Conflict of Interests Policy

  1. Conflict of Interests Policy

1.1. Purpose

This policy shall be applied to all persons “concerned persons” who are obliged to perform duties with honesty towards SADAFCO. This policy aims at explaining the practices that will prevent conflicts of interests with the concerned persons. In addition, this policy is intended to assist the Board members to manage potential conflict of interests appropriately as per legal requirements to meet the accountability and transparency objectives of the Company.

Conflict of interests may result in financial losses, statutory penalties, and adversely affect reputation, therefore, this policy endeavors to ensure to fulfill the commitments listed in (General Obligations of Work) by setting out a minimum of measures that must be applied to:

–  Identify and disclose potential conflict of interest cases.

– Assess the risks resulted from the identified and disclosed conflict of interest cases.

– Resolve conflict of interest.

– Record examples of conflict of interests and document how they arise, and how to deal with them eventually.

1.2. Conflict of interests: General Definition

A conflict of interests is considered as actual or potential interests of a concerned person in any measure undertaken by the Company, leading to, or implying that it will lead to personal gains for that person.

In other words, Conflicts of interests occur in companies when a person’s own interests interfere in any way with the interests of the company as a whole.

Most successful companies recognize and respect the fact that their board members have their own interests and have the right to engage in multiple activities, provided that such activities do not, in any way, lead to conflict with the interests of the company as a whole. Furthermore, conflict of interest can be determined by the following situations:

  • Abusing a position of authority, information, or opportunities for the Company- while carrying out his/ her duty within the Company- for his/her own gains or for external parties unduly.
  • When an employee or his/her relatives perform any type of work for suppliers, sub-suppliers, or competitors.

Conflict of interests may occur when a person takes actions or has interests that may make it difficult for him/ her to perform his/ her work for the Company objectively and effectively. It also may arise when a person or his/her family members receive illegal personal benefits for his/ her position in the Company. Loans to or guarantees of obligations to individuals or their family members may lead to conflict of interest. In addition, this conflict of interests mostly arises when a person works for the Company and, at the same time, works for the Company’s competitor, customer, or supplier.

From comprehensive aspect, the definition of conflict of interest includes any bias or manifestation of bias in decision-making that would reflect the dual role of the concerned person.

1.3. General Obligations of Business

As a part of the values and principles of business, SADAFCO sat out an obligation imposed in its dealings with business partners to ensure the following:

  • That SADAFCO is performing its due businesses with honesty, dignity, respect, quality, and fairness.
  • That SADAFCO awards its contracts and selects its business partners on the basis of objective and fair standards, bearing in mind the high ethical standards.
  • That all concerned persons must maintain morality when offering and accepting gifts.
  • That all concerned persons will not abuse the authority of their positions illegally to achieve personal benefits and gains.

1.4. General Requirements Associated with All Concerned Persons

1.4.1. General Obligations:

All concerned persons shall:

  • Always act in the best interests of SADAFCO.
  • Act with honesty and integrity.
  • Avoid situations that may adversely affect the Company’s reputation, or lead to imposing a fine or regulatory sanction.
  • Not to offer or receive gifts or favor, financial or any other type of gifts, or enter into compensation arrangements that may lead to a potential conflict of interest.
  • Not to enter into any transaction or arrangement that may result in a conflict of interest.
  • Not to use his/her position illegally to achieve personal gain illegally.

1.4.2. Disclosure Duty

All concerned persons shall promptly disclose, to their line supervisors (to the Board if that person is a Board member) and the Audit Committee of the following:

  • The occurrence or possibility of any conflict of interests.
  • The occurrence of any situation that may be considered as a conflict of interests.
  • The occurrence or possibility of personal or competing interests.
  • Any incident that may appear to be a personal or competing interest.
  • Any actual or potential violation of this policy (General Obligations of Business) stated in this policy.
  • Any incident that may appear to be an actual or potential violation of this policy (General Obligations of Work).
  • The occurrence or possibility of act of temptation.
  • Any occurrence that may appear to be an actual temptation or temptation.

