Top Banner

of 43

Corporate Governance & Business Ethics Guidelines

Apr 14, 2018

Download

Documents

mohanraokp2279
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    1/43

    CORPORATEGOVERNANCE

    ANDBUSINESS

    ETHICS

    GUIDELINES

    COPYRIGHTNOTICE

    Copyright(2011)byFFAPrivateBanks.a.l.

    POBox:901283

    OneFFAGateMarfaa128Bldg.FochStreet

    BeirutCentralDistrictLebanon

    Allrightsreserved.ThismaterialisconfidentialandproprietarytoFFAPrivateBanks.a.l.andnopartofthismaterial

    shouldbe reproduced,published inany formbyanymeans,electronicormechanical includingphotocopyorany

    information storage or retrieval system nor should thematerial be disclosed to third partywithout the express

    writtenauthorizationofFFAPrivateBanks.a.l.

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    2/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    2

    1.

    GENERAL

    PRINCIPALS

    1.1. TheseCorporateGovernanceandBusinessEthicsGuidelines(Guidelines)setforththeguidingprinciplesandpoliciesthatgoverntheactivitiesoftheFFAPrivateBanks.a.l. (Bank)and itsserviceprovidersand

    employees.TheBank iscommittedtomaintaininghighethicalstandardsandexpectsalldirectors,officers

    and employees, by virtue of their association or employment with the Bank, to adhere to the highest

    standardsofpersonalandprofessionalintegrityandtocomplywiththeseGuidelinesandallapplicablelaws,

    rulesandregulationsinLebanon;

    1.2. TheBankhasalegalresponsibilitytoprotectclientspersonalandfinancialinformationinaccordancewithBankingSecrecyLawofSeptember3,1956.Eachemployeeshallmaintainatalltimestheconfidentialityof

    information acquired in the course of work except when authorized by the client or otherwise legally

    obligated to disclose. Confidential information acquired in the course ofwork shall not beused by any

    employee

    for

    any

    personal

    advantage.

    The

    Bank

    will

    strive

    to

    maintain

    compliance

    with

    all

    applicable

    rules

    andregulationsinLebanon;

    1.3. Noemployeeshalltakeunfairadvantageofhis/herpositionthroughmanipulation,concealment,abuseofprivilegedinformation,misrepresentationoffacts,oranyotherunfairdealing.

    1.4. TheBankshallprovideacopyoftheGuidelinestoanyclientorprospectiveclientuponrequest.

    2. APPLICATIONOFTHEGUIDELINES2.1. Except where otherwise indicated in this document, the terms employee or employees include all

    directors,officers,employeesandagentsoftheBank.

    2.2. TheprovisionsoftheseGuidelinesapplytoallemployeesandserviceproviders.2.3. Failure to comply with these Guidelines could result in disciplinary action, including termination of

    employment.

    2.4. Allemployeesshallfulfilltheirobligationsinsuchamannerthattheyconductbusinessbyethical,fairandbestpractices.

    3. POLICYSTATEMENT3.1. TheseGuidelinesexplainthebasicprinciplesofethicsandprofessionalbusinessconductfortheBankand

    areintendedtoraiseethicalawareness,andasaguidetothedaytodaydecisions.Theycanalsobeusedin

    trainingprogramsandtoassurecustomersoftheintegrityoftheBank.TheseGuidelinesareacodification

    ofstandardsthatarereasonablydesignedtodeterwrongdoingandpromotethefollowingobjectives:

    (1) honest,ethicalandprofessionalconduct, includingtheethicalhandlingofactualorapparentconflictsofinterestbetweenpersonalandprofessionalrelationships;

    (2) full,fair,accurate,timelydisclosure;(3) compliancewithapplicableLebaneselaws,rulesandregulations;

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    3/43

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    4/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    4

    e EmpowertheSeniorManagementnotablyforthepurposeofsupervisingandcontrollingtheHeads

    of

    Departments

    and

    Units;

    f SetguidelinesaimingatprotectingtheBankfrominsideandoutsideinterference;g ConstituteSpecializedCommittees.

    (2) TheBoardmustdeterminetheBanksstrategicobjectivesandcorporatevalues,communicatethemtothestaff,andsupervisetheirimplementation:

    a Ensure the preparation by the Senior Management of policies and procedures aiming atapplyingthestrategicgoalssetbytheBoard;

    b Set policies to avoid any excess in lending executives andmain shareholders, and grantingprivileges

    to

    close

    parties,

    and

    disclose

    said

    policies

    according

    to

    article

    152

    of

    the

    Code

    of

    MoneyandCredit;

    c BealerttoanyReputationRisktowhichtheBankmaybesubjectedto;d Grantsufficientprotectiontoemployeeshavingdisclosedany irregularitiestothecompetent

    authoritiesattheBank.

    (3) The Boardmust clearly define responsibilities and accountability rules, and impose them at all theBanks levels, by defining the prerogative sand responsibilities of the Board and that of the Senior

    Management (i.e. the persons responsible for supervising the Banks daily business, such as the

    ChairmanoftheBoard GeneralManager,theAssistantGeneralManagers,theheadsofmaindivisions

    andtheofficersinchargeofthespecializedcommittees),whereastheSeniorManagementwillbeheld

    responsibletowardstheBoardfortheBanksperformance.

    (4) TheBoardmustensurethatSeniorManagementisfirmlysupervisingtheBank,inaccordancewiththeestablishedpolicy,by

    a Ensuring the Senior Management is formed of qualified people capable of conducting theBanksdailybusiness;

    b EnsuringtheSeniorManagementissettingefficientproceduresfor internalcontrol, includingwrittenpoliciesandprocedurescoveringallkindsofoperations;

    c EnsuringthattheSeniorManagement is followinguponthe implementationofsaidpoliciesand

    procedures;

    d Ensuringthatnoimportantdecisionistakensolelybyanyperson.(5) TheBoardandSeniorManagementmustefficientlyusetheresultsreachedbythe InternalAuditand

    theInternalControlBodies,notably:

    a Followuptherectificationsoferrorsstated intheInternalAuditReport,withinthedeadlinessetinthisReport;

    b ProtecttheindependenceoftheInternalAuditbypresentingitsReportsdirectlytotheBoard

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    5/43

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    6/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    6

    regulatoryrequirements,andachievecorporategovernancegoalsaspertheBankspractices.

    (2) TheBoardofDirectorsshallmaintainpoliciestoattract,retain,developandmotivateexecutivesandemployees.TheBoard shalldevelopa cultureof fairlyevaluatingeffortand rewardingperformance,anddevelopandmaintain a

    coherent,ethicalsystemofvaluesandincentivesforhumanresourcedevelopmentthroughouttheBank.

    (3) TheBoardshallappointand, ifnecessarydismisstheChairmanandGeneralManager,andshalldeterminehis/herannualremuneration.

    (4) DirectorsQualifications: Inorder tobe considered for theBoardsproposal to theOrdinaryGeneralAssembly, acandidateshould:

    haveahistorythatindicatesthathe/sheiscommittedtohighethicalstandards; haveaclearsenseof thebalancebetweenthe legitimate interestsandconcernsofall theBanksshareholders in

    takingdecisions,ratherthanadvancingtheinterestofoneparticularconstituent;

    havethewillingnessand intellectualauthoritytochallengemanagement,whileworkingconstructivelyaspartofateaminanenvironmentoftrust;

    bereadytodevotesufficienttimeandenergytodischarginghis/herdutyasdirector; haveskills,expertiseandknowledgethatcomplementthoseoftheexistingdirectors.(5) ThenewBoard,asacollectivebody,shouldpresentthefollowingprofile: knowledgeofthefinancialindustry,including,butnotlimitedto,individualsthathaveorhadleadershippositionsin

    financialinstitutions;

    business, governmental,nonprofit or professional experience, including individuals that serveor have served asChairman,CEOsor seniormanagers in largeorganizations,andhavea reputation thatdemonstrates theability t

    makeimportantandsensitivejudgment;

    adequate understanding of the Banks client universe, and of the geographic environment in which the Bankoperates;

    internationalandregional(MENA)experience; financialexpertisetoprovideeffectiveoversightofadiversifiedfinancialservicesbusiness.(6) The Board should comprise an adequate number of board members and should be able to exercise objective

    judgmentindependentofboththeviewsofexecutiveandofinappropriatepoliticalandpersonalinterest.Therefore,

    theBoardshallbecomprisedofamajorityofqualifiednonexecutivememberswhoarecapableofexercisingsound

    objectivejudgment.

