Bank Of Sharjah P J S C : Corporate Governance Report 2021

CORPORATE GOVERNANCE REPORT 2021

bankofsharjah.com

BOARD OF DIRECTORS BOARD COMMITTEES GENERAL MANAGEMENT SHAREHOLDERS APPENDIX CSRR 2021

Table of content

Introduction	3
I -	Board of Directors	6
A. Members of the Board	7
B. Board of Emirates Lebanon Bank S.A.L.	9
C. Role of the Board	10
II -	Board Committees	14
A. Board Executive Committee	15
B. Board Credit Committee	17
C. Board Audit Committee	20
D. Board Risk Committee	25
E. Board Corporate Governance and Compliance, AML, CFT Committee	27
F	Board Remuneration, Nomination and Compensation Committee	31
III -	General Management	34
A.	Group CEO	34
B.	Management Structure	34
C.	Control Functions	40
D.	Emiratization	40
IV - Shareholders	42
A. Shareholders Meetings	42
B. Composition	43
C. Dividends	44
V -	Appendix	46
A. Code of Ethics and Conduct	46
B. Conflict of Interest Policy	48
C. Disclosure Policy	49

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BOARD OF DIRECTORS BOARD COMMITTEES GENERAL MANAGEMENT SHAREHOLDERS APPENDIX CSRR 2021

INTRODUCTION

Corporate Governance is the set of relationships between the Bank's management, Board, shareholders and other stakeholders which provide the structure through which the objectives of the Bank are set, as well as the means of attaining those objectives and monitoring performance. It helps define the way authority and responsibilities are allocated and how corporate decisions are made.

The Bank's Board of Directors works with management to establish and promote business goals, organisational objectives, and a strategy that promotes businesses that are in sync with the broader environment.

Corporate Governance instils a culture where the Board of Directors and the Executive Management contemplate the impact of their decisions prior to implementation to consider the interests of all the stakeholders, first and foremost being the shareholders of the company.

Bank of Sharjah's approach to Corporate Governance

Bank of Sharjah believes Corporate Governance to be the guiding force that determines how the organisation is directed and controlled. Effective Corporate Governance, that is appropriately aligned with relevant regulations and international best practices, is the basic tenet of Bank of Sharjah's business philosophy.

As a Bank whose fundamental value is to maintain the highest ethical standards, Bank of Sharjah strives to compete only on the basis of quality of services we provide to our customers. The success of the Bank's business is dependent on the trust and confidence it earns from our shareholders, customers and employees.

The Corporate Governance function in the Bank is mandated to stipulate, institute and monitor a group-wide corporate governance framework and to act as its guardian.

Corporate Governance has been launched to the forefront of business activity post the financial crisis of 2008-09. Regionally and internationally, recessions and downturns in many countries have been blamed on lack of corporate governance or non- compliance with corporate governance guidelines. It has therefore become imperative that companies focus on this as a matter of urgency, aiming to meet regulatory requirements and striving to meet international best practices.

Corporate Governance is the core foundation of any business activity and without it, the business would begin to suffer. Governance is a holistic approach to the management and organization within a firm which, if directed in a comprehensive manner can make a substantial difference to the business's success and its long-term sustainability; it feeds into all areas of the business.

Corporate governance at Bank of Sharjah

• Establishes and preserves management accountability to shareholders by appropriately allocating rights and responsibilities among Board members and managers.
• Provides a structure for management and the Board to set objectives and monitor performance.
• Strengthens and safeguards the Bank's culture of business integrity and responsible business practices.
• Encourages the efficient use of resources, and establishes accountability for stewardship of those resources.

Bank of Sharjah P.J.S.C. (hereafter "the Company" or "the Bank") has always been committed to achieving a high level	2021
of corporate governance. Ethical and responsible business practices have been embedded in the Bank's culture since its
inception in 1973. The Bank focuses on transparency and disclosure to ensure it is in line with best international standards
and practices. The Bank continuously strives to enhance the level of trust amongst its stakeholders and to further focus on

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the principle of transparency. As such, it updates the shareholders on the recent corporate governance developments by publishing the Corporate Governance and Corporate Social Responsibility (CSR) report as part of its Annual Report. The Corporate Governance framework within the Bank is governed by the model set by the UAE Central Bank and the regulations of the Securities & Commodities Authority (SCA), the Federal and local legislations such as the National Electronic Security Authority (NESA) as well as the Basel II 'Principles for enhancing Corporate Governance' and Basel III Corporate Governance updates.

