Post on 25-Mar-2021
Audit Committee charter
Zain Bahrain
Policy Details & Approvals
Approvals
This Charter has been approved by the Board of Directors at their meeting held on:
Version number Reference number
Last reversion date
First release
Signature
Date
AbdulRahman Al ShafeiManager, Investor Relations, Corporate Governance, Compliance & General Management Office
Prepared by
Signature
Date
Latifa SalahuddinDirector, Legal Department and Board Secretary
Reviewed by
Signature
Date
Mohammed ZainalabedinGeneral Manager
Approved by
Board Of Directors TargetedAudience
Internal CirculationOpen CirculationStrictly Confidential
Document type
2
Zain Bahrain B.S.C. ("Zain")Audit Committee Charter
Change History:
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Date Change owner Name
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Table of Contents
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Zain Bahrain B.S.C. ("Zain")Audit Committee Charter
The Board of Directors (hereinafter referred to as the "Board" or the "Directors") may amend
this Board Charter (hereinafter referred to as the "Charter") or grant waivers in exceptional
circumstances, provided that any such modification or waiver does not violate any applicable
laws, rules, regulations, Zain Bahrain B.S.C.’s ("Zain") Delegation of Authority Matrix and
"Articles of Association" and further provided that any such modification or waiver is
appropriately disclosed to the concerned parties.
The changes to this document will be consecutively numbered and dated.
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1 Introduction
1.1 The Board of Directors of Zain, in its adoption to "Corporate Governance Code"
in line with the "Central Bank of Bahrain Rule Book – Volume 6: Capital
Markets" issued by the Central Bank of Bahrain (hereinafter referred to as the
"CBB") and the "Corporate Governance Code" issued by the Ministry of Industry
and Commerce (hereinafter referred to as the "MoIC"), and assurance to that it
remains aligned with leading practices in terms of "Corporate Governance" issued
by the Organization for Economic Cooperation and Development (hereinafter
referred to as the "OECD"), has prepared and approved this Charter.
1.2 As per "Principle 1 issued by the Corporate Governance Code: The
Company shall be headed by an effective, collegial and informed Board" The
Audit Committee (hereinafter referred to as the "Committee") will act only within
its mandate and therefore the Board will not allow the Committee to dominate or
effectively replace the whole Board in its decision making responsibility.
1.3 This Charter will govern the operations of the Audit Committee and details the
scope of the Committee's responsibilities and how it will carry out those
responsibilities, including but not limited to its structure and procedures.
1.4 The Committee will review this Charter annually and will recommend to the
Board any changes to the extent required under any applicable regulations, as well
as to bringing it in line with leading practices.
1.5 As per "Principle 1 issued by the Corporate Governance Code: The
Company shall be headed by an effective, collegial and informed Board" and
"Appendix B: Audit Committee" the Board will evaluate, with the assistance of
the Nomination and Remuneration Committee (hereinafter referred to as the
"NRC"), the performance of the Audit Committee annually, based on a self-
evaluation report prepared by the Audit Committee. The Audit Committee
evaluation will include an assessment of the performance and commitment of
each member to the activities of the Committee as well as his/her constructive
involvement in discussion and decision making.
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2 Purpose
2.1 The Board of Directors being the governing body of Zain will ensure, through its
Audit Committee, that the Company's management maintains adequate policies,
procedures and internal controls for:
2.1.1 Safeguarding the Company's assets.
2.1.2 Properly recording the transactions and events as they take
place.
2.1.3 Preparing reliable financial information.
2.1.4 Overseeing and monitoring the enterprise wide risks for
managing the Company's operations.
2.2 The above aspects will be independently and periodically assessed by the
Company's internal as well as "External Auditors".
2.3 To further strengthen the Internal Audit Function (hereinafter referred to as the
"IAF") and to ensure its objectivity and independence, the Board established this
Committee. The primary purpose of the Audit Committee of the Board of
Directors of Zain is to monitor the following Company affairs on behalf of the
Board:
2.3.1 Adequacy and soundness of internal control systems, financial
accounting and reporting policies and practices, and effectiveness of
internal and "External Audit" functions.
2.3.2 Adherence to the Company's approved policies and procedures.
2.3.3 Adequacy and soundness of policies and procedures in respect
of the safety and security of the Company's assets, resources and integrity
of the Company's financial statements.
2.3.4 Performance of the Company's internal and "External Audit"
functions and their independence.
2.3.5 Existence of a framework for the identification, management
and review of risks, including agreeing risk capacity and tolerance.
