zain bahrain...zain bahrain b.s.c. ("zain") audit committee charter 2.3.7 revision and...

Audit Committee charter

Zain Bahrain

Policy Details & Approvals

Approvals

This Charter has been approved by the Board of Directors at their meeting held on:

Version number Reference number

Last reversion date

First release

Signature

Date

AbdulRahman Al ShafeiManager, Investor Relations, Corporate Governance, Compliance & General Management Office

Prepared by

Signature

Date

Latifa SalahuddinDirector, Legal Department and Board Secretary

Reviewed by

Signature

Date

Mohammed ZainalabedinGeneral Manager

Approved by

Board Of Directors TargetedAudience

Internal CirculationOpen CirculationStrictly Confidential

Document type

2

Zain Bahrain B.S.C. ("Zain")Audit Committee Charter

Change History:

VersionNo.

Date Change owner Name

Change Owner Title

Signature Description of change

Table of Contents

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The Board of Directors (hereinafter referred to as the "Board" or the "Directors") may amend

this Board Charter (hereinafter referred to as the "Charter") or grant waivers in exceptional

circumstances, provided that any such modification or waiver does not violate any applicable

laws, rules, regulations, Zain Bahrain B.S.C.’s ("Zain") Delegation of Authority Matrix and

"Articles of Association" and further provided that any such modification or waiver is

appropriately disclosed to the concerned parties.

The changes to this document will be consecutively numbered and dated.

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1 Introduction

1.1 The Board of Directors of Zain, in its adoption to "Corporate Governance Code"

in line with the "Central Bank of Bahrain Rule Book – Volume 6: Capital

Markets" issued by the Central Bank of Bahrain (hereinafter referred to as the

"CBB") and the "Corporate Governance Code" issued by the Ministry of Industry

and Commerce (hereinafter referred to as the "MoIC"), and assurance to that it

remains aligned with leading practices in terms of "Corporate Governance" issued

by the Organization for Economic Cooperation and Development (hereinafter

referred to as the "OECD"), has prepared and approved this Charter.

1.2 As per "Principle 1 issued by the Corporate Governance Code: The

Company shall be headed by an effective, collegial and informed Board" The

Audit Committee (hereinafter referred to as the "Committee") will act only within

its mandate and therefore the Board will not allow the Committee to dominate or

effectively replace the whole Board in its decision making responsibility.

1.3 This Charter will govern the operations of the Audit Committee and details the

scope of the Committee's responsibilities and how it will carry out those

responsibilities, including but not limited to its structure and procedures.

1.4 The Committee will review this Charter annually and will recommend to the

Board any changes to the extent required under any applicable regulations, as well

as to bringing it in line with leading practices.

1.5 As per "Principle 1 issued by the Corporate Governance Code: The

Company shall be headed by an effective, collegial and informed Board" and

"Appendix B: Audit Committee" the Board will evaluate, with the assistance of

the Nomination and Remuneration Committee (hereinafter referred to as the

"NRC"), the performance of the Audit Committee annually, based on a self-

evaluation report prepared by the Audit Committee. The Audit Committee

evaluation will include an assessment of the performance and commitment of

each member to the activities of the Committee as well as his/her constructive

involvement in discussion and decision making.

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2 Purpose

2.1 The Board of Directors being the governing body of Zain will ensure, through its

Audit Committee, that the Company's management maintains adequate policies,

procedures and internal controls for:

2.1.1 Safeguarding the Company's assets.

2.1.2 Properly recording the transactions and events as they take

place.

2.1.3 Preparing reliable financial information.

2.1.4 Overseeing and monitoring the enterprise wide risks for

managing the Company's operations.

2.2 The above aspects will be independently and periodically assessed by the

Company's internal as well as "External Auditors".

2.3 To further strengthen the Internal Audit Function (hereinafter referred to as the

"IAF") and to ensure its objectivity and independence, the Board established this

Committee. The primary purpose of the Audit Committee of the Board of

Directors of Zain is to monitor the following Company affairs on behalf of the

Board:

2.3.1 Adequacy and soundness of internal control systems, financial

accounting and reporting policies and practices, and effectiveness of

internal and "External Audit" functions.

2.3.2 Adherence to the Company's approved policies and procedures.

2.3.3 Adequacy and soundness of policies and procedures in respect

of the safety and security of the Company's assets, resources and integrity

of the Company's financial statements.

