CORPORATE GOVERNANCE. Emirates Telecommunications Group Company PJSC (Etisalat Group) REPORT

Transcription

1 CORPORATE GOVERNANCE Emirates Telecommunications Group Company PJSC (Etisalat Group) 2016 REPORT

2 Table of Content 1 Introduction 4 2 Implementation of Governance Rules 6 3 Board of Directors 10 4 Committees of the Board of Directors 20 5 Remunerations of the Board of Directors 26 6 Etisalat Securities Trading 28 7 Executive Management 32 8 Related Party Transaction 35 9 Internal Control The External Auditor Violations Corporate Social Responsibility Investor Relations Special Resolutions General Information Key Events

3 1 Introduction Emirates Telecommunications Group Company PJSC ( Etisalat Group ) is keen to apply a next-to-none model of governance practices throughout its operations by setting a disciplined relationship among the main stakeholders of the Company, especially the Shareholders, Executive Management and the Board of Directors. Thus, the Company determines the rights and responsibilities of each party and reinforces the principles of transparency, accountability and equity through adopting an array of policies and charters grounded on the rules and standards of corporate discipline applicable in the UAE and commensurate with worldwide best-in-class governance practices. This has created an environment that aligns the Company s businesses and activities with these rules and standards. Accordingly, Etisalat Group does not only perceive the compliance and alignment with the rules and regulations governing the corporate governance in UAE as a mandate that has to be fulfilled, but also as an integral part of its legal structure. Therefore, the Articles of Association of Etisalat Group were promulgated in line with the rules, regulations and procedures defined by the Securities and Commodities Authority ( SCA ) regarding numerous matters in relation to the convention of the General Assembly, constitution of the Company s Board of Directors, candidature for Board membership, disclosure rules for the Board members and related parties, preparation of the minutes of the Board of Directors meetings etc. This has enhanced the transparency and credibility which characterizes Etisalat in all aspects of its business. This report sheds the light on all governance aspects related to the Board of Directors and its committees in term of its functions, powers and responsibilities, and also provides statistics on the number of the meetings held, their attendance record and the remuneration of the Board as well as the Executive Management. 4 5

4 2 Implementation of Governance Rules Building on the best international practices and standards and at the aim of becoming a role model in various fields of compliance and commitment, Etisalat has set a distinguished full-fledged governance system that harmonically collated the management, shareholders, auditors, public and the authorities concerned under an umbrella of policies that proved to be transparent and fruitful. This has contributed to enhancing the communication between the Company s management, the public and the shareholders by sharing with them the essential information on milestones that constitute a key diversion in the Company s march and information that may affect the share price upwardly and downwardly. Etisalat has also constantly explained the changes it underwent to the public and has spared no effort to publish several press releases on its various activities in local and international press. The Company has also been cooperating with the external auditors to come out with reliable reports compatible with the International Financial Reporting Standards ( IFRS ). Moreover, the Company in an endeavor to achieve best communication with its shareholders and the public to enhance the modes of communication with them has used different platforms like its website, social media and electronic and printed press. As previously tackled, there is a wide array of policies which are adopted by Etisalat Group and fabricated in a manner that is harmonized with international governance standards and the applicable policies and regulations related to the governance rules and corporate discipline standards in UAE. Below is a glance at some of these policies: 6 7

5 2.1 Etisalat Security Trading Policy In view of the fact that the trading in securities and the controlling of its transparency are substantial pillars within the corporate governance structure, Etisalat has adopted a comprehensive policy setting out the basis and the controls governing the trading conducted by the Insiders. This policy has taken into consideration the governance requirements stipulated in SCA Chairman Resolution No. 7 (R.M) of 2016 concerning Governance Rules and Corporate Discipline Standards ( SCA Resolution No. 7 of 2016 ) and other rules and regulations governing this kind of trading. This policy defines the material information and the Insiders including, but not limited to, the Chairman, Board members, Company staff, and everyone having access to such information before disclosing them even if such access is on temporary basis. This policy also provides for a wide range of rules, regulations and procedures governing the trading of the aforesaid persons in Etisalat securities in a bid to protect the rights of the Company s shareholders and maintain the highest level of transparency in the trading of this category of investors. 2.3 Policy of Holding Shareholders General Assembly Needless to say that General Assembly ( AGM ) is considered one of the most important tools of control and interaction with shareholders. Therefore, the Company has eagerly set a policy for the General Assembly convention that conforms with the best international governance practices especially those conforming with the relevant applicable laws in UAE, aiming to implement the highest level of transparency and credibility. For a seamless and easy reference to the provisions that govern the General Assembly convention and to facilitate compliance with its provisions, this policy has detailed all the matters related to the General Assembly including, but not limited to, AGM competencies, the rules and procedures of its convention, its quorum, voting rights, mechanism of voting on its resolutions and any other matters of relevance to the AGM. 2.2 External Auditor Policy Etisalat Group has always considered the audit function one of the fundamental components through which integrity of business results can be ensured. Hence, it paid an exceptional attention to the mandates of the External Audit and set a policy that defines the regulations and procedural rules governing the External Auditor in full harmony with the requirements and rules stipulated in the relevant governance and corporate discipline standards in UAE. Aiming to realize an exemplary governance in this aspect, the said policy regulated all the matters related to the External Auditor including the mechanism of its engagement, the manner of performing its duties, the mandating of its competencies, the scope of its authorities and the services & acts it is prohibited to undertake while engaged in auditing Etisalat accounts. 8 9

