SSIF > Corporate Governance > Corporate Governance Guide

Corporate Governance Guide

"The Organization for Economic Cooperation and Development (OECD) has defined the corporate governance as a set of relations between Corporation’s management, Board of Directors, shareholders and the other stakeholders. Corporate Governance shows the mechanism through which objectives of the Corporation are set and the means for achieving and monitoring them as well. Accordingly, the good corporate governance is the one which provides the Board of Directors and the Executive Management with the appropriate incentives to reach these objectives which serve the best interest of the Corporation and facilitates establishing an efficient control process. Corporate Governance helps the Corporation exploit its resources efficiently."

The importance of the Corporate Governance in the Unit stems from the fact that it provides a foundation for developing the future Corporate performance in order to support the confidence in the Unit’s activities as an independent entity for administering the funds of the General Social Security Corporation competently and professionally, and clarify communication mechanisms between the Investment Unit and the Board of Directors of the Social Security Corporation in its capacity as the guardian of the Social Security Corporation’s funds, in accordance with the best international practices in administering Pension Funds. The guide is based on the following four guiding principles:

- Justice: In dealing with all stakeholders (shareholders, the Board of Social Security Corporation, subscribers of the Social Security Corporation, Investment Unit’s Employees and the Control Authorities).
- Transparency in Disclosure: In a way that enables the stakeholders to evaluate the status and the financial performance of the Social Security Investment Unit.
- Accountability in Relations: Between the Social Security Investment Commission and the Executive Management of the Unit on the one hand and the Social Security Investment Commission, the Board of Directors of the Social Security Corporation and the other stakeholders.
- Responsibility: In terms of clear separation of responsibility and delegation of authorities among the stakeholders.

The Social Security Investment Commission, through the Governance Committee emanating from it, should review, develop and modify this guide from time to time and whenever necessary, in order to keep pace with the changes in the needs and expectations of both the Social Security Corporation and the Social Security Investment Unit Commission.

The Basic Pillars of the Guide:

First: Commitment to Corporate Governance:

The Social Security Investment Unit prepares a Governance Guide (based on the guiding principles included in this guide), provided that it is adopted by the Social Security Investment Unit Commission and published on its web-site.
The Social Security Investment Unit Commission forms a committee, emanating from it, to be called the Governance Committee which is comprised of three members of the Social Security Investment Unit Commission to direct the operations of preparing, updating and applying this Guide.
In its annual report, the Investment Unit ensures pointing out the extent of commitment to the Guide’s Articles. Upon non-commitment to any of its Articles, reasons should be mentioned.

Second: Functions of the Social Security Investment Unit Commission

1- General Principles

A. Pursuant to Bylaw No. (111) for the Year 2001 "The Social Security Funds Investment Regulation", the Social Security Investment Unit Commission holds all the responsibilities related to the Unit’s operations and its financial soundness. It should make sure they meet all requirements of the Board of the Social Security Corporation and other stakeholders and ensures that the management of the Investment Unit is being prudently operated and within the scope of the applicable laws and the internal policies of the Unit.

B. The Social Security Investment Unit Commission establishes the commitment principle in each member of the Committee towards the Unit’s highest interests as to serve the subscribers of the Social Security Corporation.

C. The Social Security Investment Unit Commission sets up the strategic objectives for the Unit, in addition to the systems of internal control and surveillance over its Executive Management which is responsible for the daily operation. Moreover, the Social Security Investment Unit Commission endorses the systems of internal control and surveillance, ensures its effectiveness, and to what extent does the Unit abide by the strategic plan, policies, adopted or required procedures in accordance with laws and regulations issued thereunder. Also to ensure all the Units’ risks are being properly administered.

