RISKS RELATED TO FAILURE TO OBTAIN AND RENEW LICENSES, PERMITS AND CERTIFICATES

DEFICIT 13 2.1.12 RISKS RELATED TO THE INCREASE IN THE COMPANY’S CURRENT LIABILITIES AGAINST ITS

2.1 Risks Related to the Company’s Activity and Operations .1 Risks Related to the Inability to Implement the Strategy

2.1.6 RISKS RELATED TO FAILURE TO OBTAIN AND RENEW LICENSES, PERMITS AND CERTIFICATES

The Company and its subsidiaries shall obtain and maintain the various regulatory permits, licenses and approvals regarding its activities. These licenses include, but not limited to, the following: The license issued by the Ministry of Media (The Ministry of Culture and Information) or General Commission for Audiovisual Media, Company registration certificates issued by Ministry of Commerce, Chamber of Commerce membership certificates, trademark registration certificate, Saudization certificates, social insurances, Zakat certificates, and VAT registration certificate.

The Company and its subsidiaries should comply with the terms and conditions of each licence, permit or certificate they have obtained. If none of these companies can do that, it may not be able to renew such licences, permits and certificates or obtain other new ones, which it may need from time to time for the purposes of expanding its activities which may result in the suspension or disruption of the business of the Company or the imposition of financial fines on it by government agencies. In turn, this will have a material and adverse impact on the Company’s business, financial position, results of its operations and prospects.

The following are details of the expired permits and licences of the Company, its branches and subsidiaries indicating the consequences of each:

1. Tihama Advertising and Public Relations and Marketing (under Commercial Register No. 1010016722): The Company does not have a civil defence certificate and a VAT registration certificate. The Zakat certificate issued to both the Company and its branch is also expired. That will result in the following:

a. Failure to obtain a civil defense permit breaches the Civil Defense Law issued by Royal Decree No. (M/10) dated 10/05/1406H (corresponding to 01/21/1986G) and amended by Royal Decree No. (M/66) dated 10/02/1424H (corresponding to 26/11/2003G), which will expose the Company to penalties and fines stipulated in Article (30) of the same Law, that provides any person violating any of the provisions of this Law, its regulations, or decisions issued thereupon, shall be subject to imprisonment for a term not exceeding six months, a fine not exceeding

b. 30,000 riyals, or both. Failure to obtain a civil defence permit will also result in unable the Company to renew a municipal licence. If it is unable to obtain a safety licence from the civil defence, this may cause to close the headquarters until the statutory procedures are completed.

c. The absence or renewal of the said permits is a breach of the companies law, resulting in a fine not exceeding five hundred thousand (500,000). The fine shall be doubled if repeated within 3 years of the date of the judgement by the imposition of the fine.

d. Failure to obtain or renew Zakat certificates would result in preventing from contracting with government agencies.

e. Non-registration of VAT within the period specified in the Regulations will result in a fine of (10,000) ten thousand Saudi Riyals. If the unregistered person issues a tax bill, it shall be liable to a fine not exceeding one hundred thousand (100,000) Saudi Riyals. A fine may also be doubled for the violator if the violation is repeated within three years of the date of the decision.

2. Tihama Distribution Company (under Commercial Register No. 1010630677): The Company dose not have the following certificates: 1) Media License, 2) VAT Certificate, 3) Social Insurance Certificate, 4) Performance Report, 5) Wage Protection Certificate. According to the commercial registry, Tihama Distribution Company has two activities requiring a licence. The Company has not provided the relevant licenses. That will result in the following:

a. The absence or renewal of the said permits is a breach of the companies law, resulting in a fine not exceeding five hundred thousand (500,000). The fine shall be doubled if repeated within 3 years of the date of the judgement by the imposition of the fine.

b. Failure to obtain or renew Zakat certificates would result in preventing from contracting with government agencies.

c. Non-registration of VAT within the period specified in the Regulations will result in a fine of (10,000) ten thousand Saudi Riyals. If the unregistered person issues a tax bill, it shall be liable to a fine not exceeding one hundred thousand (100,000) Saudi Riyals. A fine may also be doubled for the violator if the violation is repeated within three years of the date of the decision.

d. Failure to upload the wage protection file on a monthly basis or adhere to, when uploading the file on a monthly basis, with the compliance rate specified by the ministry will also result in a fine ranging from five thousand (5000) Saudi Riyals to fifteen thousand (15,000) Saudi Riyals.