6 3 The Board of Directors The Board of Directors ( the Board ) is the authority that enjoys all the powers required for carrying out Etisalat business, except those reserved by Law or Etisalat Articles of Association for the General Assembly. The Articles of Association of the Company provides for the mechanism and rules of constituting the Board of Directors and its roles and responsibilities. It states that the Board of Directors consists of eleven members; some are appointed and others are elected directors. The Government Shareholder (Emirates Investment Authority EIA or any other authority assumes the government representation in the Company by virtue of a Cabinet Resolution) appoints a number of members in proportion to its shareholding in the Company while the remaining seats are filled by members elected by the General Assembly. The Board currently consists of seven appointed members and four elected. Etisalat is proud to have been committed to adopting best international governance practices coupled with the applicable legislations in UAE which resulted in the current Board composition that is fully compliant with the requirements stipulated under governance rules and corporate discipline standards specially in relation to the capacities of Board members as all current s are non-executives and independent. It is worth mentioning here that Etisalat pays incessant attention to female engagement in all aspects of its business including the Board of Directors. Hence, the Company opened the door equally for males and females to run the candidacy for Board membership; however, all candidates for Board membership were males only

7 The table below shows the names, roles and capacities of the members in Etisalat Group s Board and its committees: The table below shows the names of the Government-appointed Board members and the starting dates of their appointments on the Board: Name Roles Capacity Eissa Mohamed Ghanem Al Suwaidi Chairman Chairman of Investment and Finance Committee Non-Executive & Independent Government-Appointed s Name Date of Accession to the Board Eissa Mohamed Ghanem Al Suwaidi Chairman since 2012 Sheikh Ahmed Mohd Sultan Bin Suroor Al Dhahiri Vice Chairman Member in Audit Committee Non-Executive & Independent Mohamed Sultan Abdulla Mohamed Al Hameli since 2015 Mohamed Sultan Abdulla Mohamed Al Hameli Abdulla Salem Obaid Salem Al Dhaheri Chairman of Nominations and Remunerations Committee Member in Nominations and Remunerations Committee Non-Executive & Independent Non-Executive & Independent Abdulla Salem Obaid Salem Al Dhaheri since 2012 Hesham Abdulla Qassim Al Qassim since 2015 Essa Abdulfattah Kazim Al Mulla since 2012 Hesham Abdulla Qassim Al Qassim Member in Nominations and Remunerations Committee Non-Executive & Independent Abdulfattah Sayed Mansoor Sharaf since 2013 Essa Abdulfattah Kazim Al Mulla Chairman of Audit Committee Non-Executive & Independent Mohamed Hadi Ahmed Abdulla Al Hussaini since 2012 Abdulfattah Sayed Mansoor Sharaf Mohamed Hadi Ahmed Abdulla Al Hussaini Abdelmonem Bin Eisa Bin Nasser Alserkal Member in Investment and Finance Committee Member in Investment and Finance Committee Member in Nominations and Remunerations Committee Non-Executive & Independent Non-Executive & Independent Non-Executive & Independent The table below shows the names of the elected Board members and the starting dates of their Board memberships: Name Elected s Date of Accession to the Board Khalid Abdulwahid Hassan Alrustamani Member in Audit Committee Non-Executive & Independent Sheikh Ahmed Mohd Sultan Bin Suroor Al Dhahiri Vice Chairman since 2015 since 2000 Otaiba Khalaf Ahmed Khalaf Al Otaiba Member in Investment and Finance Committee Non-Executive & Independent Board Member Abdelmonem Bin Eisa Bin Nasser Alserkal since 2012 Khalid Abdulwahid Hassan Alrustamani since 2015 Otaiba Khalaf Ahmed Khalaf Al Otaiba since

8 3.1 s Eissa Mohamed Ghanem Al Suwaidi (Chairman) Abdulfattah Sayed Mansoor Sharaf () Sheikh Ahmed Mohd Sultan Bin Suroor Al Dhahiri (Vice Chairman) Mohamed Hadi Ahmed Abdulla Al Hussaini () Mohamed Sultan Abdulla Mohamed Al Hameli () Abdelmonem Bin Eisa Bin Nasser Alserkal () Abdulla Salem Obaid Salem Al Dhaheri () Khalid Abdulwahid Hassan Alrustamani () Hesham Abdulla Qassim Al Qassim () Otaiba Khalaf Ahmed Khalaf Al Otaiba () Essa Abdulfattah Kazim Al Mulla () Hassan Mohamed Al Hosani (Group Corporate Secretary) 14 15

