Articles of Association

Transcription

1 Articles of Association

2

3 Articles Of Association Published in the official Gazette Al-Kuwait Al-Yawm Issue No. 552 on Sunday 10/2/2002

4 Content First - The Basics of the Company s Foundation 3 Second - The Company s Objectives 4 Third - The Company s Capital 6 Fourth - The Board of Directors 7 Fifth - The General Assembly 11 Sixth The Company s accounts 15 Seventh - The Closing & Liquidation of the Company 17 Eighth The Final Provisions 18 5

5 First The Basics of the Company s Foundation Article (1) The Company was founded in accordance to the provisions of the Commercial Companies law No.15 of 1960 and decree law No. 6 of 1980, by establishing Kuwait Petroleum Corporation (KPC) and these Articles of Association between shareholders whose provisions are stated later as a Closed Kuwaiti Shareholding Company named as Kuwait Gulf Oil Company (K.S.C). The law provisions No. 48 of 1966 are applied as per approval on the Divided Zone (DZ) agreement and the law No. 35 of 2000 and endorsement on offshore agreement adjacent to the Divided Zone between the governments of both Kingdom of Saudi Arabia and the State of Kuwait on this statute in the way of applying it, the law s provisions that are issued are applied by approval on agreements or decrees related to arranging the legal conditions in the two areas referred to as well as other areas between the State of Kuwait and the governments of neighbouring countries on this basis. Article (2) The Company s Main Office and its legal location is in the State of Kuwait and the Board of Directors has the right to establish other branches, agencies, offices or operation centres or appointing representatives in the State of Kuwait or abroad. 3

6 Article (3) The Company s duration shall be indefinite and starts from the date of registering it in the Commercial Record and publishing the Articles of Association related to its foundation in the official gazette. Second: - The Company s Objectives Article (4) The objectives of establishing the Company are:- 1. Conducting operations related to exploration, drilling for prospecting oil and gas as well as fields development, production of oil & gas besides transporting, storing and delivering them, processing of oil & gas as well as exporting them. 2. Carrying out refineries operations, refining petroleum, manufacturing refining outputs in the form of industrial products as well as transporting, storing, exporting and distributing products from these operations. 3. Conduct all supporting operations and works that help in carrying out the above mentioned operations in clause 1 & 2 above and implementing them appropriately. 4. Marketing and selling the State of Kuwait s share of oil & gas in the form of crude oil or after manufacturing it as derivatives or industrial products. 5. Holding the State of Kuwait s share of any existing 4

7 assets, any underway assets and any assets that may arise in future for utilizing the joint hydrocarbon natural riches. 6. Collecting all the State of Kuwait s rights from the Joint Operations revenues for utilizing the joint hydrocarbon natural resources. This will be conducted in the State of Kuwait and the whole area of the Divided Zone known as the agreement approved by the law No. 48 of 1966, and the offshore area adjacent to it through the agreement adopted by the law No. 35 of 2000 between the governments of both Kingdom of Saudi Arabia (KSA) and the State of Kuwait, in coordination with all legal officials who are assigned by the government of KSA to work in both areas for similar purposes according to the terms stipulated in the stated agreements, and in all continental shelf areas of the State of Kuwait in coordination with all ordinary & legal personnel who are assigned by the concerned neighbouring countries in these areas, so as the State of Kuwait s share of oil and gas or any products manufactured by the Company are state-owned and the partners manage it consistent with the agreement with KPC without prejudice to the existing laws and decrees in this regard. For achieving these objectives, the Company has the right to undertake the following:- 1. Establishing sharing companies in the State of Kuwait and abroad, and have an interest or otherwise 5

8 associate with organizations which carry on similar operations or which may be of help to the Company in achieving its objectives in the State of Kuwait or abroad and may acquire or take over such organizations. 2. Establish administrative & industrial facilities alone or in partnership with Kuwaiti, regional and foreign companies in the State of Kuwait or outside which it selects. Article (5) Third The Company s Capital The Company s capital has been established at Kuwaiti Dinar one hundred and twenty million (KD 120,000, ) made up of (120,000,000) shares, and the value of each share one Kuwaiti Dinar (KD 1.000) and all of them are cash shares. The capital may be increased provided that shares are fully paid prior to such increase. Article (6) Holding the share entails inevitably accepting the Company s Memorandum of Association, provisions of its Articles of Association and its General Assembly s decisions. Article (7) The Company s shares are nominal, and non-kuwaiti 6

9 nationals are not allowed to own them, except pursuant to the law s provisions and the governing ministerial decisions. Article (8) The Board of Directors submits to KPC a temporary bond within three months from the date of completing the registration of the Company in the Commercial Record and announce emphatically the foundation of the Company proving in it the share s value, the amounts paid and the remaining premiums, which replaces the shares it owns, and it is exchanged with shares in case of paying the rest of the instalments. Article (9) Fourth The Board of Directors The Company shall be managed by a Board of Directors that comprises seven (7) members appointed by the Board in KPC based upon a proposal of the Chairman of Board of Directors in KPC for three years and can be renewed. Article (10) The Board s members must have qualifications stipulated in the Commercial Companies law. Article (11) KPC s Board of Directors appoints one of the Company s full-time (unoccupied) Board members as a Chairman 7

