EFG Hermes stands as a regional leader in the corporate governance realm, a position it has earned through its rigorous rules and procedures that the Group’s staff follows during their everyday operations. The Firm’s prudent management and corporate governance frameworks have been at the heart of its success over the years will continue to play a central role as the Group evolves, and cements itself as a leading financial services provider not just in the MENA region but also across the entire Frontier Emerging Market space.

The Firm’s Board of Directors is committed to providing EFG Hermes with the needed guidance and support acquired over decades of cumulative experience. This expertise has helped EFG Hermes grow sustainably while delivering value to all its stakeholders.

Since 2017, the Group has implemented a new Corporate Governance Framework that addresses new country-specific policies and works to blend EFG Hermes’ group-wide strategy with the more focused subsidiary development programs. The new framework provides the grounds for efficient decision-making across the entire organization and guarantees a high degree of accountability to ensure that all shareholders and clients have their investments handled in a responsible and professional manner. The framework sets out the minimum standards expected Group-wide while complying with local laws or regulations for an even higher level of stringency.

Based on the mandate of this framework, the Board of Directors continues to comply with the Egyptian Financial Regulatory Authority’s (FRA) corporate governance regulations released in 2016, stipulating the appointment of a minimum of two independent board members for all regulated Egyptian subsidiaries. EFG Hermes is fully compliant with FRA regulations and EGX listing rules Moreover, EFG Hermes Holding complies with the new FRA mandated regulations requiring all regulated companies in Egypt to have at least one female board member.

Management and Control Structure

Board of Directors

EFG Hermes’ Board of Directors is responsible for providing the Firm with strategic leadership, financial soundness, governance, management supervision and control. The Board is comprised of 12 members, 11 of whom are non-executive.

Without exception, all EFG Hermes’ Directors possess a broad spectrum of experience and expertise, directly related to EFG Hermes’ expansive lines of business and divisions, with a strong emphasis on competence and integrity. Directors are selected based on the contributions they can make to the Board and Management in addition to their ability to represent the interests of shareholders.

The Board of Directors met 4 times throughout 2019.

The following principles govern the conduct of the Board of Directors and the Firm:

Compliance with Laws, Rules and Regulations

Adherence to the law is the fundamental principle on which the Firm’s ethical standards are built. All directors must respect and obey all applicable laws, rules and regulations. The board complies with the international best practices, rules and regulations of the Firm in addition to laws and regulations of the markets in which the Firm operates.

Conflicts of Interest

All members of the board abstain from participating in any discussions and decisions that might affect their own personal interests or those of a closely related person or company.

Safeguarding and Proper Use of Company Assets

All directors endeavor to protect the Firm’s assets and ensure their efficient use. All assets must be used for legitimate business purposes only.

Fair Dealing

Each director should deal fairly with the Firm’s clients, competitors, providers and employees. None should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice.

Code of Conduct

The Code of Conduct defines core values, principles and other requirements that all the Firm’s directors and employees are required to follow while conducting their regular daily duties.

Standards and Policies

The Firm’s standards and policies comply with Egyptian as well as international corporate governance guidelines.

Confidentiality

Directors and officers must ensure the confidentiality of information entrusted to them by the Firm or its clients, except when disclosure is authorized or legally mandated. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Firm or its clients if disclosed.

Corporate Opportunities

Directors are prohibited from taking personal advantage of potential opportunities that are revealed through corporate information, property or position without the consent of the board. Directors are obliged to advance the Firm’s legitimate interests when the opportunity presents itself.

Audit

Auditing forms an integral part of corporate governance at EFG Hermes. Both internal and external auditors play a key role in providing an independent assessment of our operations and internal controls. Furthermore, to ensure independence, Internal Audit has a direct reporting line to the Audit and Risk Committee, a subcommittee of the board.

Corporate Governance Committees

Audit Committee

The Audit Committee is comprised of 3 members*, all of whom are nonexecutive. The committee meets at least once per quarter or as required. In 2018 they met 4 times. The committee is responsible for oversight of financial statements and financial reporting, internal control and governance systems, compliance with laws and regulations, whistleblowing and fraud, the internal audit function and compliance with the Code of Conduct established by management and the board. The committee ensures free and open communication between the committee members, internal auditors, management and the external auditor once a year.

