2017-02-13
Added · Updated
The Board of Directors must ensure fair treatment of shareholders, provide complete and accurate information, and appoint an investor relations officer. Board composition requires a majority of Non-Executive Directors and at least two or one-third Independent Directors. The Board must announce nominee details on the Exchange’s website, convene the Ordinary General Assembly within six months of the financial year-end, and publish invitations at least twenty-one days prior. Additionally, the Board must notify the Authority of member names within five business days of appointment and provide General Assembly minutes to the Authority within ten days.
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KINGDOM OF SAUDI ARABIA
Capital Market Authority
Corporate Governance Regulations
English Translation of the Official Arabic Text Issued by the Board of the Capital Market Authority Pursuant to Resolution Number 8-16-2017 Dated 16/5/1438H Corresponding to 13/2/2017G Based on the Companies Law Issued by Royal Decree No M/3 dated 28/1/1437H Amended by Resolution of the Board of the Capital Market Authority Number 8-5-2023 Dated 25/6/1444H Corresponding to 18/1/2023 G Based on the Companies Law Issued by Royal Decree No. M/132 dated 1/12/1443H Note: Arabic is the official language of the Capital Market Authority Important Notice:
The current version of these Regulations, as may be amended, can be found at the Authority website: www.cma.org.sa
Table of Contents
Part 1: Preliminary Provisions
Article 1: Definitions
Article 2: Preamble
Article 3: Objectives of the Regulations
Part 2: Rights of Shareholders
Chapter 1: General Rights
Article 4: Fair Treatment of Shareholders
Article 5: Rights related to shares
Article 6: Shareholder access to information
Article 7: Communicating with Shareholders
Article 8: Electing the Board Members
Article 9: Distribution of Dividends
Chapter 2: Rights Related to the Meeting of the General Assembly
Article 10: Preamble
Article 11: Competencies of the Extraordinary General Assembly
Article 12: Competencies of the Ordinary General Assembly
Article 13: Shareholders' Assembly
Article 14: The Agenda of the General Assembly
Article 15: Management of the Shareholders' Assembly
Part 3: The Board of Directors
Chapter 1: Formation of the Board
Article 16: Composition of the Board
Article 17: Appointment of the Board members
Article 18: Conditions for the Membership of the Board
Article 19: Issues Affecting Independence
Chapter 2: Responsibilities and Competencies of the Board
Article 20: Responsibility of the Board
Article 21: Main Functions of the Board
Article 22: Distribution of Competencies and Duties
Article 23: Separation of Positions
Article 24: Oversight over the Executive Management
Article 25: Competencies and Duties of the Executive Management
Chapter 3: Competencies of the Chairman and the Board Members
Article 26: Competencies and Duties of the Chairman of the Board
Article 27: Appointing the Chief Executive Officer after the end of his/her services as
Chairman of the Board
Article 28: Tasks and Duties of the Board Members
Article 29: Duties of the Independent Director
Chapter 4: Procedures of the Board Activities
Article 30: The Board Meetings
Article 31: Remarks of the Board Members
Article 32: Organising the Attendance of the Board Meetings
Article 33: The Agenda of Board Meetings
Article 34: Exercising the Competencies of the Board
Article 35: The Secretary of the Board
Article 36: Qualifications of the Secretary
Chapter 5: Training, Support and Assessment
Article 37: Training
Article 38: Providing Members with Information
Article 39: The Assessment
Chapter 6: Conflicts of Interest
Article 40: Dealing with Conflicts of Interest and Related Parties Transactions
Article 41: Conflicts of Interest Policy
Article 42: Avoiding Conflicts of Interest
Article 43: Disclosure of Conflicts of Interest by the Nominee
Article 44: Rules of Competing with the Company
Article 45: Concept of the Competing Businesses
Article 46: Accepting Gifts
Part 4: Company Committees
Chapter 1: General Provisions
Article 47: Forming the Committees
Article 48: Committees Membership
Article 49: Studying Subjects
Article 50: Committees Meetings
Chapter 2: The Audit Committee
Article 51 Audit Committee Formation
Article 52: Competencies, powers and responsibilities of the Audit Committee
Article 53: Conflict between the Audit Committee and the Board
Article 54: Audit Committee Meetings
Article 55: Arrangements for Providing Remarks
Article 56: Powers of the Audit Committee
Chapter 3: Remuneration Committee
Article 57: Composition of the Remuneration Committee
Article 58: Competencies of the Remuneration Committee
Article 59: Remuneration Policy
Article 60: Meetings of the Remuneration Committee
Chapter 4: Nomination Committee
Article 61: Composition of the Nomination Committee
Article 62: Competencies of the Nomination Committee
Article 63: The Nomination Procedures
Article 64: Meetings of the Nomination Committee
Article 65: Publishing the Nomination Announcement
Article 66: Nomination Rights of Shareholders
Chapter 5: Risk Management Committee
Article 67: Composition of the Risk Management Committee
Article 68: Competencies of the Risk Management Committee
Article 69: Meetings of the Risk Management Committee
Part 5: Internal Control
Article 70: Internal Control System
Article 71: Establishing Independent Units or Departments within the Company
Article 72: Duties of the Internal Audit Unit or Department
Article 73: Composing an Internal Audit Unit or Department
Article 74: Internal Audit Plan
Article 75: Internal Audit Report
Article 76: Maintaining Internal Audit Reports
Part 6: The Company’s External Auditor
Article 77: Assigning the Audit Function
Article 78: Appointment of the External Auditor
Article 79: Duties of the External Auditor
Part 7: Shareholders
Article 80: Regulating the Relationship with Stakeholders
Article 81: Reporting Non-Compliant Practices
Article 82: Employee Incentives
Part 8: professional and Ethical Standards
Article 83: Professional Conduct Policy
Article 84: Social Responsibility
Article 85: Social Initiatives
Part 9: Disclosure and Transparency
Article 86: Policies and Procedure of Disclosure
Article 87: The Board’s Report
Article 88: The Audit Committee’s Report
Article 89: Disclosure by the Board
Article 90: Disclosure of Remunerations
Part 10: Implementation of Corporate Governance
Article 91: Implementation of Effective Governance
Article 92: Formation of a Corporate Governance Committee
Part 11: Retaining of Documents
Article 93: Retaining of Documents
Part 12: Closing Provisions
Article 94: Providing the Additional data and Information
Article 95: Publication and Entry into Force
Appendix (1) Remuneration Schedule
Part 1
Preliminary Provisions
Article 1: Definitions
The following terms and expressions shall have the meaning they bear as follows unless the contrary intention appears:
Companies Law: the Companies Law issued by Royal Decree No. (M/132) dated 1/12/1443 AH. Capital Market Law: the Capital Market Law issued by Royal Decree No. (M/30) dated 2/6/1424 AH. Rules on the Offer of Securities and Continuing Obligations: The Rules on the Offer of Securities and Continuing Obligations issued by the Board. Listing Rules: The Listing Rules approved by the Board Authority: the Capital Market Authority. The Exchange: The Saudi Stock Exchange. Company: the listed joint stock company. Board: the company’s Board of Directors. Corporate Governance: rules to lead and guide the Company that includes mechanisms to regulate the various relationships between the Board, Executive Directors, shareholders and Stakeholders, by establishing rules and procedures to facilitate the decision making process and add transparency and credibility to it with the objective of protecting the rights of shareholders and Stakeholders and achieving fairness, competitiveness and transparency on the Exchange and the business environment. Shareholders Assembly: an assembly consisting of the shareholders in the Company formed in accordance with the provisions of the Companies Law and the Company’s bylaws. Executive Director: a member of the Board who is a full time member of the executive management team of the Company and participates in its daily activities. Non-Executive Director: a member of the Board who is not a full-time member of the management team of the Company and does not participate in its daily activities. Independent Director: a non-executive member of the Board who enjoys complete independence in his/her position and decisions and none of the independence affecting issues stipulated in Article 19 of these Regulations apply to him/her.
