Nayifat Finance Co.

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Nayifat Finance Co.

Policies and Procedures for Membership in Board and Committees

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Article 1: Definitions

The following words and phrases indicate the meanings described before them unless the context requires otherwise:

 The Company: Nayifat Finance Co.

 The Policy: Policies and procedures for Membership in Board and Committees

 Central Bank (SAMA): Saudi Central Bank

 CMA: Capital Market Authority.

 Market: Saudi Exchange (TADAWUL)

 Key Principles of Governance: the main principles of governance in financial institutions under the supervision of Saudi Central Bank (Issue 3 - June 2021) under Circular No.

(42081293) and date 21/11/1442 H.

 Companies Law: Companies Law issued by the royal decree (M/3) Dated 28-01-1437H

 Governance Regulations: Corporate Governance Regulations issued by the Capital Market Authority

 The Company's By-Law: The By-Law of Gulf Union Cooperative Insurance Company.

 General Assembly: The assembly of the company’s shareholders in accordance with the provisions of the Companies Law

 Board: Board of Directors of Nayifat Finance Co.

 Chairman: Chairman of Nayifat Finance Co.

 Member: Board Member or any of its committees

 Executive Member: A member of the Board of Directors who is full-time in the executive management of the company and participates in its day-to-day business.

 Non-executive Member: a member of the Board who is not a full-time member of the management team of the Company and does not participate in its daily activities.

 Independent Member: a non-executive member of the Board who enjoys complete independence in his position and decisions and none of the independence affecting issues stipulated in the Corporate Governance Regulations issued by the Capital Market Authority apply to him.

By way of example, the following negate the independence requirement for an Independent Director:

1) if he/she holds five percent or more of the shares of the Company or any other company within its group; or is a relative of who owns such percentage.

2) if he/she is a representative of a legal person that holds five percent or more of the shares of the Company or any company within its group;

3) if he/she is a relative of any member of the Board of the Company, or any other company within the Company’s group;

4) if he/she is a relative of any Senior Executive of the Company, or of any other company within the Company’s group;

5) if he/she is a Board member of any company within the group of the Company for which he/she is nominated to be a Board member.

6) if he/she is an employee or used to be an employee, during the preceding two years, of the Company, of any party dealing with the Company or any company within its group, such as external auditors or main suppliers; or if he/she, during the preceding two years, held a controlling interest in any such parties;

7) if he/she has a direct or indirect interest in the businesses and contracts executed for the Company’s account;

8) if the member of the Board receives financial consideration from the Company in addition to the remuneration for his/her membership of the Board or any of its committees exceeding an amount of (SAR 200,000) or 50% of his/her remuneration of the last year for the membership of the board or any of its committees, whichever is less.

9) if he/she engages in a business where he competes with the Company, or conducting businesses in any of the company's activities.

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10) if he/she served for more than nine years, consecutive or inconsecutive, as a Board member of the Company.

 Secretary: Secretary of the Board of Directors of the company.

 Senior Executives: persons responsible for managing the daily operations of the Company, and proposing and executing strategic decisions, such as the Chief Executive Officer (CEO)and his delegates and the Chief Financial Officer(CFO)

 Stakeholders: All those who have an interest with the financial institution include:

shareholders, investors, customers and suppliers.

 Conflict of interest: there is a direct or direct interest in any nominee for membership in the Board of Directors or committees and that interest would influence the contribution of the member concerned to his or her opinion expressing his professional point of view.

 Related Parties:

a. Substantial Shareholders of the company.

b. Board members of the Company or any of its affiliates and their relatives.

c. Senior Executives of the Company or any of its affiliates and their relatives.

d. Board members and Senior Executives of Substantial Shareholders of the company.

e. Entities, other than companies, owned by a Board member or any Senior Executive or their relatives.

f. Companies in which a Board member or a Senior Executive or any of their relatives is a partner.

g. Companies in which a Board member or a Senior Executive or any of their relatives is a member of its Board of directors or is one of its Senior Executives.

h. Joint stock companies in which a member of the Board or a Senior Executive or any of their relatives owns (5%) or more, subject to the provisions of paragraph (D) of this definition.

i. Companies in which a Board member or a Senior Executive or any of their relatives has influence on their decisions even if only by giving advice or guidance.

j. Any person whose advice or guidance influence the decisions of the Company, the Board and the Senior Executives.

k. Holding companies or affiliates.

