Corporate Governance

1. An effective, qualified and expert Board of Directors (the “Board”);
2. The duty of loyalty;
3. Rigorous controls for financial audit and reporting, internal control, and compliance with law;
4. Effective procedures for training and evaluation of the Directors;
5. Fair and responsible remuneration practices and policies;
6. Clear and efficient management structures and clearly defined job titles, powers, roles and responsibilities;
7. Active communication with shareholders and active participation by shareholders;
8. Comprehensive corporate governance disclosure;
9. Integrity of financial statements through the appointment of external auditors; and
10. Seek through corporate social responsibility to exercise its role as a good citizen.

The members of the Board of Directors are appointed by the Chairman of the Bahrain Economic Development Board, HRH Prince Salman bin Hamad Al Khalifa, the Crown Prince, and Prime Minister.
The Board Charter sets out the duties and responsibilities of the Board of the Company. Additionally, the Board has adopted the Directors’ Code of Conduct that sets out the standards and determinants of Director professional conduct and ethical values.

Director Independence
Under the Governance Code, independence means both financial independence and independence of judgement. Directors must exhibit integrity and must not have any economic or financial relationship with Mumtalakat or any of its associates, subsidiaries or affiliates. On an annual basis, Mumtalakat’s Directors complete a Disclosure of Interest and Independence Form, disclosing their interests, and the interests of their spouse and children, and they answer a set of questions designed to establish whether they have any other positions that may jeopardise their independence. The Board’s Compensation and Governance Committee reviews these forms and makes an annual determination of the independence of each Director.

Related Party Dealings and Director Conflicts of Interest
Mumtalakat has policies for dealing with related party transactions and conflicts of interest. In addition, Mumtalakat’s Directors disclose, prior to any discussions at any meeting (whether of the Board as a whole or of the Committees of the Board), whether there are any conflicts of interest arising from any matter on the agenda. Conflicted Directors excuse themselves from discussions of the relevant matter at such meetings and abstain from voting on the matter in such circumstances. Related party transactions are reported at Mumtalakat’s annual general meeting and are disclosed in the notes to the annual audited consolidated financial statements.

Mumtalakat’s Board has established three standing Committees of the Board:

(a) The Board Audit & Risk Committee: The Board Audit & Risk Committee (the “BARC”) is entrusted with independently ensuring and maintaining oversight of Mumtalakat’s financial reporting system, internal control and risk management processes, internal and external audit, and compliance with legal and regulatory requirements. The BARC is composed of three Directors. All members of the BARC have an ability to read and understand Mumtalakat’s financial statements, and have an understanding of the accounting principles applicable to Mumtalakat’s financial statements. They also have an understanding of Mumtalakat’s internal control methods and financial reporting procedures. The BARC receives reports on a regular basis from representatives of Mumtalakat’s finance, risk and compliance functions, and also meets regularly with Mumtalakat’s external and internal auditors. The BARC reports to the Board on a regular basis.

(b) The Board Governance & Compensation Committee: The Board Governance & Compensation Committee (the “BCGC”) is entrusted with identifying and nominating individuals to serve as Board Committee members, recommending the remuneration and rewards policies for employees and the Board of Directors, and establishing the corporate governance framework of Mumtalakat. The BCGC is composed of three Directors. All members of the BCGC have an understanding of Mumtalakat’s compensation and remuneration policies, and are involved in the setting of salary bands, remuneration policies, and payment of incentives to Mumtalakat’s employees. The BCGC is also responsible for conducting the annual evaluations of the Board as a whole, each individual Director, and each Committee of the Board. The BCGC reports to the Board on a regular basis.

(c) The Board Investment Committee: The Board Investment Committee (the “BIC”) is entrusted with reviewing and approving investment and divestment opportunities, monitoring credit risks, and other investment-related matters. The BIC is composed of four Directors. All members of the BIC have experience in investments, business, and commercial matters, and are well versed in the investment trends and the sectors in which Mumtalakat invests. The BIC receives regular reports from the various Mumtalakat investment lines, including strategic investments, local investments, and asset management. The BIC reports to the Board on a regular basis.