Executive Management or Senior Executive: persons responsible for managing the daily operations of the Company, and proposing and executing strategic decisions, such as the Chief Executive Officer (CEO) and his/her delegates and the Chief Financial Officer (CFO). Relatives:
Controlling Interest: The ability to influence actions or decisions of another person directly, indirectly, individually or collectively with a relative or an affiliate through: (A) owning %30 or more of the voting rights in a company, (B) having the right to appoint %30 or more of the administrative team members. Administrative Team: A group of individuals who make strategic decisions of the person. The Board is the Company's Administrative Team. Remunerations: amounts, allowances, dividends and the like, periodic or annual bonuses linked to performance, long or short term incentive plans and any other in-kind benefits except the actual reasonable expenses and fees incurred by the Company to enable the Board member to perform his duties. Day: Calendar day whether a business day or not.
Article 2: Preamble
a) These Regulations state the rules and standards that regulate the management of the companies to ensure its compliance with the best governance practices that ensure the protection of shareholder's rights as well as the rights of Stakeholders. b) These Regulations are mandatory for companies listed on the Main Market except the provisions that contain a reference of being guiding provisions. c) Paragraph (c) of Article 13, Paragraph (b) of Article (50), Paragraph (a) of Article (51),
Article 52, Article 56, and Article (88) of these Regulations are mandatory for companies
listed on the Parallel Market, and the other provisions of these Regulations shall be deemed as guiding provisions for companies listed on the Parallel Market unless another law, regulations or a resolution of the Board of the Authority states that some provisions thereof are mandatory for companies listed on the Parallel Market. d) Without prejudice to the provisions of these Regulations, laws and instructions of other supervisory authorities apply to companies that are subject to them.
Article 3: Objectives of the Regulations
These Regulations aim at establishing an effective legal framework to govern the Company, and particularly aim at the following:
enhancing the role of the Company’s shareholders and facilitating the exercise of their
rights;
Stating the competencies and responsibilities of the Board and the Executive
Management;
enhancing the role of the Board and the committees and developing their capabilities to
enhance the Company’s decision making mechanisms;
achieving transparency, impartiality and equity in the Exchange, its transactions, and
the business environment and enhance disclosure therein;
providing effective and balanced tools to deal with conflicts of interest;
enhancing accountability and control mechanisms for the Company’s employees;
establishing the general framework for dealing with Stakeholders and protecting their
rights;
supporting the effectiveness of the system for overseeing companies and the tools
thereof; and
raising the awareness of companies in respect of the concept of professional conduct
and encouraging them to adopt and develop such concept in accordance with their nature.
Part 2
Rights of Shareholders
Chapter 1: General Rights
Article 4: Fair Treatment of Shareholders
a) The Board is obliged to seek shareholders' rights protection to ensure fairness and equality among them. b) The Board and the Executive Management of the Company is obliged not to discriminate among shareholders who own the same type or class of shares nor prevent them from accessing any of their rights. c) The Company shall specify in its internal policies the procedures that are necessary to guarantee that all shareholders exercise their rights.
Article 5: Rights related to shares
All rights related to shares shall be guaranteed to the shareholder, and particularly the following:
Article 6: Shareholder access to information
a) The Board shall make available to the shareholder complete, clear, accurate and nonmisleading information to enable him/her to properly exercise his/her rights. Such information shall be provided at the proper times and shall be updated regularly. b) The method used to provide information to the shareholders shall be clear and detailed and shall include a list of the Company's information that the shareholders may obtain. This information shall be made available to all shareholders of the same type or class. c) The Company shall use the most effective methods in communicating with shareholders and shall not discriminate among shareholders in respect of providing information.
Article 7: Communicating with Shareholders
a) The Board shall ensure communication between the Company and the shareholders based on the common understanding of the strategic objectives and interests of the Company. b) The chairman of the Board and the Chief Executive Officer shall inform the remaining Board members of the opinions of the shareholders and discuss these opinions with them. c) No shareholder may intervene in the operations of the Board or the work of the Executive Management of the Company unless he/she is a member of its Board or works in its executive management; or unless his/her intervention is through the General Assembly according to its powers. d) The Company shall appoint a person responsible for the tasks related to investor relations in the Company in order to achieve effective and fair communication between the Company and the shareholders.
Article 8: Electing the Board Members
a) Upon calling for the General Assembly, the Company shall announce on the Exchange's website information about the nominees for the membership of the Board which shall include the nominees' experience, qualifications, skills and their previous and current jobs and memberships. The Company shall make a copy of the mentioned information available in the Company's head office and its website. b) Voting in the General Assembly shall be confined to the Board nominees whose information has been announced as per paragraph (a) of this Article.
Article 9: Distribution of Dividends
a) The General Assembly shall determine the percentage of the net profits to be distributed to the shareholders and deduct the reserves if any. b) The Board shall establish a clear policy for the distribution of dividends to achieve the interests of the shareholders and the Company as per the Company's bylaw. c) The shareholder is entitled to receive his/her share of dividends as per the decision of the General Assembly in respect of the distribution of dividends to shareholders or the Board
1 Guidance Paragraph.
resolution on distributing interim dividends. The resolution shall specify the record date and the distribution date provided that the resolution shall be executed as per the Implementing Regulation of the Companies Law for Listed Joint Stock Companies.
Chapter 2: Rights Related to the Meeting of the General Assembly
Article 10: Preamble
General Shareholders Assemblies of the Company are competent in all of its affairs. A dulyconstituted General Assembly represents all shareholders in exercising their powers in respect of the Company. The General Assembly shall exercise its role in accordance with the provisions of the Companies Law and its implementing regulations and the Company's bylaws.
Article 11: Competencies of the Extraordinary General Assembly
The Extraordinary General Assembly shall have the following Competencies:
Article 12: Competencies of the Ordinary General Assembly
Except for the competencies reserved to the Extraordinary General Assembly, the Ordinary General Assembly shall have competencies in all affairs of the Company, and particularly the following:
Article 13: Shareholders' Assembly
a) The Ordinary General assembly shall convene in accordance with the situations and circumstances stated in the Companies Law and its implementing regulations and the Company’s bylaws. b) The annual Ordinary General Assembly shall convene at least once within the six months following the end of the Company's financial year. c) The General and Special Shareholders' Assemblies shall convene upon an invitation from the Board in accordance with the situations stated in the Companies Law and its implementing regulations and the Company’s bylaws. The Board shall invite the Ordinary General Assembly to convene within 30 days from the date of the external auditor request, the audit committee or a number of shareholders holding shares equal to at least (10%) of the company's shares that have voting rights. The external auditor may invite the Ordinary General Assembly to convene if the Board does not invite the assembly within thirty days from the date of the external auditor's request. d) With regards of the provisions of the Companies Law and its implementing regulations, the date, place and agenda of the General Assembly shall be announced at least twenty one days prior to the date thereof; the invitation shall be published on the website of the Exchange and the Company's website. In addition, the Company may invite the General and Special Shareholders' Assemblies to convene using contemporary technologies means. e) The Company may amend the agenda of the General Assembly within a period between publishing the announcement referred to in paragraph (d) of this Article and the date of convening the General Assembly meeting, provided that the Company shall announce this as prescribed in paragraph (d) of this Article. f) Shareholders shall be granted the opportunity to effectively participate and vote in the General Assembly meetings. The meetings of the General Assemblies of shareholders may be convened and shareholders may participate in their deliberations and vote on their resolutions using methods of contemporary technologies pursuant to the Implementing Regulation of the Companies Law for Listed Joint Stock Companies. g) The Board shall work on facilitating the participation of the largest number of shareholders in the meetings of the General Assembly, including choosing the appropriate place and time of such meeting. h) The Company shall ensure recording the details of the shareholders who desire to attend at the Company's head office prior to the specified time for convening the assembly, unless the Company's bylaw state other means.
