GIB Saudi Equity Fund صندوق جي آي بي لألسهم السعودية

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2 GIB Saudi Equity Fund صندوق جي آي بي لألسهم السعودية Public Local Equity Open-Ended Fund GIB Capital Terms & Conditions Date of Issuance January 11, 2018 Date of CMA Approval of the Establishment of the Fund 24/04/1439H Corresponding to January 11, 2018 All information and items set forth in the terms and conditions of the GIB Saudi Equity Fund are subject to the Investment Funds Regulations, and contain complete, clear, correct and non-misleading information. Potential investors must read the Terms & Conditions, Fund Information Memorandum and other documents of GIB Saudi Equity Fund carefully and thoroughly before taking any investment decision concerning this Fund. The investor must consult with an independent financial advisor if he has any doubt on the suitability of this investment in the Fund before taking any investment decision. Investors of the Fund must carefully read these Terms & Conditions, the Fund Information Memorandum and other documents therein, accept and sign them upon subscription in the Fund. Disclaimer: This only a translation of the original Arabic transcript. Information is intended solely as informal guidance. The company does not accept any liability for translation errors and does not consider this document legally binding. 2

3 Important Notice GIB Saudi Equity Fund ( The Fund ) is an open-ended Fund established and managed by GIB Capital Co. ( The Fund Manager ), a Single Shareholder Company established and regulated under the enforced laws in the Kingdom of Saudi Arabia, under Commercial Register No dated 06/02/1429H, and licensed by the Capital Market Authority under License No , with its address: Low Rise Buildings, Building B1 Granada Business & Residential Park Eastern Ring Road B. O. Box 89859, Riyadh Saudi Arabia Website: (The Terms & Conditions ) set out under which GIB Capital will provide investment services to the investors. It represents an agreement between the Fund Manager and the Investor. The Terms & Conditions have been prepared in accordance with the Investment Funds Regulations issued by the CMA under its decision No dated 03/12/1427 corresponding to 24/12/2006 based on the CMA Law issued by Royal Decree No. M/30 dated 02/06/1426 and amended by CMA s decision No dated 16/08/1437H corresponding to 23/05/2016. The Fund aims to achieve medium and long-term capital appreciation through investing in equities of the Saudi companies listed in the main Saudi Equity Market or Saudi Equity Parallel Market (Nomu), and to achieve a higher return greater than Fund s benchmark (Saudi Arabia S&P Domestic Total Return in Local Currency Index). Potential investors must read the Terms & Conditions, Fund Information Memorandum and other documents of the GIB Saudi Equity Fund carefully and thoroughly before taking any investment decision concerning this Fund. The investor must consult with an independent financial advisor if he has any doubt on the suitability of investing in the Fund before making any investment decision. All views and opinions contained in the Fund's Terms and Conditions shall be the sole discretion of the Fund Manager (having taken all reasonable care to ensure that such is the case). There are no guarantees that such opinions and views are correct. Potential Investors should not treat the contents of these Terms and Conditions as advice relating to legal, taxation, Sharia, investment or any other matters. The unit s value of the Fund is subject to the fluctuations of prices of the equities held by the Fund. Prospective investors should fully bear in mind that investing in the Fund involves a high risk. Investing in the Fund is neither a term deposit nor a commitment and it is not guaranteed by the Fund Manager. Unit holder shall bear full responsibility for any financial losses that may result from investing in the Fund, unless such losses are due to a duly proved negligence or default on the part of the Fund Manager. By signing these Terms and Conditions, each Investor agrees that the Fund Manager will invest Subscription Monies on its behalf in accordance with these Terms and Conditions. Date of Issuance of the Fund s Terms and Conditions: January 11, 2018 Date of CMA s approval of the Establishment of the Fund and Offering the Units thereof: January 11,

4 Contents Related Parties Definitions Fund s Summary... 7 Fund s Terms and Conditions General Information Governing Low... 9 Fund Objectives..9 Investment concentration policy.. 11 Fund Term Fund Investment restricting Fund currency Fees of services, commissions Fund unit valuation and pricing Dealing Distribution Policy Reporting unit Holders Unit holder register Unit holder meeting Unit holder rights Unit holder responsibilities.. 20 Unit Characteristics...21 Changes in terms and conditions Termination of fund Fund manager Custodian Auditor Fund assets Declaration of unit holder Annex 1 : Risk management policies and procedures.. 27 Risk management and mechanisms Compliance

5 Related Parties GIB Capital GIB Capital, hereinafter referred to as the Fund Manager, is a Single Shareholder Company established and organized under the laws of the Kingdom of Saudi Arabia, under Commercial Registration No dated 06/02/1429, and licensed by the Capital Market Authority under License No Fund Manager: Address: Low Rise Buildings, Building 1, Granada Business & Residential Park Eastern Ring Road P. O. Box 89859, Riyadh, Saudi Arabia Phone: Fax: Website: Alinma Investments Commercial Registration No, and CMA License No , submitted pursuant to the Authorized Persons Regulations by the Capital Market Authority to provide management, brokerage, Underwriting, arranging, advisory, and custody services. Custodian: Address: King Fahad Road, Al-Anoud Tower, 20th Floor, P. O. Pox 66674, Riyadh PO Box Kingdom of Saudi Arabia Phone: Fax: Website: Ibrahim Al Bassam & Abdul Mohsen Al Nimer Certified Accountants Address: Prince Mohammed Bin Abdulaziz Street, Sulaymaniyah District Auditor: P. O. Box 28355, Riyadh Kingdom of Saudi Arabia Phone: Fax: Website: 5

