Saudi Basic Industries Corporation (SABIC)
Corporate Governance Regulations
Approved by virtue of SABIC Board Resolution No. 07/190/2013
dated 26/09/2013 and updated in 27/04/2016
Chemistry That Matters
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Contents
Introduction: Corporation Profile
1.
2.
3.
4.
5.
6.
7.
8.
9.
Name and Legal Status
Head Office and Commercial Registration
Capital
Legal Term
Activities
Business Group
SABIC Vision
SABIC Mission
SABIC Priorities
Chapter 1: Preliminary Provisions
Article 1: Preamble
Article 2: Definitions
Chapter 2: Rights of Shareholders and the General Assembly
Article (1): General Rights of Shareholders
Article (2): Shareholders Rights Related to General Assembly
Article (3): Voting Rights
Article (4): Dividends Rights of Shareholders
Article (5): Shareholders’ Rights in Corporation Assets
Chapter 3: Board of Directors
Article (1): Formation of the Board
Article (2): Main Functions of Board of Directors
Article (3): Responsibilities of Board of Directors
Article (4): Authorities of Board of Directors
Article (5): Board of Directors Meetings and Agenda
Article (6): Remunerations and Compensations of Board
Members
Article (7): Committees of the Board and Their Independence
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Chapter 4: Policies, Disclosure and Transparency
Article (1): Dividends Distribution Policy
Article (2): Conflict of Interests Policy
Article (3): Protection Policy of Corporation Related Parties
Article (4): Non-Circulation Policy
Article (5): Information Non-Disclosure Policy
Article (6): Disclosure Policy and Transparency
Article (7): Disclosure in Board of Directors Report
Chapter 5: Advertising Instructions and Templates
Article (1): General Instructions for Advertising
Article (2): Examples of Major Developments to be
Declared
Article (3): General Instructions for Announcing the Financial
Results
Article (4): Templates of Several Corporation Advertisements
Chapter 6: Corporation Code of Ethics
Article (1): Corporation Values
Article (2): Rules of Conduct and Code of Ethics
Article (3): The Consequences of Abiding by the Code of Ethics
Chapter 7: Closing Provisions
Article (1): Publication and Entry into Force
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Introduction: Corporation Profile
Article 1: Name and Legal Status
Saudi Basic Industries Corporation (SABIC), a Saudi joint stock
corporation incorporated by virtue of the royal decree no. (M/66) in
13/09/1396h (08/09/1976g).
Article 2: Head Office and Commercial Registration
The Corporation was registered in the Commercial Registry at the
Ministry of Commerce and Industry under the number (1010010813),
and has its head office in Riyadh, the Kingdom of Saudi Arabia. The
Corporation is entitled to establish other branches inside and outside
the Kingdom, if necessary.
Article 3: Capital
The capital of the Corporation is thirty billion Saudi Riyals (SR
30,000,000,000), divided into three billion (3,000,000,000) shares,
each having a stated value of ten Saudi Riyals (SR 10).
Article 4: Legal Term
The Duration of the Corporation is ninety-nine years (99),
commencing from the date of issuance of the Royal Decree
authorizing its incorporation. Such duration may be extended for
similar or shorter period(s) by a resolution of the Extraordinary
General Meeting.
Article 5: Activities
The Objectives of the Corporation shall be:
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a. Execution of petrochemical, fertilizer and other hydrocarbon
-based industries.
b. Construction of iron, steel and aluminum industries.
c. Incorporating other industries.
d. Execution of projects necessary to supply the Corporation with
its raw material requirements.
e. Marketing industrial products inside and outside the Kingdom.
The Corporation may, for realization of its objectives, carry
out for its own account or third parties' account, all industrial,
financial and commercial activities of whatever kind, whether
related to real estate or chattels. Moreover, the Corporation
may incorporate other companies, and may participate with
other Saudi or foreign companies, organizations or
establishments conducting activities of similar nature, or
conducting activities that may assist in realizing its objectives,
or purchase all or part of any of them.
Article 6: Business Group
The Corporation has a business group called the “Affiliates”, where
SABIC acquires, directly or indirectly, an investment of more than
50% of the capital, or have active administrative control on them. The
following is a list of the affiliates and the acquired percentage:
• SABIC Industrial Investments Company (SIIC) and its affiliates
(100%)
• SABIC Luxemburg S. A. R. L. and its affiliates (100%)
• Arabian Petrochemical Company (PETROKEMYA) and its
affiliates (100%)
• SABIC Iron and Steel Company (HADEED) (100%)
• SABIC SUKUK Company (SUKUK) (100%)
• SABIC Industrial Catalyst Company (SABCAT) (100%)
• Saudi Carbon Fiber Company (SCFC) (100%)
• Saudi European Petrochemical Company (IBN ZAHR) (80%)
• United JUBAIL Petrochemical Companies (UNITED) (75%)
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• National Chemical Fertilizers Company (IBN ALBAYTAR)
(71.05%)
• National Industrial Gas Company (GAS) (70%)
• Yanbu National Petrochemical Company (YANSAB) (51.95%)
• Arabian Industrial Fiber Company (IBN RUSHD) (48.07%)
• Saudi Methanol Company (AR-RAZI) (50%)
• JUBAIL Fertilizer Company (AL-BAYRONI) (50%)
• Saudi Yanbu Petrochemicals Company (YANPET) (50%)
• National Methanol Company (IBN SINA) (50%)
• Saudi Petrochemical Company (SADAF) (50%)
• Eastern Petrochemical Company (SHARQ) (50%)
• AL-JUBAIL Petrochemical Company (KEMYA) (50%)
• Saudi Japanese Acrylonitrile Company (SHROUQ) (50%)
• Saudi Methyl Acrylate (SAMAC) (50%)
• Saudi Arabian Fertilizer Company (SAFCO) (42.99%)
• Saudi KAYAN Petrochemical Company (SAUDI KAYAN) (35%)
Article 7: SABIC Vision
To be the preferred world leader in chemicals.
Article 8: SABIC Mission
To responsibly provide quality products and services through
innovation, learning and operational excellence, while sustaining
maximum value for our stakeholders.
Article 9: SABIC Priorities
In keeping with its pioneering position and to ensure that its
operations reach up to the highest global standards, SABIC has
drawn out a set of major priorities in all its activities and operations
including the following:
• Safety, Health and Environment
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Ever since its formation, SABIC has been giving due priority to
health, safety and environment in all its industrial, marketing
and technical operations as a relief valve for its production,
marketing and technical operations. SABIC has achieved
millions of continuous work hours without lost time or disabling
injuries. It has also achieved optimum levels in preventing
industrial injuries. SABIC affiliates have won several safety
awards and distinctions from specialized local, regional and
global organizations.
• Technology and Innovation
Since its establishment, SABIC has been keen on setting up of
quality labs at its industrial complexes and technical centers all
over the world. Undoubtedly, the key to the great success
achieved by SABIC is attributable to its keen interest in
scientific research, continuous development of its research
abilities, and upgrading of production technologies.
SABIC technology centers have successfully filed hundreds of
patents all over the world relating to innovation and promotion
of several technologies and industrial catalysts.
• Quality
SABIC has always realized the importance of excellence in
quality in this highly competitive world. Therefore, SABIC has
focused on total quality assurance in all fields, which is the
reason behind its high competitiveness amongst major
international corporates.
SABIC gives top priority to the quality of its human resources,
which in turn reflects on its products, sales and after-sale
services, which ultimately determine customer satisfaction all
around the world.
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Assured quality is SABIC’s strongpoint in building solid,
extended, long term relationships with its partners all over the
world. The Corporation applies top quality standards at all its
affiliates and its marketing, development and technical units,
which put SABIC among major world petrochemical companies
in practically no time.
SABIC focusing on quality has been well recognized by
universities and scientific research centers. Seminars and
workshops are often held, and scientific research agreements
entered into, for attracting qualified and well-trained
manpower commensurate with its future aspirations.
• National Contribution and Corporate Social Responsibility
SABIC is well aware of the importance of contributing to social
services, helping in social development, increasing the
awareness of safety and preserving the environment. In this
regard, SABIC exerts efforts via submitting donations to legally
registered societies or officially-formed crisis-management
committees. Also, SABIC chooses the subject matter of the
incident that is related to its field of activities or interest. This is
usually performed within SABIC approved controls, policies,
procedures and budget. The Board of Directors must approve
the policies and procedures that regulate the social activities of
SABIC and affiliates.