 Relatives:

a. Fathers, mothers, grandfathers and grandmothers (and their ancestors).

b. children and grandchildren and their descendants.

c. siblings, maternal and paternal half-siblings.

d. Husbands and wives.

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Article 2: Preamble

1) The Nominations and Remunerations Committee has prepared the policy, standards and procedures for membership in the Board of Directors of Nayifat Finance Company, in accordance with the companies law and its executive regulations, the company's bylaws, the main principles of governance issued by Saudi Central Bank, the regulations of corporate governance issued by CMA and the requirements for appointment to leadership positions in financial institutions under the supervision of Saudi Central Bank.

2) This policy is amended only on the recommendation of the Board of Directors - at the suggestion of the Nominations and Remunerations Committee - and does not apply until the approval of the General Assembly, unless regulations and instructions issued by the competent authorities include otherwise.

3) The provisions in this policy do not prejudice the right of each shareholder of the company to stand for election or otherwise to the Board of Directors in accordance with the provisions of the company’s law and its executive regulations.

4) This policy is amended only on the recommendation of the Board of Directors - at the suggestion of the Nominations and Remunerations Committee - and the amendment does not apply until the approval of the General Assembly of the company, unless regulations, regulations and instructions issued by the competent authorities include otherwise.

Article 3: Objectives of the Policy

This policy aims to establish clear and specific criteria and procedures that clarify to the company's shareholders and nominees for board membership, the conditions, standards and procedures followed when selecting board members by the General Assembly of Shareholders.

Article 4: Shareholder's right to nominate

Each shareholder of the company has the right to nominate himself or another person or more to the Board of Directors, within the limits of his or her ownership of the capital when the terms of membership are met in accordance with the provisions of this regulation.

Article 5: Criteria and conditions of membership in the Board of Directors

A member of the Board is required to be professionally capable and has the required experience, knowledge, skill and independence, which enable him/her to perform his/her duties efficiently. He/she shall have the following qualifications in particular:

1) Ability to lead: He/she shall enjoy leadership skills which enable him/her to delegate powers in order to enhance performance and apply best practices in effective management and compliance with professional ethics and values.

2) Competency: He/she shall have the academic qualifications and proper professional and personal skills as well as an appropriate level of training and practical experience related to the current and future businesses of the Company and the knowledge of

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management, economics, accounting, law or governance, as well as the desire to learn and receive training.

3) Ability to guide: He/she shall have the technical, leadership, and administrative competencies as well as the ability to take prompt decisions, and understand technical requirements and developments related to the job. He/she shall also be able to provide strategic guidance and long-term planning and have a clear future vision.

4) Financial knowledge: He/she shall have the ability to read and understand financial statements and reports.

5) Physical fitness: He/she shall not suffer from any health issue that may hinder him/her from performing his/her duties and responsibilities.

6) The member should have the following qualities:

a. Honesty, integrity, good reputation and justice: he must not have been convicted of a crime of integrity or corruption, be honest and reputable, and have a sincere professional relationship with the financial institution, which discloses any relevant information before carrying out any transaction or contract with the financial institution or with one of its subsidiaries or owners.

b. Loyalty: Avoid transactions involving conflicts of interest, ensure fair transactions, and that they are conducted for the benefit of the financial institution and stakeholders.

c. Care and attention: performing his duties and responsibilities effectively, and ensuring that all information is met that will ensure that the decisions taken are in the interest of the financial institution.

7) The person applying for the Board of Directors must not have previously been convicted of a crime of dishonor and honesty or convicted of conduct contrary to business, bankruptcy or unfit for membership of the Board in accordance with any applicable regulations or instructions in the Kingdom.

