Disclosure and Transparency Policy

1.1. Purpose

The purpose of the disclosure and transparency policy is to ensure that the Board will endeavor to assure disclosing all material information pertaining to SADAFCO timely and accurately, including financial situation, position, performance, and governance of the Company.

1.2. Disclosure Presumptions

This policy obliges SADAFCO to the principle of maximum disclosure; meaning that all Executive Directors of SADAFCO will deal with collecting, controlling and disclosing information by the disclosure presumption except for the cases when such disclosure may represent a real risk for one of the Company’s interests- unless there is a higher public interest requires otherwise. Based on that, all information must be disclosed immediately unless if the Company believes that such disclosure as per the rules and laws applied in Saudi Arabia would result in unjustified prejudice to the Company, in addition, such disclosure would not mislead investors in relation to the necessary facts and circumstances to assess related securities. Therefore, the Company may request an exemption for disclosure or time-delay. In such case, related information statement and time-delay reasons shall be confidentially presented to the authority. However, the authority may approve or reject such request. In case if the request was approved, the authority, at any time, may require an announcement of any information related to the exemption.

1.3. Clear, Fair, and not Misleading Disclosure

Any disclosure provided by the Company shall be full, clear, correct, and not misleading. Such disclosure shall be released by the methods specified in Listing Rules.

1.4. Disclosure of Material Information

SADAFCO shall report to the CMA and public, without further delay, regarding any material development relevant to its activities and unavailable for the public, which may affect its assets, liabilities, or its financial position of its general business framework or its subsidiaries. These may affect, reasonably, the price of listed securities, or may result in recognizable influence on the Company’s ability to meet its obligations related to debt instruments.

The Company shall assess the possibility of benefiting any investor from the development information to make decisions that serve his/her investment interests.

Any major developments and information must be disclosed to the public prior to the trading period in accordance with the adopted dates.

The Company shall immediately disclose to the Authority and public about any of the following developments, whether they are material in accordance with the Rules of offering securities and ongoing obligations or not:

  • Any transaction for purchasing, selling, leasing, or mortgaging an asset at a price equals or more than 10% of the Company’s net assets, according to the most recent initial audited financial statements or the audited annual financial statements, whichever is most recent.
  • Any indebtedness out of the ordinary course of the Company equal or more than 10% of the Company’s net assets, according to the most recent initial audited financial statements or the audited annual financial statements, whichever is most recent.
  • Any losses equal or more than 10% of the Company’s net assets, according to the most recent initial audited financial statements or the audited annual financial statements, whichever is most recent.
  • Any significant change in the Company’s production environment or activity, including not limited to, availability and capability of acquiring resources.
  • Replacement of the CEO, the formation of the Board members, or the Audit Committee.
  • Any dispute, including litigation, arbitration or mediation, if the amount of the dispute or claim equals or exceeds 5%of the Company’s net assets, according to the latest initial audited financial statements or the audited annual financial statements, whichever is most recent.
  • Any judicial judgment issued against the Board or one of its members, if the subject matter of the judgment relates to the work of the Board or one of its members.
  • The increase or decrease in the Company net assets with an amount equals or more than 10% according to the most recent initial audited financial statements or the audited annual financial statements, whichever is most recent.
  • Increase or decrease in the Company’s gross profit equal or more than 10% according to the most recent initial audited financial statements or the audited annual financial statements, whichever is most recent.
  • Entering into a contract of revenues equal or more than 5% of the gross revenues of the Company according to the most recent initial audited financial statements or the audited annual financial statements, or the unexpected termination of such contract.
  • Any transaction between the Company and related party, or any arrangement in which the Company and the related party invest in a project or asset, or to provide financing in case if such transection or arrangement equal or more than 1% of the gross revenues of the Company according to the latest audited annual financial statements.
  • Any interruption of the main activities of the Company or its subsidiaries, if any, equals or more than 5% of the gross revenues of the Company according to the latest audited annual financial statements.
  • Any amendments to the Bylaw or Headquarters’ relocation.
  • Change/ Replacement of the legal accountant.
  • Applying for liquidation, issuance of liquidation order, or appointing a liquidator for the Company or its subsidiaries as per the Companies Law, or commencing any bankruptcy procedures.
  • Issuance of dissolution or liquidation resolution by the Company or its subsidiaries, or occurrence of a situation or due date leading to liquidate or dissolve the Company.
  • Any judgment, resolution, declaration, or order issued by the court or any judicial body, whether during initial or appellate stages, that may adversely affect the Company by exploiting of any part of its assets with a gross value more than 5% of its net assets, according to the most recent initial audited financial statements or the audited annual financial statements, whichever is most recent.
  • The invitation of the Special or General Assembly and its agenda.
  • Results of the Special or General Assembly meeting.
  • Any proposed change in the Company’s capital.
  • Any decision of dividends announcement, recommendation of announcement, payment of some its shares, or any other distributional procedures to holders of listed securities.
  • Any decision or recommendation not to distribute dividends in cases where the Company is expected to distribute dividends.
  • Any decision to summon, repurchase, withdraw, redeem or purchasing offer of its securities, total amount, number and value of securities.
  • Any decision not to pay in respect of debt instruments or convertible debt instruments.
  • Any change in the rights associated with any class of listed shares or convertible debt instruments into listed shares.

