Etihad Etisalat Company. Articles of Associations

Transcription

1 Company Mobily Articles of Associations Chapter One: Company Incorporation Article 1: According to these Articles of Association and Companies Act, a Saudi Joint Stock Company shall be incorporated according to the following: Article 2: Company Name: Company Article 3: The objects of the Company are to carry out a telecommunication business in accordance with all applicable laws, regulations and rules in force in the Kingdom. Without limitation to the generality of the foregoing, the Company shall carry out the following activities: A. Provide mobile services in the Kingdom in relation to the license(s) granted by CITC to the Company (the "Licenses"); B. Develop, finance, design, construct, operate, maintain, insure and own the Licenses and all plant, equipment, apparatus and other assets of any type relating to the operation of the licenses in the Kingdom; C. Manage, sell, liquidate, hold, hire and dispose of any property and any right, title or interest in any property, including movable and immovable properties, which the Company may acquire or own. D. Do all such other acts and things as are incidental or conducive to the promotion or advancement of the business of the Company, subject always to due compliance with applicable laws and regulations in the Kingdom; E. Establish fiber optic networks and any extension thereof; F. Manage, install and operate telephone networks, terminals and communication unit systems; G. Sell and maintain mobile phones and communication unit systems.

2 H. Electric works, operation and maintenance of electric works, electronic works, operation and maintenance of electronic & ICT works, operation and maintenance of ICT works, mechanical works, operation and maintenance of mechanical works The company shall exercise its activities according to the applicable laws after getting the required licenses from the relative authorities, if any. Article 4: The Company may alone establish companies (Limited Liability Companies) or closed joint stock companies, provided that the capital thereof shall be at least 5 million Saudi Riyals. The company may also own shares or interests in other current companies or merge with them, and my join with third parties in establishing joint stock companies or limited liability companies after fulfilling the regulatory requirements in this regard. The company may dispose of such shares or interests, provided that the same shall not include broker. Article 5: Head Office The Company's head office shall be located in Riyadh, and it may establish branches, offices and agencies in and outside of the Kingdom of Saudi Arabia by a decision of the Board of Directors. Article 6: Term The Company term is 99 Gregorian calendar years commencing from the issuance date of entry into the commercial register. The term of the Company may always be extended by resolution from the Extraordinary General Assembly, at least one year before its date of expiry. Chapter Two: Capital and Shares Article 7: The Company's capital is (7,700,000,000) seven billion and seven hundred million Saudi riyals divided into (770,000,000) seven hundred and seventy million shares of equal value. Nominal value of each share is 10 Saudi riyals.

3 Article 8: Shareholders subscribed to the total number of shares, amounting to (770,000,000) seven hundred and seventy million. The total amount was deposited with a Saudi bank in the name of the company. Article 9: Following the regulations set out by the relative authorities, the extra-ordinary general assembly of the company may issue priority shares, decide to purchase them or transfer ordinary shares into priority shares (not exceeding ten percent of the company's capital) or transfer priority shares into ordinary shares. Such priority shares shall not grant rights for voting at the shareholders' general assembly. However, they allow the holders to have the right to receive higher portions of the net profits than the ordinary shares, after setting aside the statutory reserve. Article 10: The shareholder shall pay the share value at the prescribed time. If the shareholders default in paying the share value at the prescribed time, the Board of Directors may serve him with a notice by registered letter at his address, informing him that such share shall be sold in public auction or the stock exchange, according to the rules set by the relative authority. The Company shall set off the due amounts from the sale proceeds and return the balance to the shareholder. If the sale proceeds are not sufficient to cover such amount, the Company may then set off the balance from all the shareholder's funds. The defaulting shareholder up to the date of sale may pay the due amount and the expenses incurred by the company in this regard. The Company shall cancel the sold shares according to the provisions of this article and give the purchaser a new share bearing the same number of the cancelled one, and make an entry to this effect in the shareholder's record, showing the name of the new shareholder. Article 11: All shares shall be nominal and may not be issued for less than their nominal value. However, the same may be issued for more than their nominal value and in this

