Inovest B S C : Corporate Governance Report 2021.

INOVEST B.S.C.

Corporate Governance Report

31 December 2021

Corporate Governance 2021

1. Corporate Governance Structure

The Company is governed by the Commercial Companies Law promulgate by Legislative Decree No. 21 of 2001 ("Companies Law"), Corporate Governance Code of the Kingdom of Bahrain ("Governance Code"), the High-Level Controls Module of Volume 4 and 6 of the CBB Rulebook, and the Bahrain Bourse Law of 1987, generally referred to as "Regulations".

The Company undertakes its responsibility towards its shareholders by adopting the highest standards of corporate governance. The Company believes that the sound implementation of corporate governance enhances shareholder value, and provides adequate guidelines to the Board of Directors, its committees and Executive Management, in order for them to perform their duties in a manner that best serves the Company and its shareholders. The Company seeks to achieve the highest level of transparency, accountability and efficient management through the adoption and pursuit of strategies, objectives and policies that ensure the fulfillment of its organizational and ethical responsibilities.

2. Board of Directors

The Board of Directors consists of seven Board Members, four independent, and three executive members.

The Board of Directors was elected in the Ordinary General Assembly held on 29th April 2021 for three years, and a new Board of Directors will be elected in the first quarter of 2024 during the Ordinary General Assembly.

2.1 Election Process

The Nomination and Remuneration Committee formed by the Board of Directors reviews the skills and qualifications that the prospective members of the Board of Directors must possess. The General Assembly elects the new candidate after obtaining majority votes in the ballot held for such purpose Responsibilities are distributed across the Board of Directors in accordance with the Company's Articles of Association and the Commercial Companies Law. Membership of the Board of Directors may be nullified in case, inter alia, the member commits a crime, breaches trust or is declared bankrupt.

2.2 Board's Composition

The Chairman of the Board of Directors oversees the activities of Executive Management and evaluates its performance regularly, in addition to his other responsibilities, that include chairing Board meetings, monitoring the performance of the CEO, and communication with shareholders. The Board of Directors has formed certain committees with specific powers for the sake of guiding the management team, supervising the running of operations and taking decisions in the Company. The Board of Directors supervises the Company's management directly & through its various committees.

The Board of Directors has specified and segregated responsibilities between the Board and the Executive Management. The Board oversees all the activities of the Company and approves the same. It is responsible for Risk Management, the preparation of financial statements and corporate governance. The other issues that require approval of the Board include, inter alia, approval of financial statements, acquisitions and exits. The Board also ensures observance of the basic values of the Company, as prescribed in the internal policies of the Company.

All Company policies are being reviewed and approved on annual basis. In coordination with the Internal Audit Unit, the Risk Management Unit follows-up the validation and implementation of the policies and procedures under the supervision of the relevant committees. The Board of Directors is also responsible for approving Related Party transactions, subject to the schedule of Authorities adopted by the Company. The Board of Directors is also responsible for preparing the consolidated financial statements of the Company.

The members of the Board may communicate with the Company's Executive Management at all times. The CEO, in cooperation with the management team, shall monitor the Company's performance with regard to specific and (approved) objectives and shall conduct the Company's daily affairs pursuant to the policies, objectives, strategies and guidelines adopted and approved by the Board of Directors from time to time.

The Board of Directors consists of seven members, and their experience is mix of highly professional and specialized experience in their field of specialization and in the Real Estate Investment field.

INOVEST has a written appointment agreement with each member of the Board of Directors, which recites the members of Board of Director's power, and duties and other matters relating to his appointment including his term, the time commitment envisaged, the committee assignment if any, his remuneration and expense reimbursement entitlement, and his access to independent professional advice when that is needed.

3. Members of the Board of Directors and their other memberships

The following tables show the names and the date of the first membership of the Board of Directors:

		Term of	Date of First	Date of the	Type of
Member		end of	Position	Notes
	Appointment	Appointment	Membership
		current Term
Mohammad			29th April 2021 Q1-2024	Independent	Chairman	-
Hamed	Al
Shalfan
Mohamed			29th April 2021		Executive	Vice	-
Salah	Al				Chairman
Ayoub
Abdulaziz			29th April 2021		Executive	Member	-
Assad
Alsanad		Three Years
Mohammed		29th April 2021		Independent	Member	-
Abdualwahab
Almatook
Abdullah			29th April 2021		Independent	Member	-
Mohamad
Alabduljader
Abdulaziz			29th April 2021		Executive	Member	-
Fahad
Dakheel
Ausama			29th April 2021		Independent	Member	-
Abdulrahim
Alkhaja

4. Director Ownership of Shares

The below table demonstrates the shares of the company owned by Board member as at 31st December 2021:

	Board Member	No. of Shares	Percentage (%)
	Abdulaziz Assad Alsanad	٥,٥٠٨٬١٨٨	١٫٨٣
	Abdulaziz Fahad Dakheel	٦٠٠٬٠٠٠	٠٫٢٠

5. Distribution of Shareholding

5.1 Distribution of Shares per Nationality

As of 31st December 2021, the Company's register show that there were 680 shareholders who own in total 300,836,787 shares. Following is the distribution of shares in the Company per nationality:

	Nationality		Number of Shares		Ownership (%)
	Bahraini		18,982,721		6.31
	Kuwaiti		270,825,030		90.02
	Emirati		3,619,751		1.20
	Saudi		6,003,018		2.00
	Others		1,406,267		0.47
	Total		300,836,787		100

5.2 Shareholders Who Own 5% or more of Company's Shares

The following schedule shows number and names of shareholders who own 5% of Company's shares or more as of 31 December 2021:

Shareholders

Number of

State

Ownership %

Shares

Gulf Investment House (GIH)

42,930,670

Kuwait

14.27

Mechanism General Trading Company

26,197,500

Kuwait

8.71

Abdulwahab Assad Alsanad & his group

25,625,257

Kuwait

Sanad Co. for buying and selling shares and

8.52

bonds

Dubai Islamic Bank

20,736,327

United Arab

6.89

Emirates

5.3 Distribution of Share Ownership per Quantity/Size

The following schedule shows the distribution of share ownership as of 31 December 2021 as per shareholding size:

		Categories:			Number of shares		Number	of Ownership %
								Shareholders
		Less than 1%	38,670,199	658	12.85
		1% up to less than 5%	146,676,834	18	48.76
		5% up to less than 10%	72,559,084	3	24.12
		10% up to less than 20%	42,930,670	1	14.27
		Total			300,836,787			680				100

5.4 Ownership by Government

None of the share of the company was owned by the Government as at 31st December 2021.

6. Board of Directors Committees

The Board of Directors formed three committees having specific assignments and powers:

Corporate Governance,	Position	Responsibilities	Type of Membership
Nomination & Remuneration
Committee Members
Abdulaziz Assad Alsanad	Chairman		Executive