2.3.6 Identification of the principal risks of Zain's business and
ensuring the implementation of appropriate systems to manage those risks.
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2.3.7 Revision and evaluation of strategic risks and the receipt of
regular reports on those as well as emerging risks.
2.3.8 Existence of a positive culture of managing opportunities,
threats and uncertainties that are embedded throughout the Company.
3 Organization of the Audit Committee
3.1 Structure of the Audit Committee
3.1.1 As per "Principle 3 issued by the Corporate Governance
Code: The Board shall have rigorous controls for financial audit and
reporting, internal control and compliance with Law" and "Appendix
B: Audit Committee" The Committee will be comprised of at least three
(3) members, such members must have no conflict of interest with any
other duties they have for the company. The majority of members of the
committee including its Chairman shall be independent. As of today’s date,
the Company is in the process of applying the Corporate Governance
requirements and the majority of the members are not independent due to
the fact that MTC holds a management agreement with Zain Bahrain. The
majority of the members will have the financial and accounting literacy to
include the following:
Ability to read and understand the annual and interim financial
statements including the balance sheet, the income statement, the
cash flow statement, the statement of changes in shareholders' equity
and the related notes to the financial statements which represent an
integral part of the latter.
Understanding of the accounting principles, assumptions and
estimates which are applicable to the financial statements.
Experience in evaluating complex accounting concepts and practices.
Understanding of internal controls and procedures for financial
reporting.
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Understanding of the Audit Committee's functions and importance.
3.1.2 "Executive Directors", including the Chief Officers (hereinafter
referred to as the "Officers"), are not eligible for Audit Committee
membership. These members will have no conflict of interest with any
other duties they have for the Company.
3.1.3 As per "Appendix B: Audit Committee" issued by the
Corporate Governance Code, the Board might choose to appoint Non-
Board members as experts in the Committee.
3.1.4 As per "Article 173: Commercial Companies Law", the
Audit Committee member who is also a member of the Board will fulfill
the following conditions:
He/she will be fully qualified to act.
He/she would not have been convicted in a crime involving negligent
or fraudulent bankruptcy or a crime affecting his/her honor or
involving a breach of trust or in a crime on account of his/her breach
of the provisions of this law, unless he/she was reinstated.
Any other conditions set out in the Company’s Articles of
Association.
If the member forfeits any of the above conditions, he/she will no longer
become member from the date of forfeiture of that condition.
3.1.5 As per "Principle 3 issued by the Corporate Governance
Code: The Board shall have rigorous controls for financial audit and
reporting, internal control and compliance with law" and "Appendix
B: Audit Committee" One of the members will serve as the Chairman of
the Committee (hereinafter referred to as the "Chairman"). The Chairman
will be designated by the Board and will be an "Independent Director".
3.1.6 The Board will also nominate a "Vice Chairman" to chair the
Committee's meeting in case of the Chairman's absence.
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3.1.7 Employees of Mobile Telecommunications Company K.S.C.
and Zain are not eligible for Audit Committee membership.
3.1.8 Members of the Committee will be appointed by the Board
upon the recommendation of the NRC and may be removed by the Board
at its discretion.
3.1.9 No Committee member will simultaneously serve on the Audit
Committee of a competitor of Zain.
3.1.10 Neither the Chairman of the Board, nor the Chairman of the
"Executive Committee" nor the Chairman of the "Board Risk Committee",
if any, may chair this Committee.
3.1.11 The Board will issue rules for appointing the members of the
Committee and define the term of their office as set by the local rules and
regulations unless otherwise stated in addition to the procedure to be
followed by the Committee.
3.1.12 The Audit Committee's term of office will be for a period not to
exceed the tenure of the Board. The membership of an Audit Committee
member, if he/she is a Director, will come to an end at the expiry of his/her
membership of the Board or by his/her voluntary resignation from the
Committee membership. A Non-Director's membership will cease by way
of his/her resignation or at the end of the Committee's term.
3.1.13 As per "Principle 4 issued by the Corporate Governance
Code: The Company shall have rigorous procedures for appointment,
training and evaluation of the Board" The "Chairman of the Board" will
confirm to the shareholders when proposing re-election of a Director that,
following a formal performance evaluation, the person's performance
continues to be effective and continues to demonstrate commitment to the
role. Any term beyond six (6) years for a Director will be subject to
particularly rigorous review, and will take into account the need for
progressive refreshing of the Board. Serving more than six (6) years is
relevant to the determination of a "Non-Executive Director's"
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independence. This clause is applicable not only to the Directors but also
to the Committee members.
