Bylaws of the Securities Depository Center Company (Edaa) Single Person Closed Joint Stock Company

(Closed Joint Stock Company)

 

Clause 1: Incorporation

In line with provisions of the Companies Law and the regulations thereto and this Bylaws, it is hereby established a single person Saudi joint stock company wholly owned by the Saudi Tadawul Group Holding Company as follows:

 

Clause 2: Company’s Name

The Securities Depository Center Company (a single person closed joint stock company).

 

Clause 3: Company’s Purposes

The purposes of the company include the deposit and settlement of securities. It may engage in any other activity related thereto in accordance with the capital market law and to achieve its objectives stated therein.

 

Clause 4: Participation and Ownership in Companies

The company may own stocks and shares in other existing companies or merge with them. The company has the right to participate with others in establishing joint stock or limited liability companies after fulfilling the requirements of the laws and instructions followed in this regard. The company may also dispose of these stocks or shares, provided that this does not include acting as a broker in trading such stocks or shares.

 

Clause 5: The Company’s Head Office

The company's head office is located in Riyadh, Kingdom of Saudi Arabia (“KSA”). The company may establish branches, offices, or agencies inside, or outside KSA by a resolution of the company's Board of Directors.

 

Clause 6: Company’s Term

The company’s term is (ninety-nine) Hijri years starting as of the date of its registration in the commercial register. This period may always be extended for a similar period or other periods by a resolution from the owner of the capital at least one year prior to its expiry.

 

Clause 7: Capital

The company's capital was set at (SR 400,000,000) four hundred million Saudi riyals, divided into (40) forty million nominal shares of equal value. the value of each share is (10) ten Saudi riyals and they are all cash ordinary shares.

 

Clause 8: Subscription to Shares

The owner has subscribed to the entire capital shares amounting to (SR 400,000,000) Four Hundred Million Saudi Riyals. The value of (SR 400,000,000) Four Hundred Million Saudi Riyals of which was paid and deposited at the Saudi British Bank (SAB).

 

Clause 9: Sale of Shares

The owner of the capital may not sell part or all his shares, except upon issuing financial statements for two fiscal years, each of which is not less than twelve months from the date of the company’s association. The owner is also obligated to inform the Ministry of his intention to sell.

 

Clause 10: Capital Increase

The owner of the capital may decide to increase the company’s capital provided that the capital has been paid in full. It shall not require that the capital has been paid in full if the unpaid part of the capital is related to shares issued in exchange for converting debt instruments or financing instruments to shares, as long as the specified period for converting them into shares is not expired.

 

Clause 11: Capital Reduction

The owner of the capital may decide to reduce the capital if it exceeds the company’s needs or if the company suffers losses. Only in the latter case, the capital may be reduced below the limit stipulated in Article (Fifty-Four) of the Companies Law. The reduction decision shall not be issued except upon reciting a special report prepared by the auditor on the reasons necessitating thereof, the obligations of the company, and the effect of the reduction on such obligations.

If the capital reduction is a result of it exceeding the company's needs, the creditors shall be invited to express their objections thereon within sixty days from the date of publishing the reduction decision in a daily newspaper distributed in the region in which the company's head office is located.

If one of the creditors objects and submits his documents to the company on the aforementioned date, the company shall pay him his debt if it falls due, or provide him with sufficient guarantee to satisfy their debt if it is due in the future.

 

Clause 12: Company’s Management

The company shall be managed by a board of directors consisting of seven members elected by the Shareholders' Ordinary General Assembly - upon obtaining the approval of the Board of the Capital Market Authority - for a period not exceeding three years.

 

Clause 13: Expiry of Board Membership

Board membership shall expire at the end of its term or at the expiration of the member’s authority according to any law or instruction enforced in KSA. However, the owner of the capital may at any time dismiss all or some of the members of the Board of Directors, without prejudice to the right of the dismissed member towards the company to claim compensation if such dismissal occurred for an unacceptable reason or at an inappropriate time. A member of the Board of Directors may retire, provided that it shall be done at an appropriate time, otherwise he shall be liable to the company for any damages resulting from his retirement.

