Title: Announcement regarding issuance of Disciplinary Board Resolution No. (20/2024 Disciplinary Board) (82/2021 Authority) and imposition of a fine against each of: 1- Chairman of the Board of Directors of Aan Digital Services Holding Company (formerly), 2- CEO of Aan Digital Services Holding Company (formerly) for violating the rules of Corporate Governance

Announcement regarding issuance of Disciplinary Board Resolution No. (20/2024 Disciplinary Board) (82/2021 Authority) and imposition of a fine against each of: 1- Chairman of the Board of Directors of Aan Digital Services Holding Company (formerly), 2- CEO of Aan Digital Services Holding Company (formerly) for violating the rules of Corporate Governance.

For the following reasons:

First: Chairman of the Board of Directors of Aan Digital Services Holding Company (formerly) violated the provision of Article (3-1) of Module Fifteen (Corporate Governance) of the Executive Bylaws of Law No. 7 of 2010.

Second: CEO of Aan Digital Services Holding Company (formerly) violated the provision of Item 5 of Article (3-10) of the same Module:

This is due to their failure to perform the roles assigned to them stipulated in the aforementioned Articles as follows:

1. Despite the continued accumulated losses on the Company, which amounted to 72% of the Company’s capital according to its financial statements for the period that ended on 30/09/2020, the Board of Directors has not conducted any plan for compensating or amortizing those losses.
2. The Company’s Board of Directors failed to activate performance measurement standards for the executive management and compare them to the planned results on a periodic basis every three months.
3. The Company’s Board of Directors failed to consider the shareholders’ benefit by not maintaining the Company’s investments, failure to ensure that those investments achieve consistent growth rates, and failure to enhance the competitive capacity for the mentioned investments, as follows:

• The Company has acquired …. Company in a percentage of (93%) on 01/01/2008.
• A loan agreement was signed on 01/04/2013 between the inspected company and the acquired company in the amount of USD 75,680,606 to be paid in full on 31/03/2014.
• On 29/01/2014, a court outside the state of Kuwait requested the liquidation of (a subsidiary of the inspected company), noting that the liquidation procedures were not completed until the end date of the inspection.
• The Company has made losses from this investment in the amount of KWD 19,810,000.

4. The Company’s investment with a company:

• An investment contract was signed with … Company on 27/04/2011 in the amount of KWD 911,000.
• The mentioned amount was transferred to the portfolio of … Company managed by another company.
• The mentioned contract was renewed annually since that date until 2018.
• The mentioned contract was renewed for a period of three years from 2018 to 2021.
• No profits were received for that contract from the date of its signature until the end date of the inspection.

5. The company’s investment in two companies:

• The inspected company has invested in two companies in the amount of KWD 9,736,000.
• The CMA has reviewed the financial statements of …. Company for the period that ended on 31/12/2019, where it was revealed that it invested in the amount of 16,347,000 with another company, which represents (80%) of its total assets.
• It was also revealed that the Company has not received any profits for that investment since 2015.
• The CMA has reviewed the financial statements of …. Company for the period that ended on 31/12/2019, where it was revealed that it invested in the amount of 15,234,000 in an associate company, which represents (53%) of its total assets.
• Is it worth mentioning that … Company owns a subsidiary, and the latter does not own any material assets other than the greenfield located in Jeddah in the Kingdom of Saudi Arabia. It was not previously revealed to the CMA that the mentioned company was able to prove its ownership of the mentioned land through ownership documents certified by official entities.

Therefore, Aan Digital Services Holding Company’s investment in two companies may lead to high financial risks on it.

The Resolution included the infliction of the following penalty: -

"1- Levying a fine against Chairman of the Board of Directors of Aan Digital Services Holding Company (formerly) in an amount of KWD 10,000 (ten thousand Dinars) for the attributed violation in all its parts.

2- Levying a fine against CEO Aan Digital Services Holding Company (formerly) in an amount of KWD 30,000 (thirty thousand Dinars) for the attributed violation in all its parts.”

In this regard, the CMA emphasizes the implementation of CMA Law and its Executive Bylaws on all persons dealing in securities activities, and urges them to comply with these Laws in order to promote investors' confidence, create a sound investment environment, and implement the Law according to the principles of fairness, transparency, and integrity in line with the best international practice.