6 Definitions: Subscriber, investor, prospective investor, investors, client and unit holder: Are synonyms used to refer to the customer who holds units in the Fund The Fund Manager, Manager, Company, Means GIB Capital Co. The Fund Board and Board of Directors: Is the Board in which the Fund Manager appoints its members in accordance with the Investment Funds Regulations to monitor the functions of the Fund Manager. The Authority, Market Authority, Capital Market Authority: Means the Capital Market Authority Market, Capital Market, Saudi Capital Market (Tadawul): Means the Saudi Capital Market (Tadawul). The Fund: Means GIB Saudi Equity Fund Main market: Means the Saudi Stock Market where securities that have been registered and listed are traded as per the listing rules. Parallel Market: Means the Parallel Stock Market where shares that have been registered and admitted to listing are traded as per the rules and rights issue of these shares. Benchmark: The index by which the fund s performance is measured. Saudi Arabia S&P Domestic Total Return in Local Currency Index: An Index for Saudi equities and is obtained from Standard and Poor's Co. Fund s Units or Units: The Shareholders in any investment fund consists of units, each unit being treated as a common share interest of the Fund s Assets. Fund units are divided into three classes in (a), (b) and (c) (see paragraph 16). Conflict of Interests: Means the status or situation which the objectivity and independency of the fund is affected by personal material or morale interest. Investments Funds Regulations: Means the Investment Fund Regulations issued by the Capital Market Authority. Risks: Is a set of potential influences that must be known and carefully considered before the investment decision is taken. Subscribers, unit holders, investors, prospective investor, and client: means the client who is investing or wishes to invest. Business Day: Means any working day in the Kingdom of Saudi Arabia according to the official working days of the market. Dealing Day: Means the day on which subscriptions and redemptions of the Fund s units will be processed. Valuation Day: Means each day on which the unit net price is determined. IPO Equities: Means the shares of companies offered for public subscription in the capital market for the first time. Rights Issue: Means the public offerings of ordinary shares in the stock market to increase the capital. Benchmark Agnostic: A method not supported by benchmark for structuring of portfolios and investment funds. Fixed Income Instruments: Investments that their yield is agreed upon at the beginning of the investment and have a fixed term. Cash and cash equivalents: Means deposits and short-term business finance contracts. Short Selling: The Fund selling the securities which it has borrowed, provided it will return them to the borrower during an agreed upon period. Dealing Expenses: The commissions of buying and selling in the financial markets. Good Liquidity Securities: Means the securities which can be exited within five days. Investment Committee: A committee with the Fund Manager responsible for managing and following up with the Fund s investments and implementing its strategies. Class (A): For institutional and individual investors with subscription amount over or equal to SR10,000,000 Class (B): For institutional and individual investors with subscription amount less than or equal to SR10,000,000 Class (C): For the staff of the Fund Manager, Gulf International Bank and the Fund Manager's and Gulf International Bank's investment portfolio. Peer: Means the other party to any transaction. Minimum Ownership: Is the lowest value of the units owned or the value of the subscription that qualifies the investor for any class of Fund units. 6

7 Fund Name Fund s Summary: Fund Manager Fund Type Custodian Fund Administrator Fund Currency Investment objective Index Risk Level GIB Saudi Equity Fund صندوق جي آي بي لألسهم السعودية GIB Capital Co. Local Equity Open-ended Fund Alinma Investment Co. GIB Capital Co. Saudi Riyal The Fund aims at achieving medium and long-term capital appreciation through investing in the equities of the Saudi companies listed on the main Saudi Equity Market or Saudi Equity Parallel Market (Nomu). S&P Saudi Arabia Domestic Total Return in Local Currency Index High risk Subscription Period Starts from Monday, 29/01/2018 to the close of Wednesday 31/01/2018 Minimum Subscription Minimum Additional Subscription Minimum Redemption Deadline for submitting subscription and redemption applications Class (A): SR10,000,000 Class (B): SR10,000 Class (C): SR10,000 Class (A): SR10,000,000 Class (B): SR2,500 Class C SR2,500 Class (A): SR1,000,000 Class (B): SR2,500 Class C: SR2,500 Before the end of Sunday for valuation on Monday and before the end of Tuesday for valuation on Wednesday each week (provided it is working day). Applicable unit redemption price Dealing days Redemption Amount Payment Date Subscription fees Annual Management fees The last announced price by the Fund Manager, which is determined as a unit purchase and redemption price for all applications satisfying the required cconditions Sunday through Thursday weekly except (provided they are working days) During four business days following the relevant valuation day 2.00% of the subscription amount Class (A): 1.00% of the fund s net asset value Class (B): 1.75% of the fund s net asset value 7

