شروط مرجعية- اللجان التابعة لمجلس الإدارة

1.0 INTRODUCTION

The Executive Committee (the Committee) is a committee of the BBK Board of Directors. The Committee serves as a link between the Bank’s Management and the Board of Directors to facilitate the operations of the Bank. The Committee meets more frequently than other Board Committees and has approving and reviewing authority for the credit, investment and matters as delegated by the Board.

The Committee takes necessary decisions regarding matters under its authority and/or raises recommendations to the Board of Directors for approval/ratification as per the specializations, powers and responsibilities assigned to it by the Board of Directors.

2.0 PURPOSE & DEFINITIONS:

2.1 Purpose: The objective for the formation of the Executive Committee is to facilitate the business/operations of the Bank through studying the various matters raised to it or the Board by the Management. The Board has delegated to the Committee suitable authorities/powers in order to perform its entrusted duties and tasks, and overseeing of Bank’s budget as deemed necessary in order to ensure Bank’s optimal management and for providing the support and flexibility necessary to enable Management to perform their assigned duties in an effective manner.

2.2 Definitions: The ‘Bank’ means BBK, ‘BBK Group’ means BBK, its overseas branches and subsidiaries and the ‘Board’ means BBK Board. The ‘Chairman’ means the Chairman of the Committee. The terms ‘Independent’, ‘Non-Executive’ have the same meaning as defined under the CBB Rule Book and classified accordingly.

3.0 COMPOSITION, MEETINGS AND FRAMEWORK:

3.1 Membership: The Committee will consist of no less than five members. The members of the committee can be changed/removed at the discretion of the Board of Directors at anytime.

3.2. Tenure: The tenure of the committee shall be of one year. The tenure of the Director who joins in between would be for the remaining period of the year.

3.3 Meetings: The Committee will meet no less than 8 times per year. The Chairman may convene a meeting of the Committee at any time on reasonable notice. Participation in the meeting through video / Tele conferencing is permitted in keeping with the provisions of the Board Charter. Attendance by Proxies is not permitted.

For the sake of having enough time to review the meeting agenda items all items are to be submitted to the Committee 5 days prior to the meeting and latest by 3 calendar days before the meeting. Any item received later than the mentioned period shall be sent by Email and considered an item under any other issues unless approved otherwise by the Chairman of the Committee.

3.3.1. Each Committee member can only attend two Committee meetings or 20% of the number of meetings via telephone conference or video conference. per annum and only one member is allowed to participate via the said means per meeting (on a first apply first serve basis) for scheduled meetings only. However, for unscheduled meetings it will be decided upon on a case by case basis. Further, the level of participation using these means shall be decided on a case by case basis during force majeure events.

On an exceptional basis, the Committee will convene at the summons of its members or at the request of Management to discuss matters of urgency in order to avoid any delay to the business interests of the Bank. The number of members present for such meetings should be more than half of the members of the Committee. The convening of such meeting shall be done by the Group Chief Executive (to be coordinated by the Group Corporate Secretary) or, in his absence his delegate, and the present Committee members.

3.4 Quorum: The quorum shall be of more than half of the members and must include the Chairman or the Deputy Chairman. The decisions/resolutions shall be adopted by simple majority of the participating members. The Chairman shall not have casting vote. In the absence of the Chairman or his Deputy, and on exceptional basis, the Committee may meet and the attending members shall elect the Chairman for the particular meeting. The quorum must be established throughout the meetings.

3.5 Chairman: The Chairman and Deputy Chairman must be a Director and appointed by the Board or alternatively elected by the members of the Committee in its first meeting after the appointment of its members.

3.6 Secretary: The Group Corporate Secretary shall be the secretary to the Committee and attend all meetings of the Committee

3.7 Resources: The Committee will be supported by the Group Corporate Secretary and the General Manager Internal Audit and the Group Head of Compliance and MLRO.

3.8 Minutes: The draft minutes of the Committee meetings shall be approved by the Committee at the end of each meeting. The final minutes shall be circulated to the members of the Committee not later than 5 working days. The minutes of each meeting will be circulated by the Group Corporate Secretary to all members and additionally to other attendees as appropriate. The Chairman will report to the Board in writing on the proceedings of Committee meeting following each meeting of the Committee. The minutes will be part of the agenda of the next Committee and Board meetings under items for information.

3.9 Disclosure: The membership of the Committee, description of its duties and activities and attendance during the year shall be disclosed in the Annual Report/Bank’s official website and to the shareholders.

3.10 Attendees: The Group Chief Executive, or any other Executive Mangment member as decided by the Committee, , the General Manager Internal Auditand the Group Head of Compliance and MLRO shall attend the meeting. The Committee must meet with the external auditors at least twice per year, and at least once per year in the absence of any members of executive management. Other Directors or persons may also attend the meetings with the consent of the Chairman. The Group Chief Executive and all the other invitees should withdraw if required to do so by the Chairman.

3.11 Training: The Committee shall make available to its new members a suitable induction and ongoing training where appropriate, as discussed with the Committee.