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BANK'S CORPORATE GOVERNANCE STRUCTURE

Bank of Sharjah was incorporated on December 22, 1973, by Emiri Decree issued by H.H. Dr. Sheikh Sultan bin Mohamed Al Qassimi, Ruler of Sharjah, as the first Financial institution in the Emirate of Sharjah, the fifth in the Federation, and the first consortium bank established in the GCC between 3 founding members:

Government of Sharjah: 20%

Mubarak Al Hassawi: 20%

Banque de Paris et des Pays-Bas: 20%

The Bank was also the first financial institution in the UAE to make 40% of its capital available to public subscription.

Bank of Sharjah has remained sustainable despite the numerous financial crises over the years. This is a strong reflection of the underlying good governance by the Board of Directors and the Management.

The Bank has always been focused on maintaining strong internal controls and effective governance. Furthermore, it has shown its commitment in many ways including being a founding member of Hawkamah - The Institute for Corporate Governance.

The Bank has designated a Corporate Governance Officer whose primary role is the development and implementation of the Bank's governance framework, overseen by the Board of Directors.

Board Executive	Board Credit
Committee	Committee

Board of Directors

Board Audit	Board Risk	Board Corporate	Board
Committee	Committee	Governance and	Remuneration,
		Compliance, AML,	Nomination &
		CFT Committee	Compensation
			Committee

The Bank has a set of 'Core Values' on which strong emphasis is placed, namely:

PETICQ: Performance | Ethics | Transparency | Initiative | Commitment | Quality

All of which form the basis of this report.

		Mission Statement Bank of Sharjah P. J.S.C
		'The mission of Bank of Sharjah is to achieve strong and sustainable Performance for its
		shareholders, operating to the benefit of our customers and personnel with high Ethics,
		offering and expecting full Transparency, adopting innovative Initiatives to help customers
		achieve their aspirations and objectives, assuring them of our unwavering Commitment to
		support their businesses through the waves of economic cycles with a pristine subscription
		to Quality of service. The Bank is committed to its personnel and clientele to accompany
		them in realizing their aspirations and objectives.
		Performance, Ethics, Transparency, Initiative and Quality are imprinted in the way we do
2021		business and how we contribute to society and the environment.
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	Management Committees
Executive	Internal Control	Credit	Asset & Liability	IT Steering
Committee	Committee	Committee	Committee	Committee
Information Security	Human Resources	Regulatory Reporting	Treasury Investment	IFRS 9 Management
Committee	Committee	Compliance Committee	Committee	Committee

The Board of Directors heads the governance structure of the bank. The Board created six Board Committees, with
specific roles and responsibilities delegated to each. In addition, in order to ensure effective achievement of the	2021
Bank's goals, the Bank's management created ten management committees, devoted to the day-to-day management
of the business.
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BOARD OF

DIRECTORS

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BOARD OF DIRECTORS

Bank of Sharjah has a very experienced, highly skilled and well-respected Board of Directors from a variety of business backgrounds. The Board members are fully committed to the Bank's long-term sustainability and their confidence is evident through their shareholding in the Bank. The Directors are engaged with the Corporate Governance and business practice, they know the Bank's business structure and its operational procedures; which enables them to keep abreast of significant changes and to act promptly to protect the Bank's long-term interests, when necessary.

The Directors are committed to achieving the Bank's objectives while ensuring shareholders' interests are always considered. In line with the revised Basel Committee's Corporate Governance Principles for Banks, the Board approves and follows the implementation of the Bank's overall strategy, and periodically reviews the Bank's Corporate Governance framework to ensure its appropriateness with respect to changes in the Bank's business strategy, scope of activities and regulatory requirements. The Board is also responsible for establishing the Bank's risk appetite along with the Senior Management, taking into consideration the Bank's risk exposure and long-term objectives.

The Board meets regularly, at least six times per year. In addition to these meetings, the Board may convene whenever the need arises upon the invitation of the Chairman, by three of its Directors or by the Group CEO. A meeting can only be held if a majority of members are in attendance. If Directors are unable to attend a meeting, their votes can be assigned to another Director of their choosing provided that they do not have any conflicts of interest. A Director cannot act for more than one other Director.

The Board of Directors consists of 11 members to be elected by the General Assembly Meeting by a secret cumulative ballot.
The Board status is aligned with the Bank's definition of independence as stated in the Articles of Association as well
as best practices regarding Directors interests and exposure levels. At least one-third of the Directors are independent
members. It is not permitted for the Chairman of the Board to be the Group CEO of the Bank or its Managing Director.
The term of the Board is three years at the end of which a new Board is elected. Directors whose terms expire may be
re-elected. The Board elects a Chairman and Deputy Chairman by a simple majority vote.
The Chairman of the Board and the majority of the Directors must be UAE citizens.
Definition of Independence
As defined in the Bank's Articles of Association.
Independent Member of the Board of Directors:
An Independent member of the Board is a person who was not personally, or through his spouse or any of his relatives
a member of the Company's executive management during the past two years, and none of them had any substantial
financial dealings with the Company, its holding company or any of its subsidiaries or affiliates during the past two years.
The Member of the Board loses his independent character in any of the following instances, inter alia:	2021
• Being employed by a party connected to the Company in the past two years.

