Ministerial Resolution
Number (518) of 2009
Concerning the Criteria of Governance and the Standards
for Institutional Discipline
The Minister of Economy and the Chairman of the Board of
Directors of the Authority,
After reviewing the provisions of the Federal Law Number (8) of the year
1984 concerning the Commercial Companies and the amendments
thereof, and
Law of Civil Transactions issued pursuant to the Federal Law Number (5)
of the year 1985, and
Federal Law Number (22) of the year 1995 concerning the regulation of
the profession of account auditors and the amendments thereof, and
Federal Law Number (4) of the year 2000 concerning the Securities and
Commodities Authority and Market and the amendments thereof, and
Federal Decree Number (18) of the year 2009 concerning the formation
of the Council of Ministers of the State of the United Arab Emirates, and
Cabinet Resolution Number (12) of the year 2000 concerning the
Regulations pertaining to the listing of securities and commodities and
the amendments thereto, and
Cabinet Resolution Number (13) of the year 2000 concerning the
Regulations pertaining to the operation of the Securities and
Commodities Authority and Market, and
Cabinet Resolution Number (194 /15) of the year 2006 establishing the
Board of Directors of the Securities and Commodities Authority, and
Decision of the Ministerial Council for Services Number (3/3) of the year
2007 concerning the authorization of the Securities and Commodities
Authority to receive the applications for the establishment of public
shareholding companies and satisfying all the procedures pertinent
thereto and supervise the same, and
Decision of the Board of Directors of the Authority Number (7) of the
year 2000 concerning the Regulations pertaining to disclosure and
transparency and the amendments thereof, and
Decision of the Board of Directors of the Authority Number (7) of the
year 2002 concerning the Regulations pertaining to the listing of foreign
companies, and
Decision of the Board of Directors of the Authority Number (43/ T) of
the year 2008 concerning the joint listing, and
After consulting and coordinating with the concerned entities in the State,
Has decided to ratify the Criteria for Governance and the Standards
of Institutional Discipline
Article (1) Definitions
In course of the application of this Resolution, the following words and
terms shall have the meanings set forth opposite each thereof, unless the
context indicates otherwise:
The Law
The Federal Law Number (4) of the year 2000
concerning the Emirates Securities and Commodities
Authority and Market and the amendments thereto
The Authority The Securities and Commodities Authority and Market
The Board
The Board of Directors of the Authority
The Market
The Securities and Commodities Market Licensed in the
State by the Authority
Corporate
Governance
The set of standards, criteria, and procedures that
ensures the corporate discipline in the Management of
the Company in accordance with the international
standards and methods through identifying the
responsibilities and the duties of the Members of the
Board of Directors, as well as the executive
Management of the Company, and which takes into
account the protection of the interests of the
shareholders and the Stakeholders
The Company The shareholding company that listed securities
belonging thereto in the Market
The Board of
Directors
The Board of Directors of the Company
The
Management
The executive management of the Company which
includes the general manager/ the executive director, the
chief executive officer, the mandated member
empowered by the Members of the Board of Directors
to manage the Company, and the deputies of the above
mentioned.
The
Company's
Manager
The general manager, the executive Director, or the
chief executive officer of the Company who are
appointed by the Board of Directors
Member of
the Board of
Directors
The natural or juridical person that is selected to become
a Member in the Board of Directors of a Company.
Executive
Member of
the Board of
Directors
The member who is dedicated to the Management of the
Company, or who receives a monthly or annual salary
from the Company
NonExecutive
Member of
the Board of
Directors
The member who is not dedicated to the Management of
the company, or who does not receive a monthly or
annual salary from the company; the remuneration
received for being a Member in the Board of Directors
shall not be considered as a salary.
Independent
Member of
the Board of
Directors
The member who was not, nor a spouse of him/her, or
any first class relative thereof was, a member of the
executive Management of the Company during the last
two years; and non of the mentioned had any relation
that resulted in financial dealings with the Company, the
Mother company' or any of the affiliated, Subsidiary, or
Sister companies during the last two years if the total of
such dealings exceeded (5%) of the paid capital of the
Company , or five million Dirhams, or the amount
equivalent thereof in a foreign currency; whichever is
less.
A Member in the Board of Directors is not considered
independent in any of the following circumstances in
particular:
 If the same was an employee for any of the
parties that are connected to the Company during
the last two years.
