Corporate Governance Manual

Table of Contents Abbreviations 3 Manual Statemen 3 Glossary 4 Purpose 4 Scope 4 Objectives 5 Manual Details 5 Pillar 1: Board of Directors 5 1. BOD overall responsibilities 5 2. Oversight of Executive Management 6 3. Succession Plans 6 4. BOD Composition 6 5. Role of the Chairman 6 6. Organization and Functioning of the Board 6 7. BOD Secretary 7 8. Authorization 7 9. Qualifications of the Board Members 7 10. Training & Continuous Development 7 11. Efficiency and Performance Assessment 7 Pillar 2: Corporate Values, Conflict of Interest and Group Structure 8 1. Corporate Ethics & Values 8 2. Conflict of Interest 8 3. Related Parties 8 4. Confidentiality 8 5. Group Structures 9 6. Board committees 9 Pillar 3: Senior Executive Management 9 Pillar 4: Risk Management & Internal Controls 10 1. Internal Control Systems 10 2. Risk Management 10 3. Risk Committee 10 4. Internal Audit 11 5. External Audit 11 6. Audit Committee 12 Pillar 5: Remunerations Systems and Policy 12 1. Nomination and Remuneration Committee 13 Pillar 6 - Disclosure and Transparency 13 1. Disclosure and Transparency Policy 13 Pillar 7: Complex Corporate Structure 13 1. Reviewing the Corporate Structure 14 2. Incorporation of new structures 14 Pillar 8: Protection of Shareholders Rights 14 1. Shareholders Rights: 14 2. Shareholders responsibilities 15 Pillar 9: Protection of Stakeholders Rights 15 1. Stakeholder rights 15 Monitoring, Evaluation and Review 15 Relevant Documents 15 References 15 Page 2 of 15

Abbreviations BCGC BOD BRMC CBK CEO CMA CRO HRD IAS IFRS WB Board Corporate Governance Committee Board of Directors Board Risk Management Committee Central Bank of Kuwait Chief Executive Officer Chief Risk Officer Human Resources Department International Accounting Standards International Financial Reporting Standards Warba Bank Manual Statement Corporate Governance refers to the method by which the bank is managed or its business is controlled. The major highlights of Corporate Governance Manual (as adopted based on international, regional standards and CBK framework) in WB are as follows: 1. Corporate Governance should be transparent to all stakeholders to ensure effective oversight and accountability of BOD and senior / executive management; 2. BOD at all times will strive to consider and safeguard the interests of all stakeholders; 3. The establishment of committees should be clearly disclosed and their responsibilities subject to oversight and periodic reporting. 4. WB ensures that a Charter for each committee is developed and made available to stakeholders and the public; 5. The functions and responsibilities of senior management must be clearly defined and disclosed. The CEO reports to BOD and is responsible for implementing BOD policies and directives; 6. WB ensures that strong systems of internal controls and risk management are in place. CRO has direct access to the Chairman of the Board Risk Committee and presents reports directly to the Board Risk Committee; 7. An Internal Audit function independent of executive management is implemented and has access to all information within the Bank. The Internal Audit function reports to the Board Audit Committee and BOD (as and when required). 8. WB has engaged External Auditor(s) with highest professional qualifications and standards. Unrestricted access to the Board Audit Committee and the Internal Audit function ensures total transparency in the Bank. The Board Audit Committee sets appropriate standards to ensure that the external audit process is carried out on Dual Audit basis which fulfils the objective of appointing two external auditors; 9. WB adopted a practice of reporting all relevant financial results and financial position, as per instructions from regulators in Kuwait. Further, International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) are also adopted; 10. WB utilizes technology to greater extent to enhance the transparency of operations, accountability, data integrity and availability; 11. Further, WB publishes its annual reports, information regarding BOD, and other pertinent data as appropriate; 12. WB annual report includes relevant information and disclosures based on the Corporate Governance rules and standards. 13. CBK issued instructions in June 2012 concerning the rules and standards of corporate Page 3 of 15

governance at Kuwaiti Banks. The instructions constitute an update of the CBK s corporate governance rules, takes into account the lessons learnt from the latest global financial crisis; new corporate governance standards issued in this respect and in particular the Paper entitled Principles for Enhancing Corporate Governance issued by Basel Committee on Banks Supervision in October 2010; the principles issued by the Financial Stability Board on remuneration schemes; and the recommendations of the World Bank report issued in late 2010 concerning assessment of corporate governance principles in Kuwaiti banks based on CBK request, as well as the principles applied in certain regional countries. 