Board of Directors Charter Template in 2024

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Board of Directors Charter Template

The Board charter sets responsibilities, principles, and guidelines

Purpose:

The Board charter sets responsibilities, principles, and guidelines for the functioning of the Board and identifies the modes of interaction with the shareholders and Executive Management of the company.

Roles and responsibilities of the Board (In alignment with the company Bylaw):

The Board of Directors represents the owner of the capital and must perform with duty of care and loyalty in managing the company and everything that preserves its interests, its development, and maximizes its value.
The Board of Directors is responsible for its actions, and if it delegates committees, entities, or individuals to exercise some of its powers, the Board may not, in all cases, issue a general or unlimited term authorization.

Main Functions and general duties of the Board:

Company’s Board shall exercise the following main functions:

Laying down the plans, policies, strategies, and main objectives of the Company; supervising their implementation and reviewing them periodically; And, ensuring that the human and financial resources required to fulfil them are available.
Setting rules and procedures for internal control and overseeing them, including, developing a written policy that would regulate actual and potential conflicts of interest, which may affect the performance of Board members, the Executive Management or any other employees of the Company and treating any cases of conflict.
Drafting Corporate Governance rules for Company and ensuring that they do not contradict with the related regulations.
Reviewing the Company’s organizational structure including the implementation of the Company’s operating model which defines the relationship with its Subsidiaries and the governance mechanisms.
Setting forth specific and explicit policies, standards, and procedures for membership in the Board, without prejudice to the mandatory provisions of these regulations, and implementing them following approval by the General Assembly.
Developing a written policy that regulates the relationship with Stakeholders pursuant to the provisions of these Regulations.
Setting policies and procedures to ensure the Company’s compliance with the laws and regulations and the Company’s obligation to disclose material information to shareholders and stakeholders and ensuring the compliance of the Executive Management with these policies and procedures.
Supervising the management of the Company’s finances, its cash flows as well as its financial and credit relationships with third parties.
Providing recommendations to the Ordinary and Extraordinary GA regarding what it deems appropriate in line with the Company's Bylaws and relevant laws and regulations.
Laying down procedures for orienting new Board members about the Company’s business and, in particular, the financial and legal aspects, in addition to their training, where necessary.
Ensuring that sufficient information about the Company is made available to all members of the Board, and, in particular, to the non-executive members, to enable them to fulfil their duties and responsibilities in an effective manner.
Preparing the Company’s interim and annual financial statements and approving them before publication.
Ensuring the accuracy and integrity of the data and information which must be disclosed pursuant to the applicable policies and systems in respect of disclosure and transparency.
Developing effective communication channels allowing shareholders to review the various aspects of the Company's business as well as any material developments continuously and periodically.
Forming specialized committees of the Board pursuant to resolutions that shall specify the term, powers, and responsibilities of such committees as well as the manner used by the Board to monitor such committees. Such resolutions shall also specify the names of the members and their duties, rights and obligations and shall evaluate the performance and activities of these committees and their members.
Specifying the types of remunerations granted to the Company's employees, such as fixed remunerations, remunerations linked to performance and remunerations in the form of shares without prejudice to the Regulatory Rules and Procedures issued pursuant to the Companies Law related to Listed Joint Stock Companies.
Setting the values and standards that govern the work at the Company.
Ensuring the Company’s compliance with the relevant laws and regulations.
Reviewing annual statements and reports of the Board as well as interim financial statements should the Board decide to prepare these.
Representing the Company in its relations with third parties, the government, and private entities.
Applying for bids to execute on behalf of the Company all kinds of contracts and agreements, documents and instruments, including but not limited to, the articles of association of a company in which the Company is a Shareholder, and any amendment of the Articles of Association of companies in which the Company is a Shareholder and to execute resolutions amending such agreements, Articles of Associations and deeds before notaries and the official bodies.
Executing loan agreements and assignment of the Company’s priority rights in repayment of the Company’s debts and to guarantee the obligations of third parties and to grant all types of securities and indemnities.
Execute powers of attorney on behalf of the Company.
Opening, managing, operating, and closing bank accounts, issuing letters of credit, receiving, paying, withdrawing, and depositing with banks, giving bank guarantees, and signing all papers, documents, checks, and all banking transactions.
Approving the Company’s system of internal controls and policies, including but not limited to procurement, human resources, legal services, and information technology.
Approving the Company’s financial position, financial statements and annual budget drawn up in accordance with the accounting standards in the operating country and the Company's Bylaws.
Carrying out any acts appropriate for the promotion of the interest of the companies that are owned by the Company and direct and indirect subsidiaries (whether wholly or partially owned), including but not limited to, undertaking equity investments in any such companies and subsidiaries, providing loans and credit facilities to any such companies and subsidiaries, transferring assets of the Company to any of its subsidiaries and guaranteeing the obligations of such subsidiaries.
Appointing and removing the Chief Executive Officer of the Company and other such executives.
Reporting to the Shareholder and submitting a report on a quarterly basis (and upon request) detailing the results of what the Company has achieved.

