ARTICLES OF ASSOCIATION OF MKB BANK ZRT According to the uniform sectoral classification system of business activities

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1 ARTICLES OF ASSOCIATION OF MKB BANK ZRT. 1. The Company's Name, Scope of Activities, Seat, Duration 1.1 Name of the Company: MKB Bank Zrt Abbreviated name: MKB Zrt 1.2 The Company's Scope of Activities According to the uniform sectoral classification system of business activities Other monetary intermediation, as main business activity Activities conditional upon licensing: Financial service activities: a) collection of deposits and acceptance - to such an extent that exceeds the Company's own funds - of other repayable funds from the public; b) granting of credit and money loans; c) financial leasing; d) money transmission services; e) issue of electronic money, and issue of cash substituting payment instruments in paper form (e.g. travel cheque, bill of exchange in paper form) and provision of services related thereto; f) undertaking of surety and bank guarantee as well as other banker's commitments; g) trading for own account or as a consignee in foreign exchange (not including currency conversion activity), bill of exchange or cheque; h) intermediary financial services (agent activities); i) custodian service, safekeeping service; j) credit reference service; Supplementary financial services: a) currency exchange activity Investment service activities: d) acceptance and forwarding of orders; e) execution of orders for customers; f) trading for own account; g) portfolio management (including portfolio management for private pension funds and voluntary mutual insurance funds); h) investment consulting; i) placement of financial instruments subject to the commitment of buying the instrument (securities or other financial instruments underwriting guarantee); 1

2 j) placement of financial instruments without the commitment of buying the instrument (financial instruments) Supplementary service activities: b) keeping in custody and registration of financial instruments and keeping of related customer accounts; c) custodian services and keeping of related securities accounts, in case of printed securities, registration thereof and keeping of customer accounts (including custodian services for collective investments); d) providing investment loans; e) consulting and services related to capital structure, business strategy and connected matters, to mergers and acquisitions Other activities pursued in a businesslike manner: a) insurance mediation activities 1.3 Seat of the Company: 1056 Budapest, V. Váci u. 38. The Company can establish branches (business premises and branch offices), as well as bank representative offices abroad Business premises of the Company: Alagút street Branch I Budapest, Alagút u. 5. Lajos street Branch II Budapest, Lajos. u. 2. Mammut Branch II Budapest, Széna tér 4. EuroCenter Branch III Budapest, Bécsi út 154. Békásmegyer Branch III Budapest, Pünkösdfürdı u Újpest Branch IV Budapest, Árpád u Szent István square Branch V Budapest, Szent István tér 11. Türr István street Branch V Budapest, Türr István u. 9. Andrássy street Branch VI Budapest, Andrássy út 17. WestEnd City Center Branch VI Budapest, Váci út 1-3. Arena Plaza Branch VIII Budapest, Kerepesi út 9. Duna Ház IX Budapets, Soroksári út 3/C. Árkád Branch X Budapest, Örs vezér tere 25. Allee Branch XI Budapest, Október huszonharmadika u Fehérvári street Branch XI Budapest, Fehérvári út 95. MOM Park Branch XII Budapest, Alkotás út 53. Nyugati square Branch XIII Budapest, Nyugati tér 5. Dévai street Branch XIII Budapest, Dévai u. 23. Duna Plaza Branch XIII Budapest, Váci út 178. Masped House Branch XIII Budapest, Váci út 85. Siemens House Branch XIV Budapest, Hungária krt Rákoskeresztúr Branch XVII Budapest, Pesti út 237. Csepel Plaza Branch XXI Budapest II. Rákóczi F. út Budafok Branch XXII Budapest, Kossuth Lajos u

3 Campona XXII Budapest, Nagytétényi út Lıportár street business premise XIII Budapest, Lıportár utca 24. Kassák Lajos street business premise XIII Budapest, Kassák Lajos utca Domestic Branch Offices of the Company: Ajka 8400 Ajka Csingeri út 2. Baja 6500 Baja, Tóth Kálmán tér 1. Balassagyarmat 2660 Balassagyarmat, Kossuth L. u Balatonfüred 8230 Balatonfüred, Kossuth utca 9. Békéscsaba 5600 Békéscsaba, Szabadság tér 2. Budaörs 2040 Budaörs, Szabadság u. 45. Cegléd 2700 Cegléd, Kossuth L. tér 8. Debrecen 4024 Debrecen, Vár u. 6/C. Debrecen Piac u Debrecen, Piac u. 81. Dunakeszi 2120 Dunakeszi, Fı út Dunaújváros 2400 Dunaújváros, Vasmő u. 4/B. Eger 3300 Eger, Érsek u. 6. Érd 2030 Érd, Budai út 11. Esztergom 2500 Esztergom, Bajcsy Zs.u.7. Gödöllı 2100 Gödöllı, Kossuth L. u. 13. Gyöngyös 3200 Gyöngyös, Köztársaság tér 1. Gyır 9021 Gyır, Bécsi kapu tér 12. Gyır 9027 Gyır, Budai út 1. Gyula 5700 Gyula, Városház u. 18. Hatvan 3000 Hatvan, Kossuth tér 4. Herend 8440 Herend, Kossuth Lajos u Heves 3360 Heves, Szerelem A. u. 11. Hódmezıvásárhely 6800 Hódmezıvásárhely, Kossuth tér 2. Jászberény 5100 Jászberény, Lehel vezér tér 16. Kalocsa 6300 Kalocsa, Hunyadi János u Kaposvár 7400 Kaposvár, Széchenyi tér 7. Kazincbarcika 3700 Kazincbarcika, Egressy Béni út 1. Kecskemét 6000 Kecskemét, Katona József tér 1. Keszthely 8360 Keszthely, Kossuth u.23. Kiskırös 6200 Kiskırös, Petıfi tér 2. Kiskunhalas 6400 Kiskunhalas,Kossuth u. 3. Kisvárda 4600 Kisvárda, Szt. László u. 51. Komárom 2900 Komárom, Igmándi út 1. Miskolc 3525 Miskolc, Szentpáli u.2-6. Miskolc 3530 Miskolc, Széchenyi u. 18. Mosonmagyaróvár 9200 Mosonmagyaróvár, Magyar u Nagykanizsa 8800 Nagykanizsa, Erzsébet tér 8. Nyíregyháza 4400 Nyíregyháza, Szarvas u. 11. Orosháza 5900 Orosháza, Kond u. 38. Paks 7030 Paks, Dózsa György út 75. Pápa 8500 Pápa, Kossuth u. 13. Pécs 7621 Pécs, Király u

