BOARD OF DIRECTORS
ARTICLE 1: FORMATION OF THE BOARD:
The Corporation shall be managed by a Board of Directors consisting of nine (9) members with the expertise required for the business of the Corporation. Five (5) members shall represent the Government share and shall include the Chairman of the Board of Directors and the Vice Chairman and Chief Executive Officer (CEO) who shall work on a full-time basis and substitute for the Chairman in case of his absence and shall both be appointed by the Council of Ministers upon nomination by the Board of Directors of the Public Investment Fund. The resolution shall specify the term of each one of the Board members. The Ordinary General Meeting shall appoint the remaining four (4) Board members from the Private Sector for a renewable term of three (3) years.
a. The number of the Independent Members of the Board of Directors shall not be less than three (3) members or one third (1/3) of the Board members, whichever is larger, even if the calculation of the one third results in a decimal fraction.
b. Before the end of the period of the actual Board, the nomination of members for the new Board shall be published in a widely spread daily newspaper in the Kingdom of Saudi Arabia
c. Any of the actual members is entitled to run for several consecutive periods.
d. Nominations and Remunerations Committee shall review the curriculum vitae (CV) of each nominee and send the full documents to the Department of Companies at the Ministry of Commerce and Industry for verification before submission to the General Meeting for voting. In addition, a copy of the list of nominees shall be sent to Capital Market Authority, after being approved by relevant authority.
e. Any member of the Board of Directors must own not less than twenty thousand (20000) shares of Corporation stocks. Such shares shall, within thirty days of the date of appointment, be deposited in TADAWUL Securities Depository Center. They shall be set aside as a guarantee for the Board member's liability, and shall remain non-negotiable until the General Meeting resolves to exonerate the Board Member from liability during his membership term. However, this clause does not apply to the members nominated by the Council of Ministers.
f. If the office of any Board Member nominated by the General Meeting becomes vacant, the Board of Directors may appoint a temporary member to fill the vacancy provided that such appointment shall be laid before the first Ordinary General Meeting. The new member shall complete the term of his predecessor.
g. If the number of Board Members falls below three (3), the Ordinary General Meeting must be convened as soon as possible to elect the requested number of members.
h. The majority of the Board of Directors members must be non-executives.
i. It is forbidden to combine the position of Board of Directors Chairman with any executive position in the Corporation such as CEO or General Manager.
j. Upon the termination of the membership of any member for any reason, the CMA and TADAWUL must be notified immediately, with justifications thereof.
k. Any member must not combine the positions of member of the Board of Directors of more than five (5) joint venture companies, listed in the Market at the same time.
ARTICLE 2: MAIN FUNCTIONS OF BOARD OF DIRECTORS
The main functions of the Board include the following:
a. Approving the strategic plans and main objectives of the Corporation and supervising their implementation; this includes:
1. Laying down a comprehensive strategy for the Corporation, the main action plans and the policy related to risk management, reviewing and updating of such policy.
2. Determining the most appropriate capital structure of the Corporation, its strategies and financial objectives and approving its annual budgets.
3. Supervising the main capital expenses of the Corporation and acquisition/disposal of assets.
4. Deciding the performance objectives to be achieved and supervising the implementation thereof and the overall performance of the Corporation.
5. Reviewing and approving the organizational and functional structures of the Corporation on a periodical basis.
Laying down rules for internal control systems and supervising them; this includes the following:
1. Developing a written policy that would regulate conflict of interests and remedy any possible cases of conflict of interests by members of the Board of Directors, executive management and shareholders. This includes misuse of Corporation’s assets and facilities and the arbitrary disposition resulting from dealings with the related parties.
2. Ensuring the integrity of the financial and accounting systems and procedures including the systems and procedures related to the preparation of the financial reports.
3. Ensuring the implementation of control procedures appropriate for risk management by forecasting the risks that the Corporation could encounter and disclosing them with transparency.
