Download Corporate Governance Code

EXHIBIT TO BOARD MINUTES No. 342 DATED JANUARY 15, 2014
CORPORATE
GOVERNANCE CODE
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TABLE OF CONTENTS
A.
Overview.
B.
Scope of Application.
C.
Applicable Laws and Regulations.
D.
Code of Ethics.
E.
Code of Banking Practice.
F.
Structure of the Company and its Subsidiaries.
G.
Shareholders; Shareholders’ Meetings and Tender Offers.
1.Shareholders.
2.Shareholders’ Meeting.
3.Control Acquisitions.
H.
Board of Directors.
1.Composition.
2.Eligibility Requirements for Directors.
3.Eligibility Requirements for Independent Directors.
4.Rules governing the Appointment and Reelection of the Board
Members.
5.Rules governing Directors’ Removal, Vacancies, Absences,
Resignations, Termination of Office.
6.Authority and Powers.
7.Responsibilities.
a.Principles.
b. Risk Management, Definition and Identification.
c. Personal Information to be provided by Directors.
8.Right to be Informed.
9.Performance Assessment.
10. Operation Rules.
11. Compensation to Directors.
12. The Board’s Secretary’s Office.
I. Committees
1. Executive Committee
a.Composition and Requirements for Membership
b. Responsibilities
2. Audit Committee
a.Composition and Requirements for Membership
b. Responsibilities
3. Committee for Controlling and Preventing Money Laundering and
Terrorism Financing
a.Composition and Requirements for Membership
b. Responsibilities
4. Information Technology Committee
a.Composition and Requirements for Membership
b. Responsibilities
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5. Credit Committee
a.Composition and Requirements for Membership
b. Responsibilities
6. Personnel Incentives Committee
a.Composition and Requirements for Membership
b. Responsibilities
7. Risk Management Committee
a.Composition and Requirements for Membership
b. Responsibilities
8. Corporate Governance Committee
a.Composition and Requirements for Membership
b. Responsibilities
9. Ethics Committee
a.Composition and Requirements for Membership
b. Responsibilities
10. Finance Committee
a.Composition and Requirements for Membership
b. Responsibilities
11. Committee of Homes
a.Composition and Requirements for Membership
b. Responsibilities
12. Committee of Social and Institutional Affairs
c. Composition and Requirements for Membership
d. Responsibilities
J.Office of the General Manager and Senior Management
1. Requirements of the positions
2. Duties and Responsibilities
a.Principles
b. Risk Management
c. Personal Details to be provided by the General Manager and
senior management
K.
Duties of the Members of the Organization
1. Duty of Diligence
2. Duty of Secrecy and Confidentiality
3. Duty of Loyalty and Non-Compete Obligation
4. Conflict of Interest
5. Procurement Decisions
6. Succession Planning Policy
7. Personnel Incentives Policy
L.
Transparency in Information; Fluency and Completeness
1. Annual Report
2. Financial Statements
3. Regulatory Information required by the Control Authorities
M.
Policies in connection with the Shareholders, the Depositors and
Relevant Third Parties
1. Duties owed to the Shareholders
a.
Information and Response to Enquiries
b.
Fair Treatment
c.
Dividend Policy
2. Protection of Depositors’ Interests
3. Protection of the Interests of Relevant Third Parties
4. Social Balance Sheet
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N.
Supervision and Internal Control
1. General Principle of Internal Control
2. Supervisory Committee
a. Composition
b. Requirements to serve as Statutory Auditor
c. Responsibilities, Powers and Duties
3. External Audit
a. Requirements for the position
b. Rotation and Hiring Regime
4. Internal Auditor
a. Independence
b. Requirements and Obligations
c. Planning and Reports
5. Compliance with Internal Controls
O.
Review and Report on Corporate Governance
P.
Relationship of the Company with its Subsidiaries
1. Supervision and Coordination Structure
a.
Supervision of Subsidiaries
b.
Internal Supervision and Coordination Mechanisms
c.
Supervision and Coordination Mechanisms of
Subsidiaries
d.
Corporate Audit
e.
Annual Approval of the Business Plan and Budget
2. Responsible of Relationships
3. Corporate Policies
4. Information and Reports
5. Conflict Resolution
EXHIBIT A – Code of Ethics
EXHIBIT B – Code of Banking Practice
EXHIBIT C – Rules of operation of the Board and its Committees
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A.
Overview.
Banco Hipotecario believes it is important for institutions to have a Corporate Governance System that provides
guidance for its corporate bodies to be structured and to operate in the interest of the Company and its
shareholders.
The Bank’s Corporate Governance is conceived as a dynamic process that considers the Company’s evolution,
the results achieved throughout its development, the rules that may be set, and the recommendations given
regarding the best market practices suited to its social reality.
In such regard, the Bank’s Corporate Governance System comprises this code, the corporate by-laws and the
applicable laws as detailed under “Applicable Laws and Regulations” which govern matters related to the
Company’s operations, Shareholders’ Meetings, the Board of Directors, the General Management, the Senior
Management and the various Committees as listed under “Committees”, and members of the Company.
On the other hand, the Bank’s Corporate Governance System has internal conduct rules contained in the code
of ethics which sanction the ethical tenets and principles governing the behavior of its directors, officers and
employees.
B.
Scope of Application.
This Code supplements the laws and regulations listed in the following paragraph under “Applicable Laws and
Regulations” and intends to establish the basic rules for the operation of Banco Hipotecario and its Subsidiaries,
the oversight of its directors and officers and the performance of their duties imposed on all of them, so as to
organize, conduct and manage the Company with the highest efficiency and transparency levels for the benefits
of its shareholders and stakeholders.
C.
Applicable Laws and Regulations.
In drafting this Corporate Governance Code, the laws applicable to the Company have been considered, and in
particular the provisions of Laws 21,526; 26,831; 19,550; 25,877, 24,855 and 24,240, as amended, regulatory
and supplementary decrees, the regulations of the Argentine Central Bank (Banco Central de la República
Argentina, or BCRA), the Argentine Securities Commission (Comisión Nacional de Valores, or CNV); the
Buenos Aires Stock Exchange (Bolsa de Comercio de Buenos Aires, or BCBA), the over-the-counter market
(Mercado Abierto Electrónico, or MAE), and the corporate by-laws.
D.
Code of Ethics.
The Company has internal rules of conduct that sanction the ethical tenets and principles governing the
behavior of its directors and employees, always observing the Laws and rules applicable to the banking
business.
In such regard, the Code of Ethics, enclosed as Exhibit A hereto, is incorporated to the Corporate Governance
System of Banco Hipotecario and its Subsidiaries.
E.
Code of Banking Practice.
The Code of Banking Practice has been drafted with the participation of all the Banking Associations and
Financial Institutions of the Republic of Argentina, as a self-regulation initiative seeking to promote the best
banking practices in Argentina.
Banco Hipotecario was one of the institutions that voluntarily adhered to the referred Code, in the belief that its
adoption will contribute to strengthening the rights of the users of financial services and products, whilst
improving transparency of the information supplied to the financial institution’s clients.
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Therefore, the Code of Banking Practice, enclosed as Exhibit B hereto, is incorporated into the Corporate
Governance System of Banco Hipotecario and its Subsidiaries, and shall contribute to the continued
consolidation of consumers’ rights, and in this particular case, those arising from Law No. 24,240.
In addition, its enforcement will be continuously monitored by the institution itself, through a Compliance Officer,
and by an independent entity, the Self-Regulation Council, that will represent the interests of the banking
industry insofar as concerns the enforcement of the Code. Repeated breaches of the Code shall result in the
forfeiture of the institution’s capacity as adherent.
F.
Structure of the Company and its Subsidiaries.
Law No 24,855 declared the former Banco Hipotecario Nacional, a governmental institution founded on
November 15, 1886, subject to privatization and resolved to convert it into a corporation (sociedad anónima).
Pursuant to the above mentioned law, its implementing decrees, Decree 677/1997; Decree 924/1997; and
Decree 1394/1998 and the Resolutions issued by the BCRA, Resolution 271/2007, Resolution 664/1998;
Resolution 362/2001 and Communication “B” 6444, since December 24, 1998 the Company has operated as a
retail commercial bank under the name of Banco Hipotecario SA. The Bank was authorized by the CNV to offer
its shares to the public and by the BCBA to have its shares listed and traded in that stock exchange.
The Bank directly or indirectly controls various companies that form its group of subsidiaries, BHN Sociedad de
Inversión SA, whose purpose is to make investments and manage equity interests in other companies; BHN
Vida SA, life risk insurer; BHN Seguros Generales SA, fire and property damage risk insurer; BACS Banco de
Crédito y Securitización SA, which operates as a second-tier commercial bank; BH Valores SA whose purpose
is to conduct stock exchange transactions, Tarshop SA, credit card issuer and BACS Administradora de
Servicios SA, a mutual fund management company.
Therefore, the structure of the Bank and its subsidiaries is as follows:
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In the corporate structure of Banco Hipotecario and its subsidiaries, the controlling Company performs the core
financial intermediation activities and delegates to other business units supplementary businesses and services
such as second-tier banking; insurance; stock exchange transactions and issuance of Shopping credit cards,
whilst maintaining and boosting synergy among its different customers, to the extent possible.
None of the companies that are members of the group has any affiliates or subsidiaries abroad or conducts any
offshore transactions.
In addition, the organization does not apply complex structures or trusts for the development of its business.
Each company’s participation as trustor, trustee or residual beneficiary is limited to the execution of financial
trusts, whose representative securities are generally subject to the public offering regime, and the most relevant
data as well as the investments in the certificates and securities issued thereunder are disclosed in the Bank’s
individual and consolidated financial statements.
The Board of Directors of Banco Hipotecario promotes the application by the business group of policies and
procedures aimed at:
G.
a)
avoiding the performance of activities that hinder transparency;
b)
seeing that each subsidiary identifies, assesses and manages the risks originated in its business;
c)
establishing adequate procedures for approving transactions and new products, in particular in
connection with such activities (for example, applicable limits, measures for mitigating legal and
reputational risk, reporting requirements, etc.);
d)
clearly delineating the responsibilities of each member of the economic group and business line within
the organization, insofar as concerns corporate governance;
e)
defining and understanding the purpose of those activities and seeing that they are enforced in
practice;
f)
monitoring the periodical evaluation of compliance with the applicable laws and regulations and the
internal policies;
g)
seeing that internal controls on the activities carried out through such structures are on equal footing
with those applied by the financial institution and are reviewed by its internal and independent
auditors; and
h)
ensuring that the information on such activities and their risks is available at the financial institution
and that the Board of Directors and supervisory authorities are notified of such transactions (including
relevant information on their purpose, strategies, structures, volume, risks and control) and that such
information is also made available to the public.
Shareholders; Shareholders’ Meetings and Tender Offers.
G.1. Shareholders.
The stock capital is $1,500,000,000, and is fully subscribed and paid in. It is represented by 1,500,000,000
common, book-entry shares, divided into classes “A”, “B”, “C” and “D”, of $1 par value each and entitled to one
vote per share, except for class D shares, which are entitled to 3 votes for as long as the class A shares (owned
by the Argentine State) represent more than 42% of the stock capital.
The classes of common shares are allocated as follows:
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a)
class A shares: to the Argentine State or the fiduciary agents appointed by it, whose voting rights are
exercised by the Argentine State.
b)
class B shares: they belong to the Stock Ownership Program (Programa de Propiedad Participada or
PPP), allocated to the Company’s employees, which at present represent 5% of the stock capital and
whose voting rights are exercised by the Argentine State until they are allocated to the employees.
c)
class C shares: intended to be initially offered to artificial persons engaged in the development of
activities related to the construction of houses or the real estate business, whose voting rights are
exercised by the Argentine State until they are acquired by such artificial persons under an acquisition
program to be established in the future. This class of shares represents 5% of the stock capital; and
d)
class D shares: title to these shares has been transferred to private capitals. Class D shares shall not
be converted to a different class in the event they are subscribed for or acquired by the Argentine
State, another public artificial person, or the employees that are members of the Stock Ownership
Program.
