corporate governance report 2014 - english

Corporate Governance Report 2014

54 Corporate Governance Report 2014 Corporate Governance Report 2014

Implementation of Governance Rules 05

The Board of Directors and its Committees 06

Etisalat Securities Trading 14

Corporate Secretary 15

Executive Management 15

Related Party Transactions 16

External Auditor 17

Internal Control Systems 18

Violations 19

Etisalat’s Social Responsibility 20

General Information 22

Table of contents

Emirates Telecommunications Corporation - Etisalat – is keen to be fully committed to adopting and applying the best governance practices and standards, taking into consideration the best international standards applied in this field, in a manner that is compatible with the applicable laws in the United Arab Emirates.

In fulfilling this commitment, Etisalat has established and updated some policies related to the governance rules and corporate discipline standards, as per the following:

Implementation of Governance Rules

1. Etisalat Securities Trading Policy In compliance with governance requirements stipulated in the Ministerial Resolution No. 518 of 2009 concerning Governance Rules and Corporate Discipline Standards, Etisalat Board of Directors has adopted a policy which regulates the trading in Etisalat securities by the “Insiders” who have access to Etisalat-related material and undisclosed information. Such policy is applicable to the Chairman, Board Members and all Etisalat staff.

2. External Auditor PolicyEtisalat pays an exceptional attention to the mandates of the External Auditors. Hence, a special policy has been established to regulate their related matters, so as to define their engagement, the manner of performing their duties, and also to determine their competencies, scopes of authority and the services & acts they are prohibited to undertake while engaged in auditing Etisalat accounts. All the aforesaid are tailored in accordance with the requirements stipulated in the Ministerial Resolution No. 518 of 2009 concerning the Governance Rules and Corporate Discipline Standards.

3. Policy of Shareholders’ General Assembly ConventionEtisalat policy for convening the Shareholders’ Ordinary and Extraordinary General Assemblies is orchestrated with the best relevant governance practices and provides for the details of the rules and procedures to be followed for convening the General Assembly. It also defines the General Assembly’s competencies and the quorum required for holding its meetings and validating the voting on its decisions. The policy further establishes the rules to be considered for electing the Board Members based on the requirements stipulated by the Securities and Commodities Authority (SCA) and the provisions of Etisalat Articles of Association.


The Board of Directors and its Committees

The Board of Directors exercises all the powers required for carrying out Etisalat business, except those reserved by Law or Etisalat Articles of Association for the General Assembly.

Etisalat Board of Directors consists of eleven members: Seven members, including the Chairman, are appointed by virtue of a federal decree issued for the appointment of government representatives in Etisalat Board. The remaining four members of the Board of Directors are elected by National (non-government) individual shareholders who hold 40 per cent of Etisalat shares.

Etisalat is proud that it has been committed to adopting best corporate governance standards and practices, which are inspired from best international standards and the legislations in force in the UAE. The current composition of Etisalat Board of Directors has been made in compliance with the requirements which are stipulated in the Ministerial Resolution No. 518 of 2009 concerning Governance Rules and Corporate Discipline Standards, in terms of capacity of Board Members, since all current Board Members are non-executives and independent.

