Home  /  The Group  /  Corporate Governance Guidelines  /   Board Charter
Send this page  Print Text: T | T

Board Charter

 

Appointment of the Group Chairman

The Board of BLOM BANK sal may appoint, after consultation with the Boards of Directors of each entity within the Group, a Chairman for the Group. The Group Chairman has, among others, the following responsibilities:

  • Review the financial results of entities within the Group
  • Evaluate the performance of entities within the Group and regularly communicate remarks and suggestions to BLOM BANK’s Board of Directors
  • Suggest the remuneration of General Managers, and the remuneration of the Group Secretary General
  • Represent BLOM BANK in the General Assemblies of entities within the Group.

The Group Chairman’s findings on the above should be reported to the Board of BLOM BANK on a periodical basis.

 

Role of the Board

The Board shall bear overall accountability for the performance of the Bank. The Board of Directors’ primary responsibility is to provide effective governance over the Bank’s affairs for the benefit of its shareholders, and to balance the interests of its stakeholders, including its customers, employees, suppliers, and local communities.
The Board is responsible for achieving the Bank’s aims, strategy and policy, and results. The Board is accountable to the general assembly of shareholders. In discharging its role, the Board of directors shall be guided by the interests of the Bank, taking into consideration the interests of the Bank's stakeholders.

The Board of Directors is responsible for complying with all relevant legislation and regulations, for managing the risks associated with the Bank’s activities, and for the Bank’s finances.

The Board is ultimately responsible for the system of internal risk control at the Bank. The Board shall report related developments to and shall discuss the internal risk management and control systems with its audit committee.

 

Structure and Composition of the Board of Directors

Structure of the Board

The Board shall be structured in such a way as to ensure that the interests of shareholders are represented fairly and objectively. The number of Board members should be in the range of three to twelve according to the Bank’s Statutes as well as the CC, however, as a matter of principle, the Board believes that the minimum should not fall below six. The Board elects a Chairman from amongst its members. The Board may also appoint honorary directors. Honorary directors are invited to Board meetings, but cannot vote on issues presented to the Board.

 

Composition of the Board

Board members are appointed by shareholders at the ordinary annual general meeting. The majority of the Board members should be independent and/or non-executive officers of the Bank. The majority of the members of the Board of Directors must be Lebanese nationals unless provided otherwise by special legislation.

Candidates for Board directorship are suggested by the Nomination and Remuneration Committee and recommended to the annual general assembly to act upon.
 

 

Qualification of Directors

Adequate Collective Knowledge

The Board shall have adequate collective knowledge of each of the types of material financial activities the Bank intends to pursue. In addition, the Board shall have sufficient knowledge and expertise to enable effective governance and oversight.For the case of Directors who are not engaged in management functions and who may not have detailed knowledge of banking, finance, risk management, regulatory compliance, information and communication technology, or other related topics, the Board shall propose programs of ongoing education for Board members and take the necessary steps to ensure that such knowledge is available to the Board, in order to enable them to fulfill their responsibilities.

Minimum Number of Shares

To be eligible for directorship, a shareholder must own at least five hundred shares of the Bank’s capital.


Disqualifications

A shareholder is disqualified for directorship if within the last ten years he/she was found guilty in Lebanon or abroad, of committing or attempting to commit the offences of forgery, theft, fraud or an offence incurring the penalties of fraud, embezzlement or for issuing uncovered cheques or an offence against the financial interests of the Lebanese state or the offence of receiving goods acquired through the above-mentioned illegal means. These disqualifications apply to individual persons as well as to representatives of corporate entities sitting on the Board.

A shareholder is disqualified for directorship if within the last ten years he/she was found guilty in Lebanon or abroad, of committing or attempting to commit the offences of forgery, theft, fraud or an offence incurring the penalties of fraud, embezzlement or for issuing uncovered cheques or an offence against the financial interests of the Lebanese state or the offence of receiving goods acquired through the above-mentioned illegal means. These disqualifications apply to individual persons as well as to representatives of corporate entities sitting on the Board.

 

Independence of Directors

Non-executive Directors

A board member shall qualify as non-executive if he has no administrative and/or executive function within the Bank and/or any of the Bank’s branches or subsidiaries in Lebanon and abroad, and does not present advisory services for the “senior executive management”, whether currently, or during the preceding two years.

A foreign subsidiaries board member is not considered as an executive member unless the laws in practice in the foreign country stipulate otherwise.
A board member shall qualify as non-executive if he has no administrative and/or executive function within the Bank and/or any of the Bank’s branches or subsidiaries in Lebanon and abroad, and does not present advisory services for the “senior executive management”, whether currently, or during the preceding two years. A foreign subsidiaries board member is not considered as an executive member unless the laws in practice in the foreign country stipulate otherwise.