3.1.14 The Secretary of the Board will act as the Committee Secretary
(hereinafter referred to as the "Secretary") to keep records of its
proceedings and resolutions. He/she can be one of the Committee's
members or a Non-Committee member and he/she can be from outside the
Board. If the Secretary is not a Committee member, he/she will attend the
Committee meetings without having any voting right. The Secretary, if not
a Committee member, will not be involved in other duties or
responsibilities that would result in a conflict of interest with his/her duties
as the Committee's Secretary. The Secretary will be a person with legal or
similar professional experience. The Secretary is responsible for the
following:
Keeping complete records of the Committee's meetings for the
purpose of issuing reports about the performance of the Committee
to the Board.
Circulating the Committee's resolutions to the concerned parties.
Coordinating with concerned departments regarding the Committee's
resolutions that necessitate legal compliance and regulatory
procedures.
Establishing a mechanism for tracking and following-up on the
Committee's resolutions.
Executing any other task or responsibility assigned to him/her by the
Committee's Chairman or any of its members.
3.1.15 The Board through the Audit Committee will have access to the
Secretary, who will have responsibility for reporting to the Committee on
its procedures.
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3.1.16 The Board may remove an Audit Committee member from the
membership by a majority vote.
3.2 Remuneration of the Committee
3.2.1 The Committee members will not be entitled to a segregated
compensation but rather will be entitled to the regular annual board
remuneration.
3.2.2 The above amounts will be approved by the Board based on the
recommendations from the NRC.
3.2.3 As per "Principle 5 issued by the Corporate Governance
Code: The Company shall remunerate Directors and officers fairly
and responsibly", remuneration will be sufficient enough to attract, retain
and motivate the Audit Committee members. However; the Company will
avoid paying more than what is necessary for that purpose.
3.2.4 As per "Principle 5 issued by the Corporate Governance
Code: The Company shall remunerate Directors and officers fairly
and responsibly" issued by the Corporate Governance Code, due to the
fact that all Audit Committee members are
Non-Executive Directors, accordingly their remuneration will not include
performance related elements such as: grants of shares, share options or
other deferred stock related incentive schemes, bonuses or pension
benefits.
3.2.5 Committee members who are resident outside the Company's
registered office location are entitled to all out of pocket expenses incurred
by them to attend the meeting.
3.2.6 The Secretary will not be entitled to any compensation but
rather will be entitled to the regular remuneration if he/she is a Director.
3.2.7 Board of Directors' reports presented to the "General
Assembly" will disclose the remunerations and other payments made to
the Committee members.
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3.3 Meetings and Procedures of the Committee:
3.3.1 The Committee will approve its tentative yearly meeting
schedule at the first meeting of each year.
3.3.2 The Audit Committee will meet at the invitation of its
Chairman or any two (2) members. Such an invitation to be accompanied
by the agenda for the meeting as well as the material packages will be
hand delivered or sent to the members electronically prior to the date of
the meeting.
3.3.3 The agenda of each meeting will be prepared by the Secretary
of the Committee after the approval of the Chairman.
3.3.4 As per "Appendix B: Audit Committee" issued by the
Corporate Governance Code, the Committee will meet at least four (4)
times in every financial year and may meet more frequently from time to
time as it deems necessary or as may be required by the Board. These
meetings may be scheduled in conjunction with regularly scheduled
meetings of the entire Board. Unless otherwise directed by the Board,
(meetings can be attended in person or via tele-conference or video-
conference), the Committee will meet at the Company's registered office.
3.3.5 As per "Appendix B: Audit Committee" issued by the
Corporate Governance Code, anyone will be entitled to be attend and
present at a meeting of the Committee based on the consent of the
Chairman.
3.3.6 The Chairman will preside, when present, at all meetings of the
Committee.
3.3.7 The presence of the majority of Committee members with the
presence of the Chairman or his/her deputy will constitute a quorum for
the Committee's meetings.
3.3.8 A member cannot elect another member of the Committee to
act on his/her behalf and to vote in the meetings.
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3.3.9 In case of emergencies or situations beyond the Committee's
control and where the Audit Committee cannot be convened, the Audit
Committee can take its decisions via circulation.
3.3.10 The Committee's resolutions will be taken by a majority of
votes.
3.3.11 The Chairman will have a casting vote in case of an equality of
votes in line with the Committee's authority specified in the DoA.