Eissa Mohamed Ghanem Al Suwaidi

- Chairman- Chairman of Investment and Finance

Committee

Non-Executive Independent Board Member

H.E. Khalaf Bin Ahmed Al Otaiba

- Vice Chairman- Member in Investment and Finance

Committee


Sheikh Ahmed Mohd Sultan Bin Suroor Al Dhaheri

- Board Member- Member in Audit Committee


H.E. Mubarak Rashed Al Mansoori

- Board Member- Member in Nominations and

Remunerations Committee- Member in Investment and Finance

Committee


Shoaib Mir Hashim Khoory- Board Member- Member in Nominations and

Remunerations Committee


Essa Abdulfattah Kazim- Board Member- Chairman of Audit Committee


Mohamed Hadi Ahmed Abdulla Al Hussaini

- Board Member- Member in Investment and Finance

Committee


Abdulla Salem Al Dhaheri- Board Member- Chairman of Nominations and



Abdulfattah Sayed Mansoor Sharaf

- Board Member- Member in Investment and Finance

Committee


Abdelmonem Bin Eisa Bin Nasser Alserkal

- Board Member- Member in Nominations and



Mana Mohammed Saeed Al Mulla

- Board Member- Member in Audit Committee


Members of the Board of Directors and its Committees


Name Date of First Appointment

Eissa Mohamed Ghanem Al Suwaidi Chairman since 2012

H.E. Mubarak Rashed Al Mansoori Board Member since 2008

Abdulla Salem Al Dhaheri Board Member since 2012

Essa Abdulfattah Kazim Board Member since 2012

Mohamed Hadi Ahmed Abdulla Al Hussaini Board Member since 2012

Abdulfattah Sayed Mansoor Sharaf Board Member since 2013

Shoaib Mir Hashim Khoory Board Member since 2010

Name Date of First Election

H.E. Khalaf Bin Ahmed Al Otaiba Board Member since 1985


Board Member since 2000

Mana Mohamed Saeed Al Mulla Board Member since 2012

Abdelmonem Bin Eisa Bin Nasser Alserkal Board Member since 2012

Government Representatives in the Board of Directors

Private Sector Representatives in the Board of Directors

Mr. Abdulla Salem Al DhaheriMr. Abdulla Al Dhaheri received Bachelor Degree in Business Administration from the United States of America in 1992, and currently holds the following positions:• ChiefExecutiveOfficerofADNOCDistribution• BoardMemberinAbuDhabiNationalOilRefiningCompany

H.E. Mubarak Rashed Al MansooriH.E. Mubarak Al Mansoori has a Bachelor Degree from Indiana States University and Master’s in Finance from West Florida University. He is currently holding the following positions:

• GovernoroftheCentralBankofUAE• CEOofEmiratesInvestmentAuthority• BoardMemberinAbuDhabiSecuritiesExchange• BoardMemberatEtihad-EtisalatCompany“Mobily”• BoardMemberinAbuDhabiNationalCompanyforBuildingMaterials“Bildco”

Mr. Eissa Mohamed Ghanem Al SuwaidiMr. Eissa Al Suwaidi holds Bachelor Degree in Economics from North Western University in the United States of America, and is currently holding the following positions:

• ExecutiveDirectorinAbuDhabiInvestmentCouncil• ChairmanofAbuDhabiCommercialBank• BoardMemberinADNOCDistribution• BoardMemberinInternationalPetroleumInvestmentCompany• BoardMemberinAbuDhabiFundforDevelopment• BoardMemberinEmiratesInvestmentAuthority• ViceChairmanofMarocTelecom

H.E. Khalaf Bin Ahmed Al Otaiba• ViceChairmanof“Etisalat”BoardofDirectorssinceMarch2009• FormerChairmanandManagingDirectorofAbuDhabiNationalInsuranceCompanyandalsoacontributortothe

incorporationofthecompany• FormerViceChairmanofNationalBankofAbuDhabiandacontributortotheincorporationofthebank• ThefirstMinisterfortheMinistryofEconomyintheUAE• FormerMemberintheNationalConsultativeCouncil• FormerBoardMemberatEmiratesBankforDevelopment•ChairmanofBinOtaibaInvestmentGroup

Profiles of Board Members

Sh. Ahmed Mohd Sultan Bin Suroor Al DhaheriSheikh Ahmed Al Dhaheri obtained Bachelor Degree in Civil Engineering Science from UAE University in Alain in 1993, and is currently holding the following positions:

• Chairman–BinSuroorEngineeringDevelopment,AbuDhabi• ViceChairman-AbuDhabiNationalHotelsCompany(ADNH),AbuDhabi• BoardMember-NationalBankofAbuDhabi(NBAD),AbuDhabi• Member-NationalConsultativeCouncil(NCC),AbuDhabi• ViceChairman-AbuDhabiAviation(ADA),AbuDhabi

Abdulfattah Sayed Mansoor SharafMr. Abdulfattah Sharaf holds a Bachelor Degree in Political Science and Special Education from the University of Denver in the USA, and is currently holding the following positions:

• MemberoftheHigherBoardofDirectorsofDubaiInternationalFinancialCenter(DIFC)• BoardMemberinHSBCBankMiddleEastLimited• BoardMemberinHSBCBankOman(HBON)• BoardMemberinHSBCSaudiArabia(IBSA)• BoardMemberinNoorDubaiFoundation


