Introduction to The Board of Directors

The Board of Directors (the “Board”) is responsible for the establishment and oversight of the Group’s business strategy and priorities, for setting its high-level policies and for overall management; and is accountable to the shareholders for the financial and operational performance of the Group. It is responsible for raising and allocating of capital, monitoring of the Executive Management and its conduct of the Group’s operations, making critical business decisions and building long-term shareholder value. The Board, through approving and monitoring the Group’s risk appetite, and identifying and guarding against the longer term strategic threats to the business, ensures that the Group manages risk effectively.
 
The Board is also responsible, inter alia, for:

• setting and reassessing periodically the Group’s corporate goals and objectives;

• establishing policies to further the achievement of the Group’s corporate goals and objectives;

• establishing and regularly reviewing the management structure and responsibilities, and monitoring the effectiveness of the Executive Management, including its ability to plan and execute strategies;

• holding the Executive Management accountable for results;

• putting in place adequate policies and processes for approving budgets, and reviewing performance against those budgets and against key performance indicators;

• ensuring that an adequate, effective, comprehensive and transparent corporate governance framework is in place;

• establishing and approving policies and procedures designed to ensure ethical behavior and compliance with laws and regulations, auditing and accounting standards and the Group’s own corporate governance policy;

• ensuring that Alzeerah Group Investment Company and its subsidiaries’ operations are supported by an appropriate control environment, i.e. that internal audit, compliance, risk management and finance and reporting functions, are well resourced and structured;

• ensuring that the Group’s operations are supported by a reliable, sufficient and well-integrated information system;

• recognizing and communicating to the Executive Management the importance of the internal audit function at Alzeerah Group Investment Company and its subsidiaries, periodically reviewing internal control procedures, and taking measures to enhance the function of internal audit and to act in a timely and effective manner on its findings;

• approving the writing off of credit facilities and investments where appropriate, in accordance with the Group’s policies and procedures;

• ensuring that an Anti-Money Laundering framework is in place to manage money laundering risk throughout the Group;

• ensuring that the Anti-bribery and Corruption program is implemented throughout the Group;

• approving strategic investments by Alzeerah Group Investment Company and its subsidiaries;

• monitoring potential conflicts of interest and preventing abusive related party transactions;

• approving material transactions outside the normal course of business or in excess of the limits of approval authority delegated to the Executive Management;

• ensuring the preparation of financial statements which accurately disclose the Group’s financial position, on a regular and consistent basis, and for reviewing and approving for dissemination its periodic financial statements and annual reports;

• approving all significant changes in the Group’s accounting and reporting policies;

• ensuring compliance at all times with all relevant requirements of Shari’a (“Sharia” or “Shari’a”) and Islamic Accounting Standards, issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI);

• ensuring that the Group establishes and maintains an approved employee Code of Conduct and is in compliance with it;

• ensuring that the control environment maintains necessary client confidentiality, and that clients’ rights and assets are properly safeguarded;

• ensuring that the Group’s Social and Sustainable Finance objectives are attained;

• convening and preparing the agenda for shareholder meetings;

• ensuring equitable treatment of all shareholders including minority shareholders;

• ensuring that there is representation of women on the Group’s Board of Directors in accordance with the directives of the Ministry of Industry & Commerce and disclosure in the Corporate Governance report for each fiscal year the percentage component of the Board membership duly classified according to gender (and the lack of or under-representation of any single gender), and non-compliance of the directives in any manner whatsoever; and

• performing any other functions required from the Board of Directors under applicable laws and regulations.

In its regular review of the Group’s strategy, the Board reviews the Group’s business plans and the inherent level of risk in those plans. It also assesses the adequacy of capital to support the business risks of the Group; sets performance objectives; and oversees major capital expenditures, divestitures and acquisitions.
 
