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Corporate Governance Report 2011

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A. Corporate Governance Compliance The current Module, which was revised to be in line with the new Corporate Governance Code of the Kingdom of Bahrain, became effective on September 1, 2011 and required that all listed companies should be in full compliance by the financial year end 2011. The Board of Directors and the Management of the Company would like to inform the shareholders that the Company is in full compliance with the High Level Controls Module.

B. New Director Appointments There is a formal, rigorous and transparent procedure for the appointment of new directors to the Board. All directors of the Company were elected by the shareholders of the Company in the AGM 23/02/2011. During the year, one director position became vacant (appointed by SIO) and awaiting nomination of new director from SIO. The directorship tenure for the current board will expire on 23/02/2014 subsequent to which the process of election of directors would take place based on the recommendations of the Nomination and Remuneration Committee (NRC) and the Board and selection by the shareholders in the AGM.

C. Board Structure The Board of Directors of the Company is accountable to shareholders for the proper conduct of the business and also for ensuring the effectiveness of and reporting on the corporate governance framework in place. The current directors of the Company are appointed by the Annual General Meeting of Shareholders from among candidates proposed by the Board. Currently, the size of the Board of the Company is 9. All of the current Directors of the Company were appointed and elected at Annual General Meeting of Shareholders for a three years term that will expire at the 2014 Annual General Meeting of Shareholders.

D. Audit Committee Meetings & Attendance The Company's internal audit function reports to the Audit Committee. The Audit Committee's primary duties and
responsibilities are:
- The integrity of the Company's financial statements and financial reporting process and the Company's systems of internal accounting and financial controls.
- The annual independent audit of the Company's financial statements, the engagement of the external auditors and the evaluation of the external auditors' qualifications, remuneration, independence and performance.
- The appointment of Head of Internal Audit and the regular review of the activities and performance of internal audit function; and
- Compliance by the Company with legal and regulatory requirements, including the Company's disclosure of controls and procedures..

E. Nomination and Remuneration Committee Meetings & Attendance The NRC's primary duties and responsibilities are to:
- Identify persons qualified to become members of the Board and executive management of the Company.
- Make recommendations to the Board regarding candidates for Board membership to be included by the Board of Directors on the agenda for the next AGM.
- Review the Company's remuneration policies for the Board and executive management, and submit for approval to shareholders.
- Remunerate Board members based on their attendance and performance.
- Administer the performance evaluation process for the Board and Board Committees and executive management.

F. Executive Committee Meetings & Attendance The EC's primary duties and responsibilities are to:
- Review of Batelco's operational performance, at least once every financial quarter and direct management to develop and implement various initiatives to achieve the Annual Operating Plan.
- Obtain reports at least once every financial quarter about the operating performance of joint ventures and associated companies and review the achievement of key financial targets and objectives.
- Review of Batelco's 'Available For Sale' investment portfolio at least once every financial quarter.
- Approve or recommend to the Board, all requests for the 'write-off' of an investment.
- Approve or recommend to the Board any budgeted and unbudgeted capital expenditure.
- Monitor the implementation of an effective corporate governance framework, with particular reference to the Corporate Governance Code of Bahrain (the "Code") and the requirements of the Central Bank of Bahrain ("CBB") Rulebook Volume 6.
- Assist the Board in the effective discharge of its responsibilities for business, financial, operational, and reputational risk management and for the management of Batelco's compliance obligations.

G. Donation Committee Meetings & Attendance The DC's primary duties and responsibilities covers, examining donation requests made to Batelco from time to time; determining whether to approve the donation requests; assess the quantum of the approved donation requests and overseeing the administration of the funding allocated by the Board for such donations.

H. Performance Evaluation Performance evaluation of the Board, Board committees' individual directors and executive management takes place on an annual basis and is conducted within the terms of reference of the Nomination and Remuneration Committee with the aim of improving the effectiveness of the Board and its committees, individual contributions and the Company's performance as a whole. The evaluation is designed to determine whether the Board, its committees, individual directors and executive management continues to be capable of providing the high level judgment required and are informed and up to date with the business and its goals and understand the context within which it operates. The next performance evaluation of the Board, its committees, individual directors and executive management is scheduled for 2012.

Batelco's principle shareholders include institutional investors, SWFs and general public.