Essa Abdulfattah KazimMr. Essa Kazim holds Honorary Doctorate from Coe College, USA, Master Degree in Economics from the University of Iowa, USA, Master Degree in Total Quality Management from the University of Wollongong and Bachelor Degree in Mathematics, Economics and Computer Science from Coe College. He is currently holding the following positions:• GovernorofDubaiInternationalFinancialCenter• ChairmanofBorseDubai• ChairmanofDubaiFinancialMarket• MemberoftheHigherBoardofDirectorsofDubaiInternationalFinancialCenter(DIFC)• ChairmanofDIFCAuthorityBoardofDirectors• ChairmanofDIFCInvestmentsBoardofDirectors• BoardMemberofDubaiEconomicCouncil• BoardMemberofNASDAQDubai• BoardMemberofNoorBank• MemberoftheBoardofRochesterInstituteofTechnology• MemberoftheBoardofGovernorsofHamdanBinMohammedE-University• BoardMemberinNASDAQ• MemberoftheBoardandSecretaryGeneralofDubaiIslamicEconomyDevelopmentCentre• MemberoftheSupremeFiscalCommitteeinDubai

Abdelmonem Bin Eisa Bin Nasser AlserkalMr. Abdelmonem Bin Eisa Bin Nasser Alserkal obtained Bachelor Degree in Business Administration, majoring in Economics, from Point Loma Nazarene University in San Diego, California, USA, in 1993. He is currently holding the following positions:• ManagingDirectorofNasserBinAbdullatifAlserkalEst.• DeveloperofAlserkalAvenue(Arts&CulturalHubinDubai)• BoardMemberinAlMalCapital• PresidentofBusinessEntrepreneursForum• AdvisoryBoardMemberofTharawatFamilyBusinessForum

Mana Mohamed Saeed Al MullaMr. Mana holds Bachelor’s Degree in Business Administration from Suffolk University in Boston. He worked at major companies in the Middle East and currently is:• ChairmanofUnitedKaiparaDairiesCo.PSC-UNIKAI• BoardMemberintheCommercialBankofDubaiPJSC• BoardMemberinAramexPJSC• BoardMemberinAbjarHotelsInternationalLLC• BoardMemberinOmanRefreshmentCompany(SAOG),theSultanateofOman• BoardMemberinUnionPropertiesPJSC

Shoaib Mir Hashim KhooryMr. Shoaib Khoory holds Bachelor Degree in Business Administration from UAE University in Alain. He joined Saint Diego University, USA, to study Business Administration Strategies in 1984, and he is currently holding the following positions:• ChairmanofDubaiBank• BoardMemberinEmiratesNBD• BoardMemberinEmiratesIslamicBank• BoardMemberinDubaiRealEstateCorporation(WASL)• ChairmanofMAHYKhoory&Co.LLC• ChairmanofLyceeFrancaisInternationaldeDubai(FrenchSchool)• Director-JebelAliCement• Director-MirHashimKhooryLLC• Chairman–InternationalConceptEducationLLCFZ(AprivatecompanylocatedinMeydanFreezone,engagedinproviding

EducationfacilitiesfromNurserytoKG,appointedinDec2013)• Chairman–MeydanMHKEducationLLCFZ(Aprivateeducationinvestment/holdingcompanyinMeydanFreezone,

appointedon22ndJan2014)• Chairman–MeydanMHKHealthcareLLCFZ(Aprivatehealthcareinvestment/holdingcompanyinMeydanFreezone,

appointedon22ndJan2014)

Mohamed Hadi Ahmed Abdulla Al HussainiMr. Mohamed Al Hussaini holds Master Degree in International Business from Switzerland, and has extensive professional experience in finance, banking, real estate and investment sectors. He is currently holding the following positions:• BoardMemberinEmiratesNBD• BoardMemberinEmiratesIslamicBank• BoardMemberinDubaiRefreshmentsCompany• BoardMemberinDubaiRealEstateCorporation• BoardMemberofEmaarMallsGroup

Name No. of Meetings


(Chairman) 6

H.E. Khalaf Bin Ahmed Al Otaiba (Vice Chairman)

1


6

H.E. Mubarak Rashed Al Mansoori 6

Abdelmonem Bin Eisa Bin Nasser Alserkal 5

Mana Mohammed Saeed Al Mulla 5

Shoaib Mir Hashim Khoory 6

Essa Abdulfattah Kazim 5

Mohammed Hadi Ahmed Abdula Al Hussaini 6

Abdulla Salem Al Dhaheri 6

Abdulfattah Sayed Mansoor Sharaf 4

Attendance of the Board of Directors’ Meetings

Board RemunerationsThe remunerations of the Board of Directors for the year 2013 are AED 16,955,643.84. It is worth mentioning that this amount comprises the Board members retainer fees and Board meetings’ attendance incentives, as well as the Board Committees’ membership retainer fees and meetings’ attendance incentives.