SABIC is well aware of its social responsibilities and gives high
priority to supporting its role as a national corporation that
takes care of achieving the cultural and civilization aspects of its
community. When defining its objectives and strategies, SABIC
is keen on overlooking maximization of profits and achieving
commercial objectives in favor of integration with its
environment and abiding by high social values. Hence, SABIC
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has always worked on having deep connections with its
community and environment.
SABIC has adopted a social mission that aims at optimizing its
contributions to the social development programs. Recognizing
that this community imposes commitments and duties on it,
SABIC supports charity projects, gifted people and other
vocational and professional organizations. Moreover, SABIC
sponsors many conferences and ad hoc vocational society
programs. It also supports conferences, seminars and activities
related to regional and national strategic objectives.
SABIC also supports awareness campaigns launched in the
printed and electronic media, and participates in cultural
contests and sports activities. In addition, SABIC organizes and
finances cultural competitions, and sports activities for the
youth, in order to spread the awareness between fellow citizens
and release their creative capabilities.
Every year, SABIC extends financial support to various
community organizations and licensed charity societies. The
model example is the close cooperation with universities in
organizing academic programs and research centers, thereby
allowing Corporation/SABIC to benefit from the brains and
experts that work in them. The Corporation has entered into
strategic alliances with the universities, and gives them financial
support.
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Chapter 1: Preliminary Provisions
Article 1: Preamble
a. These regulations aim at achieving the following:
1. Direct, manage and control Corporation activities to ensure
commitment to the best practices of governance that
guarantee shareholders’ rights, stakeholders’ rights and
activation of disclosure and transparency principle to all
investors equally
2. Explain the responsibilities and powers of the Board of
Directors and its role in promoting shareholders’ rights,
preserving their interests and the transparent explanation of
the policies and procedures adopted in selecting the members
of the Board of Directors and Board committees and their
duties. This is in addition to the issuance of their
remunerations and compensations and achievement of justice
when performing the administrative duties.
3. Explain shareholders’ rights, how they obtain the
information needed for taking their investment resolutions
and explain the policies and procedures used in the
declaration and distribution of dividends.
b. The Board of Directors has developed and approved these
regulations. They are based upon Saudi Corporation Law and
its Executive Regulations, Capital Market Authority (CMA)
Bylaws (specifically Article 10/c of Corporate Governance
Regulations), the principles of SABIC Bylaws, SABIC Internal
Policies and the best practices and controls used for managing
the Corporation.
c. The information denoted in the preamble are an integral part of
these regulations.
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Board of Directors is entitled to revise and amend/add to the
regulations whenever deemed appropriate within the
framework of related rules and regulations.
Article 2: Definitions
a. The expressions and terms mentioned in these regulations shall
have the meanings set forth opposite each of them, unless it is
otherwise required by the context.
Corporation: Saudi Basic Industries Corporation (SABIC)
SABIC Articles of Association: The Articles of Association
issued by virtue of the Royal Decree no. (m/66) in 13/09/1396h
(06/09/1976g) and the amendments thereof;
Affiliate: Any other
Corporation/SABIC.
corporation
controlled
by
the
Regulations for Companies/Corporate Regulations/ Law of
Companies: Issued by virtue of the Royal Decree no. (m/6) in
22/03/1385h (11/07/1965g) and its amendments and executive
regulations
Corporate Governance Regulations: Issued by Capital Market
Authority by the resolution no. 1-212-2006 in 21/10/1427h
(12/11/2006g), amended by Capital Market Authority resolution
no. 1-10-2010 in 30/03/1431h (16/03/2010g)
Capital Market Law: issued by virtue of the Royal Decree no
(m/30) in 02/06/1424h (22/08/2003g)
Authority (CMA): Capital Market Authority established
according to the Capital Market Law issued by virtue of the
Royal Decree no. (m/30) in 02/06/1424h (22/08/2003g)
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Capital Market Website: Exchange/TADAWUL electronic
website on the INTERNET
Securities Depository Center: The Securities Depository Center
of TADAWUL
Board: Board of Directors who manages Corporation’s business
to the interest of the shareholders.
Chairman: Chairman of Board of Directors of Saudi Basic
Industries Corporation (SABIC)
Member of The Board: Covers all the members of SABIC Board
of Directors assigned by The Council of Ministers (Cabinet) and
Corporation’s General Meeting
Committees: Assigned by, emanating from, appointed by the
Board of Directors (Board Committees)
Management: Executive management represented by the
Corporation’s Chief Executive Officer, Executive Vice
Presidents, Vice Presidents and other similar executive officers
Independent Member: A member of the Board of Directors who
enjoys complete independence, as stated in Corporate
Governance Regulations issued by Capital Market Authority
Non-executive director: A member of the Board of Directors
who does not have a full-time management position at the
Corporation, or who does not receive monthly or yearly salary
Senior Executive: Any natural person who manages the
Corporation and undertakes responsibility for setting and
executing strategic decisions, to include Corporation CEO, , his
Vice Presidents and the Chief Financial Officer (CFO)
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Financial Manager: Any natural person who manages the
financial affairs of any person; whether his title was financial
manager, financial comptroller or any other title
Related Party: Means the party included in the list of terms used in
CMA regulations regarding the terms of registration and enlisting
Related Person: Means the party included in the Glossary of
Defined Terms used in the CMA Regulations and Rules with
respect to senior executives, members of the Boards of Directors
or a single shareholder owning a large percentage of shares and
also with respect to a Corporation owning a large percentage of
shares
Person: Any natural or artificial person acknowledged as such
in the laws of Kingdom of Saudi Arabia
Concerned Person: The CEO, Board of Directors member,
senior executive, any shareholder who is a single shareholder
owning a large percentage of shares or any person related to one
of the above.
Minority Shareholders: Those shareholders who represent a
class of shareholders that does not control the Corporation and
hence they are unable to influence the Corporation
First-degree relatives: Father, mother, spouse and children.
Control: The power to influence the actions or decisions of
another person, directly or indirectly, jointly or severally, by
holding a percentage of 30% or more of the voting rights of a
Corporation, or the right to nominate 30% or more of the
members of the management body/team.
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Major Shareholder: any person who holding 5% or more of
Corporation shares
Date of Entitlement / Eligibility for Profits (Date of Maturity for
Distribution of Dividends): The date of the end of exchange of
the day on which the shareholders are entitled to the dividends
that should be distributed
Accumulative Voting:
Every shareholder shall have a number of votes equal to the
number of the shares he holds. The shareholder should use all
such votes for voting to one or more candidates of his choice,
provided that he shall not exceed the number of the votes he
holds, and not to repeat such votes (The Accumulative Voting
Approach is applicable after the amendment of the Articles of
Association of the Corporation,)
Stakeholders: Any person who has an interest in the
Corporation, such as shareholders, employees, creditors,
customers, suppliers and community.
Voting rights: all the voting rights attributable to the shares of a
Corporation which are exercisable at a general meeting.
Subscription right documents: certificates of rights or other
instruments entitling their bearers to subscribe to any shares or
debt instruments
Day: A workday in Kingdom of Saudi Arabia according to the
official workdays in CMA
Calendar day: Any day; workday or else
b. Unless it is otherwise required by the context, the expressions
and terms not included in these Regulations shall have the same
meanings they bear in the Corporate Governance Regulations
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issued by CMA or in Glossary of Defined Terms used in the
CMA Regulations and Rules.