4 Pilisvörösvár 2085 Pilisvörösvár, Fı u 60. Salgótarján 3100 Salgótarján, Fı tér 6. Siófok 8600 Siófok, Sió u.2. Solymár 2083 Solymár Terstyánszky Ödön u. 68. Sopron 9400 Sopron, Várkerület 16. Szeged 6720 Szeged, Kölcsey u. 8. Szekszárd 7100 Szekszárd, Garay tér 8. Székesfehérvár 8000 Székesfehérvár, Zichy liget 12. Szentendre 2000 Szentendre, Kossuth Lajos u. 10. Szigetszentmiklós 2310 Szigetszentmiklós, Gyári út 9. Szolnok 5000 Szolnok, Baross u Szombathely 9700 Szombathely, Szent Márton u. 4. Tata 2890 Tata, Ady Endre u. 18. Tatabánya 2800 Tatabánya, Fı tér 6. Tiszaújváros 3580 Építık u. 19. Vác 2600 Vác, Március 15. tér 23. Veszprém 8200 Veszprém, Óváros tér 3. Zalaegerszeg 8900 Zalaegerszeg, Kossuth u The Company has been established for an indefinite period of time. 2. Registered Capital and shares 2.1 Registered Capital The share capital (registered capital) of the Company is HUF 16,037,704,000 i.e. Sixteen billion thirty-seven million seven hundred and four thousand Forint fully paid up cash contribution. The registered capital divides into 16,037,704 i.e. sixteen million thirty-seven thousand seven hundred and four registered printed series "A" ordinary voting shares with a face value of HUF 1,000-, i.e. One thousand Forint each (hereinafter: shares). 2.2 Conversion and denomination of shares The shares cannot be converted into other types or classes of shares (preferential, employees', interest bearing, redeemable, etc.) The shares may also be issued as shares of aggregate denominations, and/or after issue they may be converted into shares of aggregate denominations which later may be split into aggregate shares of smaller denominations or to the basic denomination (hereinafter: "denomination") Denomination is ordered by the Board of Directors by way of resolution, on the written request of a shareholder, and the shares shall be produced within the deadline undertaken by the printing house appointed in such resolution, but in any case not later than 4 months from the submission of such request to the Board of Directors The costs of denomination shall be borne by the party initiating the denomination, and payment thereof shall be effected in advance, prior to submitting the order to the printing 4

5 house. In case the payment of such costs is not effected in advance by the deadline stipulated by the Company, the initiation of the denomination shall be considered withdrawn. 2.3 Increase of the registered capital With the exception of the cases described in s b) hereof, the increase of the registered capital shall be decided by the Shareholders' Meeting on the basis of a proposal made by the Board of Directors The increase of the registered capital by subscription of new shares may only be implemented by cash contribution, at the time specified in the conditions for subscription of shares In case of increase of the registered capital, the existing shareholders of the Company shall be entitled in proportion to the face value of their shares - to subscription priority right, to be exercised within a period of fifteen (15) days. 2.4 Keeping of the Share Register The Company shall keep a Share Register of the shares and of the temporary shares, as well as of the owners of the shares, which contains at least the following data: a) the name of the shareholder, the number of shares (percentage of control) of the shareholder, in case of a natural person the permanent address, mother's name, nationality of the shareholder, in the case of a legal entity or economic organisation the corporate name and the registered seat thereof; b) the corporate name and registered seat of the shareholder's proxy; c) if the share is owned by more than one shareholder, the data of the owners and the joint representative as defined in a) above; d) the type, security code, series, and nominal value of the share; e) the date of the overprint, of the purchase of the share and of the entry thereof in the Share Register; f) the date of deletion of the shareholder from the Share Register; g) date of redemption and destruction of the share; h) the reference number and date of the Supervision's resolution concerning the acquisition of ownership The Company shall record in an appendix to the Share Register information suitable for the identification of the indirect ownership of owners holding at least five (5) percent interest. 2.5 Transfer of shares Transfer of shares becomes effective vis-à-vis the Company by entering of the new shareholder or the shareholder's proxy defined ss of Act CXX of 2001 on the Capital Market in the Share Register. When the acquisition of shares in the Company is subject to authority approval, the shareholder has to be entered into the Share Register, even if the shareholder is represented by a proxy. 5

