Bylaws of Securities Depository Center Company (Edaa)
Closed Joint-Stock Company owned by one person
Section I: Company’s Establishment
Article 1: Establishment
A Saudi joint-stock company shall be established in accordance with the provisions of the Companies law, its regulations and this bylaws. This company is wholly owned by the Saudi Stock Exchange Company (Tadawul) according to the following:
Article 2: Company Name
Securities Depository Center (Closed Joint-Stock Company owned by one person).
Article 3: Company’s Purposes
The Company’s purposes include providing and preparing securities settlement, clearing, depository, ownership registry and safekeeping. In addition, it may engage in any other relevant activity, in accordance with the Capital Market Law to achieve its objectives stated therein.
Article 4: Participation and Ownership in Companies
The Company may own shares and equities in other existing companies or merge with them, and it may participate with others in the establishment of joint-stock or limited liability companies after fulfilling the requirements of the regulations and instructions applied in this regard. The Company may also handle these shares or equities; provided that this does not include brokerage in its trading.
Article 5: Company’s Head Office
The Company’s head office is located in Riyadh in Saudi Arabia, and it is permissible to establish branches, offices or agencies for it inside or outside Saudi Arabia by a decision of the Company's Board of Directors.
Article 6: Company’s Duration
The Company’s duration is (ninety-nine) Hijri years starting from its registration date in the Commercial Register, and this period may be extended for a similar period or other periods by a decision from the Owner at least a year before its expiry.
Section II: Capital and Shares
Article 7: Capital
The Company's capital is 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 ten (10) Saudi Riyals and they are all cash ordinary shares.
Article 8: Subscription in Shares
The Owner has subscribed the entire share capital of SR 400,000,000 (four hundred million Saudi Riyals), were an amount SR400, 000,000 (four hundred million Saudi Riyals) were paid from its value and deposited at the Saudi British Bank (SABB).
Article 9: Sell of shares
The Owner is not permitted to sell part or all of the shares until the financial statements are issued for two fiscal years not less than twelve months from the Company’s establishment date. The Owner is committed to inform the Ministry of the intention to sell.
Article 10: Capital Increase
The Owner may decide to increase the Company’s capital; provided that it has been fully paid. The capital is not required to be paid in full, if the unpaid capital portion is referred to shares issued in exchange for the conversion of debt instruments or financing instruments into shares and the prescribed period for conversion into shares did not expire.
Article 11: Capital Decrease
The Owner may decide to reduce the capital if it exceeds the Company’s need or if the Company suffered losses. The capital may be reduced below the limit stipulated in Article (54) of the Companies Law in the latter case only. The reduction decision shall be issued only after citing a special report prepared by the Auditor explaining the reasons for the reduction, the Company’s obligations and the effect of the reduction in these obligations.
If the capital reduction was a result of its increment beyond the Company’s need, then the Creditors must be invited to submit their objections to this reduction within sixty days from the publication date of the reduction decision in a daily newspaper distributed in the region in which the Company's head office is located.
If one of the Creditor objects to this reduction and submits its documents to the Company on the specified date, the Company must pay his/her debt if it is timely due or to provide him with sufficient guarantee to meet it if it is due later.
Section III: Board of Directors
Article 12: Company’s Management
The Company is managed by a Board of Directors consisting of five members elected by the Ordinary General Assembly of Shareholders for a period not exceeding three years. With exception from this, the Owner shall appoint the first Board of Directors for a period of five (5) years by a decision issued by the Foundation Assembly.
Article 13: End of Board Membership
The Board membership ends upon the expiry of its term or the member's membership in accordance with any applicable rules or instructions in the Kingdom. However, the Owner may, at any time, dismiss some or all the Board members, without prejudice to the dismissed member’s right to the Company to claim compensation, if the dismissal occurs for an unacceptable reason or at an inappropriate time. On the other hand, a Board member may retire on the condition that the retirement shall be in a timely manner, otherwise; such member will be liable before the Company for the consequences of the retirement.