    (7) Directors Incompatibilities: The following professional affiliations are incompatible with the position of Boardmember:

    anexecutive,boardmemberoremployeeoranyotheraffiliationthatimpliesadutyofloyaltytooneoftheBankscompetitor or any other institution the interests ofwhich might conflictwith the interests of the Banks or its

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    7/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    7

    shareholders;

    aconsultantorexternaladvisoroftheBankorapartneroremployeeofafirmthatisconsultingoradvisingtheBank,includingitsexternalauditors.

    (8) DirectorsElection: TheOrdinaryGeneralAssembly shall elect themembers of the Board, and grant the required authorizations in

    accordance with the provisions of the Commercial Law. Said General Assembly shall vest this Board with the

    necessarypowersinordertoundertaketheactivitiesthatwerenotvestedbyLaworbytheBylaws,andingeneral,it

    shalldeterminetheauthoritiesgrantedtotheBoardofDirectors.

    (9) DirectorsRevocation: TheOrdinaryGeneralAssemblymayatanytimerevoketheBoardMembers; ThereisnoagelimitforretirementforBoardMembers; AllexecutiveoremployeemembersoftheBoardshouldresignupontheirretirementordeparturefromtheBankor

    theGroup.

    9. THEBOARDOFDIRECTORSA BoardsInternalRegulations

    (1)CompositionandPeriod

    1.1 TheManagementoftheBankshallbeentrustedtoaBoardofDirectors,composedofnolessthanthreemembers,andnomorethantwelvemembers,electedbythe

    Ordinary General Assembly. Such Assembly may at any time revoke the Board

    Members.

    1.2 TheBoardofDirectors shallconsistofanumberofDirectorswithamajorityofLebanesenationals.

    1.3 Members of theBoard ofDirectors are elected for amaximum period of threeyears;byoneyear it isunderstoodtheperiodelapsingbetweenthemeetingsof

    two consecutive Annual Ordinary Assemblies; they may be reelected

    consecutively.

    1.4 If, in the intervening period between two Annual Meetings, the number ofmembers in office drops below three by death or resignation, or for any other

    reason,theremainingBoardMembersmustconveneaGeneralAssemblywithina

    maximumperiodoftwomonths,inordertofillthevacantposts.

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    8/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    8

    1.5 All companies which are Shareholders in the Bank shall have the right to bemembers

    of

    the

    Board

    of

    Directors,

    and

    shall

    be

    represented

    in

    the

    Board

    by

    a

    personvestedforthispurpose,whoisnotrequiredtobepersonallyaShareholder

    in the present corporation. Such companies have absolute authority to replace

    theirrepresentativesduringtheperformanceoftheirtermanddutiesintheBoard

    ofDirectors.

    1.6 Nonemaybecalledtodirectorshipifhe/shehasbeendeclaredbankruptandhasnotbeenrehabilitatedoverthelasttenyearsat least,orconvicted inLebanonor

    abroadwithin the last demeanor involving an act or attempt of forgery, theft,

    fraud

    or

    breach

    of

    trust,

    or

    a

    misdemeanor

    subject

    to

    penalties

    for

    fraud,

    embezzlement of funds or securities, or for issuing in bad faith checkswithout

    provision,orforattemptingtocausedamagetothefinancialpositionofthestate

    orforhidingchattelsobtainedthroughsuchoffenses.Thesameconditionsapply

    totherepresentativesofcorporatebodiesontheBoardofDirector.

    1.7 NomembermaybeamemberofmorethansixBoardsofDirectorsofJointStockcompanies having their principal office in Lebanon. Any Director of more than

    seventyyearsofagemaynotbeaDirectorinmorethantwocompanies.

    1.8 Themembersof theBoardmaynot takepart inthemanagementofaLebaneseBankhavingsimilarobjectstotheBank,unlesstheyobtainanauthorizationinthis

    regard,whichmustberenewedeachyear.

    (2) QualifiedShares

    2.1EachmemberoftheBoardofDirectorsmustatleastholdOneHundredSharesthroughoutthe

    duration of his term. Such Shares are not negotiable to secure the individual and collective

    liabilityoftheDirectorsforallactsofmismanagementofwhichtheymightbeliable.

    2.2Such

    Shares

    will

    not

    be

    returned

    to

    the

    Director

    until

    he

    has

    duly

    obtained

    afinal

    discharge

    from

    theGeneralAssemblyapprovingtheaccounts.

    (3) CallingofDirectorstoMeetings

    3.1TheBoardofDirectorsshallmeetattheBanksHeadOfficeor inanyotherplace inLebanonor

    abroaduponthecalloftheChairmanastheinterestoftheBankrequires.

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    9/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    9

    3.2The

    notice

    of

    the

    meeting

    shall

    be

    addressed

    by

    letter

    with

    acknowledgment

    of

    receipt

    or

    fax

    or

    by telexor telegram registeredwithanotice receiptorbypublishing in two localnewspapers

    accompaniedbytheAgendaoneweekatleastbeforethedateoftheproposedMeeting.

    3.3WhenthenoticecannotbecommunicatedpersonallytoaDirector,anynotificationtothiseffect

    made to any person of age in his actual or elected domicile shall be considered valid and

    sufficient.

    (4)Quorum

    and

    Voting

    4.1All debates of the Board shall be considered as valid if themembers of the Board present or

    representedinsuchMeetingrepresentatleastthemajorityoftheBoardofDirectorsMembers.

    Anymembermaydelegateanyofhis colleagues to representhimandvoteonhis/herbehalf

    providedthateachmembercanonlyrepresentoneothermember.

    4.2The resolutionsof theBoardareadoptedbyamajorityof thevotesof themembersDirectors,

    attendingorrepresented.Ifthenumberofvotesisequal,thevoteoftheChairmanshallprevail.

    (5) AuthorityoftheBoard

    5.1ThescopeofauthoritiesoftheBoardofDirectorsshallbedeterminedbytheGeneralAssembly.

    5.2 The Board may vest the Chairman and/or the General Manager with part of its authorities

    accordingtoArticle157oftheCommercialCode.

    5.3Any

    Agreement

    reached

    between

    the

    Bank

    and

    aDirector

    is

    subject

    to

    the

    prior

    approval

    of

    the

    GeneralAssembly,whethersuchAgreementistransacteddirectly,indirectlyorthroughamiddle

    person.ActscoveringoperationsbetweentheBankanditscustomersareexemptedfromthese

    provisions.

    5.4Equally subject to theaforesaidauthorization isany transactionpassedbetween theBankand

    any other corporation inwhich one of the BankDirectors is an owner, an active or ordinary

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    10/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    10

    partner,aManageroraBoardmember.AnymemberoftheBoardwhomaybeinoneofthese

    casesis

    required

    to

    advise

    the

    Board

    of

    Directors

    accordingly.

    5.5TheBoardofDirectorsand theauditorsshallsubmitseparately totheGeneralAssemblya

    reportonthetransactionstobeconcluded,andtheGeneralAssemblyshalltake itsdecision in

    lightofthesetworeports.Authorizationmustberenewedeveryyearifitconcernstransactions

    involvinglongtermconsecutivecommitments.

    (6) ObligationsoftheBoardThe

    Board

    of

    Directors

    is

    required

    to:

    1 AscertainthattheBankhasbeendulyestablishedsuchtasktobeconductedbythefirstBoardofDirectors;

    2 Accomplishallthelegalformalitiesrequiredforthepublicationandfortheregistrationwiththecourtregister,aswellastheCommercialRegister.

