During 2024, the PCMA completed work on developing the corporate
governance guidelines for companies listed on the Palestine Exchange. This
effort was aligned with developments in the relevant legislative frameworks,
particularly Law by Decree No. 42 of 2021 on Companies, as well as recent
advancements in corporate governance principles over the past few years. These
changes highlighted the need to update the Corporate Governance Code issued in
2009. The old Companies Law No. 12 of 1964 had been one of the main legal
obstacles to enforcing the provisions of the 2009 Corporate Governance Code.
Following the issuance of the new Companies Law under Law by Decree
No. 42 of 2021, which was designed to reflect various developments in Palestine
and better align with governance principles, the PCMA found it necessary to
update the Corporate Governance Code to reflect the legal developments
introduced by the new law. This was done through the issuance of corporate
governance instructions for listed companies, which include mandatory
governance rules. The instructions also allow the PCMA to issue optional
governance rules, with the aim of ensuring alignment, compliance, and
consistency with legislation, enhancing companies’ ability to effectively adapt
to achieve compliance, and improving their level of governance in line with
recent developments in corporate governance principles.
In this context, and as part of its efforts to establish sound
rules and best practices for the governance of publicly listed companies on the
Palestine Exchange, the PCMA, in partnership with the International Finance
Corporation (IFC), worked on developing corporate governance rules for listed
companies. This process involved assessing the current situation, identifying
gaps based on specific standards and the experiences of regional and
neighboring countries, and conducting a comparative assessment with seven
countries: Jordan, Egypt, Saudi Arabia, Türkiye, South Africa, the United
Kingdom, and Vietnam. The outcome was a draft set of corporate governance
instructions for companies listed on the Palestine Exchange, along with a set
of optional governance rules, aligned with the prevailing conditions and
legislation in Palestine. The draft also incorporates developments introduced
by the new Companies Law No. 42 of 2021, taking into account governance
principles and standards recommended based on a review of current regional and
international best practices, with greater emphasis on control environments,
written policies, and conflict of interest prevention.
The Objective of Issuing the Corporate Governance Instructions for
Companies Listed on the Palestine Exchange
The objective of issuing the Corporate
Governance Instructions for Companies Listed on the Palestine Exchange is to
establish a legal framework for regulating the affairs of listed companies,
including a regulatory framework for their governance. This complements the
relevant legal requirements set forth in the laws and regulations in force in
Palestine. Adherence to governance principles brings significant benefits to
companies, positively impacting their performance and development, and helping
to build an environment based on trust, transparency, and accountability. More
specifically, the governance rules aim to improve the quality of board
practices, enhance company performance, increase competitiveness, raise company
value, and strengthen the confidence of other stakeholders in the company.
Governance also helps improve the investment climate, activate and expand the
financial market, and boost the competitiveness of the economy by increasing
stakeholder trust, enhancing the country’s ability to manage risks, and
preserving financial and economic stability.
Scope of Application
Without prejudice to the applicable laws, regulations, and
instructions in force in Palestine, the principles and provisions of the
proposed corporate governance instructions apply to public shareholding
companies listed on the Palestine Exchange, unless otherwise provided for in
any other legislation. Based on the importance of stakeholder consultation, the
PCMA launched a broad dialogue on the draft corporate governance instructions
during the fourth quarter of 2024. This was done by publishing the draft on the
PCMA’s website for the public and interested parties and circulating it to all
relevant stakeholders and entities to obtain feedback. The PCMA received a
valuable set of comments and addressed them with care and responsibility. A
large number of these comments were reflected in the revised draft, leading to
the second draft of the corporate governance instructions for listed companies,
which was also circulated for feedback to listed companies and the Palestine
Exchange. The final corporate governance instructions for companies listed on
the Palestine Exchange are expected to be issued during 2025.