Article 14: The Agenda of the General Assembly
a) When preparing the General Assembly’s agenda, the Board shall take into consideration the matters that the shareholders wish to list; shareholders holding no less than (10%) of the Company’s shares that have voting rights are entitled to add one or more items to the agenda upon its preparation. b) The Board shall separate each of the matters listed in the agenda of the General Assembly meeting as an independent item, and not combine significantly different matters under one
item, and not combine the businesses and contracts in which any Board member has a direct or indirect interest under one item, for the purpose of obtaining the shareholders’ vote for the item as a whole. c) The shareholders shall be allowed through the Company's website and the Exchange's website, when the invitation for the convention of the General Assembly is published, to obtain the information related to the items of the General Assembly's agenda, particularly the reports of the Board and the external auditor, the financial statements and the audit committee’s report in order to enable them to make an informed decision in this regard. The Company shall update this information in case the General Assembly's agenda was amended. d) The Authority may add any items it deems appropriate to the agenda of the General Assembly.
Article 15: Management of the Shareholders' Assembly
a) The Shareholders' General Assembly meetings shall be chaired by the chairman, his deputy (if the chairman is absent) or whom is delegated by the Board of directors of its members (when the chairman and his deputy are absent); and if not possible, the General Assembly shall be chaired by whom the shareholders delegates from the board members or others by voting. b) The chairman of the Shareholders' Assembly shall commit to grant the shareholders the opportunity to effectively participate and vote in the meetings of the General Assembly, and avoid any procedure that may preventing their attendance to the assemblies or the exercise of the voting right. Shareholders shall be informed of the rules governing such meetings and the voting procedures. c) Shareholders are entitled to discuss matters listed in the agenda of the General Assembly and raise relevant questions to the Board members and to the external auditor. The Board or the external auditor shall answer the questions raised by shareholders to the extent that does not jeopardize the Company’s interest. d) Shareholders shall be granted access to the minutes of the General Assembly meeting; and the Company shall provide the Authority with a copy of such minutes within (10) days of the date of any such meeting. e) A Company shall announce to the public and inform the Authority and the Exchange, as per the rules prescribed by the Authority, of the results of a General Assembly meeting immediately following its conclusion.
Part 3
The Board of Directors
Chapter 1: Formation of the Board
Article 16: Composition of the Board
The following shall be taken into consideration when composing the Board:
2 Guiding Article.
Ability to guide: He/she shall have the technical, leadership, and administrative
competencies as well as the ability to take prompt decisions, and understand technical requirements and developments related to the job. He/she shall also be able to provide strategic guidance and long-term planning and have a clear future vision.
Financial knowledge: He/she shall have the ability to read and understand financial
statements and reports.
Physical fitness: He/she shall not suffer from any health issue that may hinder him/her
from performing his/her duties and responsibilities.
The General Assembly shall take into account, when electing members to the Board, the recommendations of the nomination committee and the availability of the personal and professional capabilities required to perform their duties effectively pursuant to this Article.
Article 19: Issues Affecting Independence
a) An Independent Director shall be able to perform his/her duties, express his/her opinions and vote on decisions objectively with no bias in order to help the Board make correct decisions that contribute to achieving the interests of the Company. b) The Board shall annually evaluate the extent of the member's independence and ensure that there are no relationships or circumstances that affect or may affect his/her independence. c) By way of example, the following negate the independence requirement for an Independent Director:
if he/she holds five percent or more of the shares of the Company or any other
company within its group; or is a relative of who owns such percentage.
if he/she is a relative of any member of the Board of the Company, or any other
company within the Company’s group;
if he/she is a relative of any Senior Executive of the Company, or of any other
company within the Company’s group;
if he/she is a Board member of any company within the group of the Company for
which he/she is nominated to be a Board member.
if he/she is an employee or used to be an employee, during the preceding two years,
of the Company or a company within its group, or if he/she held a controlling interest in the Company or any party dealing with the Company or any company within its group, such as external auditors or main suppliers during the preceding two years.
if he/she has a direct or indirect interest in the businesses and contracts executed for
the Company’s account.
if the member of the Board receives financial consideration from the Company in
addition to the remuneration for his/her membership of the Board or any of its committees exceeding an amount of (SAR 200,000) or 50% of his/her remuneration of the last year for the membership of the board or any of its committees, whichever is less.
if he/she engages in a business where he competes with the Company, or conducting
businesses in any of the company's activities.
if he/she served for more than nine years, consecutive or inconsecutive, as a Board
member of the Company. d) Unless the Nominations Committee considers otherwise, the businesses and contracts with the board member to meet his/her personal needs shall not be deemed as an interest that affect the independence of the board member which require an authorisation from the ordinary general assembly, provided that such businesses and contracts are carried out in the same conditions and settings followed by the Company with all contractors and dealers, and that such businesses and contracts must be within the normal course of the Company's activities.
Chapter 2: Responsibilities and Competencies of the Board
Article 20: Responsibility of the Board
a) The Board represents all shareholders; it shall perform its duties of care and loyalty in managing the Company’s affairs and undertake all actions in the general interest of the Company and develop it and maximise its value. b) The Board is responsible for the Company’s business even if it delegates some of its powers to committees, individuals or other third parties. In any case, the Board may not issue a general or an open-ended delegation.
Article 21: Main Functions of the Board
Without prejudice to the competencies of the General Assembly as per the Companies Law and its implementing regulations and the Company’s bylaws, the Board shall have the broadest powers in managing the Company and guiding its activities to achieve its objectives. Among the main functions and competencies of the Board are the following:
laying down the plans, policies, strategies and main objectives of the Company,
supervising their implementation and reviewing them periodically, and ensuring that the human and financial resources required to fulfill them are available, including:
a. setting a comprehensive strategy for the Company, key business plans and policies and mechanisms of the risk management and review and guide them b. determining the most appropriate capital structure for the Company, its strategies and financial objectives, and approving all kinds of estimated budgets;
c. overseeing the main capital expenditures of the Company and the acquisition or
disposal of assets; d. setting performance indicators, and monitoring the implementation thereof and the overall performance of the Company; e. reviewing and approving the organisational and human resources structures of the Company on a periodic basis; and
3 The Capital Market Authority Board issued its Resolution Number 1-35-2018 Dated 9/7/1439H Corresponding to 26/3/2018G stating that this sub-paragraph is to be a mandatory sub-paragraph starting from the term of the listed company's board that will be after 1/1/2019G.
f. ensuring that the financial and human resources required for achieving the objectives and main plans of the Company are available.
2) setting rules and procedures for internal control and generally overseeing them,
including:
a. developing a written policy to remedy actual and potential conflicts of interest scenarios for each of the Board members, the Executive Management, and the shareholders. This includes misuse of the Company’s assets and facilities and the mismanagement resulting from transactions with Related Parties; b. ensuring the integrity of the financial and accounting rules, including rules relating to the preparation of financial reports;
c. ensuring the implementation of appropriate control procedures for risk assessment
and management by generally forecasting the risks that the Company may encounter and creating an environment which is aware of the culture of risk management at the Company level and disclosing such risks transparently to the Stakeholders and parties related to the Company; and d. reviewing the effectiveness of the Company’s internal control procedures on an annual basis.
