1) Reference:
This Framework was first prepared by Savola Board in 2004 and has since undergone amendments. The first update was in 2006 when the first CMA CGR was issued, and the framework was subsequently amended in 2010 for the second time when the CMA amended the CGR. The last amendments remained effective over the years. The 2017 amendments are fundamental to Savola's history and experience in the area of corporate governance, due to the significant changes in the CGR issued by the CMA on 13 February 2017, as well as the operational model previously adopted by Savola, which regulates its relationship with OpCos.
Savola drafted its CG in accordance with CG codes and international leading guidelines and practices, which are accepted within the legislative scope and applied in the Kingdom of Saudi Arabia (KSA).
In particular, the Manual has been drafted based on the following:
- Laws and regulations of the CMA in the Kingdom of Saudi Arabia and in particular, CGR issued by the Board of CMA pursuant to resolution No. 8/16/2017 dated 16/5/1438H corresponding to 13/2/2017 based on the Companies Law issued by Royal Decree no. M/3 dated 28/1/1437H, subsequent amendments[1] and circulars by CMA.
- The Saudi Companies Law.
- Savola Group
- General Assemblies meeting resolutions.
- International Best Practices in CG such as the Organization for Economic Co-operation and Development (OECD), S&P disclosure and transparency standards, and the UK CG Code and other leading practices.
2) Amendment Procedures:
As indicated above, this CG Framework shall not be amended without the approval of Savola’s Board. In the event of any changes, these shall be incorporated only after fulfilling the following procedures:
- Any amendments initiated or recommended by the management, their consultants or any other body or Committee assigned by the Board shall be reviewed and approved by Savola’s Board, except for the policies and regulations that require to be approved by the GA, which shall be incorporated in the CG documents after being approved by the GA.
- Any amendments made by CMA in its CGR or any other regulations issued by CMA or MOCI shall be immediately incorporated in the Framework and implicitly considered to be approved by the Board.
3) Principle of Comply or Explain:
The rules, procedures and policies contained in this document shall constitute guiding principles for Savola (as a listed joint stock company) unless any regulations of the CMA, MoCI or any other regulatory body require that the provisions of this document shall be mandatory. These provisions shall be amended only by a decision of the Savola’s Board or the General Assembly in certain circumstances. In compliance with the governance standards, Savola adopts the "Comply or Explain" approach[2]. Accordingly, all the optional requirements (guiding requirements) in the Corporate Governance Regulation issued by the CMA and referred to in this document will remain optional for Savola unless the CMA decides to enforce these requirements later.
4) Implementation of Effective Governance:
The Board shall establish corporate governance rules that do not contradict with the mandatory provisions of the Corporate Governance Regulations issued by the CMA, and shall monitor their application, verify their effectiveness and amend them when necessary. Also, the Board shall:
- Verify the Company's compliance with these rules;
- Review and update rules in accordance with regulatory requirements and best practices;
- Review and develop codes of professional conduct that represent the Company’s values, and other internal policies and procedures to meet the needs of the Company and conform to best practices; and
- Keep the Board informed of the developments of the corporate governance and best practices or delegate this to the Governance Committee (if any) or any other Committee or management, in a manner not inconsistent with the relevant regulations.
[1] The Corporate Governance Regulation was issued by the Capital Market Authority Board Resolution No. 1-212-2006 dated 21/10/1427H corresponding to 12/11/2006 according to the Capital Market Law issued by Royal Decree No. M/30 dated 2/6/1424H.
[2] Paragraph (a) of Article (9) of CGR issued by the CMA.
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