The similar remunerations for the year 2014, including all the above fees and incentives, total to AED 17,272,000. The Board and its Committees’ retainer fees amount to AED 15,300,000, and their meetings’ attendance incentives amount to AED 1,972,000.

Board Meetings

12th February 2014

4th March 2014

27th April 2014

20th July 2014

29th October 2014

16th December 2014

Attendance of Board Meetings


Committees of the Board of DirectorsThere are three Committees currently subordinated to the Board of Directors: Audit Committee, Nominations and Remunerations Committee and Investment and Finance Committee. An essential role has been played by each Committee to assist the Board of Directors in assuming its roles and responsibilities of running the Corporation.

Audit Committee (AC):

The Committee consists of three non-executive and independent members of the Board of Directors, in addition to an external member who has experience in accounting and finance. The Committee convenes quarterly and whenever necessary.

The Audit Committee undertakes its duties in accordance with its Charter, which complies with the Ministerial Resolution No. 518 of 2009 concerning Governance Rules and Corporate Discipline Standards. This Charter serves as an authorization by the Board of Directors to the Audit Committee for undertaking the functions mentioned therein. Such functions include, among other things, ensuring the soundness and integrity of the Corporation’s financial statements, developing and implementing a policy

for contracting with the external auditor and ensuring such auditor independence as well as reviewing financial control systems and risk management. In addition, the Committee reviews and implements internal control systems and policies and supervises the Internal Control Department to ensure the sound performance of its duties.

The Committee’s Charter also sets out, in detail, its functions and powers, how the Committee shall be formed, the conditions governing the convention of its meetings and the quorum for the same, in addition to the way it shall take its decisions.

Meetings of Audit Committee

AC Meetings11th February 2014

2nd March 2014

24th April 2014

20th July 2014

26th October 2014

14th December 2014

Meetings’ Attendance of AC Members

Nominations and Remunerations Committee (NRC):

Nominations and Remunerations Committee consists of four non-executive independent members from the Board of Directors, and convenes quarterly and whenever necessary.

The key objective of the Nominations and Remunerations Committee is to ensure that the Board of Directors diligently and effectively performs its duties and fully complies with governance rules and corporate discipline standards. The Committee is also responsible for organizing the nominations for the Board Directorship and following them up. Further, it constantly ensures meeting the independence requirements by the independent Board Members and reports to the Board of Directors in the event that an independent Board Member loses his independence capacity.

Moreover, the Committee is entrusted with setting the policies, which define Etisalat requirements of talents at the levels of executive management and staff. It also develops the policies required for allocating the remunerations, incentives, and salaries to the Members of the Board of Directors, Executive Management and staff, in a manner that ensures meeting the Corporation’s objectives and commensurates with its performance.

The Committee’s Charter also sets out, in detail, its functions and powers, how the Committee shall be formed, the conditions stipulating the convention of its meetings and the quorum for the same, in addition to the way it shall take its decisions.

In performing its functions, the Committee shall take into account the competitive and fair nature of the compensations, which shall be in line with Etisalat strategy of attracting and retaining the talented staff in order to achieve the best results.

Meetings of the Nominations and Remunerations Committee

Meetings’ Attendance by NRC Members

Investment and Finance Committee (IFC):

The Investment and Finance Committee consists of five independent non-executive members from the Board of Directors, and convenes quarterly and whenever necessary.

In addition to the Audit Committee and the Nominations and Remunerations Committee which are provided for in the Ministerial Resolution No. 518 of 2009 concerning Governance Rules and Corporate Discipline Standards, the Board of Directors of Etisalat constituted Investment and Finance Committee to assist the Board in carrying out its functions pertaining to Etisalat internal and external investments. The Charter of the Committee defines its functions and duties and mandates the cases where the Committee is entitled to make decisions as it deems appropriate. On the other hand, it defined the cases where the Committee’s role is restricted to make recommendations for the Board to pass the appropriate resolutions thereon. This Charter serves as an authorization by the Board for the Committee to carry out the functions and responsibilities stipulated therein.