6 2.5.2 The shares shall be transferred by a special or blank endorsement made on the back of the share or, if it is full, on a sheet attached thereto (addendum). The entry into the Share Register shall not be indicated on the back of the share or the addendum thereto New shares offered by an increase of the registered capital shall first entitle the shareholder to dividend in respect of the financial year of the registration of the capital increase, unless otherwise provided by the Shareholders' Meeting or the Board of Directors deciding on the increase of registered capital. 3. Organs of the Company and their Operation 3.1 The Shareholders' Meeting Convocation of the Shareholders Meeting All the rights due to the shareholders with regard to the matters of the Company shall be exercised collectively by the shareholders at the Shareholders' Meeting The Shareholders' Meeting is ordinary or extraordinary. The Shareholders' Meetings shall be held in Budapest The ordinary Shareholders' Meeting shall be held at the latest by the end of May each year The convocation of the Shareholders' Meeting is the duty of the Board of Directors, or, in the cases defined in s hereof that of the Supervisory Board The Board of Directors is entitled to convoke an extraordinary Shareholders' Meeting whenever it deems it necessary. The Board of Directors shall convoke the Shareholders' Meeting a) immediately, if the number of the members of the Supervisory Board falls below three (3), or b) within thirty (30) days, if this is requested in writing, by specifying the objective and the cause of the meeting, by shareholders representing, according to the details in the Share Register at least one fifth of the votes; or c) within eight (8) days by simultaneously informing the Supervisory Board in order to take appropriate measures, if it learns that as a result of losses the shareholders' equity of the Company has reduced to 2/3 of the registered capital, or the shareholders' equity has fallen below the amount determined from time to time by law as the minimum registered capital of the Company, or the Company is on the brink of insolvency, or it has ceased to effect payments, and its assets do not provide cover for its liabilities The Shareholders' Meeting shall be convoked by means of an invitation sent to the shareholders at least fifteen (15) days prior to the first day of the Shareholders Meeting. 6

7 The invitation shall include the following: a) the name and seat of the Company, b) the time and place of the Shareholders' Meeting, c) the agenda of the Shareholders' Meeting, d) the conditions required to exercise voting rights as specified in the Articles of Association, e) the place and time of the repeated Shareholders' Meeting to be held in case of lack of a quorum at the original Shareholders' Meeting. The Board of Directors shall disclose material data of the financial statements prepared under the Accounting Act, and of the reports of the Board of Directors and that of the Supervisory Board to the Shareholders at least fifteen (15) days prior to the Shareholders Meeting. The disclosure shall be carried out by registered mail sent on the 19 th day prior to the date of the Shareholders Meeting to the postal address registered in the Share Register. Within eight (8) days following the receipt of the invitation to the Shareholders Meeting shareholders representing at least one fifth of the votes according to the details in the Share Register, may request the Board of Directors to place a certain issue on the agenda of the Shareholders' Meeting by specifying the cause. The Board of Directors is obliged to place the proposal on the agenda of the Shareholders' Meeting. If the Shareholders' Meeting is not duly convoked, resolutions may be passed only in the presence of each shareholder having the right to vote, provided that the shareholders grant their consent to the Shareholders' Meeting being held. The shareholders may declare any resolution adopted in a Shareholders Meeting not duly convoked and held as valid by unanimous decision adopted within thirty (30) days after the date of the Meeting Shareholders shall be entitled to participate in the Shareholders' Meeting following registration in the Share Register in possession of a certificate of deposit as defined by provisions of laws on securities. The rules of the submission to the Company of the deposit certificate and the conditions of depositing the shares with the Company shall be included in the invitation to the Shareholders' Meeting. Shareholders may exercise their rights relating to the Shareholders' Meeting through authorised representatives or shareholder's proxies as defined in ss of Act CXX of 2001 on the Capital Market. Members of the Supervisory Board or the auditor may not act as shareholder's proxy. Shareholders may authorise a member of the Board of Directors or an executive employee of the Company as well to exercise their rights relating to the Shareholders Meeting. The power of attorney of the authorised representative shall be valid for one Shareholders' Meeting or for the period of time defined therein, but in any case not more than twelve (12) months. The power of attorney shall also be valid for the continuation of the suspended Shareholders' Meeting and for the repeated Shareholders' Meeting convoked due to the lack of quorum. 7

