Memorandum and Articles of Association of Arab Banking Corporation (B.S.C.)

Transcription

1 Memorandum and Articles of Association of Arab Banking Corporation (B.S.C.) P.O. Box 5698, Manama Kingdom of Bahrain T F Commercial Registration: Licensed as a conventional wholesale bank by the Central Bank of Bahrain

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3 Contents Decree No.2 of 1980 (as amended by Decree No.3 for the year 1990) 02 Memorandum of Association 05 Articles of Association 10 Basis of Incorporation 10 Capital and Shares 12 Management of the Corporation 15 General Meeting 20 Corporation Accounts and Auditor 23 Dissolution of the Corporation 26

4 DECREE NO.2 FOR THE YEAR 1980 (as amended by Decree No.3 for the Year 1990) EXEMPTION OF ARAB BANKING CORPORATION (B.S.C.) FROM CERTAIN PROVISIONS OF THE COMMERCIAL COMPANIES LAW, DECREE NO.28 FOR THE YEAR 1975 WE ISA BIN SALMAN AL-KHALIFA, AMIR OF THE STATE OF BAHRAIN, After perusing the Constitution, the Bahrain Monetary Agency Law, Decree No.23/1973, the Commercial Companies Law, Decree No.28/1975 and the Memorandum and Articles of Association of Arab Banking Corporation (B.S.C.) dated 21 st Muharram, 1400 Hijri year corresponding to 10 th December, 1979 A.D.; pursuant to the submission made by the Minister of Commerce and Agriculture; and after approval by the Council of Ministers. HEREBY proclaim the following decree: Article 1 1 The Ministry of Finance of the Government of Kuwait and the Secretariat of the People s Public Committee of the Treasury of the Socialist People s Libyan Arab Jamahiriya shall be permitted to incorporate in Bahrain a Bahrain joint stock company to be known as Arab Banking Corporation with a share capital of United States Dollars Two Thousand Five Hundred Million (U.S.$2,500,000,000), the shares in which shall be subscribed for in the manner provided for in the Memorandum and Articles of Association of the Corporation hereinbefore referred to. The aforementioned Founder Shareholders shall, after the formation of the Corporation, abide by the Memorandum and Articles of Association of the Corporation, an official copy of each of which two documents signed by the Founder Shareholders is annexed to this Decree and both the said Founder Shareholders, save to the extent that this decree may otherwise provide, shall abide by the provisions of the Bahrain Monetary Agency Law, the Commercial Companies Law and other Laws in force. Article 2 1 Without prejudice to the provisions of Article 1 aforesaid, Arab Banking Corporation (B.S.C.) shall be exempted from the provisions of Articles 60, 71 and 103 of the Commercial Companies Law, Decree No.28 for the year

5 Article 3 Arab Banking Corporation (B.S.C.) hereinbefore referred to may not be allowed to carry out within the State of Bahrain the objects for which it is incorporated, the same being set forth in Article 3 of the Memorandum of Association of the Corporation and Article 4 of the Articles of Association thereof, which are annexed to this Decree. Exceptionally, the Minister of Commerce and Agriculture or the Minister of Finance and National Economy may permit said Corporation to carry out within Bahrain certain of its objects as set forth in the aforementioned Articles 3 and 4 provided that such excepted objects shall be conducive to the fulfillment of investment requirements in relation to economic development projects in the State of Bahrain and that the carrying out thereof shall be in conformity with the conditions and regulations laid down by the terms of such permission. Article 4 Arab Banking Corporation (B.S.C.) shall be exempted from taxes and duties in the following manner:- a) the assets, property, income and activities of the Corporation as provided for in the Memorandum and Article of Association. b) 1 the shares of the Corporation when issued and traded except fees of the Bahrain Stock Exchange. c) the profits of the Corporation and the securities issued thereby together with the interest and commission arising therefrom. Article 5 Precautionary attachment may not be effected upon the property of the Corporation save pursuant to a judicial order and its assets may not be forfeited or confiscated. 1 Articles 1, 2 and 4 (b) were amended by Law 3 of 1990 and subsequently in part by way of a Resolution passed by the Extraordinary General Meeting of the Corporation held on 28 th March 2006 whereby the authorised share capital was raised from U.S.$1 billion to U.S.$1.5 billion and paid up capital was raised from U.S.$750 million to U.S.$1 billion. The authorised share capital has again been raised from U.S.$1.5 billion to U.S.$2.5 billion and the paid up capital has been raised from U.S.$1 billion to U.S.$2 billion by way of a Resolution passed by the Extraordinary General Meeting of the Corporation held on 29 th April The authorised share capital has again been raised from U.S.$2.5 billion to U.S.$3.5 billion and the paid up capital has been raised from U.S.$2 billion to U.S.$3.11 billion by way of a Resolution passed by the Extraordinary General Meeting of the Corporation held on 28 th January

6 Article 6 The managers, deputy managers and staff of the Corporation shall be exempted from foreign exchange restrictions and shall be provided with facilities in relation to travel and residence in accordance with regulations and laws in force. Article 7 The Minister concerned shall give effect to this Decree which shall come into force upon the date of publication thereof in the Official Gazette. ISA BIN SALMAN AL-KHALIFA AMIR OF THE STATE OF BAHRAIN Issued at Rifa a Palace on 29 th Safar, 1400 Hijri Year Corresponding to 17 th January 1980 A.D. 04