Responsibilities of the Board towards Shareholders:

Approving shareholders’ invitation to convene the ordinary and extraordinary assemblies.
Ensuring that the annual report and the financial reports communicated to the shareholders reflect the real performance and position of the Company. Moreover, the Board shall ensure that Company’s management provides current and potential shareholders and the investors with all information on the performance results and the most important developments in Company, provided that this information shall be aligned with Company's disclosure and transparency policy.
Strengthening the disclosure and transparency principle as a permanent and clear policy for the Board.
Recommending the dividend policy for GA approval.
Approving the shareholders’ interim dividends (quarterly and semi-annually) and recommending to the GA to approve the annual profits and distribution rates as defined in the Company's Bylaws.
Recommending an increase or decrease in the Company’s authorized capital.
Approving the Audit Committee’s recommendations regarding selecting and nominating external auditors and their fees and recommending the GA to approve the nominated external auditors.
Reviewing, evaluating, and approving major corporate transactions including capital allocations, expenditures, and capital investments.
Determining the optimal capital allocation model across core businesses and investments.
Authorizing and overseeing mergers and acquisitions activities.
Cooperate with the Audit Committee and other Board committees in the interest of the Company and its shareholders.

Responsibilities of the Board towards the Company:

Setting overall strategy and investment plan, investment guidelines and parameters.
Reviewing activities related to organizational set-up and planning including adopting the organizational and functional design guidelines in line with the Company’s policy.
Defining the risk profile of the Company.
Setting and monitoring key performance indicators (financial/non-financial targets).
Keeping confidential information related to the Company and its activities and not disclosing it to others.
Establishing subsidiaries in line with the objective and activities of the Company and determining the appropriate legal structures, capital requirements, and the timing of their establishment.
Reviewing and approving the organizational and human resources structures of the Company on a periodic basis.
Ensuring that the financial and human resources required for achieving the objectives and main plans are available.
Reviewing annual statements and reports of the Board as well as interim financial statements should the Board decide to prepare these.
Reviewing and approving the types of remuneration granted to the Company’s employees.

Regulating, overseeing, and monitoring the Executive Management’s operating procedures and ensuring it performs the duties assigned to it such as:

Developing the necessary administrative and financial policies.
Establishing internal policies for confidentiality of information following relevant laws and regulations, and in a manner that does not violate disclosure and transparency policies.
Ensuring that the Executive Management operates in accordance with the policies approved by the Board.
Selecting and appointing the Chief Executive Officer of Company and overseeing his/ her work.
Establish the duties and set out the remuneration of the Chief Executive Officer and other such executives.
Appointing the head of the internal audit function or the internal auditor; dismissing him and determining his remuneration (if any).
Convening periodic meetings with the Executive Management to explore the work progress and any obstacles and problems in connection therewith and reviewing and discussing the important information in respect of the Company’s business.
Developing standards for the performance of the Executive Management consistent with the objectives and strategy of the Company.
Reviewing and evaluating the performance of the Executive Management; and
Developing succession plans for the management of the Company.

