Corporate Governance

SEDCO’s corporate governance is rooted in well-established principles of fairness, transparency, accountability, and responsibility.

 

Our commitment to these principles over the years has yielded an outstanding track record in corporate governance. Recognizing our dedication, the Institute of Directors has classified our services as among the best in the region.

SEDCO has developed a set of policies to help clarify and communicate important aspects of performance expectations. Key elements that form effective governance for SEDCO are:

 

SEDCO’s Governance Framework

 

In 2023, four significant improvements were proposed to SEDCO’s Corporate Governance Framework.

1. Aligning with the provisions of the New Companies Law, the term of the Board is set to transition from three years to a span of four years.
2. An alteration in the composition of the Board of Directors, expanding it from eight members to nine.

3. Comprehensive improvements to: proxy arrangements, quorum requirements, voting procedures through circulation, and guidelines pertaining to Board meetings.
4. Overall improvements to bolster the governance structure concerning affiliates and investee companies, along with decisions associated with them.

At the Board level, there was an elevation in the responsibilities of the Investment Committee, which now include executive functions as the Executive and Investment Committee. The newly formed Shariah Committee also came into effect with three Committee Members appointed.

Functioning of the Board

The Board of Directors are at the helm of SEDCO’s corporate governance framework; driving our ethical conduct, compliance with regulations, and addressing responsibility to shareholders. The successful functioning of our Board ensures we retain the trust and integrity placed on us by investors, partners, employees, and other key stakeholders. The Board also plays a crucial role in setting the strategic direction of the Company and putting in place suitable leadership to accomplish that direction.

Board Member induction: The Corporate Governance Manual provides comprehensive information on the induction process for both SEDCO Holding Board Members and Board Members of affiliates.

Board training: As part of the ongoing review of the Corporate Governance Framework, a new section focused on Board training has been introduced. This section delineates various recommended Board training programs along with their suggested frequencies.

Board effectiveness evaluation: The Corporate Governance Manual details the Board Evaluation Process specific to the SEDCO Holding Board, including frequency at which evaluations are conducted.

Board Committees

Committee	Members	Functions
Audit and Risk Committee (ARC)	Abdulraouf Mannaa Saleh Mugbel A. Alkhalaf Michael Mark Redman Khaled Al Khwaiter	The ARC reviews, approves, and/or provides recommendations on matters pertaining to: internal and external audits, financial reports, risk management strategies, legal and compliance affairs.
Compensation and Nomination Committee (CNC)	Simon Palethorpe Abdulraouf Mannaa Amr Al Taher Jumana BinMahfouz	The CNC reviews, approves, and/or provides recommendations on matters pertaining to: compensation, nomination processes, corporate governance practices, human development initiatives, and organizational structure.
Executive and Investment Committee (EIC)	Yaser BinMahfouz Zeyad AlHekail Mark Redman Rayan Nagadi	The EIC reviews, approves, and/or provides recommendations on matters pertaining to: strategy, budgeting, investment and divestment decisions, and overall financial performance.
Shariah Committee (SC)	Abdulaziz Al Qassar Yousef Al Shubaily Khalid Gama	The SC verifies the adequacy, efficiency, and effectiveness of the Shariah governance framework. It offers support and assistance to the SEDCO Holding Board or any delegated portion of the Board in fulfilling their oversight responsibilities related to Shariah investment and financial decisions, as well as providing opinions and views on such matters.

Internal Audit Function

SEDCO’s Internal Audit Department (IAD) comprises professionally qualified individuals with substantial internal audit and industry experience, possessing in-depth knowledge of risk and control processes. The team is also equipped with professional competencies and qualifications, including requisite industry certifications such as Certified Internal Auditor (CIA) and Certified Information Systems Auditor (CISA). These certifications mandate the completion of a specified number of Continuing Professional Education (CPE) hours annually, ensuring the team remains current with evolving industry standards and practices.

Our methodology is designed to ensure continuity and consistency through a streamlined execution process.
The team reports functionally to SEDCO Holding’s Audit and Risk Committee and administratively to the CEO. SEDCO’s Internal Audit function operates across a spectrum from assurance to consulting, aligning its services with the specific nature of each engagement.

Assurance services provided by the IAD involve an objective assessment of evidence to deliver independent opinions or conclusions pertaining to processes, systems, or other subject matter. These engagements involve steps and the acquisition of specific information that instills executive management with confidence in the company’s risk management, governance, and internal control systems.