14. The instructions take into account the structure of Kuwaiti banking sector, the basic characteristics of the Kuwaiti economy and its integration with global economy as well as other factors that underline the critical importance of corporate governance in Kuwaiti banks. Glossary Corporate Governance: A set of systems, organizational structures and operations that help achieve institutional control as per global standards and principles through identifying the responsibilities and duties of BOD and Executive Management of a company taking into account safeguarding shareholders and relevant stakeholders rights. Banks Governance: Governance is the method by which BOD and Executive Management organize and regulate banks affairs and business. It determines sound ways for setting banks goals and strategies as well as their daily activities, achieving the principle of accountability before shareholders and considering the rights of related parties, rules and instructions issued by regulatory bodies, safeguarding depositors interests and the related robust risk management systems that should be developed for attaining the same. Related Parties: Related parties are defined as per IAS 24 as amended. Stakeholders: Any person or entity that has a relation with the bank such as depositors, shareholders, creditors, customers, suppliers, society and other related entities. Purpose This Manual has been prepared in compliance with CBK instructions concerning the rules and regulations of corporate governance at Kuwaiti Banks. WB, through the BCGC should set the Corporate Governance Manual and get it approved by BOD and upload the manual to the Bank s website. Scope 1. This Manual includes the key rules and controls set in CBK instructions on Kuwaiti Corporate Governance at banks as minimum. 2. The Manual is formulated based on the fundamental concepts of responsibility, accountability and transparency and is applicable to both BOD and the Executive Management. 3. Corporate governance in Kuwait is based on the following main pillars / principles, the legislative and regulatory frameworks and international best practice: a) CBK Corporate Governance Instructions b) Kuwait Companies Law c) Kuwait Stock Exchange rules and instructions d) Basel Committee on Banking Supervision recommendations on sound principles on corporate governance in banks e) CMA laws, instructions, resolutions and circulars. 4. This Manual should be read together with WB Articles of Association, Memorandum of Page 4 of 15

Association, approved Bank Charters and policies, relevant regulations, instructions or circulars relating to the Islamic Banks or Corporate Governance that CBK may issue from time to time. 5. The following are the key elements of sound corporate governance: a) Transparency: Making information known and / or available on a wide scale; b) Accountability: Justifying actions and / or decisions; c) Justice: Doing business fairly and impartially d) Integrity: fosters honesty and takes the moral side into consideration Objectives 1. Ensure adoption of effective and best practices of Corporate Governance principles and practices by WB in line with best practice and CBK corporate governance instructions to Kuwaiti Banks. 2. Setting out broad principles and standards and serves as a foundation for the establishment of sound corporate governance in WB. 3. Ensuring, through adoption of sound Corporate Governance standards and practices that in WB risk taking activities and business prudence are appropriately balanced so as to maximize shareholder s return. 4. In addition, WB believes that such initiatives would protect the interests of all stakeholders. Further, WB acknowledges that strong Corporate Governance would safeguard against all kinds of mismanagement and fraudulent activities and enhances corporate accountability and transparency. Manual Details Corporate Governance at WB includes the following pillars in consistency with CBK instructions: Pillar 1- Board of Directors Pillar 2- Corporate Values, Conflict of Interest and Group Structure Pillar 3- Senior Executive Management Pillar 4- Risk Management & Internal Controls Pillar 5- Remunerations Systems and Policy Pillar 6- Disclosure and Transparency Pillar 7- Complex Corporate Structure Pillar 8- Protection of Shareholders Rights Pillar 9- Protection of Stakeholders Rights A brief summary is given below on each pillar and the actions taken by WB to apply the requirements of each pillar so as to maintain compliance with CBK instructions and reinforce sound corporate governance at the Bank. Pillar 1: Board of Directors 1. BOD overall responsibilities a) BOD have overall responsibility for the bank, including approving and overseeing the implementation of the bank s strategic objectives, risk strategy, corporate governance and corporate values. BOD is also responsible for providing oversight of executive management. b) BOD also assumes full responsibility for the bank s business and its financial soundness, fulfilment of CBK requirements and all regulators protecting the legitimate interests of Page 5 of 15