2- The Social Security Investment Unit Commission:

The Social Security Investment Unit Commission undertakes the following duties and authorities:

Proposing the investment policies and submitting them to the Social Security Corporation Board of Directors for adoption.
Developing the plans and programs needed for implementing the General Investment Policy set by the Social Security Corporation Board of Directors.
Contracting with investment companies and financial experts and determining their fees.
Formation of permanent and temporary committees needed for the work of the Investment Unit, and defining their duties, authorities and the bonuses of their members of members who are not Unit employees.
Evaluating the performance of the Investment Unit and submitting a report thereon to the Social Security Corporation Board of Directors.
Submitting quarterly reports on the activities and financial status of the Investment Unit to the Social Security Corporation Board of Directors.
Issuing the internal executive and regulatory, financial, administrative and technical instructions of the Investment Unit in order to ensure the achievement of its objectives.
Adopting the annual budget draft of the Investment Unit, indicating the various areas of expenditure and the amounts allocated to each area, in preparation for submission to the Social Security Corporation Board of Directors for approval.
Delegating any of its authorities stipulated in these Instructions or Regulation issued pursuant thereto to the Chairman of the Investment Unit Commission or to the employees thereof, provided that the delegation is in writing and specific.
Any other functions related to the objectives and activities of the Investment Unit.

3- The Chairman of the Investment Commission:

Upon the recommendation of the Chairman, a ful-ltime Chairman shall be appointed for the Investment Unit Commission by virtue of a decision taken by the Council of Ministers, which shall include the salary and all the financial rights of the Chairman. The services of the Chairman shall be terminated in the same way. The duties,responsibilities and authorities of the Commission Chairman are as follows:

Implementing the decisions taken by the Investment Unit Commission, supervising the Unit, and following up the performance of its functions.
Following up the plans and programs needed for implementing the adopted investment policy.
Managing the affairs of the Unit, supervising its employees and workers, managing all its departments, following up the financial and administrative affairs, coordinating between the Unit and any relevant authority, and carrying out the necessary procedures for that.
Proposing the organizational structure of the Unit and the job descriptions therein, and submitting both to the Investment Unit Commission for approval.
Preparing the annual budget draft of the Unit, and submitting it to the Commission for adoption in preparation for submission to the Board for approval.
Preparing the annual report of the Unit's works, financial statements related to its investment activity and the final accounts for the fiscal year ended and submitting them to the Commission for adoption in preparation for submission to the Board for endorsement.
Signing the agreements and contracts adopted by the Commission.
Preparing the regulatory, financial and administrative instructions required for the Unit's works, and submitting them to the Commission for adoption.
Any functions or authorities entrusted to him or delegated by the Commission according to the Instructions issued pursuant to the provisions of this Regulation.
Establishing constructive relations between the Social Security Corporation Board, and the Social Security Investment Unit Commission on one hand and between Social Security Investment Unit Commission and the Unit's Executive Management, on the other hand.
Creating a culture that promotes constructive criticism (during the meetings of the Investment Unit Commission) about controversial issues. It also encourages discussions and voting on those issues.
Ensuring enough information is received on time by both the Social Security Corporation Board of Directors and the members the Social Security Investment Unit Commission.
Ensuing high standards of Corporate Governance are available at the Investment Unit.

4-Structure of the Social Security Investment Commission:

The Investment Unit Commission shall be formed of nine people, headed by the Chairman of the Commission and the membership of each of: - The Director General of the Corporation as Vice-Chairman.
- Two members nominated by the Social Security Corporation Board from its members, one representing the workers and the other representing the employers; either one may be replaced with another in the same way.
- Five members of expertise and efficiency to be appointed by the Council of Ministers upon the recommendation of the Social Security Corporation Board which is based upon the recommendation of the Social Security Corporation Board Chairman; anyone of them may be replaced with another in the same way.
- The Chairman of the Commission shall name one of the Unit's employees as rapporteur.
Diversification of scientific and professional expertise and specialized skills should be considered when the Social Security Investment Unit Commission is formed.
Training courses on wise governance should be provided for the members of the Investment Unit Commission.
Considering that Members of the Commission are characterized as independent members. The independent member is defined as the member who has no relation with the Unit save his membership in its Commission, making his judgement on matters not affected by any considerations or external matters. The minimum requirements the independent member should have are as follows:

He should not have worked in the Unit for the three years preceding the date of nominating him for membership in its Commission.
He should not have any kinship up to fourth degree with any of the members of the Commission, the Chairman or any manager in the Investment Unit.
He should not receive any salary or any amount of money from the Unit, except for his membership in its Commission.
He should not be a Board member or an owner of a company the Unit deals with vitally.
He should not be a partner of the external auditor or working for him during the three years preceding the date of nominating him for membership in the Unit’s Commission.