2.3.4 Performance of the Company's internal and "External Audit"

functions and their independence.

2.3.5 Existence of a framework for the identification, management

and review of risks, including agreeing risk capacity and tolerance.

2.3.6 Identification of the principal risks of Zain's business and

ensuring the implementation of appropriate systems to manage those risks.

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2.3.7 Revision and evaluation of strategic risks and the receipt of

regular reports on those as well as emerging risks.

2.3.8 Existence of a positive culture of managing opportunities,

threats and uncertainties that are embedded throughout the Company.

3 Organization of the Audit Committee

3.1 Structure of the Audit Committee

3.1.1 As per "Principle 3 issued by the Corporate Governance

Code: The Board shall have rigorous controls for financial audit and

reporting, internal control and compliance with Law" and "Appendix

B: Audit Committee" The Committee will be comprised of at least three

(3) members, such members must have no conflict of interest with any

other duties they have for the company. The majority of members of the

committee including its Chairman shall be independent. As of today’s date,

the Company is in the process of applying the Corporate Governance

requirements and the majority of the members are not independent due to

the fact that MTC holds a management agreement with Zain Bahrain. The

majority of the members will have the financial and accounting literacy to

include the following:

Ability to read and understand the annual and interim financial

statements including the balance sheet, the income statement, the

cash flow statement, the statement of changes in shareholders' equity

and the related notes to the financial statements which represent an

integral part of the latter.

Understanding of the accounting principles, assumptions and

estimates which are applicable to the financial statements.

Experience in evaluating complex accounting concepts and practices.

Understanding of internal controls and procedures for financial

reporting.

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Understanding of the Audit Committee's functions and importance.

3.1.2 "Executive Directors", including the Chief Officers (hereinafter

referred to as the "Officers"), are not eligible for Audit Committee

membership. These members will have no conflict of interest with any

other duties they have for the Company.

3.1.3 As per "Appendix B: Audit Committee" issued by the

Corporate Governance Code, the Board might choose to appoint Non-

Board members as experts in the Committee.

3.1.4 As per "Article 173: Commercial Companies Law", the

Audit Committee member who is also a member of the Board will fulfill

the following conditions:

He/she will be fully qualified to act.

He/she would not have been convicted in a crime involving negligent

or fraudulent bankruptcy or a crime affecting his/her honor or

involving a breach of trust or in a crime on account of his/her breach

of the provisions of this law, unless he/she was reinstated.

Any other conditions set out in the Company’s Articles of

Association.

If the member forfeits any of the above conditions, he/she will no longer

become member from the date of forfeiture of that condition.


Code: The Board shall have rigorous controls for financial audit and

reporting, internal control and compliance with law" and "Appendix

B: Audit Committee" One of the members will serve as the Chairman of

the Committee (hereinafter referred to as the "Chairman"). The Chairman

will be designated by the Board and will be an "Independent Director".

3.1.6 The Board will also nominate a "Vice Chairman" to chair the

Committee's meeting in case of the Chairman's absence.

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3.1.7 Employees of Mobile Telecommunications Company K.S.C.

and Zain are not eligible for Audit Committee membership.

3.1.8 Members of the Committee will be appointed by the Board

upon the recommendation of the NRC and may be removed by the Board

at its discretion.

3.1.9 No Committee member will simultaneously serve on the Audit

Committee of a competitor of Zain.

3.1.10 Neither the Chairman of the Board, nor the Chairman of the

"Executive Committee" nor the Chairman of the "Board Risk Committee",

if any, may chair this Committee.

3.1.11 The Board will issue rules for appointing the members of the

Committee and define the term of their office as set by the local rules and

regulations unless otherwise stated in addition to the procedure to be

followed by the Committee.

3.1.12 The Audit Committee's term of office will be for a period not to

exceed the tenure of the Board. The membership of an Audit Committee

member, if he/she is a Director, will come to an end at the expiry of his/her

membership of the Board or by his/her voluntary resignation from the

Committee membership. A Non-Director's membership will cease by way

of his/her resignation or at the end of the Committee's term.