Independence  Standards

        A Director shall qualify as independent for purposes of service on the Board of the Bank and its committees if the Board has determined that the Director meets the following criteria:

    • Is a non-executive Director
    • Is not a major shareholder, i.e., does not hold directly or indirectly more than 5% of the Bank’s shares or their voting rights, whichever is greater.
    • Has not maintained any business relationship during the preceding two years with any of the top executive management or with any major shareholder.
    • Is not a relative, up to the fourth degree, with any major shareholder.
    • Is not one of the Bank’s borrowers.

Management of Conflict of Interest

A director is prohibited from having an interest with any group or entity with intention to affect the price or performance of any instrument issued by the Bank and publicly traded on Stock Exchanges.

A director may not hold the office of director in another company having the same objects or carrying on activity in the same field of business, without a special authorization of the general assembly which is to be renewed every year.

A person may not hold the office of director, at one and the same time, in more than six companies whose registered office is in Lebanon. This number drops to two if the director is more than seventy years old.

 

Director Tenure

Normal Term

Directors may be elected to the Board for a maximum of three years.
Retirement Age
A Director cannot be elected or re-elected to the Board if he/she has reached the age of eighty years.

 

Re-election of Directors

Directors may be re-elected at annual ordinary general meetings.

 

Resignation of Directors

A director may resign at any time, and his/her resignation is effective when notice is given to the Board or to the Chairman regardless of its acceptance. However, a director should take into consideration the interests of the Bank; resigning at a time when the vacating place cannot be filled may be wrongful. Executive members resigning from both the Board and their position within the Bank must maintain their executive management responsibilities during their legal or contractual notice period unless released from doing so by the Board.

 

Dismissal of Directors

Shareholders have the power, through the general assembly, to remove directors before expiration of their period of office without giving reason for the decision or paying compensation or damages.

 

Chairman of the Board

The Chairman promotes a constructive relationship between the Board and the Bank executive management, and between Directors.

The Chairman ensures that both Directors and the Bank’s shareholders receive adequate and timely information.
The Chairman ensures high standards of corporate governance by the Bank.

Independence of the Chairman
In addition to meeting the independence standards, the Chairman of the Board may not hold a similar position in more than four companies whose registered office is in Lebanon with the condition that general managers are appointed by the Chairman in at least two of those companies.

 

Director Remuneration

Directors are entitled to compensation in the form of a fixed annual amount and/or a nominal honorarium per meeting. It is the responsibility of shareholders at the ordinary general meeting to allocate and decide on the distribution of Director Compensation.

The guidelines for assessing Board member remuneration and benefits shall be developed and applied by the Nomination and Remuneration Committee. Independent and non-executive Directors serving on Board Committees are remunerated for their participation and contribution.

Board Member remuneration shall become effective upon approval by the ordinary general assembly. The power to determine and approve the remuneration of the Board of Directors should not be delegated to the Board or any corporate body other than the shareholders’ assembly.

Executive Directors may receive, in addition to the above, compensation for their managerial positions. This compensation is recommended by the Board and approved by the annual general assembly.

 

Back to top

 

Directors and Board Fundamental Duties, Functions and Practices

Fiduciary Duties of Board Members

The Bank’s Board members owe the Bank and its shareholders the fiduciary duties of care, loyalty, and the duty to comply with the corporate authority. In the discharge of their fiduciary duties, Board members must at all-time act in good faith, with candor, avoiding all potential or actual conflicts of interest, and in the best interests of the Bank and in compliance with the Bank’s articles of incorporation and bylaws, and all applicable laws, including the Code of Commerce and this code. These obligations include the following specific duties: 

 

The Duty of Care

  • In faithfully discharging his or her duties, the obligated party must act in good faith and exercise the same care and diligence which the ordinary, prudent person would exercise when in the same position, under similar circumstances, and reasonably acting in the best interests of the Bank.
  • A Board member must take reasonable steps to be fully aware of all relevant issues, and to make informed and independent decisions when voting on company matters. In addition to the obligation to be informed on the Bank’s decisions and matters, the duty of care also requires Board members to take reasonable steps to monitor the Bank’s management and finances.
  • Every newly elected Board member shall upon his/her election become familiar with the Bank structure, management, and all other information enabling the said Board member to assume his/her responsibility.

 

The Duty of Loyalty

Board members owe a duty of loyalty to the Bank and its shareholders. This fiduciary duty requires Board members to subordinate their personal interests to the interests of the Bank and its shareholders and at all times act in good faith.

