Corporate Governance Code

Corporate Governance Code

The purpose of this code is to set out Almarai’s approach to corporate governance. Almarai is committed to maintaining high standards of corporate governance and considers good corporate governance as an essential tool for maximising long-term shareholder value, and is consistent with its commitment to quality in all of its processes and products. The rules set out in the Company’s Corporate Governance Code are mandatory for all Directors and staff of Almarai, and can only be amended by a resolution of the Board of Directors.

Corporate governance is defined as ‘the system by which business corporations are directed and controlled’. The corporate governance structure specifies the distribution of authority and responsibilities among different participants in the Company, such as the Board, managers, shareholders and others, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the Company’s objectives are set and the means of attaining those objectives and monitoring performance. The Board of Directors is responsible for Almarai’s Corporate Governance Code.

The shareholders’ role in governance is to appoint the Directors and auditors and to satisfy themselves that an appropriate governance structure is in place. The responsibilities of the Board include setting the Company’s strategic aims, providing the leadership to put them into effect, supervising the management of the business and reporting to shareholders on their stewardship. The Board’s actions are subject to laws, regulations and accountability to the shareholders in the General Assembly meeting. Almarai’s Corporate Governance Code has been prepared according to international principles of corporate governance and local regulatory requirements. It should be viewed as setting the framework of requirements for corporate governance within the Company. It should not be seen as a substitute for sound judgment and honourable arms-length dealings by Directors and officers of the Company and should be viewed within the context of the broader legislative framework of Saudi Arabia. In particular, the stipulations of the following, the requirements of which have not all been incorporated in this code, need to be borne in mind when considering corporate governance issues:

The Board of Directors will approve amendments to the corporate governance framework from time to time to comply with changing legal and business requirements, consistent with ensuring sound management and governance practices.

  • The requirements of the Capital Market Authority (CMA) and of Tadawul
  • The Companies Law of Saudi Arabia and associated ministerial directives of the Ministry of Commerce & Industry (MCI)
  • Almarai’s own by-laws

The Board of Directors will approve amendments to the corporate governance framework from time to time to comply with changing legal and business requirements, consistent with ensuring sound management and governance practices.

Almarai’s Corporate Governance Code incorporates the entire corporate governance code issued by the CMA, except paragraph ‘D’ (Article 6), which stipulates that ‘Investors who are judicial persons and who act on behalf of others – e.g. investment funds – shall disclose in their annual reports their voting policies, actual voting and ways of dealing with any material conflicts of interest that may affect the practice of the fundamental rights in relation to their investments.’ The reason for not including this clause in the Company’s governance policy is that Almarai does not have the legal identity to bind investors or persons with legal status who are acting on behalf of others – such as investment funds – to disclose their voting policy.

Rights of shareholders and the General Assembly

Almarai’s Articles of Association and Corporate Governance ensure that shareholders enjoy all rights related to shares; in particular the right of receiving a share of approved dividend payments, the right to receive a share of the Company’s assets upon liquidation, the right to attend General Assembly meetings and participate in their deliberations and voting, the right of share disposal, the right to oversee the work of the Board of Directors and file responsibility litigation against Board Members, and the right to inquire and request information that does not compromise the interests of the Company and does not conflict with the Terms and Executive Regulations of the Capital Market Authority. Almarai allows maximum participation by shareholders at General Assembly meetings and is keen to ensure that the choice of time and venue enables full participation. The Company has adopted an electronic voting system to make it easier for shareholders to exercise their right of voting if they are unable to attend in person.

Almarai’s Articles of Association and Corporate Governance also provide provisions related to the General Assembly, which includes procedures and precautions necessary to ensure that all shareholders are exercising their regular rights. The General Assembly is the highest power in the Company, with sole authorities including the appointment and termination of Board Members, approval of the Consolidated Financial Statements, appointment of the external auditor and determination of his fees, approval of the set-up, duties and internal regulations of the Audit Committee and the remuneration of its members, approval of dividend distribution as recommended by the Board of Directors, increase or decrease of the capital of the Company and amendment of the Articles of Association. Almarai provides sufficient access for its shareholders to read the minutes of the General Assembly meeting, and provides the Capital Market Authority with a copy of the minutes within ten (10) days of the meeting.

Board of Directors formation and functions

Almarai’s General Assembly provides for a Board of Directors comprising nine (9) Members. The General Assembly’s rules regarding the appointment, resignation, term of office, powers, remuneration and the principal requirements are summarised below.

