Saudi Joint Stock Company
Chapter One: Company Incorporation
According to these Articles of Association and Companies Act, a Saudi Joint Stock Company shall be incorporated according to the following:
Company Name: Etihad Etisalat Company
The objects of the Company are the carrying out of a telecommunication business in accordance with all applicable laws, regulations and rules in force in the Kingdom. Without limitation to the generality of the foregoing, the Company shall carry out the following activities:
(a) Provide mobile services in the Kingdom in relation to the licence(s) granted by CITC (http://citc.gov.sa
) to the Company (the "Licences");
(b) Develop, finance, design, construct, operate, maintain, insure and own the Licences and all plant, equipment, apparatus and other assets of any type relating to the operation of the licences in the Kingdom;
(c) Manage, sell, liquidate, hold, hire and dispose of any property and any right, title or interest in any property, including movable and immovable properties, which the Company may acquire or own; and
(d) Do all such other acts and things as are incidental or conducive to the promotion or advancement of the business of the Company, subject always to due compliance with applicable laws and regulations in the Kingdom;
(e) Establish fiber optic networks and any extension thereof;
(f) Manage, install and operate telephone networks, terminals and communication unit systems; and
(g) Sell, maintain mobile phones and communication unit systems.
* Article (3) was modified by a resolution of the Extraordinary General Assembly of the Company, which was held on Wednesday 01//04/1431H corresponding to 17/03/2010.
The Company may have an interest or join in any manner establishments, companies or entities carrying out similar businesses or those which may assist it in achieving its objects or be considered complementary thereto and it may also merge with, acquire or amalgamate with such companies or entities.
The Company's head office shall be located in Riyadh, Kingdom of Saudi Arabia and the Board of Directors may establish branches, offices and agencies in and outside the Kingdom of Saudi Arabia.
Company Term: The Company term is 99 Gregorian calendar years commencing from the issuance date of the Ministerial Decision declaring its incorporation. The term of the Company shall always be extended by resolution from the Extraordinary General Meeting, at least one year before date of its expiry.
Chapter Two: Capital and Shares
The Company capital is (7,700,000,000) seven billion and seven hundred million Saudi riyals divided into (770,000,000) seven hundred and seventy million shares of equal value. Nominal value of each share is 10 Saudi riyals.
Shareholders subscribed to the total number of shares, amounting to (770,000,000) seven hundred and seventy million. The total amount was deposited with a Saudi bank in the name of the company.
Following the Minister of Commerce and Industry's approval according to the regulations set out thereby, the Company may issue priority shares not exceeding 50% of its capital. Such shares shall not grant rights for voting. However, they, in addition to the right for participation in net profits which are distributed to ordinary shares, allow the holders to:
(a) Have the right to receive certain portion of the net profits which is not less than 5% of the share nominal value after setting aside the statutory reserve and before distributing any of the Company dividends; and
(b) Have priority in redeeming the value of their shares in the capital upon the Company liquidation and obtain certain portion of the liquidation outcome.The Company may purchase such shares according to the procedures and method specified in the issuance resolution, provided that such decision shall not contain a provision obliging the shareholders to sell their shares. Such shares shall not be included in calculating the quorum required for the Company General Meeting convocation as provided for in Articles (32 and 33) hereof.
* Article (7) was modified by a resolution adopted by the Extraordinary General Assembly of the company, which was held on Sunday, 19//10/1429H corresponding to 19/10/2008.
** Articles (8) was modified for the second time by a resolution adopted by the Extraordinary General Assembly of the company, which was held on Saturday, 30/02/1434H corresponding to 12/01/2013.
Should the shareholder default in paying the share value at the prescribed time, the Board of Directors may serve him with a notice by registered letter at his address mentioned in the shareholder's record, informing him that such share shall be sold in public auction. Nevertheless, the defaulting shareholder may until the date fixed for the auction, pay the due value in addition to the expenses incurred by the Company. The Company shall set off the due amounts from the sale proceeds and return the balance to the shareholder. If the sale proceeds are not sufficient to cover such amount, the Company may then set off the balance from all the shareholder's funds. Then the Company shall cancel the sold shares and give the purchaser a new share bearing the same number of the cancelled one, and make an entry to this effect in the shareholder's record.