8 Class (C): 0.50 of the fund s net asset value Early redemption fees Custodian Fees Other Expenses & Fees Dealing expenses 1.00% of the value of the units redeemed and invested for less than 30 days 0.035% of the Fund s asset value or SR35,000 annually whichever higher. A. Auditor s Fees The Fund shall pay annual amount of SR26,250 as fees to Auditor. B. Benchmark Expenses: The Fund shall pay annual lump sum of SR 22,500 in the first year, and SR28,125 in the following years annually for obtaining the benchmark data. C. Control fees: The Fund shall pay annual lump sum of SR7,000 as control fees. D. Fees for publishing information on a Tadawul website: The Fund shall pay a lump sum of SR5,000 per annum for the publication of information on the Tadawul website. E. Remuneration of Board Members: The Fund shall pay a lump sum of 25,000 per annum for each independent member of the Board of Directors. The Fund shall pay the fees for actual transfer between the Fund s investment accounts or any additional taxes or duties, if any, including THE VAT. The Fund will bear all commissions incurred for the purchase and sale of securities transactions, for example but not limited to, brokerage and any tax or government fees. Offering Date Starts from Monday, 29/01/2018 to the close of Wednesday 31/01/2018 Unit Price at Initial offering SR10 for each unit Class 8

9 Fund s Terms and Conditions: 1. General Information a. Fund Manager GIB Capital Co. (hereinafter referred to as The Fund Manager ), a One-Person Company established and regulated under the laws enforced in the Kingdom of Saudi Arabia, under Commercial Register No dated 06/02/1429H, and licensed by the Capital Market Authority under License No b. Fund Manager s Head Office Address: GIB Capital Company Low Rise Buildings, Building 1, Granada Business & Residential Park Eastern Ring Road P. O. Box 89859, Riyadh, Saudi Arabia c. Fund s Manager Address: Further information on GIB capital can be obtained through the Company s Website: d. Fund s Custodian Alinma Investment Company, licence by the Capital Market Authority under License No , to carry out managing, dealing, underwriting, advising and custody services. e. Custodian Address: Website of the custodian: 2. Governing Law GIB Saudi Equity Fund and the Fund Manager shall be subject to the Capital Market Law and its implementing Regulations and other applicable regulations enforced in the Kingdom of Saudi Arabia. 3. Fund Objectives A. Fund s Investment Objectives: GIB Saudi Equity Fund, a public open-ended Fund, aims at achieving medium and long-term capital appreciation through investing in the equities of the Saudi companies listed on the main Saudi Equity Market or Saudi Equity Parallel Market (Nomu). B. Investment Strategies The Fund aims at achieving medium and long-term capital appreciation through investing in securities Valued below its fair value according to the Fund Manager Estimates, or short selling securities as deemed appropriate by the Fund Manager following the approach detailed below: The Fund Manager shall determine the investment universe of the Fund and manage its assets actively based on the fundamentals and fair values of the securities. The GIB Capital team conducts thorough research on the fundamentals of securities and summarizes them as follows: 9

10 Analyze the reports of the issuers of the securities (financial statements, prospectuses, investor presentations, board of directors' reports and any information issued by the issuer). Analysis of the financial positions of the issuers in terms of their solvency and strength. Analysis of earning power of the issuers of securities and the extent of sustainability and expectations of these profits. Analysis of the cash generation ability of issuers of securities the sustainability of such flows. Analysis of the business model of issuers of securities and their position in the supply chain in which they operate. To carefully analyze the industries and sectors in which the issuer of any security operates, and whether the industry faces cyclical or structural challenges and whether the industry has a growth potential. In addition, the work team visits the issuers and discusses the future of the company and the industry on continuous basis to know the performance of these companies and obtain as much knowledge of each company to develop a fair assessment of the company's performance. The team then internally discusses if the company is appropriate by comparing the expected returns on investment to the expected returns of the similar securities in the same sector or different sectors and make the decision that the team deems appropriate. The Fund does not rely on the implementation of its strategy on the weights of companies in the benchmark (Benchmark agnostic). The Fund Manager may concentrate investments in certain securities he deems appropriate, consistent with the Investment Concentration Policy contained in paragraph 2 below. 1. Types of securities available to the Fund: The Fund seeks to achieve its objectives by taking long and short positions in the following securities: 1. Shares of all companies listed on the Saudi Stock Exchange or on the Parallel Stock Exchange (Nomu). 2. Initial public offerings, secondary share issues, right issues of the Saudi companies listed in the Saudi main stock market or Parallel stock exchange (Nomu). 3. ETF s listed in the Saudi main stock market or Parallel stock exchange (Nomu). 4. REITs listed in the Saudi main stock market or Parallel stock exchange (Nomu). 5. Public Saudi equity funds licensed by the Capital Market Authority. 6. Cash or cash equivalents, including public money market funds licensed by the Capital Market Authority. 7. Fixed income instruments, Sukuk, fixed income funds, and public Sukuk funds licensed by the Capital Market Authority. 10