9 3.2 Profiles of s Etisalat Board of Directors consists of a group of professionals who have an extensive experience in various fields. Below are the profiles of the Board members: Eissa Mohamed Ghanem Al Suwaidi (Chairman) Mr. Eissa Al Suwaidi holds Bachelor Degree in Economics from Northeastern University of Boston, Massachusetts in the United States of America, and is currently holding the following positions: MANAGING DIRECTOR - Abu Dhabi Investment Council (ADIC). CHAIRMAN - Abu Dhabi Commercial Bank (ADCB). VICE CHAIRMAN - Maroc Telecom. BOARD MEMBER ADNOC Distribution (ADNOC-DIST.) BOARD MEMBER - International Petroleum Investment Company (IPEC). BOARD MEMBER - Emirates Investment Authority (EIA). Sheikh Ahmed Mohd Sultan Bin Suroor Al Dhahiri (Vice Chairman) Sheikh Ahmed Mohd Sultan Al Dhahiri graduated with Bachelor Degree in Civil Engineering Science from U.A.E. University Al Ain in He is currently holding the following positions: Vice Chairman - Abu Dhabi National Hotels Company (ADNH) - Abu Dhabi Aviation (ADA) - National Bank of Abu Dhabi (NBAD) Al Dhafra Insurance Co. Mohamed Sultan Abdulla Mohamed Al Hameli () Mr. Mohammed Sultan Al Hameli holds a Bachelor Degree in Finance from Boston University, USA, and he is a Chartered Financial Analyst (CFA). Also, he successfully completed several executive programs at Harvard Business School. Mr. Mohamed is currently holding the following positions:- Director General - Department of Finance, Abu Dhabi Chairman of the Board of Directors - National Health Insurance Company (Daman). Vice-Chairman of the Board of Directors - Abu Dhabi Commercial Bank (ADCB). - Social Welfare & Minor Affairs Foundation. Abdulla Salem Obaid Salem Al Dhaheri () Mr. Abdulla Al Dhaheri obtained a Bachelor Degree in Business Administration from the United States of America in 1992, and currently holds the following positions: Director, Sales & Marketing Abu Dhabi National Oil Co. (ADNOC). Chairman of the Board of Directors National Gas Shipping Company (NGSCO). Chairman of the Board of Directors Abu Dhabi National Tanker Company (ADNATCO). Chairman of the Board of Directors Abu Dhabi National Ports Operating Company (IRSHAD). Chairman of the Board of Directors Petroleum Services Company (ESNAAD). - Abu Dhabi National Oil Refining Company (TAKREER). - ADNOC Distribution (ADNOC-DIST.) Vice Chairman - Etisalat EMTS, Nigeria. - CEPSA Company, Spain. Chairman - CEPSA NCC Committee. - Abu Dhabi Quality & Conformity Council. Audit Committee Member Abu Dhabi Quality & Conformity Council. Essa Abdulfattah Kazim Al Mulla () Mr. Essa Kazim holds Honorary Doctorate from Coe College, USA, Master Degree in Economics from the University of Iowa, USA, Master Degree in Total Quality Management from the University of Wollongong and Bachelor Degree in Mathematics, Economics and Computer Science from Coe College. He is currently holding the following positions: Governor - Dubai International Financial Center Chairman - Borse Dubai. Chairman - Dubai Financial Market. Member - Higher Board of Directors of Dubai International Financial Center (DIFC) Member - Supreme Fiscal Committee in Dubai. Deputy Chairman - Supreme Legislation Committee in Dubai. Chairman - DIFC Authority Board of Directors. Chairman - DIFC Investments Board of Directors. - Free Zones Council. Abdulfattah Sayed Mansoor Sharaf () - NASDAQ Dubai. - Noor Bank - Rochester Institute of Technology Member of the Board of Governors - Hamdan Bin Mohammed E-University Member of the Council of United Arab Emirate University - NASDAQ Inc. and Secretary General - Dubai Islamic Economy Development Centre. Mr. Abdulfattah Sharaf is a graduate of the University of Denver, USA, and holds the following positions: Group General Manager and Chief Executive Officer - HSBC Bank Middle East Limited, UAE. - HSBC Bank Middle East Limited (HBME). - HSBC Bank S.A.O.G. Oman (HBON). Member of the Higher Board of Directors - Dubai International Financial Center (DIFC). - Noor Dubai Foundation. Member - Mastercard MEA Advisory Board. Member - Advisory Board Council of American University of Sharjah s School of Business and Management. - Emirates Golf Federation. Mohamed Hadi Ahmed Abdulla Al Hussaini () Mr. Mohamed Al Hussaini holds Master Degree in International Business from Switzerland, and has extensive professional experience in finance, banking, real estate and investment sectors. He is currently holding the following positions: - Emirates National Bank of Dubai (Emirates NBD). - Emirates Islamic Bank. - Dubai Refreshments Company. Abdelmonem Bin Eisa Bin Nasser Alserkal () - Dubai Real Estate Corporation. - Emaar Malls Group. After graduating with a Bachelor Degree in Business Administration, Majoring in Economics in 1993, from Point Loma Nazarene University in the United States, Mr. Abdelmonem began his career in real estate and development in the UAE. He has spearheaded new initiatives across multiple industries, including real estate, telecommunications, trading and investments. A patron of the arts, he conceived of Alserkal Avenue, combining his passion for the arts with his interest in real estate. He is the driving force behind Alserkal Avenue, which today houses some of the region s most prominent contemporary art spaces. Abdelmonem and the Alserkal Family have long been supporters of the arts and have been awarded Patrons of the Arts award twice, in 2012 and 2013 by HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President of the UAE and Prime Minister and Ruler of Dubai. Abdelmonem is currently holding the following positions: Founder - Alserkal Avenue Managing Director - Nasser Bin Abdullatif Alserkal Est. - Al Burj Real Estate Ltd. - USOS Holding LLC Honourary Member - Thinkers & Doers Forum, Paris President - Business Entrepreneurs Forum Advisory - Tharawat Family Business Forum Board of Patrons - Art Dubai Board of Patrons - Jean Paul Najar Foundation Member - the British Museum s Contemporary and Modern Middle Eastern Art Acquisition Group Member - Tate s Middle East and North Africa Acquisition Committee Member - Guggenheim s Middle Eastern Circle Member Centre Pompidou International Circle Middle East Hesham Abdulla Qassim Al Qassim () Mr. Hesham Al Qassim holds Bachelor s Degree in Banking and Finance and a Master s Degree in International Business Management & in Executive Leadership Development. He is currently assuming the following positions: Vice Chairman and Managing Director - Emirates National Bank of Dubai (Emirates NBD). Chairman - Emirates Islamic. Chairman - Emirates NBD Capital KSA. Chairman - Emirates NBD Egypt. Vice Chairman - Dubai Real Estate Corporation. Chief Executive Officer - Wasl Asset Management Group. - Dubai International Financial Centre (DIFC) Authority. - DIFC Investments LLC. - National General Insurance Co. - Amlak Finance. - Emirates Institute for Banking and Financial Studies (EIBFS). - the International Humanitarian City. One of the Founders of Young Arab Leaders Organization. - the National Human Resources Development Committee in the Banking and Financial Sector. Khalid Abdulwahid Hassan Alrustamani () Mr. Khalid Alrustamani holds a Bachelor s Degree in Finance from George Washington University, Washington D.C., U.S.A. He is currently holding the following positions: Vice Chairman - A.W. Rostamani Group of Companies. Vice Chairman - Commercial Bank of Dubai. - Dubai Insurance Company. Founder and Chairman - BCD Travel and KAR Transport and Freight Forwarding. Otaiba Khalaf Ahmed Khalaf Al Otaiba () Mr. Otaiba obtained a Bachelor of Laws from the University of Damascus in 2001, and a license to practice law (before the First Instance Courts, Courts of Appeal, Supreme Court) from the Ministry of Justice in the United Arab Emirates in Mr. Otaiba participated in numerous legal seminars and committees at the local and international level, among the most prominent of these activities participation as a member on the National Committee of Lawyers in UAE. He also worked as an Administrator Fundamental in the Legal Department at National Bank of Abu Dhabi for two years. Otaiba bin Khalaf Al Otaiba currently manages Al Otaiba Advocates & Legal Consultants Office, which was founded on his hand in 2004, headquartered in the city of Abu Dhabi, United Arab Emirates, and has a number of branches including a branch in Dubai, and a branch in Al Ain

