4-1 Legal Information
Issuer Name
The Issuer was registered in the Commercial Register under the trade name “Sumou Real Estate Company”.
History and Incorporation
Sumou Real Estate Company was initially established as a limited liability company with a capital of (SAR 500,000) five hundred thousand Saudi riyals divided into (1,000) one thousand shares of equal value, the value of each of which is (SAR 500) five hundred Saudi riyals, all of which are ordinary cash shares according to the Articles of Association dated 15/07/1427H (corresponding to 09/08/2006G) and Commercial Registration No. (2051034841) issued on 03/06/1428H (corresponding to 18/06/2007G).
Pursuant to the decision of His Excellency the Minister of Commerce and Investment No. (Q/38) dated 04/02/1431H (corresponding to 19/01/2010G), the Issuer was converted into a closed joint stock Company, and the capital was increased after converting the shares into shares with a value of (SAR 10) ten Saudi riyals per share bringing the Issuer's capital to (SAR 150,000,000) one hundred and fifty million Saudi riyals divided into (15,000,000) fifteen million shares of equal value, the value of each of which is (SAR 10) ten Saudi riyals, all are ordinary shares that are identical in all respects. The increase of (SAR 149,500,000) one hundred and nine has been covered by transferring an amount of (SAR 140,000,000) one hundred and forty million Saudi riyals from the retained earnings and an amount of (SAR 9,500,000) nine million five hundred thousand Saudi riyals from the partners’ current account.
The current capital of the Issuer is (SAR 375,000,000) three hundred and seventy-five million Saudi riyals divided into (37,500,000) thirty-seven million five hundred thousand ordinary shares. As at the date of the Transfer Document, the Substantial Shareholders (who own 5% or more of the Issuer's shares) are Sumou Holding Company (which owns 62.979%). The following table shows the ownership details of the Issuer:
Table No. 5: The Issuer’s current ownership structure
Name No. of shares Total value of
shares Direct
Ownership (%) Indirect Ownership (%) Sumou Holding
Company 23,617,265 236,172,650 62.98% None
Ayedh bin Farhan Al-
Qahtani 44,500 445,000 0.12% 65.21%*
Abdul Rahman Ayedh
Al-Qahtani 44,500 445,000 0.12% None
Name No. of shares Total value of
shares Direct
Ownership (%) Indirect Ownership (%) Khaled Ahmed
Mustafa Qayed 37,682 386,820 0.10% None
Bayyenah Hassan Abdul Karim Al-
Qahtani 583,176 5,831,760 1.56% 63.77%**
Society Highness
Company 175,200 1,752,000 0.47% 28.34%***
Bissan Company for Commercial and Real
Estate Investment 77,174 771,740 0.21% 28.34%****
Public (735
Contributors)***** 12,920,503 129,205,030 34.45% NA
Total 37,500,000 375,000,000 100.00% NA
Source: Shareholders Register issued on 04/11/1444H (corresponding to 24/05/2023G) Note 1: All percentages are approximate.
Note 2:
1. Sumou Holding Company was excluded from the public as it is a Substantial Shareholder owning more than 5%
of the shares of the Issuer.
2. Ayedh bin Farhan Al-Qahtani was excluded from the public, as he is the Chairman of the Board of Directors of the Issuer.
3. Abdul Rahman Ayedh Al-Qahtani was excluded as he is a member of the Board of Directors of the Substantial Shareholder in the Issuer (Sumou Holding Company).
4. Khaled Ahmed Mustafa Qayed was excluded as he is one of the senior executives of the Substantial Shareholder in the Issuer (Sumou Holding Company).
5. Bayyenah Hassan Abdul Karim Al-Qahtani was excluded from the public, as she is the wife of the Chairman of the Board of Directors at the Issuer.
6. Sumou Almujtama was excluded from the public as it is a company controlled by the Chairman of the Board of Directors by 100%.
7. Bissan Commercial and Real Estate Investment Company was excluded from the public as it is a 100% controlled by the Chairman of the Board.
