Towards “Shareholder Spring” in the Middle East?

Abstract

The events witnessed in the Middle East and North Africa (MENA) region over the past 3 years have resulted in a profound questioning of the economic and social pact in some countries of the region. And yet, the role of corporations as main actors of wealth generation and distribution has not been subject to much debate. As a result, corporate governance, as a field of research, has rarely found its place in the discussion on how to improve the productivity and integrity of MENA economies. Good corporate governance is clearly a part of the solution to both immediate and longer-term challenges of the region. Examining some of the largest companies in the region – listed and state-owned – this chapter seeks to highlight key developments in their governance and demonstrate how these might have impacted their profitability, integrity and the maintenance of the “new pact” between governments and citizens in the region in the wake of the Arab Spring. The key premise of this chapter is that unlike in other jurisdictions, developments in governance in the MENA region are driven almost entirely by regulation. Despite complaints against corruption, crony capitalism and other decisions taken against shareholders interest, the region has seen virtually no shareholder engagement. And yet, for corporate governance to serve the interest of companies and societies, it cannot be imposed through regulatory requirements only: shareholders, especially large institutional actors, also need to be part of the ongoing debate on the role of corporations in the future of the region.