Governance is the set of policies and regulations regulating the relationship between the Company's Board of Directors, shareholders and other stakeholders. It also provides the organizational structure through which the objectives of the company are set, the means to achieve them are defined and the parties to monitor the Company's performance are identified.

Thus, it is the governance that provides both the Board of Directors and the Executive Management with the appropriate incentives to reach the goals that are in the best interest of the company, and facilitate the establishment of an effective monitoring process, and thus help the company to exploit its resources efficiently.

Corporate governance is based on a set of rules that underpin good governance practices. These rules include a set of principles and an application methodology that addresses the requirements for achieving corporate governance objectives.

The importance of implementing corporate governance is as follows:

1. To enhance the administrative efficiency of the company.
2. To obtain financing at a lower cost.
3. To strengthen the control measures and the internal audit procedures.
4. To support the social role of companies.
5. To promote justice, transparency and fair treatment.
6. To eliminate the concept of conflict of interest.

Governance at Al Sharq Financial Brokerage is based on a set of axes that represent the basis for good governance practices to regulate the process of making all decisions within the company and to stimulate the transparency and credibility of those decisions.

One of the most important objectives of approving corporate governance rules is to protect the interests of shareholders and to segregate the authorities between the company's executive management that manages the company's day to day works and the Board of Directors that prepares and reviews the plans and policies of this company. This practice provides reassurance and enhances confidence when dealing with the company, it also enables shareholders and stakeholders to effectively monitor the company.

Corporate governance rules are the principles, systems and procedures that best protect and balance the interests of the management of the company, its shareholders and other stakeholders. The primary objective of implementing Corporate Governance is to ensure that the Company is in line with shareholders' objectives, thereby enhancing stakeholder confidence in the company's performance and its ability to cope with crises.

Corporate governance includes the following rules:

1. Build a balanced structure for the Board of Directors.
2. Proper identification of tasks and responsibilities.
3. Select qualified representatives for the membership of the Board of Directors and the Executive Management.
4. Ensure the integrity of the financial reports.
5. Develop sound risk management and internal control systems.
6. Promote professional behavior and ethical values.
7. Disclosure and transparency in an accurate and timely manner.
8. Respect for shareholders' rights.
9. Recognize the role of stakeholders.
10. Enhance and improve the company's performance.
11. Focus on the importance of social responsibility.

The Board of Directors of the company represents the balance point that works to achieve shareholders' objectives and follow up the executive management of the company. The Board of Directors also seeks to achieve the company's strategic objectives by ensuring that the executive management fully performs its tasks and responsibilities and that it works to enhance the competitiveness of the company, achieve high growth rates and maximize profits, and that the executive management decisions and actions are always in the interest of shareholders.

The Board of Directors' decisions have a strong impact on the performance of the Company and the integrity of its financial position. Thus, the Board of Directors has the tools and mechanisms that enable it to exercise effective control over the activities of the Executive Management and monitor the performance of leading and supervisory positions reaching to department managers. The Board of Directors is also provided with the information and data necessary to assist in making its decisions.

When forming the Board of Directors, it should be taking into consideration the Board of Directors shall have diversified practical and professional experience, skills, know-how and knowledge of the laws and regulations in force and knowledge of the activities of the company.

a) Composition of the Board of Directors

The Articles of Association sets out the number of members of the Board of Directors, and the majority of the members of the Board of Directors must be non-executive members. The Board of Directors of the Company shall consist of at least five (5) members, at least one of them shall be an independent member.

b) Term of membership

The term of office of the Board of Directors shall be three renewable years. If a new Board of Directors cannot be elected on time, the Board of Directors shall continue to manage the business of the Company until the reasons have been eliminated and a new Board of Directors has been elected.

c) Conditions of membership in the Board of Directors

Whether he is an independent member or a representative of a juridical person, the member of the Board of Directors must meet the following conditions:

d) Professional competence and technical ability requirements.

• Scientific qualifications consistent with the candidate field of employment.
• Appropriate professional experience in a field consistent with the nature of the company's work and the candidate's job.
• Technical, leadership and administrative capabilities that allow him to work independently, make the right decision and absorb all technical requirements and developments related to the progress of work.
• Commitment to achieve all the tasks and responsibilities assigned to him, and to achieve the objectives of the company.
• Ensure that he is kept abreast of all developments and professional and administrative developments.

e) Integrity and honesty requirements.

• The candidate has not previously been convicted of a crime that violates honor or honesty.
• The candidate has not previously been convicted of a corruption crime.
• The candidate has not previously been convicted of a crime related to money laundering and terrorism financing.
• The candidate should be of good reputation and conduct.
• The candidate should not be incapacitated.
• The candidate should have never been removed from office or prevented from applying for a vacant post in any entity.

f) Financial integrity requirements.

