The Audit Committee Regulations in Saudi Research and Marketing Group (SRMG) determines the Audit Committee tasks and responsibilities and the rules governing its works. The regulations also draw the general framework of the committee for implementing its works by renewing its activities, responsibilities and powers in a way suitable to group activities. The Audit Committee regulations show the relation between the audit committee and the board of directors of Saudi Research and Marketing Group, executive managers and external stakeholders, especially the external auditor of the group.
The regulations focus on due diligence and ensures objectivity and independence. They describe the general rules for planning, execution and work documentation in addition to determination of administrative communication.
Regulations is in line with laws and the instructions in Saudi Arabia, such as the corporate governance regulations that issued by the Capital Market Authority and the regulations project that organizes the audit committees work in the joint-stock companies and the one issued by Saudi Organization for Certified Public Accountants, taking into consideration the International standards for the practice of internal audit (ISPPIA) issued by The Institute of Internal Auditors in USA (IIA).
The regulations were issued and interpreted by the board of directors, and they shall be effective from the date of issue. And it must be reviewed periodically to determine whether there must be any amendments to update or develop the regulations. No amendment to these regulations may be made unless vide a resolution of the board of directors, taking into consideration the following procedures and rules:
1- The Committee shall submit recommendations and suggestions of any amendment to the provisions of these regulations to the board of directors in order to do what is necessary.
2- The Board shall inform the Chairman of the Committee via a formal written letter of its resolution on the recommendation by the Committee, stating the text of the amendment, if any, and its effective date.
Purpose of the Composition of the Committee is to assist the Board in verifying the efficiency of internal control system and its effective implementation and to submit to the board any recommendations that can activate and develop the internal control system to achieve the goals of the Group and protect the interests of all shareholders. The committee shall also assist the Board in carrying out its supervisory mission relating to the Group’s financial, operational and information systems of the group.
Based on the desire and care of the Board of Directors of the Saudi research and marketing group to attract and keep people with distinct qualifications and developed skills necessary to manage the Group at the level of the Board and senior executives and to raise performance levels in order to achieve the objectives of the group strategy, the board has entrusted this job to the Committee in accordance with the requirements of the provisions of these regulations named (Nomination and Remuneration Committee Regulations ).
equirements of the provisions of these regulations named (list of nomination and remuneration Committees).
1- Notwithstanding the competence of the General Assembly of the Group, Nomination and Remuneration Committee shall consist of members of the Board of Directors as long as it includes 3 to 5 non-executive members appointed by a decision of the Board of Directors determines the Chairman of the Committee and Vice-Chairman and the term of office of each Member which shall not exceed the duration of his membership in the Board of Directors.
2- The Board may reappoint a member on the Committee for more than one session and may extend the duration of membership.
3- Committee membership would expire in case of his resignation, incapacity or death, and the Board may terminate the membership of any member at any time in the following cases:
I- The misuse of any Member to his position in the committee or misconduct which is considered by the Board as detrimental to the objectives and the reputation of the Group.
II- The absence of the Member for two consecutive meetings with an excuse acceptable by board of directors.
III- Upon the recommendation of the chairman of the committee or two of its members, as long as the recommendation is submitted to the Board along with the reasons.
IV- The board should hire a new member if the position becomes vacant in the Committee to complement the predecessor's term of Office or the duration of his membership in the Board of Directors; whichever is closer.
Nomination and remuneration Committee is responsible for all tasks within the scope of its purposes, and any other responsibilities and tasks referred to it by the Board of directors and, in particular, the following:
1) Recommend to the Board the nominated candidates who met the requirements, based on the following regulations and standards:
1.1) Required Skills and Qualifications:
I- Appropriate level of qualifications, experience, skills, and knowledge in order to contribute in the development of the company.
II- Collectively, the members shall have the qualifications, skills and expertise necessary to achieve the Board's duties, and to be distributed in a balanced manner between the members, to be effective, and provide sufficient expertise to the Board, but it is not necessary that each Member must has all the required skills.
