Tabreed Company’s Corporate Governance

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Role of the Board of Directors

Tabreed’s Board of Directors is an asset of high importance. This team’s main priority is to manage the company and make business decisions concerning resources, budget, and innovations. The members of Tabreed’s Board of Directors possess an extensive set of professional skills. Their commercial experience is also an important feature. Each member of the Board must provide performance that would be beneficial to the company and its stakeholders.

Tabreed’s Board of Directors is responsible for the management of the organizational processes and systems. The members of the Board are required to guarantee obedience to the laws, principles, and functional necessities (District Cooling, National Central Cooling Company – Tabreed, n.d.). The corporate governance report provides extensive evidence concerning the role of the Board of Directors. It states that the members of the Board of Directors make sure that Tabreed’s management crew delivers clear and adequate information.

The data is presented promptly. The latter is a critical factor necessary to make smart decisions that would have a positive impact on the company. Another point described in the report is the Board’s participation in the meetings. At these meetings, the Board of Directors reviews the present strategic complications, directions, company’s resources, accounting, and behavioral principles inherent in Tabreed.

According to the corporate governance report, the key function of the Board of Directors is to track Tabreed’s performance against the set objectives, and its compliance with the company’s strategy and vision. Every twelve months, the members of the Board should disclose to the company evaluation of their sovereignty, validation of discretion, specifics of any share transactions, and particulars of their substantial positions in public corporations or other organizations.

Structure of the Board of Directors

The Board of Directors is comprised of nine individuals. These corporate professionals are proficient in different areas of business and are in charge of Tabreed’s directions, strategical objectives, and management. The two most important positions are the Chairman and the Vice-Chairman. Waleed Al Mokarrab Al Muhairi is Tabreed’s Chairman. He is responsible for the company’s venture portfolio and its tactical, operational, and corporate growth events.

Real estate and infrastructure are Al Muhairi’s other fields of activity (Board of Directors, n.d.). He takes care of capital venture portfolios and is Chairman/ Vice Chairman in several other corporations. Al Muhairi’s skills and experience mostly refer to foreign service and business administration. Khalid Abdulla Al Qubaisi, Vice Chairman of Tabreed, is accountable for performance supervision, education and progress, worker career development, talent attainment, and Emiratization.

His skill set also includes the management of investments, health insurance, and real estate. Al Qubaisi’s primary areas of practice are economics, processes management, and financial analysis. Five other members of the Board of Directors are complementing the Chairman and Vice Chairman’s skills. They are mostly experts in economic development, risk management, and international economics. Another important area of practice is investments. Several of the members of the Board are specialists in mechanical engineering and technology.

Also, the Board of Directors is responsible for marketing and business strategies. All the members of the Board have been previously involved in administrative projects. The Board of Directors is characterized by a transformational leadership approach as its main objective is to bring the necessary change and inspire Tabreed’s employees. The Board of Directors effectively creates and communicates their vision to the workers.

BoD committees and probable risks

Four main committees are maintained by the Tabreed’s Board – audit, nomination and remuneration, finance, and projects committee. The main objective of the audit committee is to review the financial standings of the company constantly. This committee is required to organize and recommend changes that might be made to the current Tabreed’s commercial and supervisory systems. Another noteworthy factor is that the audit committee communicates with the peripheral auditors of the company.

This is done to keep close relationships with these auditors. Moreover, Tabreed’s audit committee is responsible for taking care of the functions that relate to internal control. The committee works on elaborating recommendations for probable improvements and assesses the eminence of the internal control. Another important function of the audit committee is to assess the systems for risk management and consider Tabreed’s accounting policies.

The main function of the nomination and remuneration committee is to help the Board to manage the compensations and general human resources as effectively as possible. This committee is required to validate the sovereignty of the autonomous members of the Board of Directors. Another important objective of the nomination and remuneration committee is to control the nomination to the Tabreed’s Board of Directors membership.

This particular committee is responsible for establishing, reviewing, and applying policies regarding the company’s human resources and procedures. Every year, the nomination and remuneration committee reviews and formulates the projected changes that should be made concerning employment, benefits, pensions, and early retirement. They also establish the compensations for the Board of Directors and Tabreed’s chairman. The nomination and remuneration committee recurrently reassesses the succession plans and makes sure that they are correct and ready to be implemented.