11 2. Investment concentration policy: The following table sets out the objectives of the Fund to allocate the Fund's assets between the various types of investment mentioned above: Type of investment Minimum Maximum Saudi equities listed on the Saudi main Stock Exchange or on the Parallel Stock Exchange (Nomu); primary and secondary share issues and rights issues of the Saudi companies listed in the Saudi main stock market or Parallel stock exchange (Nomu) and REIF funds listed in the Saudi stock exchange. 30% 100% Short Selling securities 0% 25% Fixed income instruments, Sukuk, fixed income funds, and public Sukuk funds licensed by the Capital Market Authority. 0% 20% Cash or cash equivalents 1 0% 70% Public ETF funds licensed by the Capital Market Authority. 0% 10% Saudi equity funds licensed by the Capital Market Authority. 10% 0% 4. Fund Term GIB Saudi equity fund is an open-ended fund, in other words it has not limited term. The Fund shall have the right to terminate the Fund in accordance with paragraph 18 of these Terms and Conditions. 5. Fund s Investment Restrictions: The Fund shall comply with the investment restrictions included in the Investment Funds Regulations and the Terms and Conditions of the Fund as well as the information memorandum during its management of the fund, including the law of non-saudis possession of real estate and investment. 6. Fund Currency: The Fund is denominated in Saudi Riyals. Investors shall deposit their funds in the Fund Manager's account in Saudi Riyals. The Fund Manager shall treat all remittances received from outside the Kingdom or any currencies other than the Saudi Riyal in their value in Saudi riyals based on the exchange rates prevailing at the time of transfer. The unit holder shall bear any fluctuations in the exchange rates. 1 The Fund invests in cash instruments in banks licensed by the Saudi Arabian Monetary Agency (SAMA) with a lower credit rating BBB- or equivalent of the ratings of credit rating agencies. 11

12 7. Service Fees, commissions and Expenses: a. The Fund shall bear all fees and expenses mentioned below. The fees charged by the Fund are accrued daily and paid on a different basis from one fee to another. These are as follows: Management Fee: The Fund pays management fees of 1.00% per annum of the Fund's net asset value to the Fund Manager for share class (A), and 1.75% per annum of the net asset value to the Fund Manager for share class (B), and 0.50% per annum of the net asset value to the Fund Manager for share class (C). These fees shall will be paid every three calendar months. Custody fees: The Fund pays custodian fees of 0.035% of the fund net asset value or SR36,000, of which is higher. These fees will be paid every three calendar months. Auditor s Fees: The Fund pays Auditor a lump sum of SR26,250 at two semi-annual payments, including the VAT for the audit of the Fund. Financing Expenses: If the Fund obtains leverage, the Fund will pay all financing expenses at prevailing market rates. Board Remuneration: The Fund pays annual remuneration of maximum SR25,000 to each independent member to the Board of Directors of the Fund. Regulatory Fees: The Fund pays a lump sum of SR7,500 per annum. Fees for Publishing Information on Tadawul Website: The Fund pays an annual lump sum of SR5,000. Other Expenses: The Fund pays an annual lump sum in the first year of SR 22,500 and SR28,125 in the following years per annum in return for obtaining the benchmark data. The Fund pays the actual transfer fees between the bank or investment accounts of the Fund and any additional taxes or charges, if any, including the VAT. Dealing Expenses: The Fund pays all fees and charges relating to the sale and purchase of Shares and the Initial Offering. The fees and charges shall be disclosed in the disclosure summary at the end of the quarter, for example but not limited to, the brokerage commission and any taxes or government fees) VAT: The above fees, and commissions and charges due to GIB Capital or other parties do not be including the VAT. The tax shall be charged separately in accordance with the prices set forth in the VAT law and its implementing regulations. It should be noted that the above-mentioned fees of auditor include the value tax, and other than shall be subject to the VAT as of 01/01/2018. b. Fees Paid by Unit Holders for Subscription, Redemption Transaction and the for Transfer of Ownership of Units: The Fund Manager charges a subscription fee calculated as 2.00% of the amount of each initial or additional subscription transaction by the investor. One-time subscription fee shall be deducted at the time of subscription from the subscription amount and paid to the Fund Manager. An early redemption fee at 1.00% of net redeemed asset value shall be imposed on the units in case of a request for unit redemption within thirty (30) days from subscription. 12

13 Special Commissions concluded by the Fund Manager: a. Early Redemption Fees Early redemption fee shall be imposed on the Fund units in case of a request for unit redemption within thirty (30) days from subscription. These fees are calculated as follows: An early redemption fee at 1.00% shall be imposed on the Fund units in case of an early redemption. Participants shall be exempted from these fees if they hold units for more than one day. Units will be treated in subscription and redemption based on the units purchased first will be refunded first. Redemption fees shall be deducted from the total redeemed amounts and are paid to the Fund Manager. 8. Valuation and Pricing of Fund Units a. Valuation of Fund Assets The Fund assets shall be evaluated on the following basis: The Fund s held units are valuated based on the official market closing price on the dealing day plus all payable profits less all expenses and fees due. IPO shares held by the Fund shall be valued at the subscription price in the period preceding the listing date. The right issues held by the Fund are assessed based on the closing price on the dealing day. Units of investment funds owned by the Fund are evaluated based on the latest quoted unit price by the Fund Manager on the dealing day. The unit value is calculated by dividing the Fund net asset value after deducting all outstanding expenses and adding all the payable profits to the existing number of units on the trading day. The following table shows the method of calculating the entitlement of fees and expenses: Fees Management Fee Custody Fee Auditor Fee Board Remuneration Regulatory Fees Method of calculating fees and expenses their entitlement Management fees are accrued daily and paid every three months, calculated as follows: Management fees on any day = fund net assets on the last valuation day X Annual Management Fee of each share class 365 Custody fees are accrued daily and paid every three months, calculated as follows: Custody fees on any day = fund net assets on the last valuation day X Annual custody fee 365 Auditor s fees are accrued daily and paid every three months, calculated as follows: Auditor s fees on any day = Annual Auditor s fee 365 Board remuneration are accrued daily and paid to the end of year, calculated as follows: Board remunirations Board remunerations on any day = 365 Regulatory fees are accrued daily and paid at the end of the year, calculated as follows: 13

