Case Studies: Corporate Governance in the Middle East

Arab Business Review
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  • Numerous companies in the Middle East improved their governance practices in ways that boosted their performance and growth, highlighting that corporate governance is not a one-size-fits-all concept, but a customized approach.
  • The Nuqul Group case study highlights the role played by corporate governance in the decentralization of power and creation of higher level of accountability among all layers of management.
  • On the other hand, adoption of corporate governance by the Sorouh Group helped improve the credibility of its Sukuk issuance in the eyes of credit rating agencies, thereby resulting in one of the largest and most successful debt issuance in the region.

In part one of our corporate governance article series, we had talked about the meaning of corporate governance and the factors driving the implementing of corporate governance reforms in the Middle East. In the second part, analyzed the progress made on corporate governance implementation by various Middle East nations. And in this third and final part, we share two specific case studies of Middle East-based companies that implemented corporate governance practices to boost business performance and growth.

Case Study 1: Nuqul Group | Jordan   

Founded: 1952 | Conglomerate of over 30 companies                                               

Company Overview: Nuqul Group is a Jordan-based producer of manufactured goods. In 1985, Ghassan Nuqul, the vice chairman of Nuqul Group, took a leading role 33 years after his father founded the company.

Situation: After taking over the leading role, Ghassan Nuqul realized that the firm’s head office had to process all purchase orders, as well as account and audit documents from its four plants. As a result, little accountability existed outside the head office. Also, such a strong concentration of power in one office made the Nuqul Group unattractive to investors. To correct the situation, Ghasan Nuqul took a series of corporate governance steps to institutionalize processes, allocate tasks, and develop accountability mechanisms.  The steps were aimed at increasing accountability at all levels, and also to ensure that all family members understood their roles, responsibilities, and rights within the organization.

Corporate Governance Measures Taken:

  • Over a period of five years, Nuqul headed the firm’s decentralization process. He separated and delegated tasks, created job descriptions, measures of accountability for managers and employees, established key performance indicators (KPIs), balanced performance scorecards and evaluated the company against competitors in the industry.
  • The firm established a strong board composed of both family and non-family members. It now includes board members who are employed by the firm, board members from outside the firm, and board members with relevant specializations.
  • Being a private, non-listed, family-owned company, Nuqul Group is not required by the government to publish financial statements. However, the company publishes an internal annual report voluntarily disclosing information including staff turnover, corporate social responsibility indicators, community service participation, and philanthropy operations in the family foundation.

Impact: Nuqul Group has expanded from four subsidiaries in 1985 to 30 today, and as per vice chairman Ghassan Nuqul, this level of growth would not have been possible without the improved corporate governance practices.

  • As a result of the corporate governance measures taken, Nuqul Group increased accountability among managers, employees, and the family, which ensures the company’s sustainability.
  • By implementing a 10-year business plan, with forecasted budgets for every year, the company was able to create benchmarks and measure itself against global best practices.
  • Since the implementation of these practices, Nuqul Group has continued to grow in terms of size and level of profits.


Founded: 2003 | Real Estate company                                               

Company Overview: Located in Abu Dhabi, Sorouh Real Estate PJSC is one of the largest real estate developers in the UAE, and currently has over AED 70 billion worth of projects under development.

Situation Faced: From 2006 to H1 2008, Sorouh did not make any major borrowings; however, it wanted to finance its growth. For this, it issued Sukuks to help finance the development of 170 hectares on Al Reem Island and the Saraya development in Abu Dhabi’s central business district. However, as part of this process, Sorouh’s corporate governance practices had to be assessed by external credit agencies responsible for rating the Asset Backed Securities (ABS) transactions that Sorouh used to raise the money.

Corporate Governance Measures Taken: The company’s successful Sukuk issuance is rooted in the improvements it made in its corporate governance framework, in compliance with the UAE Securities and Commodities Authority’s standards. Sorouh had adopted these regulations and implemented all its material requirements in 2007, two years ahead of the compliance deadline.

  • Sorouh developed an Employee Disclosure Policy to ensure that employees are able to “blow the whistle” whenever and wherever they have adequate reasons to believe that ethical conduct has been breached.
  • The company has developed an Insider Share Dealing Policy in order to ensure that directors and employees do not misuse their possession of the company’s stock price-sensitive information.
  • In 2007, the company implemented an enterprise-wide risk management system, which has been initiated to structure and formalize existing risk management practices.

Impact: According to Sorouh’s Chief Corporate Officer, Afshar Monsef, “The actions we took for our corporate governance had a direct impact on the rating we received for our Sukuk and ultimately the interest rate premium, which resulted in paying a lower premium compared with other companies in the region.”

  • Sorouh’s corporate governance practices allowed it to issue more than US$ 1 billion worth of securitized Islamic certificates (or Sukuks), to be used for growth and expansion purpose
  • Moody’s rated the majority of the notes “AA3” while S&P rated them “A”.
  • The high ratings helped Sorouh to gain market acceptance for the Sukuks, resulting in millions in savings for the company.  
  • The debt issuance was the first of its kind and size for a Middle East and North Africa (MENA) region corporation.
  • In 2009, Sorouh was ranked 1st in Abu Dhabi and 3rd regionally by the BASIC2 GCC-wide study of corporate governance.


We hope you have enjoyed our coverage on Corporate Governance in the region. Please free to comment and share your views and other relevant examples on this increasingly important issue for businesses in the Middle East.