SABIC) Corporate Governance Regulations

Saudi Basic Industries Corporation (SABIC) Corporate Governance Regulations

Approved by virtue of SABIC Board Resolution No. 07/190/2013 dated 26/09/2013 and updated in 27/04/2016

Chemistry That Matters

Contents

Introduction: Corporation Profile

1. Name and Legal Status 2. Head Office and Commercial Registration 3. Capital 4. Legal Term 5. Activities 6. Business Group 7. SABIC Vision 8. SABIC Mission 9. SABIC Priorities

Chapter 1: Preliminary Provisions Article 1: Preamble Article 2: Definitions

Chapter 2: Rights of Shareholders and the General Assembly Article (1): General Rights of Shareholders Article (2): Shareholders Rights Related to General Assembly Article (3): Voting Rights Article (4): Dividends Rights of Shareholders Article (5): Shareholders’ Rights in Corporation Assets

Chapter 3: Board of Directors Article (1): Formation of the Board Article (2): Main Functions of Board of Directors Article (3): Responsibilities of Board of Directors Article (4): Authorities of Board of Directors Article (5): Board of Directors Meetings and Agenda Article (6): Remunerations and Compensations of Board Members Article (7): Committees of the Board and Their Independence

Chapter 4: Policies, Disclosure and Transparency Article (1): Dividends Distribution Policy Article (2): Conflict of Interests Policy Article (3): Protection Policy of Corporation Related Parties Article (4): Non-Circulation Policy Article (5): Information Non-Disclosure Policy Article (6): Disclosure Policy and Transparency Article (7): Disclosure in Board of Directors Report

Chapter 5: Advertising Instructions and Templates Article (1): General Instructions for Advertising Article (2): Examples of Major Developments to be Declared Article (3): General Instructions for Announcing the Financial Results Article (4): Templates of Several Corporation Advertisements

Chapter 6: Corporation Code of Ethics Article (1): Corporation Values Article (2): Rules of Conduct and Code of Ethics Article (3): The Consequences of Abiding by the Code of Ethics

Chapter 7: Closing Provisions Article (1): Publication and Entry into Force

Introduction: Corporation Profile

Article 1: Name and Legal Status

Saudi Basic Industries Corporation (SABIC), a Saudi joint stock corporation incorporated by virtue of the royal decree no. (M/66) in 13/09/1396h (08/09/1976g).

Article 2: Head Office and Commercial Registration

The Corporation was registered in the Commercial Registry at the Ministry of Commerce and Industry under the number (1010010813), and has its head office in Riyadh, the Kingdom of Saudi Arabia. The Corporation is entitled to establish other branches inside and outside the Kingdom, if necessary.

Article 3: Capital

The capital of the Corporation is thirty billion Saudi Riyals (SR 30,000,000,000), divided into three billion (3,000,000,000) shares, each having a stated value of ten Saudi Riyals (SR 10).

Article 4: Legal Term

The Duration of the Corporation is ninety-nine years (99), commencing from the date of issuance of the Royal Decree authorizing its incorporation. Such duration may be extended for similar or shorter period(s) by a resolution of the Extraordinary General Meeting.

Article 5: Activities

The Objectives of the Corporation shall be:

a. Execution of petrochemical, fertilizer and other hydrocarbon -based industries. b. Construction of iron, steel and aluminum industries. c. Incorporating other industries. d. Execution of projects necessary to supply the Corporation with its raw material requirements. e. Marketing industrial products inside and outside the Kingdom. The Corporation may, for realization of its objectives, carry out for its own account or third parties' account, all industrial, financial and commercial activities of whatever kind, whether related to real estate or chattels. Moreover, the Corporation may incorporate other companies, and may participate with other Saudi or foreign companies, organizations or establishments conducting activities of similar nature, or conducting activities that may assist in realizing its objectives, or purchase all or part of any of them.

Article 6: Business Group

The Corporation has a business group called the “Affiliates”, where SABIC acquires, directly or indirectly, an investment of more than 50% of the capital, or have active administrative control on them. The following is a list of the affiliates and the acquired percentage: • SABIC Industrial Investments Company (SIIC) and its affiliates (100%) • SABIC Luxemburg S. A. R. L. and its affiliates (100%) • Arabian Petrochemical Company (PETROKEMYA) and its affiliates (100%) • SABIC Iron and Steel Company (HADEED) (100%) • SABIC SUKUK Company (SUKUK) (100%) • SABIC Industrial Catalyst Company (SABCAT) (100%) • Saudi Carbon Fiber Company (SCFC) (100%) • Saudi European Petrochemical Company (IBN ZAHR) (80%) • United JUBAIL Petrochemical Companies (UNITED) (75%)

• National Chemical Fertilizers Company (IBN ALBAYTAR) (71.05%) • National Industrial Gas Company (GAS) (70%) • Yanbu National Petrochemical Company (YANSAB) (51.95%) • Arabian Industrial Fiber Company (IBN RUSHD) (48.07%) • Saudi Methanol Company (AR-RAZI) (50%) • JUBAIL Fertilizer Company (AL-BAYRONI) (50%) • Saudi Yanbu Petrochemicals Company (YANPET) (50%) • National Methanol Company (IBN SINA) (50%) • Saudi Petrochemical Company (SADAF) (50%) • Eastern Petrochemical Company (SHARQ) (50%) • AL-JUBAIL Petrochemical Company (KEMYA) (50%) • Saudi Japanese Acrylonitrile Company (SHROUQ) (50%) • Saudi Methyl Acrylate (SAMAC) (50%) • Saudi Arabian Fertilizer Company (SAFCO) (42.99%) • Saudi KAYAN Petrochemical Company (SAUDI KAYAN) (35%)

Article 7: SABIC Vision

To be the preferred world leader in chemicals.

Article 8: SABIC Mission

To responsibly provide quality products and services through innovation, learning and operational excellence, while sustaining maximum value for our stakeholders. Article 9: SABIC Priorities In keeping with its pioneering position and to ensure that its operations reach up to the highest global standards, SABIC has drawn out a set of major priorities in all its activities and operations including the following:

• Safety, Health and Environment

Ever since its formation, SABIC has been giving due priority to health, safety and environment in all its industrial, marketing and technical operations as a relief valve for its production, marketing and technical operations. SABIC has achieved millions of continuous work hours without lost time or disabling injuries. It has also achieved optimum levels in preventing industrial injuries. SABIC affiliates have won several safety awards and distinctions from specialized local, regional and global organizations.

• Technology and Innovation

Since its establishment, SABIC has been keen on setting up of quality labs at its industrial complexes and technical centers all over the world. Undoubtedly, the key to the great success achieved by SABIC is attributable to its keen interest in scientific research, continuous development of its research abilities, and upgrading of production technologies.

SABIC technology centers have successfully filed hundreds of patents all over the world relating to innovation and promotion of several technologies and industrial catalysts. • Quality

SABIC has always realized the importance of excellence in quality in this highly competitive world. Therefore, SABIC has focused on total quality assurance in all fields, which is the reason behind its high competitiveness amongst major international corporates.

SABIC gives top priority to the quality of its human resources, which in turn reflects on its products, sales and after-sale services, which ultimately determine customer satisfaction all around the world.

Assured quality is SABIC’s strongpoint in building solid, extended, long term relationships with its partners all over the world. The Corporation applies top quality standards at all its affiliates and its marketing, development and technical units, which put SABIC among major world petrochemical companies in practically no time.

SABIC focusing on quality has been well recognized by universities and scientific research centers. Seminars and workshops are often held, and scientific research agreements entered into, for attracting qualified and well-trained manpower commensurate with its future aspirations.