3.12 Resolutions by circulation: The Committee may adopt resolutions by correspondence, including mail, electronic or fax correspondence, provided that in order for resolutions taken in this manner to be valid, they shall be approved by all the members. Any member to whom a proposed resolution is sent and who fails to respond within three working days following the date on which the proposed resolution is sent to him shall be considered to have approved the resolution. The Group Corporate Secretary shall ensure that the documents related to proposed resolution(s) have reached all the Committee members.

3.13 General: The Committee will be guided by provisions under the Memorandum of Association, Articles of Association and Board Charter on matters related to its functioning and not specified in this document.

4.0 SCOPE

5.1 DUTIES AND RESPONSIBILITIES OF THE CHAIRMAN

The Chairman is responsible for:

5.1.1 Ensuring Committee meetings are duly convened and that required quorum is present when required.

5.1.2 Approving agenda and related materials for the Committee meetings.

5.1.3 Ensuring that the meetings are conducted in an efficient and effective manner.

5.1.4 Ensuring that the Committee has sufficient information to take decisions.

5.1.5 Providing leadership to the Committee and assisting it in its responsibilities.

5.1.6 Reporting to the Board on deliberations and recommendations of the Committee in writing .

5.1.7 Monitoring functioning of the Committee as per its Terms of Reference.

5.1.8 The Chairman or his Deputy shall be available at the Annual General Meeting to answer questions relating to the Committee’s functions.

5.2 DUTIES AND RESPONSIBILITIES OF THE COMMITTEE

The duties of the Committee shall be:

5.2.1 In relation to Internal Audit:

To monitor and review the effectiveness of the Bank’s internal audit function in the context of the Bank’s overall risk management framework.

To review the internal audit plan, consider the major findings of internal audit reviews, investigations and management’s response, and ensure coordination among the internal and external auditors.

To review the activities, resources and organizational structure of internal audit.

To review, discuss and make recommendations regarding the selection, appointment and termination where appropriate of the head of internal audit and the compliance functions and the budget allocated to the internal audit and compliance functions.

To review, discuss and approve the Internal Audit Manual.

5.2.2 In relation to Financial Accounts and External Auditors:

To make recommendations to the Board, in relation to the appointment, re-appointment and removal of the external auditors and to approve the remuneration and terms of engagement of the external auditors. The external auditor shall report directly to the Committee.

To review the Bank’s accounting and financial practices.

To review and monitor, on an annual basis, the external auditor’s independence, including with respect to performance of any non-audit services, objectivity and the effectiveness of the audit process, taking into consideration relevant professional and regulatory requirements and to oversee the appropriate rotation of audit partners with the external auditor.

To obtain from the external auditor a written report listing any relationships that may compromise the auditor’s independence.

To review and discuss with the external auditor the scope and results of its audit, any difficulties the auditor encountered including any restrictions on its access to requested information and any disagreements or difficulties encountered with management.

To receive and review the External Auditors year end ‘Management Letter’ and ensure that all findings mentioned therein are addressed in a timely manner.

To review and recommend for approval to the Board of Directors the Group’s quarterly, half yearly and annual accounts (Balance Sheet and Income Statement) and to carry out the necessary due diligence required in this connection.

5.2.3 In relation to the system of internal control:

To keep under review the effectiveness of the internal control systems and the financial risk management framework.

To review the Bank’s procedures for detecting fraud and whistle-blowing and ensure that arrangements are in place by which staff may, in confidence, raise concerns about possible improprieties in matters of financial reporting, financial control or any other matters.

5.2.4 In relation to regulatory compliance:

To review the effectiveness of the Bank’s system for monitoring compliance with relevant laws and regulations and the measures taken by the Management.

To review the Central Bank of Bahrain’s Inspection Report and other central bank inspection reports in countries where the Bank is operating, as and when issued and received and to address the issues raised therein as needed.

To consider and provide prior approval for dealing in the Bank’s Debt Securities outside the Kingdom of Bahrain.

5.2.5 a) In relation to compliance with Key Persons Policies:

To consider and provide prior approval to requests for trading in Treasury Shares / Securities (for holding, buy-back, supporting market or such other permitted activity). Prior approval of the Committee will not be required for trading by other insiders and key persons in the ordinary shares of the Bank in BBC.

To review and monitor the Key Persons’ Dealing Policies including any periodical changes made to it. To receive and review the reports of trading done by Insiders.

To ensure compliance with the Bank’s Key Persons Dealings policies.

5.2.5 b) In relation to compliance with the requirements of Market Abuse & Manipulation Module issued by the CBB:

To ensure prohibition of the abuse of inside information.

5.2.6 Others:

To review and discuss arrangements under which company employees can confidentially raise concerns about possible improprieties in financial reporting or other matters, and ensure that arrangements are in place for independent investigation and follow-up regarding such matters.

The review and supervision of the implementation of, enforcement of and adherence to the Bank’s code of conduct.

5.2.7 Consider any other functions as assigned/delegated by the Board.

6.0 SELF-ASSESSMENT/PERFORMANCE EVALUATION:

The Committee will conduct an annual self-assessment of the performance of the Committee/members and report conclusions and recommendations to the Board. The mechanism of evaluation would be as per the evaluation process adopted by the Board for its committees.