 

1.5. Disclosure of Financial Information

  1. The Company shall disclose its annual and initial financial statements of Q1, Q2, and Q3 of the financial year to the CMA and public immediately after its approval and before publishing it to shareholders or others. This approval shall be as follows:
  1. In respect of initial financial statements, they shall be approved upon the ratification by the Board and signature by the authorized member of the Board, CEO, and the CFO.
  2. In respect of the annual financial statements, they shall be approved and signed in accordance with the provisions of the Companies Law.
  1. Through online systems dedicated to the purpose of the Saudi Stock Exchange, the Company shall disclose its initial and annual financial statements.
  2. The Company shall prepare and examine its initial financial statements in accordance with the accounting and auditing standards approved by the Saudi Organization for Certified Public Accountants and shall disclose them to the public within a period not exceeding 30 days from the end of the financial period covered by those lists.
  3. The Company shall prepare and audit its annual financial statements in accordance with the accounting and auditing standards approved by the Saudi Organization for Certified Public Accountants and disclose them to the public within a period not exceeding three months from the end of the annual financial period covered by those lists. The Company shall disclose these financial statements within a period of not less than fifteen calendar days prior to the date of the Annual General Assembly of the Company.
  4. The Company shall ensure that the Chartered Accountant, who audits the financial statements and any partner, complies with the rules and regulations of the Saudi Organization for Certified Public Accountants regarding the ownership of any shares or securities of the Company or any of its subsidiaries, ensuring the independence of the Chartered Accountant and any partner or employee in his office.

1.6. Disclosure of the Board Report

The Company shall provide required information, including a presentation of its last year operations, as per the Corporate Governance Regulations to the CMA and disclose it to the Shareholders within a period not exceeding three months from the end of the financial annual period. The mentioned information shall include all factors affecting the Company’s businesses that the investor needs to assess the Company’s assets, liabilities, and financial status. The Company shall make a copy of the mentioned information available in the Company’s head office, its website, and Tadawul website in order to enable Shareholders to get a copy thereof. Such report of the Board shall include the following:

1) Implemented and non-implemented provisions of Corporate Governance Rules and regulations, and justifications therefor.

2) Names, qualifications, experiences and current and previous positions of the Board and committees members and Executive Management.

3) Names of the companies inside and outside the Kingdom in which a Board member is a member of their current or previous Board member or manager.

4) Composition of the Board and classification of its members, as follows: Executive Directors, Non-Executive Director, or Independent Director.

5) Procedure taken to the Board to inform its members, Non-Executive Directors in particular, of the shareholders’ suggestions and remarks on the Company and its performance.

6) A brief description of the competencies and duties of the  committees, such as the audit committee, the nomination committee and the remuneration committee indicating their names, names of their chairmen, names of their members, the number of their respective meetings, dates of those meetings and the members’ attendance details of each meeting.

7) Where applicable, the means used by the Board to assess its performance, the performance of its committees and members and the external body which conducted the assessment and its relation with the Company, if any.

8) Disclose the remuneration of the Board members and Executive Management as stated in Article (93) of Corporate Governance Rules and regulations.

9) Any punishment, penalty, precautionary procedure or preventive measure imposed on the Company by the CMA or any other supervisory, regulatory or judiciary authority, describing the reasons for non-compliance, the imposing authority and the measures undertaken to remedy and avoid such non-compliance in the future.

10) Results of the annual review of the effectiveness of the internal control procedures of the Company and the opinion of the audit committee with respect to the adequacy of the Company’s internal control system.

11) The audit committee’s recommendation on the need for appointing an internal auditor for the Company, if there is no internal auditor.