3) setting forth specific and explicit policies, standards and procedures for membership in
the Board, without prejudice to the mandatory provisions of these Regulations, and implementing them following approval by the General Assembly;
4) developing a written policy that regulates the relationship with Stakeholders pursuant
to the provisions of these Regulations;
5) setting policies and procedures to ensure the Company’s compliance with the laws and
regulations and the Company’s obligation to disclose material information to shareholders and Stakeholders, and ensuring the compliance of the Executive Management with these policies and procedures;
6) supervising the management of the Company’s finances, its cash flows as well as its
financial and credit relationships with third parties;
7) providing recommendations to the Extraordinary General Assembly as to what it deems
appropriate regarding the following:
a. increasing or decreasing the share capital of the Company; and b. dissolving the Company before the end of its term as specified in its bylaws or deciding the continuity of the Company.
8) providing recommendation to the Ordinary General Assembly as to what it deems
appropriate regarding:
a. use of the company's reserves, if they are not allocated for a specific purpose in the Company's bylaws; b. forming additional financial allocations or reserves for the Company; and
c. the method of distributing the net profits of the Company.
9) preparing the Company's interim and annual financial statements and approving them
before publishing them;
10) preparing the Board report and approving it before publishing it.
Article 23: Separation of Positions
a) without prejudice to the provisions of the Company's bylaws, The Board appoints, from its members, a chairman and a vice chairman, and may appoint from its members a managing director or a chief executive officer. b) it is prohibited to hold, at the same time, the position of chairman of the Board and any other executive position in the Company, including the positions of the managing director, the Chief Executive Officer, or the general manager, even if the Company's bylaws provided for otherwise. c) the Board shall define the competencies and specify the responsibilities of the chairman, the vice chairman, and the managing director or the chief executive officer explicitly and in writing if the Company's bylaws has no reference thereto. d) in all cases, no person shall have the sole and absolute power to take decisions in the Company.
Article 24: Oversight over the Executive Management4
The Board shall form the Executive Management of the Company, regulate its operating procedures, monitor and oversee it and ensure that it performs the duties assigned to it, and to achieve this, the Board shall:
4 The Capital Market Authority Board issued its Resolution Number 8-5-2023 Dated 25/6/1444H Corresponding to 18/1/2023G amending Paragraph (4) of Article 24 of the Corporate Governance Regulations and stating that such amendment shall be effective as of 19/6/1445H Corresponding to 1/1/2024G, provided that Paragraph (4) of
Article 25 of the Corporate Governance Regulations issued by the Board of the Authority Resolution no. (8-16-
2017) dated 16/05/1438H. corresponding to 13/02/2017G and amended by the Board of the Authority Resolution
no. (1-94-2022) dated 24/01/1444H. corresponding to 22/08/2022G, shall continue to be effective until the effectiveness date of Paragraph (4) of Article 24 of these Regulations.
Article 25: Competencies and Duties of the Executive Management
Without prejudice to the competencies entrusted to the Board pursuant to the provisions of the Companies Law and its implementing regulations, the Executive Management shall be responsible for implementing the plans, policies, strategies and main objectives of the Company in order to achieve its purposes. The competencies and duties of the Executive Management shall include the following:
implementing the Company’s internal policies and rules approved by the Board;
suggesting the Company’s comprehensive strategy as well as the principal and interim
business plans and the policies and mechanisms for investment, financing, risk management and emergency administrative circumstances management plans and implementing them;
proposing the most appropriate capital structure for the Company and its strategies and
financial objectives;
proposing the main capital expenditures of the Company and acquiring and disposing
of assets;
proposing the organisational and human resources structures of the Company and
presenting them to the Board for approval;
implementing internal control systems and procedures, and generally overseeing them,
which include:
a. implementing the conflicts of interest policy; b. correctly applying the financial and accounting procedures, including the procedures relating to the preparation of financial reports;
c. applying appropriate control systems for measuring and managing risks by
generally forecasting the risks that the Company may encounter and creating an environment which is aware of the culture of risk mitigation at the Company level, and transparently disclosing them to the Company’s Board and other Stakeholders.
implementing the Company’s Corporate Governance rules effectively, to the extent
they do not conflict with the provisions of these Regulations, and proposing amendments thereto if needed;
implementing policies and procedures to ensure the Company’s compliance with the
laws and regulations and its obligation to disclose material information to shareholders and Stakeholders;
providing the Board with the information required to exercise its competencies and
provide recommendations regarding the following:
a. increasing or decreasing the share capital of the Company; b. dissolving the Company before the end of its term as specified in its bylaws or deciding the continuity of the Company;
c. use of the Company's reserves if they are not allocated for a specific purpose in the
Company's bylaws; d. forming additional reserves for the Company; and e. the method for distributing the net profits of the Company.
proposing the policy and types of remunerations granted to employees, such as fixed
remunerations, remunerations linked to performance and remunerations in the form of shares;
preparing periodic financial and non-financial reports in respect of the progress
achieved in the business of the Company in light of the strategic plans and objectives of the Company, and presenting such reports to the Board;
managing the daily business and activity of the Company, in addition to managing its
resources in the most appropriate form in accordance with the objectives and strategies of the Company;
participating effectively in building and developing a culture of ethical values within
the Company;
implementing internal control and risk management systems and ensuring that they are
effective and efficient, and ensuring compliance with the level of risks approved by the Board;
proposing and developing internal policies related to the business of the Company,
including specifying the duties, competencies and responsibilities assigned to the various organisational levels;
proposing a clear policy to delegate tasks to the Executive Management and the method
for implementing such policy; and
proposing the powers to be delegated to the Executive Management, the procedures for
decision making and the period of delegation, provided that it shall present periodic reports to the Board in respect of its exercise of such powers.
Chapter 3: Competencies of the Chairman and the Board Members
Article 26: Competencies and Duties of the Chairman of the Board
Without prejudice to the competencies of the Board, the chairman of the Board shall be responsible for leading the Board and supervising its operations and the effective performance of its duties. The competencies and duties of the chairman of the Board shall in particular include the following:
ensuring that the Board members obtain complete, clear, accurate and non-misleading
information in due course;
ensuring that the Board effectively discusses all fundamental issues in due course;
representing the Company before third parties in accordance with the Companies Law
and its implementing regulations and the Company's bylaws;
encouraging the Board members to effectively perform their duties in order to achieve
the interests of the Company;
ensuring that there are actual communication channels with shareholders and conveying
their opinions to the Board;
encouraging constructive relationships and effective participation between the Board
and the Executive Management on the one hand, and the Executive, Non-Executive and Independent Directors on the other hand, and creating a culture that encourages constructive criticism;
preparing agendas of the Board meetings, taking into consideration any matters raised
by Board members or the external auditor and consult with the Board members and the Chief Executive Officer upon preparing the Board's agenda; and
convening periodic meetings with the Non-Executive Directors without the presence of
any executive officers of the Company.
Article 27: Appointing the Chief Executive Officer after the end of his/her services as
Chairman of the Board 5
It is prohibited to appoint the Chief Executive Officer, during the first year following the end of his/her service, as the chairman of the Board.
