QC Corporate Governance Report 2020

Qatar District Cooling Company PJSC Corporate Governance Report 2020

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TABLE OF CONTENTS

1.

Introduction

2.

Definitions

3. Commitment to Apply the Governance Code in Qatar District Cooling Company

4.

Qatar District Cooling Company Profile

5.

Subsidiary Companies of Qatar District Cooling Company

6.

Board of Directors

7.

Executive Management

8.

Internal Controls

9.

Risk Management

10. External Controls

11. Shareholders’ Rights

12.

Stakeholders’ Rights

13. Company’s Disputes and Litigation

14. Company’s Website

15. Violations

16. Governance Report

17. Commitment to Social Responsibility

QC/HR/ Qatar District Cooling Company PJSC Corporate Governance Report 2020/DN-/Ver. 1 Prepared by: [GC] / Approved by: [ Governance Committee] / Approval Date: January 12 th ,2021

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1. Introduction

Dear Shareholders,

Governance rules and regulations are no longer only a set of indicative systems as they used to be in the past. They have evolved into a binding law (“Governance Code”) that must be applied and enforced. Given that Qatar District Cooling Company is a subsidiary of the United Development Company, a company listed on the Qatar Stock Exchange, Qatar District Cooling Company is committed to implementing the best standards and rules of corporate governance. Qatar District Cooling Company has taken the lead among Qatari companies in developing transparency and internal control systems that meet the requirements of the Governance Code. The Governance Code has placed an obligation on the Board of Directors to develop several policies aimed at protecting shareholders and safeguarding their interests as well as enhancing internal controls in the company. As of now, most of the governance policies required under the Governance Code have already been developed and approved by the Board of Directors. We have made sure that the application of governance standards and systems becomes an integral part of our company’s strategy. This strategy follows closely the country’s vision, which aims to develop the economic and investment sector and to upgrade it to match the world’s best economies. Qatar District Cooling Company has worked incessantly over the past year to improve its governance performance. By issuing this report, we reaffirm our commitment to the best standards of transparency, control and good management, which ensure full protection of the company’s shareholders and employees and enhancement of its reputation as one of the prominent private joint stock companies in the State of Qatar. We are fully aware that the proper application of the Governance Code contributes directly to improving the company’s management processes in general, which in turn improves the company’s profitability and increases its returns. This is why we pay great attention to the application of the Governance Code and consider it to be an integral part of the company's business strategy. Considering that the application of the Governance Code is a continuous process of development and improvements, we are proud of the level achieved by Qatar District Cooling Company so far. We are confident of our ability to improve our performance and to enhance it further in the coming years.

QC/HR/ Qatar District Cooling Company PJSC Corporate Governance Report 2020/DN-/Ver. 1 Prepared by: [GC] / Approved by: [Governance Committee] / Approval Date: January 12 th , 2021

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We are pleased to present our 2020 Corporate Governance Report, which provides a summary of our governance performance.

Please accept my best regards.

Turki Bin Mohamed Al-Khater Chairman of the Board of Directors

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2. Definitions:

Company :

Qatar District Cooling Company Private JSC The Board of Directors of the Company The Corporate Governance Regulations for Private JSC issued in accordance with Ministerial Resolution No.71/201, and the Corporate Governance Regulations companies listed in Qatar Exchange and are subject to the supervision of the Qatar Financial Markets Authority, which are issued in accordance with the Board of Directors of the Qatar Financial Markets Authority No. 5 of the year 2016 and published in May 2017.

Board of Directors or Board:

Governance Code :

Articles of Association :

The Articles of Association of Qatar District Cooling Co. Private JSC.

Executive Management:

Comprises the CEO of the Company and members of the senior management team reporting to him, who carry out substantive executive work that affects the day to day management of the Company or its strategic plans or financial and administrative performance.

QC/HR/ Qatar District Cooling Company PJSC Corporate Governance Report 2020/DN-/Ver. 1 Prepared by: [GC] / Approved by: [Governance Committee] / Approval Date: January 12 th , 2021

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3. Commitment to Applying the Governance Code in Qatar District Cooling Company