EssaAbdulfattahKazim(Chairman)

6

SheikhAhmedMohdSultanBinSuroorAlDhaheri

6

ManaMohammedSaeedAlMulla

5

SalemSultanAlDhaheri(ExternalMember)

6

NRC Meetings11th February 2014

2nd March 2014

3rd March 2014

21st April 2014

2nd June 2014

1st July 2014

11th September 2014

25th September 2014

25th November 2014


AbdullaSalemAlDhaheri(Chairman)

9

H.E.MubarakRashedAlMansouri 9

AbdelmonemBinEisaBinNasserAlserkal

5

ShoaibMirHashimKhoory 9

Member Type of Relation-ship

Total TradingPurchase / Share

Total Trad-ing Sale /Share

Mr. Eissa Mohamed Ghanem AlSuwaidi

Mr. Eissa Suwaidi 1,070,778 0

Spouse 342,125 25,000

Son 393,624 337,275

Son 364,201 42,800

Daughter 481,437 30,000


Meetings of the Investment and Finance Committee

Meetings’ Attendance by IFC Members

IFC Meetings29th January 2014

18th February 2014

25th March 2014

17th April 2014

27th April 2014

4th May 2014

13th May 2014

3rd June 2014

13th July 2014

2nd September 2014

19th October 2014

29th October 2014

8th December 2014

16th December 2014


EissaMohamedGhanemAlSuwaidi

14

H.E.KhalafBinAhmedAlOtaiba

Hedidnotattend

H.E.MubarakRashedAlMansouri

13

MohamedHadiAhmed AbdullaAlHussaini

14

AbdulfattahSayedMansoorSharaf

6

Etisalat Securities TradingThe Board Members’ trading in Etisalat securities is governed by Securities Trading Policy, which is endorsed and approved by the Board of Directors. The Policy governs the trading in Etisalat securities which are conducted by the “Insiders”, in a manner that is compatible with the requirements of the Ministerial Decree No. 518 of 2009 concerning Governance Rules and Corporate Discipline Standards. It is also worth

mentioning that such policy is applicable to Chairman, Board Members and all Etisalat staff.

According to the Securities Trading Policy, a person is deemed an “Insider” if he has access to material and undisclosed information related to Etisalat. Material Information is defined by the Policy as any information, positive or negative, that may impact the price of Etisalat securities, hence; affects investor’s decisions in buying or selling such securities.

In general, the Material Information includes, but is not limited to, the following:

• Undisclosed profits and financial results• Profits estimates or other financial forecasts• Changes in previously released profits estimates• Merger or acquisition proposals or agreements• Material changes in reserve estimates• Changes in debt ratings• Write-down of assets • Dividend distribution• Proposed issuance of securities• Financial liquidity problems• Significant changes in operations and important

management updates

Furthermore, the Securities Trading Policy explicitly stipulates the trading prohibition periods as mentioned in Article 14 of SCA’s Resolution No. 2 of 2001 concerning the Regulations of Securities’ Trading, Clearance, Settlement, Ownership Transfer and Custody. During such periods, it is not permissible for the Chairman, Board Members and Insiders to directly or indirectly trade in Etisalat securities, i.e., Ten 10 business days prior to any material information disclosure which may affect the share price by way of a rise or a decline, and Fifteen 15 days prior to the end of the quarterly, half-yearly or annual financial period, wherein the prohibition shall remain until the disclosure of the financial statements is made.

During 2014, the trading in Etisalat shares carried out by the Board Members and their first of kin relatives was limited to the chairman and his family:


Related Party Transactions Transactions between the Corporation and its subsidiaries, which are related parties, have been eliminated on consolidation and are not stated in this disclosure. Transactions between the Group and its associates are disclosed below:

a) Federal Government and State Controlled Entities

In accordance with Federal Law No. 267/10 for 2009, the Federal Government of the UAE transferred its 60% holding in the Corporation to the Emirates Investment Authority, which is ultimately controlled by the UAE Federal Government, with effect from 1st January 2008. The Group provides telecommunication services to the Federal Government (including Ministries and local bodies). These transactions are at normal commercial terms. The credit period allowed to Government customers ranges from 90 to 120 days. Trade receivables include an amount of AED 1,073 million (2013: AED 1,041 million), which are net of allowance for doubtful debts of AED 101 million (2013: AED 82 million), receivable from Federal Ministries and local bodies.

In accordance with IAS 24 (revised 2009), Related Party Disclosures, the Group has elected not to disclose transactions with the UAE Federal Government and other entities over which the Federal Government exerts control, joint control or significant influence. The nature of the transactions that the Group has with such related parties is the provision of telecommunication services.

b) Joint ventures and associates

Sales to related parties comprise management fees and the provision of telecommunication products and services (primarily voice traffic and leased circuits) by the Group. Purchases relate exclusively to the provision of telecommunication products and services by associates to the Group. The loans due from related party is subordinated to external borrowings.