Chapter 2: Rights of Shareholders and the General Meeting
a. Article 1: General Rights of Shareholders General Meeting
b. The Ordinary General Meeting shall not be valid unless
attended by shareholders representing at least fifty (50) percent
of the capital. If such quorum is not achieved in the first meeting,
a second meeting shall be called to be held within the next thirty
(30) days following the previous meeting. The second meeting
shall be valid regardless of the number of shares represented
thereat. Resolutions shall be passed by majority votes, and in
case of a tie, the Chairman’s vote shall carry (shall be the casting
vote).
c. The Extraordinary General Meeting shall be valid only if it is
attended by shareholders representing at least sixty (60) percent
of the capital. If such quorum is not achieved in the first
Meeting, a second Meeting shall be called and shall be valid if
attended by shareholders representing at least forty (40) percent
of the capital.
d. The validly composed General Meeting represents all
shareholders, and issue the resolutions within the scope of its
authorities, according to Corporation’s Articles of Association
and shall be binding to all shareholders, without exception.
e. Shareholders are entitled to discuss the issues on the agenda of
the General Meeting, and pose relevant questions to Board of
Directors members and Auditor. Board of Directors and/or
Auditor shall answer such questions to the limit that does not
jeopardize Corporation’s interests.
f. The issues to be discussed by General Meeting shall be
accompanied with sufficient information to help shareholders
take their decisions.
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g. Shareholders are entitled to view the minutes of the General
Meeting, and the Corporation shall provide CMA with a copy of
the minutes within 10 workdays of the date of meeting.
h. The Corporation shall announce the results of the General
Meeting as soon as it is finished on the Capital Market website.
Article 2: Shareholders Rights related to General Meeting
a. A General Meeting shall convene once a year at least within the
b.
c.
d.
e.
six months following the end of the Corporation’s financial year.
The Board of Directors may call for the General Meeting to
convene whenever the Board deems it appropriate. . The Board
of Directors shall also invite a General Meeting to convene
pursuant to a request of the auditor or a number of shareholders
whose shareholdings represent at least 5% of the equity share
capital.
The Board of Directors shall specify the date, venue, and agenda
of the General Meeting at least 20 days prior to the date the
meeting.; The invitation for the meeting shall be
announced/posted in the CMA website, the Corporation’s
website and in two newspapers of voluminous distribution in the
Kingdom.
Arrangements shall be made for facilitating the participation of
the greatest number of shareholders in the General Meeting,
including, inter alia, choice of the appropriate place and time.
In preparing the General Meetings’ agenda, the Board of
Directors shall take into consideration matters the
Shareholders require to be listed therein. The; Shareholders
holding not less than 5% of the Corporation’s shares are entitled
to add one or more items to the agenda upon its preparation.
Article 3: Voting Rights
a. Every shareholder holding 20 shares is entitled to attend the
General Meeting, and he may appoint a representative to attend
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on his behalf provided that such appointment should be
submitted in a written proxy according to the following terms
and conditions:
1. Proxy should not be given to a Board of Directors member,
Corporation employee or any person assigned permanently
with a technical or an administrative job for the Corporation.
2. Proxy should be precise and reach the Corporation 3
workdays ahead of the date of the meeting; no proxy shall be
accepted after such date.
3. If the proxy is issued by the shareholder or his representative
to a third party, his signature must be attested by an
approved official authority.
4. In voting in the General Meeting for the nomination to the
board members, the accumulative voting method shall be
applied.
b. Shareholders must be given the opportunity for active
participation and voting in General Meetings. In addition, they
should be notified of the rules governing such meetings and
voting procedures.
c. Voting is deemed to be a fundamental right of a shareholder,
which shall in no way be denied. The Corporation must avoid
taking any action which might hamper the exercising of the
voting right; a shareholder must be afforded all possible
assistance as may facilitate the exercising of such right.
Article 4: Dividends Rights of Shareholders
a. The Corporation shall lay down a clear policy regarding
dividends distribution in a manner that may realize the interests
of both of the shareholders and the Corporation. Shareholders
shall be informed of that policy during the General Meeting
and reference thereto shall be made in the annual report of the
Board of Directors.
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b. The Board of Directors is entitled to distribute the dividends,
define the date of maturity and limit the policy of distribution to
what has been resolved in General Meeting.
c. The General Meeting shall approve the distributable dividends
and the date of distribution. These dividends, whether they be
in cash or bonus shares shall be given, as of right, to the
shareholders who are listed in the records kept at the Securities
Depository Center as they appear at the end of trading session
on the day on which the General Meeting is convened.
Article 5: Shareholders Rights in Corporation Assets
a. Shareholders shall have rights and incur liabilities in
Corporation assets equal to his holdings of Corporation shares.
b. Upon liquidation, the Corporation guarantees the equal
distribution of its net assets to its shareholders, each according
to the number of his shares in the Corporation.
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Chapter 3: Board of Directors
a. Article 1: Formation of the Board: The Corporation shall be
managed by a Board of Directors consisting of nine (9) members
with the expertise required for the business of the Corporation.
Five (5) members shall represent the Government share and
shall include the Chairman of the Board of Directors and the
Vice Chairman and Chief Executive Officer (CEO) who shall
work on a full-time basis and substitute for the Chairman in case
of his absence and shall both be appointed by the Council of
Ministers upon nomination by the Board of Directors of the
Public Investment Fund. The resolution shall specify the term of
each one of the Board members. The Ordinary General Meeting
shall appoint the remaining four (4) Board members from the
Private Sector for a renewable term of three (3) years.
b. The number of the Independent Members of the Board of
Directors shall not be less than three (3) members or one third
(1/3) of the Board members, whichever is larger, even if the
calculation of the one third results in a decimal fraction.
c. Before the end of the period of the actual Board, the nomination
of members for the new Board shall be published in a widely
spread daily newspaper in the Kingdom of Saudi Arabia
d. Any of the actual members is entitled to run for several
consecutive periods.
e. Nominations and Remunerations Committee shall review the
curriculum vitae (CV) of each nominee and send the full
documents to the Department of Companies at the Ministry of
Commerce and Industry for verification before submission to
the General Meeting for voting. In addition, a copy of the list of
nominees shall be sent to Capital Market Authority, after being
approved by relevant authority.
f. Any member of the Board of Directors must own not less than
twenty thousand (20000) shares of Corporation stocks. Such
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g.
h.
i.
j.
shares shall, within thirty days of the date of appointment,
be deposited i n TADAWUL Securities Depository Center. They
shall be set aside as a guarantee for the Board member's
liability, and shall remain non-negotiable until the General
Meeting resolves to exonerate the Board Member from
liability during his membership term. However, this clause does
not apply to the members nominated by the Council of
Ministers.
If the office of any Board Member nominated by the General
Meeting becomes vacant, the Board of Directors may appoint
a temporary member to fill the vacancy provided that such
appointment shall be laid before the first Ordinary General
Meeting. The new member shall complete the term of his
predecessor.
If the number of Board Members falls below three (3), the
Ordinary General Meeting must be convened as soon as
possible to elect the requested number of members.
The majority of the Board of Directors members must be nonexecutives.
It is forbidden to combine the position of Board of Directors
Chairman with any executive position in the Corporation such
as CEO or General Manager.
k.
l. Upon the termination of the membership of any member for any
reason, the CMA and TADAWUL must be notified immediately,
with justifications thereof.
m. Any member must not combine the positions of member of the
Board of Directors of more than five (5) joint venture
companies, listed in the Market at the same time.
Article 2: Main Functions of Board of Directors
The main functions of the Board include the following:
a. Approving the strategic plans and main objectives of the
Corporation and supervising their implementation; this includes:
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1. Laying down a comprehensive strategy for the Corporation,
the main action plans and the policy related to risk
management, reviewing and updating of such policy.
2. Determining the m o s t a p p r o p r i a t e c a p i t a l structure of
the Corporation, its strategies and financial objectives and
approving its annual budgets.
3. Supervising the main capital expenses of the Corporation
and acquisition/disposal of assets.
4. Deciding the performance objectives to be achieved and
supervising the implementation thereof and the overall
performance of the Corporation.
5. Reviewing and approving the organizational and functional
structures of the Corporation on a periodical basis.
Laying down rules for internal control systems and supervising
them; this includes the following:
1. Developing a written policy that would regulate conflict of
interests and remedy any possible cases of conflict of
interests by members of the Board of Directors, executive
management and shareholders. This includes misuse of
Corporation’s assets and facilities and the arbitrary
disposition resulting from dealings with the related parties.
2. Ensuring the integrity of the financial and accounting
systems and procedures including the systems and
procedures related to the preparation of the financial
reports.
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3. Ensuring the implementation of control procedures
appropriate for risk management by forecasting the risks
that the Corporation could encounter and disclosing them
with transparency.