4 case the difference in value shall be added to an independent item within the shareholders' equity and may not be distributed as profits to the shareholders. Share is indivisible towards the Company, but if it is owned by a number of holders they have to select one as their deputy to exercise the rights related thereto. Such holders shall be jointly responsible for all liabilities arising from the share ownership. Article 12: Shares shall be negotiable according to the provisions of Capital Market Authority. Article 13: A) The Extraordinary General Assembly may decide to increase the capital the period from the time of the issuance of the General Assembly of the Company, provided that the capital has been paid in full. The capital is not required to be paid in full if the unpaid part of the capital is attributable to shares issued in return for the conversion of debt instruments or financing instruments into shares and the period for conversion into shares has not yet expired. B) The extraordinary general assembly may in all cases allocate the shares issued upon the increase of the capital or part thereof to the employees of the company and the subsidiaries or some of them, or any of them. Shareholders may not exercise the right of priority when the Company issues shares to employees. C) At the time of the General Assembly's decision to approve the capital increase, the shareholder shall have the right of priority to subscribe at the new shares issued in return for cash. They shall be notified with their priority, if any, by publishing in a daily newspaper or by means of registered mail, of the decision to increase the capital and the conditions of the subscription, its duration, its start and end date. D) The extraordinary general assembly shall have the right to stop the priority right for the shareholders in the subscription by increase of the capital in exchange for cash or to give priority to non-shareholders in such cases as it deems appropriate for the benefit of the Company. E) The shareholder has the right to sell or waive the right of priority during

5 resolution approving the increase of the capital up to the last day of subscription in the new shares associated with these rights, in accordance with the controls set by the competent authority. F) Subject to the provisions of paragraph (D) above, the new shares shall be allocated to the priority rights holders who have applied for the subscription in proportion to their priority rights of the total priority rights resulting from the capital increase, provided that they do not exceed what they have requested from the new shares. the rest of the new shares will be distributed to the priority rights holders who have requested more than their shares of their priority rights from the total priority rights resulting from the capital increase, provided they do not exceed what they requested from the new shares. The rest of the shares will be offered to others, unless otherwise decided by the extraordinary general assembly or by the capital market law. Article 14: By a resolution of the Extraordinary General Meeting, the Company capital may be reduced if it exceeds the Company needs or if the Company has incurred losses. In the latter case only, the capital may be decreased to below the limit stipulated for in article 54 of the Companies Law. The reduction resolution may be issued only after introducing a special report to be prepared by the auditor on the justifications thereof and on the liabilities on the company and the influence of such reduction on such liabilities. If the reduction is the result of the fact that the capital exceeds the Company needs, creditors should be invited to intimate their objections within 60 days from the date of announcement of the reduction in a daily newspaper distributed in the region where the company head office is located. Should any one of the creditors object or submit his documents to the Company within the prescribed time, the Company must then settle his debts immediately or provide him with sufficient guarantee for settlement if the same is deferred. Article 15: Chapter Three: Board of Directors

6 The management shall be assumed by a Board of Directors consisting of (10) ten members appointed by the Ordinary General Meeting for a term not exceeding three years. Article 16: The Board membership ends upon expiry of the term thereof or upon the expiry of the member's qualification therefore according to any law or instructions applicable in the Kingdom of Saudi Arabia. However, the ordinary general assembly may dismiss all or some of the board members without prejudice to the right of the dismissed member to claim compensation if such dismissal occurred for unjustifiable reasons or at an improper time, and the board member may resign at a proper time, otherwise he shall be held responsible before the company for the consequences of such resignation. If one of the members' office becomes vacant, the Board may appoint a member to fill the vacancy on temporary basis regardless of the arrangements to gain votes, provided that such appointment shall be presented to the Ordinary General Assembly at its first meeting. The new member shall complete his predecessor's office term. If the number of the Board Members drops below the necessary quorum for the validity of its meetings, the Ordinary General Meeting should be convened within 60 days to elect the required number of members. Article 17: Subject to the functions assigned to the General Assembly, the Board of Directors shall have the broadest authority in managing the Company and shall have the right to participate in other companies. Within its authority, the Board may authorize one or more of its members or any third party to carry out a certain business(s). Without prejudice to the foregoing, the Board may appoint, from amongst its members, an executive committee(s), and delegate such powers to such executive committee(s) as the Board so determines. a. Sell or mortgage the real property or place of business of the company, and may authorize third parties to do the same. b. Release the debtors of the Company from their liabilities