The Board of Directors has overall responsibility for the Group’s system of internal control and its effectiveness, and for defining and enforcing standards of accountability that enable the Executive Management to achieve the Group’s corporate objectives. The Board ensures that the systems and controls framework, the Board structure and the organizational structure of the Group are appropriate for the Group’s business and associated risks, and regularly assesses the systems and controls framework to that end. There are established and ongoing procedures in place for identifying, evaluating and managing significant risks faced by the Group. These are regularly reviewed by the Board. The Group’s system of internal control provides for a documented and auditable trail of accountability and applies across its operations. This system is designed to ensure effective and efficient operation and compliance with all applicable laws and regulations, and seeks to manage risk with a view to avoiding material errors, losses and fraud.
 
In meeting its responsibility to ensure efficient governance in all matters related to Alzeerah Group Investment Company, the Board has established a written compliance policy governing the Group’s compliance with all laws and regulations; in particular those enunciated by the Central Bank and other local regulators. The Board is also responsible for upholding the highest ethical standards in the conduct of business activities and expects all employees, directors and associated persons of the Group to abide by the policies and laws including those stipulated by the Bahrain Penal Code. The Board has delegated responsibility for monitoring compliance to the Group Chief Executive Officer in coordination with the Board Compliance & Governance Committee. This responsibility is carried out through a dedicated Compliance Department, with a mandate to cover all aspects of compliance including: formulation of effective policies and processes for the management of the Group’s compliance risk; assisting Executive Management and staff in managing risk; advising on laws and regulations and applicable compliance standards; disseminating compliance policies and providing guidelines to Alzeerah Group Investment Company staff members; ensuring an effective compliance methodology; providing periodical reports to the Board in connection with compliance controls; and establishing operational controls and a robust Know Your Customer (KYC), Anti-Money Laundering (AML) and Anti-bribery and Corruption program (“ABC program ”) frameworks. Alzeerah Group Investment Company is continuously enhancing its compliance framework and that of each of its subsidiaries.
 
The CB has issued requirements of Module HC of its Rulebook under Volume 4 which are met by Alzeerah Group Investment Company with respect to corporate governance principles. These requirements are in line with the principles relating to the Corporate Governance Code issued by the Ministry of Industry & Commerce of the Kingdom of Bahrain, international best practice corporate governance standards set by bodies such as the Basel Committee for Banking Supervision and related high-level controls and policies. In 2014, the CB introduced further requirements addressing the matter of remuneration of Approved Persons and Material Risk Takers (see below), which requirements were duly adopted by Alzeerah Group Investment Company. Alzeerah Group Investment Company conducts annually detailed internal assessments to ensure compliance with these requirements and, in the event that any shortfall is identified, sets specific milestones for implementation of measures to address the shortfall. The CB, Alzeerah Group Investment Company’s shareholders, the Board of Directors and the Executive Management are all kept fully aware of such shortfalls, if any, and the measures taken.
 
Alzeerah Group Investment Company continuously ensures that the Group’s minority shareholders are well represented on the Board of Directors through the independent directors (who constitute the majority of the Board of Directors), who have additional responsibility for protection of the rights of minority shareholders.
 
The Board of Directors meets regularly (at least four times a year) and has a formal schedule of matters reserved for it, considering key aspects of the Group’s affairs referred to it for decision. The Board reviews the Group’s strategy and financial plans, all proposed material changes to the Group’s policies, structure and organization, reports provided to it on the operations of the Group (with emphasis on organizational, risk management and information technology development) and the performance of the Executive Management.
 
All Directors attend all Board meetings whenever possible and in any event not less than 75% of meetings in any year, and they maintain informal contact among themselves between meetings. The Chairman is responsible for leadership of the Board and for its efficient functioning. He ensures that all members receive an agenda, minutes of prior meetings and background information in writing before each Board meeting and between meetings when necessary. The Board and its Committees are supplied with full and timely information to enable them to discharge their responsibilities. In this respect, the Board, its Committees and all Directors individually have access to the Executive Management, external legal or other professional consultants and advisors at the Group’s expense, and to the Board Secretary, who is responsible for ensuring that the Board procedures and applicable rules and regulations are observed. The Board encourages participation by members of the Executive Management at Board meetings, if appropriate, regarding matters, which the Board is considering and where the Group Chief Executive Officer believes management should have exposure to the Board.
 