4. Conducting efficient auditing and examination of the
internal control procedures in the Corporation.
b. Setting special Corporate Governance Regulations that do not
conflict with these regulations. Such Regulations shall be
supervised, monitored for effectiveness and amended as needed.
(Special Corporate Governance Regulations have been set and
approved). As per Board of Directors Resolution no.
07/190/2013, dated 26/09/2013, Investor Management,
Corporate Finance, has been assigned to supervise such
regulations, monitor them for effectiveness and amend them as
needed.
c. Laying down specific and explicit policies, standards and
procedures for the membership of the Board of Directors and
implementing them after obtaining the approval of the General
Meeting.
d. Outlining a written policy that regulates the relationship with
stakeholders with a view to protecting them and preserving
their respective rights. In particular, such policy must cover the
following:
1. Mechanisms for i n d e m n i f y i n g s t a k e h o l d e r s i n case
of contravening their rights determined by the law and by
their respective contracts.
2. Mechanisms for settlement of complaints or disputes that
might arise between the Corporation and stakeholders.
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3. Suitable mechanisms for maintaining good relationships
with customers and suppliers and protecting the
confidentiality of information related to them.
4. A code of conduct (rules of conduct) for the Corporation’s
executives and employees that is compatible with the
proper professional and ethical standards, and regulates
their relationship with stakeholders. The Board of
Directors must lay down procedures for supervising this
code and ensuring compliance therewith.
5. Corporation’s social contributions (Corporate Social
Responsibility/CSR).
e. Deciding policies and procedures to ensure Corporation’s
compliance with the laws and regulations and the Corporation’s
obligation to disclose material information to shareholders,
creditors and other stakeholders.
Article 3: Responsibilities of Board of Directors
a. Without prejudice to the competences of the General Meeting,
the Corporation’s Board of Directors shall assume all the
necessary powers for the management of the Corporation. The
ultimate responsibility for the Corporation rests with the Board,
even if it sets up committees or delegates some of its powers to a
third party. The Board of Directors shall avoid issuing general
or indefinite delegations.
b. The Board of Directors shall assume its responsibilities
according to its tasks which must be clearly stated in the
Corporation’s Articles of Association and bylaws.
c. The Board of Directors must carry out its duties in a responsible
manner, in good faith and with due diligence. Its decisions should
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be based on sufficient information from the executive
management, or from any other reliable source.
d. A member of the Board of Directors represents all
shareholders; he undertakes to carry out whatever may be in the
general interest of the Corporation, but not the interests of the
group he represents or that which voted in favor of his
appointment to the Board of Directors.
e. The Board of Directors shall ensure that a procedure is laid
down for orienting the new Board members of Corporation’s
business and, in particular, the financial and legal aspects, in
addition to their training, where necessary.
f. The Board of Directors shall ensure that the Corporation
makes available sufficient information about it to all members
of the Board of Directors, generally, and, in particular, to the
non-executive members, to enable them to discharge their duties
and responsibilities in an effective manner.
g. The Board of Directors shall be entitled to enter into loans with
funds and financing agencies for unlimited periods; and with
commercial financing agencies provided that the loans’ terms
shall not survive the Corporation’ term. The following terms and
conditions shall rule the loans with terms exceeding three (3)
years:
1. The total amount of loans allowed to be entered in any fiscal
year may not exceed Corporation capital.
2. In its resolution, Board of Directors must define how the loan
shall be used and repaid.
3. The terms and conditions of the loan and the guarantees
offered shall not harm the Corporation and its shareholders.
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4. Board of Directors is entitled to give loans and suitable
financial facilities to the companies in which the Corporation
holds shares or stocks and guarantees of the loans entered by
such companies.
Article 4: Authorities of Board of Directors
a. With due considerations to the authorities of the General
Meeting, Board of Directors shall have the broadest authorities
in managing the Corporation.
b. Define the authorities delegated to by the Board to executive
management, procedures of decision-making and the term of the
delegation. The board shall also define the authorities that it
shall keep to itself. Executive management shall submit regular
reports on the practices of its delegated authorities, as required
by SABIC bylaws/internal regulations.
c. Approve the table of authorities delegated to the committees and
executive management, review them regularly and amend them,
if deemed necessary be the Board.
d. The Chairman or his representative shall represent the
Corporation before judiciary or quasi judiciary authorities.
e. The Chairman, and any member appointed for a specific case,
are entitled to sign on behalf of the Corporation severally and
jointly. The Board is entitled to assign one or more vice
presidents for the CEO, and delegate the CEO to sign on behalf
of the Corporation.
f. Board of Directors members shall not be held responsible
personally regarding Corporation obligations because they are
performing their jobs within their delegation.
Article 5: Board of Directors Meetings and Agenda
a. Board members shall dedicate sufficient time to perform their
responsibilities, including the preparations for Board meetings
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b.
c.
d.
e.
f.
g.
and permanent and temporary committees, and be keen to
attend all above.
Chairman of the Board shall preside over the meetings, and the
Vice Chairman shall assume his duties when he is absent or
incapable of assuming his duties for any reason.
Upon an invitation from Chairman of the Board, or his
representative, the Board shall hold regular meetings. The
Chairman shall invite the Board for emergency meetings upon
written request from two members. The meeting may be held
outside the Head Office of the Corporation if necessitated by
circumstances. The meeting shall not be deemed valid unless
attended by at least five (5) members, three (3) of them from the
members assigned by a resolution from the Council of Ministers.
Board member is entitled, when necessary, to delegate another
member by written proxy. In such case, the delegated member
shall have two votes. Any Board member is not entitled to
represent more than one member.
In consultation with other members and CEO when preparing
a specific agenda of any meeting, Chairman of the Board shall
send the suggested agenda, with supporting documents, to
Board members in sufficient time ahead of the meeting for
consideration and preparation. The Board shall approve the
agenda. If any member has any objections to the agenda, the
details of such objection shall be added to the minutes of the
meeting.
Board resolutions shall be issued by majority of votes of the
attendees and representatives. In case of a tie, the vote of the
Chairman, or his representative, shall be the casting vote.
Board of Directors shall document its meetings, keep minutes of
the discussions and deliberations – to include the performed
voting operations, sign them from the Chairman and Secretary,
sort them and file them for easy access.
Article 6: Remunerations and Compensations of Board Members
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a. Only the General Meeting has the authority to approve
remunerations and compensations of Board Members.
b. An amount shall be assigned for Board members remunerations
as approved by the Ordinary general Meeting, after deducting
the statutory reserve and any reserve resolved by the Ordinary
General Meeting, distributing a first payment of Corporation’s
annual net profits to shareholders at 5% of paid capital and
payment of session attendance allowance according to
Corporation Bylaws, Ministry of Commerce and Industry rules
and regulations or any other complementary regulations,
resolutions or instructions.
c. Corporation shall issue session attendance allowance to the
Board member who attends the Board meeting and to the Board
General Secretary according to Corporation remunerations
policy.
Article 7: Committees of the Board and Their Independence
A suitable number of committees shall be formed according to
Corporation requirements and circumstances to enable the Board to
perform its duties in an effective way. A sufficient number of nonexecutive members of the Board shall be appointed in the concerned
committees. The following committees were formed:
First: Audit Committee
Second: Nomination and Remuneration Committee
Third: Risk and Compliance Committee
Fourth: Investments Committee
First: Audit Committee
a. Type of Committee
A consultative committee of Corporation Board of Directors,
appointed by the Board according to the regulations approved
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by Corporation General Meeting. The Committee reports to the
Board.
b. Purpose of the Committee
Provide help and consultation to Corporation Board of
Directors in supervising Corporation financial, administrative
and operational works, especially the financial statements,
abiding by and compliance with Corporation policies, rules,
regulations, procedures and work environment risk control.
c. Organization of the Committee
1. The committee is formed at least from three (3) members
appointed by the Board for three (3) years.
2. The following terms must apply to committee members:
• The member should not be an executive member of the
Board, nor assuming a Corporation’s technical or
administrative position, even as a consultant.
• One of the members must be a financial and accountancy
expert.
• The member should be fully independent of Corporation
executive management, and have no direct or indirect
interest in Corporation’s works or contracts
• The member should not practice any business
competitive to Corporation’s activities, whether
individually or via other companies and institutions.