14 Publishing information on Tadawul Site fees Early redemption fees Subscription fees Other expenses Dealing expenses Regulatory fees Regulatory fees on any day = 365 Publication of information on Tadawul site fees are accrued daily and paid at the end of the year, calculated as follows: Publication fees Publication fees on any day = 365 Early redemption fees are paid one time for any early redemption transaction, and calculated as follows: Early redemption fees = early redemption amount X 1.00% redemption fee subscription fees are paid one time for any initial or additional subscription transaction, and calculated as follows: Subscription fees for any subscription amount = subscription amount X 2.00% subscription fee Other expenses are accrued daily and paid every three months, calculated as follows: Other expenses Other expenses on any day = 365 Dealing expenses are disclosed in the financial disclosure summary at the end of each quarter. The Fund s units are divided into 3 classes; class (A) large institutional and individual investors with subscription amount over or equal to SR10,000,000; class (B) institutional and individual investors with subscription amount less than or equal to SR10,000,000; class (C) the Fund Manager, Gulf International Bank and the staff of GIB Capital and Gulf International Bank. The differences between these classes are in the minimum holding value, minimum subscription, minimum additional subscription, minimum redemption, and management fees. B. Valuation Days Fund assets shall be evaluated each Monday and Wednesday of every working week. C. Procedures to be followed in case of an error in the valuation or pricing: 1. The Fund Manager shall document the occurrence of any impairment in the valuation or pricing of the Fund's assets. 2. The Fund Manager shall indemnify the affected unit holders for any losses misstated by the Fund Manager. 3. The Fund Manager shall immediately notify the Capital Market Authority after the assurance of any error in the valuation or pricing that affects the Fund s unit price by 0.50%. This will be disclosed on the Fund Manager s website, Tadawul website and in the reports of the Fund in accordance with Article (72) of the Investment Funds Regulations. 4. The Fund Manager shall submit the Fund's reports to the Capital Market Authority in accordance with Article (72) of the Investment Funds Regulations. These reports shall include a summary of all the errors of the valuation or pricing. D. Method of Calculating Subscription and Redemption Prices Net unit price is calculated for the purposes of subscription and redemption price by calculating the Fund's net asset value for each class of the Fund's units on the relevant trading day plus any accrued profits and deducting any expenses and fees payable for each class, and then dividing 14

15 the resulting value by the number of units per class available on the relevant dealing day. The Fund Manager may postpone the valuation of Fund s asset in the event of any exceptional circumstances that may affect the valuation process or determine the value of the Fund's assets, for example, but not limited to, natural disasters or technical malfunctions beyond the control of the Fund Manager. Such postponement shall be subject to the Fund s Board approval. E. Where Unit Price is Announced and the Frequency of Announcement The Fund Manager shall update the Fund's net assets value and announce unit price per each class of the Fund units before 5:00 pm on the Business Day following the dealing day at the Saudi Stock Exchange Tadawul 9. Dealings a. Fund Manager Responsibilities for Subscription and Redemption Applications Units may not be subscribed or redeemed on a dealing day. Deadline for submitting subscription or redemption applications is included in the Fund s terms and conditions and in the Fund s Information Memorandum. The Fund Manager shall treat applications for subscription or redemption at the rate calculated at the calendar point following the deadline for submitting the subscription and redemption applications. The Fund Manager shall execute subscription or redemption applications in a manner not to conflict with any provisions contained in the Investment Funds Regulations, the terms and conditions of the Fund or the Fund s Information Memorandum. The Fund Manager shall pay the Unit Holder the redeemed amounts prior to as a maximum the close of the fourth business day following the valuation day on which the unit redemption price is determined. b. The Period Between The Receipt of Redemption Request and Payment of Redeemed Amounts To Unit Holder: The total redeemed amount shall be transferred to the unit holder before the close of the fourth business day following the valuation point of the relevant valuation day. The Fund Manager shall, upon receipt of a refund request in any valuation day, determine the value of redeemed units based on the price of the relevant valuation day, and then credit the amount to the customer's account before the end of the fourth day following the relevant dealing day. c. Fund s Units Dealing Restrictions: All subscription and redemption requests received and accepted shall be executed according to the dates set forth in paragraph (h) of Article (9) of these terms and conditions based on the unit price at the close of the following dealing day. If the application is received after the deadline, it will be considered on the next dealing day of the request receiving day. d. The cases on which dealing in units can be postponed or suspended and the procedures followed thereon: 1. Postponement of Subscription and Redemption: The Fund Manager may postpone the fulfillment of any redemption or subscription in the fund in any of the cases in accordance with Articles (61) and (62) of the Investment Funds Regulations: 15

