BSL BANK SAL
CORPORATE GOVERNANCE GUIDELINES
OBJECTIVE
The Board of Directors (“The Board”) and the Management of BSL BANK SAL (“BSL”) are committed to
corporate governance.
BSL’s Corporate Governance Policies and Practices have been designed to ensure its focus is on its responsibilities
to its shareholders, and on creating long-term shareholder value.
The Board of Directors is committed to acting in the best interests of The Bank’s shareholders.
The Board fulfils its role directly and through Committees, to which The Board delegates certain responsibilities.
The Board and its Committees is focused on the continued improvement of governance principles and practices.
Maintaining a commitment to corporate governance requires a constant review of such principles and practices, in
order to ensure that evolving best practices and regulatory guidance are met and/or exceeded.
These Guidelines have been approved by the Board of Directors and, together with the Charters and key practices
of the Board and its Committees, provide the framework for governance at The Bank.
These Guidelines are subject to further refinement or changes as The Board may see fit or desirable, in order for
further development and the well being of The Bank.
ROLE OF THE BOARD AND MANAGEMENT
The Bank business is conducted by its employees, managers and officers, under the direction of the Chairman
General Manager and the oversight of the Board, with the goal to enhance the long-term value of The Bank
towards its shareholders.
The Board is elected by the shareholders, in order to oversee management and to assure that the long-term interests
of shareholders are advanced responsibly by addressing the concerns of other shareholders and interested parties,
including employees, customers, regulators, The Bank’s communities, and the public.
The Board’s main responsibilities include the following:
1.
Disclosure of Reliable and Timely Information to Shareholders
The shareholders depend on The Board to help them to receive the correct and most up-to-date
information.
2.
Approval of the Bank’s Strategy and Major Policy Decisions
The Board must seek to understand and, where applicable, to approve the direction of The Bank. The
Bank must also be regularly informed on the progress towards the objectives and be part of the approval
process, including being part of all major decision making processes.
3.
Evaluation, Compensation and Succession for Key Management Roles
The Board must be satisfied that the key roles have the best people assigned to them, and that such
people are regularly monitored and evaluated by the Board, and are appropriately compensated, in order
to encourage The Bank’s long-term success.
4.
Oversight of the Management of Risks and the Implementation of Internal Controls
The Board must be satisfied that the assets of The Bank are protected and that there are sufficient
internal controls to ensure continual maximum protection.
5.
Effective Board Governance
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Members of the Board needs to include strong members who possess the best and most appropriate
skills, and who are privy to the correct information in order for The Board to function properly and, in
equal measure, to excel in its duties.
BOARD OF DIRECTORS
Director Independence
The Board believes that it needs to be able to operate independently of management in order to be effective.
In essence, this means that a large majority of The Board and all Committee members are not part of Bank
management and do not have relationships with The Bank that would make them personally beholden to The Bank
and, consequently, interfere with independent judgment.
In order to be considered an independent non-executive (non-management) director by The Board, a director’s
relationship with the Bank must not interfere with independent judgment in carrying out responsibilities as an
independent director.
Such a relationship should be assured when a director ( or any of his/her affiliates) is :
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a significant client of the Bank. (A significant client is considered to be one who is among the top 10
clients of the Bank or any of its affiliated companies, in terms of either total value of outstanding credit,
and/or deposits or fees paid during the previous calendar year).
a significant supplier of The Bank over the 3 preceding calendar years.
a present or previous consultant to the Bank or a partner or employee in a firm that has provided
consulting services to The Bank over the year preceding the appointment.
in receipt of more than 5 % of outstanding BSL common stock.
not, upon appointment, or has not been a partner or an employee of the Bank's external auditor in the
preceding 2 years.
not in the position of being in any joint venture or other type of partnership that represents more than 2
% of either of the partners' revenues, in terms of the balance sheet value of respective stakes.
For the purposes of the present Guidelines, an affiliate of a director is, as the case may be:
i.
any immediate relative up to second degree of kinship or spouse or
ii.
any commercial entity of which a director or its affiliates under (i) are Board
members, senior executives or partners or of which they control directly or indirectly
more than 10 % of its decision making rights.