3. In the first session, the committee shall appoint from its
members a head and a secretary general to prepare the
minutes and perform administrative work.
4. Any member and the secretary general are entitled to
attending allowance for each session. The Board of
Directors shall decide the amount of such allowance.
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5. The Board of Directors may issue annual lump sum
remuneration to any member and the secretary general, and
define the terms of merit.
6. The committee meets upon call from its head, and the
meeting shall be valid only if attended by at least half of its
members. A member is not entitled to delegate another
member for attending the sessions. All decisions are issued
by majority of attending members. Deliberations and
decisions of the committee shall be recorded in the minutes
and signed by the head and secretary general. If any
member fails to attend three consecutive sessions, he shall
be considered as resigned.
7. The committee shall hold at least four (4) meetings during
the fiscal year.
8. Same as Board member, Committee member abides by the
discretion of Corporation’s secrets. None of them may
disclose to shareholders, or other parties, any information
in his possession.
9. The membership of committee member ends by the term
included in the assignment resolution, or by violating the
terms and conditions of paragraphs 2 and 6. The Board of
Directors is responsible for assigning his replacement
d. Duties of the Committee
1.
2.
3.
4.
To supervise Corporation’s internal audit department.
To review the internal audit procedure and prepare a
written report on such audit and its recommendations
with respect thereto.
To review the internal audit reports and pursue the
implementation of the corrective measures in respect of
the included comments.
To recommend to the Board of Directors the
appointment, dismissal and the remuneration of external
auditors. Upon any such recommendation, regard must be
made to their independence.
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5.
6.
7.
8.
9.
10.
11.
To supervise the activities of the external auditors and
approve any activity beyond the scope of the audit work
assigned to them during the performance of their duties.
To review, together with the external auditor, the audit
plan and make any comments thereon in order to support
the efficiency and effectiveness of Committee duties.
To review the external auditor’s comments on the
financial statements and follow up the actions taken by
executive management.
To review the interim, qua rterly and annual financial
statements, together with the auditor and Corporation
management, prior to presentation to the Board of
Directors; and to give opinion and recommendations with
respect thereto.
To review the accounting policies in force and advise the
Board of Directors of any recommendation regarding
them, taking into consideration the suitability to the
nature of Corporation activities.
To prepare the annual plan and budget for the Committee.
To seek the help of external bodies and houses of expertise
to perform certain duties that are within the range of its
works and requires special expertise and skill.
Second: Nominations and Remunerations Committee
a. Type of Committee
A consultant committee of Corporation Board of Directors,
appointed by the Board according to the regulation approved by
Corporation General Meeting.
b. Purpose of the Committee
Provide recommendations to Corporation Board of Directors
about nomination to the membership of the Board and setting
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policies and standards for the remunerations of Board members
and Corporation senior executives.
c. Organization of the Committee
1. Board of Directors forms a committee named “Committee
of Nominations and Remunerations” consisting at least of
three (3) members, one of them should be independent.
2. The member may a non-Board member.
3. Upon suggestion from the Board of Directors, the
Corporation General Meeting shall issue the rules and
course of action of the committee.
4. Members of the committee shall continue to perform the
duties stated in paragraph 3 as of the date of the resolution
of forming the committee and for three years, or when the
Board issues a resolution to end or re-form the committee.
Also, at the end of term, or dissolution, of the Board for any
reason, the period of the committee is terminated, and must
be re-formed by the new Board.
5. If the position of any member becomes vacant for any
reason, the Board may assign a replacement to complete the
remaining term of the previous member.
6. In the first session, the committee shall appoint from its
members a chief and a secretary general to take the minutes
and perform administrative work.
7. The committee meets upon call from its chief, and the
meeting shall be valid only if attended by at least half of its
members. A member is not entitled to delegate another
member for attending the sessions. All decisions are issued
by majority of attending members. Deliberations and
decisions of the committee shall be recorded in the minutes
and signed by the chief and secretary general.
8. A committee member may not delegate any other party to
attend and vote on his behalf, whether this party was a
committee member or a third party.
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9. Same as Board member, Committee member abides by the
discretion of Corporation secrets. None of them may
disclose any information in his possession to any other
persons or parties, unless authorized by the Board or
committee decision, within the limits granted to either
10. The Board of Directors may issue annual lump sum
remuneration to any member and the secretary general, and
define the terms of merit.
d. Duties of the Committee
a. 1. Recommend to the Board of Directors appointments to
membership of the Board in accordance with the
approved policies and standards.
2. Annual review of the requirement of suitable skills for
membership of the Board of Directors and prepare a
description of the required capabilities and qualifications
for such membership, including, inter alia, the time that
a Board member should reserve for Corporation activities
and preparations of the meetings of the Board.
3. Review t h e e f f e c t i v e n e s s o f t h e B o a r d of
Directors a n d c o m m i t t e e s , a n d r e v i e w thei r
structure and mechanisms, and recommend suitable
actions for performing the promoting operations and
changes needed for supporting performance effectiveness,
and supervise Corporation activities.
4. Ensure on an annual basis the independence of the
independent members, and the absence of any conflict of
interest in case a Board member also acts as a member of
the Board of Directors of another Corporation, or
practicing competitive activities to Corporation activities,
or provide the Corporation of any services or materials,
unless the member has declared such and was approved
by the general meeting.
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5.
6.
Draw clear policies regarding the indemnities and
remunerations of the Board members and senior
executives according to related regulations. In laying
down such policies, the committee must take into
consideration non-conflict with the approved rules and
regulations, and the use of standards related to the level of
performance.
Set a guidance program for the new Board members, to
include all important fields related to Corporation
activities.
e. Requirements for Nomination for Board Membership
1.
2.
3.
4.
Applicant must submit his application during the period
set in Corporation advertisement, and must include his
CV with supportive documents and certificates in Arabic,
attested by proper authorities.
Committee must ensure that nominees have never been
previously convicted o f a n y o f f e n s e affecting honor or
honesty, or such.
Committee must ensure that the nominated Board
member has previous skills and knowledge in the field of
business management and companies in order to enrich
the activities and discussions of the Board.
Applicant must fill in the Board Membership Nomination
form. Such form must include at least a statement signed
by the nominee that he has have never been previously
convicted o f a n y o f f e n s e affecting honor or honesty (If
otherwise was proved, his nomination for/membership of
the Board shall be dropped), and he is ready to allocate
enough time for attending Board and committees meetings
according to Corporation regulations, and his work shall
be fully independent and shall take Corporation and
shareholders into consideration.
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f. Meetings of the committee
1.
2.
3.
4.
The committee shall convene twice a year, at least, upon a
call from its chief or 50% of its members for achieving the
purposes of forming the committee as follows:
• Review the suitable skills needed in a Board member
• Review the structure of the Board
• Define the points of weakness and strength in the Board
• Ensure full independence of the resigned members of
the Board
• Ensure the member has no conflict of interests if he was
a member in other Boards.
• Set a guidance program for the new Board members, to
include regular Corporation activities.
• Ensure the application of remunerations and
compensations policy for Board Members and senior
executives.
• Recommend the amount of annual remunerations to the
Board of Directors.
• Study CVs of the nominees for Board membership.
• Ensure the availability of the required terms in the
nominees.
• Recommend the names of the approved nominees to the
Board of Directors.
The secretary of the committee shall prepare an agenda
with the issues to be discussed in the meeting, in previous
coordination with committee chief and members.
Submit regular reports about committee deliberations to
the Board.
Record all committee sessions in a special record, to be
reviewed by committee chief and secretary, and shown to
members before approval.
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Third: Risk Management and Compliance Committee:
a. Type of Committee:
It is a committee reporting to and appointed by the Board of
Directors. It is composed of four (4) members and a secretary-general.
b. Purpose of the Committee:
To assess the efficiency of the Corporation’s Risk Management and
Compliance Program;
To review and assess the Corporation’s policies in the field of risk
management, compliance, control of criteria, standards, procedures
and regulations applicable by the Corporation for ensuring
adherence to policies;
To monitor the records of the Corporation in the field of compliance,
control of risks and discussion of any legal issues having major impact
on the Corporation’s policies and procedures pertaining to
compliance with legal, regulatory, and statutory requirements and to
submit the required recommendations to the Board of Directors.