Article 28: Tasks and Duties of the Board Members
Each member of the Board shall, being a Board member, perform the following tasks and duties:
providing proposals to develop the strategy of the Company;
monitoring the performance of the Executive Management and the extent to which it
has achieved the objectives and purposes of the Company;
reviewing reports related to the performance of the Company;
ensuring the integrity and impartiality of the financial statements and information of
the Company;
ensuring that the financial control and risk management systems are sound;
determining the appropriate level of remunerations of the members of the Executive
Management;
expressing opinions as to the appointment and dismissal of members of the Executive
Management;
participating in developing the succession and replacement plans of executive positions
within the Company;
complying fully with the provisions of the Companies Law, Capital Market Law, their
implementing regulations, the relevant regulations and the bylaws when performing his/her duties as a member of the Board and abstaining from taking or participating in any action that constitute mismanagement of the Company’s affairs;
attending the Board and the General Assembly meetings, and not being absent except
for legitimate excuse of which the chairman of the Board shall be notified by prior notice, or for emergency reasons;
allocating sufficient time to fulfill his/her responsibilities and preparing for the Board
and its committees’ meetings and effectively participating therein, including raising relevant questions and carrying discussions with the Senior Executives; 12)studying and analysing all information related to the matters looked into by the Board before expressing an opinion on the same;
5 The Capital Market Authority Board issued its Resolution Number 4-52-2018 Dated 28/8/1439H Corresponding to 14/5/2018G stating that Article 27 of the Corporate Governance Regulations is to be guiding article.
Chapter 4: Procedures of the Board Activities
Article 30: The Board Meetings
a) Without prejudice to the Companies Law and its implementing regulations, the Board shall convene regular meetings to perform its duties effectively, and also convene meetings whenever needed. b) The Board shall convene no less than four meetings per year, and no less than one meeting every three months. c) The Board shall meet upon the invitation of its chairman or upon a request from one of its members. The invitation to the meeting shall be sent to each of the Board members no less than five days prior to the date of the meeting accompanied by its agenda and the necessary documents and information, unless circumstance require convening an emergency meeting, the invitation accompanied with the agenda and necessary documents and information may be sent within a period less than the five days. d) The meeting shall not be valid unless attended by half of the Board members (by themselves or by proxy), provided that the number of attendees shall not be less than three, unless the Company's bylaws stated greater percentage or number.
Article 31: Remarks of the Board Members
a) If any member of the Board has any remarks in respect of the performance of the Company or any of the matters presented and which was not resolved in the Board meeting, such remarks shall be recorded and the procedures taken or to be taken by the Board in connection therewith must be set forth in the minutes of the Board meeting. b) If a member of the Board expresses an opinion differs from the Board resolution, such opinion must be recorded in detail in the minutes of the Board meeting.
Article 32: Organising the Attendance of the Board Meetings.
a) The Attendance of Board meetings, and dealing with cases of irregular attendance by members of such meetings shall be organised. b) An Independent Director of the Board shall make every effort to attend all meetings in which important and material decisions affecting the position of the Company are made.
Article 33: The Agenda of Board Meetings
a) The Board shall approve the agenda once the Board meeting is convened. Should any member of the Board raise any objection in respect of such agenda, such objection shall be recorded in the minutes of the meeting. b) Each member of the Board is entitled to propose additional items to the agenda.
Article 34: Exercising the Competencies of the Board
a) The Board shall exercise its competencies and duties to lead the Company within a framework of effective and prudent controls that allow assessing and managing risks and limiting and mitigating their effects. b) Without prejudice to Paragraph (b) of Article (20) of these Regulations, the Board may, within the scope of its competencies, delegate to one or more of its members or committees or a third party the performance of a specific function or functions. c) The Board shall develop an internal policy that explains the procedures of the Board activities and aims at encouraging its members to work effectively to fulfill their obligations towards the Company. d) The Board shall organise its activities and allocate sufficient time to perform the duties and responsibilities assigned to it, including preparing for Board and committees’ meetings and ensuring the coordination, recording and retaining of the minutes of its meetings.
Article 35: The Secretary of the Board
a) The Board shall appoint a secretary among its members or a third party, whose competencies and wage shall be specified by a Board resolution, unless the Company's bylaws include provisions in connection therewith, provided that such powers shall include:
Article 36: Qualifications of the Secretary6
The Board must specify the conditions that the secretary must meet, provided that they include at least one of the following:
6 Guiding Article.
7 The Capital Market Authority Board issued its Resolution Number 8-5-2023 Dated 25/6/1444H Corresponding to 18/1/2023G amending Article 37 of the Corporate Governance Regulations and stating that such amendment shall be effective as of 19/6/1445H Corresponding to 1/1/2024G, provided that Article 37 shall remain to be a guiding article, provided that Article 39 of the Corporate Governance Regulations issued by the Board of the Authority Resolution no. (8-16-2017) dated 16/05/1438H. corresponding to 13/02/2017G and amended by the Board of the Authority Resolution no. (1-94-2022) dated 24/01/1444H. corresponding to 22/08/2022G, shall continue to be effective until the effectiveness date of Article 37 of these Regulations.
Article 39: The Assessment8
a) The Board shall develop, based on the proposal of the nomination committee, the necessary mechanisms to annually assess the performance of the Board, its members and committees and the Executive Management using key performance indicators linked to the extent to which the strategic objectives of the Company have been achieved, the quality of the risk management and the efficiency of the internal control systems, among others, provided that weaknesses and strengths shall be identified and a solution shall be proposed for the same in the best interests of the Company. b) The procedures of performance assessment shall be in writing and clearly stated and disclosed to the Board members and parties concerned with the assessment. c) The performance assessment shall entail an assessment of the skills and experiences of the Board, identification of the weaknesses and strengths of the Board and shall attempt to resolve such weaknesses using the available methods, such as nominating competent professional staff able to improve the performance of the Board. The performance assessment shall also entail the assessment of the mechanisms of the Board’s activities in general. d) The individual assessment of the Board members shall take into account the extent of effective participation of the member and his/her commitment to performing his/her duties and responsibilities, including attending the Board and its committees’ meetings and dedicating adequate time thereof. e) The Board shall carry out the necessary arrangements to obtain an assessment of its performance from a competent third party every three years. f) Non-Executive Directors shall carry out a periodic assessment of the performance of the chairman of the Board after getting the opinions of the Executive Directors, without the presence of the chairman of the Board in the discussion on this matter, provided that weaknesses and strengths shall be identified and a solution shall be proposed for the same in the best interests of the Company.
Chapter 6: Conflicts of Interest
Article 40: Dealing with Conflicts of Interest and Related Parties Transactions
Without prejudice to the provisions of the Companies Law and its implementing regulations, conflicts of interest situations and Related Parties transactions shall be dealt with in accordance with the provisions of this Chapter.
Article 41: Conflicts of Interest Policy
The Board shall develop an explicit and written policy to deal with actual and potential conflicts of interest situations which may affect the performance of Board members, a member of its committees, or the Executive Management or any other employees of the Company when
8 Guiding Article.
dealing with the Company or other Stakeholders. This policy shall include the following in particular:
Article 43: Disclosure of Conflicts of Interest by the Nominee
A person who desires to nominate himself/herself for the membership of the Board shall disclose to the Board or the General Assembly any cases of conflicts of interest, including:
Article 46: Accepting Gifts
No member of the Board or a member of one of its committees or Senior Executives may accept gifts from any person who has entered into commercial transactions with the Company if such acceptance of gifts may lead to a conflict of interest.
Part 4
Company Committees
Chapter 1: General Provisions
Article 47: Forming the Committees
Without prejudice to Article (51) of these Regulations, the Board shall form specialised committees as follows:
b) The Company shall take into consideration while forming the remuneration and nomination committees that their members are of Independent Directors. The Board may appoint NonExecutive Directors or persons other than Board members either from shareholders or others, provided that the chairmen of committees mentioned in this paragraph are of the Independent Directors. c) Chairman of the Board shall not be a member of the audit committee. He may be a member of other committees, provided that he is not the chairman of committees mentioned in these Regulations.