8) Shall not be a senior executive or a member of the Board of Directors of a company that is most famous for bankruptcy or liquidated on the basis of a court order.

9) The Nominee shall not serve on the Board of Directors of more than five listed joint stock companies at the same time at the beginning of the nominating board session or at the time of appointment, whichever is closer.

10) When applying for board of directors, there is no conflict of interest, and in the event of an independent candidacy, the nominee must not have any of the symptoms of independence.

11) Shall not be a member of the Board of Directors of any of the company's competing joint stock companies.

12) For current or former members of the Board of Directors of the Company, and if the member wishes to re-nominate him or her as a member, it is preferable that the member's service should not exceed twelve consecutive or sporadic years.

13) To have the possibility to allocate sufficient time to meet the responsibilities of the board member.

Article 6: Documents required for nomination

Each candidate for the Board of Directors must apply for nomination to the Company during the announced nomination period with the following:

1) Filling out and signing the company's application for nomination during the specified nomination period, and attaching with it the candidate's cv, qualifications and experience in general and in the field of finance in particular, with copies of certificates and qualifications attached and attaching a clear and valid picture of the national

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identity and family register of individuals or the commercial register of companies and institutions with the application for nomination, the nominees’ contact numbers and passport photo.

2) Fully fill out the SAMA Fit & Proper form and provide the company with a full copy of the application and sign each page in PDF and an electronic version in word that matches the signed version. The candidate can obtain the form (the " Fit & Proper") from the SAMA website.

sa/Finance/FinanceForms/Fit_and_Proper_Form.docx -

https://www.sama.gov.sa/ar

3) Fill out forms specified by the CMA such as (Form 3 CV), sign it in PDF and electronic version (word) identical to the signed version. It can be obtained from the CMA website.

ations/FormsSite/Documents/Form3.doc https://cma.org.sa/_layouts/15/download.aspx?SourceUrl=/RulesRegul

4) Membership status must be clarified, i.e. whether he or she is a nominee as an independent member, non-executive member or executive member.

5) The nature of membership must be clarified, i.e. whether he is a candidate in his or her personal capacity or is represented by a legal person.

Article 7: Nomination procedures for board of directors

The Nominations and Remunerations Committee, in coordination with Board secretary, oversees the preparation of the board elections long before the end of the current Board session and the proceedings are carried out as follows:

1) The company announces the opening of the door to nomination for membership of the Board of Directors and the announcement is published in accordance with the models and procedures regulated for this on TADAWUL and the company's website and in any other means specified by the competent authorities before the end of the current board session.

2) Nominations will continue to be opened for at least 30 days from the date of the announcement in order to allow candidates sufficient time and time.

3) If the required number of nominees for the Board is not available within the specified period, the nomination period will be extended until the required number is completed.

4) Nominees submit their applications in accordance with the conditions and standards set out in the company's announcement - accompanied by the documents required under this regulation and sent to the company's headquarters or through the specified means of communication and within the specified period in the company's announcement to open the nomination.

5) Applications are received in accordance with the stated conditions, and after the expiry of the specified period of applications as mentioned above, the Nominations and Remunerations Committee reviews the applications submitted and recommends to the Board of Directors the nominees eligible for the new board session in accordance with the criteria adopted in this regard, and the Nominations and Remunerations Committee is entitled to interview candidates in person.

6) The Nominations and Remunerations Committee must take into account the diversity of scientific qualification and practical experience in the trade-off between nominees, prioritize the required needs of those with the appropriate skills to serve on the Board of Directors, and that the number of independent members should not be less than two or one third of the board members, whichever is more, and that the number of executive members should not exceed two.

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7) A request for SAMA non-objection to nominees for membership of the Board of Directors is submitted after the board of directors approves the recommendations of the Nominations and Remunerations Committee, and these names are then submitted after obtaining the approval of SAMA to the General Assembly of the company's shareholders for the election.

Article 8: Procedures for electing board members

1) The company's Bylaws determines the number of board members, with the company being managed by a board of (9) members.

