‘Fully adhere to independence conditions’
KUWAIT CITY, Sept 5: In a circular to all local banks, the Central Bank of Kuwait (CBK) pointed out that it is not permissible for an independent board member to be elected in any bank to hold any executive position or board membership for any of the subsidiaries or associates within the bank group, in order to ensure complete independence of that member’s decisions to prevent any potential conflict of interest, reports Al-Rai daily.
The Central Bank stressed on the need for banks to fully adhere to the independence conditions contained in the instructions regarding the conditions that must be met by independent candidates. The circular stated that “with reference to the instructions of the Central Bank issued on Sept 10 last year regarding updating the instructions for governance rules and systems in Kuwaiti banks, which included in (Chapter Three/Axis I/3/C), the conditions that must be met by the member we would like to state that this condition stipulates that the independent board member, upon candidacy, or during the two years preceding the date of candidacy, shall not have held a membership in a board of directors in the bank or any executive position in it or within the bank group.”
The Central Bank added in its circular that this clause excluded – and for one time at the beginning of the implementation of these instructions – the nomination of current members of the bank, or within the bank group, who meet other conditions of independence, and this exception regarding the permissibly of candidacy as an independent member, in case the availability of membership conditions, made it easier for banks to fulfill the requirements of independent members.
It is noteworthy to mention that the Central Bank’s update of the instructions for the rules and regulations of corporate governance in Kuwaiti banks in September 2019 stipulated that the number of independent members in the bank’s board of directors shall not be less than two, starting from June 30 of this year, and four members starting from June 30, 2022.