Main Principles of Governance for Banks Operating in Saudi Arabia - Definition of Independent Member

In the Name of Allah, the Most Gracious, the Most Merciful

Saudi Arabian Monetary Authority (SAMA) Headquarters

Banking Policy Department Reference No.: .................................... Attachments: None

Circular

To: His Excellency / The Respected [Name] With regards,

Subject: Main Principles of Governance for Banks Operating in the Kingdom of Saudi Arabia - Definition of Independent Member.

Reference is made to the Authority's Circular No. 351000063651 dated 17/5/1435H, attached herewith a copy of the First Update to "Main Principles of Governance for Banks Operating in the Kingdom of Saudi Arabia", and reference is made to the paragraph regarding the definition of an Independent Member of the Board of Directors.

We wish to inform you of the cancellation of paragraph (e) regarding cases where an Independent Member's independence is not met, which states: "If he is a member of the board of directors of a company that has a credit relationship with the Bank (direct or indirect)", while emphasizing that if an Independent Member serves on the board of a company that has a current or future credit or financial interest with the Bank relating to the granting of banking facilities, the Bank must apply its Board Members' Conflict of Interest policy. This policy should include, but is not limited to, the Member's abstention from attending and participating in related deliberations or decisions, and the Member's disclosure of such cases to the Board of Directors and the General Assembly.

For your information and action, effective from the date hereof. Yours sincerely,

Ahmed bin Abdullah Al-Sheikh Deputy Governor for Supervision

Distribution Scope:

• Local Banks and Financial Institutions

Yamani

P.O. Box 2992, Riyadh 11169 | Telex: MARKAZI | Fax: 404400 | Tel: 4633000 | Fax: 4662414