• National Contribution and Corporate Social Responsibility

SABIC is well aware of the importance of contributing to social services, helping in social development, increasing the awareness of safety and preserving the environment. In this regard, SABIC exerts efforts via submitting donations to legally registered societies or officially-formed crisis-management committees. Also, SABIC chooses the subject matter of the incident that is related to its field of activities or interest. This is usually performed within SABIC approved controls, policies, procedures and budget. The Board of Directors must approve the policies and procedures that regulate the social activities of SABIC and affiliates. SABIC is well aware of its social responsibilities and gives high priority to supporting its role as a national corporation that takes care of achieving the cultural and civilization aspects of its community. When defining its objectives and strategies, SABIC is keen on overlooking maximization of profits and achieving commercial objectives in favor of integration with its environment and abiding by high social values. Hence, SABIC

8 has always worked on having deep connections with its community and environment. SABIC has adopted a social mission that aims at optimizing its contributions to the social development programs. Recognizing that this community imposes commitments and duties on it, SABIC supports charity projects, gifted people and other vocational and professional organizations. Moreover, SABIC sponsors many conferences and ad hoc vocational society programs. It also supports conferences, seminars and activities related to regional and national strategic objectives.

SABIC also supports awareness campaigns launched in the printed and electronic media, and participates in cultural contests and sports activities. In addition, SABIC organizes and finances cultural competitions, and sports activities for the youth, in order to spread the awareness between fellow citizens and release their creative capabilities. Every year, SABIC extends financial support to various community organizations and licensed charity societies. The model example is the close cooperation with universities in organizing academic programs and research centers, thereby allowing Corporation/SABIC to benefit from the brains and experts that work in them. The Corporation has entered into strategic alliances with the universities, and gives them financial support.

Chapter 1: Preliminary Provisions

Article 1: Preamble

a. These regulations aim at achieving the following:

1. Direct, manage and control Corporation activities to ensure commitment to the best practices of governance that guarantee shareholders’ rights, stakeholders’ rights and activation of disclosure and transparency principle to all investors equally 2. Explain the responsibilities and powers of the Board of Directors and its role in promoting shareholders’ rights, preserving their interests and the transparent explanation of the policies and procedures adopted in selecting the members of the Board of Directors and Board committees and their duties. This is in addition to the issuance of their remunerations and compensations and achievement of justice when performing the administrative duties. 3. Explain shareholders’ rights, how they obtain the information needed for taking their investment resolutions and explain the policies and procedures used in the declaration and distribution of dividends. b. The Board of Directors has developed and approved these regulations. They are based upon Saudi Corporation Law and its Executive Regulations, Capital Market Authority (CMA) Bylaws (specifically Article 10/c of Corporate Governance Regulations), the principles of SABIC Bylaws, SABIC Internal Policies and the best practices and controls used for managing the Corporation.

c. The information denoted in the preamble are an integral part of these regulations.

Board of Directors is entitled to revise and amend/add to the regulations whenever deemed appropriate within the framework of related rules and regulations. Article 2: Definitions

a. The expressions and terms mentioned in these regulations shall have the meanings set forth opposite each of them, unless it is otherwise required by the context.

Corporation: Saudi Basic Industries Corporation (SABIC)

SABIC Articles of Association: The Articles of Association issued by virtue of the Royal Decree no. (m/66) in 13/09/1396h (06/09/1976g) and the amendments thereof;

Affiliate: Any other corporation controlled by the Corporation/SABIC.

Regulations for Companies/Corporate Regulations/ Law of Companies: Issued by virtue of the Royal Decree no. (m/6) in 22/03/1385h (11/07/1965g) and its amendments and executive regulations

Corporate Governance Regulations: Issued by Capital Market Authority by the resolution no. 1-212-2006 in 21/10/1427h (12/11/2006g), amended by Capital Market Authority resolution no. 1-10-2010 in 30/03/1431h (16/03/2010g)

Capital Market Law: issued by virtue of the Royal Decree no (m/30) in 02/06/1424h (22/08/2003g)

Authority (CMA): Capital Market Authority established according to the Capital Market Law issued by virtue of the Royal Decree no. (m/30) in 02/06/1424h (22/08/2003g)

Capital Market Website: Exchange/TADAWUL electronic website on the INTERNET

Securities Depository Center: The Securities Depository Center of TADAWUL

Board: Board of Directors who manages Corporation’s business to the interest of the shareholders.

Chairman: Chairman of Board of Directors of Saudi Basic Industries Corporation (SABIC)

Member of The Board: Covers all the members of SABIC Board of Directors assigned by The Council of Ministers (Cabinet) and Corporation’s General Meeting

Committees: Assigned by, emanating from, appointed by the Board of Directors (Board Committees)

Management: Executive management represented by the Corporation’s Chief Executive Officer, Executive Vice Presidents, Vice Presidents and other similar executive officers

Independent Member: A member of the Board of Directors who enjoys complete independence, as stated in Corporate Governance Regulations issued by Capital Market Authority

Non-executive director: A member of the Board of Directors who does not have a full-time management position at the Corporation, or who does not receive monthly or yearly salary

Senior Executive: Any natural person who manages the Corporation and undertakes responsibility for setting and executing strategic decisions, to include Corporation CEO, , his Vice Presidents and the Chief Financial Officer (CFO)

Financial Manager: Any natural person who manages the financial affairs of any person; whether his title was financial manager, financial comptroller or any other title

Related Party: Means the party included in the list of terms used in CMA regulations regarding the terms of registration and enlisting Related Person: Means the party included in the Glossary of Defined Terms used in the CMA Regulations and Rules with respect to senior executives, members of the Boards of Directors or a single shareholder owning a large percentage of shares and also with respect to a Corporation owning a large percentage of shares

Person: Any natural or artificial person acknowledged as such in the laws of Kingdom of Saudi Arabia

Concerned Person: The CEO, Board of Directors member, senior executive, any shareholder who is a single shareholder owning a large percentage of shares or any person related to one of the above.

Minority Shareholders: Those shareholders who represent a class of shareholders that does not control the Corporation and hence they are unable to influence the Corporation

First-degree relatives: Father, mother, spouse and children.

Control: The power to influence the actions or decisions of another person, directly or indirectly, jointly or severally, by holding a percentage of 30% or more of the voting rights of a Corporation, or the right to nominate 30% or more of the members of the management body/team.

Major Shareholder: any person who holding 5% or more of Corporation shares Date of Entitlement / Eligibility for Profits (Date of Maturity for Distribution of Dividends): The date of the end of exchange of the day on which the shareholders are entitled to the dividends that should be distributed

Accumulative Voting: Every shareholder shall have a number of votes equal to the number of the shares he holds. The shareholder should use all such votes for voting to one or more candidates of his choice, provided that he shall not exceed the number of the votes he holds, and not to repeat such votes (The Accumulative Voting Approach is applicable after the amendment of the Articles of Association of the Corporation,)

Stakeholders: Any person who has an interest in the Corporation, such as shareholders, employees, creditors, customers, suppliers and community.

Voting rights: all the voting rights attributable to the shares of a Corporation which are exercisable at a general meeting. Subscription right documents: certificates of rights or other instruments entitling their bearers to subscribe to any shares or debt instruments

Day: A workday in Kingdom of Saudi Arabia according to the official workdays in CMA

Calendar day: Any day; workday or else

b. Unless it is otherwise required by the context, the expressions and terms not included in these Regulations shall have the same meanings they bear in the Corporate Governance Regulations

issued by CMA or in Glossary of Defined Terms used in the CMA Regulations and Rules.