Governance Rules and Regulations were only indicative in the past, Qatar District Cooling Company dealt with the application of the Governance Code as a mandatory requirement and as a matter of vital importance and an integral part of the Company’s activities. The Company continues to adopt standards of full transparency, responsibility and integrity, and to apply the Governance Code as an integral part of its culture and its management strategy in monitoring its day to day business. The Company adopted special charters for the Board of Directors and its committees, namely the Executive Committee, the Audit Committee and the Governance, Remuneration and Nominations Committee. These charters define the frameworks and responsibilities of the Board members and Board committees. The content of this report covers the performance and responsibilities of the Board of Directors and its various committees. With the issuance of Governance Regulations Code pursuant to the Ministerial Resolution No.71/2019 , and the Governance Code issued pursuant to the resolution of the Board of Directors of the Qatar Financial Markets Authority No. 5 of the year 2016, which gave such Code the status of a law in terms of applicability and enforceability, the Board of Directors had to adopt certain governance policies. The Board of Directors approved several governance policies to comply with the Governance Code issued by Ministry of Commerce and Industry and Qatar Financial Markets Authority as mentioned at the outset of this report. An additional indicator of the Company’s commitment to applying the Governance Code, was the amalgamation of the Corporate Governance Committee and the Remuneration and Nominations Committee in one committee. The amalgamation was done in order for the Company to become fully compatible with the latest Governance Code issued in 2017. A special charter for the newly formed committee was approved by the Board of Directors, which was subsequently amended to adopt the responsibilities and powers stipulated in the new Governance Code of 2017. Today, this committee assumes its responsibilities in assisting the Board of Directors carry out its duties in respect of nomination and appointment of executive managers and evaluation of their performance, proposing the Company’s wages and remuneration system and bonuses and incentives policies in line with its vision and goals. The Committee also assists the Board with regard to supervising the Company's implementation of the Governance Code and developing the mechanisms necessary for its implementation.

The current members of the Board of Directors elected by the General Assembly in 18/03/2020, contributed to enhancing the Company's commitment to the principles of

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governance. Undoubtedly the Board of Directors gave full attention to the implementation of and compliance with the Governance Code.

On a different note, the Company has been working constantly to develop various policies including, as an example, the human resources policy to achieve the highest possible level of compliance with the Governance Code in a manner that contributes to determining the wages policy and to the implementation of a program for succession planning. Additionally, the Board of Directors approved a number of policies related to the Governance Code, such as the “whistle blower” policy and the codes of ethical and professional conduct. This document provides a report on the Company's commitment to the requirements of the Corporate Governance Code and highlights the policies and frameworks the Company has adopted in assessing its risks and evaluating its internal controls. It also provides information about the members of the Board of Directors, Board meetings and Board committees, as well as other information as required by the Authority. This report is available also on the Company's website, which can be accessed at the following link: https://www.qatarcool.com/Policies

4. Qatar District Cooling Company Profile

Qatar District Cooling Company is the leading company in the field of district cooling in Qatar. Qatar District Cooling Company aimed, since its establishment, to achieve excellence in all aspects of its work. Over the past 16 years, the Company developed solid technical and operational expertise and refined its approach to provide its services to businesses and individuals. Qatar District Cooling Company is currently the top company in the provision of district cooling services in the State of Qatar, with a paid-up capital of Qatari Riyals 330 Million. Qatar District Cooling Company owns four cooling plants, three of which are located in the West Bay, in addition to the largest cooling plant in the world, which is located in the Pearl-Qatar, with a total capacity of 237,000 tons cooling capacity. In 2020, the company started building its second plant in the Pearl Island with a total expected capacity of 18,000 tons of cooling capacity Qatar District Cooling Company pays great attention to the environmental impact of district cooling and, accordingly, it seeks operational efficiency of district cooling plants. We strive to protect the environment, by cutting, as much as possible, CO2 emissions, possible gas leakages and noise pollution. District cooling provides significant environmental benefits and allows substantial savings in natural resources. Over the past nine years, Qatar District Cooling Company saved more than two and a half billion kilowatt hours of electricity, which in turn led to cutting more than one billion

QC/HR/ Qatar District Cooling Company PJSC Corporate Governance Report 2020/DN-/Ver. 1 Prepared by: [GC] / Approved by: [Governance Committee] / Approval Date: January 12 th , 2021

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and four hundred million tons of Carbon dioxide from the air. This reduction in carbon dioxide is equivalent to removing more than 271,000 cars from the roads or planting more than 17 million trees, which would fill more than 49,000 soccer fields. Qatar District Cooling Company recently completed the conversion of two of its West Bay district cooling plants to use Treated Sewage Effluent (TSE) in its operations. So far, we have saved more than two million cubic meters of potable water in the two cooling plants. That is enough water to meet the demand of around 3,000 medium- sized villas in the State of Qatar per year.