10 and Managing Director (C&MD), for he represents the Company in the court and before others, and he has to implement the decisions issued by the Company s Board, and the Company s Board selects among its members a deputy to the Chairman who replaces him during his absence, and also selects a deputy Managing Director or executive assistants among the Board s members or from others and the Board will define their powers and remuneration. Article (12) The Chairman or his deputy has the right to sign on behalf of the Company separately, or any other Board member mandated by the Board for this purpose. Article (13) If the Board member s post is vacant, KPC s Board will appoint his successor based upon KPC s Chairman nomination, if there are two vacant positions, appointing should be done within two months from the date of last vacated post, in all cases the new member will continue only his predecessor s period. Article (14) The Board holds its meetings in the Company s Main Office according to an invitation from its Chairman or a request by three of its members, and the Board should convene at least four times during the single fiscal year. The Board may convene in a place determined by the invitation for the meeting outside the Company s Main 8

11 Office where necessary for the Company s sake. The C&MD has to submit a copy of the Board s agenda to KPC Chairman, at least three days prior to each meeting, and has the right to defer considering some topics in this agenda to the next meeting. The Board s meeting will be valid by the presence of the majority of its members and the meeting can t be attended by proxy. Article (15) The Board s decisions are issued by the majority vote of present members and if there is a tie, decision of the Chairman s side will prevail. There should be a special record to write down the Board s minutes of meeting and its decisions, to be signed by the Chairman and the present members, the opposing member of any decision has the right to request registering his opinion, and then a copy of these minutes of the meeting & decisions are sent to KPC s Chairman. Article (16) If one of the Board s members fails to attend three consecutive meetings without an acceptable excuse, he can be considered resigned by a decision from KPC Board of Directors. Article (17) Without prejudice to the provisions of Commercial Companies law and its amendments, the ordinary General Assembly determines the remunerations of the Board s members. 9

12 Article (18) a The Board has the greatest powers to manage the Company and conduct all the Company s business to achieve its objectives, and nothing can limit this power except what is provided by law or the Articles of Association or the General Assembly s decisions or KPC s Board decisions, the Board has no right to sell the Company s real estates or mortgaging them or extend guarantees or take loans unless the consent of the General Assembly is granted and within the limits & terms by which this approval is granted. b The Board of Directors prepare the Company s annual operational & capital budget and submits it to KPC s Board of Directors to be adopted at least five months prior to the date of implementing it. KPC notifies the Company s Chairman of what it adopted from the estimated annual budget according to what the Company has shown or including the modifications introduced by the corporate under which the Company will follow. Article (19) The Board of Directors set the regulations for governing the workflow in the Company including administration affairs, finance, commercial, personnel and their financial dealings, the Board also sets a special bylaw for organizing its business and meetings besides a bylaw 10

13 for distributing assignment, powers and accountabilities between the supervisory levels of the Company s staff. Article (20) The Board s members don t comply with any personal commitment concerning with the Company s pledges due to performing their job tasks within the limits of their job. The Chairman & the Board members are responsible for their tasks towards the Company, the government and others about all acts of fraud & abuse of power and any violation to the law s provisions or this Articles of Association or the decisions of Supreme Petroleum Council (SPC), and for mismanagement. A vote by the General Assembly absolving the Board of Directors shall have no effect on such liability. Article (21) Fifth The General Assembly KPC Board of Directors shall assume the functions of the ordinary General Assembly and Supreme Petroleum Council (SPC) shall have the functions of extraordinary General Assembly which are stipulated in the Articles of Association. The General Assembly convenes normally at least once per year, according to the Chairman s invitation, within three months from the end of the Company s fiscal year and can meet whenever the Board or the auditor deem is necessary. 11

14 The Chairman should invite the ordinary General Assembly for meeting whenever requested by KPC Board within a month from the date of request. Article (22) The Chairman notifies KPC Chairman for the General Assembly meeting whatever its nature attaching the agenda. The Chairman notifies the Minister of Oil about the extraordinary General Assembly meeting attaching the agenda to be reviewed by Supreme Petroleum Council (SPC) and give its comment. Any unlisted issue in the agenda shouldn t be discussed during the General Assembly meeting unless an approval from the General Assembly to discuss this issue is obtained. Article (23) In cases of holding a meeting of the ordinary General Assembly upon the request of KPC Board of Directors or auditors, the agenda is set by those who requested the General Assembly meeting, and notify the Company s Chairman for inviting the General Assembly according to the request and the agenda. Article (24) Rules related to the validity of holding the Supreme Petroleum Council (SPC) and the majority that issue its decisions are applied on holding the extraordinary 12

