Main Menu
  • The Bank
  •   >  
Alinma Web Content Viewer
Articles of Association of Alinma Bank

Articles of Association of Alinma Bank

A Saudi Joint Stock Company

 CHAPTER I – COMPANY INCORPORATION

ARTICLE (1): INCORPORATION

A Saudi joint stock company has been incorporated by relevant shareholders under these Articles of Association, the provisions of the Companies Law issued under the Royal Decree No. (M/6), dated 22/3/1385, the Banking Control Law issued pursuant to the Royal Decree No. (M/5), dated 22/02/1386, the resolution of the Council of Ministers No. (245), dated 26/10/1407 and other laws in force in the Kingdom of Saudi Arabia, as follows:

ARTICLE (2): NAME OF THE COMPANY

Alinma Bank- a Saudi joint stock company, hereinafter referred to as the “Company”.

ARTICLE (3): OBJECTIVES OF THE COMPANY

The objectives of the Company are to exercise banking and investment activities in accordance with the provisions of these Articles of Association, Banking Control Law and all other laws applicable in Saudi Arabia as well as rules, regulations, resolutions and instructions issued by the Saudi Central Bank (SAMA). To achieve such objectives, the Company executes banking and investment operations for its own account and for the account of other internal and external parties within the limits and terms set by SAMA, namely:

1. Opening current accounts and accepting demand deposits in Saudi Riyal or other currencies.

2. Opening investment and similar accounts in Saudi Riyal and other currencies to generate profits from such accounts.

3. Issuing, accepting and dealing in commercial papers, such as promissory notes, bills of exchange and checks as well as accepting dealing in banknotes, coins and all types of currencies.

4. Offering finance and facilities in Saudi Riyal or other currencies on profit/loss share basis or any other bases as well as obtaining collaterals, such as real estate and commercial mortgages.

5. Dealing in securities and Mudaraba notes as per the rules governing corporate share trading.

6. Opening documentary credits, issuing bank guarantees and granting banking facilities for imports, exports and local commerce.

7. Acquiring, selling, owning and dealing in foreign currencies, coins, and precious metals.

8. Receiving cash, documents and valuable items as deposit, loan or for saving purposes after issuing evidential receipts.

9. Opening accounts in the name of the Company with local and foreign banks and other financial institutions.

10. Creating, managing and leasing safe deposit boxes (Vaults).

11. Acting as an agent, correspondent or representative of local and foreign banks.

12. Executing fund transfer to/from Saudi Arabia.

13. Acting as an Agent to collect money, bills of exchange, promissory notes and any other document inside and outside Saudi Arabia.

14. Executing any other banking operation permitted by banking and monetary laws applicable in Saudi Arabia.

15. Establishing, operating and managing depositories and warehouses to store goods and commodities and provide finance, taking such goods and commodities as collaterals.

16. Providing investment advisory services, acting as an investment manager, agent or financial representative, participating in the management of the affairs of any natural or legal person/persons, executing wills and managing properties.  

17. Collecting amounts payable by third parties inside or outside Saudi Arabia on behalf of any natural or legal person in the capacity of a Trustee or Will Executor and issuing clearance certificates in respect thereof.

18. Managing, purchasing, selling (on spot, deferred or instalment basis), utilizing, acquiring, transferring/accepting title, mortgaging and accepting the same, redeeming and dealing in any real estate, residential units, money, right or interest in any movable or immovable money that may revert back to the Company or be held or acquired by it for financing purposes or for collecting all or part of its liabilities or be presented as a collateral for any finance or facilities provided by it or may otherwise relate to such claim or collateral. All the foregoing should be executed within the limits set by applicable laws.

19. Establishing affiliates or contributing to or participating, in any way, in companies or institutions exercising an activity falling within the objectives of the Company or compliment them or help in achieving them, or merging with or acquiring such companies or institutions in accordance with the rules and regulations in force in Saudi Arabia.

20. Issuing Sharia’h-compliant bonds inside or outside Saudi Arabia in Saudi or any other currency after obtaining a written and prior non-objection from SAMA.

21. Borrowing or receiving finance in line with rules governing the Company’s business, signing contracts, providing relevant guarantees, sponsorships and mortgages inside or outside Saudi Arabia.

22. Supervising the management of investment units and funds and participating in capital markets to promote Islamic methods in the field of investment and finance.

23. Performing all other acts and activities that contribute to the introduction and achievement of the Company’s objectives or the expansion of its business.

24. Participating in all investment activities (commercial, agricultural, industrial, real estate, etc.).

25. Concluding all commitments presented or accepted by the Company with different governmental and public institutions or any other natural or legal person inside or outside Saudi Arabia.