Chapter 2: Rights of Shareholders and the General Meeting

a. Article 1: General Rights of Shareholders General Meeting b. The Ordinary General Meeting shall not be valid unless attended by shareholders representing at least fifty (50) percent of the capital. If such quorum is not achieved in the first meeting, a second meeting shall be called to be held within the next thirty (30) days following the previous meeting. The second meeting shall be valid regardless of the number of shares represented thereat. Resolutions shall be passed by majority votes, and in case of a tie, the Chairman’s vote shall carry (shall be the casting vote). c. The Extraordinary General Meeting shall be valid only if it is attended by shareholders representing at least sixty (60) percent of the capital. If such quorum is not achieved in the first Meeting, a second Meeting shall be called and shall be valid if attended by shareholders representing at least forty (40) percent of the capital. d. The validly composed General Meeting represents all shareholders, and issue the resolutions within the scope of its authorities, according to Corporation’s Articles of Association and shall be binding to all shareholders, without exception. e. Shareholders are entitled to discuss the issues on the agenda of the General Meeting, and pose relevant questions to Board of Directors members and Auditor. Board of Directors and/or Auditor shall answer such questions to the limit that does not jeopardize Corporation’s interests.

f. The issues to be discussed by General Meeting shall be accompanied with sufficient information to help shareholders take their decisions.

g. Shareholders are entitled to view the minutes of the General Meeting, and the Corporation shall provide CMA with a copy of the minutes within 10 workdays of the date of meeting. h. The Corporation shall announce the results of the General Meeting as soon as it is finished on the Capital Market website.

Article 2: Shareholders Rights related to General Meeting

a. A General Meeting shall convene once a year at least within the six months following the end of the Corporation’s financial year. b. The Board of Directors may call for the General Meeting to convene whenever the Board deems it appropriate. . The Board of Directors shall also invite a General Meeting to convene pursuant to a request of the auditor or a number of shareholders whose shareholdings represent at least 5% of the equity share capital. c. The Board of Directors shall specify the date, venue, and agenda of the General Meeting at least 20 days prior to the date the meeting.; The invitation for the meeting shall be announced/posted in the CMA website, the Corporation’s website and in two newspapers of voluminous distribution in the Kingdom. d. Arrangements shall be made for facilitating the participation of the greatest number of shareholders in the General Meeting, including, inter alia, choice of the appropriate place and time. e. In preparing the General Meetings’ agenda, the Board of Directors shall take into consideration matters the Shareholders require to be listed therein. The; Shareholders holding not less than 5% of the Corporation’s shares are entitled to add one or more items to the agenda upon its preparation.

Article 3: Voting Rights

a. Every shareholder holding 20 shares is entitled to attend the General Meeting, and he may appoint a representative to attend

on his behalf provided that such appointment should be submitted in a written proxy according to the following terms and conditions: 1. Proxy should not be given to a Board of Directors member, Corporation employee or any person assigned permanently with a technical or an administrative job for the Corporation. 2. Proxy should be precise and reach the Corporation 3 workdays ahead of the date of the meeting; no proxy shall be accepted after such date. 3. If the proxy is issued by the shareholder or his representative to a third party, his signature must be attested by an approved official authority. 4. In voting in the General Meeting for the nomination to the board members, the accumulative voting method shall be applied. b. Shareholders must be given the opportunity for active participation and voting in General Meetings. In addition, they should be notified of the rules governing such meetings and voting procedures. c. Voting is deemed to be a fundamental right of a shareholder, which shall in no way be denied. The Corporation must avoid taking any action which might hamper the exercising of the voting right; a shareholder must be afforded all possible assistance as may facilitate the exercising of such right.

Article 4: Dividends Rights of Shareholders

a. The Corporation shall lay down a clear policy regarding dividends distribution in a manner that may realize the interests of both of the shareholders and the Corporation. Shareholders shall be informed of that policy during the General Meeting and reference thereto shall be made in the annual report of the Board of Directors.

b. The Board of Directors is entitled to distribute the dividends, define the date of maturity and limit the policy of distribution to what has been resolved in General Meeting. c. The General Meeting shall approve the distributable dividends and the date of distribution. These dividends, whether they be in cash or bonus shares shall be given, as of right, to the shareholders who are listed in the records kept at the Securities Depository Center as they appear at the end of trading session on the day on which the General Meeting is convened.

Article 5: Shareholders Rights in Corporation Assets a. Shareholders shall have rights and incur liabilities in Corporation assets equal to his holdings of Corporation shares. b. Upon liquidation, the Corporation guarantees the equal distribution of its net assets to its shareholders, each according to the number of his shares in the Corporation.

Chapter 3: Board of Directors

a. Article 1: Formation of the Board: The Corporation shall be managed by a Board of Directors consisting of nine (9) members with the expertise required for the business of the Corporation. Five (5) members shall represent the Government share and shall include the Chairman of the Board of Directors and the Vice Chairman and Chief Executive Officer (CEO) who shall work on a full-time basis and substitute for the Chairman in case of his absence and shall both be appointed by the Council of Ministers upon nomination by the Board of Directors of the Public Investment Fund. The resolution shall specify the term of each one of the Board members. The Ordinary General Meeting shall appoint the remaining four (4) Board members from the Private Sector for a renewable term of three (3) years.

b. The number of the Independent Members of the Board of Directors shall not be less than three (3) members or one third (1/3) of the Board members, whichever is larger, even if the calculation of the one third results in a decimal fraction.

c. Before the end of the period of the actual Board, the nomination of members for the new Board shall be published in a widely spread daily newspaper in the Kingdom of Saudi Arabia d. Any of the actual members is entitled to run for several consecutive periods. e. Nominations and Remunerations Committee shall review the curriculum vitae (CV) of each nominee and send the full documents to the Department of Companies at the Ministry of Commerce and Industry for verification before submission to the General Meeting for voting. In addition, a copy of the list of nominees shall be sent to Capital Market Authority, after being approved by relevant authority. f. Any member of the Board of Directors must own not less than twenty thousand (20000) shares of Corporation stocks. Such

shares shall, within thirty days of the date of appointment, be deposited in TADAWUL Securities Depository Center. They shall be set aside as a guarantee for the Board member's liability, and shall remain non-negotiable until the General Meeting resolves to exonerate the Board Member from liability during his membership term. However, this clause does not apply to the members nominated by the Council of Ministers. g. If the office of any Board Member nominated by the General Meeting becomes vacant, the Board of Directors may appoint a temporary member to fill the vacancy provided that such appointment shall be laid before the first Ordinary General Meeting. The new member shall complete the term of his predecessor. h. If the number of Board Members falls below three (3), the Ordinary General Meeting must be convened as soon as possible to elect the requested number of members. i. The majority of the Board of Directors members must be non- executives. j. It is forbidden to combine the position of Board of Directors Chairman with any executive position in the Corporation such as CEO or General Manager. k. l. Upon the termination of the membership of any member for any reason, the CMA and TADAWUL must be notified immediately, with justifications thereof. m. Any member must not combine the positions of member of the Board of Directors of more than five (5) joint venture companies, listed in the Market at the same time.

Article 2: Main Functions of Board of Directors

The main functions of the Board include the following: a. Approving the strategic plans and main objectives of the Corporation and supervising their implementation; this includes:

1. Laying down a comprehensive strategy for the Corporation, the main action plans and the policy related to risk management, reviewing and updating of such policy.

2. Determining the most appropriate capital structure of the Corporation, its strategies and financial objectives and approving its annual budgets.

3. Supervising the main capital expenses of the Corporation and acquisition/disposal of assets.

4. Deciding the performance objectives to be achieved and supervising the implementation thereof and the overall performance of the Corporation.

5. Reviewing and approving the organizational and functional structures of the Corporation on a periodical basis.

Laying down rules for internal control systems and supervising them; this includes the following: 1. Developing a written policy that would regulate conflict of interests and remedy any possible cases of conflict of interests by members of the Board of Directors, executive management and shareholders. This includes misuse of Corporation’s assets and facilities and the arbitrary disposition resulting from dealings with the related parties.

2. Ensuring the integrity of the financial and accounting systems and procedures including the systems and procedures related to the preparation of the financial reports.

