Corporate Governance Assessment Template

Corporate Governance Assessment Report Saudi Hollandi Bank
I. Board Structure, Composition and Membership
1. Board size
Ref. Practice Recommendations/ Comments
PwC’s
Assessment
1.1 BoD lays down specific and explicit policies, standards and procedures,
for the membership of the Board of Directors and implements them after
they have been approved by the General Assembly
1.2 SHB's AoA and other internal documentation specify the number of BoD
members, provided that such number is not less than three and not more
than eleven
1.3 BoD brings the requisite knowledge, abilities and skills to the table in a
group small enough to act cohesively
1.4 BoD reconsiders the appropriate size and composition for BoD
membership frequently
1.5 Unless SHB bylaws provide otherwise, if the office of a director becomes
vacant, the board may appoint a temporary director to fill the vacancy,
provided that such appointment shall be laid before the first regular
general meeting. The new director shall complete the unexpired term of
his predecessor
1.6 If the number of directors falls below the minimum of three members or
as prescribed in SHB's bylaws, the regular general meeting must be
convened as soon as possible to appoint the required number of directors
2. Chairman of the Board

PwC’s
Assessment
2.1 There are appropriate procedures in place for appointing the Chairman
2.2 SHB’s Supervisory rules state that it is prohibited to conjoin the position
of the Chairman of the BoD with any other executive position in SHB,
such as the Chief Executive Officer (CEO) or the Managing Director or
the General Manager
3. Boardroom conduct and relationships

PwC’s
Assessment
3.1 BoD members recognize that relationships are not developed solely in
the boardroom, and that devoting time to frequent off-line interactions is
necessary to establish trust among members and with management
3.2 BoD members who are Non-Executive Directors regularly meet with
issues/guidance/ concerns communicated to the CEO, and support one
another as appropriate, especially during contentious BoD meetings
3.3 With due regard to the prerogatives vested in the general meeting, the
board of directors enjoys full powers in the administration of SHB and
there are appropriate mechanisms in place to ensure that BoD
resolutions are actually being implemented
3.4 The BoD is entitled, within the scope of its competence, to delegate one
or more of its members or 'others to perform an act or certain acts.
3.5 Directors are jointly responsible for damages to SHB, or its stockholders,
or third parties, arising from their maladministration of the affairs of
SHB, or their violation of legal requirements or of SHB's bylaws
4. Confidentially
PwC’s
Assessment
4.1 There is a policy for managing information of a confidential nature

within the BoD
4.2 There are mechanisms that ensure that this policy is operating effectively
5. Membership and Selection Criteria

PwC’s
Assessment
5.1 The General Assembly appoints the members of the BoD for the duration
provided for in the AoA of SHB, provided that such a duration does not
exceed three years.
5.2 Unless otherwise provided for in the AoA of SHB, members of the Board
may be reappointed
5.3 Skills, personal qualities, knowledge and experience required for each
appointment to BoD are specified
5.4 The independent members of the BoD are not less than two members, or
one-third of the members, whichever is greater
5.5 The term independent is clearly defined and document in SHB’s internal
documents in accordance with applicable regulations
5.6 The Majority of the members of the BoD are non-executive members
5.7 It is prohibited to conjoin the position of Chairman of the BoD with any
other executive position in SHB
5.8 The term of office of the Chairman, the Managing Director, and the
Secretary who is a director do not exceed the term of their respective
directorships
5.9 SHB's AoA specifies the manner in which membership of the BoD
terminates. At all times, the General Assembly may dismiss all or any of
the members of the BoD even if the AoA provide otherwise
5.10 SHB's BoD notifies SAMA/CMA and the Tadawul Stock Exchange on
termination of membership of a Board member in any of the ways of
termination. The Board also specifies the reasons for such termination
5.11 A member of the BoD does not act as a member of the BoD of more than
five joint stock companies at the same time nor does he act as a member
of the BoD of any other bank
5.12 No person in the following cases shall be elected as a director or shall

become a manager of SHB without prior written approval of the SAMA:
a. If he occupied a similar position in a banking concern that was wound
up.
b. If he was removed from a similar post in any banking establishment.
6. Succession Planning
PwC’s
Assessment
6.1 There are succession plans in place for BoD members, BoD Secretary and
all key positions within the executive management team
7. Independence and objectivity

