Corporate governance broadly refers to mechanisms and processes by which the Licensed Person is managed, controlled and directed. Governance structures and principles identify the distribution of powers and responsibilities within the management structure of a Licensed Person. This chapter provides standards on how to organize the Management and Governance framework of a Licensed Person.

1. 6.1.1The Licensed Person must have a Head Office within the UAE where the Manager in Charge and other functional heads must be based to carry out their responsibilities;
2. 6.1.2All files and physical records of the Licensed Person, whether they are related to the incorporation, governance, customers, transactions, accounting, employees, etc., must be available in the Head Office or otherwise accessible during the Central Bank examination;
3. 6.1.3The Central Bank expects the Licensed Person to maintain its Head Office at the same address as mentioned in the main license (or the first license) unless otherwise agreed by the Central Bank in writing;
4. 6.1.4The Head Office must not be located in a free zone or any other place (such as inside an Airport) where the free entry is restricted for the Central Bank Examiners to visit such office at any time to conduct an examination; and
5. 6.1.5The Licensed Person must obtain a Letter of No Objection from the Banking Supervision Department in order to re-locate the Head Office from its approved location to another location.

1. 6.2.1The Licensed Person may open a separate Management Office, after obtaining a Letter of No Objection from the Banking Supervision Department, to be used for the same purposes as mentioned under Paragraphs 6.1.1 and 6.1.2 of this Chapter in case the Head Office does not have sufficient space;
2. 6.2.2The Licensed Person is not permitted to carry out Exchange Business from its Management Office unless otherwise approved by the Central Bank in writing; and
3. 6.2.3Conditions under Paragraphs 6.1.4 and 6.1.5 of this Chapter are also applicable to the Management Office of a Licensed Person.

1. 6.3.1The organizational structure of the Licensed Person must be approved by its Board of Directors (or by the Owner/Partners where there is no Board of Directors); and
2. 6.3.2The organizational structure must reflect reporting lines of the Manager in Charge, Compliance Officer and other functional heads and must be free from any conflict of interests to ensure functional independence.

1. 6.4.1The Licensed Person must obtain a Letter of No Objection from the Banking Supervision Department prior to the appointment of its Manager in Charge by submitting a duly completed APA Form (Refer to Appendix 5 for this Form) along with all required documents to the Banking Supervision Department;
2. 6.4.2The Central Bank shall conduct a fit and proper test on the proposed Manager in Charge before issuing the Letter of No Objection. The Central Bank reserves the right to:
   1. a)interview the proposed Manager in Charge as part of the fit and proper test; and
   2. b)issue or decline the approval for the proposed Manager in Charge.
3. 6.4.3In case the prior approval is rejected by the Central Bank, the Licensed Person must propose a new Manager in Charge within the timeline provided by the Central Bank in the Letter of Rejection. If a specific timeline is not provided in the Letter of Rejection, then the Licensed Person must propose a new Manager in Charge within a period of one hundred and eighty (180) calendar days from the date of Letter of Rejection.
4. 6.4.4Minimum Qualification and Experience of the Manager in Charge:
   1. a)If the Licensed Person is in possession of a Category A License:
      • •A minimum of five (5) years of experience within any financial institution(s), of which at least two (2) years in senior management position(s), such as head of a core function, Manager in Charge, General Manager/CEO or member of the Board of Directors; and
      • •Sound knowledge of all applicable Laws, Rules, Regulations, Notices and the Standards related to Exchange Business in the UAE.
   2. b)If the Licensed Person is in possession of either a Category B or Category C License:
      • •A minimum of eight (8) years of experience within any financial institution(s), of which at least four (4) years in a senior management position(s), such as head of a core function, Manager in Charge, General Manager/CEO or member of the Board of Directors;
      • •Sound knowledge of all applicable Laws, Rules, Regulations, Notices and the Standards related to Exchange Business in the UAE; and
      • •Preference may be given to those with a Bachelor degree or higher in any discipline.
5. 6.4.5Employment Type and Residential Status of the Manager in Charge:
   1. a)The Manager in Charge must be a full time employee of the Licensed Person;
   2. b)The Manager in Charge is not permitted to hold any position or responsibility or role in or on behalf of any other entity or business, whether inside or outside the UAE;
   3. c)The Manager in Charge must be a resident in the UAE; and
   4. d)Foreign national must be under the employment visa of the Licensed Person when employed as a Manager in Charge.
6. 6.4.6Responsibilities of the Manager in Charge:
   1. a)The Manager in Charge is responsible for the effective management of all aspects/activities of a Licensed Person.
7. 6.4.7Resignation of the Manager in Charge and notification to the Central Bank:
   1. a)The Licensed Person must notify the Banking Supervision Department, within five (5) working days, in case the Manager in Charge resigns or vacates the office in any other manner with reasons thereof via email to: info.ehs@cbuae.gov.ae;
   2. b)The Licensed Person must also provide, in the above notification email, the contact details of an alternate person (i.e. Interim Manager in Charge) who will be responsible for managing the business until the position of the Manager in Charge is permanently filled in; and
   3. c)A permanent replacement must be appointed after obtaining a Letter of No Objection from the Banking Supervision Department within a period of one hundred and eighty (180) calendar days from the date when the position of the Manager in Charge falls vacant (Refer to Paragraphs 6.4.1, 6.4.2 and 6.4.3 of this Chapter).
8. 6.4.8Removal of the Manager in Charge:
   1. a)The Central Bank reserves the right to remove the Manager in Charge of a Licensed Person at its sole discretion;
   2. b)The Licensed Person, in such cases, must comply with Paragraphs 6.4.7 (b) and 6.4.7 (c) of this Chapter; and
   3. c)The Central Bank reserves the right to communicate or not to communicate the reasons to the Licensed Person for its decision to remove the Manager in Charge.