• The candidate should have not been declared bankrupt unless he has been rehabilitated.
• The candidate should not be insolvent.

g) Conditions of membership of an independent member

Below are the conditions to be met by the independent director:

• To be independent. Issues that contradict with independence include, but not limited to, the following:

1. To own 5% or more of the company's shares or be a representative of an owner.
2. To have a first-degree relationship with any of the members of the Board of Directors or executive management of the Company or of any company of its group or with the key related parties.
3. To be a board member in any company of its group.
4. To be an employee of the company, any company of its group or any of the stakeholders.
5. To be employed by legal persons holding controlling interests in the company.

• The independent member shall have the qualifications, experience and technical skills that are appropriate to the company's activities.

h) Termination of membership

Membership of the Board of Directors shall terminate in the following cases:

• If the member resigns by written notice.
• If the session of the Board of Directors ends.
• If shareholders wish to change the member.
• If a member of the Board of Directors fails to attend consecutive meetings without a legitimate excuse, he may be considered resigned by a decision of the Board of Directors.
• If he holds another position in the company in return for a salary, except for the position of the Chief Executive Officer.
• If he is a member of a company with activities similar to those of the company.
• Also, if a member of the Board of Directors loses any of the above conditions or the conditions provided for in Law No. 1 of 2016 to issue the Companies' Law or the relevant laws, he shall cease to be a member from the date of losing that condition.

The member of the Board of Directors may not perform the following:

• Members of the Board of Directors, their spouses or second-degree relatives may not have a direct or indirect interest in contracts and transactions concluded with the Company or for its account, unless that is permitted by the Ordinary General Assembly.
• The Chairman of the Board of Directors or any Board member shall not be a member in the Board of Directors of two competing companies at the same time, participate in any business that would compete with the Company, trade for his account or for the account of others in one of the Company's fields of activity, unless otherwise approved by the General Assembly. In the event where they fail to abide by the same, the company may recourse on them for compensation or consider the transactions undertaken for their account as if they were performed for the company's account.
• The chairman or member of the Board of Directors, even if they are representatives of a natural or juridical person, may not use the information obtained by them in the ordinary course of their membership to achieve benefits for themselves or others.

j) Remuneration of Board Members

The Ordinary General Assembly shall determine the remuneration and benefits of the Chairman and members of the Board of Directors in accordance with the laws in force and as specified in the Articles of Association of the Company.

The Board of Directors shall have all the powers and authorities necessary for the management of the Company. The ultimate responsibility for the Company shall lie with the Board of Directors in accordance with its authorities. The functions and responsibilities of the Board of Directors shall be clearly defined in the organizational structure of the Company, which reflects the balance of powers and authorities between the Board of Directors and the Executive Management and ensures that none of them have absolute powers, in order to facilitate the process of accountability of both the Board of Directors and the Executive Management by the shareholders of the company. As the Board of Directors has all the powers and authorities necessary to manage the company, the functions and responsibilities of the Board of Directors include the following:

a) Strategy, budget and organizational structure

• Approve the company's important objectives, strategies and plans, including the following:
• To approve, review and guide the company's overall strategy and master plans.
• To approve the optimal capital structure of the company and its financial objectives.
• To approve the annual budgets.
• To approve the company's capital expenditure and own and dispose of assets.
• To approve the organizational and functional structures of the company and the relevant amendments.

b) Financial statements and control

• To approve the interim and annual financial statements.
• To ensure the integrity of the financial and accounting systems, including relevant financial reporting systems.
• To monitor and oversee the performance of the members of the executive management and ensure that they perform all the tasks assigned to them. The Board of Directors should perform the following:

- To ensure that the executive management operates in accordance with the policies and regulations approved by the Board of Directors.

- To hold periodic meetings with the executive management to discuss the work and the obstacles and problems, and to explore and discuss important information related to the company's activity.

- To approve performance standards for the executive management, consistent with the company's objectives and strategy.

- To evaluate the performance of the executive management and overall performance of the company.

- To approve the limits of the administrative and financial powers for senior executives and department managers.

c) Management of risk and internal control

• To ensure that the company complies with policies and procedures that ensure that the company adheres to the applicable internal regulations and procedures.
• To receive periodic reports from the Executive Management on the effectiveness of automated information and communication systems.
• To periodically ensure the effectiveness and adequacy of the internal control systems in force in the company.
• To ensure that appropriate risk management and measurement systems are in place, by means of identifying the range of risks that the company may face and establishing a risk-sensitive environment at the company level and transparently communicating with stakeholders and the company's related parties.

d) Delegation of authorities

• To form specialized committees emanating from the Board of Directors, with a charter for each committee, which clarifies the term of the Committee, its powers and responsibilities, and the manner of the Board's oversight thereof. Committees formation decision shall also include naming members of each committee and defining their duties, rights and functions. In addition, the Board of Directors shall evaluate the performance and works of these committees and their key members.
• To determine the powers delegated to the executive management, the decision-making procedures and the duration of the mandate. The Executive Directorate submits periodic reports on its practices of the delegated authority.

e) Contracting

• To approve the capital projects of the company.
• To ratify the major contracts concluded by the Company in the ordinary course of business as determined by the Company's regulations.

f) Appointments

• To appoint or dismiss the Chief Executive Officer, senior executives and department managers.
• To approve the appointment and dismissal of the Board Secretary, Internal Audit Officer and Risk Officer.
• To submit a recommendation for the nomination of the External Auditor to the General Assembly for approval, based on the recommendation of the Audit Committee.

