Policies, Standards and procedures for Board Membership

Policies, Standards and procedures for Board Membership

DISCLAIMER:

This English version of this policy is a translation of the original Arabic document and has been made for information purpose for Non-Arabic speakers. In case of any discrepancy or misinterpretation, the original Arabic document of the said policy shall prevail.

1. Introduction
2. Policies and standards of Savola’s Board membership
3. Nominate right procedures of the company board membership
4. Appointment of Chairman and Vice Chairman
5. The expiry of the Board Membership and vacancies
6. Final Provisions (for publications, Access and Amendments)

1)  Introduction

The "Policies, Standards and procedures for the membership of the Board of Savola Group” (Savola or the Company) have been prepared to comply with item (3) of article (22) of the Corporate Governance Regulations (CGR) issued by the Capital Market Authority (CMA) Board pursuant to resolution No. (8-16-2017) dated 13/2/2017, which stipulated that the board shall "set forth specific and explicit policies, standards and procedures for membership in the board, without prejudice to the mandatory provisions of these Regulations, and implementing them following approval by the General Assembly".

2)  Policies and standards of Savola’s Board membership

The board shall have the appropriate balance of skills, experience, independence and knowledge of Savola’s business to enable them to discharge their respective duties and responsibilities effectively. The General Assembly (GA) shall take into account, when electing members to the board, the recommendations of the RNC committee and the availability of the personal and professional capabilities required to perform their duties effectively. The member shall have the following qualifications in particular:

1. The nominee shall not have been previously convicted of a crime of dishonesty, declared bankruptcy or insolvency, or deemed unfit for the board membership in accordance with any law or instructions applied in the Kingdom.
2. The nominee shall not be a member of the boards of more than five listed joint stock companies at the same time.
3. The board member shall represent all shareholders and shall abide by what meets the interests of the company in general and not what serves the interests of the group he represents or the group that voted in favor of his/her appointment as a board member.
4. independent board members of Savola shall not be less than one-third of the total board members (i.e. 4 out of 11).
5. Independent board members shall enjoy complete independence in his/her position and decisions and not having any independence conflicts stipulated in article 20 of the CG Regulation.
6. Ability to lead:  The member shall enjoy leadership skills, which enable him/her to delegate powers in order to enhance performance and apply best practices in effective management and compliance with professional ethics and values as well as being able to communicate effectively, plan and think strategically.
7. Qualifications, skills and experience:  The member shall have the academic qualifications and proper professional and personal skills as well as an appropriate level of training and practical experience related to the current and future businesses of the Company and the knowledge of management, economics, accounting, law or governance, as well as the desire to learn and receive training.
8. Ability to guide: The member shall have the technical, leadership, and administrative competencies as well as the ability to take prompt decisions, and understand technical requirements and developments related to the job. He/she shall also be able to provide strategic guidance and long-term planning and have a clear future vision.
9. Financial knowledge:  The member shall have the ability to read and understand financial statements and reports.
10. Physical fitness: The member shall not suffer from any health issue that may hinder him/her from performing his/her duties and responsibilities.
11. Each member of the board shall comply with the principles of truthfulness, honesty, loyalty, and care of the interests of the Company and its shareholders, and prioritize their interests over his/her personal interests. This shall include, in particular, the following:
    1. Truthfulness: is achieved when the relationship between the board member and the Company is an honest professional relationship, and he/she discloses to the Company any significant information before entering into any transaction or contract with the Company or any of its affiliates.
    2. Loyalty: is achieved when the board member avoids transactions that may entail conflicts of interest and ensures fairness of dealing, in compliance with the provisions relating to conflicts of interest in these Regulations.
    3. Care: is achieved by performing the duties and responsibilities set forth in the Companies Law, the Capital Market Law and their implementing regulations and the Company’s bylaws and other relevant laws.
12. The nominee shall be a natural person of at least 25 years of age, whether he/she applying in his/her personal capacity or as a representative of a legal personality.
13. Diversity of qualification and practical experience shall be taken into consideration, and priority shall be given to nominees with the appropriate skills for the board of directors.
14. A member of the board shall resign before the end of his/her office term, if he/she lost his/her eligibility to serve as a member, or if he/she lost his/her ability to perform responsibilities or couldn’t allocate the time or effort required to perform his/her role and responsibilities in the board. Also in the event of conflict of interest, the member has the option either to obtain the approval of the ordinary General Assembly (which its approval must be renewed every year) or to submit his/her resignation.

