National Central Cooling PSC : Corporate Governance Reports For The Year Ended 31 December 2016

Tabreed Corporate Governance Report 2016

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Tabreed Corporate Governa nce Report 2016

TABLE OF CONTE NTS:

PREFACE 3

1. COM PLIANCE WITH REG U LATIONS 3

2. CORPORATE GOVER NANCE STRUCTU RE 3

3. BOARD M EM BER TRANSACTIONS 6

4. FORMATION OF TH E BOARD 6

5. EXTE RNAL AU DITOR 11

6. AU DIT COM MITTEE .....•...........••..............•......•....•...•.................................•....••.••........•.•.12

1. NOMINATION AN D RE M U N ERATION COM MITTEE 13

2. INSIDE R IN FOR MATION AN D DEALINGS COM MITEE 14

3. INTER NAL CONTROL SYSTEM 14

10. IRREG U LARITIES IN 2016 15

11. CODE OF CON DUCT, H EALTH, SAFETY AN D ENVIRON M ENT, LOCAL COM M U NITY DEVE LOPM ENT .....••.••••.•..••............•.••...............•••••............••.••....•...•••..••....••.••••..•.•...........•.15

12. GEN ERAL IN FORMATION 16

APPEN DIX ONE: CORPORATE CHART •••.......•...•••....•..•.•••••••.........•.......•...•.••..•••.•.•.•..••..•....•......•.20

APPEN DIX TWO: ORGANIZATIONAL CHART 21

This Corporate Governa nce Report is a p proved by:

Chai

Jasim Husain Thabet Chief Executive Officer

The following report is governed by the Resolution of the Board of the Securities and Commodities Authority ("SCA") No. 7/R.M. of 2016 on the Corporate Discipline and Governance Standards of Public Joint-Stock Companies ("Resolution 7/2016") and the format of this report is prescribed by SCA. This report outlines the compliance of National Central Cooling Company PJSC (the "Company" or "Tabreed") with Resolution 7/2016, and the Company's overall governance structure in the period of 1 January 2016 to 31 December 2016.

1. COMPLIANCE WITH REGULATIONS

   Tabreed's corporate governance system is well developed, adopts local and international best practice and meets all relevant requirements of UAE legislation on corporate governance, including the Commercial Companies Law No. 2 of 2015 and Resolution 7/2016. Resolution 7/2016 applies to Tabreed's listing on the Dubai Financial Market ("DFM"). SCA supervises, controls and verifies Tabreed's compliance with Resolution 7/2016.

2. CORPORATE GOVERNANCE STRUCTURE

   The General Assembly Meeting is the highest decision-making body in the Company and is the forum in which shareholders exercise their right to decide on the Company's direction. The Annual General Assembly Meeting is convened once a year in order to carry out tasks such as adopting the Board of Directors' report and the annual and consolidated accounts, discharging the members of the Board of Directors and the auditors from liability and deciding how the profit of the past financial year is to be allocated.

   The shareholders are the ultimate decision-makers in respect of the direction of the Company since the shareholders are responsible for appointing the Board of Directors at the Annual General Assembly Meeting of the Company, each such appointment being for a term of three years. The shareholders present at the AGA also elect the auditors who in turn report on their scrutiny to the AGA.

   The following sections summarize how the Company has applied the principles of Resolution 7/2016 and its compliance with these principles.

   Board of Directors (Art. 3, Resolution 7/2016)

   The appointment, roles and responsibilities of the Board of Directors of Tabreed (the "Board" or "Board of Directors") are outlined in Tabreed's Articles of Association ("AoA").

   Throughout the year, the membership balance criteria set down by Resolution 7/2016 in relation to executive, non-executive and independent members of the Board was maintained by Tabreed together with an appropriate level of skills, experience and capabilities across the membership.

   Chairman of the Board (Art. 4 and 42, Resolution 7/2016)

   In 2016, Waleed Al Mokarrab Al Muhairi presided as the Chairman of the Board (the "Chairman"). The Chairman of Tabreed's Board is a non-executive and independent director with extensive and prominent experience in international and regional corporations.

   Throughout the year, the Chairman ensured that the Board participated effectively at Board meetings and that each member of the Board acted in the best interests of Tabreed and its shareholders. The Chairman develops the structure of, and agenda for, meetings of the Board, overseeing communication between Board members and shareholders, and encouraging constructive relations between the Board members.

   Members of the Board (Art. 11, 40, 43, 44, and 45 Resolution 7/2016)

   The members of the Board have a diverse set of skills and experience. Each member's duty is to act

   in the best interests of Tabreed and its shareholders. Each member of the Board ensures that Tabreed's management maintains systems and processes to ensure adherence to laws, regulations and Tabreed's operational requirements.

   The Board ensures that Tabreed's management provides them with sufficient information, in a timely manner, to make informed decisions that affect the direction of the Company. The Board members participate in Board meetings, giving independent opinions on strategic issues, policy, accounting, resources and principles of required behaviour. The Board tracks the Company's performance against strategic objectives.

   Each year, all Board members disclose to Tabreed an assessment of their independence, confirmation of confidentiality, details of any share trading and details of their significant positions in public companies or other institutions.

   Remuneration of the Chairman and the Board Members (Art. 21, Resolution 7/2016)

   The Chairman and the Board members are entitled to be remunerated by an attendance fee for each meeting as allowed under the AoA. The AoA also permits the distribution of a share of profits as remuneration for Board members subject to approval by the shareholders at the Company's AGA.

   Board Committees (Art. 46, Resolution 7/2016)

   The Board has formed four Committees that have adopted procedures which define their obligations, duration and authority and these Committees are regularly monitored by the Board regarding their performance and commitment. These Committees are as follows:

3. Audit Committee;

4. Nomination and Remuneration Committee;

5. Finance Committee; and

6. Projects Committee.

The Audit Committee and the Nomination and Remuneration Committee are mandated by Resolution 7/2016.

The Finance Committee reviews and endorses all matters that have a significant impact on the Company's finances before submission for Board approval. This includes borrowings, hedging arrangements, business cases for major initiatives, financial reporting and budgeting.

The Projects Committee investigates the viability of each potential new project and ensures that it is subjected to the highest levels of scrutiny before presentation to the Board for approval.

Nomination and Remuneration Committee (Art. 47, Resolution 7/2016)

The Nomination and Remuneration Committee assists the Board in discharging its responsibilities in relation to qualifications, compensation, appointment and succession of the Company's directors and key management personnel. The Committee oversees the Company's nomination process for the Board of Directors and continuously monitors the independency of the independent members of the Board (See Section 7 for further detail on the Nomination and Remuneration Committee).

Audit Committee (Art. 48, Resolution 7/2016)

The Board maintains an Audit Committee that monitors financial statements, renews and recommends changes to Tabreed's financial and control systems, and appoints and maintains an appropriate relationship with the Company's external auditors. The Audit Committee also oversees the Internal Control function and is responsible for approving recommendations for internal control improvements. (See Section 6 for further detail on the Audit Committee).