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• If he has connections with a consultancy firm or a firm that offers consultancy or financial services to the Company or to a party related to the Company.
• If he had connections to a major customer or supplier of the Company or any party related to it by any kind of financial, commercial and professional services etc.
• If he had contracts for personal services with the Company, any party related to it or with its executive management staff.
• If he was connected to a non-profit organisation which receives substantial funding from the Company or a party affiliated to it.
• If he works as executive staff in another company in which the Company's executive staff occupy the office of Board of Directors members.
• If during the past two years, he had connections with or was employed by the present or past auditors of the Company or any party affiliated to it.
• If he has substantial banking facilities with the Bank (in excess of 1% of the equity of the Bank).

A. MEMBERS OF THE BOARD

Bank of Sharjah P.J.S.C.

Sheikh Mohammed Bin Saud Al Qasimi	Chairman
Sheikh Saif Bin Mohammed Bin Butti Al Hamed	Vice Chairman
H.E. Humaid Nasser Al Owais	Member
Mr. Abdulaziz Hassan Al Midfa	Member
Mr. Abdulaziz Mubarak Al Hasawi	Member
Mr. Saud Abdul Aziz Al Besharah	Member
Mr. Francois Dauge	Member

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SHEIKH MOHAMMED BIN SAUD AL QASIMI | Chairman (Non-ExecutiveDirector)

Elected Chairman of the Board of Directors with effect from 25 July 2019. Board Member since 2004 and Vice Chairman from 2008 until July 2019. He is a member of the Sharjah Ruling Family, the Chairman of the Finance Department at the Government of Sharjah and a prominent businessman.

Chairman's Duties:

The Chairman shall assume the following functions and responsibilities, for example, but not limited to:

• Ensuring that the Board of Directors works effectively, discharges its responsibilities and discusses all major and appropriate issues in time.
• Setting and adopting the agenda of each Board meeting, considering any issues that Members wish to be included in the

agenda. The Chairman may entrust this responsibility to a specific member or to the Secretary of the Board.

• Encouraging all members to participate fully and effectively so as to ensure that the Board of Directors acts in the Company's best interests.
• Undertaking appropriate measures to ensure effective communication with the shareholders and to convey their views to the Board of Directors.
• Facilitating effective participation of Non-Executive Board Members in particular, and establishing constructive

relationships between Executive Management and Non-Executive Directors.

• Representing the company before judicial and administrative courts and centres of settlement of disputes and arbitration tribunals.

SHEIKH SAIF BIN MOHAMMED BIN BUTTI AL HAMED | Vice Chairman

(Non-Executive Director)

Board Member since 1999, member of the Abu Dhabi Ruling Family, a prominent businessman, and sits on many company Boards. He is the son of Sheikh Mohammed Bin Butti Al Hamed, former Representative for the Western Region of H.H. the Ruler of Abu Dhabi, and a major shareholder of United Al Saqer Group, Abu Dhabi.

H.E. HUMAID NASSIR AL OWAIS

(Non-Executive Director)

Board Member since 1973 and one of the Founding members. A former Federal Minister of Electricity and Water and a prominent businessman who maintains private businesses.

MR. ABDULAZIZ HASSAN AL MIDFA

(Independent Non-Executive Director)

Board Member since 1973. Former Director of the Finance Department in Sharjah.

MR. ABDULAZIZ MUBARAK AL HASSAWI

(Non-Executive Director)

Member of the Board since 2005. The son of the Late Mr. Mubarak Al Hassawi, one of the three main founders of the Bank. He is a well-known Kuwaiti businessman, Chairman and a Senior Executive in several leading institutions across Kuwait. He also owns and manages companies across the region including the UAE, Saudi Arabia, Lebanon, Bahrain and Europe.

	Mr. Salem Humaid Al Ghamai	Member
	Mr. Salah Ahmed Abdalla Al Noman AlShamsi	Member
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Mr. Abdulla Mohammed Sharif Al Fahim	Member
Mr. Amer Abdulaziz Khansaheb	Member

MR. SAUD ABDUL AZIZ AL BESHARAH

(Non-Executive Director)

Board member since 1985. A prominent businessman in Kuwait and a Director in various companies.

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