5) Membership of any of the Commission members terminates in the following cases:

Resignation
If he failed to attend three whole consecutive meetings without acceptable excuse.
If he is convicted of a felony or misdemeanor that infringes on the honor or involves moral turpitude.
If he is no more capable of exercising his work in the Commission for six Consecutive months.
If he declared his bankruptcy or insolvancy.

5) Organizing the Works of the Social Security Investment Unit Commission:

A- The Commission Meetings and Mechanisms of Decision-Taking:

The Commission shall convene when convoked by the Chairman, or the vice Chairman in the absence of the Chairman, at least once per month, or whenever needed, or upon a request submitted by at least three of its members, stating the reasons for the meeting and the issues to be discussed therein. The meeting is legal when it is attended by at least five of its members, provided that the Chairman or the Vice-Chairman is one of them, and takes its decisions by the majority of the attendants’ votes.
In cases of emergency and whern there is no quorum to convoke the Commission meeting, a conference call may be used with the member or members who failed to attend the meeting. They are provided with all data and information on the agenda. The Secretary documents official minutes in this concern and keeps the voice recording as a document for the meeting.
The Commission meetings are headed by the Chairman of the Investment Unit Commission. He conducts discussions, maintains order and is responsible for conveying the decisions and recommendations, issued by the Commission, to stakeholders internally and externally.
The Chairman may call on an expert or more to attend the meeting to seek his/their opinions.
For the purpose of ensuring comprehensiveness of issues presented in the meeting, which should not be less than twelve meetings per year, the Executive Management of the Investment Unit initiates proposing the issues it sees appropriate on the agendas of each meeting.
The Unit provides the Commission members with adequate information, at a time ahead enough of the Commission meetings, in order to enable them to study it. This is done after the completion of all fundamental approvals (Commission’s nomination, Investment Committee’s recommendation, legal status and the required documents).
The Commission members and committees should be entitled to direct contact with the Unit’s Executive Management.
At the beginning of the Investment Unit Commission meetings, and within the framework of the subjects suggested, the full diclosure by the Commission members should be taken into account about any conflict of interest with the subjects suggested. If there is a conflict in interests, the voice of the member concerned shall be neutralized.
The Commission members commit to updating the cofirmation of conflict of interests when required.
The minutes of the decisions therein are considered to be endorsed and effective if the authentication of all members was obtained via e-mail.
Mechanisms that ensure the recording and codifying of all discussions and interpositions by the Commission members during the meeting should be made available (manual codification, voice recording) to ensure proper decision-making.
By circulation Commission decisions are taken by unanimity of Commission members.
In numbering of the Commission decisions, distinction between decisions taken at the meetings and decisions by circulation should be considered.

B. Commission's Rapporteur:

The Chairman of the Commission names a rapporteur for the Commission from among the employees of the Unit whose responsibilities are as follows:

Writing down all the Commission’s discussions , and its members suggestions and interpositions as well as the members voting on the decisions which takes place during the Commission’s meetings.
Writing down the minutes of the meeting within four working days of the Commission’s meeting and sending it to the Commission Chairman for initial endorsement. It should be distributed via email to the members of the Commission for note-taking within two days of the date of distribution.
Having the members who attended the Commission’s meeting sign the minutes. As for the absentees, the word “absent” is written in the signature place next to the name.
Organizing the numbering and the sequence of the minutes of meetings.
Archiving the handwritten and the voice recorded minutes and the decisions electronically as well as keeping the original copies in special files in the iron safe.
Following up the implementation of the decisions and providing a monthly report to all of the members of the Commission accordingly.