 If the same is directly connected to a company
that executed consultancy work or provided
consultations to the Company or to any of the
parties connected therewith.
 If the same has any personal services contracts
with the Company or with any of the parties
connected therewith or with the staff of the
executive Management thereof.
 If the same is directly connected with one of the
non- for- profit organizations which receives a
big amount of funding from the Company or any
of the parties connected therewith.
 If the same was, during the last two years,
connected to, or an employee for, any of the
external auditors or the previous auditors of the
Company or with any of the parties connected
therewith.
 If the ownership of the same, or of his minor
children or both, in the capital of the Company
reached (10%) or more.
First Class
Relatives
Father, Mother, children, father in law, Mother in law,
and children of the spouse.
Compliance
Officer
The person whom the company appoints to ensure the
compliance of the Company and the staff members
thereof with the provisions of the Law, the bylaws, and
the decisions issued pursuant thereof, as well as the
internal policies and procedures.
Listing Rules
The rules and requirements for listing as provided for
under the Law, the regulations, and the decisions issued
pursuant thereto, as well as the internal regulations of
the Market.
Disclosure
Rules
The rules and requirements of disclosure that are
provided under the Law the bylaws and the decisions
issued pursuant thereto.
Substantial
Information
Any event, fact, decision, or information that could
directly or indirectly affect the price of a security, the
volume of the traded value thereof, or which has an
impact on the person's decision of buying, keeping,
selling, or disposing of the mentioned security.
Stakeholders
Any person who has an interest with the Company, such
as the shareholders, employees, lenders, suppliers, and
potential investors.
The Mother
Company
The company that owns a share of more than (50%) of
the capital of any other company.
The
Subsidiary
The company the half of the capital of which in
minimum is owned by another company.
The Sister
Company
The company that belongs to the same group to which
the other company belongs.
The Affiliate
The Company which is a party to a cooperation and
coordination contract with another company
The
Accumulative
Voting
That each shareholder shall have a number of votes
equal to the number of shares that the same owns, so
that the same will use them all to vote with one
candidate for the membership of the Board of Directors,
or divide the same among the candidates that he chooses
provided that the number of the votes given to the
candidates may not exceed the number of the votes he
possess in whatever condition.
Article (2) Scope of Application of the Resolution
A. The Securities and Commodities Authority shall have the
responsibility of supervising, control, and ensuring the compliance
of companies with the rules and provisions of this Resolution.
B. The provisions of this Resolution shall apply to all companies and
establishments that listed securities in any of the Markets or
securities Markets in the State, and to the members of its Boards of
Directors.
C. Companies and establishments completely owned by the Federal
Government or any of the local governments shall be exempted from
the application of these parameters.
D. Subject to the provision of Paragraph (C) of this Article, the
Authority's Board of Directors may exempt the companies in which
the Federal Government or any of the local governments is a
shareholder from the application of some of the provisions of this
Resolution, provided that the company shows in its application
submitted thereby the provisions it requires to be exempted of and
the justification for such exemption.
Article (3) The Board of Directors of the Company
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The Company shall be managed by a Board of Directors; the bylaw
of the Company shall specify the composition thereof, the number of
its members, and the duration of the membership thereon.
The Members of the first Board of Directors of the Company shall
be elected by the founders; the subsequent Members of the Board of
Directors shall be elected for a fixed term by the shareholders in the
Company, provided that appropriate balance is taken into
consideration, when forming the Board of Directors, between the
Executive, the Non-Executive, and the Independent Members, so
that at least one-third of the members are Independent Members,
and that the Non- Executive Members possessing experience and
technical skills that should inure to the benefit of the Company shall
form majority. In all cases it shall be taken into consideration, when
selecting the Non- Executive Members for the Company, that the
member be able to dedicate adequate time and attention for his
membership, and that such membership may not raise any issue of
conflict of interest with any other interests of the same.
The position of the chairman of the Board of Directors may not be
held contemporarily with the position of the Company Director
and/or the mandated member.
Each Member of the Board of Directors shall hold his office until the
expiry of the term of such membership, until the resignation thereof
is approved by virtue of a decision of the Board of Directors, or until
the death or elimination thereof by virtue of a decision by the general
assembly of the Company.
If the position of any member became vacant, the Board of Directors
may appoint a member in the vacant position provided that the
matter is presented to the general assembly in its first meeting in
order to decide the appointment thereof or the appointment of
another person, unless the bylaw of the company provides otherwise.