Role of the Chairman of the Board:

The Chairman of the Board shall be responsible for ensuring that there are effective channels of communication with shareholders and articulating their opinions to the Board. He shall lead the Board and supervise its operations. His responsibilities include the following:

Ensuring Board effectiveness:

Ensuring that the Board has adequate resources in support of its work and that the Board is provided with the required information.
Managing Board members discussions and ensuring conclusions/decisions are reached and clearly understood by all Board members as well as recorded in the minutes.
Ensuring performance evaluation mechanisms are in place for the Board, its members, Committees, and Executive Management.
Promoting a culture of frankness and debate by fostering constructive relationships and effective participation between the Board and the Executive Management and facilitating an effective exchange between non-executive members and independent members on the other.

Role of the Chairman of the Board towards the Board:

Inviting the Board to attend Board meetings and chairing those meetings.
Setting meeting agendas at the beginning of the year that factor in any issues presented by Board members or the external auditor and consulting the Board members and CEO while preparing the Board’s agenda.
Enabling all Board members to fully participate in the Board meetings.
Ensuring that processes are in place, so that the Board conducts its work effectively and efficiently.
Convening intermittent meetings exclusively for the non-executive directors.
Ensuring that responsibilities delegated to Committees or individual directors are carried out and results thereof are reported to the Board.
Ensuring that the Board is provided with enough support.
Approving the decisions of the Board and extracting resolutions from them.
Supervising the formation of all Committees of the Board and recommending the Board to approve the names nominated for these Committees, in conjunction with the Remuneration and Nomination Committee.
Ensuring that the Board members have access to timely, complete, clear, correct, and non-misleading information.
Ensuring that the Board of Directors has actively and effectively discussed all key issues.
Representing the company in front of others per rules stipulated in the company's articles of association.
Encouraging Board members to exercise their duties effectively and in the best interests of the company.

Role of the Chairman of the Board towards Shareholders:

Chairing the GA meetings.
Notifying the General Assembly during the meeting with all the business activities and contracts in which any Board member has a direct or indirect interest, provided that the notification shall include all the information provided by the Board members and shall include a report of the Company’s external auditor.
Ensuring effective communication with shareholders.

Role of the Vice Chairman of the Board of Directors:

Assisting the Chairman in issues related to the Company’s Board of Directors.
Inviting the Board for meetings when the Chairman is absent.
Chairing the Board meetings when the Chairman is absent.
Chairing the GA meetings when the Chairman is absent.
Leading the assessment of the performance of the Chairman, in coordination with other Board members.
Any other responsibilities as indicated in the Company's Bylaws.

Policies, standards, and procedures for the membership of the Board of Directors:

The Board shall develop clear and specific policies, standards, and procedures for membership of the Board upon the recommendation of the remuneration and nomination committee, in a manner consistent with the provisions of the related rules and regulations and put them into effect after approval by the General Assembly.

Remuneration Policy for Board, Committees and Executive Management:

The Board shall establish a clear policy for the remuneration of the Board members, Committees and Executive Management to be approved by the General Assembly, taking into consideration the adoption, disclosure, and verification of performance standards.

Board Meetings:

Meeting Frequency

The Board shall hold a minimum of four meetings during the year, with no less than one meeting every 3 months.

Meeting Procedures

Board meetings shall convene upon an invitation issued by its Chairman or a written request by at least two members. The invitation shall be sent to each Board member ten days before the date of the meeting and shall include the meeting agenda. All essential documents and information shall follow it in sufficient time before the meeting. Unless the situation requires that an emergency meeting to be convened, the invitation of the extraordinary or emergency meeting along with the meeting agenda shall be sent followed by all essential documents and information within a period less than the scheduled period of the planned ordinary meeting.
Board members are expected to attend all Board and committee meetings on which they serve, and to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities.
The Board will keep a written record of its meetings. The Board may meet by telephone or video conference and may act by circulation of written or electronic consent.
Non-Board members may be invited by the Chairman or other Board members to attend Board meetings as appropriate (in coordination with the Board Secretary) without having the right to vote, provided that the invitation must be approved by the chairman or the acting chairpersons.
If a Board member has queries or objections to an agenda item, such objection shall be reflected in the Board minutes of the meeting.

