Corporate Governance – Bayan Investment Holding Co.

Corporate governance rules are represented by the principles, systems and procedures that best protect and balance the interests of corporate management, shareholders, and other related stakeholders. The primary objective of implementing corporate governance is to ensure that the company is in line with shareholders’ objectives, thereby enhancing investor confidence in the company’s efficiency and its ability to cope with crises.

Governance and Bayan Investment Holding Company

Bayan Investment Holding Company has a strong organizational structure that separates powers between Executive Management (EM) and the Board of Directors (BOD), and has a long track record of transparency and credibility. The key to our philosophy is the principles of corporate governance, namely ethical values, control and accountability, and sound management.

Ethical Values

Bayan Investment Holding Company takes high measures to ensure compliance with sound professional rules, ethical values and balance for the benefit of all related parties to the company and the transparency in disclosure of financial and non-financial information.

Control and Accountability

Bayan Investment Holding Company believes that control and accountability are fundamental principles for identifying deviations and irregularities. It also believes in the importance of activating the role of shareholders and stakeholders in controlling the company and ensuring that disclosure and transparency are key elements for protecting the rights of shareholders and stakeholders.

Sound Management

Bayan Investment Holding Company believes in the potential of its employees and decision-makers, so it takes firm steps to ensure the distribution of powers and responsibilities, the separation of tasks and the establishment of incentives system and rewards by evaluating the performance of managers and employees.

Board of Directors

The management of Bayan Investment Holding Company is run by a Board of Directors consisting of qualified, knowledgeable and experienced businessmen who exercise their duties collectively and independently, and devote sufficient time to their responsibilities, to achieve the objectives, strategies and plans set by the Company for the benefit of its shareholders.

The BOD is composed of the following members:

Mr. Faisal Ali Abdul Wahab Al-Mutawa, Chairman of the Board
Mr. Mohammad Hamad Abdul Aziz Al-Mutawa, Vice Chairman
Mr. Yousef Mohammad Al Essa, Board Member & CEO
Mr. Fawaz Majed AlBader, Board Member
Mr. Abdulaziz Nader AlEisa, Independent Board Member

Roles and Responsibilities of the Board

The roles and responsibilities of the Board include, but are not limited to the following:

Approving company major goals, strategies, plans and policies.
Acknowledging annual estimated budgets and approving phase and annual financial information.
Supervising company main capital charges, assets ownership and disposing of the same.
Ensuring the company’s commitment with policies and procedures that procure the company’s compliance with internal applicable rules and regulations.
Safeguarding accuracy and validity of the data and information to be disclosed in accordance with applicable disclosure and transparency policies and rules.
Constructing effective communication channels that enable the company shareholders periodic and continuous access to company various activities and any essential developments therein.
Setting corporate governance system without interfering with the rules & regulations of the Executive Bylaws of Law No. (7) of 2010 and its amendments regarding the establishment of Capital Markets Authority and regulating securities activities – with general supervision thereof and monitoring how effective it is and amending the same, if necessary.
Pursuing performance of each Member of the Board of Directors and Executive Management member subject to Key Performance Indicators (KPIs).
Preparing annual report to be cited in the annual general assembly including the requirements and procedures of completing corporate governance rules and commitment degree thereof. However, this report shall be included in the annual report of the company activities and showing the complied and non-complied rules and excuses for the same. Such report shall be prepared as a minimum pursuant to Appendix (2) of Module Fifteen of the Executive Bylaws of Law No. (7) of 2010 and its amendments regarding the establishment of Capital Markets Authority and regulating securities activities.
Forming specialized committees where period, powers and responsibilities of the committee are clarified and how the Board shall monitor it. Formation resolution shall also include titles of members and determining their roles, rights and duties. This is in addition to assessing performance and works of the committees and their main members.
Ensuring that the company’s approved policies and procedures are transparent and clear so that resolutions’ taking and wise governance principles are applied. This in addition to separating powers and authorities of both the Board of Directors and executive management.
Determine the powers authorized to the executive management. The board shall also specify issues which it shall keep power to resolve.
Audit and supervise performance of the executive management members and procuring their accomplishment of all assigned roles.
Determine the remuneration categories to be given for employees.
Appoint or remove any executive management member including executive agency chairman or his representative.
Set a policy for regulating relationship with Stakeholders to protect their rights.
Set a mechanism to regulate dealings with Related Parties to avoid conflicts of interest.
Periodically ensure the applicable internal audit systems’ efficiency and sufficiency in the company and Subsidiary Companies thereof.
Develop a plan/policy for integrating sustainability factors in the company’s comprehensive strategy, main work plans, and the risk assessment and management process if required.

Committees of the Board of Directors

A) Nomination and Remuneration Committee

The Board of Directors has formed a Nomination and Remuneration Committee, which is responsible for preparing the recommendations for nominations of the Board members and the Executive Management members, in addition to the policies and procedures governing incentives and compensation.