shareholders, depositors, creditors, staff and stakeholders and ensuring that the bank is managed within the applicable laws and instructions and the in-house policies. 2. Oversight of Executive Management a) BOD should appoint a CEO for the bank, who should have technical and banking experience and competency as well as integrity. b) Approval of BOD should be obtained prior to appointment of certain executive and supervisory management to ensure they carry out their assigned roles in line with the bank s objectives and targets, and that the policies approved by BOD are applied. c) BOD also ensures that the bank s organizational structure facilitates effective decision making and good governance and define lines of responsibility and accountability, clearly stating the key responsibilities and authorities of BOD, as well as of executive management and those responsible for the control functions. d) BOD should segregate the position of the Chairman from that of Chief Executive Officer, and ensure that no first degree kinship exists between them or any other relation that may affect independency of decisions taken by each position holder. 3. Succession Plans BOD should ensure that HRD has in place succession plans for the positions of the executive managers and that the plans are implemented effectively. 4. BOD Composition The bank should have an adequate number and appropriate composition of BOD members to enable the bank to form the necessary number of Board committees in conformity with the sound governance requirements issued by CBK. 5. Role of the Chairman The Chairman role is to: a) Ensure the proper functioning of the board and maintain a relationship of trust with board members. b) Ensure that board decisions are taken on a sound and well-informed basis. c) Encourage and promote serious discussion. d) Ensure that dissenting views can be expressed and discussed within the decision-making process. e) Establish a productive relationship between the board and the Executive Management of the bank. f) Ensure that each board member and shareholder has the sufficient information in a timely manner. g) Ensure having good governance standards in place in the Bank. 6. Organization and Functioning of the Board a) The board should convene whenever required and will hold at least six (6) meetings a year. However it should convene one meeting at least for each quarter. The decisions taken under the minutes of the meetings shall be mandatory and constitute part of the bank s records. b) In consultation with the Executive Management, the Chairman should present the important and comprehensive topics to be included in the agenda of each board meeting. c) The board members should be provided with sufficient information enough time before Page 6 of 15

each board meeting to be able to study it prior to taking the proper decisions. d) The board secretary takes record of all board discussions, suggestions by the board members and results of voting conducted in the board meetings. e) Responsibilities of the Chairman and members of the board should be defined in writing and should not contradict with the related legislation. 7. BOD Secretary The board secretary shall assist BOD and the Hhairman to manage the board affairs as follows: a) Preparing the board meeting agenda in consultation with the Board Chairman and CEO; b) Planning and coordinating for the attendance of BOD meetings; c) Taking record of BOD discussions, members suggestions and voting results ; d) In consultation and under the supervision of the Chairman, ensure adherence to the procedures approved by BOD relating to circulation of information to the board members, committees and Executive Management, e) Keeping minutes of BOD meetings. f) Executing and following up any instructions issued by BOD; g) Ensuring compliance with any legal and regulatory requirements in respect of BOD affairs. 8. Authorization BOD authorizes senior management to take over the day to day operations of the Bank through the CEO by means of written authorization of financial and administrative powers. All banking transactions that are not authorized to the senior management and require BOD approval are clearly defined. 9. Qualifications of the Board Members a) BOD members and committees of the Board should have appropriate experience, integrity and personal qualities; adhere to the best industry s professional practices. b) Collectively, BOD should have adequate knowledge and experience relevant to key banking activities and a reasonable understanding of local, regional and global economic updates, as well as the regulatory and supervisory environment. c) BOD members should always remain qualified, by means of attending training courses relevant to their duties. They should have a clear understanding of their role in corporate governance and be able to exercise sound and objective judgment about the affairs of the Bank. d) BOD Nominations and Remuneration Committee assists BOD in selection / nomination of the board members and committees by setting key membership criteria that aim at creating BOS that is capable of meeting challenges and motivation for excellent performance in all aspects. 10. Training & Continuous Development BOD should regularly develop their skills, experience and knowledge through attending tailored training programs on financial and banking business relevant to key financial activities including financing, accounting, lending and banking operations, strategic planning, governance, risk management, internal controls, and bank s bylaws and participating in associated conferences and seminars. 11. Efficiency and Performance Assessment BOD should review and assess the performance of the board members, the board committees and Page 7 of 15