1. 6.5.1The Functional Heads must possess appropriate qualifications and experience required to carry out their responsibilities.

1. 6.6.1The Licensed Person must appoint a Compliance Officer and an Alternate Compliance Officer who will be primarily responsible for its AML compliance function; and
2. 6.6.2The Licensed Person must refer to Paragraphs 16.4 and 16.5 of Chapter 16 for additional standards regarding the appointment of the Compliance Officer and the Alternate Compliance Officer.

1. 6.7.1The Licensed Person must appoint a Board of Directors, if required by the prevailing Commercial Companies Law of the UAE;
2. 6.7.2Qualifications and Experience of Directors of the Board:
   1. a)A minimum of eight (8) years of experience within any financial institution(s), of which at least five (5) years in senior management position(s), such as head of a core function, Manager in Charge, General Manager/CEO or as member of the Board of Directors;
   2. b)Knowledge of all applicable Laws, Rules, Regulations, Notices and the Standards related to Exchange Business in the UAE;
   3. c)Preference may be given to those with a Bachelor degree or higher in any discipline; and
   4. d)The Licensed Person’s Shareholders, Partners and their immediate family members (i.e. father, mother, brother, sister, children or grandchildren, in laws, etc.) are eligible to become Directors on the Board regardless of their qualifications and experience (i.e. Paragraphs 6.7.2 (a) to (c) of this Chapter are not applicable in these cases).
3. 6.7.3Residential Status of Directors of the Board:
   1. a)The majority of Directors of the Board (i.e. more than 50% of Directors of the Board) must be resident in the UAE.
4. 6.7.4The Roles and Responsibilities of the Board of Directors:
   1. a)The Board of Directors is responsible for the oversight of all activities of the Licensed Person;
   2. b)The Board of Directors is also responsible to appoint and monitor the performance of the Manager in Charge in addition to the following:
      • •Maintain honesty, integrity and transparency throughout the business activities;
      • •Ensure that a robust and independent compliance function is established and maintained;
      • •Ensure that appropriate AML/CFT compliance and other related policies are implemented;
      • •Ensure that actions are taken by the relevant stakeholders to resolve internal/external audit findings and regulatory compliance issues including AML compliance in a timely manner;
      • •Ensure that sufficient time, freedom, resources, systems and tools are available for the Manager in Charge and Compliance Officer to fulfil their responsibilities effectively;
      • •Ensure that an internal audit function is established and maintained; and
      • •Review the effectiveness of the internal audit function at the end of every year.
5. 6.7.5The Resignation or Termination of Director of the Board:
   1. a)Upon the resignation or termination of a Director of the Board, a permanent replacement must be appointed within one hundred and twenty (120) calendar days from the date when the position of a Director of the Board falls vacant; and
6. 6.7.6In case a Licensed Person does not have any obligation to appoint a Board of Directors as per the prevailing Commercial Companies Law of the UAE, its Owner or Partners must be responsible for carrying out the responsibilities under Paragraph 6.7.4 of this Chapter.