Roles and Responsibilities

Recommending nomination and re-nomination acceptance for Members of a Board of Directors and executive management members.
Setting apparent policy for Members of a Board of Directors and executive management members’ remunerations, along with annual review of the required proper skills needs for Board membership. This in addition to importing applications for executive positions as required, studying and revising the application and determining various remuneration categories to be provided for employees.
Designing job description for Executive Members, Non-Executive Members of a Board of Directors and independent members.
Ensuring that Members of a Board of Directors independency is valid.
Preparing a report of the total remunerations granted to Members of the Board of Directors, the executive body and the managers; whether cash or benefits or privileges, of whatever nature and title, directly or indirectly through the company or Subsidiary Companies, in accordance with Rule 111 of Appendix (2) of Module Fifteen of the Executive Bylaws of Law No. (7) of 2010 and its amendments regarding the establishment of Capital Markets Authority and regulating securities activities.

B) Audit Committee

The Board of Directors has formed the Audit Committee, to enhance the culture of compliance within the Company by ensuring the accountability and integrity of the Company’s financial reports, as well as ensuring the adequacy and effectiveness of the internal control systems applied in the Company.

Roles and Responsibilities

Review periodical financial statements prior to their submission to the Board of Directors and provide such Board with opinion and recommendation concerning them, in order to ensure fairness and transparency of financial statements.
Provide the Board of Directors with its recommendations concerning the appointment, re-appointment, or replacement of the external Auditors, and specify the remunerations thereof. Upon recommendation of appointment, it is considered to verify independence of such external auditors and review letters of their appointment.
Follow up works of external Auditors and ensure no services other than services related to audit functions are provided to the company.
Consider remarks of external auditors on the company financial statements and follow up measures taken regarding them.
Consider the applied accounting policies and provide the Board of Directors with opinion and recommendation in this regard.
Evaluate the extent of sufficiency of internal audit systems applied in place, and prepare a report including the opinion and recommendations of the committee in this regard.
Supervise the company’s internal audit department, in order to ensure its effectiveness in performing the operations and tasks assigned by the board of directors.
Recommend appointment of an internal audit manager, his transfer, and removal, in addition to evaluating his performance, and the performance of the internal audit department.
Review and approve audit plans proposed by the internal auditor and provide feedback.
Review the results of the internal audit reports and ensure that corrective actions were taken concerning the observations stated in such reports.
Review the outcomes of regulatory bodies’ reports and ensure that the necessary measures have been taken in this regard.
Verify the company’s compliance with related rules, policies and regulations.

C) Risk Management Committee

The Board of Directors has formed a Risk Management Committee which is primarily engaged in the development of risk management policies and procedures in line with the Company’s risk appetite.

Roles and responsibilities

Prepare and review risk management strategies and policies prior to getting them approved by the board of directors and verify application 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.
Evaluate systems and mechanisms of identifying, measuring and monitoring various types of risks that may face the company, in order to identify areas of weakness.
Assist the Board of Directors to identify and evaluate the company’s acceptable risk level, and ensure that the company does not exceed such level after its approval by the Board of Directors.
Review the organizational structure of risk management and provide recommendations in this regard prior to to its approval by the Board of Directors.
Verify independence of the risk management employees from activities that result in subjecting the company to risks.
Verify that the risk management employees fully understand the risks surrounding the company, and raise awareness of employees concerning risk culture.
Prepare periodical reports concerning the nature of risks facing the company and submitting such reports to the company’s Board of Directors.
Review issues raised by the related audit committee, which may affect risk management in the company.

Code of Professional Conduct and Ethical Standards

Bayan Investment Holding Company seeks to establish a culture of professional conduct and ethical standards in all its transactions to enhance investors’ confidence in the integrity of the Company and the accountability of its financial statements. As part of this commitment, the Board of Directors has developed policies and procedures for the conduct of professional ethics in order to achieve the interests of all parties involved in the company, especially shareholders, without conflict of interest and with high degree of transparency.

The Code of Professional Conduct and Ethical Standards of Bayan Investment Holding Company sets standards and measures that affirm the ethical concepts and standards of the Company, in a way that help both the BOD and all employees to perform their tasks professionally and perfectly.

The Charter also includes specific rules and documented procedures that guarantee commitment and confidentiality to maintain information security and protection of the Company; and since doing business in an environment of high ethical and professional standards is the responsibility of all employees, Bayan Investment Holding Company ensures verifying that all the staff are aware of, and understand The Code of Professional Conduct and Ethical Standards, so that any violation to these standards is strictly dealt with, through immediate disciplinary action, which may lead to termination.

To view the Company’s “Code of Conduct” please click here.

Whistleblower Protection

Bayan Investment Holding Company is committed to maintain an open culture that meets the highest standards of integrity and accountability, allowing employees and other stakeholders to report their internal and external fears with “bona fide” or doubts concerning any unsound or unethical practices or any other inappropriate activities and any type of misconduct. Also, it allows its Managers, past staff, consultants, suppliers, contractors, and any third party that have a business relationship with the Company, to report their fears, in addition to developing proper arrangements that allow conducting an independent and fair investigations concerning such issues, while ensuring confidentiality for “bona fide” whistle-blower to ensure protecting him/her against any negative effect or damage that may be caused thereto due to reporting such practices.