ARTICLE (4): ESTABLISHMENT OF COMPANIES

After obtaining a prior and written non-objection from SAMA, the Company may hold shares in companies, institutions or agencies that exercise similar business or may assist the Company in achieving its objective by way of merger, acquisition or alliance.

The Company may establish entities or any other type of companies stipulated in the Saudi Companies Law, either individually or jointly. It may also own the shares or stocks of such companies, hold shares in other existing companies or merge with such companies and may work with third parties on establishing any type of companies stipulated in the Companies Law, having obtained SAMA’s non-objection and complied with the requirements of applicable laws and directives in this regard. Moreover, the Company may dispose of these shares or stocks, provided that it shall not serve as a broker for trading such shares.

ARTICLE (5): DURATION OF THE COMPANY

The duration of the Company shall be ninety-nine (99) Gregorian years commencing as of the date of announcing its incorporation by the resolution of the Minister of Commerce. This term may be extended pursuant to a resolution of the Extraordinary General Assembly at least one (1) year before the expiry of the said term.

ARTICLE (6): HEAD OFFICE OF THE COMPANY  

The Head Office of the Company shall be in the city of Riyadh and may be moved to any other city in Saudi Arabia, as decided by the Extraordinary General Assembly. The Board of Directors of the Company may open branches or offices and appoint correspondents inside or outside Saudi Arabia as required by the Company’s activities or interests with due regard to relevant laws and regulations in force in Saudi Arabia and after obtaining a written non-objection from SAMA.

 

 

CHAPTER II – CAPITAL AND SHARES

ARTICLE (7): CAPITAL

The Company’s capital shall be twenty billion Saudi Riyals (SAR 20,000,000,000) divided into two billion (2,000,000,000) nominal shares of equal value (SAR 10 per share). All shares are ordinary and cash shares and equal in terms of rights and obligations arising therefrom in all respects.

ARTICLE (8): SUBSCRIPTION

The founding shareholders have subscribed to (450.000.000) shares as shown below:

1. The Public Investments Fund, incorporated under the Royal Decree No. (M/24), dated 25/06/1391.

2. The Public Pension Agency, incorporated under the Royal Decree No. (271), dated 28/01/1378.

3. The General Organization for Social Insurance, incorporated under the Royal Decree No. (M/22), dated 06/09/1389.

 

Founder’s Name

Number of Subscribed Shares

Face Value (in SR)

The Value of Subscribed and Paid-up Shares

Public Investments Fund

150,000,000

10

1,500,000,000

Public Pension Agency

150,000,000

10

1,500,000,000

General Organization for Social Insurance

150,000,000

10

1,500,000,000

Total

450,000,000

 

4.500.000.000

 

 

The Founding Shareholders have paid the share value in full and deposited the subscription total amount (SR 4,500,000,000) into an account opened in the name of the Company “Under Formation” in Riyadh Bank according to deposit certificates. The remaining shares, totaling (1,050,000,000), will be offered for public subscription to Saudi nationals within thirty (30) days from the date of publishing the Royal Decree licensing the incorporation of the Company. The value of each should be paid in full upon subscription and the corresponding value shall be deposited in the name of the Company “Under Formation” into one of the banks designated for this purpose.

If the number of subscribed shares is higher than the shares offered for public subscription, shares shall be allocated to subscribers on a pro rata basis and the Capital Market Authority (CMA) shall give a special preference to small subscribers. If the number of shares offered for subscription is high, the shares shall be allocated to subscribers on a pro rata basis and the CMA shall give a special preference to small subscribers. In case of under subscription within thirty (30) days or any further period, as determined by the Company and approved by the CMA in accordance with applicable law, the Company shall allocate unsubscribed shares to the founding shareholders on a pro rata basis after payment in full of the share value and other expenses.

ARTICLE (9): SHARES

1. The Shares shall be nominal and they may not be issued at a value lesser than their nominal value. However, shares may be issued at values higher than their nominal values, provided that the difference in value shall be added to a separate item within the shareholders’ equity and may not be distributed to shareholders as dividends.

2. A share is indivisible against the Company. If a share is owned by several persons, they should select one of them to exercise the rights related thereto and they shall jointly be liable for the obligations arising therefrom.

ARTICLE (10): SHARE TRADING

The Shares are tradeable after being listed in the Saudi Stock Exchange (Tadawul). As an exception to the foregoing, cash shares held by the founding shareholders may not be traded before publishing the budget and profit and loss statement for a period of three (3) consecutive years as of the date of the Company’s incorporation, with each year consisting of twelve (12) months. Share certificates shall be indexed in the shareholder's register with Tadawul. However, it is allowed, during the lock-up period and in accordance with equity sale provisions, to transfer the title of the founders’ shares from one founder to another or to the members of the Board of Directors to provide them as a guarantee to the management, or from the heirs of a deceased founder to others.

