Management: Board Management in MO

Behind the facade – Anomalous practices in the Boards of Directors of the Middle East

In Western corporate systems, the Board of Directors is a strategic body founded on independence, transparency, and accountability.
In the Middle East, despite regulatory progress, governance often reflects non-standard practices shaped by cultural, familial, and legal influences.

The following summarizes some of the most atypical practices seen in companies across Saudi Arabia, the UAE, and Kuwait.

  1. Overlapping roles: The CEO is often also the Chairman, and board members are family relatives. This undermines all principles of power separation.

  2. Hierarchical inversion: In some public holdings, the board is appointed by the CEO and follows their direction. The supervisory body becomes subordinate to executive leadership.

  3. Improvised meetings: It is common for board meetings to occur in transit areas like airports or hotels, with resolutions signed without strategic discussion.

  4. Language barriers: Board members and executives may speak different languages without full comprehension, leading to miscommunication and shallow decision-making.

  5. Inactive boards: Many companies maintain a board in legal terms only. Members are appointed but never convened or involved in decisions.

  6. Ex post ratifications: Executives make operational decisions and later ask the board to rubber-stamp them, often with no debate or oversight, sometimes via informal channels.

  7. Decorative governance: In family businesses, boards are created for image purposes, ESG ratings, or formal compliance but have no real authority. Decisions are made privately.

  8. Absence during crises: During legal, financial, or reputational crises, boards are often not convened, not informed, or not accountable, delegating responsibility by default.

Conclusion.
Despite formal governance frameworks, many boards in the Gulf operate as symbolic structures. For investors and stakeholders, it is essential to look beyond formal charts and assess actual decision-making dynamics. The difference between an effective board and a passive one can carry major financial, legal, and reputational consequences.