The Board of Directors is the supreme management body within the Company and is appointed by the shareholders at the General Assembly in order to represent and protect the Company’s interests. The Board is responsible for leading and controlling the Company and discharges this responsibility by approving the implementation of Company strategies and objectives. The Board empowers the management of the Company to run the business within defined parameters and monitors the performance of the Company. While the Board delegates authority to the Company’s management, under the direction of the Chief Executive Officer (CEO), to attend to the routine running of the business, the Board retains ultimate fiduciary responsibility to shareholders to ensure the proper operation of the Company. The Board is appointed by the shareholders with primary responsibility for operating the Company in their long-term best interests. The Board also has a responsibility to provide clear directions and boundaries for the Company’s Executive Management to operate within. This involves setting out a clear vision and strategy for the Company and defining the delegations that will be allowed to management and the policies and boundaries within which they are permitted to operate. This process is achieved by:

Approving the strategic plans and main objectives of the Company and supervising their implementation. This includes:

  • Laying down a comprehensive strategy for the Company, the main work plans, and policy related to risk management, and reviewing and updating such policy
  • Determining the most appropriate capital structure of the Company, its strategies and financial objectives and approving its annual budgets
  • Supervising the main capital expenses of the Company and acquisition/disposal of assets
  • Deciding the performance objectives to be achieved, supervising the implementation thereof and overseeing the overall performance of the Company
  • Reviewing and approving the organisational and functional structures of the Company on a periodic basis

Laying down rules for internal control systems and supervising those systems. This includes:

  • Developing a written policy to regulate conflict of interest and remedy any possible cases of conflict by Members of the Board of Directors, Executive Management and shareholders. This includes misuse of the Company’s assets and facilities and arbitrary disposition resulting from dealings with related parties
  • Ensuring the integrity of financial and accounting procedures including procedures related to the preparation of the financial reports
  • Ensuring the implementation of control procedures appropriate for risk management by forecasting the risks that the Company could encounter and disclosing them transparently
  • Annually reviewing the effectiveness of internal control systems

Drafting a Corporate Governance Code for the Company that does not contradict the provisions of existing laws and regulations, supervising and monitoring, in general, the effectiveness of the code and amending it whenever necessary.

Laying down specific and explicit policies, standards and procedures, for the Members of the Board of Directors and implementing them after they have been approved by the General Assembly.

Outlining a written policy that regulates the relationship with stakeholders with a view to protecting their respective rights. Such a policy must cover the following:

  • Mechanisms for indemnifying the stakeholders in the event that their rights are contravened under the law and their respective contracts
  • Mechanisms for the settlement of complaints or disputes that might arise between the Company and stakeholders
  • Suitable mechanisms for maintaining good relationships with customers and suppliers and protecting the confidentiality of information related to them
  • A code of conduct for the Company’s executives and employees compatible with proper professional and ethical standards and regulating their relationship with stakeholders
  • The Board of Directors lays down procedures for supervising this code and ensuring its compliance
  • The Company’s social contributions

Deciding on policies and procedures to ensure the Company’s compliance with laws and regulations and the Company’s obligation to disclose material information to shareholders, creditors and other stakeholders.

Preparing the financial statements and the annual report on the activities and financial status of the company for the last financial year including the proposed method for dividends payment.

Recommending to the General Assembly of Shareholders the appointment, dismissal and the Remuneration of external auditors.

Almarai’s Corporate Governance Code stipulates that the Board should include a minimum of 1 in 3 independent Directors. Executives may be Directors upon satisfaction of the relevant legal requirements.

Members of the Board of Directors

The Extraordinary General Assembly elected Members of the Board of Directors on 4th April 2016. The Board of Directors was elected via accumulated voting, for a three year term effective 7th August 2016. The following tables include Directors’ names, positions, membership status in other joint stock companies, and attendance of the four Board meetings held during 2016, noting that these meetings were planned and the Chairman did not receive any request by two or more of the Board Members to hold emergency meetings during 2016.