    3 CarryouttheresolutionspassedbytheGeneralAssembly.4 Establish at the end of the semester of each financial year a summary statement

    regardingtheCompanyssituationwithallitsliabilities,assetsandreceivables.

    5 Establish,attheendofeachfinancialyear,theinventory,thebalancesheet,theprofitsandlossesstatement,aswellasallreportsrequiredbyLaw.

    6 ConvenetheShareholdersGeneralAssembly.7 Setupthelegalandotherreserves.

    (7) ResponsibilitiesoftheMembersoftheBoard

    Themembersof theBoardofDirectorsare responsibleeven towards thirdparties forall

    fraudulentactsandallinfringementsoftheLawortheseArticlesofAssociation.Membersof

    theBoard

    are

    also

    responsible

    towards

    the

    shareholders

    for

    their

    management

    mistakes.

    The Bank is entitled to bring an action against the members of the Board for their

    managementfaults.Failingtodoso,anyShareholdershallbeentitledtoactonbehalfofthe

    Bankproratatohisequityinterest.

    Article170oftheCommercialCodeshallbeappliedwithrespecttotheapportionmentof

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    11/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    11

    responsibilitiesamongsuchmembersoramongpartofthem.

    ConflictofinterestmayariseasaresultofthevariousactivitiesandrolesoftheBankandits

    variousstakeholders.TheBoardshouldensurethatpoliciesto identifypotentialconflictof

    interestaredeveloped and implemented and, if these conflicts cannotbeprevented,are

    appropriatelymanaged.

    TheBoardshouldensurethatappropriatepublicdisclosure(intheBanksannualreport) is

    made, and/or information is provided to supervisors, relating to the Banks policies on

    conflictofinterestandpotentialconflictofinterest.

    (8) ResolutionsoftheBoard8.1 The resolutions of the Board of Directors shall be recorded in minutes in a special

    register.

    8.2 Thesaidminutesmaybeusedasprooftowardsthirdparties.

    8.3TheChairmanoftheBoardofDirectors,andinhisabsence,theGeneralManager,shall

    certify extracts drawn from the said minutes intended to be produced in Courts or

    beforePublicandPrivateAdministrationsoranypersonwhomsoever.

    (9) ChairmanoftheBoard,ViceChairman,GeneralManagerandDelegatedBoardMembers9.1 The Chairman is elected among themembers of the Board for a period of time not

    exceedingthedurationofhisoffice intheBoard;theChairmanmustbeamemberof

    the Board in his personal capacity and not as representative of a corporation. The

    Chairmanselectionmayberenewedconsecutively.

    9.2TheChairman isnotentitledtobeaChairman inmorethan fourLebanesejointstock

    companies provided that he appoints a General Manager for two out of the four

    companies.

    9.3 If necessary, the Board may elect a Vice Chairman, and in case of absence of the

    ChairmanandanappointedViceChairman, theDirectorsmayelect foreachMeeting

    oneofthememberstochairtheMeeting.

    9.4TheChairman shallactasGeneralManagerof theBank,andmay recommend to the

    BoardtheappointmentofanAssistantGeneralManagertoactonhisbehalfandathis

    personalliability.

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    12/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    12

    9.5IftheChairmanistemporarilyunabletocarryouthisduties,hemayappointoneofthe

    Directorsto

    perform

    all

    or

    part

    of

    such

    duties,

    provided

    that

    such

    appointment

    is

    for

    a

    limitedperiodoftime.9.6IncasetheChairmanbecomespermanentlyunabletoperformhisduties,theBoardof

    Directorsshallconsiderhimtohaveresigned,andshallelectanotherChairman.

    9.7 The Boardmay appoint a Secretarywhomay not be aDirector, for a period not to

    exceedthemandateoftheBoardofDirectors.

    (10)AuthoritiesoftheChairmanoftheBoardThe

    Chairman

    of

    the

    Board

    of

    Directors

    shall

    represent

    the

    Bank

    towards

    third

    parties

    and

    shall implementtheBoardresolutionsandexercisesuchauthoritiesasmaybedetermined

    bytheBoardandunderitssupervision.HeshouldensurethatBoarddecisionsaretakenona

    soundandwell informedbasisand thatdissenting views canbeexpressedanddiscussed

    withinthedecisionmakingprocess.

    B SpecializedCommitteesThe Bank must submit its decisions related to facilities and placements of its available funds, real estate

    investments,participationsandoperations for itsownaccountonstructuredproductsandderivatives, to the

    priorapproval

    of

    specialized

    committees

    created

    and

    operating

    according

    to

    the

    rules

    set

    by

    the

    Board

    of

    Directors.

    ThefollowingCommitteeshavebeenconstitutedinthisrespectandtheirChartersdulyapprovedbytheBoard:

    a BoardRiskManagementCommittee;b CreditCommittee;c AssetLiabilityandRiskManagementCommittee;d InvestmentandParticipationCommittee;e AntiMoneyLaunderingandComplianceCommittee;f InformationSecurityandManagementInformationSecurityCommittee;g AuditCommittee;h SubsidiariesControlCommittee.

    TheChairmanandmembersoftheCommitteesaretobeelectedbytheBoardofDirectors.

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    13/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    13

    TheBoardmayestablishadditionalCommitteesasnecessaryandappropriate.

    10. CORPORATEGOVERNANCEINTHEGROUPIn theGroupstructure, theBoardof theBank,being theparentcompany,has theoverall responsibility foradequate

    corporategovernanceacrosstheGroupandensuringthattherearegovernancepoliciesandmechanismsappropriatefor

    thestructure,businessandrisksoftheGroupanditsentities.

    TheBoardoftheBankshouldexerciseadequateoversightoversubsidiaries,whilerespectingtheindependentlegaland

    governanceresponsibilitiesthatmightapplytoregulatedsubsidiariesboards.Inparticular,itshould:

    a Establishanadaptedgovernancestructurewhichcontributestotheeffectiveoversightofsubsidiaries;b EnsurethatenoughresourcesareavailableforeachsubsidiarytomeetbothGroupstandardsandlocal

    governancestandards;

    c Have appropriate means to monitor that each subsidiary complies with all applicable governancerequirements.

    11. THESENIORMANAGEMENT4.1AppointmentofDirectorsinManagerialPosts

    Directorsmay

    assume

    managerial

    posts

    in

    the

    Bank,

    against

    remuneration

    to

    be

    fixed

    by

    the

    Board ofDirectors.However, suchDirectors shall not benefit from the provisions of the

    LaborLawsunlesstheyshallhavebeenemployedbytheBankforatleasttwoyearsbefore

    theirelectionasDirectors.

    The Chairman may recommend to the Board the appointment of an Assistant General

    Manager to act on his behalf and at his personal liability, and shall determine his/her

    prerogativesbyvirtueofinternalcirculartobenotifiedasneeded.

    4.2SeniorManagement

    SeniorManagement isresponsibleandshouldbeheldaccountableforoverseeingtheday

    todaymanagementof theBank.These individuals shouldhave thenecessaryexperience,

    competenciesandintegritytomanagethebusinessesundertheirsupervisionaswellashave

    appropriatecontroloverthekeyindividualsintheseareas.

    SeniorManagement contributes substantially to the Banks sound corporate governance

    throughpersonalconductby:

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    14/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    14

    a Providingadequateoversightofthosetheymanage;b Ensuring that the Banks activities are consistent with the business strategy, risk

    tolerance/appetiteandpoliciesapprovedbytheBoard.

    SeniorManagement isresponsible fordelegatingdutiestothestaffandshouldestablisha

    managementstructurethatpromotesaccountability.

    SeniorManagementshouldremainawareof itsobligationstooverseetheexerciseofsuch

    delegatedresponsibilityand itsultimateresponsibilitytotheBoardfortheperformanceof

    theBank.