ARTICLE (11): TRADING METHOD

The Shares shall be traded in the Capital Market in accordance with the provisions of the Capital Market Law. Shareholders register with the Securities Depository Center Co. (Edaa Center) shall be reliable. Transfer of title of any Share shall not be effective, as far as the Company or third parties are concerned, unless after entry in the said register. Subscription to; and ownership of, shares by a shareholder implies his acceptance of the Company’s law as well as compliance with resolutions duly issued by the shareholders’ assemblies in accordance with the provisions of these Articles of Association, irrespective of whether he has attended such meetings or not, or has agreed to or rejected such resolutions.

ARTICLE (12): SHARE LIEN

The Company may seize the shares owned by any shareholder indebted to the Company along with unpaid dividends in order to ensure settlement by the shareholder of any outstanding amounts payable to the Company or the fulfillment of his obligations towards the Company. Seized shares shall be free of any rights (fixed or restricted) to third parties as shown in the records of the Company. After thirty (30) days of notifying the shareholder, the Company may sell such seized shares in a public auction or through TADAWUL, as the case may be, in accordance with the controls set by the competent authority. The Company shall thereafter collect amounts payable to it from the sale proceeds and return the remaining balance (if any) to the shareholder. If the amount of the sale proceeds is insufficient to cover the shareholder’s debts and obligations, the Company shall have the right to collect the remaining dues from any funds of the shareholder in accordance with regulations in force in Saudi Arabia.

ARTICLE (13): CAPITAL INCREASE

1. After obtaining the approval of SAMA and other relevant authorities, the Extraordinary General Assembly may decide capital increase one or several times by issuing new shares in the same nominal value of the original shares, provided that the original capital has already been paid up in full and the provisions of the Companies Law are taken into account.

2. The Extraordinary General Assembly may at all times allocate no more than 2% (two percent) of shares issued upon capital increase, or any portion thereof, to the employees of the Company and its affiliates. Shareholders may not exercise priority right upon issuance by the Company of staff allocated shares. Shareholders owning shares at the time of approving the capital increase resolution by the Extraordinary General Assembly shall have priority of subscription to the new cash shares. They will be notified through a daily newspaper, registered mail or through Tadawul of their priority rights, capital increase resolution, subscription conditions, period and start/end date.

3. The Extraordinary General Assembly may suspend the priority right for shareholders subscribing to capital increase against cash shares or grant such right to non-shareholders in cases it deems appropriate to the best interest of the Company. 

4. The shareholder shall have the right to sell or waive the priority right during the period extending from issuing the capital increase resolution up to the last day of subscription to the new shares related to such rights. The sale and waiver shall be in accordance with the controls set by the competent authority.

5. Subject to the provisions of paragraph (4) above, new shares shall be distributed to priority right holders who have applied for subscription to the proportion they own in total priority rights resulting from the capital increase, provided that the number of shares to be allocated to them shall not exceed the number of new shares they have applied for. The remaining new shares shall be distributed to priority right holders who have applied for more than their share, in proportion to the priority rights they hold out of priority rights resulting from the capital increase, provided that the number of shares to be allocated to them shall not exceed the number of new shares they have applied for. The rest of the shares shall be offered to third parties, unless otherwise is decided by the Extraordinary General Assembly or stipulated by the Capital Market Law.

ARTICLE (14): CAPITAL REDUCTION

In situations where the Company’s capital surpasses its needs, or if the Company endures losses, the Company may reduce its capital pursuant to a resolution adopted by the Extraordinary General Assembly based on acceptable reasons and after obtaining the approval of SAMA and other  relevant authorities. Such resolution shall not be issued unless after reciting the Auditor’s report regarding the reasons for such reduction, the obligations of the Company, the impact of reduction on such obligations and observation of the provisions of the Companies Law. The resolution shall provide for the method through which the reduction shall be made. If the reduction is caused by capital excess, the Company should invite creditors to express their objections thereto within sixty (60) days from the date of publishing the reduction resolution in a daily newspaper distributed in the city where the Head Office of the Company is located or in Tadawul website. If any creditor objects and presents his documents to the Company within the time limit set above, the Company shall pay any outstanding debt, or, if the debt is due on a later date, provide an adequate payment guarantee. The capital shall be reduced by either canceling a number of shares equal to the amount required to be reduced or by the Company purchase of a number of shares equal to the amount required to be reduced. The Company shall then cancel such shares.