3.3.12 As per "Appendix B: Audit Committee" issued by the
Corporate Governance Code, Officers of the Company might be invited by
the Chairman to attend the Committee meeting. The Non-Committee
members will be involved in the discussions but will not have any voting
right.
3.3.13 The Committee will keep written minutes of its meetings as
detailed in this Charter under "Section 3.4 "Minutes of Meetings" below".
3.4 Minutes of Meetings
3.4.1 The deliberations and resolutions of the Audit Committee will
be recorded in minutes. Such minutes will be kept with the Board of
Directors' records. These minutes will be provided to each of the
Committee members after the approval of all Committee members who
have attended the meeting.
3.4.2 The Committee will keep a record of its meetings and report on
them to the Board. The Committee's meetings will be documented as
follows:
The minutes will specify the date and the place of the meeting,
the name of attendees and absentees, summary of discussions held in
the meeting and their related decisions and recommendations.
The draft minutes will be prepared by the Secretary after each
meeting and will be sent to all Committee members for review. Any
comments on the minutes from any of the Committee members will
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be provided during a week from the draft's receipt date, or otherwise
the minutes will be considered as approved.
The Secretary will amend the draft minutes based on the
members' comments, if any, and will send the minutes along with
these comments to the Chairman.
The Secretary will prepare the final minutes according to the
Chairman's recommendations and will send them to the Committee
members duly signed by the Chairman and himself.
The signed copy of the minutes will be kept attached with the
related documents and correspondence in a special file held by the
Board Secretary.
3.5 Authority of the Committee
3.5.1 The Audit Committee's role will be to review and advise but
not to make any business decisions. The Committee will demonstrate a
constructive, supportive and advisory approach.
3.5.2 To achieve its objectives the Audit Committee is authorized to:
Perform the specific duties and functions enumerated in this
Charter and upon the directions and approval of the Board, to
investigate any of the Company's activities.
Have full access to the Company's Officers and employees at
all levels and authority to seek reports or information about the
Company's financial affairs, as it deems necessary to fulfill its
responsibilities, in coordination with the Chief Executive Officer
(hereinafter referred to as the "CEO").
Communicate its findings and recommendations for any
corrective actions to the Board and will not issue any directives to
the Company's Officers and employees in this regard. The Board will
either accept and implement the recommendations of the Audit
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Committee or advise the Committee of the reasons for any deviations
from the proposal.
As per "Principle 1 issued by the Corporate Governance
Code: The Company shall be headed by an effective, collegial
and informed Board" Grant Non-Executive Directors free access to
the Company's management beyond that provided in Board
meetings. Such access will be through the Chairman of the Audit
Committee or the CEO. The Board should make this policy known to
management to alleviate any management concern about a Director's
authority in this regard.
3.5.3 Individual members of the Committee will not access
independently the Company's Officers or employees without the
Chairman's approval or a resolution from the Audit Committee.
3.5.4 As per "Appendix B: Audit Committee" issued by the
Corporate Governance Code, in discharging its oversight role, the
Committee, in coordination with the CEO, is empowered to investigate
any matter brought to its attention with full access to all books, records,
facilities and personnel of the Company and the power to retain outside
counsel, auditors or consultants, or incur additional expenses for this
purpose, that will be paid by the Company without seeking the approval of
the Board or the Officers. The Audit Committee may require any Officer
or employee of the Company or any of its subsidiaries and the Company's
advisors (including but not limited to: consultants, auditors and legal
advisors) to meet with the Committee, after coordinating with the CEO.
3.6 Reporting Responsibilities of the Committee
3.6.1 The Chairman will report formally to the Board on its
proceedings after each meeting on all matters within his/her duties and
responsibilities.
3.6.2 Make recommendations to the Board as it deems appropriate on
any area within its responsibilities where action or improvement is desired.
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3.6.3 Prepare an "Annual Report" concerning the number of
meetings held during the year along with the number of meetings attended
by each member.
3.6.4 Review any other reports relating to the Committee's
responsibilities and issued by the Company.
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4 Audit Committee Responsibilities
4.1 The Audit Committee will carry out the following responsibilities as set out
below:
4.1.1 Internal Controls and Finance and Accounting Policies and
Procedures
Review with the Company's management and internal auditor
and "External Auditor" the Company's policies to reasonably assure
the adequacy of accounting principles and financial practices applied.
Review the effectiveness of the Company's internal controls'
system, including information technology and telecom (industry
specific) security and controls.
Understand the scope of internal and "External Auditors"
review of internal controls over financial reporting, and review
reports on significant findings, implications and recommendations
together with management's responses.