3. Ensuring the implementation of control procedures appropriate for risk management by forecasting the risks that the Corporation could encounter and disclosing them with transparency.

4. Conducting efficient auditing and examination of the internal control procedures in the Corporation. b. Setting special Corporate Governance Regulations that do not conflict with these regulations. Such Regulations shall be supervised, monitored for effectiveness and amended as needed. (Special Corporate Governance Regulations have been set and approved). As per Board of Directors Resolution no. 07/190/2013, dated 26/09/2013, Investor Management, Corporate Finance, has been assigned to supervise such regulations, monitor them for effectiveness and amend them as needed. c. Laying down specific and explicit policies, standards and procedures for the membership of the Board of Directors and implementing them after obtaining the approval of the General Meeting. d. Outlining a written policy that regulates the relationship with stakeholders with a view to protecting them and preserving their respective rights. In particular, such policy must cover the following:

1. Mechanisms for indemnifying stakeholders in case of contravening their rights determined by the law and by their respective contracts.

2. Mechanisms for settlement of complaints or disputes that might arise between the Corporation and stakeholders.

3. Suitable mechanisms for maintaining good relationships with customers and suppliers and protecting the confidentiality of information related to them.

4. A code of conduct (rules of conduct) for the Corporation’s executives and employees that is compatible with the proper professional and ethical standards, and regulates their relationship with stakeholders. The Board of Directors must lay down procedures for supervising this code and ensuring compliance therewith.

5. Corporation’s social contributions (Corporate Social Responsibility/CSR). e. Deciding policies and procedures to ensure Corporation’s compliance with the laws and regulations and the Corporation’s obligation to disclose material information to shareholders, creditors and other stakeholders.

Article 3: Responsibilities of Board of Directors a. Without prejudice to the competences of the General Meeting, the Corporation’s Board of Directors shall assume all the necessary powers for the management of the Corporation. The ultimate responsibility for the Corporation rests with the Board, even if it sets up committees or delegates some of its powers to a third party. The Board of Directors shall avoid issuing general or indefinite delegations. b. The Board of Directors shall assume its responsibilities according to its tasks which must be clearly stated in the Corporation’s Articles of Association and bylaws. c. The Board of Directors must carry out its duties in a responsible manner, in good faith and with due diligence. Its decisions should

be based on sufficient information from the executive management, or from any other reliable source. d. A member of the Board of Directors represents all shareholders; he undertakes to carry out whatever may be in the general interest of the Corporation, but not the interests of the group he represents or that which voted in favor of his appointment to the Board of Directors. e. The Board of Directors shall ensure that a procedure is laid down for orienting the new Board members of Corporation’s business and, in particular, the financial and legal aspects, in addition to their training, where necessary.

f. The Board of Directors shall ensure that the Corporation makes available sufficient information about it to all members of the Board of Directors, generally, and, in particular, to the non-executive members, to enable them to discharge their duties and responsibilities in an effective manner. g. The Board of Directors shall be entitled to enter into loans with funds and financing agencies for unlimited periods; and with commercial financing agencies provided that the loans’ terms shall not survive the Corporation’ term. The following terms and conditions shall rule the loans with terms exceeding three (3) years:

1. The total amount of loans allowed to be entered in any fiscal year may not exceed Corporation capital. 2. In its resolution, Board of Directors must define how the loan shall be used and repaid. 3. The terms and conditions of the loan and the guarantees offered shall not harm the Corporation and its shareholders.

4. Board of Directors is entitled to give loans and suitable financial facilities to the companies in which the Corporation holds shares or stocks and guarantees of the loans entered by such companies.

Article 4: Authorities of Board of Directors

a. With due considerations to the authorities of the General Meeting, Board of Directors shall have the broadest authorities in managing the Corporation. b. Define the authorities delegated to by the Board to executive management, procedures of decision-making and the term of the delegation. The board shall also define the authorities that it shall keep to itself. Executive management shall submit regular reports on the practices of its delegated authorities, as required by SABIC bylaws/internal regulations. c. Approve the table of authorities delegated to the committees and executive management, review them regularly and amend them, if deemed necessary be the Board. d. The Chairman or his representative shall represent the Corporation before judiciary or quasi judiciary authorities. e. The Chairman, and any member appointed for a specific case, are entitled to sign on behalf of the Corporation severally and jointly. The Board is entitled to assign one or more vice presidents for the CEO, and delegate the CEO to sign on behalf of the Corporation. f. Board of Directors members shall not be held responsible personally regarding Corporation obligations because they are performing their jobs within their delegation.

Article 5: Board of Directors Meetings and Agenda

a. Board members shall dedicate sufficient time to perform their responsibilities, including the preparations for Board meetings

and permanent and temporary committees, and be keen to attend all above. b. Chairman of the Board shall preside over the meetings, and the Vice Chairman shall assume his duties when he is absent or incapable of assuming his duties for any reason. c. Upon an invitation from Chairman of the Board, or his representative, the Board shall hold regular meetings. The Chairman shall invite the Board for emergency meetings upon written request from two members. The meeting may be held outside the Head Office of the Corporation if necessitated by circumstances. The meeting shall not be deemed valid unless attended by at least five (5) members, three (3) of them from the members assigned by a resolution from the Council of Ministers. d. Board member is entitled, when necessary, to delegate another member by written proxy. In such case, the delegated member shall have two votes. Any Board member is not entitled to represent more than one member. e. In consultation with other members and CEO when preparing a specific agenda of any meeting, Chairman of the Board shall send the suggested agenda, with supporting documents, to Board members in sufficient time ahead of the meeting for consideration and preparation. The Board shall approve the agenda. If any member has any objections to the agenda, the details of such objection shall be added to the minutes of the meeting. f. Board resolutions shall be issued by majority of votes of the attendees and representatives. In case of a tie, the vote of the Chairman, or his representative, shall be the casting vote. g. Board of Directors shall document its meetings, keep minutes of the discussions and deliberations – to include the performed voting operations, sign them from the Chairman and Secretary, sort them and file them for easy access.

Article 6: Remunerations and Compensations of Board Members

a. Only the General Meeting has the authority to approve remunerations and compensations of Board Members. b. An amount shall be assigned for Board members remunerations as approved by the Ordinary general Meeting, after deducting the statutory reserve and any reserve resolved by the Ordinary General Meeting, distributing a first payment of Corporation’s annual net profits to shareholders at 5% of paid capital and payment of session attendance allowance according to Corporation Bylaws, Ministry of Commerce and Industry rules and regulations or any other complementary regulations, resolutions or instructions. c. Corporation shall issue session attendance allowance to the Board member who attends the Board meeting and to the Board General Secretary according to Corporation remunerations policy.

Article 7: Committees of the Board and Their Independence

A suitable number of committees shall be formed according to Corporation requirements and circumstances to enable the Board to perform its duties in an effective way. A sufficient number of non- executive members of the Board shall be appointed in the concerned committees. The following committees were formed: First: Audit Committee Second: Nomination and Remuneration Committee Third: Risk and Compliance Committee Fourth: Investments Committee

First: Audit Committee

a. Type of Committee

A consultative committee of Corporation Board of Directors, appointed by the Board according to the regulations approved

by Corporation General Meeting. The Committee reports to the Board. b. Purpose of the Committee

Provide help and consultation to Corporation Board of Directors in supervising Corporation financial, administrative and operational works, especially the financial statements, abiding by and compliance with Corporation policies, rules, regulations, procedures and work environment risk control. c. Organization of the Committee

1. The committee is formed at least from three (3) members appointed by the Board for three (3) years. 2. The following terms must apply to committee members: • The member should not be an executive member of the Board, nor assuming a Corporation’s technical or administrative position, even as a consultant. • One of the members must be a financial and accountancy expert. • The member should be fully independent of Corporation executive management, and have no direct or indirect interest in Corporation’s works or contracts • The member should not practice any business competitive to Corporation’s activities, whether individually or via other companies and institutions. 3. In the first session, the committee shall appoint from its members a head and a secretary general to prepare the minutes and perform administrative work. 4. Any member and the secretary general are entitled to attending allowance for each session. The Board of Directors shall decide the amount of such allowance.