ARTICLE (15): SHARE PURCHASE  

After obtaining a written non-objection from SAMA, the Company may purchase its shares in accordance with the controls of the competent authority and such shares shall not have voting right in shareholder assemblies. 

 

 

CHAPTER III: BONDS

ARTICLE (16): BOND ISSUANCE

Under a resolution of the Board of Directors and after obtaining SAMA’s prior and written non-objection, the Company may issue Sharia’h-compliant bonds in one or more parts or through one or more series of issues from time to time on the dates, amounts and conditions adopted by the Board, provided that such bonds are not convertible to shares and that their value shall not exceed the Company’s capital.

ARTICLE (17): BOND ISSUANCE AUTHORIZATION

The Board of Directors shall have the right to take all necessary actions to issue bonds, obtain necessary approvals from competent authorities and delegate any authorities related thereto to another person or persons who, in turn, may delegate the same to other parties.

 

CHAPTER IV - THE BOARD OF DIRECTORS

ARTICLE (18): MANAGEMENT

The Company shall be managed by a Board of Directors consisting of nine (9) members elected by an Ordinary General Assembly for a three-year term, provided that SAMA’s approval for the Board’s candidates is obtained. It is always allowed to re-appoint the member whose membership term has expired. As an exception to the foregoing, the Founding Assembly shall appoint the first Board of Directors for a five-year term. This Board shall continue to exercise its duties after the expiry of its term until the entry into force of the term of the new Board.   

ARTICLE (19): MEMBERSHIP EXPIRY

a. Membership of the member of the Board of Directors expires in the following cases:

1. Expiry of the Board’s term.

2. Resignation or death of the member.

3. If a member becomes ineligible for membership according to the provisions of any law in force in Saudi Arabia.

4. If a member is dismissed by a resolution issued by an Ordinary General Assembly with a majority of shareholders owning at least two-thirds (2/3) of shares represented in person or by proxy, if such resolution has not been requested by the Board of Directors.

5. If a member is dismissed by a resolution issued by an Ordinary General Assembly with a majority of shares represented in person or by proxy, if the Board of Directors has requested such resolution.

6. If a member undergoes mental illness.

7. Commencement of any bankruptcy procedures against a member or if convicted of crimes involving fraud or dishonor.

b. If the total number of members drops below seven (7), the Ordinary General Assembly should be called for a meeting within sixty (60) days to elect the required number of members. The new members shall complete the remaining term of their predecessors. In cases other than the foregoing, the Board of Directors shall fill the vacant seat and present this appointment to the next General Assembly for approval and the new member shall complete the remaining term of his predecessor.

c. If the vacancy occurs in the first Board of Directors appointed for five (5) years, the Board shall fill the vacant seat for the remaining period after getting SAMA’s prior approval. In such case, the appointment resolution shall be subject to the approval of the first General Assembly following this appointment.

ARTICLE (20): AUTHORITIES  

Taking into account the provisions of the Banking Control Law and without prejudice to the authorities conferred to the General Assembly, the Board shall have the widest authority to:  

1. Manage the business of the Company and supervise its affairs;

2. Exercise all powers and carrying out all acts that the Company is entitled to perform under the Articles of Association or Articles of Incorporation, excluding what are stated explicitly in these Articles to be the sole prerogative of the General Assembly;

3. Conclude financial obligations for a fixed-term regardless of duration;

4. Sell or mortgage the Company’s assets;

5. Discharge the Company’s debtors from their liabilities;

6. Conclude settlement;

7. Establish companies or agencies;

8. Manage, supervise, hold and participate in shares or stocks of other companies and institutions;

9. Purchase and sell lands, real estate and residential units on spot, deferred or instalment basis;

10. Mortgage, redeem, assign (with or without fee) and transfer title of lands, real estate and residential units to the ownership of the purchaser or tenant after debt payment as well accepting mortgage, redemption and title transfer;

11. Add to a deed, issue a replacement deed, amend the use of deed, make a division, split, sort, merge and modify deeds and update them electronically (with increase, decrease or any other type of amendment);

12. Split, sort and merge real estate, residential and commercial units in the name and favor of the Company for financing purposes and in accordance with Sharia’h controls;

13. Delegate any of the Board’s authorities to its Chairman or any Board member, committee of Board members, authorized employees, or other persons and grant them the right to delegate the same to other parties;

14. Delegate, from time to time, certain power/powers to any person for a period the Board deems appropriate;

15. The Board of Directors shall not have the right to donate from the Company funds, save within the limits set by rules and regulations in force in Saudi Arabia.

