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Introduction

The Board of Directors (the “Board”) of Alujain Corporation (“Alujain” the “Company”) should be responsible for overseeing the Company’s Management and business affairs and should make all major policy decisions of the Company. As such, the Board has adopted this Code of Corporate Governance. This Code, together with the Company’s Articles and Memorandum of Association and the Charters of certain Board Committees, provide the authority and best practices for governance of the Company.

 

The Company shall publish its Code of Corporate Governance, key Board Committee Charters and the Code of Conduct Ethics on the Company’s website, and shall make these documents available in writing on request.

 

The Board should review these guidelines and other aspects of corporate governance from time to time and should make such changes as it deems necessary in its discretion and to the extent required under any applicable Saudi laws and Capital Market Authority (CMA) regulations.

 

Purpose

This document serves as the Corporate Governance manual for Alujain Corporation. It provides guidelines for the effective governance of the Company in an effort to enhance long-term shareholder value.

 

The Board has adopted this Corporate Governance manual, which together with the Company’s by-laws and applicable laws, rules and regulations of Kingdom of Saudi Arabia, shall provide the authority and practices for governance of the Company.

 

This Corporate Governance Manual has been developed on the basis of the Companies Laws / Regulations and CMA Corporate Governance Guidelines (some of the corporate governance guidelines were taken into consideration in the development of this manual to ensure that Alujain has effective governance structure in line with the requirements of the CMA).

 

Corporate Governance Mission

The Company aspires to attain the highest standards of ethical conduct: doing what it says; reporting results with accuracy and transparency; and maintaining full compliance with the laws, rules and regulations that govern the Company’s business.

 

The Board of Directors shall provide central leadership to the Company, establish its objectives and develop the strategies that direct the ongoing activities of the Company to achieve these objectives. Directors shall shape the future of the Company; protect its assets and reputation. They will consider how their decisions relate to “stakeholders” and the regulatory framework. Directors shall apply skill and care in exercising their duties to the Company and are subject to fiduciary duties. Directors shall be accountable to the shareholders of the Company for the Company’s performance and can be removed from office by them.

 

What is Corporate Governance?

One of the most powerful trends in today's fast changing world is the fact that businesses and their leaders are increasingly confronted with the independence between their organization and its stakeholders. As a result of this confrontation the traditional primary role of business as a "profit maker" is challenged; good business performance should be more than merely profit-focused financial performance.

 

This trend represents a shift of power from inside to outside the organization, revolutionizing Boardroom culture and priorities. As external stakeholders have more say than ever in how business leaders run their businesses, these leaders are required to demonstrate through their actions and decisions that they are part of society and not merely of an economy.

 

It's a system of "checks and balances" designed to find a careful equilibrium between the interests of the different stakeholders of the organization (shareholders, Management, employees, customers, suppliers and society at large). As such, corporate governance is not only limited to legalistic matters, respect of regulations or risk management; it is pervasive throughout the Company.

 

Using the phrase “corporate governance” literally means applying the concept in its broadest sense to the direction and management of the Company and the creation of value for its shareholders. To others, corporate governance simply means the implementation of control systems to prevent conflicts of interest and other improper conduct.

 

Manual Structure

This document provides the framework for the effective governance of the Company in an effort to enhance long-term shareholder value. The Framework addresses several key governance issues and principles and is broken into the following sections:

 

  1. Shareholders & General Assembly Guidelines – The guidelines discuss the purpose, responsibilities, structure and the operations of the Shareholders’ General Assembly.
  2. Board of Directors Guidelines – The guidelines discuss several key governance issues and principles including Board responsibilities, Director Qualifications, Director Responsibilities, Board structure and operations, Board committees, access to management and independent advisors, Director compensation, Director orientation, management evaluation and succession, Board performance evaluation, and relations with shareholders.
  3. Audit Committee Charter - The Charter discusses the purpose, responsibilities, structure and the operations of the Audit Committee of the Board of Directors.
  4. Nomination & Remuneration Committee Charter – The Charter discusses the purpose, responsibilities, structure and the operations of the Nomination & Remuneration Committee of the Board of Directors.
  5. Governance and Social Responsibility Committee Charter – The Charter discusses the purpose, responsibilities, structure and the operations of the Governance and Social Responsibility Committee Charter of the Board of Directors.
  6. Investment Committee Charter – The Charter discusses the purpose, responsibilities, structure and the operations of the Investment Committee of the Board of Directors.
  7. Code of Conduct and Ethics – The Code discusses the policies that relate to the legal and ethical standards of conduct that the Directors, Executive officers and employees of Alujain are expected to comply with while carrying out their duties and responsibilities on behalf of the Company.
  8. Disclosure – This section discusses the disclosure requirements that the Company shall carry out in accordance with the applicable laws, rules and regulations.
  9. Conflict of Interest – This section discusses matters related to Directors’ conflict of interest as well as insider trading.

 

Benefits of Good Corporate Governance

Good corporate governance is about developing, maintaining, monitoring and controlling corporate structures and procedures to ensure that accountability, transparency, fairness and responsibility are embedded in the corporate decision making process.

 

Good corporate governance is not simply about avoidance of financial shocks; nor should the emphasis be on the negative impacts of poor corporate governance. Rather the positive benefits of good governance should be the primary concern of the Company.

 

Companies that adopt a high level of transparency, accountability and fairness will have a strong and sustained impetus to perform well and create value in the long term.

 

Companies practicing good corporate governance can reap various benefits such as:

 

Mitigating risks:

  • Effective Board oversight reduces risk of mismanagement and fraud.
  • Strong internal controls improve integrity of financials.
  • Instills culture of compliance.

 

Winning confidence of the Exchange:

  • Enhanced Exchange trust from corporate governance leads to higher share price/lower cost of capital and access to wider pool of capital.
  • Improved corporate governance attracts prominent investors & retains shareholders confidence in the Company.

 

Improving competitiveness:

  • A highly qualified well informed Board can go beyond oversight and make value added contributions to strategy and provide effective directions to management.
  • Rigorous Board oversight of the President’s succession/talent management processes ensures that the right people will be available to fill the right places at the right time.
  • Accurate information derived from strong internal controls can also contribute to better management decisions.