BOARD CHARTER

Nasdaq Dubai’s governance framework is set out in its Board Charter. The Charter details the corporate governance framework, coordinates and aligns supporting policy documents and establishes an environment that enables the Board and officers of Nasdaq Dubai to meet their responsibilities under the prevailing law and to demonstrate good governance practices.

NON-EXECUTIVE DIRECTORS / INDEPENDENCE

In accordance with Dubai Financial Services Authority (DFSA) Authorised Market Institution regulation and the Articles of Association, a sufficient number of Board members should be Independent Non-Executive Directors. The Non-Executive Directors, four of whom are Independent, bring wide and varied commercial experience to the deliberations of the Board and its Committees.

An assessment of Directors’ independence is carried out on an ongoing basis and at appointment for new Directors. Each Director discloses their status i.e. independent or connected and has the opportunity to disclose changes in external directorships and other potential conflicts of interest. The Board ensures that there are sufficient number of Independent members at all times. The assessment was reviewed by the Nomination and Remuneration Committee and its recommendations were made to the Board for its approval.

A third of the Non-Executive Directors are subject to annual re-election by the shareholders at the Annual General Meeting. In relation to Board remuneration, they receive an annual retainer together with meeting attendance fees for Board and Committee meetings.

BOARD & COMMITTEE MEETINGS 2023

The Board held five scheduled meetings including a Strategy Session. A table of Board and Committee meeting attendance is set out below. Comprehensive Board and Committee papers, comprising an agenda and formal reports and briefing papers are sent to Directors in advance of each meeting. Each meeting includes a wide-ranging report from the Chief Executive, a report on Nasdaq Dubai’s financial performance and reports from the committees’ chairmen.

During the year, the Board considered the following matters:

• The review and approval of year 2022 results

• Appointment of external auditors for year 2023

• Amendments to Board Charter

• Annual AML Return and

• Nasdaq Dubai Strategy and Budget 2024

BOARD ATTENDANCE

BOARD COMMITTEES

Board Committees play an important role in the governance process and assist the Board in discharging its duties.

The standing Committees of the Board include: The Audit and Risk Management Committee, the Market Oversight Committee and the Nomination and Remuneration Committee. The Chair of each Committee reports to the Board on actions taken at each meeting. Each Committee has the authority to retain independent advisers. Each Committee has its own Charter, providing written terms of reference that define its authorities, duties and membership. In line with good practice, membership of the Committees is entirely non-executive and the majority are independent Directors.

AUDIT AND RISK MANAGEMENT COMMITTEE

The Audit and Risk Management Committee is chaired by Jamal Nasser Lootah. The other members are Abdul Wahed Al Fahim and George Möller. The company secretary acts as secretary to the Committee. The Committee is responsible for the independent and objective oversight of internal control and risk management, internal compliance, governance issues, financial reporting, external and internal auditors and financial controls.

During the year, the Committee met on 5 occasions. The Committee reviewed the annual budget, regular finance reports and the annual financial statements. The Committee recommended the annual budget, the annual financial statements and Deloitte as the external auditor for year 2023 to the Board for approval. The Committee met with the independent external auditors, PricewaterhouseCoopers, to consider the results of the annual audit and to review the annual financial statements for year 2022. The Committee reviewed the risk management reports from Market Operations and approved the Annual AML Return. The Internal Audit function, which is provided by Dubai Financial Market, met regularly with the Committee which received the Annual Internal Audit Plan for year 2023 and 2025, progress on Internal Audit together with the Internal Audit reports following the completion of each audit. The Committee reviewed and recommended the amendments to the Board Charter.

MARKET OVERSIGHT COMMITTEE

The Market Oversight Committee is chaired by George Möller. The other members are Abdul Wahed Al Fahim and Edward Knight. The company secretary acts as secretary to the Committee. The Committee is responsible for the independent oversight of Market Regulations which includes Issuer & Market Surveillance and Anti Money Laundering & Compliance functions. It also supervises the regulatory functions carried out by other areas of Nasdaq Dubai, including the application of the exchange’s Rules, Members' conduct of business and the clearing and settlement function.

During the year, the Committee met on 5 occasions. The Committee met on each occasion with Compliance and received updates on regulatory and compliance matters, including feedback on regular meetings with the DFSA. The Committee also received reports on any market incidents as part of its regulatory oversight function. The Committee reviewed and approved the annual member compliance report for year 2022 and plan for year 2023. The Committee recommended for Board approval the extension of term of Practitioner Committee members. The Committee reviewed the credit rating for debt portfolio and annual budget including resources for Compliance team.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee is chaired by Rashid Al Shamsi. The other members are Abdul Wahed Al Fahim and Jamal Nasser Lootah. The company secretary acts as secretary to the Committee. The Committee is responsible for new appointments to the Board, succession planning for the Board and executive management and reviewing the independence of Directors. It is also responsible for recommending Non-Executive Directors remuneration for Board approval, approving performance measures and target setting for the Chief Executive and broad policies and programs for employee benefits.