4. Conducting efficient auditing and examination of the internal control procedures in the Corporation.
b. Setting special Corporate Governance Regulations that do not conflict with these regulations. Such Regulations shall be supervised, monitored for effectiveness and amended as needed. (Special Corporate Governance Regulations have been set and approved). As per Board of Directors Resolution no. 07/190/2013, dated 26/09/2013, Investor Management, Corporate Finance, has been assigned to supervise such regulations, monitor them for effectiveness and amend them as needed.
c. Laying down specific and explicit policies, standards and procedures for the membership of the Board of Directors and implementing them after obtaining the approval of the General Meeting.
d. Outlining a written policy that regulates the relationship with stakeholders with a view to protecting them and preserving their respective rights. In particular, such policy must cover the following:
1. Mechanisms for indemnifying stakeholders in case of contravening their rights determined by the law and by their respective contracts.
2. Mechanisms for settlement of complaints or disputes that might arise between the Corporation and stakeholders.
3. Suitable mechanisms for maintaining good relationships with customers and suppliers and protecting the confidentiality of information related to them.
4. A code of conduct (rules of conduct) for the Corporation’s executives and employees that is compatible with the proper professional and ethical standards, and regulates their relationship with stakeholders. The Board of Directors must lay down procedures for supervising this code and ensuring compliance therewith.
5. Corporation’s social contributions (Corporate Social Responsibility/CSR).
e. Deciding policies and procedures to ensure Corporation’s compliance with the laws and regulations and the Corporation’s obligation to disclose material information to shareholders, creditors and other stakeholders.
ARTICLE 3: RESPONSIBILITIES OF BOARD OF DIRECTORS
a. Without prejudice to the competences of the General Meeting, the Corporation’s Board of Directors shall assume all the necessary powers for the management of the Corporation. The ultimate responsibility for the Corporation rests with the Board, even if it sets up committees or delegates some of its powers to a third party. The Board of Directors shall avoid issuing general or indefinite delegations.
b. The Board of Directors shall assume its responsibilities according to its tasks which must be clearly stated in the Corporation’s Articles of Association and bylaws.
c. The Board of Directors must carry out its duties in a responsible manner, in good faith and with due diligence. Its decisions should be based on sufficient information from the executive management, or from any other reliable source.
d. A member of the Board of Directors represents all shareholders; he undertakes to carry out whatever may be in the general interest of the Corporation, but not the interests of the group he represents or that which voted in favor of his appointment to the Board of Directors.
e. The Board of Directors shall ensure that a procedure is laid down for orienting the new Board members of Corporation’s business and, in particular, the financial and legal aspects, in addition to their training, where necessary.
f. The Board of Directors shall ensure that the Corporation makes available sufficient information about it to all members of the Board of Directors, generally, and, in particular, to the non-executive members, to enable them to discharge their duties and responsibilities in an effective manner.
g. The Board of Directors shall be entitled to enter into loans with funds and financing agencies for unlimited periods; and with commercial financing agencies provided that the loans’ terms shall not survive the Corporation’ term. The following terms and conditions shall rule the loans with terms exceeding three (3) years:
1. The total amount of loans allowed to be entered in any fiscal year may not exceed Corporation capital.
2. In its resolution, Board of Directors must define how the loan shall be used and repaid.
3. The terms and conditions of the loan and the guarantees offered shall not harm the Corporation and its shareholders.
4. Board of Directors is entitled to give loans and suitable financial facilities to the companies in which the Corporation holds shares or stocks and guarantees of the loans entered by such companies.
ARTICLE 4: AUTHORITIES OF BOARD OF DIRECTORS
a. With due considerations to the authorities of the General Meeting, Board of Directors shall have the broadest authorities in managing the Corporation.
b. Define the authorities delegated to by the Board to executive management, procedures of decision-making and the term of the delegation. The board shall also define the authorities that it shall keep to itself. Executive management shall submit regular reports on the practices of its delegated authorities, as required by SABIC bylaws/internal regulations.
c. Approve the table of authorities delegated to the committees and executive management, review them regularly and amend them, if deemed necessary be the Board.
d. The Chairman or his representative shall represent the Corporation before judiciary or quasi judiciary authorities.
e. The Chairman, and any member appointed for a specific case, are entitled to sign on behalf of the Corporation severally and jointly. The Board is entitled to assign one or more vice presidents for the CEO, and delegate the CEO to sign on behalf of the Corporation.
f. Board of Directors members shall not be held responsible personally regarding Corporation obligations because they are performing their jobs within their delegation.