Article 14: Vacancies in the Board
If a Board member position became vacant, the Owner may appoint a member for the vacant position; provided that he/she has the sufficient expertise and competence, and the Ministry must be notified thereof within five business days from the appointment date and the new member will complete the term of his/her predecessor. If the quorum of the Board’s is not achieved, due to the lack of the minimum number of members, which are stipulated in the Companies Law or this bylaws, the Owner must appoint the necessary number of members within sixty days.
Article 15: Board’s Authorities
Taking into account the competences of the General Assembly, the Board of Directors shall have the widest authorities to manage Company in order to achieve its purposes and supervise its affairs. In order to carry out its duties, the Board is entitled to use all the powers and carry out all the activities and acts, which the Company is entitled to perform under this bylaws, the Articles of Association or otherwise, with the exception of what has been expressly excluded by a special provision of the acts or authorities within the General Assembly’s competence. The Board’s authorities include (but not limited to), representing the Company and signing under its name and on its behalf before the third-parties, judiciary, governmental, public and private bodies and institutions, notaries, all types of dispute settlement committees, arbitral tribunals, civil rights authorities, police departments, commercial and industrial chambers, private entities, all kinds of companies and institutions, individuals, companies, all the public and private funds institutions, banks, and the Saudi and non-Saudi financial firms. The Board of Directors has the authority to establish subsidiaries; purchase, lease and rent land and real estate; buy, sell, mortgage, and redeem the assets and movables in the name of the company and on its behalf, sign the conveyance Sukuk and its related contracts, receive and pay the amount according to the Company’s interest. The Board has the power to appoint and dismiss employees and workers, determine their wages, request and extract visas, iqamas, work permits, recruit employees and workers, transfer their services and issue the financial and administrative regulations and all the regulations necessary for the Company's work. The Board will have the authority to sign all types of contracts, records, and documents, including but not limited to, the articles of associations in which the Company participates, with all its amendments, annexes, and amendment decisions; sign agreements and contracts; have the power to sell, purchase and mortgage real estates, conveyance and its acceptance, receipt, delivery, rental, leasing, receipt and payment, opening bank accounts inside and outside the Kingdom, opening and settling letters of credit, withdrawing and depositing from the Company's accounts at the banks, issuing bank guarantees of all kinds and signing all papers, documents, checks and all banking transactions. The Board has the power to enter into commitments, loans or financial facilities of any term. The Board of Directors shall have the power to issue power of attorneys, proceed, defense and litigations; attend hearings on behalf of the Company; file and hear all cases, claims, settlement, waiver, acknowledgment, denial, reply, appeal, supply of witnesses, data and satisfaction, along with appealing the rulings and taking all the statutory procedures to implement the provisions issued for the Company’s interest. Furthermore, it may appoint and dismiss arbitrators, experts or lawyers, claim the rights of the company to third parties and their receipt, acknowledge the conviction or rejection of the provisions, represent the company in any lawsuit filed by the Company or against it before all the courts at all levels, the notary public and the Board of Grievance and the Chambers of Commerce, the authorities and official departments, and the judicial and administrative committees of various types and grades. In its discretion, the Board of Directors exercises the right to discharge the Company’s Debtors.
Within the limits of its competence, the Board of Directors may delegate one or more of its members or third parties to undertake certain work(s); however, the Board of Directors is not entitled to donate any of the Company's funds except within the limits stipulated in the laws and regulations applicable in the Kingdom.
Article 16: Board’s Remuneration
- The remuneration of the Chairman and Board members will be as provided in the Governance Manual approved by the Ordinary General Assembly.
- The Board report presented to the Owner must include a comprehensive statement of all incentives received by the Board members during the fiscal year from remunerations, expense allowance and other benefits. The report must also include all the information about what the Board members have received as employees, administrators or in exchange for technical, administrative or consulting work, and also a statement of the number of Board meetings, and the number of meetings attended by each member from the date of the last General Assembly meeting.
Article 17: Powers of the Chairman, the Vice-Chairman, the Managing Director and the Secretary
The Board of Directors will appoint from its members a Chairman and a Vice-Chairman. It may also appoint a Managing Director. It is not permissible to combine between Chairman’s position and any executive position in the Company.
