stated in the MIDB governance policy, the Board of Directors follows a system for conducting a self evaluation on the Board's level and its committees being one entity, and on the basis of each member's performance including compliance with his duties, taking into consideration that the performance evaluation is the responsibility of the Chairman of the Board.

 

 

Sixth: Board of Directors Committees and competences there of:

(1)            The Executive Committee:

The Committee consists of five Board members in participation with the two Boar executive members and its competences are as follows:

-        Studying and taking decisions regarding the credit facilities and finance within the entitled authorities in a way that applies the credit submittal rules set by MIDB.

-   Studying and taking decision regarding the participations in the companies' capitals with in the entitled authorities.

-        Giving opinions in the classification reports of services provided By MIDB to its customers represented in the credit facilities and finance, as well as the suggested appropriations and the evaluation reports of participations in the companies' capitals, then submitted to the Board of Directors accompanied with the Committee's view thereof.

-        Providing opinion in amending the MIDB organizational and functional structures as well as the regulations and systems concerning the work progress.

-        Practicing authorities set in the MIDB regulations.

(2)            Auditing Committee:

The Committee consists of three non-executive Board members and its competences are as follows:

-        Suggesting appointing auditors and determining their fees as well as considering issues related to their resignation or dismissal without breaching the law provisions and the Accountability State Authority Law.

-        Giving opinion regarding permitting the assignment of auditors for providing services in favor of the Bank other than the financial statements and the relevant estimated fees in a way that does not contradict with the independence requirements thereof.

-        Holding discussions with MIDB internal inspection manager, compliance officer, auditors and concerned officials as it deems appropriate by the Committee and members.

-        Studying the annual financial statements prior to submittal to the Board of Directors for ratification.

-        Viewing the annual financial statements set for publication prior to the date of publishing and ensuring compatibility with the financial statements data and the publication rules issued by the CBE.

-        Coordinating between the internal and external auditing duties and ensuring the absence of any obstacles that may prevent the communication among the internal inspection manager, auditors, Board members and the Auditing committee.

-        Reviewing the annual internal auditing plan and the approval thereon.

-        Reviewing the reports generated by the internal inspection department including those related to the sufficiency of MIDB internal control systems and the compliance with what is stated therein, as well as following-up the department recommendations and to what extent the MIDB Board of Directors is responded thereto.  

-        Reviewing the reports generated by MIDB compliance officer especially in relation to any breaches of MIDB internal regulations,applicable legislations and instructions set by the CBE.

-        Studying the obstacles facing the internal auditing operations or the duties of the compliance officer and suggesting suitable methods of elimination.

-        Reviewing the MIDB internal inspection department on the availability of qualified personnel and the rehabilitation level for the compliance officer and the required stuff.

-        Ensuring that the Executive Department of the Bank reviews the value of guarantees provided to the customers to correspond to the periodic credit facilities and finance, as well as determining the procedures needed to be taken for facing any decline in such values and reporting them to MIDB Board of Directors for taking the necessary decision.

-        Reviewing the procedures taken by the MIDB Board of Directors for complying with the controlling regulations and criteria set by the CBE and ensuring taking the necessary corrective measures in case of any breach thereof.

-        Ensuring that the Bank has a controlling system and takes executive procedures for combating money laundering.

-        Studying the CBE remarks stated in the inspection reports on the Bank concerning the financial statements and reporting them to the Board of Directors accompanied with the Committee recommendations.

-        Studying the auditors remarks stated in their report on MIDB financial statements and other reports sent to the Bank's Board of Directors during the year, and reporting them to the Board accompanied with the Committee recommendations.

 

(3)            Risks Committee:

It consists of the Managing Director and two non-executive Board members and its most important competences are represented in following-up the functions of MIDB Risks Department and providing suggestions regarding the strategies and policies of MIDB Risks Department (including capitals strategies, Liquidity Management, market,credit, operation, compliance and reputation risks or any other risks the Bank mayexpose), taking into consideration that MIDB Board of Directors shall approve and authenticate said strategies and polices and enter necessary amendments as it deems appropriate.

 

(4)            Governance and Nominations Committee:  

It consists of three non-executive Board members and its competences are as follows:

-        Periodic evaluation of MIDB governance system.

-        Suggesting adequate changes on the governance policies approved by the Board of Directors.

-        Preparing a periodic governance reports on the Bank.

-        Reviewing MIDB annual report especially the disclosureitems and any others related to governance.

-        Studying and considering the CBE inspection remarks on the governance system.

-        Keeping, documenting and following-up the evaluation reports of the Board performance.

-        Providing suggestions regarding assigning, renewing the membership or dismissing any of the Board members.

 

Three sessions were held during 2014, where they discussed preparation of the annual report of governance for the year 2014 and the Compliance and Governance Department was assigned to prepare the report.

 

Seventh: Interests non-conflict policy:   

 

-        The interest non-conflict policy was approved by the Chairman & Managing Director on 4/3/2012. The executive sectors of the Bank is informed that in case  there are dealings related to MIDB correlated parties-particularly- with the shareholders , senior executives, advisors (if any), Board members or any relevant companies, theyshall be independently conducted in a way that results in interests conflict,provided that such dealing shall be disclosed-in written- to MIDB compliance department.

 

Eighth: Transparency and disclosure:

1-     MIDB financial statements and the auditors reports shall be published in the annual report of the Bank.

2-     The following information shall be disclosed at the site of the Bank:

-        The financial statements and the auditors report.

a-     MIDB annual report including:

·       Brief on MIDB.

·       Submitting the report.

·       Financial report.

·       Auditors report.

·       General balance sheet

·       Income statement.

·       Cash flows statement

·       Statement of change in shareholders equity

·       The complementary clarifications of the balance sheet.

b-    MIDB shareholders and shareholding percentage.

c-     Board composition.

d-    Data of MIDB Top Management.

e-     MIDB participations in companies.

 

3-     According to the CBE Board decision on 5/7/2011 concerning banks governance, the letter of the CBE Supervision & Control Sector No. 95 dated 23/8/2011 and the Deputy Governor letter dated 1/3/2012 in the same regard, MDB shall disclose the complementary clarifications of the financial statements on the monthly average of the total annual income of  twenty employees receiving the highest amounts of remunerations at the end of each year as of the financial year ended on 31/12/2011.

 

Ninth: MIDB Social Responsibility:

MIDB applies some policies related to the social responsibility towards the employees through the following:

 

a-     System of social insurance, pensions and compensations.

b-    Medical insurance system

c-     MIDB Employees Services Society

·       Housing soft loans

·       Subsidizing Hajj, minor Hajj (Umrah), entertaining and summer trips.

·       Providing personal loans with soft interest for other purposes other than housing

·       Providing subsidies to employees and their families in cases of disasters and sickness.

 

Tenth: Brief on MIDB auditors:

a-     Accountability State Authority:

It is an independent entity with juridical personality affiliates the President of the Republic aiming–basically- at achieving control on the state and the other public person funds and any others as stated in the Law, taking into consideration its efforts in assisting the Peoples Assembly in its controlling duties.

It consists of the Head of the Authority, his deputy, auditing departments' managers, supervisory technicians and others.

 

b-    KPMG (Hazim Hassan & Partners)

KPMG is one of the leading professional firms providing Audit, Tax and Advisory services in Egypt. It is also a partner with the KPMG International; one of the four biggest global network of professional auditing firms providing its financial services in 146 countries worldwide.

 

Eleventh: MIDB Message:

 MIDB message was approved by the Chairman & Managing Director dated 14/6/2011 to be distributed to all Bank employees in different sectors.