In case the vacant positions were up to a quarter of the total number
of the Members of the Board of Directors, then the general assembly
shall be invited to a meeting within three months at maximum as of
the date on which the last position became vacant for the purpose of
electing members to fill the vacant positions.
The Board of Directors shall hold a meeting every two months in
minimum upon the written invitation of the chairman of the Board of
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Directors or upon a written request submitted by at least two of the
Members of the Board of Directors; the invitation shall be addressed
at least a week in advance of the date specified for the meeting, and
shall be accompanied with the agenda; each member shall have the
right to add any subject that the same consider important to be
discussed in the meeting.
The meeting of the Board of Directors shall not be considered wellconvened unless with the attendance of the majority of its members,
and the decisions thereof shall be issued by the majority of the votes
of the attending members and those members represented in the
meeting, in case of equal voting, the Head of the Board of Directors
shall have a casting vote.
Without prejudice to the provisions of the previous Item, the Board
of Directors may exceptionally issue some of its decisions by
passing on a draft thereof for signature in emergency situations,
provided the following are taken into consideration:
A- That the cases of issuing decisions by passing on the draft
decision for signature may not exceed four cases a year.
B- The agreement of the majority of the Members of the Board
of Directors that the concerned case is a case of emergency.
C- Handing the decision to the Members of the Board in writing
for the purpose of their consent, provided that the documents
and evidences necessary to study the same are accompanied
therewith.
D- The written consent of the majority shall be attained on any
of the decisions of the Board of Directors that is issued
through passing on a written draft for signature, and
provided that the same is presented to the subsequent
meeting of the Board of Directors so as to include the same
in the minutes of its meeting.
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The details relating to the matters examined by the Board of
Directors, the decisions taken, any reservations thereon, and any
opposing opinions expressed by any of the members shall be
recorded in the meeting minutes of the mentioned Board or of any
committees thereof. All the attending members shall sign on the
drafts of the minutes of meetings of the Board of Directors before
the same are accredited, provided that copies of the mentioned
minutes are sent to the members after accrediting the same for the
sake of keeping. The minutes of the meetings of the Board of
Directors and the committees thereof shall be kept by the convener
of the Board of Directors, and in case any of the members declined
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signing, the objection of such member shall be recorded in the
minutes along with the reasons of such objection in case the reasons
are expressed.
If an interest of any of the Members of the Board of Directors
conflicted with any matter that the Board of Directors shall examine,
and the Board of Directors decides that the same is a Substantial
Matter, then the Board shall issue its decision in the attendance of
majority of the members, the member who has such interest shall
not participate in voting on the such decision, such matter may in
exceptional circumstances be dealt with by committees formed by
the Board of Directors for such purpose by virtue of a decision
thereby, provided that the opinion of the committee be presented to
the Board so as the Board will issue its decision in such matter.
The Board of Directors may, upon a decision issued by the majority
of the attending members, seek the opinion of an external consultant
in any of the matters related to the Company and on the expense of
the same, provided that no instance of conflicting interests exists.
The Board of Directors shall set the procedural rules for the
Corporate Governance and for supervising and monitoring the
application of the same provided that the same may not contradict
with the provisions of this Resolution, and shall bear the
responsibility of the application thereof in accordance with its
provisions.
The Board of Directors shall work on setting the appropriate
developing programs for all the Members of the Board of Directors,
such programs shall aim at improving and updating the knowledge
and skills of the members and insuring their effective participation in
the Board of Directors.
The Board of Directors shall set written rules for the dealings of the
Members of the Board of the Company and the staff thereof in the
securities issued by the Company, the Mother Company, the
Subsidiaries, or the Sister Companies.
Article (4) Chairman of the Board of Directors
The chairman of the Board of Directors shall assume the following
responsibilities in particular:
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To ensure that the Board of Directors is functioning effectively and
is performing its responsibilities, and is discussing all the main and
appropriate matters in due timing.
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To put and accredit an agenda for each meeting of the Board of
Directors, taking into consideration any matters that the members
propose to list in the agenda, the Chairman of the Board of Directors
may assign this responsibility to a certain member or to the convener
of the Board of Directors and under his supervision
To encourage the full and effective participation of all the members
to ensure that the Board of Directors is acting in the best interest of
the Company,
To work on implementing the appropriate procedures for the
effective communication with the shareholders and convey their
opinions to the Board of Directors.
