Policy, Standards and Procedures for Candidacy for Membership of
the Board of Directors
2019
Introduction:
These policies aim to set clear and specific standards and procedures for membership in the Board of Directors of Al-Rajhi Takaful "the company", in implementation of the provisions of paragraph (3) of Article Twenty-two of the Governance Regulations issued by the Capital Market Authority and Article (57) of the Insurance Corporate Governance Regulations issued by SAMA.
Article 1: Composition of the Board of Directors:
A- The Company’s board of directors consists of (8) members elected by the General Assembly of shareholders for a period not exceeding three years, based on Article (15) of the Company’s Articles of Association and Article (17) of the Corporate Governance Regulations issued by the Capital Market Authority. The cumulative voting system shall be used When electing members of the Board of Directors in the General Assembly in accordance with Article (8) of the Corporate Governance Regulations issued by the Capital Market Authority.
B- The majority of the Board of Directors must be non-executive members in accordance with Article (16) of the Corporate Governance Regulations issued by the Capital Market Authority. Article (15) of the Company’s Articles of Association stipulate that the number of independent board members may not be less than two members or One-third of the board members, whichever is more.
Article 2: Appointing Board Members
A- The members of the Board of Directors shall be elected by the General Assembly for a period of three years, and they may be re-elected unless the Company's Articles of Association stipulate otherwise.
B- The Company’s Management shall notify the Capital Market Authority and the Saudi Stock Exchange (Tadawul) of the names of the members and their membership status within (5) working days from the date of the start of the board’s session or from the date of their appointment - whichever is sooner - and any changes to their membership within (5) days from the date of the changes occurred.
Article 3: Conditions for Board Membership:
A- The Board must deal with and plan for future changes in the Board.
One of the most important responsibilities of the Board is to evaluate and select candidates to serve as members of the Board of Directors, and the Nominations and Remuneration Committee is responsible for the nomination and preliminary evaluation of potential Board members. The role of the Committee has been explained in more detail in the Internal Governance Regulations and Board Committees Policies.
B- A member of the company’s board of directors may not be a member of the board of directors of another local insurance and / or reinsurance company, or any of their sub-committees, or occupy one of the leadership positions in those companies.
C- The member eligible for membership in the Board must not have a criminal record or have been previously convicted of a crime involving breach of honour or trust.
D- It is required that a member of the Board of Directors be of professional competence who possesses experience, knowledge and skill, that enable him to carry out his duties efficiently and competently. The following shall be me and taken into account in particular:
1. Leadership ability (possessing leadership skills and adhering to professional values and ethics when exercising his powers).
2. Competence (availability of appropriate academic qualifications, professional and personal skills, level of training and practical experiences related to the company's activities and the desire to learn and train).
3. The ability to direct (the speed of decision-making and familiarity with the technical requirements necessary for work, planning and vision).
4. Financial knowledge (reading and understanding financial statements and reports)
5. Health fitness
6. The ability to demonstrate the highest ethical standards
7. The ability to make important and immediate contributions to discussions and decision-making in the Board
8. The ability to allocate sufficient time and effort to perform the tasks as a member of the board of directors.
9. A member should not occupy the membership of five joint stock companies listed on the market simultaneously
Article 4: Membership Procedures for the Company's Board of Directors:
A- The Nominations and Remuneration Committee shall coordinate with the executive management of the company to publish the candidacy announcement on the company’s website and the Tadawul website, and to invite those wishing to run for membership in the Board of Directors, provided that the door for candidacy remains open for at least one month from the date of the announcement, in accordance with the requirements of Article 69 from the Corporate Governance Regulations issued by the Capital Market Authority.
B- Those who wish to nominate themselves for membership in the company’s board of directors must announce their desire, according to a written notification to the company’s management, in accordance with the periods and deadlines stipulated in the laws, regulations, circulars, and decisions in force. The candidacy application must include the following:
1. A written notification signed by the candidate expressing his explicit desire to run for membership in the Board of Directors.