PwC’s
Assessment
7.1 There is an agreed process for the management of conflict of interests

among BoD members
7.2 Judicial person who is entitled under SHB’s AoA to appoint

representatives in the Board of Directors, is not entitled to a nomination
vote of other members of the Board of Directors
7.3 Any director or manager of SHB, who is adjudicated bankrupt or

convicted of a moral offense, shall be considered as having resigned his
post
7.4 A director may not, without authorization from the regular general
meeting, to be renewed annually, participate in any business that
competes with that of SHB, or engage in any of the commercial activities
carried on by SHB; otherwise, SHB shall have the right either to claim
damages from him or to consider the operations he has conducted for his
own account as having been conducted for the account of SHB
7.5 A director may not have any interest whether or indirectly, in the
transactions or contracts made for the account of SHB, except with an
authorization from the regular general meeting, to be renewed annually.
Transactions made by way of public bidding shall, however, be excluded
from this (restraint) if the director has submitted the best offer.
7.6 The director must declare to the board of directors any personal interest
he may have in the transactions or contracts made for the account of
SHB. Such declaration must be recorded in the minutes of the (board)
meeting, and the interested director shall not participate in voting on the
resolution to be adopted in this respect.
7.7 The chairman of the board communicates to the regular general meeting
when it convenes the transactions and contracts in which any director
has a personal interest in. Such communication is accompanied by a
special report from the auditor
8. Board Secretary
PwC’s
Assessment
8.1 SHB Secretary and committee secretaries are independent from

Executive Management to an extent that insures that they are shielded
from undue influence from management and other parties
8.2 SHB Secretary operates to clearly written roles and responsibilities
8.3 SHB Secretary follows up with Executive Management the

implementations of board resolutions
8.4 SHB Secretary plays an important role in the development of,

compliance with, and periodic review of SHB’s governance policies and
practices
II. Board Performance and Effectiveness
1. Access to independent advisors

PwC’s
Assessment
1.1 Directors and Committee Members are advised of their entitlement to

obtain independent professional or other advice at the cost of SHB
2. Roles and Responsibilities

PwC’s
Assessment
2.1 SHB states the responsibilities of the BoD in SHB’s Articles of

Association and the BoD Charter
2.2 Tasks and objectives to individual members including, especially, the

Chairman, MD, CFO and other key executives are clearly defined and
documented
10.3 BoD members have access to accurate, relevant and timely information
in order to fulfil their responsibilities
2.4 SHB’s Board Members represent all shareholders without favouring the
interests of the group which voted in favour of their appointment to the
Board or anyone else
4.5 BoD develops a written policy that regulates conflict of interest and
remedies any possible cases of conflict by members of the Board of
Directors, executive management and shareholders. This includes misuse

of SHB's assets and facilities and the arbitrary disposition resulting from
dealings with the related parties
BoD ensures the integrity of the financial and accounting procedures

4.6 including procedures related to the preparation of the financial reports
BoD ensures the implementation of control procedures appropriate for

risk management by forecasting the risks that SHB could encounter and
4.7 disclosing them with transparency
4.8 BoD annually reviews the effectiveness of the internal control systems
BoD drafts a Corporate Governance Code for SHB that is compliant with
all applicable regulations, supervises and monitors the effectiveness of
4.9 the code and amends it whenever necessary
BoD decides policies and procedures to ensure SHB’s compliance with

the laws and regulations and SHB’s obligation to disclose material
4.10 information to shareholders, creditors and other stakeholders
3. Appraisal / Assessment
PwC’s
Assessment
3.1 There are objectives for continuous improvement in the quality and
effectiveness of BoD performance
3.2 The strengths and weaknesses of individual directors are defined, where
this affects the performance of BoD as a whole
3.3 The development needs and training opportunities for BoD members
and SHB Secretary are met
3.4 The quality of BoD’s decisions, advice received and its actions are
regularly reviewed
3.5 BoD regularly reviews the effectiveness and performance of

management, BoD as a whole and individual members of BoD with
reference to their contribution to the performance of SHB
4. Board remuneration
PwC’s
Assessment
4.1 The AoA of SHB sets forth the manner of remunerating the Board
members, also the remuneration is paid in accordance with the AoA
4.2 BoD members’ remuneration is paid in accordance with the AoA

5. Frequency, conduct and management of meetings

PwC’s
Assessment
5.1 The board of directors shall meets at the summons of its chairman in the
manner prescribed in SHB's bylaws. Nevertheless. and notwithstanding
any provision to the contrary in SHB's bylaws, the chairman must
convene the board if requested to do so by any two directors
5.1 The Board of Directors may adopt resolutions by putting them to the
directors individually, unless a director requests in writing that the board
be convened to deliberate on such resolutions, in which case they shall be
laid before the board at the first following meeting
5.3 Deliberations and resolutions of the board are recorded in minutes to be

signed by the chairman and the secretary. Such minutes are entered in a
special register, after being signed by the chairman, all attending
members and the secretary
5.4 Board members assign ample time for performing their responsibilities,
including the preparation for the meetings of the Board and the
permanent and ad hoc committees, and attend such meetings
5.5 The Board convenes its ordinary meetings regularly upon a request by
the Chairman
5.6 When preparing a specified agenda to be presented to the Board, the

