Recent update following the Board of Directors Report to General Assembly held on 27-03-2013

 

Recent update following the Board of Directors Reportto the General Assembly pertaining Salam International Investment Limitedperformance during the year of 2012

 

Dear Shareholders,

Subsequent to the issuance of the Report submitted to you by the Board of Directors, please note the following updates:

First: Disclosure On subsidiaries registered in United Arab Emirates and Jordan:

Board of Directors is pleased to announce to the respected General Assembly  that the company had obtain the approval on the registration with full ownership of subsidiaries operating outside of the State of Qatar set forth below, as 100% in the name of Salam International. Actually, the registration of the ownership of these companies has been concluded as 99% in the name of Salam International Investment Limited, and by 1% in the name of the Salam Group (SPC) which is owned by the Salam International, in accordance with the requirements and conditions of limited liability companies. Moreover, new business licenses have been issued for these companies, namely:

-       Salam Enterprises Company (W. L. L.) Dubai.

-       Modern Decoration Company (W. L. L.) Dubai.

-       Alu Nasa Aluminums Industries (W. L. L.) Dubai.

-       Salam Media Cast (W. L. L.) Dubai.

-       Salam Studio & Stores (W. L. L.) Dubai.

Furthermore, the company is currently completing the registration procedures with full ownership of the company “Atelier 21” in Dubai. It is worth mentioning that the value of the unregistered share, at the time of purchase amounted to about QR 468 thousand.

The company also obtained the approval to register a Jordanian company that is fully owned by the subsidiary Salam Studio & Stores. The company continues to pursue its efforts to implement the approval of the registration of the ownership of the entire unregistered shares of the subsidiary operating in Jordan either in the name of Salam International or one of its subsidiaries.

In fact, the full ownership of the companies merged in 2002 and 2005 has been transferred, since the very beginning of the merger. As it is well known and disclosed previously, the company was unable, for reasons beyond the control of the former owners of the merged companies and Salam International to register the ownership of some shares in some companies operating outside the State of Qatar. The company exerted the endeavors to officially register the ownership of shares of the companies merged outside the State of Qatar, to the extent permitted by local laws in force, with taking legal action to protect the rights of Salam International.

At the same time, Salam International disclosed the legal status of these companies in a complete and transparent disclosure in its financial statements since 2002. Also, is showed detailed explanation of the percentage of the ownership of companies operating outside of the State of Qatar in its financial statements in subsequent years, and the consecutive General Assemblies, approved the financial statements, including the detailed disclosures on  legal status of these companies .

By completing the registration of subsidiaries operating outside of the State of Qatar and as shown above, the company has completed the registration procedures of the ownership of these companies that were actually transferred after the mergers of 2002 and 2005.

 

Second: the Court of Appeal decisions number 71 and 104 of 2011:

The Court of Appeal in its decisions number 71 and 104 of 2011 upheld the appealed decision judging the nullification of the executive process of merger of a number of SIIL took place in 2002 and 2005.

The nullification included the process undertaken to increase the respective capital of SIIL. The court’s decisions of nullification have not touched on the correctness of the subject nor the formalities conducted to issue the resolutions of the General Assembly related to these mergers.   The latter was the ground for the subject appeal that was clarified by the Court of Cassation concluded by returning the cases to the court of appeal for review with a new panel.  

Upon review of the decision and the reasoning thereof, SIIL resubmitted another appeal within the legal allowed time limits to the court of cassation to overturn the latest Court of Appeal decision. In line with the transparency policies adopted by SIIL, the decision of the Court of Appeal was published on the Qatar Exchange and at SIIL’s website in order for the shareholders and interested investors to view SIIL’s disclosers of this recent decision of the Court of Appeal.

The action plan to deal with the decision if it becomes final and executable is to apply the same contingency plan that was approved by the General Assembly in its assembled meeting held in 18 Jan, 2012.