The CMA and the public shall be notified, without delay, of any transaction between the Company and a related party or any arrangement in which the Company and a related party shall invest in any project or asset or provide financing for it.

Any information pertaining to the Company’s businesses, contract in which the Company is a party, or business in which one of the Board members, CEO, or CFO has interests in shall be disclosed in the Board’s report if there are any transactions or contracts. The company must submit a declaration.

Any disclosure of information conducted under this section shall be accompanied by all relevant data and details.

1.5. Additional Requirements Associated with the Board’s Members

1.5.1. General Obligations

In addition to the prescribed obligations under this section (General Requirements Associated with All Concerned Persons) stated in this policy, the Board’s members shall be committed with the obligations stated in (Additional Requirements Associated with the Board’s Members).

1.5.1. 1 Personal Interest by a Board Member

  • A Board member may not have any direct or indirect interest in the Company’s activities and contracts, unless an authorization by the Ordinary General Assembly was provided otherwise (renewed every year). The Board member shall notify the Board with any direct or indirect interest in the Company’s activities and contracts, such notification shall be included in the meeting’s minutes. This member may not involve in voting at the Shareholders assemblies on the resolution in this regard. The Board chairman shall report any businesses and contracts in which any of the Board members might have direct or indirect interest to the Ordinary General Assembly. Such report should be provided with special report by the Company’s external auditor.
  • If a Board member failed to disclose his/ her interest as mentioned above, the Company or any stakeholder may claim before judicial body for contract termination or to oblige the member to make any profit or benefit that has been achieved.

1.5.1. 2 Competing Activities of the Board Members

Any Board member shall not participate in any business that would compete with the Company, or its sub-activities; otherwise, the Company will reserve the right to claim for a proper compensation before the judicial bodies, unless he/she has a prior authorization of the General Assembly (renewed every year).

1.5.1. 3 Board Members’ Cash Loans & Guarantees

  1. The Company shall not give any type of loans to any Board member or Shareholder, or to guarantee any loan to be made by any of them with third parties.
  2. Clause (1) does not include the loans and guarantees approved in accordance with the Company bylaw provisions and by the Ordinary General Assembly resolution in which the Company offers as incentives to motivate employees.

1.5.1. 4 Remuneration Policy

Any Board member may not set his/ her own remuneration policy, and it is mandatory to prevent him/ her from participating in any voting in the General Assembly meeting in this regard.

1.5.2. Information Disclosure Duty

All Board members shall disclose to the Board and Audit Committee promptly regarding all the information and details listed below:

  • Any actual or potential violation of (General Requirements) section mentioned in this policy.
  • The occurrence of any event that may be considered as a violation chapter (General Requirements).

Any disclosure hereby shall be provided with relevant information and details.

1.5.3. Exclusion

Any Board member with interest shall be excluded from any discussion, trading, voting at the level of the Board, the General Assembly of Shareholders or any Board’s committee in connection with the existence of the consequences of conflict of interest and / or in connection with that transaction or arrangement.

1.6. Investigation Process

1.6.1. Investigation through Audit Committee

The audit committee shall investigate all disclosures in conformity with (Disclosure Duty) section set forth in this policy. This Committee shall:

Regarding any related transaction or arrangement, the Committee shall approve it as being fair, correct, and reasonable for the interest of the Company.

In case of violating this policy, the committee shall consider any necessary disciplinary or corrective action.

The Audit Committee may request the concerned person or Board member with the interest to disclose detailed information.

Following the completion of all necessary investigations and the exercise of all necessary due diligence, the Audit Committee shall prepare and send a report to the Board recommending the course of action.

1.6.2. The Final Decision in respect of the Disclosure of General Requirements, or the ones proceeding as per (Disclosure Duty) section in this policy

The Board has the right to take actions regarding  (Disclosure Duty) chapter revealed hereby. The decision of the Board shall be issued at the sole discretion of the Board. The Board shall be focused on the interests of SADAFCO, and the development and realization of its objectives.

