EFG Hermes stands as a regional leader in the corporate governance realm, a position it has earned through its rigorous rules and procedures that the Group’s staff follows during their everyday operations. The Firm’s prudent management and corporate frameworks that have been at the heart of its success over the years will continue to play a central role as the Group evolves and cements itself as a leading financial services provider not just in the MENA region, but also across the entire FEM space.
The Firm’s Board of Directors is committed to providing EFG Hermes with the needed guidance and support acquired over decades of cumulative experience. This expertise has helped EFG Hermes grow sustainably while delivering value to all its stakeholders.
Since 2017, the Group has implemented a new Corporate Governance Framework that addresses new country-specific policies and works to blend EFG Hermes’ group-wide strategy with the more focused subsidiary development programs. The new framework provides the grounds for efficient decision-making across the entire organization and guarantees a high degree of accountability to ensure that all shareholders and clients have their investments handled in a responsible and professional manner. 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 and updated in 2020, stipulating the appointment of a majority of non-executive board members half of whom (with a minimum of two) should be independent for all regulated Egyptian subsidiaries. EFG Hermes is fully compliant with FRA regulations and EGX listing rules. Moreover, EFG Hermes Holding complies with the new FRA mandated regulations requiring all regulated companies in Egypt to have at least one female board member.
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 their contributions they can make to the Board and Management in addition to their ability to represent the interests of shareholders.
Due to restrictions imposed by the COVID-19 pandemic, 2020 saw numerous changes in function and structure when it came to governance procedures. All face-to-face interactions, including the Annual General Meeting (AGM), committee proceedings, and executive committee meetings were held virtually, making EFG Hermes the first EGX-listed company to conduct an AGM through virtual channels. We collaborated with an EGX-affiliated company to implement an e-voting system during the AGM, which was completed to great success. The year also saw increased levels of collaboration between divisions, particularly with at least 50% of staff across our footprint working from home, to ensure that the challenges posed by the pandemic did not impact business continuity when it came to overall governance matters.
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 international 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 declare their outside business interest and board directorships annually. They also abstain from participating in any discussions and decisions that might affect their own personal interests or those of a loosely related person or company. Business relationships between the Firm and any of its board members must be approved by the Firm’s AGM.
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 Committee, a subcommittee of the Board.
Corporate Governance Committees
The Audit Committee is comprised of four members, all of whom are non-executive. The committee meets at least once per quarter or as required. In 2020, the meetings were held virtually. 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 four members, all of whom are non-executive. The committee meets at least once per quarter or as required. In 2020, the meetings were held virtually. The committee overseas risk, legal, and operational issues across the Group, assisting the Board in fulfilling its duties with regards to the oversight of (1) identification and management of risks; (2) adherence to risk management policies; and (3) compliance with risk-related regulatory requirements, advising the board on risk appetite and tolerance in accordance with 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 five 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) and to assist the Board in fulfilling its duties with regards to strategic human resources issues and the remuneration policies of EFGH. 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. In 2020, the meetings were held virtually.
Corporate Governance and Nomination Committee
The Corporate Governance and Nomination Committee is comprised of one executive and four non-executive board members. It assesses and 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.
The Executive Committee is appointed by EFG Hermes’ Board of Directors and is comprised of eight members, who are strategically selected to ensure all divisions are represented. Moreover, the Executive Committee is entrusted with the implementation of the policy decisions of the board and overseeing the Firm’s risk management structures and policies.
Its purview includes:
Developing the Firm’s strategic plans and goals for board approval while managing issues that emerge that are material to the business.
Approving transactions within its authority limit in relations to investments, acquisitions, and disposals in addition to considering and approving expansions into new geographies and product lines.
Reviewing the Group’s annual capital, revenue, and cost budgets while monitoring performance against financial objectives in addition to approving cost-cutting measures as needed
Overseeing the management of the Group’s current and future balance sheet in line with its business strategy and risk appetite.
Considering material joint ventures, strategic projects or investments and new businesses from a capital perspective while monitoring and managing capital and liquidity positions.
Aligning investment spending across the Group functions with its investment plan and strategic objectives and consider business commitments for Board approval.
Receiving and considering reports on operational matters material to the Group or have cross-divisional implications
Promoting the Group’s culture and values and monitoring overall employee morale and working environment.
Identifying ESG matters that affect the operations of EFG Hermes, monitoring ESG integration throughout the Firm and passing ESG resolutions while suggesting updates to the ESG policy for board approval.
The Executive Committee meets once a month to discuss and follow up on day-to-day operations of the Firm and address any pressing issues that may arise. In 2020, most meetings were held virtually.
EFG Hermes shares are listed on the Egyptian Exchange (EGX) and the London Stock Exchange (LSE) in the form of USD-denominated GDRs.
EFG Hermes is required by law to notify the Egyptian Stock Exchange (EGX) and the Financial Regulatory Authority (FRA) of shareholders whose holdings reach or exceed 5% of voting rights. Further notification is made once a multiple of the 5% is exceeded or reduced by a shareholder.
As of 31 December 2020, a total of 10,999 shareholders were listed in the Firm’s share register.
Executive Holdings and Management Transactions
As of 31 December 2020, the EFG Hermes Board of Directors held a total of 876,788 EFG Hermes shares, representing 0.11% of the total 768,618,223 shares of EFG Hermes.
Share Ownership Information
All information relating to EFG Hermes Securities held or transacted by members of the Board of Directors and other insiders are promptly disclosed and reported without fail in accordance with relevant local and international regulations.
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