The following words and phrases indicate the meanings specified next to each, unless the context requires otherwise:

Companies Law: The Companies Law, issued by Royal Decree No. (M/3) dated 28/1/1437 AH.

Regulation: Regulation for the Governance of Unlisted Joint Stock Companies.

Ministry: Ministry of Commerce and Investment.

Company: The unlisted joint stock company in the financial market.

Board of Directors: The Board of Directors of the company.

Corporate Governance: Rules and standards for leading and directing the company, which include procedures to organize the relationship between the Board of Directors, executive directors, shareholders, and stakeholders, facilitate the decision-making process, and impart transparency and credibility to it, with the aim of protecting the rights of shareholders and stakeholders, and achieving fairness, competitiveness, and transparency in the business environment.

Shareholders' Assembly: An assembly formed by the company's shareholders in accordance with the provisions of the Companies Law and the company's bylaws.

Executive Member: A member of the Board of Directors dedicated to the executive management of the company, participating in its daily operations.

Non-Executive Member: A member of the Board of Directors who is not dedicated to the executive management of the company and does not participate in its daily operations.

Independent Member: A non-executive member of the Board of Directors who enjoys complete independence in his position and decisions, and none of the independence impairments stipulated in Article 20 of the Regulation apply to him.

Executive Management or Senior Executives: Individuals responsible for managing the company's daily operations, proposing and implementing strategic decisions, such as the CEO, his deputies, and the CFO.

Relatives or Kinship:

• - Parents, grandparents, and great-grandparents, regardless of their lineage.

• - Children and their descendants, regardless of their lineage.

• - Full siblings, half-siblings, and their children.

• - Spouses.

Related Parties:

• ‌A. Major shareholders in the company.

• ‌B. Members of the Board of Directors of the company or any of its subsidiaries and their relatives.

• ‌C. Senior executives in the company or any of its subsidiaries and their relatives.

• ‌D. Members of the Board of Directors and senior executives at major shareholders in the company.

• ‌E. Entities owned by a member of the Board of Directors or a senior executive or their relatives.

• ‌F. Companies in which any member of the Board of Directors or senior executives or their relatives is a partner.

• ‌G. Companies in which any member of the Board of Directors or senior executives or their relatives is a member of its Board of Directors or a senior executive therein.

• ‌H. Joint stock companies in which any member of the Board of Directors or senior executives or their relatives owns 5% or more, taking into account what is stated in paragraph (D) of this definition.

• ‌I. Companies in which any member of the Board of Directors or senior executives or their relatives has influence over its decisions, even through advice or guidance.

• ‌J. Individuals whose advice and guidance influence the decisions of the company and its Board of Directors and senior executives.

• ‌K. Holding or subsidiary companies of the company.

• Exempted from paragraphs (I) and (J) of this definition are the advice and guidance provided professionally by a licensed person in that regard.

Group: In relation to a person, it means that person and all of their affiliates.

Affiliate: A person who controls another person, or is controlled by that other person, or shares control with a third person. Control in any of the above may be direct or indirect.

Stakeholders: Anyone with an interest in the company, such as employees, creditors, customers, suppliers, and the community.

Major Shareholders: Anyone who owns 5% or more of the company's shares or voting rights therein.

Cumulative Voting: A voting method for electing members of the Board of Directors that grants each shareholder voting power equal to the number of shares they own; allowing them to vote for one candidate or distribute their votes among their chosen candidates without repeating those votes.

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

• ‌A. Owning 50% or more of the voting rights in the company.

• ‌B. The right to appoint 50% or more of the members of the Board of Directors or senior executives.

Compensation: The total amounts received by a member of the Board of Directors in terms of sums, allowances, profits, and similar benefits, periodic or annual bonuses linked to performance or short- or long-term incentive plans, and any other in-kind benefits, excluding reasonable actual expenses incurred by the company on behalf of the members of the Board of Directors for the purpose of performing their duties.

1. This Regulation outlines the rules and guiding standards governing the management of the company to ensure compliance with the best practices of corporate governance that guarantee the protection of the rights of shareholders and stakeholders.

2. This Regulation is advisory for unlisted joint-stock companies, except for provisions stipulated by the Companies Law or any other regulation or decision that are deemed mandatory.

3. A company owned or controlled by a family should prepare a family charter; with the aim of promoting and nurturing the family's business values, ensuring the continued success and growth of the company, maximizing its value, and ensuring the organized transition of successive generations within the company, while establishing a sound and fair balance between the interests of family members and the interests of the company.

4. The provisions of this Regulation do not affect the powers of the competent authorities to issue regulations and instructions to regulate the companies under their supervision.

The purpose of this Regulation is to establish an effective legal framework for the governance of the company, and it specifically aims to achieve the following:
‌A. Activating the role of shareholders in the company and facilitating the exercise of their rights.
‌B. Clarifying the competencies of the Board of Directors and the executive management and their responsibilities.
‌C. Activating the role of the Board of Directors and committees and enhancing their efficiency to improve decision-making processes in the company.
‌D. Achieving transparency, integrity, and fairness in transactions and the business environment.
‌E. Providing effective and balanced tools to address conflicts of interest.
‌F. Enhancing control and accountability procedures for employees in the company.

1. The Board of Directors is committed to working on protecting the rights of shareholders in a manner that ensures fairness and equality among them.
2. The Board of Directors and the executive management of the company are committed to not discriminating between shareholders owning the same class of shares, and not withholding any rights from them.
3. The company outlines in its internal policies the necessary procedures to ensure that all shareholders can exercise their rights.

1. The Board of Directors is obligated to provide complete, clear, accurate, and non-misleading information to enable the shareholder to fully exercise their rights. This information should be provided in a timely manner and updated regularly.

2. The means of providing information to the shareholders must be clear and detailed, and should include a statement of the company information that shareholders can access, and should be made available to shareholders of the same category.

3. The most effective means of communication with shareholders should be followed, and there should be no discrimination among them in the provision of information.

1. The Board of Directors shall ensure communication between the company and the shareholders based on a mutual understanding of the company's strategic objectives and interests.

2. The Chairman of the Board and the Chief Executive Officer shall inform the other members of the Board of Directors about the shareholders' opinions and discuss them with them.

3. No shareholder may interfere in the activities of the Board of Directors or the executive management of the company unless they are a member of its Board of Directors or its executive management, or their interference is through the ordinary general assembly and in accordance with its competencies, or within the limits and conditions permitted by the Board of Directors.