10 3.3 Profile of Group Corporate Secretary Hassan Mohamed Al Hosani has been taking up the role of Group Corporate Secretary since He holds a Bachelor Degree in Sharia and Law from the UAE University and is a licensed lawyer listed in the Lawyers Register at the Ministry of Justice and an arbitrator listed in Abu Dhabi Commercial Conciliation & Arbitration Center. He also has more than 17 years of experience in the legal field during which he assumed the following positions: General Counsel - the Department of Municipal Affairs, Abu Dhabi. The below table shows the Board members attendance for the meetings of the Board of Directors in 2016: Attendance of the Board of Directors Meetings Number of Meetings Manager of Property Regulations Department - the Department of Municipal Affairs, Abu Dhabi. Property Laws Expert - the Department of Municipal Affairs, Abu Dhabi. Name Personal Attendance Attendance by Proxy Proxy Granted to Legal Advisor - National Petroleum Construction Company (NPCC). Eissa Mohamed Ghanem Al Suwaidi (Chairman) Meetings of the Board of Directors The Board of Directors held seven meetings during 2016 as per the following dates: Sheikh Ahmed Mohd Sultan Bin Suroor Al Dhahiri (Vice Chairman) Mohamed Sultan Abdulla Mohamed Alhameli Chairman Dates of the Board of Directors Meetings Abdulla Salem Obaid Salem Al Dhaheri th January 2016 Hesham Abdulla Qassim Al Qassim th March 2016 Essa Abdulfattah Kazim Al Mulla th March th April 2016 Abdulfattah Sayed Mansoor Sharaf 6 1 Essa Abdulfattah Kazim 27th July 2016 Mohamed Hadi Ahmed Abdulla Al Hussaini th October 2016 Abdelmonem Bin Eisa Bin Nasser Alserkal th December 2016 Khalid Abdulwahid Hassan Alrustamani 6 1 Chairman Otaiba Khalaf Ahmed Khalaf Al Otaiba 4 2 Vice Chairman 18 19

11 4 Committees of the Board of Directors The Board of Directors of Etisalat Group has a flexible and streamlined management system that facilitates undertaking its duties. The pillars of this system are based on sub-constituting three Board Committees namely: Audit Committee, Nominations and Remunerations Committee and Investment & Finance Committee. An essential role has been played by each Committee in assisting the Board of Directors to assume its roles and responsibilities of running the Company. 4.1 Audit Committee ( AC ) To mold and attain the above-mentioned management system, Audit Committee has been constituted to help the Board of Directors in various fields and to undertake its duties in accordance with its Charter which serves as an authorization by the Board of Directors to the Audit Committee for undertaking the functions mentioned therein in compliance with the laws and regulations taking force in the country. Such Charter also sets out, in detail, its functions and powers, the mechanism of its constitution, the conditions governing the convention of its meetings and the quorum for the same, in addition to how it shall take its decisions. The functions of the Audit Committee include, among other things, monitoring the soundness and integrity of the Company s financial statements, developing & implementing a policy for contracting with the external auditor and ensuring such auditor s independence as well as reviewing the systems of the financial control systems and risk management. In addition, the Committee reviews and implements internal control systems and policies and supervises the functions of the Internal Control and Audit Department to ensure the sound performance of its duties. The Committee consists of three non-executive and independent members of the Board of Directors in addition to one external member. All the Committee members are well-versed in financial and accounting matters. The Committee convenes quarterly and whenever necessary

12 4.1.1 Meetings of the Audit Committee The Committee held seven meetings in 2016 as per the following schedule: Dates of AC Meetings 25th January th February th March th April th July rd October th December 2016 The attendance of the Committee s members in the AC meetings in 2016 was as follows: Name Attendance of the AC Meetings Dates of AC Meetings Essa Abdulfattah Kazim Al Mulla (Chairman) 7 Sheikh Ahmed Mohd Sultan Bin Suroor Al Dhahiri Khalid Abdulwahid Hassan Alrustamani 6 Salim Sultan Al Dhaheri (External Member) Nominations and Remunerations Committee ( NRC ): The Nominations and Remunerations Committee has been constituted from within the Board of Directors to assist the Board in performing its duties diligently and effectively as per the Committee s charter which serves as an authorization by the Board of Directors to it for undertaking the functions mentioned therein in compliance with the laws and regulations taking force in UAE. The Committee s Charter also sets out, in detail, the functions and powers granted to the Committee, its constitution, the conditions governing the convention of its meetings & its quorum and the Committee s decision-making mechanism. Whereas the Company s cadre is deemed fundamental for the Company s advancement and for achievement of its targeted goals, the Committee assumes setting the policies which define Etisalat requirements of talents at the levels of Executive Management and staff as well as setting the policies pertaining to the remunerations, incentives and salaries of the members of the Board of Directors, Executive Management and staff of the Company in a manner that ensures meeting the Company s objectives and that is commensurate with its performance. In performing its functions, the Committee takes into account preserving the competitive and fair nature of the compensations, which is to be in line with Etisalat strategy of attracting and retaining the talented staff in order to achieve the best results. The Committee is also responsible for organizing and administering the nominations for the Board Directorship. Further, it constantly ensures meeting the independence requirements by the independent Board members and reports to the Board of Directors in the event that one of the independent Board members loses his independence capacity. The Committee consists of four non-executive and independent members from the Board of Directors, and convenes quarterly and whenever necessary Meetings of the Nominations and Remunerations Committee The Committee held four meetings in 2016 as per the following schedule: Dates of AC Meetings 2nd February th February nd May th September