Fourth: Investment Committee
a. Type of Committee
A subordinate committee to the company’s Board of Directors.
It is appointed by the BOD, and includes five members and a
secretary general.
b. Purpose of the Committee
The committee carries out its approved tasks and functions,
including the assessment of SABIC investment activities,
delivering suggestions and recommendations to the BOD
35
concerning transactions of mergers, acquisitions, joint ventures,
investments in new, existing or expansion projects, and reviewing
SABIC’s investment strategy.
Chapter 4: Policies, Disclosure and Transparency
Article 1: Dividends Distribution Policy
The Corporation dividends distribution; cash, in-kind or capital
increase via granting shares; is based upon several controls taking
into consideration net dividends achieved, cash flow and distribution
policy as stipulated for in Corporation bylaws. In case of in-kind
distribution, Corporation interests and all above shall be taken into
consideration. Cash or in-kind distribution is done upon
recommendation from Board of Directors to the Corporation, in
accordance with all related regulations.
Article 2: Conflict of Interests Policy
The Corporation truly believes that managing its business and
making of its decisions must be based upon pure economic bases, and
recruitment operation and appointment of positions are based upon
merit and efficiency. To that effect, the Corporation avoids any
conflict of interests that may have impact on the economic bases of
managing business and making decisions. If any conflict of interests
was discovered, the Corporation manages it so as it will not have any
impact on its decisions. Therefore, Corporation policy regarding the
conflict of interests requires abiding by the following:
First: Members of the Board of Directors and senior executives:
a. Board member shall not have any interest (whether directly or
indirectly) in the Corporation’s business and contracts without a
prior authorization from the General Meeting, to be renewed
each year. The activities to be performed through general bidding
36
b.
c.
d.
e.
shall constitute an exception where a Board member is the best
bidder. A Board member shall notify the Board of Directors of
any personal interest he/she may have in the business and
contracts that are completed for the Corporation’s account. Such
notification shall be entered in the minutes of the meeting. A
Board member who is an interested party shall not be entitled to
vote on the resolution to be adopted in this regard. The
Chairman of the Board of Directors shall notify the General
Meeting, when convened, of the activities and contracts in respect
of which a Board member may have a personal interest and
shall attach to such notification a special report prepared by the
Corporation’s auditor.
Board member shall not participate in any activity which may
likely compete with the activities of the Corporation, or be a
manager or Board member in any competitive Corporation or
any Corporation practicing a similar activity, or trade in any
branch of the activities carried out by the Corporation unless
there is a prior authorization of the General Meeting, to be
renewed annually,.
The Corporation shall not grant cash loan whatsoever to any of
its Board members or render guarantee in respect of any loan
entered into by a Board member with third parties, excluding
housing and other similar loans, within the limits, purposes and
terms used with the employees, if the member was a Corporation
employee.
Nominations and Remunerations Committee, formed by the
Board, shall ensure the nonexistence of conflict of interests for
Board members, if the member was also a member in the Boards
of Directors of other companies.
The Corporation must declare any transaction concluded with
any related party, or any arrangement made between The
Corporation and any related party for investment in or financing
any project or asset.
37
f. The Corporation must include in the report of the Board of
Directors a description of any transaction concluded with any
related party.
g. The Corporation must include in the report of the Board of
Directors any concluded contracts that comprise the Corporation
as a party, or comprise – or had comprised - an interest for any
Board of Directors member, CEO, Financial Manager or any
party related to them. If there were no such transactions or
contracts, the Corporation must submit a statement of such.
Second: Corporation Employees
a. Corporation employees abide by immediately informing executive
management of any actual or possible conflict of interests, up to
the knowledge of the employee.
b. Before giving the employee the approval to establish a
Commercial Record, he must sin a conflict of interests agreement.
c. Corporation’s policy and Table of Authorization are based upon
full separation between the authorities and responsibilities of the
employees who execute the works, and those who register such
works.
d. Corporation employees who have access to internal information,
directly or indirectly, are forbidden form benefiting of such
information for making profits or commercial benefit prior to
declaring such information on market website, as defined by
Market Code of Ethics.
e. Within the policy of protecting related parties, the Corporation
has set a code of ethics that prevents or reduces any conflict of
interests.
f. Corporation purchase policy based upon complete separation
between the authority of technical evaluation and the authority of
commercial evaluation of contractors bids.
g. Corporation may approve the employee to have a commercial
record, provided that he must sign a conflict of interests
agreement. But, he must immediately inform the executive
38
management of any actual or possible conflict of interests, up to
his knowledge, to include:
i. Acquiring, he or his family, a considerable financial share in
any external project that works or is trying to work or
competing with the Corporation.
ii. Working as a member in a Board of Directors or as an
executive, partner, consultant, major shareholder or investor
or practicing a major role in any external project that works
or is trying to work or competing with the Corporation.
iii. Working as broker, agent, representative or other medium for
a third party in commercial transactions related to the
Corporation or its interest.
Article 3: Protection Policy of Corporation Related Parties
The Corporation sets clear policies and procedures for regulating its
relations with all parties related to it, such as employees,
shareholders, providers, customers … etc. so as to protect the rights
of the Corporation and all above parties. Regulations and contracts
are the basic source of defining the rights and duties of all related
parties. The Corporation is keen on defining and clarifying such
contracts, the rights and obligations of the parties, the method of
performing, the consequences of failure to perform, the limits of
responsibility and the method of settling the disputes that might arise
during the performance of such contracts in such a way that protects
Corporation related parties through the following mechanisms:
a. Mechanism of compensating the owners of interests in case of
violating their rights:
i. Violation must be due to Corporation failure in satisfying its
obligations as stipulated in the contracts and related systems,
failure to exert enough care or failure to follow approved
standards and industrial practices.
ii. Corporation act has been the reason behind the damage caused
to related parties.
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iii. Corporation shall exert its efforts to limit the amount of
damage caused to related parties.
iv. Violation must be proved by Corporation statement, or by an
award of settlement authorities.
v. Corporation shall seek to enter into discussions and
deliberations with the damaged parties to discuss the
possibility of reaching the mechanism and amount of
compensation.
vi. Corporation shall seek to provide suitable insurance coverage
– third party insurance – to compensate related parties for the
possible damages.
vii. Any action by any Corporation employee that causes damages
to third parties shall not oblige the Corporation with any
material consequences; unless such employee was authorized
by the Corporation to perform such act, without prejudice to
what he was authorized to do.
b. Mechanisms of Settling Complaints or Disputes.
i.
The Corporation shall seek to include its contracts and
agreements with related parties a full coverage of all
regulatory and legal aspects that spare the Corporation –
and related parties – any possible disputes.
ii. The Corporation shall seek to include its contracts and
agreements with related parties the methods of settling any
disputes that may arise due to the performance of such
contracts.
iii. The Corporation shall abide by following the above methods
of settling disputes in all signed contracts, whenever possible.
iv. The Corporation shall seek to settle its disputes with related
parties amicably, whenever possible.
v. Corporation policies and bylaws shall include the
procedures of handling employee complaints and methods of
solving them.
vi. Corporation policies and bylaws shall include the
procedures of handling customer complaints and methods of
solving them.
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vii. Corporation performance standards shall include the
standards of measuring customer complaints and speed
solutions to reach maximum satisfaction.
viii. The Corporation shall provide necessary technical support
to customers in order to handle the problems arising from
using its products.
Article 4: Non-Circulation Policy
The Corporation shall abide by article 33 of registration rules issued
by Capital Market Authority stipulating that Board members, senior
executives or any related party are prohibited from dealing in any
Corporation financial papers during the following periods:
a. Fifteen (15) Calendar days prior to the end of the annual quarter
until the date of declaring and announcing Corporation financial
statement.
b. Thirty (30) Calendar days prior to the end of the fiscal year until
the date of declaring and announcing Corporation financial
statement.
Article 5: Information No-Disclosure Policy
In this regard, the Corporation shall do the following:
1. Know and abide by privacy and information non-disclosure laws
and regulations that include controls for special information and
personal information at the country where such information is
collected, processed and used. Also, know and abide by
Corporation instructions in this regard.