* As for the indirect ownership of the Chairman of the Board, Ayedh Al-Qahtani, it amounted to 65.21%, where he owns 100% of the Sumou Almujtama Company, which owns 0.47% of the Sumou Real Estate Company. The ownership of Sumou Almujtama Company is 0.47%. Ayedh Al-Qahtani also indirectly owns shares in Sumou Real Estate Company through his ownership in Sumou Holding Company, which owns 62.98% of Sumou Real Estate Company. Whereas, Sumou Holding Company is owned by each of: Ayedh Al-Qahtani by 10% directly, Bissan Company for Commercial and Real Estate Investment by 45% (in which Ayedh Al-Qahtani owns 100%) and Sumou Almujtama Company by 45% (which is owned 100% by Ayedh Al-Qahtani). Accordingly, Ayedh Al-Qahtani’s ownership percentage in Sumou Holding Company, directly and indirectly, is 100%, as shown: (10% + (45%*100%) + (45%*100%) = 100%). Thus, Ayedh Al-Qahtani owns 62.98% of Sumou Real Estate Company through his ownership
in Sumou Holding Company. The Chairman of the Board of Directors indirectly owns shares in Sumou Real Estate Company through his ownership in Bissan Commercial and Real Estate Investment Company, which owns 0.21%
of Sumou Real Estate Company, and where the Chairman of the Board owns 100% of the shares of Bissan, thus the ownership percentage of the Chairman of the Board of Directors indirectly in Sumou Real Estate Company through the ownership of Bissan Company is 0.21%. Likewise, the Chairman of the Board of Directors owns 0.46% in Arbah Capital Company through his ownership in Athar Company indirectly through his ownership of 100% of the Sumou Almujtama Company and Bissan Commercial and Real Estate Investment Company (Athar Company is owned at 60% by Bissan Commercial and Real Estate Investment Company and at 40% by Sumou Real Estate Company), where Arbah Financial Company owns 0.001% of Sumou Real Estate Company, and therefore the indirect ownership percentage of the Chairman of the Board in Sumou Real Estate Company through the ownership of Arbah Financial Company is 0.000002%. The wife of the Chairman of the Board of Directors owns 1.56% of Sumou Real Estate Company, so the Chairman of the Board owns 1.56% indirectly through his wife’s ownership. Thus, Ayedh Al-Qahtani’s indirect ownership in Sumou Real Estate Company is 65.21%, as shown, 0.47%
+62.98%+0.21%+0.000002%+1.56% = 65.21%.
** The indirect ownership of Bayyinah Hassan Abdul Karim Al-Qahtani (the wife of the Chairman of the Board of Directors) is 63.77%, which is the total ownership of her husband, the Chairman of the Board of Directors of the Issuer, both direct and indirect, except for his indirect ownership through his wife.
*** The indirect ownership of Sumou Almujtama Company is 28.34%, where Sumou Almujtama Company owns 45%
of the shares of Sumou Holding Company, which owns 62.98% of the shares of the Issuer (45%*63.H%=28.34%).
**** The indirect ownership of Bissan Commercial and Real Estate Investment Company is 28.34%, where Sumou Almujtama Company owns 45% of the shares of Sumou Holding Company, which owns 62.98% of the shares of the Issuer (45%*63.H%=28.34%).
***** With reference to the additional liquidity criteria required for the transition, the number of the public who owns (100) one hundred shares or more is 615 shareholders as stated in the shareholder register as of 04/11/1444H (corresponding to 24/05/2023G), who own collectively (34.45%) of the total shares of the Issuer, which represents the number (12,918,455) twelve million nine hundred and eighteen thousand four hundred and fifty-five ordinary shares. Thus, the company has achieved the first criterion of the availability of sufficient liquidity for the shares subject to the transfer request by fulfilling the fourth tranche, which is the presence of more than (600) six hundred shareholders from the public category, and the second criterion by the fact that the number of public shares exceeds one million shares and a percentage of more than 30 %, and the third criterion is through the number of shares owned by each shareholder who meets the definition of the public, as those who own (100) shares or more were counted.