Chairman consults the other members of the Board and the MD
5.7 The agenda and other documentation are sent to members in sufficient
time prior to the meeting so that they are able to consider such matters
and prepare themselves for the meeting.
5.8 Once convened, the Board approves the agenda; should any member of
the Board raise any objection to this agenda, the details of such objection
are entered in the minutes of the meeting
5.9 The Board documents its meetings and prepare records of the
deliberations and the voting, and arrange for these records to be kept in
chapters for ease of reference
5.10 There is an agreed process for Directors to acknowledge dissent and

subsequent registration on matters of principle in which they are unable
to acquiesce with BoD
6. Induction and training

PwC’s
Assessment
6.1 SHB sends a formal letter of appointment to all directors which sets out:
- The term of their appointment
- Their remuneration, and arrangements for its review
- Any special duties or arrangements that may be relevant
- The arrangements by which the Directors can take advice, at SHB’s
expense, in the furtherance of their duties
6.2 Non-executive directors are formally advised of the reasons they have
been asked to join BoD and given an outline of what BoD expects of them
before accepting appointment
6.3 BoD ensures that a procedure is laid down for orienting the new board
members of SHB’s business and, in particular, the financial and legal
aspects, in addition to their training, where necessary
6.4 There is a policy for director training and continuing education
6.5 Directors training and continued education is based on directors’

assessment
7. Management/Board relationship
PwC’s
Assessment
10.1 SHB’s BoD assumes all the necessary powers for SHB’s management.
The ultimate responsibility for the SHB rests with the Board even if it
sets up committees or delegates some of its powers to a third party
10.2 The BoD avoids issuing general or indefinite power of attorney
2.11 SHB's BoD determines matters reserved for decision by the BoD
2.12 SHB's BoD determines the powers to be delegated to the executive

management and the procedures for taking any action and the validity of
such delegation
2.40 There is a mutual understanding of powers and responsibilities to be

allocated to senior management
2.13 Executive management submit to the BoD periodic reports on the

exercise of the delegated powers
III. Strategy, Planning and Monitoring
1. Management Performance Monitoring and Assessment

PwC’s
Assessment
1.1 BoD ensures that senior management’s successes and failures are
communicated to them, and ensures appropriate rewards and sanctions
are implemented
1.2 Through this process, BoD:

- Communicates its conclusions directly or by delegation to members of
the management team quickly and effectively
- Insists that rewards or sanctions are executed promptly
1.3 Performance measures used by management and reported to BoD are

linked to tactics and strategy and to the real value drivers
1.4 Performance measures are balanced between financial and non-financial

metrics which include forward looking measures and enable
benchmarking against competitors, peers and best practice companies
1.5 Performance measures are directly linked to rewards at all SHB levels,
tying to both unit and SHB-wide goals
1.6 Management progress towards meeting targets is being continuously

examined
1.7 BoD decides the performance objectives to be achieved and supervise the
implementation thereof and the overall performance of SHB
2. Strategic/Corporate plan
PwC’s
Assessment
2.1 BoD approves the strategic plans and main objectives of SHB and
supervises their implementation
2.2 BoD lays down a comprehensive strategy for SHB and the main work
plans based on the bank’s risk appetite document and reviews and
updates it periodically
2.3 BoD determines the most appropriate capital and organizational

structures for SHB, its strategies and financial objectives and approves
its annual budgets
2.4 BoD supervise the main capital expenses of the SHB and
acquisition/disposal of assets
2.5 BoD reviews and approves the organizational and functional structures
of SHB on a periodical basis
3. Technology
PwC’s
Assessment
3.1 Technology facilitates continuous monitoring and alignment of business

units, business process and individual activities to the overall SHB
objectives
3.2 Technology and systems used in SHB are adequate so as to ensure the
business is properly run and for it to remain a meaningful competitor
IV. Robust Risk Management and Compliance Processes
1. Internal controls Framework

Ref. Practice
PwC’s
Recommendations/ Comments
Assessment
1.1 The BoD is responsible for annually reviewing the effectiveness of SHB’s
internal control systems
The BoD lays down rules for internal control systems and supervises
1.2 them
1.3 The Bank’s overall internal control framework is aligned to best practice
(COSO)
1.4 There are approved policies and procedures manuals for key executive
positions throughout the bank. These manuals are reviewed and
approved periodically
1.5 The Bank has appropriate document controls over approved policies and
procedures manuals
1.6 The internal/external auditors satisfied with the overall framework of

policies and procedures
2. Compliance Processes and infrastructure

PwC’s
Assessment
2.1 SHB has an independent compliance function that is operating

effectively
2.2 SHB’s Board approves Compliance Policy and Framework and validates
that they are in-line with SAMA regulations, Basel guidelines and leading
practices
2.3 The Compliance Committee charter lays down clear objectives for the
committee with appropriate bank wide authorities
2.4 The Compliance function is well designed, well resourced and is

integrated with the bank’s AML unit
2.5 The Bank’s compliance manual is aligned with SAMA Compliance

