CONFLICT OF INTEREST POLICY
Version 2.0 5 December 2017
Document Description:
Document Title Conflict of Interest Policy
Issuance/ Revision 2.0
Date 5 December 2017
Owner Human Resource
Author Risk Management & Business Continuity
Approvals
Name Role Signature Date
Legal Director Review
Chief Human Resource & Corporate Communication Officer
CHR&CO Review
Chief Executive Officer CEO
(Review) Board Independent member –
Corporate Governance
Review & Recommend
Chairman of the Board Chairman of the Board (Approval)
Document Change History
Date Issuance/
Revision
Author Description of Changes
2 September 2012 1 - First version
5 December 2017 2 HR & Risk Management &
Business Continuity
Changes based on the updated Companies Law and Corporate Governance Regulations.
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T ABLE OF C ONTENT
1. Introduction ... 2
2. Purpose ... 2
3. Policy Principles ... 3
4. Conflict of interest principles ... 4
4.1 Board of Directors ... 4
4.2 Senior Executives and management ... 6
5. Company Assets ... 6
6. Procedures for disclosure ... 7
7. Records and documentation of misconduct ... 8
8. Definitions... 10
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1. Introduction
1.1 The Board of the Mobile Telecommunications Company Saudi Arabia ("Zain KSA” or “the Company”) in its attempt to adopt a Corporate Governance Framework in line with the Corporate Governance Regulations dated 13 February 2017 issued by the Capital Market Authority ("CMA") of the Kingdom of Saudi Arabia, and in order to ensure that it remains aligned with the requirements of Companies Law 2015 issued by Ministry of Commerce and Investment (“MoCI”) and leading practices in terms of Corporate Governance has approved this policy (Article 22 (2.a) of Corporate Governance Regulations).
1.2 This Conflict of Interest Policy is intended to set forth guidelines and scenarios for each of the Board members, the Executive Management, and the shareholders. This includes misuse of the Company’s assets and facilities and the mismanagement resulting from transactions with Related Parties.
1.3 Expressions and words in this Policy shall have the meaning set forth in the Companies Law 2015 and Corporate Governance Regulations issued by CMA.
1.4 The Board will review periodically this document to ensure that the policies and processes both meet the statutory requirements and applicable regulations and remain in line with leading practices.
2. Purpose
2.1 The purpose of the Conflicts of Interest Policy is to protect Zain KSA when it is contemplating entering into a transaction or arrangement that might benefit the private interest of an employee, officer, director and/or board member of Zain KSA and provide Zain KSA with a procedure which, if observed, will allow a transaction to be treated as valid and binding even though an employee, officer, director and/or board member has or may have a conflict of interest with respect to the Transaction.
2.2 This Policy is intended to supplement but not replace any applicable laws or regulations governing conflicts of interest in the Kingdom of Saudi Arabia including but not limited to the provisions of the Companies Law 2015 and the Corporate Governance regulations.
2.3 The Policy is applicable to all shareholders, board members, senior executives1 and employees of Zain KSA. The policy will also extend to transactions, contracts and arrangements made by the family members Board and senior executives who shall all be regarded as related parties.
2.4 The objectives of the policy are:
To provide guidance on the behaviors expected in accordance with Company standards and regulations.
To protect both the Company and the individuals involved from any appearance of impropriety and to ensure compliance to statutory and best practice requirements.
To promote transparency and to avoid business-related conflict of interest.
To ensure fairness in the interests of employees and Zain KSA.
To document the process for the disclosure, approval and review of activities that may amount to actual, potential or perceived conflict of interest.
1Persons responsible for managing the daily operations of the Company, and proposing and executing strategic decisions, such as the Chief Executive Officer (CEO) and his/her delegates and the Chief Financial Officer (CFO).
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3. Policy Principles
3.1 Without prejudice to the provisions of the Companies Law and Its Implementing Regulations, conflicts of interest situations and Related Parties transactions shall be dealt with in accordance with Part 3, Chapter 6 of Corporate Governance Regulations (Article 42 of Corporate Governance Regulations).
