The Audit and Compliance Committee (formerly Audit Committee) was constituted by the Board in its meeting 139 dated 20-12-1995 to enhance the Bank’s commitment to adopt best practices and in keeping with the Central Bank of Bahrain (CBB) regulations and other rules and regulations in the Kingdom of Bahrain.
2. PURPOSE & DEFINITIONS:
2.1. Purpose: The Audit and Compliance Committee’s primary function is to assist the Board of Directors in fulfilling its oversight responsibilities defined by law, regulatory authorities and articles of association and internal policies of the Bank.
2.2. Definitions: The ‘Bank’ means BBK, ‘BBK Group’ means BBK, its overseas branches and subsidiaries and the ‘Board’ means BBK Board. The ‘Chairman’ means the Chairman of the Committee. The terms ‘Independent’ and ‘Non-Executive’ have the same meaning as defined under the CBB Rule Book and classified accordingly.
3.0 COMPOSITION, MEETINGS AND FRAMEWORK:
3.1 Membership: The Committee shall be appointed by the Board from amongst the non-executive directors of the Company and shall consist of not less than 4 members having sufficient technical expertise. The members shall have no conflict of interest with any other duties they may have for the Bank. The majority of the Committee members including the Chairman shall be independent. There must be at least one qualified and appropriately experienced accountant in the Committee. The members of the Committee can be changed/removed at the discretion of the Board of Directors at any time.
3.2. Tenure: The term of the Committee members shall be of one year. The tenure of the Director who joins in between would be for the remaining period of the year.
3.3 Meetings: Meetings shall be held not less than four times a year. The Chairman may convene a meeting of the Committee at any time on reasonable notice. Participation in the meeting through video / Tele conferencing is permitted in keeping with the provisions of the Board Charter. The meeting would normally be synchronized with the Board meetings. Attendance by Proxies is not permitted.
3.3.1. Each Committee member can only attend one Committee meeting via telephone conference or video conference per annum and only one member is allowed to participate via the said means per meeting (on a first apply first serve basis) for scheduled meetings only. However, for unscheduled meetings it will be decided upon on a case by case basis. Further, the level of participation using these means shall decided on a case by case basis during force majeure events.
3.4 Quorum: The quorum shall be of more than half of the members and must include the Chairman or the Deputy Chairman. The decisions/resolutions shall be adopted by simple majority of the participating members. The Chairman shall not have additional vote. In the absence of the Chairman and his Deputy, and on exceptional basis, the Committee may meet and the attending members shall elect the Chairman for the particular meeting; however if the quorum is not established then the exceptional issues shall be raised to the Board. The quorum must be established throughout the meetings.
3.5 Chairman: The Chairman and Deputy Chairman must be a Director and appointed by the Board or alternatively elected by the members of the Committee in its first meeting after the appointment of its members. The Chairman must be an independent Director.
3.6 Secretary: The Group Corporate Secretary shall be the secretary to the Committee and attend all meetings of the Committee.
3.7 Resources: The Committee will be supported by the Group Corporate Secretary and the General Manager Internal Audit and the Group Head of Compliance and MLRO.
3.8 Minutes: The draft minutes of the Committee meetings shall be approved by the Committee at the end of each meeting. The final minutes shall be circulated to the members of the Committee not later than 5 working days. The minutes of each meeting will be circulated by the Group Corporate Secretary to all members and additionally to other attendees as appropriate. The Chairman will report to the Board in writing on the proceedings of Committee meeting following each meeting of the Committee. The minutes will be part of the agenda of the next Committee and Board meetings under items for information.
3.9 Disclosure: The membership of the Committee, description of its duties and activities and attendance during the year shall be disclosed in the Annual Report/Bank’s official website and to the shareholders.
3.10 Attendees: The Group Chief Executive, or any other Executive Mangment member as decided by the Committee, , the General Manager Internal Auditand the Group Head of Compliance and MLRO shall attend the meeting. The Committee must meet with the external auditors at least twice per year, and at least once per year in the absence of any members of executive management. Other Directors or persons may also attend the meetings with the consent of the Chairman. The Group Chief Executive and all the other invitees should withdraw if required to do so by the Chairman.
3.11 Training: The Committee shall make available to its new members a suitable induction and ongoing training where appropriate, as discussed with the Committee.
3.12 Resolutions by circulation: The Committee may adopt resolutions by correspondence, including mail, electronic or fax correspondence, provided that in order for resolutions taken in this manner to be valid, they shall be approved by all the members. Any member to whom a proposed resolution is sent and who fails to respond within three working days following the date on which the proposed resolution is sent to him shall be considered to have approved the resolution. The Group Corporate Secretary shall ensure that the documents related to proposed resolution(s) have reached all the Committee members.
3.13 General: The Committee will be guided by provisions under the Memorandum of Association, Articles of Association and Board Charter on matters related to its functioning and not specified in this document.
4.1 The Committee will report on periodic basis to the Board. The Committee’s scope will involve all matters relating to financial audit and reporting, internal audit, internal control, compliance and the relevant laws.
4.2 The Committee is authorized by the Board to investigate any activity within its terms of reference. It is authorized to seek any information it requires from any director, member of the Executive Management or employee and all are directed to cooperate with any request made by the Committee.
4.3 The Committee is also authorized by the Board to function as the Bank’s ‘Insiders Committee’ with the responsibility of providing prior approval for dealing in the Bank’s Treasury Shares and Debt Securities. The Committee will have the responsibility of : a) Monitoring compliance with the Key Persons Dealing Policies issued by the Bahrain Bourse Company (BBC); and b) Monitoring and ensuring compliance with the provisions relating to ‘Prohibited Conduct in Possession of Inside Information’ contained in the ‘Prohibition of Market Abuse and Manipulation (MAM)’ module issued by the CBB.
4.4 The Committee will review its terms of reference every three years commencing at the start of a new term for the Board.
5.0 TERMS OF REFERENCE
5.1 DUTIES AND RESPONSIBILITIES OF THE CHAIRMAN
The Chairman is responsible for: