Governance in Tadawul

Compliance with corporate governance principles and regulations

Governance is an important part of the values and practices of Tadawul, which seeks to implement the best corporate governance practices for managing joint stock companies. In addition, the Company works towards raising the level of transparency and corporate integrity by maintaining the best governance practices based on the following:

  • Companies Law
  • Capital Market Law
  • Company Bylaws

In addition to being guided by the Corporate Governance Regulations issued by the Board of the Capital Market Authority, the Corporate Governance Regulations for unlisted joint stock companies, and the governance guides issued by the Public Investment Fund for companies that are fully owned by the Fund.

Disclosure concerning the composition of the Board of Directors and Senior Executives

The Board of Directors of Tadawul relies in its composition on the Capital Market Law issued by Royal Decree No. (M/30) dated 2/6/1424 H. Clause (b) of Article 22 states that: “The Exchange, the Security Depository Center and the Securities Clearing Center shall present the names of their respective Board members nominees to the Board of the Authority to obtain its approval of their nomination prior to them being elected by the General Assembly.” Therefore, the Extraordinary General Assembly held its meeting on Thursday, 2 January 2020 in which amending the Company's Bylaws was approved and Board members for the fifth term were elected and appointed starting from the date of the Extraordinary General Assembly and for a period of three years.

Diversity of the Board

Governance structure of Tadawul

The roles and authorities of the Board of Directors

Subject to the functions reserved for the General Assembly in accordance with relevant laws, the Board shall have the widest authority to manage the business of the Company in order to attain its objectives, including:

  • The overall strategy and business plan of the Company;
  • Approval of the annual budget;
  • Approval of the Company's internal, financial, administrative, and technical regulations as well as employee-related policies and regulations and setting the Company's performance indicators;
  • Approval of establishment of companies, buying shares therein and mergers as well as obtaining and amending of commercial registers; and
  • Investment of Company's monies.

Statement of current Board members 2020

No. Member Membership category Positions and membership on other companies
1. Mrs. Sarah Jammaz
Al-Suhaimi
Chairperson of the
Board of Director
Non-Executive
  • NCB Capital - CEO and Member of the Board of Directors
2. Mr. Yazeed Abdulrahman
Al-Humaid
Vice-Chairman Non-Executive
  • Public Investment Fund - Head of the General Department for Investments in Local Companies
  • The National Security Services Company - Chairman of the Board of Directors
  • Samba Financial Group - Vice-Chairman
  • Saudi Arabian Airlines General Corporation - Member of the Board of Directors
  • Civil Aviation Holding Company - Member of the Board of Directors
  • Flyadeal Aviation Company - Member of the Board of Directors
  • RAA-Richard Attias Associates - Member of the Board of Directors
3. Eng. Khalid Abdullah
Al-Hussan
Chief Executive
Officer
  • The Securities Depository Center Company (Edaa) -
    Chairman of the Board of Directors
  • The Securities Clearing Center Company (Muqassa) -
    Chairman of the Board of Directors
  • Tadawul Real Estate Company - Member of the Board of Directors
    and Chairman of the Audit Committee
  • World Federation of Exchanges (WFE) - Member of the Board
  • Arab Federation of Exchanges (AFE) - Chairman of the Board of Directors
  • Tadawul Advanced Solutions Company (Wamid) -
    Chairman of the Board of Directors
4. Mr. Hashem Othman
Al-Hekail
Non-Executive
  • Boa Information Technology Company - Chairman of the Board of Directors
  • Derayah Financial - Member of the Board of Directors
  • Bayan Payments Limited - Member of the Board of Directors
5. Mr. Sabti Sulaiman
Al-Sabti
Non-Executive
  • Riyad Capital - CEO
  • Zakat, Tax and Customs Authority - Member of the Board of Directors
6. Mr. Yousef Abdullah
Al-Benyan
Non-Executive
  • Saudi Basic Industries Corporation (SABIC) - CEO and Vice-Chairman
  • Saudi Arabian Fertilizer Company (SAFCO) -
    Chairman of the Board of Directors
  • Saudi Information Technology Company - Member of the Board of Directors
  • Nusand Investment Company - Chairman of the Board of Directors
No. Member Category Positions in Other Companies
7. Ms. Rania Mahmoud
Nashar
Non-Executive
  • Samba Financial Group - CEO and Member of the Board of Directors
  • Samba Bank Limited Pakistan - Member of the Board of Directors
  • Samba Group for Global Markets Ltd. - Member of the Board of Directors
  • Samba Capital for Assets and Investment Management -
    Member of the Board of Directors
  • Capital Market Authority - Member of the Advisory Committee
  • Saudi Space Authority - Member of the Board of Directors
  • The National Center for Performance Measurement (Adaa) -
    Member of the Board of Directors
  • Future Investment Initiative Audit Committee (FII) - Chairperson
8. Mr. Xavier Rolet Non-Executive
  • Shore Financial Markets Ltd. - Chairman of the Board
  • Tadawul Advanced Solutions Company (Wamid) -
    Member of the Board of Directors
  • Golden Falcon Acquisition Company - Member of the Board of Directors
9. Mr. Mark Makepeace Non-Executive
  • Tadawul Advanced Solutions Company (Wamid) -
    Member of the Board of Directors
  • London Stock Exchange Group (LSEG) - Chairman, Information Services
  • FTSE Russell - Chairman of the Information Services Group
  • Monica Top GP (Cayman), LLC - Member of the Board of Directors
  • Monica Intermediate Holdings GP, LLC - Member of the Board of Directors
  • Monica Holdco (US), Inc - Member of the Board of Directors
  • Monica Holdco (UK) Limited - Member of the Board of Directors
  • Wilshire Opco UK Limited - Member of the Board of Directors
  • Wilshire Advisors LLC - Member of the Board of Directors
  • Suzhou Wilshire Investment Services Co., Ltd. - Member of the Board of Directors
  • Wilshire Hong Kong Limited - Member of the Board of Directors
  • Wilshire Australia Pty Limited - Member of the Board of Directors
  • Wilshire Global Advisors, LLC - Member of the Board of Directors
  • Wilshire U.S. Private Markets Fund VI (Offshore), Inc - Member of the Board of Directors
  • Wilshire European Private Markets VIII (Offshore), Inc -
    Member of the Board of Directors
  • Wilshire Asia Private Markets VIII (Offshore), Inc - Member of the Board of Directors
  • Wilshire U.S. Private Markets Fund VIII (Offshore), Inc. -
    Member of the Board of Directors
  • St Giles Global (SGG) GP LLC - Member of the Board of Directors
  • St Giles Global (SGG) LP - Member of the Board of Directors
  • The Singapore Stock Exchange (SGX) - Non-Executive Director

Attending Board meetings

Number of meetings: 7

Name of member Position 05.02.2020 19.04.2020 29.06.2020 25.08.2020 20.10.2020 10.11.2020 17.12.2020
Mrs. Sarah Jammaz Al-Suhaimi Chairperson of the Board of Directors
Mr. Yazeed Abdulrahman Al-Humaid Vice-Chairman Excused
Eng. Khalid Abdullah Al-Hussan Member
Mr. Hashem Othman Al-Hekail Member
Mr. Sabti Sulaiman Al-Sabti Member Excused
Mr. Yousef Abdullah Al-Benyan Member Excused
Ms. Rania Mahmoud Nashar Member
Mr. Xavier Rolet Member
Mr. Mark Makepeace Member

Board of Directors' remuneration

Each member of the Board of Directors receives an annual remuneration of SAR 250,000, and the Chairperson of the Board of Directors receives an additional annual reward of SAR 100,000.

Board members receive an attendance allowance for Board meetings, an amount of SAR 3,000.

Each member of the Board of Directors is entitled to an annual remuneration for their membership in the committees of the Board of SAR 150,000, in addition to the allowance for attending committee meetings of SAR 3,000.

Reference to the Board and Committees remuneration policy approved by the 12 General assembly in 2020 and accordance with the Company’s commitment to what is stipulated in Article 76 of the Companies Law, which regulates the remuneration of members of the Board of Directors, which states that in all cases; The total remuneration and financial or in kind benefits and rewards that a member of the Board of Directors receives does not exceed an amount of SAR 500,000 annually, according to the controls laid down by the competent authority.

Remuneration of Board members for their membership in the Board for the year 2020 (New Term)

Name of member The number
of meetings
attended
by the member
Number of
Board meetings
Board member
remuneration
SAR
Remuneration
of the Chairperson
of the Board
SAR
Total


SAR
Mrs. Sarah Jammaz Al-Suhaimi 7 7 250,000 100,000 350,000
Mr. Yazeed Abdulrahman Al-Humaid 6 7 250,000 214,286
Eng. Khalid Abdullah Al-Hussan 7 7 250,000 250,000
Mr. Hashem Othman Al-Hekail 7 7 250,000 250,000
Mr. Sabti Sulaiman Al-Sabti 6 7 250,000 214,286
Mr. Yousef Abdullah Al-Benyan 6 7 250,000 214,286
Ms. Rania Mahmoud Nashar 7 7 250,000 250,000
Mr. Xavier Rolet 7 7 250,000 250,000
Mr. Mark Makepeace 7 7 250,000 250,000
Total 2,242,858

Allowances for members to attend Board meetings for the year 2020 (New Term)

Name of member The number
of meetings
attended
by the member
Number of
Board meetings
Meeting
attendance
allowance
SAR
Total


SAR
Mrs. Sarah Jammaz Al-Suhaimi 7 7 3,000 21,000
Mr. Yazeed Abdulrahman Al-Humaid 6 7 3,000 18,000
Eng. Khalid Abdullah Al-Hussan 7 7 3,000 21,000
Mr. Hashem Othman Al-Hekail 7 7 3,000 21,000
Mr. Sabti Sulaiman Al-Sabti 6 7 3,000 18,000
Mr. Yousef Abdullah Al-Benyan 6 7 3,000 18,000
Ms. Rania Mahmoud Nashar 7 7 3,000 21,000
Mr. Xavier Rolet 7 7 3,000 21,000
Mr. Mark Makepeace 7 7 3,000 21,000
Total 180,000

 

Remuneration of committee members for their membership in the Board’s committees for the year 2020 (New Term):

Name of member The number of
meetings attended
by the member
The number of
committee meetings
during the fiscal year
Membership
bonus
SAR
Allowance to
attend committees
SAR
Total

SAR
Nomination and Remuneration Committee
Mrs. Sarah Jammaz Al-Suhaimi 3 4 150,000 3,000 121,500
Ms. Rania Mahmoud Nashar 4 4 150,000 3,000 162,000
Mr. Mark Makepeace 4 4 150,000 3,000 162,000
Mr. Bandar Abdulrahman bin Mogren 4 4 150,000 3,000 162,000
Audit Committee
Mr. Yazeed Abdulrahman Al-Humaid 3 4 150,000 3,000 121,500
Mr. Hashem Othman Al-Hekail 4 4 150,000 3,000 162,000
Dr. Abdullah Abdulrahman Al-Shuwayer 4 4 150,000 3,000 162,000
Mr. Omar Mohammed Al Hoshan 4 4 150,000 3,000 162,000
Mr. Abdulrahman Mohammed Al-Odan 4 4 150,000 3,000 162,000
Regulatory Policy and Oversight Committee
Dr. Abdullah Hassan Al-Abdulqader 5 5 150,000 3,000 165,000
Dr. Abdulrahman Abdul Mohsen Al-Khalaf 5 5 150,000 3,000 165,000
Dr. Najim Abdullah Al-Zaid 5 5 150,000 3,000 165,000
Eng. Khalid Abdullah Al-Hussan 3 5 150,000 3,000 99,000
Risk Management Committee
Mr. Yousef Abdullah Al-Benyan 3 3 150,000 3,000 159,000
Mr. Xavier Rolet 3 3 150,000 3,000 159,000
Mr. Sabti Sulaiman Al-Sabti 2 3 150,000 3,000 106,000
Dr. Yahya Ali Al-Jabr 2 3 150,000 3,000 106,000
Total 2,501,000

 

Remuneration and allocations for Senior Executives* (in SAR)

Statement Total amounts
Salaries and allowances 8,849,838
Periodic and annual bonuses 17,440,000
Total 26,289,838

* The Senior Executives' remuneration represents the top five Executives and includes the CEO and CFO.

Board of Directors Committees

Four subcommittees emanate from the Board of Directors, consisting of Board members and other independent members with expertise and specializations necessary for the work of each committee. The committees are formed according to the general procedures set by the Board of Directors. The committees submit their findings and decisions to the Board, and the Board of Directors supervises the committees' work regularly to ensure that they perform the duties and tasks assigned to them. Each of these committees has approved charters that define their powers and work procedures.

Audit Committee

The Audit Committee was formed by the resolution of the Company's Ordinary General Assembly on 19 March 2020.

The Audit Committee is responsible for monitoring the Company's business, verifying the integrity of the reports, financial statements and internal control systems and approving the annual internal audit plan, reviewing the efficiency of the Company's business, including compliance with international standards for the practice of the internal audit profession. This is done by appointing an external body to review the work of both the Audit Committee and the Internal Audit Division every five years.

The Committee recommends the approval to review the financial and accounting policies, and recommend to the General Assembly the external auditors candidates and act as a link between the External Auditors and the Board; reviews the appointment of the Chief of Internal Audit, approves and evaluates his performance indicators, and takes decisions regarding them. The Committee's tasks also include reviewing the results of the regulatory authorities and ensuring that the Company takes the necessary measures regarding them. The Committee is also working to put in place a mechanism that allows the Company's employees to submit their observations regarding any breach of financial reports confidentially.

The Committee has important powers in order to perform its duties, “based on Article 59 of the Corporate Governance Regulations” are:

  • The right to review the Company's records and documents.
  • To request any clarification or statement from members of the Board of Directors or the Executive Management.
  • To ask the Board of Directors to invite the Company's General Assembly to convene if the Board of Directors impedes its work or is exposed to severe damages or losses.

The Committee consists of five members and they are:

Number of meetings: 1 (Previous Term)

Name of member Position 01.01.2020
Mr. Suhail Muhammad Abanmi Committee Chairman
Mr. Hashem Othman Al-Hekail Member
Dr. Abdulrahman Ibrahim
Al-Humaid (May Allah
rest his soul)
Independent member
Dr. Abdulrahman I. Al-Humaid Independent member
Mr. Abdulrahman
Mohammed Al-Odan
Independent member
Name of member Position 26.03.2020 10.06.2020 26.08.2020 02.12.2020
Mr. Yazeed Abdulrahman Al-Humaid Committee Chairman Excused
Mr. Hashem Othman Al-Hekail Member
Dr. Abdullah Abdulrahman Al-Shuwayer Independent member
Mr. Omar Mohammed Al Hoshan Independent member
Mr. Abdulrahman Mohammed Al-Odan Independent member

Risk Management Committee

The Committee is responsible for risk management and information security responsibilities. Its tasks include recommending to the Board the approval of the necessary policies for managing risks in the Company, looking into the recommendations of the Risk and Security Division regarding analyzing the risks of the Company's business and determining an acceptable level of risks that the Company may be exposed to and maintaining it, including risks related to services and products provided by the Company and its capital investment. The Committee also studies the risks of information technology systems and ensures their adequacy for conducting business, managing the mechanisms of trading, settlement, clearing, depositing, registering ownership of listed securities, disseminating information related to them, studying the business continuity plan and analyzing its impact on the Company's business. In addition to preparing detailed reports on exposure to risks and the proposed steps for managing these risks and submitting them to the Board of Directors, while continuously verifying the independence of the risk management personnel from the activities that may result in the Company's exposure to risks and working to increase awareness of the risk culture of the Company's risk management staff. The Committee consists of four members and they are:

Number of meetings: 3

Name of member Position 16.03.2020 27.07.2020 15.11.2020
Mr. Yousef Abdullah
Al-Benyan
Committee Chairman
Mr. Sabti Sulaiman
Al-Sabti
Member Excused
Mr. Xavier Rolet Member
Dr. Yahya Ali Al-Jabr Independent member Excused

Nomination and Remuneration Committee

The Committee undertakes tasks related to human capital in the Company and studies the human resources strategy and related policies. The Committee shall set standards for the performance of the CEO, evaluate it, ensure the existence of a long-term succession plan for the CEO and the Executive Management, and supervise its implementation. The Committee also examines the organizational structure of the Company and undertakes the study and development of the competencies and qualifications of the Executive Management. The Committee is also responsible for reviewing the performance of the Board and its members and for recommending the appointment of independent members in the committees emanating from the Board. The Committee consists of four members and they are:

Number of meetings: 4

Name of member Position 20.05.2020 20.08.2020 24.11.2020 06.12.2020
Mrs. Sarah Jammaz Al-Suhaimi Committee Chairperson Excused
Ms. Rania Mahmoud Nashar Member
Mr. Mark Makepeace Member
Mr. Bandar Abdulrahman bin Mogren Member

Regulatory Policy and Oversight Committee

The Committee oversees the work of the Regulatory Oversight and Authorization Division, which is the executive arm directly responsible for the regulation, control, and supervision activities entrusted to Tadawul and its Capital Market infrastructure companies.

Among the tasks of the Committee is studying draft market regulations and rules and their amendments, and supervising communication and coordination between the market and the capital market authority in matters related to market regulations. Its responsibilities also include studying management recommendations regarding listing applications, suspending and canceling them, issuing approval for listing decisions in the main market, the parallel market (Nomu) and debt markets, supervising their implementation, and requests for transferring from the parallel market (Nomu) to the main market, in addition to requests for changes in capital issuer and issuance of approvals to increase the capital of the listed companies.

As for its tasks related to members, the Committee studies the recommendations of the Divisoin in the matter of licensing applications for members and their agents who fall within the market jurisdiction, and requests to suspend and cancel the license, in addition to supervising the Division's procedures in the matter of overseeing the activities of members and their agents who fall within the market's jurisdiction, including their activities and procedures. Taken in the matter of their violations of any of the provisions of the Market rules, regulations and instructions, and decisions are taken in their regard.

The Committee consists of four members:

Number of meetings: 5

Name of member Position 13.02.2020 16.04.2020 28.07.2020 14.10.2020 29.12.2020
Dr. Abdullah Hassan Al-Abdulqader Committee Chairman (Independent)
Dr. Abdulrahman Abdul Mohsen Al-Khalaf Independent member
Dr. Naijm Abdullah Al-Zaid Independent member
Eng. Khalid Abdullah Al-Hussan Executive member Excused Excused

Dividend policy

The Company is obligated to distribute its annual net profits in accordance with the methods stipulated in its basic system and the extent of availability of liquidity necessary to fulfil the Company's obligations and strategic projects, where the annual net profits of the Company are distributed - after deducting all general expenses and other costs - as follows:

1. 10% of the net profits shall be set aside to form a statutory reserve, and the Ordinary General Assembly may stop this deduction when the said reserve reaches 30% of the Company's paid-up capital.

2. The Ordinary General Assembly - based on the proposal of the Board of Directors - to allocate a percentage of the net profits to form a consensual reserve and allocate it to one or more specific purposes.

3. The Ordinary General Assembly may decide to set up other reserves, to the extent that it serves the interest of the Company or guarantees the distribution of fixed profits as possible to the shareholders. The aforementioned association may also deduct amounts from the net profits to establish social institutions for the Company's employees or to assist such institutions that may exist.

4. The Board of Directors may recommend that a certain percentage of the remaining profits be distributed to the shareholders. The Company has the right to distribute quarter and half profits after complying with the requirements of the relevant authorities.

The following are the proposed dividends for the year 2020 compared to the dividends for the year 2019:

Dividend 2020 SAR Mn 2019 SAR Mn
Net profit/loss for the year 500,518,870 153,293,786
Appropriating 10% of net profit as a statutory reserve (50,051,887) (15,329,379)
Dividends (5% of capital) (60,000,000) (60,000,000)
Dividend (additional share) (60,000,000) (60,000,000)
The net 330,466,983 17,964,407

 

Tadawul's subsidiaries

Name of subsidiary Capital Tadawul's ownership percentage % Activity The main
country
of operations
Country of incorporation
Securities Depository
Center Company (Edaa)
400,000,000 100 Actions related to depositing securities, registering their ownership, transferring them, settling and clearing them, and recording any ownership restrictions
on the deposited securities.
Kingdom of
Saudi Arabia
Kingdom of
Saudi Arabia
Securities Clearing Center Company (Muqassa) 600,000,000 100 Stock Clearing. Kingdom of
Saudi Arabia
Kingdom of
Saudi Arabia

Tadawul Advanced
Solutions Company

300,000,000 100 FinTech solutions, engineering and technology research and development, market research and opinion polls. Kingdom of
Saudi Arabia
Kingdom of
Saudi Arabia

Transactions with related parties

The Company has conducted transactions with parties related to the Public Investment Fund (the shareholder), as well as some companies in which some of the Company's Board members are members. As the terms of these transactions are similar to that of ordinary commercial debtors and creditors, there is no preference or special benefits offered to related parties. The following are the material transactions and related amounts as of 31 December 2020:

Dealing with related parties 2020
SAR Mn
2019
SAR Mn
Trading commission 767,002,623 317,830,780
Market information services 112,495,753 61,345,104
Deposit center services 132,255,954 123,287,116
Listing services 65,340,676 60,615,484
Other services 1,179,864 1,669,415
Subsidiaries 7,749,946 7,462,037
Board of Director's remuneration and allowances 6,254,359 5,437,049
Balance due from Tadawul Real Estate Company - 130,000,000

Balances and operations resulting from these transactions included in the financial statements as of 31 December 2020 (in SAR):

Description Nature of the relationship Monitoring at the
beginning of the year
Charged during
the year
Collected/Paid
during the year
Balance at the
end of the year
Accounts receivable Joint ownership
and Directors
10,136,265 663,738,287 (666,656,727) 7,217,825
Accounts payable Joint ownership
and Managers
8,506,476 17,350,437 (12,203,276) 13,653,637

It should be noted that the Company, in its dealings with related parties, takes into account the procedures followed to deal with cases of conflict of interest in accordance with the relevant regulations, in addition to the rules of professional conduct for the members of the Company's Board of Directors and approved in the Commission's Board Decision No. 2010-02-20 dated 27/08/1431 AH. Corresponding to 8 August 2010.

Loans

The Company has no loans.

Company declarations

The Company's Management declares the following:

  • Correctly prepared account records.
  • The internal control system was prepared on a sound basis and was effectively implemented.
  • There is not the slightest doubt about the Company's ability to continue its activity.

In addition, there are no differences from the accounting standards issued by the Saudi Organization for Certified Public Accountants. There are no material notes from the Auditor's on the Company's financial statements for the fiscal year 2020.

Due system payments

Statement SAR Mn Description
Distributed profits 120,000,000 What is paid or charged to the period as dividends to government agencies (Public Investment Fund)
Social insurance contributions 20,041,855 What is paid or charged to the period in accordance with the provisions of the Labor Law in the Kingdom of Saudi Arabia
Withholding tax 2,729,688 What is paid or charged to the period according to the provisions of the Department of Zakat and Income Authority
Total 32,758,785 It represents the statutory amounts due and payments to government agencies

Sanctions or penalties from regulatory or governmental bodies

There are no sanctions or penalties from any Government agencies.

Results of the annual review of the effectiveness of the internal control system

The Internal Audit Department submits periodic reports to the Audit Committee on the results of the auditing processes, which aim to verify the adequacy of the internal control system in protecting the assets of the Company and its subsidiaries (deposit and clearing), assess business risks and measure the efficiency and effectiveness of control procedures and system