In order to manage the day-to-day operations and investment activities of Mumtalakat, three internal management committees have been established:

(a) Management Executive Committee: The Management Executive Committee (“MEC”) is composed of the Chief Executive Officer, the Chief Investment Officer, the Managing Director for local investments, the Managing Director - Finance, the Managing Director - Corporate Services, the Managing Director - Corporate Strategy, Planning and Communications, and the Managing Director - Human Capital. The MEC meets on a regular basis to discuss matters of strategic importance. Examples of matters discussed at the MEC are governance, budget, financing plans, operations, corporate social responsibility, performance and other staff-related matters.

(b) Management Investment Committee: The Management Investment Committee (“MIC”) is composed of the Chief Executive Officer, the Chief Investment Officer, the Head of Global Asset Management, the Managing Director for local investments, and the Managing Director - Finance. The MIC assists the BIC in fulfilling its oversight responsibilities on policy, standards and procedures for investing in a responsible manner. The MIC meets on a regular basis to examine, review, debate and challenge proposed investment activities before recommending such activities for execution or implementation. The focus of the MIC is on business, commercial investment and strategic considerations.

(c) Management Investment Diligence Committee: The Management Investment Diligence Committee (“MIDC”) is composed of the Managing Director - Corporate Services, the Head of Legal, the Head of Procurement, and representatives from Finance, Risk and Treasury. The MIDC works in coordination with the MIC in reviewing the Company’s proposed investment related activities. The MIDC meets on a regular basis to examine, review, debate and challenge proposed investment activities before these activities are raised to the MIC. The focus of the MIDC is on finance, risk, legal and procurement considerations.

Mumtalakat’s Board has established Discretionary Authority Limits (“DAL”) which (a) clearly specify the authorities, and limits on those authorities, for various tasks associated with the governance and operational structure of Mumtalakat, and (b) assign responsibility and accountability to various members of Mumtalakat’s management for those tasks. The DAL covers areas such as: (i) strategic planning, (ii) corporate governance, (iii) asset management, (iv) advertising, marketing and corporate communications, (v) professional services, (vi) property management, (vii) information technology, (viii) capital expenditure and budgeting, (ix) human capital, (x) treasury, and (xi) finance. The DAL also allows the Chief Executive Officer certain delegation powers, and where appropriate, these have been delegated to ensure efficiency of Mumtalakat’s operations.

The Company ensures transparency, accountability and fairness in its business and governance practices through proactively maintaining ongoing direct communication between the Chairman and other Directors of the Company on the one hand, and the Shareholder on the other hand, in order to actively solicit the Shareholder views (both as a shareholder, and through the Shareholder’s representation on the Board of Directors) and to understand any concerns the Shareholder may have with respect to the Company’s business activities.

In addition, the Company convenes annual ordinary general meetings and extraordinary general meetings when required, by sending invitations ahead of the meetings and ensuring that all material information and documentation is provided to the Shareholder in advance of any such shareholder meeting. This communication approach provides the Company with a further opportunity to hear the Shareholder’s perspectives. Furthermore, disclosure of all material facts is made available to the Shareholder prior to any vote by the Shareholder.

Finally, in accordance with the disclosure requirements of the Governance Code, all material information related to the Company, such as the Company’s financial statements and annual report, as well as the annual Corporate Governance Report, and Corporate Governance Guidelines, are made available on the Company’s website.

Through Mumtalakat’s various decision-making layers, Mumtalakat ensures that:

1. Mumtalakat has a clear corporate governance framework;
2. Mumtalakat provides to all of its stakeholders disclosure that is fair, transparent, timely and comprehensive;
3. Mumtalakat has more than one forum for constructively debating and challenging all actions;
4. Decisions at each level are made on an informed basis; and
5. Mumtalakat has clearly allocated responsibilities and segregation of duties, and, therefore, there is true accountability for decision-making.