The following table shows the current composition of the stock capital, specifying the classes of shares, par
value and equity interest percentage:
Class
A (a)
B (a)
C
D (a)
Shares
Par Value
676,144,306
57,009,279
75,000,000
691,846,415
1,500,000,000
1
1
1
1
Stock Capital
676,144,306
57,009,279
75,000,000
691,846,415
1,500,000,000
% Interest
45.08%
3.80%
5.00%
46.12%
100.00%
(a) Decree No. 2127/2012 and the Ministry of Economy and Public Finances’ Resolution
264/2013implemented the Stock Ownership Program. In an initial stage, 17,990,721 Class
B shares –out of a total 75,000,000- were converted into Class A shares for distribution
amongst the agents that have left the Bank as prescribed by the formalization guidelines.
As soon as these 17,990,721 shares are delivered to former agents, they will turn into
Class D shares. As of December 31, 2013 the steps described above were taken only in
connection with 377,295 shares. The shares allocated to the Bank's current active
personnel representing the Stock Ownership Program are designated as Class B shares.
In accordance with the corporate by-laws, class A shares are entitled to certain special rights, and the
affirmative vote of this class is required, irrespective of the equity interest percentage represented by them, for
the Company to adopt valid resolutions on:
a)
the merger with one or more companies, or the Company’s spin-off;
b)
an acquisition of its shares by third parties implying a consented or hostile takeover that constitutes a
change of control within the meaning of Section 33 of Law 19,550 and/or the BCRA regulations and/or
paragraph c), Section 7, of the corporate by-laws;
c)
the disposition in favor of third parties of a substantial portion of its mortgage assets and residential
loan portfolio resulting in the total cease of or substantial reduction in the Company’s mortgage and
residential loan business;
d)
a change in the Company’s corporate purpose;
e)
the relocation of the Company’s corporate domicile abroad; and
f)
the Company’s voluntary dissolution.
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In addition, for as long as the Argentine State holds at least one class A share, it shall be entitled to appoint 2
directors and one statutory auditor.
Moreover, class B and C shares will be entitled to appoint a Board member each for as long as they represent
more than 2% and more than 3% of the Company’s capital, respectively.
G.2. Shareholders’ Meeting.
The Board of Directors shall call Ordinary or Extraordinary Shareholders’ Meetings to deal with the matters set
forth in Sections 234 and 235 of Law No. 19,550.
Calls to ordinary and extraordinary shareholders’ meetings shall be made through notices published in the
Official Gazette, in one of the widest circulation newspapers of Argentina and in the bulletins of the stock
exchanges and markets of the country where the Company’s shares are listed, for such term and as far in
advance as required under the applicable laws.
Shareholders may attend shareholders’ meetings by proxy, by executing a private instrument of proxy and
having their signature certified by a court, a notary public or a bank. Shareholders’ Meetings will be chaired by
the Board Chairman or otherwise, by the person designated by the Shareholders’ Meeting.
The quorum and majority requirements set forth in Sections 243 and 244 of Law No. 19,550 shall be applicable,
according to the kind of Shareholders’ Meeting, notice and matters to be dealt with, provided, however, that:
a)
there will be quorum at Extraordinary Shareholders’ Meetings on second call irrespective of the
number of voting shares that are present;
b)
to resolve upon matters over which class A shares are entitled to special rights, the affirmative vote of
such shares will be required;
c)
the following matters shall require the affirmative vote of a majority equal to 75% of the voting shares,
both on first and second call:
d)
1.
relocation of the corporate domicile abroad;
2.
material change in the corporate purpose, so that the business defined in Section 4, paragraph a)
of the corporate by-laws ceases to be the Company’s main or priority business;
3.
delisting of the Company’s shares in the Buenos Aires or New York Stock Exchanges; and
4.
the Company’s spin-off into various companies, when as a result of such spin-off 25% or more of
the Company’s assets are transferred to the resulting companies, even if such result is achieved
through successive spin-offs made over a term of 1 year;
the following matters shall require the affirmative vote of a majority equal to 66% of the voting shares,
both on first and second call:
1.
changing the percentages set forth in paragraphs b) or c) of Section 7 of the corporate by-laws
related to the duty to report acquisitions that exceed 3% of the stock capital and takeover
acquisitions when the equity interest percentage reaches 30% of the stock capital;
2.
eliminating the requirements set forth in paragraphs d)(ii), e)(i)(F) and e)(v) of Section 7 of the
corporate by-laws in the sense that the tender offer reaches 100% of the shares and convertible
securities, is payable in cash and is not lower than the price resulting from the mechanisms
therein contemplated;
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3.
the issuance of guarantees in favor of the Company’s shareholders except when the guarantee
and the secured obligation were undertaken in fulfilling the corporate purpose.
4.
the total cease or substantial reduction of the housing loan activities, and
5.
the provisions on number, nomination, election and composition of the Board of Directors.
e)
the agreement of a special class of shares shall be required to be given at a Special Shareholders'
Meeting to affect the rights of such class of shares.
f)
a special majority shall be required to amend any rule of the by-laws requiring a special majority, and
g)
different requirements shall apply in any other case in respect of which the by-laws require a class
voting or the agreement of each class.
Special Class Shareholders’ Meetings shall be governed by the provisions on quorum for Ordinary Meetings
applied to all of the outstanding shares of such class.
As long as the holder of Class A shares is the Argentine State exclusively, a notice signed by a competent
government official in lieu of the Special Meeting of such class may be given for voting such shares.
G.3. Control Acquisitions.
Banco Hipotecario does not adhere to the tender offer process set forth in the rules issued by the CNV since its
by-laws provide for a special procedure in such regard. However, such particular method is based on the same
transparency and competitiveness principles that govern the controlling market, thus warranting to both the
controlling and minority shareholders their rights to purchase or be purchased at an equitable price.
Such procedure shall apply to the extent it is not inconsistent with the rules of the jurisdictions where the public
offer of acquisition is made, and provided that any additional requirements contemplated by the provisions of
stock exchanges on which the shares of the Company are traded shall be met.
The Bank’s by-laws determines in paragraphs c) to f) of Section 7 such situations consisting in takeovers as
follows: (a) where any acquisition in addition to previous shareholdings in the aggregate account for 30% or a
higher percentage of the stock capital, (b) any merger, consolidation or any other form of combination having
substantially the same effects in respect of the holding of Class D shares, and (c) the public tender offer.
The public tender offer procedure is described below:
a)
The Offeror shall give written notice to the Company of the tender offer at least fifteen (15) business
days in advance of the commencement date thereof. Such notice shall include information on all the
terms and conditions of any agreement or prior agreement made or intended to be made by the
Offeror with any holder of the Company's shares whereby, if such agreement or prior agreementis
consummated, the Offeror shall obtain the prior consent of the Special Meeting of Class A
Shareholders and shall make a public offer to acquire all shares of all classes and all securities
convertible into shares of the Company. Any resolution adopted at a Special Meeting of Class A
Shareholders as to the matters described in this subsection shall be final and shall not give right to
any indemnification, and it shall further notify the following minimum information:
1.
Offeror’s identity, nationality, domicile and phone number.
2.
If the Offeror consists of a group of individuals, identity and domicile of each member of the group
and of the responsible manager of each entity comprising the group.
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3.
The price offered for the shares and/or securities. If the offer were conditioned upon the
acquisition of a certain amount of shares, such minimum amount shall also be stated.
4.
The expiration date of the public tender offer, whether such date may be postponed and, if so, the
postponement procedures.
5.
An Offeror's statement of the exact dates before and after which the holders of shares and
securities who have tendered such shares and securities for acquisition in the tender offer shall
be entitled to withdraw such shares and securities, the manner in which such shares and
securities tendered shall be accepted and the procedures for the withdrawal of such shares and
securities from the tender offer.
6.
A statement setting forth that the tender offer shall be open to all the holders of shares and
securities convertible into shares, and
7.
Any additional information, including the Offeror's financial statements, that may be reasonably
requested by the Company or that may be necessary for the above-mentioned notice not to be
misleading or due to the incompleteness or deficiency of the information supplied.
8.
Any other information not included in clauses 1 through 7 above and to be supplied pursuant to
applicable laws or regulations.
b)
The Company's Board of Directors shall convene by any conclusive means a Special Class A
Shareholders’ Meeting to be held ten (10) business days as from receipt by the Company of the notice
mentioned in clause (a), in order to discuss the approval of the tender offer and shall submit its
recommendation in such respect to the consideration of such Meeting. The Meeting shall discuss
whether the control acquisition by the Offeror is in the best interest of the Company and the public in
general. If such Meeting were so called but not held or, if held, the tender offer were disapproved,
neither the tender offer nor the prior agreement, if any, shall be executed.
c)
The Company shall, at the Offeror's expense and exercising reasonable diligence, mail a copy of the
notice delivered to the Company as provided in clause (a) above to each holder of shares or securities
convertible into shares. The Offeror shall advance to the Company the funds required to such effect.
d)
The Offeror shall, at the request of any holder of shares or securities convertible into shares, send
with reasonable diligence either by mail or any other conclusive means, a copy of the notice given to
the Company and shall, at least once a week, publish a notice substantially containing the information
required in clause (a) above commencing on the date when such notice is delivered to the Company
pursuant to clause (a) above and ending on the expiration date of the tender offer. Subject to
applicable laws, such notice shall be published in the business section of widely circulated
newspapers of Argentina, the City of New York, U.S.A., and of any other place on whose exchanges
or markets the shares are listed, and in the newsletters of any such exchanges or markets.
e)
The price for each share or security convertible into shares to be received by each holder thereof shall
be the same, in cash, and not lesser than the price per Class D share or, as the case may be, security
convertible into Class D share which is the highest of:
1.
the highest price per share or security paid by or on behalf of the Offeror in respect of any
purchase of Class D shares or securities convertible into Class D shares within the term of two
(2) years immediately preceding the Control Acquisition notice, adjusted to reflect any stock split,
stock dividend, subdivision or reclassification affecting or related to Class D shares; or
2.
the highest selling price at the close of business during the thirty (30) days' period immediately
preceding such notice for a Class D share as quoted by the Buenos Aires Stock Exchange, in
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each case adjusted to reflect any stock split, stock dividend, subdivision or reclassification
affecting or related to Class D shares, or
3.
A price per share equal to the market price per Class D share determined as provided for in
clause e)2. above multiplied by the ratio of: (i) the highest price per share paid by or on behalf of
the Offeror for any Class D share in any purchase of shares of such class within the last two (2)
years immediately preceding the date of the notice mentioned in clause a), to (ii) such market
price per Class D share prevailing on the day immediately preceding the first day of the two-year
period during which the Offeror has purchased any kind of interest or right in a Class D share.
The price shall in each case be adjusted to account for any subsequent stock split, stock
dividend, subdivision or reclassification affecting or related to Class D shares; or
4.
The Company's net earnings per Class D share during the four (4) full fiscal quarters immediately
preceding the date of the notice mentioned in clause a), multiplied by the highest of the following
ratios: the price/earnings ratio during such period for Class D shares (if any) or the highest
price/earnings ratio obtained by the Company during the two (2) years' period immediately
preceding the date of the notice mentioned in clause a). Such multiples shall be determined as
usually computed by and reported to the financial community.
f)
Holders of shares or securities tendered in the tender offer shall be able to withdraw those shares or
securities from the publicoffering before the deadline fixed for such offering.
g)
The tender offer shall not expire before ninety (90) days following the date when notice thereof was
given to the shareholders or published as provided in clause (c) above, which term shall be counted
as from the date when such notice was published for the first time.
h)
The Offeror shall purchase all the shares and/or securities convertible into shares tendered before the
offering expiration date pursuant to the tender offer regime. If the amount of such shares or securities
were lesser than the minimum amount set by the Offeror as a condition for the tender offer, the Offeror
shall be entitled to withdraw the offer.
i)
If the Offeror has not conditioned the tender offer to any minimum amount as provided in clause a)3.
hereof, upon conclusion of such procedure it may be able to execute the Prior Agreement, irrespective
of the number of shares and/or securities it may have purchased under the tender offer. If such
minimum was set, the Offeror shall be able to execute the Prior Agreement only if such minimum has
been met under the tender offer regime. The Prior Agreement must be executed within thirty (30) days
following termination of the tender offer; otherwise, the whole procedure provided for in this Section
shall be repeated. If no Prior Agreement were made, the Offeror shall, in the events and opportunities
such Offeror could have executed a Prior Agreement as set forth above, be entitled to freely purchase
the number of shares and/or securities informed to the Company in the notice mentioned in clause a)
hereof as long as it has not purchased such shares and/or securities through the tender offer.