Requirements issued in 2008
2.6 The Compliance function’s risk assessment process and methodology are
compliant with regulatory requirements as well as leading practices
2.7 The Bank’s annual compliance plan is aligned with the compliance risk
assessment results
2.8 The Bank’s Compliance Monitoring Program appropriately covers all key
regulations and risks along with appropriate test procedures
2.9 Cross dependencies between the Compliance Function and other control
functions are effectively managed and controlled
2.10 The process followed by Compliance Function to effectively exercise

oversight over AML activities is adequate and commensurate to the
bank’s size and complexity
2.11 There is a clearly documented process for the Compliance Function to

escalate high risk issues or other regulatory breaches
2.12 SHB reviews the penalties and fines incurred during the year for non-
compliance including causes and impact
2.13 The compliance function is involved in policy framework setting for all
business units from a compliance perspective
2.14 The Board of Directors is aware of all relevant compliance requirements
2.15 The compliance function is staffed by qualified, experienced and skilled

officers
2.16 The Compliance officer is knowledgeable about laws and regulations
2.17 There is an established and documented Processes for dissemination of

compliance requirements and information
2.18 Compliance designated staff avoids conflicts of interest
2.19 There are secure systems for exception reporting
2.20 Senior management and the Board are involved in all major exceptions
2.21 The Bank is compliant with all compliance requirements as set by SAMA
and regular compliance checks are undertaken
3. Effective Internal Audit

PwC’s
Assessment
3.1 The internal audit department within SHB operates to a well

documented mandate with clear objectives and Bank-wide authority
3.2 The internal audit department has a well laid organization structure that
is commensurate with bank operations with clear reporting lines
3.3 The internal audit department reports functionally to the Audit

Committee and administratively to the MD
3.4 The Audit Committee approves the internal audit charter and audit plan
3.5 The Audit Committee is actively involved in reviewing significant

findings and recommendations, and other reports by internal auditors
3.6 The internal audit department is being quality assessed frequently by an

independent party
3.7 The internal audit department follows a detailed methodology and

operates to clearly documented policies and procedures
3.9 Internal audit operations are based on risk based internal audit plan
3.10 Internal Audit plays a significant advisory role in SHB
3.11 The internal audit department is adequately resourced with a sufficient

number of competent and skilled staff
3.12 Internal audit staff are being offered adequate training and development
opportunities within SHB
4. Security over Assets

PwC’s
Assessment
7.1 Security over SHB’s assets is included within the scope of Internal Audit
7.2 There are adequate access controls over the security of assets
5. Improper Payments/Receipts
PwC’s
Assessment
5.1 There is a history of improper payments and receipts in SHB, and it was
dealt with appropriately
5.2 The detection of improper payments and receipts is included within the
scope of internal audit’s work
5.3 Fraud is addressed within the risk management framework

V. Effective and Appropriate Committee Structures
1. Committee Structure
PwC’s
Assessment
1.1 SHB sets out a suitable number of committees which are in accordance
with SHB’s requirements and circumstances, in order to enable the
Board of Directors to perform its duties in an effective manner
1.2 The BoD sets up a committee to help it achieve its objectives with regards
to nomination and remuneration
1.3 The BoD sets up a committee to help it achieve its objectives with regards
to audit oversight
1.4 The BoD sets up a committee to be named “Executive Committee”
1.5 All Islamic Financing products are reviewed and approved by the Bank's
Shariah Committee which is comprised of highly qualified Islamic
scholars who are experts in Shariah compliant products
2. Charters
PwC’s
Assessment
2.1 The formation of committees subordinate to the Board of Directors is

according to general procedures laid down by the Board, indicating the
duties, the duration and the powers of each committee, and the manner
in which the Board monitors its activities
2.2 The formation of management committees is according to general

procedures laid down by the relevant authority, indicating the duties, the
duration and the powers of each committee, and the manner in which its
activities are monitored
2.3 The duties and responsibilities of all Committees are compliant with the
tenants of the relevant SAMA Regulations and the CMA Corporate
Governance code
2.4 The General Assembly, upon a recommendation of the BoD, issues rules
for the appointment of the members of the Audit and Nomination and
Remuneration Committees, their remunerations, and terms of office and
the procedure to be followed by such committee
2.5 The committee notifies the Board of its activities, findings or decisions
with complete transparency
2.6 The Board pursues periodically the activities of all committees so as to

ensure that the activities entrusted to those committees are duly
performed
3. Skills/Selection Criteria
PwC’s
Assessment
3.1 SHB sets out a sufficient number of the non-executive members of the
BoD who are appointed in the committees that are concerned with
activities that might involve a conflict of interest
VI. Transparency and Disclosure
1. Annual report disclosures