13 The attendance of the Committee members in the NRC meetings in 2016 was as follows: Attendance of the NRC Meetings Meetings of the Investment and Finance Committee The Committee held eight meetings in 2016 as per the following schedule: Name Mohamed Sultan Abdulla Mohamed Al Hameli (Chairman) No. of Meetings 4 Dates of IFC Meetings 12th January 2016 Abdulla Salem Obaid Salem Al Dhaheri 3 17th February 2016 Hesham Abdulla Qassim Al Qassim 4 12th April 2016 Abdelmonem Bin Eisa Bin Nasser Alserkal 4 24th May th July Investment and Finance Committee ( IFC ) Etisalat Group is one of the major companies investing in telecom industry not only inside UAE but also overseas, and has a shareholding in many companies like Maroc Telecom, Etisalat Misr, Mobily, and many other companies. This necessitated the Board to constitute this Committee to assist the Board in undertaking its duties pertaining to the Group s investments along with other financial matters which are fundamental for the Company s success and progress. Therefore, the IFC was formed to carry out such duties. A charter has been composed for the Committee which defines its functions and duties, the cases in which the Committee is entitled to make the decisions which it deems appropriate and the cases in which it is only empowered to make recommendations for the Board to pass the appropriate resolutions thereon. This Charter serves as an authorization by the Board for the Committee to carry out the functions and responsibilities stipulated therein. The Investment and Finance Committee consists of four independent and non-executive members from within the Board of Directors and convenes quarterly and whenever necessary. 4th October th October th November 2015 The attendance of the Committee s members in IFC meetings in 2016 was as follows: Attendance of the IFC Meetings Name No. of Meetings Eissa Mohamed Ghanem Al Suwaidi (Chairman) 8 Abdulfattah Sayed Mansoor Sharaf 6 Mohamed Hadi Ahmed Abdulla Al Hussaini 8 Otaiba Khalaf Ahmed Khalaf Al Otaiba

14 The remuneration of the Board of Directors are linked to the Net Profit that the Company generates. As per Etisalat Group s Articles of Association which was promulgated by virtue of Cabinet Resolution No. 29 of 2015, the Board of Directors remunerations shall be a lump sum amount based on a recommendation by the Board and approval by the AGM provided that such remunerations shall not exceed 0.5% of the Net Profit after deducting the depreciations and reserves. 5 Board Remunerations The total remunerations of the Board members for the year 2015 amounted to AED 17,227,068.49, while the Board remunerations for the year 2016 has amounted to AED (17,143,000) including the attendance allowance of the Committees meetings. Such remunerations constitute 0.23% of the net profit after deducting all the reserves and depreciations. The table below shows the quantum of said remunerations. Investment and Finance Committee No Name Attendance of Committee Meetings Allowance (AED) 1 Eissa Mohamed Ghanem Al Suwaidi 56,000 2 Abdulfattah Sayed Mansoor Sharaf 42,000 3 Mohamed Hadi Ahmed Abdulla Al Hussaini 56,000 4 Otaiba Khalaf Ahmed Khalaf Al Otaiba 56,000 Audit Committee No Name Attendance of Committee Meetings Allowance (AED) 1 Essa Abdulfattah Kazim Al Mulla 49,000 2 Sheikh Ahmed Mohd Sultan Bin Suroor Al Dhahiri 49,000 3 Khalid Abdulwahid Hassan Alrustamani 42,000 Nominations and Remunerations Committee No Name Attendance of Committee Meetings Allowance (AED) 1 Mohamed Sultan Abdulla Mohamed Al Hameli 28,000 2 Abdulla Salem Obaid Salem Al Dhaheri 21,000 3 Hesham Abdulla Qassim Al Qassim 28,000 4 Abdelmonem Bin Eisa Bin Nasser Alserkal 28,

15 6 Etisalat Securities Trading This report tackles Etisalat Securities Trading Policy in another context where it articulates the policies set to implement the governance rules and corporate disciplines. The afore-said policy controls the Insiders tradings in the Company s securities in compliance with the governance and disclosure requirements applicable in UAE. This section of the report provides for the tradings in Etisalat shares effectuated by the Chairman and Members of the Board of Directors and their first of kin relatives since they are subject to the abovementioned policy given that they are deemed part of the Insiders definition; namely, chairman, Board members, all Company s staff and any person who has access to Company s material information prior to publishing it

