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Corporate Governance

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Corporate Governance

Corporate Governance Framework
Fransabank implemented a Corporate Governance Framework in line with the regulatory requirements and international best practices. This framework promotes fair and transparent relationship between the Bank’s management, its Board of Directors, its shareholders and other stakeholders. In addition, it specifies the distribution of responsibilities among the main concerned parties in the Bank, including directors and managers; spells out the rules and procedures for making decisions on the Bank’s affairs; and defines the rights of shareholders.
Fransabank believes in, and is committed to implement sound Corporate Governance practices, which is considered the basis for its future development, enhanced performance and strong confidence in its activities, and thus, enabling the Bank to share in the development of the Lebanese banking system and in turn, in the expansion and growth of the economy.
 
The Bank is and has always been committed to the highest level of transparency, integrity and accountability, which has become the cornerstone of its culture. It has implemented a Corporate Governance Code, which sets out the Bank’s vision, mission and core values and identifies the rights and responsibilities of each of the Shareholders, Board of Directors, Senior Management, and internal control functions. This code was approved by Fransabank Board of Directors during 2012 and it was communicated to the entire Bank’s staff.
 
In addition, the Board of Directors has created three committees, namely the Corporate Governance Committee, the Risk Management Committee, and the Audit Committee. These Committees meet regularly to assist the Board in exercising its duties and oversight responsibilities over the Bank, including its banking subsidiaries. In addition, the Bank has established a charter to each of these Committees which indicates the Committee’s scope of work, membership structure and composition, meetings as well as its roles and responsibilities.
 
Fransabank strategy is to standardize the Corporate Governance practices to all its local and foreign subsidiaries, taking into consideration the Corporate Governance requirements of host jurisdictions. 
 
 
Governance Structure
Fransabank corporate governance structure includes the General Assembly (shareholders); the Board of Directors; the various committees; the Chairman; the Deputy Chairman; Control Functions; the External Auditors; Senior Management and the Business and Support functions. The Bank has also established an independent Corporate Governance Unit, which reports directly to the Corporate Governance Committee.
The aim behind such a structure is to provide an efficient framework for the assignment of responsibilities, accountability and workflows to ensure efficiency and effectiveness in the management decision making process.
 
Rights of Shareholders 
Shareholders enjoy all rights conferred upon them by the Lebanese Code of Commerce. All common shareholders, including minority shareholders, enjoy the same rights and benefits and have one voting right for each common share (the principle of one share, one vote) without limitation. Shareholders who own registered shares for at least two years are entitled to a double voting right according to Article 117 of the Lebanese Code of Commerce.
 
Governance Framework 

Fransabank is governed by a Board of Directors, which consists of twelve members elected by the General Assembly of Shareholders for a term of three years. The responsibilities of the Board of Directors are to ensure the proper management of the Bank, with the objective of adding value to all shareholders, investors, clients, and community in the short, medium, and long terms. In addition, the Board has overall responsibility of the Bank, including adopting and overseeing the implementation of the Bank’s strategic objectives, risk strategy, corporate governance and corporate values, as well as ensuring that adequate, effective and independent controls are in place.

 

Board Structure and Composition   

Fransabank Board of Directors has a sufficient number of non-executive Board members and independent*  members. The presence of executive, non-executive and independent Board members ensures the governance and effectiveness of the Board.

Fransabank SAL Board Structure:

- Independent Non-executive Members: 50%
- Executive Members 17%
- Non-Executive Members 33%

Fransabank Board of Directors consists by its majority of non-executive members.
During 2012, Fransabank has elected one independent Board member and re-elected a former Board member, who worked in reputable international bank and financial institutions. 
  