III- Members shall have strategic perspective, perception of good administrative, management and supervisory capacity, legal and financial expertise, and knowing the Group and its activities will be particularly important.
IV- Commitment to spend sufficient time to carry out its terms of reference and duties
1.2) Nomination Terms and Conditions:
1- Submit a notification to the board of directors or the member responsible for receiving nomination notifications. Such notification shall include introduction of the candidate including the candidate's CV, qualifications and experience in the field of company works. CV of the candidate attached to the notification shall be written according to the form prescribed by the Capital Market Authority in addition to a clear copy of the ID for individuals and commercial register for companies and establishments and contact numbers of the candidate. This shall be done within the specific time announced by the Group and before at least 30 days of the General Assembly date.
2- The candidate may not have been convicted of an offence prejudicial to honor or integrity, with a written approval of that.
3- The candidate, who has already been a Board member, must provide the number of corporations and boards of companies or institutions that he has been a member of.
4- Statement of the joint-stock companies of which he is still a member.
5- A statement of the groups or establishments which he is involved in its management or ownership and which practice similar works.
6- If a candidate has previously held the membership of the Board of Directors of Saudi Research and Marketing Group, the nomination notification shall be attached to a statement of candidacy of Group management stating the last session in which he was a board member including the following information:
I- The Number of Board meetings during each year, and the number of meetings attended by the Member himself and percentage of his attendance to the total meetings.
II- Standing committees in which the member participated and the number of meetings held by each of those committees during each year of the session.
III- Summary of financial outcomes achieved by the company during each year.
7- The candidate should not participate in any action that would rival the Group as stipulated in article (70) of the Companies Act, and not to hold any executive position in a company competing with the Group's activity.
1.3) Board Members Classifications
The majority must be of non-Executive Board members, and not less than two independent members or one third of the members of the Board, whichever is higher.
2- Annual review of the requirements of skills appropriate for Board membership and prepare a description of the capabilities and qualifications for Board membership, including a limitation on the time needed to be devoted to the work of board of directors Member.
3- Review the structure of the Board and make recommendations on changes that can be made
4- Identify weaknesses and strengths in the board of directors, and submit a formal suggestion in order to solve it in a way in line with the interest of the group.
5- Check, on an annual basis, the independence of independent members, and make sure that there will be no conflict of interests if the Member holds another membership in other companies.
6- Develop a clear policy for compensation and bonuses to the Board members and senior executives, taking into consideration that such policies should be linked to performance criteria.
7- Follow-up the implementation of the recommendations and resolutions adopted by the Committee after being approved by the Board of Directors.
8- Prepare an annual report to the board of directors on the works achieved by the Committee.
9- Making a periodic review of the provisions of these regulations and submit necessary recommendations thereon to the board of directors.
1- It is for the audit committee chairman, to decide the frequency and timing of its meetings and notify the member one week before the agenda of the committee, taking into consideration providing the committee members with the meeting documents, if any, three days in advance of the meeting.
2- The committee shall hold its meetings whenever there is a need provided that its meetings shall not be less than two meetings per fiscal year. A meeting shall be held before at least one week of the end of its term.
3- The Committee may hold an emergency meeting upon request of the Chairman or two of its members. In all cases the meeting request must state the reasons for the request and the proposed date for convening.
4- Member of the committee may not authorize another person to attend or vote on its behalf in the Committee meetings.
5- Committee meeting can only be valid if two thirds of its members are present.
6- Resolutions and recommendations of the Committee shall be issued by a majority of the votes of the attending members and when the votes are equal the committee takes the side where the chairman of the committee voted.
7- The Committee shall take its decisions and recommendations by passing them through showing to all members individually, whenever needed, provided that these resolutions shall be presented to the committee in the next meeting.
8- The Committee's deliberations, decisions and recommendations shall be written down in minutes to be signed by the Chairman of the Committee and its Secretary, taking into consideration that such minutes shall be recorded in a special register signed also by the Chairman and Secretary of the Committee.