During the year, the Committee met on 2 occasions. The Committee reviewed Director Independence, the Human Capital annual budget and set the targets and objectives for the Chief Executive. The Committee received reports from Human Capital on key matters.

INTERNAL CONTROL AND RISK MANAGEMENT

Internal control aims to ensure that processes and controls are in place to achieve Nasdaq Dubai’s business objectives. Internal audit provides assurances that these processes and controls are effective and being complied with on an ongoing basis. Through risk management, Nasdaq Dubai is able to identify, understand, manage, and mitigate risks to its business in order to reduce the probability that those corporate objectives are jeopardised by unforeseen events.

INTERNAL CONTROL

The Board has overall responsibility for ensuring that Management maintains an adequate and effective system of internal control and for reviewing its adequacy and effectiveness on an ongoing basis. Such a system is designed to support the identification and management of risks affecting Nasdaq Dubai and the business environment in which it operates. Nasdaq Dubai operates a system of internal control which provides reasonable assurance of effective and efficient operations covering all controls, including financial and operational controls and compliance with laws and regulations. Processes are in place for identifying, evaluating, managing, and mitigating risks that may face the exchange. The Board, through the Audit and Risk Management Committee (ARMC), regularly reviews these processes. The ARMC is responsible for the independent and objective oversight of Nasdaq Dubai’s internal control and risk management systems, internal compliance, governance issues, financial reporting, external and internal auditors and financial controls. Additionally, the adequacy and effectiveness of controls is periodically reviewed within the business areas. Regular reports are made to the ARMC by Management, Internal Audit, Risk Officer and Compliance covering matters such as financial controls, compliance and operational controls. The ARMC monitors resolution of any identified control issues of significance through to a satisfactory conclusion.

Management is responsible for establishing and maintaining adequate internal control over financial reporting. In accordance with International Financial Reporting Standards (IFRS), the internal control over financial reporting is a process designed under the supervision of the Chief Executive and the Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes.

Nasdaq Dubai’s internal control over financial reporting includes policies and procedures to provide for the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS and that receipts and expenditures are being made only in accordance with authorisations of Management and the Board; and provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

Management assesses the effectiveness of internal controls to satisfy itself that the processes followed are effective. The system of internal financial and operational controls is also subject to regulatory oversight by the DFSA.

The purpose of the Internal Audit function is to assist the Board and Management in the effective discharge of their fiduciary and administrative responsibilities by providing independent, objective assurance and consulting services with respect to evaluating risk management, control, and governance process. To ensure independence and objectivity, Internal Audit reports directly to the ARMC. For administrative matters, the Head of Internal Audit has a secondary reporting line to the Chief Executive Officer. The Internal Audit function adopts standards issued by the Institute of Internal Audit (IIA). Internal Audit services are provided by Dubai Financial Market which follows a risk based audit approach. An annual risk based internal audit plan is prepared based on the rating of following criteria; in addition to management request and required mandatory audits;

• Criticality/Materiality;

• Complexity;

• Inherent risk;

• Extent of change;

• Time since last audit;

• Fraud potential.

All key areas subject to high and/or medium risks such as compliance, financial, information technology and operations are included in the plan while the non-priority and low risk areas are excluded or to be considered later depending on circumstances. During the planning process key business areas and operational risks are identified, compiled, risk rated and ranked to draw a final risk assessed audit scope of work that factors in high and medium risk areas. The audit plan, submitted to the ARMC for approval, provides information about the risk assessment, the current order of priority of audit projects and how they are to be carried out. The audit plan outlines the key departments, activities and processes to audit and estimated start dates and completion timelines as well resources dedicated for the audit. Internal Audit submits regular activity reports to the ARMC and Management summarizing the results of the audit assignment including significant risk exposures and control issues and follow up on the issues raised in the audit report. Internal Audit liaises regularly with internal stakeholders to maintain and uphold communication and relationships to a high level. The key internal stakeholders include; compliance, company secretariat and risk management functions.