The unique and diversified ownership structure gives Batelco the edge whereby it can seek to pursue the Company's strategies objectively, independently and without bias and as a result aligns interests between Batelco and its shareholders.

Ownership Structure by Nationality

The table and illustration shows the distribution of ownership of Batelco shares by nationality:

Nationality

Number of Shares

% of shares held

1 Bahrain

1,095,376,483

76%

2 Cayman Islands

288,000,000

20%

3 GCC

34,557,666

3%

4 Others

22,065,851

1%

 

Ownership Structure by Size

The table and illustration shows the distribution of ownership of Batelco shares by size (5% and above):

Owner

Number of Shares

% of shares held

1 Mumtalakat Holding Company

528,000,000

36.67%

2 Amber Holding Company

288,000,000

20%

3 Social Insurance Organization

296,098,447

20.56%

4 Public

327,901,553

22.77%

 

Ownership Structure by Category

The table below shows the distribution of ownership of Batelco shares by the government entity (ies), directors and executive management:

GovtEntity(ies)

Number of Shares

% of shares held

1 Mumtalakat Holding Company

528,000,000

36.67%

2 Amber Holding Company

288,000,000

20%

3 Social Insurance Organization

296,098,447

20.56%

 

Directors

Number of Shares

% of shares held

1 Murad Ali Murad

2,766,127

0.192%

2 Adel Hussain Al Maskati

226,760

0.016%

3 Abdul Razak Al Qassim

500,274

0.035%

4 Ali Yousif Engineer

385,200

 

0.027%

 


Executive Management

Number of Shares

% of shares held

1 Peter Kaliaropoulos

9,180

0.001%

2 GhassanMurad

90,000

0.006%

 

A.     Board Meetings

As per the charter of the Board, the directors are required to meet at least 4 times in a given financial year to discharge its responsibilities effectively. 

During the year, the Board of Directors met for 12 times on following dates and discussed the below mentioned significant items. The Board agreed not to consider the first two non attendances by any director due to the volume of meetings. The summary of final decisions taken on significant items discussed during the meetings is also stated below:

Meeting Date

Key Matters Discussed

Final Decision

(Approved / Rejected / Put on Hold / Needs further Discussions / Other comments)

26/01/2011

  • Recommendation to AGM
  • Approved

09/02/2011

  • Acquisition
  • Approved

23/02/2011

  • Appointment of Committees' members and Boards' members of Subsidiaries
  • Group Financial Performance
  • Approved
  • Approved

20/04/2011

  • Restructuring of a Subsidiary (ATHEEB)
  • Disciplinary action against staff participating in general strike
  • Approved

 

  • Approved

07/06/2011

  • Appointment of new Group CEO
  • Acquisition (Update)
  • Approved
  • Approved

03/07/2011

  • Status of Subsidiaries
  • Approved

20/07/2011

  • Second Quarter Financials
  • Acquisition (Update)
  • Annual Deposit Limits (Shk. Mohammed, Mr. Murad and Mr. Abdulrazak excused themselves from the meeting due to conflict of interest)
  • Approved
  • Approved
  • Approved

13/10/2011

  • Restructuring of Board Committees and JVs Board Membership
  • Termination of Acquisition

 

  • Approved
  • Approved

26/10/2011

  • Third Quarter Financials
  • Approved

15/11/2011

  • Group Strategy
  • Approved

23/11/2011

  • Discuss Three years Group Business Plan
  • Approved

26/11/2011

  • Corporate Governance Code Update
  • Approved

 

B.     Board Attendance

The members of the Board during the year 2011, together with a record of their attendance at meetings which they were eligible to attend, are set out below:

Director Name

Status of Director

Meetings Eligible to Attend

Meetings Attended

Shk Hamad Bin Abdulla Al Khalifa

Non- Executive

12

12/12

Shk Mohamed bin Isa Al Khalifa

Non- Executive

7

5/7

Served as Deputy Chairman till his appointment as Group CEO on 1 October 2011

Mr Murad Ali Murad

Non-Executive

12

12/12

Dr Zakaria Hijris

Non-Executive

12

8/12

Mr Adel AlMaskati

Non-Executive

12

12/12

Mr Nedhal AlAujan

Non-Executive

12

10/12

Mr Waleed AlKhajah

Executive

12

10/12

Dr Yousif Dashkouni

Non-Executive

12

12/12

Mr Abdulrazak AlQassim

Non-Executive

12

11/12

Mr Ali Engineer

Non-Executive

12

11/12

Shaikh Mohamed Bin Isa AlKhalifa was a Board member and served as Deputy Chairman till his new appointment as Group CEO on 1 October 2011.  Upon his departure, Mr. Murad Ali Murad was appointed as Deputy Chairman.