Investor Percentage of Ownership Number of Investors
HH Prince Sultan bin Mohammed bin Saud Al Kabeer Chairman of the Board Non-Executive
HH Prince Naif bin Sultan bin Mohammed bin Saud Al Kabeer Board Member Non-Executive
Mr. Abdulrahman bin Abdulaziz Al Muhanna Board Member Non-Executive
Mr. Suliman bin Abdulkader Al Muhaideb Board Member Non-Executive
Engr. Rayan bin Mohammed Fayez Board Member Non-Executive
Mr. Bader bin Abdullah Al Issa Board Member Non-Executive
Dr. Abdulrahman bin Suliman Al Turaigi Board Member Non-Executive
Engr. Mosa bin Omran Al Omran Board Member Non-Executive
Dr. Ibrahim bin Hassan Al Madhoun Board Member Non-Executive
Member Name Position Membership Status
HH Prince Sultan bin Mohammed bin Saud Al Kabeer Chairman of the Board Non-Executive
HH Prince Naif bin Sultan bin Mohammed bin Saud Al Kabeer Board Member Non-Executive
Mr. Abdulrahman bin Abdulaziz Al Muhanna Board Member Non-Executive
Mr. Suliman bin Abdulkader Al Muhaideb Board Member Non-Executive
Engr. Rayan bin Mohammed Fayez Board Member Non-Executive
Mr. Bader bin Abdullah Al Issa Board Member Non-Executive
Dr. Abdulrahman bin Suliman Al Turaigi Board Member Non-Executive
Engr. Mosa bin Omran Al Omran Board Member Non-Executive
Dr. Ibrahim bin Hassan Al Madhoun Board Member Non-Executive

Board of Directors committees

The Board may at any time establish, by formal resolution, other subcommittees and specify the authority, objectives and reporting lines of such committees. On an annual basis the Board will review and either ratify or modify the authorities of its subcommittees, to ensure that their delegations remain appropriate. During 2016, there were no new sub-committees formed. During its General Assembly on 4th October 2016, the Company’s shareholders approved the constitution, duties and internal regulations of the Audit Committee, as well as the remuneration of its members, in accordance with Article (101) of the Companies Law.

Executive Committee

Almarai’s by-laws (Article 26) allow the Board the option to establish an Executive Committee, if it so chooses. Article 26 states: ‘The Board of Directors may appoint from among its Members an Executive Committee. The Board of Directors shall appoint a chairman from among the members of the Committee and shall specify the number of members of the Committee and the required quorum for its meetings. In accordance with the directions and guidelines prescribed by the Board from time to time, the Committee may exercise all of the powers authorised by the Board. The Executive Committee may not revoke or alter any of the resolutions adopted, or rules laid down, by the Board of Directors.’

The Executive Committee can be subjected to Article 13 of the Corporate Governance Code, which stipulates that the composition of Board committees is based on the Company’s needs and circumstances, to allow the Board of Directors to perform its duties effectively. The committees are formed in accordance with general procedures established by the Board of Directors, including: defining the tasks of the committee, the duration of its work and the prerogatives given. The Board has the obligation to periodically follow up on these committees to check on the progress of the work entrusted to them. The Company’s Board of Directors decides upon the composition of the Executive Committee and its tasks and responsibilities, which include the following:
  • Participate in the development of new strategic plans and evaluate proposals from Executive Management for such plans, including possible mergers or acquisitions and make recommendations to the Board
  • Review Company performance at each Executive Committee meeting and assess performance against targets; analyse and make enquiries about underlying factors, trends and major developments and advise management accordingly
  • Review Company performance on a monthly basis against agreed objectives and budgets, based on an agreed set of reports to be supplied monthly by Company management and alert management and other Executive Committee members of any significant developments observed. If necessary, request the Company’s management to convene an additional Committee meeting
  • Review, evaluate and make recommendations to the Board on the approval of annual budgets
  • Review and evaluate new project CAPEX proposals, approving those within the delegation of the Committee, initially set as approval of project CAPEX up to SAR 20.0 million and capped at a maximum approval of SAR 150.0 million in any one financial year after approval of the annual (Operational and CAPEX) budget. In the case of all project CAPEX outside this delegation, the Committee will review and evaluate the CAPEX and make a recommendation to the Board on acceptability
  • Review post–implementation analyses supplied by management for all major CAPEX (greater than SAR 2.0 million) and advise the Board on the outcome and any learning points to emerge
  • Provide advice to the Board on the setting of dividends, taking into account any recommendations made by the Audit Committee in this regard
  • Review policies and procedures developed by Executive Management but do not approve anything requiring Board approval
  • Approve the appointment of persons reporting directly to the CEO, based on the recommendations of the CEO, providing that he should not take office until approved by the Committee
  • Make recommendations to the Board on any changes to sponsors or agency structures
  • Review and approve requests for corporate guarantees, up to the Committee’s limit of authority
  • Periodically review the Company’s corporate governance policies and Code of Conduct, and make recommendations to the Board for any modifications considered desirable
  • Carry out specific requests from the Board of Directors
  • Review the implementation of decisions taken by the Board as well as by the Executive Committee itself
  • Review matters or intended actions which might have a significant impact on the Company’s public image