2. A Biography containing his CV, qualifications and experience in the field of the company's business, if any.
3. A statement of the joint-stock companies in which he is still a board member, if any.
4. A statement of the names of companies or institutions that he directly or indirectly participates in managing or owning which practice businesses similar to the Company’s business.
5. Clarification of any kinship or other relationship that he has with one of the company’s major shareholders, or one of its external auditors.
6. A statement of the existing contracts and deals with the company, or any interests he has in, directly or indirectly.
7. A copy of the candidate’s ID, family ID, and means of communication.
8. Fill out the Fit & Proper e-form issued by the Central Bank of Saudi Arabia and attach it to the nomination application. The form is available on the Saudi Central Bank website.
9. Fill out the Disclosure Form No. 3 issued by Tadawul. The form is available on Tadawul website.
10. Any other additional documents that may be requested by the regulatory authorities, or by the company.
The candidate who previously was a member in the board of directors of a joint-stock company or an insurance company must submit a statement of the number and date of his membership in the boards of directors of the companies he assumed their membership, including the following information:
1. The number and dates of board meetings he attended during each year of his membership, the number of meetings attended on his own behalf, and his attendance percentage of the total number of meetings.
2. The permanent committees in which the member participated, the number and date of the meetings held by each of those committees during the years of his membership in them, the number of meetings he attended on his own behalf and the percentage of his attendance to the total number of meetings.
C- The Nomination and Remuneration Committee shall make its recommendation to the Board of Directors regarding nomination for Board membership in accordance with the aforementioned policies and criteria, after studying candidacy applications.
D- The Nominations and Remuneration Committee, in coordination with the executive management of the company, provides the Saudi Stock Exchange "Tadawul" with the CVs of the candidates for membership in the company's board of directors according to the "CV template for a candidate for membership in the board of directors of a joint stock company listed in the Saudi Stock Exchange."
E- written non-objection must be obtained from SAMA before any board member is elected.
F- The Nominations and Remuneration Committee must implement any observations received from the competent authorities about any candidate.
G- Voting in the General Assembly is restricted to those who nominate themselves in accordance with the aforementioned policies, criteria and procedures.
H- Voting in the General Assembly on the item for electing the board of directors is cumulative.
I- The Company must inform SAMA when any of the applications for candidacy for membership of the Board are rejected, with the reasons for the rejection.
J- The number of candidates for the Board of Directors whose names are presented to the General Assembly must exceed the number of seats available so that the General Assembly has the opportunity to choose from among the candidates.
Article 5: Vacant position in the Board:
A- In the event that the position of one of the members of the Board of directors becomes vacant during the term of membership for any reason, the Board of Directors may appoint a member to the vacant position according to Article (17) of the Company's Articles of Association, after obtaining SAMA’s written non-objection, provided that this appointment is presented at the first meeting of the Company's General Assembly for approval, and the new member completes the term of membership of his predecessor.
B- The resignation decision shall be deemed effective from the date the Chairman is notified of the resignation, or at any other time agreed upon.
C- If the resigning member has observations on the performance of the company, he must submit a written statement about them to the chairman, and this statement must be presented to the members of the board of directors.
D- If it is proven to the Board of Directors that a member of the board has violated his duties in a way that harms the interests of the company or provided misleading or incorrect information upon candidacy, then the board may dismiss him and appoint a replacement after obtaining SAMA’s non-objection, provided that this appointment is presented at the first meeting of the Company’s General Assembly for approval.
Article 6: Candidate Disclosure of Conflict of Interest:
Whoever wishes to run for membership in the Board of Directors must disclose to the Board and the General Assembly any cases of conflict of interest in accordance with the procedures prescribed by the Capital Market Authority - which include:
1- The existence of a direct or indirect interest in the business and contracts that are concluded in the interest of the Company.
2- Participation in a business that would compete with the company or compete with it in one of the branches of the activity that it is practicing.
Article 7: Validity and entry into force
A- These policies shall be effective from the date they are approved by the General Assembly.
B- It is the authority of the Board of Directors to make any amendments to this policy under the authority of the General Assembly of shareholders, provided that such amendments are in accordance with the laws and regulations of the relevant authorities.