7 MEMORANDUM OF ASSOCIATION 2 OF ARAB BANKING CORPORATION (B.S.C.) (Bahrain Joint Stock Company) This Monday the 21 st of Muharram, 1400 Hijri Year, corresponding to the 10 th of December 1979, between the parties undersigned: First: The Ministry of Finance of the State of Kuwait, Second: The Secretariat of the People s Public Committee of the Treasury of the Socialist People s Libyan Arab Jamahiriya. It is hereby agreed as follows: Article 1 The two signatories of this Memorandum have agreed to form a Bahraini Joint Stock Company in accordance with the provisions of the laws in force in Bahrain and the Articles of Association annexed to this Memorandum. Article 2 Name of Corporation: The name of the Corporation shall be Arab Banking Corporation (B.S.C.). Article 3 The objects for which the Corporation is incorporated are: To carry on all the business activities of commercial and investment banks including the financing of trade and projects and to carry out studies and research and activities related thereto for its own account or for the account of others and to engage in all kinds of business supplementary to and connected with its activities and those that are necessary for the conduct of banking or financial business, such as but not being restricted to carrying on the following: 2 Articles 6 & 7 were amended by Decree No.3 of 1990 and subsequently in part by way of a Resolution passed by the Extraordinary General Meeting of the Corporation held on 28 th March 2006 whereby the authorised share capital was raised from U.S.$1 billion to U.S.$1.5 billion and paid up capital was raised from U.S.$750 million to U.S.$1 billion. The authorised share capital has again been raised from U.S.$1.5 billion to U.S.$2.5 billion and the paid up capital has been raised from U.S.$1 billion to U.S.$2 billion by way of a Resolution passed by the Extraordinary General Meeting of the Corporation held on 29 th April The authorised share capital has again been raised from U.S.$2.5 billion to U.S.$3.5 billion and the paid up capital has been raised from U.S.$2 billion to U.S.$3.11 billion by way of a Resolution passed by the Extraordinary General Meeting of the Corporation held on 28 th January

8 1. Opening of current, savings and deposit accounts. 2. Acceptance of deposits of all kinds and issuing certificates of deposit. 3. Dealing in money exchange, transfer of foreign currencies and trading in precious metals. 4. Dealing in financial markets by receiving funds and reinvestment thereof. 5. Opening of documentary letters of credit and confirmation thereof on behalf of others and the undertaking of all collection business relating thereto. 6. Issuing of bank guarantees and bonds of all kinds. 7. Issuing of bankers acceptances and exchanging thereof. 8. Acting as financial agent for others. 9. Providing advances and bank facilities to manufacturers and exporters against tangible security or without security. 10. Providing loans and financing either directly or in cooperation with others. 11. Arrangement of and participation in international loans. 12. Arrangement and underwriting of bond issues and the promotion and marketing thereof for others. 13. Investigation and evaluation of investment opportunities with a view to direct investment therein or the provision of finance in the various business sectors. 14. Promotion of and participation in industrial, agricultural, commercial and other business projects. 15. Arranging mergers and amalgamations of existing companies. 16. Investing and trading in the shares of joint stock companies irrespective of whether they are quoted on a stock exchange or otherwise. 17. Formation of specialised companies or establishments whether wholly or partially owned by the Corporation. It shall likewise be permitted to acquire existing banks or companies or to acquire a shareholding therein. 18. Provision of services for the formation of companies for other persons or participating with such other persons in this regard. 19. Dealing in the leasing of fixed assets and real estate. 20. Provision of financial and technical investment advice to others. 06

9 The Corporation may have an interest in other entities carrying on activities similar to its own or which are conducive to the attainment of its objects both in Bahrain and abroad. It may likewise participate in any manner whatsoever with such entities or merge therewith or purchase or take over such entities. All the foregoing shall be in accordance with the conditions and requirements laid down from time to time by the Central Bank of Bahrain. Article 4 Head office of the Corporation: The Head Office of the Corporation shall be situated in the City of Manama, in the Kingdom of Bahrain, but the Board of Directors may open branches, offices or agencies of the Corporation within or outside Bahrain. Article 5 Duration of the Corporation: The duration of the Corporation shall be fifty (50) calendar years commencing from the date of publication of its incorporation but the duration of the Corporation may be extended for a further period or periods by a resolution of the Extraordinary General Assembly with the approval of the Minister of Industry and Commerce, in the event that the purposes of the Corporation shall require such extension. The duration of the Corporation shall terminate for any statutory reason giving rise to termination. Article 6 Capital of the Corporation: The authorised capital of the Corporation is fixed at United States Dollars Three Thousand Five Hundred Million (U.S.$3,500,000,000). The issued and paid up capital is fixed at United States Dollars Three Thousand One Hundred Ten Million (U.S.$3,110,000,000), and is divided into Three Thousand One Hundred Ten Million (3,110,000,000) ordinary shares, each of which has a nominal value of United States Dollars One (U.S.$1). 07

