Conflict of Interest Policy

1- Scope:

This policy applies to the bank, the board of directors, and the executive management, without conflicting with the bank's rules and standards of professional conduct, in cases where conflicts of interest affect the interests of the institution, stakeholders, related parties, high-balance depositors, all bank employees, bank consultants, auditors, and supervisors. It is important for all relevant bank employees to understand the requirements of this policy, the instructions of the Securities Commission, and related rules, laws, and instructions, and to adhere to them accurately. In case of conflict between the provisions of this policy and any instructions or laws issued by relevant regulatory authorities, the provisions of those laws and instructions shall prevail over the provisions of this policy.

2- Objective:

This policy aims to organize and avoid conflicts of interest by adopting appropriate procedures, controls, and rules that regulate conflicts of interest for the bank's shareholders, institutional committees, board of directors, senior executive managers, employees, auditors, consultants, and stakeholders, achieving greater transparency in decision-making and avoiding conflicts of interest.

3- Definitions:

4- Responsibilities:

The responsibility for implementing this policy lies with all board members, senior executive managers, and bank employees. Everyone covered by this policy must review their interests and relationships outside of work, whether commercial, personal, or familial, to ensure there are no actual or potential conflicts of interest related to their work within the bank.

Policy:

First: Introduction:

The Conflict of Interest Policy sets out the necessary guidelines for identifying, reporting, disclosing, and strictly preventing or mitigating actual/potential conflicts of interest, including regulations related to related party transactions and the possibility

2- Conflict of Interest Cases:

• Conflict of Interest Related to the Board of Directors:

  1.  A board member may not, without authorization from the general assembly according to the regulations set by the competent authority, have a direct or indirect interest in transactions and contracts made for the bank.
  2. The board must ensure that the executive management operates with high integrity, implements approved policies and procedures, and avoids conflicts of interest.
  3. A board member must inform the board of any personal interest in transactions and contracts made for the bank, and this notification must be recorded in the meeting minutes. The interested member may not participate in voting on the decision related to this matter.
  4. The chairman of the board must inform the general assembly at its meeting of transactions and contracts in which any board member has a personal interest.
  5. A board member may not, without authorization from the general assembly according to the regulations set by the competent authority, participate in any activity that competes with the bank, which includes:
     • Establishing a company or owning a significant percentage of shares or interests in another company or establishment that engages in activities similar to the bank's activities.
     • Accepting membership on the board of directors of other banks.
     • Obtaining a commercial agency or its equivalent, whether apparent or hidden.
  6. The board must consider the requirements of independence and conflict of interest as stated in the regulations issued by the Securities Commission when appointing financial and legal advisors and auditors.
  7.  The board must ensure due diligence in arranging matters related to the bank's operations and personal affairs in a way that avoids conflicts of interest between personal interests and the bank's interests, and not exploit their position for personal gain.
  8. When granting credit to related parties, prior approval from the bank's board of directors must be obtained after obtaining approval from the Central Bank of Iraq.

• Conflict of Interest Related to Executive Management and Bank Employees:

  1. The board must be informed of any external work activities undertaken by any executive or employee, and approval must be obtained from the board, with disclosure according to regulations and laws.
  2. If there is an actual or potential conflict of interest among key executive employees, it must be reported to the authorized manager, their deputy, or the human resources manager for review, evaluation, and recommendation to the bank's board of directors for an appropriate decision.
  3. Employees must not exploit internal bank information for personal gain.

• Conflict of Interest Related to Major Shareholders:

  1. All transactions with major shareholders and their relatives who own 5% or more of the bank's shares, directly or indirectly, must be disclosed according to regulations and laws.
  2. All transactions and contracts with shareholders and their relatives up to the fourth degree who own 5% or more of the bank's shares, directly or indirectly, are subject to the same conditions as transactions with others.

• Conflict of Interest Related to External and Internal Auditors and Consultants:

  1. The bank must not appoint the same auditor continuously for more than five (5) years from the date of election.
  2. Auditors must be independent and qualified with experience in auditing the bank's accounts, and they are appointed at the general assembly meeting by the shareholders.
  3. The independence of the internal auditor must be maintained, and sufficient support must be provided for them to perform their duties, with the internal auditor functionally reporting to the Audit Committee and administratively to the bank's management.
  4. When appointing any external auditor or financial or legal consultant, conflict of interest cases must be considered.