2) The General Assembly elects members of the Board of Directors for the duration stipulated in the company's statutes provided that they do not exceed three years, and may be re-elected unless the company's statute provides otherwise.

3) The General Assembly of the Company is invited to convene and a provision is included on its agenda for the election of members of the Board of Directors from among the qualified nominees, and this is announced at least (21 days) before the meeting of the Association, and shareholders are allowed to vote electronically on the items of the association listed in the meeting, and attached with the invitation annexes to the meeting a description of the candidates' experiences, qualifications, skills, functions and past and current memberships with the recommendation of the Committee of Nominations and Remunerations and any other annexes requested by the competent authority, and the company must provide a copy of this information in its main center.

4) The number of nominees for the Board of Directors whose names are put before the General Assembly must exceed the number of seats available so that the General Assembly has the opportunity to choose from among the nominees as well, taking into account the availability of sufficient independent members.

5) The cumulative voting method is followed in the election of board members.

6) Voting in the General Assembly is limited to nominees for the Board of Directors whose information the company has announced.

7) The results of the General Assembly meeting will be announced as soon as it is over and the names of the elected members of the Board of Directors are mentioned in the election clause, the recipe for their membership and the date of the beginning and end of the session.

8) The Chairman and vice Chairman of the Board of Directors (non-executives) are elected and MD is appointed when the Board of Directors deems appropriate, and the secretary of the Board is appointed and the committees formed - except the Audit committee, where they are formed by decision of the General Assembly on the recommendation of the Board of Directors - in accordance with the regulations and conditions of each committee at the first meeting of the Board after the beginning of the board session and approval of these appointments is taken by SAMA and announced.

9) The company must notify the regulators of the names of the board members, their membership recipes, the managing director "if any", the formed committees and the secretary within five working days of the start of the board session or from the date of their appointment - whichever is closer - and any changes to their membership within five working days of the date of the changes.

10) Introductory programs are prepared for newly appointed board members to publicize the company's mission, strategic objectives and activities, and each member is provided with a note explaining the tasks and responsibilities involved in its membership.

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Article 9: Membership Vacancy

1) According to the company's Bylaws and after meeting the requirements of convenience decided by SAMA and obtaining a letter from it containing its non-objection, if the status of a member of the Board of Directors is vacant for any reason, the Board was to appoint an interim member of the vacant position in order to obtain votes in the assembly that elected the Board, provided that the members of the board are experienced and sufficient and must inform the regulators - within five working days - of the date of appointment, and The appointment is submitted to the general assembly at its first meeting and the new member completes the term of his predecessor. The company declares this in accordance with the statutory regulations.

2) If the necessary conditions for the board of directors are not met because of the lack of members below the minimum stipulated in the Companies law or Company Bylaws, the rest of the members must convene within 60 days to elect the necessary number of members.

Article 10: Disclosure of conflict of interest by the Nominee

A person who desires to nominate himself/herself for the membership of the Board shall disclose to the Board or the General Assembly any cases of conflicts of interest, including:

1) having direct or indirect interest in the contracts and businesses entered into for the benefit of the Company in which he/she desires to be nominated to the Board.

2) Engaging in business that may compete with the Company or any of its activities.

3) The company takes the necessary measures in the event that the candidate discloses the availability of the above (in 1,2) and an item is included in the assembly's agenda to obtain permission from the association for the member and must precede the election clause of the members of the Board of Directors if the general assembly does not authorize the transaction in which the member has an interest excluded from the list of candidates and the next is chosen in the vote.

Article 11: Review and Effectiveness.

1) The policy is subject to periodic review and supervision - when needed - by the Nomination and Remuneration Committee, and any suggested amendments by the Committee are presented to the Board of Directors, which studies and reviews the amendments then recommends to the General Assembly of the company’s Shareholders for approval.

2) Everything that is not mentioned in this policy for which Companies Law and its regulations, the Capital Market Authority’s law and its regulations, the company’s By- Law and the resolutions issued by the competent authorities in relation to the policy shall apply.

Nayifat Finance Co.