Code: The Company shall have rigorous procedures for appointment,

training and evaluation of the Board" The "Chairman of the Board" will

confirm to the shareholders when proposing re-election of a Director that,

following a formal performance evaluation, the person's performance

continues to be effective and continues to demonstrate commitment to the

role. Any term beyond six (6) years for a Director will be subject to

particularly rigorous review, and will take into account the need for

progressive refreshing of the Board. Serving more than six (6) years is

relevant to the determination of a "Non-Executive Director's"

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independence. This clause is applicable not only to the Directors but also

to the Committee members.

3.1.14 The Secretary of the Board will act as the Committee Secretary

(hereinafter referred to as the "Secretary") to keep records of its

proceedings and resolutions. He/she can be one of the Committee's

members or a Non-Committee member and he/she can be from outside the

Board. If the Secretary is not a Committee member, he/she will attend the

Committee meetings without having any voting right. The Secretary, if not

a Committee member, will not be involved in other duties or

responsibilities that would result in a conflict of interest with his/her duties

as the Committee's Secretary. The Secretary will be a person with legal or

similar professional experience. The Secretary is responsible for the

following:

Keeping complete records of the Committee's meetings for the

purpose of issuing reports about the performance of the Committee

to the Board.

Circulating the Committee's resolutions to the concerned parties.

Coordinating with concerned departments regarding the Committee's

resolutions that necessitate legal compliance and regulatory

procedures.

Establishing a mechanism for tracking and following-up on the

Committee's resolutions.

Executing any other task or responsibility assigned to him/her by the

Committee's Chairman or any of its members.

3.1.15 The Board through the Audit Committee will have access to the

Secretary, who will have responsibility for reporting to the Committee on

its procedures.

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3.1.16 The Board may remove an Audit Committee member from the

membership by a majority vote.

3.2 Remuneration of the Committee

3.2.1 The Committee members will not be entitled to a segregated

compensation but rather will be entitled to the regular annual board

remuneration.

3.2.2 The above amounts will be approved by the Board based on the

recommendations from the NRC.


Code: The Company shall remunerate Directors and officers fairly

and responsibly", remuneration will be sufficient enough to attract, retain

and motivate the Audit Committee members. However; the Company will

avoid paying more than what is necessary for that purpose.


Code: The Company shall remunerate Directors and officers fairly

and responsibly" issued by the Corporate Governance Code, due to the

fact that all Audit Committee members are

Non-Executive Directors, accordingly their remuneration will not include

performance related elements such as: grants of shares, share options or

other deferred stock related incentive schemes, bonuses or pension

benefits.

3.2.5 Committee members who are resident outside the Company's

registered office location are entitled to all out of pocket expenses incurred

by them to attend the meeting.

3.2.6 The Secretary will not be entitled to any compensation but

rather will be entitled to the regular remuneration if he/she is a Director.

3.2.7 Board of Directors' reports presented to the "General

Assembly" will disclose the remunerations and other payments made to

the Committee members.

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3.3 Meetings and Procedures of the Committee:

3.3.1 The Committee will approve its tentative yearly meeting

schedule at the first meeting of each year.

3.3.2 The Audit Committee will meet at the invitation of its

Chairman or any two (2) members. Such an invitation to be accompanied

by the agenda for the meeting as well as the material packages will be

hand delivered or sent to the members electronically prior to the date of

the meeting.

3.3.3 The agenda of each meeting will be prepared by the Secretary

of the Committee after the approval of the Chairman.


Corporate Governance Code, the Committee will meet at least four (4)

times in every financial year and may meet more frequently from time to

time as it deems necessary or as may be required by the Board. These

meetings may be scheduled in conjunction with regularly scheduled

meetings of the entire Board. Unless otherwise directed by the Board,

(meetings can be attended in person or via tele-conference or video-

conference), the Committee will meet at the Company's registered office.


Corporate Governance Code, anyone will be entitled to be attend and

present at a meeting of the Committee based on the consent of the

Chairman.

3.3.6 The Chairman will preside, when present, at all meetings of the

Committee.

3.3.7 The presence of the majority of Committee members with the

presence of the Chairman or his/her deputy will constitute a quorum for

the Committee's meetings.

3.3.8 A member cannot elect another member of the Committee to

act on his/her behalf and to vote in the meetings.

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3.3.9 In case of emergencies or situations beyond the Committee's

control and where the Audit Committee cannot be convened, the Audit

Committee can take its decisions via circulation.

3.3.10 The Committee's resolutions will be taken by a majority of

votes.