The finance committee is responsible for revising and ratifying all materials that have a momentous influence on the company’s financial state before submission for Board consent. More specifically, this committee is also in charge of developing long-range goals in accordance with the financial background of the company. These objectives might comprise, for instance, the formation of a working investment or cash reserve deposit and the conception of stock for maintaining or substituting the company’s equipment.

If Tabreed has a premeditated strategy, the finance committee will collaborate with the workers to recognize the economic allegations of the plan and will include them into a multi-year administrative budget that will fiscally sustain the application of the policies. The finance committee of the company has a well-defined leadership role in the area, making certain proper internal control measures for all financial transactions are enumerated in a special manual and obeyed by the workers. The committee also controls and brings up-to-date all the necessary bank account signatories.

The projects committee is responsible for assessing the potential benefits of the new projects that are proposed by the staff. This committee is thoroughly evaluating all of the aspects of the projects before presenting them to the Board. Their main objective is to elaborate projects and adopt ideas that would guarantee the positive growth of the company and its progressive development. Moreover, the projects committee is in charge of collecting relevant information and statistics concerning the company’s projects. This helps the company minimize the probability of flops.

Despite the harmonious work of the committees, it is safe to say that two committees could fit perfectly into Tabreed’s organizational structure. The first, one is the marketing committee. The marketing committee would be conducting research to find ways to outrun its competitors and provide high-quality services to Tabreed’s customers. The relationships that would be developed throughout the process of the research would help create a presence in social media. The second one is the evaluation committee. Its function would be to investigate Tabreed’s performance and estimate the efficiency of its actions, agendas, facilities, and resources for constant enhancement.

The company would be evaluated in regard to its assignment, objective, and goals. The evaluation committee would play a major role in helping to recognize Tabreed’s substantial strengths and in creating endorsements regarding the adherence to the admissibility requirements, values, and strategies of the Board of Directors. The incorporation of these two committees would not impose any risks on the company. On the contrary, the presence of these two committees would increase the efficiency of Tabreed and help it grow the customer base.

Structure of the committees

The committees are composed of corporate professionals. The current situation in the company hints at the fact that the members of the four committees are doing a great job trying to maintain the high-level performance and provide excellent service. All the committees consist of not more than four people. The members of the committees showed a high level of commitment to Tabreed and also attended all of the committee meetings.

The latter signifies the committee members’ professional attitude. Most importantly, the members of all four committees adopted Tabreed’s values, we’re able to recognize and manage the risks, and complied with the company’s policies. All of the members of the committees possess an adequate skill set and are independent. Their meetings and efforts have a great influence on the company and its success. Based on the mentioned aspects, a reasonable assumption can be made – the committees are composed of the right people and are extensively competent in their areas of practice.

BoD meetings

Throughout 2015, the Board of Directors had a total of seven meetings (January, February, April, May, July, October, November). Also, a significant event took place on 29 April 2015, when the Board of Directors passed a Circular Resolution. This allowed validating the accounts for the first quarter of the fiscal year that were not audited. All the members of the Board of Directors attended all seven meetings (except Khaled Abdullah Al Qubaisi who only attended six). Judging by this, one may state that the members of the Board of Directors met regularly during 2015. Throughout these meetings, the Directors were able to establish Tabreed policies which summarize the principles that the Board members want Tabreed to function within.

Another important point is the approval of a strategic plan for the company. At their meetings, the Board of Directors outlined a reporting instrument to record the feedback. Risk management and internal control environment were the key topics of all seven meetings. The Board of Directors also discussed the integrity of financial reporting. In general, the Board of Directors sought for ways to create a decidedly competent and skilled senior management crew within Tabreed.

They also dwelled on the management strategies, events of the highest priority, and the company’s performance. This allowed the Board of Directors cautiously evaluate the steps that could be taken to reach the goals and Tabreed’s performance against competitors. During each of the seven meetings, the Board of Directors provided a synopsis of the company’s current progress. The members of the Board also reviewed the obstacles on the way to Tabreed’s success and profitability (human resource management and financial investments).