To facilitate the effective participation of the Members of the Board
of Directors, in particular the Non- Executive Member, and establish
constructive relations among the Executive and the Non Executive
Members.
Article (5) Members of the Board of Directors:
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The Administration shall commit to present to the newly appointed
member in the Board of Directors all the administrations and the
sections of the Company, and shall provide the same with all the
information that are necessary for such member to accurately
understand the activities and the business of the Company, as well as
to fully understand his responsibilities and all what enables the same
from performing his work in the fullest manner as per the applicable
laws, legislations the other regulatory requirements, and the policies
of the company in its field of business.
The Administration shall commit to provide the Board of Directors
and the committees formed thereby with the necessary information
in a full and documented manner, and in the appropriate timing so as
to enable the same from issuing its decision on the correct basis as
well as to perform its duties and responsibilities in the full manner;
the Board of Directors may do whatever is needed to acquire the
information that enables the same to base its decisions on the
accurate basis.
The Member of the Board of Directors, in course of performing his
powers and executing his duties, shall act in full fidelity and
devoutness taking into consideration the interest of the Company and
the shareholders thereof, and shall exercise his best efforts and abide
by the provisions of the applicable laws, bylaws, decisions, as well
as the bylaw of the Company and its internal regulations.
The duties of the Non Executive Members of the Board of Directors
shall include in particular the following:
A- To participate in the meetings of the Board of Directors, so
as to provide an independent opinion in the strategic matters,
the policy, the performance, the accountability, the
resources, the essential appointments, and the work criteria.
B- To give the interest of the Company and the shareholders
thereof the priority in case a conflict of interest arose.
C- To participate in the auditing committees of the Company.
D- To follow up on the performance of the Company with the
aim of achieving its agreed upon goals and aims as well as to
monitor the performance reports.
E- To enable the Board of Directors and the different
committees to benefit from their skills, experiences, and
their diversified qualifications and areas of specialty through
the regular attendance and the effective participation, as well
as to attend all the meetings of the general assembly and
establish a balanced understanding to the opinions of the
shareholders.
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Each member shall upon the commencement of his employment
disclose to the Company the nature of the positions the same
occupies in the companies and the public establishments and other
important commitments and specify the time allocated thereto, and
any change on the above mentioned upon occurrence.
Article (6) The Committees of the Board of Directors
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The Board of Directors shall form the permanent committees which
shall be directly answerable thereto; as follows:
A- The Auditing Committee; the duties thereof shall be as per
Article (9).
B- The Proposal and Remunerations Committee, the duty of
which shall be mainly the following:
(1) To continuously ensure the independence of the
Independent Members.
(2) To prepare the policy pertinent to the reward of the
remunerations, privileges, incentives and salaries to the
Members of the Company's Board of Directors and the
employees thereof, and to review the same on annual
basis; the Committee shall also ensure that the
remunerations and the privileges granted to the high
executive Management of the company is rational and
proportionate with the performance of the Company.
(3) To determine the company needs of qualified staff both
in the levels of the higher executive Management as well
as the employees, and the criteria for selecting the same.
(4) To set the policy related to the human resources and
training in the Company and monitor the implementation
of the same, as well as to review the same on annual
basis.
(5) Arrange and follow up on the procedures pertaining to
the proposal for the membership in the Board of
Directors in accordance with the provisions of the
applicable laws, regulations and the provisions of this
Decision.
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The committees shall consist of no les s than three of the NonExecutive Members of the Board of Directors provided that at least
two of them are Independent Members, and that the chair of the
committee shall be one of the last mentioned; the Chairman of the
Board of Directors may not be member in any of the mentioned
committees, the Board of Directors shall elect the Non Executive
Members of the Board of Directors for membership in the
committees concerned with the duties that are likely to raise issues
of conflict of interest, such as the verification of the accuracy of the
financial and non financial reports, the review of the transactions
concluded with the Stakeholders, the selection of the Non Executive
Members of the Board of Directors, and the specification of the
remunerations.