Article 49: Studying Subjects
a) Each committee shall assess the matters that fall within its authority or those referred to it by the Board and shall communicate its recommendations to the Board to issue decisions in connection therewith. The committees shall take decisions in regards to these matters if delegated by the Board, in pursuance to paragraph (b) of Article (20) of these Regulations. b) The committees may seek assistance from any experts or specialists, whether internal or external, within the scope of its powers. This shall be included in the minutes of the committee meeting; the minutes states the name of the expert and his relation to the Company or its Executive Management.
Article 50: Committees Meetings
a) No member of the Board or the Executive Management except the secretary or a member of the committee may attend the meetings of a committee unless such committee requests his/her opinion or advice. b) Committee meetings are valid if attended by a majority of its members. Resolutions of the committees shall be issued by a majority of the votes present and, in case of a tie, the chairman of the relevant committee shall have the casting vote. c) Board meetings shall be documented and minutes including the discussions and deliberations carried during such meetings shall be prepared. Recommendations of the committees and voting results shall be documented and retained in a special and organised register, including the names of the attendees and any reservations they expressed (if any). Such minutes shall be signed by all of the attending members.
Chapter 2: The Audit Committee
Article 51: Audit Committee Formation
a) An audit committee shall be formed by a resolution of the Company’s Board, and the members of the audit committee shall be from the shareholders or others, provided that no Executive Director is among its members. The number of the members of the audit committee shall not be less than three or more than five, provided that one of its members is specialised in finance and accounting. b) The audit committee shall have at least one Independent Director among its members.
c) The chairman of the audit committee shall be an Independent Director.9 d) Half of the audit committee’s members must be Independent Directors or from those on whom the issues affecting independence in Article (19) of this Regulation do not apply. e) The Company's General Assembly shall, upon a recommendation of the Board, issue a regulation for the audit committee which shall include the rules and procedures for the activities and duties of the committee, the rules for selecting its members, the means of their nomination, the term of their membership, their remunerations, and the mechanism of appointing temporary members in case a seat in the committee becomes vacant. f) Any person who works or has worked in the Company's finance Department, the Executive Management or for the Company’s external auditor during the preceding two years may not be a member of the audit committee. g) A member of the audit committee shall not be a member of the audit committees of more than five listed joint stock companies at the same time.
Article 52: Competencies, powers and responsibilities of the Audit Committee11
The audit committee shall be competent in monitoring the Company’s activities and ensuring the integrity and effectiveness of the reports, financial statements and internal control systems. The duties of the audit committee shall particularly include the following:
a) Financial Reports:
9 Guiding paragraph.
10 Guiding paragraph.
11 The Capital Market Authority Board issued its Resolution Number 8-5-2023 Dated 25/6/1444H Corresponding to 18/1/2023G amending Sub-Paragraph (3) of Paragraph (b) of Article 52 of the Corporate Governance Regulations and stating that such amendment shall be effective as of 19/6/1445H Corresponding to 1/1/2024G, provided that Sub-Paragraph (3) of Paragraph (b) of Article 55 of the Corporate Governance Regulations issued by the Board of the Authority Resolution no. (8-16-2017) dated 16/05/1438H. corresponding to 13/02/2017G and amended by the Board of the Authority Resolution no. (1-94-2022) dated 24/01/1444H. corresponding to 22/08/2022G, shall continue to be effective until the effectiveness date of Sub-Paragraph (3) of Paragraph (b) of
Article 52 of these Regulations.
Article 54: Audit Committee Meetings12
a) The audit committee shall convene periodically, provided that at least four meetings are held during the Company's financial year. b) The audit committee shall convene periodically with the Company's external auditor and internal auditor. c) The internal auditor and the external auditor may call for a meeting with the audit committee at any time as may be necessary.
Article 55: Arrangements for Providing Remarks
The audit committee shall develop arrangements that enable the Company’s employees to confidentially provide their remarks in respect of any inaccuracies in the financial or other reports. The audit committee shall ensure that such arrangements have been put into action through an adequate independent investigation in respect of the error or inaccuracy, and shall adopt appropriate follow-up procedures.
Article 56: Powers of the Audit Committee
In order to perform its duties, the audit committee may:
12 The Capital Market Authority Board issued its Resolution Number 8-5-2023 Dated 25/6/1444H Corresponding to 18/1/2023G amending Paragraph (b) of Article 54 of the Corporate Governance Regulations and stating that such amendment shall be effective as of 19/6/1445H Corresponding to 1/1/2024G, provided that Paragraph (b) of
Article 57 of the Corporate Governance Regulations issued by the Board of the Authority Resolution no. (8-16-
2017) dated 16/05/1438H. corresponding to 13/02/2017G and amended by the Board of the Authority Resolution
no. (1-94-2022) dated 24/01/1444H. corresponding to 22/08/2022G, shall continue to be effective until the effectiveness date of Paragraph (b) of Article 54 of these Regulations.
Article 58: Competencies of the Remuneration Committee
The competencies of the remuneration committee are:
Chapter 4: Nomination Committee
Article 61: Composition of the Nomination Committee
a) The Company's Board shall, by resolution thereof, form a committee to be named the “nomination committee,”. Members of the committee shall not be Executive Directors, provided that there shall be at least one Independent Director among them. b) The Company's General Assembly, as per the Board recommendation, issues a regulation for the nomination committee including its procedures, duties and rules for selecting its members, the term of their membership and their remunerations.
Article 62: Competencies of the Nomination Committee
The competencies of the nomination committee shall include the following:
b) The number of nominees to the Board whose names are presented to the General Assembly shall be more than the number of available seats to give a chance to the General Assembly to select the Board members among those nominees.13
Article 64: Meetings of the Nomination Committee
The nomination committee shall convene periodically at least once a year, and as may be necessary.
Article 65: Publishing the Nomination Announcement
The Company shall publish the nomination announcement on the websites of the Company and the Exchange and through any other medium specified by the Authority; to invite persons wishing to be nominated to the membership of the Board, provided that the nomination period shall remain open for at least a month from the date of the announcement.
Article 66: Nomination Rights of Shareholders
None of the provisions of this Chapter shall prejudice the right of any shareholder to nominate him/herself or others to the membership of the Board in accordance with the provisions of the Companies Law and its implementing regulations.
Chapter 5: Risk Management Committee
Article 67: Composition of the Risk Management Committee14
The Company's Board shall, by resolution therefrom, form a committee to be named the “risk management committee.”. Chairman and majority of its members shall be Non-Executive Directors. The members of that committee shall possess an adequate level of knowledge in risk management and finance.
Article 68: Competencies of the Risk Management Committee15
The competencies of the risk management committee shall include the following:
13 Guiding Paragraph.
14 Guiding Article.
15 Guiding Article.
16 Guiding Article.
Part 5
Internal Control
Article 70: Internal Control System
The Board shall approve an internal control system for the Company in order to assess the policies and procedures relating to risk management, implementation of the provisions of the Company's governance rules approved by the Company and compliance with the relevant laws and regulations. Such system shall ensure compliance with clear accountability standards at all executive levels in the Company, and that Related Party transactions are implemented in accordance with the relevant provisions and controls.
Article 71: Establishing Independent Units or Departments within the Company
a) For purposes of implementing the approved internal control system, the Company shall establish units or departments for the assessment and management of risks and for internal auditing. b) The Company may utilise external entities to perform the duties and competencies of the units or departments of risks assessments and management and internal control without prejudice to the Company's responsibility for those duties and competencies.