Compensation reports

The compensation reports presented by the company describe the remuneration in a decent and relatively detailed way. First of all, the report states that each member of the Board of Directors is paid a fixed appearance fee for each Board summit and Board committee assembly that they go to. This is done to compensate the so-called “out of pocket” spendings used to successfully attend all the Board meetings. Moreover, the General Assembly Meeting approved the remuneration for the Board of Directors that is equal to 10% of the net profits. The total fees and remuneration were equal to almost $2 million.

The remuneration that is recommended for the next fiscal year is identical to the one paid in 2015. It is important to mention that Tabreed also presents the remuneration data for the executives, too. The management layer is responsible for the daily operations of the company’s business, premeditated scheduling, accounting, fiscal reporting, and risk supervision. Their reimbursements vary in the range from $115000,00 to $313000,00 (Tabreed Profile Page, n.d.). Despite the information concerning the remunerations, this data still lacks specifics concerning the spendings on variable compensation.

The companies should provide reports containing the data on Directors’ and Executives’ compensation. One of the reasons may be that the companies that provide such information are much more transparent and open to their customers. This might be beneficial in terms of creating a bond with clientele and gaining their trust. Nonetheless, this practice should not be required to be included in the company policy. Even though it is an important means of reaching out to the customers, detailed financial information should not be publicly available on no occasion. This assumption is based on the fact that such data may be involved in fraudulent activity or merely misinterpreted (Al-Amine, 2014).

Conflicts of interest

After reviewing the information concerning Tabreed, no conflicts of interest were recognized. The Board of Directors is not experiencing any complications to the affiliation, business, and family relations. It can be clearly stated that there are no possible conflicts of interest between the obligations to Tabreed of the individuals that work for the company and their interests or other responsibilities. Moreover, it has been found that no Director has any motivation to promote the company or its products on illegal terms.

The Board of Directors does not have any present or possible conflicts of interest between any of its obligations to the customers and their interests or other obligations. In compliance with the United Arab Emirates’ law, each Director is legally and morally obliged to act fairly and in good faith with an understanding of the best interests of the customer, irrespective of any other managerial positions he may hold.

All of the executives and directors managing Tabreed have a good reputation and prove to be loyal to the company’s principles. No bad intentions or unlawful activities have been spotted. Similarly, no conflicts of interest have been recognized. Therefore, it is reasonable to assume that even if the conflicts of interest exist, the disclosure of this information should not happen under any circumstances (Moustafa, 2013).

Company ownership

The report provides detailed information concerning company ownership. It states that Tabreed is working with shareholders, suppliers, and government. Some of the stakeholders are mentioned in the report. Tabreed as well disclosed the data regarding the share prices. The information describes market indexes and sector indexes. According to the report, the UAE’s ownership percentage as of December 2015 is 67.5% (Reports and Presentations, n.d.).

The report also displays the shareholder ownership percentages that relate to the individuals, companies, government, banks, and other institutions. Tabreed presents the shareholders that own more than 5% of the share capital – General Investments FZE and Mubadala Development Company. Moreover, the company reveals the data concerning the distribution of ownership among the shareholders. The report also presents to the readers the financial results of the first quarter of 2015 and describes the main driving factors of Tabreed’s success.

It is also known that the company’s stakeholders accepted the Board of Director’s proposal to buy 28% of the fixed exchangeable bonds held by Mubadala. The recommendation for Tabreed would be to keep the amount of information presented in the report across all of their reports. The data is relevant and useful. It is rather easy to estimate the company’s performance and evaluate Tabreed’s business efficiency.

Ethical issues and CSR

Tabreed reports about business ethics issues and corporate social responsibility. The report provides an extensive description of their corporate policies and explains the backgrounds of each of the guidelines. Tabreed emphasizes the importance of their main corporate values – employees, community, customers, environment, and shareholders. Consequently, the company’s framework takes into consideration people, the environment, and the community (CSR, n.d.). Tabreed strives to constantly develop, serve the environment, and play an active role in the community by being a good corporate citizen.

Also, Tabreed trustfully relies on the company’s corporate governance. The notion of corporate governance, in the case of this company, includes a strict code of conduct, grievance policy, and whistleblower policy. The company believes that a strong corporate governance philosophy provides the essential core checks while guaranteeing transparency and liability for Tabreed’s shareholders, especially their staff. The main objective of the company’s CSR is to uphold Tabreed’s integral values.