10 Article 7 Subscription of Shares by the Founder Members and Shareholders: The entire issued capital has been allocated for subscription by the Founder Shareholders and the other Shareholders in the following manner: FOUNDER MEMBER/ SHAREHOLDER NO. OF SHARES VALUE IN U.S.$ The Central Bank of Libya 3 1,295,237,807 1,295,237,807 Kuwait Investment Authority 923,289, ,289,191 The Abu Dhabi Investment Authority 4 551,151, ,151,902 Public Subscription 340,321, ,321,100 The Founder Members and the other current Shareholders have paid in full the nominal value of the shares for which they have subscribed in the total amount of United States Dollars Three Thousand One Hundred Ten Million (U.S.$3,110,000,000) divided into Three Thousand One Hundred Ten Million (3,110,000,000) shares of United States Dollars One (U.S.$1). Article 8 The two signatories of this Memorandum (the Founder Shareholders) undertake to use their endeavours to procure the issue of the Decree giving assent to the incorporation and to carry out all such procedures as are required to complete such incorporation; and they have authorised Mr. Abdulla Ammar Al-Saudi and Mr. Abdul-Wahab Ali Al-Tammar to submit this Memorandum to the Department of Commerce and Company Affairs in the Ministry of Industry and Commerce, to furnish the supporting documents required by the said Department, to effect such amendments as are deemed appropriate by the Department whether to this Memorandum or to the Articles of Association annexed hereto, to procure the registration of the Corporation in the Commercial Registry, and to cause such registration to be published. 3 On 15 March 1987, the Secretariat of the People s Public Committee of the Treasury of the Socialist People s Libyan Arab Jamahiriya transferred 2,500,000 shares of U.S.$100 each to the Central Bank of Libya. 4 On 2 December 2010, the Central Bank of Libya ( CBL ) acquired Abu Dhabi Investment Authority s 17.72% shareholding in the Corporation bringing the CBL s shareholding to 59.37% of the Corporation. 08

11 Article 9 Expenses and Fees: The Corporation shall undertake to meet fees and expenses incurred in connection with its formation in the amount of approximately (United States) Dollars Two Hundred Thousand (U.S.$200,000). Article 10 The Articles of Association annexed hereto shall be deemed to be supplementary to this Memorandum and an integral part thereof. Article 11 This Memorandum has been issued in six copies, each party hereto receiving one copy, the remaining copies being retained so that one copy may be submitted with the application for approval for the formation of the Corporation to the Department of Commerce and Companies Affairs and the other remaining copies to the appropriate authorities. Kuwait, the 21 st Muharram, 1400 Hijri Year corresponding to the 10 th of December, 1979 A.D. For the Ministry of Finance, State of Kuwait For the People s Public Committee of the Treasury of the Socialist People s Libyan Arab Jamahiriya Abdul-Rahman Salem Al- Atiqi Minister of Finance Mohammed Al-Zarouq Rajab Secretary of the People s Public Committee of the Treasury 09

12 ARTICLES OF ASSOCIATION 5 OF ARAB BANKING CORPORATION (B.S.C.) CHAPTER I: BASIS OF INCORPORATION Article 1 There has been established pursuant to the Memorandum and these Articles of Association a Bahraini joint stock company under the name of Arab Banking Corporation (B.S.C.). Article 2 The Head Office of the Corporation shall be situated in the City of Manama in the Kingdom of Bahrain but the Board of Directors may open branches, offices or agencies within or outside Bahrain. Article 3 The duration of the Corporation shall be fifty (50) (calendar) years, commencing from the date of publication of its incorporation, but the duration of the Corporation may be extended for a further period or periods by a resolution of the Extraordinary General Meeting with the approval of the Ministry of Industry and Commerce, in the event that the purposes of the Corporation shall require such extension. The duration of the Corporation shall terminate for any statutory reason giving rise to termination. Article 4 The objects for which the corporation is incorporated are: To carry on all the business activities of commercial and investment banks including the financing of trade and projects and to carry out studies and research and activities related thereto for its own account or for the account of others and to engage in all kinds of business supplementary to and connected with its 5 Articles 5, 6, 7, 10, 11, 19, 44 and 47 incorporate amendments approved by Decree No.3 of In addition, Articles 5 & 6 were amended in part by way of a Resolution passed by the Extraordinary General Meeting of the Corporation held on 28 th March 2006 whereby the authorised share capital was raised from U.S.$1 billion to U.S.$1.5 billion and paid up capital was raised from U.S.$750 million to U.S.$1 billion. The authorised share capital has again been raised from U.S.$1.5 billion to U.S.$2.5 billion and paid up capital has been raised from U.S.$1 billion to U.S.$2 billion by way of a Resolution passed by the Extraordinary General Meeting of the Corporation held on 29 th April The authorised share capital has again been raised from U.S.$2.5 billion to U.S.$3.5 billion and the paid up capital has been raised from U.S.$2 billion to U.S.$3.11 billion by way of a Resolution passed by the Extraordinary General Meeting of the Corporation held on 28 th January