2. Collect, process and use personal information for legal work
purposes only, prior to establishing or updating any information
collecting system(s) or using, disclosing or transporting it. Ensure
abiding fully by all terms and requirements related to handling
personal information.
41
3. Refrain, as much as possible, to use information that is “unknown
source and circulating”, “in-general and anonymous” or
“ambiguous or hard to trace back to a specific person or
authority”.
4. Limit getting, accessing and processing personal information to
concerned personnel and for work purposes.
5. Care must be taken to deny access to personal information to nonauthorized personnel during processing, and prevent sudden loss
or damage of personal information.
6. Notify line manager, Legal Affairs or officer upon discovering the
use of personal information in violation of this policy, or upon
discovering that security protection system that contains personal
information has been or shall be jeopardized.
Article 6: Disclosure Policy and Transparency
The Corporation has approved policies and procedures for achieving
justice in providing the right information in the right time for helping
the investors take investment decisions based upon correct and
complete information, and giving all parties equal opportunities in
accessing the information and ensure there is no leakage in favor of
one investor than the others.
The Corporation abides by executing the policies and procedures set
by the Board of Directors about disclosing major Developments,
financial statements and performance reports according to legal
requirements and applied regulations, without conflict with the
instructions of proper authorities.
Article 7: Disclosure in Board of Directors Report
Board of Directors shall prepare its annual report according to the
stipulations of article (43) of Registration and Inclusion about the
contents of Board of Directors report. The report shall include a
demonstration of Corporation operations during the fiscal year, and
42
the issues that have impact on Corporation operations that the
investor needs to evaluate Corporation assets and liabilities and its
financial position. The report must be advertised in widely spread
local newspaper, and copy must be sent to Capital Market Authority.
The report must comprise the following:
1.
A description of the major activities of the Corporation and
affiliates. In case of describing two or more types of the activity,
attach a statement of each activity, its impact on the volume of
Corporation commercial business and its contribution to the
results.
2. A description of Corporation important plans and decisions, to
include Corporation structuring, expansion, discontinuance of
business or future expectations of its activities and any expected
hazards.
3. A summary in the form of table or chart of Corporation assets
and liabilities and the results of its activities for the last5 financial
years or since establishment, whichever shorter.
4. A geographic analysis of returns of the Corporation and
affiliates.
5. Explanation of any major differences in operational results from
previous year’s results, or any declared expectations.
6. Explanation of any differences in from the accountancy
standards issued by Saudi Chartered Accountants Authority.
7. The name of each affiliate, its major activity, the country of its
major activities and the country of its establishment.
8. Details of shares and debt tools issued by each affiliate.
9. Description of Corporation policy in distributing dividends.
10. Description of any interest in the type of “shares with entitlement
of voting” that belong to persons – except for Board members
and senior executives, their wives and under age children – who
have informed the Corporation of such rights according to
article 45 of Rules of Registration and Inclusion, and any change
in such rights during the previous fiscal year.
43
11. Description of any interest, right to choose and subscription
rights of Bard members, senior executives, their wives and under
age children in shares or debt tools of the Corporation or its
affiliates, and any change in such interest(s) during the previous
fiscal year.
12. Information related to any Corporation “due on demand” or
other loans, a list of total debts of the Corporation and its
affiliates and any amounts paid for remittance of debts during
the year. In case the Corporation has no debts, a report of such
must be submitted.
13. Description of types and numbers of any debt tools transferrable
to shares, any choosing rights, memos of subscription rights or
other similar rights issued or granted by the Corporation during
the fiscal year, and an explanation of any compensation earned
by the Corporation against such rights.
14. Description of any choosing or subscription rights stipulated by
debt tools transferrable to shares, choosing rights or other
similar rights issued or granted by the Corporation.
15. Description of any recovery, purchase or cancellation by the
Corporation of any recoverable debt tools, and the value of the
remaining financial papers, with separation between listed
financial papers purchased by the Corporation and those
purchased by the affiliates.
16. Numbers of Board of Directors meetings held during the
previous fiscal year, and the attendance record for each meeting,
to include the names of attendants.
17. Description of any transaction between the source and any
related party.
18. Information regarding any works or contracts entered by the
Corporation, and any actual – or past – major interest for any
Board member, CEO, Financial Manager or any other related
party. If there were no contracts, a statement of such must be
submitted.
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19. A statement of any arrangements or agreements where a Board
member or any senior executives weavers any salary of
remuneration.
20. A statement of any arrangements or agreements where a
shareholder weavers any of his rights in dividends.
21. A statement of the value of due legal amounts for Zakat, taxes,
fees or any other dues, with brief description of them and their
reasons. A statement of
22. A statement of any investments or other reserves established for
the benefit of Corporation employees.
23. Statements of the following:
• Account records are correctly kept.
• Internal control system was prepared on sound bases and
performed effectively.
• There is no doubt about the ability of the Corporation to
continue its activities. If case of failure to issue any of the
above, include the failure in a statement with explanation of
the reasons.
24. If the report of the chartered accountant included reservations
on the annual financial statements, and Capital Market
Authority requested additional information, Board of Directors
report must explain all such information as submitted to Capital
Market Authority.
25. In case the Board recommends replacing the chartered
accountant before three successive years, the report must include
such recommendation and explain the reason of recommending
the replacement.
26. Names of joint ventures that any Board member is also a
member in their Boards
27. The composition of the Board of Directors and classifying its
members as follows: executive Board member, non-executive
Board member or independent Board member.
28. Short description of duties of major Board committees such as
Audit Committee and Nominations and Remunerations
45
Committee and, their names, their chiefs, their members and
number of meetings.
29. Details about remunerations and compensations paid to each of
the following:
• Board members
• Five (5) of senior executives who got the highest remunerations
and compensations from the Corporation, in addition to CEO
and Financial Manager, if not included.
30. Reference to any punishment, penalty or preventive restriction
imposed by CMA or any other supervising, regulatory or judicial
authority.
31. The results of the annual audit of the effectiveness of
Corporation internal audit procedures.
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Chapter 5: Advertising Instructions and Templates
The following instructions define, in general, the basic elements that
must be included in all Corporation advertisements that are relayed
through market website, especially the advertisements of the financial
statements, Board of Directors recommendations about increasing or
decreasing the capital, the call for the ordinary or extraordinary
meeting of the General Meeting and the resolutions of either meeting
when held.
Article (1): General Instructions for Advertising:
The advertisement must include the following information:
1. The heading of the advertisement must be clear and reflect the
major event to be advertised.
2. A fully detailed description of the major event must be
included, with explanation of all related information.
3. Explain the reasons and justification that led to the event.
4. If the event has a financial effect on the financial statements, the
financial effect must be stated. Otherwise, state the reason.
5. The Corporation must exert due effort to ensure that any events
or information related to that event are true and not misleading.
6. The Corporation must not exclude, omit, or hide any
information that may impact the content or results of the major
event.
7. If the major event resulted in any financial obligation on the
Corporation, the advertisement must include the terms, period
and value, other parties and impact of such obligation.
8. If the Corporation advertises a future major event, the
Corporation must advertise any updates on this event.
9. If the Corporation has two major events, each event must be
advertised separately.
10. In case any major event occurs 2 hours before, or during, the
period of circulation, the Corporation must wait until the end of
the circulation period, and then advertise such event of on the
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Stock Exchange website (TADAWUL). All necessary
precautions must be taken to prevent any leak of the news about
such future major changes before the advertisement. If the
Corporation cannot guarantee non-leakage of the news about
such major event (due to the existence of other parties that their
commitment to non-disclosure cannot be guaranteed, or the
event was a media subject such as natural disaster, fire … etc.),
CMA must be informed immediately after occurrence.
11. If the Corporation shall hold meetings of its Board of Directors,
audit committees or any other committees for discussing an
event to be advertised according to the rules of registration and
Inclusion during a period that enables the Corporation to
advertise such event on Stock Exchange website (TADAWUL),
such meetings must be held two hours at least before the start of
circulation period that follows the meeting.
12. The Corporation must define the need to relay and
advertisement on TADAWUL to deal with any rumors about
any major events. Capital Market Authority (CMA) has the
right to oblige the companies to relay an advertisement
whenever deemed necessary.
