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Middle East investor strategy requires better education

Education and better communication are the ways forward for improving on and strengthening the prevailing investor relations strategy of public listed companies in the Middle East.

That was the message from a group of panelists comprising local and international heads of business and investor relations officers and corporate governance expert at the fifth annual conference of Middle East Investor Relations Society held in Dubai yesterday.

While some companies have come a long way when it comes to adopting responsibility of developing a better investor relations strategy, there are many others who struggle and even do not take it seriously. In a quick on the spot survey of the assembled audience comprising of investor relations officers (IROs) and other related stakeholders, a substantial number voiced their concern on not just access to management disclosure but to the quality of disclosure.

However, the impediment towards a successful investor relations strategy revolves around the empowerment of IROs. In another on the spot survey of the members present, a majority said there were not empowered by their management towards achieving their goal of improving relations. Fifty one per cent of those assembled said they were not empowered, 28 per cent said they were and 22 per cent were not sure.

“With time a lot of companies have realised how they can communicate their information to their shareholders,” said Majid S. Al Ghurair, chief executive of the Al Ghurair Group of Companies. “It is not just about meeting once during the AGMs (annual general meetings) and going through the agendas.”

One of the concerns commonly voiced in corporate circles and by bodies of corporate governance in the region is that while there are boards in place, following stricter enforcement of market regulations, members are not always aware of their role and the role and importance of investor relations cells. This comes into sharp relief in cases of family businesses, many of which are controlled by founder-owners or their next generation members.

“A lot of boards need to be educated themselves,” said Al Ghurair, adding that the employees as well as the shareholders need to be educated too.

In terms of best practices, Patrick Tobias, senior vice president of IPREO, a provider of market intelligence, which also works to enhance investor relations efforts, said that when it comes to communication it has to be simple” “short, precise and consistent.” And consistency would mean communicating internally and externally not just once a year, but once a month, if not every second week.

Globally speaking, there is a major change when it comes to requirements of Boards, especially in the period after the global financial crisis, said Leonardo Peklar, chief executive of Hawkamah, the Institute for Corporate Governance, DIFC. The changes, he said, are coming in the forms of reporting, which is becoming much more content oriented; risk orientation; technology and finally, what is going to be happen in the future is the big differentiation in the way the retail and the long term shareholder has to be approached.

On the issue of convincing the senior management to provide more time to IROs, Michael A Miller, head of investor relations of National Bank of Abu Dhabi, said that “the way to get management on board is to provide value.”