In addition, in the case of a merger, consolidation or other form of combination, the offer shall only be made if
the price to be received by each of the Company's shareholders as a result of such transaction is the same for
all shareholders and not lesser than:
a) The highest price per share paid by or on behalf of such Interested Shareholder for the purchase of:
1.
shares of the same class as those to be transferred by the shareholders in such transaction
within the two (2) years' period immediately preceding the first public notice of the transaction, or
2.
shares of the Class purchased by such Interested Shareholder in any Control Acquisition. In
either case, the price shall be adjusted to reflect any stock split, stock dividend, subdivision or
reclassification affecting or related to such Class.
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b)
The highest selling price at the close of business during the thirty (30) days' period immediately
preceding the date of notice or the date of purchase by the Interested Shareholder of shares of such
Class in any Control Acquisition, for a share of that Class as quoted by the Buenos Aires Stock
Exchange, as adjusted to reflect any stock split, stock dividend, subdivision or reclassification affecting
or related to such Class.
c)
A price per share equal to the market price per share of such Class determined as provided in clause
b) above multiplied by the ratio of: (i) the highest price per share paid by or on behalf of the Interested
Shareholder for any share of such Class in any purchase of shares of such Class within two (2) years
immediately preceding the Date of Notice, to (ii) such market price per share of such Class prevailing
on the day immediately preceding the first day of the two-year period during which the Interested
Shareholder has acquired any kind of interest or right in a share of such Class. The price shall in each
case be adjusted for any subsequent stock split, stock dividend, subdivision or reclassification
affecting or related to that Class.
d)
The Company's net earnings per share of such Class during the four (4) full fiscal quarters
immediately preceding the date of notice, multiplied by the highest of the following ratios: the
price/earnings ratio for such period in respect of shares of such Class (if any) or the highest
price/earnings ratio obtained by the Company during the two (2) years' period immediately preceding
the date of notice. Such multiples shall be determined as usually computed by and reported to the
financial community.
H.
Board of Directors.
H.1.
Composition.
Pursuant to Section 21 of Law No. 24,855 and the by-laws, Banco Hipotecario’s Board of Directors is composed
of thirteen (13) regular members, who shall be appointed at the shareholders’ class meetings to hold office for
two (2) fiscal years and may be reelected indefinitely and on a staggered basis.
Each class of shares shall appoint a number of alternate Directors equal to or lesser than the number of regular
directors elected by such class. Alternate directors shall fill, in the same order as they were appointed, any
vacancies occurred amongst the directors of the relevant class due to absence, resignation, leave, disability,
legal disqualification, or death, subject to the Board of Directors' prior approval of the reason for such
replacement if the latter is temporary.
The Directors shall be appointed by a majority vote within each of the classes of common shares as follows:
a)
Class A shall appoint two (2) regular directors and two (2) alternate directors;
b)
Class B shall appoint one (1) regular director and one (1) alternate director as long as Class B shares
represent over two per cent (2%) of the stock capital issued at the time the respective Shareholders'
Meeting is convened;
c)
Class C shall appoint one (1) regular director and one (1) alternate director as long as Class C shares
represent over three per cent (3%) of the stock capital issued at the time the respective Shareholders'
Meeting is convened;
d)
the appointment of the rest of the regular and alternate directors (who in no event shall be less than
nine (9) regular directors and a like or lesser number of alternate directors) shall be vested with Class
D. When either Class B or Class C lacks or forfeits, for any reason, its rights to appoint or participate in
the election of Directors, said class may vote jointly with Class D shares at the Special Shareholders'
Meeting of Class D shares convened to elect Directors, and
Page # 13
e)
as long as there exist several classes of shares the appointment of Directors by cumulative voting
shall not apply even within the class subject to the provisions of Sections 262 and 263 of Law No.
19,550.
In case of absence of all the shareholders of a given class entitled to elect directors of such class at a
Shareholders’ Meeting held on second call and convened for the election of directors, the directors of such class
shall be elected by the shareholders of the other classes voting together as if they belonged to a single class;
provided, however, that if no shareholders were present at a Class A meeting, the statutory auditor appointed by
Class A shareholders shall appoint the regular and alternate directors of Class A.
Directors appointed by each class of shares shall formally state his or her acceptance of the appointment and
represent whether he/she is independent or not within the terms set forth under “Eligibility Requirements for
Independent Directors”.
The Board of Directors believes it is advisable that some of its members qualify as independent directors in
order to strengthen objective decisions and to avoid conflicts of interests.
H.2.
Eligibility Requirements for Directors.
In order to be a member of the Company’s Board of Directors, the candidate shall not be subject to the
disqualifications set forth in Section 264 of Law No. 19,550 and Section 10 of Law No. 21,526, shall have
experience in the financial business and shall not take office until it is so authorized by the Argentine Central
Bank.
The following persons are not permitted to act as Directors:
a)
Those who may not act in commerce.
b)
Those adjudged bankrupt on grounds of negligence or fraud for up to 10 years after their discharge,
those adjudged unintentionally bankrupt or those against whom reorganization proceedings were
undertaken up to 5 years after their discharge; company directors and/or managers whose behavior
had been considered as negligent or fraudulent for up to 10 years after their discharge.
c)
Convicts who received an ancillary sentence of disqualification from service as public officials; those
convicted of theft, robbery, embezzlement, bribery, issuing checks without sufficient funds and of
crimes against public faith; those convicted of crimes perpetrated in the formation, operation and
liquidation of companies. In all the preceding cases, the inability shall subsist for up to 10 years after
the sentence was served;
d)
Public officials serving in positions related to the Company’s corporate purpose for up to 2 years after
they step down from such positions.
e)
Those disqualified from serving as public officials.
f)
Those who are non-performing debtors at financial institutions.
g)
Those disqualified from holding checking or other types of accounts in a similar nature for up to three
years after the lifting of such disqualification.
h)
Those disqualified pursuant to the application of Sub-section 5 of Section 41 of Law No. 21,526, for as
long as the disqualification is in force, and
i)
Those who, following a decision by a competent authority, have been found guilty of misconduct in the
government and management of financial institutions.
Page # 14
The Argentine Central Bank reviews the Directors’ background information and considers their competence and
experience for the office based on: (i) their previous experience in the conduct of financial businesses and/or (ii)
their professional skills and experience in performing public or private services in related areas or fields that are
relevant to the Institution's business profile. In addition, the Argentine Central Bank regulations require that at
least two thirds of all Directors show evidence of experience in the financial business when the Board is elected.
H.3.
Eligibility Requirements for Independent Directors.
To be nominated as Independent Director, the following conditions set out in Law No. 19,550, Law No. 26,831,
the CNV and the Argentine Central Bank rules and regulations shall be met:
a)
not to be a member of the management body or an employee of holders of significant share interests
in the Company or in other Companies in which such shareholders hold, directly or indirectly,
significant share interests or on which such shareholders have significant influence in relation to the
management of such companies, pursuant to Section 33 of Law No. 19,550.
b)
not to be engaged in professional relationships with the Company or be a member of a Company or
professional association engaged in professional relationships with or receiving compensation or fees
from the Company or shareholders holding, directly or indirectly, significant share interests therein or
with companies in which such shareholders hold significant share interests, either directly or indirectly,
or otherwise having a significant influence on the management thereof.
c)
not to be a seller or supplier of goods and services of the Company, directly or indirectly, or of the
shareholders who directly or indirectly hold significant share interests therein or exercise significant
influence.
d)
not to hold, directly or indirectly, any significant interest in the Company or in a Company which holds
a significant interest therein or exercises a significant influence thereon.
e)
not to have been employed by the Company, mainly in executive offices, in the last 3 years prior to
nomination.
f)
if there is no control relationship and he/she is not related to the financial institution in accordance with
the following guidelines:
1.
any company or person who, directly or indirectly, exercises control over the financial institution
or any company or person who is, directly or indirectly, controlled by a person(s) controlling the
financial institution.
2.
any company or person who is, directly or indirectly, controlled by the financial institution, which
shall take into account the provisions of Section 28(a) of Law No. 21,526 and the regulations
thereunder.
3.
any company having directors in common with the company that exercises control over the
financial institution or with the financial institution, provided that such directors comprise a simple
majority in the management bodies of each of such companies or financial institution.
4.
exceptionally, pursuant to a resolution of the Board or upon motion made by the Superintendent
of Financial and Exchange Institutions, any company or person who is held to be engaged in a
relationship with the financial institution or the person controlling it, which may give rise to
financial damages to the financial institution.
5.
such company or person holding or controlling, directly or indirectly, 25% or a higher percentage
of the aggregate number of votes under any voting instrument in the other company.
Page # 15
H.4.
6.
such company or person has directly or indirectly held 50% or a higher percentage of the
aggregate number of votes under voting instruments in shareholders’ meetings or meetings at
which their directors or other persons performing similar functions have been elected.
7.
such company or persons holds, directly or indirectly, an interest in the other company under any
right or title, even if its votes account for less than 25%, so as to have the necessary votes to
adopt resolutions at shareholders’ meetings or at meetings of the Board of Directors or a
comparable body, and/or
8.
pursuant to a resolution adopted by the Board of the Directors of the Argentine Central Bank,
such company or person is held to exercise, directly or indirectly, controlling influence on the
management and/or the policies of the other company. The following are examples of controlling
influence: (a) holding a share interest in the capital stock of a related company conferring the
voting power required to exercise influence on the approval of its financial statements and in the
distribution of profits, for which purpose, the manner in which the remaining capital is distributed
should be taken into account; (b) representation in the Board of Directors or senior management
bodies of the related company, for which purpose the existence of agreements, circumstances or
situations under which the management could become vested in some minority group should be
also taken into account; (c) corporate policy-making powers; (d) the existence of significant
transactions with related companies; (e) the exchange of management personnel; (f) the related
company’s technical-administrative dependence.
g)
not to be a spouse, a relative within the fourth degree of kinship or adopted relative or within the
second degree of affinity of individuals who do not meet the conditions set forth in the foregoing
subsections.
h)
having available time and such dedication required to ensure unrestricted performance of the
functions and responsibilities of his/her office, and
i)
receiving a fair and equitable compensation excluding pension or stock option plans.
Rules governing the Appointment and Reelection of the Board Members.
In order to take office, newly appointed directors and/or directors reelected to serve a new term at the
Shareholders’ Class Meetings shall comply with the requirements set forth in the by-laws and the BCRA Circular
CREFI-2 as follows:
H.5.
a)
they shall post the performance bond set forth in Section 12 of the by-laws.
b)
they shall set up domicile.
c)
the Directors elected for the first time at a Special Class D Shareholders’ Meeting shall not take office
until the Board of Directors of the Argentine Central Bank issues a favorable opinion as to their
competence and experience in the financial business and failure to be subject to any disqualification.
The directors whose term of office is renewed shall only be subject to such requirement if so resolved
by the Superintendent of Financial and Exchange Institutions, and
d)
the Directors elected for the first time at Special Class A Shareholders’ Meetings, and Class B and C
Shareholders’ Meetings (so long as their voting powers are exercised by the Argentine State), whose
appointments depend on an action taken by the Executive Branch of Power, may take office and serve
in commissions, subject to the relevant resolution of the Argentine Central Bank, notwithstanding the
validity of any actions in which they may participate during such term.
Rules governing Directors’ Removal, Vacancies, Absences, Resignations, Termination of Office.
Page # 16
In the events of: (a) removal pursuant to Section 11(i) of the by-laws; (b) resignation pursuant to Section 259 of
Law No. 19,550 if such resignation does not disrupt normal operations and is neither fraudulent nor untimely; (c)
vacancy; (d) absence, regular Directors shall be replaced by alternate directors of the relevant class and in the
order of their appointments:
Alternate Directors shall take office as regular Directors in the following events:
a)
permanently, due to resignation, removal, termination, incapacity, disqualification or death of the
regular Director. The incoming alternate director shall hold office until the next Special Meeting for the
relevant class is held, and
b)
temporarily, due to the regular Director’s absence or leave, in which case the Board shall approve the
reason for substitution. The incoming alternate director shall hold office until the regular Director
resumes his/her duties.