3.3.11 The Chairman will have a casting vote in case of an equality of

votes in line with the Committee's authority specified in the DoA.


Corporate Governance Code, Officers of the Company might be invited by

the Chairman to attend the Committee meeting. The Non-Committee

members will be involved in the discussions but will not have any voting

right.

3.3.13 The Committee will keep written minutes of its meetings as

detailed in this Charter under "Section 3.4 "Minutes of Meetings" below".

3.4 Minutes of Meetings

3.4.1 The deliberations and resolutions of the Audit Committee will

be recorded in minutes. Such minutes will be kept with the Board of

Directors' records. These minutes will be provided to each of the

Committee members after the approval of all Committee members who

have attended the meeting.

3.4.2 The Committee will keep a record of its meetings and report on

them to the Board. The Committee's meetings will be documented as

follows:

The minutes will specify the date and the place of the meeting,

the name of attendees and absentees, summary of discussions held in

the meeting and their related decisions and recommendations.

The draft minutes will be prepared by the Secretary after each

meeting and will be sent to all Committee members for review. Any

comments on the minutes from any of the Committee members will

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be provided during a week from the draft's receipt date, or otherwise

the minutes will be considered as approved.

The Secretary will amend the draft minutes based on the

members' comments, if any, and will send the minutes along with

these comments to the Chairman.

The Secretary will prepare the final minutes according to the

Chairman's recommendations and will send them to the Committee

members duly signed by the Chairman and himself.

The signed copy of the minutes will be kept attached with the

related documents and correspondence in a special file held by the

Board Secretary.

3.5 Authority of the Committee

3.5.1 The Audit Committee's role will be to review and advise but

not to make any business decisions. The Committee will demonstrate a

constructive, supportive and advisory approach.

3.5.2 To achieve its objectives the Audit Committee is authorized to:

Perform the specific duties and functions enumerated in this

Charter and upon the directions and approval of the Board, to

investigate any of the Company's activities.

Have full access to the Company's Officers and employees at

all levels and authority to seek reports or information about the

Company's financial affairs, as it deems necessary to fulfill its

responsibilities, in coordination with the Chief Executive Officer

(hereinafter referred to as the "CEO").

Communicate its findings and recommendations for any

corrective actions to the Board and will not issue any directives to

the Company's Officers and employees in this regard. The Board will

either accept and implement the recommendations of the Audit

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Committee or advise the Committee of the reasons for any deviations

from the proposal.

As per "Principle 1 issued by the Corporate Governance

Code: The Company shall be headed by an effective, collegial

and informed Board" Grant Non-Executive Directors free access to

the Company's management beyond that provided in Board

meetings. Such access will be through the Chairman of the Audit

Committee or the CEO. The Board should make this policy known to

management to alleviate any management concern about a Director's

authority in this regard.

3.5.3 Individual members of the Committee will not access

independently the Company's Officers or employees without the

Chairman's approval or a resolution from the Audit Committee.


Corporate Governance Code, in discharging its oversight role, the

Committee, in coordination with the CEO, is empowered to investigate

any matter brought to its attention with full access to all books, records,

facilities and personnel of the Company and the power to retain outside

counsel, auditors or consultants, or incur additional expenses for this

purpose, that will be paid by the Company without seeking the approval of

the Board or the Officers. The Audit Committee may require any Officer

or employee of the Company or any of its subsidiaries and the Company's

advisors (including but not limited to: consultants, auditors and legal

advisors) to meet with the Committee, after coordinating with the CEO.

3.6 Reporting Responsibilities of the Committee

3.6.1 The Chairman will report formally to the Board on its

proceedings after each meeting on all matters within his/her duties and

responsibilities.

3.6.2 Make recommendations to the Board as it deems appropriate on

any area within its responsibilities where action or improvement is desired.

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3.6.3 Prepare an "Annual Report" concerning the number of

meetings held during the year along with the number of meetings attended

by each member.

3.6.4 Review any other reports relating to the Committee's

responsibilities and issued by the Company.

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4 Audit Committee Responsibilities

4.1 The Audit Committee will carry out the following responsibilities as set out

below:

4.1.1 Internal Controls and Finance and Accounting Policies and

Procedures

Review with the Company's management and internal auditor

and "External Auditor" the Company's policies to reasonably assure

the adequacy of accounting principles and financial practices applied.