8 The power of attorney shall be issued and presented to the Company in the form of a notarial document or a fully conclusive private document. The authorisation issued by the shareholder's proxy shall state that the representative is acting as shareholder's proxy. The persons to be invited to take part in the Shareholders Meeting shall be determined by way of resolution adopted by the Board of Directors or the Supervisory Board. Scope of authority of the Shareholders Meeting The following activities shall be within the exclusive authority of the Shareholders' Meeting: a) decision on the promulgating and amending of the Articles of Association, except for the cases set out in ss b), f) and g) hereof; b) decision on the alteration of the form of the operation of the Company; c) decision on the transformation or winding up of the Company without a legal successor; d) alteration of the rights associated with the shares, transformation of the various share types and classes; e) decision on the reduction of the registered capital; f) approval of the financial statements prepared under the Accounting Act; g) election and recall of members of the Board of Directors, the Supervisory Board, the auditor and the determination of their remuneration, and election of the Chairman of the Board of Directors ; h) approval of the By-laws of the Supervisory Board; i) decision on the approval of the persons liable for the audit; j) approval of the essential elements of the contract to be concluded with the auditor; k) decision on payment of dividend advance, except for the cases set out in s g) hereof; l) decision on conversion of shares produced by printing techniques into dematerialised shares; m) authorisation of the Board of Directors to acquire own shares; s.243(1) of the Companies Act: The articles of association may prescribe that the chairman of the board of directors be elected directly by the general meeting. 8

9 n) decision on granting discharge of liability to the members of the Board of Directors; o) decision on the increase of the registered capital, with the exception of the case regulated by s. s b) hereof; p) decision on all issues falling within the exclusive authority of the Shareholders' Meeting under the law, or the Articles of Association. Quorum and suspendability of the Shareholders Meeting An attendance sheet of shareholders present at the Shareholders' Meeting containing the name (firm) of the shareholders and/or the representatives thereof, the address (seat), the number of shares owned, and the number of votes due to each shareholder and any changes during the Shareholders Meeting in the persons of those present shall be prepared, and it shall be signed by the chairman of the Shareholders' Meeting and the keeper of the minutes The Shareholders' Meeting has a quorum when the shareholders representing more than half of the votes embodied in the shares are present A Shareholders' Meeting repeated due to lack of quorum shall be convoked on the first or second working day following the Shareholders Meeting without quorum A Shareholders Meeting may be suspended. If a Shareholders' Meeting is suspended it shall be continued within thirty (30) days. In such case the rules on the convocation of the Shareholders' Meeting and the election of the officials of the Shareholders' Meeting shall not be applied. A Shareholders' Meeting may not be suspended more than once. Participation and voting in the Shareholders Meeting The shareholder is entitled to participate in the Shareholders' Meeting, to request information within the limits specified in Act No. IV. of 2006 on Business Associations, to make proposals and to vote. The holders of shares shall participate in the voting by displaying the voting-paper put at their disposal by the Company. The issue of voting papers shall be based on the certificates of deposit or ownership and data from the Share Register Each share entitles to one vote With regard to the issue set out in hereof, the Shareholders' Meeting shall decide upon those listed in a) - e) with a 3/4 majority of all the votes cast in approval of the proposal, while in the other cases with a simple majority of the votes cast The presiding chairman of the Shareholders' Meeting shall be the Chairman of the Board of Directors, or a person invited by him to perform this task. The presiding chairman of the Shareholders' Meeting shall conduct the meeting, order the voting for the individual items on the agenda and announce the resolutions of the Shareholders' Meeting. 9

10 The presiding chairman of the Shareholders' Meeting shall appoint the keeper of the minutes and the officials counting the votes, and upon his proposal the Shareholders' Meeting shall elect the person from the present shareholders to witness the minutes. Minutes of the Shareholders Meeting The Shareholders' Meeting minutes shall contain: a) the name and seat of the Company, b) the place and date of the Shareholders' Meeting, c) the names of the presiding chairman of the Shareholders' Meeting, the keeper and the witness of the minutes and of the officials counting the votes, d) the main events that took place at the Shareholders' Meeting, the motions made, e) the draft resolutions, the votes cast for each proposal, the number of votes cast against each proposal, and the number of those who abstained from voting in respect of each proposal, f) the objection of a shareholder, of a member of the Board of Directors or that of the Supervisory Board against any resolution, if this is required by the objecting person The minutes shall be signed by the keeper thereof and the presiding chairman of the Shareholders' Meeting, and certified by one elected shareholder witness Any shareholder can request of the Board of Directors the issue of an excerpt or of a copy of the Shareholders' Meeting minutes. 3.2 The Board of Directors The Board of Directors is the operative management body of the Company. The members of the Board of Directors represent the Company with regard to third parties, at court and before other authorities. The Board of Directors establishes the organisational structure of the Company, controls the work of the organisation and determines in its By-laws the distribution of various functions for exercising employer's rights over the Deputy Chief Executives of the Company among the members of the Board of Directors The Board of Directors is entitled to take all actions permitted by the effective legal regulations and the resolutions of the Shareholders' Meeting except for matters falling within the exclusive authority of the Shareholders' Meeting or the Supervisory Board The Board of Directors shall pursue tasks in particular pursuant to the following classification Tasks attaching to the Shareholders Meeting The Board of Directors shall a) form opinions and make proposals on matters put on the agenda of the Shareholders' Meeting and submit them to the Supervisory Board for approval; b) provide for the preparation of the financial statements prepared under the Accounting Act and the proposal concerning the appropriation of the profit after tax, convey them 10

