1-3

Companies must, every year, appoint an External Auditor or more, approved by the Central Bank, for auditing their accounts.

2-3

The Board audit committee must recommend the appointment, reappointment, dismissal and compensation of the External Auditor.

3-3

a.

The Board audit committee must establish a policy and processes for the nomination of the External Auditor. The policy and processes must be approved by the Board and applied at the general assembly for the purpose of selecting an External Auditor. The Board audit committee must review and recommend to the Board to agree to the terms of engagement prior to the signing of the written contract with the External Auditor. Where relevant, the Board audit committee must ensure that the terms of engagement with the External Auditor have been updated to reflect changes in the size, nature or complexity of the Company or in the instructions of the Central Bank.

b.

The Company must carry out a procurement procedure to select the external audit firm at least once every six (6) years, which coincides with the period of the rotation of the firm. Following rotation, a cooling off period of three (3) years must be observed before the same firm may be reselected. In addition, the Company must rotate the external audit partner in charge of the audit every three (3) years.

4-3

The Board audit committee must oversee the External Auditor’s effectiveness and independence.

5-3

The External Auditor must provide the Board audit committee with timely observations arising from the audit that are relevant to the Committee’s oversight responsibility for the reporting process. These include, but not limited to:

a.

 significant difficulties encountered during the audit;

b.

key areas of significant risk of material misstatement in the financial statements, including a summary of material corrected and uncorrected misstatements.

c.

the extent of requests made by the Group auditor to another audit firm of member firms with respect to performance of a Group audit;

d.

the use of external experts to assist with the audit;

e.

the extent to which the External Auditor has used the work of the internal audit function and Internal Controls;

f.

matters relating to accountability, including significant decisions or actions by Senior Management that lack appropriate authorization;

g.

significant qualitative aspects of financial statement disclosures;

h.

feedback on the External Auditor’s relationship with Senior Management;

i.

identification of internal control weaknesses;

j.

issues resulting from regulatory and accounting changes; and

k.

changes in insurance and financial risks.

6-3

The External Auditor must conduct audits in accordance with the International Standards on Auditing (ISA) that require the use of a risk and materiality based approach in planning and performing the audit.

7-3

The scope of the external audits must include but not be limited to investments, technical provisions, solvency margins, commissions to distribution channels, capital adequacy, reinsurance arrangements, efficiency of the Corporate Governance and Risk Management arrangements and Internal Controls, and where applicable, compliance with Shari’ah requirements.

8-3

The External Auditor must comply with the independence requirements laid down in the Central Bank Laws and this Regulation. In case of violation of these requirements or failure in the performance of duties, the Central Bank may take any measures against the violating or negligent External Auditor, including rejection by the Central Bank to conduct audits in Companies.

9-3

The Central Bank may require a Company to rescind the appointment of an External Auditor when the Central Bank determines that the External Auditor has not adhered to established professional standards or has inadequate expertise or independence.

10-3

The External Auditor must meet with the Central Bank as deemed necessary for supervisory purposes. The Central Bank determines the agenda, timing and attendees for such meetings, which might be without the presence of the Company. The Central Bank may access the External Auditor’s working papers, when necessary.

11-3

The Central Bank may require a Company to appoint, at the Company’s expense, the existing External Auditor or another specified by the Central Bank to provide a report on a particular aspect of the Company’s business operations, prudential requirements, risk governance framework or other matters specified by the Central Bank.