5. Subsidiary Companies of Qatar District Cooling Company

Qatar District Cooling Company owns the following companies: -

Company Name

Nationality

Capital

Equity

Installation Integrity WLL Qatari

QR. 200,000

100%

CoolTech Qatar WLL

Qatari

QR. 200,000

100%

6. Board of Directors

A- Election and Structure of the Board of Directors The Company's current Board of Directors was elected at the General Assembly meeting held on 18/03/2020. The Board consists of five members in accordance with the Articles of Association which defines the number of members. According to the current composition of the Board, all members are non-executive. The following table shows the structure of the Board and the functions of its members and their membership in the Board committees:

Committees

Executive Non- Executive Non- Executive

Name

Board

Executive

Audit

Governance

H.E. Mr. Turki Mohamed Al- Khater Mr. Ali Hussein Al-Fardan

Chairman -

-

-

Vice Chairman

-

-

Chairman

Non- Executive

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Mr.

Ibrahim

Member

Chairman Chairman Member

Non- Executive

Jassim Othman

Al

-

Mr. Colin Stuart Sangster Jean Francoise Pierre Chartrain Mr.

Member

Member

Member Member

Non- Executive Non- Executive

Member

-

-

-

The following Table shows the number of Qatar District Cooling Company shares represented by each member of the Board as of the date of issuing this report:

Shares

Board Member

Representing

Number

%

H. E. Mr. Turki Mohamed Al-Khater

United

Development

16,170,000 49%

Company (Q.P.S.C).

Mr. Ali Hussein Al-Fardan Medina Innova (L.L.C)

330,000 330,000

1% 1%

Mr. Ibrahim Jassim Al Othman Mr. Jean Francois Pierre Chartrain

The Pearl Qatar Company (L.L.C) National Central Cooling Company (P.S.C)

14,190,000 43%

Mr. Colin Stuart Sangster Tabreed

Energy

330,000

1%

Investment (L.L.C)

The following table shows the number of personally owned shares as of the date of issuing this report:

Shareholder’s Name

Owned Shares Number

%

H. E. Sheikh Faisal Bin Qasim Al Thani 660,000

2% 2% 1%

H. E. Mr. Khalid bin Nasser Al Misnad H. E. Mr. Abdulrahman bin Hamad Al Atiya

660,000 330,000

B- Board Members The Board of Directors of the Qatar District Cooling Company comprises the following members:

His Excellency Mr. Turki Mohamed Al-Khater Chairman of the Board: Representing United Development Company (QPSC)

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A Qatari National, born in 1958 and holds numbers of high positions. He is the Chairman of United Development Company since 2013. He is the President of General Retirement and Social Insurance Authority, Vice Chairman of Masraf Al Rayan, and a Board Member of Ooredoo. He has previously held the position of Managing Director of Hamad Medical Cooperation and Under Secretary of Public Health. H.E enjoys diverse background and significant experience in business and finance. Mr. Al-Khater received his B.S. in Economic from Portland State University, USA.

Mr. Ali Hussein Al-Fardan Vice-Chairman of the Board: Representing Medina Innova (LLC)

A Qatari national, born in 1959, holds a BA in political science from Portland State University. Ali Hussein Al-Fardan is currently the Vice Chairman of Al-Fardan Group, Partner and Vice Chairman of the International School of Choueifat, Chairman of the Board of Directors of Danat Qatar Company, CEO of Al-Fardan Jewelry Corporation, CEO of Ghada Jewelry Company, CEO of Al Manara Trading Company and board member of the United Development Company. Mr. Ibrahim Jassim Al-Othman Member of the Board, representing the Pearl Qatar Company (LLC) A Qatari national, born in 1964, holds a BSc. in Petroleum Engineering from the University of Southern California and Master’s Degree in Business Administration from the American University of Beirut. He has over 26 years of experience in the oil and energy industry in a number of leading national and international companies. Currently, he holds several positions including the CEO and board member of the United Development Company, and member of the Board of Directors of Qatari Diar. In the past he held several executive positions and boards membership in various sectors. Mr. Jean-Francois Pierre Chartrain Member of the Board of Directors representing the National Central Cooling Company (PSC) French national, born in 1974, holds a Bachelor's degree in mechanical and electrical engineering from the High School of Economics and Economic Studies in France and an MBA from the European School of Management, Paris, France. Jean-Francois has more than 20 years of experience in business development, engineering and construction in various sectors such as utilities, energy, renewable energy, and environmental industries in different geographical regions. In the past, he was the technical director at Engie Italia where he headed three separate departments: design, maintenance engineering and energy efficiency. He was also responsible for leading the private development of the district heating scheme.