7 c. Borrow money for periods which may exceed three years and enter into contracts for lending the Company any monies required by the Company or furnish any other security for the replacement or performance of obligations of the Company in connection with any such loan in the Kingdom or elsewhere or enter into any investment. Article 18: The Board of Directors remuneration, if any, shall consist of a specific amount, benefits or percentage, based on the proposal of the board of directors within the provisions of the Companies Law and its implementing regulations, in addition to attendance allowance, transport allowance as determined by the board, pursuant to the laws and regulations applicable in the kingdom. The board's report to the ordinary general assembly shall include a comprehensive statement showing all earnings obtained by board members within the financial year including rewards, allowances and other benefits, it shall also include a statement of what the Board Members in their capacities as staff members or administrators have received in consideration for technical, administrative or consultative activities as well as a statement of the number of the board sessions attended by each member as from the last meeting of the Company General Assembly. Article 19: From among its members, the Board of Directors shall appoint a Chairman and a vice chairman, and may appoint a Managing Director. The Chairman may not hold any other executive position in the company. The Chairman shall be nominated by and selected from amongst the Board Members. The functions and responsibilities of the Chairman shall be: a) To preside over meetings of the Board of Directors and the shareholders General Meetings and to represent the Company before all government authorities and the judiciary; and b) Carrying out all other duties entrusted to him by the Board of Directors. The Managing Director shall be nominated by Emirates Communication Group (Etisalat Group) to be appointed by the board as long as the new Support and

8 Technical Services agreement is valid. After that, the board of directors shall appoint the managing director. The managing director of the Company shall be the Chief Executive Officer, and shall exclusively be; a) In charge of all day-to-day matters of the Company and shall represent the Company on all matters related to its business. b) Responsible for reporting to the Board regarding the on-going activities of the Company; and c) Responsible for informing the board on administering the Licenses, and acting on behalf of the Company with respect to any strategic agreements to which the Company is a signatory. In order for the Managing Director to carry out the above functions, the Managing Director is hereby granted the required powers and authorities. Represent the Company in its relations with third parties, judiciary or arbitration committees. The chairman or the managing director shall have the right to sign articles of association of companies where the Company participates, amendment annexes for increase or decrease of capital, or sale or purchase of shares or stocks in companies, share or merge with them upon the resolution of the board, amend their purposes, or type, amend the structure or number of board members, amend the management clause, and other contracts, instruments, deeds before the notary public and official authorities. In addition, either of them may authorize a board member or company employee with his powers, and the chairman may authorize lawyers to defend and plead for all legally permitted matters in the lawsuits filed by or against the company, and other works for the interest of the company and its business. The Board of Directors shall appoint a secretary from its members whose tasks shall be to record the proceedings of the meetings of the Board of Directors, including the resolutions of the Board of Directors, and to maintain a register of all resolutions of the Board of Directors and his remuneration shall be determined by the Board of Directors.

9 The term of office of the Chairman, his deputy and, Managing Director and the Secretary shall not exceed the membership term of each of them in the Board. They may be re-elected, and the board may dismiss them or any of them at any time, without prejudice to their right of remuneration if dismissal occurred for unjustifiable reason or at improper time. Article 20: The Board of Directors shall convene upon invitation by the Chairman and such invitation shall be delivered to members of the Board in writing at least 14 Business Days prior to the date set for such meeting. Such written invitation shall also include the agenda for the meeting and any relevant papers. The Chairman of the Board may call for meeting whenever the same is requested by two Board Members. Article 21: The Board meeting shall only be valid if it is attended by at least seven Directors. In case one of the Board Members authorize another member to attend the meeting such authorization shall be according to the following measures: a) The Board Member may not represent more than one member in attending the same meeting. b) Such authorization shall be in writing; and c) Deputy may not cast vote in any resolutions which the Articles of Association prohibits the deputy to vote in. The Board of Directors' decisions shall be passed by an absolute majority vote of at least seven Directors voting in favor of the decision. Article 22: The Board deliberations and resolutions shall be recorded in minutes signed by the Board Chairman and its Secretary and such minutes shall be recorded in special register signed by the Chairman and the Secretary.