Review with the Chief Audit Executive (hereinafter referred to
as the "CAE") and the "External Auditors" the coordination of audit
efforts to ensure complete coverage of key business controls and
high risk areas, improve efficiency and the effective use of audit
resources.
Review and comment on any significant new or changes to
existing finance and accounting policies and procedures adopted by
management.
4.1.2 External Audit and Financial Statements
As per "Appendix B: Audit Committee" issued by the
Corporate Governance Code, recommend to the Board the
appointment, dismissal and remuneration of "External Auditors".
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Any such recommendation will be made with regard to their
independence, cost and competencies.
In appointing an "External Auditor" for the Company, the
management of the Company and the Audit Committee will comply
with the related guidelines issued by the MoIC.
An invitation for "External Audit" proposals should be
requested from the firms short-listed by the IAF. A formal
documented evaluation of the auditors included in the short-list
should be carried out by the CAE in coordination and agreement with
the CEO. The evaluation should take into account specific industry
expertise, size of the audit firm, other similar audits, the value that
could be added as well as the fees. The evaluation and management's
recommendation will be submitted to the Audit Committee for
review. The Committee's recommendations will be subject to the
Board's approval.
As per "Appendix B: Audit Committee" issued by the
Corporate Governance Code, make a determination at least once
each year of the "External Auditor's" independent report, including:
Determining whether its performance of any non-audit services
compromised its independence. Additionally, the Audit Committee
will pre-approve all non-audit services provided by the "External
Auditors", including specific pre-approval of internal controls related
services, and will not engage the "External Auditors" to perform non-
audit services prohibited by law or regulations.
Obtaining from the "External Auditor" a written report listing
any relationships between the "External Auditor" and the Company
or with any other person or entity that may compromise the "External
Auditor's" independence.
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Recommend a frequency for change/rotation of "External
Auditors" on a periodic basis.
Review "External Audit" reports, work with and support the
"External Auditors" where practicable and provide an alternative
communication link between the "External Auditors" and the Board
as and when needed.
Oversee the arrangements for the completion of the quarterly
interim reviewed financial statements and year-end audited financial
statements. Review together with the "External Auditor" the audit
plan (proposed audit scope); including coordination of the audit
effort with the IAF.
As per "Appendix B: Audit Committee" issued by the
Corporate Governance Code, review with the "External Auditor" the
audited financial statements with respect to the audit approach,
accounting adjustments and reclassifications, recommendations for
improving the internal controls and any other significant audit
findings before these are presented to the Board as well as discuss
any restrictions on its access to requested information and any
disagreements or difficulties encountered with Officers.
As per "Chapter HC-3 Issued by the Central Bank of
Bahrain Rule Book – Volume 6: Capital Markets: Audit
Committee and Financial Statements Certification" Make
effective use of the work of the "External Auditor" as well as the
internal auditor and ensure the integrity of the Company's accounting
and financial reporting systems through regular independent review.
Audit findings will be used as an independent check on the
information received from management about the Company's
operations and performance as well as the effectiveness of its internal
controls.
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Discuss the adopted accounting policies and any changes in
accounting policies, providing opinion and recommendations to the
Board.
As per "Chapter HC-3: Audit Committee and Financial
Statements Certification" issued by the Central Bank of Bahrain
Rule Book – Volume 6: Capital Markets, recommend any additional
or specific audit required in respect of the financial statements and
other specific part of the business.
As per "Chapter HC-3: Audit Committee and Financial
Statements Certification" issued by the Central Bank of Bahrain
Rule Book – Volume 6: Capital Markets, recommend and table for
discussion a management letter to be provided to the external auditor.
Annually review and evaluate the "External Auditor's"
qualifications, performance and independence, including a review
and evaluation of the lead partner, taking into account the opinions of
the Company's Chief Officers and the CAE and present its
conclusions to the Board. The Audit Committee will also consider
the regular rotation of the "External Audit" firm itself to assure
continuing auditor independence in fact and in appearance.
Review the scope, terms of reference and remuneration for any
tax services assignment which can be performed by external
consultants.
On a regular basis, meet separately with the "External
Auditors" to discuss major observations arising from interim and
final audits and any other matter which the auditors wish to
highlight.
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Review the "Management Letter" issued by the "External
Auditors" and follow up the actions taken in response.
Consider, review and follow-up with management any findings
raised as part of the "External Auditor's" "Management Letter", and
management's response thereto, including timetable for
implementation of any recommendations.