13 activities and those that are necessary for the conduct of banking or financial business, such as but not being restricted to carrying on the following: 1. Opening of current, savings and deposit accounts. 2. Acceptance of deposits of all kinds and issuing certificates of deposit. 3. Dealing in money exchange, transfer of foreign currencies and trading in precious metals. 4. Dealing in financial markets by receiving funds and reinvestment thereof. 5. Opening of documentary letters of credit and confirmation thereof on behalf of others and the undertaking of all collection business relating thereto. 6. Issuing of bank guarantees and bonds of all kinds. 7. Issuing of bankers acceptances and exchanging thereof. 8. Acting as financial agent for others. 9. Providing advances and bank facilities to manufacturers and exporters against tangible security or without security. 10. Providing loans and financing either directly or in cooperation with others. 11. Arrangement of and participation in international loans. 12. Arrangement and underwriting of bond issues and the promotion and marketing thereof for others. 13. Investigation and evaluation of investment opportunities with a view to direct investment therein or the provision of finance in the various business sectors. 14. Promotion of and participation in industrial, agricultural, commercial and other business projects. 15. Arranging mergers and amalgamations of existing companies. 16. Investing and trading in the shares of joint stock companies irrespective of whether they are quoted on a stock exchange or otherwise. 17. Formation of specialised companies or establishments whether wholly or partially owned by the Corporation. It shall likewise be permitted to acquire existing banks or companies or to acquire a shareholding therein. 18. Provision of services for the formation of companies for other persons or participating with such other persons in this regard. 19. Dealing in the leasing of fixed assets and real estate. 20. Provision of financial and technical investment advice to others. 11

14 The Corporation may have an interest in other entities carrying on activities similar to its own or which are conducive to the attainment of its objects both in Bahrain and abroad. It may likewise participate in any manner whatsoever with such entities or merge therewith or purchase or take over such entities. All the foregoing shall be in accordance with the conditions and requirements laid down from time to time by the Central Bank of Bahrain. CHAPTER II: CAPITAL AND SHARES Article 5 The authorised capital of the Corporation is fixed at United States Dollars Three Thousand Five hundred million (U.S.$3,500,000,000). The issued and paid up capital is fixed at United States Dollars Three Thousand One Hundred Ten million (U.S.$3,110,000,000), and is divided into Three Thousand One Hundred and Ten million (3,110,000,000) ordinary shares, each of which has nominal value of United States Dollars One (U.S.$1). Article 6 (a) The entire issued capital has been allocated for subscription by the Founder Shareholders and the other Shareholders in the following manner: FOUNDER MEMBER/ SHAREHOLDER NO. OF SHARES VALUE IN U.S.$ The Central Bank of Libya 1,295,237,807 1,295,237,807 Kuwait Investment Authority 923,289, ,289,191 The Abu Dhabi Investment Authority 551,151, ,151,902 Public Subscription 340,321, ,321,100 The Founder Members and the other current Shareholders have paid in full the nominal value of the shares for which they subscribed in the total amount of United States Dollars Three Thousand One Hundred Ten million (U.S.$3,110,000,000) divided into Three Thousand One Hundred Ten million (3,110,000,000) shares of United States Dollars One (U.S.$1). (b) The balance of the nominal value of the issued shares shall be paid at the times and in the manner as decided by the Board of Directors provided that the dates fixed for payment shall be announced at least thirty (30) days in advance. 12

15 (c) (d) Interest will be charged on any amounts not paid on the dates fixed for payment at a rate determined by the Board of Directors of the Corporation forthwith as from the said dates, without the need for any notice, warning or legal proceedings, until the date upon which payment is made. The Board of Directors shall have the right to sell shares for the account of the defaulting shareholder and at his responsibility, if payment of amounts due in settlement of the value thereof has been delayed, without the need for any notice. The proceeds shall be applied, in priority to all other creditors, to recovery of the amounts unpaid on shares together with interest and expenses. The balance, if any, will be paid to the shareholder. In the event that the proceeds of sale will not be sufficient, the Corporation shall have recourse against the private assets of the shareholder. Article 7 The shares of the Corporation are nominal and indivisible. Article 8 The Board of Directors shall within three months from the date of subscription for any new share deliver to each shareholder provisional nominal certificates showing the number of shares subscribed for and the amounts paid up thereon and the installments remaining due and, after payment in full of the installments, the shareholder shall be given final certificates. The final certificates shall be delivered within three months from the date of payment of the last installment. Article 9 (a) (b) The share certificates shall be detached from a book of coupons and they shall be given serial numbers, be signed by the Chairman or any other person so authorised by the Board of Directors in his stead and be sealed with the Corporation seal. The share certificate shall include a statement that the shares are nominal and give the number of the Decree assenting to incorporation, the date of its publication in the Official Gazette, the amount of authorised capital and the amount of capital issued and subscribed for, the number of shares into which it has been divided, the purposes of the Corporation, its Head Office and duration. Article 10 Subject to the provisions of Article 11 hereof, the shares of the Corporation are freely transferable. The Corporation may list its shares for trading on securities 13