6- The Commission’s Activities”

1) Appointments /Replacements/ Development:

The Investment Unit Commission policy should include appointing persons with integrity, technical qualifications and investment and financial expertise.
The Commission’s approval on the appointments is obtained in accordance with the applicable regulations and instructions.
In order to achieve this activity, the Commission ensures the availability of the following plans and systems:

A. A system for job positions and job levels and a system for the salaries and benefits based on a methodology of jobs classification and evaluation.

B. Plans for the career courses, a management system, performance evaluation and setting objectives and replacement plans of the Unit Departments’ Managers.

C. Periodical review for the Human Resources regulations and policies, and the benefits in a way that enables the Unit to attract qualified people and retain highly qualified personnel .

D. Providing advanced programs for the competent professional people that the Unit requires.

2) Planning/Control and Surveillance Systems/Code of Ethics and Conflict of Interests:

1. The Commission determines the Unit’s objectives and directs the Executive Management to develop strategies for achieving these objectives. In return, the Executive Management develop work plans that go along with those strategies through a planning process that includes the contribution of all the Unit’s Departments. The Commission adopts the strategy and the work plans and makes sure that the Executive Management has reviewed the performance achievements according to the work plans. It also makes sure that the correctional procedures have been taken where required and considers the estimated budget process as a part of the short term planning process of the performance measurement.

2. The Social Security Investment Unit Commission should make sure that the Unit has high integrity in exercising its business through providing policies and a code of ethics which include a definition of the conflict of interests. These policies together with the code of ethics should be distributed to all of the Unit’s employees after being endorsed by the Commission.

The policies should include the followings:

A. Rules and procedures that organize the operations with the stakeholders, whether between the Unit and its employees, its Commission members or the parties related to them. The Unit's Departments concerned with the internal control and surveillance systems should make sure that the operations of the stakeholders were done in accordance with this policy.

B. Clear internal control and surveillance systems to prevent the Commission’s members, the Unit’s managers and employees from exploiting inside information of the Unit for their personal benefit.

C. The Unit should have written policies that cover all of its investment activities. These policies should be distributed to all administrative levels and reviewed regularly to ensure they include any amendments or changes to the laws and regulations and any other matters related to the Unit.

D. The Unit, as a part of the approval process on the various investment decisions, evaluates the quality of the Corporate Governance for its clients, especially the Public Shareholding Companies so as to include a risk evaluation of the clients by points of weakness and strength of their practices in the field of Governance.

3) Self-Assessment of the Social Security Investment Unit Commission and the Evaluation of the Executive Management Performance:

1. The Commission evaluates its performance and efficiency, at least once a year, through the Governance Committee according to principles proposed by the Governance Committee and approved by the Commission.

2. The Executive Management is evaluated annually by the Commission according to standards and principles approved by the Commission.

Third: The Committees of Social Security Investment Unit Commission:

1. General Provisions:

In order to increase its efficiency, the Social Security Investment Unit Commission should form, as soon as possible, Committees emerging from it with definite objectives.. These Committees are to be empowered with authorities and responsibilities identified by the Commission for a definite period of time according to a Charter that clarifies all the aforementioned. Also, these Committees submit their periodical reports to the Commission noting that the existence of these Committees does not free the Commission from bearing the direct responsibility for all the issues related to the Unit.
The principle of transparency should be adopted when appointing members of the Commission’s Committees. The names of the members in these Committees with a summary of their duties and responsibilities are declared in the annual report of the Investment Unit.
The Commission can integrate the duties of several Committees together if this was more convenient from the administrative point of view.

