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:

  • - Fathers, mothers, grandfathers and grandmothers (and their ancestors).

  • - children and grandchildren and their descendants.

  • - siblings, maternal and paternal half-siblings.

  • - Husbands and wives.

• Holding Company: a Joint Stock Company or simplified Joint Stock Company or Limited Liability Company that establishes companies or owns stake or shares in existing companies that become subsidiaries thereof in accordance with the provisions of the Companies Law and its implementing regulations.

• Person: any natural or legal person that is recognised as such under the laws of the Kingdom.

• Related Parties:

  • 1) affiliates of the Company except for wholly-owned companies;

  • 2) substantial shareholders of the Company;

  • 3) directors and senior executives of the Company;

  • 4) directors of affiliates of the Company;

  • 5) directors and senior executives of substantial shareholders of the Company;

  • 6) any relatives of persons described at (1), (2), (3) or (5) above;

  • 7) any company controlled by any person described at (1), (2), (3), (5) or (6) above.

  • For the purposes of paragraph (6) of this definition, the term “relatives” shall mean a parent, spouse, and children.

• The Group: When referring to a person, means the person and his affiliates.

• Affiliate: a person who controls another person or is controlled by that other person, or who is under common control with that person by a third person. In any of the preceding, control could be direct or indirect.

• Stakeholder: any person who has an interest in the Company, including employees, creditors, customers, suppliers and the community.

• Substantial Shareholders: any person who owns (5%) or more of the shares of the Company or voting rights therein.

• 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.

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.

These Regulations aim at establishing an effective legal framework to govern the Company, and particularly aim at the following:

• 1) enhancing the role of the Company’s shareholders and facilitating the exercise of their rights;

• 2) Stating the competencies and responsibilities of the Board and the Executive Management;

• 3) enhancing the role of the Board and the committees and developing their capabilities to enhance the Company’s decision making mechanisms;

• 4) achieving transparency, impartiality and equity in the Exchange, its transactions, and the business environment and enhance disclosure therein;

• 5) providing effective and balanced tools to deal with conflicts of interest;

• 6) enhancing accountability and control mechanisms for the Company’s employees;

• 7) establishing the general framework for dealing with Stakeholders and protecting their rights;

• 8) supporting the effectiveness of the system for overseeing companies and the tools thereof; and

• 9) 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

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.

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.

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.