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Mr. Colin Stuart Sangster Member of the Board of Directors representing Tabreed Energy Investment Company British citizen, born in 1962, Colin holds a BSc. from the University of Manchester in the United Kingdom. He has more than 30 years of experience in the utilities and environment sector throughout Europe, Asia and the Middle East. Currently, he heads the Asset Management department of "Tabreed", managing contractual relations with the company’s customers in the UAE as well as the company’s investments in projects throughout the GCC . Previously, he held the position of chief financial officer of Azalya, a JV between Mubadala and Veolia. Prior to that, he held the position of CFO for the Suez Water and Solid Waste Companies in Hong Kong, Macao and Mainland China. C- Board of Directors’ Charter Qatar District Cooling Company Board of Directors issued long time back the Charter of Board of Directors and amended later its charter to include the provisions of the Governance Code issued by the Ministry of Commerce and Industry and Qatar Financial Markets Authority , as these codes were more comprehensive and detailed in relation to the main tasks, functions, duties and responsibilities of the Board in terms of delegation of responsibilities, duties of the Chairman and the obligations of the Board members. The Board of Directors’ charter stated clearly the framework of the Board’s activities and provided members with the necessary indicators that help them in carrying out their duties in a manner that enhances governance culture. The Board of Directors’ charter adopted the articles contained in the Governance Codes issued by the Ministry and QFMA which are as follows: • The Main Functions and Tasks of the Board of Directors These include, as an example and not by way of limitation, approving the Company’s strategic plan and main objectives and overseeing their implementation, setting the Company’s business plan and risk management policy, determining the Company’s financial structure and approving its annual budget, periodically reviewing the organizational structure to ensure the balanced distribution of jobs, tasks and responsibilities, developing written policies for governance in respect of conflict Interest, Related Parties and disclosure systems in a manner that achieves fairness and transparency, ensuring integrity of the financial systems, preparing reports, approving special nominations to senior executive management positions and adopting written policies that establish the basis for granting Board members, top executive management and Company’s employees bonuses and incentives. • Board of Directors’ Responsibilities These include, as an example, the Board’s responsibility to perform its duties responsibly, carefully, earnestly and with goodwill, commitment of Board members to

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the Company’s interests and not to the interests of the shareholders they represent, specifying the powers delegated to executive management and the duration of such delegation, barring the Board from concluding loan contracts the term of which extends beyond three years and prohibiting it from carrying out any action that requires approval of the General Assembly except after obtaining such approval. • Delegation of Authorities Without prejudice to the authorities of the General Assembly, the Board assumes all the authorities and powers, and may delegate its committees to exercise some of such authorities, but the ultimate responsibility for the Company remains with the Board. • Duties of the Chairman of the Board The Chairman of the Board of Directors is the president of the Company and represents it before others and the judiciary. He holds the prime responsibility for the good and effective running and management of the Company. The duties of the Chairman of the Board include, as an example, ensuring that the Board discusses all issues in a timely manner, approving the agenda of the Board meetings and taking into account any issue raised by any of the members, encouraging members to conduct the affairs of the Board in a cooperative manner, providing all required data and documents to Board members and committees and inviting the active participation of members. The Vice-Chairman shall replace the Chairman in his absence, and the Chairman may delegate some of his authorities to other members of the Board. • Obligations of Board Members The obligations of the Board members include, but are not limited to, attending the Board meetings regularly, upholding the interests of the Company, shareholders and other stakeholders and giving them priority over private interests, monitoring the Company's performance in achieving its goals and objectives, overseeing the development of governance rules, employing their diverse skills and experience in managing the Company effectively, actively participating in the General Assembly of the Company, not to make any statements or press releases except with the prior written permission of the Chairman, disclosing any financial or commercial relations or judicial cases that may compromise the performance of their tasks. In the event that a Board member retires or leaves his position for any reason, he must handover all the papers and documents of the Company. Handing over the Company’s documents does not relieve the member from maintaining the confidentiality of the information gained during his membership. Board members must work within the boundaries of the powers granted to them in accordance with the Company's Articles of Association, directives of the Chairman, decisions of the shareholders, and the relevant laws and regulations.