Their corporate ethics reinforce the way Tabreed runs the business daily and how they cooperate with all their shareholders. These values are dependent on the company’s clients, stockholders, community, environment, and workers. Every month, the employees nominate their colleagues who represent Tabreed’s values and behavior themselves in a way that reinforces the company’s corporate values.

In addition to this, Tabreed managed to improve the work-life balance in the company. The management of the company reviewed the feedback they got from Tabreed’s employees and presented some novel initiatives (including flexible shifts and the increase in the number of optional activities) that eventually were implemented to enhance employee engagement in the company’s activities.

Narrative reporting on risk management

The first and foremost risk that the company is exposed to is competition. Tabreed’s administration is aware of the rivalry but is in a rather comfortable position for the reason that the company’s middle-term development is covered by signed client agreements. To surpass this, Tabreed’s administration supposes that a considerable percentage of incomes would come from the established extra build-out potential of the signed contracts (Hughes, Rezazadeh, & Chaudhry, 2013).

Accordingly, the company’s management is certain of the fact that the growth in resources that will happen during the next five years (and hence the incomes out of those resources for the subsequent two decades) is not susceptible to the pressure that comes from their competitors. More significantly, this rivalry will not harmfully distress cash flows under the current agreements, and undoubtedly would not disturb the present extremely gainful business organization.

Tabreed’s management accepts as true that the key risk of entering into the local cooling market is the loss of the significant portion of the company’s initial assets and long-term funding necessities for the development of the local cooling ventures which may become a serious obstacle for Tabreed. Even considering the latter, the company’s administration believes that the market is large enough to put up numerous companies. The recommendation for Tabreed would be to follow a traditional technique and track the improvements using a Scheme Initiation system to evade the majority of the possible risks.

The system should be introduced by the marketing committee and approved by the Board of Directors. This would result in the creation of a corporate development unit. Then, the form would be managed by the business, projects, process and maintenance, and the investment branches. During this time, Tabreed would continuously negotiate with the customer. If the negotiations are successful, a bond is signed, and all the subdivision sign-offs have been attained, the corporate development unit is converted into a corporate venture unit with the proper capital budget and the execution of the project begins.

Overall assessment

Tabreed can be characterized as a company with high standards and extensive corporate social responsibility. It is important to realize that the company’s business approach is broadly relying on the company’s values and Tabreed customers’ contracts. The company’s reports are rather detailed and provide the necessary information concerning Tabreed’s financial state of affairs. The data regarding the Board of Directors is also present.

Overall, the reports genuinely cover the fiscal implications and dwell on the company’s shareholders. On a bigger scale, the reports represent a comprehensive review of Tabreed’s financial background. Judging by the facts presented in the reports, the company is on the rise and experiences robust growth. Nonetheless, it is critical to remember that Tabreed mostly relies on its customers’ contracts. Owing to this aspect of the corporation’s business approach, the company’s Board of Directors and Tabreed’s executives should look for a strategy that would guarantee stable incomes in the times of aggressive local and countrywide rivalry.

Board meetings should accentuate the importance of research and growth. It is recommended to conduct the Board meetings at least nine times per annum. The reasons behind this are the currently unstable market, shifting more toward globalization, and the need for strategies that would comply with this kind of market. The present review expresses the opinion that the company’s corporate governance practice is decent and Tabreed should adhere to the current business strategy.

References

Al-Amine, M. (2014). Islamic finance development and growth. Global Sukūk and Islamic Securitization Market, 32(11), 9-55. Web.

Board of Directors. (n.d.). Web.

CSR. (n.d.). Web.

District Cooling, National Central Cooling Company – Tabreed. (n.d.). Web.

Hughes, B., Rezazadeh, F., & Chaudhry, H. (2013). Economic viability of incorporating multi-effect distillation with district cooling systems in the United Arab Emirates. Sustainable Cities and Society, 7(37), 37-43. Web.

Moustafa, M. A. (2013). The effect of the corporatization of Dubai financial market on its efficiency: A preliminary study. SSRN Electronic Journal, 1(3), 22-29. Web.

Reports and Presentations. (n.d.). Web.

Tabreed Profile Page. (n.d.). Web.

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