Conflict of Interests

Bayan Investment Holding Company continuously identifies and addresses conflicts of interests by establishing clear and rigorous policies and procedures. Any complaint of conflict of interest shall be taken seriously, verified, dealt with, and addressed expeditiously.

Common situations that may give rise to a conflict of interest:

Arranging deals that the company or employee knew, or whoever could have known, that he will be the other party involved in.
The employee obtaining personal gains from any third party, whether directly or indirectly, by benefiting from his position and involvement in managing the Company’s affairs.
Benefiting from the job by employing relations or offspring or granting them a specific preference within the company or practicing any form of intermediary and favoritism.
Benefiting from confidential information, or information that becomes available in the normal course of business, to achieve personal interest, or for a third party of mutual interest.
Engaging in an activity that is competitive with the company’s activities, without prior approval of the company’s general assembly.
The employee’s use or abuse to his job authority or influence in the company, for personal benefit or for the benefit of others.
Owning or participating in the ownership of any type of shares or bonds of a competing company, or engaging in a competitive activity to the company, without prior approval from the company’s general assembly.
Obtaining loans or guarantees due to the person’s position in the company.

Disclosure and Transparency

The Board of Directors of Bayan Investment Holding Company is keen to develop mechanisms for presentation and disclosure of all issues related to the Company’s incorporation, financial position, performance and ownership, to the shareholders, the investors and the public, as the BOD believes in the importance of timely, accurate, and transparent disclosure, to allow shareholders and investors to get acquainted with all aspects related to the Company’s activities and financial statements, and to evaluate its performance.

Shareholders Rights

The corporate governance system at Bayan Investment Holding Company ensures that the shareholders have access to the basic rights thereof to a significant extent of fairness and equality, ensuring equal dealing with all shareholders and protection against breach of the rights thereof, in addition to protecting capitals of shareholders against misuse by the company managers, the Member of a Board Members, and Major Shareholders.

To ensure fairness and equality among all shareholders and to protect their rights, Bayan Investment Holding Company included the procedures and conditions necessary to ensure having access by all shareholders to the rights thereof, in a manner that achieve fairness and equality without contradiction with the applicable laws, regulations, resolutions and instructions issued in this regard.

General rights of shareholders in regards to General Assembly shall include:

List the ownership value of their shared investment in the company records.
Dispose Shares, including registration and transfer of ownership.
Receive the decided share in dividends.
Receive a share in company assets in case of liquidation.
Have access to data and information of the company activity and operational and investment strategy regularly and easily.
Participate in meetings of the shareholders’ general assembly and vote on the resolutions thereof.
Elect Members of a Board of Directors.
Control performance of the company, in general, and the Board of Directors, in particular.
Hold the company’s Members of a Board of Directors or the executive management accountable and file liability claim, if they fail to meet roles entrusted thereto.
Approving any sale and purchase transactions or disposal in any way of the company’s assets, if this transaction is 50% or more of the total amount of the company’s assets.

General rights of shareholders in regards to the mechanism of Voting in the General Assembly shall include:

The right in receiving information on rights, regulations and voting procedures.
The company shall allow all shareholders to exercise the right of voting without placing any obstacles preventing such voting.
Shareholders shall vote as principal or by proxy, with the same rights and duties, whether as principal or by proxy.
Shareholder shall be informed with all the standards that govern the voting process.
The company shall provide all information related to voting rights for current shareholders and potential investors and ensure availability of information for all shareholders.
All shareholders owning the same type of Shares shall be entitled to vote on any changes related to the rights of shareholders through a call for holding the shareholder’ general assembly.
The company shall allow the shareholders to participate in voting to elect Members of a Board of Directors in the general assembly through mechanisms set forth by the company memorandum of association and articles of association and in context of those set forth in the Companies Law and its Executive Bylaws and Module Fifteen of the Executive Bylaws of law No. (7) of 2010 and its amendments regarding the establishment of the Capital Markets Authority and regulating securities activities.
The company shall provide a brief introduction of candidates for the Members of a Board of Directors, and the capacity on which he wishes to nominate himself before voting. This will give shareholders a clear concept of the professional and technical skills of candidates and other experience and qualifications thereof.
All categories of shareholders shall have an opportunity to hold the Board of Directors accountable for the roles entrusted thereto.

Roles of Stakeholders

Recognizing the stakeholders’ roles and encourage cooperation between the Company and the stakeholders in various fields, is a matter of concern for Bayan Investment Holding Company, as contributions of the stakeholders represent very important resource in establishing the Company’s competitiveness and support its profitability levels, therefore the company has set the necessary systems and polices that guarantee the protection of the stakeholders, in accordance with the regulating rules issued in this regards.

Corporate Social Responsibility

Bayan Investment Holding Company continues its efforts to act ethically and contribute into achieving social sustainability in general. Therefore, Bayan focuses on developing the quality of living, social and economic conditions of its workforce and their families. It also works on encouraging and supporting national labour, in addition to contributing to protecting the environment against pollution and other environmental damages.