5. The Board of Directors may issue annual lump sum remuneration to any member and the secretary general, and define the terms of merit. 6. The committee meets upon call from its head, and the meeting shall be valid only if attended by at least half of its members. A member is not entitled to delegate another member for attending the sessions. All decisions are issued by majority of attending members. Deliberations and decisions of the committee shall be recorded in the minutes and signed by the head and secretary general. If any member fails to attend three consecutive sessions, he shall be considered as resigned. 7. The committee shall hold at least four (4) meetings during the fiscal year. 8. Same as Board member, Committee member abides by the discretion of Corporation’s secrets. None of them may disclose to shareholders, or other parties, any information in his possession. 9. The membership of committee member ends by the term included in the assignment resolution, or by violating the terms and conditions of paragraphs 2 and 6. The Board of Directors is responsible for assigning his replacement d. Duties of the Committee

1. To supervise Corporation’s internal audit department. 2. To review the internal audit procedure and prepare a written report on such audit and its recommendations with respect thereto. 3. To review the internal audit reports and pursue the implementation of the corrective measures in respect of the included comments. 4. To recommend to the Board of Directors the appointment, dismissal and the remuneration of external auditors. Upon any such recommendation, regard must be made to their independence.

5. To supervise the activities of the external auditors and approve any activity beyond the scope of the audit work assigned to them during the performance of their duties. 6. To review, together with the external auditor, the audit plan and make any comments thereon in order to support the efficiency and effectiveness of Committee duties. 7. To review the external auditor’s comments on the financial statements and follow up the actions taken by executive management. 8. To review the interim, quarterly and annual financial statements, together with the auditor and Corporation management, prior to presentation to the Board of Directors; and to give opinion and recommendations with respect thereto. 9. To review the accounting policies in force and advise the Board of Directors of any recommendation regarding them, taking into consideration the suitability to the nature of Corporation activities. 10. To prepare the annual plan and budget for the Committee. 11. To seek the help of external bodies and houses of expertise to perform certain duties that are within the range of its works and requires special expertise and skill.

Second: Nominations and Remunerations Committee

a. Type of Committee

A consultant committee of Corporation Board of Directors, appointed by the Board according to the regulation approved by Corporation General Meeting.

b. Purpose of the Committee

Provide recommendations to Corporation Board of Directors about nomination to the membership of the Board and setting

policies and standards for the remunerations of Board members and Corporation senior executives. c. Organization of the Committee

1. Board of Directors forms a committee named “Committee of Nominations and Remunerations” consisting at least of three (3) members, one of them should be independent. 2. The member may a non-Board member. 3. Upon suggestion from the Board of Directors, the Corporation General Meeting shall issue the rules and course of action of the committee. 4. Members of the committee shall continue to perform the duties stated in paragraph 3 as of the date of the resolution of forming the committee and for three years, or when the Board issues a resolution to end or re-form the committee. Also, at the end of term, or dissolution, of the Board for any reason, the period of the committee is terminated, and must be re-formed by the new Board. 5. If the position of any member becomes vacant for any reason, the Board may assign a replacement to complete the remaining term of the previous member. 6. In the first session, the committee shall appoint from its members a chief and a secretary general to take the minutes and perform administrative work. 7. The committee meets upon call from its chief, and the meeting shall be valid only if attended by at least half of its members. A member is not entitled to delegate another member for attending the sessions. All decisions are issued by majority of attending members. Deliberations and decisions of the committee shall be recorded in the minutes and signed by the chief and secretary general. 8. A committee member may not delegate any other party to attend and vote on his behalf, whether this party was a committee member or a third party.

9. Same as Board member, Committee member abides by the discretion of Corporation secrets. None of them may disclose any information in his possession to any other persons or parties, unless authorized by the Board or committee decision, within the limits granted to either 10. The Board of Directors may issue annual lump sum remuneration to any member and the secretary general, and define the terms of merit. d. Duties of the Committee

a. 1. Recommend to the Board of Directors appointments to membership of the Board in accordance with the approved policies and standards. 2. Annual review of the requirement of suitable skills for membership of the Board of Directors and prepare a description of the required capabilities and qualifications for such membership, including, inter alia, the time that a Board member should reserve for Corporation activities and preparations of the meetings of the Board. 3. Review the effectiveness of the Board of Directors and committees, and review their structure and mechanisms, and recommend suitable actions for performing the promoting operations and changes needed for supporting performance effectiveness, and supervise Corporation activities. 4. Ensure on an annual basis the independence of the independent members, and the absence of any conflict of interest in case a Board member also acts as a member of the Board of Directors of another Corporation, or practicing competitive activities to Corporation activities, or provide the Corporation of any services or materials, unless the member has declared such and was approved by the general meeting.

5. Draw clear policies regarding the indemnities and remunerations of the Board members and senior executives according to related regulations. In laying down such policies, the committee must take into consideration non-conflict with the approved rules and regulations, and the use of standards related to the level of performance. 6. Set a guidance program for the new Board members, to include all important fields related to Corporation activities. e. Requirements for Nomination for Board Membership

1. Applicant must submit his application during the period set in Corporation advertisement, and must include his CV with supportive documents and certificates in Arabic, attested by proper authorities. 2. Committee must ensure that nominees have never been previously convicted of any offense affecting honor or honesty, or such. 3. Committee must ensure that the nominated Board member has previous skills and knowledge in the field of business management and companies in order to enrich the activities and discussions of the Board. 4. Applicant must fill in the Board Membership Nomination form. Such form must include at least a statement signed by the nominee that he has have never been previously convicted of any offense affecting honor or honesty (If otherwise was proved, his nomination for/membership of the Board shall be dropped), and he is ready to allocate enough time for attending Board and committees meetings according to Corporation regulations, and his work shall be fully independent and shall take Corporation and shareholders into consideration.

33 f. Meetings of the committee

1. The committee shall convene twice a year, at least, upon a call from its chief or 50% of its members for achieving the purposes of forming the committee as follows: • Review the suitable skills needed in a Board member • Review the structure of the Board • Define the points of weakness and strength in the Board • Ensure full independence of the resigned members of the Board • Ensure the member has no conflict of interests if he was a member in other Boards. • Set a guidance program for the new Board members, to include regular Corporation activities. • Ensure the application of remunerations and compensations policy for Board Members and senior executives. • Recommend the amount of annual remunerations to the Board of Directors. • Study CVs of the nominees for Board membership. • Ensure the availability of the required terms in the nominees. • Recommend the names of the approved nominees to the Board of Directors. 2. The secretary of the committee shall prepare an agenda with the issues to be discussed in the meeting, in previous coordination with committee chief and members. 3. Submit regular reports about committee deliberations to the Board. 4. Record all committee sessions in a special record, to be reviewed by committee chief and secretary, and shown to members before approval.

Third: Risk Management and Compliance Committee: a. Type of Committee:

It is a committee reporting to and appointed by the Board of Directors. It is composed of four (4) members and a secretary-general.

b. Purpose of the Committee:

To assess the efficiency of the Corporation’s Risk Management and Compliance Program; To review and assess the Corporation’s policies in the field of risk management, compliance, control of criteria, standards, procedures and regulations applicable by the Corporation for ensuring adherence to policies; To monitor the records of the Corporation in the field of compliance, control of risks and discussion of any legal issues having major impact on the Corporation’s policies and procedures pertaining to compliance with legal, regulatory, and statutory requirements and to submit the required recommendations to the Board of Directors.