C.     Audit Committee Meetings

As per the charter of the Audit Committee, the directors are required to meet at least 4 times in a given financial year to discharge its responsibilities effectively. 

During the year, the Audit Committee met for 4 times on following dates and discussed the below mentioned significant items. The summary of final decisions taken on significant items discussed during the meetings is also stated below:

Meeting Date

Key Matters Discussed

Final Decision

(Approved / Rejected / Put on Hold / Needs further Discussions / Other comments)

25/01/2011

  • 2010 Group Financials
  • CrediMax Issue (Chairman excused himself from the meeting due to conflict of interest)
  • Nomination of External Auditor
  • 3 Years Internal Audit Plan
  • Approved
  • Negotiation of Agreement

  • Submitted to Board
  • Approved

19/04/2011

  • Q1 Group Financials
  • Compliance Update
  • Approved
  • Noted

19/07/2011

  • H1 Group Financials
  • Adoption of IFRS 9
  • Compliance Report
  • CrediMax Issue Update (Chairman excused himself from the meeting due to conflict of interest)
  • Approved
  • Approved
  • Noted
  • Refer matter to EXCO

24/10/2011

  • Q3 Group Financials
  • Corporate Governance Code
  • Qnet Board Restructure
  • CrediMax Issue Update (Chairman Excused himself from the meeting due to conflict of interest)
  • Approved
  • Needs further Discussions
  • Approved
  • Update

D.    Audit Committee Attendance

The members of the Audit Committee during the year 2011, together with a record of their attendance at meetings which they were eligible to attend, are set out below:

Director Name

Status of Director

Meetings Eligible to Attend

Meetings Attended

Mr Murad Ali Murad

Non-Executive

4

4/4

Mr Adel AlMaskati

Non-Executive

4

4/4

Mr Waleed AlKhajah

Executive

2

2/2

 Appointed after the second meeting

Dr Yousif Dashkouni

Non-Executive

4

4/4

Mr Ali Engineer

Non-Executive

2

1/2

Appointed after the second meeting

E.     Nomination and Remuneration Committee Meetings

As per the charter of the Nomination and Remuneration Committee, the directors are required to meet at least 2 times in a given financial year to discharge its responsibilities effectively. 

During the year, the Nomination and Remuneration Committee met for 5 times on following dates and discussed the below mentioned significant items. The summary of final decisions taken on significant items discussed during the meetings is also stated below:

Meeting Date

Key Matters Discussed

Final Decision

(Approved / Rejected / Put on Hold / Needs further Discussions / Other comments)

24/01/2011

  • Directors' Remuneration
  • Batelco Bahrain Bonus
  • Retention of Executives
  • Submitted to Board
  • Approved
  • Approved

31/05/2011

  • Appointment of Group CEO
  • Appointment of Group Deputy CFO
  • Approved
  • Approved

07/06/2011

  • Group CEO Package
  • Approved

15/06/2011

  • Update on Group CEO position
  • Update

18/08/2011

  • Resignation of Group Deputy CFO
  • Group Structure
  • Group CEO Update
  • Approved
  • Approved
  • Update

20/10/2011

  • Contract of CEO Strategic Assignment
  • Approved

F.     Nomination and Remuneration Committee Attendance

The members of the Nomination and Remuneration Committee during the year 2011, together with a record of their attendance at meetings which they were eligible to attend, are set out below:

Director Name

Status of Director

Meetings Eligible to Attend

Meetings Attended

Shk Hamad Bin Abdulla Al Khalifa

Non-Executive

6

6/6

Mr Murad Ali Murad

Non-Executive

6

6/6

Mr Abdulrazak AlQassim

Non-Executive

5

5/5

Appointed after the first meeting

Mr Ali Engineer

Non-Executive

5

4/5

Appointed after the first meeting

G.    Executive Committee Meetings

As per the charter of the Executive Committee, the directors are required to meet at least 4 times in a given financial year to discharge its responsibilities effectively. 

