Corporate Governance

Directive Corporate Governance

I. GENERAL PROVISIONS

Art. 1 Background

The Listing Rules require that Issuers provide Corporate Governance information to investors, enabling them to evaluate the issuer and its securities comprehensively. Corporate Governance ensures ethical standards permeate all levels of the organization, preventing misconduct and promoting long-term success.

Art. 2 Purpose

This Directive ensures that Issuers disclose their Corporate Governance standards and practices transparently, empowering investors to evaluate the organization’s accountability and structure.

Art. 3 Scope of Applicability

This Directive applies to all Issuers whose equity securities have a primary listing on MERJ Exchange.

II. DISCLOSURE OBLIGATIONS

Art. 4 Information to be Published

Issuers must disclose Corporate Governance information as detailed in the Annex to this Directive. The information must:

1. Be provided in the Corporate Governance Report section of the annual report.

2. Be properly cited, with references to other annual report sections or external sources where necessary.

3. Include a negative statement for information not applicable to the Issuer.

Art. 5 Place of Publication

The Corporate Governance Report must be:

1. Published as a separate section in the annual report.

2. Cross-referenced with supporting documents or external sources (e.g., URLs) when applicable.

Art. 6 Comply or Explain

Issuers must adhere to the principles outlined in this Directive or provide detailed explanations for any deviations, including justifications for non-disclosure.

III. REPORTING DATE AND RISK MANAGEMENT

Art. 7 Sustainability and Risk Reporting

1. The conditions on the balance sheet date determine the information to be disclosed.

2. Significant changes occurring after the balance sheet date but before publication must be included.

3. Issuers may opt to produce a Sustainability Report aligned with recognized international standards. If opted, the report must be:

   1. Published online within eight months of the fiscal year-end; and

   2. Maintained online for five years.

4. Risk management disclosures must include:

   1. Identification of material risks, including operational, legal, and cybersecurity risks; and

   2. Measures undertaken to mitigate these risks.

IV. SANCTIONS

Art. 8 Non-Compliance

MERJ Regulation may impose sanctions on listed companies or auditors who fail to comply with the provisions of this Directive, as per the corresponding provisions of the Listing Rules.

V. FINAL PROVISIONS

Art. 9 Entry Into Force

This Directive shall enter into force on 1 March 2025.

Art. 10 Transition Provisions

The requirements of this Directive must be complied with for all interim and annual reporting periods starting from 30 June 2025.

ANNEX: SUBJECT AND EXTENT OF CORPORATE GOVERNANCE INFORMATION

A. Group Structure and Shareholders

1. Group Structure

   1. A detailed description of the operational group structure.

   2. Names of all listed and non-listed entities in the group.

   3. Registered offices of these entities.

   4. Listing venues, market capitalization, and security/ISIN numbers for listed entities.

   5. Share capital and percentage shareholding by subsidiaries for non-listed entities.

2. Significant Shareholders

   1. Disclosure of major shareholders or shareholder groups holding significant stakes.

   2. Key elements of shareholder agreements made public during the year under review.

   3. A summary of all public disclosures related to shareholdings or references to the relevant web page where such disclosures can be found.

3. Cross-Shareholdings Disclosure of any cross-shareholdings exceeding 5% of the capital or voting rights between the issuer and other entities.

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B. Capital Structure

1. Capital Composition

   1. Total ordinary, authorized, and conditional capital as of the reporting date.

   2. Details of the maximum potential increase in capital for authorized or conditional shares.

2. Changes in Capital Summary of changes to capital over the last three financial years, including reasons for such changes.

3. Shares and Participation Certificates

   1. Description of all share classes and participation certificates, including their rights (e.g., voting, dividends).

   2. Identification of shares not fully paid in, if applicable.

4. Transfer Restrictions and Nominee Registrations

   1. Limitations on transferability of shares and any conditions for nominee registrations.

   2. Procedures for removing transferability restrictions or related exceptions.

5. Convertible Bonds and Options

   1. Summary of outstanding convertible bonds, options, or other equity-linked instruments.

   2. Terms of conversion or exercise.

   3. Amounts of underlying equity affected.

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C. Board of Directors

1. Board Composition For each member:

   1. Name, nationality, education, and professional background.

   2. Executive or non-executive designation and current roles in the issuer or subsidiaries.

   3. Membership in key governing/supervisory bodies and associations.

2. Election and Terms

   1. Date of first election to the board.

   2. Term limits or rules governing re-elections.

3. Internal Organizational Structure

   1. Allocation of roles and responsibilities within the board.

   2. Overview of board committees, their mandates, and membership details.

4. Information and Control Instruments Description of mechanisms for overseeing the executive committee, including:

   1. Risk management systems.

   2. Internal auditing processes.

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D. Executive Committee

1. Executive Members For each executive:

   1. Name, nationality, and role.

   2. Education and professional experience.

   3. Past roles with the issuer or subsidiaries.

2. Management Contracts

Key details of management contracts with external entities, including:

a. Names and offices of contracted entities.

b. Scope and terms of the contracts.

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E. Compensation, Shareholdings, and Loans

1. Compensation Policy

   1. Summary of policies for compensating board members and executives.

   2. Details of shareholding or incentive programs.

2. Loan Disclosures Terms of loans provided to directors or executives, including:

   1. Principal amounts.

   2. Interest rates.

   3. Repayment terms.

F. Shareholder Participation Rights

1. Voting Rights and Representation

   1. Rules on voting rights, including any restrictions or group clauses in the articles of association.

   2. Methods for institutional proxies and justifications for granted exceptions.

2. Quorums and Resolutions

   1. Specific quorum requirements for shareholder meetings.

   2. Resolutions requiring supermajorities.

3. Meeting Procedures

   Rules for convening and conducting general meetings, including:

   1. Shareholder rights to propose agenda items.

   2. Deadlines for submission.

G. Changes of Control and Defense Measures

1. Change-of-Control Clauses

   1. Details of any clauses triggered by a change in control, including:

   2. Takeover defenses.

   3. "Opt-out" or "opt-up" provisions.

   4. Obligations to make mandatory offers.

2. Other Mechanisms

   Measures designed to deter hostile takeovers.

H. Auditors

1. Audit Firm Information

   1. Audit Firm Information

   2. Name and domicile of external auditors.

   3. Fees paid for audit and non-audit services.

2. Audit Oversight

   Description of how the board interacts with auditors, including the role of audit committees.

I. Information Policy

1. Communication Practices

   1. Channels for disseminating price-sensitive and non-price-sensitive information.

   2. Publication schedule for financial and operational updates.

2. Access to Information URLs or platforms where corporate information can be accessed, including:

   1. Investor relations.

   2. Financial statements.