Corporate Governance seeks to define rules, instructions, and procedures for decision-making and control of a company in order to control conflicts of interest and ensuring conformity of information for its beneficiaries and to propose a structure within which the company can attain its objectives. This system emphasizes on equity, transparency, responsibility, and accountability of the organization. It includes mechanisms that ensure that the organizations financing – human and financial resources – is in line with the objectives of the organization. Furthermore, it ensures and enhances the efficiency of the organizations capital management for the long-term.
It is worth noting that the banking system is one of the most critical and sensitive sectors of a countrys economy, as it is responsible for financing the other economic enterprises as well as providing major financial services to the public sector through their payment systems. The banks also have the responsibility of providing credit and liquidity to help improve the economic situation during a financial crisis. Due to the existence of micro and macro depositors as well as plurality and diversity of the customers (users of banking services), the scope of the beneficiaries of the banking system is broader than that of the other economic enterprises, which merits further investigation.
In addition to continually increasing the wealth and the Economic Value Added (EVA) of its shareholders and the broader society, the Middle East Bank (MEB) has been diligent in considering and securing the interests of its other beneficiaries. In order to achieve success in different fields of its activities, MEBs Board of Directors is responsible for setting and overseeing the administrative rules and procedures, as well as the transparency and uniformity of these beneficiaries.
The function of the Compliance Committee is to ensure the conformity of internal instructions, bylaws, and regulations with other pertinent rules such as the Central Bank of Irans rules. The Compliance Committee receives reports from the Compliance Department. Compliance department as one of the most crucial departments of Middle East Bank was established with the aim of reducing the risk of non-compliance with regulations and reputational risk, ensuring that the activities of the bank are in full compliance with rules and regulations, and enhancing the credibility of the bank. In line with these objectives, the MEB compliance department follows a strict policy with respect to the grant of credits and facilities. All the requests of the customers such as loans, letters of credits, and guarantees are monitored by the compliance department to ensure that they comply with domestic and international rules. The domestic rules entail internal as well as external rules. Internal rules are guidelines issued by MEB, and external rules include a vast area comprising of the constitution, domestic codes, the central bank of Iran banking regulations, and banking guidelines. International rules include international conventions, United Nations resolutions, international treaties, Anti-Money laundering and fraud regulations, uniform principles such as the ICC-UCP, and other relevant regulations. The compliance department provides reporting to relevant credit committees on complying with the aforesaid rules. It further assists the board by supplying information about the rules to demonstrate effective corporate governance.
Internal Audit Committee
The main function of the Internal Audit Unit is to ensure the accurate and correct exercise of activities in all sectors and sub-sectors of the bank. Some of the responsibilities of this unit include continuous auditing of the internal controls, evaluation and revision of the financial reporting system, interaction with independent auditors and the inspection of their auditing reports and management letters, and regular visits for inspection of the branches and other units of the bank.
The function of the Compensation Committee is to control the salaries, bonuses, and compensation schemes within the bank. This committee has the duty to evaluate the functions of the managers and employees on an annual basis to assess its conformity with the defined objectives outlined by the organization. It must also propose a plan to the Board of Directors that outlines the salaries, bonuses, and methods of payment and to inform the Annual General Meeting (AGM) of its findings through a detailed report.