All shares shall be nominal and may not be issued for less than their nominal value. However, the same may be issued for more than their nominal value and in this case the difference in value shall be added to statutory reserve even if it already reached the maximum. Share is indivisible towards the Company, but if it is owned by a number of holders they have to select one as their deputy to exercise the rights related thereto. Such holders shall be jointly responsible for all liabilities arising from the share ownership.
Shares shall be negotiable after issuing certificates thereof. However, shares which are given against shares in kind or in cash subscribed by the founders or the shares owned by the partners in the converted company shall be non-negotiable before the publication of the balance sheet and profit and loss account for 2 complete financial years, each of which should not be less than 12 months from the date of the Company incorporation or the issue of the resolution approving the Company conversion.
Such provisions shall apply to whatever the founders subscribe in case of capital increase before the prohibition period lapses, with respect to the remaining period of this term. However, if the Company conversion has been accompanied by an increase in its capital through public offer, prohibition shall not be applied to shares subscribed in this way. The same shall be entered in all the deeds showing the share type, date of Company incorporation and the period during which shares may not be negotiable.
However, during the prohibition period, the ownership of cash shares may be transferred according to the sale of rights stipulations by one of the founders to the other or to any of the Board of Directors members to submit the same to the management as a guarantee or from the heirs of one of the founders, in case of death, to a third party.
Nominal shares shall be negotiated by entry in the shareholders' register, which contains their names and nationalities, profession, place of residence, addresses, share numbers and whatever amount paid therefrom. This entry shall be mentioned on the share certificates and the transfer of the share ownership shall not be valid vis-à-vis the Company or third parties except from the date of entry in the said record or finalization of ownership transfer formalities through the shares electronic information system. Subscription in shares and ownership thereof confirms the shareholder acceptance of the Company Articles of Association and his compliance with the resolutions issued by shareholders' General Meeting in accordance with the provisions hereof, whether he is present or absent and whether he is in agreement or disagreement with the same.
The Company shall issue share certificates holding serial numbers and signed by the Chairman of the Company's Board of Directors or his Deputy from within the Board Members. The same shall be stamped by the Company seal. The share certificate shall contain in particular the number and date of the Royal Decree authorizing the Company's incorporation, number and date of the Ministerial Resolution announcing the Company's incorporation, the capital, number of distributed shares, value of nominal shares, paid amount therefrom, Company objects in brief, head office and term. Shares may have coupons holding the same serial number and containing the number of shares attached thereto.
After confirmation of the economic feasibility and obtaining approval from competent authorities, the Extraordinary General Meeting may resolve to increase the Company capital one time or several times by issuing new shares for the same nominal value of the original shares provided that the original capital shall have been paid in full and with the observance of the provisions of Companies Act. Such resolution shall specify the method of capital increase. Shareholders shall have priority in subscribing the new cash shares and shall be informed by their priorities, through a daily newspaper, of the capital increase resolution and subscription terms. Each shareholder shall intimate his desire to use his priority right within 15 days from the date of publication referred to hereinabove.
Such shares shall be distributed to the original shareholders who requested subscription proportionate to the original shares they own, provided that what they get should not exceed what they requested to have from the new shares. Balance of new shares should be distributed among the shareholders who requested to acquire more than their respective original shares provided that what they get shall not exceed what they requested to acquire from the new shares and the remainder shall be offered on public subscription.
By a resolution of the Extraordinary General Meeting, based on acceptable justifications and after obtaining Minister of Commerce's approval, the Company capital may be reduced if it exceeds the Company needs or if the Company has incurred losses. Such resolution may only be passed after recitation of the auditor's report about reasons for such reduction, Company's obligations, the impact of reduction on such obligations and in full observance of the provisions of Companies Act. The resolution shall state the method of reduction and if the reduction is the result of the fact that the capital exceeds the Company needs, creditors should be invited to intimate their objections within 60 days from the date of announcement of the reduction in a daily newspaper distributed in the country where the company head office is located. Should any one of the creditors object or submit his documents to the Company within the prescribed time the Company must then settle his debts immediately or provide him with sufficient guarantee for settlement if the same is deferred.