ARTICLE (21): THE BOARD’s COMMITTEES

Subject to obtaining SAMA’s non-objection, the Board of Directors shall have the right to form specialized committees originating from the Board based on the Company’s need, conditions and circumstances in order to assist it in the effective performance of its duties. The Board of Directors shall approve the work rules and scope of these committees, the powers granted to them and the Board control mechanism. The Board may appoint members from outside the Board in any of these committees.

ARTICLE (22): THE EXECUTIVE COMMITTEE

Subject to obtaining SAMA’s non-objection, the Board of Directors shall form an Executive Committee from among its members. The Executive Committee shall have the right to exercise all powers delegated to it, taking into account the instructions issued from time to time by SAMA and the Board of Directors. However, the Executive Committee shall not have the right to amend any resolution, rule or regulation issued by the Board. The Executive Committee shall consist of five (5) members headed by the Chairman of the Board of Directors or his delegate. The Committee’s meeting shall only be valid if attended by at least three (3) members in person or by means of modern technology. A Committee member may authorize another member to attend and vote on behalf of him in the Committee’s meetings. However, a member may not represent more than one (1) member of the Committee. The Committee shall hold at least six (6) annual meetings or as requested by its Chairman. Deliberations and resolutions of the Committee shall be recorded in minutes to be signed by the Chairman and members of the Committee. A summary of the minutes shall be presented before the Board of Directors.

ARTICLE (23): THE AUDIT COMMITTEE

Subject to obtaining SAMA’s non-objection and the instructions issued by it, the Board of Directors shall form an Audit Committee, which will be approved by the General Assembly. The Committee shall consist of at least three (3) to five (5) non-executive members. The Committee’s members from outside the Board shall be more than those from the Board and should include a specialist in financial affairs. Based on a proposal made by the Board of Directors, the General Assembly shall issue the rules of selecting the Committee’s members, membership term, functions, manner/controls of its work and remunerations. The Audit Committee shall be responsible for monitoring the Company’s activities, verifying the integrity of its financial reports/statements and internal control systems. The Committee shall continue to carry out its functions after the expiry of its term until the entry into force of the term of the new committee and procuring necessary approvals for the appointment of the new members from the relevant supervisory authority.

ARTICLE (24): REMUNERATIONS

1. Remuneration of the Chairman and members of the Board of Directors and its committees shall be governed by the provisions of the Companies Law and provisions issued by SAMA with respect to remunerations of Boards’ members in Saudi banks. Financial and in-kind remunerations, allowances and benefits shall be as approved by the General Assembly of the Bank.

2. The annual Directors’ Report addressed to the General Assembly shall include a comprehensive statement of all funds paid to the Board members during the fiscal year of the Company, including remunerations, attendance allowances, expenses and other cash and in-kind benefits. The report shall also include a statement of cash received by the Board members in their capacities as authorized employees or executives in the Company, funds received in return for technical, administrative or consulting services and a statement of the Board meetings attended by each member during the fiscal year.

ARTICLE (25): CHAIRMAN OF THE BOARD OF DIRECTORS, VICE-CHAIRMAN AND SECRETARY

The Board of Directors shall appoint a Chairman and Vice-Chairman from among its members, and may appoint a Managing Director after obtaining SAMA’s non-objection. The Chairman shall not be allowed to hold any executive position in the Company. The Chairman jurisdictions include:

1. Presiding over the meetings of the Board and General Assembly;

2. Representing the Company before all competent authorities, judicial bodies and third parties;

3. Carrying all other tasks as delegated by the Board;

4. Signing the Articles of Incorporation for the companies in which the Company holds shares along with other contracts, deeds and title transfer before the Notary Public and other official authorities;

5. Instituting claims, lawsuits, pleading, defending, hearing and responding to lawsuits; acknowledgement, denial, reconciliation, waiver, release;

6. Requesting/lifting travel ban;

7. Requesting confinement;

8. Checking Seizure and Execution Departments and requesting the same;

9. Requesting arbitration and appointment of experts and arbitrators;

10. Requesting judgment execution;

11. Requesting appeal and reconsideration;

12. Receiving sums and checks in all cases with all courts, judicial/quasi-judicial committees and security/executive bodies;

13. Delegating or authorizing other parties and granting them the same right in all or part of such authorities.

The Vice-Chairman shall replace the Chairman of the Board of Directors during his absence.  

The Board of Directors shall appoint one of its members or any other person to act as the Board’s Secretary. The Secretary shall be responsible for the entry and keeping of the Board’s deliberations and resolutions in minutes to be signed by the Chairman and members of the Board of Directors. The Secretary’s remuneration shall be determined pursuant to a resolution by the Board.

The term of the Chairman, Vice- Chairman and Secretary (if he is a Board member) shall not exceed the term of their respective membership term in the Board and they may always be reappointed.