Review the effectiveness of the Company's internal controls'

system, including information technology and telecom (industry

specific) security and controls.

Understand the scope of internal and "External Auditors"

review of internal controls over financial reporting, and review

reports on significant findings, implications and recommendations

together with management's responses.

Review with the Chief Audit Executive (hereinafter referred to

as the "CAE") and the "External Auditors" the coordination of audit

efforts to ensure complete coverage of key business controls and

high risk areas, improve efficiency and the effective use of audit

resources.

Review and comment on any significant new or changes to

existing finance and accounting policies and procedures adopted by

management.

4.1.2 External Audit and Financial Statements

As per "Appendix B: Audit Committee" issued by the

Corporate Governance Code, recommend to the Board the

appointment, dismissal and remuneration of "External Auditors".

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Any such recommendation will be made with regard to their

independence, cost and competencies.

In appointing an "External Auditor" for the Company, the

management of the Company and the Audit Committee will comply

with the related guidelines issued by the MoIC.

An invitation for "External Audit" proposals should be

requested from the firms short-listed by the IAF. A formal

documented evaluation of the auditors included in the short-list

should be carried out by the CAE in coordination and agreement with

the CEO. The evaluation should take into account specific industry

expertise, size of the audit firm, other similar audits, the value that

could be added as well as the fees. The evaluation and management's

recommendation will be submitted to the Audit Committee for

review. The Committee's recommendations will be subject to the

Board's approval.


Corporate Governance Code, make a determination at least once

each year of the "External Auditor's" independent report, including:

Determining whether its performance of any non-audit services

compromised its independence. Additionally, the Audit Committee

will pre-approve all non-audit services provided by the "External

Auditors", including specific pre-approval of internal controls related

services, and will not engage the "External Auditors" to perform non-

audit services prohibited by law or regulations.

Obtaining from the "External Auditor" a written report listing

any relationships between the "External Auditor" and the Company

or with any other person or entity that may compromise the "External

Auditor's" independence.

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Recommend a frequency for change/rotation of "External

Auditors" on a periodic basis.

Review "External Audit" reports, work with and support the

"External Auditors" where practicable and provide an alternative

communication link between the "External Auditors" and the Board

as and when needed.

Oversee the arrangements for the completion of the quarterly

interim reviewed financial statements and year-end audited financial

statements. Review together with the "External Auditor" the audit

plan (proposed audit scope); including coordination of the audit

effort with the IAF.


Corporate Governance Code, review with the "External Auditor" the

audited financial statements with respect to the audit approach,

accounting adjustments and reclassifications, recommendations for

improving the internal controls and any other significant audit

findings before these are presented to the Board as well as discuss

any restrictions on its access to requested information and any

disagreements or difficulties encountered with Officers.

As per "Chapter HC-3 Issued by the Central Bank of

Bahrain Rule Book – Volume 6: Capital Markets: Audit

Committee and Financial Statements Certification" Make

effective use of the work of the "External Auditor" as well as the

internal auditor and ensure the integrity of the Company's accounting

and financial reporting systems through regular independent review.

Audit findings will be used as an independent check on the

information received from management about the Company's

operations and performance as well as the effectiveness of its internal

controls.

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Discuss the adopted accounting policies and any changes in

accounting policies, providing opinion and recommendations to the

Board.

As per "Chapter HC-3: Audit Committee and Financial

Statements Certification" issued by the Central Bank of Bahrain

Rule Book – Volume 6: Capital Markets, recommend any additional

or specific audit required in respect of the financial statements and

other specific part of the business.



Rule Book – Volume 6: Capital Markets, recommend and table for

discussion a management letter to be provided to the external auditor.

Annually review and evaluate the "External Auditor's"

qualifications, performance and independence, including a review

and evaluation of the lead partner, taking into account the opinions of

the Company's Chief Officers and the CAE and present its

conclusions to the Board. The Audit Committee will also consider

the regular rotation of the "External Audit" firm itself to assure

continuing auditor independence in fact and in appearance.

Review the scope, terms of reference and remuneration for any

tax services assignment which can be performed by external

consultants.

On a regular basis, meet separately with the "External

Auditors" to discuss major observations arising from interim and

final audits and any other matter which the auditors wish to

highlight.

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Review the "Management Letter" issued by the "External

Auditors" and follow up the actions taken in response.