 

Clause14: Vacant Position in the Board

If the position of a member of the Board of Directors becomes vacant, the owner of the capital may appoint a member to the vacant position, provided that he is one of those who possess experience and competence. The Ministry shall be notified thereof within five working days from the date of appointment. The new member shall complete the term of his predecessor. If the necessary conditions are not met for a Board of Directors to convene due to the number of its members is less than the minimum number stipulated in the Companies Law or this Bylaws, the owner of the capital shall, within sixty days, appoint the necessary number of members.

 

Clause 15: Authorities of the Board

Without prejudice to the authority assigned to the General Assembly, the Board of Directors shall have the widest authority to manage the company in order to achieve its purposes and supervise its affairs.

In order to carry out its duties, the Board shall have the right to exercise all authorities and carry out all activities and acts that the company has the right to perform under this Bylaw, the articles of incorporation, or otherwise, except for activities or acts that are excluded by a special provision that fall within the jurisdiction of the General Assembly.

The Board of Directors has the authority to establish subsidiary companies, purchase, rent, and lease lands and real estate, buy, sell, mortgage, and release the mortgage of assets and movables in the name of the company and on its behalf, along with sign ownership instruments and contracts related thereto, and to receive and pay the price according to the interest of the company.

The Board shall have the authority to appoint and dismiss employees and workers, determine their wages, request, and issue visas, residency permits, and work permits, bring in employees and workers, transfer their services, and issue financial and administrative regulations, and all required regulations for the company’s operation.

The Board shall have the authority to sign all types of contracts, instruments, and documents, including - but not limited to – article of incorporation for companies in which the company share therein along with all the amendments and appendices thereto, sign agreements and contracts, in addition to the authority to sell, buy and mortgage real estate, transfer of title and accept thereof, receive and deliver the same, rent and provide for renting, receive and pay, open bank accounts inside and outside KSA, open and settle letter of credits, withdrawing and depositing from the company’s accounts at banks, issuing bank guarantees of all kinds, sign all papers, documents, checks, and all banking transactions.

The Board shall have the authority to conclude commitments, loans, or financial facilities, whatever their duration. The Board of Directors has the right, in cases it deems appropriate, to discharge the company’s debtors.

The Board of Directors has the right - within the limits of its authority - to authorize one or more of its members or a third party to undertake a specific work or tasks. However, the Board of Directors has no right to donate any of the company’s funds except within the limits stipulated in the laws and regulations enforce in KSA.

 

Clause 16: Remuneration for Board Members

The remuneration of a member of the Board of Directors and all the benefits that he obtains - if any - shall be as approved by the Ordinary General Assembly in accordance with the official decisions and instructions issued in this regard, within the limits of what is stipulated in the Companies Law and the regulations thereto. The Board of Directors’ report to the General Assembly shall include a comprehensive statement of all that the members of the Board of Directors received during the fiscal year in terms of remunerations, allowances, and other benefits. It shall also include a statement of what members of the Board of Directors received in their capacity as employees or administrators, or what they received in return for technical, administrative, or consulting work. It shall also include a statement of the number of sessions of the Board and the number of sessions attended by each member as of the date of the last General Assembly meeting.

 

Clause 17: Authorities of the Chairperson, Vice Chairperson, Managing Director and Secretary

The Board of Directors shall appoint from among its members a Chairperson and Vice Chairperson and may appoint a Managing Director. The position of Chairperson of the Board of Directors may not be combined with any executive position in the company.

