Governance Report 2024

Eshraq Investments PJSC

Governance Report for the Fiscal Year 2024

1- Recitals

Eshraq Investments, founded in 2006 and listed on the Abu Dhabi Securities Exchange (ADX) in 2011, is committed to continuing to grow its investment portfolio from primarily real estate towards a diversified multi-asset class investment fund, with allocation across multiple sectors to offer highly competitive long-term returns and improved resilience to market volatility. The Group's diversification strategy has been a key catalyst, already delivering material rewards following the acquisition of the Goldilocks Fund in 2022, alongside existing profitable real estate investments.

Eshraq Investments PJSC ("Eshraq" or "Company") aims to accomplish the objectives for which it was incorporated, maximizing the Company's revenues, developing and promoting its businesses by adopting an ambitious strategic business plan to contribute to supporting the overall economic development of the Emirate of Abu Dhabi.

Finally, we present to your esteemed Authority the Governance Report of the Company for the fiscal year 2024 including the main items in accordance and pursuant to the requirements of the Securities and Commodities Authority ("SCA"). Guided by the corporate governance philosophy of accountability, responsibility, transparency and fair disclosure, Eshraq remains committed to maintaining high standards of corporate governance based on best practices.

2- Company's corporate discipline standards applications (Governance)

This section will include the following items:

• ❑ First item: The pillars upon which the Company's Governance principles are based

• ❑ Second item: The procedures taken to finalize the Governance Manual for the fiscal year 2024 and modalities of implementation. We will address those two items in details as follows:

First item: The pillars which the Company's Governance principles are based upon.

Eshraq has abided by the terms and conditions of the following sources ("Sources") in the draft of its Articles of Association, Internal Policies and Administrative Regulations:

• ❑ Decree by Federal Law no. (32) of year 2022 concerning the amendments to the Federal Law no. (2) of 2015 pertaining to the commercial companies.

• ❑ SCA's board of directors' Decision No. (3) of 2000 concerning the regulations as to Disclosure and Transparency and its amendments.

• ❑ SCA's Chairman of board of directors' resolution No. (7/R.M.) of 2017 concerning the standards of institutional discipline and governance of public joint stock companies.

• ❑ SCA's Chairman of board of directors' resolution No. (3/R.M.) of 2020 concerning the approval of Joint Stock Companies Governance guide.

• ❑ The provisions of the Company's Articles of Association as amended from time to time.

The Company deals with the Governance Manual as a document of prime importance that incorporates the Company's Corporate Discipline Standards which may not be breached or altered for any reason. The Governance Manual addresses the internal policies and procedures of the Executive Management hence the entire adherence to disclosure, transparency, and monitoring by all the departments of the Company.

Second item: The procedures taken to finalize Governance Manual for the fiscal year 2023 and modalities of implementation: The most significant actions taken in 2024 are the following:

• ❑ Enhancing the website by improving the Governance icon and the publication of the mandatory and material information.

• ❑ The Board of Directors of the Company spared no effort in meeting the Shareholders, Stakeholders and maintaining ongoing communication with them, resolving any issues or obstacles to ensure that the Company functions efficiently and in a transparent way. The following steps have been taken to ensure adherence of everyone at the Company to the Governance Manual:

• ❑ Following up the implementation of the Corporate Discipline in compliance with the Governance Manual of the Company.

• ❑ Establishing Board of Directors Committees, fixing their roles and authorities namely:

  • - Audit committee.

  • - Nomination and Remuneration Committee.

  • - Insiders' Trading Follow-up and Supervision Committee.

• ❑ Ensuring avoidance of cumulating between the positions of the Chairman of the Board of Directors, delegated member, CEO, or the General Manager.

• ❑ Ensuring, through the Compliance department, that all the members of the Board of Directors, Executive Management and all Com pany's employees have committed to disclose their trades and the trades of their first-tier relatives in the Company's securities.

• ❑ Adherence by the members of the Board of Directors, the Executive Management and all Company employees to the code of Ethics and the Corporate Discipline Standards and their amendments through regular instructions on the updates in this regard.

3- Report of the trades in the Company's securities concluded by the members of the Board of Directors, their spouses and sons, during the fiscal year 2024.