The principal management and other services provided to the Group’s associates are set out below:

i. Etihad Etisalat Company

Pursuant to the Communications and Information Technology Commission’s (CITC) licensing requirements, Mobily (then under incorporation) entered into a management agreement (“the Agreement”) with the Corporation as its operator from 23 December 2004. Amounts invoiced by the Corporation relate to annual management fees, fees for staff secondments and other services provided under the Agreement. The term of the Agreement is for a period of seven years and can be automatically renewed for successive periods of five years unless the Corporation serves a 12 month notice of termination or Mobily serves a 6 month notice of termination prior to the expiry of the applicable period.

ii. Thuraya Telecommunications Company PJSC

The Corporation provides a primary gateway facility to Thuraya including maintenance and support services. The Corporation receives annual income from Thuraya in respect of these services.

iii. Emerging Markets Telecommunications Services B.V.

Amounts invoiced by the Corporation relate to annual management fees, fees for staff secondments, interest on loan and other services.

Associates Joint Ventures

2014 2013 2014 2013

AED millions AED millions AED millions AED millions

Telecommunication services – sales 136.8 123.0 - -

Telecommunication services – purchases 99.6 105.0 - -

Management and other services 272.9 234.5 7.3 -

Net amount due from related parties as at 31 December 451.5 670.2 8.4 13.6

Loans to related party

Loans due from related party as at 31 December 2,390.2 2,390.2 - -

The External Auditor - Deloitte & Touche ( M.E)

A Glance:

Deloitte & Touche (M.E.), which was established around 85 years ago, is part of Deloitte Touche Tohmatsu Limited, and it is the first company providing professional services in the Middle East.

Emirates Telecommunications Corporation “Etisalat” has entrusted the external audit services to Deloitte & Touche (M.E.) since 2005.

Disclosure for the Fees & Costs of External Audit

The amount of fees for 2014 external auditing services was AED 2,520,419.

The fees paid by Etisalat in 2014 to External Auditor against services other than the audit tasks; namely, professional services, GMTN, Sukuk Program and Project Alysse, amounted to AED 1,740,908.

The fees paid for consultancy services which were delivered by other external auditors to Etisalat in various fields in 2014 amounted to AED 8,691,278.

Internal ControlBoard of Directors and the Implementation of Internal Control System

In accordance with Article 8 of Ministerial Resolution No. 518 which deems the Board of Directors accountable for the internal control system within Etisalat, the Board has approved the governance functions and structures to attain the goal of effectively undertaking the internal control functions and to create a perception on the efficiency and effectiveness of internal control aspects within the Corporation.

Etisalat Internal Control System and the Names of its Key Heads of Departments & their Qualifications

In order to ensure the optimal application for the internal control requirements, Etisalat has adopted the internationally recognized “three lines of defence” model. The system of internal control in Etisalat consists of the following elements:

1. Frontline business functions: (1st line of defence) - governed by policies, procedures and code of business ethics approved by the Board of Directors and signed by all staff.

2. The Internal Control Department: (2nd line of defence) - includes the enterprise risk management and compliance requirements. This department is headed by Chief Internal Control Officer.

3. The Internal Audit Department: (3rd line of defence) - headed by Chief Internal Auditor.The Internal Control and Internal Audit Departments are completely independent from the Executive Management. They are reporting to Etisalat Board of Directors which, in turn, authorized the Audit Committee to supervise the functions of these two departments. A Charter, approved by the Board of Directors, has been developed, and it defines the functions and powers of the Audit Committee with respect to the internal control system.

• Internal Control DepartmentThe mission of the Etisalat Group Internal Control Department is to engage with the 1st line of defence teams to establish and to maintain a Group-wide internal control framework that provides the Management, the Audit Committee and the subsidiaries with reliable assurances on the health of controls to:

• Meet the operational and financial objectives • Manage risks and ensure the validity of the reports• Comply with applicable laws and regulations

Corporate Governance Report 2014 1918 Corporate Governance Report 2014


Etisalat’s Social Responsibility

Etisalat has given the Corporate Social Responsibility (CSR) utmost attention and has become one of the biggest supporters for public community initiatives in the UAE. CSR spend in the past five years has exceeded AED 2 billion. Major activities undertaken during 2014 are summarized below:

1. Khalifa FoundationPublic auctions were organized for special numbers with Etisalat VIP Plans and proceeds were handed over to the Khalifa bin Zayed Al Nahyan Foundation as part of continuous efforts to support social responsibility programmes.