2. Audit Committee:

Pursuant to Bylaw number (111) for the year 2001 and its Amendments, and by a decision taken by the Commission, a Committee called “Audit Committee” is formed and it is comprised of a Chairman and two non-executive members selected by the Social Security Investment Unit Commission. The names of the Committee’s members should be declared in the Unit's annual report.
The Commission’s policy provides that at least two of the Committee’s Audit members should hold an academic qualification and/or practical experience in financial management. The number of the independent members, in the Committee, should not be less than two.
The Audit Committee exercises its entrusted responsibilities and authorities, pursuant to the Investment Bylaw number 111 and any other related legislations, which include the followings:
1. Reviewing the comments mentioned in the external audit reports and following up the actions taken in this respect.
2. Studying the annual internal audit plan, reviewing the comments mentioned in the internal audit reports, and following up the actions taken thereon.
3. Ensuring the accuracy and the correctness of the accounting and control procedures and to what extent it is abided with.
4. Ensuring full compliance to laws and regulations that the Unit is subject to.
The Audit Committee works under the supervision of the Commission and submits its reports and recommendations to the latter, and in its turn, the Commission submits the recommendations endorsed by it to the Board of the Social Security Corporation.
The Audit Committee submits its recommendations to the Commission regarding appointing, terminating or rewarding the external auditor and any other contractual conditions. In addition, it evaluates the objectivity of the external auditor, taking into consideration any irrelevant actions carried out by the auditor to secure this objectivity.
The Audit Committee should be authorized to get any information from the Executive Management in addition to its right in calling upon any employee or Executive Director or member of the Investment Unit Commission to attend its meetings provided that it is stipulated in writing in its charter which includes the duties and responsibilities of the Committee.
The Audit Committee holds at least one meeting annually with the external auditor, the internal auditor and the compliance officers without the attendance of the Executive Management.
The responsibility of the Audit Committee doesn’t obviate the responsibilities of the Commission or the Executive Management of the Unit with regard to the control over the adequacy of its internal control and surveillance systems.

3. The Governance Committee:

A Committee called the Governance Committee is formed by a decision of the Commission and comprises a Chairman and two non-executive members selected by the Commission from its members. The names of these members should be declared in SSIU annual report.
The Governance Committee develops rules and restrictions that enhance commitment to Governance principles in the Investment Unit, according to the best international practices.
The Governance Committee checks on the availability and the suitability of the legislations (regulations and instructions), strategies, policies and procedures related to all aspects of the Unit’s activities which would promote the governance in the Investment Unit.
The Governance Committee checks on the availability and the suitability of a list of appropriate authorizations of the investment decision-making. It also checks on the empowerment of authorizations and the methodology and mechanisms of investment decision-making in the Investment Unit.
The Governance Committee checks on the availability of a charter that governs the work ethics. This charter is to be distributed and committed to by all of the employees of the Unit and the members of the Commission.
The Governance Committee ensures the independency and impartiality of its members and that the Investment Unit Commission adheres to the application of adopted policies of the interests conflict, and dicloses any form of the conflict of interests on the Commission’s members level in every meeting whether this conflict is financial, commercial, functional or professional, and which would negatively affect the impartiality and independency of the member.
The governance committee ensures and follows up the Investment Unit compliance with the approved disclosure policy concerning the transparency in declaring the Commission activities and financial data. It also ensures that the Investment Unit complies with the disclosable information, definite timetable for disclosure as well as disclosure mechanisms for the information that diclosure provisions apply to, according to the adopted diclosure policy.
The Governance Committee checks on the availability of an organizational structure which reflects the convenience of the distribution of the rights, authorities and responsibilities in the Investment Unit. It also checks on the availability of mechanisms and policies for evaluating the performance and the accountability.
The Governance Committee proposes the fundamentals that regulate the representation processes of the Social Security Corporation representatives in the companies Boards of Directors in which it has shares, including the fundamentals of evaluating the current representatives proposed to represent the Corporation in the Boards.
The Governance Committee proposes definite and clear standards to evaluate the efficiency of the Commission’s performance, where these standards are previously specified, (at the beginning of the fiscal year) clear and measurable.
The Governance Committee makes sure that the Commission has a rewards policy which involves that rewards/salaries are good enough to attract qualified people to work in the Unit and retain them in a way that goes along with the rewards/salaries offered by similar financial establishments in the market, taking into consideration qualifications, experience, job importance and performance when determining salaries for SSIU managers.
The committee prepares a clear policy to evaluate the performance & determine the rewards for SSIU's Chairman and managers pursuant to point (2) article (8) of Bylaw Number 111 issued in 2001 Regulation "The Social Security Investment Fund Regulation" .