    Senior

    Management

    should

    implement

    appropriate

    systems

    for

    managing

    the

    risks

    both

    financialandnonfinancial towhich theBoard isexposed.This includesacomprehensive

    and independent riskmanagement function and an effective system of internal controls

    designed and operated to ensure adherence to the Banks strategy and risk

    tolerance/appetite.

    4.2SpecializedCommittees

    a BOARDRISKMANAGEMENTCOMMITTEE

    Mission&Scope:TheBoardRiskManagementCommittee (BRMC)shallbecomposedofnot fewer

    thanthree

    non

    executive

    Directors,

    each

    of

    whom

    shall

    be

    totally

    independent

    and

    appointed

    from

    amongstthenonexecutiveoftheBankforaperiodof3years.Itsmission istoReviewandmanage

    risk issuesandpolicies,ensure that theBanks riskpoliciesarecompliedwithandproceduresare

    being consistently applied in all locations, consider and propose changes to existing risk related

    policies/proceduresasandwhenappropriate.TheBRMCreviewsreportsand findings identifiedby

    theRiskManagementDepartmentandasset liabilitymanagement,includingthedifferentrisk limits

    that are recommended for ultimate approval by the Board, and reviews strategy set by ALCO to

    manageliquidityandinterestraterisksinbusinessasusualscenariosandunderstresstesting.

    ThekeyresponsibilitiesoftheBRMCareto:

    1. AssessriskstrategyandensurethatitisalignedwiththeBank'soverallobjectives.2. Oversee the implementation of the business plans/portfolio strategies and set accordingly the

    prudentiallimits/ceilings:

    a. Maximumexposuretoanindividualcounterpartyb. Maximumexposuretoanindustryc. Maximumexposuretoonesecurityd. Geographicaldiversificatione. Sovereign/countryrisklimit

    3. OverviewthedelegationofcreditapprovalauthoritiesbytheCreditCommittee.4. Approve, and oversee the implementation of a firmwide operational risk framework to explicitly

    manage each and every source of operational risk as a distinct risk to the banks safety and

    soundness,including:

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    15/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    15

    a. Technology risk: technological failure, programming errors, deteriorating systems,contingency

    planning.

    b. Employeerisk:humanerror,internalfraud,confidentialitybreach.c. Customerrisk:clientdissatisfaction,contractualdisagreement.d. Capitalassetrisk:safety,security,fire/flood,insurancecoverage.e. Externalrisk:externalfraud,legalrisk,collapseofmarkets,war.f. HR risk: Hiring practices, Compensations and bonuses regulations, workplace safety,

    diversityanddiscrimination.

    The framework includes an appropriatedefinitionofoperational risk, policiesoutlining thebanks

    approachtomanagingoperationalrisk,andclear linesofmanagementresponsibility,accountability

    andreporting.

    5. Review theBank'spractices and ensure that riskpolicies are efficient, appropriate, and arebeingcompliedwith.

    6. Ensure that the Bank is always in conformity with the Basel requirements concerning riskmeasurement

    and

    management.

    7. Review the comments issuedby the Banking ControlCommission that relate to risk;oversee andmonitormanagementsresponsethereto;andreportasnecessarytotheAuditCommitteeandthe

    BoardofDirectorsconcerningtheresultsofsuchexaminationsandtheprogressofmanagement in

    implementinganycorrectiveaction.

    8. ReviewtheresultsofinternalauditsthatrelatetoriskasdefinedbytheBank;overseeandmonitormanagementsresponsethereto;andreportasnecessarytotheAuditCommitteeandtheBoardof

    Directorsconcerningtheresultsofsuchauditsandtheprogressofmanagementinimplementingany

    correctiveaction.

    9. Reviewtheannualexternalauditreports.10. Manage and control Reputation risk by overseeing how the management deals with negative

    publicityabouttheBank,relatedmostlytocasesofmoneylaunderingandbadcustomerserviceand

    whichmayhavepotentialimpactontheBanksearningsandmarketshares.

    11. OverseetheworkoftheAMLCC,CreditCommitteeandALCO,byreviewingreportspreparedbysaidcommittees.

    bCREDITCOMMITTEE

    Mission&Scope:TheCreditCommittee(CC)isthehighestcreditauthorityinthebank.Itsmissionis

    toreviewandapprovecreditproposals,settherulesandguidelinesofMarginAccountsandreview

    theapplicationofsuchrulesandguidelines.

    TheCCscreditlimitsshouldnotexceedtheBanksregulations,authorizedlendinglimitsandcomply

    withlocalandinternationallawsandregulations.

    ThekeyresponsibilitiesoftheCCareto:

    ApprovecreditproposalsrecommendedbydivisionsoftheBank SettherulesapplicabletoMarginAccounts,advancesonsecurities,andotherengagementsor

    risksrelatedtoClientstransactionsonSecuritiesorotherfinancialInstruments.

    Preparemonthly reports of the credits granted to clients, and submit them to the Board ofDirectorsevery6monthsincludingMarginaccountsandClientsMarketEngagementsandRisks.

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    16/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    16

    Approvedecisionsby theChairman GeneralManager tograntcredits individually.Otherwise,said

    matters

    will

    be

    submitted

    to

    the

    BOD.

    ProvidetheBoardofDirectorsperiodicallywithitsrecommendationsconcerningtheinvestmentdecisionswhichvalueexceeds1%oftheBanksprincipalnetassetsortheamountofonemillion

    AmericanDollars,whicheverisless,foreachinvestmentproposal.

    TheCCscreditlimitwillnotexceedtheBanksregulatorylendinglimit.

    c ASSETLIABILITYANDRISKMANAGEMENTCOMMITTEE

    Mission

    &

    Scope:

    Monitorthecompliancewithapprovedregulatoryratios(capitaladequacyandliquidity)

    Reviewandmanagethefollowingissues:

    Liquidity,FX,Market,andinterestratesrisks

    Counterpartyrisk

    AssetLiabilityManagementriskLitigationRiskandPolicies

    OtherReputationrisk

    Considerandproposechangestoexistingriskrelatedpolicies/proceduresasandwhenappropriate.

    ActastheplatformwhereissuesrelatedtotheimplementationofBasel2projectswillbediscussed

    andfollowedupthroughthefeedbackfromrelatedsteeringcommittees

    ThekeyresponsibilitiesoftheCommitteeareto:

    ManagetheLiquidityPosition:

    LiquidityratioistobeagreedupononCommitteemeetings.

    TheobjectiveoftheCommittee istohavesufficient fundsonhandtomeettheBanksobligations.

    Obligationsincludemainlyrunoffondepositsandliabilitiesandincreasesinloandemands.

    Manage

    the

    interest

    rates

    position:

    TheobjectiveoftheCommitteeistoreducetheriskofadecrease intheBanksnet interestmargin

    andtheriskofadecreaseinthemarketvalueofequityinavolatileinterestrateenvironment.

    ManageMarketRisk:

    TheobjectiveoftheCommitteeistominimizetheriskofalossinon andoffbalancesheetpositions

    that the bankmay experience as a result of unfavorablemovements inmarket prices. Themain

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    17/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    17

    exposuretomarketriskintheBankisinthefixedincomesecuritiesportfolio,theequityinvestment

    portfolioand

    the

    foreign

    exchange

    exposures.

    Oversee the implementationand approve theproprietary tradingand investment strategiesand

    proceduresandfixaccordinglytheprudentiallimits/ceilingregardingmarketrisk:

    Maximumexposuretoanassetclass

    Maximumexposuretoanindustry

    Maximumexposuretoonesecurity

    Geographicaldiversification

    Sovereign/country

    risk

    limit

    Manageandcontrolvariousriskssuchas:

    Reputationrisk:overseehowthemanagementdealswithnegativepublicityabouttheBank,related

    mostlytocasesofmoneylaunderingandbadcustomerserviceandwhichmayhavepotentialimpact

    ontheBanksearningsandmarketshares.

    Litigationrisk:overseehowthemanagementdealswithclientcomplaintsandassessrelatedrisk.

