1) Introduction, Objectives and Importance
1-1) Introduction
In accordance with Savola Group's (the “Company” or “Savola) policy and strategy to ensure proper internal controls across Savola, compliance with rules and regulations and to provide its stakeholders with highly transparent and credible information, to strengthen its relations with them, and enhance its performance and decision making process, the Savola Board of Directors (the “Board) approved this Corporate Governance (CG) Framework and thereafter it shall be subject to changes and amendments as necessary.
1-2) Objectives of CG Framework
This Framework shows Savola's set of controls, principles, standards and policies that are managed and monitored through Savola's commercial, financial and administrative operations to achieve its objectives and plans. These rules shall ensure that the Company complies with best governance practices that enable the Board to exercise its responsibilities towards the Company and its Operating Companies (OpCos) to achieve the best results for shareholders and protect their rights as well as the rights of all stakeholders.
1-3) Importance of Corporate Governance for Savola
Corporate Governance is concerned with the way in which the business and the Company affairs are managed by the Board and Executive Management, particularly regarding the following:
- Enhancing the mechanisms that help in setting Savola’s objectives and strategies and following up their implementation through clear performance indicators;
- Setting effective mechanisms to manage Savola’s affairs and its OpCos and activating the mechanisms of decision-making (i.e. activating the role of the Board and its Committees and determining the level of authority among Savola and its OpCos);
- Protecting the interests and rights of Shareholders;
- Being fully responsible towards the shareholders and other stakeholders and treating them in a just and fair manner;
- Enhancing compliance with applicable laws, regulations, and policies; and
- Enhancing the mechanisms of transparency and disclosure.
Savola believes that an effective CG system requires an efficient Board and Executive Management team that are aware of the importance of this Framework, as well as an effective organizational structure with clear roles, competencies and responsibilities. It also requires a sound internal control system through the implementation of a number of functions such as (sound planning and visibility, effective investment portfolio management, policies and procedures, external audit, internal audit, risk management, and governance and compliance), as well as providing a supportive and responsive culture and work environment.
This is further envisaged in Savola as depicted in the diagram below, which shows that there are three lines of defence whereby the Control Department is the “first line of defence”. The multiple risk controls (i.e. financial control, quality control, etc.) in addition to compliance oversight functions established by management are the “second line of defence”, and independent assurance (i.e. internal audit) is the “third line of defence”. Each of these three lines of defence plays a distinct role within Savola’s wider governance framework. The Board and senior management are the primary stakeholders served by the lines, and they are the parties best positioned to help ensure that the three lines of defence are reflected in Savola’s risk management and internal control and compliance processes.
This Framework shall apply to Savola as a joint stock company listed on the Saudi Stock Exchange and shall regulate the relationship between the Company, its Board of Directors’ Committee and its OpCos’ Boards (where and when appropriate). Each Savola’s OpCo shall prepare its own governance charter in the light of this Framework and in a manner consistent with them in accordance with its legal position and bylaws and under the supervision of its Board, its Boards’ Committees and Executive Management.
Three Lines of Defence
2) Definitions and Abbreviations
The expressions and terms in this Framework have the meanings they bear in the Company’s Bylaws and in the glossary of defined terms used in the regulations and the rules of CMA, unless otherwise stated in these regulations.
