A) This Regulation does not derogate from the provisions contained in the Companies Law, the Capital Market Law, their executive regulations, and other related regulations.

B) The Authority may exempt any person subject to this Regulation from applying any of its provisions, in whole or in part, based on a request received from that person or on its own initiative.

C) The words and phrases used in this Regulation shall have the meanings set forth opposite each of them unless the context of the text dictates otherwise:

• • Shares: Shares of listed joint-stock companies.
• • Treasury Shares: Shares purchased and held by the company, including shares allocated to employees that the company retains.
• • Employee-Allocated Shares: Treasury shares allocated by the company to its employees.
• • Purchased Shares: Shares purchased by the company pursuant to Article 114 of the Companies Law.
• • Preferred Shares: Shares issued by the company that entitle their holders to receive a higher percentage of the company’s net profits after deducting reserves—if any—than ordinary shareholders, and these shares do not grant their holders voting rights in the general assemblies of shareholders.
• • Redeemable Shares: Shares issued by the company that are redeemable at the company’s option, or at the option of the shareholders in a special purpose acquisition company, in accordance with the terms and conditions of their redemption.
• • General Assembly: The general assembly convened in the presence of the company’s shareholders pursuant to the provisions of the Companies Law and the company’s Articles of Association.
• • Special Assembly: The special assembly convened in the presence of holders of a particular class of the company’s ordinary, preferred, or redeemable shares pursuant to the provisions of the Companies Law, the company’s Articles of Association, and this Regulation.
• • Public: Any person other than those mentioned within the definition of the term "Public" contained in the glossary of terms used in the Capital Market Authority’s regulations and rules. For the purposes of this Regulation, shares held by the company are not counted as part of the public ownership.
• • Shareholders Register: The shareholders register prepared and maintained by the Depository Center, which includes the names, nationalities, residences, and share numbers of shareholders, and in which all transactions affecting the company’s issued shares are recorded.
• • Market: The Saudi Stock Market.
• • Financial Market Institution: A person licensed by the Authority to conduct securities business.
• • Company: A joint-stock company listed on the Market.
• • Cumulative Voting: A voting method for electing members of the Board of Directors that grants the holder of voting shares voting power equal to the number of those shares; allowing the holder to cast all votes for one candidate or distribute them among chosen candidates without repeating those votes.
• • Rules for Offering Securities and Continuing Obligations: Rules for Offering Securities and Continuing Obligations issued by the Board of the Capital Market Authority.
• • Depository Center Rules: Rules of the Securities Depository Center approved by the Board of the Capital Market Authority.
• • Rules Regulating Investment by Qualified Foreign Financial Institutions in Listed Securities: Rules Regulating Investment by Qualified Foreign Financial Institutions in listed securities issued by the Board of the Capital Market Authority.
• • Corporate Governance Regulation: The Corporate Governance Regulation for Listed Joint-Stock Companies issued by the Board of the Capital Market Authority.
• • Remuneration Committee: A committee formed pursuant to the provisions of the Corporate Governance Regulation.
• • Board of Directors: The company’s Board of Directors.
• • Registered Shareholders: Shareholders registered in the shareholders register at the end of the day of the extraordinary general assembly convened to approve the company’s capital increase and issuance of new shares representing it, or at the end of the profit entitlement day determined by the ordinary general assembly or the Board of Directors regarding dividend distribution.
• • Remunerations: Amounts, allowances, profits, and equivalents, periodic or annual performance-related remunerations, short- or long-term incentive plans, and any other in-kind benefits, excluding reasonable actual expenses and costs borne by the company for a Board member to perform his duties.
• • Offering Prospectus: The document required for offering securities pursuant to the Capital Market Law and the Rules for Offering Securities and Continuing Obligations.
• • Capital Market Law: Capital Market Law issued by Royal Decree No. (M/30) dated 2/6/1424H.
• • Companies Law: Companies Law issued by Royal Decree No. (M/132) dated 1/12/1443H.
• • Depository Center: Securities Depository Center.
• • Authority: Capital Market Authority.
• • Working Day: A working day in the Kingdom according to the official working days at the Authority.
• • Day: The calendar day, whether a working day or not.
• • Affiliate: A person who controls another person, is controlled by that other person, or shares control with that other person by a third party. In any of the foregoing, control may be direct or indirect.