    Oversee,manageandcontrol risks related toAsset/liabilityManagementandensurecompliance

    withthegeneralprincipleofmatchingbetweenmaturitiesofassetsandliabilities.

    d INVESTMENTANDPARTICIPATIONCOMMITTEE

    Mission&Scope:ThemissionoftheInvestmentandParticipationCommittee(IPC)istoapprove

    specific investment decisions in real estate and participations in Financial or nonFinancial

    Companies.

    TheIPCskeyresponsibilitiesareto:

    Defineinvestmentneedssuchasnature,specifications,terms. SetupastrategywhichguaranteestheBankwillnotbesubjecttorisksitcannotbearas

    aresultoftheinvestmentdecisionsortheirconsequences.

    Assessthefeasibilitystudyofproposed investment intermsoftheirfuturereturn,andsubjecttheBanktoStressTestingScenariosinordertomeasureitscapacitytobearthe

    changesintheRiskfactors andtheirimpactontheBanksfinancialstatus.

    ProvidetheBoardofDirectorsperiodicallywithitsapprovalconcerningtheinvestment

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    18/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    18

    decisionswhichvalueexceeds1%of theBanksprincipalnetassetsor theamountof

    onemillion

    American

    Dollars,

    whichever

    is

    less,

    for

    each

    investment

    proposal.

    Studythecreditrisksthebankmayencounterandsetceilingsandrestraintsensuringthe balanced distribution and diversification of these risks, notably concerning the

    EconomicalSectorsandregions.

    e ANTIMONEYLAUNDERINGANDCOMPLIANCECOMMITTEE

    Mission & Scope: The Compliance Committee (AMLCC) is established based on the

    recommendationsoftheBDLdecisionnumber7818datedMay18,2001(Chapter4,article10),

    and

    its

    addenda.

    The

    mission

    of

    the

    committee

    is

    to

    ensure

    that

    the

    Bank

    is

    in

    compliance

    with

    antimoney laundering laws (mainlyLawNumber318datedApril20,2001)andtoensurethat

    the internal antimoney laundering procedure (KYC policy) is comprehensive, clear and is

    followedbyallBankstaff.Thecommitteewillbecopiedandwillreviewallreportsmadebythe

    Compliance Officer. The committee will also decide on whether to report any suspicious

    customer to the Special Investigation Commission brought forward to its attention by the

    Compliance Officer or the Internal AuditUnit. Anymatter not resolved by the committee is

    escalatedtotheChairmanoftheBoard.

    Thecommitteeisconcernedwithallreportsissuedbyanyofthefollowing:

    ComplianceOfficer SpecialInvestigationCommission InternalAuditreportsonantimoneylaundering ExternalAuditorsreportsonthesubjectmatter

    TheAMLCCs keyresponsibilitiesareto:

    Draft the Bank procedures for fighting Money Laundering and any changes madethereon(namelyKYCProcedure)andensuring itscompliancewith local legislationand

    regulations.

    EnsurethattheKnowYourCustomer(KYC)policyadherestominimumstandardsonobtainingnecessaryinformationoncustomersprofile.

    Ensure that the antimoney laundering policies and procedures are comprehensive,completeandeffective.

    Ensure that proper and effective controls are applied to prevent and detectMoneyLaunderingoperations.

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    19/43

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    20/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    20

    projectswheresecurityissensitive.

    SetInformationSecurityandInformationSystemspriorities Set Information security and Information Systems direction and strategy and drive

    policies

    Provide resources to information security and information systems efforts as perprioritiesandneeds

    Supportchangeanddefineculturalvaluesrelatedtoriskawareness. EnsureallSecurityissuesraisedbyinternalandexternalauditorsarecarefullyaddressed Require monitoring and metrics to ensure the effectiveness and the efficiency of

    Information

    Security

    and

    Information

    Systems

    investments

    Ensurethatsecurityisconsideredanintegralpartofallbusinesssolutionsdevelopment.

    gAUDITCOMMITTEE

    Mission&Scope:

    OverseeingtheAuditfunction; FacilitatetheeffectivesurveillancebytheBoardofDirectorsofthe implementationof

    thegeneralstrategyasdefinedbythelatter;

    AssisttheBoardofDirectorsintheoversightof:TheintegrityoftheBanksfinancialstatements

    ThesafeguardoftheassetsandincomeoftheBank

    Theexternalauditorsqualificationsandindependence

    TheperformanceoftheBanksinternalauditfunctionandexternalauditor

    Thecompliancewith theBanksethicalstandards,policies,plansandprocedures,and

    withapplicablelawsandregulations.

    EncouragethecommunicationbetweentheDirectors,theInternalAudit,theStatutoryAuditorsandtheLebaneseBankingControlCommissionmembers;

    SubmitareportonthetasksaccomplishedtotheBoardofDirectorsonceayearatthemeetingofthelatterprecedingtheAnnualGeneralMeetingoftheshareholders,which

    approvestheFinancialStatementsfortheprecedingyear.

    Review internal control regulations and procedures, including procedures relating tofightingmoney launderingandterroristfinancing, inordertoascertaintheirefficiency

    andeffectiveness.

    Discuss the main financial and administrative reports prepared by the Senior

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    21/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    21

    Management, the Internal AuditUnit (IAU), the auditors, or the control authorities,

    aboutany

    weakness

    in

    the

    internal

    control

    regulations

    and

    procedures.

    Coordinateworkbetweenthe IAUandtheauditors,particularlywheneachofthem isreviewingtheseregulationsandprocedures.

    TheAuditCommittees keyresponsibilitiesareto:

    Directlyoversee the IAU toascertain its independence from the SeniorManagementandtheobjectiveperformanceofitstasks.

    ApprovetheIAUsremunerations.

    Propose

    the

    IAUs

    Chiefs

    appointment

    or

    dismissal.

    MeetonaquarterlybasisandwhennecessarywiththeIAUsChieftodiscusstheUnitsactivities,andalsoonceayear,at least,withouttheattendanceofanymemberofthe

    SeniorManagement.

    ApprovetheIAUsManualofProceduresand,whennecessary,proposeitsamendment,inadditiontoensureallthehumanandmaterialresourcesneededforitsapplication.

    ReviewalltheUnitsreports. Give its opinion about any agreement the bank would like to conclude with any

    specialized institution for performing all internal control tasks (outsourcing) or part

    thereof(cosourcing).

    TheAuditCommitteeshallalso:

    Giveitsopinionaboutauditorsbeforetheirappointment,anddeterminetheconditionsoftheirappointmentincludingtheirannualremuneration.

    Evaluatetheauditorsperformance,independenceandobjectivity. Discuss with the Management and the auditors the financial statements to be

    published.

    Discussthemainsremarksandrecommendationsincluded intheauditorsreportsandreportthemtotheBoardofDirectors.

    Meetwiththeauditorsonceayearat leastandwhenevernecessarytoenquireabouttheiractivitiesanddiscusstheresultsoftheirassignments.

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    22/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    22

    hSUBSIDIARIESCONTROLCOMMITTEE

    Mission & Scope:Pursuant to BDL Basic Circular 110 dated August 16, 2007, a Subsidiaries Control

    Committee (SCC)shallbeestablished to followup,monitorandcontrol the statusandactivitiesof the

    Bankssubsidiaries,the latterbeingbranchesabroad,affiliatedbanksof financial institutionsabroad, in

    whichFFAPrivateBankholds,directlyor indirectly,aminimumof40%of the voting rights,orwhose

    managementiseffectivelycontrolledbyFFAPrivateBank,regardlessofthelattersstake.

    TheSCCs keyresponsibilitiesareto:

    1. Examine the reports, financial statements and documents submitted by the subsidiaries, and toexpressopinionsaboutthem;

    2. Askforclarificationsandadditionalinformation;3.

    Require

    from

    subsidiaries

    the

    taking

    of

    remedial

    measures,

    and

    verify

    the

    implementation

    of

    these

    measures;

    4. Propose,whenneeded,thesendingofateam tosubsidiaries forthepurposeofonsitediscussionandassessmentoftheirstrategy,performance, resultsandrisks;

    5. Provide the Banks Board of Directorswith summaries of its minutes of meetings, andwith thequarterlyreport(businessletter)submittedbyeachsubsidiary.