the executive management at least once a year. Pillar 2: Corporate Values, Conflict of Interest and Group Structure 1. Corporate Ethics & Values a) BOD should define appropriate governance practices for its own work and have in place the means to ensure that such practices are followed and periodically reviewed for ongoing improvement. b) BOD should take the lead in establishing the tone at the top and in setting professional standards and corporate values that promote integrity for itself, executive management and other employees. c) The policies and code of conduct should include provision for avoidance of conflict of interest and deals made based on insider information for achieving personal benefits. d) Such policies and code of conduct should include the rules and procedures that regulate transactions made with related parties and appropriate mechanism to handle customer complaints in line with the instructions issued by CBK in this respect. e) The Charter, code of professional conduct and ethics should be circulated to all bank staff and board members, and signatures should be obtained as an acknowledgment of compliance thereon. The Bank shall also publish that charter on its website. 2. Conflict of Interest BOD should have a formal written conflict of interest policy. This policy should cover all aspects of conflict of interest and possibility whether this conflict arises between the board members and the bank or the Executive Management and the bank such as: a) A member should avoid activities that could create conflict of interest; b) BOD approval should be obtained on any activity undertaken by a board member that may create a conflict of interest; c) A BOD member should disclose any matter that may result, or has already resulted, in a conflict of interest; d) A BOD member should abstain from voting on any matter where the member may have a conflict of interest or where the member s voting objectivity; e) Transactions with related parties should be made on an arms-length basis, and the way in which the board will deal with any non-compliance with the policy. 3. Related Parties a) WB should have written policy for related parties, which should include the rules and procedures regulating operations with these parties. WB should keep records of the transactions of related parties, and have such transactions audited appropriately. b) WB should determine its related parties based on the definition of these parties under IAS, and keep list of these parties and control any transaction with any of them. c) The related parties transactions should be disclosed pursuant to the provisions of IAS and IFRS in this respect, as well as any other local regulatory authorities including those of CBK. 4. Confidentiality 1. Banking confidentiality is considered one of the key principles of banking business due to the trust and reassurance it gives to all parties dealing with banks, whether depositors, borrowers, investors or other stakeholders. 2. WB has written policies for keeping the confidentiality of banking business, which should Page 8 of 15

stipulate the following at least: a) The necessity that WB directors and staff maintain the confidentiality of information and data of WB and its customers, and the information and data of the customers of other banks, which may be known to the employees due to their work nature. b) Non-disclosure of any information or data of WB or its clients unless by the authorized persons, and to the extent allowed by the WB internal rules, instructions and policies. c) Maintaining the security of the information of WB and its customers and setting the regulatory controls to prevent access to the same by anyone except the authorized persons. d) The necessity of BOD and Executive Management s recognition of their responsibility for developing security awareness in the bank in a way that enhances and maintains banking confidentiality. e) These policies should stress the importance of not utilizing any information about WB positions, which may be available with a board member or any of WB staff, for personal interests or the interests of other related parties. f) These policies should stress control over its implementation by WB Internal Audit. 5. Group Structures BOD has the overall responsibility for adequate corporate governance across the group and ensuring that there are governance policies and mechanisms appropriate to the structure, business and risks of the group and its entities and periodically review such policies to ensure compliance of each subsidiary company with applicable corporate governance requirements. 