16 The below table shows the tradings in the Company s shares conducted by the s, their spouses, sons and daughters in 2016 along with the number of shares they own: The Material Information is defined by the above-mentioned Policy as any information, positive or negative, that may impact the price of Etisalat securities, hence; affects investor s decisions towards buying or selling such securities. In general, the Material Information includes, but is not limited to, the following: Undisclosed profits and financial results. Profits estimates or other financial forecasts. Changes in previously released profits estimates. Merger or acquisition proposals or agreements. Material changes in reserve estimates. Changes in debt ratings. Write-down of assets. Dividend distribution. Name Eissa Mohamed Ghanem Al Suwaidi Sheikh Ahmed Mohd Sultan Bin Suroor Al Dhahiri Mohamed Sultan Abdulla Mohamed Al Hameli Owned Title/ Shares Relationship as of 31/12/2016 Total Sold Shares in 2016 Total Purchased Shares in 2016 Chairman Wife - 210,391 - Son - 150,000 - Daughter - 209,924 - Son - 486,770 - Vice Chairman 14, Director 289, Wife 10, Proposed issuance of securities. Financial liquidity problems. Significant changes in operations and important management updates. Furthermore, the Securities Trading Policy explicitly stipulates the trading prohibition periods as mentioned in Article 14 of SCA s Resolution No. 2 of 2001 concerning the Regulations of Securities Trading, Clearance, adjustments, Ownership Transfer and Custody. During such periods, it is not permissible for the Chairman, s and Insiders who have access to Material Information to directly or indirectly trade in Etisalat securities within the ten business days preceding the release of any material information which may affect the share price by way of a rise or a decline, and fifteen days prior to the end of the quarterly, half-yearly or annual financial period, wherein the prohibition shall remain until the disclosure of the financial statements is made. Abdulla Salem Obaid Salem Al Dhaheri Director Hesham Abdulla Qassim Al Qassim Director 330, Director Essa Abdulfattah Kazim Al Mulla Wife 139, Abdulfattah Sayed Mansoor Sharaf Director Mohamed Hadi Ahmed Abdulla Al Hussaini Director Abdelmonem Bin Eisa Bin Nasser Alserkal Director 2,686, Khalid Abdulwahid Hassan Alrustamani Director 876, Son 319, Otaiba Khalaf Ahmed Khalaf Al Otaiba Director 11,

17 7 Executive Management The Executive Management carries out Etisalat s day-to-day activities and exercises the authorities delegated to it by the Board of Directors of the Company pursuant to the customary practice and the governance rules and regulations. The Executive Management, in undertaking its functions, abides by a performance mechanism and ambitious targets approved by the Board of Directors and grounded on linking remunerations and incentives with the level of performance. The Board of Directors delegated to its Chairman some of its powers by virtue of the power of attorney dated 27th July 2016 which is valid until 24 March The Chairman, in turn, sub-delegated part of his powers to the Executive Management to ease exercising its role and tasks under the power of attorney dated 31st July 2016 which is valid until 24th March The authorities granted to the Management under this power of attorney include, but not limited to, executing documents, transactions, warranties, contracts and agreements as well as signing bank documents, appointing employees and setting their salaries, establishing companies and representing the company before official and quasi-official bodies. Moreover, the Company has set a clear policy with well-defined limits within which the Management may act in respect of the above. Below are the details of Etisalat Group s key Executive Management members where the positions they hold, their joining date as well as the gross salaries and remunerations for the year 2016 are set out: Position Appointment date 2016 Gross Salaries and Remunerations 2016 Gross Bonuses Group Chief Executive Officer 1/11/992 3,647,400 15,000,000 Group Chief Corporate Governance Officer 19/06/1993 2,409,029 2,800,000 Chief Executive Officer/ International 27/9/2015 2,340,000 3,573,000 Group Chief Financial Officer 1/1/2012 2,143,002 4,100,000 Group Chief Human Resource Officer 1/12/1991 1,888,352 2,850,

18 8 Related Parties Transactions Organization chart Corporate Secretary BOARD OF DIRECTORS Investment and Finance Committee Nominations and Remunerations Committee Audit Committee GCEO GCEO Office Internal Control & Audit Finance International Operations Corporate Governance Human Resources Carrier & Wholesale Business Procurement & Contracts Etisalat Group did not conduct any transactions with Related Parties in the year 2016 in accordance with the provisions that govern this kind of transactions under SCA Resolution No. 7 of

19 9 Internal Control and Audit The Board of Directors is responsible for the Company s internal control system, its revision and ensuring its efficiency. Hence, the Board approved certain governance functions and structures that achieve the goal of effectively undertaking the internal control functions and creating a perception on the efficiency and effectiveness of internal control aspects within the Company. In order to ensure the optimal application for the internal control and audit requirements, Etisalat has adopted the internationally recognized three lines of defence model. Thus, the system of internal control and audit in Etisalat consists of the following three elements: 1. Frontline business functions: (First line of defence) - governed by policies, procedures and code of business ethics approved by the Board of Directors and signed by all staff. 2. The Internal Control Function: (Second line of defence) - includes the enterprise risk management and compliance requirements. 3. The Internal Audit Function: (Third line of defence). The aforesaid system and functions are run by a specialized department named Internal Control and Audit Department which is headed by Mr. Mohamed Dukandar who has a wide experience of over 20 years in the fields of governance, internal control and internal audit at reputable companies, especially Telecom companies. Mr. Dukandar is a Chartered Accountant (CA), Certified Internal Auditor (CIA) and Certified Control Self Assessor (CCSA). It is noteworthy that Mr. Dukandar assumes the role of the Compliance Officer. The Internal Control and Audit Department is completely independent from the Executive Management. It is reporting to Etisalat Board of Directors which, in turn, authorized the Audit Committee to supervise the functions of this department. A Charter, approved by the Board of Directors, has been developed, and it defines the functions and powers of the Audit Committee with respect to the internal control system

20 9.1 Internal Control Function The mission of the Etisalat Internal Control Function is to engage with the 1st line of defence teams to establish and to maintain a Group-wide internal control framework that provides the Management and the Audit Committee with reliable assurances on the health of controls to: Meet the operational and financial objectives Manage risks and ensure the validity of the reports Comply with applicable laws and regulations. The objective of Internal Control is to maintain a central repository of risk information; assist the business with implementing and monitoring its risk mitigation practices and perform the compliance function. The framework of Etisalat s risk management is aligned to international best practices such as the ISO standards. 9.3 Key Control/Audit Matters The Internal Control and Audit Department addresses key issues or risks identified in the annual reports and accounts, which include but are not limited to the following: Ensuring establishment of remediation or action plans for all key risks and compliance breaches, if any. Such plans identify the responsible persons along with timelines for completion; Monitoring progress in completing agreed actions is monitored with regular reporting on their status to Audit Committee; and Performing follow-up reviews, if needed. It is worth mentioning that the Company did not face any material problems in the year Regular risk assessments are conducted in all the fields in which the Group and its OpCos operate. Reports on these risks are regularly submitted to the Management and the Audit Committee. 9.2 Internal Audit Function Etisalat Internal Audit Function is dedicated for providing independent and objective assurance and consulting services, which are designed to add value and improve the operations of Etisalat. The Department helps Etisalat accomplish its objectives by adopting a systematic and disciplined approach in conformance with the International Standards for the Professional Practice of Internal Auditing as evidenced by being the first UAE listed company to successfully pass an External Quality Assessment by the IIA Global with the highest rating of Generally Conforms in the three areas: Attributes Standards, Performance Standards and Code of Ethics. The Internal Audit Function evaluates and reports on the effectiveness and efficiency of Etisalat s operations, systems and controls, in line with the internationally recognized COSO framework