    12. THEINDEPENDENTCONTROLFUNCTIONS12.1. INTERNALAUDIT

    Thescopeof theworkof the InternalAuditUnit shall includeallprograms,activities,

    group divisions, and departments administered by the Bank. The Internal AuditUnit

    shall determine whether the Banks networks of risk management, control and

    governanceprocessesareadequateandfunctioninginamannertoacknowledgethat:

    Risksareappropriatelyidentified,quantifiedandtheirimpactassessed; Riskmanagementsystemsandproceduresarereliableandintegral; The Bank is complying with risk policies in terms of reviewing and assessing credit,

    market,andoperationalrisks;

    Appropriate policies and procedures have been developed tomanage the identifiedrisks;

    TheBanksandclientsassetsaresafeguarded; Properduediligenceisconductedonsubcustodiansandcorrespondents; Interactionwiththevariousgovernancegroupsoccursasrequired; Significant financial,managerial, and operating information is accurate, reliable, and

    timely;

    Activitiesare incompliancewithpolicies,standards,proceduresandapplicableBDL&

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    23/43

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    24/43

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    25/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    25

    TheBanksArticlesofAssociation.

    Report&AccountsCoordinatingthepublicationanddistributionoftheBanksannualreportandaccounts

    and interimstatements, inconsultationwiththeBanks internalandexternaladvisers,

    inparticular,whenpreparingthedirectorsreport.

    ShareRegistrationMaintaining the Banks register of shareholders; dealing with transfers and other

    matters

    affecting

    share

    holdings;

    dealing

    with

    queries

    and

    requests

    from

    shareholders.

    ShareholderCommunicationsCommunicating with the shareholders (e.g. through circulars); arranging payment of

    dividendsandinterest;maintaininggoodgeneralshareholderrelations.

    CorporateGovernanceContinually reviewing developments in corporate governance; facilitating the proper

    inductionofdirectorsintotheirrole;advisingandassistingthedirectorswithrespectto

    theirdutiesandresponsibilities,inparticularcompliancewithCompanyLawandCentral

    BankofLebanonrequirements.

    CompanySealEnsuringthesafecustodyandproperuseoftheBanksseals.

    SubsidiaryCompaniesEnsuring that procedures are in place for the correct administration of subsidiary

    companiesand

    that

    correct

    information

    is

    given

    to

    the

    holding

    company;

    maintaining

    a

    recordofthegroupsstructure.

    GeneralComplianceMonitoring and laying in place procedureswhich allow for compliancewith relevant

    regulatoryand legal requirements; retaining theminimumsetof records required for

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    26/43

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    27/43

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    28/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    28

    (8) Undertakeriskassessmenttakingintoconsideration/eventLikelihoodandtheirimpact,and

    Event

    Interdependencies;

    (9) UndertakeRiskMeasurement(ScenarioAnalysisandStressTesting)(10)ImplementthedelegationofcreditapprovalauthoritiesbytheCreditCommittee.(11)Ensurethatcreditriskpoliciesarebeingcompliedwith.(12)Ensure that theBank isalways in conformitywith theBasle requirementsconcerning

    creditriskmeasurementandmanagement.

    (13)Assess regularly the overall composition of the loan portfolios and the economicenvironmentascreditriskisaffectedbychangesineconomicconditions.

    (14)Manage

    and

    control

    various

    risks

    such

    as

    reputation

    risk.

    TheBoardandSeniorManagementpromoteacultureofriskawarenessandriskmanagementwithinthe

    Bank.

    The risk management function is independent of the business units whose activity and exposures it

    reviews.

    WhilereportingtotheChairman CEO,theChiefRiskOfficer (CRO)hasregularaccesstotheBoardand

    theBoardRiskManagementCommittee.

    TheBoardandtheBankingControlCommissionaretobeinformedofthedismissaloftheCRO,andofthe

    reasonsofsuchdismissal.

    13. COMPENSATION

    Compensation systems contribute to the Banks performance and risktaking, and are therefore a key

    component of the Banks governance and riskmanagement. The overall design and operation of the

    compensation system does not include determining compensation for individual employees; the

    compensationpolicyisdevelopedfortheBankasawhole.

    Becausecompensationshouldbealignedwithrisk,anunderstandingoftheBanksriskmeasurementand

    management,and

    of

    how

    different

    compensation

    practices

    can

    impact

    the

    Banks

    risk

    profile,

    is

    important. Incentivesarisingfromcompensationsareevaluated,andanannualcompensationreview is

    undertakenbySeniorManagement.

    In addition, Senior Management monitors and reviews outcomes of the established compensation

    system, toensure the latter isoperationas intended.Forexample,SeniorManagement shouldensure

    thatlowerriskadjustedincomeinabusinesslinewillresultinlowercompensation.

    Thecompensationofthecontrolfunctionsshouldbestructuredinawaythatisbasedprincipallyonthe

    achievementoftheirobjectivesanddoesnotcompromisetheir independence(i.e.compensation isnot

    substantiallytiedtobusinesslinerevenue).

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    29/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    29

    COMPENSATIONALIGNMENTWITHRISKTAKINGa Anemployeescompensationshouldbeeffectivelyalignedwithprudentrisktaking;b Compensationshouldbeadjustedforalltypesofrisk;c Compensationoutcomesshouldbesymmetricwithriskoutcomes;d Compensationpayoutschedulesshouldbesensitivetothetimehorizonsofrisks;e Themixofcash,equityandotherformsofcompensationshouldbeconsistentwithrisk

    alignment.

    Sinceemployeescangenerateequivalentshorttermrevenueswhiletakingonvastlydifferentamountof

    riskinthelongerterm,theBankshallensurethatvariablecompensationisadjustedtotakeintoaccount

    the risksanemployee takes.This should considerall typesof risksovera timeframe sufficient for risk

    outcomestoberevealed.

    Compensationshouldbesensitivetoriskoutcomesoveramultiyearhorizon.

    14. KNOWYOURSTRUCTURE

    TheBoardandSeniorManagementshouldunderstand (i)thestructureandorganizationoftheGroup;(ii)the

    legalandoperational risksandconstraintsofthevarioustypesof intragroupexposuresandtransactionsand

    howtheyaffecttheGroupscapitalandriskprofile.

    Soundandeffectivemeasuresand systemsare inplace to facilitategenerationandexchangeof information

    among and about the various entities, tomanage the risks of the Group as awhole, and for the effective

    supervisionoftheGroup.

    TheBoardapprovespoliciesandstrategiesfortheestablishmentofnewstructures.Moreover,theBoardshall:

    a Avoidsettingupunnecessarilycomplicatedstructures;b Requiretheapprovalofthe InvestmentandParticipationCommittee forthecreationofnew

    legalentities;

    c Recognizetherisksthatthecomplexityofthelegalentitystructureitselfmaypose;d Evaluatehowtheaforementionedrisksof thestructureand legalentityrequirementsaffect

    theGroupsabilitytomanageitsriskprofileanddeployfundingandcapitalundernormaland

    adversecircumstances;

    e Ensure compliance with applicable regulations governing the creation and supervision offoreignsubsidiaries;

    When the Bank is indirectly exposed to riskswhile performing certain services or establishing structures on

    behalfofcustomers,SeniorManagementshallensuretheBankhasappropriatepoliciesandproceduresto:

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    30/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    30

    a Establish processes for the approval of such activities taking into account the implications for theresulting

    operational

    structure

    of

    the

    organization;

    b Ensurethatthe informationregardingtheseactivitiesandassociatedrisk isappropriatelyreportedtotheBoardsandcompetentsupervisors;

    c Ensurethattheseactivitiesaresubjecttoregularinternalandexternalauditreviews.