The members of the Board of Directors of Eshraq are committed to regularly disclose their trading with the Board Secretary.

4- Board of Directors

A-

Composition of the Board of Directors of the Company.

The Board of Directors of the Company has been established pursuant to the provisions of the amended article (19) of the Company's Articles of

Association to comply with the provisions of the Decree by Federal Law no. (32) of year 2022 pertaining to the commercial companies. The members were elected by the General Assembly on 30/04/2024 by way of secret cumulative ballot. The Board of Directors comprises (5) highly skilled and qualified members who are experts in their respective fields. Such expertise and qualifications help the Board of Directors to take the proper resolutions for the benefit of the Company. These members are listed below:

The Board of Directors of the Company has one female member, Mrs. Maha Alfahim.

Discrimination between men and women is prohibited by the Company's policies and by-laws, and consequently there are no hurdles impeding or refraining the election/appointment of females assuming any administrative, professional, leadership or board membership office.

B-

Not Applicable

C- Statement of Remunerations:

The Company has paid to the members of the Board of Directors during the year 2024 a total amount of AED 1,000,000/-(One Million Emirati Dirhams) to all the members of the Board of Directors for the Fiscal year 2023, and the newly appointed member being disbursed to them prorate to the tenure of each of them.

II. Aggregate proposed remunerations to be paid to the Board of Directors for the fiscal year 2024 and that will be submitted to the vote of the Annual General Assembly

The Board of Directors will propose to payment of a total remuneration of AED1,000,000-/ (One million dirham) to all the members of the Board of Directors for the Fiscal year 2024, subject to SCA and shareholders approval.

III. Report of the attendance allowances paid to the members of the Committees of the Board of Directors

The Board of Directors has recommended granting an attendance allowance of AED 10,000 to each member of the Audit Committee and the Nomination and Remuneration Committee for every meeting attended during the year 2024, in recognition of their efforts and the time dedicated to fulfilling committee responsibilities.

IV. Additional allowances, salaries or fees received by a Board member other than allowances for attending committees and reasons

No additional allowances, salaries or fees were received by a Board member for works performed during or other than as a result of their membership in the Board of Directors or the Committees.

D- Number of the Board of Directors' meetings convened during the fiscal year 2024

The list of meetings of Eshraq Board of Directors convened during the year 2024 is as follows:

E- Number of the Board resolutions by Circulation passed during the 2024 fiscal year, along with its dates

The Board of Directors passed one resolution by circulation during the fiscal year 2024 as follows:

F- Authorities of the Board of Directors assumed by the executive management based on special authorization

In addition to the powers and proxies listed in the 2023 Corporate Governance Report, which remain in full force, no new authorities were granted to the executive management in 2024.

G- Report on the Related Parties detailed transactions

During the year 2024, the Company has not contracted any transaction with a Related Party, as defined in the Law and the Regulations of SCA.

H- Company's organization chart during the fiscal year 2024

The Company is currently organized as follows:

I- Executive Management, Jobs, salaries, bonuses and other payments

The Executive Management of the Company performs all duties, roles and responsibilities referred to it by the Board of Directors and administers the daily activities of the Company. The Executive Management is currently chaired by CEO who is supervising and monitoring the daily operations and the administrative activities of the Company and will regularly and effectively contribute to developing the Company, enhancing its performance and adding value to its shareholders.

Below, the most significant positions occupied by the Executive Management of the Company for the fiscal year 2024 and identification of their entitlements such as salaries, allowances and remunerations paid during 2024:

* Bonus in relation to 2024 payable in 2025 have not been awarded.

5- External Auditors

A- Brief about the External Auditor

Deloitte, Touche Tohmatsu Limited, or Deloitte, is considered worldwide as one of the most renowned professional service firms. Established in 1845. Deloitte is the largest professional services network in the world by revenue and number of professionals with headquarters in London-UK. Deloitte provides audit, tax, consulting, enterprise risk and financial advisory services with approximately 312,000 professionals globally. Furthermore, it is ranked as one of the big four companies alongside Ernst & Young, PWC and KPMG.