10 Chapter Four : Shareholders General Meeting Article 23: Each shareholder has the right to attend the shareholders' general meeting personally or through other authorized person from other than the board members or the company employees. Article 24: Save for the matters falling within the competence of the Extraordinary General Meeting, the Ordinary General Meeting shall be in charge of all the matters related to the Company and convene at least once every year during the six months following the end of the company financial year. Ordinary General Meetings shall be convened whenever deemed necessary. Article 25: Extraordinary General Meeting has the authority to amend the Company Articles of Association with the exception of the Articles which the Extraordinary General Meeting is legally prohibited to amend. It may pass resolutions in respect of the matters falling within the authority of the Ordinary General Meeting under the same conditions and circumstances specified for the Ordinary General Meeting. Article 26: Shareholders General or special Meetings shall be convened by the Board of Directors. The Board of Directors has to convene the Ordinary General Meeting if it is so required by the auditor or a number of the shareholders representing at least 5% of the capital. The auditor may convene the general assembly to meet if the board failed to convene it within thirty days from the date of auditor's request. Article 27: Convocation of the Ordinary General Meeting shall be published in the official Gazette and in a daily newspaper distributed at the Company head office at least 10 days before the time prescribed for the convocation. However, invitation at the prescribed time by registered letters may be enough. A copy of the invitation and the agenda shall be forwarded to the Companies General Directorate at the

11 Ministry of Commerce as well as to the CITC during the period specified for publishing. Article 28: A number of shareholders representing two percent of the capital at least may apply to the relative authority to convene the general assembly in the cases stipulated for in article 90 of the Companies Law. Article 29: Upon the General Meeting convocation, a list of the shareholders and representatives present at the meeting should be made showing their place of residence, number of shares they hold personally or by proxy and the number of the votes allocated thereto. Each party who has an interest shall have access to this list. Article 30: Ordinary General Meeting shall not be valid unless attended by shareholders who at least represent half of the capital. If such quorum is not achieved at the meeting, a second meeting should be held after one hour, provided that convocation to the first meeting include the possibility to hold such meeting. The second meeting shall be deemed valid irrespective of the number of shares represented thereat. Article 31: The Extraordinary General Meeting shall not be valid unless attended by shareholders who at least represent half of the capital. If such quorum is not achieved at the first meeting the second meeting should be held after one hour, provided that convocation to the first meeting include the possibility to hold such meeting. The second meeting shall be valid if attended by number of shareholders who represent at least quarter of the capital. If quorum is not available at the second meeting, a third meeting shall be convened at the same conditions stipulated for in article 91 of the Companies Law. The third

12 meeting shall be deemed valid irrespective of the number of shares represented thereat, upon approval of the relative authority. Article 32: Votes at Ordinary General Meeting and Extraordinary General Meeting shall be calculated on a one vote for each share basis. Cumulative voting should be used when electing the board of directors. Article 33: Resolutions at Shareholders constituent meeting are passed by absolute majority of shares represented thereat. However, if such resolutions are related to the assessment of shares in kind or special privileges, in this case the approval of the majority of subscribers by cash shares representing two thirds of the said shares after excluding the shares subscribed in kind and holders or beneficiaries of the special privileges, should be obtained. The latter shall have no say in such resolutions even if they are holders of cash shares. Resolutions of the Ordinary General Meeting shall be passed by absolute majority of 66% of the shares represented at the meeting. The resolutions of Extraordinary General Meeting shall be passed by the majority of two thirds of the shares represented at the meeting. Unless the resolution is related to the increase or reduction of the capital, extension of the company term, or winding up the company before the expiry of the term specified in its Articles of Association or go for merger with another company or establishment, then the resolution shall not be valid unless passed by the majority of three quarters of the shares represented at the meeting. Article 34: Each shareholder has the right to discuss the issues mentioned in the General Meeting agenda, raise questions in respect thereof to the Board Members and the auditor. The Board of Directors and auditor shall reply to the questions raised by the shareholders in the manner that may not expose the Company interest to any harm. If the shareholder thinks that the answer to his question is not convincing, he