The Articles of Association of the Company and the Charter of the Board of Directors shall specify all matters relating to the organization of the activities of the Board of Directors, including meetings, quorum, voting and writing down the minutes of meetings.

The meeting of the Board of Directors shall be held whenever it is needed. The number of meetings of the Board of Directors shall not be less than six meetings per year and not less than one meeting every quarter. The Board of Directors decisions indicated within the minutes of meetings shall be mandatory and become part of the Company's records.

The Chairman of the Board of Directors shall consult with the Chief Executive Office on the important topics proposed to be included in the agenda of the Board meetings. Members of the Board of Directors shall be provided with adequate data and information well in advance of Board meetings to take the necessary decisions. The Board Secretary shall also record the discussions of the Board of Directors, the suggestions of the Board members and the results of any voting conducted during the Board meeting. The responsibilities of the Chairman and members of the Board of Directors shall be specified in writing and shall not contradict with the relevant legislation and regulations.

The Chairman of the Board of Directors shall be responsible for the proper functioning of the Board of Directors in an appropriate and effective manner and ensuring complete and correct information is provided to the Board members and independent members in a timely manner. The duties and responsibilities of the Chairman of the Board of Directors shall include, but not limited to, the following:

• To ensure that the Board of Directors discusses the key topics effectively and in a timely manner.
• To represent the company before third parties as provided for in the company's Articles of Association.
• To encourage all Board members to participate fully and effectively in managing the affairs of the Board of Directors to ensure that the Board's practices are in the interest of the company.
• To encourage constructive relationships and effective participation between the Board of Directors and the Executive Management.
• To create a culture that encourages constructive criticism on issues of different view points among the Board members.

The company shall have a Board Secretary from among the employees of the company. His main role is to assist the Board of Directors and the Chairman of the Board of Directors in managing the Board of Directors affairs.

The duties and responsibilities of the Board Secretary should be explained in detail in the job description and included in the Board of Directors' Charter. Responsibilities of the Board Secretary include, but not limited to, the following:

a) To ensure that the Board's minutes of meeting are prepared in a timely manner in conjunction with the Chairman of the Board and the Chief Executive Officer.

b) To organize and coordinate the meetings of the Board of Directors and shareholders.

c) To keep the minutes and drafts of the Board meetings.

d) To execute any instructions issued by the Board of Directors.

e) To prepare the invitation letters to the Board Members.

f) To ensure compliance with all legal requirements in relation to the affairs of the Board of Directors.

The Board of Directors shall form permanent and provisional specialized committees, in order to enable the Board of Directors to carry out its duties and responsibilities effectively in accordance with the Company's needs. The committees are divided into the following:

a. Permanent committees:

Permanent committees are the committees that should be established by the Board of Directors on need-to-have basis. The formation decision shall specify the duration and composition of each committee:

• Audit Committee.
• Risk Committee.
• Nomination and Remuneration Committee.

b. Provisional Committees:

Provisional committees are the committees established by the Board of Directors to consider a particular topic or objective. The committees’ formation decision shall also define term and composition.

The Board of Directors shall take into account the following when forming Board committees:

a) The formation of Board committees shall be in accordance with the internal regulations established by the Board of Directors. The formation decision shall specify the committee's duties, term, mode of functioning, the powers granted to it during the term of service and the manner of the Board's oversight thereof. The Committee shall report, to Board of Directors, its findings, conclusions or decisions in a transparent manner.

b) The Board of Directors shall approve the proposed amendments resulting from the annual review conducted by the Board committees.

c) The Board of Directors shall approve all regulations, procedures and charters for all the permanent Board committees, and follow up the activities of the committees on a regular basis to ensure their performance of the tasks entrusted to them.

d) The committees are responsible for their actions before the Board of Directors, but this does not exempt the Board of Directors from responsibility for the activities of these committees.

e) To appoint a sufficient number of members of the Board of Directors in the formed committees.

The existence of a risk committee is one of the key characteristics of the application of good governance. This committee develops risk management policies and regulations in line with the Company's risk appetite, identifying internal or external factors that have led to or lead to such risks and developing ways to address them.

In this regard, sound risk management must have effective internal control systems that provide oversight over the integrity of financial statements, the efficiency of the business of the Company and the assessment of compliance with the regulatory controls.

The Committee shall be composed of three members under the following conditions:

• Its members shall be members of the Board of Directors.
• The Chairman of the Committee shall be a non-executive board member.
• The Chairman of the Board of Directors may not be a member of this Committee.