Board Meetings
During 2012, the Board of Directors has met on four occasions. Some of the major issues discussed during these meetings were:
• Business Plan for the Period 2012 – 2014 and the Budget for 2012.
• Approving the Corporate Governance Code
• Approving the Charters of the Audit Committee and Risk Management Committee.
• Reviewing the Formation of Specialised Committees.
• Discussing the reports prepared by the Chief Risk Officer and the Chief Audit Executive.
• Discussing the Operations Procedural Manual.
• Increasing the Capital through the issuance of Preferred Shares “Series C” and specifying the issuance conditions.
• Discussing the opening of new branches.
• Approving the accounts of the financial year 2011.
 
 
Board Members 
 
 
Corporate Governance Committee
Risk Management Committee
Audit Committee
H.E. Mr. Adnan Kassar
 
 
 
Mr. Adel Kassar
 
 
 
Mr. Antoine Jeancourt Galignani
ü Chairman
 
ü Chairman
Mr. Rafic Charafeddine
 
 
 
Sheikh Fahd Mazyad Al Rajaan
Representing the Public Institution for Social Security - Kuwait
 
 
 
Mrs. Magda Rizk
 
ü Member
 
H.E. Mr. Nehmé Tohmé
 
 
 
H.E. Mr. Walid Daouk, Esq.
ü Member
 
ü Member
Mr. Mohamad Al Fadl
 
 
 
Dr. Walid Naja
ü Member
ü Chairman
ü Member
Mr. Bernd Tümmers
 
 
 
Mr. Henri Guillemin
 
ü Member
 
 
 
  
Board Committees
In carrying out its duties, the Board is supported by the Corporate Governance Committee, the Risk Management Committee, and the Audit Committee. The charters of these Board committees were reviewed during 2012 to take into account the new regulatory requirements.
 

Corporate Governance Committee
The Corporate Governance Committee is composed of five members, whereby the Chairman of the Committee is an independent Board member. The committee members meet at least quarterly.

The responsibility of the Corporate Governance Committee is to provide oversight of all material Corporate Governance issues affecting the Bank and its subsidiaries; and to ensure that Fransabank Corporate Governance practices are in line with best practices and Fransabank Corporate Governance Guidelines; in addition to assist the Board in maintaining an effective governance framework, an optimal Board composition and an effective Board structure.
 
During 2012, the Corporate Governance Committee held four meetings.
 
Risk Management Committee
The Risk Management Committee is chaired by a non-executive director, and comprises two other members. The Committee meets at least quarterly. The Committee’s responsibilities are to assist the Board of Directors in fulfilling its oversight responsibilities in identifying the Bank’s risks profile vis-a-vis its risk appetite and risk tolerance; monitoring all aspects of the risks inherent in the Bank’s activities; and assessing the Bank’s risk management process and the capital adequacy.
 
During 2012, the Risk Management Committee held four meetings.

Audit Committee
The Audit Committee is composed of three non-executive Board members, whereby the Chairman of the Committee is an independent Board member. The Audit Committee is established to assist the Board of Directors in its oversight responsibilities with respect to audit and compliance with Central Bank of Lebanon and Banking Control Commission and the implementation of accounting standards related to financial reporting. The Committee meets on a quarterly basis and when necessary. Moreover, the Committee assists the Board of Directors in fulfilling its tasks and supervisory role, particularly in regard to internal control regulations and procedures, supervision of the internal audit’s activities, appointment of external auditors and follow up on their activities along with other responsibilities.\
 
During 2012, the Audit Committee held four meetings.
 


*Fransabank’s definition of independent Board member as indicated in the Corporate Governance Code:
In order to be considered as an independent member, a Board member should be independent of any person from the Bank’s “Executive Senior Management” and of its major shareholders in the sense that there is no work relationship with anyone of them currently or during the past two years preceding his/her nomination as a Board member.
In addition, a member should not be an Executive Board member; not from the major shareholders who own, directly or indirectly, more than 5% of the Bank’s total shares or voting rights related to these shares; whichever is greater; not have any family-relationship with any of the major shareholders until the fourth degree; and not any of the Bank’s debtors.

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