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D- Board Meetings In 2020, the Board of Directors of Qatar District Cooling Company achieved compliance with the number of meetings stipulated in Article 14 of the Governance Code and Article 104 of the Companies Law. The Board held six (6) meetings. All Board meetings were convened with invitations from the Chairman, which were sent to the members, on average, 15 days in advance of respective meetings. The invitations included the meeting agenda as required under the Governance Code. The Chairman approves the minutes of the agenda of each subsequent meeting at the beginning of each meeting. He also views the minutes and signs it for all members of the Board. E - Evaluating Board of Directors’ Performance Qatar District Cooling Company adopted a policy for the evaluation of the performance of the Board of Directors in terms of attendance by members of Board meetings and their active participation during such meetings. Qatar District Cooling Company has involved the Corporate Governance, Remuneration and Nominations Committee in conducting the evaluation of the Board members. Board members are allowed the opportunity to conduct self-evaluation through a questionnaire prepared specially for this purpose. The questionnaire will be completed by Board members and then delivered to the Governance, Remuneration and Nominations Committee who, in turn, will decide on the performance of the members and refer it to the Board. F- Board of Directors Remuneration Qatar District Cooling Company adheres to the provisions of the Governance Code, the law and the Articles of Association related to remuneration of Board members, specifically Article 119 of Law No. (11) for the year 2015 (the Commercial Companies Law) and Item No. (48) of the Articles of Association. The Company applies the formula and the standard provided for in the said Articles. In general, the decision of the Board of Directors regarding such remuneration will be forwarded to the General Assembly for approval. G – The Board Secretary The Company’s General Legal Counsel assumes the duties of the Board Secretary in accordance with Article 10 of Governance issued by the Ministry and article 16 of the Governance Code issued by QFMA. In accordance with Articles of the Governance Code, the tasks of the Board Secretary in Qatar District Cooling Company include the following: • Editing and preserving the minutes of the meetings of the Board and its committees, taking attendance of the members, recording the decisions taken

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by the Board in the meetings as well as objections or reservations by members, if any, and maintaining the correspondence and reports referred to the Board. • Recording the Board’s decisions in the register prepared for this purpose in chronological order. • Keeping the minutes of the Board's meetings, decisions, and reports, and all the Board's records and correspondence in hard and soft copies. • Sending meeting invitations together with the agenda attached thereto to Board members and other invitees (if any) at least two weeks in advance of the date set for respective meeting, as well as receiving requests from members to add items to the agenda and recording the date of submitting such requests. • Coordinating between the Chairman and Board members and between the various Board members, as well as coordinating between the Board and other stakeholders, including shareholders, management and employees; • Assisting the Chairman of the Board by facilitating delivery of all relevant information to Board members; • Providing advice to the Board on issues related to governance and other legal issues, as a matter of course.

H – Board Committees First: The Executive Committee:

The Board decided, several years ago, to form an Executive Committee from within the Board for the purpose of facilitating management activities and making them more flexible. The Executive Committee was empowered with the necessary authorities to manage and execute the Company’s business including the administrative, financial and contractual issues. The Committee focuses on assisting the Board in handling strategic issues as well as issues related to budgets and procurement. The Executive Committee is chaired by Mr. Ibrahim Jassim Al-Othman, and includes Mr. Colin Stuart Sangster, Mr. Karim Farhat, Mr. Nasser Hatem as members. The Executive Committee held seven (7) meetings during 2020, during which it reviewed the various operations of the Company and made the necessary recommendations related to different projects. Second: The Governance, Remunerations and Nominations Committee: The Board of Directors established the Governance, Remuneration and Nominations Committee, with the aim of fulfilling the requirements of the Governance Code, making the Company's activities more efficient, enhancing specialization and optimizing distribution of authorities. The Committee’s charter was amended by the Board on 15/12/2019 to conform to the Governance Code issued by the Ministry of Commerce and Industry and QFMA. The Governance, Remuneration and Nominations Committee is chaired by Mr. Ali Hussein Al-Fardan and includes Mr. Ibrahim Jassim