The contingency plan is structured to chronologically process as follows:

  1. To approve the execution of the court’s decision by adopting the process of acquisition or capital increase in kind instead of merger;
  2. Simultaneously with the above, to issue new shares against shares in kind  of the same evaluated base implemented in the years of 2002 and 2005.  

 

Commencing from 21st February 2013 until unknown notice, Qatar Financial Markets Authority (QFMA) for the third time in respect of the same court decision suspended trading of SIIL’s shares reasoning this suspension being for the protection of the potential shareholders whereas the protection of the current shareholders totaling to five thousand and five hundred shareholder should have been treated by QFMA with an equal if not of higher concern.  

 

On 24th February, 2013 subsequent to the unjustified suspension decision, QFMA proposed to form a joint team comprising of QFMA, QE and SIIL to which the latter responded promptly by naming its nominated member. The representative of SIIL cooperated fully with QFMA by providing them with the required documentation to include those related to the different stages of the merger process. SIIL has also furnished to QFMA the contingency plan and the disclosures to deal with the court of Appeal decision if it becomes in its executive form.

 

After intensive 4 meetings with the QFMA representatives discussing the plan of execution of the court decision when it becomes in its final form, the meeting failed to be concluded successfully. Regretfully QFMA insisted to interpret the court decision in accordance with its own understanding which was in contradiction with court’s decision reasoning and the details.

 

To avoid reaching a deadlock with QFMA, the representative of SIIL proposed the issuance of an updating discloser in compliance with the discloser and transparency requirement of QFMA and Qatar Exchange.  It was proposed further that the interpretation of the decision is to be left to the executive judge to determine.

 

Despite the proposal submitted, QFMA remained silent resulting into the extension of the suspension of trading although SIIL has clarified the negative impact and the damaging results that are irredeemable.

 

 Such silence of QFMA ignoring the best protection of the shareholders and the continuous damage occurring to SIIL and its shareholders, led SIIL to file a complaint to the respective committee to review QFMA decision of suspension that is still under its perusal.

 

The Board of Directors elaborates that the recent judgement according to which QFMA based its suspension is upholding the previous decision issued back in 27th December, 2010 being the same court of appeal decision issued in 30th October, 2011 in support of the court of appeal decision.

 

QFMA took exaggerated precautions for the possibility of implementing the court’s decision of nullification of the executive procedures of the merger earlier at the time of the issuance of the primary court of first instance and appeal decisions.

 

The precautions are:

 

  1. Holding all available shares  of former owners of merged companies;
  2. Concluding  an undertaken signed by the owners of the merged companies  to fully abide by the execution of the court decision once it becomes final;

 

  1. The voluntary initiative of the owners of the merged companies to release the attachment imposed upon eleven and a half million shares owned by them to be under the disposal of QFMA in addition to those previously held.

 

The Board reemphasises its conviction that such suspension is unjustified particularly with the sufficient and adequate disclosers made by SIIL. The legal standing and the issued decisions through the judgement stages became well-known to the public. It is affirmed that SIIL is taking all measurements to protect the best interest of its shareholders and to adhere to executable decision once it becomes final.

 

Third: Acquisition of the total shares of Salam Bounian: 

On this day Wednesday 27, 2013 , the Board of Directors preliminarily decided to acquire the total shares of Salam Bounian and to increase SIIL’s capital for a value equal to the market fair value of Salam Bounian. It is decided to issue new in kind shares in accordance with Article 190 of the Commercial Companies Law number (5) of 2002.

The above approved intention is meant to replace the previous announced approach of restructuring “The GATE” project relation between SIIL and Salam Bounian   

Upon satisfaction of all Ministerial, QFMA or any other relevant authority requirements for the above, a General Assembly shall be called to congregate to review such resolution of ownership of the total shares of Bounian.

 

Best regards,

 

Issa AbdulSalam Abu Issa

Chairman of Board of Directors  

 

 

Note: This text has been translated from its original Arabic equivalent,

which remains the official version.