Nomination, Remuneration & Governance Committee Terms of Reference

1.0 INTRODUCTION

The Nomination and Remuneration Committee is constituted by the Board in its meeting 195/5/2004 dated June 20th, 2004. A Corporate Governance Committee was formed by the Board at its Meeting No. 246//5/2010 held on 18th April 2010. At its Meeting No. 252/3/2011 dated 6th March 2011, the Board decided to merge the Nomination & Remuneration Committee and the Corporate Governance Committee to enhance the Bank’s commitment to adopting good governance practices and in keeping with the requirements/recommendations contained in the relevant provisions of Central Bank of Bahrain’s Rule Book.

2.0 PURPOSE & DEFINITIONS:

2.1 Purpose: The Nomination and Remuneration Committee is a Board Committee established by the Board of Directors in compliance with the provisions of the Corporate Governance Code and the HC Module of the CBB Rulebook. The purpose of the Committee is:

oversee the design of, and recommend to the Board, an overall remuneration policy and philosophy for the Bank that is aligned with its long term business strategy, its business objectives, its risk appetite, values and the long term interests of the Group.

Advise the Board of Directors on all matters relating to nomination including policy formulation, Board composition, appointments of the Boards of wholly owned subsidiaries and affiliate companies, and executive management succession.

Advise the Board in ensuring that the Bank and its wholly owned subsidiaries have the appropriate corporate governance standards and practices.

2.2 Definitions: The ‘Bank’ means Bank of Bahrain and Kuwait, ‘BBK Group’ means Bank of Bahrain and Kuwait, its overseas branches and subsidiaries and the ‘Board’ means Bank of Bahrain and Kuwait Board of Directors. The ‘Chairman’ means the Chairman of the Committee. The terms ‘Independent’ and ‘Non-Executive’ have the same meaning as defined under the CBB Rule Book and classified accordingly. ‘Executive Management:’ within the context of this document shall mean to include Group Chief Executive, Deputy Chief Executives, General Managers,, Heads of wholly owned subsidiaries, Heads of Overseas Branches, GM Audit, Group Corporate Secretary and other senior direct reports of the Chief Executive or the Board Committees.

3.0 COMPOSITION, MEETINGS AND FRAMEWORK:

3.1 Membership: Membership will comprise of minimum four members, appointed by the Board of Directors. The Directors would be only ‘independent’ Directors or, alternatively, only non-executive Directors of whom a majority is independent Directors and the Chairman is an independent Director. The members of the Committee can be changed/removed by the Board at any time.

3.2 Tenure: The tenure of the Committee shall be of one year. The tenure of the Director who joins in between would be for the remaining period of the year.

3.3 Meetings: The Committee will meet twice in a year as a minimum. The Chairman may convene a meeting of the Committee at any time on reasonable notice. Participation in the meeting through video / Tele conferencing is permitted in keeping with the provisions of the Board Charter. The meeting would be normally be synchronized with the Board meetings. Attendance by Proxies is not permitted.

3.3.1. Each Committee member can only attend one Committee meeting via telephone conference or video conference per annum and only one member is allowed to participate via the said means per meeting (on a first apply first serve basis) for scheduled meetings only. However, for unscheduled meetings it will be decided upon on a case by case basis. Further, the level of participation using these means shall be decided upon on a case by case basis during force majeure events.

3.4 Quorum: The quorum shall be of more than half of the members and must include the Chairman or the Deputy Chairman. The decisions/resolutions shall be adopted by simple majority of the participating members. The Chairman shall not have a casting vote. In the absence of the Chairman and his Deputy, and on exceptional basis, the Committee may meet; however if the quorum is not established then the exceptional issues shall be raised to the Board. The quorum must be achieved thought out the duration of the meeting.

3.5 Chairman/Deputy Chairman: The Chairman/Deputy Chairman would be appointed by the Board or alternatively elected by the members of the Committee.

3.6 Secretary: The Group Corporate Secretary shall be the secretary to the Committee and attend all meetings of the Committee.

3.7 Resources: The Committee will be supported by the Group Corporate Secretary and the Group Chief Officer Human Resources and Administration.

3.8 Minutes: The minutes of the Committee meetings shall be approved by the Committee at the end of each meeting. The final minutes shall be circulated to the members of the Committee not later than 5 working days. The minutes of each meeting will be circulated by the Group Corporate Secretary to all members and additionally to other attendees as appropriate. The Chairman will report to the Board in writing on the proceedings of Committee meeting following each meeting of the Committee. The minutes will be part of the agenda of the Board under items for information.

3.9 Disclosure: The membership of the Committee, description of its duties and activities and attendance during the year shall be disclosed in the Annual Report and to the shareholders.

3.10 Attendees: Committee members and the Group Corporate Secretary shall attend all Committee meetings. However, other individuals such as the Group Chief Executive, Deputy Chief Executives and the Group Chief Officer Human Resources and Administration , and others may be invited to attend for all or part of any meeting as and when appropriate.