Under Alzeerah Group Investment Company’s Articles of Association, the Board of Directors shall consist of no fewer than five and no more than 15 members. Members of the Board of Directors hold office for a three-year renewable term, although the term of office may be extended at the request of the Board for a period not exceeding six months with the approval of the Ministry of Industry & Commerce of Bahrain.
 
There is no maximum age limit at which a Director must retire from the Board of Directors. Each Director’s membership of the Board shall terminate upon the expiry of his/her term, or upon the resolution of the shareholders in General Meeting, or as a result of one of a number of specified events or circumstances, including:

• the original appointment being found to be contrary to the provisions of the Commercial Companies Law (CCL) or Alzeerah Group Investment Company’s Articles of Association;

• If the member is in breach of any of the qualifying conditions referred to in Article 173 of the CCL;

• If the member misuses his position in carrying on a business that is in competition with Alzeerah Group Investment Company or if he causes actual damage to it;

• If the member fails to attend three consecutive Board meetings without presenting a lawfully excused notification in writing to the Board;

• If the member resigns or withdraws from his/her office, provided the foregoing shall be done in an opportune time, otherwise he shall be liable to pay damages to Alzeerah Group Investment Company;

• Death of the member; and

• If the member occupies any other office at Alzeerah Group Investment Company for which he/ she would receive remuneration other than that which the Board of Directors may decide from time to time because of the executive nature of his/her duties.

When an announcement is made requesting nominations for the position of membership of the Board of Directors to replace those members whose three-year term is due to expire, such nominations must be submitted to the Chairman of the Board, within the time frame provided in the announcement, then to the Board Nomination and Remuneration Committee for it to make its recommendations to the Board. As part of the nomination process, each nomination must comply with local rules and regulations, and must be submitted for approval to the CB in order to ensure compliance with the CB’s “Fit and Proper” criteria. The names of all nominated individuals approved by the CB are then submitted to the shareholders at the next AGM for consideration and election. Election of Alzeerah Group Investment Company Directors takes place in accordance with the rules and procedures set out in the CCL and Alzeerah Group Investment Company’s Articles of Association.
 
In line with corporate governance best practice, there is a succession plan for the Executive Management. This is reviewed annually and submitted to the CB.
 
Each new Director elected to the Board receives a written appointment letter, detailing the powers, duties, responsibilities and obligations of that Director, and other relevant terms and conditions of his appointment.
 
As of December 31st 2022, there were 13 Directors on the Board. They have varied backgrounds and experiences and are, individually and collectively, responsible for performing the responsibilities of the Board, and for exercising independent and objective judgement. No individual Director or group of Directors has unfettered powers of decision making or dominates the Board’s decision making. The majority of the Directors are non-executive and fully independent of management, and are individually responsible for scrutinizing and challenging management decisions and performance. The posts of Chairman, Vice Chairman and Group Chief Executive Officer are held by different Directors, and the Group Chief Executive Officer has separate, clearly defined responsibilities. The size and composition of the Board and its Committees are regularly assessed, while the effectiveness, contribution and independence of individual Directors are assessed annually in light of interests disclosed and conduct. The independence or non-independence of Directors is, likewise, reviewed annually.
 
All Directors are remunerated solely by means of an annual retainer fee and sitting fees paid for each meeting attended. Their travel expenses are also reimbursed as appropriate.
 
The Board of Directors has adopted a formal Code of Business Conduct and Ethics applicable to Directors and Executive Management, officers, employees and agents, consultants and others representing or acting for the Group. Details of the Code are provided in the Additional Public Disclosures section of this report. In line with international best practice and the CB Rulebook, the Board has instituted corporate governance measures to ensure that the interests of the shareholders are protected, including the appointment to the Board of more than one third of Directors as independent Directors, as defined in the CB Rulebook.