Duties and responsibilities related to risk management and follow-up:

• To prepare and review risk management strategies and policies before they are approved by the Board of Directors and ensure that these strategies and policies are implemented and that they are commensurate with the nature and size of the company's activities.
• To ensure adequate resources and systems are available for risk management.
• To evaluate the systems and mechanisms for identifying, measuring and monitoring the various types of risks that the Company may face in order to identify deficiencies.
• To assist the Board of Directors in identifying and evaluating the acceptable level of risk in the Company and ensuring that the Company does not exceed this level of risk once approved by the Board of Directors.
• To review the organizational structure of the Risk Unit and make recommendations thereon before being approved by the Board of Directors.
• To ensure that the Risk Unit's employees are independent from the activities that result in the company being exposed to risks.
• To ensure that the Risk Unit's employees have a full understanding of the risks surrounding the company and seek to increase the employees' awareness and understanding of the culture of risk.
• To prepare periodic reports on the nature of the risks to which the Company is exposed and submit these reports to the Board of Directors of the Company.
• To review the issues raised by the related the Audit Committee, that may affect the Company's risk management.

In the event of any conflict between the recommendations of the Risk Committee and the Board of Directors' decisions, including when the Board of Directors refuses to follow the Committee's recommendations, the Board of Directors shall incorporate in the Corporate Governance Report included in the Company's Annual Report a statement clearly detailing these recommendations and the reason or reasons for the Board's decision not to comply with them.

The Committee shall meet on a regular basis at least once every three months (four times a year) in conjunction with the meetings of the Board of Directors, as well as when necessary. The Committee's Charter shall clarify the powers and regulations of its meetings and documentation of its activities.

The existence of an internal Audit Committee is one of the main characteristics of the application of the rules of good governance. The committee shall perform the following to establish a culture of commitment within the company by ensuring the soundness and integrity of the financial reports of the company and ensure the adequacy and effectiveness of the internal control systems applied in the company.

The Committee shall be composed of three members under the following conditions:

1. Its members shall be members of the Board of Directors.
2. At least one of its members shall be an independent member.
3. At least one member of the committee shall have practical qualifications and / or hands-on experience in accounting and financial fields.
4. The Chairman of the Board of Directors or executive Board members may not be a member of this Committee.

1. To review the periodic financial statements before presenting them to the Board of Directors and provide an opinion and recommendation thereon to the Board of Directors, in order to ensure the fairness and transparency of the financial reports.
2. To recommend to the Board of Directors the appointment, reappointment or change of the external auditors as well as their fees, taking into account, when recommending the appointment, to ensure their independence and review their engagement letters.
3. To monitor the activities of the external auditors and ensure that they do not provide services to the company except the required audit services.
4. To study the external auditors' observations on the company's financial statements and follow up on that relevant action plan.
5. To study the accounting policies in place and express opinions and recommendation to the Board of Directors.
6. To assess the adequacy of the internal control systems applied within the company and to prepare a report containing the opinion and recommendations of the committee in this regard.
7. To oversee the internal audit unit of the company in order to ensure its effectiveness in carrying out the duties and tasks specified by the Board of Directors.
8. To recommend the appointment, transfer, dismissal and performance evaluation of the internal audit officer as well as the performance of the internal audit unit.
9. To review and approve the audit plans proposed by the internal auditor and express their observations thereon.
10. To review the results of the internal audit reports and ensure that the appropriate corrective action has been taken on the observations mentioned in the reports.
11. To review the results of the reports of the regulatory bodies and ensure that the necessary procedures have been taken in this regard.
12. To ensure that the company complies with relevant laws, policies, regulations and instructions.

The Committee shall hold four meetings per year as well as when necessary. The Committee's Charter shall clarify the powers and regulations of its meetings and documentation of its activities.

The Nomination and Remuneration Committee aims to assist the Board of Directors in fulfilling its supervisory responsibilities related to the nomination and independence of Board members and the integrity of the remuneration, benefits, incentives and salaries strategy of the Company.

The Committee shall be composed of three members under the following conditions:

1. Its members shall be members of the Board of Directors.
2. The Chairman of the Committee shall be a non-executive board member.
3. At least one of its members shall be an independent member.

a. To recommend nomination and re-nomination to the Board of Directors and Executive Management.

b. To establish a clear policy for the remuneration of the members of the Board and the Executive Management, with annual review of the skills required for Board membership. It shall also attract applicants to occupy executive positions as needed, study and review such applications, and identify the various segments of remuneration to be awarded to employees; such as the fixed bonus segment, the performance bonus segment, the shares bonus segment and the end of service bonus segment.

c. To develop job descriptions for executive members, non-executive and independent members.

d. To ensure that the independent board member's independence is not breached.

e. To prepare a detailed annual report on all the remuneration granted to the members of the Board of Directors and the Executive Management, whether amounts, interests or benefits of any nature or name, provided that this report is submitted to the company's General Assembly for approval and to be read by the Chairman of the Board. The Company shall follow the standards of accuracy and transparency when preparing the remuneration report, so that all remuneration given, whether directly or indirectly, shall be disclosed and any attempt to conceal or mislead is avoided.

f. Annual review of required skills for Board membership.

g. To ensure that anyone wishing to run for membership of the Board of Directors or Executive Management has the following:

- Academic and scientific qualifications consistent with the candidate field of employment.