The Chairman is entitled to call for Board meetings; and chairs Board meetings as well as the General Assemblies meetings. The Chairman represents the Company in its relations with third parties, before the judiciary, the government agencies, the notary public, the courts, the securities disputes settlement committee, the dispute settlement committees of different types, the arbitral tribunals, the civil rights, the police departments, the chambers of commerce and industry, the private bodies, companies and institutions of all kinds. In addition, the Chairman has the power to issue power of attorneys; appoint and dismiss agents and lawyers, conduct proceedings, defense, litigations, reconciliation, acknowledgment, and arbitration; accept and oppose rulings on behalf of the Company. In addition, the Chairman shall have the right to sign all types of contracts and documents, including but not limited to, the Articles of association, in which the Company participates, with all its amendments and annexes; sign agreements, Sukuk, and conveyance before the notary public and the official bodies; and sign the loan agreements with government financing funds and institutions, banks, authorized persons, brokerage companies and financial houses; sign guarantees, warranties, pledges, mortgages and their liquidation. Furthermore, it is entitled to collect the Company's entitlements, pay its obligations; sell; purchase; discharge; accept; receive; deliver; rent; lease; pay; enter into tenders; open bank and investment accounts; conduct appropriations, withdrawals and deposits with banks; issue bonds, checks and all commercial papers; recruit and contract with employees; specify their salaries; dismiss them from the service; apply for visas and recruit employees and workers from abroad, extract residence and work permits; transfer guarantees and waive them. The Chairman shall carry out all other tasks entrusted to him/her by the Board and this Bylaws. The Chairman may, by a written decision, delegate some of his powers to other Board members or from others in carrying out specific work(s).
The Board of Directors will appoint a secretary from amongst its members or from others. The Secretary will be competent to prove and record the Board’s deliberations and decisions; and his/her remuneration will be determined by a decision from the Board of Directors. The term of the Chairman, the Vice-Chairman, and the Secretary will not exceed the term of their respective members in the board. They may be re-elected and the Board may at any time dismiss one or all of them without prejudice to the dismissed person’s right in compensation, if the dismissal occurs for an illegal reason or at an inappropriate time.
Article 18: Board Meetings
The Board of Directors shall meet on a regular basis in accordance with the provisions of these meetings; provided that they are not less than (2) meetings a year at the invitation of its Chairman. The Board Chairman shall call the Board for the meeting when requested by two members.
Article 19: Board Meeting Quorum
The Board meeting will not be valid unless attended by at least half of the members; provided that the number of attendees will not be less than three members according to the following controls:
- The attendance must be in person for the majority of the Board members; provided that the Chairman is one of them.
- The Chairman will chair the Board meetings and conduct, control and direct the meetings.
The Board's decisions are issued by a majority vote of the present or represented members present, and when the votes are equal, the Chairman’s vote shall prevail.
Article 20: Board’s Deliberations
The Board’s deliberations and its decisions will be recorded in minutes signed by the Board Chairman, the present members, and the Secretary. These minutes will be recorded in a special register signed by the Board Chairman and the Secretary.
Section IV: Assemblies
Article 21: Attendance of Assemblies
The Subscribing Owner has the right to attend the Foundation Assembly or appoint another person to attend. As well as the right to attend the General Assemblies or appoint another person, who is not a member of the Board of Directors or the Company's employees, to attend the General Assembly.
Article 22: Foundation Assembly
The Foundation Assembly will be held within 45 days from the issuance date of the Ministry’s decision to authorize the Company’s establishment. The meeting shall require the presence of the Owner or a representative of the Owner.
Article 23: Competences of the Foundation Assembly
The Foundation Assembly will be competent in matters referred to in Article (63) of the Companies Law.
Article 24: Competences of the Ordinary General Assembly
With the exception of the matters within the Extraordinary General Assembly’s competence, the Ordinary General Assembly will be responsible for all matters related to the Company, including the adoption of the technical aspects that require coordination and harmonization with the Owner’s technical systems, and approval of the Company's governance manual in accordance with the policies adopted by the Owner. 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 convened whenever needed.