6. Board committees 1. The board should form board committees to increase the efficiency of the board s control over the bank s key operations. Having such committees in place does not discharge the board from shouldering direct responsibility for all the bank related matters. The Committees of the Board are as follows: a) Corporate Governance Committee b) Audit Committee: c) Risk Committee d) Nomination & Remuneration Committee e) Other Board Committees 2. The Board Chairman may not be a member in the Audit Committee, Risk Committee or the Nomination & Remuneration Committee. Pillar 3: Senior Executive Management 1. Senior Executive Management consists of BOD-appointed group of individuals responsible for managing the bank s day-to-day operations. Such group is comprised of the CEO, CEO s deputies and assistants and associates directly reporting to the CEO and executive managers who bear the responsibility for supervising WB. 2. Under the supervision of BOD, Senior Executive Management should ensure that the bank s activities are consistent with the business strategy, risk appetite and board-approved policies. BOD depends on the Executive Management experience in implementing board decisions without BOD interference in the executive management duties. 3. Executive management contributes substantially to WB sound corporate governance through personal conduct by means of having adequate control over its activities. 4. Executive management is responsible for delegating duties to the staff and should establish a management structure that promotes accountability and transparency. 5. Executive management is responsible for supervision and control over the bank s business, Page 9 of 15

particularly with respect to ensuring functionality of compliance & risk control, setting appropriate systems to manage financial and non-financial risks in line with the directions given by BOD, taking into consideration independence of supervisory functions and separation of duties. 6. Executive management should provide BOD with transparent and objective financial and administrative reports, every two months at least. Pillar 4: Risk Management & Internal Controls 1. Internal Control Systems a) WB has established effective internal controls and risk management systems. b) BOD should approve an organizational structure consistent with the bank s nature and business strategy. c) BOD should also approve the policies of each administrative units, banking operations and job descriptions of various jobs. d) WB ensures, on a periodic basis at least once a year, the adequacy and effectiveness of the internal control systems through reviewing the Bank s internal controls by an independent and approved auditor other than the Bank s External auditors. e) The Report on the internal control systems should be incorporated in the Bank s annual report. f) WB should set procedures to enable employees to contact the Chairman to communicate their concerns regarding any potential violations. g) These procedures stress WB protection of those employees in order to give them enough reassurance that they will not be subject to any threats or penalties even in case these concerns are not proved correct. h) The implementation of these procedures should be monitored by WB internal audit. 2. Risk Management 1. BOD and the Risk Committee have and develop robust comprehensive policies for risk management and control that describe the roles and responsibilities of the Board, Risk Committee and CRO. 2. CRO is responsible for risk functions WB and has direct access and reports directly to the bank s Chairman as well as the Chairman of the Board Risk Management Committee (BRMC). CRO should be able to influence the bank s decisions related to risk exposure. 3. CRO should be independent, without any financial responsibilities. 4. CRO should not be removed from position for any reason without the prior approval of BOD. Moreover, such reasons should be discussed with CBK before termination. 5. Risk Management function is responsible for identifying, measuring, monitoring, controlling, mitigating and reporting on risk exposures. While Risk management function should be independent of the business units, it should have access to all internal and external business lines, so as to understand them or request certain related information to assess exposures in an appropriate way. 6. Irrespective of Risk Management Function s responsibilities towards the fulfilment of their respective duties, the ultimate responsibility for the same lies with BOD. 3. Risk Committee 1. BRMC is formed of three non-executive directors including the Committee Chairman. 2. The committee is responsible for advising BOD on WB present and future risk strategy and appetite, and monitoring the Executive Management s implementation of this strategy. 3. Risk Committee should review Risk Management policies and strategies before submission Page 10 of 15