ARTICLE 5: BOARD OF DIRECTORS MEETINGS AND AGENDA
a. Board members shall dedicate sufficient time to perform their responsibilities, including the preparations for Board meetings and permanent and temporary committees, and be keen to attend all above.
b. Chairman of the Board shall preside over the meetings, and the Vice Chairman shall assume his duties when he is absent or incapable of assuming his duties for any reason.
c. Upon an invitation from Chairman of the Board, or his representative, the Board shall hold regular meetings. The Chairman shall invite the Board for emergency meetings upon written request from two members. The meeting may be held outside the Head Office of the Corporation if necessitated by circumstances. The meeting shall not be deemed valid unless attended by at least five (5) members, three (3) of them from the members assigned by a resolution from the Council of Ministers.
d. Board member is entitled, when necessary, to delegate another member by written proxy. In such case, the delegated member shall have two votes. Any Board member is not entitled to represent more than one member.
e. In consultation with other members and CEO when preparing a specific agenda of any meeting, Chairman of the Board shall send the suggested agenda, with supporting documents, to Board members in sufficient time ahead of the meeting for consideration and preparation. The Board shall approve the agenda. If any member has any objections to the agenda, the details of such objection shall be added to the minutes of the meeting.
f. Board resolutions shall be issued by majority of votes of the attendees and representatives. In case of a tie, the vote of the Chairman, or his representative, shall be the casting vote.
g. Board of Directors shall document its meetings, keep minutes of the discussions and deliberations – to include the performed voting operations, sign them from the Chairman and Secretary, sort them and file them for easy access.
ARTICLE 6: REMUNERATIONS AND COMPENSATIONS OF BOARD MEMBERS
a. Only the General Meeting has the authority to approve remunerations and compensations of Board Members.
b. An amount shall be assigned for Board members remunerations as approved by the Ordinary general Meeting, after deducting the statutory reserve and any reserve resolved by the Ordinary General Meeting, distributing a first payment of Corporation’s annual net profits to shareholders at 5% of paid capital and payment of session attendance allowance according to Corporation Bylaws, Ministry of Commerce and Industry rules and regulations or any other complementary regulations, resolutions or instructions.
c. Corporation shall issue session attendance allowance to the Board member who attends the Board meeting and to the Board General Secretary according to Corporation remunerations policy.
ARTICLE 7: COMMITTEES OF THE BOARD AND THEIR INDEPENDENCE
A suitable number of committees shall be formed according to Corporation requirements and circumstances to enable the Board to perform its duties in an effective way. A sufficient number of non-executive members of the Board shall be appointed in the concerned committees. The following committees were formed:
First: Audit Committee
Second: Nomination and Remuneration Committee
Third: Risk and Compliance Committee
Fourth: Investments Committee
First: Audit Committee
a. Type of Committee
A consultative committee of Corporation Board of Directors, appointed by the Board according to the regulations approved by Corporation General Meeting. The Committee reports to the Board.
b. Purpose of the Committee
Provide help and consultation to Corporation Board of Directors in supervising Corporation financial, administrative and operational works, especially the financial statements, abiding by and compliance with Corporation policies, rules, regulations, procedures and work environment risk control.
c. Organization of the Committee
1. The committee is formed at least from three (3) members appointed by the Board for three (3) years.
2. The following terms must apply to committee members:
1. The member should not be an executive member of the Board, nor assuming a Corporation’s technical or administrative position, even as a consultant.
2. One of the members must be a financial and accountancy expert.
3. The member should be fully independent of Corporation executive management, and have no direct or indirect interest in Corporation’s works or contracts
4. The member should not practice any business competitive to Corporation’s activities, whether individually or via other companies and institutions.
3. In the first session, the committee shall appoint from its members a head and a secretary general to prepare the minutes and perform administrative work.