16 exchanges within Bahrain and abroad subject to approval of its Board of Directors. Article 11 Transfer of ownership of shares shall be evidenced in writing and registered in a special register at the Corporation called the Share Ownership Transfer Register, after the submission of a declaration signed by the transferor and the transferee. The Corporation shall have the right to require authentication of the signatures of the two parties and confirmation as to their capacity in the usual legal manner. Registration of such transfer shall be effected by the Corporation upon submission (and authentication as aforesaid if so required by the Corporation) of the instrument of transfer. The parties to such transfer shall not be required to attend a sales meeting. Article 12 The liability of a shareholder shall be limited to the unpaid amount of the nominal value of the issued shares for which he has subscribed and such liability may not be increased. Article 13 Ownership of a share entails acceptance of the Articles of Association of the Corporation and the resolutions of its General Meeting. Article 14 The heirs and creditors of a shareholder shall not be permitted for any reason to call for the affixing of seals to the Corporation s books of account or to its property or for the division of its assets or, in the event of the impossibility of such division, for the sale of the whole undertaking nor shall they be permitted to interfere in the management of the Corporation in any manner whatsoever but in the exercise of their rights they shall be obliged to rely on the inventories of the Corporation, its final accounts and upon the resolutions of the General Meeting. Article 15 Each share shall entitle its holder to exactly the same share in the Corporation s assets and in the profits, distributed in the manner hereinafter specified, as the share of another. 14

17 Article 16 Dividends on shares shall be paid to the last person whose name is registered in the records of the Corporation as the owner thereof and such person shall have the sole right to receive the amounts due in respect of the share whether such amounts are dividends or a share in the assets of the Corporation. Article 17 (a) (b) (c) The authorised capital of the Corporation may be increased by the issue of new shares of the same nominal value as the original shares or by the conversion of the Reserve Fund into shares and the capital of the Corporation may likewise be reduced. But new shares may not be issued with less than the nominal value and if issued at more than the nominal value the difference shall be credited to a Share Premium Reserve Account. Any increase or reduction of the capital shall be by a resolution of the Extraordinary General Meeting pursuant to a recommendation of the Board of Directors which, in case of an increase, shall show the amount of such increase, the price at which the new shares are issued and the extent of the right of priority of original shareholders to subscribe for such new shares. In the case of a reduction of capital, the recommendation of the Board of Directors shall include the amount and manner of such reduction, provided that no increase in capital may take place until after the amount of the authorised capital has been fully paid up. The Corporation may, by resolution of the Ordinary General Meeting, issue debentures provided that the value thereof shall not exceed the aggregate of the capital and reserves of the Corporation. CHAPTER III: MANAGEMENT OF THE CORPORATION Article 18 (a) (b) The management of the Corporation shall be vested in a Board of Directors composed of at least four Members and not exceeding twelve Members and the Board shall elect from its Members a Chairman and a Deputy (or Deputies) to the Chairman. The Deputy Chairman shall act as the Chairman in the latter s absence. The Board of Directors may appoint from among its Members one or more Managing Directors and shall determine their powers. 15

18 Article 19 (a) The Members of the Board shall be appointed for a term of three financial years subject to renewal. In all cases the Board of Directors shall remain in office until approval by the General Meeting of the last balance sheet of its term of office. (b) A Member of the Board of Directors need not be a shareholder. Representation of the shareholders on the Board of Directors shall be in accordance with their shareholdings determined on the basis that the number of shares giving rise to the right to nominate a Board Member shall be equal to the number arrived at by dividing the number of issued shares by the number of the Members of the Board provided, however, that a shareholder or a group of shareholders holding not less than twentyfive percent of the issued and paid up shares of the Corporation shall have the right to nominate Members of the Board of Directors and shall be represented thereon in proportion to their shares of the capital of the Corporation. (c) (d) The Ordinary General Meeting shall, upon expiry of the term of membership of the Board of Directors, elect the new Members from among the persons nominated by the shareholders in accordance with the provisions of the foregoing paragraph (b). A juristic person shall have the right to be elected as a Board Member subject to the condition that it shall nominate some natural person as its representative for this purpose. Article 20 Without prejudice to the provisions of paragraphs (a) and (b) of Article 19 above, the Board of Directors shall, in the case of a vacancy occurring among its Members, appoint a substitute, whose appointment shall be ratified by the General Meeting at its meeting next following. The new Member shall complete the term of office of his predecessor. Article 21 A Member of the Board may, when necessary, appoint in writing another Member of the Board as his proxy and in such case the Member acting as proxy shall have two votes. No Member of the Board may act as proxy for more than one other Member. 16