In addition to complying with the guidelines concerning related party transactions, to fully discharge this duty the obligated parties must refrain from any:

  • Self-dealing where an obligated party has a financial interest in a company action which constitutes a conflict of interest
  • Activities which compete with the financial interests of the Bank, including engaging in a competing business; however this section does not prohibit an obligated party from owning less than 10% of a publicly traded company’s shares
  • Apparent, potential, and actual conflicts of interests. In the instance of such a conflict of interest involving a director, the affected director must fully disclose the conflict and refrain from voting on or being present when any matters related to the conflict are brought to a Board vote.
  • Action which results in a preferential personal loan to another obligated party when similar loans and loan terms are not offered to the general public; and
  • Action which constitutes insider trading or otherwise improperly disclosing confidential information.

 

The Duty to Comply with the Corporate Authority

All obligated parties must act within the scope of the authority entrusted to them under the Bank’s articles of incorporation, duly enacted Board directives, shareholder resolutions, and applicable laws. Directors acting outside of the scope of their authority are absolutely liable for losses suffered by the Bank as a result of those unauthorized acts.

 

 

Board Meetings

Directors are expected to attend Board meetings and meetings of committees and subcommittees on which they serve, and to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities.

Information and materials that are important to the Board’s understanding of the business to be conducted at a Board or committee meeting shall be distributed to the Directors at least one week prior to the meeting, and within 48 hours in exceptional cases, in order to provide ample time for review beforehand. The Board of Directors may be promptly convened in some urgent cases when required. The Chairman shall establish the agenda for each Board meeting. Each Board member is free to suggest items for inclusion on the agenda of the next meeting or to raise subjects that are not on the agenda for that meeting for discussion. However, only items on the agenda can be voted upon to be Board resolutions.
 

Invitation to Meeting

Board meetings are called by the Chairman/General Manager or by two Directors.

 

Meeting Frequency

The Board of directors shall meet as frequently as necessary for the discharge of its governance obligations and to ensure the good functioning of the Bank, noting that the Board shall meet at least once every three months, and at least two of the meetings shall be held in Lebanon.

 

Quorum

Half of the number of directors constituting the Board who are present or represented shall constitute a quorum.

 

Voting

Each director has a single vote for himself. Directors may act by proxy provided that the proxy holder is a director. Further, a director may not represent more than one other director.

An absolute majority is needed to carry out resolutions. In the case where Directors are equally divided upon an issue, the Chairman is granted a casting vote.

 

Minutes of Meeting

Minutes of Board meetings are recorded, validated and signed by the Chairman of the meeting and one voting member, and safeguarded in a separate register at the Bank’s registered office. 

Board Secretariat

The Board shall have a secretary in charge of registering and coordinating all Board meetings’ minutes, records, books, and reports submitted by and to the Board. The Secretary shall also be in charge of coordinating between the various Board members as well as between the Board and the other Bank constituencies including shareholders, management, and employees.

 

 

Board Functions

Shareholder Representation

The Board shall act within the scope of the normal conduct of the business, convene the general assemblies, prepare the agenda of the meetings and carry out the decisions of the general assembly.

 

Oversight Functions

The Board shall ensure the validity and legality of amendments to the Statutes and supervise the Chairman, the General Manager, and the Managing Director in the course of their duties.

 

Annual Strategic Review

The Board shall review the Bank’s long-term strategic plans and the principal issues that it expects the Bank may face in the future during at least one Board meeting each year.

The Board shall understand the Bank’s risk profile; approve the Bank’s strategy and the Bank’s risk management policy.

 

Financial Reporting

The Board shall prepare at the end of each financial year the inventory of the Bank’s assets, the balance sheet and the profit and loss account of the Bank and submit the said documents fifteen days at least before the ordinary general meeting, prepare at the end of the first semester of each financial year a brief statement of the assets and liabilities of the Bank. In addition, the Board should publish the balance sheet and the list of directors and auditors in the Official Gazette, in a business publication and in a local newspaper within two months of the approval of the accounts by the ordinary general assembly.

 

Other Reporting

The Board shall submit a report on the issue of convertible bonds to the extraordinary general assembly and a special report on the proposed related-party transactions to the general assembly.

 

Legal Reserves

The Board is responsible to transfer ten percent of the annual net profits to legal reserves.

 

Appointment of Top Management

The Board is responsible to appoint the Chairman-General Manager, and if it so chooses also Vice-Chairmen/General Manager(s) and the Group Secretary General, and, upon the recommendation of the Chairman of the Board, the General Manager(s).

 

Director Access to Senior Management

Directors shall have full and free access to senior management of the Bank. Any meetings or contacts that a Director wishes to initiate may be arranged through the General Manager or Board Secretary. The Board may invite senior management of the Bank to attend Board meetings for specific items on the agenda. If the General Manager wishes to have additional personnel attendees, he/she will first obtain the consent of the Chairman/General Manager.

