Former Thimar board members convicted of market law violations

One of Thimar’s branches

The General Secretariat of the Committees for Resolution of Securities Disputes (GS-CRSD) entered the Appeal Committee for the Resolution of Securities Disputes' (ACRSD) final decision No. (2870/L.S/2023) of 1444 Hjiri, May 7, 2023, on the public penal case filed by the Public Prosecution against a number of previous members of board of directors in Thimar Development Holding Co. (Thimar), the Managing Director, and one of the employees of the company's previous external auditor.

The convicted officials are former managing director Sari Al-Mayouf, former board members Mut'ib Alsaif, Najla Abu-nayyan, Abdulaziz Al Ghanim and Abdullah Alhamoudi, ex-board chairman Ibrahim Al-Mayouf and an employee at the company’s previous external audit firm Ashraf Afifi. 

The decision concluded with the conviction of the abovementioned individuals for violating Article (49/a) of the Capital Market Law, due to their acts - each according to his/her position – in proving incorrect information in the financial statements that affected the company's assets and showed untrue financial statements, as well as created a false and misleading impression regarding the value of the security of Thimar company.

 These acts resulted in inflating the net profit for the initial financial period ending on March 31, 2015, and the annual financial period ending on Dec. 31, 2015, which includes recording profit on sale of investments in associate companies with a value of SAR 35 million and stating such profits incorrectly. 

The decision also convicted Sari Al-Mayouf for violating Article (7) of the Market Conduct Regulations and Article (211/b) of the Companies Law, for deliberately committing an act that created false and misleading impression with the aim of affecting the value of the company's security.  

This was done through his responsibility for what was included in his statement contained in the press release published on the Saudi Exchange website on March 31, 2015, in which he affirmed that the process of selling and transferring the company's stake in Thimar and Wasmi Agricultural Markets Co. is consistent with the company's strategy. 

He also concealed material information relating to the sale transaction of such stakes, in addition to using the company's funds against its interests to achieve personal aims, by receiving a bank transfer in the amount of SAR 1.5 million from an external party, preceded by the company's transfer of the said amount from its account to the account of the same external party without he providing a legal justification for obtaining such amount. In addition, he obtained an amount of SAR 6.04 million as a bonus for the profit achieved during the two fiscal years 2014 and 2015, part of which was the profit realized from the concluded contract. 

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

Sari Al-Mayouf will be fined SAR 2.3 million and shall be banned from working in companies listed on the stock exchange for a period of 10 years. 

Mut'ib Alsaif, Najla' Abu-nayyan, Abdulaziz Al Ghanim, Ibrahim Al-Mayouf and Abdullah Alhamoudi each will be fined SAR 200,000 and shall be banned from working in companies listed on the stock exchange for a period of two years. 

Ashraf Afifi will face a fine of SAR 100,000 and will be banned from working in listed companies for a period of five years. In addition, he will be prohibited from providing legal accounting business for authorized persons or any issuer of securities or any entity that intends to issue securities for a period of 10 years.

Furthermore, any person affected by these violations in this case is entitled to file a compensation claim (as individual or class action) with the CRSD for the damage he/she suffered from due to these violations, provided that such claim is preceded by a complaint filed with the Capital Market Authority (CMA) in this regard.

However, the GS-CRSD will announce to the public on its website in case of registering any class action in order to enable the rest of investors affected by such violations to apply to the CRSD to join the class action.