Major changes in the capital
On 04/02/1431H (corresponding to 19/01/2010G), the Issuer was converted into a closed joint stock company, and the capital was increased after converting the shares into shares with a value of (SAR 10) ten Saudi riyals per share, so that the Issuer’s capital became (SAR 150,000,000) one hundred and fifty million Saudi riyals divided into (15,000,000) Fifteen million shares of equal value, the value of each of which is (SAR 10) ten Saudi riyals, and all of them are ordinary shares identical in all respects. The increase of (SAR 149,500,000) one hundred and nine has been covered by transferring an amount of (SAR 140,000,000) one hundred and forty million Saudi riyals from the retained earnings and an amount of (SAR 9,500,000) nine million five hundred thousand Saudi riyals from the partners’ current account.
On corresponding to 26/01/1439H (corresponding to 16/10/2017G), the Extraordinary General Assembly of the Issuer approved the increase of the capital to become (SAR 250,000,000) two hundred and fifty million Saudi riyals, divided into (25,000,000) twenty-five million ordinary shares of equal value, each with a value of (10) ten Saudi riyals. The increase was affected by capitalizing an amount of (SAR 73,456,645) seventy-three million four hundred and fifty-six thousand six hundred and forty-five Saudi riyals from retained earnings, and an amount of (SAR 26,543,355) twenty-six million five hundred forty-three thousand three hundred and fifty-five Saudi riyals from the legal reserve.
On 23/09/1442H (corresponding to 05/05/2021G) the Extraordinary General Assembly of the Issuer approved to increase the Issuer’s capital through bonus shares for the Issuer’s shareholders, and the Issuer’s capital was increased to (SAR 375,000,000) three hundred and seventy-five million Saudi riyals divided into (37,500,000) thirty- seven million five hundred thousand ordinary shares.
Issuer purposes
According to Article No. (3) of the Articles of Association, the Issuer may carry out the following activities:
− Real estate activities.
− Construction.
The activities of the Issuer are based on the commercial registry as follows:
− General construction of residential buildings.
− General construction of non -residential buildings such as schools, hospitals, and others.
− Construction of airports and their facilities.
− Construction of prefabricated buildings on sites.
− Restorations of residential and non -residential buildings.
− Buying and selling lands and real estate and dividing them and selling activities on the map.
Issuer Term
Article Six (6) of the Articles of Association stipulates that the term of the Issuer shall be ninety-nine (99) Gregorian years, starting from the date of its registration in the commercial register. The commercial registry data indicates that the Issuer’s term ended on 17/02/1533H.
Board Formation
The Issuer shall be managed in accordance with Article Seventeen (17) of its Articles of Association, by a Board of Directors consisting of five (5) members elected by the Ordinary General Assembly of Shareholders for a period not exceeding (3) three years.
On 04/05/1443H (corresponding to 08/12/2021G), the Extraordinary General Assembly of shareholders elected members of the Board of Directors for the current term, which started on 24/12/2021G for a period of three years and ends on 22/06/1446H (corresponding to 23/12/2024G). The Board of Directors for the said term is composed of the following gentlemen:
Table No. 6: The Issuer Board of Directors
Name Position Status of
Membership Independence Nationality Ayedh Farhan Al-
Qahtani Chairman Non-executive Non-
Independent Saudi
Saeed Salem AL
Nahdi Deputy Chairman Non-executive Non-
Independent Bahraini Faisal Abdullah
Alkhaldi Member Non-executive Independent Saudi
Khalid Saleh AL Aqeel Member Non-executive Independent Saudi
Essam Ahmed
Kalthoum Member Non-executive Non-
Independent Saudi
Source: Sumou Real Estate Company
The Issuer adheres to the Companies Law and the Corporate Governance Regulations issued by the Board of Directors of the Capital Market Authority. The Issuer also adheres to Article (16) of the Corporate Governance Regulations, which requires the majority of the board members of listed companies to be non-executive members, and that the number of its independent members is not less than two members or one-third of the Board members, (whichever is greater).