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The committees shall be formed in accordance with the procedures
the Board of Director sets; such procedures shall identify the duty of
the committee, its duration, the powers granted thereto, and the
method by which the Board of Directors shall monitor the same. The
committee shall present to the Board of Directors a written report
containing the procedures, results, recommendations that the same
reaches in absolute transparency; the Board of Directors shall ensure
the monitoring of the work of the committee in order to ensure the
Committee's commitment to the duties assigned thereto.
Article (7) The Remuneration of the Members of the Board
of Directors
Subject to the provisions of Article (118) of the Commercial Companies
Law Number (8) of the Year 1984, the remuneration of the Members of
the Board of Directors shall be a percentage of the net profit; the
Company may also pay additional expenses or fees or a monthly salary in
the amount specified by the Board of Directors to any of its members if
such member is working in any Committee, is extending special efforts,
or is performing additional works for the service of the Company in
addition to his ordinary duties as a Member in the Board of Directors of
the Company. In all cases the remuneration of the Members of the Board
of Directors may not exceed (10%) of the net profit after deducting the
consumptions, the reserve, and distributing a dividend of not less than
(5%) of the capital among the shareholders.
Article (8) the Internal Monitoring
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The Company shall have a precise system for internal control; the
system shall aim at setting an evaluation for the methods and the
procedures for risk management in the Company, applying the rules
of Governance thereon in the due manner, insuring the compliance
of the Company and its staff with the provisions of the applicable
laws, bylaws, and decisions that regulates the operation thereof, as
well as the internal policies and procedures, and reviewing the
financial statements which are presented to the supreme management
in the company and which are used to prepare the financial lists.
The internal control system shall be issued by the Board of Directors
after consulting with the Administration, and shall be applied by an
administration specialized in internal control.
The Board of Directors shall specify the goals, duties, and powers of
the internal control administration, provided that the same shall
enjoy the sufficient independence to perform its duties, and shall be
answerable directly to the Board of Directors.
The Board of Directors shall execute an annual review to ensure the
efficiency of the internal control system in the Company and the
Subsidiaries, and shall disclose the results it reaches to the
shareholders in its annual report concerning the Corporate
Governance.
The annual review shall include the following elements in particular:
A- The substantial elements for monitoring; including the
control over the financial affairs, operations, and risk
management.
B- The changes that affected the nature and the extent of the
main risks since the last annual review, and the Company's
capability to respond to such changes in its business as well
as in the surrounding environment.
C- The extent and the type of the continuous control By the
Board of Directors over the risks, the internal control
system, and the performance of the internal auditors.
D- The number of the times of notifying the Board or the
committees thereof with the results of the works of control in
order to enable the same from evaluating the status of the
internal control in the company as well as the efficiency of
the risk Management.
E- The cases of failures or weaknesses in the control system
that were discovered, and the emerging , unexpected
circumstances that substantially affected, or that are likely to
substantially affect, the performance or the financial
situation of the Company.
F- The efficiency of the Company’s operations in regard to the
preparation of the financial reports as well as the abidance
by the Listing Rules and those relating to disclosure.
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The Board of Directors shall disclose in the Corporate Governance
report the extent to which the Company is abiding by the internal
control system during the duration of the report, this disclosure shall
include the following:
A- The mechanism by which the internal control administration
is functioning in the Company.
B- The measure that the Company applied for specifying,
valuating, and managing big risks.
C- Any additional information that helps in understanding the
operations of risk management and the internal control
system in the Company.
D- An acknowledgement by the Board of its responsibility for
the internal control system in the Company and for its
review and efficiency.
E- The measure that the Company applied to review the
efficiency of the internal control system.
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The measure that the Company applied to deal, from the
prospective of the substantial internal control, with any
serious problems that have been disclosed in the annual
reports and accounts.
The Board of Directors shall verify that all the disclosures of the
Company provide sufficient and punctual information that are not
misleading to the investors thereon, and which are issued in full
compliance with the rules of disclosure.
The Company shall appoint a Compliance Officer who shall be
responsible for verifying the extent to which the Company and the
staff thereof are abiding by the issued laws, bylaws, decisions, and
regulations. The positions of Compliance Officer and manager of
internal control administration may be held contemporarily by the
same person.
Article (9) The Auditing Committee.
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The Board of Directors shall form an auditing committee comprising
the Non- Executive Members of the Board of Directors, provided
that the Independent Members shall represent the majority of the
members of the Committee, and that the number of its members be
not less than three, among whom is an expert in the financial and
accounting matters. It shall be permissible to appoint a member or
more from outside the company in case the sufficient number of Non
Executive Members of the Board of Directors does not exist.
