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7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 1/30
Monday 7 January 2013 1Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 2/30
Monday 7 January 2013 2Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 3/30
OECD: Set of relationships between a company’s management,its board, its shareholders, and other stakeholders.
World Bank, Wolfensohn: The purpose behind corporategovernance is fairness, transparency, and accountability.
US/ UK culture: Maximization of shareholders value.
EU culture: Protecting interests of other stakeholders.
Others: A combination of principles and governing practices thatfacilitate high quality services to stakeholders.
Monday 7 January 2013 3Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 4/30
Protect and servethe interests of all
stakeholders in anequitable manner.
Monday 7 January 2013 4Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 5/30
Major reason is separationbetween ownership and
management incorporations.
Monday 7 January 2013 5Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 6/30
Transparency
Justice
SustainabilityDisclosure
Accountability
Monday 7 January 2013 6Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 7/30
It is Shari’a originated and related.
The relationship with the partner client is of anentrepreneurship nature.
The bank takes business and market risks with the client .
The bank is entitled to a profit share.
No additional revenues in case of delay in payments.
Eliminate speculation and possible conflict.
Shari’a related boundaries and codes.
Monday 7 January 2013 7Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 8/30
Employees
ThirdParties
Business P ar tner s
Depositor s/ Inv estor s
Shar eholder s
Manager s
Monday 7 January 2013 8Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 9/30
Boardof
Directors
SeniorManagers
Shareholders
Depositors
Monday 7 January 2013 9Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 10/30Monday 7 January 2013 10Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 11/30
Specify strategic objectives.
Codes of conduct for seniormanagement.
Duties and responsibilities inthe organization structure.
Transparency and flow of information in and out.
Approve policies.
Monitor progress.
Approve Effective control system andRisk mitigation procedures.
Monday 7 January 2013 11Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 12/30Monday 7 January 2013 12Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 13/30
Establish the
internalcontrol
systems for
risksmitigation.
Monday 7 January 2013 13Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 14/30Monday 7 January 2013 14Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 15/30
Vote on major changes in extraordinary general assembly meeting.
Vote on annual financial results.
Release current board of directors from responsibilities.
Elect board of directors.
Assign internal auditor.
Agree on distribution of dividends.
Have a representative member on the board of directors.
Monday 7 January 2013 15Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 16/30Monday 7 January 2013 16Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 17/30
Participate inthe decision
process.
Profit and Losssharing.
Representativemember on the
Board of directors.
Monday 7 January 2013 17Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 18/30
Internalcontrolsystems
7 Risks
Riskmanagement
tools.
Monday 7 January 2013 18Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 19/30Monday 7 January 2013 19Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 20/30
Recognize risks.
Assess risks.
Earlydetection of problems and
deviations.
Applycorrectivemeasures.
Remedialmanagement.
Policies andprocedures.
Monday 7 January 2013 20Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 21/30
Monday 7 January 2013 21Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 22/30
Credit risk.
Liquidity risk.
Operations risk.
Market risk.
Business risk.
Moral risk.
Shari’a non-compliance risk.
Monday 7 January 2013 22Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 23/30
Sound CreditPolicies
Policies toMeasure &
Monitor
MISPeriodicReviews
RemedialManagement
Monday 7 January 2013 23Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 24/30
Expand Client Base
Cash Flow management
Deposit Insurance
Remedial Management PlanFor Liquidity Shortage
Monday 7 January 2013 24Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 25/30
Breakdown of Control System
Failure of Technology
Erosion of reputation
Non Compliance With Regulations
Human Errors
Fraudulent acts
Monday 7 January 2013 25Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 26/30
Market Prices
Monday 7 January 2013 26Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 27/30
Analysis of Track Record
QualifiedManagement
ContingencyPlans
RemedialManagement
Diversification
Monday 7 January 2013 27Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 28/30
Analysis of the client’s payment track record.
Follow up on the client’s cash flow.
Checking on the character of the client.
Request a guarantor.
Charge delay payment penalty.
Suspend all financing .
Establishment of a credit bureau.
Public declarations.
Setting of external auditor to client.
Member on the board of the client’sorganization.
Monday 7 January 2013 28Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 29/30
Client introduces Shari’a
non compliant activity.
Shari’a non compliantcontracts by the bank.
Monday 7 January 2013 29Anwar Misbah Soubra
7/29/2019 Corporate Governance in Islamic Finance Institutions - By Anwar Soubra - iCompetences IFC2012
http://slidepdf.com/reader/full/corporate-governance-in-islamic-finance-institutions-by-anwar-soubra-icompetences 30/30
Legal Risk.
Tax Risk. Political Risk.
Sovereign Risk.