Consulting services are advisory in nature and initiated upon specific requests from clients. The scope and nature of consulting engagements are defined through agreements with the client, emphasizing problem-solving activities and value addition to operating management.

Audit Cycle

The IAD employs TeamMate+, a comprehensive audit management software, to streamline and enhance the audit cycle management process. External Quality Assurance (EQA) assessments are conducted by the Institute of Internal Auditors (US IIA) every five years, with the most recent evaluation carried out in 2020.

ESG governance and risk management

Ongoing review of the Corporate Governance Framework is bringing in consideration of ESG factors and other topics identified as material to the Company. The changes detail SEDCO Holding’s commitments to Environmental, Social, and Governance pillars, along with ESG governance outlining the oversight by the Board and its committees on ESG-related matters.

Given the pivotal role that the ESG mandate plays in SEDCO Holding’s overarching strategy, the Sustainability Council, comprised of members from SEDCO Holding and selected individuals from affiliated or related organizations within SEDCO, actively engages with the Corporate Communications and Sustainability Team in reviewing climate-related risks and opportunities and the potential ESG impacts of SEDCO Holding’s strategic roadmap. Included in the ESG Strategy is a continued commitment to reduce the environmental impact of the Company’s operations, including greenhouse gas emissions.

Governance developments in the coming years

In the upcoming year, our objective is to continue implementation of the updated Corporate Governance Manual, Framework, Delegation of Authority and Policies; across processes and systems.

Improvements to our CG framework. With a newly formed committee, expanded and elevated mandates, and adjustments to our Board composition and term; we continue to uphold the highest standards of corporate governance.

Our Code of Business Conduct

SEDCO’s Code of Business Conduct outlines the principles and standards that guide employees at all levels of the organization in their daily operations, fostering a culture grounded in integrity and accountability. Continuing an outstanding track record of ethical business practice, SEDCO recorded no instances of non-compliance in 2023.

The Code of Business Conduct necessitates adherence to pertinent laws and regulations as a foundational requirement. It addresses critical areas such as conflicts of interest, upholding integrity, preventing insider trading, managing gifts, acceptance, business-related entertainment, and combating money laundering.

In addition, the Code offers clear directives on navigating ethical issues and provides structured reporting channels for addressing unethical conduct internally. This Code applies across all SEDCO activities and extends to SEDCO’s suppliers, contractors, and consultants, where applicable. The responsibility for overseeing ethics and compliance within SEDCO’s portfolio companies rests with the respective management teams of these entities. While SEDCO Holding has no direct involvement, the Company carries out a top-level review of portfolio companies where SEDCO has majority ownership.

The Code is integrated into our overarching Corporate Governance framework and Human Resources policies. Dedicated policies developed at the SEDCO Holding level, including directives such as the Personal Conduct Policy and the Proper Business Practice Policy, are integral components of the Governance, Risk, and Compliance (GRC) project. These policies are currently incorporated in the updated Corporate Governance Manual.

The implementation and oversight of the Code are managed collaboratively by SEDCO’s Legal Department in conjunction with the compliance function, Corporate Communication and Sustainability Department; as well as the Human Resources Department, which facilitates staff training and communication. SEDCO’s Code is accessible to all employees, delineating their entitlements and providing clarity on addressing potential concerns. In instances where an employee identifies a possible breach of the Code, they have the option to report anonymously via a dedicated email channel.

Additionally, SEDCO’s Quality Assurance and Improvement Program encompasses both internal and external evaluations. Internal assessments are conducted annually; either by department heads or by qualified personnel possessing adequate expertise in internal auditing. External evaluations are conducted at a minimum interval of every five years by a qualified and independent assessor or an external assessment team. Findings from both internal and external assessments are presented by the Vice President of Internal Audit to the senior management team and the Audit and Risk Committee (ARC).

Shariah compliance

Given the expansive scale and nature of SEDCO’s operations, the Board of Directors moved to establish a specialised Shariah Committee within the organization in 2022. The committee was entrusted with overseeing the Shariah governance framework and supervising all investment decisions.

In 2023, a Shariah compliance template was designed for implementation across our investment sectors: Domestic, and Real Estate. As part of our adherence to Shariah principles, all potential investment opportunities require the approval of the Shariah Advisor prior to a transaction proceeding.

In addition, recognizing the importance of Shariah compliance, the Legal department has established a dedicated Shariah Division. Comprising two members of the legal department, this division ensures effective coordination and communication between the Shariah Committee and SEDCO Holding management teams.