As per "Appendix B: Audit Committee" issued by the
Corporate Governance Code, review with the Officers and the
"External Auditor" the interim and annual financial statements prior
to presentation to the Board, and give comments and
recommendations with respect thereto.
Review with management, CAE and "External Auditor" the
effect of changes in applicable accounting standards and the changes
of the regulations on the Company's financial statements.
Regularly review with the "External Auditors" any audit
problems or difficulties encountered during the course of the audit
work, including any restrictions on the scope of the "External
Auditors" activities or access to requested information and
management's response.
Regularly report to the Board any issues that arise with respect
to the quality or integrity of the Company's financial statements, the
Company's compliance with legal or regulatory requirements, the
performance and independence of the Company's independent
"External Auditor", or the performance of the IAF.
As per "Principle 3 issued by the Corporate Governance
Code: The Board shall have Rigorous Controls for Financial
Audit and Reporting, Internal Control and Compliance with
Law" Encourage management accountability for the financial
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statements required by the Directors, the Company's CEO and Chief
Financial Officer. The CEO and Chief Financial Officer will state in
writing to the Audit Committee and the Board as a whole that the
Company's interim and annual financial statements present a true and
fair view, in all material respects, of the Company's financial
condition and results of operations in accordance with applicable
accounting standards.
4.1.3 Internal Audit
Ensure that the Company maintains an IAF/function to provide
management and the Audit Committee with ongoing assessments of
the Company's risk management processes and system of internal
controls.
As per "Appendix B: Audit Committee" issued by the
Corporate Governance Code, review and discuss with the Board, the
IAF's budget.
As per "Appendix B: Audit Committee" issued by the
Corporate Governance Code, review and discuss the adequacy of the
Company's internal auditing personnel.
Review the annual performance appraisal and bonus, based on
performance and salary increment of the CAE, in coordination with
the CEO.
Oversee the IAF and review its charter, scope, efficiency,
independence, objectivity, performance and work plan.
Review, for the purpose of carrying out internal audit work and
preparation of the internal audit plan, the internal audit risk
assessment to decide on the effectiveness of the internal audit plan.
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Evaluate the internal audit procedures for establishing the
annual internal audit plan.
As per "Chapter HC-3: Audit Committee and Financial
Statements Certification" issued by the Central Bank of Bahrain
Rule Book – Volume 6: Capital Markets, approve the internal audit
charter as well as internal audit policies and procedures.
As per "Appendix B: Audit Committee" issued by the
Corporate Governance Code, review the internal audit scope, internal
audit risk assessment and nature of the internal audit plan as well as
any subsequent changes, including whether or not the internal audit
plan is sufficiently linked to the Company's overall business
objectives and management's success and risk factors.
Review all internal audit reports, including executive summary,
observations/findings, implications, recommendations, management
replies as well as the exceptions noted and pursue the
implementation of the corrective measures in respect to the
comments included in the internal audit report.
Review and discuss all the follow-up reports of the internal
audit as well as the status of all the significant observations/findings
in the internal audit report.
Review with the CAE the results of the internal audit efforts on
a yearly basis, or as deemed necessary, and peruse periodical and
annual internal audit reports.
Supervise the Company's IAF/function to ensure its
effectiveness in executing the activities and duties specified in the
internal audit charter.
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Review and approve, on a regular basis, the IAF risk register,
audit plan and all major changes to the plan.
As per "Appendix B: Audit Committee" issued by the
Corporate Governance Code, ensure that there are no unjustified
restrictions or limitations and review and concur in the appointment,
replacement or dismissal of the CAE.
Review the effectiveness of the IAF, including compliance with
the "Institute of Internal Auditors' (IIA) International Standards for
the Professional Practice of Internal Auditing".
On a regular basis, meet separately with the CAE to discuss any
matters that the Audit Committee or CAE believes should be
discussed privately.
4.1.4 Compliance with Laws, Regulations and Internal Policies
Review the effectiveness of the system for monitoring
compliance with applicable laws and regulations, the results of
management's investigation and follow-up (including any
disciplinary action) of any instances of non-compliance.
Review the findings of any examinations by regulatory
agencies
(including but not limited to: Telecommunication Regulatory
Authority of Bahrain "Financial Impact", MoIC, Ministry of Finance,
BB, CBB and internal/"External Auditor's" observations.
As per "Appendix B: Audit Committee" issued by the
Corporate Governance Code, review the Company's internal
compliance and ethics programs, including consideration of legal and
regulatory requirements and review with management its periodic
evaluation of the effectiveness of such programs.