12) The audit committees recommendation with conflict with Board resolution or those which the Board disregards relating to the appointment, dismissal, assessment or determining the remuneration of an external auditor, as well as justifications for those recommendations and reasons for disregarding them.  13) Details of the Company’s social contributions, if any.

14) A list of the dates of the General Assembly meetings held during the last fiscal year and the names of the Board members who attended them.

15) A description of the main scope of activities of the company and its affiliates. If there are two or more, a statement showing each activity and how it affects the company businesses and results shall be attached.

16) A description of the company’s significant plans and decisions (including changes to the structure, expanding the company’s operations or halting them) and the future expectations.

17) Information on any risks facing the company (operational, financial or market related) and the policy of managing and monitoring these risks.

18) A summary in a form of table or graph showing the company’s assets, liabilities and results of the last five fiscal year or since the incorporation date, whichever is shorter.

19) Geographical analysis of the company’s and its affiliates’ revenues.

20) Any material differences in the operational results compared to the preceding year’s results, along with any expectations announced by the company.

21) Any inconsistency with the standards approved by the Saudi Organizations for Certified Public Accountant.

22) Name of each affiliate company, its capital, the company’s ownership percentage, the main scope of business, country of operation and country of incorporation.

23) Details of shares and debt instruments issued for each affiliate company.

24) A descriptions of the dividends distribution policy.

25) A description of any interest in a class of voting shares held by persons (other than the company’s directors, Senior Executives and their relatives) who have notified the company of their holdings in accordance to applicable rules and regulations, together with any change to such interests during the last fiscal year.

26) A description of any interest, contractual securities or rights issue of the Board members, Senior Executives and their relatives on shares or debt instruments of the company or its affiliates, and any change on these interest or rights during the last fiscal year.

27) Information on any loans (payable upon request or not), a statement of the total indebtedness of the company and its affiliates, any amounts paid by the company in repayments of loans during the year, the amount of the principal debts, the creditor name, the loan term and remaining amount. In case there is no debts, a declaration thereof shall be presented.

28) A description of the class and number of any convertible debt instruments, contractual securities, preemptive right or similar rights issued or granted by the company during the fiscal year, as well as stating any compensation obtained by the company in this regard.

29) A description of any conversion or subscription rights under any convertible debt instruments, contractually based securities, warrants or similar rights issued or granted by the company.

30) Description of any redemption, purchase or cancellation by the company of any redeemable debt instruments and the value of such securities outstanding, distinguishing between those listed securities purchased by the company and those purchased by its affiliates.

31) The number of Board meetings held during the last financial year, their dates and the attendance record of each meeting listing the names of the attendees.

32) Numbers of company’s requests of shareholders records, dates and reasons thereof.

33) A description of any transaction between the company and any Related Party.

34) Information relating to any transaction or contract to which the company is a party and in which a director of the company, a Senior Executive or any person related to any of them is or was interested, including the names of persons in relation, the nature, conditions, durations and the amount of the business or contract. If there are no such transactions or contracts, the company must submit a statement thereof.

35) A description of any arrangement or agreement under which a director or a Senior Executive of the company has waived any remuneration.

36) A description of any arrangement or agreement under which a shareholder of the company has waived any rights to dividends.

37) A statement of the value of any paid and outstanding statutory payment on account of any zakat, taxes, fees or any other charges that have not been paid until the end of the annual financial period with a brief description and the reasons therefor.

38) A statement as to the value of any investments made or any reserves set up for the benefit of the employees of the company.

39) Declarations that:

  1. the Company’s records are prepared in the correct method.
  2. The system of internal control is sound in design and has been effectively implemented.
  3. There are no significant doubts concerning the company’s ability to continue its activity.

40) If the external auditor’s report contains reservations on the annual financial statements, the Board report shall highlight this mentioning the reasons and any relevant information.

41) If the Board recommended replacing the external auditor before the end of its term, the report shall indicate this mentioning the reasons for the replacement recommendation.

42) With regard to the Audit Committee’s disclosure, the Audit Committee’s report shall include details of its performance of its competencies and duties stated in the Companies Law and Its Implementing Regulations, provided that the report contains its recommendations and opinion on the adequacy of the internal and financial control systems and risk management systems in the Company.

43) The Board shall regulate the disclosures of each of its members and the members of the Executive Management, maintaining a register for the disclosures of the Board members and the Executive Management and updating it periodically based on disclosures required as per the Companies Law, the Capital Market Law and their implementing regulations. Moreover, the Board shall make such register available for review by the Company’s shareholders free of charge.