B- Statement of the fees or costs of auditing or the services provided by the External Auditor

Audit firmPartner in charge

Deloitte & Touche (M.E.)Mr. Firas Anabtawi

Number of years served as the Company External AuditorTotal fees of auditing financial statements of 2024 (in AED)

Six years; since 2019400,000 (Excluding VAT)

The fees and costs of the special services other than the auditing of the FS 2024 (in AED), if any, and in case of absence of any other fees, this shall be expressly stated.

The details and nature of other services provided (if any). If there are no other services, this matter shall be stated expressly

A statement of the other services that an external auditor other than the company accounts auditor provided during 2024 (if any). In the absence of another external auditor, this matter is explicitly stated,

No other services provided by other external Auditors

For Corporate Tax Review - AED 40,000 ( excluding vat)

For the valuation of Goldilocks - AED 277,988.50 (excluding vat) * For AUP for capital reduction- AED 29,380 (excluding vat)

• - Corporate Tax Review during Year 2024

• - Review of the valuation of Goldilocks during Year 2024

• - Professional Fees for AUP related to Capital reduction

*Including amount of $15,000 added as Provision for last quarter of 2024 and subject to 2024 Yr-end audit finalization

C- Statement of the qualified opinions made in the interim and annual financial statements for 2024

The auditors issued no qualified audit opinions in respect of the interim financial statements of the Group for 2024.

The auditors issued qualified audit opinion only in respect of the year end accounts of the Group as follows :

Basis for Qualified Opinion

The Group's investments in financial assets at fair value through profit or loss, which are carried in the statement of financial position at AED 671 million, include an investment in Goldilocks of AED 659 million. We were unable to obtain sufficient appropriate audit evidence of certain underlying investments approximating AED 497 million of the carrying amount of the investment in Goldilocks because we were unable to determine if the valuation methodology and inputs into the determination of this portion of the fair value of Goldilocks were appropriate. Consequently, we were unable to determine the adjustments necessary to this amount.

6- Audit Committee

A- Audit Committee Chairman's acknowledgment

I, Jacques Elias Fakhouri, Chairman of the Audit Committee, acknowledge my responsibility for the Committee's system in the Company, review of its work mechanism and ensuring its effectiveness.

B- Functions and duties of the Audit Committee and name of the members

• ▪ Key duties and authorities of the Audit Committee:

• - Developing and implementing policy on contracting with external auditors, submitting a report to the Board whereby it outlines the matters it deems necessary to take action upon along with submitting its recommendations on necessary steps to be taken …etc.

• - Monitoring the soundness of the Company's financial statements and reports (annual - semi-annual - quarterly) and reviewing them as part of this regular activities during the year.

• - Coordinating with the Board, the Executive Management and the Finance Director regarding the fiscal policy and the roles of each team member within the finance department …etc.

• - Ensuring the Company's compliance with all legal and regulatory rules, monitoring the Company accounts and developing the Corporate Discipline and the Governance Standards of the Company.

• - Reviewing internal financial control, internal control and risk management of the Company.

• - Ensuring the coordination between the Internal Auditor and the External Auditor.

• - Ongoing review of policies, financial and accounting procedures and seeking their sustainable development.

• - Monitoring the extent to which the Company is adhering to the code of conduct.

• - The right to study any matter falling within its authorities and it is authorized to have access without limitation or restriction to the External Auditor and to obtain any professional consultation pertaining to the Company.

• ▪ The Committee is vested with the power to request any needed information from any employee or Board member, and the Board mem bers and employees are directed to cooperate with any request raised by the Committee.

The Board of Directors has amended the composition of the Audit Committee as follows:

C- Meetings of the Audit Committee

D- Annual Audit Committee Report:

Significant issues reviewed by the committee concerning the financial statements and how these issues were addressed.