3.2 As per Article 44 of Corporate Governance, a member of the Board shall:
Perform his/her duties with honesty and integrity, and priorities the interests of Zain KSA over his/her own interest, and not use his/her position to achieve personal interests.
Avoid situations of conflicts of interest and notify the Board of situations of conflict which may affect his/her neutrality when looking into matters presented before the Board. The Board shall not allow such member to be involved in deliberations and shall not count his/her vote when voting on such matters in the Board and the Shareholders Assemblies meetings and
Protect the confidentiality of the information related to Zain KSA and its activities, and not disclose any of such information to any person.
3.3 For senior executives and employees of the Zain KSA, following shall be followed on conjunction ethical standards as mentioned in Zain KSA Code of Conduct.
Perform his/her duties with honesty and integrity, and priorities the interests of Zain KSA over his/her own interest, and not use his/her position to achieve personal interests;
Avoid situations of conflicts of interest and notify the Chief Human Resource Officer (CHR&CO) Human Resource (“HR”) of situations of conflict which may affect his/her neutrality when looking into matters presented for decision making purposes. In case, conflict relates to CHR&CO him/herself, matters shall be reported to Chief Executive Officer (“CEO”).
No member of senior executives shall be allowed to be involved in deliberations and in the decision making process on such matters and
He/she shall protect the confidentiality of the information related to Zain KSA and its activities, and not disclose any of such information to any person.
3.4 Since situations leading to conflict of interest are inevitable, it is expected that the interested persons follow transparency in their actions based on full disclosure of relevant information by them. The following guidelines are suggested for management of actual or potential conflict of interest and to address disputes arising out of conflict of interest and maintenance of confidentiality:
Appropriate disclosure of the conflicting situations involved in a decision or transaction.
Abstaining from participating in decision making process or transactions involving such situations.
Obtaining appropriate approvals to avoid conflicts; and
Report policy breaches that may have arisen unintentionally.
Restrict the flow of confidential and inside information.
Put in place procedures governing access to electronic data.
Segregation of duties that may give rise to conflict of interest if carried on by the same individual.
A log of all external business interests of directors and employees.
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3.5 Non-compliance with this policy will be considered a misconduct and employees shall be subject to disciplinary actions.
3.6 Each new employee or a Board member shall annually review a copy of this Policy to acknowledge in writing that he/she or she has abided by it. All are required to declare their outside interests when they join Zain KSA.
3.7 Each employee and a Board member shall semi – annually complete a disclosure form (Annexure III) identifying any relationships, positions or circumstances in which the employee or Board member is involved that he/she or she believes could contribute to a Conflict of Interest arising (Required by Article 43 (4) of Corporate Governance Regulations).
3.8 NRC to annually ensure the absence of any conflicts of interest if a Board member also acts as a member of the Board of directors of another company (Article 65 of Corporate Governance Regulations).
3.9 Any information regarding business interests shall be treated as confidential and shall generally be made available only to the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) or other employees who, due to the nature of the disclosure, are required to be made aware of it, except to the extent additional disclosure is necessary in connection with the implementation of this Policy
4. Conflict of interest principles 4.1 Board of Directors
Following are the requirements mentioned in Part 3, Chapter 6 of the Corporate Governance Regulations and Articles 71, 72 & 73 of Companies Law 2015 for conflict of interest within Board of Directors
4.1.1 A Board member shall not, without a prior authorization from the General Assembly, to be renewed each year, have any interest (whether directly or indirectly) in Zain’s business and contracts. The activities to be performed through general bidding shall constitute an exception where a Board member is the best bidder, in accordance with Zain KSA procurement policies. 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 Zain’s account. Such notification shall be entered in the minutes of the meeting. A Board member who is an interested party (direct or indirect) shall not be entitled (prohibited) to vote on the resolution to be adopted in this regard neither in the General Assembly nor in the Board. The Chairman of the Board of Directors shall notify the General Assembly, 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 company’s auditor. (Articles 71 the Companies Law & Article 44 of Corporate Governance Regulations).