3.11 Resolution by Circulation: Any transaction of business of the Committee to be conducted by circulation shall require unanimous approval, allowing three business days following sending the related documents for response. If no response is received within that period the issue shall be considered as approved by the concerned Director. The Corporate Secretary should ensure that the documents related to the proposed resolution are received by all members of the Committee.

3.12 Training: The Committee shall make available to its new members a suitable induction and ongoing training where appropriate, as discussed with the Committee.

3.13 General: The Committee will be guided by provisions under the Memorandum of Association and Articles of Association, Board Charter on matters related to its functioning and not specified in this document.

4.0 SCOPE

4.1 The Committee will report on periodic basis to the Board. The Committee’s scope will involve nomination , remuneration and corporate governance issues of the entire BBK Group and its authority extends to all relevant matters relating to the Group.

4.2 The Committee has authority to examine any matters within its responsibilities and to obtain such information as it may require from any Director, member of the Executive Management or employee of the Group.

4.3 The Committee will review its terms of reference every three years following each new term for the Board.

5.0 TERMS OF REFERENCE

5.1 DUTIES AND RESPONSIBILITIES OF THE CHAIRMAN

The Chairman is responsible for:

5.1.1 Ensuring Committee meetings are duly convened and that required quorum is present when required.

5.1.2 Approving agenda and related materials for the Committee meetings.

5.1.3 Ensuring that the meetings are conducted in an efficient and effective manner.

5.1.4 Ensuring that the Committee has sufficient information to take decisions.

5.1.5 Providing leadership to the Committee and assisting it in its responsibilities.

5.1.6 Reporting to the Board on deliberations and recommendations of the Committee in writing .

5.1.7 Monitoring functioning of the Committee as per its Terms of Reference.

5.1.8 The Chairman or his Deputy shall be available at the Annual General Meeting to answer questions relating to the Committee’s functions.

5.2 DUTIES AND RESPONSIBILITIES OF THE COMMITTEE

Under nomination role, the Committee shall:

5.2.1 Provide recommendations and advise to the Board (for submission to the Shareholders) in addition to the following specific information to be submitted to the shareholders for election or re-election of a Director:

5.2.1.1 The term to be served, which may not exceed three years (but there need not be a limit on reelection for further terms)

5.2.1.2 Biographical details and professional qualifications.

5.2.1.3 In the case of an independent Director, a statement that the Board has determined that the criteria in the CBB rulebook have been met,

5.2.1.4 Any other Directorships held,

5.2.1.5 Particulars of other positions which involve significant time commitments.

5.2.1.6 Details of any relationships between the candidate and the company or its Directors.

5.2.2 Identify and nominate for the approval of the Board of Directors candidates qualified to become members of

5.2.2.1 Board of Directors of the Bank or its wholly owned subsidiaries.

5.2.2.2 Board of Directors of other shareholding companies, subsidiaries or a subsidiary of the Bank’s subsidiaries.

5.2.2.3 Members that will enter the election to represent the Bank in the minority interest.

5.2.2.4 Members of the Executive Management team and approved persons reporting to the Group CE or a Group Chief Officer.

5.2.2.5 Group Corporate Secretary.

5.2.3 Nominations to Head of controlled functions that are reporting directly to Board’s committees shall be recommended by the respective Committee to the Board; however should there be a difference in view between the respective Committee and the Management, the Nomination, Remuneration and Governance Committee’s views can be obtained.

5.2.4 In performing the nomination responsibilities, the Committee shall consider any criteria approved by the Board and such other factors as it deems appropriate in arriving to their final recommendation. These may include judgment, specific skills, experience with other comparable businesses, the relation of a candidate’s experience with that of other Directors, and other factors and interviews by some or all of the Committee members if needed.

5.2.5 Make recommendations to the Board of Directors from time to time as to changes the Committee believes to be desirable to the size of the Board or any Committee of the Board.

5.2.6 Whenever a vacancy arises (including a vacancy resulting from an increase in Board size), the Committee shall recommend to the Board a candidate to fill the vacancy either through appointment by the Board or through Shareholders election.

5.2.7 Review the leadership needs of the Group and its organization structure with a view to ensuring the continued ability of the organization to compete effectively in the market place. This shall also include preparation and review of job descriptions of the Chief Executive and other members of the Executive Management, as well as other necessary qualifications.

5.2.8 Ensure that orderly and timely succession plan is in place to address any unforeseen vacancy within the Executive Management team.

5.2.9 The number of other company boards on which a Director may serve shall be subject to a case-by-case review by the Committee, in order to ensure that each Director is able to devote sufficient time to perform his or her duties as a Director.

5.2.10 The Committee will oversee and manage the annual formal performance evaluation process conducted on Board, its committees and members as per the agreed upon process adopted by the Board of Directors.

Under remuneration role the Committee shall:

5.2.11 Review and recommend remuneration and HR policies for the approval of the Board taking into account the long term business strategy, the Group Values, regulatory requirements, as well as the need to promote effective risk management. The general framework of the remuneration policies shall be approved by the Shareholders approval.