2. ICT FundEtisalat regularly contributes to ICT Fund. The ICT Fund’s key objective is to drive the strategic development of the UAE ICT sector in order to strengthen the innovation and knowledge capital level of the market by providing research, education and entrepreneurial opportunities.

3. Dubai CaresEtisalat continued the partnership with Dubai Cares - a philanthropic organization working to improve children’s access to quality primary education in developing countries. The initiative targets primary education.

4. Duroosi – Tutorial VideosEtisalat’s YouTube ‘Duroosi’ channel is an initiative in partnership with Google and the federal Ministry of Education to launch tutorial videos for children, including Grade 11 and 12 students. The channel currently features 415 tutorials covering a range of subjects. Etisalat launched Duroosi to help students improve their skills, particularly those who are unable to afford private tuitions.

5. Etisalat Technology CentreEtisalat launched the Etisalat Technology Centre in collaboration with Ministry of Higher Education to facilitate and encourage use of modern technology in education by teachers and students. The Centre effectively supports education and training needs across the country.

Today, the Centre has two established locations – in Dubai and Ras Al Khaimah – while the Centre in Khorfakkan will be launched in 2015.

6. Special Children EmpowermentEtisalat initiated several humanitarian activities in 2014 to serve children in the UAE diagnosed with birth and developmental disorders. Some of these initiatives are as follows:

• Autism Awareness Campaign Etisalat sponsored a month-long Autism Awareness Campaign organized by Dubai Autism Center under the patronage of H.H. Sheikh Hamdan Bin Mohammed Bin Rashid Al Maktoum, Crown Prince of Dubai.

•100 disabled children at The Smurfs Live on StageAs sponsors of the world premiere of The Smurfs Live on Stage, Etisalat invited over 100 children from the Rashid Centre for the Disabled to watch a spectacular theatric performance during Dubai Shopping Festival.

•300 children at Disney on Ice show300 thrilled children from Dar Zayed Orphanage, Rashid Centre for the Disabled and Dubai Autism Centre attended the Disney On Ice presents Rockin’ Ever After show, thanks to a special gift from Etisalat.

•Disability and Children’s Literature EventEtisalat sponsored the ‘Disability and Children’s Literature, the Three Apples’ event, organized by Sharjah City for Humanitarian Services, coinciding with Sharjah Capital of Islamic Culture for 2014, to provide insights on the importance of Children’s book and to address the subject of disability through various patterns of books suitable for children with disability.

7. Student EmpowermentEtisalat’s Students Empowerment Programme continued to support students from three Government Universities - Zayed University, Higher Colleges of Technology and UAE University. Students are selected by the universities. Etisalat supports students by providing a monthly stipend along with mobile credit on a monthly basis on their Etisalat prepaid accounts.

Smart Class Room Services for Umm Suqeim SchoolEtisalat and Al Motahida Group joined forces to provide smart class room solutions to Umm Suqeim School which includes Interactive Teaching System, Virtual Studio, Digital Display System. Al Motahida Group is a company specialized in providing smart school solutions and producing educational multimedia and digital content in the Arab world.

8. Special Needs Sports9th UAE Visual Impaired Football ChampionshipEtisalat sponsored the 9th Visual Impaired Football Championship, organized by Emirates Association of the Visually Impaired, in collaboration with UAE Disabled Sports Federation.

Dubai Ramadan Wheelchair Basketball TournamentEtisalat sponsored the Ramadan event organized by Dubai Club for the Disabled. Sheikh Hamdan Bin Mohammed, the Crown Prince of Dubai, also took part in a friendly match between a Dubai Government team and the UAE wheelchair basketball team.


Etisalat Shares’ Performance Comparing to the General Index and Telecommunication Index in 2014

Corporation’s Share Price during 2014

Month OPEN HIGH LOW CLOSE

Jan-14 11.60 11.85 11.60 11.75

Feb-14 12.20 12.30 12.10 12.30

Mar-14 12.05 12.15 12.00 12.00

Apr-14 11.50 11.55 11.45 11.50

May-14 11.45 11.45 11.30 11.45

Jun-14 11.15 11.35 11.15 11.20

Jul-14 11.80 11.85 11.70 11.70

Aug-14 11.65 11.70 11.55 11.55

Sep-14 11.70 11.75 11.65 11.65

Oct-14 11.55 11.60 11.50 11.50

Nov-14 11.45 11.55 11.40 11.40

Dec-14 11.05 11.10 10.95 10.95

General InformationPrice of Etisalat Shares During 2014

Significant Events

April 2014

UfoneAcquires3GLicence

Ufone was one of 4 mobile operators in Pakistan to bid in the country’s initial 3G auction. Ufone, a wholly owned subsidiary of PTCL was allocated 5 MHz band on 2100 MHz band.

