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DIFC Regulator Reviews Financial Services Firms

by Lorys Charalambous, Lowtax.net, Cyprus
16 September, 2014

The Dubai Financial Services Authority (DFSA) recently concluded a review of the corporate governance rules in place for those companies offering financial services from the Dubai International Financial Center (DIFC) free zone.

The review focused on twelve themes said to be fundamental to good corporate governance, including management structures and practices, systems and controls, and internal audit and management information flows. The DFSA said it is the first time the Authority has comprehensively reviewed corporate governance rules and its follow-up report is the first to be released on the subject.

The DFSA said it generally found a good level of compliance by institutions and that governance structures and arrangements generally reflected the nature, scale, and complexity of the businesses reviewed. However, the practices of some institutions fell short of their own stated policies, it said.

A significant finding of the review, documented in the Report, was that firms often did not carry out structured, periodic reviews of their Governing Bodies (generally a Board of Directors), their committees, or their effectiveness.

Ian Johnston, Chief Executive Officer of the DFSA said: "The findings of the review provide a benchmark and reference that should be used by institutions to assess their corporate governance frameworks and practices. The DFSA is working to enhance the quality of governance of regulated businesses in the DIFC, and where we detect governance failures we will rectify them through supervisory methods or enforcement action."

DIFC is a financial free zone connecting markets in the Middle East and North Africa with the rest of the world. The benefits of doing business in the center include 100 percent foreign ownership, zero percent tax on income and profits for 50 years, and an international legal system based on English Common Law.

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