Corporate Governance

EFG Hermes Holding upholds the highest levels of corporate governance on the group and subsidiary level, with rigorous processes, policies, and procedures in place that ensure transparent and ethical running throughout the organization. The Firm’s prudent management and governance frameworks that have been at the heart of its success over the years will continue to play a central role as the Group evolves and further cements itself as a universal bank in Egypt with a leading investment bank franchise across the entire FEM space and a dedicated commercial banking arm.

The Firm’s Board of Directors is committed to providing EFG Hermes Holding with the needed guidance and support acquired over decades of cumulative experience. This expertise has helped EFG Hermes Holding grow sustainably while delivering value to all its stakeholders.

The Group’s Corporate Governance Framework addresses country-specific policies and works to blend EFG Hermes Holding’s group-wide strategy with the more focused subsidiary development programs. The framework provides the grounds for efficient decision-making across the entire organization and guarantees a high degree of accountability to ensure that all shareholders and clients have their investments handled in a responsible and professional manner. The framework sets out the minimum standards expected Group-wide while complying with local laws and regulations for an even higher level of stringency.

Based on the mandate of this framework, the Board of Directors continues to comply with the Egyptian Financial Regulatory Authority’s (FRA) corporate governance regulations released in 2016 and updated in 2020, stipulating the appointment of a majority of non-executive board members half of whom (with a minimum of two) should be independent for all regulated Egyptian subsidiaries. EFG Hermes Holding is fully compliant with FRA regulations and EGX listing rules. Moreover, the Firm complies with the new FRA mandated regulations requiring all regulated companies in Egypt to have at least two female board members.

EFG Hermes Holding’s Board of Directors is responsible for providing the Firm with strategic leadership, financial soundness, governance, management supervision and control. The Board is comprised of 12 members, 11 of whom are non-executive.

Without exception, all EFG Hermes Holding’s Directors possess a broad spectrum of experience and expertise, directly related to the Group’s expansive lines of business and divisions, with a strong emphasis on competence and integrity. Directors are selected based on the contributions they can make to the Board and Management in addition to their ability to represent the interests of shareholders.

Due to restrictions imposed by the COVID-19 pandemic, 2021 saw the Group continue to adapt in the face of region-wide restrictions and the evolving challenges posed by the pandemic when it came to precautionary procedures. All face-to-face interactions, including the Annual General Meeting (AGM), committee proceedings, and executive committee meetings continued to be held virtually, and the Firm collaborated with an EGX-affiliated company to implement an e-voting system during the AGM, which was completed with great success. The year also saw increased levels of collaboration between divisions with a portion of staff across its footprint continuing to work from home to ensure that the challenges posed by the pandemic did not impact employee health and safety nor business continuity when it came to overall governance matters.

The following principles govern the conduct of the Board of Directors and the Firm:

Adherence to the law is the fundamental principle on which the Firm’s ethical standards are built. All directors must respect and obey all applicable laws, rules, and regulations. The board complies with the international best practices, rules, and regulations of the Firm in addition to laws and regulations of the markets in which the Firm operates.

All members of the board declare their outside business interest and board directorships annually. They also abstain from participating in any discussions and decisions that might affect their own personal interests or those of a loosely related person or company. Business relationships between the Firm and any of its board members must be approved by the Firm’s AGM.

All directors endeavor to protect the Firm’s assets and ensure their efficient use. All assets must be used for legitimate business purposes only.

Each director should deal fairly with the Firm’s clients, competitors, providers, and employees. None should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing practice.

The Code of Conduct defines core values, principles, and other requirements that all the Firm’s directors and employees are required to follow while conducting their regular daily duties.

The Firm’s standards and policies comply with Egyptian as well as international corporate governance guidelines.

Directors and officers must ensure the confidentiality of information entrusted to them by the Firm or its clients, except when disclosure is authorized or legally mandated. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Firm or its clients if disclosed.

Directors are prohibited from taking personal advantage of potential opportunities that are revealed through corporate information, property, or position without the consent of the board. Directors are obliged to advance the Firm’s legitimate interests when the opportunity presents itself.

Auditing forms an integral part of corporate governance at EFG Hermes Holding. Both internal and external auditors play a key role in providing an independent assessment of the Firm’s operations and internal controls. Furthermore, to ensure independence, Internal Audit has a direct reporting line to the Audit Committee, a subcommittee of the Board.

The Audit Committee is comprised of five members, all of whom are non-executive. The committee meets at least once per quarter or as required. In 2021, the meetings were held virtually. The committee is responsible for oversight of financial statements and financial reporting, internal control and governance systems, compliance with laws and regulations, whistleblowing and fraud, the internal audit function and compliance with the Code of Conduct established by management and the board. The committee ensures free and open communication between the committee members, internal auditors, management, and the external auditor once a year.