A board member who plans not to attend a meeting at which he/she has reason to believe that the board will act on a matter in which the person has a conflict of interest shall disclose to the Chairman of the meeting all facts material to the Conflict of Interest prior to the meeting. The Chairman shall report the disclosure at the meeting and the disclosure shall be reflected in the minutes of the meeting which shall be available to Shareholders.
4.1.2 A Board member shall not, without a prior authorization of the General Assembly, to be renewed annually, participate in any activity which may likely compete with the
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activities of the company, or trade in any branch of the activities carried out by the company.
4.1.3 If the General Assembly rejects renewing the authorization granted pursuant to Articles 71 and 72 of the Companies Law and Article 46 of Corporate Governance Regulations, the member of the Board shall resign within a period specified by the General Assembly; otherwise, his/her membership in the Board shall be deemed terminated, unless he/she decides to withdraw from such contract, transaction or competing venture or regularize his/her situation in accordance with the Companies Law and its Implementing Regulations prior to the end of the period set by the General Assembly (Article 48 of Corporate Governance Regulations).
4.1.4 Without prejudice to Article 72 of the Companies Law and, Article 46 of Corporate Governance Regulations requires if a member of the Board desires to engage in a business that may compete with Zain KSA or any of its activities, the following shall be taken into account:
Notifying the Board of the competing businesses he/she desires to engage in and recording such notification in the minutes of the Board meeting.
The conflicted member shall abstain from voting on the related decision in the Board meeting and General Assemblies.
The Chairman of the Board informing the Ordinary General Assembly, once convened, of the competing businesses that the member of the Board is engaged in.
Obtaining a prior authorization of the Ordinary General Assembly of the Company for the member to engage in the competing business, provided that such authorization shall be renewed annually.
4.1.5 Where a board member fails to disclose his/her interest referred above, Zain KSA or any interested party may claim before the competent judicial authority to void of the contract or oblige the director to repay any arising profit or benefit (Articles 71 the Companies Law). Any contract concluded in violation of the provisions of this section shall be considered void. Zain KSA shall the right to claim for any incurred damages from the offender before the competent judicial authority (Article 73 the Companies Law).
4.1.6 No member of the Board may accept gifts from any person who has entered into commercial transactions with the Company if such acceptance of gifts may lead to a conflicts of interest (Article 49 of Corporate Governance).
4.1.7 As per Article 45 of Corporate Governance Regulations, 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:
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.
engaging in business that may compete with the Company or any of its activities.
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4.2 Senior Executives and management
Board of Zain KSA requires following principles to be followed for management of conflict of interest within senior executives and management of the Company
4.2.1 An employee including senior executive of Zain KSA shall not, without a prior authorization from the Board, have any interest (whether directly or indirectly) in any of Zain’s business and/or contracts. Such authorization shall be reviewed and renewed on an annual basis. Further, following shall be applied for such matters:
4.2.1.1 Such matter shall only be considered by the Board if the contract has gone through a general bidding process and the employee or senior executive is the best bidder, in accordance with Zain procurement policies.
4.2.1.2 The activities and/or scope of such contract or business, shall not be under
the scope of operations/responsibilities of the senior executive or
of the department, to which the employee belongs to and/or the employee is responsible for.
4.2.1.3 A senior executive shall notify the Board, in advance, of any personal interest he/she may have in the business and contracts. Such notification shall be entered in the minutes of the meeting of the Board in which the contract has been put for deliberation.
4.2.2 All employees of the Company shall notify Zain KSA CHR&CO and CFO of any personal interest he/she may have in the business and contracts that are completed for Zain’s account. Such notifications shall be logged in a register.
4.2.3 An interested party (direct or indirect) shall not be entitled (prohibited) to be included the deliberation or in the decision making of transaction or contract.
4.2.4 Senior executives or employees of Zain KSA are prohibited to participate in any activity which may likely compete with the activities of Zain KSA, or trade in any branch of the activities carried out by Zain KSA.