1.7. Disclosure Regarding CG:

The Company shall disclose material information regarding CG policies and procedures. In particular, the Company shall disclose the following:

  • Powers delegation among Stakeholders, Executive Directors and Board’s members.
  • Nomination of Board’s members policy.
  • Conflict of interests’ policy.
  • Number of Board’s meetings.
  • The Company’s objectives- in addition to creating maximum Stakeholders value- and explaining these objectives.
  • Voting system and electoral process of Board’s members.

1.8. Disclosure of Annual General Assembly Date:

The date, place and agenda of the General Assembly shall be announced at least twenty one (21) days prior to the date thereof; the invitation shall be published on the website of the Exchange, the Company’s website and in a daily newspaper distributed in the province where the Company’s head office is located. The Company shall be using methods of contemporary technologies to invite Shareholders.

1.9. Disclosure Regarding Corporate Social Responsibility:

The Company shall disclose its corporate social responsibility policies and procedures related to employees, community and environment at least once a year.

1.10. Disclosure to the Regulatory Bodies:

The Company shall disclose the following to the concerned regulatory bodies:

  • The termination or resignation of a Board member, together with an explanation, such changes of positions shall be disclosed to the CMA and Tadawul within the regulatory

1.11. Disclosure of Major Shareholders Transactions of Shares and Convertible Debt Instruments:

  • Any person shall notify the Exchange upon owning 5% or more of the shares or interests of any class of the Company’s shares with voting eligibility or convertible debt instruments within a period not exceeding the end of the third trading day following the execution of the transaction or the occurrence of the event leading to such ownership or interest. Such notice shall include a list of persons who have an interest in the shares or convertible debt instruments that they own or control.
  • The person referred to in paragraph (a) of this Article shall notify the Exchange of any change to the list of persons referred to in paragraph (a) of this Article, whether as a result of an event requiring the addition of a person to that list or the exclusion of any person already included therein, within a period not exceeding three trading days following the event that caused the related change.
  • For the purposes of this article, when calculating the total number of shares or convertible debt instruments to which any person has an interest, the person is considered to have an interest in any convertible shares or instruments owned or controlled by any of the following persons:
  • Relatives of the mentioned person.
  • A company owned by the mentioned person.
  • Any other persons acting in agreement with the mentioned person to obtain interests or exercise voting rights in the Company’s convertible shares or debt instruments.
  1. d) The notices referred to in this article shall be in accordance with the forms prepared in this regard, provided that the notice referred to in paragraph (a) of this article shall at least contain the following information:
  2. Names of persons owning or having the right to dispose shares or convertible debt instruments.
  3. Details of the acquisition process.
  4. Details of any financial support from another person for the acquisition or financing loans.

1.12. Restrictions on Transactions of Board members and Senior Executives:

(a) Members of the Board, members of the Audit Committee, senior executives or any person related to any of them may not deal in any securities of the Company during the following periods:

  1. Within 15 calendar days prior to the end of the financial quarter until the date of disclosure of the Company’s initial financial statements upon the required examination to be disclosed as per the Regulations.
  2. Within 30 calendar days preceding the end of the financial year until the date of disclosure of the audited annual financial statements.

(b) The exercise of the right to subscribe and sell priority rights shall be excluded from the limitation referred to in paragraph (a).

(c) Upon the resignation of a member of the Board, any of the members of the Audit Committee or any of the senior executives of the Company during the limitation periods referred to in paragraph (a) above, this period applies (where applicable) to that resigning member,  senior executive or any related person to any of them.

1.13. Language of Announcements, Notices and Disclosure Forms

  • Any notice to the Saudi Stock Exchange (Tadawul) and any disclosure to the public shall be made by the Company in Arabic and the Company shall translate any of these into English and shall be through the system specified by the Saudi Stock Exchange (Tadawul) for this purpose and shall be on regulatory dates.
  • Arabic shall be the adopted language for explaining and interpreting any notice or disclosure provided by the Company. In case of any discrepancy between the Arabic and English versions, the Arabic version shall be considered.
  • Any disclosure to the public shall include information about the identity of the Company and any persons related to the disclosure, the subject matter of the disclosure, its date and timing, in accordance with the executive regulations and rules of the Saudi Stock Exchange (Tadawul). The Company shall comply with the obligatory disclosure forms in preparing the disclosure or the required report as per the laws, rules and regulations issued by the specialized authorities.

1.14. Review and Amendments:

The CEO is the Company’s spokesperson and explaining this policy falls under his responsibility. The Audit Committee shall review this policy periodically, and provide remarks and recommendations, when necessary, to the Board for discussion and approval.

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