5.2.12 Liaise as required with the Board Risk Committee and Risk Function in relation to risk adjusted performance measures to confirm that the Remuneration Policy is in line with sound and effective risk management

5.2.13 Approve remuneration amounts; including fixed and variable pay, for members of executive management at the level of “General Manager” and above, the Group Corporate Secretary and heads of controlled functions reporting directly to the Board committees. This shall include hiring salary, exceptional benefits or variable pay and salary increases that exceed the approved total increase matrix or promotion policy. In case of Group Chief Executive, the committee shall raise its recommendation with regards to the above for the approval of the Board of Directors.

5.2.14 Approve the variable pay for the other approved persons and material risk takers per the approved human resources policy.

5.2.15 The remuneration policy should cover the following components: • Compensation strategy • Salary & grading structure. • The specific terms of any performance-related incentive plans including performance share plans, stock options, merit bonus, sales incentive or other deferred-benefit compensation. • Pension plans and fringe benefits such as non-salary perquisites. • Retention Schemes. • Termination policies including any severance payment policies.

The remuneration policy shall also include guidelines to be used for determining remuneration in individual cases, including relative importance of each component and Specific criteria to be used in evaluating the performance of the Executive.

5.2.16 Evaluate the annual performance of the Group Chief Executive in terms of achievements of the corporate goals and objectives. In determining the reward, the Committee shall take into consideration, overall achievement and performance of the Group, Shareholder return relative to comparable companies, the value of rewards to Group CE’s offered by comparable companies, and awards paid to the Group CE in past years.

5.2.17 Remuneration of both Directors and officers should be sufficient enough to attract, retain and motivate persons of the quality and competency needed to run the company successfully, but the company should avoid paying more than is necessary for that purpose.

5.2.18 Ensure remuneration is adjusted for all types of risks and that the remuneration system takes into consideration employees that earn same short-run profit but take different amount of risk on behalf of the Bank.

5.2.19 The Committee should ensure that for material risk takers, variable remuneration forms a substantial part of their total remuneration.

5.2.20 Review the stress testing and back testing results before approving the total variable remuneration. Carefully evaluate practices by which remuneration is paid for potential future revenues whose timing and likelihood remain uncertain. The Committee will question payouts for income that cannot be realized or whose likelihood of realization remains uncertain at the time of payment.

5.2.21 Ensure that for approved persons in risk management, internal audit, operations, financial controls, AML and compliance functions the mix of fixed and variable remuneration is weighted in favor of fixed remuneration

5.2.22Recommend Board member remuneration based on their attendance and performance and in compliance with Article 188 or any other relevant articles of the Company Law.

5.2.23 Ensure appropriate compliance mechanisms are in place to ensure that employees commit themselves not to use personal hedging strategies or remuneration-and liability-related insurance to undermine the risk alignment effects embedded in their remuneration arrangements.

5.2.24 Discuss and approve or recommend to the Board the cases relating to Malus and Clawback as appropriate.

Under Corporate Governance role the Committee shall:

5.2.25 Periodically review Bank’s governance practices and relevant issues, including opportunities for improving the governance framework. Monitor Group’s adherence with applicable legal, regulatory and listing requirements relating to Corporate Governance; and make recommendations to the Board as appropriate.

5.2.26 Develop and recommend to the board corporate governance guidelines, and review those guidelines at least once a year

5.2.27 Periodically assess and review the role of the Board and its committees and the methods and processes by which the Board discharges its duties and responsibilities, including the process for the Board’s annual self-evaluation and make recommendations to the Board with respect to such methods and processes.

5.2.28 Advise the Board with respect to significant developments in the law and practice of corporate governance; periodically review and recommend to the Board, the composition of various committees of the Board.

5.2.27 Periodically review the Board Profile and Corporate Governance related policies such as Corporate Governance Framework, Board Charter, Code of Conduct, Conflict of interest, Director’s compensation etc and recommend to the Board such changes as it considers appropriate.

5.2.30 Assess, from time to time, if any third party evaluations, are desirable.

5.2.31 Consider other issues referred to it by the Board or Management.

5.2.32 Ensurethere is a satisfactory induction for new directors with respect to their Board and Board committee responsibilities and ensure that an appropriate ongoing training program is in place in line with market practice. Periodically review the orientation programs for new directors.

5.2.33 Review any material information to be made available to public by the Bank relating to corporate governance; Review corporate governance disclosures for the Annual Report and to be made to the shareholders.

5.2.34 Review the annual Corporate Governance report for the Annual General Meeting.

5.2.35 Meet separately with Senior Management, employees or independent advisers, as deemed necessary by the Committee.

5.2.36 Engage at its discretion professional advisers on issues before the Committee at Bank’s cost.

5.2.37 Conduct a review of the Conflicts of Interest events and review if any disclosures relating to conflicts of interest are to be made public.

5.3 TRAINING & COMPTENCY

The Committee shall be responsible for the following with regards to Directors and the Group Chief Executive training and competency:

5.3.1 Define minimum competency requirements.

5.3.2 Describe the process for monitoring and tracking competencies and skills to ensure that competency levels are attained within the established time frames.