13 shall put up the matter to the General Meeting whose decision in this respect shall be effective and final. Article 35: The General Meeting shall be chaired by the Chairman or the Vice Chairman in his absence. The Chairman shall appoint a secretary for the meeting and votes collector. Minutes shall be prepared for the General Meeting containing name of the present shareholders or representatives, number of shares they own on behalf of themselves or by proxy, number of votes allocated thereto, passed resolutions, number of votes agreed and disagreed to such resolutions and full summary of the deliberations at the meeting. Minutes of Meeting should be recorded on regular basis, after each meeting in a special record signed by the General Meeting Chairman, the Secretary and Votes Collector. Chapter Five: The Audit Committee Article 36: By a resolution of the ordinary general assembly, an audit committee shall be formed of five members not from among the executive directors whether from shareholders or others. The resolution shall identify the committee's duties, controls and remunerations. Article 37: The audit committee's meeting shall be valid only if attended by the majority of its members. Its decisions shall be issued by the majority of present votes. Upon equal votes, the party supported by the committee head shall prevail. Article 38: The audit committee shall be responsible for auditing the company's business, and for doing so, shall have the right for access to Company books and records and other documents and to request any clarifications or statements from Board members or the executive management. They may also request the board of directors to convene the general assembly of the company if the board hindered its work or if the company is exposed to severe damages or losses.

14 Article 39: The audit committee shall review the company's financial statements, reports and notes submitted by the auditor, and give their opinion on the same, if any. The audit committee shall prepare a report with their opinion in terms of the sufficiency of internal audit system at the company and their other activities within their powers. The board of directors shall deposit sufficient copies of such report at the company's head office at least ten days prior to the date of the general assembly, to provide the interested shareholders with copy thereof. The report should be read during the general assembly meeting. Article 40: Company standing as to enable him to obtain these statements and the Chapter Six: The Auditor The Company may have one auditor or more to be selected from the auditors who are authorized to operate in the Kingdom of Saudi Arabia. The General Meeting shall appoint the auditor on annual basis, fix his remuneration and may re-appoint him, provided that his term shall not exceed five consecutive years. An auditor who has completed such term may be reelected after two years from expiry of such term. Article 41: Auditor shall have the right for access to Company books and records and other documents at any time. He may also request to have statements and clarifications deemed necessary by him and may verify the Company assets and liabilities and other matters within its powers. The chairman of the board should empower him to perform his duty. If the auditor faced any difficulties in this regard, he shall report the same to the board of directors. If the board failed to facilitate the work of the auditor, he may request the board to convene the general assembly to consider such matter. Auditor shall have to submit a report to the annual General Meeting prepared in accordance with the generally accepted auditing standards, containing the

15 clarifications he requires, as well as any breaches discovered by him of the Companies Act or these Articles of Association, in addition to his opinion on how fair is the Company's financial statements. The auditor shall read his report at the general assembly. If the assembly decided to ratify the board's report and financial statements without listening to the auditor's report, their decision shall be void and null. Chapter Seven: Company Accounts and Distribution of Dividends Article 42: The financial year of the Company shall begin as of 1 January (G) and end on 31 December (G) in each year, provided that the first financial year of the Company shall begin from the date of issue of resolution announcing the Company establishment and end on 31 December of the following year. Article 43: 1. At the end of each financial year, the Board of Directors shall prepare the Company balance sheet, financial position during the passing financial year, profit and loss account, report on the Company business and the way it proposes to distribute the net profit. The Board of Directors shall put these documents at the disposal of the auditor at least 45 days before the time specified for the General Meeting convocation. 2. Chairman of the Board, CEO and CFO shall sign the said documents stated in paragraph (2) of this article, copy of which shall be lodged at the Company's head office at the disposal of the shareholders at least 10 days before the time specified for the General Meeting convocation. The Chairman of the Board shall provide the shareholders with the company's financial statements, board report and auditor's report, unless published in a daily newspaper distributed at the head office of the Company. He shall send also copy of such documents to the ministry and CITC if the company is listed in the stock exchange at least 15 days before the convocation of the General Meeting.