ARTICLE (26): MEETINGS

The Board of Directors shall hold at least four (4) meetings per year upon an invitation made by the Chairman. The Chairman should call for a meeting if requested by any two (2) Board members. The invitation, together with the agenda, shall be sent to each member by e-mail or by means of modern technology at least five (5) business days before the scheduled date of the meeting.  

ARTICLE (27): QUORUM

A Board meeting shall be valid only if attended in person or by proxy by at least six (6) members, five (5) of whom should attend in person or by means of modern technology.  In the event that a Board member delegates another member to attend the Board meetings on behalf of him, the delegation should be governed by the following controls:

1. No member may be allowed to act on behalf of more than one member in the same meeting.

2. The proxy should be in writing.

3. An acting member may not vote on certain resolutions as provided for by applicable law.  

ARTICLE (28): RESOLUTIONS

Deliberations and resolutions of the Board of Directors shall be entered into minutes to be signed by the Chairman and members of the Board of Directors. The Board’s resolutions shall be adopted by the approval of the majority votes of the members attending in person or represented by proxy. If the votes are equal, the Chairman shall have a casting vote. The Board may issue circular resolutions, which shall be presented to the next meeting for approval.

 

CHAPTER V – SHAREHOLDER ASSEMBLIES

ARTICLE (29): SHAREHOLDER ASSEMBLIES

A duly formed General Assembly represents all shareholders and shall be held in the city where the Head Office of the Company is located. Each subscriber may attend the Founding Assembly in person or by proxy regardless of the number of shares he holds. Each shareholder may attend the General Assembly and authorize another shareholder, other than the Board members and the Company’s staff, to attend the General Assembly on behalf of him. Meetings of General Assemblies, participation of shareholders in deliberations and voting on resolutions may be held by means of modern technology.

ARTICLE (30): AUTHORITIES OF THE FOUNDING ASSEMBLY

The Founding Assembly shall be convened pursuant to an invitation by the founders in accordance with the Companies Law and it shall have the following authorities:

1. Verifying that the capital of the Company has been fully subscribed to and that the minimum capital and the amount owed by share value have been met according to the Companies Law.

2. Formulating the final texts of the Articles of Association of the Company. However, the Founding Assembly may not introduce major amendments into the Articles of Association unless after obtaining the consent of all subscribers represented in it.

3. Appointing the first Board of Directors of the Company.

4. Appointing an Auditor/Auditors and fixing their charges.

5. Discussing the founders’ report related to the establishment works and expenses.

The Founding Assembly’s meeting should be attended by 50% of subscribers in order to be valid. If such majority is not attained, an invitation should be made for a second meeting to be convened within fifteen (15) days and such meeting shall be valid regardless of the number of attendees. The resolutions of the Founding Assembly shall be issued by the absolute majority of shares represented therein and each subscriber shall have one (1) vote for each share he holds or represents.  

ARTICLE (31): ORDINARY GENERAL ASSEMBLY

Except for issues falling within the jurisdictions of the Extraordinary General Assembly, the Ordinary General Assembly shall have authority over all issues related to the Company and shall be convened at least once a year, within six (6) months following the end of the fiscal year of the Company. Other meetings may be held whenever needed.

ARTICLE (32): EXTRAORDINARY GENERAL ASSEMBLY

Subject to the requirements of the Banking Control Law and other relevant laws, the Extraordinary General Assembly shall be responsible for amending the Articles of Association of the Company, save for provisions the amendment of which by an Extraordinary General Assembly is prohibited by law. Furthermore, the Extraordinary General Assembly may issue resolutions on matters falling within the jurisdictions of the Ordinary General Assembly.

ARTICLE (33): CONVENENING OF SHAREHOLDERS’ GENERAL ASSEMBLIES

Shareholders’ General Assemblies shall be convened pursuant to an invitation made by the Board of Directors if so requested by the Auditor or by shareholders representing at least (5%) of the Company’s capital. The invitation shall be posted on the websites of the Capital Market Authority and the Company and published in a daily newspaper distributed in the city where the Company’s Head Office is located at least twenty-one (21) days prior to the meeting date. The invitation shall include the meeting agenda and a copy thereof shall be sent to SAMA, CMA and the Ministry of Commerce during the period set for publication.

ARTICLE (34): MANNER OF ATTENDANCE

Upon the convening of the General Assembly, a list of shareholders attending in person or by proxy, the number of shares they own in person or by proxy and the number of allocated votes shall be prepared. Any stakeholder representing a supervisory/control authority may have access to such list.