5.3.3 Outline assessment criteria and requirements

5.3.4 Outline training and personal development requirements.

5.3.5 Allocate the CPD training budget.

Determine and confirm whether competency requirements are met.

5.4 SELF-ASSESSMENT/PERFORMANCE EVALUATION:

The Committee will conduct an annual self-assessment of the performance of the Committee/members and report conclusions and recommendations to the Board. The mechanism of evaluation would be as per the evaluation process adopted by the Board for its committees.

Risk Committee Terms of Reference

1. INTRODUCTION:

The Risk Committee (the Committee) is a committee of the BBK Board of Directors. The Committee serves as a link between the Bank’s Management and the Board of Directors in fulfilling its oversight responsibilities in respect of the risks inherent in the businesses of the Bank and the control processes with respect to such risks. The Committee takes necessary decisions regarding matters under its authority and/or raises recommendations to the Board of Directors for approval/ratification as per the specializations, powers and responsibilities assigned to it by the Board of Directors.

2. PURPOSE & DEFINITIONS:

2.1 Purpose: The objective for the formation of the Risk Committee is to facilitate the business/operations of the Bank by establishment of an effective risk management framework through appropriate risk policies /processes, to monitor risk profile of the Bank to ensure that it is in accordance with risk appetite of the Bank and, to provide the support necessary to enable the Management to perform their assigned duties and responsibilities in an effective manner.

2.2 Definitions: The ‘Bank’ means BBK, ‘BBK Group’ means BBK, its overseas branches and subsidiaries and the ‘Board’ means BBK Board. The ‘Chairman’ means the Chairman of the Committee. The terms ‘Independent’, ‘Non-Executive’ have the same meaning as defined under the CBB Rule Book and classified accordingly.

3.0 COMPOSITION, MEETINGS AND FRAMEWORK:

3.1 Membership: The Committee will consist of no less than 4 members. The members of the committee can be changed/removed at the discretion of the Board of Directors at anytime.

3.2. Tenure: The tenure of the committee shall be of one year. The tenure of the Director who joins in between would be for the remaining period of the year.

3.3 Meetings: The Committee will meet not less than 4 times per year. The Chairman may convene a meeting of the Committee at any time on reasonable notice. Participation in the meeting through video / tele conferencing is permitted in keeping with the provisions of the Board Charter. Attendance by Proxies is not permitted. On an exceptional basis, the Committee will convene at the summons of its members or at the request of Management to discuss matters of urgency in order to avoid any delay to the business interests of the Bank. The number of members present for such meetings should be more than half of the members of the Committee. The convening of such meeting shall be done by the Chief Executive (to be coordinated by the Corporate Secretary) or, in his absence his delegate, and the present Committee members.

3.3.1. Each Committee member can only attend one Committee meeting via telephone conference or video conference per annum and only one member is allowed to participate via the said means per meeting (on a first apply first serve basis) for scheduled meetings only. However, for unscheduled meetings it will be decided upon on a case by case basis. Further, the level of participation using these means shall be decided on a case by case basis during force majeure events.

3.4 Quorum: The quorum shall be of more than half of the members and must include the Chairman or the Deputy Chairman. The decisions/resolutions shall be adopted by simple majority of the participating members. The Chairman shall not have a casting vote. The quorum must be established throughout the meetings.

3.5 Chairman: The Chairman and Deputy Chairman must be a Director and appointed by the Board or alternatively elected by the members of the Committee in its first meeting after the appointment of its members.

3.6 Secretary: The Group Corporate Secretary shall be the secretary to the Committee and attend all meetings of the Committee.

3.7 Resources: The Committee will be supported by the Group Corproate Secretary and the Management.

3.8 Minutes: The minutes of the Committee meetings shall be approved by the Committee at the end of each meeting. The final minutes shall be circulated to the members of the Committee not later than 5 working days. The minutes of each meeting will be circulated by the Group Corporate Secretary to all members and additionally to other attendees as appropriate. The Chairman will report to the Board in writing on the proceedings of Committee meeting following each meeting of the Committee. The minutes will be part of the agenda of the Board under items for information.

3.9 Disclosure: The membership of the Committee, description of its duties and activities and attendance during the year shall be disclosed in the Annual Report/ The Bank’s official website and to the shareholders.

3.10 Attendees: The following invitees shall attend all meetings of Committee to assist the Committee in its proceedings –The Group Chief Executive, , Chief Risk Officer , Chief Credit Officer and Chief Financial Officer. These invitees shall not have any voting rights. Other Directors, members of Management or persons may also attend the meetings at the invitation of the Chairman. All invitees should withdraw from the meeting if required to do so by the Chairman.

3.11 Training: The Committee may make available to its new members a suitable induction and ongoing training where appropriate, as discussed with the Committee.

3.12 Resolutions by circulation: The Committee may adopt resolutions by correspondence, including mail, or electronic correspondence, provided that in order for resolutions taken in this manner to be valid, they shall be approved by all the members. Any member to whom a proposed resolution is sent and who fails to respond within three working days following the date on which the proposed resolution is sent to him shall be considered to have approved the resolution. The Group Corporate Secretary shall ensure that the documents related to the proposed resolutions are received by all members of the Committee.