4-2 Board of Directors
According to the Issuer’s Articles of Association, the Board of Directors has the widest powers in managing the Issuer in a way that achieves its objectives, and it has the power, within the limits of its competence, to authorize one or more of its members or third parties to undertake specific work or actions.
Board Remunerations
The remuneration of the Board of Directors shall be made in accordance with the stipulations of the Issuer’s Articles of Association. The report of the Board of Directors for the year 2022G, which was approved by the Board of Directors on 29/08/1444H (corresponding to 22/03/2023G), includes a comprehensive statement of all amounts received by the members of the Board of Directors during the fiscal year in terms of bonuses, allowances, expenses and other benefits. It also includes a statement of the number of board sessions and the number of sessions attended by each member. The report was presented to the Ordinary General Assembly of the Issuer for discussion on 12/10/1444H (corresponding to 02/05/2023G).
Board Meetings
According to Article (23) of the Issuer’s Articles of Association, the Board meets at the invitation of its Chairman,
Board Responsibilities
Taking into account the terms of reference of the General Assembly, the Board of Directors shall have the widest powers and authorities necessary to manage the Issuer, and the final responsibility for the Issuer remains with the Board, even if it forms committees or delegates other entities or individuals to carry out some of its work.
The Board must avoid issuing general or indefinite delegations. The Board of Directors must perform its duties responsibly, in good faith, with seriousness and concern, and its decisions must be based on reliable information from the executive management or any other reliable source.
A member of the Board of Directors represents all shareholders, and he must undertake to do what is in the interest of the Issuer in general, and not what urges the interests of the group that he represents, or that voted to appoint him to the Board of Directors. The Board of Directors determines the powers that it delegates to the executive management, decision-making procedures, and the duration of the delegation. It also determines the issues that it retains the power to decide on. The executive management submits periodic reports on its exercise of the delegated powers. The Board of Directors must also ensure that procedures are put in place to familiarize the new Board members with the Issuer's business, especially the financial and legal aspects, as well as training them if necessary. The Board of Directors must ensure that the Issuer provides adequate information about its affairs to all members of the Board of Directors in general, and to non-executive members of the Board of Directors in particular, in order to enable them to carry out their duties and tasks adequately. It is prohibited for the members of the Board of Directors to disclose to the shareholders, outside the meetings of the General Assembly, or to third parties, what they have agreed upon regarding the Issuer’s secrets as a result of their management of the Issuer; otherwise, they must be dismissed and held accountable for compensation. The members of the Board of Directors shall be jointly responsible for compensating the Issuer, the shareholders or third parties for the damage arising from their mismanagement of the Issuer’s affairs or their violation of the provisions of the laws and regulations. The responsibility rests with all members of the Board of Directors unless the error arose from a unanimous decision. As for the decisions issued by the majority of opinions, the dissenters are not responsible for them once they explicitly prove their objection in the minutes of the meeting. Absence from attending the meeting in which the decision is issued shall not be considered a reason for exemption from responsibility unless it is proved that the absentee was not aware of the decision or was unable to object to it after becoming aware of it.
Board Committees
The Board of Directors has two committees, which are:
4-3 Audit Committee
The Audit Committee is formed of four (4) members, who are appointed by the General Assembly held on 26/12/1441H (corresponding to 16/08/2020G) for a period of three years ending on 28/01/1445H (corresponding to 15/08/2023G). On 28/01/1445H (corresponding to 15/08/2023G), the issuer’s Board of Directors issued a resolution extending the membership of the current Chairman and members of the Audit Committee for a period of three years ending on 02/03/1448H (corresponding to 15/08/2026G).
Table No. 7: Members of the Audit Committee
Name Position Independence
Khaled Saleh Al-Aqeel* Chairman of the Committee Independent
Faisal Abdullah Al-Khaldi Member Independent
Saeed Salem Al-Nahdi Member Non-Independent
Name Position Independence
Khaled Ahmed kaid** Member Non-Independent
Ziad Bassam Al-Bassam*** Member Non-Independent
Source: Sumou Real Estate Company note:
* He was appointed according to the decision of the Ordinary General Assembly on 16/10/14443H (corresponding to 17/05/2022G), and his membership began on 09/09/1443H (corresponding to 12/03/2022G).