During the year, the Executive Committee met for 5 times on following dates and discussed the below mentioned significant items. The summary of final decisions taken on significant items discussed during the meetings is also stated below:

Meeting Date

Key Matters Discussed

Final Decision

(Approved / Rejected / Put on Hold / Needs further Discussions / Other comments)

23/03/2011

  • Financial & Business Performance
  • Batelco Innovation Center
  • JV Performance
  • EXCO Term of Reference
  • Approved
  • Approved
  • Approved
  • Approved

18/05/2011

  • Sabafon Management Agreement
  • STel Funding
  • Group Financial Performance
  • Business Divisions Performance
  • Approved
  • Approved
  • Approved
  • Approved

15/06/2011

  • Group Financial Performance
  • Atheeb update on rights issue
  • Approved
  • Update

21/09/2011

  • Group Financial Performance
  • Disposal of Fixed Assets
  • Regulatory Matters
  • Mobile Number Portability
  • Group Strategy (Mid Year Review)
  • Corporate Governance
  • Approved
  • Approved
  • Approved
  • Update
  • Update
  • Needs further Discussions

18/10/2011

  • Corporate Governance Code
  • Approved

H.    Executive Meeting Attendance

The members of the Executive Committee during the year 2011, together with a record of their attendance at meetings which they were eligible to attend, are set out below:

Director Name

Status of Director

Meetings Eligible to Attend

Meetings Attended

Mr Abdulrazak AlQassim

Non-Executive

5

5/5

Mr Nedhal AlAujan

Non-Executive

5

5/5

Dr Zakaria Hijris

Non-Executive

5

4/5

Shk Mohamed bin Isa Al Khalifa

Non-Executive

4

4/4

Served in the Committee till his appointment as Group CEO on 1 October 2011

I.      Donation Committee Meetings

As per the charter of the Donation Committee, the directors are required to meet at least 2 times in a given financial year to discharge its responsibilities effectively. 

During the year, the Donation Committee met for 2 times on following dates and discussed the below mentioned significant items. The summary of final decisions taken on significant items discussed during the meetings is also stated below:

Meeting Date

Key Matters Discussed

Final Decision

(Approved / Rejected / Put on Hold / Needs further Discussions / Other comments)

23/02/2011

  • Approval of Donations for Q1 2011
  • Approved

24/05/2011

  • Approval of Donations for remaining period of 2011
  • Approved

J.     Donation Committee Attendance

The members of the Donation Committee during the year 2011, together with a record of their attendance at meetings which they were eligible to attend, are set out below:

Director Name

Status of Director

Meetings Eligible to Attend

Meetings Attended

Shk Hamad Bin Abdulla Al Khalifa

Non-Executive

2

2/2

Dr Yousif Dashkouni

Non-Executive

2

2/2

Mr Abdulrazak AlQassim

Non-Executive

2

2/2

 

 

 

 

 

Shaikh Mohamed bin Isa Al Khalifa

Group Chief Executive

 

October 2011 - Present

Joined Batelco

Deputy Chairman of Batelco Board of Directors from 2002-2011

Previous roles/Experience

Social Insurance Organisation  - CEO

General Organisation Social Insurance (GOSI) - Director General

GOSI - Director Finance & Investment Department

Represented SIO as:-

-SICO Chairman

-Batelco Vice Chairman

-BBK Vice Chairman

-Bahrain International Golf Course Company Vice  Chairman

-Bahrain Commercial  Facilities Company Director

Qualifications/Achievements

University of Texas, Austin, US - BA Business Administration

 

Marco Regnier

Group Chief  Financial Officer

 

2012

Joined Batelco

2012

Previous roles/Experience

Manager at Ernst & Young

Financial Analyst at Imperial Oil, a subsidiary of Exxon Mobil in Canada

Qualifications/Achievements

Chartered Accountant, Graduated in accounting sciences

MBA from ESG Montreal.