Chairman of the Board
The role of the Chairman of the Board is to facilitate the functioning of The Board, independent of management,
and to maintain and enhance the quality of corporate governance at the Bank.
The Chairman of the Board represents The Bank in all instances, and in accordance to Lebanese law.
The Board has the ultimate power to make decisions on all issues of management (except in those areas that are
reserved by law or by the By-laws of The Bank) to the authority of the Chairman of the Bank or the General
Meeting of Shareholders.
The Chairman is to be elected by the Board of Directors and assume the following role and responsibilities:
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Responsibilities of the Leadership of the Board, including the fulfillment of all The Board’s tasks and
responsibilities, such as the proper planning of its agenda, the effectiveness of its meetings, and the
efficient use of The Board's time.
Calling and presiding over the meetings of The Board, approving all agendas, and guiding the Corporate
Secretary on all matters relevant to The Board.
Ensuring at all times that the directors receive, in a timely manner, clear and accurate information.
Facilitating the effective contribution of non-executive / independent directors.
Being available to shareholders as the Representative of the Bank and being its principal voice on all
matters.
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The Chairman is also the General Manager of the Bank. He / she shall propose to The Board the appointment of a
General Manager, other than him/herself, and who is to assume the responsibility of managing the business and
operations of The Bank on behalf of the Chairman and with accountability to the Chairman and The Board.
Board Size and Other Board Composition Considerations
The Board is required to have a minimum of seven directors. The exact size of The Board is to be set in the annual
General Assembly meeting and is based on the recommendation of the Chairman.
The Board size may be changed from time to time between annual meetings by the General Assembly.
In considering Board size, The Board balances the competing goals in keeping The Board size small enough for
effective discussions yet, in the context of The Bank’s business and operating environment, also offers adequate
representation that meet the demands of Board and Committee work,
The Board composition should consist of the following qualified directors:
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The majority of Board members must be Lebanese.
The Board should consist of a number of Non-Executive Directors, representing shareholders or
shareholders group, who are not employed by The Bank or other Group affiliates, and who are not
involved in its day-to-day business.
At least 3 members of the Board should consist of Independent Non-Executive Directors.
Each year The Board must carefully examine its composition, including issues relating to its size and balance,
taking into consideration factors of age, professional background, and industry representation.
The Board will satisfy itself that the Directors of the Bank, taken as a whole, have the right skills, experience and
capabilities to meet the challenges that The Bank faces daily.
The Board strives to be constituted in order to achieve a balance between experience and learning on the one hand,
and the need for renewal and fresh perspectives on the other hand.
Board members should be endowed with a broad spectrum of educational backgrounds and expertise. Each
director must be of sound mind and he/she must be physically able to carry out his or her duties and
responsibilities as a director, as well as being willing and able to meet Banque du Liban (BDL) requirements.
Process for Recruiting New Directors
The Board is to recommend director nominees to the shareholders. In turn, a voting system is to be employed,
whereby at the annual meeting the shareholders are to vote on each (director) nominee put forward.
The Board is responsible in determining what skills, qualities and backgrounds The Board requires in order to
fulfill its many responsibilities (as set out in the Bylaws and Committee Charters), and in view to seeking a
diverse representation on The Board.
The Board must actively seek candidates that are able to successfully fill any gaps in the skills, qualities and
backgrounds of Board members.
The Board must also rigorously aim to assess a candidate’s ability to make a valuable contribution to The Board
(including consideration of whether each new nominee can devote sufficient time and resources to his/her duties as
a Board member).
In addition to having the requisite skills and experience, all directors must meet the qualifications for the role of
director, as set out by the Lebanese Law and BDL. This includes meeting the highest ethical and fiduciary
standards, possessing the relevant knowledge and inquisitiveness about the issues facing The Bank, and possess
sound judgment and commitment to The Board and The Bank.
Non-Executive directors should strive to meet the standards for independence from management.
Election of Directors
Each director must be elected by a vote of the majority of the shares represented in person or by proxy, at any
shareholders general meeting (General Assembly) for the election of directors.