Chapter Three: Board of Directors
The management shall be assumed by a Board of Directors consisting of ten members appointed by the Ordinary General Meeting for a term not exceeding three years.
However, the first Board of Directors term of office shall be five years as a maximum, commencing from the date of the Ministerial resolution announcing the Company's incorporation. The first and subsequent Board Members shall include four members representing Etisalat. The first Board shall include six members, each of which representing one of the remaining Founder Shareholders.
Without prejudice to the foregoing, after the expiry of the Management Agreement (as defined below), Etisalat shall be entitled to one representative on the Board of Directors for every 10% of the shares held in the Company.
A member of the Board should be an owner of Company shares, the nominal value of which is not less than 10,000 Saudi Riyals. Such shares shall be deposited within 30 days from the date of the member's appointment, in one of the banks designated by the Minister of Commerce for this purpose. These shares shall be allocated to guarantee the liability of the Board Members and remain non-negotiable until the period specified for hearing the liability case mentioned in Article (76) of Companies Act, lapses, or until the said case is adjudged. If the Board member does not submit the guarantee shares within the prescribed time, his membership shall be deemed null and void.
The Board membership ends upon expiry of the term thereof or upon the expiry of the member's qualification therefore according to any law or instructions applicable in theKingdomofSaudi Arabia. If one of the members' office becomes vacant the Board may appoint a member to fill the vacancy on temporary basis provided that such appointment shall be presented to the Ordinary General Manager at its first meeting. The new member shall complete his predecessor's office term. If the number of the Board Members drops below the necessary quorum for the validity of its meetings, the Ordinary General Meeting should be convoked as soon as possible to appoint the required number of members.
Subject to the functions assigned to the General Meeting, the Board of Directors shall have the broadest authority in managing the Company and shall have the right to participate in other companies. Within its authority, the Board may authorize one or more of its members or any third party to carry out a certain business(s). Without prejudice to the foregoing, the Board may appoint, from amongst its members, an executive committee(s), and delegate such powers to such executive committee(s) as the Board so determines.
Without needing to obtain the consent of the shareholders in a general meeting, the Board of Directors may:
(a) Sell or mortgage the real property or place of business of the company;
(b) Release the debtors of the Company from their liabilities;
(c) Enter into, maintain and renew a management agreement (the "Management Agreement") between the Company and Etisalat for the operation and management of the Company; and
(d) Borrow money for periods which may exceed three years and enter into contracts for lending the Company any monies required by the Company or furnish any other security for the replacement or performance of obligations of the Company in connection with any such loan in the Kingdom or elsewhere or enter into any investment.
* The first paragraph of Article (20) was modified by a resolution adopted by the Extraordinary General Assembly of the Company, which was held on Wednesday, 01//04/1429H corresponding to 17/03/2010.
The Board of Directors remuneration shall be determined by the shareholders in an Ordinary General Meeting in accordance with the Council of Ministers' Resolution No. 202 dated 30/4/1405H, and within the limits provided for in the Companies Act or any other regulations, resolutions or instructions complementary thereto. The Board of Directors report to the Ordinary General Meeting shall include a detailed statement on the salaries, portion of profits, attendance allowance, expenses and other benefits received by the member of the board during the financial year. The report shall also include a statement of what the Board Members in their capacities as staff members or administrators have received in consideration for technical, administrative or consultative activities already approved by the Company General Meeting.
From among its members, the Board of Directors shall appoint a Chairman and a Managing Director. One member may hold both Chairman and Managing Director positions. The Chairman shall be nominated by and selected from amongst the Board Members other than Etisalat Board Members.
The functions and responsibilities of the Chairman shall be:
(a) To preside over meetings of the Board of Directors and the shareholders General Meetings and to represent the Company before all government authorities and the judiciary; and
(b) Carrying out of all other duties entrusted to him by the Board of Directors.
