Corporate Governance

Code of Corporate Governance

• A. Introduction

  I. Preamble

  The purpose of this company code of corporate governance (“Code”) is to improve and systematize the company’s governance, make its governance more transparent and demonstrate the company’s commitment to good corporate governance by developing and furthering:

   

  1. Responsible, accountable, and value-based management;
  2. Effective oversight and executive bodies that act in the best interests of the company and its shareholders, including minority shareholders, and seek to enhance shareholder value in a sustainable manner; and
  3. Appropriate information disclosure and transparency, as well as an effective system of risk management and internal control.

   

  By adopting, following, and updating this Code, the company’s charter and by-laws on a regular basis, the company confirms its desire to demonstrably lead and promote good corporate governance. In order to foster the confidence of its shareholders, employees, investors, lenders and the general public, this company Code goes beyond the established legal and regulatory framework in the applicable laws and embraces both national and internationally recognized corporate governance principles and practices.

   

  The company’s governing bodies and employees understand this Code as their joint obligation, and accordingly, obligate themselves to ensure that its provisions and its spirit are adhered to and acted upon throughout the company [and its subsidiaries and dependent companies].

   

  II. Background and Profile

  Our mission is simple. To rebuild Iraq one project at a time – with Iraqis.

  Our values are clear.

   

  1. Safety - Embracing a culture to protect our employees, clients and the public
  2. Integrity - Being honest and doing what is right no matter what
  3. Talent - Hiring the best, keeping the best
  4. Quality - Delivering a step above the rest
  5. Customers - Communications, mutual understand and total satisfaction
  6. Results - A driving force behind customer success

   

  The company operates in the following business sectors:

   

  1. Oil and Gas / Industrial
  2. Support for US Government Facilities and Operations and Other Commercial and Industrial projects, including Build Own and Operate projects

   

  The Company operates:

   

  1. Primarily in Iraq;
  2. And all other applicable jurisdictions

   

  The company is privately owned.

• B. Commitment to Corporate Governance

  I. Definition and Principles

  The company defines corporate governance as a set of structures and processes for the direction and control of companies, which involves a set of relationships between the company’s shareholders, Board and executive bodies with the purpose of creating long-term shareholder value. It views corporate governance as a means to improve operational efficiency, attract financing at a lower cost and build a better reputation. It also views a sound system of corporate governance as an important contribution to the rule of law in applicable jurisdictions and is an important determinant of the role of the company in a modern economy and society.

   

  The Code sets out the company’s corporate governance framework and is consistent with applicable laws code as well as internationally recognized best practices and principles.

   

  The company’s corporate governance framework is based on the following principles:

   

  1. Accountability: This Code establishes the company’s accountability to all shareholders and guides the company’s Board in setting strategy and guiding and monitoring the company’s management.
  2. Fairness: The company obligates itself to protect shareholder rights and ensure the equitable treatment of all shareholders. All shareholders are to be granted effective redress for violation of their rights through the Board.
  3. Transparency: The company is to ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, performance, ownership and governance of the company, in a manner easily accessible to interested parties.
  4. Responsibility: The company recognizes the rights of other stakeholders as established by laws and regulations, and encourages cooperation between the company and stakeholders in creating sustainable and financially sound enterprises.

   

  The company, its key officers and all employees act in accordance with all applicable laws and regulations and furthermore, shall comply with ethical standards of business conduct as defined by this company Code, the country’s code of corporate governance, other company policies and procedures and customer contract obligations.

   

  II. Internal Corporate Documentation

  This company Code is principle based. More specific corporate governance structures, processes and practices are regulated in the company’s articles of association and the company’s corporate charters including those of the Board and Board committees.

   

  The company’s set of internal corporate documents follows legal and regulatory requirements and incorporates internationally recognized corporate governance practices. The above-mentioned corporate documents are maintained and available in the company’s documentation management systems.