ARTICLE (35): QUORUM OF ORDINARY GENERAL ASSEMBLIES

The meeting of the Ordinary General Assembly shall be deemed valid only if shareholders representing at least 25% of the Company’s capital attend and/or participate by means of modern technology. If such quorum is not reached at the first meeting, a second meeting shall be held within one (1) hour following the end of the first meeting, provided that an indication has been made in the invitation for the first meeting as to the possibility of holding a second meeting. The second meeting shall be deemed valid irrespective of the number of shares represented therein.

ARTICLE (36): QUORUM OF THE EXTRAORDINARY GENERAL ASSEMBLIES

The meeting of the Extraordinary General Assembly shall be valid if at least 50% of shareholders attend and/or participate by means of modern technology. If such quorum is not reached at the first meeting, a second meeting shall be held within one (1) hour following the end of the first meeting, provided that an indication has been made in the invitation for the first meeting as to the possibility of holding a second meeting. The second meeting shall be deemed valid if at least 25% of shareholders attend and/or participate by means of modern technology. If the required quorum is not attained in the second meeting, an invitation shall be made for a third meeting and shall be published in a daily newspaper distributed in the city where the Head Office of the Company is located. The invitation shall be made at least twenty-one (21) days prior to the meeting date. The third meeting shall be valid irrespective of the number of shares represented therein.

ARTICLE (37): VOTING

Each shareholder shall have one vote per share at General Assemblies. However, members of the Board of Directors shall have no voting rights on resolutions related to discharging them, giving them the required licenses to carry out certain tasks that include personal interest or renewing such licenses. The provisions of the Companies Law shall apply to all issues that the Board’s members are not allowed to vote on. Cumulative voting shall be used for electing the members of the Board of Directors.

ARTICLE (38): RESOLUTIONS

Resolutions of the Founding Committee shall be issued by the absolute majority of shares represented therein. Resolutions of the Ordinary General Assembly shall be issued by the absolute majority of shares represented in the meeting. Resolutions of the Extraordinary General Assembly shall issued by a majority of two thirds (2/3) of shares represented therein, unless it relates to capital increase/decrease, extending the Company’s term, dissolving the Company before the expiry of its term as stipulated in its Articles of Association, or merging the Company with another entity or institution. In such cases, the resolution cannot be issued unless voted on by a majority of three quarters (3/4) of the shares represented in the meeting.

ARTICLE (39): MEETING AGENDA  

Each shareholder shall have the right to discuss and raise questions with respect to issues included in the agenda of the General Assemblies to members of the Board of Directors and the Auditor, who should provide responses to such questions in a way that shall not imply any damage to the Company’s interest. If any shareholder feels that he has received an unsatisfactory response, he may raise the issue to the General Assembly and its resolution shall be effective.

ARTICLE (40): GENERAL ASSEMBLIES CHAIRMANSHIP

The Chairman of the Board of Directors (or the Vice-Chairman in the absence of the Chairman, or the person delegated by the Board of Directors from its members) shall preside over the meetings of shareholders General Assemblies. The General Assembly shall appoint a Secretary and vote counter. The minutes of meeting shall include the names of shareholders (attending in person or by proxy), number of their shares (personally or by proxy), number of allocated votes, resolutions adopted, number of affirmative/negative votes and a brief summary of the meeting discussions. At the end each meeting, the minutes shall be entered into a special register to be signed by the Chairman, Secretary and the vote counter.

 

CHAPTER VI – THE AUDITOR

ARTICLE (41): APPOINTMENT

The Company shall have one (1) or more Auditors from among those licensed to work in Saudi Arabia and shall be appointed annually by the General Assembly, which shall decide their charges and reappointment.

ARTICLE (42): ACCESS TO RECORDS

The Auditor shall at all times have the right to access the Company’s books, records and other documents and may request any information and clarifications he deems necessary. He may further check the Company’s assets and liabilities. The Auditor should submit a report to the annual General Assembly detailing the extent to which the Company cooperated in providing him with information and clarifications, the violations he has come across (especially to the provisions of the Companies Law or Banking Control Law) and his opinion as to the extent to which the accounts of the Company are in conformity with reality.

 

CHAPTER VII – ACCOUNTS AND PROFIT DISTRIBUTION

ARTICLE (43): FISCAL YEAR

The fiscal year of the Company commences on the first day of January up to the last day of December of each Gregorian year. However, the first fiscal year of the Company starts on the date of issuing the resolution announcing the incorporation of the Company until the last day of December of the following year.

