Families dominate Gulf corporate boards: new research

May 19th, 2008 - 7:34 pm ICT by admin  


Dubai, May 19 (IANS) Powerful families dominate corporate boards in the Gulf Cooperation Council (GCC) countries with up to 100 percent board ownership in some of the region’s public companies, says new research here. The research, conducted by the United Arab Emirates (UAE)-based merchant bank The National Investor (TNI) and Hawkamah, an institute of corporate governance, found that, on an average, 25-75 percent of companies researched have at least two board members from the same family, including 76 percent of Qatari companies and only 39 percent of Dubai-listed companies.

The GCC comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

According to the research, a report of which was released here Monday, individual power in the region was diluted, with power held among a small pool of royal and business families.

“The top 15 families in Qatar control more than 50 percent of public company boards. Some families own up to 100 percent of a board, this is particularly prevalent in Kuwait,” the report stated.

Unexpectedly, it said, prominent ruling families were largely absent from listed companies, except in Qatar where the ruling family presides over 76 percent of all public company boards.

“Families with the most directors on company boards are the most economically influent,” the report stated.

On gender representation, it said female representation was generally low in the GCC, but was not as low as expected and, in places, higher than European countries.

“The percentage of women on boards in Kuwait is 2.7 and 2.3 in Oman, compared to 2.0 in Italy and 3 in Spain. The lowest female representation was in Saudi,” the report said.

As for board sizes, the research found that Saudi companies have the biggest boards with a median of nine members, while Kuwaiti companies have the smallest boards with a median of six members.

“Year on year average board sizes in the UAE have decreased… The five largest companies in each market have board sizes significantly above their market average, but correlation between company size and board size is not linear,” it stated.

According to the report, “there is pleasingly little cross-representation, 80-90 percent of directors in the GCC sit on one board only”.

“Bahrain has the best single-board Director statistics, Oman and Qatar have most multi-board directors,” it stated.

“We assume that company directors are economically powerful, particularly in this region,” said Amer Halawi, head of research at TNI and author of the report.

“Furthermore, we believe that families in the Gulf have been at the core of political and economic influence. The purpose of the research was to understand the mechanics of such power and of family and possibly female influence.”

The research analyzed the boards of 582 companies in the GCC, covering 4,254 seats.

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