21 10.1 A Glance 10 External Auditor Emirates Telecommunications Group Company PJSC (Etisalat Group ) has entrusted the external audit services to Deloitte & Touche (M.E.) since Deloitte & Touche, with its 244,400 professionals, enjoys a globally connected network of member firms in more than 150 countries where it provides audit, consulting, financial advisory, enterprise risk services tax. The Company has been making an outstanding presence in the Middle since 1926, through Deloitte & Touche (M.E.) which is part of Deloitte Touche Tohmatsu Limited. It is worth mentioning that Deloitte & Touche (M.E.) is the first company providing professional services in the Middle East, and currently has more than 3,300 staff working in over 26 offices in 15 countries in the Middle East. In the UAE, Deloitte is a full service firm and has well developed practices serving leading enterprises and institutions in fields of telecommunications, insurance, banking, construction, public sector activities, trading, manufacturing, energy and resources. Deloitte UAE has over 1,100 professionals based within five practice offices in Abu Dhabi, Dubai, Fujairah, Ras Al Khaimah and Sharjah. The UAE practice has 28 Partners, Principals and Directors, and more than 450 dedicated audit professionals External Audit Fees, Services & Costs: The amount of fees for 2016 external auditing services was AED 2,232,896. The fees paid/payable by Etisalat in 2016 to its External Auditor against services other than the audit tasks amounted to AED 195,000 These services are all of advisory nature and served the following purposes: 1. XBRL SCA Review AED 75, Royalty Assurance Report AED 120,000 The fees paid/payable for services which were delivered by other external auditors to Etisalat in 2016 amounted to AED 5,441,783 which were all paid/payable against sundry advisory services such as: 1. Consultancy for the implementation of IFRS 15 and IFRS 9 standards. 2. Consultancy for accounting & tax matters related to Etisalat Group s operating companies. 3. Consultancy for legal & regulatory advisory services

22 11 Violations During the year 2016, Etisalat received seven violation decisions from the Telecommunications Regulatory Authority (TRA) as follows: 1. One violation decision was in relation to implementing the hard cap limits on all mobile data bundles. Etisalat addressed the requirements for both prepaid and postpaid mobile plans. 2. Three violation decisions were in relation to submission of information to the TRA within set timeframes. Etisalat addressed the issues and is working on automating the process in this regard. 3. One violation decision was in relation to alleged interruption of EITC s network, where Etisalat investigated the matter internally and shared the updates and action plan with the TRA. 4. Two violation decisions in relation to the TRA s mobile registration requirements. Etisalat has allocated resources to address these requirements to the satisfaction of the TRA and work is still ongoing in this regard. This includes implementing adequate controls to eliminate recurrence of any such violations

23 12 Corporate Social Responsibility Etisalat highly cares for the development and prosperity of the community and, in its endeavor to realize the same, it has continually contributed to the local community advancement till it has become a major supporter to public initiatives that serve the community in the UAE. The spending on these contributions in 2016 has exceeded AED 32 millions. Etisalat s contributions targeted various segments of the society: children, youth, women and people with special needs. Further, the Company has always been in the forefront of the organizations that supported the Government-Launched Initiatives like Al Bayt Mitwahid Home is United Campaign and Dubai Forum for Government Best Practices In addition, Etisalat sponsored and supported many events that truly embodied the Reading Nation Initiative such as Ramadan 2016 Campaign organized in collaboration with Dubai cares, the UAE Board for the Books of youngsters, UAE Children Book Award and Dubai International Holy Quran Award Having faith in the importance of sport in augmenting youth lives, youth were given the utmost care from Etisalat through its sponsorship of UAE Football League and Professional League Committee. In the same context, Etisalat sponsored UAE Paralympic Committee to encourage engagement of people with special needs in the various sports and; hence, enhanced their active role in the society. Etisalat has always considered woman as key pillar of the society and deemed women sports as integral parts of the society health. Therefore, the Company supported women sports activities through extending its hands to the Committee of Arab Women Sports. As Etisalat has been known for its auspice of the heritage and preserving the cultural legacy, it had the privilege of sponsoring Sheikh Zayed Heritage Festival

24 Below is a list of the activities and initiatives taken or supported by Etisalat in 2016: SL Description Amount (AED) 1 UAE Football League 7,500,000 2 Professional League Committee Sponsorship 7,000,000 3 The UAE Board on Books for Young People-Sharjah Book Fair 2,000,000 4 Sponsorship UAE Children Book 2,000,000 5 Gold Sponsorship Package for Sheikh Zayed Heritage Festival 1,000,000 6 Sponsorship of Nation Read Ramadan 2016 Campaign - Dubai Cares 4,185,000 7 Sponsorship of Ajman Census 500,000 8 Sponsorship of Sharjah Census 1,000,000 9 UAE Special Olympics Sponsorship 1,000, Emirates Airline Incubator 1,000, Journalist Association 900, Al Bayt Mitwahid Campaign 500, Committee of Arab Women Sports 1,000, Dubai International Holy Quran Award , Sponsorship of Dubai Forum for Government Best Practices , Arab Media Forum 1,000, Others 747,000 Total: 32,332,