to BOD for approval. 4. Risk Committee reviews risk management structure, role, responsibilities and methods of development prior to BOD approval. 5. Risk Committee should present periodic reports to BOD on rapid developments and increased complications that risk management undergoes within the bank. 6. CRO should present reports directly to the Chairman of Risk Management Committee. 4. Internal Audit 1. Internal Audit Function in WB is independent and is headed by Chief Internal Auditor who provides BOD and senior management with reasonable assurance that WB key procedural controls are effective, appropriate and are complied with. 2. BOD approval is a prerequisite for the appointment of Chief Internal Auditor. Internal Audit Department should report to the Chairman of the Audit Committee. 3. The bank should provide Internal Audit Department with adequate qualified personnel who should be trained and rewarded properly. The Internal Audit should have access to any information or any staff in WB. It should have full authority to perform their tasks as required. BOD should approve an Audit Charter or Plan and circulate the same within the bank. 4. Internal Audit Function should have access to any information and has the right to contact any of the Bank s employees. Internal auditors should not be assigned with any executive responsibilities. Internal Audit Department should be responsible for proposing the structure and scope of internal audit, and for informing the Audit Committee of any potential conflict of interests. 5. Internal Audit Department should perform its duties and prepare its report independently without any interference. It shall have the right to discuss its report with the bank s audited departments. 6. BOD should direct the Internal Audit Department to focus on risk-based audit. Key responsibilities of Internal Audit Department shall include the following: a) Verify and evaluate sufficiency and effectiveness of internal control systems. b) Ensure compliance with the bank s internal policies, as well as relevant laws, systems and instructions. c) Inspect certain activities and transactions relating to the bank s financial position, internal control systems, risk management etc. 7. The Bank should not outsource any of the basic internal auditing roles. In the event where the bank desires to outsource certain audit tasks to external firms, CBK approval will then be obtained for certain purposes and a specific period of time. 5. External Audit 1. The external auditor should provide BOD with enhance sound corporate governance reflected in WB financial registers and reports. External Auditors are selected by shareholders based on recommendations of both BOD and the Audit Committee. 2. The Audit Committee should set appropriate standards to ensure that the external audit process is carried out on Dual Audit basis. 3. The external auditor should provide the Board Audit Committee with a copy of the audit report, and should meet with the Audit Committee to discuss this report and other relevant significant observations, if any. These meetings should be convened in the presence of the executive management. The Audit Committee should meet with the external auditor at least once a year, without presence of the executive management. 4. When external audit firms or other consulting agencies (other than the external auditors of the bank) are engaged to review and assess the internal control systems, they should focus on the areas which harbour latent dangers for the bank and may lead to operational Page 11 of 15

risks, as well as other areas whose review importance maybe highlighted by CBK s reports, observations and directions. 5. Rotation of external audit firms should be applied (Rotation every four years maximum) in order to avoid slackness of the audit role which may take place if a particular external auditor keeps carrying out the bank s audit process for years. 6. Audit Committee 1. The Audit Committee should be formed of at least three non-executive directors including the Chairman of the Committee. At least two members of the Audit Committee should have educational qualifications and / or hands on experience in financial areas. 2. The key responsibilities and authorities of the Audit Committee are to review the following: a) Scope, results and adequacy of the bank s internal and external audit. b) Accounting issues of a substantial impact on the bank s financials. c) The bank s internal control systems and ensuring that regulatory posts are staffed adequately. d) Review the bank s financials before presentation to the board to ensure sufficiency of necessary provisions. e) The bank s compliance with relevant laws, policies, systems and instructions. 3. The Audit Committee should make recommendations to BOD regarding the appointment, termination, and fees of the external auditor, and any other related contractual terms and conditions. It should further evaluate the external auditor s objectivity. 4. The Audit Committee should be authorized to obtain any information from the executive management, and invite any executive officer or BOD member to its meetings. 5. The Audit Committee should meet with the external and internal auditors and compliance officers at least once a year, without presence of the executive management. 6. The Audit Committee should meet at least once quarterly, when necessary, or upon the request of the committee s Chairman or the other two members. Chief Internal Auditor should attend the Audit Committee s regular meetings. 7. BOD secretary should be the Audit Committee s secretary, and should record the committee s minutes of meeting for the bank s records. These minutes should be made available for CBK inspectors. 