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Al-Othman and Mr. Colin Stuart Sangster as members and Mrs. Aysha AlShriem (Chief Administration & Support Services Officer) as Committee Secretary. The charter defined the Committee’s responsibilities and powers within the framework of the Governance Codes. The Committee’s responsibilities include, but are not limited to, drafting a succession plan for the Company’s management review, receiving nominations and appointing holders of executive management jobs in the Company, evaluating the performance of such managers as well as the performance of the Board of Directors on annual basis, proposing a wages, remuneration, incentives and bonuses policy, monitoring the Company’s implementation of the Governance Code and developing mechanisms to implement it. The Governance, Remunerations and Nominations Committee held three (3) meetings during 2020, in which it approved and endorsed recommendations related to the human resources policy and the remuneration of the Board of Directors and the Company’s employees, in addition to approving the Corporate Governance Report. Third: The Audit Committee: - The Board of Directors formed the Audit Committee with the aim of fulfilling the requirements of Governance Code and improving efficiency of the Company’s operations. The Committee’s charter was approved number of years ago and subsequently amended by the Board to comply with the Governance Codes. The Audit Committee is chaired by Mr. Ibrahim Jassim Al-Othman and includes Mr. Colin Stuart Sangster and Mr. Karim Samaha as members. It is worth noting that most of the Committee members have good experience in auditing activities. The Audit Committee’s charter defines its responsibilities and authorities within the framework of the Governance Code. The Committee’s responsibilities include nominating and supervising the external auditors, verifying their independence, and reviewing and ensuring the accuracy and correctness of the financial statements and reports. It is worth noting that the Audit Committee does not include any member who currently work or previously worked for any of the Company’s external auditors. The Audit Committee held seven (7) meetings during 2020, during which it discussed the 2020 audit plan to identify progress in its implementation in addition to various audit tasks beyond the scope of the plan and special reviews requested by the CEO. Fourth: Allowing Public Access to the Board’s and Committee’s Charters The Board of Director’s charter as well as the charters of the Audit Committee, the Governance, Remunerations and Nominations Committee, referenced in this report, in addition to the detailed Corporate Governance Report are available to shareholders on the Company's website, and can be accessed at the following link: https://www.qatarcool.com/Policies

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Fifth: Remuneration of Members of Board Committees It goes without saying that the work carried out by Board members within the various Board Committees constitutes an additional effort and workload. In recognition of this, the Board decided to pay each Board member who is a member of any of the said Committees a financial allowance against attending each meeting. 7. Executive Management A- With the Board’s approval, the Company’s CEO established the Company’s Organizational Structure to facilitate the running of the Company’s operations smoothly and without overlapping amongst the various departments. The Company’s work was divided among seven (7) departments, each with a distinct role, headed by a department manager reporting directly to the CEO. Each department is responsible for implementing the Company's policies in relation to its scope, in accordance with the directives of the CEO and the Board of Directors. B - The performance of the executive departments and executive managers is evaluated according to specific mechanisms and precise criteria to ensure meeting the key performance indicators. The evaluation is carried out under the direct supervision of the CEO and the results are presented to the Board of Directors for approval or amendment. 8. Internal Control The Internal Audit function in Qatar District Cooling Company has undergone steady improvements in order to respond effectively to the Company's activities, meet its internal audit obligations and provide the necessary recommendations regarding required changes to enhance governance and risk management in the Company. The Company has adopted a set of policies, internal regulations, decisions, circulars and other written control procedures that are designed to ensure the proper organization of business activities within the various departments and to ensure implementation of management directives, appropriate separation of duties, development and motivation of employees, improvement of employees’ professional conduct, and facilitating exchange of information in a manner that enables related parties to carry out their duties satisfactorily, thereby contributing to optimum performance and control of work. The responsibility for assessing the effectiveness of the Company’s internal control procedures rests with the Internal Audit Department, which employs very experienced and efficient auditors. The Internal Audit Department audits all the Company's departments, businesses and projects, following annual audit plans approved by the

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Audit Committee. It assesses the quality of performance, identifies risks and makes recommendations, especially with regard to: • Evaluating the internal control systems in place and their conformity to standards and suitability to achieve senior management’s desired targets, and making suggestions and recommendations to enhance the efficiency of these systems. • Evaluating the extent of commitment by all departments to the implementation of the Company's internal control systems. • Identifying failure to adhere to the Company's policies and procedures, and the reasons for such failure. It is worth noting that the Company’s Internal Audit department is an independent department headed by an internal auditor with extensive professional and technical background, who works independently and objectively. He is responsible for all internal audit tasks of the Company and has free access at all times to all of the Company's departments, activities and documents in order to perform the audit tasks satisfactorily. The Head of Internal Audit reports technically to the Audit Committee. To preserve their independence and impartiality regarding the activities they monitor, members of the internal audit team are prohibited from participating in the daily tasks of the Company's departments and divisions. The Board of Directors delegated all matters related to internal auditing to the Audit Committee, including the appointment of the Head of the Internal Audit department. The Head of Internal Audit submits his reports related to internal audit matters to the Audit Committee. It is noted that the Internal Audit department submits its quarterly reports to the meetings of the Audit Committee. 9. Risk Management The Qatar District Cooling Company pays great attention to implementing an integrated system of management practices that aims to evaluate and manage all risks related to the Company's activities conducted in pursuit of achieving its goals and plans. The responsibility for risk management falls within the scope of the Business Excellence Department. The primary objective of risk management is to protect the Company from impediments that hinder achieving operational and financial goals in a sustainable manner. The Company’s management understands the critical importance of implementing effective and efficient risk management systems. The role of this department is to assist the managers and subsidiary companies in identifying risks, developing plans for risk mitigation or prevention and, subsequently, following up on the implementation of the said plans and gauging their effectiveness in preventing or avoiding risks .