Quorum:

The Board meeting shall not be valid unless attended by at least (As per the Company’s Bylaw) of its members. The Board members may attend remotely by conference call or any other means of communication, as stipulated in the Company's Bylaws. A Board member may delegate another member to attend the Board meeting on his behalf and vote for him in meetings, as stipulated in the Company's Bylaw.

Voting:

Board members shall have equal voting rights, and the resolutions of the Board shall be issued by a majority of the votes, and in case of a tie, the Chairman shall have the casting vote. (As per the Company’s Bylaw).

Resolutions by Circulation:

With respect to urgent matters, the Board may pass resolutions by circulation, unless any member calls for a meeting of the Board in writing for purposes of deliberation. Such resolutions shall be brought before the Board at its first subsequent meeting and shall be documented in the minutes of the meeting.

Board Members’ Preparation:

Preparation for the meetings involves analyzing the information and documents sent to the Board members five days before the meeting. The Board pack received shall include an agenda and the supporting documents including:

The CEO’s operational report – providing an overview of major events impacting on the business since the last meeting.
A financial performance report, focusing on KPIs and strategic performance.
Minutes of the previous meeting.
A list of actions made in prior meetings and their progress.
Information and documents on specific issues to be discussed and decided on.

Minutes of Meetings:

The Board shall minute, document, categorize and maintain the discussions and deliberations, including the voting conducted, for the purposes of retention and facilitating reference, as necessary. Board members shall be provided with the draft meeting minutes five business days after the date of the meeting convened for their comments. In case no comments were received within 10 days, this shall be deemed an implied consent and an approval for the drafts until being approved by the Board and signed off by all attending members during the first upcoming Board meeting or by circulation, if necessary.
If any Board member has any remarks in respect of the performance of the Company or any of the matters presented which were not resolved in the Board meeting, such remarks shall be recorded, and the procedures taken or to be taken by the Board in connection therewith must be set forth in the minutes of the Board meeting. If a member of the Board expresses an opinion which differs from the Board resolution, such an opinion shall be recorded in detail in the minutes of the Board meeting.
The absence of a member from attending any meeting in which the decision is issued shall not be considered a reason for relieving him/her of responsibility unless it is proved that the absent member is not aware of the decision or is unable to object thereto after being informed of it.

Remunerations and compensations of the Board members:

The remunerations and compensations of the Board members consist of the following:

The annual remuneration of the members of the Board of Directors shall be determined based on the policy established by the Board of Directors, and following the company's articles of association, the decisions of the shareholders' General Assembly, and the relevant laws and regulations.
The remuneration of the Board members shall be determined by the Nomination and Remuneration Committee in addition to the seating fees for each meeting attended at one thousand five hundred dollars (US$ 1,500) for each member of each meeting attended.
The company is obliged to cover transportation, housing, and any other expenses to enable the Board members to attend and participate in the Board meetings.
Travel tickets for internal or external trips shall be provided (Traveling class determined by the Board of Directors), along with accommodation for members residing outside the region in which Board meetings are held. If a Board member purchases the travel ticket, they will be compensated with cash for the value of the actual ticket.
All remuneration and compensation shall be paid annually, and after the fiscal year ends.
All remuneration and compensation granted to Board members should be disclosed in the annual report of the Board of Directors.

