Title: Announcement regarding issuance of Disciplinary Board Resolution No. (22/2023) Disciplinary Board - (151/2022 Authority) and imposition of a fine against each of: 1- Massaleh Real Estate Company, 2- Mr. Mohammad Dawood Musaed Al-Saleh - Chairman of the Board of Directors of Massaleh Real Estate Company, 3- Hamad Nader Hamad Al-Eissa - Vice Chairman of the Board of Directors of Massaleh Real Estate Company, 4- Saoud Abdulaziz AlAyoub - Member of the Board of Directors of Massaleh Real Estate Company, 5- Abdulrazzaq Salah Al- Mutawaa - Member of the Board of Directors of Massaleh Real Estate Company, 6- Abdullah Zaher Dawood Al-Saleh - Member of the Board of Directors of Massaleh Real Estate Company,7- Abdullah Faisal Abdullah Al-Mutawaa - Member of the Board of Directors of Massaleh Real Estate Company, 8- Yousef Mohammad Al-Eissa -Member of the Board of Directors of Massaleh Real Estate Company for violating the rules of Dealing in Securities, Listing and Corporate Governance.

Announcement regarding issuance of Disciplinary Board Resolution No. (22/2023) Disciplinary Board - (151/2022 Authority) and imposition of a fine against each of:

1. Massaleh Real Estate Company
2. Mr. Mohammad Dawood Musaed Al-Saleh- Chairman of the Board of Directors of Massaleh Real Estate Company
3. Hamad Nader Hamad Al-Eissa - Vice Chairman of the Board of Directors of Massaleh Real Estate Company
4. Saoud Abdulaziz AlAyoub - Member of the Board of Directors of Massaleh Real Estate Company
5. Abdulrazzaq Salah Al- Mutawaa - Member of the Board of Directors of Massaleh Real Estate Company
6. Abdullah Zaher Dawood Al-Saleh - Member of the Board of Directors of Massaleh Real Estate Company
7. Abdullah Faisal Abdullah Al-Mutawaa - Member of the Board of Directors of Massaleh Real Estate Company
8. Yousef Mohammad Al-Eissa -Member of the Board of Directors of Massaleh Real Estate Company

for violating the rules of Dealing in Securities, Listing and Corporate Governance.

For the following reasons

First: Massaleh Real Estate Company, for violating the following:

1. Violating the provision of paragraph (d) of Article (3) of Appendix (1) (Real Estate Assets Valuation) of Module Eleven (Dealing in Securities) of the Executive Bylaws of Law No. 7 of 2010 and their amendments:

“Persons licensed and listed companies in the Exchange shall comply with the following procedures and regulations for the purpose of evaluating real estate listed in their consolidated financial statements:

3. Procedures required for valuation of foreign real estate listed in the consolidated financial statements and classified as fixed assets or others on the financial position statement:

d.   Valuation shall be conducted two months at most from the date of financial statements.”

According to what the Authority found, the Company did not conduct a valuation of its real estate listed under the item (retained lands and real estate for development) within two months from the date of the financial statements.

2. Violating the provision of Article (1-14) of Module Twelve (Listing Rules) of the Executive Bylaws of the aforementioned Law that stipulates the following:

“Each Listed Company shall organize and keep books, registers and accounts

reflecting detailed and accurate transactions or ownership transfers of the assets

of such company, in accordance with International Financial Reporting Standards

(IFRS) and the audit standards issued by International Accounting Standards Board

(IASB), which are amended from time to time.”

It became evident to the Authority that the Company is complying with the International Financial Reporting Standard (IAS28) (Investments in associates and joint ventures) Paragraph (41 A).

Second: Each of:

1. Mr. Mohammad Dawood Musaed Al-Saleh - Chairman of the Board of Directors of Massaleh Real Estate Company.
2. Hamad Nader Hamad Al-Eissa - Vice Chairman of the Board of Directors of Massaleh Real Estate Company.
3. Saoud Abdulaziz AlAyoub - Member of the Board of Directors of Massaleh Real Estate Company
4. 5- Abdulrazzaq Salah Al- Mutawaa - Member of the Board of Directors of Massaleh Real Estate Company
5. Abdullah Zaher Dawood Al-Saleh - Member of the Board of Directors of Massaleh Real Estate Company
6. Abdullah Faisal Abdullah Al-Mutawaa - Member of the Board of Directors of Massaleh Real Estate Company
7. Yousef Mohammad Al-Eissa - Member of the Board of Directors of Massaleh Real Estate Company

For violating the following:

1) a- Provision of Article (3-1) of Module Fifteen (Corporate Governance) of the Executive Bylaws of the aforementioned Law which 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.”

b) Provision of Article (7-1) of the aforementioned Module Fifteen which stipulates that:

“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.”

It was proven to the Authority that the company had purchased an asset (investment property) from related parties at a value higher than its market value, which resulted in Massaleh Real Estate Company incurring impairment losses in the fair value of the property when it was re-evaluated to determine its fair value that  will be included in the financial statements for the year ending on 31/12/2021.

2) The provision of paragraph No. (5) of Article (6-3) of the aforementioned Module Fifteen which stipulates that:

“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:

5. Review transactions to be made by the company with the Related Parties and provide proper recommendations thereof to the Board of Directors.”

It was proven to the Authority that the Company entered into an agreement with a related party without a recommendation by the Company's risk department to its Board of Directors regarding this agreement.

The Resolution included the infliction of the following penalty: -

“First: - Levying a fine against Massaleh Real Estate Company in an amount of KWD 1,000 (one thousand Dinars) for the first violation, and an amount of KWD 2,000 (two thousand Dinars) for the second attributed violation.

Second: - Levying a fine against each of:

1. Mr. Mohammad Dawood Musaed Al-Saleh- Chairman of the Board of Directors of Massaleh Real Estate Company
2. Hamad Nader Hamad Al-Eissa - Vice Chairman of the Board of Directors of Massaleh Real Estate Company
3. Saoud Abdulaziz AlAyoub - Member of the Board of Directors of Massaleh Real Estate Company
4. Abdulrazzaq Salah Al- Mutawaa - Member of the Board of Directors of Massaleh Real Estate Company
5. Abdullah Zaher Dawood Al-Saleh - Member of the Board of Directors of Massaleh Real Estate Company
6. Abdullah Faisal Abdullah Al-Mutawaa - Member of the Board of Directors of Massaleh Real Estate Company
7. Yousef Mohammad Al-Eissa -Member of the Board of Directors of Massaleh Real Estate Company

an amount of KWD 2,000 (two thousand Dinars) for each of them for the second attributed violation, and dismissal of the case for the first 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 rules 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.