The Risk Committee is comprised of five members, all of whom are non-executive. The committee meets at least once per quarter or as required. In 2021, the meetings were held virtually. The committee overseas risk, legal, and operational issues across the Group, assisting the Board in fulfilling its duties with regards to the oversight of (1) identification and management of risks; (2) adherence to risk management policies; and (3) compliance with risk-related regulatory requirements, advising the board on risk appetite and tolerance in accordance with its strategic objectives. It is responsible for advising the board on risks associated with strategic acquisitions or disposals and to review comprehensive reporting on Group Enterprise Risk Management, including reports on credit, investments, market, liquidity and operational risks, business continuity, and regulatory compliance.

The Compensation Committee is comprised of five non-executive board members. The committee meets once a year to study compensation within the Group as a whole (and for senior management in particular) and to assist the Board in fulfilling its duties with regards to strategic human resources issues and the remuneration policies of EFG Hermes Holding. This not only safeguards shareholder interests, but also ensures that management’s interests are fully aligned with those of the Firm. The committee directly manages the allocations within the Management Incentive Scheme for Senior Management as approved by the General Assembly. In 2021, the meetings were held virtually.

The Corporate Governance Committee is comprised of three non-executive board members, and holds one meeting per year. The committee’s responsibilities include periodically evaluating the Firm's corporate governance structure, reviewing and monitoring the implementation of the company’s corporate governance framework, documenting and following up on the board’s performance evaluation reports, reviewing the regulators observations related to the implementation of corporate governance, and ensuring that they are appropriately handled and addressed.

The Nomination Committee is comprised of one executive and three non-executive board members. It assesses and oversees the appointment of Board Members, the Group Chief Executive Officer, and Group Executive Committee members. It is the committee’s responsibility to make sure appointments, which must be approved by the Annual General Assembly, align with the Group’s strategic directives, and ensure the independence of directors in accordance with applicable laws, regulations, and the best international practices. The committee also conducts regular assessments of the structure, size, and composition of key executive positions at the Group level along with reviewing the Group’s overall corporate governance framework. The nomination committee’s meetings are scheduled and held on an as-needed basis.

The Executive Committee is appointed by EFG Hermes Holding’s Board of Directors and is comprised of eight members, who are strategically selected to ensure all divisions are represented. Moreover, the Executive Committee is entrusted with the implementation of the policy decisions of the board and overseeing the Firm’s risk management structures and policies.

1. Developing the Firm’s strategic plans and goals for board approval while managing material issues to the business that emerge.
2. Approving transactions within its authority limit in relations to investments, acquisitions, and disposals in addition to considering and approving expansions into new geographies and product lines.
3. Reviewing the Group’s annual capital, revenue, and cost budgets while monitoring performance against financial objectives in addition to approving cost-cutting measures as needed.
4. Overseeing the management of the Group’s current and future balance sheet in line with its business strategy and risk appetite.
5. Considering material joint ventures, strategic projects or investments and new businesses from a capital perspective while monitoring and managing capital and liquidity positions.
6. Aligning investment spending across the Group functions with its investment plan and strategic objectives and consider business commitments for Board approval.
7. Receiving and considering reports on operational matters material to the Group or have cross-divisional implications
8. Promoting the Group’s culture and values and monitoring overall employee morale and working environment.
9. Identifying ESG matters that affect the operations of EFG Hermes Holding, monitoring ESG integration throughout the Firm and passing ESG resolutions while suggesting updates to the ESG policy for board approval.

The Executive Committee meets once a month to discuss and follow up on day-to-day operations of the Firm and address any pressing issues that may arise. In 2021, most meetings were held virtually.

EFG Hermes Holding’s shares are listed on the Egyptian Exchange (EGX) and the London Stock Exchange (LSE) in the form of USD-denominated GDRs.

EFG Hermes Holding is required by law to notify the Egyptian Stock Exchange (EGX) and the Financial Regulatory Authority (FRA) of shareholders whose holdings reach or exceed 5% of voting rights. Further notification is made once a multiple of the 5% is exceeded or reduced by a shareholder.

• As of 31 December 2021, a total of 10,764 shareholders were listed in the Firm’s share register.

• As of 31 December 2021, the EFG Hermes Holding Board of Directors held a total of 1,052,146 shares, representing 0.11% of the total 973,070,671 shares of EFG Hermes Holding.

All information relating to EFG Hermes Holding’s Securities held or transacted by members of the Board of Directors and other insiders are promptly disclosed and reported without fail in accordance with relevant local and international regulations.