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Director Conflict of Interest
Directors shall not be eligible for election if they have a potential or actual conflict of interest that may be, in any
way, incompatible with service as a director. One such example is having a material interest in an entity that
competes directly with a core activity of The Bank.
Directors must provide The Bank with complete and accurate information regarding all entities in which they have
a vested and material interest, in order for any conflict of interests regarding any such entities to be identified.
It is the responsibility of a director to submit a report to The Board whenever there is a conflict of interest or
potential conflict of interest between him/her and The Bank.
Reports should also be made and submitted in cases where/when a member of The Bank management feels
compelled to bring an issue to the attention of a director or The Board.
The issue and details of the situation and the nature and extent of the conflict of interest must be declared and
disclosed in reasonable detail, along with any other relevant information.
The Board may obtain any additional information it deems appropriate. After reasonable analysis of the report,
The Board will determine a course of action that is appropriate and which will always be in view to the best
interests of The Bank.
Director Attendance and Preparation
Directors must be committed to the attendance of Board and committee meetings.
Likewise Directors are expected to be fully prepared for the participation of such
meetings.
If a director fails to attend the Board and Committee meetings, The Board
has the right to seek the reasons for non attendance and to take steps towards working
with the director to improve his/her attendance.
It is important to note that Director attendance is a key factor to be considered in the
nomination and re-election process.
Confidentiality
Directors must maintain a strict confidentiality policy at all times, regarding all information concerning The Bank,
and which has not been disclosed by the Bank.
Directors have a duty not to disclose any information, data, reports or background information which comes to
their knowledge in the course of their duties, as long as this information has not otherwise become public. This
obligation shall continue once a director has left The Board.
Related Party Transactions
All transactions between the Bank and a director (or his / her affiliates) that do not fall within the normal bounds of
banking business or are substantially different from those prevailing at the time for comparable transactions with
non-affiliated persons should be approved by The Board and consequently by the shareholders general meeting
(General Assembly).
Directors shall disclose in a timely manner any such transactions to The Board.
DIRECTOR TENURE
Normal Term
Directors are elected for a term that is not to exceed 3 years.
Term Limits
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Other than as provided by these Guidelines herein, each director shall serve on The Board in accordance to the
following term limits:
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Directors can be re-elected indefinitely.
There is no retirement age limit for directors of the Board.
Disqualification
A director ceases to hold office when he/she becomes disqualified or ineligible to o do so or is removed by the
shareholders.
Resignation of Non-Executive Directors
Each non-executive director, upon any material change in his/her status or circumstances, must offer his/her
resignation forthwith to the Chairman of the Board.
The Board will determine whether a director's Board membership continues to be appropriate under such
circumstances.
Examples of such material change are the following:
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a significant change in job responsibility/ies, occupation or employment.
potential or actual conflict of interest and which is incompatible with service as a director.
any mental or physical impairment that renders the director unable to perform effectively his/her duties
as a director.
any loan from The Bank to the director that transpires to be not in good standing.
becoming the subject of a charge under a criminal or quasi criminal statute in Lebanon or elsewhere.
becoming the subject of investigation by a duly constituted branch, agency or commission of the
Government of Lebanon or elsewhere, in connection with any conduct involving illegal or immoral
activity.
engaging in conduct or activity that could reasonably be construed as likely to materially and adversely
impact the status or reputation of The Bank.
Resignation of Executive (Management) Directors
Any executive officer of BSL BANK SAL who serves on The Board must, upon resignation, retirement or
removal as an executive officer of The Bank, offer his/her written resignation as a director to the Chairman of the
Board.
To assist with the orderly transition of executive functions, The Board will determine whether it would be
appropriate under the circumstances for such a director's Board membership to continue for a further period of
time to serve on The Board.
FUNCTIONS OF THE BOARD
Board Operations
The Board meets at least four times per year as required by the regulators, and as scheduled by the Chairman of the
Board in conjunction with the Corporate Secretary.
For scheduled regular meetings, a draft agenda and further documents for consideration are to be provided to all
directors approximately one week in advance.