3. Branch - Tihama Distribution Company (under Commercial Register No. 4030032382): The Company dose not have the following certificates: 1) Media License, 2) Certificate of Municipalities,Secretariats and Commercial Enterprises, 3) Civil Defense Certificate. According to the commercial registry, Tihama Distribution Company has two activities requiring a license. The Company has not provided the relevant licenses. It should be noted that Tihama Distribution Company does not engage in any activities. That will result in the following:

b. 30,000 riyals, or both. Failure to obtain a civil defense permit will also result in unable the Company to renew a municipal license. If it is unable to obtain a safety licence from the civil defense, this may cause to close the headquarters until the statutory procedures are completed.

c. The absence or renewal of the said permits is a breach of the companies law, resulting in a fine not exceeding five hundred thousand (500.000). The fine shall be doubled if repeated within 3 years of the date of the judgement by the imposition of the fine.

d. Failure to obtain or renew Zakat certificates would result in preventing from contracting with government agencies.

f. Failure to upload the wage protection file on a monthly basis or adhere to, when uploading the file on a monthly basis, with the compliance rate specified by the ministry will also result in a fine ranging from five thousand (5000) Saudi Riyals to fifteen thousand (15,000) Saudi Riyals.

4. Tihama Education Company (under Commercial Register No. 1010556302): The Company dose not have the following certificates: 1) Media License, 2) civil defense certificate. That will result in the following:

5. Branch - Tihama Education Company (under Commercial Register No. 1010519778): The Company dose not have the following certificates: 1) Social Insurance Certificate, 2) Nitaqat Certificate, 3) Saudization Certificate, 4) Wage Protection Certificate, 5) Media License, 6) VAT Certificate. The Municipal License expired. That will result in the following:

a. Non-renewal of the municipal license is considered a violation of the requirements of the Ministry of Municipal, Rural Affairs and Housing, which may expose the branch to the penalties stipulated in the list of penalties for municipal violations (issued on 02/05/1442H (corresponding to 9/22/2022G) may reach five hundred thousand (500,000) Saudi Riyals in addition to closing the branch, which will negatively affect its operations.

b. The absence or renewal of the said permits is a breach of the companies law, resulting in a fine not exceeding five hundred thousand (500,000). The fine shall be doubled if repeated within 3 years of the date of the judgement by the imposition of the fine.

e. The absence of a Saudization Certificate will also prevent the branches from participating in tenders and applying for new projects. The Saudization certificate is one of the key documents to be attached to the submission file for government and private tenders and bids, which will adversely affect the productivity and revenues of the Company.

6. Tihama for Commercial Investment Holding Company: The Company dose not have the following certificates:

1) Social Insurance Certificate, 2) Nitaqat Certificate, 3) Saudization Certificate, 4) Wage Protection Certificate, 5) VAT Registration Certificate. It should be noted that Tihama for Commercial Investment Holding Company does not engage in any activities. That will result in the following:

b. Non-registration of VAT within the period specified in the Regulations will result in a fine of (10,000) ten thousand Saudi Riyals. If the unregistered person issues a tax bill, it shall be liable to a fine not exceeding one hundred thousand (100,000) Saudi Riyals. A fine may also be doubled for the violator if the violation is repeated within three years of the date of the decision.

c. Failure to upload the wage protection file on a monthly basis or adhere to, when uploading the file on a monthly basis, with the compliance rate specified by the ministry will also result in a fine ranging from five thousand (5000) Saudi Riyals to fifteen thousand (15,000) Saudi Riyals.

d. The absence of a Saudization Certificate will also prevent the branches from participating in tenders and applying for new projects. The Saudization certificate is one of the key documents to be attached to the submission file for government and private tenders and bids, which will adversely affect the productivity and revenues of the Company.

