Statement of modifications to the work of the audit committee

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ﲑﻤﻌﺘﻟﺍﻭ ءﺎﺸﻧﻺﻟ ﺔﻜﻣ ﺔﻛﺮﺷ ﺔﯾدوﻌﺳ ﺔﻣھﺎﺳﻣ ﺔﻛرﺷ

Statement of modifications to the

work of the audit committee

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Amendments to the audit commitee work regula�ons

comments Text After Modification

Text Before Modification Article Number

Ser.

- The number of committee members has been amended in paragraph )1 (

- Paragraph (2) has been added to the article.

- Paragraph (6) has been added to the article.

- Paragraph (5) of the article has been cancelled.

- Partial modification of some other paragraphs.

The Audit Committee shall be formed by a decision of the Board of Directors of the company from among the shareholders or others, in accordance with the following provisions:

1) The audit committee of the company shall be formed from the number of three members, whether shareholders or others, by a decision of the company’s board of directors, for a period not exceeding the term of membership of the board.

2) There must be at least one independent member among the committee members.

3) He shall not be a member of the executive board of directors, or who works or worked during the past two years in the executive or financial management of the company or with the company's auditor.

4) The committee member should have a reasonable knowledge of the financial and accounting rules, provided that among them is a specialist in financial and accounting affairs.

By a decision of the company’s Ordinary General Assembly, a commitee called (the Audit Commitee) shall be formed from shareholders or others, according to the following provisions:

1) The audit commitee of the company shall be formed of four members, shareholders or others, by a decision of the Ordinary General Assembly, for a period not exceeding the term of the Board membership, provided that at least one of them is an independent member

2) He should not be a member of the Execu�ve Board of Directors, or someone who works or worked during the past two years in the execu�ve or ﬁnancial management of the company or with the company's auditor.

3) He should have a reasonable knowledge of the ﬁnancial and accoun�ng rules, provided that one of Second Subject

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5) A member of the committee may not have a direct or indirect interest in the business and contracts that are concluded for the account of the company, except with a prior authorization from the General Assembly, to be renewed annually.

6) The member of the committee should not be a member of audit committees in more than five listed companies at the same time.

7) When the membership of a member of the Audit Committee expires by one of the methods of termination of membership, another member who meets the conditions for appointment to the Audit Committee shall be appointed, by a decision of the Board of Directors of the company.

them is specialized in ﬁnancial and accoun�ng aﬀairs.

4) A member of the commitee may not have a direct or indirect interest in the business and contracts that are concluded for the account of the company, except with a prior authoriza�on from the Ordinary General Assembly, to be renewed annually.

5) The commitee selects a chairperson from among its members.

6) When the membership of a member of the Audit Commitee ends by one of the methods of termina�on of membership, a temporary member who meets the condi�ons for appointment to the Audit Commitee is appointed, by a decision of the Board of Directors of the company, provided that this appointment is presented to the ﬁrst mee�ng of the General Assembly of the company for approval.

Partial modification.

5) The committee may invite experts and specialists from within or outside the company, within the limits of its powers, to attend its meetings, provided that this is recorded in the minutes of the meeting with the name of the expert and his relationship with the company or the executive management 5) The Commitee may invite whoever it

deems appropriate to atend its

mee�ngs, provided that this is recorded in the minutes of the mee�ng without having the right to vote on the decisions of the Commitee .

Paragraph (5) of Article Three 2

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mentioned, without him having the right to vote on the decisions of the committee.

Full mod.

6) Documenting the committee’s meetings and preparing minutes for it that include the discussions and deliberations that took place, documenting its recommendations and voting results, keeping them in a special and organized record, indicating the names of the members present and the reservations they made - if any -, and signing these minutes from all the members present.

6) The commitee's delibera�ons and decisions are recorded in minutes signed by the commitee chairman and the commitee secretary. These minutes are recorded in a special register signed by both of them.

Paragraph (6) of Article Three

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(New Paragraph) Paragraph (8) has been added to the article.

8) The committee chairman shall attend the meeting of the general assemblies to answer the questions of the shareholders or whomsoever he deputizes from among its members.

8) Nothing Paragraph (8) of

Article Three 4

Examine carefully the issues raised by the financial manager or the compliance officer in the company or the auditor.

3) Examine carefully the issues raised by the financial manager or the compliance officer in the company or the auditor.

3) Examine carefully the issues raised by the ﬁnancial manager, the compliance oﬃcer, or the auditor.

Subparagraph (3) of Paragraph First of Article Five

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3) Control and supervise the performance of the internal auditor and the internal audit department in the company, to ensure its effectiveness in performing the tasks and tasks entrusted to it. If the company does not have an internal auditor, the 3) Control and supervise the

performance of the internal auditor and the internal audit department in the company, to ensure its eﬀec�veness in performing the tasks and tasks entrusted to it. If the company does not have an internal auditor, the commitee must Subparagraph (3) of

Paragraph Two of Article Five

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committee must submit its recommendation to the Board regarding the need to appoint him.

submit its recommenda�on to the Board regarding the need to appoint him.

