Corporate Governance Description

Philosophy

AQARAT believes that sound governance is an essential factor to boost the image of the Company, through the commitment of the board of directors, executive management, and employees to a corporate culture that would motivate them to maximize the efficiency and effectiveness of the Company’s operations and achieve growth in its activities. AQARAT also believes that sound corporate governance is the key to enhance the trust of the shareholders and stakeholders and increase transparency and accountability.

To ensure the proper implementation of the principles of sound governance, the Board of Directors of AQARAT approved comprehensive governance policies and procedures, as per Module Fifteen “Corporate Governance” of the Executive Bylaws issued by Capital Markets Authority.

Board of Directors

AQARAT’s board of directors consists of eight (8) members; one (1) executive member, two (2) independent, and five (5) non-executive members and enjoys a diversified educational and professional experience, specialized skills as well as knowledge of the Company’s activities. The number of directors is sufficient to form the required committees.

Name Designation
Ibrahim Saleh Al-Therban Chairman, non-executive
Talal Jassim Al-Bahar Vice Chairman & CEO, executive
Hamed Mohammad Al-Aiban Board member, non-executive
Marzouq Jassim Al-Bahar Board member, non-executive
Ahmed Faisal Al-Qatami Board member, independent
Mishari Abdullah Al-Dakhil Board member, independent
Mishari Ahmed Al-Ajeel Board member, non-executive
Mohammad Essam Al-Bahar Board member, non-executive

Roles and responsibilities:
  • Approve the Company’s major goals, strategies, plans, and policies.
  • Approve annual budgets, periodic and annual financial information.
  • Ensure the company’s commitment to the policies and procedures, which guarantee the company’s compliance with internal rules and regulations.
  • Safeguard the accuracy and validity of the information to be disclosed in line with applicable disclosure and transparency policies and rules.
  • Set corporate governance system, monitor the effectiveness of this system, and modify it if necessary
  • Monitor the performance of each member of a Board of Directors and executive management
  • Prepare an annual report to be cited in the annual general assembly that includes the procedures of fulfilling corporate governance rules.
  • Form specialized committees where period, powers, and responsibilities of each committee are clarified.
  • Ensure that the Company’s approved policies and procedures are clear and transparent to facilitate decision making, implement sound governance, segregate powers and authorities of both the board of directors and executive management.
  • Monitor the performance of executive management to ensure their efficient implementation of job requirements.
  • Set a policy that regulates the relationship with stakeholders to protect their rights.
  • Set a mechanism that regulates dealings with related parties to avoid conflicts of interest.
  • Periodically ensure that the implemented internal audit systems’ are efficient and sufficient in the Company and its subsidiaries.

Board Committees

In line with the roles and responsibilities carried out by the board of directors, especially those related to strategic planning, supervision of governance, risk management, and internal control implementation, the board has established/formed three committees to assist in the effective accomplishment of its roles and responsibilities.

Audit Committee

The committee consists of three (3) members; one (1) independent member, the Chairman, and the executive member of the board are not members. The committee is fully independent.


Name Designation
Marzouq Jassim Al-Bahar Chairman of the Committee, non-executive
Ahmed Faisal Al-Qatami Committee member, independent
Misahri Abdullah Al-Dakhil Committee member, independent

Roles and responsibilities:
  • Review the periodical financial statement before being presented to the board, state its opinion and submit its recommendation to ensure fairness and integrity of the financial statements.
  • Submit its recommendation to the board regarding the appointment and re-appointment or replacement of the external auditors, and specify their fees. When recommending the appointment of the auditors, it shall ensure their independence and review the letters of their appointment.
  • Follow up on the performance of the external auditor and ensure that they are not providing services to the Company other than the services required by the auditing profession.
  • Review the observations of the external auditor on the financial statements and follow up on what steps were taken in this regard.
  • Study the implemented accounting policies, and give opinion and recommendations to the board in this regard
  • Assess the adequacy of the internal control systems implemented in the Company and prepare a report that includes the opinion and recommendations of the committee in this regard
  • Technically supervise the Internal Audit function to verify the effectiveness of tasks and assignments carried out.
  • Review the results of the internal audit reports and ensure that the necessary corrective actions are taken in respect of the comments mentioned in the report.
  • Ensure that the Company complies with the related laws, policies, systems, and instructions.
  • 1Meet regularly and independently with the external and internal auditors.

Risk Management Committee

The Risk Management Committee consists of three (3) members, chaired by a non-executive board member and the Chairman is not a member.


Name Designation
Ahmed Faisal Al-Qatami Chairman of the Committee, independent
Mohammed Essam Al-Bahar Committee member, non-executive
Marzouq Jassim Al-Bahar Committee member, non-executive

Roles and responsibilities:
  • Prepare and review risk management strategies and policies prior to submitting them the board of directors for approval, ensure the implementation of such strategies and policies, and that they are appropriate to the Company’s nature and level of activities.
  • Ensure provision of resources and systems sufficient for risk management.
  • Assist the board of directors in identifying and assessing the Company’s acceptable risk level, and ensure that the Company does not exceed such level after its approval.
  • Review the organizational structure of risk management and provide recommendations prior to its approval by the Board of Directors.
  • Verify the independency of the risk management employees from activities that result in subjecting the company to risks.
  • Ensure that the risk management employees fully understand the risks the Company faces and raise awareness of employees concerning risk culture.
  • Review issues raised by the audit committee, which may affect risk management in the company.

