PD-1.3.10

Past version: Effective from 01 Apr 2011 to 31 Dec 2011
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The following information relating to corporate governance should be disclosed in the annual report:

(a) Information about the Board structure (e.g. the size of the Board, Board committees, function of committees and membership divided into independent and non-independent members), and the basic organisational structure (lines of business structure and legal entity structure);

(b) Information about the profession, business title, and experience in years of each Board member, describing each director as executive or non-executive and the qualifications and experience in years of all senior managers (see Section PD-1.1 for definitions);

(c) Descriptive information on the managerial structure, including:

(i) Committees (see w) below for detailed disclosure requirements relating to various types of committees);

(ii) Segregation of duties;

(iii) Reporting lines; and

(iv) Responsibilities;

(d) Descriptive information on the performance-linked incentive structure for the Chief Executive, the General Manager, Managers, Shari'a Board and the Board (remuneration policies, executive compensation, stock options, etc.);

(e) Nature and extent of transactions with related parties (as defined by AAOIFI and IFRS as appropriate see also PD-1.3.23(d));

(f) Approval process for related party transactions;

(g) Information about any changes in the structures (as mentioned in Subparagraphs PD-1.3.10(a) to PD-1.3.10(c) above) from prior periods;

(h) The communications strategy approved by the Board (including the use of the bank's website) which should perform at least the following:

(i) The disclosure of all relevant information to stakeholders on a timely basis in a timely manner; and

(ii) The provision of at least the last three years of financial data on the bank's website;

(i) Distribution of ownership of shares by nationality;

(j) Directors' and senior managers' trading of the bank's shares during the year, on an individual basis;

(k) Distribution of ownership of shares by directors and senior managers, on an individual basis;

(l) Distribution of ownership of shares by size of shareholder;

(m) Ownership of shares by government;

(n) The Board's functions — rather than a general statement (which could be disclosed simply as the Board's legal obligations under various laws) the 'mandate' of the Board should be set out;

(o) The types of material transactions that require Board approval;

(p) Number and names of independent board members;

(q) Board terms and start date for each term for each director;

(r) What the board does to induct, educate, orient new directors;

(s) Election system of directors and any termination arrangements;

(t) Meeting dates (number of meetings during the year);

(u) Attendance of directors at each meeting;

(v) Whether the board has adopted a written code of ethical business conduct, and if so the text of that code and a statement of how the board monitors compliance;

(w) Minimum number of Board committee meetings per year, the actual number of board meetings, attendance of committees' members and the work of committees and any significant issues arising during the period;

(x) Reference to Module HC and any amendments subsequently made by the CBB;

(y) Review of internal control processes and procedures;

(z) Directors responsibility with regard to the preparation of financial statements;

(aa) Board of Directors — whether or not the board, its committees and individual directors are regularly assessed with respect to their effectiveness and contribution;

(bb) Banks are encouraged to maintain a website. If a bank does not have a website, it must state in its strategy how it will make all relevant information available to shareholders and other stakeholders on a timely basis;

(cc) Descriptive information on any investor/ consumer awareness programmes for information on new products and services;

(dd) Information on any mediation and advice bureaus for investors and customers set up by the bank, including clearly written procedures for logging of complaints;

(ee) Social functions and charitable contributions of the bank;

(ff) Descriptive information on the governance arrangements, systems and controls employed by the bank to ensure Shari'a compliance and on how these meet applicable AAOIFI standards, and if there is less than full compliance, an explanation of the reasons for non-compliance;

(gg) How non-Shari'a-compliant earnings and expenditure occur and the manner in which they are disposed of; and

(hh) The annual zakah contributions of the bank, where relevant.

Amended April 2011
Amended October 2010
April 2008

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PD-1.3.10