Contents:
1. Authority Reference 2. Subject
3. Purpose 4. Scope 5. References 6. Definitions
7. Responsibility of the Board towards the Committee 8. Board Obligations towards the Committee
9. The Committee Powers and Authorities 10. Confidentiality
11. Conflict of Interests
12. Conflict of Financial Transactions with the Company
13. Formation and Organization of the Audit Committee’s Duties 14. Effective Date
1. Authority Reference: General Assembly 2. Subject: Audit Committee Charter
3. Purpose:
The Audit Committee Charter defines regulations and requirements for the formation and organization of the Audit Committee’s work. It also specifies the responsibility of the General Assembly in determining the duties, responsibilities and the Audit Committee powers.
4. Scope:
The provisions of the Audit Committee Charter shall apply to the Company in all matters pertaining to the enforcement of the provisions of this Charter.
5. References:
5-1 Audit Committee charter issued by the Saudi Central Bank.
5-2 Corporate Governance Regulation issued by the Saudi Central Bank.
5-3 Corporate Governance Regulation issued by the Capital Market Authority.
5-4 The Companies Law issued by the Ministry of Commerce.
5-5 The Implementing Regulations of the Companies Law for Listed Joint Stock Companies.
6. Definitions:
6-1 CMA: The Capital Market Authority.
6-2 Charter: The Audit Committee Charter of the Company for Cooperative Insurance (Tawuniya).
6-3 Company: The Company for Cooperative Insurance (Tawuniya) 6-4 Board: The Company Board of Directors
6-5 Senior Management: The Chief Executive Officer (CEO), and his deputies, Chief Financial Officer, managers of key departments, and those responsible for the Risk Management, Internal Audit and Compliance functions of the Company, and similar positions, and those holding any other positions determined by the Saudi Central Bank (SAMA).
6-6 The Committee: The Audit Committee in the Company is an independent committee formed by a decision of the Board of Directors and is directly linked to the Board. It is responsible for monitoring the performance and implementation of the internal control systems in the Company, ensuring the efficiency and effectiveness of the System and Procedures, verifying the implementation of the internal control decisions, and ensuring compliance with the application of the Law on the Supervision of the Cooperative Insurance Companies, its Executive Regulations and other relevant regulations, rules and instructions, in addition to the duties set forth herein.
6-7 Compliance Department: An independent department linked to the Audit Committee and reports administratively to the CEO. The department is responsible for ensuring the company compliance with the Law on the supervision of the cooperation of the Insurance Companies, its executive regulations and other relevant regulations. It submits its reports to the Audit Committee on any violations to the regulations and instructions in force in the Company.
6-8 Internal Audit Department: An independent department linked to the Audit Committee and administratively to the Chief Executive Officer. It is responsible for developing the audit plan of the Company, monitoring the performance of the Company through auditing and examining the operations and transactions of the Company to verify non existence of any financial and non-financial irregularities or violations to the Company's internal regulations It is also responsible for the effectiveness of these systems and the verification of the proper implementation of internal control decisions, and it submits its reports to the Audit Committee.
7- Responsibility of the Board towards the Committee:
7-1 The Board assumes the responsibility for the work of the Audit Committee in accordance with the various regulations and instructions under which the Company transacts its business.
7-2 The Board assumes the responsibility for ensuring the efficiency and effectiveness of financial systems and reports and for safeguarding the assets of the Company.
7-3 The Board shall ensure that the Audit Committee members are qualified to fulfill their responsibilities. At least two members of the Committee, including its Chairman, must have recent and relevant experience in accounting and financial management.
8- Board Obligations towards the Committee:
As the Board forms the Audit Committee and authorizes it to undertake specific tasks, the Board of Directors' obligations include, but are not limited to, the following:
8-1 The Board and Senior Management of the Company shall provide all support required to facilitate the work of the Committee, the Internal Audit Department and the Compliance Department.
8-2 The Board shall ensure that the Company has the appropriate organizational structure, bylaws and Policies & Procedures which should be reviewed periodically, and that it has a system and mechanism for reporting within the Company on the various aspects within the domain and duties of the Committee.
8-3 The Nomination and Remuneration Committee shall recommend to the Board of Directors the formation of the Audit Committee in accordance with the rules set forth herein. The Board shall also specify the Committee term and sequence of its membership and ensure that its meetings are held periodically and adequately.
8-4 The Board shall follow up the work of the Committee, verify its compliance with its responsibilities and duties and discuss the relevant matters, including the recommendations of the Committee. The Board should also emphasize that the Audit Committee will keep abreast of the international and local developments pertinent to accounting standards and in accordance with SAMA regulations and instructions.
8-5 The Board shall ensure that the Committee performs its supervisory and assurance roles and that it does not exercise executive functions or tasks.