ARTICLE (44): FINANCIAL STATEMENTS AND THE DIRECTORS’ REPORT

At the end of each fiscal year, the Board of Directors shall prepare the financial statements of the Company and a report on the activities of the Company and its financial position for the preceding financial year. The report shall include the method proposed for distributing net profits. The Board of Directors shall place such documents at the disposition of the Auditor at least forty-five (45) days prior to the date set for convening the General Assembly. The Chairman of the Board of Directors, CEO and CFO shall sign such documents and a copy thereof shall be made available to shareholders at the Company’s Head Office twenty-one (21) days before the meeting of the General Assembly. The Chairman of the Board of Directors shall provide shareholders with the financial statements of the Company along with the Directors’ Report and the Auditor’s Report unless these reports have already been published in a daily newspaper distributed in the city where the Company’s Head Office is located. A copy of the aforementioned documents shall be sent to the Ministry of Commerce, CMA, and SAMA at least fifteen (15) days before the meeting of the General Assembly.

ARTICLE (45): PROFIT DISTRIBUTION

Annual or interim (semi-annual, quarterly) net profits of the Company shall be distributed after deducting general expenses and other costs and forming necessary reserves against bad debts, investment losses and contingent liabilities in line with the Banking Control Law and SAMA’s instructions, as follows:

1. Calculation and payment of the Zakat amounts to the concerned authorities.

2. Transferring no less than 25% of the remaining net profits after the Zakat deduction to the statutory reserve account until it becomes at least equal to the paid up capital.

3. Allocating (from the remaining profits after deducting the Zakat and reserve amounts) at least 5% of the paid-up capital to be distributed to shareholders as proposed by the Board of Directors and decided by the General Assembly. If the remaining profit is insufficient to cover this amount (5%), shareholders shall have no right to claim the payment of the same in the next year/years. The General Assembly shall have no right to distribute profits in excess of the amounts decided by the Board of Directors.

4. The remaining balance (after allocating the amounts referred to in paragraphs 1, 2, 3) shall be used as proposed by the Board of Directors and decided by the General Assembly.

5. Based on a proposal made by the Board of Directors, the General Assembly may allocate part of the net profits to establish social institutions for the Company’s staff or to assist existing ones. 

The Board of Directors may distribute interim profits (semi-annual or quarterly) as per the rules and regulations governing the same.

ARTICLE (46): DIVIDEND PAYMENT

Dividends shall be paid to shareholders in accordance with the General Assembly resolution issued in this respect, which shall specify maturity and distribution dates. Shareholders registered in the shareholders register shall be entitled to receive dividends at the end of the maturity day.

 

CHAPTER VIII – DISPUTES

ARTICLE (47): LIABILITY ACTION

Each Shareholder shall have the right to file a liability action on behalf of the Company against the members of the Board of Directors if they commit a fault causing damage to such Shareholder, provided that the Company’s right to file such action shall still be valid. The Shareholder should notify the Company of such intention to file such action.

 

CHAPTER IX – LIQUIDATION AND DISSOLUTION

ARTICLE (48): LOSSES OF THE COMPANY

If the Company’s losses reach 50% of its paid up capital at any time during the fiscal year, the Auditor or any officer of the Company shall notify the Chairman immediately upon becoming aware of such losses, who in turn shall promptly notify the Board of Directors. The Board of Directors shall, within fifteen (15) days and after obtaining SAMA’s approval, invite for an Extraordinary General Assembly meeting within no more than forty-five (45 days) to either increase or decrease the Company’s capital in accordance with the provisions of the Companies Law and the Banking Control Law to reduce the losses to less than 50% of the paid-up capital, or to dissolve the Company before the expiry of its term as defined herein.

ARTICLE (49): LIQUIDATION AND DISSOLUTION OF THE COMPANY

If the incorporation period of the Company expires, or if the Company is dissolved prior to its expiry date, the Extraordinary General Assembly shall decide, based on a proposal made by the Board of Directors, the method of liquidation and appoint one or more liquidators and define their jurisdictions and charges. The jurisdictions of the Board of Directors shall cease upon the expiry of the Company, provided, however, that the Board of Directors shall remain liable for the management of the Company until the appointment of the liquidator. Other departments shall exercise their powers to the extent that they shall not be in conflict with those of the liquidator.

 

CHAPTER X – FINAL TERMS

ARTICLE (50): COMPANIES LAW

The provision of the Companies Law, Banking Control Law and SAMA’s instructions shall apply to all matters not specifically provided for herein. 

ARTICLE (51):

The business of the Company shall be governed by Sharia’h provisions and controls.

ARTICLE (52): FILING OF THE ARTICLES OF ASSOCIATION

The Articles of Association shall be filed and published in accordance with the provisions of the Companies Law. The provisions of the Banking Control Law and other regulatory rules and resolutions issued by SAMA, which are in line with banking business and Sharia’h provisions, should also be taken into account.

Complementary Content
${loading}