On February 8, 2006, the government of Syria issued the Stock Exchange Act No. 55, mandating that the members of the Syrian Commission on Financial Markets and Securities (SCFMS) promote the establishment of the Damascus Securities Exchange (DSE). According to an article issued by the Business Intelligence Middle East in August 2008, the SCFMS has published licensing regulations and a code of practice for financial intermediaries. In order to be listed on the DSE, per the same article, Syrian companies will have to change their legal structure from general partnerships to limited liability companies. Ultimately, companies will have to register as joint-stock companies. They will also be required to adopt standard accounting practices, and to publish accurate balance sheets. A draft of the SCFMS's proposed listing requirements has been issued for comment. The International Monetary Fund's 2007 Article IV Consultation states that the DSE was expected to start operations early in 2008, with a total of 46 listed companies. Despite the information provided above, there is insufficient publicly available information regarding Syria's compliance with the Principles on Corporate Governance developed by the Organization for Economic Cooperation and Development.

General Overview

In light of the quasi non-existent capital markets in Syria at the time of the International Monetary Fund's (IMF) 2006 Article IV Consultation, Syrian authorities were encouraged to move forward with "reforms aimed at scaling down the state's involvement in the economy, improving governance, and fostering private-sector growth" (p. 4). On February 8, 2006, the government of Syria issued the Stock Exchange Act No. 55, mandating the members of the Syrian Commission on Financial Markets and Securities (SCFMS) to promote the establishment of the Damascus Securities Exchange (DSE). The Board of Commissioners of the SCFMS - established in 2005 pursuant to the SCFMS Law No. 22 - comprises the Deputy Minister of Finance, the Deputy Minister of Economy and Foreign Trade, and the Deputy Governor of the Central Bank of Syria. The IMF's 2007 Article IV Consultation states that the DSE was expected to start operations early in 2008, with a total of 46 listed companies. As stated on its website, the Syrian Investment Agency (SIA) was established in 2007 under Legislative Decree No. 9. Responsibilities of the SIA include implementing national investment policies, and developing the investment environment in Syria. Despite the information provided above, there is insufficient publicly available information regarding Syria's compliance with the Principles on Corporate Governance developed by the Organization for Economic Cooperation and Development (OECD).

According to an article issued by the Business Intelligence Middle East (BIME) in August 2008, the SCFMS has published licensing regulations and a code of practice for financial intermediaries. In order to be listed on the DSE, per the same article, Syrian companies will have to change their legal structure from general partnerships to limited liability companies. Ultimately, companies will have to register as joint-stock companies. They will also be required to adopt standard accounting practices, and to publish accurate balance sheets. A draft of the SCFMS's proposed listing requirements have been issued for comment.

The United Nations Development Program's Program on Governance in the Arab Region (POGAR) website lists Syria as a member. POGAR was launched in early 2000 by the UNDP and the Regional Bureau for Arab States. According to its website, POGAR is dedicated to the promotion and development of good governance practices and related reforms in the Arab states. It works in partnership with key governance institutions, including legislatures, judiciaries, and civil-society organizations to identify needs and solutions. According to Kaufmann et al. in their 2007 working paper on governance indicators prepared for the World Bank, Syria has shown a slight improvement in its Government Effectiveness and Political Stability between 2005 and 2007 but remains characterized by low levels of Regulatory Quality, Voice and Accountability, and Control of Corruption.

In its 2008 Doing Business report, the World Bank ranks investor protection in Syria in 2008 below both the regional average and the OECD mean. The Investor Protection Index is a subcomponent of the Doing Business Indicators, and consists of three dimensions of investor protection: transparency of transactions (Extent of Disclosure Index), liability for self-dealing (Extent of Director Liability Index) and shareholders' ability to sue officers and directors for misconduct (Ease of Shareholder Suits Index). The indexes range between 0 and 10, with higher values indicating greater disclosure, greater liability of directors, greater powers of shareholders to challenge the transaction, and better investor protection. Syria scores 6.0 in the disclosure index against a regional average of 5.8 and an OECD average of 6.4. It scores 5.0 in the Director Liability Index against a regional average of 4.7 and an OECD average of 5.1 and 2.0 in the Shareholder Suits Index against a regional average of 3.7 and an OECD average of 6.5.

The Principles

Principle I: Ensuring the Basis for an Effective Corporate Governance Framework

II

As stated in a 2008 article issued by the BIME, the SCFMS has published licensing regulations and a code of practice for financial intermediaries. In order to be listed on the DSE, per the same article, Syrian companies will have to change their legal structure from general partnerships to limited liability companies. Ultimately, companies will have to register as joint-stock companies. They will also be required to adopt standard accounting practices, and to publish accurate balance sheets. A draft of the SCFMS's proposed listing requirements have been issued for comment. Nevertheless, the available sources do not directly address Syria's compliance with this principle.

Principle II: The Rights of Shareholders and Key Ownership Function

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There is insufficient information publicly available addressing Syria's compliance with this principle.

Principle III: The Equitable Treatment of Shareholders

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There is insufficient information publicly available addressing Syria's compliance with this principle.

Principle IV: The Role of Stakeholders in Corporate Governance

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There is insufficient information publicly available addressing Syria's compliance with this principle.

Principle V: Disclosure and Transparency

II

In order to be listed on the DSE, according to a 2008 article published by the BIME, Syrian companies will have to adopt standard accounting practices. They will also be required to publish "balance sheets that truly reflect the state of the business." Nevertheless, there is insufficient information publicly available addressing Syria's compliance with this principle.

Principle VI: The Responsibilities of the Board

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There is insufficient information publicly available addressing Syria's compliance with this principle.