So long as the Management Agreement is in force and effect, the Managing Director shall be nominated by and selected from among the Board Members representing Etisalat. Thereafter, the Managing Director shall be nominated by and selected from the Board Members in accordance with the voting thresholds set forth in Article 24.
The Managing Director shall be the Chief Executive Officer of the Company and shall exclusively be;
(a) In charge of all day-to-day matters of he Company and shall represent the Company on all matters related to its business. The Managing Director shall function as the Company's representative on all matters related to the management and administrative activities of the company;
(b) Responsible for reporting to the Board regarding the on-going activities of the Company; and
(c) Responsible for administering the Licences, and acting on behalf of the Company with respect to the Management Agreement and any other agreement to which the Company is a signatory.
In order for the Managing Director to carry out the above functions, the Managing Director is hereby granted the following powers and authorities:
(a) To incur the following expenditures:
(i) make expenditures in respect of, and up to the amount of those items set out in the budget approved by the Board from time to time (the "Budget");
(ii) Without prejudice to Article 22 (d), incur indebtedness up to five million US dollars (US$5,000,000) or such higher amount as may be agreed by the Board in respect of any one contract or transaction.
(b) In the event of an emergency situation which could in the opinion of the Managing Director, result in significant damage to any part of the network under the Licences or is a serious hazard to human life, the Managing Director shall have the authority to take all necessary actions to eliminate such danger and shall not be subject to the expenditure limitations set out above provided, however, that any such emergency actions taken by the Managing Director shall be reported at the first opportunity to the Board;
(c) Sell, transfer, or otherwise dispose of any asset provided that the net proceeds from such transaction or transactions are (a) reinvested in assets of at least equivalent value, or (b) used to repay any permitted indebtedness secured by such asset or assets:(d) Execute on behalf of the Company any contract, arrangement, or commitment (and any variation, amendment, revocation, or termination thereof) (including, but not limited to, any equipment supply contract) with any person that is either (a) authorized by the Board; or (b) included in the approved Budget of the Company.
(e) Draw down on any borrowing of money approved by the Board and apply the proceeds in accordance with the purpose for which they were drawn;
(f) Prepare the Budget of the Company for approval by the Board;
(g) Commence dispute resolution proceedings against any person and settle or compromise any claim against the Company where the amount of such settlement or compromise is not more than one million US dollars (US$1,000,000);
(h) Subject to the policies and procedures for remuneration of employees approved by the Board, appoint any employee of the Company, (including but limited to, senior managers) remove any employee for just cause, and determine employee's remuneration from time to time (subject to the limitations set forth in the Budget). The Managing Director shall, subject to the respective policies and procedures, have the power to deal with all issues relating to employees' recruitment.
(i) Subject to internal Company accounting procedures approved by the Board, operate the bank accounts of the Company.
(j) Represent the Company for governmental or other regulatory purposes and delegate such right of representation to employees of the Company under powers of attorney or other form of authorizations.
(k) Take such actions as may be required to cause the Company to comply with the statutory formalities under applicable law and other applicable statues;
(l) Except with respect to the Company's auditor, and subject to the limitations set forth in accordance with the Budget, retain such professional consultants and advisors as may be reasonably required for the Company in the carryout of its business;
(m) Prepare a draft staffing plan and submit the same to the Board for approval;
(n) Prepare a draft set of policies and procedures for the remuneration of Company employees and submit the same to the Board for approval;
(o) Arrange for audits of the Company records;
(p) Provide requested information andaccessto independent public accountants duty appointed by the Board;
(q) Make recommendations to the Board on capital improvements;
(r) Monitor, control and report to the Board on operations, maintenance and administration, and propose changes where needed;(s) Perform such other tasks as directed, from time to time, by the Board; and
(t) Perform all other tasks and responsibilities inherent in and incidental to the above tasks and responsibilities including delegating any of the powers herein to any third party seconded to or employed by the Company.