11 along with the auditor s opinion to the Supervisory Board, and submit them to the ordinary annual Shareholders' Meeting along with the reports of the Board of Directors and the Supervisory Board, as well as the report on the business policy of the Company; c) approve the text of the invitation to the Shareholders' Meeting and convene the Shareholders Meeting in accordance with the provisions of the Articles of Association; d) ensure that the material data of the financial statements prepared under the Accounting Act and the reports of the Board of Directors and the Supervisory Board are disclosed to the shareholders at least fifteen (15) days before the Shareholders Meeting; e) provide necessary information in connection with the issues placed on the agenda of the Shareholders Meeting within the framework of the discussion thereof, in case questions are raised by the shareholders; f) ensure that, if requested by any of the Company's shareholders, a copy of or extract from the minutes of the Shareholders' Meeting be given to them; g) ensure the execution of resolutions passed by the Shareholders' Meeting Tasks attaching to the shares and the dividend The Board of Directors shall a) appoint the keeper of the Share Register; b) decide upon the increase of the registered capital pursuant to the authorisation of the Shareholders Meeting granted by way of resolution. In connection with the foregoing, the Board of Directors shall be entitled and at the same time obliged to amend the Articles of Association. Such decision of the Board of Directors may not be executed before the approval thereof by the Supervisory Board; c) decide upon the consolidation or split of shares; if change in the denomination is requested by shareholders, the cost of such change must be borne by them; d) decide on the acquisition of own shares pursuant to the authorisation granted by the Shareholders Meeting, including the cases where the shares are acquired by another private limited company or a private limited-liability company in which the Company controls - directly or indirectly - over fifty (50) per cent of the voting rights or effectively exercises a dominant influence. Such decision of the Board of Directors may not be executed before the approval thereof by the Supervisory Board; e) decide on the acquisition of own shares, if the own shares are acquired ea) for preventing material losses directly threatening the Company, or eb) by way of a court proceeding or non-judicial proceedings for the settlement of any legitimate claim of the Company, or ec) in connection with transformation. 11

12 Such decision of the Board of Directors may not be executed before the approval thereof by the Supervisory Board. f) decide on the alienation of own shares. Such decision of the Board of Directors may not be executed before the approval thereof by the Supervisory Board; g) decide on the basis of the prior approval of the Supervisory Board on the payment of dividend advance; h) decide on the basis of the prior approval of the Supervisory Board on the approval of the interim balance sheet; i) define, on the basis of s.5.4 hereof, the initial date, the place and the manner of the payment of dividend. Such decision of the Board of Directors may not be executed before the approval thereof by the Supervisory Board; j) shall record the transfer of title on the reverse side (allonge) of the printed share in question, by way of inheritance, termination of the shareholder with succession, or the division of community property among spouses, relying on the final court ruling or auction records, indicating its date and number, and shall register the new owner in the register of shareholders Tasks attaching to the operation of the Supervisory Board The Board of Directors shall a) prepare a written report on the management and the business policy of the Company, annually to the Shareholders' Meeting, and once each quarter to the Supervisory Board; b) prepare a written report annually to the Supervisory Board on the executive mandates held by the Chairman and Chief Executive of the Company and his deputies in strategic participations of the Company and on their respective remuneration; c) discuss in advance the proposals prepared for the Supervisory Board; d) draw up the proposals of the Shareholders Meeting and submit them for approval to the Supervisory Board; e) ensure that resolutions of the Board of Directors, conditional upon the approval of the Supervisory Board, are submitted to the Supervisory Board or its committee in order to obtain such approval Tasks attaching to the organisation and the scope of activities of the Company a) From among the members of the Board of Directors the Chairman and Chief Executive, as the Chairman of the Board of Directors shall exercise over the Deputy Chief Executives of the Company the rights attaching to their bonus, as well as to the conclusion, modification and termination of their employment contracts. Such 12

13 decision of the Chairman may not be executed before the approval thereof by the Remuneration Committee of the Supervisory Board. All other employer s rights over the Deputy Chief Executives shall be exercised by the Chairman of the Board of Directors, as Chairman and Chief Executive independently; b) From among the members of the Board of Directors the Chairman of the Board of Directors, as Chairman and Chief Executive shall exercise employer s rights over all employees of the Company, who are not Deputy Chief Executives. The present Articles of Association shall empower the Board of Directors to stipulate the order of transferring employer s rights exercised over employees holding a position lower than Deputy Chief Executive by way of regulation; c) The Board of Directors shall provide the guiding principle for evaluating employees behaviours raising the suspicion of insider trading, and/or market manipulation or which may otherwise jeopardise the Company s reputation; d) The Board of Directors shall assign the employees of the Company authorised to sign on behalf of the Company; e) The Board of Directors shall conclude the contract of assignment with the auditor for carrying out the audits of accounting documents as specified in the Accounting Act under the conditions stipulated by the Shareholders Meeting; f) The Board of Directors shall decide on changing the Company s corporate name, registered office, and scope of activities with the exception of the main business activity. (The Board of Directors is entitled and at the same time obligated to modify the Articles of Association to that effect.) Such decision of the Board of Directors may not be executed before the approval thereof by the Supervisory Board; g) The Board of Directors shall decide on changing the Company s business premises and branch offices. (The Board of Directors is entitled and at the same time obligated to modify the Articles of Association to that effect.); h) The Chairman of the Board of Directors, as Chairman and Chief Executive shall decide on granting prior consent to undertaking board of directors or supervisory board membership by the Deputy Chief Executives of the Company in another business association with the exception of the cases set out under s f) hereof Tasks attaching to strategic planning The Board of Directors shall a) draw up and submit to the Supervisory Board for approval the (non-consolidated and consolidated) medium term business policy and financial plan, and ensure the supervision of its implementation; b) draw up and submit to the Supervisory Board for approval the annual (nonconsolidated and consolidated) business and financial plan of the Company, and ensure the supervision of its implementation; 13