16 If the Capital Market Authority requested so from the Fund Manager. If the total of redemption requests is equal to 10.00% or more of the Fund's NAV on any dealing day. In the event the dealing is suspended in the main market in which the securities or other assets held by the Fund are traded either in general or in respect of the Fund's assets which the Fund Manager reasonably believes to be substantial to the Net Asset Value of the Fund. The Fund Manager shall take the following actions in the event of any suspension of the Fund's units: Ensure that no suspension is continued unless for the necessary and justified period, considering the interests of the Fund Unit holders. Regularly review the suspension and to consult the Fund's Board and Custodian in this regard. Notifying the Capital Market Authority and the unit holders immediately upon suspension with explanation of the suspension reasons, and to immediately notify the CMA and unit holders of the annulment of suspension in the same manner of notifying about the suspension, and to disclose that on the Fund Manager's and the Market websites. Redemption requests will be processed on the nearest possible dealing date and redemption requests will be treated proportionately, and the redemption proceeds will be transferred to the unit holders as soon as possible. 2. Rejection of Subscription: The Fund Manager reserves the right to reject any subscription request in the Fund if the Subscriber does not comply with the laws and regulations of the Authority. The value of the subscription will be credited the customer's account within three working days from the date of payment of the subscription value. E. Procedures for determining redemption requests to be deferred The provisions for postponement of redemption are governed by Article (61) of the Investment Funds Regulations issued by the Capital Market Authority: The Fund Manager may defer implementation of any redemption request from an open fund till the end of the dealing day on which the Total Unit Assets Value of unit holder redemption requests on any dealing day amounts to 10% or more of the Fund s net asset value. Fair and equal actions will be followed when selecting redemption requests to be deferred and such actions shall be disclosed in the Terms and Conditions and Information Memorandum of the Fund. F. Provisions Governing the Transfer of Units Ownership to Other Investors: The governing provisions are the regulating the provisions of the Saudi Capital Market Authority and their implementing regulations and other relevant laws and regulations applicable in the Kingdom of Saudi Arabia. G. Investment of the Fund Manager in the Fund: The Fund Manager may, at his absolute appreciation and as he deems appropriate, subscribe in the fund as an investor. However, he reserves the right to reduce its investment in part or in whole when he deems it appropriate. The Fund Manager shall, at the end of each quarter, disclose in accordance with Article (7) of the Investment Funds Regulations any investment he 16

17 holds in the Fund Financial disclosure. H. The deadlines for submitting the subscription and redemption requests on any dealing day: Days of accepting subscriptions: Subscription to the fund can be made daily. Subscription in the fund is accepted after submitting a duly completed application and payment of the full amount of subscription before the end of Sunday for Monday s valuation and before the end of the Tuesday for Wednesday s valuation of each week (provided it is a working day). Subscription will be on the basis on the unit price on the relevant valuation day. Days of accepting redemptions: Redemption of amounts can be made daily. Redemption request is accepted before the end of Sunday for Monday s valuation and before the end of the Tuesday for Wednesday s valuation of each week (provided it is a working day). Redemption will be on the basis on the unit price on the relevant valuation day. I. Procedures for Submitting Subscription and Redemption Requests: Subscription Procedures: The customer will complete the subscription form, sign these terms and conditions and the Fund s Information Memorandum and submit the same to the Fund Manager. Redemption Procedures: Upon request for redemption of some or all its units, the customer will complete the redemption application form and submits the same to the Fund Manager. Subscription in the Fund can be made by visiting the Fund Manager's headquarters or through the Fund Manager's website, if available. J. Minimum Holding, Subscription, Additional Subscription and Redemption: The Fund includes three classes of units (A), (B), and (C). The minimum holding, subscription, additional subscription and redemption for each class of units are as follows: Minimum holding value: - Class (A) SR10,000,000 - Class (B): Nil - Class (C): Nil Minimum subscription: - Class (A): SR 10,000,000 - Class (B): SR 10,000 - Class (C): SR 10,000 Minimum additional subscription: - Class (A): SR 1,000,000 - Class (B): SR 2,500 - Class (C): SR 2,500 Minimum Redemption: - Class (A): SR 1,000,000 - Class (B): SR 2,500 - Class (C): SR 2,500 K. Minimum Amount that the Fund Manager Intends to Collect, and The Extent of The Impact of not Reaching Such Limit on The Fund: 17