PwC’s
Assessment
1.1 All information which enable shareholders to properly exercise their

rights are made available and such information are comprehensive and
accurate; provided and updated regularly and within the prescribed
times
1.2 There is a policy for ensuring that SHB does not communicate
misleading and deceptive information
1.3 SHB doesn't discriminate between shareholders in relation to providing

information
1.4 SHB complies with the Listing Rules and provides to the CMA without
delay all information, explanations, books and records that the CMA may
require
1.5 SHB appoints annually two auditors from amongst the approved list of
auditors registered with the Ministry of Commerce and Industry. The
Auditors submit a report on the Balance sheet and profit and loss
account. This report includes whether in the auditor's opinion the Bank's
balance sheet duly and correctly represents its financial position and the
extent of their satisfaction with any explanations or information they
may have requested from the bank's manager or other staff
1.6 The interim and annual accounts of SHB are approved by the board of
directors and signed by a director authorized by the board of directors
and by the CEO and the CFO prior to their issuance and circulation to
shareholders and third parties
1.7 The interim and annual accounts and the director’s report are filed with
the CMA immediately upon approval by the board of directors
1.8 SHB announces, through the electronic applications that the CMA will
specify, its interim and annual accounts immediately upon approval by
the board of directors and such statements are not be published to the
shareholders or third parties prior to their announcement in the market
1.6 SHB provides the CMA and announces to the shareholders its annual
accounts (which are prepared and audited in accordance with the
accounting standards issued by SOCPA) as soon as they have been
approved and within a period not exceeding 40 days after the end of the
annual financial period to which they relate. SHB provides the CMA and
announces to the shareholders these annual accounts not less than 25
days before the date of the SHB’s annual general meeting
2. Board Report
PwC’s
Assessment
2.1 SHB includes with its annual accounts a report issued by the board of
directors including a review of the operations of the SHB during the last
financial year and of all relevant factors affecting SHB’s business which
an investor requires to assess the assets, liabilities and financial position
of SHB
2.2 BoD's report includes the implemented provisions of the CMA Corporate
Governance Regulations as well as the provisions which have not been
implemented, and the justifications for not implementing them
2.3 BoD's report includes the formation of the Board of Directors and
classification of its members as follows: executive Board member, non-
executive Board member, or independent Board member
2.4 BoD's report includes the names of any joint stock company or
companies in which the SHB Board of Directors member acts as a
member of its Board of directors
2.5 BoD's report includes a brief description of the jurisdictions and duties of
the Board’s main committees such as the Audit Committee, the
Nomination and Remuneration Committee; indicating their names,
names of their chairmen, names of their members, and the aggregate of
their respective meetings
2.6 BoD's report includes the details of compensation and remuneration paid
to:
1. The Chairman and members of the Board of Directors,
2. The Top Five executives who have received the highest compensation
and remuneration from the SHB
2.7 BoD's report includes any punishment or penalty or preventive

restriction imposed on the SHB by the CMA or any other supervisory or
regulatory or judiciary body
2.8 BoD's report includes the results of the annual audit of the effectiveness
of the internal control procedures of the SHB
2.9 The board of directors’ report contains a description of the principal

activities of SHB and its group. If two or more activities are described, a
statement is included giving for each activity the turnover and
contribution to trading results attributable to it
2.10 The board of directors’ report contains a description of SHB’s significant

plans and decisions (including any corporate restructuring, business
expansion or discontinuance of operations), the future prospects of SHB
and any risks facing SHB
2.11 The board of directors’ report contains a summary, in the form of a table
or a chart, of the assets and liabilities of SHB and of SHB’s business
results for the last five financial years or from incorporation, whichever is
shorter
2.12 The board of directors’ report contains a geographical analysis of SHB’s

consolidated turnover and of the consolidated turnover of its subsidiaries
outside the Kingdom
2.13 The board of directors’ report contains an explanation for any material
differences between the operating results of the last year and the
operating results of the previous year or any announced forecast made by
SHB
2.14 The board of directors’ report contains an explanation for any departure
from the accounting standards issued by SOCPA
2.15 The board of directors’ report contains the name of every subsidiary, its
main business, its principal country of operation and its country of
incorporation
2.16 The board of directors’ report contains the particulars of the issued
shares and debt instruments of every subsidiary
2.17 The board of directors’ report contains a description of SHB’s dividend

policy
2.18 The board of directors’ report contains a description of any interest in a

class of voting shares held by persons (other than SHB’s directors, senior
executives and their spouses and minor children) that have notified SHB
of their holdings pursuant to Article 30 of these Rules, together with any
change to such interests during the last financial year
2.19 The board of directors’ report contains a description of any interest,