Any previous partner in the external auditing bureau assigned with
the auditing of the accounts of the Company may not become a
member in the Auditing Committee, this provision shall apply for
one year as from the date in which he seized to be a partner, or any
financial interest thereto whichever comes first.
The Committee shall hold its meetings at least once every three
months or as necessary, the minutes of the meetings of the
Committee shall be kept by the convener, the drafts of the minutes of
the meeting of the Committee shall be signed by all the attending
members before the same are accredited, and in case a member
declined from signing, the objection thereof shall be documented in
the minutes along with the reasons thereof if expressed, provided
that final copies of the minutes are sent after the accreditation
thereof for keeping.
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The Company shall commit to make available to the auditing
committee the resources sufficient for the same to perform its tasks,
this shall include permitting the Committee to seek expertise
whenever necessary.
The Auditing Committee shall have the following duties and
missions:
A- To put and implement the policy for contracting with the
external account auditors, and to submit a report to the Board of
Directors which shall specify the issues for which it deems
important to take an action, along with submitting its
recommendations for the steps that need to be taken.
B- To follow up and monitor the independence of the external
account auditor and the extent to which the same is objective,
and to discuss with the same the nature and the extent of the
auditing process and its efficiency in accordance with the
accredited auditing standards.
C- To monitor the correctness of the financial statements and
reports of the Company (annual, semi- annual, and quarterly)
and review the same as part of its ordinary work during the
year. In particular, the Committee shall concentrate on the
following:
(1) Any changes in the accounting policies and practices
(2) Distinguish the matters that are subject to the discretion of
the Administration.
(3) The substantial amendments resulting from auditing.
(4) Assuming the continuous operation of the Company
(5) Abiding by the accounting standards decided by the
Authority.
(6) Abiding by the Listing Rules and disclosure, and other
legal requirements pertaining to the preparation of financial
reports.
D- To coordinate with the Board of Directors of the Company, the
executive management, the financial director, or the director
assuming the same responsibilities in the Company for the
purpose of performing its duties; the Committee shall meet with
the external account auditor of the company at least once a year.
E- To examine any other important and non- ordinary items that
appear or that should have appeared in these reports and
accounts, and it shall exert its due attention on any matter raised
by the financial director of the Company, the director
performing the same duties, the Compliance Officer, or the
external account auditor.
F- To review the systems of financial control, internal control, and
risk management in the Company.
G- To discuss the internal auditing system with the Administration,
and insuring that the same is performing its duty in establishing
an efficient system for the internal control.
H- To review the results of the main investigations in the matters of
internal control as assigned by the Board of Directors, or as
initiated by virtue of the initiative of the Committee that is
approved by the Board of Directors.
I- To ensure the realization of coordination between the internal
account auditor and the external account auditor, to ensure the
availability of the resources necessary for the internal auditing
body and to review and monitor the efficiency of this body.
J- To review the financial and accounting policies and the
procedures of the Company.
K- To review the letter of the external account auditor, his action
plan, and any substantial questions the same poses to the
Administration with regard to the accounting records, the
financial accounts, or the control systems, and its response or
approval thereof.
L- To ensure that the Board of Directors is responding in the due
time to the requests for clarification and the substantial matters
mentioned in the letter of the external account auditor.
M- To put the measures that enables the employees of the Company
from reporting in confidence any possible cases of breaches in
the financial reports, internal control, or any other matter, and
the steps that ensure the execution of independent and just
investigations with regard to such instances of breach.
N- To monitor the extent to which the company is abiding by the
rules of professional conduct.
O- To ensure the application of the operational rules related to the
duties thereof, as well as to the powers given by the Board of
Directors.
P- To submit a report to the Board of Directors concerning the
matters mentioned in this Item.
Q- To review any other matters determined by the Board.
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In case the Board of Directors does not approve the
recommendations of the Auditing Committee with regard to the
selection, appointment, resignation, or dismissal of the external
account auditor, then the Board of Directors shall include in the
governance report an explanation for the recommendations of the
Auditing Committee and the reasons for the Board of Directors to
disregard such recommendations.
Article (10) The External Account Auditor
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The Board of Directors shall nominate the external account auditor
upon the recommendation of the Auditing Committee; the
appointment, as well as the determination of the fees thereof shall be
decided by the general assembly of the Company.