    15. PRINCIPLESANDSTANDARDSOFBUSINESSCONDUCT

    15.1. GeneralPrinciplesforBankEmployees(1) Integrity:mustobservehighstandardsofintegrityandfairdealingincarryingouteveryfunction;(2) Dueskill,careanddiligence:mustactwithdueskill,careanddiligenceincarryingouteveryfunction;(3) MarketConduct:mustobserveproperstandardsofconduct infinancialmarkets incarryingoutevery

    function;

    (4) RelationswithBDL,BCCandSIC:mustdealwithBDL,BCCandSICinanopenandcooperativemannerand must disclose appropriately any information of which BDL, BCC or SIC would reasonably be

    expectedtobenotified;

    (5) Management, Systems and Control: an employee who has significant responsibility must takereasonablecaretoensurethatthebusinessoftheBankforwhichheisresponsibleisorganisedsothat

    itcanbemanagedandcontrolledeffectively;

    (6) Compliance:anemployeewhohassignificantresponsibilitymusttakereasonablecaretoensurethatthebusinessoftheBankforwhichheisresponsiblecomplieswithanylegislationapplicableinLebanon.

    15.2. GeneralPrinciplesfortheBanksBusiness(1) Integrity:mustconductitsbusinesswithhighstandardsofintegrityandfairdealing;(2) DueSkill,CareandDiligence:mustconductitsbusinessactivitieswithdueskill,careanddiligence;(3) Management, Systems and Controls: must ensure that its affairs are managed effectively and

    responsiblybyitsseniormanagement.ABankmusthaveadequatesystemsandcontrolstoensure,as

    farasisreasonablypractical,thatitcomplieswithlegislationapplicableinLebanon;

    (4) Resources:mustmaintainandbeabletodemonstratetheexistenceofadequateresourcestoconductandmanageitsaffairs.Theseincludeadequatefinancialandsystemresourcesaswellasadequateand

    competenthumanresources;

    (5) MarketConduct:mustobserveproperstandardsofconductinfinancialmarkets;(6) Information and Interests: must pay due regard to the interests of the clients and communicate

    informationtotheminawaywhichisclear,fairandnotmisleading;

    (7) Conflictof Interest:must take reasonable steps toensure that conflictsof interestarepreventedor

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    31/43

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    32/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    32

    meritand,wheneverappropriateandfeasible,competitivebidding;

    15.6. SoftDollarsPolicy:undernocircumstancesshouldemployeesenterintosoftdollararrangementsonbehalfoftheBank;

    15.7. FairCompetition:discussionswithcompetitorsoftheBankaboutcurrentorfuturepricingplansarestrictlyforbidden.However,thisdoesnotprohibitanemployeefromconductingsurveysofcurrentBankratesand

    feesinourareawhenmanagementhasassignedsuchatask;

    15.8. PersonalFeesandCommissions:noemployeemayacceptpersonalfeesorcommissionsinconnectionwithanytransactionsonbehalfoftheBank,exceptwheresuchfeesorcommissionsareexplicitlyauthorizedby

    theBoardofDirectorsand/orSeniorManagementoftheBank;

    15.9. Employmentoutside theBank: an employee is expected todevote full attention to the Banks interestduring

    regular

    working

    hours

    of

    employment.

    All

    outside

    employment

    must

    be

    reported

    to

    and

    approved

    by

    theChairmanandGeneralManager.TheBankreservestherightnottoapproveanyoutsideemployment

    thatcouldbedetrimentaltotheBanksinterests.Forthepurposesofthisparagraph,thetermemployee

    doesnotincludedirectorsoftheBank;

    15.10. Work Relationships: no employee may give or receive any special consideration to the conditions ofemployment of another employee due to family or personal relationships. Just as external business

    decisionsarebasedonsound,ethicalbusinesspractices,allpersonneldecisionsmustbebasedonsound

    managementpracticesandmustnotbeinfluencedbypersonalconcerns.

    15.11. Confidentiality: the Bank has the fiduciary responsibility tomaintain all information regarding clients instrictconfidence,includingtheclientsidentity,theclientsfinancialsituation,theclientsportfolioholdings;

    andanyadviceorarrangementprovidedtotheclient,inaccordancewithBankingSecrecyLaw.

    (1) AllemployeesmustcomplywiththeBankssecrecyandprivacylaws.(2) Employeesmustnotdivulge information regarding theBank to anyoutsider except for a legitimate

    businesspurposeandwith theunderstanding that the information is confidentialand is tobeused

    solelyforthelimitedbusinesspurposeforwhichitwasgivenandreceived.

    (3) Employees must collect and maintain only the information that is necessary to serve a client inmanaginghisrelationship/accountsproperlyandtorenderfairadvisoryanddealingservices;

    (4) Employees must maintain in a secure manner all files and record keeping systems which containcustomerinformation;

    (5) Employees, during or subsequent to association or employmentwith the Bank andwithout properauthority,maynotgiveormakeavailabletoanyone,oruseforhisorherownbenefit,informationofa

    confidentialnaturederivedfromassociationoremploymentwiththeBank;

    (6) Employeesareexpectednottodivulgeconfidential informationabouttheBanksassets,businessandareexpectedtouseconfidentialinformationonlyintheperformanceoftheirduties.Employeesshould

    be discreet with the Bank confidential information and not discuss it in places where it can be

    overheard,suchaselevators,restaurants,taxisandairplanes;

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    33/43

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    34/43

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    35/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    35

    15.20. Communication of Information: all communications with clients must conform to BDL regulatoryrequirements,

    the

    Banks

    Conduct

    of

    Business

    Compliance

    Policy.

    All

    information

    provided

    to

    clients,

    prospectiveclients,theirrepresentatives,orthemediamustbeprofessional,unbiased,clear,fairandnot

    misleadinginanyway

    15.21. QualityServiceandComplaintsHandling:allemployeesmustbecommittedtodeliveringqualityservicesina cost effective manner. All employees should provide the best service to clients. All employees are

    expected to treat the client fairlyandcourteously, recognizingclientsdistinctneedsand respect clients

    legalrightsandprivacy.Thefollowingaresomeofthetipsthatshouldbeobserved.

    (1) clientgreeting;(2) fullyexplainfinancialproductsandservicesthatmeetclientsprofileandneeds.(3) remain knowledgeable and well aware of the financial products, market issues and BDL rules and

    regulations;

    (4) accessible,dependableandtimelyresponsiveservice;(5) clear,open,andrespectfulrelationship;(6) mustalwaysshowandacceptresponsibilityandaccountabilityforrespondingtoclientcomplaints;(7) responsiveserviceandcommittedtoimprovement;

    15.22. AntiFraudRequirements:allemployeesarerequiredatalltimesto:(1) acthonestlyandwithintegritytosafeguardtheBanksactivitiesforwhichtheyareresponsible;(2) participateactivelyinprotectingclientsmoneyandinformation;(3) toreportsuspiciousoperationstotheChairmanandGeneralManagerandtheCompliance Officer;

    15.23. AML, CTF and KYC Requirements:AntiMoney Laundering (AML), Counter Terrorist Financing (CTF) andKnowYourCustomer(KYC)areprioritizedfocusareaswithintheBank.Appropriateproceduresareinplace

    andimplementedwithintheBankinaccordancewiththeapplicablelocalandinternationallaws,rulesand

    regulations.AllemployeesmuststrictlycomplywithallapplicableAML,CTFandKYCpolicies,procedures,

    systemsandcontrols.Allemployeesmustbeabletoidentifyandunderstandrisksofmoneylaunderingand

    terroristfinancinginordertoapplypreventivemeasures.AllemployeesmustbeabletoapplyproperKnow

    YourCustomer

    (KYC)

    practices

    for

    understanding

    the

    general

    activities

    in

    which

    aclient

    would

    be

    expected

    toengage.Allemployeesmustbeabletodetectunusualandsuspiciousactivitiesandtodeterminewhether

    aspecificcustomerisincludedondifferentlistingsofterroristsand/orsanctions.