If the Directors' absence affects the minimum quorum required to hold a meeting, after an hour has elapsed
from the time indicated in the notice of the meeting, the Chairman may invite to the meeting the alternate
Director(s) of the relevant class(es) consistent with such of the absent Directors until a quorum is reached. The
alternate Director shall only take office in the event referred to above, upon the Board's prior resolution and
compliance with the requirements set forth in “Rules governing the Appointment and Reelection of the Board
Members”.
In addition, if the number of vacancies arising in the Board prevents meetings from being validly held despite the
incorporation of the alternate directors, pursuant to Section 13 of the by-laws, the Supervisory Committee shall
appoint the number of Directors required to constitute a quorum. They shall hold office until new Directors are
elected at a Special Meeting of Shareholders representing the respective classes. The statutory auditors
appointed by each class of shares shall appoint the Director(s) of the same class in consultation with the
respective shareholders. For such purpose, the Supervisory Committee shall comply with the rules governing
such appointment and nominees shall only take office if they meet the requirements set forth in “Rules
governing the Appointment and Reelection of the Board Members”.
On the other hand, if any Director resigns, is removed or ceases to hold office for any reason, notice thereof
shall be given by the Company to the CNV within 2 days of occurrence and to the Argentine Central Bank.
H.6.
Authority and Powers.
The Board shall have the authority and powers to organize, manage and administrate the Company, including
those actions for which special powers are required under Section 1881 of the Civil Code and Section 9 of
Decree-Law No. 5965/1963 and such powers are listed in Section 17 of the by-laws.
In turn, the Board members appointed by Class D shares shall appoint the Chairman of the Board of Directors,
who has the authority and powers listed in Section 18 of the by-laws.
The Board of Directors vests the regular conduct of business in the Executive Committee consisting of Directors
appointed by Class D shares and entrusted with the authority set forth in Section 19 of the by-laws, including the
appointment of the General Manager and other Senior Management officers.
Notwithstanding the authority to adopt resolutions concerning the matters exclusively entrusted to them, as
defined in the by-laws, the Board approves the purposes and strategies of the Bank and its Subsidiaries, as well
as the most suitable organization and structure to deploy them; and further makes arrangements with the
Executive Committee in supervising and controlling the achievement of purposes and the execution of actions in
the best interest of the company by the General Management and the Senior Management. For such purposes,
the Board of Directors has the authority to issue general policies and strategies in furtherance of the corporate
purposes, ensuring that the institution’s activities meet the necessary safety and solvency standards and are in
compliance with the laws and regulations in force, to determine the risks to be assumed, to protect the interests
of depositors, shareholders and other relevant third parties, for which purpose it shall:
Page # 17
a)
H.7.
approve and monitor the implementation of the corporate governance code and the corporate
principles and values governing the entity and the economic group it controls, and supervise and
evaluate on an annual basis whether it is suitable to its profile, complexity and importance.
b)
approve the strategic plan and management purposes.
c)
approve the business plan and the annual budget.
d)
approve the investment and financing policies.
e)
approve the corporate governance, corporate responsibility, risk control and management policies and
dividend policies.
f)
promote and review on a regular basis the business general strategies and the institution’s policies,
including the risk policy and determination of risk acceptable levels.
g)
follow up on internal information and control systems on a regular basis.
h)
approve the entity’s level of risk tolerance and monitor its risk profile
i)
ensure that managerial positions take the necessary steps to identify, assess, monitor, control and
mitigate assumed risks.
j)
determine whether the capital amount is commensurate with the assumed risks.
k)
supervise the Company’s Senior Management, exercising its authority to obtain sufficient information
as and when required to evaluate performance.
l)
approve, monitor and review design and operation of the personnel compensation system and the
financial incentive system, in accordance with applicable laws, ensuring that they are implemented in
accordance with provisions and that they are not inconsistent with the entity's credit risk strategy.
m)
become aware of its subsidiaries' corporate governance policy, and
n)
promote executive training and development, and establish ongoing training programs for the
members and Senior Management, so as to maintain an adequate level of expertise and experience.
Responsibilities.
H.7.a. Principles.
The Directors are responsible for making sure that applicable rules and regulations –particularly Laws No.
24,855, 24,240, 21,526, 19,550 and 26,831– regulatory and supplementary decrees, the rules of the Argentine
Central Bank and the CNV and the by-laws are duly complied with.
The Directors must act with loyalty and with the diligence of a good businessman. Those who breach their
obligations are unlimitedly and jointly and severally liable for the damages resulting from their action or
omission.
The delegation of duties to Directors and exercise of the authority conferred on the Executive Committee under
Section 19 of the by-laws, as well as the actions taken by the various Committees do not release other Directors
from liability for the actions taken by them.
Page # 18
The Directors shall be released from liability for the resolutions adopted by the Board of Directors and/or for the
actions taken by the Executive Committee and/or the other Committees and/or Directors or officers who are
personal delegatees only in the following events:
a)
if the duties have been personally assigned to one or more Director(s) under the by-laws or pursuant
to a resolution adopted at a Shareholders' Meeting duly registered with the Public Registry of
Commerce, in which case liability shall be attributed taking into account individual actions only, and
b)
if the Director who took part in discussions or in the resolution had stated his/her dissenting opinion in
writing and given notice thereof prior to his/her liability being reported to the Board, to the Supervisory
Committee, to the Shareholders' Meeting, to the competent authorities or prior to a legal action being
filed.
In connection with the Bank’s internal controls and risk management, the Board shall provide for and approve
internal control and risk management rules and procedures, vesting the Audit Committee with the authority to
monitor the implementation of and compliance with the procedures across the organization.
H.7.b. Risk Management, Definition and Identification.
The Board of Directors shall be responsible for the Company’s having designed an appropriate and duly
documented framework, with the implementation of procedures to monitor the effectiveness and consistency of
internal controls and comprehensive risk management (including credit, liquidity, market, interest rate and
operational risks).
Accordingly, it shall approve risk management strategies; it shall have a process in place to evaluate the capital
suitability to the entity’s risk profile; it shall have suitable information available to measure and evaluate risks
and to report the level, composition and quality of exposure.
In addition, it shall establish policies and procedures to approve new products and initiatives related to risk
management; it shall have one or more unit(s) responsible for identifying, assessing, following up on, controlling
and mitigating risks, which shall be separate from risk-originating divisions; it shall approve stress-testing
programs to identify any potential events or changes in the market conditions that may have a significant
negative impact on the entity, and a contingency plan that establishes the strategies to be implemented to tackle
emergency situations and policies to manage ranges of potential stress situations as well as lines of
responsibility for each level of stress.
The main responsibilities inherent to management of each risk are described below.
1.
Credit Risk:
The credit risk is defined as the possibility of suffering losses due to a debtor or counterparty's failure to
comply with its contract obligations; while in most financial institutions the loan portfolio is the main source
of credit risk, there are other activities that also entail this risk, for example: sureties, guarantees,
investments, government securities and other credits involving financial intermediation.
In managing the credit risk, its responsibilities shall include:
a)
to approve significant credit strategies, policies and practices and to review them at regular intervals
every time that in its opinion any relevant events or situations occur in relation to this risk.
b)
to approve the Company’s level of risk tolerance.
c)
to approve the organizational structure for credit risk management avoiding conflicts of interest.
d)
to ensure that Senior Management is qualified to manage the Company's credit transactions and that
they are consummated in line with the strategy, policies and the level of risk tolerance as approved.
Page # 19
2.
e)
to ensure that the personnel financial incentive policy is not inconsistent with the Company’s credit
risk strategy.
f)
to determine whether the Company’s capital level is adequate in the face of the risks assumed.
g)
to approve the launching of new products and Company's businesses.
h)
to follow up on exposures with related persons or companies.
i)
to approve exemptions from policies and limits implying a significant departure therefrom.
j)
to receive on a regular basis reports to become aware of the credit risk related to financing and
compliance with established limits, and
k)
to receive timely information and, in the event that any issue arises in relation to credit risk
management, ensure that the Senior Management takes any appropriate corrective actions to deal
with such issues.
Liquidity Risk:
Liquidity means the financial institutions’ capacity to fund asset increases and meet their liabilities as they
become due, without incurring significant losses. And liquidity risk is mainly defined as the funding liquidity
risk defined as such risk where an entity is unable to effectively meet expected and unexpected, current
and future cash flows and the guarantees without affecting for such purpose its daily operations or financial
position.
In managing the liquidity risk, its responsibilities shall include:
a)
to approve the significant liquidity strategy, policies and practices, and to review them at regular
intervals every time that in its opinion any relevant events or situations occur in relation to this risk.
b)
to approve the Company’s level of risk tolerance defined as the highest risk level that the Company is
willing to assume, which level shall be in line with its business strategy and importance in the financial
system and reflect its financial position and funding capacity.
c)
to ensure that Senior Management reports the liquidity strategy through clear and operative guidelines
and that it manages the risk effectively.
d)
to approve the organizational structure for an adequate management of the liquidity risk.
e)
to ensure that the Company is staffed with qualified personnel and that it has the resources required
to manage the liquidity risk.
f)
to ensure that the Company has processes and systems in place to identify, assess, follow up on,
control and mitigate liquidity risk sources.
g)
to assess the incidence of existing interactions between funding liquidity risk and market liquidity risk
and analyze the incidence on the Company’s global liquidity strategy.
h)
to receive reports on a regular basis to become aware of the Company’s liquidity position.
i)
to receive immediate information in the event that any issues arise in connection with liquidity,
including matters such as an increase in costs of funding, concentrations, increases in cash flows
gaps, shortage of alternative liquidity sources, significant and repeated failures to comply with the
Page # 20
limits, significant reductions in the support for liquid assets or changes in external market conditions
which may be indicative of future difficulties.
j)
to ensure that Senior Management takes the appropriate corrective actions to handle any issues
arising in relation to liquidity matters, and
k)
to approve exemptions from policies and limits implying a significant departure therefrom.
In addition, the Board is required to take actions to ensure that sufficient liquidity exists –including high
quality liquid asset support not encumbered as security of any transaction-, so that the Company may face
a range of stress events including those events involving the loss of traditional funding sources. For these
purposes, the Senior Management shall make available the outcomes of the stress tests and the applicable
contingency plan.
3.
Market Risk:
The market risk is defined as the possibility of incurring position-related in- and off-balance sheet losses
resulting from adverse fluctuations in market prices of various assets; it includes the exchange rate risk
defined as the possibility of incurring position-related in- and off-balance sheet losses resulting from
adverse fluctuations in exchange rates for foreign currency.
In managing the market risk, its responsibilities shall include:
4.
a)
to approve the strategy for market risk management, which shall clearly determine the administrative
structure related to risk management and be duly documented.
b)
to approve the significant policies and practices, and to review them at regular intervals every time
that in its opinion any relevant events or situations occur in relation to this risk.
c)
to approve exemptions from policies and limits implying a significant departure therefrom.
d)
to ensure that Senior Management reports the market risk management strategy through clear and
operative guidelines and that it manages the risk effectively.
e)
receive information on a regular basis to become aware of the Company’s trading portfolio, and
promptly receive information in the event that adverse situations arise, in which case it shall ensure
that the Senior Management takes any appropriate corrective actions to deal with such issues.
f)
to ensure that the Senior Management and the personnel from the concerned areas have the
necessary experience to manage the market risk and that the institution has processes and systems in
place to identify, assess, follow up on, control and mitigate market risk sources.
g)
to understand existing interactions between the market risk and the other risks of the Company; and
h)
to ensure that the personnel financial incentive policy is not inconsistent with the institution’s market
risk strategy.
Interest Rate Risk:
The interest rate risk is defined as the possibility of occurrence of changes in the financial position of an
entity as a result of fluctuations in the interest rates, which may have adverse effects on net financial
income and/or the institution’s economic value –i.e., the current value of its assets and liabilities.
