Corporate Governance

The Bank is committed to upholding the highest standards of corporate governance, which it regards as a key factor in ensuring fairness for all stakeholders and achieving organisational efficiency. During 2007, the Board conducted a thorough review of the Bank’s high level policies for corporate governance, internal controls, risk management and compliance, in accordance with the latest regulations and guidelines issued by the Central Bank of Bahrain (CBB). The Board’s adherence to best corporate governance practices is underlined by various principles, such as integrity, transparency, independence, accountability, responsibility, fairness and social responsibility. Moreover, the Bank’s Corporate Governance Policies are designed to lay a solid foundation for management and oversight, promote ethical and responsible decision making, safeguard integrity in financial reporting, make timely and balanced disclosures, respect the rights of shareholders, recognise and manage risk, encourage enhanced performance, remunerate fairly and responsibly, and recognise the legitimate interest of stakeholders.

Shareholder’s Rights

Recognising the importance of shareholders, Ithmaar Bank treats all its shareholders equally and fairly in line with the guidelines of regulatory agencies. Basic legitimate rights of shareholders include the right to participate in shareholders’ meetings, the right to appoint other persons as a proxy for participating in and voting at meetings, and the right to participate in the election or disqualification of a director, individually. Their rights also include voting on the appointment of independent auditors, and voting for other businesses of the Bank, such as increases in or reduction of capital, the right to receive dividend payments, as well as the right to give opinions and the right to enquire during shareholders’ meeting.

Bank Administration

The Bank is administered by the Board of Directors, committees of the Board, and the Executive Management.

Bank Administrative Chart

 

Board’s Responsibilities

The Board of Directors is accountable to the shareholders for setting the broad policy guidelines and strategic direction, and the creation and delivery of strong sustainable financial performance and long-term shareholder value. The Chairman is responsible for
leading the Board, ensuring its effectiveness, monitoring the performance and supporting the Executive Management. The Board’srole includes the task of monitoring management in such a manner as to ensure that appropriate policies and processes are inplace, that they are operating effectively and that the Bank is meeting its plans and budget targets.

Term

Each director is elected for a three-year term renewable at annual general meetings of the shareholders of the Bank.

Board Committees

The Board of Directors may, from time to time, establish committees as it considers necessary or appropriate to assist it in carrying out its responsibilities. The Board has established the following committees and has adopted charters setting out the matters relevant to their composition, responsibilities and administration.

Executive Committee

The main objective of this committee is to provide oversight of the company’s strategic planning, approve transactions for which the Board has delegated authority to the committee within the parameters of the limits of authority, to make recommendations to the Board regarding transactions not falling within the limits of authority of the Executive Committee, and to evaluate the company’s financial strategies and policies.

- Mr. Khalid Abdulla-Janahi, Chairman
- Mr. Graham R. Walker, Member
- Mr. Michael P. Lee, Member

Audit Committee

The Audit Committee comprises 3 members from the Board of Directors and operates under the terms of reference set forth in a formal charter. The Audit Committee assists the Board through review of the Bank’s financial information, internal controls, risk management processes and internal audit functions. The Committee also oversees the internal audit function and evaluates the performance of the Bank’s external auditors. In addition, the Committee is charged with ensuring the Bank’s compliance with applicable laws and regulations.
- Mr. Ziad H. Rawashdeh, Chairman
- Mr. Abdelhameed Aboumoussa, Member
- Mr. Khalil Nooruddin, Member

Remuneration and Nomination Committee

The main objective of this committee is to assist the Board in the effective discharge of its responsibilities in relation to the remuneration of directors and performance of the Board, ensure the appropriate board composition, ensure appropriate nomination of directors to the Board, and provide a formal forum for communication between the Board and the company’s management on Human Resource issues.
- Tunku Dato’ Ya’acob Bin Tunku Abdullah, Chairman
- Mr. Mohamed Bin Saif Al Mezrouei, Member
- Sheikha Hissah Bint Saad Al-Sabah, Member