The following tables illustrate Executive Committee member names and position for the current session:


Member Name Position
Mr. Abdulrahman bin Abdulaziz Al Muhanna Chairman
HH Prince Naif bin Sultan bin Mohammed bin Saud Al Kabeer Member
HH Prince Saud bin Sultan bin Mohammed bin Saud Al Kabeer Member
Engr. Mosa bin Omran Al Omran Member
Engr. Rayan bin Mohammed Fayez Member
Dr. Ibrahim bin Hassan Al Madhoun Member
Mr. Georges P. Schorderet Member
Mr. Christopher Ledwidge Member

Nomination and Remuneration Committee

The Nomination and Remuneration Committee was formed on 24th March 2008. The Committee has the role of making recommendations to the Board of Directors on nominations to the Board, developing clear policies for the remuneration of the Board of Directors and Senior Executives of the Company and its subsidiaries, reviewing the structure of the Board of Directors, identifying weaknesses and strengths of Members of the Board, ensuring the independence of independent Members (annually) and ensuring the absence of conflicts of interest if Members also belong to the Board of Directors of another company. The Committee’s role includes the following tasks.

The Executive Committee can be subjected to Article 13 of the Corporate Governance Code, which stipulates that the composition of Board committees is based on the Company’s needs and circumstances, to allow the Board of Directors to perform its duties effectively. The committees are formed in accordance with general procedures established by the Board of Directors, including: defining the tasks of the committee, the duration of its work and the prerogatives given. The Board has the obligation to periodically follow up on these committees to check on the progress of the work entrusted to them. The Company’s Board of Directors decides upon the composition of the Executive Committee and its tasks and responsibilities, which include the following:
  • Participate in the development of new strategic plans and evaluate proposals from Executive Management for such plans, including possible mergers or acquisitions and make recommendations to the Board
  • Review Company performance at each Executive Committee meeting and assess performance against targets; analyse and make enquiries about underlying factors, trends and major developments and advise management accordingly
  • Review Company performance on a monthly basis against agreed objectives and budgets, based on an agreed set of reports to be supplied monthly by Company management and alert management and other Executive Committee members of any significant developments observed. If necessary, request the Company’s management to convene an additional Committee meeting
  • Review, evaluate and make recommendations to the Board on the approval of annual budgets
  • Review and evaluate new project CAPEX proposals, approving those within the delegation of the Committee, initially set as approval of project CAPEX up to SAR 20.0 million and capped at a maximum approval of SAR 150.0 million in any one financial year after approval of the annual (Operational and CAPEX) budget. In the case of all project CAPEX outside this delegation, the Committee will review and evaluate the CAPEX and make a recommendation to the Board on acceptability
  • Review post–implementation analyses supplied by management for all major CAPEX (greater than SAR 2.0 million) and advise the Board on the outcome and any learning points to emerge
  • Provide advice to the Board on the setting of dividends, taking into account any recommendations made by the Audit Committee in this regard
  • Review policies and procedures developed by Executive Management but do not approve anything requiring Board approval
  • Approve the appointment of persons reporting directly to the CEO, based on the recommendations of the CEO, providing that he should not take office until approved by the Committee
  • Make recommendations to the Board on any changes to sponsors or agency structures
  • Review and approve requests for corporate guarantees, up to the Committee’s limit of authority
  • Periodically review the Company’s corporate governance policies and Code of Conduct, and make recommendations to the Board for any modifications considered desirable
  • Carry out specific requests from the Board of Directors
  • Review the implementation of decisions taken by the Board as well as by the Executive Committee itself
  • Review matters or intended actions which might have a significant impact on the Company’s public image

The following tables illustrate Executive Committee member names and position for the current session:


Member Name Position
Mr. Abdulrahman bin Abdulaziz Al Muhanna Chairman
HH Prince Naif bin Sultan bin Mohammed bin Saud Al Kabeer Member
HH Prince Saud bin Sultan bin Mohammed bin Saud Al Kabeer Member
Engr. Mosa bin Omran Al Omran Member
Engr. Rayan bin Mohammed Fayez Member
Dr. Ibrahim bin Hassan Al Madhoun Member
Mr. Georges P. Schorderet Member
Mr. Christopher Ledwidge Member

Audit Committee

The constitution, duties and internal regulations of the Audit Committee, as well as the remuneration of its members, were approved by the General Assembly on 4th October 2016, in accordance with Article (101) of the Companies Law.