   

  III. General Governance Structure

  The company has the following governing and other bodies:

   

  1. The Company is the AWI Group of companies
  2. The Board is responsible for the strategic direction of the company, and the guidance and oversight of management. The company’s Board will also establish committees on audit and other committees as needed
  3. The chief executive officer (CEO) and executives are assigned the task of executing the strategy as approved by the Board;
  4. The board secretary ensures that the governing bodies follow internal rules and external regulations in order to facilitate clear communications between the governing bodies, and acts as an adviser to directors and senior executives;
  5. The Internal Auditor develops and monitors internal control procedures for the business operations of the company. The Internal Auditor reports directly to the audit committee and reports administratively to the CEO.
  6. The External Auditor is a publicly recognized independent auditing firm, where independent means independence from the company, the company’s management, and major shareholders.

   

  IV. Compliance with and Adherence to Corporate Governance Policies and Practices

  The board secretary is responsible for ensuring the development of, compliance with, and periodic review of corporate governance policies and practices in the company.

• C. Good Board Practices

  The company views an effective, professional and independent Board as essential for good corporate governance. The Board cannot substitute for talented professional managers, nor change the economic environment in which the company operates. It can, however, influence the performance of the company through its supervision, guidance and control of management in the interests and for the benefit of the company’s shareholders. Executive bodies also play a crucial role in the governance process. The effective interaction between the Board and management, and a clear separation of authorities, is key to sound corporate governance.

   

  I.  At the Board Level

  1. Authority. The Board’s scope of authority is set forth in the Board’s articles of association and charter.
  2. Composition and Independence. The composition of the Board is determined in such a manner that combines key executive managers, representatives of the shareholders and Non-Executive Directors (NED).

      c. Structure and Committees. The company has established the following Board committees:

  • • The audit & risks committee;
    • Nomination committee;
    • Remuneration committee

   

  All committees have charters containing provisions on the scope of authority, competencies, composition, working procedures, as well as the rights and responsibilities of the committee members. The Board’s chairman assigns directors to chair committees upon recommendation by the corporate governance and Nomination and Remuneration Committee.

   

  Each committee is to provide provisional consideration of the most important issues that fall within the authority of the Board. After each of its meetings, the committee shall report on the meeting to the Board.

   

  d. Working Procedures. The Board meets according to a fixed schedule, set at the beginning of each year, which enables it to properly discharge its duties. As a rule, the Board shall meet at least 4 times a year.

   

  Detailed procedures for calling and holding meetings of the Board are defined in the Board’s charter. All directors are provided with a concise but comprehensive set of information by the board secretary in a timely manner, concurrently with the notice of the Board meeting, but no less than 5 days before each meeting. This set of documents is to include: an agenda; minutes of the prior Board meeting; key performance indicators, including relevant financial information prepared by management; and clear recommendations for action.

   

  The Board keeps detailed minutes of its meetings that adequately reflect Board discussions, signed by the chairman.

   

  e. Self-Evaluation. The Board conducts a yearly self-evaluation. This process is to be organized by the vice-Chairman and the results are to be discussed by the full Board. Independent consultants may also be invited to assist the Board in this process.

  f. Training and Access to Advisers. The company offers an orientation program for new Board members on the company, its business and on other subjects that will assist them in discharging their duties. The company also provides general access to training courses to its Board members as a matter of continuous professional education. The Board and its committees shall also have the ability to retain independent legal counsel, accounting or other consultants to advise the Board when necessary.

  g. Remuneration. The remuneration of (non-executive) Board members is comprised of an annual fee, and an additional fee for the chairmanship of committees or the Board itself. The remuneration package shall, however, not jeopardize a director’s independence. Executive directors are not paid beyond their executive remuneration package. The Board’s Nomination and Remuneration Committee periodically reviews the remuneration paid to directors. All Board members sign a letter of appointment with the company.

  h. Duties and Responsibilities. Members of the Board act in good faith, with due care and in the best interest of the company and all its shareholders–and not in the interests of any particular shareholder–on the basis of all relevant information. Each director is expected to attend all Board and applicable committee meetings.