The external account auditor shall be selected based on his
capability, renown, and experience.
The external account auditor shall be independent from the
Company and the Board of Directors thereof, and shall not be a
partner or an agent to any of the founders of the Company nor to a
Member of its Board of Directors or a relative to the mentioned up to
the forth class.
The Company shall take reasonable steps to ensure the independence
of the external account auditor, and that all the works the same
performs does not raise any instance of conflict of interest.
Subject to the provisions of this Resolution, the Companies licensed
by the Central Bank and the account auditors thereof shall coordinate
with the Bank with regard to the auditing works concerning such
companies.
During the term in which he is assigned with the review/ the audit of
the accounts of the Company, the external account auditor shall
refrain from providing any services or additional technical,
administrative, and consultancy works related to the works that the
same is executing, if any of the mentioned will affect his decision
and independence , or any other services or works that the Authority
finds that doing the same is not permissible; in particular the
following:
1- Any services or other accounting works related to the
accounting records and the financial lists, except the ordinary
accounting services that the auditor may provide to a Subsidiary
of the Company that the same is auditing its accounts; provided
that the following conditions are met:
a) That the service provided by the auditor does not require
the same to issue judgments.
b) That the Subsidiary is not substantial for the Company the
same is auditing its accounts.
c) That the volume of these services is clearly minimal for the
auditor and the Subsidiary.
d) That the provision of such service by the auditor should not
substantially affect financial statements of the Mother
company.
2- Design and execute any information systems if the same has
substantial effect on the financial statements or the control
systems related thereto; it shall be the responsibility of the
Auditing Committee to verify the existence of such conditions.
3- Provide any internal services or auditing works through subcontracting.
4- Provide any actuarial services or works.
5- Provide any valuation or evaluating services or works for the
Company during the process of auditing thereon, or participate
in the mentioned.
6- Provide any administrative works or services or recruitment for
human resources working in the financial administration of the
Company or the administrative positions thereon on the levels
of sections heads and above, or any equivalent administrative or
supervisory positions.
7- Provide any works or services of a financial broker.
8- Provide any consultations, except the following investment
consultations:
- Assisting a client in the preparation of feasibility studies as
well as strategic plans.
- Consultations concerning the rehabilitation of capital.
- Review and auditing services for companies the client is
intending to acquire.
In all the above exceptional circumstances the Auditing
Committee shall ensure the following:
a) That policies and procedures preventing the employees of
the auditors from taking any decision relating to the
management of the Company have been set.
b) That the employees of the auditor who provided the
above services may not participate.
c) That the auditor's fees for such services are not
substantial.
d) That the subject of the service is not of value, and that it
has no effect on the financial statements of the Company
the same is auditing its accounts.
9- Provide any legal works or services or any expertise works,
except the supporting expertise work pertaining to a suit heard
by a court.
7- The external account auditor shall attend the general assembly
meetings, and shall recite the report thereof in front of the
shareholders, explaining any constrains or interference from the Board
of Directors that the same faces in course of doing his work, his
remarks on the accounts of the Company and its financial standing,
and any cases of breach therein; the report thereof shall be
independent and impartial.
8- The external account auditor shall inform the monitoring bodies of
any substantial cases of breach, any constrains, and the details thereof
in case the Board of Directors did not take the appropriate action in its
regard.
Article (11) Delegation of the Administration
The Board of Directors may delegate any of its members or the executive
Management in some of the administrative matters on which the same
have the authority to decide, in which case, the Board shall give clear
directions with regard to the authorities of the administration, especially
with regard to the cases in which the administration shall acquire the prior
approval of the Board of Directors before taking any decisions or
committing to any obligations on behalf of the Company, provided that a
written list of the tasks and duties which the Board of Directors exercise
be prepared, along with those delegated to the administration, and
reviewing the mentioned tasks and duties regularly.
Every delegation shall be specific with regard to its subject, the duration
of its validity, and shall specify the time on which the results thereof shall
be presented to the Members of the Board.
Article (12) The Rights of the Shareholders
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Shareholders shall acquire all the rights relating to the share, in
particular the right to acquire a dividend of the profit decided to be
distributed, the right to acquire a share of the Company’s assets in
case of liquidation, the right to attend the meetings of the general
assembly and participate in its deliberations and vote on its
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decisions, the right to dispose of the shares, and the right to review
the financial reports and lists of the Company, and shall have the
right to request to review the books of accounts and the documents
of the Company under the permission of the Board of Directors or
the general assembly and in accordance with the provisions of the
bylaw of the Company.