4.2.5 Where a senior executives or an employee fails to disclose his/her interest referred above, Zain KSA shall take disciplinary actions shall be taken as per Zain KSA internal policies and procedures. Zain KSA shall claim before the competent judicial authority to void of the contract or oblige the employee to repay any arising profit or benefit.
Any contract concluded in violation of the provisions of this section shall be considered void.
4.2.6 No member of senior executives may accept gifts from any person who has entered into commercial transactions with the Company if such acceptance of gifts may lead to a conflicts of interest (Article 49 of Corporate Governance). Refer Code of Conduct for details.
4.2.7 Audit Committee and Zain KSA management shall, at the time of proposing external auditors for appointment, ensure that the external auditor's interests are not in conflict with the interests of Zain KSA (Article 81 of Corporate Governance).
5. Company Assets
5.1 Each Board member including senior executives are prohibited from misusing or benefitting, directly or indirectly, from any of the Company’s assets, information or investment opportunities presented to the Company or to him in his/her. This includes investment opportunities which are within the activities of the Company, or which Zain
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KSA to make use of. Such prohibition shall extend to Board member who becoming aware of an investment opportunity during his/her membership in the Board, resigns at the time or before the discussion on the investment opportunity is taking place and he/she wishes to use such investment opportunities, directly or indirectly, that Zain KSA wishes to use.
Hence, even after resignation, the prohibition as per B (Article 44 of Corporate Governance Regulations applies.
5.2 All Board members, Officers and employees shall protect Zain’s assets and use those assets in the manner intended. Zain’s assets shall be used for the sole benefit of Zain KSA.
For example, the occasional personal phone call or e-mail from the workplace is acceptable. Excessive personal calls or e-mails are a misuse of the Company's assets. Theft of Company assets—whether physical theft such as unauthorized removal of Company products, equipment or information, or theft through misuse or intentional misreporting of time or expenses—may result in termination and/or criminal prosecution. The use of Zain’s assets outside the Company’s objectives such as using the Company materials or equipment to support personal interests is not acceptable. The Directors, Officers and employees shall not:
engage in personal activities during work hours that interfere with or prevent him/her from fulfilling the job responsibilities;
use the Company computers and equipment for outside businesses, or for illegal or unethical activities; and
take for himself/ herself any opportunity for financial gain that he/she learns about because of his/her position at the Company, or through the use of Company property or information.
6. Procedures for disclosure
As per Article 43 (3) of Corporate of Governance Regulations Board of Zain KSA has prescribed following procedures for disclosing conflicts of interest and obtaining authorization or the requisite approval prior to commencing the activities that may lead to conflicts of interest.
6.1 Prior to an action on a contract or transaction involving a conflict of interest, a Board member or Interested member of management having a Conflict of Interest and who is in attendance at the meeting shall disclose all facts material to the conflict of interest including, but not limited to, the terms of the transaction, the business purpose of the transaction, and the benefits to Zain KSA and to the relevant related party. Such disclosure shall be reflected in the minutes of the meeting.
6.2 The disclosure shall be made as follows:
For all cases to the CHR&CO, CFO, CEO and Executive Committee
For Board members: Board Secretary, Nomination & Remuneration Committee (NRC), Board and General Assembly.
6.3 Prior to nominate himself/herself for the membership of the Board, NRC shall ensure that he/she has disclose to the Board or the General Assembly any cases of conflicts of interest through the voting form.
6.4 Any employee who is involved in an actual or potential Conflict matter shall immediately bring the matter to the attention as mentioned above, either she is involved in the meeting/discussion or not
6.5 Any potential conflicts of interest that are brought to the attention of the CEO, CFO, or the Board of Directors shall be analyzed with the Zain KSA Legal, in consultation with management to determine whether the transaction or relationship does, in fact, constitute a Conflict of Interest compliance with this Policy.