14 c) draw up the risk strategy and submit it to the Supervisory Board for approval; d) draw up its work schedule for the entire following year in the last meeting of the current year at the latest Tasks attaching to regulations The Board of Directors shall a) accept the By-laws of the Board of Directors and submit them for approval to the Supervisory Board; b) decide on the Organisational and Operational Rules of the Company; c) approve the business rules of the Company; d) approve the regulations of the Company and the amendments thereof, the approval of which is conferred to the competence of the Board of Directors by law, in particular: da) regulations on the assumption of risks drawn up within the framework of the accounting policy (classification of customers and/or partners, assessment of collaterals, qualification and evaluation of transactions, diminution in value and provisioning); db) regulation on the assumption of risk vis-á-vis a customer or a customer group falling under the provisions of s.79(7) of the Credit Institutions Act (according to the definition stipulated by law and effective prior to December 31 st, 2000: ownerrelated loans ); dc) investment regulation; dd) credit policy; de) regulation on investment loans; df) regulation on the principles of publication; dg) conflict of interest policy; dh) regulation defining the procuration right of persons assuming obligations on behalf of the Company; The entry into force of the investment regulation under point dc) is conditional upon the approval of the Supervisory Board. e) draw up the Peremptory Risk Competence Regulation and submit it for approval to the Supervisory Board; f) approve the Risk Competence Regulation of the Company; S.79(7) of the Credit Institutions Act on owner related loans: Granting credit to and assuming risks vis-á-vis the mother or daughter company of the Company, the daughter company of the mother company, the owner of qualifying participation in the Company and an enterprise in which the Company or the owner of the Company, members of the Board of Directors, members of the Supervisory Board, managing directors of the Company and close relations thereof (s. 685 of the Civil Code) have a qualifying participation. 14

15 g) draw up the regulation on granting internal credit and submit it for approval to the Supervisory Board; h) stipulate the order of transferring employer s rights exercised over employees holding a position lower than Deputy Chief Executive by way of regulation Tasks attaching to individual business transactions The Board of Directors shall a) decide on risk assumption matters conferred to the competence of the Board of Directors in the Peremptory Risk Competence Regulation. Those risk assumption decisions, which are conditional upon the approval of the Supervisory Board pursuant to this regulation, may not be executed before obtaining such approval; b) ensure that resolutions of the Board of Directors, which are conditional upon the approval of the Supervisory Board pursuant to the Peremptory Risk Competence Regulation, are submitted to the Supervisory Board in order to obtain such approval; c) decide on granting internal credit. Such decision of the Board of Directors may not be executed before the approval thereof by the Supervisory Board; d) decide on country limits. Such decision of the Board of Directors shall be evaluated and commented by the Risk Committee of the Supervisory Board in order to prepare the approval of the Supervisory Board; e) decide on the prior consent to contracts of sale and other contractual commitments between an executive officer, holding office in the Board of Directors or Supervisory Board or as a managing director in the Company or a financial institution which is subject to consolidated supervision together with the Company, and the Company or the financial institution pursuant to s.57(3) of the Credit Institutions Act. Such decision of the Board of Directors may not be executed before the approval thereof by the Supervisory Board; f) decide on the approval of the acquisition of shareholding, except for public companies limited by shares, and the acceptance of a mandate as executive officer by a member of the Company s Board of Directors in another business association pursuing activity identical to that of the Company. Such decision of the Board of Directors may not be executed before the approval thereof by the Supervisory Board; g) decide on granting credit to and assuming risks vis-á-vis the mother or daughter company of the Company, the daughter company of the mother company, the owner Assumption of risk according to s.57(3) of the Credit Institutions Act: An executive officer may not assume any contractual obligations and may not enter into any sales contract with the financial institution in which he is a member of the board of directors or supervisory board, or is a managing director thereof, unless the board of directors has granted prior consent by unanimous decision. This provision must be duly applied regarding any executive officer of the financial institution holding office in the board of directors or supervisory board or as a managing director concerning his plans to conclude a contract with another financial institution of the same bank group. 15