3)  Nominate right procedures of the company board membership

1. Each shareholder shall have the right to nominate himself/ herself or other person(s) for membership to the board of directors, to the extent of his shareholding in the capital.
2. The RNC committee shall coordinate with the executive management of the company to announce the opening of the nomination for the company board membership at least 60 days prior to the end of the Board’s office term in accordance with applicable laws and regulations.
3. The Company shall publish the nomination announcement on the websites of the Company and the Exchange and through any other medium specified by the Authority; to invite persons wishing to be nominated to the membership of the Board, provided that the nomination period shall remain open for at least a month from the date of the announcement.
4. The RNC committee shall submit its recommendation to the board of directors on nomination for the board membership in accordance with the standards mentioned in this policy.
5. Anyone who is interested in being nominated to the company board shall declare his/her wish by notifying the company administration in accordance with the applicable rules and regulations. This notice shall include an introduction of the nominee with respect to his/her curriculum vitae, his/her qualifications and his/her work experience, such documents shall be submitted in Arabic language. In addition, he/she must provide the Company with the all supporting documents such as (national ID, family ID, passport for non-Saudis nominees for board membership and any other relevant documents requested by the company to meet the legal requirements).
6. A person who desires to nominate himself/herself for the membership of the Board shall disclose to the Board or the General Assembly any cases of conflicts of interest, including:
   1. having direct or indirect interest in the contracts and businesses entered into for the benefit of the Company in which he/she desires to be nominated to the Board.
   2. engaging in business that may compete with the Company or any of its activities.
7. Nominees for board membership shall complete the form(s) specified by the CMA, which can be found on their website.
8. Any nominee who is a previous board member of Joint stock company shall state the names and dates of the boards in which he was a member.
9. Any nominee who has served as a board member in the company shall enclose with the nomination notice a statement from the company management on the last session in which he/she was a board member including the following:
   1. The number of Board meetings held during each year of the session.
   2. The number of meetings attended by the member, and the percentage of his attendance of the total meetings.
   3. The committees in which the member participated, the number of meetings held by each of these committees during each year of the session, the number of meetings attended and the attendance percentage of the total number of meetings.
10. Membership type shall be clarified upon nomination, i.e. if the nominee is an executive member or a non-executive member or an independent member.
11. The membership nature shall be clarified, i.e. if the member is a nominee for himself /herself or he/she represents a legal person.
12. The RNC shall coordinate with the executive team of the company to satisfy the regulatory requirements and to provide the regulatory authorities with all required documents.
13. Cumulative voting is used as a voting method in Board elections.
14. Voting in the General Assembly shall be confined to the Board nominees whose nominate himself/herself in accordance with the procedures, the criteria’s and polices mentioned above.

4)  Appointment of Chairman and Vice Chairman

Savola's shareholders elect the members of the board at the GA meeting in accordance with the rules and regulations and provision provided herein. Then the board, selects from its non-executive members a chairman and a Vice chairman and the board shall have the right to remove or re-appointment them.

5)  The expiry of the Board Membership and vacancies

1. The office term of the board shall expire by the end of the defined period which is 3 years from the date of his/her election by the GA.
2. The office term of the board member shall expire in accordance with any law or regulation worked under in the Kingdom, or because of death or resignation or conviction of a crime against honor and honesty; nonetheless, the GA may, at all times dismiss, all or any of the members of the board, but without prejudice to the dismissed member’s right to remuneration if such dismissal has taken place in an untimely manner or is without cause. Further, a member of the board may resign office, provided that such resignation be in proper time, failing which, such member shall be liable to pay remuneration to the Company for any damage arising from such resignation
3. Upon the recommendation of the board of directors, the general assembly may terminate the membership of board member who fails to attend three consecutive board meetings without a valid reason.
4. If during the membership period, any position becomes vacant, the board shall temporarily appoint a member to fill that position provided that such member be from among persons who are experienced and qualified and that such appointment be brought before the Ordinary General Assembly in its first meeting; and the member newly appointed shall complete the terms of his predecessor.

6)  Final Provisions (for publications, Access and Amendments)

This policy shall be implemented and complied with by the Company starting from the date it is approved by the GA. This policy shall be published and made available to the shareholder and the public in the Company’s website after GA meeting approval. The content of this policy shall be reviewed - as needed - upon the recommendation of the board, provided that, any recommended changes are presented to the GA in the next meeting for approval.

Note:

This policy was approved by the Shareholders General Assembly in its meeting held on 02/11/2017 corresponding to 13/02/1439