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6.6 If a potential conflict of interest arises, the transaction must first be discussed with management and approval should be obtained as appropriate, as per the DOA, from the Board before entering into the transaction
6.7 If a Board member or officer fails to declare an interest that is known, and subsequently management or the Board gets aware of the same the Chairman in case of the Board and CEO in case of an employee shall declare that interest in accordance with good governance. The Board shall decide on the measures to be taken for prevention of this violation from the Board member including disciplinary actions if any.
6.8 In case the Company contracts or enters into a transaction with a related party which equals to or exceeds 1% of the total revenue as reported in the last financial statements, following shall be followed (Article 43 of Corporate Governance)
Transaction / contraction shall only be valid through a bidding process.
It shall be reported to the Investors Relations, Audit Committee, Nomination & Audit Committee and Board Immediately
Audit Committee and the Board shall ensure that CMA and shareholders (through Tadawul are notified immediately.
6.9 There may be times where a false disclosure of a conflict of interest is made in order to prevent Zain KSA from entering into a transaction that may be detrimental to the related party’s self-interest. Such a situation may arise as a result of the following:
Zain KSA is planning to enter into a transaction with a party; the party in the transaction is a direct competitor of an entity whose shares / ownership is held by a related party of the Company. In such a scenario the related party may falsely claim the conflict of interest just to prevent Zain KSA from entering into a transaction with the party.
Zain KSA shall verify any conflict of interest reported by the related party in order to mitigate the risk of false claims. Further false disclosure will be considered as misconduct and employees may be subject to disciplinary action provided in the Code of Ethics.
7. Records and documentation of misconduct
The records of the conflict of interest shall contain:
7.1 The names of persons who disclosed or otherwise were found to have a potential conflict of interest in connection with a proposed contract, arrangement, policy, program or other matter;
7.2 The nature of the potential conflict of interest;
7.3 Any action taken to determine whether a conflict of interest was present;
7.4 The General Assembly, Board's or the Committee's, as applicable, decision as to whether a conflict of interest in fact existed;
7.5 The names of the persons who were present for discussions and votes relating to the transaction, contract, arrangement, policy, program or other matter;
7.6 The content of the discussion, including any alternatives to the proposed transaction, contract, arrangement, policy, program or other matter;
7.7 A record of any votes taken in connection therewith; and
7.8 Regular follow-up notes and strict vigilance on the related parties found guilty.
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7.9 For Board, the responsibility of maintaining the records shall lie with the Board Secretary and for the employees of the Zain, with HR.
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8.
Definitions
8.1 A conflict of interest is a situation in which an Employee including a Board member has contradictory professional or personal interests. Such conflict of interest arises when a Board member or employees of Zain KSA or a member of his or her family, receives improper personal benefits, financial or otherwise, as a result of his or her position in the Company, whether received from the Company or a third party. Such contradictory interests can make it difficult for the employee to fulfil their duties fairly. Even if there is no evidence of improper actions, a conflict of interest can create an appearance of impropriety that can undermine confidence in the ability of that Employee to use his/ her position with proper ethics. A conflict of interest can exist even if no unethical or improper act results from it. Such situation may include, but not limited to:
A financial interest: Financial interest refers to cash, cash equivalent, voucher, gift, service, advantage, benefit, discount, domestic or foreign travel, hospitality, accommodation, sponsorship, other incentive or valuable consideration, except for:
An ownership interest;
Training, that is not exclusively available to a selected group of providers or representatives, on:
Products / services and legal matters relating to those products / services;
General financial and industry information;
Specialized technological systems of a third party necessary for the rendering of a service; but excluding travel and accommodation associated with that training
An ownership interest: Ownership interest means holding a financial or ownership interest in a business or entity, including stock, stock option, partnership interest, or other ownership interest.
Any relationship with a third party: Third party means;
a product supplier,
service provider,
an associate of a product supplier or a service provider;
a distribution channel;
any person who in terms of an agreement or arrangement with a person referred to above provides a financial interest to a provider or its representatives.
8.2 Illustrative examples of conflict of interest situations
A contract or Transaction between Zain KSA and an employee / Board member or Family Member.
A contract or Transaction between Zain KSA and an entity in which a Board member/employee or Family Member has an Interest.