• Conflict of Interest Related to Other Stakeholders:

  All transactions and contracts with the bank's suppliers are subject to the same conditions as transactions with others in terms of evaluation, fairness of execution, disclosure, and notification.

3- Mechanisms for Addressing Conflicts of Interest:

• Each board member or executive management member is prohibited from:
  1. Making a decision where objectivity and independence are affected by a personal material or moral interest that concerns them personally or concerns one of their relatives up to the fourth degree, or when their performance is influenced by direct or indirect personal considerations or their knowledge of information related to the decision.
  2. Receiving gifts, services, or benefits of substantial value from an entity or person that may influence their decisions or duties towards the bank.
  3. Disclosing any confidential information related to the bank except with written authorization or under applicable laws and regulations.
• Each board member or executive management member must:
  1. Disclose to the board any direct or indirect financial benefit concerning them or on behalf of other parties in any transactions and matters that directly or indirectly affect the bank or its activities and may lead to a conflict of interest.
  2. Disclose any conflict of interest (for board members) in matters presented to the board, and members with conflicting interests must refrain from participating in discussions and voting on these matters, and this must be recorded in the meeting minutes.

4- Conflict of Interest Cases:

This policy includes examples of behavioral standards for various situations, but it does not necessarily cover all potential conflict of interest cases. All parties must independently adhere to this policy and avoid any behavior that constitutes or appears to constitute a conflict of interest. Examples of conflict of interest cases include:

• Participating in any work or activity with a personal or professional interest that may directly or indirectly affect the objectivity of decisions or the ability to perform duties and responsibilities towards the bank.
• Gaining personal benefits from any other party, directly or indirectly, by leveraging their position and involvement in managing the bank's affairs.
• Engaging in material transactions involving the sale, purchase, or leasing to the bank.
• Using their position at the bank to appoint their children or relatives to the bank.
• Using confidential information obtained through their position for personal gain or for the benefit of an entity with which they have an interest.
• Being associated with more than one entity, such as being a board member of a company that provides services to the bank.
• Accepting bribes and commissions for services related to the bank's operations.
• Disclosing secrets or providing information considered the bank's property, which they access through their position at the bank.
• Accepting gifts and gratuities from individuals or entities dealing with the bank, aiming to influence the bank administrator's actions.
• Providing bank services to clients whose interests conflict or compete with the interests of other clients, affecting the interests of one party.

5- Code of Conduct and Work Ethics:

There are essentially four ways to manage conflicts of interest:

• Disclosure and advising the client of any interests.
• Independent adherence to any formal internal conflict of interest policy.
• Refusing to accept the work and not committing to it.
• Implementing internal control systems to prevent employees from engaging in actions that lead to conflicts of interest.

6- Confidentiality:

• All employees must maintain complete confidentiality of all information related to the bank and its activities and not disclose it to any person or third party. Employees must protect the information they obtain in the course of their work. This condition is included in every employment contract, and any violation will be subject to disciplinary regulations. The bank adopts a systematic approach by providing information to employees on a need-to-know basis rather than making it generally available to all employees.
• All employees have a special responsibility to protect the confidentiality of information related to the bank's clients. This responsibility is imposed by law and may arise from agreements with clients or be based on internal rules set by the bank. No client information will be disclosed outside the bank except in cases permitted by legal provisions or by a decision from a competent judicial authority or the public prosecutor.
• Board members must maintain the confidentiality of information related to the bank and not disclose it to any person except in cases permitted by legal provisions or by a decision from a competent judicial authority or the public prosecutor.

7- Publication:

This policy is published on the bank's website to be accessible to all related parties or through other available publication means.

8- General Provisions:

• This policy is subject to periodic review and update as needed.
• This policy was issued based on the institutional governance guide, Banking Law No. (94) of 2004, and Companies Law No. 21 of 1997 as amended.
• Everyone working in the institution is fully responsible for any breach or non-compliance with the requirements of this policy and the procedures issued under it.
• The board secretary must ensure that board members and executive management sign annual disclosure forms and update the provided information as necessary (Appendix No. 1 - Board Members' Disclosure Statement) and (Appendix No. 2 - Executive Management Disclosure Statement).
• All current and new employees must read the Code of Conduct and Work Ethics and adhere to the rules stated therein.
• The bank's regulatory departments must ensure that related party transactions are conducted in accordance with approved policies and procedures. The Audit Committee reviews all related party transactions, monitors them, and informs the board of these transactions.