1. 6.8.1Shareholders must meet at least once every year to approve the External Auditors’ report and financial statements for the previous financial year, annual budgets, appointment of External Auditors for the current financial year etc.;
2. 6.8.2The Board of Directors must meet at regular intervals, in accordance with the provisions of the prevailing Commercial Companies Law of the UAE, with a pre-agreed agenda to discuss all aspects of the business activities with the Manager in Charge, Compliance Officer and other functional heads;
3. 6.8.3Where the Licensed Person does not have a Board of Directors, the Owner/Partners, Manager in Charge, Compliance Officer and other functional heads must meet at least once in six (6) months to discuss all aspects of the business; and
4. 6.8.4The minutes of above meetings must be available for the verification of the Central Bank Examiners.

1. 6.9.1The Licensed Person, irrespective of its legal form or constitution, must constitute at least two committees as per Paragraphs 6.9.2 and 6.9.3 of this Chapter;
2. 6.9.2An Audit Committee must be constituted in order to:
   1. a)recommend the name(s) of appropriate External Auditors for the approval of the Board of Directors (or of the Owner/ Partners where there is no Board of Directors) to carry out the annual financial audit;
   2. b)review and ensure that the Internal Audit Charter and the Internal Audit Plan are appropriate to the nature, size and complexity of the business prior to obtaining approval from the Board of Directors (or from the Owner/Partners where there is no Board of Directors);
   3. c)review all internal/external audit reports, management letters, etc.;
   4. d)review action plans to address findings of the internal/external reports; and
   5. e)provide updates about various matters mentioned under Paragraphs 6.9.2 (a) to (d) of this Chapter to the Board of Directors (or to the Owner/Partners where there is no Board of Directors).
3. 6.9.3A Compliance Committee must be constituted in order to:
   1. a)recommend the name(s) of appropriate External Auditors for the approval of the Board of Directors (or of the Owner/Partners where there is no Board of Directors) to perform an Agreed-Upon Procedures on the AML/CFT compliance function annually;
   2. b)review various ML/FT risks associated with the business and confirm that appropriate policies, procedures, controls, resources, etc. are in place to mitigate such risks;
   3. c)periodically review resources, systems and tools available to the Compliance Officer and ensure that they are appropriate to the nature, size and complexity of the business;
   4. d)review recommendations from the Annual Report of the Compliance officer;
   5. e)review findings of internal audit, independent review of the AML/CFT compliance function by External Auditors, the Central Bank examinations and all related action plans; and
   6. f)provide updates about various matters mentioned under Paragraphs 6.9.3 (a) to (e) of this Chapter to the Board of Directors (or to the Owner/Partners where there is no Board of Directors).
4. 6.9.4Composition of Committees:
   1. a)The Audit Committee must include the following members at a minimum:
      • •at least one Director of the Board or the Owner or at least one Partner;
      • •Manager in Charge;
      • •Internal Auditor; and
      • •Any other functional heads, if the Licensed Person deems it necessary.
   2. b)The Compliance Committee must include the following members at a minimum:
      • •at least one Director of the Board or the Owner or at least one Partner;
      • •Manager in Charge;
      • •Compliance Officer;
      • •Alternate Compliance Officer; and
      • •Any other functional heads, if the Licensed Person deems it necessary.
5. 6.9.5Committees must meet at least once in every quarter and minutes of such meetings must be available for the verification of the Central Bank Examiners.