MUSCAT: The Oman Investment Authority implemented the Code of Governance for state-owned companies which will enable the firms to issue guiding principles and policies pertaining to procurements, tenders, investment, risk management, workflow and information security, based on the specialties/tasks assigned to the OIA under Royal Decree No. 57/2021.

The significance of applying governance to OIA firms is to bolster their financial and operational performance, raise their productivity and establish a comprehensive system of decision making.

What is the Code of Governance?

The Code of Governance seeks to regulate the tasks of OIA entities, improve their performance and align their plans with sustainable development plans in a manner that achieves balance between economic and strategic goals for which the entities have been established.

The Code of Governance encourages efficient use of financial and human resources and enhances the principle of accountability.

The Code states that the OIA shall have clear-cut long-term strategies on the ownership of its affiliate entities and that the OIA sticks to the application of governance practices on the basis of transparency, accountability, responsibility and competence.

The OIA determines the penalties to be charged against any cases of breach of the Code of Governance if those cases are not cited under any other enforced law. The OIA may agree with other shareholders to determine a specific timeframe or economic standards that may, if concluded, enable the OIA to sell its shares.

The Code also requires all OIA entities to clearly outline the purpose of their existence. In case they deviate from that purpose or fail to honour their obligations, the OIA will set up an evaluation scheme to determine the next course of action.

To ensure equitable treatment of shareholders other than the OIA or its affiliate entities, the Code of Governance states that the general assembly or board of directors at each company shall undertake all measures to provide assurances for equal treatment for other shareholders. The entity’s constitutional documents, policies and procedures must reflect the rights of those shareholders and how they are safeguarded. This includes enabling shareholders to access information that allows them to practice their rights and provide frameworks to allow unconditional expression of opinions.

If any entity wishes to underwrite part of their shares for initial public offering (IPO) or to transfer some of them to the private sector, they shall amend their foundation documents to reflect and protect shareholders’ rights on a regular basis.

Firms must prepare annual report 

The Code dictates that all OIA companies must prepare an annual report that indicates their adherence to the Code, guiding principles and policies.

The entity shall also adopt a clear policy on distribution of dividends, according to the Code, which makes it clear that the entity receives the same treatment accorded to all private entities in the event of any conflict with creditors, suppliers or other parties.

The Code stipulates that each board comprises a variety of skilled members and expertise necessary for the effective supervision of the entity’s management. The Code sets out that the officials of the board shall not have government officials ranking as high as ‘minister’ or ‘undersecretary’ and that the independent members of the board shall not be less than one third of the total.

These members shall serve in their roles for a maximum of two board terms provided a single term spans three years, according to the Code, which states that a member shall not be reelected for another term if his/her performance in the previous terms is assessed as ‘poor’ or unsatisfactory.