Corporate Governance The General Principles of CG The subject of corporate governance occupied the forefront of economic departments in various countries as a result of the financial crises, That effects a lot of shareholding companies which led to shake the confidence in these companies management and the validity of its declared financial results and the real value of the prices of these companies shares in the stock exchange markets leading to negative repercussions. The global crisis during the last quarter of 2008 came to reaffirm the importance of the corporate governance standards as this crisis revealed that the weakness in corporate governance standards in both the banking business and the business of other companies was within the range of several factors that contributed to the outbreak of the global financial and economic crisis. The corporate governance in banks has a particular importance because of the magnitude of the risks and consequences resulting from improper practices and non implementation of corporate governance standards in the banking business in light of the important role banks are playing in the economic life, and its deep relationship with the society as whole such as depositors, borrowers, shareholders and employees, in addition to the importance of products and services provided by banks to the national economy. These all factors make corporate governance practices in banks are important for each bank and its financial system, which makes it one of the important pillars of effective governance for financial stability. Hence, and In line with the development and progress of the international control standards designed to enhance corporate governance in banks, the Central Bank of Kuwait has issued on June 20, 2012 new instructions (corporate governance standards in Kuwaiti banks) which replaced the old instructions issued on May 2004. These instructions emphasized on developing corporate governance standards in banking sector to match international standards issued by relevant international organizations , taking into account lessons learned from the global financial crisis. Central Bank of Kuwait instructions included nine basic pillars of Corporate Governance: 1. 2. 3. 4. 5. 6. Board Of director’s and Board Members duties and responsibilities. Corporate value, Conflict of Interest, and Group Structure. Senior Executive Management. Risk Management & Internal Control. Remunerations’ Systems and Policy. Disclosures and transparency. 7. Complex Corporate Structure. 8. Protection of Shareholders’ Rights. 9. Protection of Stakeholders’ Rights. practicing corporate governance effectively is the most important key factors to boost confidence in the banking system and it is necessary for the proper functioning of the banking and macroeconomic performance, as any weakness in applying the governance standards will affect the work of the banks, leading for high costs on the state, and negative consequences in the economy sector, especially in case of incidence of systemic crisis which negatively affect the payment and settlement systems. To get sound practice of Corporate Governance, Banks should depend on distribution of powers and responsibilities and arranging the bank affairs between the Board of Directors and the Executive Managements, Such as the following: Set the bank Strategy and Objectives. Identify the bank’s risk tolerance /appetite. Operate the bank’s day to day business. Protect the interest depositors, meet shareholders obligations, and take into account the interests of other stakeholders. Operate the bank business in safe, integrity and sound manner, and in compliance with applicable laws and instructions. Manage the bank, taking into account not to expose the banking sector to any system crisis.