Delegation of Authorities:

The responsibilities of the chairman, vice-chairman, the Board or directors, and Executive Management, including the CEO and the Managing Director - if any - are explicitly defined either in this guideline’s booklet or in the Company’s Bylaw. In all cases, no person shall have the sole and absolute power to make decisions in the Company. In that matter, the Board does the following:

Develop and approve internal policies related to the Company’s activities, including specifying the duties, competencies and responsibilities assigned to the various organizational levels with identification of the matters which the Board reserves the right to decide.
Approve a detailed written policy on the authorities to be delegated to the Executive Management, clarifications, and implementation method and period of delegation. The Board may request the Executive Management to submit periodic reports in respect of its exercises of such delegated authorities.
Set a clear Delegation of Authorities (“DoA”) manual that organizes the relationship between the company and its subsidiaries and updates it on a regular basis and whenever necessary.

Segregation of Duties:

The Board shall appoint, among its members, a chairman, and a vice-chairman. The Board may also appoint among its members a managing director (As per the Company’s Bylaw).
It is not permitted to combine the chairman, or vice-chairman positions with any executive role within the company, including the CEO or the managing director, if any. (As per the Company’s Bylaw)
The Bylaws shall define the competencies and responsibilities of the chairman, vice- chairman, and managing director - if any.
In all cases, no one may have the sole and absolute power over the company’s decisions, and all decisions shall be taken at the organizational level.

Evaluation and Training:

Performance Evaluation

The Board shall develop, based on a proposal from the Remunerations and Nominations Committee, a mechanism for annual performance evaluation.
The performance evaluation mechanism shall be in writing, clear, and disclosed to the parties under evaluation to ensure the effective functioning of the Board members, committees, and Executive Management.
The performance evaluation shall test against (and not be limited to) key performance indicators of the strategic objectives of the Company, the quality of risk management, the efficiency of the internal control, and relevant activities. Evaluations shall also entail an assessment of the strengths and weaknesses, and the corresponding methods to address weaknesses.
The individual Board member assessment shall consider the extent of effective participation of each member and his/her commitment to performing his/her duties and responsibilities. The overall evaluation shall focus on areas in which the Board or management believes that the Board could improve its effectiveness, including attending the Board and its committee meetings and dedicating adequate time thereof.
The Board shall obtain an assessment of its performance from an independent third party every three years.
The Board shall ensure that non-executive members carry out periodic assessments of the performance of the chairman, taking into consideration executive members views without the presence of the Chairman.
The Board annual report shall contain the results of the performance evaluation of the Board, committees, and Executive Management.

Training

The Company should pay adequate attention to the training and qualification of the Board members and the Executive Management, by preparing programs for the newly appointed Board members and Executive Management to introduce the company's operations and activities, in particular:

The company's strategy and objectives.
The company’s financial and operational activities.
Obligations, duties, responsibilities, and rights of the Board members.
Duties of the committees.
Developing the mechanisms necessary for the Board members and Executive Management to maintain continuous training programs and courses in order to develop their skills and knowledge in fields related to the company's activities.

In light of the above, the new member induction program includes the following:

Preparing a file that contains all necessary documents to be accessed and considered, it must include, for example, the Company's Bylaws, the annual report for the past two years, some internal regulations such as governance regulations that clarify duties, obligations, responsibilities and terms of the Board members and committees.
Providing a comprehensive introduction by the Executive Management to the new members to the company's plans and strategy, financial and operational activities, subsidiaries operations, and all related activities.
Coordinating to arrange a visit to the company for in-depth clarifications on its activities.

Communication Protocol between the Board and Executive Management:

For purposes of enhancing and fostering communication between the Board, Committees, and Subsidiaries’ Boards inside and outside the country of operation, the following directives shall be adhered to:

Invitations shall be extended for all meetings through the chairman of the Board or designated Committee either at the company or subsidiary level.
The chairman of the Board or designated committee shall be informed before the cancellation or postponement of any meeting.
The chairman of the Board may call for an extraordinary meeting or if two Board members consider necessary.
Agenda shall be drawn in coordination between the chairman of the Board, Board Secretary, Board members, and CEO.
Coordination with the Board Chairman and Committees shall be essential prior to the distribution of information or conducting of meetings.
Subsidiaries shall provide monthly performance reports to the Company’s Board.
To avoid conflict, a schedule shall be developed in advance by the Parent company (Company) for meetings of the company’s Board and committees, and subsidiaries’ Boards and committees, and circulated to the concerned parties to take their views thereon and act accordingly.
The Board secretary shall be the key contact for Board members regarding Board affairs matters. In the event of his absence or any emergency, a member of the Executive Management team who is involved and experienced in the Board work under the direction of the CEO shall carry out the task on his behalf until the return of the Secretary.
Board and committee members may contact the CEO, CFO and other executives when needed.