The Chairperson of the Board has the right to invite the Board to convene. He shall chair the meetings of the Board of Directors as well as the meetings of the general assemblies and represents the company in its relations with third-party and before the judiciary, government entities, the notary public, the courts, Committee for Resolution of Securities Disputes, dispute resolution committees of various types, arbitration, civil rights, police departments, chambers of commerce and industry, private entities, companies and institutions of all kinds, individuals and companies, all funds, governmental and private financing institutions, Saudi and non-Saudi banks and financial houses. To issue legal powers of attorneys, appointing and dismissing attorneys and lawyers, pleading, defending, disputes, reconciliation, approval, arbitration, accepting and objecting to judgments on behalf of the company. Sign all types of contracts and documents, including, but not limited to, article of incorporation for companies that the company establishes or participates in establishing, along with all the amendments and appendices thereto. Sign agreements, instruments, the transfer of ownership before notaries and official authorities, loan agreements with funds and government financing institutions, banks, licensed persons, brokerage companies, financial houses, guarantees, bonds, and mortgages and release thereof, collecting the company’s dues, paying its obligations, selling, buying, transferring titles and accepting thereof, receiving, delivering, renting, leasing, collecting, paying, entering into tenders, opening bank and investment accounts, letter of credits, withdrawal and deposit with banks, issuing bonds, checks, all commercial papers, appointing employees, contracting with them, determining their salaries, dismiss them from service, requesting visas, and bringing employees and workers from abroad, obtaining residence permits and work permits, transferring and waiving sponsorships. The Chairperson shall carry out all other tasks entrusted to him by the Board and these bylaws. The Chairperson of the Board shall have the right to appoint or delegate others to carry out a certain work or tasks within his authority, and the deputy or delegator has the right to authorize or empower others to carry out these tasks.

The Board of Directors shall appoint a secretary who is chosen from among its members or from others. He shall be responsible for recording the Board’s deliberations and resolutions, whereby the remuneration thereof shall be determined by a resolution of the Board of Directors. The term of the Chairperson of the Board, the Vice Chairperson, and the Secretary shall not exceed the term of each of them in the Board. They may be re-elected. The Board may dismiss all or any of them at any time, without prejudice to the right of the dismissed person to compensation if such dismissal occurred for an illegal reason or at an inappropriate time.

 

Clause 18: Board Meetings

The Board of Directors shall meet periodically according to what the Board deems appropriate, provided that such meetings are not less than four meetings per year upon the invitation of its Chairperson. The Chairperson of the Board shall call the Board to a meeting whenever two members request thereof.

 

Clause 19: Quorum for the Board Meeting

The Board meeting shall not be valid unless attended by at least half of the members, provided that the number attending is not less than three members. A member of the Board of Directors may delegate other members to attend Board meetings on his behalf according to what the Board determines.

The Board's resolutions shall be issued by a majority vote of the members present or represented therein. If votes are equal, the side with which the Chairperson of the session voted shall prevail. In urgent matters, the Board of Directors may issue resolutions by circulation by presenting them to members individually, unless one of the members requests the Board - in writing - to meet to discuss these resolutions. These resolutions are issued once adopted by the approval of the majority of Board members and are presented to the Board at its first subsequent meeting.

 

Clause 20: Board’s Deliberations

The deliberations and resolutions of the Board of Directors shall be recorded in minutes signed by the Chairperson of the Board, the present members of the Board of Directors, and the Secretary. These minutes are recorded in a special register signed by the Chairperson of the Board of Directors and the Secretary.

 

Clause 21: Attending Assemblies

The owner subscriber has the right to attend the Incorporation assembly, and he has the right to delegate another person on his behalf. He shall also have the right to attend the general assemblies. He shall have the right to delegate another person on his behalf, who is not a member of the board of directors or employees of the company, to attend the general assembly.

 

Clause 22: Incorporation Assembly

The Incorporation assembly shall be held within forty-five days from the date of the Ministry’s resolutions authorizing the establishment of the company. The presence of the owner or his representative is required for the validity of the meeting.

 

Clause 23: Competence of the Incorporation Assembly

The Incorporation assembly shall be concerned with the matters stipulated in Article (Sixty-Three) of the Companies Law.

 

Clause 24: Competence of the Ordinary General Assembly

Excluding matters within the authority of the Extraordinary General Assembly, the Ordinary General Assembly shall have power over all matters related to the company. It shall be held at least once a year during the six months following the end of the company’s fiscal year. Other ordinary general assemblies may be called whenever the need arises.

 

Clause 25: Competence of the Extraordinary General Assembly

The Extraordinary General Assembly has the authority to amend the company’s bylaws, with the exception of matters prohibited from being amended by law. It may issue decisions on matters that originally fall within the jurisdiction of the Ordinary General Assembly, under the same terms and conditions established for the Ordinary General Assembly.