Article 25: Competences of the Extraordinary General Assembly
The Extraordinary General Assembly will have the authority to amend the Company’s Bylaws, except for matters which are not legally forbidden to be amended, and it may issue decisions in matters already included in the competence of the Ordinary General Assembly, and that is under the same terms and conditions prescribed by the Ordinary General Assembly.
Article 26: Invitation to Assemblies
The General Assembly may be held at the invitation of the Board of Directors. The Board of Directors will call the Ordinary General Assembly to convene, if this was requested by the Auditor or the Audit Committee. The Auditor may call the Assembly to convene; if the Board did not invite the Assembly within (30) days from the Auditor’s request date. A copy of the invitation and the agenda shall be sent to the Ministry at least (10) days prior to the specified convention date.
Article 27: Attendance Record of Assemblies
The Owner or its representative will register the attendance to the General Assembly at the Company’s head office.
Article 28: Quorum of the Ordinary General Meeting
The Ordinary General Assembly’s meeting will not be valid except in the presence of the Owner or its representative. In case of its absence, a second meeting will be called within the (30) days following the previous meeting.
Article 29: Quorum of the Extraordinary General Meeting
The Owner or its representative will be entitled to discuss the matters listed in the Assembly’s agenda and to ask questions to the Board members and the Auditor in their regard. The Board of Directors or the Auditor will answer the questions to the extent that does not jeopardize the Company’s interest.
Article 30: Discussion in Assemblies
Each Subscriber will have a vote for each share the Subscriber represents in the Foundation Assembly, and each shareholder will vote for each share in the General Assemblies. The cumulative vote must be used in the election of the Board of Directors.
Article 31: Chairmanship of the Assemblies and Preparation of Minutes
The General Assemblies meetings will be chaired by Board Chairman or the Vice-Chairman in the absence of the Chairman or by a member assigned by the Board from among its members in the absence of the Board Chairman and the Vice-Chairman. A minutes will be written in the Assemblies meeting containing the attendees’ names, the decisions taken, and a sufficient summary of the discussions held at the meeting. The minutes will be recorded in a regular manner after each meeting in a special register signed by the Assembly’s Chairman and its Secretary.
Section V: Audit Committee
Article 32: Formation of the Committee
The Audit Committee is formed by the Owner decision consisting of three members, who are not Board Executives. The decision will specify the Committee’s tasks, its applicable controls and the remuneration of its members.
Article 33: Quorum of the Committee
Audit Committee’s meeting must be attended by the majority of its members to be valid, and its decisions are issued by the majority vote of the present members, and when the votes are equal, the side in which the Chairman has voted will prevail.
Article 34: Competence of the Committee
The Audit Committee will be competent to monitor the Company's business and will have the right to view its records and documents, and request any clarification or statement from the members of the Board of Directors or the Executive Management. It may request the Board of Directors to invite the General Assembly to convene, if the Board hindered its work or the Company suffered severe damages or losses.
Article 35: Committee’s Reports
The Audit Committee must consider the Company’s financial statements, and the reports and notes submitted by the Auditor, and express their views thereon, if any. It must also prepare a report on its opinion regarding the adequacy of the Company’s internal control system and its other work within its competence. The Board of Directors must provide the Owner with a copy thereof at least (10) days before the General Assembly’s convening date. The report will be read during the Assembly’s convention.
Section VI: Auditor
Article 36: Auditor’s Appointment
The Company must have one (or more) auditors from among the auditors authorized to operate in the Kingdom, appointed by the Ordinary General Assembly annually, and the Auditor’s remuneration and term will be determined. The Assembly may also change him at any time without prejudice to its right to a compensation, if the change occurs at an inappropriate time or for an illegal reason.
Article 37: Auditor’s Authorities
The Auditor may, at any time, have access to the Company's books, records and other documents. The Auditor may also request data and clarifications that deems necessary to be obtained in order to verify the Company's assets, liabilities, and other matters included within the work scope. The Board Chairman must enable the Auditor to do the required job, and if the Auditor faces difficulty in this regard, this will be proven in a report submitted to the Board of Directors. If the Board does not facilitate the Auditor’s work, the Auditor shall request the Board of Directors to call the Ordinary General Assembly for a meeting to consider the matter.
