This chapter aims at clarifying the policies for managing affairs pertaining to relations with stakeholders under the Board of Directors of SADAFCO.
Stakeholders are individuals or group of individuals with direct or indirect stake in the Company and can affect or be affected by the company’s activities, objectives, and policy. Shareholders, executive directors, employees, customers/ consumers, creditors, banks, vendors, local community, and the government are the main stakeholders. The below table illustrates stakeholders’ interest and influence on any Company:
Interests & Powers of Stakeholders
|The stakeholder||Interests/ concerns||Influence and power|
|Shareholders||Growth of profits||Voting at the General Assemblies|
|Banks and other lenders||Payment of benefits and loans, assessing credit class of the Company||May withdraw bank facilitations and affect credit classification of the Company|
|Board members and executive directors||Salaries, job satisfaction, and position||Decision making|
They have detailed information
|Employees||Wages and salaries, job security, job satisfaction and motivation||Workers turnover, and quality of service|
|Suppliers||Long-term contracts, prompt payment of liabilities||Pricing, quality, and product availability|
|Customers/ consumers||Reliable quality, good value, and customer service||Revenues, lasting work relation, and jeopardize or safeguard reputation|
|Community||Environment, and local jobs||Indirectly through the government or civil bodies|
|Government||Legally operating, jobs||Regulations and rules|
Companies investing their times to promote their relations with stakeholders enjoy more success. Unlike other companies that are unaware of the key element of success, which is building trust, and providing support to stakeholders.
Good relationships with stakeholders help the Company in many ways, such as:
- Strengthening loyalty
- Enabling making the right decisions.
- Challenges and problems recognition.
- Assessing solving problems.
- Supporting and encouraging knowledge sharing.
The Company’s Board of Directors is committed to the highest ethical standards, as the Company desires its stakeholders to have strong faith and commitment towards it. The key to success of SADAFCO for building relationships with stakeholders is strong faith and commitment.
The Company is committed to creating sustainable shareholder value to achieve distinguished financial returns and act in the Shareholders’ best interest efficiently as possible.
The Company is committed to providing excellent services and value-adding solutions. It also seeks to deal with customers and suppliers in a straightforward and honest manner. The Company additionally seeks to build and maintain good relations with its customers and suppliers, ensuring to protect the confidentiality of information related to them.
The Company is committed to treating its people with dignity and providing equal employment opportunities for all employees, including recruiting, compensation, professional development and promotion.
The Board believes in providing safe and healthy working conditions, respecting human and employees’ rights.
The Board of the Company expects from its employees to speak out when they see unethical practices. The Company additionally does not want others to request its employees to work unethically; alternatively, the Company shall not request anyone to act unethically.
The Company is committed to contributing to the overall quality of life wherever it operates and to use resources responsibly to preserve the environment. The Board wants communities to count on the Company contributions in civilian, charitable and other activities to improve the community.
Furthermore, the Company shall adopt the following meaningful standards aiming at developing successful relations with Stakeholders:
- Institutions/ individuals whom may be influenced by the Company’s operations will be informed by its activities, and shall be allowed to participate with transparency and explicitly in all problems and opportunities affecting them.
- Stakeholders shall be provided with accurate and timely information regarding the Company’s activities. The Company shall bear in mind all Stakeholders’ needs and concerns when making decisions.
- The Company will require Stakeholders’ opinions regarding the Company’s decisions related to the activity.
- The Company will encourage Stakeholders to determine the suitable method of deliberation, and will make every effort to respond accordingly.
- The Company respects each and every Stakeholder’s culture and values. In case of unresolvable dispute, the employees of the Company will always respect differing perspectives and make sure to solve problems as soon as possible.
A Stakeholder is a person, group, institution, or system that can affect or be affected by the Company’s actions.
Formulation and generalization Code of ethics and conduct is one of the effective methods to manage Stakeholders relations. One of the chapters of this Code guides the Company to be committed with the legal requirements relating to legit Stakeholders.
The Audit committee will make sure of applying the appropriate corrective measures or recommending them to solve problems fully in case of violation occurred against one of the Stakeholders’ rights.
The Board shall be responsible for the formulation of the Company’s nature and culture, and ensure compliance with the Code of Conduct, including the Management Stakeholders Requirements. The Company’s Code shall solve legal obligations as well as providing means for employees to report any potential abusive practices to the Board and directors without fear of reprimand.
The list of Stakeholders’ with related legal, contractual and trade considerations includes:
- Institutional investors
- Banks/ lenders.
In overall, the Board is not liable for any credit’s legal obligations of its employees. However, the Board must recognize the following:
- The importance of supporting the employee and ensuring his/ her compliance to meet the Company’s objectives.
- The specified obligations imposed as per other legislations, including professional health and safety laws.
In a nutshell: there is no business without customers. This highlights the importance of customers to the Company and its Board. Not only the Executive Management is responsible for understanding the needs and concerns of customers and accordingly promptly respond, but also the Board that has to consider the best way to deal and solve customers’ complaints. Reports and statistics about key problems of customers’ complaints shall be reported to the Board.
The Board positive responsibility towards creditors has been discussed and confirmed under legal and judicial cases, therefore it must be a key focus in insolvency situations.
Decisions made by investors are based on the information received. Most of these pieces of information are delivered by the Company itself. Consequently, it is important to understand and respond appropriately to the needs and expectations of the investors and such institutional investors shall carry voting privilege in terms of shareholders’ demands.
The Company needs to ensure that it balances the expectations and demands of institutional investors against the interests of shareholders as a whole, and to ensure a fair, equitable and consistent treatment of all shareholders.
The Company shall pay careful attention to its obligations toward banks and financial institutions. Many lenders will have covenants in place that require the Company to adhere to predetermined ratios and other requirements in order to fulfill financing arrangements.
Board members need to have a clear understanding of these requirements and ensure that management are effectively monitoring the financial position of the Company to ensure these covenants are not breached, to avoid penalties or other consequences. In addition, the Company should establish open communication with its financiers, engaging them in periodic dialogues and responding positively to their information needs and requests. A positive relation between the Company and lenders is a key element for entering into, renewing, adjusting or extending credit facilities.
Environmental regulations, economic activities’ rules and public expectations are requiring companies to be socially responsible in their operations within the community. Although they are not considered as credit liabilities, they are legal and ethical obligations that must be recognized as a part of the business and the decision making process. Failure to understand community issues and not responding appropriately to them may adversely affect the Company financially and can cause other consequences.
1.4.7 Mechanisms to Resolve Disputes and Complaints of Stakeholders
In the event where a complaint arose, whether directly through the Company or the CMA, by a shareholder or in the case of a complaint or dispute arose between a stakeholder and the Company, the shareholder or stakeholder must contact the Company’s Investor Relations Officer, the Board Secretary, Audit Committee and/ or Executive Management within two (2) working days in order to review, respond, and take the appropriate corrective measures or recommendation to efficiently resolve the issue. The Company must respond to complaints within (10) ten working days following the date of receiving them from the shareholder, stakeholder or the CMA.
To ensure that the Company operates in compliance with this policy, the Board shall review and assess the effectiveness and adequateness of his policy on a periodic basis. The Audit Committee shall provide notices and recommendations for amendments, whenever needed, to the Board for review and approval.