8. The Audit Committee s responsibility for monitoring the adequacy of the Bank s internal control systems does not discharge BOD or the executive management from their responsibilities for the same. Pillar 5: Remunerations Systems and Policy 1. WB BOD should actively oversee, monitor, and review the remuneration systems and processes to ensure proper application. 2. The Nomination & Remuneration Committee should make recommendations to BOD regarding all remunerations associated matters. 3. There should be in place a BOD approved written remuneration policy reflecting the integrity of the Bank s operations and financial position. This policy is subject to periodic review. 4. This policy should incorporate all aspects and components of financial remunerations to reinforce the bank s effective risk management. This policy is prepared with a view to attract and retain highly qualified, skilled, and knowledgeable professionals. 5. The bank has remuneration scheme with compensatory components as follows: a) Fixed allowances b) Variable allowances c) Short term benefits d) Long term benefits Page 12 of 15

6. The Bank has a system in place to appraise and measure the performance of all staff members objectively. Remunerations are linked to the Bank s performance and risk timeline. The Bank s annual report incorporates the most significant aspects of the bank s remunerations policy and scheme. 1. Nomination and Remuneration Committee 1. The Nomination and Remuneration Committee is formed of three non-executive directors at least, including the Committee s Chairman. 2. The Nomination and Remuneration Committee s authorities include providing assistance to BOD by giving recommendations in respect of the nomination to BOD membership pursuant to the approved policies and standards as well as CBK s instructions setting nomination controls for BOD membership. 3. The Committee will also conduct an annual review on the required appropriate skills for BOD membership and conduct an annual assessment of BOD overall performance and performance of each BOD member. 4. The Committee will also prepare the remuneration policy and submit the same to BOD for approval and monitor the policy implementation. It will review the remuneration policy regularly and provide BOD with necessary recommendations in this respect and regularly evaluate the sufficiency and effectiveness of the remuneration policy. The Committee shall have a Charter that defines its duties, powers etc Pillar 6 - Disclosure and Transparency 1. Disclosure and Transparency Policy 1. The Bank recognizes that good disclosure system and quality of disclosed information is a vital means which the Bank seeks to attain. Disclosure system is an effective tool for influencing the Banks behaviour and protecting shareholders, investors and stakeholders and enhances their confidence in bank. 2. The Bank should provide shareholders and investors with accurate, comprehensive, and timely essential information. 3. BOD has approved disclosure and transparency policy that covers all information required to be disclosed, at the proper time and manner as per the law, legislations as well as CBK resolutions and instructions. 4. The policy includes measures, rules and processes that should be adopted to comply with disclosure requirements as stated by regulatory authorities including CBK, CMA and in compliance with International financial reporting standards, Basel guidelines and best international practises. 5. WB BOD is responsible for verifying the integrity, accuracy and impartiality of the disclosed information, ensuring the adherence to the relevant bank s approved policy, and providing the mechanisms necessary for the proper implementation. 6. On the other hand, WB will not disclose any information or data, which might have an adverse impact on its conditions or financial positions, to certain categories (like financial analysts, financial institutions etc.,) before disclosing the same to the public. 7. WB has a disclosure unit and keeps Disclosure Register for BOD and the Executive Management that contains all information and data required under laws, resolutions and instructions issued by the regulatory authorities. That register is updated immediately with any changes that may occur. 8. The information and data included in WB annual or quarter reports are posted and updated on WB website, in both Arabic and English languages as applicable. Pillar 7: Complex Corporate Structure Page 13 of 15

1. Reviewing the Corporate Structure 1. WB BOD and Executive Management must be fully aware of the structure of the bank s operations, relevant risks and the structure of the group, in terms of the objectives of each unit or entity, as well as formal and informal relationships among the units and the parent company. 2. Proper and effective measurements and bylaws must be in place for obtaining and exchanging information among the group s entities, so as to manage the risks of the group as a whole and control the same effectively. 3. WB BOD and Executive Management must ensure that the products and their relevant risks are assessed by each entity in the group, and on the group level. 4. In addition, WB BOD and Executive Management must be familiar with the nature of the risks which could be experienced by the bank through its branches and subsidiaries. 