The Chairman of the Nomination and Remuneration Committee is responsible for fulfilling the tasks and responsibilities of the Committee in accordance with the provisions of these regulations as follows:
1- Invite the committee for convention and determine the time, date and place of meeting according clause No. (1) of article (4) herein.
2- Chair the meetings of the Committee
3- Submit the committee meeting minutes, results, decisions, and recommendations after being signed according to clause (8) of article (4) of these regulations to the board of directors and follow up the implementation of the resolutions approved by the board and provide the board of directors with its reports and results.
4- Vice-Chairman of the Committee shall exercise the competences of the Committee Chairman during his absence.
In order to participate in the accomplishment of the duties and responsibilities of the committee according to these regulations, each member of the Nomination and Remuneration Committee shall commit to the following:
1- Attend committee meetings regularly and participate actively in its works.
2- Notify the Chairman of the Committee in writing if there will be any absence or delay from attending any meeting of the Committee for an emergency case.
3- Keep the secrets of the Group and never disclose any information or data.
4- Perform its work, functions and responsibilities with objectivity and impartiality.
5- Disclose to the Committee about any conflict between its own interests and the group interests, whether they are direct or indirect interests, and shall register this in the minutes of the committee. A member with an interest may not participate in voting on the committee’s resolution or recommendation in this regard.
A member of nomination and remuneration committee shall receive (3000 SAR) three thousand Riyal as an attendance allowance for each of the committee meetings, in addition to compensation for actual incurred expenses.
The Board shall appoint the Secretary of the Committee from among the members of the Committee or others and identify its fees. In order to fulfill the tasks and responsibilities of the committee in accordance with the provisions of these regulations, the Secretary of the Committee shall - under supervision of the Chairman – assume the following:
1- Attend the committee meetings without having the right to vote unless he is one of the Committee members.
2- Coordinate with the Committee members with respect to its work including the committee meetings agenda preparation.
3- Prepare minutes for each meeting of the Committee, indicating the number, date, venue and the names of present and absent members. The deliberations of committee meetings and the resolutions or recommendations shall be recorded in these minutes. In addition, the secretary shall write these minutes and related documents in a special register taking into account clause (8) of article (4) of these regulations.
4- The Committee Secretary shall do the necessary procedures in order to facilitate the Committee's functions in following-up the implementation of the decisions and recommendations adopted by the Board of Directors.
5- The Committee Secretary shall complete the administrative and financial procedures of the Committee.
6- The Committee Secretary shall do any of the above tasks of any subcommittees constituted by the committee to accomplish specific tasks.
7- The Committee Secretary shall include any amendments to the provisions of these regulations in a special register along with all the documents based on which the amendments were approved.
8- The Committee Secretary shall comply with all obligations stated under article 6 of these regulations.
1- Nomination and remuneration Committee may seek assistance of any member of the Board of directors or the executive or administrative staff or any of the consultants associated with the group vide agreements or contracts.
2- The committee may also seek assistance from specialized advisory individuals or organizations for the purpose of obtaining advice or conduct research or studies in any matter related to its responsibilities and functions.
3- Nomination and remuneration Committee shall determine the fees, costs and charges resulting from the enforcement of the provisions of the previous clause according to objective and reasonable basics, taking into consideration that this shall be made under agreements, contracts or communications signed by the Chairman of the Committee after approval of its members.
4- The Committee must assure in all its agreements and contracts with whom that assist the group according to the provisions of clause (1) of this article, to preserve the secrets of the Group and never disclose any information or data.
These regulations may only be amended by a resolution of the Board of Directors, taking into consideration, the following procedures and standards:
1- The nomination and remuneration committee shall submit its recommendations and suggestions of any amendment to the provisions of these regulations to the board of directors to take necessary procedures.
2- The Board shall inform the President of the Committee in writing of its decision on the recommendation submitted by the Committee, containing the amended text, if any, and its effective date.
3- The provisions of these regulations shall be effective on the date of issue.