3.13 General: The Committee will be guided by provisions under the Memorandum of Association and Articles of Association, Board Charter on matters related to its functioning and not specified in this document.

4.0 SCOPE:

4.1 The role of the Committee is to review risk policies and recommend to Board for approval. It will also examine and monitor the risk issues related to Bank’s business and operations and direct the Management appropriately.

4.2 The Committee has authority to examine any matters within its responsibilities and to obtain such information as it may require from any Director, member of the Management or employee of the Group or external parties subject to Board approval. The Committee will report on periodic basis to the Board. The Committee’s scope will involve related issues of the entire BBK Group and its authority extends to all relevant matters relating to the Group.

4.3 The Committee will review its terms of reference every three years commencing each new term for the Board.

5.0 TERMS OF REFERENCE:

5.1 DUTIES AND RESPONSIBILITIES OF THE CHAIRMAN

The Chairman is responsible for:

5.1.1 Ensuring Committee meetings are duly convened and that required quorum is present when required.

5.1.2 Approving agenda and related materials for the Committee meetings.

5.1.3 Ensuring that the meetings are conducted in an efficient and effective manner.

5.1.4 Ensuring that the Committee has sufficient information to take decisions.

5.1.5 Providing leadership to the Committee and assisting it in its responsibilities.

5.1.6 Reporting to the Board on deliberations and recommendations of the Committee in writing.

5.1.7 Monitoring functioning of the Committee as per its Terms of Reference.

5.1.8 The Chairman or his Deputy shall be available at the Annual General Meeting to answer questions relating to the Committee’s functions.

5.2 DUTIES AND RESPONSIBILITIES OF THE COMMITTEE:

The Committee shall perform the following duties/responsibilities:

5.2.1 Review of Risk Policies: Review various risk policies (comprising inter-alia all areas of risk such as credit risk, credit process, market risk, operational risk, investments, liquidity risk, interest rate risk etc) submitted by the Management and present/recommend them to the Board of Directors for approval.

5.2.2 Risk Related Documents: Review various risk related documents such as Annual Risk Management Strategy, Liquidity Strategy, Internal Capital Adequacy Assessment Process (ICAAP), tools & techniques and approach papers relating to Risk Management etc., and then recommending for approval of the Board wherever necessary.

5.2.3 Review of reports: Reviewing risk related reports presented by business units, support / control functions as required by various risk policies such as Investment Portfolio performance, Industry / Sector Concentration, Maximum / Large exposures, Market risk, Stress Testing etc.

5.2.4 Any other regulatory / control / risk issues: Reviewing any regulatory, control, risk related aspects pertaining to the Bank such as Business Continuity, Anti Money Laundering etc., for necessary action.

5.2.5 In relation to the Risk Management function:

• To monitor and review the effectiveness of the Bank’s risk management function, which reports directly to the Committee in the context of the Bank’s overall risk management framework.
• To review and recommend to the Board the risk management strategy.
• To review, discuss and make recommendations regarding the selection, appointment and termination where appropriate of the Chief Risk Officer, who reports directly to the Committee.

 

6.0 SELF-ASSESSMENT/PERFORMANCE EVALUATION:

The Committee will conduct an annual self-assessment of the performance of the Committee/members and report conclusions and recommendations to the Board. The mechanism of evaluation would be as per the evaluation process adopted by the Board for its committees.

Independent Directors Committee Terms of Reference

INTRODUCTION

The Independent Directors Committee (the Committee) is a committee of the BBK Board of Directors. The meeting of independent Board members in the absence of other Board members is recommended by the Kingdom of Bahrain’s Corporate Governance Code, the Central Bank of Bahrain (CBB) and international best corporate governance practice.

PURPOSE & DEFINITIONS:

2.1. Purpose: The objective for the formation of the Independent Directors Committee is to facilitate free and open communication among independent directors.

2.2. Definitions: The ‘Bank’ means BBK, its overseas branches and wholly owned subsidiaries and the ‘Board’ means BBK Board. The ‘Chairman’ means the Chairman of the Committee. The term ‘Independent’, shall have following meaning in line with the CBB’s definition:

• • ‘Independent director’ means a non-executive director of the Bank who, or whose family shareholders either separately or together with him or each other, does not have any material pecuniary relationships or transactions with the Bank (not counting director’s remuneration for this purpose) and in particular who, during the one year preceding the time in question met all the following conditions:(a) Was not an employee of the company;(b) Did not:(i) Make to, or receive from, the Bank payments of more than BD31,000 or equivalent (not counting director’s remuneration);

    (ii) Own more than a 10% share or other ownership interest, directly or indirectly, in an entity that made to or received from the bank payments of more than such amount;

    (iii) Act as a general partner, manager, director or officer of a partnership or company that made to or received from the Bank payments of more than such amount;

    (iv) Have any significant contractual or business relationship with the Bank which could be seen to materially interfere with the person’s capacity to act in an independent manner,

    (c) 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 Bank;

    (d) Was not engaged directly or indirectly as an auditor or professional advisor for the Bank, and

    (e) Was not an associate of a Director or a member of senior management of the Bank.