Consider, review and follow-up with management any findings

raised as part of the "External Auditor's" "Management Letter", and

management's response thereto, including timetable for

implementation of any recommendations.


Corporate Governance Code, review with the Officers and the

"External Auditor" the interim and annual financial statements prior

to presentation to the Board, and give comments and

recommendations with respect thereto.

Review with management, CAE and "External Auditor" the

effect of changes in applicable accounting standards and the changes

of the regulations on the Company's financial statements.

Regularly review with the "External Auditors" any audit

problems or difficulties encountered during the course of the audit

work, including any restrictions on the scope of the "External

Auditors" activities or access to requested information and

management's response.

Regularly report to the Board any issues that arise with respect

to the quality or integrity of the Company's financial statements, the

Company's compliance with legal or regulatory requirements, the

performance and independence of the Company's independent

"External Auditor", or the performance of the IAF.


Code: The Board shall have Rigorous Controls for Financial

Audit and Reporting, Internal Control and Compliance with

Law" Encourage management accountability for the financial

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statements required by the Directors, the Company's CEO and Chief

Financial Officer. The CEO and Chief Financial Officer will state in

writing to the Audit Committee and the Board as a whole that the

Company's interim and annual financial statements present a true and

fair view, in all material respects, of the Company's financial

condition and results of operations in accordance with applicable

accounting standards.

4.1.3 Internal Audit

Ensure that the Company maintains an IAF/function to provide

management and the Audit Committee with ongoing assessments of

the Company's risk management processes and system of internal

controls.


Corporate Governance Code, review and discuss with the Board, the

IAF's budget.


Corporate Governance Code, review and discuss the adequacy of the

Company's internal auditing personnel.

Review the annual performance appraisal and bonus, based on

performance and salary increment of the CAE, in coordination with

the CEO.

Oversee the IAF and review its charter, scope, efficiency,

independence, objectivity, performance and work plan.

Review, for the purpose of carrying out internal audit work and

preparation of the internal audit plan, the internal audit risk

assessment to decide on the effectiveness of the internal audit plan.

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Evaluate the internal audit procedures for establishing the

annual internal audit plan.



Rule Book – Volume 6: Capital Markets, approve the internal audit

charter as well as internal audit policies and procedures.


Corporate Governance Code, review the internal audit scope, internal

audit risk assessment and nature of the internal audit plan as well as

any subsequent changes, including whether or not the internal audit

plan is sufficiently linked to the Company's overall business

objectives and management's success and risk factors.

Review all internal audit reports, including executive summary,

observations/findings, implications, recommendations, management

replies as well as the exceptions noted and pursue the

implementation of the corrective measures in respect to the

comments included in the internal audit report.

Review and discuss all the follow-up reports of the internal

audit as well as the status of all the significant observations/findings

in the internal audit report.

Review with the CAE the results of the internal audit efforts on

a yearly basis, or as deemed necessary, and peruse periodical and

annual internal audit reports.

Supervise the Company's IAF/function to ensure its

effectiveness in executing the activities and duties specified in the

internal audit charter.

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Review and approve, on a regular basis, the IAF risk register,

audit plan and all major changes to the plan.


Corporate Governance Code, ensure that there are no unjustified

restrictions or limitations and review and concur in the appointment,

replacement or dismissal of the CAE.

Review the effectiveness of the IAF, including compliance with

the "Institute of Internal Auditors' (IIA) International Standards for

the Professional Practice of Internal Auditing".

On a regular basis, meet separately with the CAE to discuss any

matters that the Audit Committee or CAE believes should be

discussed privately.

4.1.4 Compliance with Laws, Regulations and Internal Policies

Review the effectiveness of the system for monitoring

compliance with applicable laws and regulations, the results of

management's investigation and follow-up (including any

disciplinary action) of any instances of non-compliance.

Review the findings of any examinations by regulatory

agencies

(including but not limited to: Telecommunication Regulatory

Authority of Bahrain "Financial Impact", MoIC, Ministry of Finance,

BB, CBB and internal/"External Auditor's" observations.


Corporate Governance Code, review the Company's internal

compliance and ethics programs, including consideration of legal and

regulatory requirements and review with management its periodic

evaluation of the effectiveness of such programs.

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Review the process for communicating the "Code of Conduct

and Ethics" to the Company's employees and for monitoring

compliance therewith.