The bylaw of the Company and its internal regulations shall specify
the procedures and the measures needed to ensure that all the
shareholders are enabled from exercising their legitimate rights,
among which are:
A- The provision of all the information that enables the
shareholders from exercising their rights fully without any
discrimination, this shall include the shareholders knowledge
of the rules that govern the meetings of the general assembly
and the procedures for voting therein; such information shall
be made available in full and accurate manner, and shall be
regularly presented and updated in the specified dates; among
such information shall be the information relating to the plans
of the Company before the same undergo voting in the
meetings or any other information.
B- To give the opportunity to all the shareholders to effectively
participate in the deliberations of the meetings of the general
assembly and the voting on its decisions. The shareholders
shall have the right to discuss the matters listed in the agenda
of the meeting, pose questions on its regard to the Members of
the Board of Directors and the external account auditor, and
the Board of Directors and the external account auditor shall
answer such questions to the extent that does not jeopardize
the interests of the Company.
C- Provide a brief of the persons nominated for the membership
of the Board of Directors before the voting, which shall enable
the shareholders from acquiring a clear idea about the
experience and the qualifications of the nominated persons.
Voting for members shall be in accordance with the
Accumulative Voting system.
The Board of Directors shall disclose any substantial events,
important decisions, and explanatory information relating to the
situation of the Company and its activities. The Board shall set a
clear policy with regard to the distribution of dividends of the
Company in a manner that realizes the interest of the Company and
the shareholders; such policy shall be presented to the shareholders
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in the general assembly meeting and shall be indicated in the report
of the Board of Directors.
Members of the Board of Directors may not acquire proxies from the
shareholders for attending the meetings of the general assembly in
proxy.
The Company shall announce the opening of the opportunity to run
for the membership of the Board of Directors in two daily news
papers, at least one of which shall be issued in Arabic language, the
opportunity to run for membership shall remain available for no less
than a month from the date on which the announcement was
published.
Article (13) Professional Rules of Conduct
- The Company shall commit to accredit the professional rules of
conduct and other internal policies and principles in consistency with
the goals and objectives thereof, subject to the compliance with the
applicable laws and bylaws, such rules shall also be applicable to the
Members of the Board of Directors, managers, employees, and the
internal account auditors when the mentioned are in course of
performing their duties.
- The Company shall work on implementing an environmental and
social policy to favor the local community.
Article (14) The Corporate Governance Report.
The Corporate Governance Report is the report signed by the Chairman
of the Board of Directors of the Company, and presented to the Authority
on annual basis or upon request within the accounting period that the
report covers or any subsequent period until the date of publishing the
annual report that should include all the information and statements listed
in the form that is issued by the Authority; in particular the following:
1- The requirements and principles for completing the Corporate
Governance system, and the method of its implementation.
2- The breaches that took place within the financial year, a
representation for its reasons, and the method for treating the same
and avoiding its reoccurrence in future.
3- The method by which the Board of Directors is to be formed in
accordance with the categories of its members, the duration of their
memberships, the method of specifying their remunerations, as
well as the remunerations of the general manager, the executive
Director, or the chief executive officer appointed by the Board of
Directors.
The Board of Directors shall make such report available to all the
shareholders of the Company sufficiently in advance of the date on
which the general assembly will convene.
Article (15) Administrative penalty
The Authority may, when any of the provisions of this Resolution is
breached, impose any of the following penalties:
1- Issue a warning to the Company to remedy the reasons of the
breach.
2- Suspend the listing of the Company's securities.
3- Cancelling the listing.
4- A financial fine that shall not exceed in maximum the amount
specified in the law.
Article (16) Execution of the Resolution.
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Companies and establishments listing securities in any of the
securities Markets shall do the necessary to conform to the
provisions of this Resolution by the date of 30/4/2010.
This Resolution shall be published in the Official Gazette and shall
enter into force as of the date following the date of its publication.
Companies and establishments listing securities in any of the
securities Markets shall abide by the provisions hereof.
Sultan Bin Sai'd Al- Mansouri
Minister of Economy
Issued in Abu Dhabi
on 29/ 10 /2009