options, and subscription rights of SHB’s directors, senior executives and
their spouses and minor children in the shares or debt instruments of
SHB or any of its subsidiaries, together with any change to such interest
and rights during the last financial year
2.20 The board of directors’ report contains information relating to any

borrowings of SHB (whether repayable on demand or otherwise), and a
statement of the aggregate indebtedness of SHB and its group together
with any amounts paid by SHB as a repayment of loans during the year.
In case there are no loans outstanding for SHB, SHB must provide an
appropriate statement
2.21 The board of directors’ report contains a description of the classes and
numbers of any convertible debt instruments, options, warrants or
similar rights issued or granted by SHB during the financial year,
together with the consideration received by the SHB
2.22 The board of directors’ report contains a description of any conversion or

subscription rights under any convertible debt instruments, options,
warrants or similar rights issued or granted by the SHB
2.23 The board of directors’ report contains a description of any redemption

or purchase or cancellation by the SHB of any redeemable debt
instruments and the amount of such securities outstanding,
distinguishing between those listed securities purchased by the SHB and
those purchased by its subsidiary
2.24 The board of directors’ report contains the number of meetings of the
board of directors held during the last financial year and the attendance
record of each meeting
2.25 The board of directors’ report contains information relating to any

contract to which the SHB is party and in which a director of the SHB,
the CEO, the CFO or any associate is or was materially interested, or if
there are no such contracts, the SHB must submit an appropriate
statement
2.26 The board of directors’ report contains a description of any arrangements

or agreement under which a director or a senior executive of the SHB has
waived any emolument or compensation
2.27 The board of directors’ report contains a description of any arrangements

or agreement under which a shareholder of the SHB has waived any
rights to dividends
2.28 The board of directors’ report contains a statement of the amount of any
outstanding statutory payment on account of any Zakat, taxes, duties or
other charges with a brief description and the reasons therefore
2.29 The board of directors’ report contains a statement as to the value of any
investments made or any other reserves set up for the benefit of the
employees of the SHB
2.30 The board of directors’ report contains statements that:

* proper books of account have been maintained;
* the system of internal control is sound in design and has been
effectively implemented; and
* there are no significant doubts concerning the SHB’s ability to continue
as a going concern;
if any of the statements above cannot be made, the report must contain a
statement clarifying the reasons therefore
2.31 If the external auditors’ report on the relevant annual accounts is

qualified, and the CMA requires additional information, the directors
report includes such information as has been provided to the CMA
2.32 If the board of directors recommends that the external auditors should
be changed before the elapse of three consecutive financial years, the
report contains a statement to that effect and the reasons for such
recommendation
3. Relationship with Stakeholders

PwC’s
Assessment
3.1 BoD has a written policy that regulate the relationship with stakeholders
with a view to protecting their respective rights
3.2 The Stakeholders relation policy includes mechanisms for indemnifying

the stakeholders in case of contravening their rights under the law and
their respective contracts
3.3 The Stakeholders relation policy includes mechanisms for settlement of

complaints or disputes that might arise between SHB and the
stakeholders
3.4 The Stakeholders relation policy includes suitable mechanisms for

maintaining good relationships with customers and suppliers and
protecting the confidentiality of information related to them
4. Rights of Shareholders - Ownership

PwC’s
Assessment
4.1 SHB acknowledges in writing the rights of all Shareholders to dispose of

their shares at will, to a share of the distributable profits and to a share of
SHB’s assets upon liquidation
4.2 SHB acknowledges in writing the rights of all Shareholders to attend the
General Assembly and participate in deliberations and vote on relevant
decisions
4.3 SHB acknowledges in writing the rights of all Shareholders to supervise

the Board of Directors activities, and file responsibility claims against
board members
4.4 SHB acknowledges in writing the rights of all Shareholders to inquire

and have access to information without prejudice to SHB’s interests and
in a manner that does not contradict the Capital Market Law and the
Implementing Rules
4.5 SHB's AoA and by-laws specify the procedures and precautions that are
necessary for the shareholders’ exercise of all their lawful rights
4.6 The Board of Directors lays down a clear policy regarding dividends, in a
manner that may realize the interests of shareholders and those of the
SHB
5. Rights of Shareholders – The General Assembly