9- The Committee Powers and Authorities:
The Audit Committee shall have direct and unlimited access to the Board and Senior Management of the Company, all employees, committees, legal advisors, internal and external auditors at the Company's Head Office and/ or branches, as well as other parties related to the Company, and shall have access to all records, documents, and confidential materials necessary for the performance of its functions.
The Committee may seek the assistance of consultants from outside the Company to carry out specific assignments in order to assist it in the performance of its work.
In addition, the Committee may request any clarification or statement from the Board or the Executive Management. It may request the Board to ask the convening of the General Assembly of the Company if the Board obstructs its work or in case the Company suffers serious damages or losses.
10- Confidentiality:
All members of the Committee must maintain the confidentiality of all topics relating to the Committee work, even after leaving the Committee.
11- Conflict of Interests:
11-1 A member of the Committee shall not have a direct or indirect interest in the businesses and contracts of the Company.
11-2 A member of the Committee shall not participate in any business that may compete with the Company or trade in the business activities of the Company.
The Company may claim indemnification for any damage incurred as a result of this act or action by any Committee member.
11-3 It is not permissible for any of members of the Board of Directors, members of Board committees and senior executives to accept gifts from any person who has business dealings with the Company, if such gifts may lead to a conflict of interest.
12- Conflict of Financial Transactions:
The Company shall not issue or renew any insurance policy to any of the Committee members or related parties before paying the premium due in full. If any member of the Committee submits a claim for indemnification against an insurance policy issued by the Company, the claim shall be handled in accordance with the official procedures set forth in the regulations applicable to the clients' claims and without preferential treatment, with notice to the Compliance Department of any indemnification payable to the Committee member.
13- Formation and Organization of the Audit Committee:
13-1 Composition of the Committee
• The Audit Committee shall be formed by a resolution of the Company's Board of Directors, provided that its members are shareholders or others, and it contains among its members a specialist in financial and accounting affairs, and the Board shall select a chairman from among the Committee members for the same term of the Board of Directors. The decision is issued upon the recommendation of the Nomination and Remuneration Committee, after obtaining the written non- objection of the Saudi Central Bank (SAMA).
• The Audit Committee shall consist of at least three members and a maximum of five members, including at least one independent member, the majority of whom shall be from outside the Board.
• The Chairman of the Board of Directors may not be a member or chairman of the Committee.
• A member of the Audit Committee should not be a one who has worked for the last two years in the executive or financial management of the Company, or with the Company's external auditor.
• The Committee member must not be from the executives, employees or advisors of the Company.
• The member of the Audit Committee shall not be a member of the Board of Directors, directors, employees, consultants, employees or representatives of any of the related parties of the Company, including, but not limited to, the following:
a. Major shareholders or founders.
b. External auditors.
c. Suppliers.
d. Customers of the Company.
e. Legal persons (corporate bodies) who have a financial or commercial relationship or a first degree relationship with the Board of Directors of the Company or the executive staff of the Company.
• The member of the Audit Committee shall not be a member of the Board of Directors or the Audit Committee of any other company operating in the insurance sector in the Kingdom of Saudi Arabia.
• The Audit Committee member should not be an executive member of the Board of Directors.
• The Board member nominated to the Committee membership must be independent.
• No member of the Audit Committee may serve simultaneously in audit committees for more than four public companies.
• The Board may renew to the Committee or one of its members for another term only once.
• The Board, after obtaining non-objection from SAMA in writing, has the right to recommend the dismissal of any member of the Committee in the event of losing membership conditions or committing a violation of these Regulations, the provisions of the Law of the Supervision of Cooperative Insurance Companies, its Executive Regulations or the provisions of the other relevant regulations and instructions.
• SAMA may cancel its non-objection for appointing any member or members of the Audit Committee.
• A member of the Committee shall have the right to resign, provided that his resignation application is submitted in advance to the Board one month before the date of his resignation. He shall notify SAMA and CMA in writing of the resignation of the Committee member and the reasons for his resignation and provide SAMA with a copy of the resignation within five (5) working days from the resignation date.
• The Chairman of the Audit Committee shall not have a close kinship or financial or commercial relationship with any member of the Board of Directors.
• The Chairman of the Audit Committee shall not have a relationship with the Senior Management of the Company influencing his independence.
• A member shall be considered resigned from the membership of the Committee if he fails, without a reason acceptable to the Committee and the Board, to attend its meetings for more than three consecutive meetings.
• If the position of a member of the Committee becomes vacant during the term of office, the Board shall Assign within a maximum period of one month from the vacancy of this position after obtaining the written of non-objection from SAMA.
The new member shall complete the term of his predecessor.
• The membership of the Committee member shall terminate immediately if any change of its nature violates the conditions of membership set forth in this Charter or any other regulations, instructions or decisions issued by SAMA, CMA or other relevant legislative bodies. The Committee member shall inform the Company in writing immediately after such change. A Committee member may not attend any Committee meeting held after the date of such change.
