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Announcing the Issuance of ACRSD Final Decision Convicting Violators of the Capital Market Law and its Implementing Regulations

The General Secretariat of the Committees for Resolution of Securities Disputes (GS-CRSD) announces the issuance of the Appeal Committee for the Resolution of Securities Disputes' (ACRSD) final decision No. (2801/L.S/2023) of 1444 H., dated 11/07/1444 H., corresponding to 02/02/2023, on the public penal case filed by the Public Prosecution (referred to it by the Capital Market Authority (CMA)) against a number of members of board of directors in the Saudi Paper Manufacturing Company, as well as senior executives and members of its (previous) audit committee; being: Hassan Mahmoud Hassan Halloum (financial director), Adeeb bin Abdulrahman bin Musa'ed Alsuwailem (board member), James David Phipps (board member), Muhammad bin Abdullah bin Ibrahim Alkhorayef (board member), Azzam bin Abdullah bin Mansour Aba Alkhail (board member), Ali bin Suleiman bin Ayed Ala'ed (audit committee member), Abdulrahman bin Saleh bin Abdulrahman Al-Obaid (board member), Musa bin Abdulkarim bin Musa Alrubai'an (board member) Abdulaziz bin Saleh bin Mansour Aljarbou (board member), and Abdullah bin Musa'ed bin Abdulaziz Al Saud (chairman of board of directors).

The decision concluded with the conviction of the abovementioned individuals for violating Article (49/a) of the Capital Market Law, by participating, each through his own position, in proving capital profits that resulted from a sale transaction in violation of the accounting standards endorsed by the Saudi Organization for Chartered and Professional Accountants (SOCPA). As such, this act proved the existence of the amount of (SR. 115,757,648) one hundred fifteen millions seven hundred fifty seven thousand six hundred forty eight Saudi Riyals as capital profits in the annual financial statements of the Company for the year ending on 31/12/2012, hence showing the financial position of the Company appearing untrue, and created a false impression of the value of the Company's security, by covering the losses which the Company endured during 2012 that resulted from the decrease in the value of receivables, goods and investments that amounted (SR. 97,268,574) ninety seven millions two hundred sixty eight thousand five hundred seventy four Saudi Riyals. Accordingly, the net profit of 2012 became (SR. 102,107,280) one hundred two million one hundred seven thousand two hundred eighty Saudi Riyals. This had positively affected the price of the Company's security and avoided the negative effect which would had supposed to happen to the Company's security. Additionally, the two respondents; Hassan Mahmoud Hassan Halloum and Muhammad bin Abdullah bin Ibrahim Alkhorayef, had committed acts that resulted in excluding the item (receivables from sale of estates) that proved false and untrue information in the annual financial statements that led to an effect on the Company's assets and showed its financial statements unreal, thus created a false and misleading impression of the value of the Company's security in an attempt to create such an impression.

The decision included the imposition of a number of sanctions upon them according to the following:

First: Hassan Mahmoud Hassan Halloum:

Imposing a fine upon him amounting to (SR. 200,000) two hundred thousand Saudi Riyals.
Banning him from working in companies listed in the Exchange for a period of Two years.

Second: Adeeb bin Abdulrahman bin Musa'ed Alsuwailem: