RELATED PARTY TRANSACTION POLICY

Alternative Bank Limited has in place a Related party transaction policy contained in the Finance and Investment Policy Guide (FIPG) that covers on and off-balance sheet credit transactions involving a related party, whether granted at the Group or subsidiary level.

A “transaction” in this context refers to an extension of credit in any form, whether involving direct, contingent, or pre-settlement risk, like Kafalah.

The term transaction should be interpreted broadly to incorporate not only transactions that are entered into with related parties, but also situations in which an unrelated party (with whom a bank has an existing exposure) subsequently becomes a “related party”.

A “related party” in this context is a person or a legal entity that is:

• a) A shareholder of the Bank who, directly or indirectly, owns or controls more than 5% of the Bank’s shares.
• b) A shareholder of any subsidiary or affiliate of the Bank who, directly or indirectly, owns or controls more than 5% of the shares of that subsidiary or affiliate.
• c) A member of the Board of Directors or other similar body of the Bank.
• d) A member of the Board of Directors or other similar body of any subsidiary or affiliate of the Bank.
• e) A member of senior management of The Alternative Bank and any subsidiary or affiliate of the Bank.
• f) Each of the parents, brothers, sisters, and children of the persons falling under items (a) through (e) above.
• g) Each of the spouses of the persons falling under items (a) through (e) above.
• h) Any entity owned or controlled by any of the persons falling under items (a) through (g).
• i) A political or campaign committee that is controlled by any of the persons falling under items (a) through (g).
• j) Any other person owned or controlled by a member of the immediate family of an employee of the Bank or of any of its subsidiaries or affiliates, including their spouse, parent, brothers and sisters, children, and their spouses.
• k) Any subsidiary or affiliate of the Alternative Bank.
• l) Any other person as defined by a central bank or other regulatory supervisor; and
• m) A “member of senior management” is defined as any member of management, within the Bank, who reports directly to the Board or to the CEO however described

Identification of Related Parties

A record has been established to identify all people who are related parties to subsidiaries and affiliates. The bank maintains records of related parties in the following format:

• a) A list of directors, including the director’s name, the date the person became a member of the Board of Directors, the names of companies owned or controlled by the person, and family and corporate affiliations
• b) A list of senior management, including the senior manager’s name, title, the date the person became a senior manager, the names of companies owned or controlled by the person, and family and corporate affiliations
• c) A list of shareholders who own or control more than 5% of the bank’s shares or of any of its subsidiaries and affiliates, indicating the shareholder’s name, the date the person reached 5% shareholding, the number of shares held, the names of companies owned or controlled by the person, and family and corporate affiliations.

The related-party status will be captured in the relevant credit management system in the following instances:

• a) For directors, upon nomination as a director of the bank or of any of its subsidiaries and affiliates.
• b) For senior managers and employees of the bank, upon employment or promotion by the bank or any of its subsidiaries and affiliates.
• c) For subsidiaries and affiliates, upon receipt of the license.
• d) For shareholders, upon reaching 5% shareholding.

Upon the occurrence of the events above, each director, senior manager, and employee will provide the Bank with the names and particulars of their spouses, and their parents, brothers, sisters, and children, and their spouses, and of corporate businesses they are connected with, as part of the due diligence in respect of the Bank’s Related Party Policy.