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Dealers monitor the stock market at a bank in Riyadh July 25, 2005.

Zainal Abd Halim/Reuters

Canada's newest export to the Middle East has nothing to do with maple syrup or Tim Horton's outlets – the latest product is good corporate governance.

A group of Saudi Arabian business and governance leaders are launching a new project to develop board ratings criteria for Saudi public companies, similar to board rankings done in The Globe and Mail's Board Games project for Canadian companies. One of the partners in the venture is the University of Toronto's Clarkson Centre for Business Ethics and Board Effectiveness, which already does a ranking of corporate governance practices in Canada and does the marking for The Globe's project.

Clarkson Centre manager Matt Fullbrook says the first task to be tackled by partners is to figure out which governance criteria are relevant for the Saudi market to create a meaningful marking scheme.

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"We just don't know what an effective board looks like there, so that's what we want to find out," he says.

The project's organizers include the Saudi Arabian General Investment Authority, which promotes investment in the kingdom, as well as Alfaisal University and the GCC Board Directors Institute, a membership organization for corporate directors in Gulf states.

David Beatty, chairman of the Clarkson Centre, said a key force behind the initiative is Abdullatif Al-Othman, the governor and chairman of the Saudi Arabian General Investment Authority, who is keen to ensure Saudi Arabia embraces top governance practices to help attract investment. While Saudi Arabia's stock market is currently restricted to Saudi citizens, the country is looking ahead to a day when the market will open wider and seek to attract the attention of global investors.

Mr. Beatty said it is difficult for any country to differentiate itself in a global market of 120 stock exchanges in 100 countries, "so getting noticed and trusted in such a potpourri is tough."

Canada's role in the governance project will be to provide expertise and experience with governance assessments. The plan is to select best practices – such as director independence, board composition and compensation practices – that have the greatest impact on board effectiveness, but to craft a "made in Saudi Arabia" set of guidelines. The final criteria will be developed in collaboration with the Saudi business community and a review of current regulatory rules in the kingdom.

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