Article 72: Duties of the Internal Audit Unit or Department
An internal audit unit or department assesses and monitors the implementation of the internal control system, and verifies that the Company and its employees comply with the applicable laws, regulations and instructions, and the Company's policies and procedures.
Article 73: Composing an Internal Audit Unit or Department17
The internal audit unit or department shall be composed of at least one internal auditor whose appointment is recommended by the audit committee. Such internal auditor shall be responsible before the audit committee. The formation and operation of the internal audit unit or department shall take into consideration the following:
17 The Capital Market Authority Board issued its Resolution Number 8-5-2023 Dated 25/6/1444H Corresponding to 18/1/2023G amending Article 73 of the Corporate Governance Regulations and stating that such amendment shall be effective and that Article 73 shall become mandatory as of 19/6/1445H Corresponding to 1/1/2024G, provided that Article 76 of the Corporate Governance Regulations issued by the Board of the Authority Resolution no. (8-16-2017) dated 16/05/1438H. corresponding to 13/02/2017G and amended by the Board of the Authority Resolution no. (1-94-2022) dated 24/01/1444H. corresponding to 22/08/2022G, shall continue to be effective until the effectiveness date of Article 73 of these Regulations.
18 The Capital Market Authority Board issued its Resolution Number 8-5-2023 Dated 25/6/1444H Corresponding to 18/1/2023G amending Article 74 of the Corporate Governance Regulations and stating that such amendment shall be effective and that Article 74 shall become mandatory as of 19/6/1445H Corresponding to 1/1/2024G, provided that Article 77 of the Corporate Governance Regulations issued by the Board of the Authority Resolution no. (8-16-2017) dated 16/05/1438H. corresponding to 13/02/2017G and amended by the Board of the Authority Resolution no. (1-94-2022) dated 24/01/1444H. corresponding to 22/08/2022G, shall continue to be effective until the effectiveness date of Article 74 of these Regulations. 19 The Capital Market Authority Board issued its Resolution Number 8-5-2023 Dated 25/6/1444H Corresponding to 18/1/2023G amending Article 75 of the Corporate Governance Regulations and stating that such amendment shall be effective and that Article 75 shall become mandatory as of 19/6/1445H Corresponding to 1/1/2024G, provided that Article 78 of the Corporate Governance Regulations issued by the Board of the Authority Resolution no. (8-16-2017) dated 16/05/1438H. corresponding to 13/02/2017G and amended by the Board of the Authority Resolution no. (1-94-2022) dated 24/01/1444H. corresponding to 22/08/2022G, shall continue to be effective until the effectiveness date of Article 75 of these Regulations.
Part 6
The Company’s External Auditor
Article 77: Assigning the Audit Function
The Company shall assign the function of auditing its annual accounts to an independent and competent external auditor who possesses the necessary expertise and qualifications to prepare an objective and independent report to the Board and the shareholders, setting out whether the Company’s financial statements clearly and impartially express the financial position of the Company and its performance in the significant areas.
Article 78: Appointment of the External Auditor
The Ordinary General Assembly shall appoint the Company's external auditor based on a recommendation from the Board, provided that the following requirements are met:
Part 7
Stakeholders
Article 80: Regulating the Relationship with Stakeholders20
The Board shall establish clear and written policies and procedures regulating the relationship with Stakeholders with the aim of protecting them and safeguard their rights, which shall include the following, in particular:
20 Guiding Article.
Article 82: Employee Incentives21
The Company shall establish programmes for developing and encouraging the participation and performance of the Company’s employees. The programmes shall particularly include the following:
21 Guiding Article.
Part 8
Professional and Ethical Standards
Article 83: Professional Conduct Policy
The Board shall establish a policy for professional conduct and ethical values at the Company, which shall particularly take the following into consideration:
22 Guiding Article.
23 Guiding Article.
Part 9
Disclosure and Transparency
Article 86: Policies and Procedure of Disclosure
Without prejudice to the Rules on the Offer of Securities and Continuing Obligations, the Board shall set forth in writing the policies, procedures and supervisory rules related to disclosure pursuant to the disclosure requirements provided for in the Companies Law and the Capital Market Law, as the case may be, and their implementing regulations, taking into consideration the following:
24 Guiding Paragraph.
25 The Capital Market Authority Board issued its Resolution Number 8-5-2023 Dated 25/6/1444H Corresponding to 18/1/2023G amending Paragraph (11) of Article 87 of the Corporate Governance Regulations and stating that such amendment shall be effective as of 19/6/1445H Corresponding to 1/1/2024G, provided that Paragraph (11) of Article 90 of the Corporate Governance Regulations issued by the Board of the Authority Resolution no. (8- 16-2017) dated 16/05/1438H. corresponding to 13/02/2017G and amended by the Board of the Authority Resolution no. (1-94-2022) dated 24/01/1444H. corresponding to 22/08/2022G, shall continue to be effective until the effectiveness date of Paragraph (11) of Article 87 of these Regulations.
composition of the Board and classification of its members, as follows: Executive
Directors, Non-Executive Director, or Independent Director;
Procedure taken to the Board to inform its members, Non-Executive Directors in particular,
of the shareholders' suggestions and remarks on the Company and its performance.
a brief description of the competencies and duties of the committees, such as the audit
committee, the nomination committee and the remuneration committee indicating their names, names of their chairmen, names of their members, the number of their respective meetings, dates of those meetings and the members' attendance details of each meeting;
Where applicable, the means used by the Board to assess its performance, the performance
of its committees and members and the external body which conducted the assessment and its relation with the Company, if any;
disclose the remuneration of the Board members and Executive Management as stated in
Article (90) of these Regulations;
any punishment, penalty, precautionary procedure or preventive measure imposed on the
Company by the Authority or any other supervisory, regulatory or judiciary authority, describing the reasons for non-compliance, the imposing authority and the measures undertaken to remedy and avoid such non-compliance in the future;
results of the annual review of the effectiveness of the internal control procedures of the
Company and the opinion of the audit committee with respect to the adequacy of the Company's internal control system;
the audit committee’s recommendation on appointing an internal auditor for the Company,
if it has made such recommendation in the last financial year.
the audit committee’s recommendation with conflict with Board resolution or those which
the Board disregards relating to the appointment, dismissal, assessment or determining the remuneration of an external auditor, as well as justifications for those recommendations and reasons for disregarding them.
details of the Company's social contributions, if any;
a list of the dates of the General Assembly meetings held during the last fiscal year and the
names of the Board members who attended them.
a description of the main scope of business of the Company and its affiliates. If there are
two or more, a statement showing each activity and how it affects the Company businesses and results shall be attached.
a description of the company's significant plans and decisions (including changes to the
structure, expanding the Company's operations or halting them) and the future expectations.
information on any risks facing the Company (operational, financial or market related) and
the policy of managing and monitoring these risks.
a summary in a form of table or graph showing the company's assets, liabilities and results
of the last five fiscal year or since the incorporation date, whichever is shorter.
geographical analysis of the company's and its affiliates' revenues.
any material differences in the operational results compared to the preceding year's results,
along with any expectations announced by the company.
any inconsistency with the standards approved by the Saudi Organization for Chartered and
Professional Accountants.
name of each affiliate company, its capital, the company's ownership percentage, the main
scope of business, country of operation and country of incorporation.
details of shares and debt instruments issued for each affiliate company.
a description of the dividends distribution policy.