- Appropriate professional experience in a field consistent with the nature of the company's work and the candidate's job.

- Technical, leadership and administrative capabilities that allow him to work independently, expedite the decision making and understand all technical requirements and developments related to the progress of work.

- To develop job descriptions for executive members, non-executive and independent members.

h. To propose the nomination and re-nomination of independent members and ensure that the independent Board member's independence is not breached.

i. To ensure that new board members receive induction programs to ensure that they have a proper understanding of the company's progress of activities and operations, and that development opportunities and ongoing education are available to all members.

j. To conduct the annual evaluation of the performance of the Board of Directors, the members of the Board of Directors and the Board Committees and submit the performance evaluation report to the Board.

k. The Nomination and Remuneration Committee may seek the assistance of consultants from an independent advisory body whom the Committee may deem appropriate to carry out its functions or some of its functions. The Company shall bear the relevant consultancy fees.

l. To perform any duties assigned to it by the Company's Board of Directors.

a. To establish a clear remuneration policy for the Board members and senior executives, taking into account compliance with the remuneration granting policy's criteria set out below.

b. To identify the various segments of remuneration to be awarded to employees; such as the fixed bonus segment, the performance bonus segment, the shares bonus segment and the end of service bonus segment.

c. To ensure that the remuneration is awarded as set forth in the policy.

d. To review the remuneration policy annually and evaluate its effectiveness in achieving the desired objectives of attracting the human cadres and maintaining the professional staff and technical capabilities necessary to promote the position of the company.

e. To prepare a detailed annual report on all the remuneration granted to the members of the Board of Directors and the Executive Management, whether amounts, interests or benefits of any nature or name, provided that this report is submitted to the company's General Assembly for approval.

The Nomination and Remuneration Committee shall meet on a regular basis at least once a year and whenever necessary. The Committee's Charter shall clarify the powers and regulations of its meetings and documentation of its activities.

The Executive Management of the company is the group of officials assigned to manage the day-to-day operations of the company (i.e., the Chief Executive Officer and the Executive Managers).

Members of the Company's Executive management must have high level professional knowledge and experience as well as personal characteristics that enable them to perform their responsibilities in accordance with the highest levels of integrity and professionalism.

The Executive Management should also be fully aware of its role in governance, in addition to understanding its functions and responsibilities to implement the legal requirements and instructions of the Board of Directors in a way that serves the company's interests.

The Executive Management is responsible for the optimal performance of the businesses, while ensuring that the information relevant to the operational activities are credible, complete and available to the Board of Directors on request and in a timely manner.

The main role of Executive Management is as follows:

• To implement the company's strategic plans and associated internal policies and regulations and ensure their adequacy and effectiveness.
• To be fully responsible for the overall performance of the company and the results of its operations, through the establishment of an organizational structure approved by the Board of Directors, which defines the duties, responsibilities, powers and administrative sequences of activities and works while avoiding any conflicts of interest.

The following are some of the duties and responsibilities be adhered to by the Executive Management in light of the powers and authorities vested in it by the Board of Directors:

1. To implement all internal policies, regulations and procedures of the Company, which have been approved by the Board of Directors.
2. To implement the annual plans and strategy approved by the Board of Directors.
3. To prepare periodic reports (financial and non-financial) on the progress of the company's activity in light of the company's strategic plans and objectives and present these reports to the Board of Directors.
4. To establish an integrated accounting system that keeps books, records and accounts that accurately and thoroughly reflect the financial statements and income accounts, in order to maintain the company's assets and prepare the financial statements in accordance with international accounting standards.
5. To manage daily works and activity, as well as to manage the company's resources in an optimal manner, and seek to maximize profits and reduce expenditures, in line with the objectives and strategy of the company.
6. To participate actively in building and developing a culture of ethical values within the company.
7. To develop internal control and risk management systems, ensure the effectiveness and adequacy of such systems, and ensure adherence to the risk appetite approved by the Board of Directors.
8. To provide the appropriate procedures to ensure that all compliance requirements are met.
9. To implement all the recommendations issued by the Board of Directors in respect of the Executive Management.

The executive management shall draw up a charter for the permanent administrative committees of the company, if any, and lay down the bases and criteria for selecting the members of these committees.

The Board of Directors has the ability to understand and analyze the nature and volume of the risks facing the Company's activities to eliminate risks as much as possible, as well as to set the appropriate procedure for dealing with them, including identifying the internal or external factors that have led or lead to the occurrence of such risks and the development of countermeasures.