During the reporting period and for each quarter, the Audit Committee reviewed several significant issues concerning the Company 's consolidated financial statements to ensure their compliance with the applicable financial reporting framework and local regulations. Key matters addressed included revenue recognition policies, significant elements that affected the valuation of investments in Goldilocks fund, valuation of investment properties, major subsequent events during the year, provisioning for legal, tax and regulatory matters and fair value measurement of financial instruments. For each issue, the committee engaged in detailed discussions with senior management and external auditors, evaluated the assumptions and methodologies used, and ensured that disclosures were transparent and comprehensive. Additionally, the committee reviewed the Company's going concern assessment and related party transactions, confirming their alignment with governance standards and financial reporting requirements. The committee is satisfied that these issues were addressed effectively, with appropriate resolutions and disclosures reflected in the consolidated financial statements

An explanation of how the committee assessed the independence and effectiveness of the external audit process, including the approach followed in appointing or reappointing the external auditor, and details about the tenure of the current audit firm.

The Audit Committee conducted a comprehensive assessment of the independence and effectiveness of the external audit process during the reporting period. This included a review of the external auditor's objectivity, performance, and compliance with ethical standards. The Audit Committee evaluated the scope and quality of audit work, the auditor's understanding of the Company's business, and the responsiveness toqueries raised during the audit. Based on its review, the Audit Committee is satisfied with the external auditor's independence, professionalism, and overall performance.

The approach to the appointment or reappointment of the external auditor involved a formal tendering process, considering the firm's expertise, experience, and commercial proposals. The committee monitors the tenure for appointment and reappointment of external auditors to ensure adherence to applicable rotation requirements.

The existing external auditors for Eshraq (Deloitte & Touche (M.E.)) have completed their tenure of six years with the Company starting from the year 2019 to the year 2024. They will be absolved from any responsibility for the year 2025.

The Audit Committee, pursuant to a formal tender process, concluded that the appointment of new external auditor Grant Thornton (GT) for the year 2025 will be recommended to the shareholders at the Annual General Meeting for the year 2024.

An explanation of how the independence of the external auditor is ensured when providing non -audit services to the Company.

The Audit Committee reviewed the external auditors non-audit services (if any) for the Company and confirmed that they remained within permissible thresholds to ensure independence of the external auditors.

During the year 2024, the following non audit services were received from the existing external auditor (Deloitte & Touche (M.E.))

▪

Corporate Tax Review

▪

Review of the valuation of Goldilocks Fund

▪

Professional fees for Agreed Upon Procedures related to Capital reduction

▪

The Audit Committee remains committed to maintaining a robust internal control and risk management framework. In the event of identified deficiencies or shortcomings, the committee promptly engages with management to investigate root causes and develop remedial action plans. Corrective measures may include revising policies and procedures, enhancing internal control mechanisms, implementing additional monitoring and reporting tools, and providing targeted training to employees. The Audit Committee also ensures that timelines for rectification are clearly established and closely monitored. The Audit Committee remains vigilant in ensuring that internal controls and risk management processes are continually strengthened to safeguard the Company's operations and objectives.

Audit Committee has assigned the task of assessing the latest enterprise risks and internal controls for the year 2024-25 to the Head of Internal Audit who was appointed during the year 2024.

Audit Committee receives regular updates from the Head of Internal Audit function about the findings related to internal controls and risk management and review the propose action plan to mitigate the risks and enhancement of internal controls.

The Audit Committee confirms that it has reviewed initial risk assessment reports for key functions and areas such as Finance, Information Technology General Controls (ITGC), Personal Data Protection issued by the Internal Audit function during the reporting period. The committee will review the planned risk assessment of other functions which are scheduled to be completed during the first six months of the year 2025. and the audit reports issued by the Internal Audit Department highlighting the key issues faced by Eshraq.

The Audit Committee assessed the findings and worked closely with management and the Internal Audit team to ensure that appropriate remedial actions were implemented on priority basis. The committee also monitored the progress of these actions to ensure timely resolution and incorporated the insights gained into ongoing evaluations of the Company's risk management and internal control systems. This proactive approach highlights the committee's commitment to maintaining a robust governance framework and safeguarding the Company's operations.

Comprehensive information on the corrective action plan in case of material deficiencies in risk management and internal control systems.

The Audit Committee is committed to maintaining a robust risk management and internal control framework. In the event of material defic iencies identified in these systems, the Audit Committee oversees the implementation of a comprehensive corrective action plan. No material deficiencies were observed into Risk Management and Internal Control systems during the year 2024.