7. Fast Advertising Company: The Company dose not have the following certificates: 1) Media License Certificate. According to the commercial registry, Fast Advertising Company has one activity requiring a license. The Company has not provided the relevant licenses. That will result in the following:

a. The absence or renewal of the said permits is a breach of the companies law, resulting in a fine not exceeding five hundred thousand (500.000). The fine shall be doubled if repeated within 3 years of the date of the judgement by the imposition of the fine.

8. Estidama Real Estate Company: The Company dose not have the following certificates: 1) Chamber of Commerce Certificate, 2) Certificate of Municipalities,Secretariats and Commercial Enterprises, 3) Civil Defense Permit Certificate, 4) Social Insurance Certificate, 5) Nitaqat Certificate, 6) Wages Protection Certificate, 7) Saudization Certificate, 8) Media License, 9) VAT Certificate. The Company’s commerial registry expired. That will result in the following:

a. Breach of article (5) of the Commercial Registry law which stipulates that anyone is registered in the Commercial Registry must deposit with the Commercial Registry Office within thirty days of the date of registration, a certificate of participation in the Chamber of Commerce. That may expose the Company to the fine provided for in the Article (15) of the commercial registry law not exceeding (500,000) five hundred thousand Saudi Riyals in addition to the Company’s inability to benefit from the services provided by the Chambers of Commerce, resulting in the disruption of the Company’s operations in this matter.

b. Non-renewal of the municipal license is considered a violation of the requirements of the Ministry of Municipal, Rural Affairs and Housing, which may expose the branch to the penalties stipulated in the list of penalties for municipal violations (issued on 02/05/1442H (corresponding to 9/22/2022G) may reach five hundred thousand (500,000) Saudi Riyals in addition to closing the branch, which will negatively affect its operations.

c. The absence or renewal of the said permits is a breach of the Companies law, resulting in a fine not exceeding five hundred thousand (500.000). The fine shall be doubled if repeated within 3 years of the date of the judgement by the imposition of the fine.

d. Non-registration of VAT within the period specified in the Regulations will result in a fine of (10,000) ten thousand Saudi Riyals. If the unregistered person issues a tax bill, it shall be liable to a fine not exceeding one hundred thousand (100,000) Saudi Riyals. A fine may also be doubled for the violator if the violation is repeated within three years of the date of the decision.

e. Failure to upload the wage protection file on a monthly basis or adhere to, when uploading the file on a monthly basis, with the compliance rate specified by the ministry will also result in a fine ranging from five thousand (5000) Saudi Riyals to fifteen thousand (15,000) Saudi Riyals.

f. The absence of a Saudization Certificate will also prevent the branches from participating in tenders and applying for new projects. The Saudization certificate is one of the key documents to be attached to the submission file for government and private tenders and bids, which will adversely affect the productivity and revenues of the Company.

9. Tihama Modern Bookstores Company: The certificate of Municipalities,Secretariats and Commercial Enterprises isn’t available with the Company. The Company has a number of expired Certificates which are: 1) Zakat Certificate issued by the Zakat, Tax and Customs Authority under No. 1030891147 dated 04/08/1442H and expired on 18/09/1442H (corresponding to 30-04-2021G). 2) Media License Certificate under No. 20088 dated 29/06/1414H and expired on 27/10/1441H. 2) Shop Opening License under No.1100056187 expired on 21/06/1438H. 4) Civil Defense Permit Certificate in Jeddah under No. 000023-38289 issued by the Field Safety Center in Al-Shatea on 12/04/1438H and expired on 12/04/1439H. That will result in the following:

a. Failure to obtain or renew Zakat certificates would result in preventing from contracting with government agencies.

c. Non-renewal of the municipal license is considered a violation of the requirements of the Ministry of Municipal, Rural Affairs and Housing, which may expose the branch to the penalties stipulated in the list of penalties for municipal violations (issued on 02/05/1442H (corresponding to 9/22/2022G) may reach five hundred thousand (500,000) Saudi Riyals in addition to closing the branch, which will negatively affect its operations.