Fourth: Investment Committee

a. Type of Committee

A subordinate committee to the company’s Board of Directors. It is appointed by the BOD, and includes five members and a secretary general.

b. Purpose of the Committee

The committee carries out its approved tasks and functions, including the assessment of SABIC investment activities, delivering suggestions and recommendations to the BOD

35 concerning transactions of mergers, acquisitions, joint ventures, investments in new, existing or expansion projects, and reviewing SABIC’s investment strategy. Chapter 4: Policies, Disclosure and Transparency

Article 1: Dividends Distribution Policy

The Corporation dividends distribution; cash, in-kind or capital increase via granting shares; is based upon several controls taking into consideration net dividends achieved, cash flow and distribution policy as stipulated for in Corporation bylaws. In case of in-kind distribution, Corporation interests and all above shall be taken into consideration. Cash or in-kind distribution is done upon recommendation from Board of Directors to the Corporation, in accordance with all related regulations.

Article 2: Conflict of Interests Policy

The Corporation truly believes that managing its business and making of its decisions must be based upon pure economic bases, and recruitment operation and appointment of positions are based upon merit and efficiency. To that effect, the Corporation avoids any conflict of interests that may have impact on the economic bases of managing business and making decisions. If any conflict of interests was discovered, the Corporation manages it so as it will not have any impact on its decisions. Therefore, Corporation policy regarding the conflict of interests requires abiding by the following:

First: Members of the Board of Directors and senior executives: a. Board member shall not have any interest (whether directly or indirectly) in the Corporation’s business and contracts without a prior authorization from the General Meeting, to be renewed each year. The activities to be performed through general bidding

shall constitute an exception where a Board member is the best bidder. A Board member shall notify the Board of Directors of any personal interest he/she may have in the business and contracts that are completed for the Corporation’s account. Such notification shall be entered in the minutes of the meeting. A Board member who is an interested party shall not be entitled to vote on the resolution to be adopted in this regard. The Chairman of the Board of Directors shall notify the General Meeting, when convened, of the activities and contracts in respect of which a Board member may have a personal interest and shall attach to such notification a special report prepared by the Corporation’s auditor. b. Board member shall not participate in any activity which may likely compete with the activities of the Corporation, or be a manager or Board member in any competitive Corporation or any Corporation practicing a similar activity, or trade in any branch of the activities carried out by the Corporation unless there is a prior authorization of the General Meeting, to be renewed annually,. c. The Corporation shall not grant cash loan whatsoever to any of its Board members or render guarantee in respect of any loan entered into by a Board member with third parties, excluding housing and other similar loans, within the limits, purposes and terms used with the employees, if the member was a Corporation employee. d. Nominations and Remunerations Committee, formed by the Board, shall ensure the nonexistence of conflict of interests for Board members, if the member was also a member in the Boards of Directors of other companies. e. The Corporation must declare any transaction concluded with any related party, or any arrangement made between The Corporation and any related party for investment in or financing any project or asset.

37 f. The Corporation must include in the report of the Board of Directors a description of any transaction concluded with any related party. g. The Corporation must include in the report of the Board of Directors any concluded contracts that comprise the Corporation as a party, or comprise – or had comprised - an interest for any Board of Directors member, CEO, Financial Manager or any party related to them. If there were no such transactions or contracts, the Corporation must submit a statement of such.

Second: Corporation Employees a. Corporation employees abide by immediately informing executive management of any actual or possible conflict of interests, up to the knowledge of the employee. b. Before giving the employee the approval to establish a Commercial Record, he must sin a conflict of interests agreement. c. Corporation’s policy and Table of Authorization are based upon full separation between the authorities and responsibilities of the employees who execute the works, and those who register such works. d. Corporation employees who have access to internal information, directly or indirectly, are forbidden form benefiting of such information for making profits or commercial benefit prior to declaring such information on market website, as defined by Market Code of Ethics. e. Within the policy of protecting related parties, the Corporation has set a code of ethics that prevents or reduces any conflict of interests. f. Corporation purchase policy based upon complete separation between the authority of technical evaluation and the authority of commercial evaluation of contractors bids. g. Corporation may approve the employee to have a commercial record, provided that he must sign a conflict of interests agreement. But, he must immediately inform the executive

management of any actual or possible conflict of interests, up to his knowledge, to include: i. Acquiring, he or his family, a considerable financial share in any external project that works or is trying to work or competing with the Corporation. ii. Working as a member in a Board of Directors or as an executive, partner, consultant, major shareholder or investor or practicing a major role in any external project that works or is trying to work or competing with the Corporation. iii. Working as broker, agent, representative or other medium for a third party in commercial transactions related to the Corporation or its interest.

Article 3: Protection Policy of Corporation Related Parties

The Corporation sets clear policies and procedures for regulating its relations with all parties related to it, such as employees, shareholders, providers, customers … etc. so as to protect the rights of the Corporation and all above parties. Regulations and contracts are the basic source of defining the rights and duties of all related parties. The Corporation is keen on defining and clarifying such contracts, the rights and obligations of the parties, the method of performing, the consequences of failure to perform, the limits of responsibility and the method of settling the disputes that might arise during the performance of such contracts in such a way that protects Corporation related parties through the following mechanisms: a. Mechanism of compensating the owners of interests in case of violating their rights: i. Violation must be due to Corporation failure in satisfying its obligations as stipulated in the contracts and related systems, failure to exert enough care or failure to follow approved standards and industrial practices. ii. Corporation act has been the reason behind the damage caused to related parties.

iii. Corporation shall exert its efforts to limit the amount of damage caused to related parties. iv. Violation must be proved by Corporation statement, or by an award of settlement authorities. v. Corporation shall seek to enter into discussions and deliberations with the damaged parties to discuss the possibility of reaching the mechanism and amount of compensation. vi. Corporation shall seek to provide suitable insurance coverage – third party insurance – to compensate related parties for the possible damages. vii. Any action by any Corporation employee that causes damages to third parties shall not oblige the Corporation with any material consequences; unless such employee was authorized by the Corporation to perform such act, without prejudice to what he was authorized to do. b. Mechanisms of Settling Complaints or Disputes. i. The Corporation shall seek to include its contracts and agreements with related parties a full coverage of all regulatory and legal aspects that spare the Corporation – and related parties – any possible disputes. ii. The Corporation shall seek to include its contracts and agreements with related parties the methods of settling any disputes that may arise due to the performance of such contracts. iii. The Corporation shall abide by following the above methods of settling disputes in all signed contracts, whenever possible. iv. The Corporation shall seek to settle its disputes with related parties amicably, whenever possible. v. Corporation policies and bylaws shall include the procedures of handling employee complaints and methods of solving them. vi. Corporation policies and bylaws shall include the procedures of handling customer complaints and methods of solving them.

vii. Corporation performance standards shall include the standards of measuring customer complaints and speed solutions to reach maximum satisfaction. viii. The Corporation shall provide necessary technical support to customers in order to handle the problems arising from using its products.

Article 4: Non-Circulation Policy

The Corporation shall abide by article 33 of registration rules issued by Capital Market Authority stipulating that Board members, senior executives or any related party are prohibited from dealing in any Corporation financial papers during the following periods: a. Fifteen (15) Calendar days prior to the end of the annual quarter until the date of declaring and announcing Corporation financial statement. b. Thirty (30) Calendar days prior to the end of the fiscal year until the date of declaring and announcing Corporation financial statement.

Article 5: Information No-Disclosure Policy

In this regard, the Corporation shall do the following:

1. Know and abide by privacy and information non-disclosure laws and regulations that include controls for special information and personal information at the country where such information is collected, processed and used. Also, know and abide by Corporation instructions in this regard. 2. Collect, process and use personal information for legal work purposes only, prior to establishing or updating any information collecting system(s) or using, disclosing or transporting it. Ensure abiding fully by all terms and requirements related to handling personal information.