Risk Committee

The Risk Committee is comprised of 3 members*, all of whom are nonexecutive. The committee meets at least once per quarter or as required. In 2018 they met 4 times. The committee oversees compliance, risk, legal, and operational issues across the Group, advising the board on risk appetite and tolerance in accordance to its strategic objectives. It is responsible for advising the board on risks associated with strategic acquisitions or disposals and to review comprehensive reporting on Group Enterprise Risk Management, including reports on credit, investments, market, liquidity and operational risks, business continuity and regulatory compliance.

Remuneration and Compensation Committee

The Compensation Committee is comprised of 4 non-executive board members. The committee meets once a year to study compensation within the Group as a whole (and for senior management in particular). This not only safeguards shareholder interests, but also ensures that management’s interests are fully aligned with those of the Firm. The committee directly manages the allocations within the Management Incentive Scheme for Senior Management as approved by the General Assembly. The committee met 1 times in 2018.

Corporate Governance and Nomination Committee

The Corporate Governance and Nomination Committee is comprised of the Chairperson, one non-executive director and the Group CEO. It oversees the appointment of Board Members, the Group CEO and Group Executive Committee members. It is their responsibility to make sure appointments, which must be approved by the Annual General Assembly, align with the Group’s strategic directives and ensure the independence of directors in accordance with applicable laws, regulations and international best practices. It also conducts regular assessments of the structure, size and composition of key executive positions at the Group level along with reviewing the Group’s overall corporate governance framework. The committee meets on an as-needed basis.

Executive Committee

The Executive Committee is appointed by EFG Hermes’ Board of Directors and is comprised of eight members, who are strategically selected to ensure all divisions are represented. Moreover, the Executive Committee is entrusted with the implementation of the policy decisions of the board and overseeing the Firm’s risk management structures and policies.

Its purview includes:

1. Identifying matters required or appropriate for escalation to the Board.
2. Developing the Firm’s strategic plans and goals for board approval while managing issues that emerge that are material to the business.
3. Approving transactions within its authority limit in relations to investments, acquisitions, and disposals in addition to considering and approving expansions into new geographies and product lines.
4. Reviewing the Group’s annual capital, revenue and cost budgets while monitoring performance against financial objectives in addition to approving cost-cutting measures as needed.
5. Overseeing the management of the Group’s current and future balance sheet in line with its business strategy and risk appetite.
6. Considering material joint ventures, strategic projects or investments and new businesses from a capital perspective while monitoring and managing capital and liquidity positions.
7. Acting on all material and enterprise-wide risk and control matters.
8. Aligning investment spend across the Group functions with its investment plan and strategic objectives and consider business commitments for Board approval.
9. Assessing the strategic and financial merits, as well as the risk profile, of any proposal relating to strategic mergers and acquisitions or other transactional activity involving the Group.
10. Receiving and considering reports on operational matters material to the Group or have cross-divisional implications.
11. Reviewing issues related to executive succession planning and promotions to managing director levels across the Group.
12. Promoting the Group’s culture and values and monitoring overall employee morale and working environment.
13. Identifying ESG matters that affect the operations of EFG Hermes, monitoring ESG integration throughout the Firm and passing ESG resolutions while suggesting updates to the ESG policy for board approval.

The Executive Committee meets once a month to discuss and follow up on day to-day operations of the Firm and address any pressing issues that may arise.

Shareholder Information

Shareholders

EFG Hermes shares are listed on the Egyptian Exchange (EGX) and the London Stock Exchange (LSE) in the form of USD-denominated GDRs.

Significant Shareholders

EFG Hermes is required by law to notify the appropriate parties of shareholders whose holdings reach or exceed 5% of voting rights. Further notification is made once a multiple of the 5% is exceeded or reduced by a shareholder.

Shareholder Structure

As of 31 December 2019, a total of 10,387 shareholders were listed in the Firm’s share register.

Executive Holdings and Management Transactions

As of 31 December 2019, the EFG Hermes Board of Directors held a total of 571,788 EFG Hermes shares, representing 0.07% of the total 768,618,223 shares of EFG Hermes.

Share Ownership Information

All information relating to EFG Hermes Securities held or transacted by members of the Board of Directors and other insiders are promptly disclosed and reported without fail in accordance with relevant local and international regulations.