Section VII: Company Accounts and Profits Distribution
Article 38: Fiscal Year
The Company's fiscal year starts from 1st of January and ends at the 31st of December of each year; provided that the first fiscal year starts from the date of its registration in the Commercial Register until the end of December of the following year.
Article 39: Financial Documents
- At the end of each fiscal year for the Company, the Board of Directors must prepare the Company's financial statements and a report of its activities and financial position for the previous fiscal year. This report will ensure the proposed method for profits distribution. The Board must make these documents available to the Auditor at least (45) days before the specified date for the General Assembly’s convention.
- The Company’s Board Chairman, Chief Executive Officer and Chief Financial Officer must sign the documents referred to in Paragraph (1) of this Article. Copies thereof must be sent to the Company's head office at be at the disposal of the Owner at least (10) days before the General Assembly’s convening date.
- The Board Chairman must provide the shareholders with the Company's financial statements, the Board’s report and the Auditor's report; and he must also send a copy of these documents to the Ministry, at least (15) days before the General Assembly’s convening date.
Article 40: Profits Distribution
The Company’s annual net profits are distributed after deducting all the general expenses and other costs as follows:
- A rate of (10%) from the net profit will be retained to form the Company’s statutory reserve. The Ordinary General Assembly may decide to discontinue such retention, when the mentioned reserve reaches (30%) of the paid-up capital.
- The General Assembly may decide to form other reserves to the extent that it serves the Company’s interest or ensures the distribution of fixed profits as much as possible to the shareholders. The mentioned assembly may also deduct amounts from the net profits to establish social institutions for the Company’s employees or to assist the existing institutions.
- A rate of (5%) from the remainder from the Company’s paid-up capital will be distributed to the Owner.
Article 41: Profit Entitlement
The Owner will be entitled to its share of the profits in accordance with the decision issued in this regard. The decision will indicate the entitlement and distribution dates.
Article 42: Company’s Losses
- If the losses of the Joint Stock Company exceed half of the paid-up capital at any time during the fiscal year, any official or auditor, upon becoming aware thereof, must inform the Board Chairman, and the Chairman will immediately inform the Board members. The Board of Directors must invite the Owner, within 15 days of such notice, to decide within (45) days from the date of his knowledge of the losses to either increase the Company’s capital or reduce it, in accordance with the provisions of the Companies Law, and that is to the extent that the loss ratio falls below half of the paid-up capital, or to dissolve the Company before the time specified in this system.
- The Company shall be deemed dissolved according to the Companies Law, if the Capital Owner has not taken a decision within the period specified in paragraph (1) of this Article.
Part VIII: Disputes
Article 43: Liability Lawsuit
The Capital Holder may file the Company's liability lawsuit against the Board members, if the mistake issued by them could cause damage to him. The Capital Owner cannot file the said lawsuit unless the Company’s right to file it still exists, and the Capital Owner must informs the Company about its intention to file a lawsuit.
Part IX: Company’s Dissolution and Liquidation
Article 44: Company’s Expiration
The Company enters into liquidation once it has expired and shall retain its legal personality to the extent necessary for liquidation. The Capital Owner shall issue the voluntary liquidation decision. The liquidation decision must include the appointment of the Liquidator, the determination of his powers and fees, the restrictions imposed on his powers and the time required for liquidation. The voluntary liquidation period must not exceed five years and should not be extended further by a judicial order. The Board’s authority will end with its dissolution. However, the Board members will continue to manage the Company and are deemed as liquidators by others until the Liquidator is appointed, and the Capital Owner will continue to enjoy his competences that do not contradict with the Liquidator’s competences.
Part X: Final Provisions
The Companies Law and its regulations will be applied in all the matters that do not have any text in this Bylaws.
This Bylaws will be sent and published according to the provisions of the Companies Law and its regulations.