19 Article 22 (a) (b) (c) The Board of Directors shall meet at the Head Office of the Corporation at the written invitation of the Chairman which must be sent out at least two weeks before the date of the Board Meeting. The Board of Directors shall meet at least four times during each financial year. The Board of Directors shall likewise meet at the request of at least three of its Members provided that a written invitation is sent out at least two weeks before the date of the Board Meeting. The Board of Directors may meet at a place outside the place where the Head Office is situated in case of necessity. Article 23 (a) The Meeting of the Board of Directors shall be valid if attended by a majority of its Members provided that the Chairman or his Deputy is present. The resolutions of the Board shall be passed by a majority vote of the Members present either in person or by proxy and, in the event of an equal vote, the Chairman shall have a casting vote. The following matters shall require consent by two thirds of the members present whether in person or by proxy: 1. Appointment of the Executive Committee and definition of its powers. 2. Appointment of the Managing Director and definition of his powers. 3. Proposal to increase or reduce the capital. (b) The Board may deem any Member who fails to attend three consecutive Meetings without a legitimate excuse to have resigned. Article 24 A meeting of the Board of Directors shall be deemed to be valid if attended by all the Members thereof, all Members having agreed to convene such meeting without prior invitation. Article 25 The Board of Directors may appoint a Secretary to the Board from among its Members or from outside its membership and shall maintain a special register in which shall be recorded the minutes of the Board s Meetings which shall be signed by the Chairman and the Secretary of the Board. A dissenting Member may request that his views be recorded. 17

20 Article 26 The Chairman shall represent the Corporation in its relations with third parties and before the Courts of Law and, in his absence, the Deputy Chairman shall act in his place. Article 27 The Chairman or the Deputy Chairman or any other person so authorised by the Board shall have the right severally to sign on behalf of the Corporation. Article 28 The General Assembly shall fix the remuneration of the Chairman, the Deputy Chairman and the Members of the Board of Directors for each financial year. The aggregate value of such remuneration shall not exceed 10% of the net profits after allowance has been made for depreciation, transfer to reserves and distribution to the shareholders of a dividend equal to not less than 5% of the capital or any higher percentage provided for by these Articles of Association. Article 29 The Board of Directors shall have sufficiently extensive powers to carry out the activities required by the objects of the Corporation with the exception of those matters expressly reserved, by law and these Articles of Association, to the General Meeting. The Board shall lay down regulations relating to financial, administrative and technical matters and regulations covering the employment and salaries and benefits of staff. The Board shall likewise lay down rules for regulating the agenda and Meetings of the Board of Directors and the allocation of particular assignments and responsibilities. The Board shall appoint and dismiss senior management within the terms laid down by it in this regard and shall determine the powers and remuneration thereof. Article 30 (a) (b) (c) The Board of Directors may constitute from among its Members or other persons Committees to study matters referred to it or to submit reports in respect of such matters. The Board of Directors may appoint any Member or other person to undertake a specific assignment or to conclude a business transaction and to grant to such persons all necessary powers in that regard. The Board may at any time dissolve committees so constituted or dismiss any person so appointed to carry out a specific assignment. 18

21 Article 31 No Member of the Board of Directors or any manager may participate in any transaction which conflicts with the interest of the Corporation and every act in breach of this provision shall be void but this shall be without prejudice to the right of the Corporation, where necessary, to claim damages from the person in breach. Article 32 No Member of the Board of Directors may have a direct or indirect interest in contracts and transactions concluded with the Corporation except with the special permission of the Board of Directors. Article 33 No person who has been convicted of a felony or of any offence of dishonor may be a Member of the Board of Directors. Article 34 The Board of Directors shall, within three months at the most after the end of each financial year, prepare the Balance Sheet and Profit and Loss Account of the Corporation in accordance with proper accounting principles. Article 35 The Chairman and Members of the Board of Directors shall be liable to the Corporation and the shareholders and to third parties for all acts of fraud, abuse of powers and any violation of the law or these Articles of Association and for mismanagement. No resolution of the General Meeting absolving the Board of Directors from liability shall bar any such legal proceedings from being taken. Article 36 The Board of Directors may appoint an Executive Committee from among its Members and shall determine the number of its members, its powers and other procedures relating to the manner in which its meetings are to be held and votes taken. 19

22 CHAPTER IV: GENERAL MEETING Article 37 The General Meeting shall represent all shareholders. When necessary and with the consent of the Minister of Industry and Commerce, it may meet outside Bahrain. Article 38 Every shareholder shall have the right to attend the General Meeting in person or by proxy, which must be in writing (by cable, telex or some written instrument). Article 39 6 (a) Written invitations to attend the Ordinary and Extraordinary General Meetings shall be sent to shareholders together with an agenda at least fifteen (15) days before the date of the Meeting. (b) For the Ordinary General Meeting to be validly held, it must be attended by persons representing at least 75% of the capital of the Corporation. If such minimum percentage is not attained at the first Meeting, the Meeting shall be reconvened pursuant to a second invitation issued within the next fifteen (15) days, and the second Meeting shall be deemed valid whatever the number of shares represented. In all cases, the resolutions of the Ordinary General Meeting shall be passed by an absolute majority of the shareholders represented at the Meeting. Article 40 (a) (b) The two Founder Shareholders shall prepare the agenda for the meeting of the Founders General Meeting and the Board of Directors shall prepare the agenda for the Ordinary and Extraordinary General Meetings. In circumstances where the General Meeting may be convened pursuant to a request of the shareholders or of the Auditors, the agenda shall be prepared by the person calling the General Meeting and no issue shall be discussed unless listed in the agenda. 6 Article 39 (a) was amended by way of a Resolution passed by the Extraordinary General Meeting of the Corporation held on 29 th April 2008 whereby the minimum notice period for Ordinary and Extraordinary General Meeting was changed from thirty (30) days to fifteen (15) days. 20