 

Clause 26: Invitation for Meetings of Assemblies

General assemblies shall be held upon the invitation of the Board of Directors. The Board of Directors shall invite the ordinary general assembly to convene if the auditor or the audit committee requests. The auditor may invite the assembly to convene if the Board does not invite the assembly within thirty days from the date of the auditor’s request. The invitation to convene the assembly shall be published in a daily newspaper distributed in the region where the company's head office is allocated, at least twenty-one days prior to the date specified for the meeting.

However, it is permissible to suffice with sending the invitation within the aforementioned time to all shareholders by registered letters. The invitation shall include the agenda, and a copy of the invitation and agenda shall be sent to the Ministry of Commerce within the period specified for publication.

 

Clause 27: Assemblies Attendance Register

The owner or his representative shall be registered in the general assembly’s attendance list at the company’s main office.

 

Clause 28: Quorum for the Ordinary General Assembly Meeting

The Ordinary General Assembly meeting shall not be valid unless the owner or his representative is present. In his absence, a second meeting shall be called within thirty days following the previous meeting.

 

Clause 29: Quorum for the Extraordinary General Assembly Meeting

The extraordinary general assembly meeting shall not be valid unless the owner or his representative is present. In his absence, a second meeting shall be called within thirty days following the previous meeting.

 

Clause 30: Discussion in Assemblies

The owner or his representative has the right to discuss the topics included in the assembly meeting agenda and direct questions in such regards to the members of the Board of Directors and the auditor. The Board of Directors or the auditor shall answer the questions to the extent that does not expose the company’s interest for damage.

 

Clause 31: Chairing the Assembly and Preparation of Minutes

General assembly meetings shall be chaired by the Chairperson of the Board of Directors or the Vice Chairperson in his absence, or whomever the Board of Directors delegates from among its members for that purpose in the absence of the Chairperson of the Board of Directors and the Vice Chairperson. Minutes shall be drawn up at the assembly meeting that includes the names of the attendees, the decisions that were taken, and a comprehensive summary of the discussions that took place at the meeting. The minutes are recorded on a regular basis after each meeting in a special register signed by the assembly’s Chairperson and secretary.

 

Clause 32: Forming of the Committee

An audit committee shall be formed upon a decision of the owner of capital. Its members shall not be less than three members and no more than five members who are not members of the Executive Board of Directors. The decision shall specify the tasks of the committee, the controls of its work, and the remuneration of the members thereof.

Clause 33: Quorum for the Committee Meeting

For a meeting of the Audit Committee to be valid, the majority of its members must be present, and its decisions shall be issued upon the majority of the votes of those present. If votes are equal, the side with the Chairperson of the Committee voted shall prevail.

 

Clause 34: Competence of the Committee

The Audit Committee shall be responsible for monitoring the company’s operations. For this purpose, it shall have the right to review its records, documents, and request any clarification or statement from members of the Board of Directors or the Executive Management. It may ask the Board of Directors to invite the company’s General Assembly to convene if the Board of Directors obstructs its work or the company is subject to gross damage or loss.

 

Clause 35: Committee Reports

The Audit Committee shall review the company’s financial statements, reports and notes submitted by the auditor, and express its views thereon, if any. It shall also prepare a report on its opinion regarding the adequacy of the company’s internal control system and the other work it has undertaken that falls within the scope of its powers, and the Board of Directors before 21 days of holding the General Assembly, provide the owner of the capital with a copy thereof. The report shall be read out during the Assembly.

 

Clause 36: Appointing an Auditor

The company shall have an auditor (or more) from the auditors licensed to work in the Kingdom. The Ordinary General Assembly shall appoint him annually, and determines his remuneration and the term of his work. The Assembly may also change him at any time without prejudice to his right to compensation if the change occurs at an inappropriate time, or for an inappropriate reason.

 

Clause 37: Authority of the Auditor

The auditor may at any time review the company records and books and other documents.  He may also request info and disclosures that he may deems necessary to obtain to validate the company assets and liabilities and other matters that falls within the scope of his work, whereby, the Chairperson shall enable him to perform his work.  If, coincidently, the auditor has difficulty in this regard, he demonstrated this in a report submitted to the Board of Directors. If the Board does not facilitate the work of the auditor, he must ask the Board of Directors to invite the Ordinary General Assembly to consider the matter.