QC/HR/ Qatar District Cooling Company PJSC Corporate Governance Report 2020/DN-/Ver. 1 Prepared by: [GC] / Approved by: [Governance Committee] / Approval Date: January 12 th , 2021

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10 . External Control The decision to appoint External Auditors, including determining their fees, is taken by the General Assembly in its meeting that can be attended by all shareholders. The External Auditors attend this meeting to present their report and answer shareholders’ inquiries. The General Assembly of the Qatar District Cooling Company, in its last meeting held on 18/03/2020, appointed “KPMG” as External Auditors to review the Company’s statements and provide audit services to the Company for the fiscal year 2020. External Auditors are appointed to assure the Board of Directors and the shareholders that the Company’s financial statements are prepared in accordance with all relevant laws and legislations and international standards for preparation of financial reports, and to ensure that the said financial statements represent the true financial standing of the Company and reflect its business performance in all aspects. It is to be noted that the role of the External Auditor is restricted to providing audit services to the Company only, and that the Company is prohibited from engaging them to provide any other consulting services. In accordance with auditing principles, External Auditors are required to work with maximum objectivity and independence from the Company and its Board of Directors and shall have no conflict of interest whatsoever with the Company. External Auditors attend General Assembly meetings regularly to present their reports and answer shareholders’ inquiries. It is worth mentioning that as per Article 24 of the Governance Code of 2017, External Auditors must provide Qatar Financial Markets Authority with all reports and any irregularities that come to their attention. 11. Shareholders' Rights A- The Right to Request an Invitation to Hold a General Assembly Meeting In accordance with Article 32 of the Governance Code, the Company's Articles of Association grant shareholders who hold a certain percentage of the Company’s shares the right to call for a regular General Assembly meeting. The AOA stipulates that: “The Board of Directors may call for a General Assembly meeting whenever the need arises. The Board must call for a General Assembly meeting within fifteen days from the date of a request from the External Auditors or a request by a shareholder or shareholders who own no less than (10%) of the Company’s capital, for serious reasons.” Voting by proxy is permitted in accordance with Article (43) of the Articles of Association and in accordance with the relevant laws and regulations. B- Dividend Policy Distribution of profits in Qatar District Cooling Company is decided by the General Assembly at its meeting, upon a recommendation by the Board of Directors. The Board raises its recommendation to the General Assembly after due consideration of the

QC/HR/ Qatar District Cooling Company PJSC Corporate Governance Report 2020/DN-/Ver. 1 Prepared by: [GC] / Approved by: [Governance Committee] / Approval Date: January 12 th , 2021

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A Better Way To Cool Your Environment www.qatarcool.com

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Company’s financial position and the External Auditors’ report, consultation with the Company’s Financial Management and after reviewing the Company's performance and strategy. Generally, profits are distributed according to the mechanism given in the Commercial Companies Law and the Governance Code. 12. Stakeholder Rights The Company works constantly to develop its human resource policy in order to achieve the highest possible levels of commitment to the Governance Code, especially with regard to developing a job grading system in a manner that contributes to establishing an optimum remuneration policy and implementing an employee succession plan. The Company has developed a code of conduct that governs and regulates behavior of Company employees to ensure their integrity, transparency, impartiality, objectivity and professionalism. The Company requires all of its employees to sign a conflict of interest form designed to allow disclosure of any existing or future conflicts, and also requires employees to sign confidentiality agreements to ensure non-disclosure of Company’s confidential information and other matters. The Company adopts a mechanism that allows its employees to report suspicious activities and behavior, in accordance with the Open Doors and (Whistle Blower) Policies. Based on these policies, employees are required to ask for consultation or to report any corrupt act, conflict of interest, discrimination or inequality to management. We refer here to Article 6 of the Audit Committee’s charter and Article 8 of the Code of Conduct, which stipulate the requirement to establish systems that enable Company employees to report confidentially any suspicions they may have regarding any dubious issues in the financial reports or the internal control procedures or any other matter, and to ensure that adequate arrangements are in place to allow impartial and independent investigations of such cases. As regards other stakeholders such as creditors, customers and suppliers, the Company applies the principle of transparency regarding its customers and service providers and does the selection based on quality and price. The Board of Directors has adopted all policies related to procurement, tenders and auctions. 13. Company Disputes and Litigation The occurrence of disputes and litigations is a normal matter, considering that Qatar District Cooling Company is engaged in the business of supply of energy. It is normal for the Qatar District Cooling Company to have, from time to time, disputes with its customers, contractors and service providers, however, the Company does not have any court cases filed at present, and as of the date of issuing this report, either for or against it. The External Auditors conducted a very transparent audit of the company’s