4. Any member and the secretary general are entitled to attending allowance for each session. The Board of Directors shall decide the amount of such allowance.
5. The Board of Directors may issue annual lump sum remuneration to any member and the secretary general, and define the terms of merit.
6. The committee meets upon call from its head, and the meeting shall be valid only if attended by at least half of its members. A member is not entitled to delegate another member for attending the sessions. All decisions are issued by majority of attending members. Deliberations and decisions of the committee shall be recorded in the minutes and signed by the head and secretary general. If any member fails to attend three consecutive sessions, he shall be considered as resigned.
7. The committee shall hold at least four (4) meetings during the fiscal year.
8. Same as Board member, Committee member abides by the discretion of Corporation’s secrets. None of them may disclose to shareholders, or other parties, any information in his possession.
9. The membership of committee member ends by the term included in the assignment resolution, or by violating the terms and conditions of paragraphs 2 and 6. The Board of Directors is responsible for assigning his replacement
d. Duties of the Committee
1. To supervise Corporation’s internal audit department.
2. To review the internal audit procedure and prepare a written report on such audit and its recommendations with respect thereto.
3. To review the internal audit reports and pursue the implementation of the corrective measures in respect of the included comments.
4. To recommend to the Board of Directors the appointment, dismissal and the remuneration of external auditors. Upon any such recommendation, regard must be made to their independence.
5. To supervise the activities of the external auditors and approve any activity beyond the scope of the audit work assigned to them during the performance of their duties.
6. To review, together with the external auditor, the audit plan and make any comments thereon in order to support the efficiency and effectiveness of Committee duties.
7. To review the external auditor’s comments on the financial statements and follow up the actions taken by executive management.
8. To review the interim, quarterly and annual financial statements, together with the auditor and Corporation management, prior to presentation to the Board of Directors; and to give opinion and recommendations with respect thereto.
9. To review the accounting policies in force and advise the Board of Directors of any recommendation regarding them, taking into consideration the suitability to the nature of Corporation activities.
10. To prepare the annual plan and budget for the Committee.
11. To seek the help of external bodies and houses of expertise to perform certain duties that are within the range of its works and requires special expertise and skill.
Second: Nominations and Remunerations Committee
a. Type of Committee
A consultant committee of Corporation Board of Directors, appointed by the Board according to the regulation approved by Corporation General Meeting.
b. Purpose of the Committee
Provide recommendations to Corporation Board of Directors about nomination to the membership of the Board and setting policies and standards for the remunerations of Board members and Corporation senior executives.
c. Organization of the Committee
1. Board of Directors forms a committee named “Committee of Nominations and Remunerations” consisting at least of three (3) members, one of them should be independent.
2. The member may a non-Board member.
3. Upon suggestion from the Board of Directors, the Corporation General Meeting shall issue the rules and course of action of the committee.
4. Members of the committee shall continue to perform the duties stated in paragraph 3 as of the date of the resolution of forming the committee and for three years, or when the Board issues a resolution to end or re-form the committee. Also, at the end of term, or dissolution, of the Board for any reason, the period of the committee is terminated, and must be re-formed by the new Board.
5. If the position of any member becomes vacant for any reason, the Board may assign a replacement to complete the remaining term of the previous member.
6. In the first session, the committee shall appoint from its members a chief and a secretary general to take the minutes and perform administrative work.
7. The committee meets upon call from its chief, and the meeting shall be valid only if attended by at least half of its members. A member is not entitled to delegate another member for attending the sessions. All decisions are issued by majority of attending members. Deliberations and decisions of the committee shall be recorded in the minutes and signed by the chief and secretary general.
8. A committee member may not delegate any other party to attend and vote on his behalf, whether this party was a committee member or a third party.
9. Same as Board member, Committee member abides by the discretion of Corporation secrets. None of them may disclose any information in his possession to any other persons or parties, unless authorized by the Board or committee decision, within the limits granted to either
10. The Board of Directors may issue annual lump sum remuneration to any member and the secretary general, and define the terms of merit.
d. Duties of the Committee
1. Recommend to the Board of Directors appointments to membership of the Board in accordance with the approved policies and standards.