Review the scope and status of systems designed to promote

the Company's compliance with laws, regulations, internal

procedures and the "Code of Conduct and Ethics" through the review

of reports from the IAF as well as from third parties as determined by

the Committee.

4.1.5 Information Technology (hereinafter referred to as "IT") Systems

Controls and Telecom Systems Controls

The Committee will consider and review with management, the "External

Auditors" and the IAF work relating to:

The effectiveness or weaknesses of the Company's

computerized information system controls and security.

Any related significant findings/observations, implications and

recommendations of the "External Auditors" and IAF together with

management's responses thereto, including the timetable for

implementation of recommendations to correct weaknesses in the

system's controls, including any significant risks related thereto and

major controls over such activities.

The status and adequacy of management information systems

and other information technology.

The Committee will review with the CAE and the "External

Auditors" the coordination of the audit effort to ensure complete

coverage of key system controls and risk areas related to IT controls.

4.1.6 Other Responsibilities

Follow-up on allegations of material, financial, ethical or legal

irregularities; look into serious violations of the Company's policies,

alleged breach of legal provisions or contravention of the "Code of

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Conduct and Ethics", which are highlighted by the IAF or any other

staff member.

Institute, oversee and direct any special investigations, as

needed, concerning matters relating to the Company's financial

statements, internal controls, compliance with the laws or business

ethics.

Review all significant issues within the scope of the Committee

Charter, including any changes in accounting principles/estimates,

with the management and the "External Auditors", prior to any

decision being reached on reporting practices to be followed by the

Company, and report thereon to the Board.

Review procedures for the receipt, retention and treatment of

complaints received by the Company regarding accounting, internal

controls or auditing matters, including procedures for the

confidential, anonymous submission by employees of the Company

of concerns regarding questionable accounting or auditing matters.

The Committee will be available at all times to receive

suggestions, questions or recommendations from the "External

Auditors", IAF or the Officers.

Perform other activities related to these activities as requested

by the Board.


Code: The Board shall have Rigorous Controls for Financial

Audit and Reporting, Internal Control and Compliance with

Law" and "Appendix B: Audit Committee" The Board should

adopt a "Whistleblower" program under which employees can

confidentially raise concerns about possible improprieties in financial

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or legal matters. Under this program, concerns may be

communicated directly to any Audit Committee member or,

alternatively, to an identified officer or employee who will report

directly to the Audit Committee on this point.

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5 Responsibilities of the Audit Committee Members

5.1 The members will make every effort to attend all Committee meetings and to

effectively participate in discussions. The members will inform the Chairman if

they cannot attend a meeting.

5.2 The members will maintain the confidentiality of the Company's trade secrets

gained through performing their duties and will not publicize confidential

information to shareholders out of the "General Assembly" or to any other party.

In such cases, the member will be dismissed from the Committee and can be held

responsible for the financial damages caused by such announcements.

5.3 The members of the Audit Committee will not execute any management job in the

Company even by way of consultancy.

5.4 The members will carry on good performance in executing their duties and

responsibilities and will be updated in their domain in the interests of the

Company.

5.5 The members will be honest, truthful, objective and independent in performing

their duties.

5.6 The members will not participate in any occupations that can violate the

"Directors’ Code of Conduct Policy" of the Company or its principles. Moreover,

the members will not accept any occupations that are liable to give rise to conflicts

of interest with the Company and those which may prevent them from executing

their duties objectively and independently.

5.7 The members are required to disclose all personal interests (including shares'

ownership in the Company) and their nature that are executed with the Company

and any personal relation with the Board of Directors and the Officers.

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6 Relationship with Others

The sphere of the Committee's responsibilities will make it necessary for it to maintain

a good relationship with other committees established at Zain.

6.1 Board Risk Committee

6.1.1 The Committee will coordinate with the "Risk Committee", once formed,

to ensure that the Company's overall "Risk Management Process" is

comprehensive in scope and is functioning effectively and also to seek the

"Internal Audit" intervention where required.

6.2 Other Board Committees

6.1.2 The Committee may coordinate with other Board committees, as

appropriate, to perform its duties and responsibilities.