In managing the interest rate risk, its responsibilities shall include:
Page # 21
5.
a)
to approve the strategy for interest rate risk management, which shall be duly documented.
b)
to approve and review, at least on an annual basis, the interest rate risk policies and practices and the
business strategies affecting the Company’s exposure to this risk.
c)
to establish the Company's level of risk tolerance defined as the highest risk level that it is willing to
assume, which should be adequate to its business strategy and significance in the financial system
and reflect its financial position. For such purposes, it shall approve aggregate limits related to the risk
amount acceptable to the institution.
d)
to define the authority lines and levels of responsibility in managing interest rate risks, and to clearly
establish the persons and/or committees responsible for managing the key components of the risk
management system.
e)
to ensure that the Company has personnel trained and skilled in identifying, assessing, following up
on, controlling and mitigating the interest rate risk.
f)
to promote among its members and management members fluid communication in connection with
exposures and the interest rate risk management scenario.
g)
to ensure that Senior Management reports the interest rate risk management strategy through clear
and operative guidelines and that it manages the risk effectively.
h)
to receive reports on a regular basis to become aware of the exposure to the interest rate risk, which
reports shall be promptly reviewed if any issues arise in connection with interest rate risks.
i)
to understand how the other risks affect the Company’s global interest rate risk strategy.
j)
to receive reports on a regular basis on the outcome of stress tests.
k)
to ensure that the Senior Management takes the appropriate corrective actions to deal with stress
situations and that related contingency plans are effective.
l)
to assess whether the risk assumed is in line with the allocated capital, and
m)
to ensure that the personnel financial incentive policy is not inconsistent with the Company’s interest
rate risk strategy.
Operational Risk:
Operational risk is the risk of losses resulting from non-adequacy or failure of internal processes, the
personnel's actions or systems, or those resulting from external events. Pursuant to internationally
accepted standards, there are 7 kinds of operational risk incidents as follows: (i) internal fraud, (ii) external
fraud, (iii) employment and workplace safety, (iv) client, product and business practices, (v) business
alterations and technological failures, (vi) execution, management and compliance with process deadlines.
In managing the operational risk, its responsibilities shall include:
a)
to approve the framework that will govern operational risk management subject to annual revisions or
every time any relevant events or situations occur in relation to this risk.
b)
to become aware of any procedures developed to manage the operational risk and the level of
compliance.
Page # 22
c)
to ensure that the framework governing operational risk management is subject to an internal audit
process contemplating an adequate coverage and in-depth revisions, as well as timely adoption of
corrective measures by audited divisions.
d)
to approve policies providing for dissemination of the framework governing operational risk
management and training policies, addressed to all divisions and officers of the financial institution;
e)
to establish policies for management of operational risks resulting from subcontracted activities and
services provided by suppliers.
f)
to approve a policy for dissemination to third parties of the relevant information on the operational risk
management framework.
g)
to ensure that the Company has qualified personnel and any resources required to manage the
operational risk, and
h)
to check that any person in charge of such management does not perform other tasks in other areas
that may result in conflicts of interest with his/her task.
H.7.c. Personal Information to be provided by Directors.
Regular and Alternate Directors are required to file personal information and data in the form of an affidavit
before agencies that control the Bank and failure to comply with such obligation may give rise to penalties. The
information to be provided is described below:
To be filed with the Argentine Central Bank:
a)
Personal Background Form - “Background Information of Promoters, Founding Members, Directors,
Managers, Members of the Supervisory Committees, Statutory Auditors or Managers” including the
personal details, labor history in financial activities, statement of assets and sworn statement about the
disqualifications of Section 10 of Law No. 21,526. This form must be filed as soon as the person is
designated by the Bank’s relevant shareholders’ meeting or governance body and then once a year,
after the due date for filing the tax returns with the Tax Authorities (AFIP) for the duration of the term of
office or for as long as the person remains in office, and within 5 days of any change in the personal
details provided in the form. All the statements of assets inserted in the form must be consistent with the
tax return most recently filed with the Tax Authorities (AFIP) for income tax and personal property tax,
when applicable.
b) Certificate of absence of criminal records issued by the Registry of Offenders with Prior Convictions
within the purview of the Ministry of Justice, where a certificate is issued acknowledging the absence of
criminal records or describing the relevant person’s criminal records. The certificate must be filed
together with the Personal Background Form.
c)
Information related to transfers of the Bank’s shares. Section 15 of Law No. 21,526 and Section 1 of
Chapter V of CREFI-2 Circular require the Directors to report any transfer of shares capable of
changing the composition of the financial institution’s group of shareholders or of the shareholders who
control the financial institution. This obligation includes any transactions accounting for 5% or more of
the capital stock and/or voting power of the respective Institution. The information is required to be filed
within 10 days of becoming aware of the transaction, and
d) Sworn statements regarding the existence of related individuals or legal entities: each one of the regular
Directors must prepare a sworn statement disclosing whether he/she does have related Argentine or
foreign companies or not, and, if applicable, he/she must identify them. Besides, they must provide: a
sworn statement about the persons related by kinship. The sworn statement about related individuals or
legal entities must be filed upon taking office and semiannually, before January 31 and July 31 each
year. The sworn statement about persons related to him/her by kinship must be filed upon taking office
Page # 23
and on an annual basis, before January 31 of each year. Should there be changes in the information
provided in the sworn statements, they must be reported within 5 days of said change in a new sworn
statement. In addition, the directors shall submit the financial statements of their related companies is
so requested by the Superintendent’s Office of Financial Institutions in exercising its control and
inspection powers. To be filed with the CNV:
With Banco Hipotecario being a company that issues shares and securities admitted to public offering,
an individual file is to be submitted for each one of the regular and alternate members of the
management bodies. The file must comprise Directors’ personal data and it must also detail the
positions occupied in the management bodies of other companies. The file must be submitted within 10
days of the appointment as Director.
a)
b) Initial and annual sworn statement of holdings of securities. Directors are required to report the number
and class of shares, debt instruments, stock options and debt securities issued by Banco Hipotecario
that are directly or indirectly owned or managed by them. The sworn statement must be filed within 10
days subsequent to taking office and each year disclosing updated information.
Monthly sworn statement of changes in securities’ holdings. The Directors are required to report any
changes in the holdings or stock options and/or debt securities issued by Banco Hipotecario. It must be
filed within 15 days after the end of the month in respect of which the information is submitted.
c)
To be filed with the Buenos Aires Stock Exchange:
a) Information on the Directors of the Bank related to personal details and the offices held by them in the
management bodies of other companies. Such information shall be filed within 10 days following the
date of the shareholders’ meeting at which they were appointed.
To be filed with MAE:
H.8.
a)
Information about the Directors discharging duties as MAE agents, who must provide their personal
details, their actual domicile and their domicile of choice, whether they render services for other
companies, their related companies and a sworn statement of their assets. This information must be
provided within 10 days following their appointment.
b)
Information about the Directors, who must provide a detail of the securities held in their portfolios. This
information must be submitted annually, upon filing the financial statements.
Right to be Informed.
For Directors to be able to fulfill the duties described under “Duties of the Members of the Organization” and the
conducts mentioned under “Responsibilities” they have a right to be informed of any matters related to the
corporate operations and risk management by requesting it in writing to the Chairman or Vice Chairman, as the
case may be.
Any gathered information may be related, among other matters, to:
a) the meetings held by the Committees other than those of which they are members.
b) the corporate books and other additional documents related to issues discussed or to be discussed by
the Board.
c) the items included on the agenda of the meetings.
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d) information on the discharge of duties by the Senior Management and other officers of the Company,
and
e) the Company’s facilities, including both the Headquarters and its branches.
In this case, the President or Vice President, as the case may be, will evaluate the appropriateness of the
request for information and cause the General Manager or relevant officers to provide such requested
information within the applicable period.
In exercising this right, the Directors will refrain from taking any action that may in any way disrupt the
Company’s course of business, in view of the fact that their modus operandi is jointly and not individual, except
for the discharge of duties expressly delegated by the Board.
H.9.
Performance Assessment.
Each year a self-assessment process shall be conducted in connection with the Board's performance of duties
as the Company’s management body. The self-assessment shall be supported by formal processes and the
scopes and rating methods shall be previously defined. The Chairman is responsible for conducting the selfassessment process.
However, the final opinions shall be rendered by the Shareholders’ Meeting upon discussing the Board’s
discharge of duties.
H.10. Operation Rules.
The Board shall meet at least once a month and an absolute majority of its members shall constitute a quorum.
For such purposes the directors who are present in person or capable of communicating with each other by any
simultaneous means of transmission of sound, images or voice shall be counted, provided that the members
who attend on a remote basis and the means used for that purpose are put on record in the meeting’s minutes.
In the case of meetings regularly convened, those directors who expect to be absent from the registered office
on the date scheduled for the meeting shall give written notice in advance of their remote attendance and their
means of communication, in order to ensure their effective connection.
A regular director who, for any reason, is prevented from attending a meeting in person or on a remote basis
shall give written notice thereof (by mail or e-mail) to the Chairman or Secretary of the Board within 2 business
days following the date on which notice of the meeting is received. If so decided, he/she shall further state in
such notice the name of the Director authorized to vote on his/her behalf.
Pursuant to Section 16 of the by-laws the Chairman shall be in charge of causing any exceptional actions to be
taken in order to constitute a quorum under “Rules governing Directors’ Removal, Vacancies, Absences,
Resignations, Termination of Office”.
The Board meetings shall be presided over by the Chairman, who will submit the items on the Agenda to the
consideration of present Directors , lead the discussions, make motions and suggest voting thereon.
The Board may resolve upon the vote of a simple majority of present Directors to adjourn the meeting, in which
case it shall determine the date and time of resumption.
The following persons shall attend the Board’s Meetings:
a)
Regular Directors.
b)
regular members of the Supervisory Committee.
c)
the General Manager.
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d)
the Secretary of the Board, and
e)
the Company’s officers and advisors, if so recommended by the Chairman or any Director for the sole
purpose of submitting any requested reports.
Each Director shall have a right to discuss and vote the items on the Agenda, except:
a)
if such matters may give rise to a conflict of interest between the Director and the Company.
b)
if the item discussed concerns the compensation payable to executive Directors and to those
performing technical and administrative duties and the Director in question performs such duties,
pursuant to Section 14(b) of the by-laws.
c)
if the resignation, reason for permanent removal or request for leave of the Director in question is
being discussed, in which case he/she shall be entitled to voice his/her opinion but not to cast votes,
and
d)
if so provided for by the applicable laws and by-laws.
Resolutions shall be adopted by a majority of Directors present in person or communicated on a remote basis,
except that a different majority is required by Law or the by-laws. The Chairman shall have a casting vote in
case of a tie.
Any director who does not attend a meeting in person or on a remote basis may authorize another Director to
vote on his/her behalf. Such authorization shall be given in writing, refer to a specific meeting and be signed by
the authorizing director. He/she shall be liable in the same manner as any present Directors.
The Secretary of the Board shall be in charge of preparing the minutes of Board's meetings and shall record
discussions and resolutions by manual or electromagnetic means.
Within 2 business days following a relevant meeting, draft minutes thereof shall be prepared and sent by e-mail
to the Directors and members of the Supervisory Committee who have attended the meeting, for further revision
and correction. Attendants shall reply to the Secretary of the Board by the same means of communication within
2 business days following receipt of the draft minutes.
The following day, the proposed final version shall be transcribed by the Secretary of the Board onto the Book of
Board of Directors’ Meetings Minutes as officially signed and sealed, and the Secretary shall cause it to be
signed by those who attended the relevant meeting.
The minutes shall be drafted in Spanish language and shall be brief and clear. Reference shall be made to each
item discussed, the discussions, the opinions of officers and advisors invited to the meeting, the motions made
by the Directors and members of the Supervisory Committee and the resolutions adopted by the Board.
The Secretary of the Board shall be in charge of filing any supplementary and additional documents used at the
Board’s meetings.
H.11. Compensation to Directors.
In relation to the compensation payable to Directors, Section 14 of the by-laws sets forth the remuneration
system and pursuant to Section 110(e) of Law No. 26,831, the Audit Committee shall issue an opinion on the
reasonableness of any compensation and stock option plans for the Company’s Directors and managers
proposed by the management body.