3. Refrain, as much as possible, to use information that is “unknown source and circulating”, “in-general and anonymous” or “ambiguous or hard to trace back to a specific person or authority”. 4. Limit getting, accessing and processing personal information to concerned personnel and for work purposes. 5. Care must be taken to deny access to personal information to non- authorized personnel during processing, and prevent sudden loss or damage of personal information. 6. Notify line manager, Legal Affairs or officer upon discovering the use of personal information in violation of this policy, or upon discovering that security protection system that contains personal information has been or shall be jeopardized.

Article 6: Disclosure Policy and Transparency

The Corporation has approved policies and procedures for achieving justice in providing the right information in the right time for helping the investors take investment decisions based upon correct and complete information, and giving all parties equal opportunities in accessing the information and ensure there is no leakage in favor of one investor than the others.

The Corporation abides by executing the policies and procedures set by the Board of Directors about disclosing major Developments, financial statements and performance reports according to legal requirements and applied regulations, without conflict with the instructions of proper authorities.

Article 7: Disclosure in Board of Directors Report

Board of Directors shall prepare its annual report according to the stipulations of article (43) of Registration and Inclusion about the contents of Board of Directors report. The report shall include a demonstration of Corporation operations during the fiscal year, and

42 the issues that have impact on Corporation operations that the investor needs to evaluate Corporation assets and liabilities and its financial position. The report must be advertised in widely spread local newspaper, and copy must be sent to Capital Market Authority. The report must comprise the following:

1. A description of the major activities of the Corporation and affiliates. In case of describing two or more types of the activity, attach a statement of each activity, its impact on the volume of Corporation commercial business and its contribution to the results. 2. A description of Corporation important plans and decisions, to include Corporation structuring, expansion, discontinuance of business or future expectations of its activities and any expected hazards. 3. A summary in the form of table or chart of Corporation assets and liabilities and the results of its activities for the last5 financial years or since establishment, whichever shorter. 4. A geographic analysis of returns of the Corporation and affiliates. 5. Explanation of any major differences in operational results from previous year’s results, or any declared expectations. 6. Explanation of any differences in from the accountancy standards issued by Saudi Chartered Accountants Authority. 7. The name of each affiliate, its major activity, the country of its major activities and the country of its establishment. 8. Details of shares and debt tools issued by each affiliate. 9. Description of Corporation policy in distributing dividends. 10. Description of any interest in the type of “shares with entitlement of voting” that belong to persons – except for Board members and senior executives, their wives and under age children – who have informed the Corporation of such rights according to article 45 of Rules of Registration and Inclusion, and any change in such rights during the previous fiscal year.

11. Description of any interest, right to choose and subscription rights of Bard members, senior executives, their wives and under age children in shares or debt tools of the Corporation or its affiliates, and any change in such interest(s) during the previous fiscal year. 12. Information related to any Corporation “due on demand” or other loans, a list of total debts of the Corporation and its affiliates and any amounts paid for remittance of debts during the year. In case the Corporation has no debts, a report of such must be submitted. 13. Description of types and numbers of any debt tools transferrable to shares, any choosing rights, memos of subscription rights or other similar rights issued or granted by the Corporation during the fiscal year, and an explanation of any compensation earned by the Corporation against such rights. 14. Description of any choosing or subscription rights stipulated by debt tools transferrable to shares, choosing rights or other similar rights issued or granted by the Corporation. 15. Description of any recovery, purchase or cancellation by the Corporation of any recoverable debt tools, and the value of the remaining financial papers, with separation between listed financial papers purchased by the Corporation and those purchased by the affiliates. 16. Numbers of Board of Directors meetings held during the previous fiscal year, and the attendance record for each meeting, to include the names of attendants. 17. Description of any transaction between the source and any related party. 18. Information regarding any works or contracts entered by the Corporation, and any actual – or past – major interest for any Board member, CEO, Financial Manager or any other related party. If there were no contracts, a statement of such must be submitted.

19. A statement of any arrangements or agreements where a Board member or any senior executives weavers any salary of remuneration. 20. A statement of any arrangements or agreements where a shareholder weavers any of his rights in dividends. 21. A statement of the value of due legal amounts for Zakat, taxes, fees or any other dues, with brief description of them and their reasons. A statement of 22. A statement of any investments or other reserves established for the benefit of Corporation employees. 23. Statements of the following: • Account records are correctly kept. • Internal control system was prepared on sound bases and performed effectively. • There is no doubt about the ability of the Corporation to continue its activities. If case of failure to issue any of the above, include the failure in a statement with explanation of the reasons.

24. If the report of the chartered accountant included reservations on the annual financial statements, and Capital Market Authority requested additional information, Board of Directors report must explain all such information as submitted to Capital Market Authority. 25. In case the Board recommends replacing the chartered accountant before three successive years, the report must include such recommendation and explain the reason of recommending the replacement. 26. Names of joint ventures that any Board member is also a member in their Boards 27. The composition of the Board of Directors and classifying its members as follows: executive Board member, non-executive Board member or independent Board member. 28. Short description of duties of major Board committees such as Audit Committee and Nominations and Remunerations 45

Committee and, their names, their chiefs, their members and number of meetings. 29. Details about remunerations and compensations paid to each of the following:

• Board members • Five (5) of senior executives who got the highest remunerations and compensations from the Corporation, in addition to CEO and Financial Manager, if not included.

30. Reference to any punishment, penalty or preventive restriction imposed by CMA or any other supervising, regulatory or judicial authority. 31. The results of the annual audit of the effectiveness of Corporation internal audit procedures.

Chapter 5: Advertising Instructions and Templates

The following instructions define, in general, the basic elements that must be included in all Corporation advertisements that are relayed through market website, especially the advertisements of the financial statements, Board of Directors recommendations about increasing or decreasing the capital, the call for the ordinary or extraordinary meeting of the General Meeting and the resolutions of either meeting when held.

Article (1): General Instructions for Advertising:

The advertisement must include the following information: 1. The heading of the advertisement must be clear and reflect the major event to be advertised. 2. A fully detailed description of the major event must be included, with explanation of all related information. 3. Explain the reasons and justification that led to the event. 4. If the event has a financial effect on the financial statements, the financial effect must be stated. Otherwise, state the reason. 5. The Corporation must exert due effort to ensure that any events or information related to that event are true and not misleading. 6. The Corporation must not exclude, omit, or hide any information that may impact the content or results of the major event. 7. If the major event resulted in any financial obligation on the Corporation, the advertisement must include the terms, period and value, other parties and impact of such obligation. 8. If the Corporation advertises a future major event, the Corporation must advertise any updates on this event. 9. If the Corporation has two major events, each event must be advertised separately. 10. In case any major event occurs 2 hours before, or during, the period of circulation, the Corporation must wait until the end of the circulation period, and then advertise such event of on the

Stock Exchange website (TADAWUL). All necessary precautions must be taken to prevent any leak of the news about such future major changes before the advertisement. If the Corporation cannot guarantee non-leakage of the news about such major event (due to the existence of other parties that their commitment to non-disclosure cannot be guaranteed, or the event was a media subject such as natural disaster, fire … etc.), CMA must be informed immediately after occurrence. 11. If the Corporation shall hold meetings of its Board of Directors, audit committees or any other committees for discussing an event to be advertised according to the rules of registration and Inclusion during a period that enables the Corporation to advertise such event on Stock Exchange website (TADAWUL), such meetings must be held two hours at least before the start of circulation period that follows the meeting. 12. The Corporation must define the need to relay and advertisement on TADAWUL to deal with any rumors about any major events. Capital Market Authority (CMA) has the right to oblige the companies to relay an advertisement whenever deemed necessary. 13. Upon wording the advertisement, the Corporation must abide by correct Arabic language grammar.