RISK MANAGEMENT

Risk management is a systematic and continuous process that revolves around defining and identifying risks in each department, measuring, monitoring, managing, mitigating and reporting significant risks to which Nasdaq Dubai may be exposed. Nasdaq Dubai has established a Risk Management Framework (RMF) to ensure that the exchange continues to be a stable, credible, and reliable organisation that manages all potential risks to its stakeholders. Nasdaq Dubai has a Risk Officer with overall responsibility for the risk management function in relation to the activities carried out by the exchange and for overseeing the implementation of the RMF. The Head of Department within each unit and function is responsible for establishing and maintaining pertinent risk management. The functions and systems for internal control and internal audit are part of the overall risk management process.

Nasdaq Dubai’s Exchange, Clearing and Central Securities Depository operations place significant emphasis on managing risk, including business continuity and default management. Nasdaq Dubai’s RMF is subject to specific regulation and supervision by the DFSA. In operating a Clearing House, Nasdaq Dubai acts as the Central Counterparty (CCP) to transactions executed on the Exchange between Member firms. As a CCP, Nasdaq Dubai is exposed to various clearing related risks, including Counterparty Risk, Credit Risk, Operational Risk and Liquidity Risk. The Head of Market Operations in consultation with the Risk Officer, is responsible for implementing the Board’s strategy for identifying, monitoring, managing and mitigating these risks. One primary risk management tool is the requirement placed on Clearing Members to provide margin payments and collateral to Nasdaq Dubai in accordance with its Business Rules. In addition to the collateralisation of obligations, other risk management tools adopted by the Board include rigorous Clearing Membership standards, dedicated clearing capital, netting arrangements and advanced risk management monitoring techniques.

CORPORATE RESPONSIBILITY

The UAE’s Net Zero strategic initiatives and broader sustainability commitments, including the fact that 2023 was the “Year of Sustainability” act as the backdrop for Nasdaq Dubai’s ongoing efforts, and has inspired nationwide, collective action to enhance sustainable practices.

In 2023, Dubai hosted COP28, the annual climate conference that convenes world leaders and businesses discuss how to take transformative climate action and prepare for the future. We are proud to have participated in the activities linked to COP28 in Dubai. At COP28, the Dubai Financial Services Authority (DFSA) announced it will waive all regulatory fees for issuers wishing to list sustainability-related debt securities in the Dubai International Financial Centre (DIFC) throughout 2024. This fee waiver applied to any new ESG-related bonds and sukuk labelled as green, social, sustainable, sustainability-linked, climate, climate adaptation, climate transition, or similar that is listed in 2024, and underpins the region’s long-standing commitment to accelerating the growth of sustainable capital markets.

The Group has also hosted several events in partnership with key stakeholders including the KraneShares Dubai COP28 Climate / Carbon Investment Forum where attendees discussed actionable strategies and actions to ensure portfolios grow while investing in ESG, carbon, and the clean energy transition. Key topics included the role of exchanges, governments, and asset managers in facilitating climate investing, how long-term investors incorporate ESG into portfolios and an overview of voluntary carbon markets and green financing. The event highlighted practical investment opportunities that mitigate any divestment risks, while also providing attractive uncorrelated return potential.

The WFE hosted an event at Nasdaq Dubai’s office during COP28, bringing together members to discuss several topics, including how Voluntary Carbon Markets (VCMs) can be developed and their role in contributing towards the Paris Agreement goals, and how exchanges and their stakeholders can play a valuable role in securing a Just Transition.

The Group also hosted the UN SDG Investment Forum in partnership with the UN SSE, the CFO Coalition and the Global Investors for Sustainable Development (GISD) Alliance, where we discussed the role of stock exchanges, investors and CFOs in promoting climate finance and in tackling the Climate Crisis, including the adoption of the ISSB Standards.

We work in partnership with schools and universities to empower people with the knowledge and resources they need to contribute to a thriving and economically strong society. We believe in the Youth capabilities and hence we have presented the importance of capital markets to university students through different activities whether by visiting their campuses or hosting students at Nasdaq Dubai to enhance Financial Literacy among Youth.

Several UAE corporates have joined Nasdaq Dubai to support the “1 Billion Meals Endowment” campaign, launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. Launched over Ramadan, in 2023, this marked the largest sustainable food aid endowment fund in the region. Seven companies have pledged towards the campaign reflecting our unified approach to providing humanitarian aid.

We are committed to delivering the UAE’s Green Agenda 2015-2030 and achieving the UAE’s commitment to reach net zero emissions by 2050. While we continue to take actions to eliminate the environmental footprint of our own operations, we are increasingly playing an active role to raise awareness of climate change within society. Through digital transformation solutions, such as implementing integrated virtual servers, adopting cloud mitigation and using online collaborative tools, we are able to reduce our energy consumption. Since 2015, digital solutions have increased our energy savings and we continue to explore ways to reduce our emissions, energy and water consumption, and waste production that deliver maximum long-term impact.