Role of the Board
Structure and composition
Appointment, retirement and re-election
Induction and professional development
Matters reserved to the Board
Conflicts of interest
- Board Members' Profiles, Committee Membership and Remuneration
- Governance at ADCB
- Documentary Framework
- Public Outreach
- Related Links
Governance at ADCB
This website provides an in depth analysis of the Bank’s standard governance practices. Recent developments in corporate governance, including, amongst other things, the Board’s activities, meetings, performance evaluation, remuneration and interests, management remuneration and incentives, internal controls and audit arrangements, and Islamic banking, in each case in the most recent financial year, can be found in the Bank’s latest annual report.
Click here to view the Bank's latest annual report.
Directors’ Remuneration Policy
Dividend payments are part of the Bank’s commitment to delivering value to shareholders.
The Bank has not adopted a formal dividend policy, but may do so in future years. In determining the Bank’s dividend payout for a particular year, the Board of Directors considers a variety of factors including the Bank’s outlook for earnings growth, liquidity requirements, capital expenditure requirements, cash flow from operations, acquisition and business expansion strategy, debt position, capital position and capital adequacy rules. The Bank seeks to adopt a progressive approach to dividend payments, subject to the foregoing considerations and also subject to prescribed statutory limitations regarding the amount available for distribution. In particular, as required by UAE laws, the Bank’s articles of association (Article 82) specify that the Bank’s net annual profits shall, after deduction of general expenses and other costs, be distributed as follows: (a) 10% will be deducted and allocated to a statutory reserve account (b) a further percentage shall be deducted from the profits and allocated to any established voluntary reserve account (c) not less than 5% shall be distributed to shareholders (d) a maximum of 10% of net profit shall be allocated as remuneration for the Board, but only after approval of the General Assembly, and (e) the remaining profits shall be retained or distributed to shareholders as the Board shall recommend.
Generally, dividends shall be paid out in cash or bonus shares, on an annual basis, shortly after the Bank’s annual general assembly.
Certain day-to-day activities of the Bank have been delegated by the Board to the Bank’s Management Executive Committee (the “MEC”). The MEC meets weekly and reports to the Board.
The MEC is composed of key members of management, whose appointments to the MEC are approved by the Nomination, Compensation & HR Committee. The responsibilities of the MEC include:
- establishing the organization structure for management and management committees
- implementing strategy set by the Board and recommending strategy and policy decisions
- recommending the Bank’s annual budget and funding plan
- approving key performance indicators for each business line
- approving expenditures, up to certain delegated limits set by the Board
- approving establishment of branches, agencies, joint ventures and subsidiaries and appointments of directors to subsidiaries
- approving debt-funding issues, hedging and investments, up to certain delegated limits set by the Board
- approving recovery settlements and write-offs, up to delegated limits set by the Board
- approving new products
- approving Bank policies, excluding those falling within the Board’s responsibility
Other management committees included the Capital Expenditure Committee, the Assets & Liabilities Committee, the Management Risk & Credit Committee, the Senior Management Committee and the Recoveries Committee. Separate working groups are established by the MEC on an “as required” basis. All management committees report to the MEC. The MEC has full authority to review and reorganize the composition and terms of reference of the management committees and other working groups.
Management Remuneration and Incentives
The Directors set the strategic direction of the Bank (with due consideration given to risk tolerance, shareholder expectations, business development opportunities and other macro-economic factors) which senior management then uses to design the Bank’s annual strategic plan and prepare the annual budget for Board approval. Thereafter, quarterly updates are provided by senior management to the Board of Directors to monitor progress and permit any necessary modifications or adjustments in strategic direction.
Code, standards and communications
ADCB Islamic Banking, the Islamic Banking window of ADCB, was launched in September 2008, and is a separate business unit of the Bank, comprised of the Bank’s Islamic banking department and Abu Dhabi Commercial Islamic Finance PSC, a wholly-owned subsidiary of the Bank.
ADCB Islamic Banking is part of the Bank’s governance framework and supervision, and reports to the Bank’s senior management. In addition, the Shari’ah governance is carried out under the guidance of a three-member Shari’ah Supervisory Board, which operates according to the IFSB standards and guidelines as laid by AAOIFI.
The Bank maintains a separate set of general ledger and accounts to ensure that the books of accounts for the Islamic Business are accounted for separately as per AAOIFI standards. The Bank has appointed a dedicated Islamic accountant and routes all Islamic transactions through a dedicated Islamic core banking system. The accounts for the Islamic Business are reported internally, and the accounts of Abu Dhabi Commercial Islamic Finance PSC are approved by its board of directors. The Bank’s consolidated accounts include the results of ADCB Islamic Banking.
As an Islamic financial institution, the processes and accounts of ADCB Islamic Banking are subject to internal and external audits, as well as Shari’ah audits through its Shari’ah coordinator, and the results are monitored internally and by the Shari’ah Supervisory Board.
The Shari’ah Supervisory Board meets quarterly with ADCB Islamic Banking to review the business progress, oversee the day to day operations and ensure Shari’ah compliance. The Shari’ah Supervisory Board is also updated regularly with the strategy, policies and procedures of the Bank. To facilitate the process, the Bank liaises with Dar Al Sharia, a Shari’ah consultancy firm that manages the role of the Shari’ah coordinator.
Fatawas (edicts) are issued by the Shari’ah Supervisory Board for all products to certify compliance with the procedures of Shari’ah. This includes approving the product structure including the underlying Islamic contract, legal documentation, operational process flow and all associated product literature. The product Fatwa are issued by the Shari’ah Supervisory Board and are published on the Bank’s web site and displayed at the Bank’s branches – see www.adcbislamic.com.
Islamic liabilities are used to fund Islamic Assets and any excess is placed in Shari’ah compliant investments. A dedicated resource in Treasury manages the Islamic funding. Staff members undergo regular training for all products and process.
During 2012, the Board’s Nomination, Compensation & HR Committee considered the Bank’s succession planning process for directors and senior management to ensure transparency and satisfactory alignment with Bank strategy.
The succession plan is reviewed annually through discussions between the Board, the CEO and senior management to identify key jobs across the organization, which if not filled in a timely fashion would put the organization at risk, and to identify a caretaker and a minimum of one successor for each key job.