** His resignation from the Audit Committee membership was accepted by the Board of Directors on 08/08/1443H (corresponding to 12/03/2022G).
*** He was appointed in accordance with the decision of the Ordinary General Assembly on 16/10/1443H (corresponding to 17/05/2022G), and his membership began on 09/09/1443H (corresponding to 12/03/2022G).
Competencies of the Audit Committee
The Audit Committee is responsible for monitoring the Issuer’s business and verifying integrity of the reports, financial statements and internal control systems therein. The committee’s duties and responsibilities include, in particular, the following:
a. Financial reports:
1. Studying the Issuer's interim and annual financial statements before presenting them to the Board of Directors and expressing their opinion and recommendation with regard to ensure their integrity, fairness and transparency.
2. Expressing a technical opinion, at the request of the Board of Directors, whether the report of the Board of Directors and the financial statements of the Issuer are fair, balanced, and understandable, and include information that allows shareholders and investors to evaluate the Issuer's financial position, performance, business model, and strategy.
3. Examining any important or unusual issues contained in the financial reports.
4. Examining carefully any issues raised by the Issuer's financial manager or whoever assumes his duties, the Issuer's compliance officer, or the auditor.
5. Verifying the accounting estimates in material matters contained in the financial reports.
6. Studying the accounting policies followed in the Issuer and expressing an opinion and raise recommendation to the Board of Directors in this regard.
b. Internal audit
1. Studying and reviewing the Issuer's internal and financial control and risk management systems.
2. Studying the internal audit reports and following up the implementation of corrective actions according to the notes contained therein.
3. Controlling and supervising the performance and activities of the internal auditor and the internal audit department in the Issuer, if any, to verify the availability of the necessary resources and their effectiveness in performing the tasks and duties entrusted to them. If the Issuer does not have an internal auditor, the committee shall submit its recommendation to the Board regarding the need to appoint one.
c. Auditor
1. Recommending to the Board of Directors the nomination and dismissal of auditors, determining their fees and evaluating their performance after verifying their independence and reviewing the scope of their work and the terms of their contacts.
2. Verifying the auditor's independence, objectivity and fairness, and the effectiveness of the audit work, taking into account the relevant rules and standards.
3. Reviewing the Issuer's auditor's plan and work and verifying that he does not submit technical or administrative work that is outside the scope of the audit work and expressing its opinions in this regard.
4. Answering the inquiries of the Issuer's auditor and providing the necessary support to enable him to perform his duties.
5. Examining the auditor's report and his notes on the financial statements and following up on what steps have been taken in their regard.
d. Commitment Guarantee
1. Reviewing the results of the regulatory authorities' reports and verifying that the Issuer has taken the necessary measures in this regard.
2. Verifying the Issuer's compliance with relevant regulations, policies and instructions.
3. Reviewing contracts and transactions proposed to be conducted by the Issuer with related parties and submitting its views in this regard to the Board of Directors.
4. Raising the issues, it deems necessary to take action on to the Board of Directors and providing recommendations for the actions to be taken
The Ordinary General Assembly agreed to amend the Audit Committee’s Charter on 16/10/1443H (corresponding to 17/05/2022G).
The Committee held four (4) meetings during the fiscal year ending on December 31, 2022
4-4 Remuneration and Nominations Committee
The Remuneration and Nominations Committee consists of three (3) members who were appointed by the Board of Directors pursuant to the decision of the Board of Directors of the Issuer in its meeting held on 08/10/1441H (corresponding to 31/05/2020G), and ends on 30/05/2023G.
Table No. 8: Members of the Remuneration and Nominations Committee
Name Position Independence
Faisal Abdullah Al-Khaldi Chairman of the Committee Independent
Saeed Salem Al-Nahdi Member Non-Independent
Essam Ahmed Kulthoum Member Independent
Source: Sumou Real Estate Company
The Ordinary General Assembly agreed to amend the work regulations of the Remuneration and Nominations Committee on 16/10/1443H (corresponding to 17/05/2022G)