   

  The Board must decide as to whether its directors can hold positions in the governing bodies of other companies. The company shall not unreasonably prohibit its directors from serving on other Boards. Directors are expected to ensure that other commitments do not interfere in the discharge of their duties.

   

  Board members shall not divulge or use confidential or insider information about the company.

   

  Members of the Board shall abstain from actions that will or may lead to a conflict of interest with the company. When such a conflict exists, members of the Board shall disclose information about the conflict of interest to the other Board members and shall abstain from voting on such issues.

   

   

  II  Interaction Between the Board and Management and the Role of the Board secretary

  Good corporate governance provides for an open dialogue between the company’s Board and management. The company has thus developed a procedure for periodic reports (information briefs) from the CEO and management to the Board. The Board shall further have unrestricted access to the company’s management and its employees. The board secretary plays a key, overall role in facilitating this process.

   

  The board secretary is employed on a full-time basis. The board secretary possesses the necessary qualifications and skills to ensure that the governing bodies follow internal rules and external regulations, facilitates clear communications between the governing bodies in-line with the company’s articles of association, charters, by-laws and other internal rules, and keeps the Board and the company’s key officers abreast of the latest corporate governance developments.

   

  Senior executives are presented with ample opportunity to present during Board meetings, so that managers gain the necessary exposure and experience in interacting with the Board and the Board in turn can obtain direct information and better gauge the next generation of managers and future leaders.

• D. Control Environment and Processes

  I. Internal Audit and Control

  1. The Board’s audit committee. The audit committee is to focus on three key areas: financial reporting, risk management, and internal and external audit {and legal compliance and risk management}. Its exact authority, composition, working procedures and other relevant matters are regulated in its charter.
  2. Risk management: The company places great importance on a risk management and it is the Board of Directors that is tasked with ensuring that appropriate risk management systems are established. Among other things, the Board (i) approve risk management procedures and ensure compliance with such procedures; (ii) analyzes, evaluates, and improves the effectiveness of the internal risk management procedures on a regular basis; (iii) develops adequate incentives for the executive bodies, departments and employees to apply internal control systems; (iv) ensures that the company complies with legislation and charter provisions.
  3. The Internal Auditor. The company has an Internal Auditor [or office of the Internal Auditor] that is responsible for the daily internal control of the company’s finances and operations. The Internal Auditor is staffed by a highly respected and reputable person[s], and reports to the audit committee functionally and to the CEO administratively. The Internal Auditor’s authority, composition, working procedures and other relevant matters are regulated in its charter.

   

  II . The External Audit

  An external auditor audits the company’s financial statements. The external auditor is a publicly recognized independent auditing firm, where independent means independence from the company, the company’s management and major shareholders. The remuneration of the auditor is disclosed to shareholders. The external auditor is selected by the general assembly following an open tender and upon the recommendation of the Board.

• E. Information Disclosure and Transparency

  Transparency, and timely and accurate information disclosure, is a key corporate governance principle for the company.

   

  I. Disclosure Policies and Practices

  The company discloses and provides easy access to all material information, including the financial situation, performance, ownership and the governance structure of the company to shareholders free of charge. The Board prepares and approves a policy on information disclosure and makes it publicly available on the company’s internet site. The company publishes a comprehensive annual report that includes a corporate governance section. The company discloses its corporate governance practices, corporate events calendar and other material information on its internet site in a timely manner.

   

  The company takes measures to protect confidential information as defined in its policy on information disclosure. Any information obtained by the company’s employees and the members of the governing bodies may not be used for their personal benefit.

   

  II  Financial Reporting

  The company keeps records and prepares a full set of financial statements in accordance with International Financial Reporting Standards. Detailed notes accompany financial statements so that the users of the statements can properly interpret the company’s financial performance. A management discussion and analysis, as well as the opinions of the external auditor, shall complement all financial information.

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