The Audit Committee will have full

oversight on the management of risk at Almarai and its subsidiaries. The Committee’s main role is to provide oversight of the financial reporting process, the audit process, the system of internal controls, risk management systems, compliance with laws and regulations and the recommendation on the appointment of he external and internal auditors along with overseeing their roles and effectiveness. In addition, the Audit Committee is also responsible for overseeing the Company’s business and verifying the validity and integrity of the reports. The Committee’s role includes:

  • Review Almarai’s interim and annual Financial Statements before presenting them to the Board of Directors, advising the Board on the acceptability thereof
  • Oversee and review the scope of work, reports and activities of the external auditors, and comment on their report where appropriate
  • Oversee and review internal control systems within the Company and prepare a written report on the adequacy of these systems. The Board of Directors should submit sufficient copies of the report at the Company’s Head Office, at least ten days before the General Assembly, for access by shareholders. The report should be read at the General Assembly meeting
  • Supervise the work of the Internal Audit department to ensure its effectiveness in performing the tasks entrusted to it
  • Review and approve the annual audit plan of the Internal Audit department, review summary reports of their audits and monitor management’s responses and remediation plans
  • Oversee and review effectiveness of risk management within the Company
  • Make recommendations to the Board of Directors on the appointment of the external auditors, including determination of fees, ensuring independence, and reviewing the scope of work and terms of contract;
  • Oversee and review the auditors’ plans, ensuring that all items are within the scope of the audit, and approving any out of scope work
  • Review the external auditors’ report and comments on the Financial Statements, following up any actions taken to address them
  • Review the Company’s accounting policies and make any recommendations necessary to the Board
  • Review regulatory reports and announcements on reporting, ensuring the Company takes the necessary actions to meet prescribed criteria
In general, the Committee has authority to investigate any activity within its terms of reference or any matters specifically requested. The Committee has unrestricted access to all records and staff of Almarai (including Internal Audit) and the external auditors. The Committee is authorized to obtain outside legal or other independent professional advice, as necessary, to assist the Committee. The Committee shall consider at each meeting whether any failures of risk management, internal control or compliance matters (that are brought to the Committee’s attention) are significant and should be immediately reported to the Board. Any suspected serious frauds and irregularities shall be immediately reported by the management to the Head of Internal Audit or the Audit Committee, depending upon their severity. To ensure the independence of the work of the Audit Committee, the head of Internal Audit and the head of the external auditors communicate directly with the Committee, without any intermediary. The Committee is formed according to the following rules:
  • Members of the Audit Committee are appointed by the General Assembly upon the proposal of the Board of Directors
  • The Committee should not include any executive board members
  • The Committee might include members who are or are not shareholders
  • The Committee will comprise a minimum of three (3) members and not exceed five (5) members
  • A chairman will be appointed by members at the first meeting
  • Committee members should be selected to ensure a range of different backgrounds, skills and experiences and a sound understanding of the industry in which Almarai operates. At least one member should have sound accounting or finance experience
  • Members are appointed for a term up to a maximum of three years and are eligible for re-appointment subject to the composition requirements of the Committee
  • The Committee can appoint a secretary from among its members or a Company employee
As per Article 103 of the Companies Law, the Audit Committee may ask the Board of Directors to convene’ the General Assembly of Shareholders, if the Audit Committee is unable to fulfil its obligations through the Board of Directors or if the Company sustained substantial losses or damages.

The following tables illustrate Audit Committee member names and position for the current session:


Member Name Position
Dr. Abdulrahman bin Suliman Al Turaigi Chairman
Dr. Muhammad bin Hassan Ikhwan Member
Dr. Ibrahim bin Hassan Al Madhoun Member
Mr. Farraj bin Mansour Abo Thenian Member
Mr. Sulaiman bin Nasser Alhatlan* Member