For special meetings of The Board, the best efforts are to be made to distribute materials to the directors as far in
advance as is practicable.
A complete Board package, which is to include all material for the meeting, is to be provided to each director at
the commencement of each aforesaid meeting.
The Chairman of the Board, in conjunction with the Corporate Secretary, is responsible for setting the agenda for
each Board meeting.
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The Board has the ability to conduct all or part of any meeting in the absence of management.
Committee Composition
The Board should establish and maintain the following regular committees:
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The Audit Committee ("AC")
The Risk Committee ("RC")
Each Committee operates under a written Charter that sets out its responsibilities and composition requirements.
The Board decides on the composition of each Committee.
All Committees are composed of directors of the Bank and, in respect of such Committees, are to satisfy all
applicable regulatory requirements.
The Board approves the composition of Committees and has the power to remove members in accordance of
applicable rules and regulations, and any other relevant considerations.
In determining appropriate membership of Committees, The Board, in order to have fresh ideas and insights,
actively tries to strike a balance between having members who possess adequate experience and expertise on the
Committee and having a rotating membership,
Committee Operations
Each Committee, as set out in respective Charters, meets for a set minimum number of times per year.
The Chair of each Committee, in conjunction with the senior business executive assigned by The Bank
management to assist the Committee, sets Committee meeting agendas and effectively conducts the administrative
affairs of the Committee, including reviewing the information provided to the Committee, in order to confirm it is
appropriately detailed, and to allow for the preparation of meaningful discussion and decision making to take
place.
All non-executive directors who are not members of a Committee have a standing invitation to attend meetings of
the Committee, but are not eligible to participate in the voting process.
Additionally, each Committee may invite to its meetings any director, member of management of The Bank, or
such other persons as it deems appropriate, in order to carry out Committee responsibilities.
Each Committee may also exclude from its meetings any persons it deems appropriate, in order to carry out
Committee responsibilities effectively and efficiently.
For scheduled regular meetings, a draft agenda, and further documents for consideration, are to be provided to all
Committee members approximately one week in advance.
For special meetings of Committees, the best efforts are undertaken to distribute materials to the Committee
members as far in advance as is practicable.
The Chair of each Committee is to report material matters arising at the Committee meetings to The Board after
each Committee meeting has taken place.
The minutes of each Committee meeting are to be made available to The Board.
In addition, the Committees are to review the Charters each year, in order to be satisfied that regulatory and
shareholder obligations are met and/or exceeded.
Pursuant to the Charters and appropriate to The Bank fulfilling its responsibilities, each Committee has the
authority to conduct any investigation and access any officer, employee or agent related in any way, shape or form
to The Bank.
Each Committee has the authority to engage independent advisors, paid for by The Bank, in order to provide
expert advice as required.
Committee Chairs
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The Chairs of the Audit Committee and the Risk Committee shall be appointed by The Board.
The term of the Chairs of such Committees shall not exceed 3 years.
Upon the agreement of the Board and the acceptance by the incumbent Committee Chair, the term of a Chair of
any such Committee may be extended for an additional period and indefinitely.
DIRECTOR ORIENTATION AND EDUCATION
The Bank is to provide comprehensive sessions in order to orientate new directors. During such sessions, members
of The Bank’s executive management team are to present and answer questions on:
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how The Bank is managed.
The Bank’s key businesses, strategic direction, human resources, information technology, regulatory
environment.
any significant issues and key risks The Bank faces.
Directors have complete access to The Bank’s management, in order to become and to remain informed about the
business of The Bank, and for any other purposes that may be helpful to The Board and its Committees in fulfilling
responsibilities.
DIRECTOR COMPENSATION
The Ordinary General Assembly is, on an annual basis, responsible for reviewing and fixing the director
compensation and for determining the adequacy and form of director compensation.
BOARD FEEDBACK PROCESS
The Board shall evaluate annually the effectiveness of the Committees and their Chairs, and individual directors.
The Board’s approach to the feedback process is meant to be constructive and is meant to ensure the right
programs are set in place for the continuous improvement of directors’ skills, The Board’s functioning ability, and
their effectiveness.