The Board may conduct its own investigations and maintain, or omit, the recommendations of the Audit Committee’s report in whole or in part. The Board may make a decision without waiting for the report and recommendations of the Audit Committee.

1.6.3. The Final Decision in respect of the Disclosure of General Requirements or those decisions being made as per (Disclosure Duty) chapter in this policy

1.6.3. 1. Competencies of Decision Making

Shareholders General Assembly is the only body with the authority to offer necessary delegations under this section (General Requirements), or to decide on violation to the provision of the mentioned chapter.

1.6.3. 2. Notices to Shareholders General Assembly

The Board Chairman shall notify the Assembly, upon convening, with all the transactions and contracts in which one of the Board members has a personal, whether direct or indirect, interest in. This notice shall include a special report by the Company’s external auditor.

The Board reserves the right to conduct special investigations, and provide its special report and recommendations to Shareholders General Assembly

1.6.3. 3. The Shareholders General Assembly’ Resolutions

Shareholders (non-stakeholders) shall vote at Shareholders General Assembly on the following:

  • Determining whether the circumstances mentioned in the two sections (Personal Interest of the Board Members) and (Competing Activities of the Board Members) as set forth in this Policy will be approved as fair, equitable and reasonable conditions for SADAFCO (and any approval granted in this respect must be renewed annually as long as the transaction or arrangement are in force).
  • Take any appropriate disciplinary or corrective action if one of the Board members has breached the provisions of section (additional requirements relating to Board members).

 

1.7. Documents

1.7. 1. Meeting Minutes

Meetings minutes of the Board and its committees document and describe in detail any action taken by the members of the Board or the committees regarding the implementation of this policy.

Such minutes shall include the names of all Board members (or the members of the concerned committee), attendees, or participants. In addition, it shall describe the discussions, deliberations, voting processes, or any resolutions therewith.

Moreover, the Board’s annual report shall include and describe those situations in which this policy has been implemented, and particularly shall state the following:

  • Contracts, transactions, or arrangements that have been approved despite the situation of an actual or potential conflict of interest.
  • Any sanctions or corrective actions taken in case of any irregularities.

 

1.7. 2. Declarations

All concerned persons must provide a signed declaration confirming the following:

  • He/ she received a copy of this policy.
  • He/ she read and understood this policy.
  • He/ she agreed to comply with this policy.

1.8. Interpretation of this policy

1.8. 1. The Policy

The purpose of this policy is to clarify and state further, not to replace, the applicable regulations that manage conflict of interests.

1.8. 2. Non-Exhaustive

Personal and competing interests listed in (General requirements for all concerned persons) section is considered as non-exhaustive. Moreover, as explained in section (Conflict of Interests: General Definition), conflict of interests cases may arise during different situations; this shall require a broad-concept.

1.8. 3. Diligence

All concerned persons shall always be responsible for scrutinizing their contracts, transactions, outside business interests, and external relations to avoid any potential conflict of interests. Therefore, they have to disclose promptly any necessary information. Accordingly, they are expected to recognize and avoid situations of conflict of interests, and adhere to the highest ethical standards. Concerned persons shall avoid not only actual conflict of interest but also any potential one. As such, any arising conflict of interests may be harmful to SADAFCO, leading to questioning its credibility.

1.8.4. Disclosure Consequences

The disclosure as stated in section (Information Disclosure Duty) does not necessarily imply an actual conflict of interest or that such conflict, if any, is a sufficiently material conflict to be of a practical significance. If that is the case, a full disclosure of all relative facts and circumstances then it will result in a negative impact on SADAFCO’s interests.

1.9 Review and Amendments

To ensure that the Company’s activities are in compliance with this policy. This policy will be reviewed periodically, and it will be assessed for its effectiveness and efficiency. The Audit Committee will provide remarks and recommendations, if any, to the Board for review and approval.

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