QC/HR/ Qatar District Cooling Company PJSC Corporate Governance Report 2020/DN-/Ver. 1 Prepared by: [GC] / Approved by: [Governance Committee] / Approval Date: January 12 th , 2021

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A Better Way To Cool Your Environment www.qatarcool.com

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business, and the company’s annual financial statement report addressed a detailed statement.

14. The Company's Website The Company's website, mentioned below, provides full information about the Company's activities. It includes section in both Arabic and English, that contains annual reports and quarterly financial reports for the current year and previous years, which can be downloaded directly. The website includes the corporate governance report, the Board of Directors’ charter, the charters of the Board committees, as well as Company’s news, which are updated as soon as they are duly disclosed. The site also includes complete information about the companies owned by Qatar District Cooling Company. https://www.qatarcool.com 15. Irregularities As of now, neither the Internal Audit department, nor the External Auditors have detected any financial violations committed by the Company whatsoever. It is evident that the Company has taken all the necessary precautionary measures, in accordance with the international accounting standards. It is worth noting that the Company manages risks through constant coordination and cooperation between its departments overseeing the financial and legal affairs and internal audit, under the direct supervision of the Board and its specialized committees, especially the Audit Committee, which carries out its tasks in accordance with its published charter and in accordance with the instructions of the Qatar Financial Markets Authority. 16. The Governance Report In compliance with the Governance Code, Qatar District Cooling Company issues this Governance Report signed by the Chairman of the Board of Directors. This document provides a statement of the Company’s commitment to the requirements of the Governance Code and highlights the Company’s policies developed to comply with it, as well as with the frameworks it has adopted to measure its risks and assess its internal controls. The report also includes information about the Board of Directors, its meetings, its committees and other information required by the Authority. This report confirms the Company’s commitment to fully implement all governance requirements during 2020. The Corporate Governance Report and all the Corporate Governance Policies can be found on the Company's website, which can be accessed at the following link: https://www.qatarcool.com

QC/HR/ Qatar District Cooling Company PJSC Corporate Governance Report 2020/DN-/Ver. 1 Prepared by: [GC] / Approved by: [Governance Committee] / Approval Date: January 12 th , 2021

Confidential

A Better Way To Cool Your Environment www.qatarcool.com

Printed copies are uncontrolled & for information only

17. Commitment to Social Responsibility The Qatar District Cooling Company and the Board of Directors are committed to the Corporate Social Responsibility Policy. This policy is in full harmony with the Qatar National Vision 2030. In this policy, Qatar District Cooling Company defines all matters related to its social responsibility and places them within its priorities. The Company takes its social responsibilities very seriously. It seeks to make sound decisions that support its sustainable growth, in a manner that meets the requirements of shareholders and customers. The Company's social responsibility is not limited to the local community of Qatar but extends to the international community in terms of commitment to international conventions related to human rights and the environment. The Company places among its highest priorities the provision of products that reduce energy consumption, encourage proper use of resources and reduce waste. It also includes in its priorities supporting the community and setting high standards in dealing with its suppliers’ network. Additionally, the Company is committed to the following: • Upgrading its capacity to save energy and conserve resources when developing its products. • Applying high standards regarding workers' rights and environmental issues. • Applying strict employment policies that fully take into account the international principles of human rights and non-discrimination in terms of race, gender or religion. • Contributing to sports and social and cultural activities.

Chairman of the Board of Directors Turki Bin Mohamed Al-Khater

QC/HR/ Qatar District Cooling Company PJSC Corporate Governance Report 2020/DN-/Ver. 1 Prepared by: [GC] / Approved by: [Governance Committee] / Approval Date: January 12 th , 2021

Confidential

A Better Way To Cool Your Environment www.qatarcool.com

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