16 Article 44: 1. 10% of the net profit shall be set aside to form the statutory reserve and the Ordinary General Meeting may discontinue the deduction for the statutory reserve when such reserve reach 30% of the paid-up capital. 2. The Ordinary General Meeting may, upon the recommendation of the Board of Directors proposal, set aside 5% from the net profit to form an adequate reserve to be allocated for certain purposes. 3. The ordinary general assembly may decide forming other reserves, in the manner achieving the company's interests or ensure distribution of fixed profits whenever possible to shareholders. 4. From the balance after that shall be distributed 5% of the paid-up capital to the shareholders. 5. Notwithstanding the provisions of article 21 of these articles and article 76 of the Companies Law, a percentage of 10% of the balance shall be allocated for remuneration of the board of directors, according to the regulations and controls issued in this regard by CMA. Article 45: The shareholder shall be entitled for his share of the profit according to the decision of the general assembly in this regard. The decision shall indicate the date of entitlement and date of distribution, and entitlement for profits shall be for holders of shares registered in the shareholders' register at the end of entitlement day. Article 46: If no dividends are distributed in any financial year, then no dividends shall be distributed in the following years until the percentage referred to in Article 9 is paid to the owners of non-voting shares for such year. If the Company failed to pay this percentage of profits for three consecutive years, the General Meeting for such shareholders, which is convened according to Article 89 of the Companies Act, may decide either to allow them to attend the General Meetings and participate in voting, or appoint representatives in the Board of Directors pro rata to the value of their respective shares in the capital. This will last till the Company is able to pay

17 the full amount of the priority profits allocated to those shareholders for the previous years. Article 47: If the Company's losses reach half the paid-up capital, any officer of the company or the auditor, upon knowing the same, shall notify the chairman of the Board of Directors, and the chairman shall notify the board members immediately of the same. The board of directors, within 15 days of knowing of the same, should convene the Extraordinary General Meeting within 45 days from the date of knowing about the losses. Therefore, they will consider increasing or decreasing the capital, according to the provisions of the law, to the extent where the losses fall below half the paid-up capital, or dissolve the Company before the term specified in its articles of association. The company shall be considered expired by the force of law if the extra ordinary general assembly did not meet within the above specified period, or if they meet and failed to pass a decision in this regard, or if they decided to increase the capital according to the situations and no subscription has been made for each increase within ninety days from the date of the general assembly's decision of increase. Chapter Eight: Disputes Article 48: Each Shareholder has the right to file Company liability case against members of the Board of Directors if the mistake they have committed resulted in damage thereto provided that the Company's right to file such case still exists. The shareholder must inform the company of his intention to file the case. Article 49: Chapter Nine: Company Dissolution and Liquidation Upon expiry of the Company term, the company shall enter into liquidation and shall retain its legal entity to the extent required for liquidation. The General

18 Meeting shall pass the elective dissolution decision. The dissolution decision shall appoint a Liquidator and specify his powers and remuneration and the restrictions imposed on his powers and the required liquidation period. The elective dissolution period should not exceed five years and may be extended only upon a legal order. The power of the Board of Directors shall end upon the Company expiration. However, the Board of Directors shall continue to run the Company until a Liquidator is appointed. The general assemblies shall remain valid during the liquidation period, and their powers shall remain to the extent that is not contradicting with the Liquidators' powers and authorities. Chapter Ten: Final Provisions Article 50: The Companies Act and implementing regulations shall apply to all matters not provided for in these articles. Article 51: These Articles of Association shall be lodged and published according to the Companies Act.