 

Access to Information

Board members have the right to access information, documents, and records pertaining to the Bank that would enable each member to inform themselves of issues to be decided upon at Board meetings insofar as it does not conflict with the Banking Secrecy Law.

 

Approval of Other Matters

The Board has additionally the authorities to:

  • Establish local and foreign branches, subsidiaries and affiliates for the Bank
  • Specify and oversee the Bank’s investment policy and procedures
  • Approve ownership, transfer, and disposal of financial assets
  • Establish Board and management committees and specify the agenda and authorities of each committee.

 

 

Board Practices

Related-Party Transactions

For the purpose of this code, a related party transaction is in general any transaction involving a related party according to articles 158 of the CC and 152 of the Code of Money and Credit.


Authorization of Related Party Transactions

Related party transactions may be allowed only if approved by the Board of Directors and by the General Assembly of Shareholders in compliance with the requirements of articles 158 of the CC and 152 of the Code of Money and Credit.

Every related-party transaction during any period should be reported by the Board to the general assembly of shareholders during the next general meeting. The report shall explain the transaction and the rationale for entering into such transaction with the relevant related party, as well as the relationship between the Bank and the concerned related party.

Investments

Investments Offered by the Bank

A Director, or family member of a Director, may participate in investment opportunities offered or sponsored by the Bank provided they are offered on substantially similar terms as those for comparable transactions with similarly situated non-affiliated persons. Directors and members of senior management investing in partnerships or other investment opportunities sponsored, or otherwise made available by the Bank should declare such investments to the Board. 

 

Investments Offered by a Third Party Entity

Directors and members of senior management may not invest in a third party entity when the investment opportunity is made available to him or her as a result of such individual’s status as a Director or member of senior management.

 

Indemnification

The Bank provides reasonable directors’ and officers’ liability insurance for Directors and shall indemnify the Directors to the fullest extent permitted by law and the Bank’s certificate of incorporation and by-laws.

The Bank provides reasonable directors’ and officers’ liability insurance for Directors and shall indemnify the Directors to the fullest extent permitted by law and the Bank’s certificate of incorporation and by-laws.

 

 

Board Committees

The standing committees of the Board are:

  • Board Audit Committee
  • Risk Management Committee
  • Consulting, Strategy and Corporate Governance Committee
  • Nomination and Remuneration Committee

Board Audit Committee

The Board Audit Committee has the mission to (1) monitor and assess the integrity of the Bank’s financial accounting and reporting as well as the adequacy of related processes and controls, (2) monitor the performance and assess the competence of External Auditors and the Internal Audit Department, and (3) monitor adequacy of processes and internal controls used to ensure legal and regulatory compliance, and compliance with the Bank’s by-laws and internal regulations.

 

Risk Management Committee

The Risk Management Committee has the mission to periodically (1) review and assess the Risk Management function of the Group, (2) review the adequacy of the Bank’s capital and its allocation within the Group, and (3) review risk limits and reports and make recommendations to the Board.

 

Consulting, Strategy, and Corporate Governance Committee

This Committee has the mission to (1) oversee development of the strategic plan, (2) monitor progress relative to the strategic plans and annual or quarterly objectives, (3) review effectiveness of the Group’s strategies, (4) approve and monitor large projects, (5) shape corporate governance policies and practices, including recommending to the Board the corporate governance guidelines applicable to the Bank and reviewing the Board’s goals, agenda, and work plan, (6) monitor compliance with these policies and guidelines, and (7) advise the Board on business matters and overall business development referred to it by the Chairman of the Board.

The strategic plan should cover up to a minimum three year period and include the Board’s thoughts on expanding and developing the various businesses, for example by geographic market or market segment within each region and whether such expansion should be organic or inorganic. Expected staffing requirements and capital allocation should also be specified within such plan.


Nomination and Remuneration Committee

The mission of the Committee is to provide assistance to the Board in (1) identifying individuals qualified for directorship and recommending candidates to the Board or shareholders, (2) identifying individuals qualified to sit on Board committees and recommending candidates to the Board, (3) overseeing the induction programs for Directors, (4) planning the succession of executive and non-executive directors as well as the General Manager, (5) drawing up and submitting to the Board the criteria for determining the remuneration of top management and ensure these criteria are properly applied, and (6) evaluating the performance of top management and Board members.

 

 

Select Group Entities
Delivery Channels
LebanonCyprusJordanFranceUAEUnited KingdomRomaniaSwitzerlandSyriaEgyptSaudi ArabiaQatar
List of Banks No. 14. Copyright 2013 BLOM BANK. All rights reserved.