 

Peter Kaliaropoulos

CEO Strategic Assignments

October 2011

Joined Batelco

2005

Previous roles/Experience

Batelco Group CEO

SingTel Optus Business (Australia) MD

Telstra (Australia)  MD

Clear (New Zealand) CEO

StarHub (Singapore) COO/SVP

BT Asia Pacific (Singapore & Australia) Director Sales & Services

Qualifications/Achievements

Macquarie University, Sydney, Australia  - MBA

University of NSW, Sydney, Australia - Bachelor of Electrical Engineering

 

Rashid Abdulla

Chief Executive Batelco Bahrain

 

January 2011 -

Joined Batelco

1974 (Cable & Wireless)

Previous roles/Experience

Qualitynet, Managing Director 2000 - 2010

General Manager Major Accounts

General Manager New Business  Development

Qualifications/Achievements

Thames Polytechnic, UK - BSc (hons) Electrical & Electronics Engineering

 

Dr. Ghassan Murad

Chief Financial Officer Bahrain

 

September 2010 - 

Joined Batelco

1996

Previous roles/Experience

Batelco Head of Mergers & Acquisitions for MENA

University of Leicester Research Associate

Qualifications/Achievements

University of Leicester, UK - PhD Control Systems Theory

Imperial College of Science, Technology & Medicine, London, UK

  • MSc in Control Systems theory
  • BSc Control Engineering

 

Ihab Hinnawi

Umniah Chief Executive  Officer

 

2009 -

Joined Batelco

2007

Previous roles/Experience

Batelco Bahrain Enterprise Division  General Manager

Batelco Jordan CEO

Umniah Operations Director (2004-2007)

Qualifications/Achievements

BA Business Administration

 

Faisal Qamhiyah

Umniah Chief Financial Officer

 

2012 -

Joined Batelco

2012

Previous roles/Experience

Qualifications/Achievements

 

 

Ahmed Al Janahi

GM Corporate Affairs & Batelco Group Board Secretary

 

 

2004

Joined Batelco

2003

Previous roles/Experience

Gulf Air Public Relations Manager

World Travel  Service - Asst. General Manager

Arab Exchange - General Manager

Qualifications/Achievements

American College, Atlanta, US - BA Business Administration

 

Shaikh  Ahmed bin Khalifa Al Khalifa

Group GM HR & Development

 

 

2008

Joined Batelco

1997

Previous roles/Experience

Batelco Bahrain General Manager HR Bahrain

Batelco Bahrain Senior Manager Employee  Retention

Qualifications/Achievements

University of Virginia, US, Darden School of Business - Executive Development Programme

University of Glamorgan, Wales, UK - Masters of Business Administration information and Business Systems Technology - Diploma

KLM Aviation College, Netherlands - Aviation  Engineering Certificate

 

Bernadette Baynie

Group General Counsel

 

January 2008

Joined Batelco

2007

Previous roles/Experience

Batelco Bahrain Senior Commercial Legal Counsel

National Australia Bank Limited - Head of Legal and Compliance

National Australia Bank Limited - Principal Counsel

Qualifications/Achievements

Bachelor of Law - Sydney University

 

Ali Sharif

Group Chief Internal Auditor

 

2010

Joined Batelco

1989

Previous roles/Experience

Chief Internal Auditor

Internal Audit Manager

Qualifications/Achievements

CIA (USA)

CISA (USA)

St. Edwards University, Austin, Texas, US-  BA Finance (Hons)

 

Hamid Husain

Group Chief Information Officer

 

February 2011

Joined Batelco

2011

Previous roles/Experience

Hutchinson Group CIO

Zain Group, Nigeria CIO

Du, UAE VP of IT & CIO

Vodafone CIO

Qualifications/Achievements

University of Houston MBA

 

Auditors - External

KPMG Fakhro

The Audit Committee reviews the appointment of the external auditors, as well as their relationship with the Company, including monitoring the Company's use of the auditors for non-audit services and the balance of audit and non-audit fees paid to the auditors.

Details with regards to the audit and non-audit fees for the Parent Company Bahrain Telecommunications Company BSC as a legal entity are stated here below:

Audit Fees for 2011 - BD 48,250

Non-Audit Fees for 2011 - BD 156,008

KPMG Fakhro has been the Company's auditors since 1993. Having reviewed the independence and effectiveness of the external auditors, the Audit Committee has not considered it necessary to change the external auditors.

There are no contractual obligations restricting the Company's choice of external auditor. The Audit Committee has recommended to the Board that the existing auditors, KPMG Fakhro, be reappointed.

KPMG Fakhro has signified their willingness to continue in office and ordinary resolutions reappointing them as auditors and authorizing the Directors to set their remuneration will be proposed in next AGM.