 

Clause 38: Fiscal Year

The company's fiscal year shall begin on the first of January and ends at the end of December of each year, provided that the first fiscal year begins as of the date of its registration in the commercial register until the end of December of the following year.

 

Clause 39: Financial Documents

1. The Board of Directors shall, at the end of each fiscal year of the company, prepare the company’s financial statements, a report on its activity, and financial position for the past fiscal year. This report includes the proposed method for dividends. The Board places these documents at the disposal of the auditor forty-five days before the date set for the General Assembly to be held.
2. The Company’s Chairperson of Board of Directors, Chief Executive Officer, and Chief Financial Officer must sign the documents referred to in Paragraph (1) of this Article, and copies thereof shall be deposited at the Company’s head office at the disposal of the owner of the capital at least twenty-one days before the date set for the General Assembly to be held.
3. The Chairperson of the Board of Directors shall provide shareholders with the company’s financial statements, the Board of Directors’ report, and the auditor’s report. He shall also send a copy of these documents to the Ministry at least fifteen days before the date of the General Assembly.

 

Clause 40: Distribution of Dividends

The company's annual net profits are distributed - after deducting all general expenses and other costs - as follows:

1. (10%) of the net profits shall be retain to form the company’s legal reserve. The Ordinary General Assembly may decide to stop such retain when the aforementioned reserve reaches (30%) of the paid-up capital.
2. The Ordinary General Assembly may decide to form other reserves to the extent that serves the interest of the company or ensures the distribution of fixed profits as much as possible to shareholders. The aforementioned assembly may also deduct amounts from the net profits to establish social institutions for the company’s employees or to aid existing thereof.
3. From the remainder, a percentage of the company’s paid-up capital will then be distributed to the owner in accordance with what the Ordinary General Assembly decides.

 

Clause 41: Entitlement to Dividends

The owner of the capital is entitled to his share in the profits according to the decision issued in this regard. The decision shall indicate the due date and the distribution date.

 

Clause 42: Company’s Losses

1. If the losses of the joint-stock company reach half of the paid-up capital, at any time during the fiscal year, any company’s officer or auditor shall immediately inform the Chairperson of the Board of Directors thereof. The Chairperson of the Board of Directors shall immediately inform the members of the Board. The Board of Directors shall within fifteen days of becoming aware of such, invite the owner of the capital to decide within forty-five days as of the date of becoming aware of the losses, either to increase or decrease the company’s capital in accordance with the provisions of the Companies Law, to the extent that the percentage of losses decreases to less than half of the paid-up capital, or to dissolve the company before the deadline specified in this bylaw.
2. The company shall be deemed dissolved according to the Companies Law if the owner of the capital does not take a decision within the period specified in Paragraph (1) of this Article.

 

Clause 43: Liability Lawsuits

The owner of the capital may file a lawsuit against the members of the Board of Directors for the liability prescribed for the company if the error committed by them resulted in particular damage thereto. The owner of the capital may not file the aforementioned lawsuit unless the company’s right to file thereof still valid. The owner of the capital shall inform the company of his intention to file a lawsuit.

 

Clause 44: End of the Company

Upon the end of the company, it shall enter the phase of liquidation. It shall maintain its legal personality to the extent necessary for liquidation. The voluntary liquidation decision is issued by the owner of the capital. The liquidation decision shall include the appointment of the liquidator, determine his powers and fees, the restrictions imposed on his powers, and the necessary period for liquidation. The period of voluntary liquidation shall not exceed five years and may only be extended further upon a legal order. The authority of the company’s board of directors shall end upon its dissolution. However, the members of the board of directors shall remain in charge of managing the company and are considered as liquidators in regards to others until the liquidator is appointed. The owner of the capital shall retain his competency during the liquidation that do not conflict with the competency of the liquidator.

 

Clause 45

The Companies Law and its regulations shall apply to whatever not stipulated in this Law.

 

Clause 46

This Bylaw shall be filed and published in accordance with the provisions of the Companies Law and its regulations.