1) Recommend to the Board of Directors the nomination and dismissal of auditors, determine their fees and evaluate their performance, after verifying their independence and reviewing the scope of their work and the terms of contracting with them.

1) Recommending to the Board of Directors the nomina�on and dismissal of auditors, determining their fees and evalua�ng their performance, a�er verifying their independence and reviewing the scope of their work and the terms of contrac�ng with them, provided that the total period of their appointment does not exceed ﬁve consecu�ve years, and a period of two years must elapse before they resume audit work in the company.

Subparagraph (1) of Paragraph Third of Article Five

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4) Reviewing the company's auditor's plan and work, and verifying that he does not perform technical, administrative or advisory work that is outside the scope of the audit work, and expressing its opinions in this regard.

4) Reviewing the company's auditor's plan and his work, verifying that he has not submited technical or administra�ve work outside the scope of the audit work, and expressing its views on that.

Subparagraph (4) of Paragraph Third of Article Five

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ﲑﻤﻌﺘﻟﺍﻭ ءﺎﺸﻧﻺﻟ ﺔﻜﻣ ﺔﻛﺮﺷ ﺔﯾدوﻌﺳ ﺔﻣھﺎﺳﻣ ﺔﻛرﺷ

The work list of the audit committee

After modification

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Makkah Construction and Development Company Saudi joint stock company

Audit Committee Work Regulations 2023

approved by the thirty-sixth Ordinary General Assembly of the company's shareholders on 6/6/2023 AD corresponding to 17/11/1444 AH

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Audit Committee Work Regulation s Page | 2

Article Description Page No.

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Audit Committee Work Regulation s Page | 3 Article 01: Preface

A work Regulation for the Audit Committee has been prepared to update the general governance framework of Makkah Construction and Development Company - a Saudi Joint Stock Company.

The General Assembly of the company issues a work regulation for the Audit Committee, based on a proposal from the Board of Directors. This regulation shall include the committee's work regulations and procedures, its tasks, rules for selecting its members, their nomination process, their membership duration, their rewards, and the mechanism for temporarily appointing members in case of a vacant seat on the committee.

Article 02: Formation of the Committee

An audit committee is formed by a decision of the company's board of directors from among the shareholders or others, according to the following terms:

1. The audit committee in the company is formed of three members from among the shareholders or others, by a decision of the company's board of directors, for a period not exceeding the board's membership term.

2. One of the committee members should be an independent member at least.

3. Executive board members or those who have worked in the executive or financial management of the company or at the company's auditors in the past two years should not be committee members.

4. The committee member should have reasonable familiarity with financial and accounting rules, with one of them being an expert in financial and accounting affairs.

5. A committee member cannot have a direct or indirect interest in the company's business and contracts unless authorized annually by the general assembly.

6. A committee member cannot be a member of audit committees in more than five listed companies at the same time.

7. When a committee member's term ends through one of the termination methods, another member who meets the appointment conditions for the audit committee is appointed by a decision of the company's board of directors.

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Audit Committee Work Regulation s Page | 4 Committee’s Controls and Procedures

1) The committee meets regularly with the external auditor and the internal auditor of the company to ensure that the auditing process is carried out correctly.

2) Both the external auditor and the internal auditor of the company may request a meeting with the audit committee whenever necessary.

3) The committee member is bound by the same confidentiality obligations as a member of the Board of Directors, and it is not permissible for committee members to disclose any information to shareholders or third parties .

4) A committee member is considered to have resigned if he is absent from attending three consecutive committee meetings without a legitimate excuse, and the member’s absence from attending the meeting is not considered a reason for exemption from responsibility for the decisions taken unless he proves that he was not aware of the decision or that he was unable to object to it after knowing it.

5) The committee may invite experts and specialists from within or outside the company to attend its meetings within its powers, provided that this is recorded in the minutes of the meeting, mentioning the expert's name and their relationship with the company or executive management without having the right to vote on committee decisions.

6) Documenting the committee’s meetings and preparing minutes for it that include the discussions and deliberations that took place, documenting its recommendations and voting results, keeping them in a special and organized record, indicating the names of the members present and the reservations they made - if any -, and signing these minutes from all the members present.

7) The audit committee is responsible for developing a mechanism that allows employees of the company to provide their comments on any financial or other reports, and to verify the implementation of this mechanism and adopt appropriate follow-up procedures.

8) The committee chairman must attend the general meetings to answer any questions from shareholders or their representatives.