PwC’s
Assessment
5.1 SHB convenes a General Assembly at least once a year at least within the
six months following the end of SHB’s financial year
5.2 SHB convenes the General Assembly upon a request of the Board of
Directors
5.3 The Board of Directors invites a General Assembly to convene pursuant

to a request of the auditor or a number of shareholders whose
shareholdings represent at least 5% of the equity share capital
5.4 Date, place, and agenda of the General Assembly are specified and
announced by a notice, at least 20 days prior to the date the meeting
5.5 SHB informs the Shareholders about rules governing the meetings and
the voting procedure
5.6 SHB allows the Shareholders the opportunity to effectively participate

and vote in the General Assembly
5.7 SHB facilitates the participation of the greatest number of shareholders

in the General Assembly, including inter alia determination of the
appropriate place and time
5.8 In preparing the General Assembly’s agenda, the Board of Directors takes
into consideration matters shareholders require to be listed in that
agenda; shareholders holding not less than 5% of SHB’s shares are
entitled to add one or more items to the agenda. upon its preparation
5.9 SHB allows the Shareholders the opportunity to discuss matters listed in
the agenda of the General Assembly and raise relevant questions to the
board members and to the external auditor. The Board of Directors or
the external auditor answers the questions raised by shareholders in a

manner that does not prejudice SHB’s interest
5.10 Matters presented to the General Assembly are accompanied by

sufficient information to enable shareholders to make decisions
5.11 Votes in the General Assembly are cast by custodians or nominees in a

manner agreed upon with the beneficial owner of the shares
5.12 SHB enables the Shareholders to peruse the minutes of the General
Assembly; SHB provides the CMA with a copy of those minutes within 10
days of the convening date of any such meeting
5.13 The Stock Exchange is informed immediately of the results of the

General Assembly
5.14 Voting is deemed to be a fundamental right of a shareholder, which shall

not, in any way, be denied. SHB avoids taking any action which might
hamper the use of the voting right; a shareholder must be afforded all
possible assistance as may facilitate the exercise of such right
5.15 In voting in the General Assembly for the nomination to the board
members, the accumulative voting method is applied
5.16 A shareholder may, in writing, appoint any other shareholder who is not
a board member and who is not an employee of SHB to attend the
General Assembly on his behalf
5.17 Shareholders are informed of the dividends policy during the General
Assembly and reference thereto is made in the report of the Board of
Directors
5.18 The General Assembly approves the dividends and the date of
distribution. These dividends, whether they be in cash or bonus shares
are given, as a right, to the shareholders who are listed in the records
kept at the Securities Depository Centre as they appear at the end of
trading session on the day on which the General Assembly is convened
6. Communication with Regulators

PwC’s
Assessment
6.1 SHB communicates effectively with all regulatory bodies in charge of

regulating the banking industry in Saudi Arabia
6.2 SHB notifies regulators promptly of any change in SHB’s by-laws or the
location of its principal office
6.3 SHB notifies regulators promptly of any change in its external auditors
6.4 SHB notifies regulators promptly of the presentation of any winding-up

petition, the making of any winding-up order or the appointment of a
liquidator in respect of SHB, its holding company or any of its
subsidiaries under the Companies Regulations, or the commencement of
any proceedings under the Bankruptcy Regulations
6.5 SHB notifies the regulators promptly of the passing of a resolution by

SHB, its holding company or any subsidiary that it be dissolved or
liquidated, or the occurrence of an event or termination of a period of
time which would require SHB to be put into liquidation or dissolution
6.6 SHB notifies the regulators promptly of the making of any judgment,
order or declaration by a court or tribunal of competent jurisdiction,
whether at first instance or on appeal, which may adversely affect SHB’s
utilization of any portion of its assets which in aggregate value represents
an amount in excess of 5% of the book value of the net assets of SHB
6.7 SHB notifies regulators promptly of it becoming aware that the

percentage of listed shares which are in the hands of the public or the
number of shareholders required by these Rules has fallen below the
minimum levels required
6.8 SHB sends copies to regulators of the circulars sent to shareholders and
all documents relating to take-overs, mergers and offers, notices of
meetings, reports, announcements or other similar documents, promptly

after they are issued
6.9 SHB notifies regulators without delay of the following information:

1) any proposed change in the capital of SHB;
2) any significant change in the holding or identity of those persons
holding more than 5% of SHB’s listed securities;
3) any decision to declare, recommend or pay dividends or to make any
other distributions to the holders of its listed securities;
4) any decision not to declare, recommend or pay dividends which would
otherwise have been expected to have been declared, recommended or
paid in the normal course of events;
5) any decision to call, repurchase, draw, redeem or propose to buy any
of its securities and the total amount thereof;
6) any decision not to make payment in respect of listed debt
instruments; or
7) any change in the rights attaching to any class of listed securities or to
any securities into which any listed securities are convertible
VII. Corporate Citizenship (Social, Ethics and Environment)
1. Charitable contributions
PwC’s
Assessment
1.1 There is a documented process for determining charitable donations
1.2 BoD approves all charitable donations
1.3 Shareholders have access to information relating to charitable

contributions
2. Code of Conduct/Code of Ethics

PwC’s
Assessment
2.1 BoD supports and encourages the values of honesty and integrity
throughout the bank
2.2 There is a directors’ code of conduct
2.3 There is a code of conduct for SHB’s executives and employees that is
compatible with the proper professional, ethical and legal standards
2.4 The Board of Directors lays down procedures for supervising this code
and ensuring compliance therewith
2.5 The code of conduct covers practical processes and performance

measures, which allow SHB’s employees to understand what the overall
objectives mean for them
2.6 There is a process to monitor compliance with the code of conduct
2.7 The process established by management to monitor compliance with

