Title: Announcement regarding issuance of Disciplinary Board Resolution No. (24/2023) Disciplinary Board – (194, 195/2022) Authority, and imposition of a fine against each of: 1- Jiyad Holding Company, 2- Chairman, Vice Chairman, and Members of the Board of Directors of Jiyad Holding Company (formerly), 3- Auditor of Jiyad Holding Company, for violating Listing Rules, and not complying with the International Auditing Standard and the International Financial Reporting Standards, and violating the Rules of Corporate Governance, and violating the Rules of Securities Activities and Registered Persons of the Executive Bylaws of Law No. 7 of 2010 and their Amendments.

Announcement regarding issuance of Disciplinary Board Resolution No. (24/2023) Disciplinary Board – (194, 195/2022) Authority, and imposition of a fine against each of:

1. Jiyad Holding Company,
2. Chairman, Vice Chairman, and Members of the Board of Directors of Jiyad Holding Company (formerly),
3. Auditor of Jiyad Holding Company,

for violating Listing Rules, and not complying with the International Auditing Standard and the International Financial Reporting Standards, and violating the Rules of Corporate Governance, and violating the Rules of Securities activities and Registered Persons of the Executive Bylaws of Law No. 7 of 2010 and their amendments.

For the following reasons:

First: Jiyad Holding Company:

The Company violated the provision of Article (1-14) of Module Twelve (Listing Rules) of the Executive Bylaws of Law No. 7 of 2010 and their amendments. It was proven to the CMA by examining the financial statements for the year ending on 31/12/2021, and the financial period ending on 31/3/2022, and the financial period ending on 30/6/2022 for Jiyad Holding Company, the Company’s non-compliance with Item (5.5.3) and Item (5.5.5) of International Financial Reporting Standard No. 9 (IFRS 9), as the Company failed to undertake any amendments to the balance of credit losses expected during the first half of 2022. It was also proven to the Authority of the Company’s non-compliance with Item (9-b-2) of International Accounting Standard (24) (IAS 24), as the Company has reclassified the Item (Claimed from related parties) to the item (trade receivables) for a balance still due from a related party that is classified as an investment in an associated company, which is evident from the Company’s failure to disclose its dealings with related parties in the notes to the financial statements. It was also proven to the Authority that the Company did not comply with the two items. No. (38), (41) regarding comparative information from International Accounting Standard No. (1) (IAS 1), as the Company did not display the comparison figures and the clarification for the “Claimed from related parties” item, when it reclassified the item “Claimed from related parties” to “Trade receivables”.

Second: Chairman, Vice Chairman, and Members of the Board of Directors of Jiyad Holding Company (formerly)

This is due to their violation of the provisions of Article (3-1) and the provision of Article (7-1) of Module Fifteen (Corporate Governance) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, where Article 3-1 stipulates that: “The role of Board of Directors represents the balance core which aims at achieving shareholders’ goals and pursuing the company executive management. Board of Directors aim at accomplishing the strategic goals of the company through ensuring that  executive  management  are  perfectly  performing  its  assigned  roles  and  that  it is enhancing the company’s competitive capacity, achieving high growth rates, increasing profits, and integrating economic, social, and governance Sustainability considerations  in  its  processes  if  required,  and  that  executive  management  resolutions and actions are always for the benefit of the shareholders.”

Article (7-1) Stipulates: “Establishing  the  culture  of  code  of  conduct  and  the  ethical  standards  inside  a  company promotes the confidence of investor in such company’s integrity and financial soundness, as the commitment by all employees in the company, either the Members of a Board of Directors, executive management, or other employees, to the company policies and regulations as well as the legal and regulatory requirements shall result in achieving interests of all the Related Parties, particularly shareholders, without conflicts of interest and with a significant extent of transparency.”

As it was proven to the Authority through examining the financial statements of Jiyad Holding Company for the year ending on 31/12/2021, the financial period ending on 31/03/2022, and the financial period ending on 30/06/2022 that they offloaded the Company’s assets for the benefit of related parties, in addition to failure to conclude any contract or document regulating the relationship between the two parties, despite the Company taking a full allocation on the amount during the financial year ending on 31/12/2021, which harmed the Company’s shareholders.

Third: Auditor of Jiyad Holding Company, for violating the following:

1) The provision of Article (3-4-5) of Module Five (Securities Activities and Registered Persons) of the Executive Bylaws of the aforementioned Law, it was proven to the Authority through examining the financial statements of Jiyad Holding Company for the year ending 31/12/2021, and the financial period ending on 31/03/2022, and the financial period ending on 30/06/2022, his failure, in his capacity as an auditor of Jiyad Holding Company, to make any observations in his report on the Company’s financial statements for the financial periods ending on 31/03/2022 and 30/06/2022, as the International Financial Reporting Standards on which a qualified opinion was not expressed were the following:

1. Items (5.5.3) (5.5.5) of International Financial Reporting Standard No. (9) (IFRS 9).

The Company did not make any adjustments to the balance of credit losses expected during the first half of 2022.

2. Item (9-B-2) of International Accounting Standard (24) (IAS24).

Where the Company has reclassified the item (acclaimed from related parties) to the item (trade receivables) for a balance still due from a related party, which is classified as an investment in a subsidiary company, which is clear from the Company’s failure to disclose its dealings with related parties in the financial data clarifications.

3. Item No. (38) and (41) regarding comparative information from International Accounting Standard No. (1) (IAS 1).

The Company did not display the comparison figures and clarification for the “Claimed from Related Parties” item when it reclassified the “Claimed from Related Parties” item to the “Trade Receivables” item.

4. Paragraph (46) of Auditing Standard (2410) regarding “examination of preliminary financial information carried out by the entity’s independent auditor.”

As it was proven to the Authority that he, in his capacity as auditor of Jiyad Holding Company, did not determine the impact of the items on which a qualified opinion was expressed in the financial statements for the periodical financial periods ending on 31/03/2022 and 30/06/2022, despite the availability of all the necessary data that would enable him to determine that.

2) The provision of Item No. (7) of Article (3-4-4) of the aforementioned Module Five, where it was proven to the Authority that he was not obligated, in his capacity as auditor of Jiyad Holding Company, to inform the Authority of the Company’s violations mentioned above.

The Resolution included the infliction of the following penalty: -

“First: Levying a fine on Jiyad Holding Company in an amount of KWD 7000 (seven thousand Dinars) for the attributed violation.

Second: Levying a fine on each of the Chairman, Vice Chairman, and Members of the Board of Directors of Jiyad Holding Company (formerly), in an amount of KWD 30,000 (thirty thousand Dinars) on each of them for the attributed violation.

Third: Levying a fine on the Auditor of Jiyad Holding Company in an amount of KWD 2,000 (two thousand Dinars) for the first violation, and an amount of 1,000 (one thousand Dinars) for the second attributed violation)

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.