4. Risk Management Committee:

A Committee known as the "Risk Management Committee" shall be formed by a decision of SSIC, and shall be formed of a Chairman and two members selected by the SSIC from its members, names of committee members must be disclosed in SSIU annual report.
The Risk Management Committee shall supervise the process of determining , analyzing, evaluating and managing financial & non- financial risks that are related to investment portfolios which managed by SSIU.
The Risk Management Committee shall study and revise current and expected risks ( Risk Profile) , and ensure that major risks are being managed effectively.
The Risk Management Committee shall revise risk management strategies and policies prior to their adaption by SSIC , SSIC shall ensure the implementation of these strategies as well as to develop policies and procedures to manage different types of risks.
The Risk Management Committee shall monitor deviations from the risk management policies and recommend related necessary decisions.
The Risk Management Committee shall revise business Continuity & Disaster Recovery Plan and monitor the provision of all the necessary requirements for its work.
The Risk Management Committee shall monitor the compliance of SSIU through all the legislation governing the work and developments in legislation that could affect the risk profile.
The Risk Management Committee shall evaluate the effectiveness of risk management in SSIU.
SSIU's Executive Management proposes a structure for the Risk Management Department and the process of developing it. This structures to be reviewed by the Risk Management Committee and adopted by the Commission.
The Risk Management Committee follows up the rapid developments and the increasing complications that occur in the Risk Management inside SSIU. It submits periodical reports to the Investment Unit Commission about these developments.

5. Real Estate Committee :

A Committee known as the "Real Estate Committee" shall be formed by a decision of SSIC, and shall be formed of a Chairman and four members selected by the SSIC from its members, names of committee members must be disclosed in SSIU annual report.
Based on the recommendation of the Internal Investment Committee the Real Estate Committee shall recommend selling , buying and renting real estate to SSIC.
Based on the recommendation of the Internal Investment Committee the Real Estate Committee shall recommend the amount of compensation that should be paid to compensate SSC real estate that is acquired by others
The Real estate Committee shall inspect land and real estate if needed.

6. Executive Committee:

1. A Committee known as the "Executive Committee" shall be formed by a decision of SSIC, and shall be formed of a Chairman and four members selected by the SSIC from its members, names of committee members must be disclosed in SSIU annual report.
2. The Executive Committee works under the supervision of SSIC it submits its recommendation to SSIC concerning its tasks according to as follows:

Studying investments opportunities and projects suggested by SSIU.
Studying SSIU investment policy and sub-policies on investment.
Studying key strategic polices of SSIU and the executive and organizational instructions.
Studying the mechanisms of managing SSIU investments.
Studying SSIU organizational structure and jobs description.
Studying any subjects submitted to the Committee by SSIU.

7. Central Tenders Committee:

A Committee known as the "Executive Committee" shall be formed by a decision of SSIC and pursuant to article (11) of SSIU procurement instructions.
According to SSIU procurement instructions the Central Tenders Committee practices its tasks.

Fourth: Internal Control and Surveillance Context

Further to what is mentioned hereinafter, the Commission Chairman of the Investment Unit’s decision No (2007/19) on 21/8/2007 regarding “the decision of the internal control and surveillance systems” is accredited as the fundamental reference in the context of internal control and surveillance, in addition to the following:

1. Internal Control and Surveillance Systems:

1- The structure of internal control and surveillance systems is reviewed by the internal auditor and the external auditor, at least once a year.

2- The Commission encloses a report about the ability of the internal control and surveillance systems to financial reporting, in the annual report, where the report includes:

- A paragraph that clarifies the Executive Management’s responsibility for setting up internal control and surveillance systems on the financial reporting in the Unit and maintaining them.

- A paragraph about the framework which has been used by the Executive Management to evaluate the efficiency of the internal control and surveillance systems .