15 General Assembly as well as its decisions. Article (25) Minutes of meeting should be issued including the attendees, a detailed brief of all the General Assembly s discussions and decisions that were taken as well as what the General Assembly wants to write down in the minutes of meeting, and all minutes of meeting are registered in a special record. Article (26) Normally, the General Assembly is concerned with everything related to the Company s issues except for those retained by the law or these Articles of Association to the General Assembly convened in extraordinary. Article (27) In the General Assembly ordinary meeting, the Board of Directors shall submit a report including a detailed statement of the Board s report about the Company s workflow, its financial & economic status, the Company s budget, Balance Sheet, profit & loss account, and the full statement of the auditor s report, as well as a statement of the Board s members remuneration, the auditor s salaries, and a proposal of distributing the profits, and KPC should be notified of all these reports & statements at least twenty-one days before holding the General Assembly meeting. 13

16 Article (28) The General Assembly in its ordinary meeting discusses the Board s report and decide what is appropriate in this regard and reviews the auditor s report, and appoint auditors for the next fiscal year, defining their remunerations & salaries. Article (29) The General Assembly meets extraordinarily according to the Board s invitation or upon a request from Supreme Petroleum Council (SPC), and hence the Board should invite the General Assembly for meeting within fifteen days from the request. The Chairman of Supreme Petroleum Council (SPC) would invite the extraordinary General Assembly for meeting and define the date and its agenda then inform the Minister of Oil. Article (30) The following issues are reviewed only by the General Assembly when meeting extraordinarily:- a Amending the Memorandum of Association or the Company s Articles of Association. b Selling the whole project carried out by the Company or dealing with it in another way. c Dissolution of the Company or merging it in another company or organization. d Reduce the Company s capital. 14

17 Article (31) Sixth The Company s Accounts The Company should have an auditor or more from certified accountants, to be appointed by the General Assembly and assess his fees, and he should review the fiscal year s accounts which he was appointed for. Article (32) The Company s financial year starts from the first of January and ends by thirty-first of December of each year, except for the first financial year which extends to include the period that passed from the date of founding the Company until thirty-first of December Article (33) The auditor has the powers and obligations stipulated in the Commercial Companies law, and particularly has the right to review all the Company s files, records and its documents at any time, and asking for the data which he finds important, and has the right to check the Company s assets and its commitments, and if he couldn t exercise these powers, he should prove this in a written report to be submitted to the Board of Directors and displayed on the General Assembly, and has the right to invite the General Assembly for this purpose. Article (34) The auditor submits a report to the General Assembly stating in it whether the budget along with profits & 15

18 losses accounts are consistent with reality and express honestly and clearly the Company s real financial status, and whether the stated data in the Board s report are consistent with what is mentioned in the Company s records, and if there are any violations to the provisions of the Company s regime or to the law s provisions which occurred during the fiscal year in a way that affects the Company s business or its financial status with clarifying whether there are still existing violations, this is within the information available to him. The auditor is responsible for the accuracy & validity of information stated in his report being an agent of the whole shareholders, and can be debated in his report to explain what was mentioned during the General Assembly meeting. Article (35) A percentage from gross profit determined by KPC Board of Directors is deducted for the consumption of the Company s assets or compensating the declining of its value, additional sum of money can be deducted from gross profit to be allocated for financing the process of replacement and renewal of the Company s assets, and the Company has to transfer assets replacing allotment to KPC, and deduct part of gross profit which is defined by the General Assembly for the commitments upon the Company under labour laws. Article (36) All distributable net profit are transferred to KPC after deducting the amount allocated as a mandatory 16

19 reserve of ten percentage (10%) from net profit before distribution and after withholding the remunerations of Board s members which are determined by the General Assembly, within a month from the date of distribution by the General Assembly. The General Assembly may stop withholding the allocation for the mandatory reserve if it exceeds half of the Company s capital, and it may deduct sums of net profit to be allocated for establishing a capital for extraordinary reserve or consumption. The reserve is utilized only by a decision from the ordinary General Assembly according to the Board s proposal. Article (37) The Company s cash money is deposited in a bank or many banks selected by the Board of Directors, and the Board determines the maximum limit of cash money which the treasurer can retain in the Company s fund. Seventh The Closing & Liquidation of the Company Article (38) The Company shall be terminated in any of the cases provided in the Commercial Companies law. Article (39) Liquidation of the Company s funds is conducted after closing it pursuant to the provisions stated in the Commercial Companies law. 17

20 Article (40) Eighth The Final Provisions These Articles of Association is delivered and published as per the law. Article (41) The provisions of the Commercial Companies law No. 15 of 1960 as well as its amendments are applied in all issues that don t have special provisions in this statute. 18