Article (2): Example on Major Developments to Be Declared As per Capital Market Authority (CMA) in this regard, any major developments that should be advertised - when occurred - must include, but not be restricted to, the following: a. Any deal for purchasing or selling any asset at a rate that equals 10% or more than the net assets of the source. b. Any debt beyond the framework of the ordinary activity of the source of an amount that equals 10% or more than the net assets of the source. c. Any loss that equals 10% or more than the net assets of the source.

d. Any major changes in the environment of the source or its activity including, but not restricted to, abundance or availability of resources. e. Changing CEO of the source, or any changes in the formation of its Board of Directors members. f. Any major lawsuit if the subject matter amount equals 5% or more than the net assets of the source. g. The increase or decrease in the net assets of the source equals 10% or more. h. The increase or decrease in the total profits of the source equals 10% or more. i. Concluding a contract with income that equals 5% or more of the total income of the source, or the unexpected termination of such contract. j. Any transaction made between the source and a related party or any arrangement made between the source and a related party for investment in or financing any project or asset. k. Any cessation (stoppage) of any major activities of the source or its affiliates.

Article (3): General Instructions for Announcing the Financial Results a. The Corporation shall advertise its annual financial statements within a period not more than forty (40) days of the end of the annual financial period covering such statements, and twenty five (25) calendar days before the date of holding the General Meeting of the Corporation. Also, the Corporation shall announce its preliminary financial statements within fifteen (15) workdays from the end of the period announced on Capital Market Authority website before announcing them in any other media inside or outside the Corporation. b. Before announcement, the preliminary and annual financial statements must be approved by the Board of Directors and signed by an authorized member of Board of Directors, CEO and financial manager.

c. Special forms for financial statements must be filled in and uploaded via Capital Market Authority electronic form system. d. Preliminary financial statements must be published in a widespread daily newspaper within a period not less than twenty one (21) days from the end of the financial period. e. Annual financial statements must be published with the Board of Directors report in a widespread daily newspaper within a period not less than forty (40) days from the end of the annual financial period. f. Form (8) must be sent with the Board of Directors’ report and financial statements to CMA within a period of not less than forty (40) days from the end of the annual financial period.

Article (4): Templates of Several Corporation Advertisements

Attached with these regulations is an updated copy of the forms of Corporation advertisements approved by Capital Market Authority. Such forms help organizing the text and content of the information required in announced Corporation advertisements for helping stock companies raise and sustain the level of disclosure and transparency, and help investors making sound investment decisions based upon complete and correct information. Such form include (administrative changes advertisements, capital changes advertisements, Dividends advertisements, consequential and correction advertisements, signing memorandum of understanding advertisements, projects advertisements, assets purchase and selling advertisements, financing advertisements, debt toots advertisements, lawsuits advertisements, previously announced development advertisements). Any updates that may occur to the forms and obliging instructions are published on the following Capital Market Authority (CMA) official website: http://www.cma.org.sa/Ar/FormsSite/Documents/instr20%(1213-1-1).docx

Chapter 6: Corporation Code of Ethics

Article (1): Corporation Values

Controlling and organizing the rules of conduct and code of ethics in SABIC can be achieved by encouraging the following values:

1. Inspire our employees by empowering them with a clear and common understanding of the ethical boundaries in which we must operate.

2. Engage our diverse workforce by ensuring that we maintain a respectful and welcoming work environment.

3. Create a sustainable compliance and integrity framework to support innovation in products, processes and solutions in a highly regulated world.

4. Deliver growth by earning the trust of our employees, customers and business partners that we will always conduct business with uncompromising integrity.

Article 2: Rules of Conduct and Code of Ethics

The code of ethics comprise the rules of conduct to be followed by all SABIC employees daily, in all transactions and in every work location. In a situation with concerns or doubts about failure to abide by the code of ethics, the Corporation works on inspiring and creating the culture of immediate reporting such concerns to proper authorities via several channels such as line manager, Human Resources, Legal Affairs and helpdesk phone for technical support for handling legal and regulatory violations. The Corporation focuses on the fact that it shall not take any penalty or procedures or legal consequence against any person for reporting his concerns or doubts about any legal or regulatory violations.

Code of ethics comprises 13 policies about integrity covering the major fields of risk and hazard. The 13 policies were classified into 3

51 categories: Our International Environment, Work Place and Corporation Assets Protection. The above policies include rules of conduct control in several aspects; the following are examples of such rules:

1. Handle Corporation business honestly and apply the highest methods and ethics in management, and refrain to perform any act that jeopardized Corporation’s honesty and integrity inside and outside the Corporation. 2. Exert all time and efforts for performing his duties, and refrain to waste other colleagues’ time. 3. Cooperate with his co-workers to perform the work to the best interests of the Corporation. 4. Loyalty to the Corporation is a very desirable trait for both management and employees. All must prove their loyalty and act always to the best interest of the Corporation in all work relations, to include customers, government authorities, Corporation presidents and colleagues, and report to executive management any action of negative impact on the Corporation. 5. Comprehend, and act upon such, that all employees are jointly responsible of supporting Corporation objectives regarding internal administrative and finance control, and abide by such objectives. 6. Refrain to use any information or items disclosed to the employee confidentially - as a Corporation employee – for his personal purposes or interests; and avoid disclosing confidential propriety, technical or administrative information to any unauthorized body. 7. Refrain to participate – for free or against money – in any media activity such as giving press releases of announce articles without prior written approval from SABIC authorized officer. 8. Refrain to accept any gifts or benefits from internal or external bodies that may have impact on employee’s decision or performance of his duties, or failure to perform for the interest of such bodies.

9. Under no circumstances whatsoever should the employee offer or try to offer a bribe or any other item for tempting a probable customer for promoting Corporation products or services or influencing his decision. 10. Refrain to accept any bribe or any other temptation whatsoever, for achieving any purpose such as: awarding a contract or purchase order to a probable vendor, or giving him information. If the employee was offered a bribe or any other temptation, he should immediately report the incident to his manager. 11. Refrain to use the authority of your position for achieving personal profits. 12. Abide by accuracy and fairness in registering all Corporation financial transactions according to generally accepted practices of accountancy, protect Corporation properties according to Corporation rules and regulations, insure using the assets properly and insure that financial and operational records and reports are accurate, complete and reliable. 13. Employee should not disclose any job secrets and information that came to his knowledge by virtue of his position, and refrain to transport any unannounced information to any third party, unless such action is part of his normal performance of his duties, or approved by the Corporation. 14. Abide by all applied systems in Kingdom of Saudi Arabia. 15. Corporation forbids using computers, phone sets and lines, internet and email in aggressive methods towards third parties, or degrade the Morales of employees. Corporation properties should not be used to enter into commercial joint ventures with third parties, or discus religious, political or non-work related issues.

Article 3: The Consequences of Abiding by the Code of Ethics

The Corporation exerts its efforts in planting the culture of “abiding by rules and regulations”, which will enhance its development and development plans in the Corporation through the following:

1. Adding value to the commercial aspect of the Corporation, and increase the trust of customers, providers partners, communities and governments in the Corporation. 2. Open the opportunity for teamwork because the Corporation aims to exert its efforts towards achieving the same mutual objectives. 3. Encourage self-control, and provide protection beyond the methods of external control only. 4. Increase employees’ self-confidence, where they can comprehend work values and introduce them to third parties. 5. Achieve more sense of responsibilities and higher professionalism because the employees can deduce the expected behavior that encourages them to act in a true professional method. 6. Spread the concept of abiding by rules and regulations in order to help employees in working in an environment of controlled performance that abides by regulatory rules.

Chapter 7: Closing Provisions

Article 1: Publication and Entry into Force

These regulations shall be valid and in force as of the date of its approval by Corporation Board of Directors.