For the purpose of implementing these regulations, the following expressions and terms shall have the meaning they bear as follows, unless the contrary intention appears:
# | Term | Definition |
1 | The Company | Savola Group (a joint stock company listed on the Saudi Stock Exchange) for more information about Savola please refer to the following link: |
2 | Corporate Governance (CG) | Rules to guide the Company, including mechanisms to regulate the various relationships between the Board, Senior Executives, shareholders and stakeholders by establishing special rules and procedures to facilitate decision making, transparency and credibility for the purpose of protecting shareholders 'and stakeholders' rights, fairness, competitiveness and transparency in finance and the business environment. |
3 | The Authority (CMA) | Saudi Capital Market Authority. |
4 | Shareholder General Assembly (GA) | Savola’s Shareholders' General Assembly which is formed under the provisions of the Companies Laws and the Company's Bylaws. |
5 | Major Shareholders | Any person who owns (5%) or more of the Company shares or voting rights therein. for more information about the list of Major Shareholders please refer to the following link: Here |
6 | Board of Directors (the Board) | Savola’s Board of Directors. for more information about the Board members please refer to the following link: Here |
7 | Higher Administrative Body | As authorized by the General Assembly (GA), the Board is the higher administrative body and main responsible for the Company’s management and is regarded as the main authority to formulate the policies and strategies, and oversee and monitor its performance in the framework of the Assembly resolutions in accordance with the required rules and regulations. The Board shall be responsible before the Assembly for its resolutions. The CEO or Managing Director (if any) position is the highest executive position in the Company, and all executive departments in the Group reports to the CEO. He/or She exercises his/her powers and authorities according to the Company's Bylaws and the authorities articulated in this framework under the supervision of the Board and its Committees, for more information about the executive team please refer to the following link: Here |
8 | Executive Member | The Board member who is a full time member of the Executive Management team of the Company and participates in its daily activities.
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9 | Non-Executive Member | The Board member who does not have a full-time management position at the Company and does not participate in its daily activities. |
10 | Independent Member | A non-executive Board member who enjoys complete independence in his/her position and decisions and to which no independence rules stipulated in Article 20 of GC Regulations of CMA shall apply. He/she shall be able to perform his/her duties, express his/her opinion and vote on decisions objectively without bias; in a manner that contributes to achieving the interests of the Company. |
11 | Chief Executive Officer (CEO) | Any natural person who heads the operations of Savola and represents the highest executive grade in the Company. The CEO shall include the chief executive officer, the president of the company or equivalent, or the Managing Director (if any) |
12 | Senior Executives | Any natural person who manages and is responsible for making and implementing the Company's strategic decisions, including the CEO, deputies according to the hob grade defined for Senior Executives and the CFO, as well as the CEO of Savola Foods (Food Sector), the CEO of Panda Retail (Retail Sector) and any other major sector that could be subsequently included in the Group portfolio. The CMA shall be notified of the names of Senior Executives and any changes that may occur to them in addition to their family members according to the form prepared by the CMA and within the period specified by the regulations. |
13 | Controlling Interest | The ability to influence the 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, or (b) Having the right to appoint 30% or more of the members of the governing body (administrative team members). |
14 | 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. |
15 | Subsidiary | Any other company on which Savola Group has a control directly or indirectly. |
16 | Relatives |
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17 | Operating Companies (OpCos) | This refers to direct OpCos and core operating businesses of Savola Group. This includes:
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18 | Stakeholders | Any person who has an interest in the Company, including shareholders, employees, creditors, customers, suppliers, public and private organizations and the community. |
19 | Remunerations/ Compensations | Amounts, allowances and equivalents, periodic or annual bonuses linked to performance, long or short term incentive schemes and any other in-kind benefits except the actual reasonable expenses and fees incurred by the Company to enable the Board or Committee member to perform his/her duties. |
20 | Cumulative Voting | A voting method for the selection of Board members that grants each shareholder the voting power proportionate to the number of shares he holds. He shall be entitled to vote for one candidate or to divide them among his chosen candidates without repeating these votes. This method is adopted by Savola as a mechanism for electing its Board of Directors. |
21 | Financial Year | A calendar year commencing in January and ending on 31 December. |
22 | Day | Calendar day, unless otherwise indicated in this Manual. |
Abbreviations: | |
CEO | Chief Executive Officer |
CFO | Chief Financial Officer |
GCIAO | Group Chief Internal Audit Officer |
CMA | The Capital Market Authority |
MOCI | Ministry of Commerce and Investment |
CG | Corporate Governance |
Bylaws | Article Of Association (Bylaws of the company) |
OpCos | Operational Companies |
AC | Audit Committee |
RNC | Remuneration and Nomination Committee |
CSRC | Corporate Social Responsibility Committee |
IC | Investment Committee |
LoA | Level of Authority |
GA | General Assembly |
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