25 13 Investor Relations In light of the Company s endeavors to create the best means of communication with its shareholders, it created Investor Relations Department to serve as the main interface with existing and potential shareholders and investment community. Key responsibilities of the Investor Relations department is to: Disclose timely information to the market and ensuring compliance with regulatory disclosure requirements while disseminating information to investors, market analysts and public. Organizes quarterly conference calls with the financial analysts to present the Company s results after the annual and quarterly disclosures have been submitted to the ADX. Interact and respond to queries from analysts and investors. Hold investors and analysts meetings. Attend conferences and roadshows. Etisalat s Investor Relations manages the Company s IR section of the Corporate website that includes: Corporate information (Overview of the Company, Corporate Governance report and Company s strategy); Financial Information (all published financial information, key financial data, quarterly reports and quarterly results presentation); Debt Profile (outstanding debt, credit ratings, issued Bonds and key metrics); Share information (stock chart and historical share price, analyst coverage and dividends information); Annual Reports; Financial Calendar; and latest announcements the company disclosed to ADX. In doing so, the Company keeps abreast with the best international practices in this field and complies with the provisions of SCA s Resolution No. 7 (R.M.) of 2016 Concerning Corporate Governance and Discipline standards of Public Joint Stock Companies. The Investor Relations Department is headed by Mr. Nazih Ramez El Hassanieh whose experience exceeds 20 years in various roles in Finance, of which 5 years were in investor relations field in Etisalat Group. Mr. Nazih holds a Master of Science in Management with Concentration in Finance from Babson College in USA. He is a Chartered Financial Analyst (CFA) and passed the Chartered Public Accountant (CPA) exam

26 Below are the contact details of Investor Relations Department and the link of its webpage: 14 Special Resolution Etisalat Investor Relations Etisalat Head Office P.O. Box Investor Relations Contact Tel: ir@etisalat.ae Website: Below are the contacts for all shareholder queries related to dividends, dividend payouts and share certificates: Ms. Engy Zaki Phone: shares@etisalat.ae 13.1 Insiders Trading Supervisory Committee In an endeavor to ensure the implementation of Etisalat Securities Trading Policy, which governs the insiders tradings, and compliance with the applicable rules and regulations for this kind of tradings Etisalat Group ensures constant engagement in managing, following up and supervising insiders trading and ownership through Investor Relations Department. The latter Department updates the Insider list and sends such record to Abu Dhabi Security Market ( ADX ) as amended. Accordingly, Investor Relations Department preforms the functions required to be vested with the Insiders Trading Supervisory Committee. The special resolution as defined in the Company s Articles of Association is the resolution requiring approval of the Company s General Assembly by votes of a majority of three fourth of the shares represented in the General Assembly. Special Resolutions are passed for specific matters defined and specified in the Company s Articles of Association; such matters are also in conformity with the relevant laws and regulations taking effect in UAE. It is noteworthy that no Special Resolutions were passed during the year

27 15 General Information 15.1 Price of Etisalat Shares: The below table shows the price of Etisalat shares throughout the year 2016: Date Open High Low Close 29/12/ /11/ /10/ /09/ /08/ /07/ /06/ /05/ /04/ /03/ /02/ /01/

28 15.2 Etisalat Shares Performance: The below table shows the performance of Etisalat shares agaist the General Index and Telecom Index in 2016: 15.4 Shareholding Volume: The below table shows the shareholding percentage against the share capital in 2016: Shareholding Number of Shareholders Number of Shares Shareholding Percentage Against the Share Capital Less than 50,000 shares 8,910 87,345, % 50,000 to less than 500,000 shares 500,000 to less than 5,000,000 shares 5,000,000 shares and above 2, ,253, % 819 1,172,352, % 97 6,979,802, % Total 12,567 8,696,754, % 15.3 Shareholding Structure: The below table shows the percentage of the shares owned by different categories of shareholders as at the end of 2016: 15.5 Shareholding Above 5%: This table shows the shareholder(s) who own 5% and above of Etisalat shares: Shareholder Name No. of Shares Owned % Shareholders Individuals Percentage of the Owned Shares Corporate Government Total Emirates Investment Authority 5,218,052,400 60% UAE % 1.459% % % GCC 0.008% 0.047% 0.025% 0.079% Arab 0.016% 0.000% 0.000% 0.016% Foreign 0.005% 3.504% 0.024% 3.532% Total % 5.010% % 100% 54 55

29 January 2016 Creating the Region s First Smart Theme Park Resort: Etisalat and Dubai Parks and Resorts collaborate in creating the region s first smart theme park resort. 16 Key Events License Acquisition in Togo: Maroc Telecom Group extended the 2G license to 3G until December 2021 in Togo for 3.7 billion CFA francs. February 2016 GSMA Awards: Etisalat Group won two GSMA s Glomo awards including the most prestigious title of overall winner and Supreme Connected Life Champion and Best Mobile Innovation for Health. Etisalat Group Received two special awards from GSMA for the projects successfully executed in Pakistan and UAE with Digital Identity service - Mobile Connect. March 2016 Listing in the FTSE Russell Emerging Markets Index: Listing of Etisalat Group in the FTSE Russell Emerging Markets Index effective from after market close of 18 March License Acquisition in Ivory Coast: Maroc Telecom Group acquired a 17 years universal license in Ivory Coast for a total of 100 billion CFA francs. April 2016 Etisalat Conducted First Successful Trial of Smart Parking in the Middle East: Etisalat Group and Huawei successfully completes the first trial of smart parking in the Middle East, which ran on Etisalat s live network. May 2016 Etisalat in High-Speed Download Trials: Etisalat Group successfully completed high-speed download trials with Huawei to deliver first MEA 10Gbps broadband service June 2016 Etisalat Partnered with Dubai s Expo 2020: Etisalat Group named as one of a few major partners of Dubai s Expo 2020 mega event where it will be involved in creating the infrastructure for the Expo site. 4G Services in Ivory Coast: Moov Ivory Coast begins marketing its 4G offers