    • For purposes of this definition, the ‘payments’ referred to in paragraph (b)(i), (b)(ii) and (b)(iii) do not include monies received from dividends, deposits, investments and credit facilities arising from the Bank’s normal business activities, but instead ordinarily refer to monies received (and/or payable during the period in question) for services rendered to the Bank by the director or company concerned, or paid (or payable) by the concerned director or company to the Bank for services provided by the Bank.
    • Dividends, deposits, investment accounts and credit facilities are to be considered under item (b)(iv) of this definition.
    • For the purpose of the definition of “independent director”:

(a) Where the term “family” or “family member or related persons” is used reference is made to: spouse, father, mother, son(s) or daughter(s); and

(b) Where the term “associate” is used reference is made to:

(i) Spouse, father, mother, son(s) or daughter(s); or

(ii) A person who is an employee or partner of the Director or of the firm represented or owned by the Director.

• In addition to the above mentioned CBB’s definition all nominated Directors are considered non-independent.

 

COMPOSITION, MEETINGS AND FRAMEWORK:

3.1 Membership: The Committee will consist of all independent Board members. Immediately after every general assembly the Board of Directors will determine the independent Directors who will be members of this Committee.

3.2. Tenure: The tenure of the Committee shall be of one year. The tenure of a member will be as long as he/she is considered independent.

3.3 Meetings: The Committee will meet at least once a year. The Chairman may convene a meeting of the Committee at any time on reasonable notice. Participation in the meeting through video / tele conferencing is not permitted for this Committee. Attendance by Proxies is not permitted.

3.4 Quorum: The quorum shall be of more than half of the members and must include the Chairman. The decisions shall be adopted by simple majority of the participating members. The Chairman shall not have a casting vote.

3.5 Chairman: The Chairman must be a Director and appointed by the Board or alternatively elected by the members of the Committee in its first meeting after the appointment of its members.

3.6 Secretary: The Corporate Secretary shall be the secretary to the Committee and attend all meetings of the Committee.

3.7 Resources: The Committee will be supported by the Corporate Secretary and the Management.

3.8 Minutes: The minutes of the Committee meetings shall be approved by the Committee at the end of each meeting. The final minutes shall be circulated to the members of the Committee not later than 5 working days. The minutes of each meeting will be circulated by the Corporate Secretary to all members and additionally to other attendees as appropriate. The Chairman may report to the Board on the proceedings of Committee meeting if required. The minutes will be part of the agenda of the Board under items for information.

3.9 Disclosure: The membership of the Committee, description of its duties and activities and attendance during the year may be disclosed in the Annual Report/ The Bank’s official website and to the shareholders.

3.10 Attendees: Only the independent Directors and the Corporate Secretary attend the meeting. However, the Committee has the right to invite any member of the management to attend a part of the discussion as and when required.

3.11 Training: The Committee shall make available to its new members a suitable induction and ongoing training where appropriate, as discussed with the Committee.

3.13 General: The Committee will be guided by provisions under the Kingdom of Bahrain’s Code of Corporate Governance, the CBB’s Rulebook, the Memorandum of Association and Articles of Association of the Bank, and the Board Charter on matters related to its functioning and not specified in this document.

SCOPE:

4.1 The role of the Committee is to provide independent analysis of issues raised to the Board and raise recommendations to the Board if required. This will include determining whether decisions taken by the Board or its other Committee have any material of negative impact to the interests of the minority/small shareholders of the Bank.

4.2 The Committee has authority to examine any matters within its responsibilities and to obtain such information as it may require from any Director, member of the Management or employee of the Group. The Committee’s scope will involve related issues of the entire BBK Group and its authority extends to all relevant matters relating to the Group.

4.3 The Committee will review its terms of reference every three years commencing each new term for the Board or as and when required.

TERMS OF REFERENCE:

5.1 DUTIES AND RESPONSIBILITIES OF THE CHAIRMAN

The Chairman is responsible for:

5.1.1 Ensuring Committee meetings are duly convened and that required quorum is present when required.

5.1.2 Approving agenda and related materials for the Committee meetings.

5.1.3 Ensuring that the meetings are conducted in an efficient and effective manner.

5.1.4 Ensuring that the Committee has sufficient information to take decisions.

5.1.5 Providing leadership to the Committee and assisting it in its responsibilities.

5.1.6 Reporting to the Board on deliberations and recommendations of the Committee if required.

5.1.7 Monitoring functioning of the Committee as per its Terms of Reference.

5.1.8 The Chairman shall be available at the Annual General Meeting to answer questions relating to the Committee’s functions.

5.2.1 The Committee shall exercise its duties and responsibilities as per its scope mentioned under 4.0 above.

5.2.2 The Committee will discuss issues of interest to minority/small shareholders.

5.2.3 The Committee shall be responsible to discuss major issues of conflict of interest of its institutional shareholders/Board members or any other related parties.

5.2.4. The Committee shall bring to the attention of the Board such issues mentioned in 5.2.1, 5.2.2 & 5.2.3 and make suitable recommendations for the consideration of the Board.