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Review the process for communicating the "Code of Conduct
and Ethics" to the Company's employees and for monitoring
compliance therewith.
Review the scope and status of systems designed to promote
the Company's compliance with laws, regulations, internal
procedures and the "Code of Conduct and Ethics" through the review
of reports from the IAF as well as from third parties as determined by
the Committee.
4.1.5 Information Technology (hereinafter referred to as "IT") Systems
Controls and Telecom Systems Controls
The Committee will consider and review with management, the "External
Auditors" and the IAF work relating to:
The effectiveness or weaknesses of the Company's
computerized information system controls and security.
Any related significant findings/observations, implications and
recommendations of the "External Auditors" and IAF together with
management's responses thereto, including the timetable for
implementation of recommendations to correct weaknesses in the
system's controls, including any significant risks related thereto and
major controls over such activities.
The status and adequacy of management information systems
and other information technology.
The Committee will review with the CAE and the "External
Auditors" the coordination of the audit effort to ensure complete
coverage of key system controls and risk areas related to IT controls.
4.1.6 Other Responsibilities
Follow-up on allegations of material, financial, ethical or legal
irregularities; look into serious violations of the Company's policies,
alleged breach of legal provisions or contravention of the "Code of
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Conduct and Ethics", which are highlighted by the IAF or any other
staff member.
Institute, oversee and direct any special investigations, as
needed, concerning matters relating to the Company's financial
statements, internal controls, compliance with the laws or business
ethics.
Review all significant issues within the scope of the Committee
Charter, including any changes in accounting principles/estimates,
with the management and the "External Auditors", prior to any
decision being reached on reporting practices to be followed by the
Company, and report thereon to the Board.
Review procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
controls or auditing matters, including procedures for the
confidential, anonymous submission by employees of the Company
of concerns regarding questionable accounting or auditing matters.
The Committee will be available at all times to receive
suggestions, questions or recommendations from the "External
Auditors", IAF or the Officers.
Perform other activities related to these activities as requested
by the Board.
As per "Principle 3 issued by the Corporate Governance
Code: The Board shall have Rigorous Controls for Financial
Audit and Reporting, Internal Control and Compliance with
Law" and "Appendix B: Audit Committee" The Board should
adopt a "Whistleblower" program under which employees can
confidentially raise concerns about possible improprieties in financial
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or legal matters. Under this program, concerns may be
communicated directly to any Audit Committee member or,
alternatively, to an identified officer or employee who will report
directly to the Audit Committee on this point.
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5 Responsibilities of the Audit Committee Members
5.1 The members will make every effort to attend all Committee meetings and to
effectively participate in discussions. The members will inform the Chairman if
they cannot attend a meeting.
5.2 The members will maintain the confidentiality of the Company's trade secrets
gained through performing their duties and will not publicize confidential
information to shareholders out of the "General Assembly" or to any other party.
In such cases, the member will be dismissed from the Committee and can be held
responsible for the financial damages caused by such announcements.
5.3 The members of the Audit Committee will not execute any management job in the
Company even by way of consultancy.
5.4 The members will carry on good performance in executing their duties and
responsibilities and will be updated in their domain in the interests of the
Company.
5.5 The members will be honest, truthful, objective and independent in performing
their duties.
5.6 The members will not participate in any occupations that can violate the
"Directors’ Code of Conduct Policy" of the Company or its principles. Moreover,
the members will not accept any occupations that are liable to give rise to conflicts
of interest with the Company and those which may prevent them from executing
their duties objectively and independently.
5.7 The members are required to disclose all personal interests (including shares'
ownership in the Company) and their nature that are executed with the Company
and any personal relation with the Board of Directors and the Officers.
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6 Relationship with Others
The sphere of the Committee's responsibilities will make it necessary for it to maintain
a good relationship with other committees established at Zain.
6.1 Board Risk Committee
6.1.1 The Committee will coordinate with the "Risk Committee", once formed,
to ensure that the Company's overall "Risk Management Process" is
comprehensive in scope and is functioning effectively and also to seek the
"Internal Audit" intervention where required.
6.2 Other Board Committees
6.1.2 The Committee may coordinate with other Board committees, as
appropriate, to perform its duties and responsibilities.
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7 Members' Orientation
7.1 New Committee members will be provided with an orientation program which
will include presentations by Officers on the Company's strategic plans, its
significant financial, accounting and risk management issues, legal affairs,
compliance programs, operations, "Directors’ Code of Conduct Policy",
management structure, key policies, practices and internal and "External
Auditors". In addition, each incoming member will be provided with copies of
Zain's "Articles of Association", "Management Agreement", the executive
summary of the corporate plan, previous internal audit reports, internal audit plans
and other appropriate information.