The Chairman of the Board and the Managing Director shall jointly and/or severally represent the Company in its relationship with third parties and before the Courts of law. Either of them shall have the right to sign the articles of association of companies in which the Company participates and other contracts, deeds, transfers, instruments and documents, before the Notary Public and competent authorities. In addition, either of them may empower any member from amongst the Board of Directors, by way of a valid notarized power of attorney, to exercise any of their respective powers. Furthermore, either of them shall be entitled to appoint lawyers or any of the Company's employees to defend, argue and to do all that may be legally authorized, with regard to the cases filed by or against the Company and any other act that may be otherwise required to carry out any of the Company's business or businesses.
Each of them shall receive remuneration in addition to the one specified for the Board of Director members amounting to SR 50,000 per annum.
The Board of Directors shall appoint a secretary from its members whose tasks shall be to record the proceedings of the meetings of the Board of Directors, including the resolutions of the Board of Directors, and to maintain a register of all resolutions of the Board of Directors and his remuneration shall be determined by the Board of Directors.
The term of office of the Chairman, Managing Director and the Secretary shall not exceed the membership term of each of them in the Board.
* The paragraph set out after sub-section (t) of Article (22) was modified by a resolution adopted by the Extraordinary General Assembly of the Company, which was held on Wednesday, 01//04/1429H corresponding to 17/03/2010.
The Board of Directors shall convene upon invitation by the Chairman and such invitation shall be delivered to members of the Board in writing at least 14 Business Days prior to the date set for such meeting. Such written invitation shall also include the agenda for the meeting and any relevant papers. The Chairman of the Board may call for meeting whenever the same is requested by two Board Members.
The Board meeting shall only be valid if it is attended by at least seven Directors. In case one of the Board Members deputise another member to attend the meeting such deputisation shall be according to the following measures:
(a) The Board Member may not represent more than one member in attending the same meeting:
(b) Such deputisation shall be in writing; and
(c) Deputy may not cast vote in any resolutions which the Articles of Association prohibits the deputy to vote in. The Board of Directors' decisions shall be passed by an absolute majority vote of at least seven Directors voting in favour of the decision.
The Board deliberations and resolutions shall be recorded in minutes signed by the Board Chairman and its Secretary and such minutes shall be recorded in special register signed by the Chairman and the Secretary.
Chapter Four : Shareholders General Meeting
Validly formed General Meeting shall represent all the shareholders and convene in the city where the Company head office is located.
Each subscriber regardless of the number of shares he holds has the right to attend the constituent meeting personally or through other subscriber. Each shareholder possessing 20 shares or more has the right to attend the General Meeting and may deputize another shareholder other than a Board Member to attend the General Meeting on his behalf;
The Shareholders constituent meeting shall carry out the following:
(a) Ensure full subscription of the capital and fulfillment of the minimum capital and the amount due from the shares value in accordance with the provisions of Companies Act.
(b) Set out the final provisions for the Company Articles of Association but may not introduce any substantial amendments to the Articles of Association presented thereto without obtaining the approval of all subscribers represented thereat.
(c) Appoint the members of the first Board of Directors for a term not exceeding five years and the first auditor if not already appointed in the company Memorandum or Article of Association.
(d) Deliberation in the founders report on the works and costs required for the incorporation.
(e) Consider approval of the value of share in kind (if any).
For the valid convocation of Shareholders General Meeting the number of subscribers representing at least half of the capital should be present. Each subscriber shall have one vote for each of subscribed share or share he represents at the General Meeting.
Save for the matters falling within the competence of the Extraordinary General Meeting, the Ordinary General Meeting shall be in charge of all the matters related to the Company and convene at least one time every year during the six months following the end of the company financial year. Ordinary General Meetings shall be convoked whenever deemed necessary.
Extraordinary General Meeting has the authority to amend the Company Articles of Association with the exception of the Articles which the Extraordinary General Meeting is legally prohibited to amend.
It may pass resolutions in respect of the matters falling within the authority of the Ordinary General Meeting under the same conditions and circumstances specified for the Ordinary General Meeting.
Shareholders General Meetings shall be convoked by the Board of Directors. The Board of Directors has to convoke the Ordinary General Meeting if it is so required by the auditor or a number of the shareholders representing at least 5% of the capital. Convocation of the Ordinary General Meeting shall be published in the official Gazette and in a daily newspaper distributed at the Company head office at least 25 days before the time prescribed for the convocation. The invitation shall include the agenda. A copy of the invitation and the agenda shall be forwarded to the Companies General Directorate at the Ministry of Commerce and Industry during the period specified for publishing.
Upon the General Meeting convocation, a list of the shareholders and representatives present at the meeting should be made showing their place of residence, number of shares they own personally or by proxy and the number of the votes allocated thereto. Each party who has an interest shall haveaccessto this list.
Ordinary General Meeting shall not be valid unless attended by shareholders who at least represent half of the capital. If such quorum is not achieved at the meeting, another meeting should be convoked within thirty days following the previous meeting. Invitation shall be sent in same manner provided for in Article 30 herein. The second meeting shall be deemed valid irrespective of the number of shares represented thereat.
The Extraordinary General Meeting shall not be valid unless attended by shareholders who at least represent half of the capital. If such quorum is not achieved at the first meeting an invitation shall be sent for a second meeting under the same conditions provided for in the previous articles. The second meeting shall be valid if attended by number of shareholders who represent at least quarter of the capital.
Each subscriber shall have one vote for each share be represented in the Shareholders constituent meeting. Votes at Ordinary General Meeting and Extraordinary General Meeting shall be calculated on a one vote for each share basis. Nevertheless, no shareholder on behalf of himself or on behalf of others or in both capacities shall have number of votes exceeding 35% of the total Company shares as to the resolutions of Ordinary General Meeting and Extraordinary General Meeting of the Company related to the appointment and dismissal of the Board Members, auditors or the amendment of the Company Articles of Association.
Resolutions at Shareholders constituent meeting are passed by absolute majority of shares represented thereat. However, if such resolutions are related to the assessment of shares in kind or special privileges, in this case the approval of the majority of subscribers by cash shares representing 2/3 of the said shares after excluding the shares subscribed in kind and holders or beneficiaries of the special privileges, should be obtained. The latter shall have no say in such resolutions even if they are cash share holders.
Resolutions of the Ordinary General Meeting shall be passed by absolute majority of 66% of the shares represented at the meeting.
The resolutions of Extraordinary General Meeting shall be passed by the majority of 2/3 of the shares represented at the meeting unless the resolution is related to the increase or reduction of the capital, extension of the company term or winding up the company before the expiry of the term specified in its Articles of Association, or go for merger with another company or establishment, then the resolution shall not be valid unless passed by the majority of 3/4 of the shares represented at the meeting. Notwithstanding the foregoing and anything to the contrary herein, any resolution to amend the Articles of Association shall be passed by a majority of eighty six percent of the shares represented at the Extraordinary General Meeting.
Each shareholder has the right to discuss the issues mentioned in the General Meeting agenda, raise questions in respect thereof to the Board Members and the auditor. The Board of Directors and auditor shall reply to the questions raised by the shareholders in the manner that may not expose the Company interest to any harm. If the shareholder thinks that the answer to his question is not convincing, he shall put up the matter to the General Meeting whose decision in this respect shall be effective and final.
The General Meeting shall be chaired by the Chairman or the Deputy Chairman in his absence. The Chairman shall appoint a secretary for the meeting and a votes collector. Minutes shall be prepared for the General Meeting containing name of the present shareholders or representatives, number of shares they own on behalf of themselves or by proxy, number of votes allocated thereto, passed resolutions, number of votes agreed and disagreed to such resolutions and full summary of the deliberations at the meeting. Minutes of Meeting should be recorded on regular basis, after each meeting in a special record signed by the General Meeting, Chairman, the Secretary and Votes Collector.
Chapter Five: The Auditor
The Company may have one auditor or more to be selected from the auditors who are authorized to operate in the Kingdom of Saudi Arabia. The General Meeting shall appoint the auditor on annual basis, fix his remuneration and may re-appoint him.