GENERAL MANAGER POSITION DESCRIPTION AND EVALUATION
The Board is to review and approve on an annual basis the General Manager Position Description; and
recommends to The Board for its approval the corporate goals and objectives for which the General Manager is
responsible (which include all performance indicators and key milestones relevant to the General Manager
compensation).
The Board is to monitor the General Manager performance relative to such goals and objectives.
The Board is also responsible (at least annually) for the evaluation of General Manager performance. The
Chairman of the Board is to lead the formal evaluation process.
Subsequently, the Chairman of the Board is to meet with the General Manager in order to provide constructive
feedback.
SUCCESSION PLANNING
The Board is responsible for the General Manager succession planning in order to satisfy that a robust succession
planning process is in place for all critical leadership positions in The Bank. This includes identifying potential
succession candidates for the General Manager; and fostering depth of management, by rigorously assessing
candidates for further senior positions; and reviewing development plans for senior officers.
ESTABLISH AND MONITOR STANDARDS OF BUSINESS CONDUCT AND ETHICAL BEHAVIOUR
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The Bank, as a responsible business enterprise and corporate citizen, is committed at all times to conducting its
affairs to the highest standards of ethics, integrity, honesty, fairness and professionalism.
While reaching and achieving its business goals is critical to The Bank’s success, of equal importance is how the
Bank achieves such goals. To this end, The Board has adopted the Code of Conduct and Ethics (the “Code”),
which is to be applied to all levels of the organization, be it the major decisions made by The Board and/or to the
day-to-day transactions occurring in The Bank’s individual branches.
The Code establishes the standards that govern the way employees, managers, and directors deal with each other,
and with The Bank’s shareholders, customers, suppliers, competitors and communities.
Within this framework, employees, managers, and directors are expected to exercise good judgment, best practice
and be accountable for their actions.
Compliance of the Code is part of all BSL employees’ employment contracts.
All directors and employees are required annually to review and attest to compliance with the Code.
COMMUNICATION POLICY AND MEASURES FOR RECEIVING FEEDBACK
The Board responsibilities are to include satisfying itself that The Bank communicates effectively with its
shareholders and other interested parties through a responsive communications policy.
The Bank maintains a Disclosure Policy that sets out The Bank’s commitment in providing to all concerned parties
timely, accurate and balanced disclosure of all material information that pertains to The Bank.
The Board is to oversee that there are clear channels and regular opportunities for shareholders and their
representatives to communicate with The Bank or The Board.
The Audit Committee is to monitor a whistleblower program, in order to provide a confidential and anonymous
communication channel, whereby employees and other shareholders are able to raise concerns regarding
accounting, internal accounting controls, operational controls, ethical business or personal conduct, integrity and
professionalism.
Shareholders or managers or employees may communicate directly with the directors via the Chairman of the
Board, ℅ BSL BANK SAL, P.O. Box 11-957, Beirut, Lebanon or by sending an e-mail ℅ BSL Shareholder and
Employee Relations at info@bsl.com.lb.
The Chairman is committed to relay to the directors any communication received from a shareholder or employee
expressing that intent.
EXECUTIVE COMPENSATION
The Board of Directors is to review on an annual basis the executive compensation policies, procedures and
decisions.
The disclosure regarding executive compensation contained within the annual report must be complete, clear and
understandable.
The Bank is committed to continuously improving the executive compensation disclosure.
IMPLEMENTATION AND REVIEW
Senior Agreement and Letter of Appointment:
Upon appointment, all directors are to receive and to countersign a Service Agreement or a Letter of Appointment,
which highlights responsibilities, rights and duties, including a duty to adhere to these Guidelines.
Review and Amendments:
The present Guidelines are reviewed annually by The Board, along with further elements of The Bank's corporate
governance framework.
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The Board might, upon its own initiative, adopt amendments to the present Guidelines at any given time.
Transitional Provisions:
The Board and The Bank are to implement within one year of their adoption all provisions set down in the present
Guidelines.
Adopted by the Board on December 2011
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