In addition, it should be mentioned that the Bank has purchased liability insurance for its Directors providing for
coverage against risks inherent to performance of their duties.
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H.12. The Board’s Secretary’s Office.
The Board's Secretary’s Office shall provide assistance to the Chairman, the Board members and other
Committee members in exercising their powers, when acting jointly and in performing their duties.
The Secretary responsible for such Office shall be appointed with the Board’s consent from among its members
or he/she shall be an officer in charge of the Legal Department. The Secretary shall be assisted by such clerical
personnel required to fulfill his or her duties.
The Secretary shall act with the loyalty and diligence of a good businessman and keep any information to which
he/she may have access in performing his/her duties in confidence.
The Board’s Secretary’s Office shall be responsible for the following duties:
a)
to assist the Chairman in calling, making arrangements for and holding the Board’s and Shareholders’
Meetings.
b)
to participate in the Board’s and Shareholders’ Meetings without being entitled to voice his/her opinion
or to cast votes, in order to take the relevant notes so as to draft the minutes of such meetings.
c)
to prepare draft minutes of the Board's and Shareholders' Meetings and send them to attendants for
further revision and discussion.
d)
to draft the final versions of the minutes of Board’s and Shareholders’ Meetings, transcribe them into
the relevant books as officially signed and sealed and cause them to be signed by attendants.
e)
to keep the books required by Law No. 19,550, the Argentine Central Bank and the CNV and other
applicable rules and regulations, in compliance with any formality requirements set forth therein.
f)
to make arrangements for and organize the distribution of any additional information in connection with
the matters discussed by the Board and the Shareholders’ Meetings among Directors and
shareholders, and keep them on file.
g)
to make filings, disclosures and registrations of all information concerning the resolutions adopted by
the Board of Directors and the Shareholders’ Meeting, Directors, Supervisory Committee members
and shareholders before the relevant Controlling Agencies.
h)
to keep in custody the books of the Company, additional corporate information and the books of
minutes for the different Board Committees, and
i)
to provide assistance to the Board and Supervisory Committee members in exercising their rights to
be informed, making any requested documents available and, if applicable, making copies thereof
upon request.
I.
Committees.
I.1.
Executive Committee.
I.1.a. Composition and Requirements for Membership.
In its Section 19, the by-laws deal with the operation of an Executive Committee. Overall, the objective pursued
by the Executive Committee is to supervise the ordinary conduct of the Bank’s businesses and it shall be made
up by a minimum of 5 and a maximum of 9 directors chosen by Class D shareholders and a number of alternate
directors appointed by the same class of shares to be determined by the Board. Besides, the General Manager
may, if summoned, participate in the Executive Committee and he/she shall be entitled to voice his/her opinion
but not to cast votes.
Page # 27
The appointment of the members of this Committee as well as any change in its composition, due to either
resignation, leave of absence, addition or substitution of members, or otherwise shall be communicated by the
Company to the Argentine Central Bank and to the CNV as soon as it has been considered by the Board and
within the terms imposed to that end by currently applicable rules and regulations.
I.1.b. Responsibilities.
The Executive Committee must hold sessions at least once a month and whenever the Chairman of the Board
calls a meeting. The Executive Committee shall have the duties and powers laid down in the Bank’s By-laws,
which are set forth in detail in the “Rules of Operation of the Executive Committee” and included in this Code as
part of its Exhibit C.
In addition, when it comes to internal control tasks and the Bank’s risk management, in its role as the Board’s
first Committee, the Executive Committee must supply and approve the standards and procedures for internal
control and risk management. In this respect, the Executive Committee is responsible for designing,
documenting and implementing the procedures and, taking into account the size of the entity, the number of
venues, the volume and complexity of the operations conducted, it falls on the Executive Committee the duty to
appoint the persons who will discharge such duties.
I.2.
Audit Committee.
I.2.a. Composition and Requirements for Membership.
In conformity with its Rules, the Audit Committee shall be made up by no less than 3 and no more than 7
Regular Directors and the highest-ranking internal audit officer shall be in attendance at its meetings. At
present, the Committee is made up by 3 directors, with its majority meeting the independent director
requirement and with one of them serving as Chairman. Besides, their members are skilled in corporate,
financial or accounting matters.
The members of this Committee who are Directors shall serve in the Audit Committee for a minimum period of 2
years (in so far as their term of office does not come to an end sooner) and for a maximum of 3 years. This term
may be extended only on a case-by-case basis by express decision of the Board. The term in office as member
of the Audit Committee must not coincide with the term in office of the other Directors serving on the Committee
in a manner such that the Committee shall always have amongst its members a Director experienced and
knowledgeable in the matter.
The highest-ranking internal audit officer must not be within the scope of the prohibitions and incompatibilities
set forth in Section 264 of Law No. 19,550 and Section 10 of Law No. 21,526. This officer participates in the
Audit Committee meetings and may voice his/her opinions though not cast votes.
Furthermore, the members of the Audit Committee are bound by the principles laid down under the headings
“Duty of Diligence”; “Duty of Secrecy and Confidentiality”; and “Duty of Loyalty and Non-Compete Obligation”.
The appointment of the members of the Audit Committee as well as any change in its composition, due to either
resignation, leave of absence, addition or substitution of members, or otherwise shall be communicated by the
Company to the Argentine Central Bank and to the CNV as soon as it has been considered by the Board and
within the terms imposed to that end by currently applicable rules and regulations.
I.2.b. Responsibilities.
The Audit Committee shall have the responsibilities set forth in detail in the “Rules of Operation of the Audit
Committee” (see Exhibit C to this Code), which shall be discharged in the framework of: (i) the Minimum
Page # 28
Requirements on Internal Controls issued by the Argentine Central Bank and of (ii) Law No. 26,831, the CNV’s
General Resolution 622 and its supplementary resolutions or amendments thereto.
I.3.
Committee for Controlling and Preventing Money Laundering and Terrorism Financing.
I.3.a. Composition and Requirements for Membership.
The Committee for Controlling and Preventing Money Laundering and Terrorism Financing shall be composed
of no less than 2 regular Directors, the highest-ranking officer in the unit in charge of preventing and controlling
money-laundering and combating terrorism financing and by a senior officer seasoned and knowledgeable in
financial intermediation operations. At least one of the Directors making up this Committee must have
experience in these matters.
The members of this Committee who are Directors shall serve on the Committee for a minimum period of 2
years (in so far as their term of office does not come to an end sooner) and for a maximum of 3 years. This term
may be extended only on a case-by-case basis by express decision of the Board. The term in office as member
of the Committee must not coincide with the term in office of the other Directors serving on the Committee in a
manner such that the Committee shall always have a Director –experienced and knowledgeable in the matteramongst its members.
Neither the highest-ranking officer in the unit in charge of preventing and controlling money-laundering and
combating terrorism financing nor the senior officer seasoned and knowledgeable in financial intermediation
operations at the helm of the financial area may be within the scope of the disqualifications and incompatibilities
set forth in Section 264 of Law No. 19,550 and Section 10 of Law No. 21,526. These officers shall attend the
meetings and may voice their opinions though not cast votes.
Besides, the members of this Committee are bound by the principles laid down under the headings “Duty of
Diligence”; “Duty of Secrecy and Confidentiality”; and “Duty of Loyalty and Non-Compete Obligation”.
The designation of the members of the Committee for Controlling and Preventing Money Laundering and
Terrorism Financing, as well as any change in its composition, due to either resignation, leave of absence,
addition or substitution of members, or otherwise shall be communicated by the Company to the Argentine
Central Bank, to the UIF (Financial Information Unit) and to the CNV as soon as it has been considered by the
Board and within the terms imposed to that end by currently applicable rules and regulations.
I.3.b. Responsibilities.
The responsibilities and the mission of this Committee shall be discharged in the framework of the Rules
governing the Prevention and Control of Money Laundering and other Illegal Activities as issued by the
Argentine Central Bank and the Resolutions of the Financial Information Unit, Law No. 25,246 and the Decrees
issued by the Argentine Executive Branch in connection with the decisions made by the UN’s Security Council
to combat terrorism and shall also comply with the provisions laid down by the Ministry of Foreign Relations,
Foreign Trade and Religion. The main responsibilities of this Committee are set forth in detail in the “Rules of
Operation of the Committee for Controlling and Preventing Money Laundering and Terrorism Financing” (see
Exhibit C to this Code).
I.4.
Information Technology Committee.
I.4.a. Composition and Requirements for Membership.
The Information Technology Committee shall be made up by no less than 2 and no more than 5 regular
directors and by the highest-ranking officers in the area of systems and the area of logic security. At least one of
the Directors that make up the Committee must be experienced in the matter. At present, it is made up by two
directors, one of whom meets the independent director requirement.
Page # 29
The members of this Committee who are Directors shall serve on the Committee for a minimum period of 2
years in so far as their term of office does not come to an end sooner. This term may be extended only on a
case-by-case basis by express decision of the Board.
The highest-ranking officers in the area of systems and the area of logic security must be executives with a
long-standing track record in the Company, and experienced and knowledgeable in this matter. Furthermore,
they may not be within the scope of the prohibitions and incompatibilities set forth in Section 264 of Law No.
19,550 and Section 10 of Law No. 21,526. These officers shall attend the meetings and may voice their opinions
though not cast votes.
Besides, the members of this Committee are bound by the principles laid down under the headings “Duty of
Diligence”; “Duty of Secrecy and Confidentiality”; and “Duty of Loyalty and Non-Compete Obligation”.
The designation of the members of the Information Technology Committee, as well as any change in its
composition, due to either resignation, leave of absence, addition or substitution of members, or otherwise shall
be communicated by the Company to the Argentine Central Bank and to the CNV as soon as it has been
considered by the Board and within the terms imposed to that end by currently applicable rules and regulations.
I.4.b. Responsibilities.
The Information Technology Committee shall discharge the duties set forth in detail in the “Rules of Operation of
the Information Technology Committee” (see Exhibit C to this Code).
I.5.
Credit Committee.
I.5.a. Composition and Requirements for Membership.
The Credit Committee shall be made up by no less than 3 and no more than 7 regular Directors, a majority of
whom must be skilled in the matter, and by the highest ranking officers in the area of credit risk, both at the retail
banking segment and at the corporate banking segment. The General Manager may attend the Credit
Committee meetings, where he/she will be allowed to voice his/her opinions but not to cast votes.
The members of this Committee who are Directors shall serve on the Committee for a minimum period of 2
years in so far as their term of office does not come to an end sooner. This term may be extended only on a
case-by-case basis by express decision of the Board. The term in office as member of the Committee must not
coincide with the term in office of the other Directors serving on the Committee in a manner such that the
Committee shall always have a Director –experienced and knowledgeable in the matter- amongst its members.
The highest-ranking officers in the area of credit risk, both in the retail banking and in the corporate banking
segments, must be executives experienced and knowledgeable in these matters. Furthermore, they may not be
within the scope of the prohibitions and incompatibilities set forth in Section 264 of Law No. 19,550 and Section
10 of Law No. 21,526. These officers shall attend the meetings and may voice their opinions though not cast
votes.
Besides, the members of this Committee are bound by the principles laid down under the headings “Duty of
Diligence”; “Duty of Secrecy and Confidentiality”; and “Duty of Loyalty and Non-Compete Obligation”.
The designation of the members of the Credit Committee, as well as any change in its composition, due to
either resignation, leave of absence, addition or substitution of members, or otherwise shall be communicated
by the Company to the Argentine Central Bank and to the CNV as soon as it has been considered by the Board
and within the terms imposed to that end by currently applicable rules and regulations.
I.5.b. Responsibilities.
The Credit Committee shall have the duties set forth in detail in the “Rules of Operation of the Credit
Committee” (see Exhibit C to this Code).
Page # 30
I.6.
Personnel Incentives Committee.
I.6.a. Composition and Requirements for Membership.
The Personnel Incentives Committee shall be made up by 3 regular Directors and by the highest-ranking officer
in the area of organizational development. At least one of the Directors making up the Committee must be
experienced in the matter. The General Manager may attend this Committee’s meetings, where he/she will be
allowed to voice his/her opinions but not to cast votes.