23 Article 41 Each shareholder shall have a number of votes equivalent to the number of his shares and no member is allowed to take part in the voting, either in person or on behalf of the member whom he is representing, in respect of issues relating to a personal interest or to a current dispute between himself and the Corporation. Article 42 (a) (b) (c) The General Meeting shall be presided over by the Chairman or his Deputy or any person appointed by the Board of Directors or by the General Meeting in this regard. In any case where the General Meeting is deliberating upon an issue relating to the chairman of the meeting, the General Meeting shall select some person from among the shareholders to take over the chairmanship. Voting in the General Meeting shall be in the manner determined by the chairman of the meeting unless the General Meeting decides upon some particular form of voting. Article 43 The Founders General Meeting shall satisfy itself regarding all procedures relating to the incorporation and shall peruse the relevant supporting documents. The Meeting shall likewise verify the correctness of the information contained in the report of the Incorporation Committee and its conformity with the law and the Memorandum and Articles of Association. It shall also elect the Members of the Board of Directors and the Auditors and shall declare the Corporation finally incorporated. The Meeting shall not be legal unless attended by a number of shareholders holding or representing more than half the shares and resolutions shall be passed by a majority of the number of shares represented at the Meeting. Article 44 The Ordinary General Meeting shall be held at least once a year at the invitation of the Board of Directors within three months from the end of the financial year of the Corporation. The Board of Directors may summon this meeting whenever it deems it appropriate. The Board, however, shall be under a duty to call for an Ordinary General Meeting whenever a number of shareholders holding not less than one tenth of the capital so request (provided they have a legitimate cause) or if such meeting is requested by the Auditor. 21

24 Article 45 The Board of Directors shall submit to the Ordinary General Meeting a Report giving full details of the operations of the Corporation, its financial and economic status, the Corporation s Balance Sheet and Profit and Loss Statement, a statement as to the emoluments of the Members of the Board of Directors and the remuneration of the Auditors and its proposals for the distribution of profits. Article 46 The Ordinary General Meeting shall concern itself with all the Corporation s matters with the exception of those reserved by the Articles of Association to the Board of Directors or the Extraordinary General Meeting or to the Founders General Meeting. The Meeting shall in particular convene to hear the Board of Directors on the activities of the Corporation and on its financial situation, the report of the Auditors, to give approval to the final Balance Sheet for the financial year and the Profit and Loss Statement, to fix the dividend to be distributed among the shareholders, to appoint Auditors and determine their remuneration, to elect Members of the Board of Directors, if necessary, and to determine the emoluments of the Chairman, his Deputy and the Members of the Board of Directors. Article 47 7 The Extraordinary General Meeting shall be convened at the invitation of the Board of Directors or pursuant to a written request addressed to the Board by the holders of at least one quarter of the Shares of the Corporation (provided they have a legitimate cause). In the latter case the Board of Directors shall summon an Extraordinary General Meeting within next fifteen (15) days from the actual receipt of such request. Article 48 For an Extraordinary General Meeting to be validly held, holders of at least 75% of the capital of the Corporation must be represented thereat. If such minimum percentage is not attained at the first Extraordinary General Meeting, it shall reconvene pursuant to a second invitation issued within the next fifteen (15) days and in such case the Meeting shall be valid if attended by persons representing at least 50% of the capital. In all cases no resolution shall be valid unless approved by persons representing at least 50% of the capital. 7 Article 47 was amended by way of a Resolution passed by the Extraordinary General Meeting of the Corporation held on 29 th April 2008 whereby the minimum notice period for Ordinary and Extraordinary General Meeting was changed from thirty (30) days to fifteen (15) days. 22

25 Article 49 The Extraordinary General Meeting shall concern itself with the following matters: 1. Amendments to the Memorandum and Articles of Association of the Corporation. 2. Sale of the entire business undertaking of the Corporation or the disposal thereof in any other manner. 3. Winding up the Corporation or its amalgamation with any other establishment or company. 4. Increase or reduction of capital. CHAPTER V: CORPORATION ACCOUNTS AND AUDITOR Article 50 (a) (b) (c) In respect of every financial year the Board of Directors shall present the following: 1. The Corporation s Balance Sheet for the financial year ending giving particulars of the assets and liabilities of the Corporation. 2. The Profit and Loss Account. 3. A detailed Report on the operations of the Corporation and its financial situation during the year ending. 4. Detailed statements, in the manner proposed by the Board regarding the distribution of the net profits accruing in the year ending and carried forward from the previous year. The Board of Directors shall, at least one week before the date fixed for the Annual General Meeting, have prepared for perusal by the shareholders the Balance Sheet, the Profit and Loss Account, and the Report aforementioned together with the report of the Auditors. The consolidated Balance Sheet shall be signed by the Chairman or his Deputy and also by the General Manager of the Corporation. The Corporation shall send by registered mail to each shareholder a statement of the consolidated Balance Sheet and the report of the Auditors and every other document relating to the Balance Sheet. 23