2. Annual review of the requirement of suitable skills for membership of the Board of Directors and prepare a description of the required capabilities and qualifications for such membership, including, inter alia, the time that a Board member should reserve for Corporation activities and preparations of the meetings of the Board.
3. Review the effectiveness of the Board of Directors and committees, and review their structure and mechanisms, and recommend suitable actions for performing the promoting operations and changes needed for supporting performance effectiveness, and supervise Corporation activities.
4. Ensure on an annual basis the independence of the independent members, and the absence of any conflict of interest in case a Board member also acts as a member of the Board of Directors of another Corporation, or practicing competitive activities to Corporation activities, or provide the Corporation of any services or materials, unless the member has declared such and was approved by the general meeting.
5. Draw clear policies regarding the indemnities and remunerations of the Board members and senior executives according to related regulations. In laying down such policies, the committee must take into consideration non-conflict with the approved rules and regulations, and the use of standards related to the level of performance.
6. Set a guidance program for the new Board members, to include all important fields related to Corporation activities.
e. Requirements for Nomination for Board Membership
1. Applicant must submit his application during the period set in Corporation advertisement, and must include his CV with supportive documents and certificates in Arabic, attested by proper authorities.
2. Committee must ensure that nominees have never been previously convicted of any offense affecting honor or honesty, or such.
3. Committee must ensure that the nominated Board member has previous skills and knowledge in the field of business management and companies in order to enrich the activities and discussions of the Board.
4. Applicant must fill in the Board Membership Nomination form. Such form must include at least a statement signed by the nominee that he has have never been previously convicted of any offense affecting honor or honesty (If otherwise was proved, his nomination for/membership of the Board shall be dropped), and he is ready to allocate enough time for attending Board and committees meetings according to Corporation regulations, and his work shall be fully independent and shall take Corporation and shareholders into consideration.
f. Meetings of the committee
1. The committee shall convene twice a year, at least, upon a call from its chief or 50% of its members for achieving the purposes of forming the committee as follows:
1. Review the suitable skills needed in a Board member
2. Review the structure of the Board
3. Define the points of weakness and strength in the Board
4. Ensure full independence of the resigned members of the Board
5. Ensure the member has no conflict of interests if he was a member in other Boards.
6. Set a guidance program for the new Board members, to include regular Corporation activities.
7. Ensure the application of remunerations and compensations policy for Board Members and senior executives.
8. Recommend the amount of annual remunerations to the Board of Directors.
9. Study CVs of the nominees for Board membership.
10. Ensure the availability of the required terms in the nominees.
11. Recommend the names of the approved nominees to the Board of Directors.
2. The secretary of the committee shall prepare an agenda with the issues to be discussed in the meeting, in previous coordination with committee chief and members.
3. Submit regular reports about committee deliberations to the Board.
4. Record all committee sessions in a special record, to be reviewed by committee chief and secretary, and shown to members before approval.
Third: Risk Management and Compliance Committee:
a. Type of Committee:
It is a committee reporting to and appointed by the Board of Directors. It is composed of four (4) members and a secretary-general.
b. The Purpose and Duties of the Committee:
To assess the efficiency of the Corporation’s Risk Management and Compliance Program;
To review and assess the Corporation’s policies in the field of risk management, compliance, control of criteria, standards, procedures and regulations applicable by the Corporation for ensuring adherence to policies;
To monitor the records of the Corporation in the field of compliance, control of risks and discussion of any legal issues having major impact on the Corporation’s policies and procedures pertaining to compliance with legal, regulatory, and statutory requirements and to submit the required recommendations to the Board of Directors.
Fourth: Investment Committee
a. Type of Committee
A subordinate committee to the company’s Board of Directors. It is appointed by the BOD, and includes five members and a secretary general.
b. Purpose of the Committee
The committee carries out its approved tasks and functions, including the assessment of SABIC investment activities, delivering suggestions and recommendations to the BOD concerning transactions of mergers, acquisitions, joint ventures, investments in new, existing or expansion projects, and reviewing SABIC’s investment strategy.