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8 Approval
8.1 This Audit Committee Charter has been approved by the Board of Directors at
their meeting held on___________.
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9 Definitions
9.1 Ministry of Industry and Commerce ("MoIC")
As per "The Introduction" issued by the Corporate Governance Code, the MoIC
is the governmental body with responsibility for administering the "Company
Law" and the "Corporate Governance Code" as well as the
closely-related "Audit Law". The MoIC will actively exercise its monitoring and
penalty powers under the "Commercial Companies Law" and will work closely
with the CBB and the BB.
9.2 Central Bank of Bahrain ("CBB")
As per "The Introduction" issued by the Corporate Governance Code, as the
body responsible for licensing and regulating the BB and for supervision of
financial institutions, the CBB will also have an important role in monitoring and
enforcement of the "Corporate Governance Code".
9.3 Bahrain Bourse ("BB")
As per "The Introduction" issued by the Corporate Governance Code, and
through its authorities to impose listing and delisting standards, its investigation
function, and its disciplinary Board with specific penalty powers, the BB will also
contribute importantly to enforcement of this "Corporate Governance Code".
Among other things, the BB's listing rules will require compliance with this
"Corporate Governance Code" and/or such more stringent requirements as the BB
will consider necessary from time to time.
9.4 Independent Director
As per "Appendix A: Independent Director" issued by the Corporate
Governance Code, an Independent Director is a Director whom the Board has
specifically determined has no material relationship which could affect his/her
independence of judgment, taking into account all known facts. The Board of
Directors should consider that, although a particular Director meets the formal
requirements, he/she may not be independent owing to specific circumstances of
the person or the Company, ownership structure of the Company, or for any other
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reason. The Board's determination should be a good faith finding after diligent
review and full discussion.
Independent Director means a Director of the Company who, or whose family
shareholders either separately or together with him/her or each other, does not
have any material pecuniary relationships or transactions with the Company
(not counting Director's remuneration for this purpose) and in particular who,
during the one (1) year preceding the time in question met all the following
conditions:
Was not an employee of the Company.
Did not:
Make to, or receive from, the Company payments of more than
BHD31,000 or equivalent (not counting Director's remuneration).
Own more than a 10% share or other ownership interest, directly or
indirectly, in an entity that made to or received from the Company
payments of more than such amount.
Act as a general partner, manager, Director or officer of a partnership
or Company that made to or received from the Company payments of
more than such amount.
Have any significant contractual or business relationship with the
Company which could be seen to materially interfere with the person's
capacity to act in an independent manner.
Did not own directly or indirectly (including for this purpose ownership by
any family member or related person) 5% or more of the shares of any type
or class of the Company.
Was not engaged directly or indirectly as an auditor or professional advisor
for the Company.
Was not an associate of a Director or a member of senior management of the
Company.
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9.5 Executive Director
As per "The Terms Used in the Code" issued by the Corporate Governance
Code, an Executive Director means a Director who is an officer or employee, or is
otherwise involved in day-to-day management, of either:
The Company;
Another Company which is a "Controlling Shareholder" of the Company;
Another Company of which the Company is a "Controlling Shareholder"; or
Another Company which is controlled by a "Controlling Shareholder" of the
Company.
9.6 Non-Executive Director
As per "The Terms Used in the Code" issued by the Corporate Governance
Code, a Non-Executive Director means any Director who is not an Executive
Director.
9.7 Controlling Shareholder
As per "The Terms Used in the Code" issued by the Corporate Governance
Code, a Controlling Shareholder means any shareholder who holds 10% or more
of the share capital or is able to exercise (or control the exercise of) 10% or more
of the voting power in the Company.
9.8 Chief Executive Officer (CEO)
As per "The Terms Used in the Code" issued by the Corporate Governance
Code, a CEO means a Company's Chief Executive Officer.
9.9 Company
Zain Bahrain B.S.C.
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10 List of Terms and Abbreviations
BHD Bahraini Dinar
CAE Chief Audit Executive
CBB Central Bank of Bahrain
CEO Chief Executive Officer
DoA Delegation of Authority
IAF Internal Audit Function
MoIC Ministry of Industry and Commerce
No. Number
NRC Nomination and Remuneration Committee
OECD Organization for Economic Cooperation and Development
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