Part Seven Auditors

التاريخ

2004-06-27


Article (192)	Companies Obliged to Elect an Auditor
	A-	The General Assembly of a Public Shareholding Company, a Limited Partnership in Shares, a Limited Liability Company and a Private Shareholding Company shall elect one or more licensed auditors from amongst licensed auditors for one renewable year, and shall determine their remuneration or authorize the Board of Directors to determine such remuneration. The Company shall inform the elected auditor by writing thereof within fourteen days from the date of his election.
	B-	If the Company's General Assembly fails to elect an auditor, or if the auditor who has been elected apologized or declined to carry out the work for any reason whatsoever, or if he dies, the Board of Directors should recommend to the Controller at least three auditors to chose from within fourteen days from the date of the vacancy of such post.

Article (193)	Auditor’s Duties
	The auditors shall undertake jointly or severally the following duties:
	A-	Monitor the Company's operations.
	B-	Audit its account in accordance with recognized auditing rules, auditing profession principals and scientific and technical standards.
	C-	Revision of the financial and administrative by-laws of the Company and its internal financial controls and to ensure their suitability for the Company's business and safeguarding of its assets.
	D-	Verification of the Company's assets and its ownership thereof and to ascertain the legality and correctness of the Company's obligations.
	E-	Revision of the Board of Directors’ decisions and instructions issued by the Company, and any statements which their work requires their acquirement and verification.
	F-	Any other duties the auditor must perform in accordance with this Law, the Auditing Profession Law and other regulations related thereto.
	G-	The auditors shall present a written report addressed to the General Assembly. The auditors or the person delegated by them shall recite the report before the General Assembly.

Article (194)	Hindrance of the Auditor’s Duties
	Should the auditor fail, for any reason whatsoever, to perform the duties and responsibilities vested in him in accordance with the provisions of this Law for any reason whatsoever, then he must, prior to declining the auditing of the Company's accounts, submit to the Controller a written report and a copy thereof to the Board of Directors. This report shall include the reasons hindering his work or preventing him from performing his duties. The Controller shall resolve these reasons with the Board of Directors. If the Controller fails to do so, then he must put the issue before the General Assembly at the first meeting held by it.

Article (195)	Contents of the Auditor’s Report
	A-	Subject to the Auditing Profession Law in force, and any Law or other regulation related to this profession, the auditor’s report must include the following:
		1.	That the auditor has obtained the information, statements and clarifications he deemed necessary to perform his work.
		2.	That the Company maintains organized accounts, registers and documents. Its financial statements must be prepared in accordance with internationally recognized accounting and auditing principles which can justly show the financial position of the Company, its cash flow, and that its balance sheet and profit and loss account confirm with the records and books.
		3.	That the auditing procedures carried out by him for the Company's accounts form, in his opinion, a sufficient reasonable basis to express his opinion regarding the Company's financial position, results of its operations and cash flow in accordance with internationally recognized auditing rules.
		4.	That the financial statements included in the Board of Director’s report addressed to the General Assembly comply with the Company's records and registers.
		5.	Any violations of the provisions of this Law or the Company's Memorandum of Association that have taken place during the year in question and which have had a material effect on the results of the Company's operations and its financial position, and whether any of these violations still exist, and that is within the limits of the information available to him, or that he should know by virtue of his professional duties.
	B-	The auditor must give his final opinion on the Company's balance sheet and profit and loss account in one of the following ways:
		1.	Absolute approval of the annual sheet, profit and loss account and cash flow.
		2.	Approval with reserve of the balance sheet, profit and loss account and cash flow, provided that he states the reasons for such a reservation and its financial effect on the Company.
		3.	Non-approval of the balance sheet, profit and loss account and cash flows and returning them to the Board of Directors, with the reasons justifying such a rejection of the balance sheet.