16 of qualifying holding in the Company and an enterprise in which the Company or the owner of the Company, members of the Board of Directors, members of the Supervisory Board, managing directors of the Company and close relatives thereof (s. 685 of the Civil Code) have a qualifying holding. Such decision of the Board of Directors may not be executed before the approval thereof by the Supervisory Board; h) decide on the approval of contracts on outsourcing activities falling within the financial service and investment service activity of the Company Tasks attaching to foreign banking subsidiaries The Board of Directors shall a) discuss trends, market environment, development potentials regarding group level business, risk, functional and operational issues related to the foreign banking subsidiaries of the Company; b) discuss strategic issues concerning the foreign banking subsidiaries of the Company, discusses business, risk and functional, operational strategies, strategic issues. Decides on strategic development priorities and development proposals; c) issue recommendations towards the local supervisory bodies, proposes decisions to be taken by the local decision making bodies, give recommendations and guidance to delegates of the Company chosen for representing the Company in local supervisory bodies; d) defines implementation, monitoring and proposal-submission tasks towards the organisational unit of the Company responsible for group management and/or towards the other line business departments and ongoing projects; e) initiate or propose to launch group level projects related to the foreign banking subsidiaries of the Company for know-how transfer or joint development Submission of regular and ad-hoc reports The Board of Directors shall have the following reports drawn up and submit them for acknowledgement to the Supervisory Board: aa) quarterly financial report comparing actual with planned figures; ab) quarterly risk report; ac) report on the markets, the competitive environment and important changes in the Company (at each meeting); ad) quarterly report on earnings and risk positions regarding strategic participations; ae) af) quarterly report on the anti money laundering activity of the Company; quarterly report on the compliance activity of the Company; 16

17 ag) annual report pursuant to the Capital Market Act; ah) annual report on the human resources activity of the Company; ai) other ad-hoc reports as requested by the Supervisory Board. The Board of Directors shall have the following reports drawn up and submit them for approval to the Risk Committee of the Supervisory Board: ba) report on major developments and events affecting the risk position; bb) risk reporting; bc) report on the overall implementation status of BayernLB Group Risk Management Principles and Guidelines; bd) report on risk relevant topics and findings from internal, external and regulatory audits; be) risk strategy updates (the proposal of the Board of Directors shall be evaluated and commented by the Risk Committee in order to prepare the approval of the Supervisory Board) Examination of regular reports The Board of Directors shall discuss the following monthly reports: a) report of the Chairman of the Credit Committee on the operation and the decisions of the Committee; b) report of the Chairman of the Asset and Liability Management Committee on the operation and the decisions of the Committee; c) report of the Chairman of the Bank Development Committee on the operation and the decisions of the Committee Membership in the Board of Directors The Board of Directors consists of at least three (3) and at most eleven (11) members. Only natural persons may be members of the Board of Directors The Board of Directors consists of the Chairman and Chief Executive of the Company and his Deputies Board of Directors members are elected by the Shareholders' Meeting for a period of no more than three (3) years. Members of the Board of Directors may be reelected and recalled freely at any time Membership in the Board of Directors is terminated upon: a) expiry of the term of assignment, b) recall, 17

18 c) resignation, d) termination of employment relationship of the members of the Board of Directors, e) arising of any statutory grounds for disqualification or in other cases specified by law, f) or upon the Board of Directors member s death. Members of the Board of Directors may resign at any time. However, if so required by any vital interest of the Company, such resignation shall only take effect on the sixtieth day after the announcement thereof, unless the Shareholders Meeting has already provided or could have provided for the election of a new Board of Directors member beforehand. Until the resignation takes effect, the member of the Board of Directors shall participate in making any urgent decisions and taking any urgent measures Chairman of the Board of Directors The Shareholders Meeting shall elect the Chairman of the Board of Directors from among the members of the Board of Directors. The Chairman of the Board of Directors shall organise the work of the Board of Directors and ensure the efficient operation thereof. He shall represent the Board of Directors at the Shareholders' Meeting and with regard to any third parties The Chairman of the Board of Directors (if he is prevented, a Board of Directors member appointed by the Chairman) shall decide: a) on the convocation of Board of Directors meetings, the agenda of the meeting and on sending the invitation thereto, as well as on any later changes of the Board of Directors meeting s agenda or the work schedule of the Board of Directors intended, b) on the enforcement of the procedure of decision-making under s. 6 of the Board of Directors By-laws Operation of the Board of Directors The Board of Directors shall hold its meetings whenever it deems necessary, but at least ten (10) times a year in order to perform its duties properly The meetings shall be convened in compliance with the provisions of the By-laws of the Board of Directors In addition to the members of the Board of Directors, persons invited by the Chairman of the Board of Directors in their capacity as experts may participate in Board of Directors meetings with the right of consultation The Chairman of the Supervisory Board or a member appointed by the Chairman may participate in the Board of Directors meetings. s.243(1) of the Companies Act: The articles of association may prescribe that the chairman of the board of directors be elected directly by the general meeting. 18

19 The auditor of the Company may, with the right to consult, be invited to participate in the meetings of the Board of Directors Members of the Board of Directors may, without holding a meeting, establish opinions and adopt resolutions in writing in the manner and in the cases determined in the By-laws of the Board of Directors, on the basis of proposals sent to them via facsimile or by other means of delivery. In this case the member of the Board of Directors shall, within five (5) working days after the sending of the proposal sent by the Chairman of the Board of Directors, forward to the registered office of the Company his/her vote put into a private document of conclusive force. Failure to meet the deadline is to be considered as if the Board of Directors members had not attended the meeting Members of the Board of Directors, their close relatives [s. 685 b) of the Civil Code] or domestic partner may conclude transactions falling within the scope of the main activities of the Company with the Company in their own name or on their own account, within the limits specified by the rules of law applying to credit institutions and by the rules of law on investment services. 3.3 The Supervisory Board The Supervisory Board shall control the management of the Company, and when approving the decisions of the Board of Directors listed under s hereof it shall act as a Decision Making Supervisory Board. In the framework of controlling the management of the Company it may request reports or information from members of the Board of Directors and other senior employees of the Company, which shall be provided in writing to the chairman of the Supervisory Board within thirty (30) working days upon receipt of such written request The Supervisory Board may examine the books and documents of the Company with the help of experts when deemed necessary The Supervisory Board shall draw up its By-laws, and shall submit them for approval to the Shareholders' Meeting The Supervisory Board can initiate the convocation of the Board of Directors and can make proposals for the items on the agenda If, according to the judgement of the Supervisory Board, the activity of the Board of Directors is contrary to the law, to the Articles of Association or to the resolutions of the Shareholders Meeting, or otherwise infringes upon the interests of the Company or the shareholders, the Supervisory Board may convoke an extraordinary Shareholders' Meeting and make proposals for the items of its agenda The Supervisory Board shall pursue tasks in particular pursuant to the following classification: 19