Communication with the Board to Provide them with Information:

The company’s Executive Management shall provide Board members, particularly the non-executive members, and the committees with all necessary information, data, documents, and records, provided that they shall be complete, clear, correct and not misleading and in a timely manner to enable them to perform their duties and tasks, i.e. the minutes of the meetings of the Board and all committees and Company's Bylaws, corporate governance framework, monthly, quarterly, and annual financial reports, Board report, and documents related to the meetings of the Board and Committees well before convening each meeting.

Boards and Authority:

In discharging its oversight role without contradiction with the Company's Bylaw, the Board is empowered to investigate any matter brought to its attention with full access to all books, records, documents, facilities, and the company’s personnel affairs. It shall also have the power to outsource to any third party, auditor, or consultant, or incur other expenses for this purpose, which the company shall pay. The Board may require any employee of the company, its subsidiaries, its outside legal counsel, external auditors, or any committee to meet. Additionally, the Board members shall be entitled to have company liability insurance on their behalf.

The Board Secretary Roles and Responsibilities:

Documenting the Board meetings and preparing minutes therefor, which shall include the discussions and deliberations carried out during such meetings, as well as the place, date, times on which such meetings commenced and concluded; recording the decisions of the Board and voting results and retaining them in a special and organized register; including the names of the attendees and any reservations they expressed, if any; and signing these minutes by all of the attending members.
Retaining the reports submitted to the Board and the reports prepared by it.
Providing the Board members with the agenda of the Board meeting and related worksheets, documents and information and any additional information related to the topics included in the agenda items, requested by any Board member.
Ensuring that the Board members comply with the procedures approved by the Board.
Preparing the annual calendar for boards and committee's meetings (for the company and subsidiaries) in line with the corporate governance code, charters and rules approved by the General Assembly or the Board and notifying the Board members of the dates of the Board’s meetings within sufficient time prior to the date specified for the meeting.
Presenting the draft minutes to the Board members to provide their opinions on them before signing the same.
Ensuring that the Board members receive, fully and promptly, a copy of the minutes of the Board’s meetings as well as the information and documents related to the Company.
Coordinating among the Board members.
Providing assistance and advice to the Board members.
Coordinate with the governance and compliance officer with regards to the governance requirements relevant to the Board and its Committees (where applicable) and their composition, responsibilities, and regulations.
Follow-up the implementation of the Council's decisions and submit periodic reports to the members of the Council including the status of decisions and is responsible for performing all other tasks assigned to it by the Council.
The Secretary of the Board shall not participate in or vote on any of the Board's resolutions unless he is a member of the Board of Directors.

The Qualifications of the Board Secretary:

Holds a bachelor’s degree in law, management, administration, finance, or accounting with a relevant practical experience of not less than three (3) years or has not less than five (5) years of practical experience if he/she does not hold a bachelor’s degree in one of the fields aforementioned.
Has excellent communication skills.
Familiar with the Companies Law, related laws, and regulations.
Understands the Company’s business.
Is detail-oriented, flexible, and creative.
Has excellent English writing skills.

The Independence of the Board Secretary:

The Board shall appoint a secretary to the Board from among its members or employees of the company to carry out the functions stipulated in these guidelines. The Board secretary may be removed only by a decision of the Board, and the Board shall determine their entitlements and rewards. The Board secretary reports functionally to the Board of directors and administratively to the chairman or as dictated by the Board.
The CEO is required to provide the Board secretary with regular updates on the performance and the internal controls of the company, and the Board secretary will be responsible for ensuring such updates are provided to the Board.

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