Auditor shall have the right for access to Company books and records and other documents at any time. He may also request to have the statement and clarifications deemed necessary by him and may verify the Company assets and liabilities.'
Auditor shall have to submit a report to the annual General Meeting containing the Company standing as to enabling him obtain these statements and the clarifications he requires, as well as any breaches discovered by him of the Companies Act or these Articles of Association, in addition to his opinion on the factual conformity of the Company's accounts.
Chapter Six: Company Accounts and Distribution of Dividends
The financial year of the Company shall begin 1 January (G) and end on 31 December (G) in each year, provided that the first financial year of the Company shall begin from the date of issue of resolution announcing the Company establishment and end on 31 December of the following year.
At the end of each financial year, the Board of Directors shall prepare an inventory for the value of the Company's assets and liabilities at the said date. The Board shall also prepare the Company balance sheet, profit and loss account, report on the Company business, its financial position for the ending financial year and the way it proposes to distribute the net profit at least 60 days before the convocation of the Ordinary General Meeting. The Board of Directors shall keep these documents at the disposal of the auditor at least 55 days before the time specified for the General Meeting convocation. Chairman of the Board shall sign the said document, copy of which shall be lodged at the Company's head office at the disposal of the shareholders at least 25 days before the time specified for the General Meeting convocation. The Chairman of the Board shall publish in a daily newspaper distributed at the head office of the Company, the balance sheet, profit and loss account and a detailed summary of the Board of Directors report, full text of the auditor's report and shall send copies of such documents to Companies General Directorate at least 25 days before the convocation of the General Meeting.
Annual net profit of the Company shall be distributed after the deduction of overheads and other costs, including shareholders loans and Zakat, as follows:
(a) Put aside 10% of the net profit to form the statutory reserve and the Ordinary General Meeting shall discontinue the deduction for the statutory reserve when such reserve reach half of the capital.
(b) Ordinary General Meeting may, upon the recommendation of the Board of Directors proposal, set aside a percentage from the net profit to form an adequate reserve to be allocated for certain purposes.
(c) Payment of dividends to the shareholders.
Dividends scheduled to be distributed among shareholders shall be paid at the place and time determined by the Board of Directors according to instructions from the Ministry of Commerce.
If no dividends are distributed in any financial year, then no dividends shall be distributed in the following years until the percentage referred to in paragraph (a) of Article 9 is paid to the owners of non-voting shares for such year. Should the Company fail to pay this percentage of profits for three consecutive years, the General Meeting of for such shareholders, which is convoked according to Article 86 of the Companies Act, may decide either to allow them to attend the General Meetings and participate in voting or appoint representatives to the Board of Directors pro rata to the value of their respective shares in the capital, until the Company is able to pay the full amount of the priority profits allocated to those shareholders for the previous years.
If the Company's losses reach seventy five percent of the capital the Board of Directors members should convoke the Extraordinary General Meeting to consider the continuation or pre-mature dissolution of the Company as provided for in Article 6 herein. The General Meeting resolution shall be in all cases published in the Gazette.
Chapter Seven: Disputes
Each Shareholder has the right to file Company liability case against members of the Board of Directors if the mistake they have committed resulted in damage thereto provided that the Company's right to file such case is still exists. The shareholder must inform the company of his intention to file the case.
Chapter Eight: Company Dissolution and Liquidation
Upon expiry of the Company term or its pre-mature dissolution the Extraordinary General Meeting according to a proposal by the Board of Directors, shall determine the method of liquidation, appoint one Liquidator or more, specify their powers and remuneration. The Board of Directors' power shall end upon the Company expiration. However, the Board of Directors shall continue to run the Company until a Liquidator is appointed and the Company departments and sections shall keep their powers to the extent that is not contradicting with the Liquidators' powers and authorities.
Chapter Nine: Final Provision
These Articles of Association shall be lodged and published according to the Companies Act.
* In case of any discrepancy, the Arabic version shall prevail.