18 The minimum amount that the Fund Manager intends to collect is SR10 million or equivalent during the period of the Initial Offering for investors subscriptions till 31/01/2018. L. Corrective Actions to Ensure Minimum Requirement of SR 10 Million or Equivalent to Fund Net Asset Value: If the net asset value of the Fund falls below SR10 (ten) million for a maximum period of (6) months, the Fund Manager shall first notify the CMA's, and then analyze and study the market situation and the options that serve the interests of the unit holders to liquidate the assets of the fund, or request to increase the investments of the Fund's unit holders. The Fund Manager will call for a meeting of the unit holders and vote on the options put forward by the Fund Manager in accordance with the regulations of the Market Authority. The fund manager will announce for such meeting on its website and on the market site. If the unit holders vote not to increase their investments in the fund to raise the Fund s net asset value to SR10 (ten) million, the fund manager will liquidate the fund's assets after obtaining the necessary approvals from the Capital Market Authority. The Fund Manager shall comply with all the regulations and instructions of the Capital Market Authority. 10. Distribution Policy: a. Income and Profits of Distribution Policy: The Fund Manager aims to re-invest all the profits of the Fund. b. Approximate Date of Maturity and Distribution Nil c. Method of Profit Distribution: Nil 11. Reporting to Unit Holders a. Information Relating to Financial Reports of Fund and Preliminary and Annual Financial Periods. The Fund Manager shall prepare annual financial reports of the fund (including annual audited financial statements of the Fund), brief annual reports and initial reports in accordance with the requirements of Annex 5 of the Investment Funds Regulations. The Fund Manager shall provide the Unit Holders with these reports free of charge at the customer's request. The annual reports shall be made available to the public within a period not exceeding seventy (70) days from the end of the reporting period. These reports shall be published at the places and in the means specified in paragraph (b) of these Terms and Conditions The initial reports shall be prepared and made available to the public within a period not exceeding thirty-five (35) days from the end of the reporting period. These reports shall be published in the places and means specified in paragraph (b) of Article 11 of these Terms and Conditions. The Fund Manager will make available reports to subscribers including the following information. - Fund's net asset value - Number and value of Units held by investor. - Record of each investor's transactions executed within 15 of each transaction. 18

19 - The Fund Manager sends an annual statement to the unit holders (including any person held units within the year to which the statement is prepared) summarizing the transactions relating to the Fund's units throughout the financial year within thirty (30) days from the end of the financial year. Such statement shall include the profits distributed and the total service costs, expenses and fees deducted from the Unit Holder, in addition to the details of all violations of the investment restrictions provided for in the Investment Funds Regulations, in the terms and conditions of the Fund or the Information Memorandum. b. Venues and Means of Making the Reports Prepared by Fund Manager Available Reports will be sent to Unit Holder postal address, by , or fax as shown in the account opening form unless the Fund Manager has been notified of any change in the address. The Fund Manager shall be notified of any errors within sixty (60) calendar days from the issuance of such reports. The reports issued by the Fund Manager shall be final and decisive. The reports will be published on the website of the Fund Manager and the Saudi Stock Exchange website (Tadawul) c. Means of Providing Unit Holders with The Annual Financial Statements The Unit Holders and potential customers will be informed of the annual reports free of charge (including the audited annual financial statements) by publishing them within a period not exceeding 70 days of the end of the report period on the Fund Manager's website and the website of the Saudi Stock Exchange (Tadawul) or by mail if requested. 12. Unit Holders Register: The Fund Manager shall prepare a register of the Unit Holders to be maintained and kept at the Kingdom of Saudi Arabia. 13. Unit Holders Meeting: a. Circumstances Requiring a Meeting of The Unit Holders The Fund Manager may call for a meeting of unit holders on his own initiative. The Fund Manager shall call for a meeting of the unit holders within ten (10) days of receiving a written request from the Custodian. The Fund Manager will call for a meeting of the unit holders within ten (10) days of receipt of a written request from one or more of the unit holders holding together or individually more than or equal to 25.00% of the net value of the Fund. b. Procedures for Calling a Unit Holders Meeting The Fund Manager shall announce the meeting on the website of the Fund Manager and the website of the Capital Market (Tadawul) and send written notification to all unit holders and custodian at least ten (10) days before the meeting and no more than twenty-one (21) days prior to the meeting. The Fund Manager shall specify in the announcement the place and date of the meeting and the open decisions. The Fund Manager must also send a copy of the written notification addressed to unit holders to the Authority. The meeting of the unit holders shall not be deemed to be a valid meeting unless it is attended by the unit holders who together or individually hold 25% or more of the total number of units. If the quorum mentioned in the preceding paragraph is not met, the Fund Manager shall call for a second meeting by announcing it on its website and on the website of the Saudi Stock Exchange (Tadawul) and by sending a written notification to all unit holders and the Fund s 19

20 Custodian (5) days before the second meeting. The second meeting shall be valid, regardless of the percentage of unit represented in the meeting. c. Vote of Unit Holder: Method of Unit Holders Voting: - The unit holder may appoint an agent to represent him at the unit holders meeting. - Each unit holders may make one vote for each unit he holds in the Fund - Meetings of unit holders may be held and participate in its deliberations and vote on its decision by means of modern technology in accordance with the requirements established by the Authority. Voting Rights in the Unit Holder Meetings: - The unit holder and the custodian shall be entitled to receive a written notice at least ten days prior to the meeting and not later than twenty-one days prior to the meeting. - Every Unit holder shall be entitled to exercise all the rights of units including obtaining its approval to any changes requiring the approval of the unit holders according to the Investment Funds Regulations. - Unit holders meetings may be held by modern technology means and Unit holders may participate in their deliberations and vote on the resolutions passed therein using the same means in accordance with requirements set by the CMA. 14. Unit holder Rights Obtain an Arabic updated free of charge copy of the Fund s terms and conditions and the Fund s Information Memorandum. Each unit holder shall receive a report containing the net value of the units of the Fund, the number of units held by him and their net value, in addition to a record of all transactions executed by the holder on the Fund Units. Such report shall be provided to the unit holders within fifteen (15) days of each transaction. Obtain the audited financial statements of the Fund free of charge. To be notified of any change to the Fund s terms and conditions and Information Memorandum and to have a summary of such change before being enforced according to the type of change and the specified in the Investment Fund Regulations. To be notified of any change in the Fund s Board. Obtain annually updated copy of the Fund s terms and conditions and Fund s Information Memorandum showing the actual fees and charges and Fund s performance information at request. Notification of the Fund's desire to terminate the Investment Fund at least twenty-one (21) days before such termination. Payment of the redemption amounts at the specified date. Obtain complaints processing procedures upon request from the Fund Manager. 15. Unit Holders Responsibility: Except for the loss of Unit Holder of its investment in or part thereof in the Fund, the Unit Holder shall have no liability for the debts and obligations of the Fund. 16. Units Characteristics: 20