Nomination and Remuneration Committee

The committee consists of three (3) members; one (1) independent member and the committee is chaired by a non-executive member.

Name Designation
Ibrahim Saleh Al-Therban Chairman of the Committee, non-executive
Mohammed Essam Al-Bahar Committee member, non-executive
Mishari Abdullah Al-Dakhil Committee member, independent

Roles and responsibilities:
  • Recommend the nomination and re-nomination of members of the board of directors and executive management.
  • Set a clear remuneration policy for members of the board of directors and executive management, annually review the required skills for the board, obtain applications for executive positions as needed, study and revise such applications and determine remuneration categories to be provided for employees.
  • Design job description for executive, non-executive, and independent members of the board of directors and independent members.
  • Ensure the indecency of the independent board member.
  • Prepare a detailed annual report of all remunerations granted to members of the board of directors and executive management members; whether cash or benefits or privileges, of whatever nature and title.
  • Approve grades and salaries structure.

Executive Management

The Company’s operations are run by the executive management under the oversight of the Company’s CEO to achieve balance in the relationship of the Company and its shareholders, employees, clients, and other stakeholders.

Roles and responsibilities:
  • Give recommendations on the implemented strategies with aim of improving such strategies.
  • Execute the Company’s strategies, regulations and ensure their sufficiency and effectiveness
  • Provide timely, comprehensive, and accurate information and reports.
  • Prepare and submit to the board of directors, periodic financial and non-financial reports that highlight the accomplishment of the Company’s strategies and goals.
  • Execute internal controls and risk management systems and ensure their sufficiency and effectiveness.
  • Manage all Company’s activities, human and financial resources effectively and efficiently to maximize profits, reduce costs and achieve the Company’s strategic goals.

Internal Control Systems

AQARAT’s internal control systems are an integrated procedure that is implemented by both management and employees. It aims to increase the efficiency and effectiveness of all operations within the Company, confirm the accuracy and soundness of the financial statements, and commit to the applicable laws and regulations, therefore, ensure the protection of property from damage, loss, or misuse.

Internal Audit

The internal audit ensures the integrity of the internal control systems, risk management, and governance, assesses the Company’s various operations, and ensures the accuracy of the financial statements.

External Audit

The Audit Committee gives its recommendation to the board of directors on the appointment or re-appointment of an external auditor and determines their fees after ensuring their independence, and that no services other than audit services are provided to the Company. Grant Thornton-Al-Qatami, Al-Aiban and Partners are commissioned to carry out the auditing services.

Risk Management

The risk unit in AQARAT identifies, assesses, and monitors risks associated with the Company’s operations as well as prepare periodic risk reports. It is an independent unit with access to all operations within the Company to form a complete understanding of such operations and can request further information to properly assess and monitor risks.

Code of Conduct and Ethical Standards

AQARAT’s board of directors established standards/principles to promote good conduct and values, in a way that reflects on and boots both the image and reputation of the Company. The code of conduct affirms the commitment of all employees, whether members of the board of directors, executive management, or staff in general, to the Company’s internal policies and procedures as well as the applicable rules and bylaws of the regulators.

Whistleblowing Policy

The whistleblowing policy provides a supportive and transparent environment for all employees. It allows them to report their concerns on any irregularities, misconduct, or malpractice to the board of directors. Whistleblowing procedures are carried out within a framework that ensures the protection of the whistleblower, the conduct of the necessary investigation, and the effective supervision of such procedures.

Disclosures and Transparency

To boost the mechanism of accurate and timely disclosure of all significant information, AQARAT developed disclosures’ policies and systems that aim at achieving fairness, transparency, prevent conflicts of interest and misuse of inside information. Additionally, the policies regulate disclosures’ procedures of material/significant information and provide announcement mechanisms in accordance with corporate governance principles.

Shareholders’ Right

The board of directors of AQARAT has adopted a policy that protects the rights of shareholders and ensures fair and equal treatment in exercising their rights, which are:

  • List the ownership value in the Company’s records
  • Registration, dispose, or transfer their ownership freely
  • Receive dividends
  • Access to information related to the Company’s activities, operations, and investment strategies
  • Participate in shareholders’ general meetings, vote, and elect members of the board of directors.
  • Monitor performance of the Company, in general, and the Board of Directors, in particular
  • Approve any sale and purchase transactions or disposal of the Company’s assets, if the transaction value is 50% or more of the total amount of the Company’s assets.

Stakeholders’ Right

AQARAT is committed to protecting the rights of stakeholders and creating employment opportunities through maintaining stable and strong financial positions. Additionally, and as part of the governance framework, the Company has developed a policy that protects the rights of stakeholders, and ensures that their rights are respected and honored. Moreover, the board of directors is responsible for setting the standards and principles that protect the rights of stakeholders and update them whenever required, to clarify the changes in the provisions of law and regulations issued by regulators.

Social Responsibility

The company contributes to the sustainable development of society in general and to the employees of the company in particular and contributes to the reduction of unemployment in the society and to the optimal utilization of available resources.