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Audit Committee Work Regulation s Page | 5

Article 04: Rules for Selecting Committee Members

The committee member must possess academic qualifications, professional skills, practical experiences, and relevant personal characteristics related to the current and future activities of the company. The committee member must also commit to the principles of honesty, integrity, loyalty, care, and concern for the interests of the company and shareholders, and prioritize them over personal interests

Article 05: Competencies, Functions and Responsibilities of the Committee

The audit committee is responsible for monitoring the company's operations, verifying the integrity and accuracy of financial reports and internal control systems. Its specific tasks include:

First: Financial Reports

1) Reviewing the company's preliminary and annual financial statements before they are presented to the board of directors, expressing opinions and making recommendations to ensure their fairness, impartiality, and transparency.

2) Examining any significant issues included in the financial reports.

3) Conducting a thorough investigation of issues raised by the financial manager, compliance officer, or auditor.

4) Verifying accounting estimates in the essential matters included in the financial reports.

5) Examining the accounting policies adopted by the company and providing opinions and recommendations to the board of directors.

Second: Internal Auditing:

1. Studying and reviewing the company's internal financial control and risk management systems.

2. Studying internal audit reports and monitoring the implementation of corrective actions for the observations made.

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Audit Committee Work Regulation s Page | 6

3. Supervising the performance of the internal auditors and the internal audit management in the company to ensure their effectiveness in performing their duties.

4. Recommending to the board of directors the appointment of the head of the internal audit unit or department, or the internal auditor, and proposing their compensation.

Thirdly: Auditors:

1. Recommend to the Board of Directors the nomination of auditors, their dismissal, determination of their fees, and evaluation of their performance after verifying their independence, reviewing their scope of work, and terms of contract.

2. The Board of Directors presents to the General Assembly the recommendation submitted to it by the Audit Committee regarding the selection of the company's auditors, indicating the names of the auditors who have submitted their bids and their fees. The General Assembly shall appoint one or more auditors from among them to audit the company's accounts.

3. Verify the independence, objectivity, and fairness of the auditors, and the effectiveness of the audit work in accordance with relevant rules and standards.

4. Review the company's audit plan and activities, and verify that the auditor has not provided technical, administrative or consulting work outside the scope of the audit, and provide opinions on this matter.

5. Answer the queries of the company's auditors.

6. Study the reports and notes of the auditors on the financial statements and follow up on what has been taken regarding them.

Fourthly: Compliance:

1. Review the results of regulatory reports and verify that the necessary actions have been taken by the company regarding them.

2. Verify the company's compliance with relevant regulations, policies, and instructions.

3. Review contracts and proposed transactions that the company intends to conduct with related parties, and provide opinions on this matter to the Board of Directors.

4. Submitting to the Board of Directors of the company any issues that it deems necessary to take action on and provide recommendations on the actions that need to be taken.

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Audit Committee Work Regulation s Page | 7 Article 06: Committee Powers

For the Audit Committee to perform its duties:

1. The right to access the company's records and documents.

2. Request any clarification or statement from board members or executive management.

3. Request the board of directors to convene the company's general assembly if the board is obstructing its work or if the company is experiencing significant damage or losses.

Article 07: Committee Membership Term

The term of membership of the committee shall be three years, provided that the term of the Audit Committee's membership does not exceed the current term of the members of the company's board of directors. Members of the committee may be re-elected for additional terms of membership.

Article 08: Committee Members' Remuneration

The member shall be entitled to an attendance allowance for each meeting of the amount of three thousand riyals, provided that the attendance allowance prescribed for the committee member in all cases does not exceed the attendance allowance determined for the meetings of the members of the Board of Directors

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Article 09: Secretary of the Committee

The committee appoints a secretary from among its members or others, specifying their duties and compensation. The secretary is responsible for documenting committee meetings, preparing minutes that include discussions and deliberations, documenting committee decisions and voting results, and having these minutes signed by all present members and recorded in a special and organized register.

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Audit Committee Work Regulation s Page | 8 Article 10: Committee Meetings

The audit committee meets at least four times during the company's fiscal year, and as needed.

Article 11: Committee Meeting Quorum

For a meeting of the audit committee to be valid, the majority of its members must be present, and its decisions are made by a majority vote of those present. In case of a tie, the side that the meeting chairperson voted with is given preference.

Article 18: Review, Publication, and Enforcement

This regulation is subject to annual review and should be updated when new instructions or regulations related to the work of the Committee are issued by the competent authorities, provided that the amendment of the regulation is approved by a decision of the company's general assembly:

1. This regulation is complementary to the company's governance regulations and statute.

2. This regulation shall take effect in accordance with the decision adopted by the General Assembly.

3. This regulation shall be published on the company's website to enable shareholders and stakeholders to review it.

Statement of modifications to the work of the audit committee