The Company's organizational structure (approved by the Board of Directors) has an independent risk management unit reporting to the Board of Directors. Risk management and follow-up works mainly to measure, monitor and limit all types of risks facing the company, as follows:

1. To develop effective systems and procedures for risk management in order to be able to perform its main tasks of measuring and following up all types of risks to which the company is exposed. This process is carried out continuously and periodically reviewed. In addition, the systems and procedures are amended as needed.
2. To develop periodic reporting systems as they are an important tool in risk monitoring and reduction of occurrence.
3. To ensure the complete independence of risk management and follow-up personnel through their direct reporting to the Board Audit Committee, as well as the considerable powers and authorities they have, except for the financial powers and authorities, in order to carry out their tasks to the fullest.
4. To provide risk management and follow-up with qualified staff with professional competencies and technical capabilities.
5. To review deals and transactions proposed by the Company with related parties and make appropriate recommendations thereon to the Audit and Risk Committees.

The organizational structure of the Company has an independent internal audit unit reporting to the Board Audit Committee. The Unit Manager shall be appointed directly by the Board of Directors based on a recommendation of nomination from the Board Audit Committee.

The Internal Audit Unit works primarily to ensure the adequacy of the internal control systems and maintain the financial integrity of the company, the accuracy of its data as well as the efficiency of its operations in various aspects. The Board of Directors shall determine the duties and responsibilities of the Internal Audit Unit.

The Internal Audit Unit prepares a report that includes a review and assessment of the Company's internal control systems, provided that the report includes:

1. The procedures of supervising and overseeing the efficiency and effectiveness of the internal control systems necessary to protect the Company's assets, the correctness of the financial statements and the efficiency of its administrative, financial and accounting operations.
2. Comparison of the evolution of risk factors in the company and the existing systems to assess the efficiency of the Company's day-to-day businesses and to cope with the unexpected changes in the market.
3. Evaluation of the performance of the Executive Management in terms of the application of the internal control systems.
4. Reasons for failure to apply the internal controls, the poor application of the same or emergency situations that have affected or may affect the financial performance of the company and the procedure followed by the company in dealing with the failure to apply the internal controls.

The procedures for nominating the external auditor shall be in accordance with the provisions of the Companies Law and the Company's Articles of Association. The external auditor must be independent, qualified and appointed according to the recommendations of the Board Audit Committee. The External Auditor provides the Board of Directors and the shareholders with an impartial and objective assurance that the financial statements have been prepared in accordance with the applicable laws and regulations and in accordance with the International Financial Reporting Standards (IFRS), in addition to verifying their accuracy in highlighting the company's financial performance and position.

The External Auditor shall be fully independent of the Company and the members of the Board of Directors and shall not have any conflict of interest that may affect their relationship with the Company. The External Auditor shall attend the Ordinary General Meeting of the Company to discuss their annual report and to answer any questions or concerns. They shall also be invited to attend the quarterly meetings of the Board Audit Committee to discuss the financial statements before submitting the same to the Board of Directors for the approval.

The external auditor shall be accountable to the shareholders and be committed to the company to carry out the audit task with all diligence, care and professionalism.

The Company expects Board members and employees of the company to perform their works to the fullest as much as possible and to act in a manner that shall showcase and enhance the Company's image and reputation. Accordingly, the Company is committed to establishing a code of professional conduct and ethical values that includes the standards of conduct and behavior to be followed by each board member, officer and employee when dealing with the stakeholders in the Company and the public.

The Code of professional conduct is based on a set of parameters and criteria to be followed by Board members, employees and other parties dealing with the Company. Such criteria include the following:

1. To establish the principle of the compliance by each Board member and senior executives (i.e., the Chief Executive Officer and the Executive Managers) with all laws and regulations, and commitment to what is in the best interest of the company and the shareholders and other stakeholders, not the interest of a specific group only.
2. The member of the board of directors or the executive management shall not use their position to achieve personal interest or any personal goals for themselves or any other person.
3. Not to exploit the assets and resources of the company to achieve personal interests and seek to use them in the best way to achieve the objectives of the company.
4. The members of the Board of Directors and the employees shall not exploit the information they have received through their position for their personal benefit. Prohibition of disclosure of information and data pertaining to the company except in cases where it is permitted for disclosure or according to legal requirements.
5. The commitment of the board member, senior executives and employees to disclose any common interests or cases involving conflicts of interest with the Company, whether directly or indirectly.
6.  Urge employees to report their doubts about any improper practices or suspicious matters in financial reports, internal control systems or other matters.
7. The commitment to undertake an independent and fair investigation into cases of staff reporting their doubts about any improper practices while ensuring that good faith reporter is kept anonymous to protect them from any adverse reaction or damage that may result from their reporting of such practices.