The members of this Committee who are Directors shall serve on the Committee for a minimum period of 2
years in so far as their term of office does not come to an end sooner. This term may be extended only on a
case-by-case basis by express decision of the Board. The term in office as member of the Committee must not
coincide with the term in office of the other Directors serving on the Committee in a manner such that the
Committee shall always have a Director –experienced and knowledgeable in the matter- amongst its members.
The highest-ranking officer in the area of organizational development must be an executive experienced and
knowledgeable in this matter. Furthermore, he/she may not be within the scope of the prohibitions and
incompatibilities set forth in Section 264 of Law No. 19,550 and Section 10 of Law No. 21,526. This officer shall
attend the meetings and may voice his/her opinions though not cast votes.
Besides, the members of this Committee are bound by the principles laid down under the headings “Duty of
Diligence”; “Duty of Secrecy and Confidentiality”; and “Duty of Loyalty and Non-Compete Obligation”.
The designation of the members of the Personnel Incentives Committee, as well as any change in its
composition, due to either resignation, leave of absence, addition or substitution of members, or otherwise shall
be communicated by the Company to the Argentine Central Bank and to the CNV as soon as it has been
considered by the Board and within the terms imposed to that end by currently applicable rules and regulations.
I.6.b. Responsibilities.
The Personnel Incentives Committee shall be principally entrusted with the mission of overseeing the incentive
system. To that end, it shall discharge the responsibilities set forth in detail in the “Rules of Operation of the
Personnel Incentives Committee” (See Exhibit C to this Code):
I.7.
Risk Management Committee.
I.7.a. Composition and Requirements for Membership.
The Risk Management Committee shall be made up by no less than 3 and no more than 5 regular Directors and
by the highest-ranking officer in the area of risk. At least one of the Directors making up the Committee must be
experienced in the matter. The General Manager and the highest ranking officer of the risk area may attend the
Risk Management Committee meetings, where they will be allowed to voice their opinions but not to cast votes.
The members of this Committee who are Directors shall serve on the Committee for a minimum period of 2
years in so far as their term of office does not come to an end sooner. This term may be extended only on a
case-by-case basis by express decision of the Board. The term in office as member of the Committee must not
coincide with the term in office of the other Directors serving on the Committee in a manner such that the
Committee shall always have a Director amongst its members knowledgeable and experienced in the matter.
The highest-ranking officer in the area of risk must be an executive experienced and knowledgeable in these
matters. Furthermore, he/she may not be within the scope of the prohibitions and incompatibilities set forth in
Section 264 of Law No. 19,550 and Section 10 of Law No. 21,526.
Page # 31
Besides, the members of the Risk Management Committee are bound by the principles laid down under the
headings “Duty of Diligence”; “Duty of Secrecy and Confidentiality”; and “Duty of Loyalty and Non-Compete
Obligation”.
The designation of the members of the Risk Management Committee, as well as any change in its composition,
due to either resignation, leave of absence, addition or substitution of members, or otherwise shall be
communicated by the Company to the Argentine Central Bank and to the CNV as soon as it has been
considered by the Board and within the terms imposed to that end by currently applicable rules and regulations.
I.7.b. Responsibilities.
The Risk Management Committee shall be primarily entrusted with the duty to supervise the risks to which the
Company is exposed. To that end, it shall discharge the responsibilities set forth in detail in the “Rules of
Operation of the Risk Management Committee” (See Exhibit C to this Code):
I.8.
Corporate Governance Committee
I.8.a. Composition and Requirements for Membership.
The Corporate Governance Committee shall be made up by 3 Regular Directors. At least one of these directors
must meet the independent director requirement. The majority of this Committee’s members must be
knowledgeable in corporate governance.
The members of this Committee who are Directors shall serve in the Corporate Governance Committee for a
minimum period of 2 years in so far as their term of office does not come to an end sooner. This term may be
extended only on a case-by-case basis by express decision of the Board. The term in office as member of the
Corporate Governance Committee must not coincide with the term in office of the other Directors serving on the
Committee in a manner such that the Committee shall always have amongst its members a Director
experienced and knowledgeable in the matter.
Furthermore, the members of the Corporate Governance Committee are bound by the principles laid down
under the headings “Duty of Diligence”; “Duty of Secrecy and Confidentiality”; and “Duty of Loyalty and NonCompete Obligation”.
The appointment of the members of the Corporate Governance Committee as well as any change in its
composition, due to either resignation, leave of absence, addition or substitution of members, or otherwise shall
be communicated by the Company to the Argentine Central Bank and to the CNV as soon as it has been
considered by the Board and within the terms imposed to that end by currently applicable rules and regulations.
The Committee may summon the Regulatory Compliance Manager or other members of management to its
meetings for them to provide information. The top ranking authority in the area of Regulatory Compliance must
be an officer experienced and knowledgeable in the matter who must not be within the scope of the prohibitions
and incompatibilities set forth in Section 264 of Law No. 19,550 and Section 10 of Law No. 21,526. he/she will
take part in the Committee’s meetings and shall be allowed to express opinions though not to cast votes.
I.8.b. Responsibilities.
The Corporate Governance Committee shall discharge the duties set forth in detail in the “Rules of Operation of
the Corporate Governance Committee” (See Exhibit C to this Code):
I.9.
Ethics Committee.
I.9.a. Composition and Requirements for Membership.
The Ethics Committee shall be made up by no less than 3 and no more than 7 regular Directors, with the
participation of the highest-ranking officer in the Organizational Development and Quality area, and whenever
Page # 32
deemed necessary in light of the matters to be dealt with, the highest-ranking officer in the Regulatory
Compliance area will also attend if summoned. A majority of the Directors who serve as members of the Ethics
Committee must be independent as prescribed by the Argentine Central Bank and the CNV which are detailed
under the heading “Requirements to be met by Independent Directors” and they must also be skilled in
regulatory compliance matters and in the financial business.
The members of this Committee who are Directors shall serve on the Committee for a minimum period of 2
years in so far as their term of office does not come to an end sooner. This term may be extended only on a
case-by-case basis by express decision of the Board. The term in office as member of the Committee must not
coincide with the term in office of the other Directors serving on the Committee in a manner such that the
Committee shall always have a Director –experienced and knowledgeable in the matter- amongst its members.
Besides, the members of the Ethics Committee are bound by the principles laid down under the headings “Duty
of Diligence”; “Duty of Secrecy and Confidentiality”; and “Duty of Loyalty and Non-Compete Obligation”.
The designation of the members of the Ethics Committee, as well as any change in its composition, due to
either resignation, leave of absence, addition or substitution of members, or otherwise shall be communicated
by the Company to the Argentine Central Bank and to the CNV as soon as it has been considered by the Board
and within the terms imposed to that end by currently applicable rules and regulations.
I.9.b. Responsibilities.
The Ethics Committee shall have the responsibilities set forth in detail in the “Rules of Operation of the Ethics
Committee” (See Exhibit C to this Code) and in the Code of Ethics (See Exhibit A to this Code) which include
settling issues relating to the interpretation of the Code of Ethics and it shall serve as a forum where the Bank’s
employees may make direct enquiries or file reports of potential violations of the Code of Ethics by using the
transparency line in place to that end. Each case shall be confidentially treated by the Committee. Under no
circumstances shall adverse measures be implemented against the person posing the enquiry or against whom
there are suspicions of a potential crime or irregular situation in breach of the provisions laid down by the Code
of Ethics, a law, regulation or internal procedure at the Bank.
After the request is received, the process required to respond to the enquiries and/or to corroborate the reports
shall start. It is a declared objective of the Bank’s Board to afford a formal treatment to all the enquiries and
reports received, adopting, in all cases, a resolution. This resolution shall be communicated through a formal
response through the channel considered relevant in each case.
I.10. Finance Committee.
I.10.a. Composition and Requirements for Membership.
The Finance Committee shall be made up by no less than 3 and no more than 7 regular Directors and by the
highest ranking officers in the Departments of Finances, Financial Operations and Market Risk, who will
participate with permission to voice their opinions though not to cast votes. At least one of the Directors making
up the Finance Committee must be experienced in the matter. The General Manager is also allowed to
participate in this Committee with permission to express opinions though not to cast votes
The members of this Committee who are Directors shall serve on the Committee for a minimum period of 2
years in so far as their term of office does not come to an end sooner. This term may be extended only on a
case-by-case basis by express decision of the Board. The term in office as member of the Committee must not
coincide with the term in office of the other Directors serving on the Committee in a manner such that the
Committee shall always have a Director –experienced and knowledgeable in the matter- amongst its members.
The top ranking officers in the Departments of Finances, Financial Operations and Market Risk must be
executives experienced and knowledgeable in the matter who must not be within the scope of the prohibitions
and incompatibilities set forth in Section 264 of Law No. 19,550 and Section 10 of Law No. 21,526.
Page # 33
Besides, the members of the Finance Committee are bound by the principles laid down under the headings
“Duty of Diligence”; “Duty of Secrecy and Confidentiality”; and “Duty of Loyalty and Non-Compete Obligation”.
The designation of the members of the Finance Committee, as well as any change in its composition, due to
either resignation, leave of absence, addition or substitution of members, or otherwise shall be communicated
by the Company to the Argentine Central Bank and to the CNV as soon as it has been considered by the Board
and within the terms imposed to that end by currently applicable rules and regulations.
I.10.b.Responsibilities.
The Finance Committee shall have the responsibilities set forth in detail in the “Rules of Operation of the
Finance Committee” (See Exhibit C to this Code).
I.11. Committee of Homes.
I.11.a. Composition and Requirements for Membership.
The Committee of Homes shall be made up by no less than 3 and no more than 13 regular Directors and by the
highest ranking officer in the Departments of Homes, who will participate with permission to voice his/her
opinions though not to cast votes. At least one of the Directors making up the Committee of Homes must be
experienced in the matter. The General Manager is also allowed to participate in this Committee with permission
to express opinions though not to cast votes
The members of this Committee who are Directors shall serve on the Committee for a minimum period of 2
years in so far as their term of office does not come to an end sooner. This term may be extended only on a
case-by-case basis by express decision of the Board.
The top ranking officer in the Department of Homes must be an executive experienced and knowledgeable in
the matter who must not be within the scope of the prohibitions and incompatibilities set forth in Section 264 of
Law No. 19,550 and Section 10 of Law No. 21,526.
Besides, the members of the Committee of Homes are bound by the principles laid down under the headings
“Duty of Diligence”; “Duty of Secrecy and Confidentiality”; and “Duty of Loyalty and Non-Compete Obligation”.
The designation of the members of the Committee of Homes, as well as any change in its composition, due to
either resignation, leave of absence, addition or substitution of members, or otherwise shall be communicated
by the Company to the Argentine Central Bank and to the CNV as soon as it has been considered by the Board
and within the terms imposed to that end by currently applicable rules and regulations.
I.11.b.Responsibilities.
The Committee of Homes shall be entrusted with the responsibilities set forth in detail in the “Rules of Operation
of the Committee of Homes” (See Exhibit C to this Code).
I.12. Committee of Social and Institutional Affairs.
I.12.a. Composition and Requirements for Membership.
The Committee of Social and Institutional Affairs shall be made up by no less than 2 and no more than 5 regular
Directors and by the highest ranking officer in the Department of Institutional and Community Relations who will
participate with permission to express an opinion though not to cast votes. At least one of the Directors making
up the Committee must be experienced in the matter. In turn, the General Manager may attend this Committee’s
meetings, where he/she will be allowed to voice his/her opinions but not to cast votes.
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The members of this Committee who are Directors shall serve on the Committee for a minimum period of 2
years in so far as their term of office does not come to an end sooner. This term may be extended only on a
case-by-case basis by express decision of the Board.
The highest-ranking officer in the Department of Institutional and Community Relations must be an executive
experienced and knowledgeable in these matters. Furthermore, he/she may not be within the scope of the
prohibitions and incompatibilities set forth in Section 264 of Law No. 19,550 and Section 10 of Law No. 21,526.
Besides, the members of the Committee of Social and Institutional Affairs are bound by the principles laid down
under the headings “Duty of Diligence”; “Duty of Secrecy and Confidentiality”; and “Duty of Loyalty and NonCompete Obligation”.