AcceleratingInteroperableMobileMoneyService

Etisalat partners with 8 other telecom operators to accelerate the implementation of interoperable mobile money services across 48 countries in Africa and Middle East. This is part of the GSMA Mobile Money Interoperability Programme.

May 2014

Acquisitionof53%ofMarocTelecom

Etisalat successfully completes acquisition of 53% shareholding in Maroc Telecom for a final consideration of €4.138 billion. Additionally, Etisalat and Maroc Telecom signed a Share Purchase Agreement (SPA) for sale of Etisalat’s shareholding in French-speaking operations in West Africa (Benin, the Central African Republic, Gabon, the Ivory Coast, Niger, Togo and Prestige Telecom). These transactions will establish the largest Franco-phone West Africa telecom cluster.

Shareholding Structure at the End of 2014

Shareholders Owning 5% or more of Etisalat Capital

Shareholder Share

Emirates Investment Authority 60%

LocalCategory

40%Individuals

60%Government

100%Total

24 Corporate Governance Report 2014

June 2014

US$7BillionGlobalMediumTermNoteProgramme

Etisalat lists its US$ 7 billion GMTN on the Irish Stock Exchange and issues 4 bond tranches consisting of: 5-year tranche (US$ 500 million), 7-year tranche (€ 1.2 billion), 10-year tranche (US$ 500 million) and 12-year tranche (€1.2 billion). This bond issue is the biggest corporate issue ever in the region.

EtisalatCreditRatings

Credit Ratings Agencies S&P, Fitch and Moody’s affirm Etisalat high credit Ratings at AA-/A+/Aa3 with stable outlook. S&P at the same time affirmed the ‘AA-‘ senior unsecured debt ratings on Etisalat’s US$7 billion GMTN program.

August 2014

EtisalatNigeriaandIHSSignTowerSale&LeaseBackAgreement

Etisalat Nigeria signs sales and leaseback agreement with IHS Holding Limited as part of its strategy to drive improvement in the quality of network performance and to accelerate roll out of 2G and 3G coverage and new services to its customers. The transaction is the first by a major GSM operator in Nigeria.

September 2014

MobilyLaunchesFundtoInvestinEmergingInternetandITStartups

Etihad Etisalat (Mobily) launches “Mobily Ventures”, the Corporate Venture Capital Arm of Mobily that will invest in early-stage and growth-stage start-ups in areas including e-commerce and retail innovation, mobile financial services and payment, digital advertising, digital content and entertainment as well as IT and cloud services.

October 2014

Etisalat’s Mobile Network First in the region tobeginupgradesto700Mbps4GLTETri-BandCarrierAggregationTechnology

Etisalat has tested and started a phased upgrade of it its network to the futuristic 4G Advanced (LTE-A) tri-band technology based on carrier aggregation technology, for the first time in the region. A live testing on the network has successfully concluded, making way for ultra-speeds of 700Mbps mobile broadband connectivity and ensuring network readiness once handsets are commercially available.

EtisalatShowcase5GMobileBroadbandatGitex

Etisalat and Huawei have jointly showcased 5G mobile broadband services at Gitex Technology Week in Dubai. This is the first time 5G technology has been presented in the region. The demonstration showcased a 115 Gbps data transmission rate capability, which is faster than current mobile networks. An increase of capability will support the connection requirements for the Internet of Things, 4D film, MirrorSys and Vehicular Telematics.

December 2014

EtisalatGroupCEOElectedasGSMA’DeputyChair

The GSMA Board has elected Mr. Ahmad Abdulkarim Julfar, CEO of Etisalat Group as Deputy Chair for a two-year period from January 2015 through December 2016. The newly elected board will oversee the strategic direction of the organisation, which represents nearly 800 of the world’s mobile operators, as well as more than 250 companies in the broader mobile ecosystem.


Chairman of the Board of Directors

corporate governance report 2014 - english

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