An employee or Board member competing with Zain KSA in the rendering of services or in any other contract or Transaction with a third party.
An employee or Board member having an Interest in an entity that competes with Zain KSA in the provision of services or in any other contract or Transaction with a third party.
A Responsible Person accepting gifts, entertainment or other favors from any individual or entity not in compliance with the Code of Conduct
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When an employee or consultant misuses information obtained in the course of employment or consulting work with the Company.
For the purpose of this Policy the following shall be excluded:
Entertainment such as business meals and the like (accepted business practice) as per code of ethics and normal business practices
Token gifts which are typically exchanged as a formality or custom such as pens, pencils, paperweights, ties, scarves and the like which may include the company logo, as per code of ethics.
8.3 Related party: As defined in the Corporate Governance Regulations covers the following:
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. 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 k. Board and the Senior Executives.
l. Holding companies or affiliates.
m. Advice or guidance that is provided on a professional basis by a person licensed to provide
n. such advice shall be excluded from the provisions of paragraphs (I) and (J) of this definition.
8.4 Associate means:
in relation to the senior executives or a director or to a substantial shareholder who is an individual any of the following:
(a) that individual’s spouse or minor children (together “the individual’s family”); and
(b) any company in whose equity shares the individual or any member or members (taken together) of the individual’s family or the individual and any such member or members (taken together) are directly or indirectly interested so that they are able:
o to exercise or control the exercise of 30% or more of the votes at the general meeting on all, or substantially all, matters; or o to appoint or remove directors holding a majority of voting rights
at board meetings on all, or substantially all, matters; and
in relation to a substantial shareholder which is a company (i.e. Zain Group):
any other company which is its subsidiary or parent or fellow subsidiary of the Zain Group;
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any company whose directors are accustomed to act in accordance with the substantial shareholder’s directions or instructions; and
any company in the capital of which the substantial shareholder, and any other company under above taken together, are directly or indirectly interested so that they are able:
(a) to exercise or control the exercise of 30% or more of the votes at the general meeting on all, or substantially all, matters; or
(b) to appoint or remove directors holding a majority of voting rights at board meetings on all, or substantially all, matters.
8.5 Affiliate: a person who controls another person or is controlled by that other person, or who is under common control with that person by a third person. In any of the preceding, control could be direct or indirect.
8.6 Interested Director: Interested Director shall mean any serving Director or a Director who has served on the Board in the preceding 12 months who has a financial interest in, or who serves as a Director or Officer of any entity with which the Company has or is contemplating a transaction, contract, or other arrangement.
8.7 Interested Officer: Interested Officer shall include but not be limited to management, employees, consultants and contractors on the payroll of Zain in the immediate prior twelve (12) calendar months who has a financial interest in, or who serves as a Director or Officer of any entity with which the Company has a transaction, contract, or other arrangement.
8.8 Substantial shareholder: a person holding (5%) or more of the class of shares of Zain KSA.
8.9 Transaction: Transaction means any agreement or relationship involving the sale or purchase of goods, services, or rights of any kind.
8.10 Competition: (Article 47 of Corporate Governance Regulations) The following shall be deemed a participation in any business that may compete with the Company or any of its activities:
The Board members’ establishing a company or a sole proprietorship or the ownership of a controlling percentage of shares or stakes in a Company or any other entity engages in business activities that are similar to the activities of the Company or its group.
Accepting membership in the Board of a company, an entity that competing with the Company or its group, or managing the affairs of a competing sole proprietorship or any competing company of any form.
The Board member’s acting as an overt or covert commercial agent for another company or entity competing with the Company or its group.
8.11 Executive Management or Senior Executive (As defined in Corporate Governance Regulations): 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/her delegates and the Chief Financial Officer (CFO).
8.12 Relatives (As defined in Corporate Governance Regulations)
Fathers, mothers, grandfathers and grandmothers (and their ancestors).
children and grandchildren and their descendants.
siblings, maternal and paternal half-siblings and their children.
Husbands and wives.
13 All Rights Reserved to Zain 2017