• • Control: The ability to influence the actions or decisions of another person, directly or indirectly, alone or together with a relative or affiliate, through:

    • (A) Owning 30% or more of the voting rights in a company.
    • (B) The right to appoint 30% or more of the members of the administrative body.
• • Capitalization Issue: Offering additional shares to existing shareholders, fully paid from the company’s reserves, in proportion to the shares owned by those shareholders.

Filing of the Company’s financial statements, Board’s report and external auditor’s report shall be in accordance with the provisions related to the disclosure of financial statements and Board’s report in the Rules on the Offer of Securities and Continuing Obligations.

a) The Ordinary General Assembly shall appoint an external auditor and shall determine his fees, term of office, and scope of work.

b) The total term of office for the external auditor shall not exceed seven consecutive or non-consecutive financial years, and the Authority may, at its discretion, amend this term for any company or sector; such period shall be recalculated after the lapse of not less than three consecutive financial years from the end of the last financial year in which he worked on auditing of the Company’s accounts.

c) The total term of office for the partner supervising the audit work at the external auditor shall not exceed seven consecutive or non-consecutive financial years, and the Authority may, at its discretion, amend this term for any company or sector; such period shall be recalculated after the lapse of not less than five consecutive financial years from the end of the last financial year in which he worked as a partner supervising the audit work of the Company’s accounts.

Each member of the Board shall comply with the duties of care and loyalty, and this shall include, in particular, the following:

• 1) Duty to act within conferred powers: A member of the Board shall perform and exercise his/her duties and powers in managing the Company and guiding its activities within his/her conferred powers in accordance with the Companies Law and its implementing regulations and the Company’s bylaws and other relevant laws, and only exercise powers for the purposes for which they were conferred.

• 2) Duty to act for the best interest of the Company and to promote its success: A member of the Board shall comply with the following: a) working in good faith for the best interest of the Company and all its shareholders and shall not prioritise his/her personal interests over the interest of the Company and its shareholders, and in doing so shall have regard to the rights of the other stakeholders; b) ensure exerting all efforts to promote the success and growth of the Company and maximise its value on the long term for the benefit of its shareholders.

• 3) Duty to exercise independent judgment: A member of the Board shall perform his/her duties objectively and independently in relation to managing the Company and making decisions, and shall avoid cases that affect his/her independence in making decisions or voting on them.

• 4) Duty to exercise reasonable and expected care, skill and diligence: A member of the Board shall perform his/her duties and responsibilities in accordance with the Companies Law, the Capital Market Law and their implementing regulations and the Company’s bylaws and other relevant laws, and in accordance with the diligence and care that should be exercised by a diligent person with the general knowledge, skill and experience that the member of the Board has and that are expected of a person carrying out the functions carried out by the member of the Board.

• 5) Duty to avoid conflict of interest: A member of the Board shall avoid transactions and situations in which he/she has actual or potential direct or indirect interest that conflicts or may conflict with the Company’s interest, and the member of the Board shall comply with the provisions relating to conflicts of interest in the Companies Law and its implementing regulations.

• 6) Duty to disclose any direct or indirect interest in businesses and contracts executed for the Company’s account: A member of the Board shall disclose any direct or indirect interest he/she has in the business and contracts executed for the Company’s account immediately upon becoming aware thereof, and shall comply with the provisions relating to disclosure of interest in business and contracts in the Companies Law and its implementing regulations.

• 7) Duty not to accept benefits from third parties in relation to his/her role in the company: A member of the Board shall not exploit his position, duties and powers vested in him/her in his/her capacity as a board member in any way to obtain or accept benefits from third parties for a specific act or to refrain from doing a specific act.