d. Failure to obtain a civil defense permit breaches the Civil Defense Law issued by Royal Decree No. (M/10) dated 10/05/1406H (corresponding to 01/21/1986G) and amended by Royal Decree No. (M/66) dated 10/02/1424H (corresponding to 26/11/2003G), which will expose the Company to penalties and fines stipulated in Article (30) of the same Law, that provides any person violating any of the provisions of this Law, its regulations, or decisions issued thereupon, shall be subject to imprisonment for a term not exceeding six months, a fine not exceeding

e. 30,000 riyals, or both. Failure to obtain a civil defense permit will also result in unable the Company to renew a municipal license. If it is unable to obtain a safety licence from the civil defense, this may cause to close the headquarters until the statutory procedures are completed.

10. Tihama International Advertising Company: The Company dose not have the following certificates: 1) Social Insurance Certificate, 2) Saudization Certificate, 3) Nitaqat Certificate, 4) Wage Protection Certificate, 5) Media License, 6) VAT Registration Certificate. That will result in the following:

a. The absence of a Saudization Certificate will also prevent the branches from participating in tenders and applying for new projects. The Saudization certificate is one of the key documents to be attached to the submission file for government and private tenders and bids, which will adversely affect the productivity and revenues of the Company.

b. The absence or renewal of the said permits is a breach of the companies law, resulting in a fine not exceeding five hundred thousand (500.000). The fine shall be doubled if repeated within 3 years of the date of the judgement by the imposition of the fine.

11. Nasej Al Khayal Audiovisual Media Production Company: The Company dose not have the following certificates: 1) Social Insurance Certificate, 2) Saudization Certificate, 3) Nitaqat Certificate, 4) Wage Protection Certificate, 5) Media License. The Company’s commerial registry expired. That will result in the following:

b. Failure to upload the wage protection file on a monthly basis or adhere to, when uploading the file on a monthly basis, with the compliance rate specified by the ministry will also result in a fine ranging from five thousand (5000) Saudi Riyals to fifteen thousand (15,000) Saudi Riyals.

12. Aventus Global Trading LLC: The Company has a number of expired Certificates which are: 1) Media License Certificate of the Aventus Global Trading’s branch (W. H. Smith) under No. 6627134 ended on 27/04/2022G.

2) Civil Defense Permit Certificate of Aventus Global Trading LLC in Dubai, UAE under No. BD-ALST-0001374 issued on 04/06/2021G, and the subscription is renewed annually and the certificate was not provided to us after renewal 3) Civil Defense Permit Certificate of Aventus Global Trading LLC in Dubai, UAE under the No.

BD-ALST-0005550 issued on29/04/2021, and the subscription is renewed annually.

13. TIhama New Media Company: The Company dose not have the following certificates: 1) Social Insurance Certificate, 2) Saudization Certificate, 3) Nitaqat Certificate, 4) Wage Protection Certificate, 5) VAT Registration Certificate. It should be noted that TIhama New Media Company does not engage in any activities. That will result in the following:

In case of the Company’s and its subsidiaries inability to renew its current licenses, permits and certificates, or to obtain any licenses necessary for its business, or if any of its licenses are suspended or expired, or if any of those licenses were renewed on conditions that are not appropriate for the Company, or in the event that the Company is unable to obtain the additional licenses, permits and certificates that may be required of it in the future, this may expose the Company to cease and stop its operations, e.g. Company closure or freezing all services obtained from supervisory authorities (e.g. renewing licenses and certificates, issuing visas, residence permits, and transferring sponsorships ... etc). This will result in disruption of Company’s operations and incurring additional costs and financial penalties according to the relevant regulations, and consequently, which would have a material adverse impact on the Company’s business, results of operations, financial condition and prospects. (for more information, please refer to Subsection (10.3) “Licenses, Permits and Certificates” of Section (10) “Use of Offering Proceeds” of this Prospectus).

Dalam dokumen Tihama Advertising and Public Relations Co. (Halaman 45-49)