a description of any interest in a class of voting shares held by persons (other than the
company’s directors, Senior Executives and their relatives) who have notified the Company of their holdings pursuant to Article 85 of the Rules on the Offer of Securities and Continuing Obligations, together with any change to such interests during the last fiscal year;
a description of any interest, contractual securities or rights issue of the Board members,
Senior Executives and their relatives on shares or debt instruments of the Company or its affiliates, and any change on these interest or rights during the last fiscal year.
information on any loans (payable upon request or not), a statement of the total
indebtedness of the Company and its affiliates, any amounts paid by the Company in repayments of loans during the year, the amount of the principal debts, the creditor name, the loan term and remaining amount. In case there is no debts, a declaration thereof shall be presented.
a description of the class and number of any convertible debt instruments, contractual
securities, preemptive right or similar rights issued or granted by the Company during the fiscal year, as well as stating any compensation obtained by the Company in this regard.
a description of any conversion or subscription rights under any convertible debt
instruments, contractually based securities, warrants or similar rights issued or granted by the company.
description of any redemption, purchase or cancellation by the Company of any redeemable
debt instruments and the value of such securities outstanding, distinguishing between those listed securities purchased by the Company and those purchased by its affiliates.
the number of Board meetings held during the last financial year, their dates and the
attendance record of each meeting listing the names of the attendees.
numbers of company's requests of shareholders records, dates and reasons thereof.
a description of any transaction between the Company and any Related Party.
information relating to any business or contract to which the Company is a party and in
which a director of the Company, a Senior Executive or any person related to any of them is or was interested, including the names of persons in relation, the nature, conditions, durations and the amount of the business or contract. If there are no such businesses or contracts, the Company must submit a statement thereof.
a description of any arrangement or agreement under which a director or a Senior Executive
of the Company has waived any remuneration.
a description of any arrangement or agreement under which a shareholder of the Company
has waived any rights to dividends.
a statement of the value of any paid and outstanding statutory payment on account of any
zakat, taxes, fees or any other charges that have not been paid until the end of the annual financial period with a brief description and the reasons therefor.
a statement as to the value of any investments made or any reserves set up for the benefit
of the employees of the company.
declarations that:
a.proper books of account have been maintained; b.the system of internal control is sound in design and has been effectively implemented; and c.there are no significant doubts concerning the company's ability to continue its activity.
if the external auditor's report contains reservations on the annual financial statements, the
Board report shall highlight this mentioning the reasons and any relevant information.
if the Board recommended replacing the external auditor before the end of its term, the
report shall indicate this mentioning the reasons for the replacement recommendation.
information relating to any competing business with the Company or any of its activities
that any member of the Board is engaging in or was engaging in such competing businesses, including the names of persons in relation, the nature, conditions of such competing businesses. If there are no such competing businesses, the Company must submit a statement thereof.
Article 88: The Audit Committee’s Report
a) The report of the audit shall include details of its performance of its competencies and duties stated in these Regulations, provided that the report contains its recommendations and opinion on the adequacy of the internal and financial control systems and risk management systems in the Company. b) The Board shall make available sufficient copies of the audit committees' report at the Company's head office, and publish them on the Company's and the Exchange's websites when publishing the invitation to convene the General Assembly, to enable shareholders to get a copy thereof. Summary of the report shall be read at the General Assembly.
Article 89: Disclosure by the Board
The Board shall regulate the disclosures of each of its members and the members of the Executive Management, observing the following:
maintaining a register for the disclosures of the Board members and the Executive
Management and updating it regularly based on disclosures required as per the Companies Law, the Capital Market Law and their implementing regulations; and
making such register available for review by the Company's shareholders free of charge.
Article 90: Disclosure of Remunerations
a) The Board shall:
disclose the remuneration policy and the method by which remunerations of the Board
and executive management are determined;
provide an accurate, transparent and detailed disclosure in the Board report on the
remunerations granted to the Board members and Executive Management, directly or indirectly, without any omission or misleading information, and whether these were in
cash or other benefits of any nature. In case they were shares of the Company, the value of the shares is the market value on the due date;
3) explain the relationship between remunerations granted and applicable remuneration
policy, highlighting any significant deviation from such policy; Board
4) a description of the necessary details with respect to the remunerations and
compensations granted to each of the following, separately:
a. Board members; b. five Senior Executives who have received the highest remuneration from the Company, provided that the chief executive officer and chief financial officer are among them.26
c. members of committees.
b) The disclosures in this article and in the Board report shall be pursuant to the appended
schedule.
26 The Capital Market Authority Board issued its Resolution Number 1-35-2018 Dated 9/7/1439H Corresponding to 26/3/2018G stating that the remunerations of senior executives mentioned in sub-paragraph (b) of paragraph (4) of Article 90 of the Corporate Governance Regulations is to be disclosed collectively.
Part 10
Implementation of Corporate Governance
Article 91: Implementation of Effective Governance
The Board shall establish governance rules for the Company in accordance with the provisions of these Regulations, and shall monitor their implementation, verify their effectiveness, and amend them as necessary. To that end, the Board shall:
27 Guiding Article.
Part 11
Retaining of Documents
Article 93: Retaining of Documents
A Company shall retain all minutes, documents, reports and other papers required to be maintained in the company's head office for at least ten years as per these Regulations. This shall include the Board report and audit committee report. Without prejudice to this period, a company, in case of any lawsuit (filed or threatened to be filed) or ongoing claim or any investigation relating to those minutes, documents, reports and other papers, shall maintain them until the end of the ongoing lawsuit, claim or investigation.
Part 12
Closing Provisions
Article 94: Providing the Additional data and Information
The Authority may request from the Company any additional information or details it deems necessary to verify the extent of its compliance with the provisions of these Regulations.
Article 95: Publication and Entry into Force
These Regulations shall be effective as per its approval resolution.
Appendix (1) Remuneration Schedule
Board Remuneration
Fixed remunerations Variable remunerations
End-of-service award
Aggregate Amount
Expenses Allowance
Specific amount
Allowance for attending Board meetings
Total Allowance for attending committee meetings committee In-kind benefits Remunerations for technical, managerial and consultative work Remunerations of the chairman, Managing Director or Secretary, if a member Total Percentage of the profits Periodic remunerations Short-term incentive plans Long-term incentive plans Granted shares (insert the value) Total First:
Indepen dent
Director s
Total
Second:
NonExecutiv e
Director s
Total
Third:
Executiv e
Director s
Total
Remunerations of Senior Executives 28
28 The Capital Market Authority Board issued its Resolution Number 1-35-2018 Dated 9/7/1439H Corresponding to 26/3/2018G stating that the table for disclosure of senior executive remunerations specified in Appendix (1) of the Corporate Governance Regulations is of guiding nature, and the disclosure of senior executives' remunerations in the Board of Directors' reports, which will be issued for the financial periods beginning on 1/1/2020, shall be detailed in accordance with the table for the disclosure of senior executives remunerations specified in Appendix (1) of the Corporate Governance Regulations. Senior Executives Fixed remuneratio ns Variable remunerations End-ofservice award Total remunerat ions for Board executive, if any Aggre gate Amou nt Salaries Allowances In-kind benefits Total Periodic remunerations Profits Short-term incentive plans Long-term incentive plans Granted shares (insert the value) Total 1- CEO 2- CFO Total
Committees Members Remuneration
Fixed
Remuneration
(Except for the allowance for attending Board meetings) Allowance for attending Board meetings Total Audit Committee Members Total Remuneration Committee Members Total Nomination Committee Members Total Risks Committee Members Total (………) Committee Members Total
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Source: Capital Market Authority — original document · Summary generated with machine assistance and reviewed before publication; the authoritative text is the regulator's original document. How RegAlert works
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