Title: Announcement regarding issuance of Disciplinary Board Resolution No. (26/2023) Disciplinary Board - (14/2023) Authority and imposition of a fine against each of: 1- Arabi Holding Group Company, 2- Chairman of the Board of Directors of Arabi Holding Group Company, 3- Vice Chairman of the Board of Directors of Arabi Holding Group Company, 4- Members of the Board of Directors of Arabi Holding Group Company for Violating the Rules of Disclosure and Transparency and the Rules of Corporate Governance

Announcement regarding issuance of Disciplinary Board Resolution No. (26/2023) Disciplinary Board - (14/2023) Authority and imposition of a fine against each of:

1-  Arabi Holding Group Company.
2- Chairman of the Board of Directors of Arabi Holding Group Company.
3- Vice Chairman of the Board of Directors of Arabi Holding Group Company.
4- Members of the Board of Directors of Arabi Holding Group Company.

For violating the rules of Disclosure and Transparency and the rules of Corporate Governance.

For the following reasons:
First: Arabi Holding Group Company violated the following provisions:

1) Provision of Item (2) of Article (3-1-2) of Module Ten (Disclosure and Transparency) of the Executive Bylaws of Law No. 7 of 2010 and their amendments which stipulates:

“A Person is considered an Insider in a Listed Company in the following cases:
2. Any other Person or entity who is directly linked to the company and holds Inside Information related to the Listed Company or its clients including, but not limited to, the Parent Company, the Auditor, banking firms, advisory firms…”

It was proven to the CMA that the Company failed to include an office for legal advisory and an office for attorney and legal advisory within the insiders list of Arabi Holding Group Company.

2) Provision of Item (13) of Article (4-1-1) of the same Module which stipulates:

“A Listed Company shall disclose Material Information within the timing set out in Article (4-2) of this Module, including but not limited to the following:
13. Any default on debt, obligation or interests.”

It was proven to the CMA that the Company failed to disclose the default on its finance, in addition to its failure to disclose the defaults of Arabi Enertech Company (subsidiary company) to some of the banks.

3) Provision of Article (4-2-1) of the same Module which stipulates:

“A Listed Company shall immediately disclose Material Information according to the following:
1. If information became available during working hours of the Authority or the Exchange, disclosure shall be made immediately upon availability, taking all the necessary precautions to prevent leakage of information before disclosure.
2. If the information became available outside working hours of the Authority or the Exchange, disclosure shall be made fifteen minutes before the start of the next trading session after the availability of the Material Information.”

It was proven to the CMA that the Company was late to disclose some material information.

4) Provision of Item (3) of Article (6-3) of Module Fifteen (Corporate Governance) of the same Executive Bylaws which stipulates:

“The company organizational structure approved by the Board of Directors shall have a department/ an office/ an independent unit, which shall primarily measure, monitor, and mitigate all types of risks encountered by the company in accordance with the following:
3. Officials of risk department/ office, unit shall be independent through the direct affiliation thereof to the Risk Committee.  In addition, they shall assume a significant extent of powers, in order to perform their roles properly without being granted financial powers and authorities, or any powers or authorities that leads to conflict with their regulatory role.”

It was proven to the CMA that the Company has assigned the work of its Risk Management Officer without having a contract signed between them. In addition, the aforementioned is the Accounts’ Officer at Company (a related company), which may lead to lack of independency of the mentioned department and conflict with its regulatory role.

5) Provision of Article (8-7) of the same Module which stipulates:

“The company shall incorporate a unit of investors affairs and such unit shall be responsible for providing data, information, and reports related to potential investors thereof. Such unit of investors’ affairs shall be reasonably independent, in a manner that allows it to provide data, information, and reports timely and accurately through familiar methods of disclosure, such as the company website.”

Unavailability of a contract of the Investors Affairs Unit Officer was proven to the CMA. In addition, the aforementioned is an accountant at Arabi Company W.L.L (Subsidiary Company), which may lead to lack of independency of the mentioned unit.

Second: Each of the following:

1- Chairman of the Board of Directors of Arabi Holding Group Company.
2- Vice Chairman of the Board of Directors of Arabi Holding Group Company.
3- Members of the Board of Directors of Arabi Holding Group Company.

They violated the following provisions:
1) The provision of Item (3) and Item (13/b) of Article (3-7) of Module Fifteen (Corporate Governance) of the Executive Bylaws of Law No. 7 of 2010 and their amendments which stipulates:

“Board roles and responsibilities include, for example without limitation:
3. Supervising company main capital charges, assets ownership and disposing of the same.
13. Audit and supervise performance of executive management members and procuring their accomplishment of all assigned roles so that the Board can:
b. Hold periodic meetings with executive management to discuss work issues and challenges as well as presenting and discussing important information in regard of the company’s activity.”

It was proven to the CMA that the Company failed to pay the salaries of some of its employees from March 2022 until the end of the inspection and that the Board of Directors did not discuss that problem and the obstacles it has caused with the executive management.

2) Provision of Item (15) of Article (3-7) of the same Module which stipulates:

“Board roles and responsibilities include, for example without limitation:
15. Appoint or remove any of executive management members including executive agency chairman or his representative.”

It was proven to the CMA that the Board of Directors failed to take the necessary action regarding signing any contract with the Chief Executive Officer of Legal Affairs.

The Resolution included the infliction of the following penalty: -

"First: Levying a fine against Arabi Holding Group Company as follows:
1- An amount of KWD 1000 (one thousand Dinars) for the first violation.
2- An amount of KWD 15000 (fifteen thousand Dinars) for the second violation.
3- An amount of KWD 25000 (twenty-five thousand Dinars) for the third violation.
4- An amount of KWD 5000 (five thousand Dinars) for each of the fourth and fifth violations.

Second: Levying a fine against each of the following:
1- Chairman of the Board of Directors of Arabi Holding Group Company.
2- Vice Chairman of the Board of Directors of Arabi Holding Group Company.
3- Members of the Board of Directors of Arabi Holding Group Company.
In an amount of KWD 5000 (five thousand Dinars) on each one of them for each of the two attributed violations.

In this regard, the CMA emphasizes the implementation of CMA Law and its Executive Bylaws on all persons dealing in securities activities, and urges them to comply with these Laws in order to promote investors' confidence, create a sound investment environment, and implement the Law according to the principles of fairness, transparency, and integrity in line with the best international practice.