The Company shall apply the policies and regulations required by the Corporate Governance Rules as follows:

1. Conflict of interest policy
2. Disclosure and transparency policy
3. Related party transactions policy
4. Protection of stakeholders' rights policy
5. Protection of shareholders' rights policy
6. Social responsibility policy
7. The training policy of the Board of Directors and the Executive Management.
8. Performance assessment policy for the Board of Directors and the members of the Board and the Executive Management
9. Risk committee policy
10. Internal audit policy
11. Contracts and tenders awarding policy
12. Nomination and remuneration policy.
13. Protection of shareholders' rights policy

The Company has a Board approved conflict of interest policy. This policy contains clear examples of conflicts of interest and how to deal with and address them. For example:

1. A member of the Board of Directors may not, without a permit from the General Assembly renewed every year, have any interest in the works and contracts made for the Company's account, except in cases where the member of the Board of Directors is the best bidder.
2. The Board member shall disclose to the Board of Directors his personal interest in the works and contracts that are made for the company's account. Such disclosure shall be recorded in the minutes of the meeting. The disclosing Board member may not participate in voting on the relevant decision. The Chairman of the Board of Directors shall inform the General Assembly when convened of the works and contracts in which a member of the Board of Directors has a personal interest. This disclosure shall be accompanied by a special report from the external auditor.
3. A member of the Board of Directors may not, without a permit from the General Assembly renewed every year, participate in any activity competing the Company or trade in one of the Company's fields of activity.
4. The Company may not extend any credit facilities to its Board members or guarantee any loan concluded by any of them with third party.
5. The Board Secretary shall keep a record of disclosures of Board members and senior executives of cases of conflict of interest.

The company has developed a disclosure and transparency system that complies with the provisions of the Companies Law, which defines aspects and areas of disclosure, in order to provide all basic data in a timely, regular and accurate manner.

The disclosure policy clarifies the information and data disclosed through the appropriate means of disclosure, whether it is the daily press or the Company's annual report or website.

Information disclosures includes but are not limited to the following:

1. Financial reports and operating results.
2. The company's future plan, strategy and objectives.
3. Amendments to the Articles of Association, the Company's incorporation provisions or the purposes of the Company.
4. Names of the members of the Board of Directors and the Executive Management.
5. Composition of the Board of Directors and the Board Committees.
6. Brief description of the authorities of the key Board committees and the duties assigned to them.
7. The Board approved governance manual, pointing put the distribution of powers and functions between the Executive Management and the Board of Directors, and the reports prepared by the Board Audit Committee on the requirements of governance.
8. Corporate social responsibility policy and activities.

The Company has developed a policy for related party transactions, which aims to provide a framework for the related parties' transactions with the Company. This policy sets forth the necessary rules and controls to deal with the related parties in a transparent and purely commercial manner, and to ensure that dealing with the members of the Board of Directors and the related parties is carried out under the same conditions adopted by the Company when dealing with various stakeholders, without any discrimination or preferential conditions.

The provisions of this policy shall apply to all related parties defined in accordance with IAS 24; such as Chairman and members of the Board of Directors, members of the Senior Executive Management, and the companies in which any of such members owns a controlling interest, and parent, subsidiary, sister or allied companies. And applies also to:

1. Internal audit activities.
2. Activities of business continuity plan.
3. Certain activities relating to information systems.

This policy regulates the company's relations with all stakeholders including shareholders, employees, suppliers, customers, etc., to preserve the rights of the company and all these parties. The laws in force in the State of Kuwait and the contracts are the main source for determining the rights and duties of all stakeholders. The Company shall specify and clarify such contracts, the rights and obligations of the contractors and the way to perform the same, the consequences of default in performance, limits of liability and the manner of settlement of disputes that may arise as a result of the execution of these contracts, in a way that guarantees the protection of the company's related parties.

The Company seeks to incorporate a full coverage of all legal aspects within its contracts and agreements concluded with the stakeholders, with a view to keep the company and the stakeholders away from any potential disputes.

Protection of stakeholders' rights policy includes:

1. Confirmation that dealing with Board members and related parties is in accordance with the conditions applied by the Company for various stakeholders without any discrimination or preferential conditions.
2. Clarifying the procedures that will be followed in the event of breach by any of the parties of its obligations, as well as the procedures whereby compensation will be paid. Confirmation that the contracts concluded between the stakeholders and the company include such procedures and explain them in detail.
3. Providing mechanisms for compensating stakeholders in the event of violation of their rights set forth in the regulations and protected by contracts.
4. Providing mechanisms that demonstrate how the company can establish good relations with customers and suppliers and maintain the confidentiality of their information.
5. Clarifying the mechanisms of solving complaints or disputes that may arise between the company and stakeholders.
6. For solving the disputes, the Company shall abide by the relevant methods mentioned in the signed contracts whenever possible.

The Company's Articles of Association and internal regulations shall include the procedures and controls necessary to ensure that shareholders exercise their rights in a manner not inconsistent with applicable laws and regulations.