2. Incorporation of new structures 1. BOD approves clear policies and strategies for incorporation of new structures taking the following into consideration: a) Avoiding unnecessary complex structures. b) Having central procedures in place for approving and monitoring the incorporation of new legal entities. c) Having the ability to conclude information on the bank s structure, including type, charter, ownership structure, and activity of each legal entity. d) Observing the risks associated with complex structures, including incomplete transparency of operational risks arising from correlated and complex financing structures. e) Evaluating how such risks affect the bank s ability to manage its risks, in order to identify the group s required capital requirements. Pillar 8: Protection of Shareholders Rights 1. BOD ensures protection of shareholders rights including minority interests and stakeholders in light of the provisions of CBK law, instructions on corporate governance, WB Articles of Association, internal policies and practices that contain controls and measures of protecting shareholders and stakeholders rights. 2. WB prepares a statement of financial and non-financial penalties imposed during the year and the statement is recited in the annual general assembly meeting. a) Shareholders Rights 1. Ownership registration and transfer, voting in shareholders meetings, sharing profits, and obtaining regular information on WB. 2. Review and participate in the decisions of amending WB Articles and Memorandum of Association as well as the decisions related to unordinary transactions which might affect WB future or activity. 3. Encouraging shareholders effective participation in general assembly meetings, and apprising them of voting procedures and rules, including notifying them of the General Assembly s convening timing and agenda quite enough before the meeting. The venue and timing of the meeting should be published publicly as per relevant laws, bylaws and instructions. 4. Emphasizing equal treatment of shareholders, including minority and foreign shareholders, and giving them the opportunity to question BOD and rectify any violations of their rights. 5. Providing adequate, accurate, updated and timely information to all shareholders Page 14 of 15

without discrimination at the suitable time to enable them practise their rights to the fullest. 6. Providing shareholders with the minutes of meetings of the General Assembly. b) Shareholders responsibilities 1. Ensuring that BOD carries on effective oversight role. 2. Shareholders should ensure being familiar of the Bank, care about its components, the performance of BOD and board committees. Shareholders should not interfere directly in the Bank s affairs. 3. Shareholders should not seek insider and material information on the Bank which is disclosed at appropriate time. Pillar 9: Protection of Stakeholders Rights 1. Stakeholders (other than shareholders) are relevant people that contribute to the success of the system. BOD recognizes that the Bank s ultimate success is the fruit of joint efforts of many parties, including depositors and borrowers, employees, investors and other parties that have business relationships with WB. 2. The various procedures, policies and practices at WB stress the importance of respecting the stakeholders rights in accordance with the relevant laws and regulations. 3. According to the governance system in WB, BOD supports the following: a) Respecting the rights of all legal stakeholders. b) There should be mechanisms to enhance the performance of the stakeholders to participate in the corporate governance process to become a consultative process to ensure the adoption of an effective and responsible approach in managing WB. 1. Stakeholder rights 1. The right to obtain equitable and fair treatment. 2. The right to have direct and clear disclosures of relevant information 3. WB takes into account, throughout all stages of dealing with customers, that the dealings are characterized by justice, equality, fairness and honesty. 4. WB also cares to make such approach a part of its governance rules. 5. WB gives more attention and care to customers with limited income and education, elderly and people with special needs without discrimination between both sexes. Monitoring, Evaluation and Review 1. Compliance Department shall review this manual every 2 years and make needed amendments, if any or if amendments deem necessary to reflect any new requirements by either of WB regulatory bodies. 2. Board Governance Committee (BGC), through Compliance Department, monitors the implementation of this manual within its normal course of duties. 3. The Board Corporate Governance Committee is the custodian of this Manual and monitors the application of the Manual rules and controls and reports the same to the Board. 4. The manual shall be published into the Bank s website. 5. The manual is also made available for any of the Bank s shareholders during working hours. Associated Documents All Board and Board Committees charters and other associated manuals, policies and procedures. References CBK instructions on Corporate Governance Rules in Kuwaiti Banks (End) Page 15 of 15