Governance, compliance and ethics

RED House: Our Integrated ESG Commitment

Good corporate governance is the bedrock of our operations, ensuring transparency, accountability, and ethical conduct across all levels of the organization:

Our Commitment to Governance, Compliance, and Ethics

At RED House Group, our foundation is built upon an unwavering commitment to robust corporate governance. We achieve this through stringent compliance with all applicable laws and regulations, consistently implementing industry best practices, and fostering a culture of transparency and accountability. The administration of RED House strictly adheres to Lebanese legislation, its Articles of Incorporation, and other regulations pertaining to Joint-Stock companies. Furthermore, all RED House operations are guided by a set of common values and internal operating principles deeply embedded within the company's ethos.

The Board of Directors and the Chief Executive Officer (CEO) are fully dedicated to maintaining and continuously improving high ESG (Environmental, Social, and Governance) standards throughout the Company, adapting to new developments and insights wherever possible. We ensure that our Board of Directors and senior executives possess extensive experience and relevant skills, strategically aligned to promote and advance the Group's business objectives.

To uphold our commitment to transparency and stakeholder communication, RED House maintains rigorous yearly reporting standards and continuously updates its corporate presentation. Moreover, a comprehensive and strict Code of Conduct applies to all employees and associates, encompassing vital policies such as Anti-Corruption, Conflict of Interest, Anti-Bribery, and Anti-Discrimination.

RED House Governance Bodies

RED House's highest decision-making authority resides with the Annual General Meeting (AGM), which is composed of the company’s esteemed shareholders.

The Board of Directors, alongside the President and CEO, bears primary responsibility for the overall management and strategic direction of the company. Other members of the Management Board provide essential assistance and support to the President and CEO in their executive tasks. The Board of Directors is ultimately responsible for establishing the Group’s comprehensive governance systems and ensuring the company's unwavering compliance with principles of good corporate governance.

Board of Directors

The Company is administered by a Board of Directors, which is vested with the necessary powers to perform and manage all operations in the Company’s best interest.

The Board of Directors serves as the collective representative of the shareholders, making decisions solely in the Company’s best interest and acting independently of any potential conflicts of interest. The Board of Directors and senior management regularly evaluate the effective fulfillment of their respective remits and rigorously monitor compliance with robust corporate governance rules.

Members of the Board of Directors are elected by the general meeting of the shareholders for a term not exceeding three years and are eligible for re-election. Directors may be dismissed, with or without cause, at any time and at the sole discretion of the general meeting of the shareholders.

Role of the Board

The primary role of the Board is to protect and enhance long-term value and returns for the shareholders. To this end, the Board undertakes several critical responsibilities:

  • Strategic Oversight: Approving the Company’s strategic plans, key business initiatives, major investments, and funding decisions.

  • Operational Management: Ensuring the business affairs of the Company are effectively managed and conducted by the executive management (the “Management”).

  • Leadership & Resource Allocation: Providing entrepreneurial leadership, setting the strategic directions and goals of the Company, and ensuring adequate resources are available to meet these objectives.

  • Risk Management & Controls: Establishing a framework of prudent and effective controls that enables risks to be assessed and managed, including safeguarding shareholders’ interests and the Company’s assets.

  • Performance Monitoring: Overseeing and monitoring the management and affairs of the Company, and reviewing the Management’s performance towards achieving organizational goals.

  • Stakeholder Relations: Identifying key stakeholder groups and recognizing that their perceptions affect the Company’s reputation.

  • Transparency & Communication: Ensuring accurate and timely reporting to, and communication with, shareholders.

  • Compliance: Ensuring the Company’s compliance with all applicable laws, regulations, policies, directives, guidelines, and its internal code of conduct.

  • Ethical Standards: Determining and setting the Company’s values and standards, including ethical standards, and ensuring that obligations to shareholders and other stakeholders are understood and met.

  • Sustainability Integration: Considering sustainability issues, including environmental and social factors, in the formulation of the Company’s strategies.

Each individual Director is expected to objectively discharge their duties and responsibilities at all times as fiduciaries, acting solely in the best interests of the Company.

The Company has adopted internal guidelines governing matters that specifically require the Board’s approval. Clear directives have also been given to the Management that the following matters must be approved by the Board:

  • Material acquisition and disposal of assets/investments.

  • Corporate/financial restructuring and corporate exercises.

  • Material financial/funding arrangements and capital expenditures.

  • Policies and procedures, delegation of authority matrix, and the code of conduct and business ethics.

All relevant information on material events and transactions is circulated to the Directors as and when they arise to ensure informed decision-making.

To facilitate effective management without abdicating the Board’s ultimate responsibility, certain functions of the Board have been delegated to various Board Committees. The Board is assisted by an Audit Committee (AC) as well as a Remuneration and Nominating Committee (RNC). The functions of each committee are clearly defined in their respective terms of reference and operating procedures, which are reviewed by the Board on a regular basis. Both the RNC and AC comprise Non-Executive Directors, all of whom, including the Chairman, are independent.