21 The Fund s units are divided into 3 classes; class (A) large institutional and individual investors; class (B) institutional and individual investors; class (C) the Fund Manager, Gulf International Bank and the staff of GIB Capital and Gulf International Bank. The differences between these categories lie in the minimum holding value, minimum subscription, minimum additional subscription, minimum redemption and management fees. The following table the difference between Fund s classes: Differences Class (A) Class (B) Class (C) Type of Holders Minimum holding value Minimum subscription Minimum additional subscription Minimum redemption Large Investors of institutional and individual Small Investors of institutional and individual SR10,000,000 Nil Nil SR10,000,000 SR10,000 SR10,000 SR1,000,000 SR2,500 SR2,500 SR1,000,000 SR2,500 SR2,500 Management fees 1.00% 1.75% 0.50% Fund Manager staff, Gulf International Bank and the staff of GIB Capital and Gulf International Bank 17. Changes in Terms and Conditions: a. The provisions governing the change of the Fund's terms and conditions and the approvals and notification stipulated by the Investment Funds Regulations. The provisions governing the change in the Fund s terms and conditions are divided into three sections, which construct the quality of the information to be changed according to the Investment Funds Regulations (Articles 56, 57 and 58, respectively). The provisions governing the change in the Fund s terms and conditions are divided into the following: 1. The approvals of the Authority and Unit Holders to the major changes. The Fund Manager shall obtain the approval of Fund's Unit Holders on the major proposed change through the decision of an ordinary Fund. The Fund Manager shall, upon obtaining the approval of the Unit Holders in accordance with the preceding paragraph of this Article, obtain the CMA's approval of the Fund's major change proposed to the Fund. The term "major change" means any of the following situations: 1. The significant change in the Fund's objectives or nature. 2. Change that has an impact on the Fund's risk status. 3. Voluntary withdrawal of the Fund's manager from its position. 21

22 4. Any other cases determined by the Fund from time to time and communicated to the Fund Manager. The Fund s Unit Holders shall be entitled to redeem their units prior to any major change and without imposing any redemption fees. 2. The Fund Manager shall notify the Authority and the Unit Holders any significant changes. The Fund Manager shall in writing notify the Authority and the Unit Holders of any major changes proposed for any public fund managed by the Fund Manager. The notice period shall not be less than twenty-one (21) days before the effective date of the change determined by the Fund Manager. Significant Change means any change which is not yet a fundamental change in accordance with Article (56) of the Investment Fund Regulations or any change that would: 1. Normally leads to the unit holders reconsidering their participation in the Fund. 2. Leads to increased payments from the Fund's assets to the Fund Manager or any member of the Board of Directors of the Fund or any Affiliate belongs to them. 3. Provides a new type of payment that is paid out of the Fund's assets or substantially increases the types of other payments made from the Fund's assets. 4. Any other cases determined by the Authority from time to time. Fund's unit holders may redeem their units before any major change takes effect without the imposition of a refund. 3. Notice to the Authority and to the unit holders of any changes to be notified: The Fund Manager shall in writing notify the Authority and Unit Holders of any change in the Fund managed by the Fund Manager eight (8) days before the change takes effect. The Change to be Notified means any change that does not fall within the provisions of Articles (56) and (57) of the Mutual Fund Regulations. b. Procedures for notifying on any change in the terms and conditions of the Fund: The Fund Manager shall notify the unit holders and disclose the details of the major changes on the Fund Manager and the Saudi Stock Exchange s (Tadawul) websites within ten (10) days of the validity of the change. Highlight the details of the major changes in the Fund's reports prepared by the Fund Manager in accordance with Article (7) of the Investment Funds Regulations. Disclosure of details of the significant changes on the Fund Manager and Saudi Stock Exchange (Tadawul) websites or in the manner determined by CMA, ten (10) days before the effectiveness of the change. Highlight the details of the significant changes in the Fund's reports prepared by the Fund Manager in accordance with Article (71) of the Investment Funds Regulations. Disclosure the changes required to be notified, on the Fund Manager and Saudi Stock Exchange (Tadawul) websites within twenty-one (21) days of the enforcement of the change: Highlight the details of the major changes in the Fund's reports prepared by the Fund Manager in accordance with Article (7) of the Investment Funds Regulations. 22