SHB’s code of conduct is reviewed periodically
2.8 Mechanisms are deployed to ensure that the management of conflict of

interests is effective
3. Health and Safety
PwC’s
Assessment
3.1 There are SHB policies, objectives and targets related to health and
safety. They reflect current practices or desired practices
3.2 SHB has obtained all required permits and licenses to conduct business.
There are policies in place to ensure compliance
3.3 SHB monitors its performance against the policies, objectives and targets
in a timely and sufficient manner
3.4 The potential health and safety risks and impacts are appropriately
anticipated and assessed. There are systems and strategies in place to
minimize the likelihood of their occurrence
3.5 Potential environmental risks and impacts are properly anticipated and
assessed. There are systems and strategies in place to minimize the
likelihood of their occurrence
3.6 SHB properly educates its workers about its environmental policies. Also,
there is a documented program for that
3.7 BoD is regularly briefed about environmental performance
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Corporate Governance Assessment Report Saudi Hollandi Bank

I. Board Structure, Composition and Membership

2. Chairman of the Board

3. Boardroom conduct and relationships

4.1 There is a policy for managing information of a confidential nature

5. Membership and Selection Criteria

5.12 No person in the following cases shall be elected as a director or shall

7. Independence and objectivity

7.1 There is an agreed process for the management of conflict of interests

7.2 Judicial person who is entitled under SHB’s AoA to appoint

7.3 Any director or manager of SHB, who is adjudicated bankrupt or

8.1 SHB Secretary and committee secretaries are independent from

8.2 SHB Secretary operates to clearly written roles and responsibilities

8.3 SHB Secretary follows up with Executive Management the

8.4 SHB Secretary plays an important role in the development of,

II. Board Performance and Effectiveness

1. Access to independent advisors

1.1 Directors and Committee Members are advised of their entitlement to

2. Roles and Responsibilities

2.1 SHB states the responsibilities of the BoD in SHB’s Articles of

2.2 Tasks and objectives to individual members including, especially, the

Directors, executive management and shareholders. This includes misuse

BoD ensures the integrity of the financial and accounting procedures

BoD ensures the implementation of control procedures appropriate for

BoD decides policies and procedures to ensure SHB’s compliance with

3.5 BoD regularly reviews the effectiveness and performance of

4.2 BoD members’ remuneration is paid in accordance with the AoA

5. Frequency, conduct and management of meetings

5.3 Deliberations and resolutions of the board are recorded in minutes to be

5.6 When preparing a specified agenda to be presented to the Board, the

are entered in the minutes of the meeting

5.10 There is an agreed process for Directors to acknowledge dissent and

6. Induction and training

6.4 There is a policy for director training and continuing education

6.5 Directors training and continued education is based on directors’

10.2 The BoD avoids issuing general or indefinite power of attorney

2.12 SHB's BoD determines the powers to be delegated to the executive

2.40 There is a mutual understanding of powers and responsibilities to be

2.13 Executive management submit to the BoD periodic reports on the

III. Strategy, Planning and Monitoring

1. Management Performance Monitoring and Assessment

1.2 Through this process, BoD:

1.3 Performance measures used by management and reported to BoD are

1.4 Performance measures are balanced between financial and non-financial

1.6 Management progress towards meeting targets is being continuously

2.3 BoD determines the most appropriate capital and organizational

3.1 Technology facilitates continuous monitoring and alignment of business

IV. Robust Risk Management and Compliance Processes

1. Internal controls Framework

1.6 The internal/external auditors satisfied with the overall framework of

2. Compliance Processes and infrastructure

2.1 SHB has an independent compliance function that is operating

2.4 The Compliance function is well designed, well resourced and is

2.5 The Bank’s compliance manual is aligned with SAMA Compliance

2.10 The process followed by Compliance Function to effectively exercise

bank’s size and complexity

2.11 There is a clearly documented process for the Compliance Function to

2.14 The Board of Directors is aware of all relevant compliance requirements

2.15 The compliance function is staffed by qualified, experienced and skilled

2.16 The Compliance officer is knowledgeable about laws and regulations

2.17 There is an established and documented Processes for dissemination of

2.18 Compliance designated staff avoids conflicts of interest

2.19 There are secure systems for exception reporting

3. Effective Internal Audit