26 Article 51 The financial year of the Corporation shall begin on l st January and end on 31 st December of each year with the exception of the first financial year of the Corporation which shall begin on the date on which the final establishment of the Corporation will be declared by the registration of the Corporation in the Commercial Register and shall end on 31 st December of the following year. Article 52 The Corporation shall have one or more Auditors who shall be certified accountants; the Auditor shall be appointed by the General Meeting who shall fix his remuneration. The Auditor shall audit the accounts in respect of the financial year for which he is appointed. Article 53 The Auditor shall at all times have the right to peruse the books, records and documents of the Corporation and to request such information as he deems it necessary to obtain. He shall likewise have the right to verify the assets and ascertain the liabilities of the Corporation. In the event that he is not able to exercise such powers, he shall state this fact in a written report to the Board of Directors which shall refer the matter to the General Meeting; and the Auditor shall have the right to convene the General Meeting for such purpose. Article 54 The Auditor shall submit to the General Meeting a report stating whether or not the Balance Sheet and the Profit and Loss Account accord with the actual situation and may be considered to give a true and clear view of the actual financial position of the Corporation, whether the Corporation keeps properly organised accounts, whether the inventory has been taken in accordance with the standard practices, whether the statements contained in the Report of the Board of Directors reflect the entries and data contained in the Corporation s books and whether in this regard any violations of the provisions of the Articles of Association of the Corporation or of the law have occurred during the financial year such as might affect the business of the Corporation or its financial position and indicating whether, on the basis of the information made available to him, such violations are still continuing. The Auditor shall be liable for the accuracy of the information contained in his report, in his capacity as the representative of the body of the shareholders. Each shareholder shall have the right during the General Meeting to discuss the Auditor s report with him and to request clarification from the Auditor of the contents thereof. 24

27 Article 55 A percentage, to be determined by the Board of Directors in accordance with standard technical and accounting principles, shall be deducted from gross profits, by way of amortisation of all varieties of wasting assets belonging to the Corporation, or to cover the depreciation thereof, and as provision for the Corporation s obligations under the Labour Laws. These funds shall be used for the purchase of necessary materials, equipment, and plant or for the maintenance of the same and may not be distributed to shareholders. Article 56 The annual net profits of the Corporation shall be distributed as follows: (i) (ii) (iii) Ten percent of the net profits to be deducted for the purposes of creating a Legal (Mandatory) Reserve from the net profits. This deduction shall cease when the aggregate amount of the Reserve is equal to 50% of the paid up capital of the Corporation but, whenever the Reserve shall for any reason fall below such percentage, the deduction from net profits shall be resumed. Such further percentage to be deducted from the net profits, for the purposes of creating a Voluntary Reserve as the Board of Directors may propose having regard to the business requirements and financial position of the Corporation. Distribution of the requisite amount to the shareholders as dividends. (iv) The balance of profits shall be carried forward to the following year or allocated to the formation of an Extraordinary Financial Reserve. (v) The Financial Reserve shall be utilised pursuant to a resolution of the Board of Directors in such manner as shall best serve the interests of the Corporation. Article 57 Dividends shall be paid to the shareholders in the places and at the times determined by the Board of Directors. Article 58 The Mandatory Reserve shall not be distributed to the shareholders but may be used solely to ensure the distribution of profits to the shareholders of up to 5% in 25

28 those years in which the profits of the Corporation do not permit the distribution of such percentage. CHAPTER VI: DISSOLUTION OF THE CORPORATION Article 59 The Corporation shall be dissolved in any of the following circumstances: 1. Conclusion of the business for which it has been formed; 2. Declaration of bankruptcy; 3. Winding up in accordance with the law; 4. Judgment of the Court ordering its liquidation. Article 60 If the Corporation loses 75% of its capital, the Board of Directors shall convene an Extraordinary General Meeting to determine whether the situation necessitates the winding up of the Corporation, the reduction of its capital or taking any other appropriate measures. If the Board of Directors fails to convene an Extraordinary General Meeting or if the Meeting does not convene owing to the lack of a legal quorum or if the General Meeting refuses to wind up the Corporation, each shareholder shall have the right to apply to the Court to have the Corporation wound up. Article 61 Any such resolution to dissolve the Corporation shall be published in the Official Gazette and registered in the Commercial Register. Article The Ordinary General Meeting shall elect liquidators and fix their number and remuneration. 2. If it is not possible to obtain a resolution of the General Meeting for electing and fixing the number of liquidators, the Court shall appoint them and shall determine their remuneration. 3. The liquidators may be elected or appointed from among the Members of the Board of Directors, or from the shareholders, and may be a juristic person. 26

29 Article 63 The Auditors shall remain in office and shall be joined by an expert appointed by the Court in association with whom they shall jointly carry out their functions and the supervision of the liquidation. Article 64 The liquidators shall have the powers of the Board of Directors with respect to the process of liquidation and shall bear the same responsibilities. Article 65 The books, records and documents of the dissolved Corporation shall be retained for 10 years in safe custody, in a place determined by the liquidator, or, failing any such decision, by the appropriate Government authority. 27