Article (196)	Auditor’s Recommendation to Reject the Board of Directors’ Financial Statements
	In the event the auditor recommends the rejection of the financial statements, and returns same to the Companies Board of Directors, the Company's General Assembly may decide the following:
	A-	Either to request the Board of Directors to correct the balance sheet and the profit and loss accounts in accordance with the auditor’s remarks, and consider them approved after making such a correction.
	B-	Or refer the issue to the Controller in order to appoint a committee of experts from licensed auditors to settle the dispute arising between the Company's Board of Directors and its auditors. The decision of the said committee shall be binding after presenting it for a second time to the General Assembly for its approval. The balance sheet and the profit and loss account shall be adjusted accordingly.
	C-	In order to realize the objectives of paragraph (b) of this Article, the Controller shall exercise his powers in coordination with the Central Bank, Securities Commission and Insurance Regulatory Commission, as the case may be.

Article (197)	Acts that the Auditor is Prohibited from Carrying out towards Public Shareholding Companies
	The auditor is not entitled to participate in the founding of a Public Shareholding Company whose accounts he audits, to be a member of its Board of Directors, to work permanently in any technical, administrative or consultancy work therein, to be a partner to any member of its Board of Directors or to be an employee of any Board member. Otherwise, any action in violation of the provisions of this Article shall be considered null and void.

Article (198)	Auditor’s Attendance of the General Assembly Meeting
	The Company's Board of Directors shall provide the auditor with a copy of the reports and statements which the Board sends to the shareholders including the invitation for attending the meetings of the Company's General Assembly, and the auditor or his representative shall attend that meeting.

Article (199)	The Auditor Represents the Shareholders and their Right to Discussion
	A-	The auditor of the Company shall be the representative of the shareholders therein within the limits of the duties vested in him.
	B-	Each shareholder may request during the meeting of the General Assembly clarification from the auditor regarding his report and may discuss the issue with him.

Article (200)	Notifying the Auditor of any Company Violation
	Should the auditor become aware of any violation by the Company of this Law, the Company's Memorandum of Association or any important financial issues which may adversely affect the financial or administrative position of the Company, he shall immediately notify in writing the chairman of the Board of Directors, the Controller, the Commission and the Market as soon he discovers or becomes aware of these matters provided that such information shall be dealt by all parties with strict confidentiality until the violations is decided upon.

Article (201)	Compensation of the Company by the Auditor for his Errors
	The auditor shall be liable towards, the Company which he audits its accounts, its shareholders, and the users of its financial statements for compensating any realized damage or lost profit incurred as a result of errors committed by him while carrying out his duties, or as a result of his failure to accomplish his duties that are specified in accordance with the provisions of this Law, and the provisions of any other legislation in force, or duties demanded by internationally recognized accounting and auditing standards, or as a result of issuing financial statements that do not confirm with reality in a major manner or for approving these statements. The auditor shall also be held responsible for compensating the damage incurred by him on a shareholder or a bona fide third party as a result of the error committed. Should the Company have more than one auditor who participated in the error then they shall be held jointly liable in accordance with the provisions of this article. Any civil liability suit arising from any of the aforesaid shall be dismissed upon the lapse of three years from the date of convening the Company's General Assembly meeting where the auditor’s report was read out. If the act attributed to the auditor constitutes a crime then the civil liability suit shall not prescribe unless the public right proceeding prescribes.

Article (202)	Prohibition of the Auditor to Disclose Company Secrets
	Without prejudice to the main obligations of the auditor, the auditor must not disclose to the shareholders at the headquarters of the General Assembly meeting or at any other place or at any time or to non-shareholders any secrets of the Company secrets that came to his knowledge in the course of his duty therein. Otherwise he shall be dismissed and requested to compensate the damages.

Article (203)	Prohibition of the Auditor to Speculate over the Company Shares
	The Company's auditor and his employees are prohibited to speculate in the shares of the Company which he audits its accounts whether directly or indirectly. Otherwise, the auditor shall be penalized by dismissal from his position as Company auditor, and shall be requested to compensate for any damage that he has caused as a result of his violation of the provisions of this Article.

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Part Seven Auditors

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Part Seven Auditors