- The Executive Management’ evaluation for the efficiency of the internal control and surveillance systems , as it is on the date of the financial data which is included in the annual report.

A disclosure of any vulnerable points of substantial value in the internal control and surveillance systems (any substantial weakness is a clear weakness point(s) that result in a potential inability to prevent or disclose invalid data of substantial effect.

A report from the external auditor that shows his opinion as to the evaluation of the internal control and surveillance systems by the Executive Management.

3- The Unit develops procedures that enable the employees to report confidentially and duly any concerns about a possibility of violations in a way that allows an independent investigation on these concerns. The implementation of these procedures are monitored by the Audit Committee.

4- For the purpose of elevating the level of the internal control and surveillance systems , the Investment Unit develops the methodology of self-assessment for the internal control and surveillance systems and risks through proposals and contributions from all the Unit’s cadres as well as the Control Departments in the Unit.

2. Internal Audit:

1) The Unit should provide the Management of the Internal Audit with sufficient number of qualified human resources, and should be trained and rewarded adequately. The Audit Management has the right to obtain any information and contact any employee in the Unit. Additionally, it is granted all the authorities that enable it to perform its tasks appropriately, and the Unit should document the tasks, authorities and responsibilities of the Audit Management in the Internal Audit Charter adopted by the Unit and distribute it in the Unit.

2) The Internal Audit Management refers its reports to the Chairman of the Commission and the Chairman of the Audit Committee.

3) Employees of the Internal Audit should not be assigned to any executive responsibility. The Internal Audit Management is responsible for proposing the structure and the scope of the Internal Audit and for informing the Audit Committee about any possibility of conflict of interests.

4) The Internal Audit Management exercises its tasks and prepares a full report without any external interference. It has the right to discuss its reports with the departments that were audited.

5) The basic responsibility of the Internal Audit Management - based on the risks - includes reviewing the minimum of the followings:

- Financial reporting processes in the Unit (to ensure that the key information about administrative and financial issues and the operations have accuracy, reliablility and appropriate timing).

-Compliance with the Unit’s internal policies, the international criteria and procedures, laws, and the related instructions. .

3. External audit :

1) The Unit is required to have regular circulation for the External Audit among the audit offices. If the application is practically difficult, then the Unit is required to have regular circulation for the main partner responsible for the External Audit of the Unit.

2) The External Auditor provides the Audit Committee with a copy of his report and meets with the Audit Committee, at least once a year, without the presence of the Executive Management.

4. Risk Management

1) The Risk Management Department in the Unit submits its periodical reports to the Risk Management Committee. As for the daily operations, its connection is to be with the Commission Chairman.

2) The Risk Management Department’s responsibilities in the Unit include:

1. Analyzing all risks including market risks, liquidity risks and operations risks.
2. Developing methodologies for measurement and control for each type of risk.
3. Recommending the Risk Management Committee on the ceilings of the risks, approvals, submitting reports and recording of the exceptional cases about the Risk Management Policy.
4. Providing the Commission Chairman and the Investment Unit Commission members with information about risk measurement and risk profile in the Unit. The Commission reviews risks statistics in the Qualitative and Quantitative Unit regularly in every meeting of the Commission.
5. Offering information about risks in the Unit for the purposes of disclosure and publicizing.

3) The annual report of the Unit should include information about Risk Management Department in respect of its structure, the nature of its operations and the recent developments.

5 . Compliance :

A- Risk Management Department prepares an effective methodology to ensure the Unit’s compliance with all of the applicable laws, legislations and any related directions and guides. The Unit should document tasks, authorities and responsibilities of the Compliance Management and distribute them in the Unit.
B- The Commission adopts and controls the Compliance Policy. The policy’s preparation, development, checking on its application in the Unit are the authorities of the Risk Management Department.
C- Risk Management Department refers its reports, about the results of its works in regard of the compliance, to the Commission Chairman with a copy being sent to the Executive Management.