Insider Trading Compliance Sub-Committee

(of the Executive Committee)
This Committee is established by the Executive Committee and its main objective is to undertake theresponsibility of ensuring that the company complies with the insider trading guidelines issued by the Central Bank of Bahrain and to review and investigate any matter within the scope of its charter, and to make recommendations to the Executive Committee in relation thereto.
- Mr. Graham R. Walker, Chairman
- Nayla Asgharali, Member
- Mr. Jassim A. Karim Salman, Member

Executive Management

Management is responsible for operating the Bank in an effective, ethical and legal manner designed to produce value for the Bank’s shareholders consistent with the Bank’s policies and standards. The Chief Executive Officer is appointed by and reports to the Board of Directors. Senior management is responsible for implementing the Board’s strategic directions, and understanding the Bank’s income-producing activities and material risks faced by the Bank.

Investment Committee (Management)

The main objective of this Committee is to review, approve and ratify all investments within its authority, review risk management reports, and resolve all credit-related issues.
- Michael P. Lee, CHAIRMAN
- Shaikh Salman bin Ahmad Al Khalifa, MEMBER
- Carolyn Prowse, MEMBER
- Masood Tyabji, MEMBER
- Scott A. Creswell,MEMBER

Board and Management Conduct

Confidentiality of Information
In order to facilitate open discussion, the Board believes that maintaining confidentiality of the Bank’s information and Board and committee deliberations are critical.

Conflicts of Interest
Directors avoid any action, position or interest that conflicts with an interest of the Bank, or gives the appearance of a conflict. The Bank annually solicits information from directors in order to monitor potential conflicts of interest and directors are expected to be mindful of their fiduciary obligations to the bank. In the event of a situation involving a potential conflict of interest, directors are encouraged to seek advice from the Bank’s compliance officer.

Code of Business Conduct and Ethics
The Bank’s Code of Business Conduct and Ethics applies to members of the Board, as well as executive management, officers, employees, agents, consultants, and others, when they are representing or acting for the Bank. The Board of Directors, as well a officers and employees, act ethically at all times and acknowledge their adherence to the Bank’s policies. Any waiver of the Code of Business Conduct and Ethics for a director or executive officer may be granted only by the Board or the appropriate Board committee and must be promptly disclosed to the stockholders.

Communication with Shareholders
The Bank conducts all communications with its stakeholders in a professional, honest, transparent, understandable, accurate and timely manner. Main communications channels include an annual report, quarterly publications of financial results, corporate website and regular announcements in the appropriate media.

Internal Audit

The Bank’s internal audit function monitors compliance with the policies and procedures and effectiveness of internal controls. The work of internal audit is focused on the areas of risk assigned through a risk assessment approach. The internal audit function reports directly to the Audit Committee of the Board of Directors.Theinternal auditors conduct their work independently of the Bank’s senior management in accordance with the internal audit plan approved by the Audit Committee.

Compliance

In accordance with the directives of the Central Bank of Bahrain, the Bank appointed a Compliance Officer, who also acts as a Money Laundering Reporting Officer (MLRO). The Compliance Officer acts as central coordinator for the group in respect of all matters relating to the CBB’s regulatory reporting and other
requirements, the Bahrain Stock Exchange and the Ministry of Industry and Commerce. The compliance function covers the broad areas of corporate governance, adherence to best practices, code of conduct, conflict of interest, adherence to the IFRS, compliance with Basel II and other issues. Each of Ithmaar’s operating subsidiaries has appointed local compliance officers to ensure adherence to local requirements and regulatory issues. It is the duty of the MLRO in each subsidiary to ensure that sufficient evidence is obtained in all cases to enable the identity of every client to be satisfactorily established, failing which monies cannot be transferred, and to report any suspicions concerning a customer or account to their relevant regulator and senior management. The MLRO is also responsible for establishing and maintaining
appropriate and effective systems, controls and records to ensure compliance with regulatory obligations in regard to money laundering. This responsibility of the Compliance Officer also includes the issue and implementation of policy and procedural manuals to all subsidiaries throughout the group, arranging in-house and external training for relevant officers and submission of group reports to the Board & the CBB.