13-2 Appointment of a Secretary to the Committee:
13-2-1 The Committee shall appoint a secretary from amongst the Company staff to carry out its administrative work, prepare the minutes of its meetings, ensure that the Chairman of the Committee signs these minutes, and schedules the meetings of the Committee in coordination with its Chairman.
13-2-2 The Secretary of the Committee shall document and record the minutes of the meetings of the Committee in a special register.
13-2-3 The Secretary of the Committee shall not be the secretary of any other Board committees.
13-3 Remuneration of Committee Chairman, Members and Secretary:
a. The chairman and members of the Audit Committee shall be entitled to an annual remuneration of SR 150,000 applicable as of the inception of the Committee term. The remuneration of the Committee member who is a Board member is subject to the Remuneration Policy of Board Members and Committees stated in accordance with the Company Articles of Association.
b. The chairman and members of the Audit Committee shall be entitled to an attendance remuneration of SR 5,000 for each meeting up to a maximum of SR 60,000 per year, applicable as of the inception of the Committee term. The Secretary of the Committee shall be entitled to remuneration for the performance of his functions for each of its meetings. The remuneration amount shall be determined by a decision issued by the Board.
13-4 Duties of the Committee:
The functions of the Committee shall include, at a minimum, the following:
13-4-1 Regarding the External Auditors:
a. Recommend to the Board the approval of the nomination or re-nomination of the external auditors, their dismissal, the determination of their fees, the evaluation of their performance, the review of their scope of work and the confirmation of their independence and the terms of contracting with them; provided that they should have the experience required in auditing the business of insurance and re- insurance companies, and/or reinsurance companies, taking into account the following:
1. The Ordinary General Assembly shall nominate the auditor and determine his fees, term and scope of work.
2. The total duration of the auditor's work should not exceed seven consecutive or separate financial years, and CMA, at its sole discretion, may modify this period for any company or sector. This period shall be re-calculated after the lapse of no less than three consecutive financial years from the date of the end of the last financial year in which such external auditor audited the Company's accounts.
3. The total period of work of the partner supervising the audit work with the external auditor should not exceed seven consecutive or separate financial years, and CMA may, at its sole discretion, modify this period for any company or sector. This period shall be re-calculated after the lapse of at least five consecutive financial years from the date of the end of the last financial year in which he worked as a partner supervising the auditing of the Company's accounts.
b. Ensure the independence of the external auditors from the Company and the members of the Board and Senior Management in the Company.
c. Review the Audit Plan of the Company and its work, verifying that it does not submit technical, administrative or advisory works that fall outside the scope of the audit work, and expressing its viewpoints thereon.
d. Study the auditor's report and his observations on the financial statements, follow up on what has been taken and make recommendations thereon to the Board.
e. Answer the queries raised by the Company’s auditor.
f. Review the management letter prepared by the auditors and peruses the management's views on them.
13-4-2 Regarding the Financial Reports:
a. Study and review the preliminary annual and quarterly financial statements, before presenting them to the Board, with the external auditors and Senior Management of the Company before issuing them, and express their opinion and recommendation in this regard, to ensure their integrity, fairness and transparency.
b. Provide technical opinion, upon the request of the Board, whether the report of the Board and the financial statements of the Company is fair, balanced and understandable, and that it includes information that will allow shareholders &
Investors to assess the Company financial position, its performance, its business model and strategy.
c. Study any important or unusual issues contained in the financial reports.
d. Examine the Company's accounting policies and expressing its opinion and recommendations to the Board.
e. Perform detailed study of any issues raised by the Company's Chief Financial Officer, whoever performs his duties, the Company's Chief Compliance Officer, the Company's Chief Internal Auditor or the External Auditor.
f. Verify the accounting estimates of material matters contained in the financial reports.
13-4-3 Regarding the work of the Internal Audit Department:
a. Recommend to the Board the appointment and dismissal of the Chief Internal Auditor after obtaining the non-objection in writing from SAMA, and appoint him by a Board resolution.
b. Proposing the monthly salary, incentive bonus and other remuneration for the Internal Audit Department or the Chief Internal Auditor in accordance with the Company's bylaws, to be approved by the Board.
c. Ensure the independence of the Internal Audit Department in the performance of their duties, and verify that there is no restriction on their work or that there may be a negative impact on their work.
d. Monitor and supervise the performance and activities of the Internal Audit Department in the Company to verify the availability of the necessary resources and their effectiveness in the performance of the assigned tasks.
e. Examine the Audit Plan and follow up its implementation.
f. Coordinate between internal auditors and external auditors.
g. Review the reports of the Internal Audit Department and make recommendations thereon to the Board.
h. Examine the internal audit reports and follow up the implementation of the corrective actions of the notes contained therein.
i. Evaluate the level of efficiency, effectiveness and objectivity of the work of the Internal Audit Department.