    15.24. Personal Account Transactions: during the course of employment with the Bank, it is prohibited toundertake,orenter into,apersonalaccounttransaction;tocommunicateany informationoropiniontoa

    close relative, familymemberor toanotherperson if theemployee knows,orought to know, that that

    personwillasaresult,enterintosuchatransactionorprocuresomeotherpersontodoso.

    15.25. ClientsOrdersandSuitability:allemployeesmustactinthebestinterestoftheclientswhilereceivingandpassing orders. It is prohibited to make any personal recommendation to any client to buy or sell a

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    36/43

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    37/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    37

    19.

    REPORTING

    POSSIBLE

    VIOLATIONS;

    ACCOUNTABILITY

    FOR

    ADHERENCE

    TO

    THE

    GUIDELINES

    TheBankhasdevelopedthefollowingprocedurestoensurethepromptandconsistentenforcementofthe

    Guidelines, protection for persons reporting questionable behavior, clear and objective standards for

    compliance,andafairprocessbywhichtodetermineviolations.

    (1) Ifanemployeebelievesthatheorsheviolatedorcreatedapotentialviolation,ortheappearanceofaviolation,oftheseGuidelines,eveninadvertently,theemployeeshouldreportthefactsofthesituation

    totheComplianceOfficer.

    (2) If an employee suspectsor is awareof anapparent violation of theseGuidelines orother illegalorunethicalbusinessorworkplaceconductbyanotheremployee, that factshouldbe reported ingood

    faithtotheComplianceOfficer.

    (3) TheComplianceOfficerhasanobligationtoreportthebreachdirectlytotheBoardofDirectorsandtheAMLCC.

    (4) Upon receipt of a breach or suspected violation, the Compliance Officer in consultation with theAMLCC,will evaluate the report as to gravity and credibility. If suchpersonsdetermine that further

    action iswarranted, theywill consult, as appropriate, the BCC or outside advisor (legal or external

    auditors);

    (5) Reportscreatedasaresultofinvestigation,shallbemaintainedbytheComplianceOfficerforaperiodofminimumsixyearsfromthedateofitsreceipt.

    (6) TheBankmustnotifyemployeesuponanymaterialamendmenttotheGuidelines.Onanannualbasis,the

    Compliance

    Officer

    will

    review

    the

    sufficiency

    and

    effectiveness

    of

    the

    Guidelines.

    (7) Retaliation against any employee who reports a violation is strictly prohibited and constitutes anadditionalviolationoftheGuidelines.

    (8) Any violation of these Guidelines could result in disciplinary action, including, but not limited toTermination of employment, Downgrading, Suspension, Warnings, Probationary status and, if

    warranted,legalproceedings.

    (9) Asnecessary,violationsmayresultinreferraltotheBCCorgovernmentauthorities.(10)Noone,regardlessofhisorherposition,isauthorizedtodirectanothertocommitanillegalact.(11)No violationof theseGuidelines,anypolicies,procedures, systems and controls,orany law, ruleor

    regulationwillbejustifiedthatitwasorderedbysomeoneinhigherauthority.

    (12)Should itbediscovered thatanemployeehasbeenarrested foror chargedwith suspected criminalconduct,eitheronoroffthejob,theBankmayconductan independentreviewoftheavailablefacts

    anddeterminewhetherdisciplinaryoremploymentactioniswarranted.

    (13)TheBanksdirectors and SeniorManagement are expected to complywith theseGuidelines and allapplicablelaws,rulesandregulations.Theyarealsoexpectedtopromoteethicalbehaviorby(1)having

    open door policy; (2) encouraging employees to report violations to the ComplianceOfficer and/or

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    38/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    38

    appropriate personnel; and (3) reminding employees that the Bank will not permit retaliation for

    reports

    made

    in

    good

    faith.

    (14)Allemployeesarerequiredtocooperate fully inany internal investigation. Ifanyemployeediscoverstheneedtoreportasuspectedviolation,thatpersonwillnotbeterminated,disciplined,demotedor

    otherwisediscriminatedagainst for (1)makinga reportofaviolationor suspected violation ingood

    faithandonthebasisofareasonablebeliefthataviolationhasoccurredorwilloccuror(2)assisting

    withanyensuing investigation.Totheextentpermissible,theBankwillendeavortokeepconfidential

    theidentityofanyonereportingpossibleviolations.

    20. INTERPRETATIONAND EXCEPTIONS TO THESEGUIDELINES: theseGuidelinesmay be amended ormodified by the Compliance Officer of the Bank. Amendments to the Guidelines will be disclosed to

    shareholdersandallemployeesinaccordancewithBDLandBCCRulesandRegulationsandtheBanksPolicy

    andProcedures.

    21. CERTIFICATIONS:Allemployeesare required to certify compliancewith theseGuidelinesonanannualbasisbysigningandreturningthecertificationattachedheretototheComplianceOfficer.

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    39/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    39

    ANNEX1

    LISTOFSHAREHOLDERSASONMarch10,2011

    ShareholderName BalanceShares % out of common

    170000

    JeanRiachi 23093 13.58

    EmileRiachi 14714 8.66

    GeorgesBouJaoude 11898 7.00

    MariaCatafagoAudi 21356 12.56

    JoeAouad 2869 1.69

    TareckFarah 1593 0.94

    SihamBakhaaziCatafago 6418 3.78

    KapitalHoldingSAL 4446 2.62

    PaulKebbe 100 0.06

    PatrickGeorge 2273 1.34

    ZahiaRiachiJabre 26000 15.29

    AbdelKarimAlKhalil 2272 1.34

    NestInvestmentsHoldingLebanonSAL 4546 2.67

    SalehAlHajjaj 2273 1.34

    AbdelAzizAlAfaliq 6182 3.64

    MohammedAlDhoheyan 4546 2.67

    SalahAlQahtani 2273 1.34

    ShadiKaram 100 0.06

    SultanMohammedBenSalehBenSultan 4546 2.67

    DarwishBenAhmad&SonsCo. 4546 2.67

    MohamedAlQassimi 4546 2.67

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    40/43

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    41/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    41

    ANNEX2

    GROUPSTRUCTUREASONMarch10,2011

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    42/43

    Initial:_________

    CorporateGovernanceandBusinessEthics

    42

    ANNEX3

    ORGANIZATIONALCHARTASONMARCH10,2011

  • 7/27/2019 Corporate Governance & Business Ethics Guidelines

    43/43

    Initial:

    CorporateGovernanceandBusinessEthics

    DECLARATIONOFCOMPLIANCEANDCORPORATEGOVERNANCE

    Name :__________________________________________

    DateofAppointment :__________________________________________

    CurrentPosition/Designation :__________________________________________

    IherebyacknowledgehavingcarefullyreadFFAPrivateBanks.a.l.CorporateGovernanceandBusinessEthics

    Guidelineson_______________(dd/mm/yyyy).

    Iunderstandthatitismyresponsibilitytoreadthisstatementcarefully.Iunderstandthatanyviolationofthe

    Guidelines or illegal or unethical conduct is subject to disciplinary action, up to and including removal or

    dismissal,and,ifwarranted,legalproceedings.

    IamexecutingandsubmittingthisReceiptandCertificationFormbecause:

    Iamcurrentlyanemployee,officerordirector,andIamsubmittingeitheran initialorarequiredannual

    Receipt&CertificationForm.

    Iamanewemployee,officerordirector.

    Iamawareofmyrolesandresponsibilitiesasprovidedundermyjobdescription.Iundertaketostandready

    toservethevaluesandprinciplesoftheBank.

    IundertaketocomplywiththerequirementoftheseGuidelinesandwithallapplicablePolicies,Procedures,

    Systems and Controls of BDL, BCC, the Bank, and the applicable laws and regulations, a copy ofwhich I

    acknowledgehasbeenmadeavailableformyreview,andanyotherproceduresandmanualsassuppliedto

    mefromtimetotime.

    _________________________/_________________________ Date:_____________

    EmployeeName

    Signature

    (dd/mm/yyyy)

    _________________________/_________________________ Date:_____________

    Witnessedby:Name Signature (dd/mm/yyyy)