Content

1. Code Requirements: What is new Code Requirements for listed companies Presented byProfessor Jasim Al-AjmiMember of the steering committeeJune 2010

2. Introduction • What is new • The Corporate Governance Code • What has been Achieved • Application of the Proposed Code • Provisions in the Law to Corporate Governance Code • Requirements for listed companies • Structure of the code • Underlying relation of the Principles • Principles 1-9 Content

3. Do Companies need to adoptcorporate Governance Practices?

5. Code requirements: What is new?

6. What has been achieved

7. What has been achieved Continued

8. What has been achieved Continued

9. What has been achieved Continued

10. What has been achieved Continued

11. Provisions in the Law relating to corporate governance Code

12. Current rules & regulations

13. Application of the proposed Code

14. The purpose of this Code is to • establish best-practice corporate governance principles in Bahrain • Provide protection for investors and other company stakeholders through compliance with those principles. • International experience has proven that good corporate governance attracts investment, protects investors and other stakeholders, and enhances companies’ value. Purpose and Background of this Code

15. Legally • Financial Institutions • Listed Companies • Practically • All companies Institutions Required to Comply

16. The Code states eight plus one fundamental Principles of corporate governance, each of which is followed by one or more numbered directives for applying the Principle. These Principles and directives are broad and they should be complied with by every company • Recommendations under almost all of the directives. • These recommendations are not required to be complied with by every company and may not be appropriate in some companies. • However, every company should either comply with those recommendations or explain why it does not because of its specific situation. This is known as the “comply or explain” principle Structure of the Code

17. Board of Directors (1, 2, 4, and 5) • Disclosure (8) • Shareholders (7) • Management & Internal Controls (3 and 6) • Special – Islamic (9) Underlying relation of the principles

18. The Company shall be headed by an effective, collegial and informed board Principle 1

19. Principle 1.1 The Company shall be headed by an effective, collegial and informed board

20. Principle 1.2 The Company shall be headed by an effective, collegial and informed board

21. Principle 1.3 The Company shall be headed by an effective, collegial and informed board

22. Independent director

23. Principle 1.4 The Company shall be headed by an effective, collegial and informed board

24. Principle 1.5 The Company shall be headed by an effective, collegial and informed board

25. Principle 1.6 The Company shall be headed by an effective, collegial and informed board

26. Principle 1.7 The Company shall be headed by an effective, collegial and informed board

27. Principle 1.8 The company shall have rigorous procedures for appointment, training, and evaluation of the board

28. The Directors and Officers Shall have Full Loyalty to the Company Principle 2

29. Principle 2.1 The Directors and Officers Shall have Full Loyalty to the Company

30. Principle 2.2 The Directors and Officers Shall have Full Loyalty to the Company

31. Principle 2.3 The Directors and Officers Shall have Full Loyalty to the Company

32. Principle 2.4 The Directors and Officers Shall have Full Loyalty to the Company

33. The board shall have rigorous controls for financial audit and reporting, internal control, and compliance with law Principle 3

34. Principle 3.1 The board shall have rigorous controls for financial audit and reporting, internal control, and compliance with law

35. Principle 3.2 The board shall have rigorous controls for financial audit and reporting, internal control, and compliance with law

36. review the company’s accounting and financial practices, • review the integrity of the company’s financial and internal controls and financial statements, • review the company’s compliance with legal requirements, and • recommend the appointment, compensation and oversight of the company’s outside auditor. • Recommend the appointment of the internal auditor Committee Duties and Responsibilities

37. Principle 3.3 The board shall have rigorous controls for financial audit and reporting, internal control, and compliance with law

38. The company shall have rigorous procedures for appointment, training, and evaluation of the board Principle 4

39. Principle 4.1 The company shall have rigorous procedures for appointment, training, and evaluation of the board

40. Principle 4.2 The company shall have rigorous procedures for appointment, training, and evaluation of the board

41. Principle 4.3 The company shall have rigorous procedures for appointment, training, and evaluation of the board

42. Principle 4.4 The company shall have rigorous procedures for appointment, training, and evaluation of the board

43. The company shall remunerate directors and officers fairly and responsibly Principle 5

44. Principle 5.1 The company shall remunerate directors and officers fairly and responsibly

45. Principle 5.2 The company shall remunerate directors and officers fairly and responsibly

46. Principle 5.3 The company shall remunerate directors and officers fairly and responsibly

47. Principle 5.4 The company shall remunerate directors and officers fairly and responsibly

48. Principle 5.5 The company shall remunerate directors and officers fairly and responsibly

49. The board shall establish a clear & efficient management structure Principle 6

50. Principle 6.1 The board shall establish a clear & efficient management structure