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7 Members' Orientation

7.1 New Committee members will be provided with an orientation program which

will include presentations by Officers on the Company's strategic plans, its

significant financial, accounting and risk management issues, legal affairs,

compliance programs, operations, "Directors’ Code of Conduct Policy",

management structure, key policies, practices and internal and "External

Auditors". In addition, each incoming member will be provided with copies of

Zain's "Articles of Association", "Management Agreement", the executive

summary of the corporate plan, previous internal audit reports, internal audit plans

and other appropriate information.

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8 Approval

8.1 This Audit Committee Charter has been approved by the Board of Directors at

their meeting held on___________.

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9 Definitions

9.1 Ministry of Industry and Commerce ("MoIC")

As per "The Introduction" issued by the Corporate Governance Code, the MoIC

is the governmental body with responsibility for administering the "Company

Law" and the "Corporate Governance Code" as well as the

closely-related "Audit Law". The MoIC will actively exercise its monitoring and

penalty powers under the "Commercial Companies Law" and will work closely

with the CBB and the BB.

9.2 Central Bank of Bahrain ("CBB")

As per "The Introduction" issued by the Corporate Governance Code, as the

body responsible for licensing and regulating the BB and for supervision of

financial institutions, the CBB will also have an important role in monitoring and

enforcement of the "Corporate Governance Code".

9.3 Bahrain Bourse ("BB")

As per "The Introduction" issued by the Corporate Governance Code, and

through its authorities to impose listing and delisting standards, its investigation

function, and its disciplinary Board with specific penalty powers, the BB will also

contribute importantly to enforcement of this "Corporate Governance Code".

Among other things, the BB's listing rules will require compliance with this

"Corporate Governance Code" and/or such more stringent requirements as the BB

will consider necessary from time to time.

9.4 Independent Director

As per "Appendix A: Independent Director" issued by the Corporate

Governance Code, an Independent Director is a Director whom the Board has

specifically determined has no material relationship which could affect his/her

independence of judgment, taking into account all known facts. The Board of

Directors should consider that, although a particular Director meets the formal

requirements, he/she may not be independent owing to specific circumstances of

the person or the Company, ownership structure of the Company, or for any other

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reason. The Board's determination should be a good faith finding after diligent

review and full discussion.

Independent Director means a Director of the Company who, or whose family

shareholders either separately or together with him/her or each other, does not

have any material pecuniary relationships or transactions with the Company

(not counting Director's remuneration for this purpose) and in particular who,

during the one (1) year preceding the time in question met all the following

conditions:

Was not an employee of the Company.

Did not:

Make to, or receive from, the Company payments of more than

BHD31,000 or equivalent (not counting Director's remuneration).

Own more than a 10% share or other ownership interest, directly or

indirectly, in an entity that made to or received from the Company

payments of more than such amount.

Act as a general partner, manager, Director or officer of a partnership

or Company that made to or received from the Company payments of

more than such amount.

Have any significant contractual or business relationship with the

Company which could be seen to materially interfere with the person's

capacity to act in an independent manner.

Did not own directly or indirectly (including for this purpose ownership by

any family member or related person) 5% or more of the shares of any type

or class of the Company.

Was not engaged directly or indirectly as an auditor or professional advisor

for the Company.

Was not an associate of a Director or a member of senior management of the

Company.

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9.5 Executive Director

As per "The Terms Used in the Code" issued by the Corporate Governance

Code, an Executive Director means a Director who is an officer or employee, or is

otherwise involved in day-to-day management, of either:

The Company;

Another Company which is a "Controlling Shareholder" of the Company;

Another Company of which the Company is a "Controlling Shareholder"; or

Another Company which is controlled by a "Controlling Shareholder" of the

Company.

9.6 Non-Executive Director


Code, a Non-Executive Director means any Director who is not an Executive

Director.

9.7 Controlling Shareholder


Code, a Controlling Shareholder means any shareholder who holds 10% or more

of the share capital or is able to exercise (or control the exercise of) 10% or more

of the voting power in the Company.

9.8 Chief Executive Officer (CEO)


Code, a CEO means a Company's Chief Executive Officer.

9.9 Company

Zain Bahrain B.S.C.

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10 List of Terms and Abbreviations

BHD Bahraini Dinar

CAE Chief Audit Executive

CBB Central Bank of Bahrain

CEO Chief Executive Officer

DoA Delegation of Authority

IAF Internal Audit Function

MoIC Ministry of Industry and Commerce

No. Number

NRC Nomination and Remuneration Committee

OECD Organization for Economic Cooperation and Development

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