Board Meetings and Meetings of Board Committees

The Board convenes on a half-yearly basis to review the Company’s financial performance and approve the release of the Company’s half-year and full-year financial results. Additional Board meetings may be held as and when circumstances require. The Constitution of the Company allows meetings of the Board and Board Committees to be conducted by way of teleconference and videoconference, ensuring flexibility and efficiency. The Directors typically set dates for these meetings well in advance.

Training and Development of Directors

Management is committed to organizing comprehensive orientation programs for new Directors to familiarize them thoroughly with the Company’s operations, business issues, and relevant regulatory and governance requirements.

RED House provides ongoing education to its Directors on Board processes, corporate governance best practices, and updates on changes to laws and regulations. Directors are actively encouraged to stay abreast of the latest developments relevant to the Company or their roles. Where necessary, Directors receive timely updates on new legislations and/or regulations and evolving commercial risks pertinent to the Company.

News releases issued by the Beirut Commercial Registrar, the Beirut Chamber of Commerce, the Lebanese Capital Market Authority, or the Corporate Regulatory Authority, which are relevant to the Directors, are regularly circulated to the Board. Directors are also kept informed of upcoming conferences and seminars relevant to their roles, with such training courses arranged and fully funded by the Company for all Directors. Annually, the external auditors update the AC and the Board on any new and revised financial reporting standards relevant to the Company.

Newly appointed Directors receive a formal letter from the Company Secretary upon their appointment, clearly explaining their duties and obligations as a Director.

Annual General Meeting

The Board of Directors meets semi-annually in Beirut. The Annual General Meeting (AGM) takes place every January at the company’s registered offices in Beirut, Lebanon, or at such other place as may be specified in the notice of the meeting. If such day is a legal holiday, the AGM shall be held on the following business day. At the AGM, the Board of Directors presents, among other reports, the management report as well as the statutory and consolidated financial statements to the shareholders.

The AGM resolves, among other critical decisions, on the statutory and consolidated financial statements of RED House, the allocation of the statutory financial results, the appointment of the approved independent auditor, and the discharge to the (re-) election of the members of the Board of Directors. The convening notice for the AGM, containing the agenda, is publicly announced at least eight days before the meeting in a local newspaper in Beirut and/or on the Company’s official website.

Internal Control and Risk Management

RED House maintains a robust framework for internal control and risk management, diligently monitoring and managing potential risks to mitigate the occurrence of possible failures to a minimum. This critical function is led by the Risk Committee, which is responsible for constructing the comprehensive risk management structure, organization, and processes.

The Risk Committee monitors the effectiveness of risk management functions throughout the organization, ensuring that the necessary infrastructure, resources, and systems are in place and adequate to maintain a satisfactory level of risk management discipline. RED House categorizes its risk management systems into two main categories: internal risk mitigation and external risk mitigation.

Internal Risk Mitigation

Internal controls are meticulously constructed from four main elements:

  • Risk Assessment: Set by the Risk Committee and guided by an ongoing analysis of the organizational structure and by identifying potential weaknesses.

  • Control Discipline: Based on the company’s organizational structure and supported by its employees’ integrity, ethical values, and management commitments.

  • Control Features: The company implements physical controls, compliance checks, and other verification procedures.

  • Monitoring Procedures: The company monitors unusual entries on its statements, primarily through detailed monthly actual vs.-budget analysis and similar checks.

Strong and sustainable controls significantly reduce the probability of errors and mistakes. Management places high importance on constantly improving all measures, adjusting to market changes and organizational dynamics.

External Risk Mitigation

As an ordinary course of business, the Company is exposed to various external risks. The Risk Committee is constantly assessing whether the infrastructure, resources, and systems are in place and adequate to maintain a satisfactory level of risk.

The potential risks and exposures rigorously examined include: volatility of interest rates, liquidity risks, credit risk, regulatory and legal risks, collection and tenant deficiencies, the need for unexpected capital investments, and market downturn risk. The group sets direct and specific guidelines and boundaries to mitigate and address each identified risk, thereby hedging and reducing to a minimum the occurrence of failure or potential default.

Shareholders’ Rights

The shareholders of RED House exercise their voting rights at the Annual General Meeting of the shareholders, where each share is granted one vote. The Annual General Meeting of the shareholders takes place on the fourth Wednesday in October at the registered office of the Company, or at such other place as may be specified in the notice of the meeting. If such day is a legal holiday, the Annual General Meeting of the shareholders shall be held on the following business day. At the Annual General Meeting of the shareholders, the Board of Directors presents, among other reports, the management report as well as the statutory and consolidated financial statements to the shareholders.

The Annual General Meeting resolves, among other critical decisions, on the statutory and consolidated financial statements of RED House, the allocation of the statutory financial results, the appointment of the approved independent auditor, and the discharge to the (re-) election of the members of the Board of Directors. The convening notice for the Annual General Meeting of the shareholders, containing the agenda, is publicly announced at least eight days before the meeting in a local newspaper in Beirut and/or on the Company‘s official website.