13. Upon wording the advertisement, the Corporation must abide
by correct Arabic language grammar.
Article (2): Example on Major Developments to Be Declared
As per Capital Market Authority (CMA) in this regard, any major
developments that should be advertised - when occurred - must
include, but not be restricted to, the following:
a. Any deal for purchasing or selling any asset at a rate that equals
10% or more than the net assets of the source.
b. Any debt beyond the framework of the ordinary activity of the
source of an amount that equals 10% or more than the net assets
of the source.
c. Any loss that equals 10% or more than the net assets of the
source.
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d. Any major changes in the environment of the source or its
activity including, but not restricted to, abundance or
availability of resources.
e. Changing CEO of the source, or any changes in the formation
of its Board of Directors members.
f. Any major lawsuit if the subject matter amount equals 5% or
more than the net assets of the source.
g. The increase or decrease in the net assets of the source equals
10% or more.
h. The increase or decrease in the total profits of the source equals
10% or more.
i. Concluding a contract with income that equals 5% or more of
the total income of the source, or the unexpected termination of
such contract.
j. Any transaction made between the source and a related party
or any arrangement made between the source and a related
party for investment in or financing any project or asset.
k. Any cessation (stoppage) of any major activities of the source or
its affiliates.
Article (3): General Instructions for Announcing the Financial
Results
a. The Corporation shall advertise its annual financial statements
within a period not more than forty (40) days of the end of the
annual financial period covering such statements, and twenty
five (25) calendar days before the date of holding the General
Meeting of the Corporation. Also, the Corporation shall
announce its preliminary financial statements within fifteen (15)
workdays from the end of the period announced on Capital
Market Authority website before announcing them in any other
media inside or outside the Corporation.
b. Before announcement, the preliminary and annual financial
statements must be approved by the Board of Directors and
signed by an authorized member of Board of Directors, CEO
and financial manager.
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c. Special forms for financial statements must be filled in and
uploaded via Capital Market Authority electronic form system.
d. Preliminary financial statements must be published in a
widespread daily newspaper within a period not less than
twenty one (21) days from the end of the financial period.
e. Annual financial statements must be published with the Board
of Directors report in a widespread daily newspaper within a
period not less than forty (40) days from the end of the annual
financial period.
f. Form (8) must be sent with the Board of Directors’ report and
financial statements to CMA within a period of not less than
forty (40) days from the end of the annual financial period.
Article (4): Templates of Several Corporation Advertisements
Attached with these regulations is an updated copy of the forms of
Corporation advertisements approved by Capital Market Authority.
Such forms help organizing the text and content of the information
required in announced Corporation advertisements for helping stock
companies raise and sustain the level of disclosure and transparency,
and help investors making sound investment decisions based upon
complete and correct information. Such form include (administrative
changes advertisements, capital changes advertisements, Dividends
advertisements, consequential and correction advertisements, signing
memorandum
of
understanding
advertisements,
projects
advertisements, assets purchase and selling advertisements, financing
advertisements, debt toots advertisements, lawsuits advertisements,
previously announced development advertisements). Any updates
that may occur to the forms and obliging instructions are published
on the following Capital Market Authority (CMA) official website:
http://www.cma.org.sa/Ar/FormsSite/Documents/instr20%(1213-1-1).docx
Chapter 6: Corporation Code of Ethics
Article (1): Corporation Values
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Controlling and organizing the rules of conduct and code of ethics in
SABIC can be achieved by encouraging the following values:
1. Inspire our employees by empowering them with a clear
and common understanding of the ethical boundaries in
which we must operate.
2. Engage our diverse workforce by ensuring that we maintain
a respectful and welcoming work environment.
3. Create a sustainable compliance and integrity framework
to support innovation in products, processes and solutions
in a highly regulated world.
4. Deliver growth by earning the trust of our employees,
customers and business partners that we will always conduct
business with uncompromising integrity.
Article 2: Rules of Conduct and Code of Ethics
The code of ethics comprise the rules of conduct to be followed by all
SABIC employees daily, in all transactions and in every work
location. In a situation with concerns or doubts about failure to abide
by the code of ethics, the Corporation works on inspiring and
creating the culture of immediate reporting such concerns to proper
authorities via several channels such as line manager, Human
Resources, Legal Affairs and helpdesk phone for technical support
for handling legal and regulatory violations. The Corporation focuses
on the fact that it shall not take any penalty or procedures or legal
consequence against any person for reporting his concerns or doubts
about any legal or regulatory violations.
Code of ethics comprises 13 policies about integrity covering the
major fields of risk and hazard. The 13 policies were classified into 3
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categories: Our International Environment, Work Place and
Corporation Assets Protection. The above policies include rules of
conduct control in several aspects; the following are examples of such
rules:
1. Handle Corporation business honestly and apply the highest
methods and ethics in management, and refrain to perform any
act that jeopardized Corporation’s honesty and integrity inside
and outside the Corporation.
2. Exert all time and efforts for performing his duties, and refrain to
waste other colleagues’ time.
3. Cooperate with his co-workers to perform the work to the best
interests of the Corporation.
4. Loyalty to the Corporation is a very desirable trait for both
management and employees. All must prove their loyalty and act
always to the best interest of the Corporation in all work relations,
to include customers, government authorities, Corporation
presidents and colleagues, and report to executive management
any action of negative impact on the Corporation.
5. Comprehend, and act upon such, that all employees are jointly
responsible of supporting Corporation objectives regarding
internal administrative and finance control, and abide by such
objectives.
6. Refrain to use any information or items disclosed to the employee
confidentially - as a Corporation employee – for his personal
purposes or interests; and avoid disclosing confidential propriety,
technical or administrative information to any unauthorized
body.
7. Refrain to participate – for free or against money – in any media
activity such as giving press releases of announce articles without
prior written approval from SABIC authorized officer.
8. Refrain to accept any gifts or benefits from internal or external
bodies that may have impact on employee’s decision or
performance of his duties, or failure to perform for the interest of
such bodies.
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9. Under no circumstances whatsoever should the employee offer or
try to offer a bribe or any other item for tempting a probable
customer for promoting Corporation products or services or
influencing his decision.
10. Refrain to accept any bribe or any other temptation whatsoever,
for achieving any purpose such as: awarding a contract or
purchase order to a probable vendor, or giving him information.
If the employee was offered a bribe or any other temptation, he
should immediately report the incident to his manager.
11. Refrain to use the authority of your position for achieving
personal profits.
12. Abide by accuracy and fairness in registering all Corporation
financial transactions according to generally accepted practices of
accountancy, protect Corporation properties according to
Corporation rules and regulations, insure using the assets
properly and insure that financial and operational records and
reports are accurate, complete and reliable.
13. Employee should not disclose any job secrets and information that
came to his knowledge by virtue of his position, and refrain to
transport any unannounced information to any third party, unless
such action is part of his normal performance of his duties, or
approved by the Corporation.
14. Abide by all applied systems in Kingdom of Saudi Arabia.
15. Corporation forbids using computers, phone sets and lines,
internet and email in aggressive methods towards third parties, or
degrade the Morales of employees. Corporation properties should
not be used to enter into commercial joint ventures with third
parties, or discus religious, political or non-work related issues.
Article 3: The Consequences of Abiding by the Code of Ethics
The Corporation exerts its efforts in planting the culture of “abiding
by rules and regulations”, which will enhance its development and
development plans in the Corporation through the following:
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1. Adding value to the commercial aspect of the Corporation, and
increase the trust of customers, providers partners, communities
and governments in the Corporation.
2. Open the opportunity for teamwork because the Corporation
aims to exert its efforts towards achieving the same mutual
objectives.
3. Encourage self-control, and provide protection beyond the
methods of external control only.
4. Increase employees’ self-confidence, where they can comprehend
work values and introduce them to third parties.
5. Achieve more sense of responsibilities and higher professionalism
because the employees can deduce the expected behavior that
encourages them to act in a true professional method.
6. Spread the concept of abiding by rules and regulations in order to
help employees in working in an environment of controlled
performance that abides by regulatory rules.
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Chapter 7: Closing Provisions
Article 1: Publication and Entry into Force
These regulations shall be valid and in force as of the date of its
approval by Corporation Board of Directors.
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