This policy aims to ensure that the company achieves the following:

1. Protect the shareholders' rights guaranteed by the Companies Law in line with the Company's Articles of Association.
2. Provide accurate and timely information regarding the company including the financial position.
3. Encourage shareholders to participate effectively in the General Assembly meetings.
4. Hold the members of the Board or the Executive Management accountable, and file liability claim in the event of failure to perform the tasks assigned to them.
5. Establish the necessary controls, policies and procedures to effectively implement this policy.

The company has developed a social responsibility policy with a view to achieve the following:

1. To achieve sustainable development for the society in general and for the company's employees in particular.
2. To achieve balance between the goals of the company and the goals that the society seeks to achieve, and seek to enhance the living, social and economic conditions of the society in which the Company operates.
3. To increase the loyalty of employees and customers, especially with the fact that customers prefer companies interested in social responsibility.
4. To help the company to attract, recruit, develop and maintain its human resources.
5. To contribute to the company's long-term vitality by promoting the sustainability of natural resources and environmental services.
6. To adhere to the international standards of good implementation of the social responsibility as a long-term investment that benefits the company and the society with all its components.

The company has developed a policy for the training of members of the Board of Directors and the Executive Management, which aims at developing the mechanisms that enable the members of both the Board of Directors and the Executive Management to receive continuous training programs and courses to provide them with appropriate understanding and knowledge of all subjects related to the Company's activities.

These programs include, at a minimum:

1. The Company's strategy and objectives.
2. Financial and operational aspects of all the company's activities.
3. Legal and regulatory obligations of the company.
4. Responsibilities and tasks assigned to them, as well as the powers and rights available to them.
5. The role of the Board Committees.

The Company has developed a policy aimed at establishing systems and mechanisms to evaluate the performance of the members of the Board of Directors and the Executive Management on a regular basis by developing a set of performance measurement indicators linked to the extent to which the Company's strategic objectives are achieved, risk management quality and adequacy of internal controls systems. Performance assessment policy include the following:

1. To set objective performance indicators for the Board of Directors as a whole and the contribution of each Board member and each Board committee, and to evaluate the performance of the Executive managers annually.
2. To identify strengths and weaknesses and propose remedies.

The company has developed a risk management policy to add the highest possible value to all of the company's activities. Risk management should be a continuous and evolving process that is applied in all strategic aspects of the company and throughout the implementation of its strategy. All risks surrounding the Company's past, present or especially future activities must be addressed theoretically. It should also be integrated into the company culture through a policy and program managed by senior management.

Risks are assessed by analyzing, identifying, describing and assessing the risks that the Company may face.

The company has developed a social responsibility policy with a view to achieve the following:

1. To identify the extent of compliance with the internal control policies and procedures.
2. To examine and evaluate the consistent application of the accounting, financial and operational control by evaluating the various control systems.
3. To verify the efficiency and effectiveness of performance within the company's departments and divisions.
4. To identify the extent of employees' adherence to policies, plans, procedures, laws and regulations that have a significant effect on the company's business.
5. To determine the appropriateness of the accounting procedures for assets and the adequacy of the protection and safety provided for such assets.
6. To verify the reliability and integrity of the information and to examine the means used to identify, measure, categorize and report such information.
7. To assess the adequacy and rationalized use of the company's resources and report deviations from scientific standards, if any, analyzed and communicated the same to those responsible for making corrective decisions.
8. To evaluate the quality of performance related to the implementation of specific responsibilities.
9. Recommend operating enhancements.

The company has established the contracts and tenders awarding policy in order to regulate the relationship between the company and the stakeholders and to specify the relevant systems and procedures, in order to achieve the following:

1. To guarantee that the contracts and agreements concluded by the Company include and outline in detail the procedures to be followed for the awarding of such contracts and deals.
2. To ensure the continuous application of and compliance with the standards.
3. To establish the necessary controls, policies and procedures to effectively implement this policy.

The Company has established a nomination and remuneration policy with a view to set criteria to assist the Board of Directors in performing the following:

1. To appoint or reappointment of the Board members.
2. To develop job descriptions for executive, non-executive and independent members.
3. To assess the performance of the Board members and the Board of Directors as a whole.
4. To form the Board of Directors, taking into consideration to have the required diversity and balance of experience, knowledge and skills
5. To set remuneration for the members of the Board of Directors and the Executive Management.

The company has developed a protection of shareholders' rights policy in order to ensure that the company achieves the following:

1. To protect all shareholders 'rights including minority shareholders' rights.
2. Provide accurate and timely information regarding the company including the financial position and major shareholders.
3. To encourage shareholders to participate effectively in the General Assembly meetings and grant them their rights in line with the company's Articles of Association and the prevailing laws and regulations, including the Companies Law.
4. To provide disclosures to shareholders, regulatory bodies and the public in a timely manner, as per the required by various regulatory bodies and relevant laws.
5. To provide appropriate means to enable shareholders and stakeholders to report cases where the company may have infringed their rights and to take the necessary corrective action as required.
6. To protect shareholders' capital against any misuse by the company's managers, board members or major shareholders.
7. Establish the necessary controls, policies and procedures to effectively implement this policy.