Five: Relation with the Social Security Corporation Board of Directors:

The principle of separating the Governance (Governing Functions) from investment decision-making and management (Managing Functions) by establishing an investment arm that has full independence and neutralism represented in the Social Security Investment Unit Commission reinforces the principle of performance evaluation and accountability by giving the Social Security Corporation Board of Directors its role in setting up the general policy of investment, exercising the role of controlling, following up the investment arm’s performance and evaluating and measuring its performance according to referential benchmarks and business plans. For achieving this purpose, the regulatory and monitoring role of the Social Security Corporation Board of Directors in its relation with the Social Security Investment Unit Commission is as follows:

1. Ratifying the investment strategy and policy of the Investment Unit.

2. Ratifying the instructions and regulations that regulate the Investment Unit's businesses.

3. Ratifying the annual estimated budget of the Investment Unit.

4. Ratifying the annual and quarterly final accounts ( Balance Sheet and Income Statement).

5. Exercising its authorities in respect of the Unit’s activities in accordance with the regulations and the applicable policies.

6. To quarterly examine a detailed report from the Investment Unit Management which includes the following:

Details of the investment portfolios.
The executed operations for the period covered by the report.
Returns of all types of investment.
A statement of the cash deposits.
An avowal by the Investment Unit Commission that the investment conforms with the investment policy adopted by the Corporation Board of Directors.

Six: Transparency and Diclosure:

1) The Unit should perform disclosing according to the International Financial Reporting Standards (IFRS). It should be cognizant of the changes to the international practices of the financial reporting and the transparency scope required of the financial institutions. The Unit's Management is responsible for ensuring compliance with the full implementation of all the amendments to the international standards. The Executive Management refers the reports about the developments to the Commission in addition to providing recommendations on ways to enhance the Unit’s practices in the field of disclosure.

2) The Unit is committed to offer significant and meaningful information about its activities to the Unit's Management, the Social Security Corporation Board of Directors and the Corporation’s public subscribers with a focus on issues of concern to the general public. The disclosure of all this information should be periodical and accessible to all.

3) In its annual report, the Unit confirms its responsibility for the accuracy and adequacy of the financial data of the Unit and the information contained in its annual report.

4) The Unit commits to maintaining lines of communication with the control authorities and the public in general, through the following:

Public Relations post, which is occupied by a qualified staff capable of providing comprehensive, objective and updated information about the Unit, its financial status, its performance and its activities.
The annual report, which is issued after the end of the fiscal year.
Quarterly reports, which contain quarterly financial information.
Providing the information included in the annual report of the Unit, or in its quarterly reports, or in the lectures delivered by the Executive Management, and on the Unit’s Website with updating in Arabic and English, if possible, through the post of Public Relations.
The annual report and the quarterly reports of the Unit include a disclosure by the Executive Management of the Unit called Management Discussion and Analysis (MD&A) so as to help the general public understand the results of the current and future operations and the financial status of the Unit, ,including the potential impact of common tendencies, accidents and cases of uncertainty. The Unit undertakes the obligation that all of the explanations stated in this disclosure are adopted, complete, fair, balanced and intelligible and based on the Unit's published financial data.
As a part of commitment to transparency and full disclosure, the annual report should include in particular:

1. The Unit’s strategic plan and its goals.

2. The financial and operational results of the Unit (the financial position and achievements)

3. The Unit's trading operations in the stock market (according to the instructions of the Securities Commission).

4. Any important data related to the Unit's businesse and investments, which are not classified as confidential data.

5. A summary of the organizational structure of the Unit.

6. A description of the structure and activities of Risks Management Department.

7.A testimony of the Commission that the internal control and surveillance systems are sufficient

8. Corporate Governance Guide at the Unit and the annual details of commitment level to its Articles.

9. A summary of the duties and responsibilities of the Unit’s Committees, and any authorization the Commission has assigned to those Committees.

10. Information about the staff of the Investment Unit Commission, their qualifications and the mechanisms of selecting them.

11. Privileges and rewards of the members of the Board of Directors and the Executive Management.

12. The number of the Commission and the Commission's Committees meetings during the year.

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