20 The Supervisory Board shall a) ensure that the Company has a comprehensive control mechanism suitable for its efficient operation and provide for the proper operation of the internal control system of the financial enterprises controlled by the Company; b) submit proposals to the Shareholders' Meeting concerning the person and the remuneration of the auditor to be elected; c) inspect the annual and interim financial statements of the Company, and the quarterly reports of the Board of Directors on the management, the financial position and the business policy of the Company; d) direct the internal control organisation of the Company, within the frame of which it shall accept the annual control plan of the internal control organisation, and it shall discuss the quarterly and other reports submitted by the internal control organisation, and oversee the implementation of the measures to be taken; e) if needed, stipulate control tasks for the internal control in addition to those included in the annual plan of the internal control organisation; f) if needed, facilitate the work of the internal control by appointing external expert(s); g) make proposals on changes in the number of staff at the internal control organisation; h) elaborate recommendations and proposals based on the findings of the examinations carried out by internal control; i) examine all material business policy reports put on the agenda of the Shareholders' Meeting as well as all proposals prepared for the Shareholders' Meeting; The Shareholders' Meeting may make decisions on the financial statements prepared under the Accounting Act and the appropriation of the profit after tax only in possession of the written report of the Supervisory Board. j) approve the By-laws of the Board of Directors; k) draw up its work schedule for the entire following year in the last meeting of the current year at the latest; l) decide on the distribution and the date of payment of the remuneration in connection with the Supervisory Board membership and the Board of Directors membership The prior consent of the Supervisory Board is needed pursuant to the Credit Institutions Act a) for making decisions related to the establishment and/or termination of the engagement of the manager and employees of the internal control organisation; b) for the establishment of the remuneration of the manager and employees of the internal control organisation The prior consent of the Supervisory Board is needed pursuant to the Companies Act a) for Board of Directors decisions on the approval of the payment of dividend advance, as set out in s g) hereof; b) for Board of Directors decisions on the approval of the interim balance sheet, as set out in s h) hereof. 20

21 Pursuant to the Capital Market Act the Supervisory Board shall pursue the following additional audit committee tasks: a) monitoring of the procedure of financial reporting; b) monitoring of the efficiency of the risk management system; c) tracking down of the audit process of the non-consolidated and the consolidated annual report; d) monitoring of the independency of the auditor and the auditor company, including all other services rendered to the Company by the auditor in addition to the auditing of the non-consolidated and the consolidated annual report Pursuant to the provisions of s.37(1) of the Companies Act the following decisions of the Board of Directors may not be executed before the approval thereof by the Supervisory Board: a) decision on the increase of the registered capital within the scope of authority of the Board of Directors, and on the modification of the Articles of Association to that effect; b) decision on the acquisition or alienation of own shares; c) decision on the date, the place and the manner of the payment of dividend; d) decision on changing the Company s corporate name, registered office, and scope of activities with the exception of the main business activity, and on the modification of the Articles of Association to that effect; e) decision on determining the medium term (non-consolidated and consolidated) business policy and financial plan of the Company; f) decision on determining the annual (non-consolidated and consolidated) business and financial plan of the Company; g) decision on determining the risk strategy of the Company; h) decision on the establishment of the regulation on granting internal credit; i) decision on the approval of the Peremptory Risk Competence Regulation; j) decision on granting internal credit; k) decision on risk assumption matters conditional upon the approval of the Supervisory Board pursuant to the Peremptory Risk Competence Regulation; l) decision on the approval of the investment regulation; m) decision on the approval of risk reports under s ba) be); n) decision on country limits; o) decision on the prior consent to contracts of sale and other contractual commitments between the executive officer, Board of Directors or Supervisory Board member or a managing director of the Company or a financial institution which is subject to consolidated supervision together with the Company, and the Company or the financial institution; p) decision on granting credit to and assuming risks vis-á-vis the mother or daughter company of the Company, the daughter company of the mother company, the owner of qualifying holding in the Company and an enterprise in which the Company or the owner of the Company, members of the Board of Directors, members of the Supervisory Board, managing directors of the Company and close relatives thereof (s. 685 of the Civil Code) have a qualifying holding. q) decision on the approval of the acquisition of shareholding, except for public companies limited by shares, and the acceptance of a mandate as executive officer by a member of the Company s Board of Directors in another business association pursuing activity identical to that of the Company; 21