Monday, June 3, 2013

The Board of Directors' Report

To help ensure the effectiveness of the internal regulations of management of public joint stock companies in Oman, the Capital Market Authority (“CMA”) issued Administrative Decision 4/2002 which requires the board of directors of public joint stock companies to produce a directors’ report for each financial year.

The directors’ report provides an opportunity for the shareholders to review inter alia the company’s performance as well as fiscal information for the past year and to better understand the direction the business will take in the future.

The report should encompass details of the company’s business structure and include the following information:

  • the names of the persons who were the directors of the company during the financial year;
  • the principal activities of the company in the course of the year;
  • details of the structure of the company’s capital;
  • details of those persons with a significant direct or indirect shareholding;
  • the amount that the board recommends should be paid as dividend;
  • donations made by the company in discharge of corporate social responsibility;
  • any material agreements to which the company became a party during the course of the year;
  • any recommendations for the amendment of the articles of association of the company;
  • likely future developments in the business of the company; and
  • research and development in the business of the company.
Furthermore, the report must cover an integral part of annual audited and interim financial statements which includes a statement that the company is in compliance with its internal regulations and control systems.

Additionally, the report should include the following:

Corporate governance statement

Broadly, the corporate governance statement relates to the code of corporate governance adopted by the company and the main features of the company’s internal control and risk management systems in relation to the financial reporting process.

Business review

A business review as an element of the directors’ report should be a comprehensive analysis of the past and present performance and discussion of the business trends and likely future performance.

Statement on disclosure to auditors

It is customary for the directors’ report to contain a statement confirming that, so far as each director is aware, the auditors are aware of all information that is relevant to their report on the company’s accounts.

Directors' statement of responsibility

The directors should also set out a statement of their relevant responsibilities for the accounts and reports. This directors’ statement of responsibility is commonly made in the directors’ report.

The board must approve the directors’ report and it must be signed on behalf of the board by the chairman and the secretary.