13-4-4 Regarding the Compliance Management:
a. Appointment and dismissal of the Chief Compliance Officer or Compliance Officer after obtaining the non-objection in writing from SAMA.
b. Determine the monthly salary, incentive bonus and other remuneration for the Compliance Department or Chief Compliance Officer in line with the Company's internal regulations approved by the Board.
c. Study and approve the Compliance Plan and follow up its implementation.
d. Ensure the independence of the Compliance Department or the Chief Compliance Officer in the performance of their duties, and verify that there is no restriction on their work or that there may be a negative impact on their work.
e. Examine the reports of the Compliance Department or Chief Compliance Officer and make recommendations thereon to the Board.
f. Assess the level of efficiency, effectiveness and objectivity of the Compliance Department or Chief Compliance Officer.
g. Examine the observations and reports of SAMA and the relevant regulatory and supervisory authorities regarding any legal violations or requesting corrective measures and making recommendations thereon to the Board.
h. Reviewing the results of the reports of the regulatory authorities and verifying that the Company has taken the necessary measures in this regard.
i. Verify the Company's compliance with the relevant laws, regulations, policies and instructions.
13-4-5 Others:
a. Follow up on important legal cases filed by or against the Company with the Chief Legal Officer, and submit periodic reports thereon to the Board.
b. Study the reports of the actuary and make recommendations thereon to the Board.
c. Review the contracts and transactions proposed by the Company with the related parties and submit its views thereon to the Board.
d. Ensure the Company's full compliance to apply the suggestions and recommendations of the actuary when they are compulsory in accordance with the regulations and instructions issued by SAMA and the relevant regulatory and supervisory authorities.
e. Ensure the availability of a written code of professional conduct after its approval by the Board to ensure that the activities of the Company are conducted in a fair and ethical manner.
f. Ensure the optimal use of information technology and having the necessary controls to obtain accurate and reliable information and data.
g. Submit such matters as it deems necessary for the board to act on, and to make recommendations to the Board thereof.
13-5 Responsibility of the Committee:
13-5-1 Members of the Committee shall be responsible in front of SAMA, the Shareholders of the Company and its Board for the application of the provisions of this Charter and for the implementation of the Committee's Action Plan as issued by a decision of the Board.
13-5-2 During the performance of their duties, the members of the Committee shall give priority to the Company's interest on any other considerations that may affect their work and decision.
13-6 Meetings of the Committee:
• The meeting of the Audit Committee shall not be held except in the presence of its majority members.
• The Audit Committee shall hold at least six meetings per year, including the annual meeting with the Board. Where necessary, the Audit Committee may hold further meetings in response to, but not limited to, the following:
a. Request from the Board Chairman.
b. Cases where the External Auditors, the Chief Internal Auditor, the Chief Compliance Officer or the actuary have requested a meeting of the Committee, if a need so requires.
c. Meetings on other matters such as:
o Financial and audit matters.
o Legal issues.
o Conflict of interests.
o Code of professional and ethical conduct.
The Audit Committee shall meet periodically with the Company's external auditor and the Company Chief Internal Auditor.
13-7 Decisions of the Committee:
13-7-1 The decisions of the Committee shall be made by a majority vote. However, in the event of an equal number of votes, the Chairman shall have a casting vote, provided that the secretary of the Committee shall record the views of all parties in the minutes of the meeting.
13-7-2 Decisions of the Committee shall not be voted on by proxy or on behalf of a Committee member.
13-8 Attending the Committee meetings:
The Committee may invite those whom it deems appropriate, whether from within or outside the Company, to attend its meetings, whenever needed.
13-9 The Committee Action Plan:
The Committee shall draw up a detailed annual Action Plan that includes the main issues to be discussed during the year and the dates of its meetings, provided that it is approved by the Board.
13-10 Conflict between the Audit Committee and the Board:
If a conflict arises between the recommendation(s) of the Audit Committee and the decisions of the Board, or if the Board refuses to take the recommendation(s) of the Audit Committee regarding the nomination of the Company External Auditor, its dismissal and determination of its fees and performance evaluation or the appointment of the Chief Internal Auditor, the report of the Board should include the
Committee's recommendation and justification, and the reasons for not taking the same.
13-11 Arrangements for the submission of observations
The Compliance Department shall develop a mechanism whereby the employees of the Company may submit their observations/ comments on any financial or other reports in confidentiality. The Committee shall approve this mechanism. The Committee should verify the implementation of this mechanism by conducting an independent investigation commensurate with the magnitude of the error or omission and adoption of appropriate follow-up procedures thereto.
14.0 Effective Date:
This Charter shall enter into force from the date of their approval by the General Assembly until 25/03/2026, and will fall due for review and revision on 01/12 /2025, if there is no interim revision due to policy changes.