The designation of the members of the Committee of Social and Institutional Affairs as well as any change in its
composition, due to either resignation, leave of absence, addition or substitution of members, or otherwise shall
be communicated by the Company to the Argentine Central Bank and to the CNV as soon as it has been
considered by the Board and within the terms imposed to that end by currently applicable rules and regulations.
I.12.b.Responsibilities.
The Committee of Social and Institutional Affairs shall have the responsibilities set forth in detail in the “Rules of
Operation of the Committee of Social and Institutional Affairs” (See Exhibit C to this Code).
J.
Office of the General Manager and Senior Management.
J.1.
Requirements of the positions.
To serve as General Manager or as a member of senior management at the Company, candidates must be
experienced and skilled in financial activities and not be within the scope of the disqualifications and
incompatibilities set forth in Section 264 of Law No. 19,550 and Section 10 of Law No. 21,526. Any one falling
within any of the following situations shall be considered as disqualified for, and incompatible with, the position
of General Manager or membership in senior management:
a)
Those who may not act in commerce.
b) Those adjudged bankrupt on grounds of negligence or fraud for up to 10 years after their discharge,
those adjudged unintentionally bankrupt or those against whom reorganization proceedings were
undertaken up to 5 years after their discharge; company directors and/or managers whose behavior had
been considered as negligent or fraudulent for up to 10 years after their discharge.
c)
Convicts who received an ancillary sentence of disqualification from service as public officials; those
convicted of theft, robbery, embezzlement, bribery, issuing checks without sufficient funds and of crimes
against public faith; those convicted of crimes perpetrated in the formation, operation and liquidation of
companies. In all the preceding cases, the inability shall subsist for up to 10 years after the sentence
was served;
d) Public officials serving in positions related to the Company’s corporate purpose for up to 2 years after
they step down from such positions.
e)
Those disqualified from serving as public officials.
f)
Those who are non-performing debtors at financial institutions.
g) Those disqualified from holding checking or other types of accounts in a similar nature for up to three
years after the lifting of such disqualification.
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h) Those disqualified pursuant to the application of Sub-section 5 of Section 41 of Law No. 21,526, in so
far as the sanction is in force, and
i)
Those who, following a decision by a competent authority, have been found guilty of misconduct in the
government and management of financial institutions.
It is only with the previous approval of the Argentine Central Bank’s Board of Trustees that the General Manager
may take office. To that end, the Central Bank shall assess: i) the candidate’s track record in financial activities
and/or ii) his/her professional qualifications and track record as a public official or in the private sector or in
similar spheres relevant to the Entity’s commercial profile.
In this Code, Senior Management shall mean those managers who have decision-making powers and/or directly
report to the General Manager or the Chairman of the Board.
J.2.
Duties and Responsibilities.
J.2.a. Principles
The General Manager and the members of senior management are responsible for complying with currently
applicable rules and regulations, particularly Laws No. 24,855, 24,240, 21,526, 19,550 and 26,831, regulatory
and supplementary decrees, the rules of the Argentine Central Bank and the CNV and the by-laws.
The members of senior management must act with loyalty and with the diligence of a good businessman. Those
who breach their obligations are jointly and severally liable for the damages resulting from their action or
omission.
Furthermore, the members of senior management are responsible for implementing the strategy, policies and
practices for managing credit, liquidity, market, interest rate and operational risk as approved by the Board as
well as for preparing and developing the written procedures necessary to identify, assess, follow up on, control
and mitigate risks.
J.2.b. Risk Management.
Amongst other duties, senior management must:
a) when it comes to credit risk,
1.
see that the activities concerning loans are in harmony with the approved strategies and policies.
2.
implement the structure, responsibilities and controls necessary to manage credit risk. This
structure must provide for positions specifically in charge of following up on the quality of loans
and the associated risk mitigation agents; it must also guarantee that the positions responsible for
allocating the internal credit risk rating should receive sufficient information.
3.
approve the written procedures, making sure that they are in line with the policies and practices
approved by the Board and that they should be implemented.
4.
see to it that the responsibilities for approving and reviewing loans are clearly and adequately
allocated
5.
make sure that there should be a periodical and independent internal assessment of loan
granting and managing functions.
6.
make sure that sufficient resources are allocated for credit risk to be efficaciously managed.
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7.
define the procedures and level of approval relevant to the exceptions to the limits in line with the
policy approved by the Board.
8.
ensure that the persons taking part in transactions involving credit risk should have the skills and
knowledge necessary to conduct the activities in conformity with the Company’s policies and
procedures.
9.
communicate the credit risk strategy, the policies that are of the utmost importance to deploy that
strategy and the structure for managing that risk to all of the Company’s areas that are directly or
indirectly involved.
10. ensure that there are adequate internal controls to protect the integrity of the credit risk
management process.
11. engage in a frequent and thorough follow-up of the market trends apt to pose significant or
unprecedented challenges to credit risk management.
12. ensure that the stress tests and the contingency plans are effective and appropriate for the entity,
and
13. ensure that costs, revenues and credit risks are appropriately incorporated into the internal
pricing system, in the performance measurements and in the process to approve new products
for the significant activities being performed, be them of a financial nature or off-balance sheet
ones.
b) when it comes to liquidity risk management:
1.
implement the structure, responsibilities and controls necessary to manage liquidity risk, including
all the subsidiaries and branches of the jurisdictions where the entity operates.
2.
assess the incidence of existing interactions between funding liquidity risk and market liquidity
risk and analyze the incidence of the other risks in the implementation of the Company’s global
liquidity strategy.
3.
continuously review the information concerning the Company’s developments in terms of liquidity
and keep the Board regularly informed.
4.
efficaciously communicate the liquidity risk management strategy, the policies that are of the
utmost importance to deploy that strategy and the structure for managing that risk to all of the
Company’s areas that are directly or indirectly involved.
5.
make sure that there are adequate internal controls in place to safeguard the integrity of the
liquidity risk management process.
6.
engage in a frequent follow-up of the market trends apt to pose significant or unprecedented
challenges to liquidity risk management.
7.
define the procedures and level of approval relevant to the exceptions to the limits in line with the
policy approved by the Board.
8.
ensure that the stress tests, the contingency plans and the liquidity requirements are effective
and appropriate for the Company, and
9.
ensure that costs, revenues and liquidity risks are appropriately incorporated into the internal
pricing system, in the performance measurements and in the process to approve new products
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for the significant activities, aligning the incentives for risk assumption in each business line with
the exposure to the global liquidity risk that these activities pose for the Company.
c) when it comes to market risk management:
1.
approve and develop the specific procedures to actively manage positions in the trading portfolio.
2.
implement the structure, responsibilities and controls necessary to manage market risk by area
and by product.
3.
define the procedures and the level of approval necessary for the exceptions to the limits in
conformity with the policy approved by the Board.
4.
design and review at regular intervals the outcomes of the stress tests, which must be reflected in
the policies and limits in place.
5.
implement the contingency plans, which must be tied to the outcomes of the stress tests.
6.
continuously review the market information that may have an impact on the Company’s positions
and submit regular reports to the Board.
7.
perform an assessment of the entity’s ability to actively manage risk in the exposure inherent in
its trading activities.
8.
analyze the ability to transfer risks between the trading portfolio and the investment portfolio.
9.
communicate the market risk management strategy, the policies that are of the utmost
importance to deploy that strategy and the structure for managing that risk to all of the Company’s
areas that are directly or indirectly involved.
10. engage in a frequent follow-up of the market trends apt to pose significant or unprecedented
challenges to liquidity risk management.
11. make sure that there are adequate internal controls in place to safeguard the integrity of the
market risk management process.
d) when it comes to interest rate risk management:
1.
implement the strategy, policies and practices approved by the Board.
2.
approve and develop the specific procedures to actively manage interest rate risk.
3.
make sure that there are effective internal controls in place including adequate risk limits as well
as appropriate systems and standards to measure interest rate risk.
4.
define the procedures and the level of approval relevant to the exceptions to the limits in
accordance with the policies laid down by the Board.
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5.
periodically review the Company’s interest rate risk management framework in order to ensure
that it is still appropriate and in line with sound practices.
6.
regularly design and review the outcomes of the stress tests, which must be reflected in the
policies and limits in place.
7.
implement the contingency plans, which must be tied to the outcomes of the stress tests.
8.
understand, together with the areas that are directly or indirectly involved in this risk, the
scenarios covered by the system to measure interest rate risk, which must be reviewed at least
once a year.
9.
make sure that previous to introducing a new product, hedge or position strategy, there should be
adequate operational procedures and risk control systems in place.
10. receive reports on interest rate risk covering both aggregate and itemized information fit for
determining the Company’s vulnerability to changes in market conditions and other risk factors
and keep the Board periodically informed.
11. see to it that there are sufficient provisions to minimize the potential influences that the risk takers
may have on the control functions of the risk management system, the development and
application of the policies and processes, the risk reports submitted to senior management and
other administrative functions.
12. ensure that the reviews and assessments that are a part of the internal control system are
periodically performed by individuals who are not related to the functions assigned to them for
review.
13. understand the incidence of the interactions existing between the different risks.
14. efficaciously communicate the interest rate risk management strategy, the policies that are of the
utmost importance to deploy that strategy and the structure for managing that risk to all of the
Company’s areas that are directly or indirectly involved, and
15. ensure that the costs, benefits and the interest rate risk are appropriately incorporated into the
internal pricing system, in the performance measurements and in the process to approve new
products for the Company’s significant activities, aligning the incentives for risk assumption in
each individual business line with the exposure to the interest rate risk that these activities pose
for the Company as a whole.
e) when it comes to operational risk management:
1.
take part in the implementation, reporting and control activities associated to the processes and
procedures to implement and operate the management framework approved by the Entity’s
Board. This framework must be consistently applied throughout the financial institution, with all
the levels of the organization being obligated to understand their responsibilities for managing this
risk.
2.
see to it that there should be processes and procedures applicable to each business unit aimed
at managing the operational risk inherent in the products, activities, processes and systems of the
financial institution.
3.
lay down clear lines of authority, responsibility and communication with the various departments
to foster and maintain the assumption of responsibilities.
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4.
make sure that there are sufficient resources available to efficaciously manage operational risk.
5.
evaluate whether management’s supervisory process is attuned to the risks inherent in the
policies of each business unit.
6.
gather reports about the outcomes of the execution of the processes and procedures, the
detection of any potential weaknesses in the policies, processes and procedures for managing
operational risks and the relevant proposals for correction.
7.
report to the Board, at least semiannually, on the main aspects associated to operational risk
management.
J.2.c. Personal Details to be provided by the General Manager and senior management.
The General Manager and the members of senior management must submit personal information and details in
the manner of an affidavit to the Bank’s control areas. Failure to comply with this duty may result in the
imposition of sanctions. The information to be supplied is detailed hereinbelow:
To be filed with the Argentine Central Bank:
a)
Personal Background Form - “Background Information of Promoters, Founding Members, Directors,
Managers, Members of the Supervisory Committees, Statutory Auditors or Managers” including the
personal details, labor history in financial activities, statement of assets and sworn statement about the
disqualifications of Section 10 of Law No. 21,526. This form must be filed as soon as the person is
designated by the Bank’s relevant governance body and then once a year, after the due date for filing
the tax returns with the Tax Authorities (AFIP) for the duration of the term of office and/or for as long as
the person remains in office and within 5 days of any change in the personal details provided in the
form. All the statements of assets inserted in the form must coincide with the tax return most recently
filed with the Tax Authorities (AFIP) for income tax and personal property, when applicable.
b) Certificate of absence of criminal records issued by the Registry of Offenders with Prior Convictions
within the purview of the Ministry of Justice, where a certificate is issued to those who do not have a
criminal record. The certificate must be filed together with the Personal Background Form.
c)
Sworn statements regarding the existence of related individuals or legal entities: the general manager
must prepare an affidavit disclosing whether he/she does have related Argentine or foreign companies
or not, and if he/she does, he/she must identify them. Besides, the general manager must provide: an
affidavit about the persons related to him by kinship. The sworn statement about related individuals or
legal entities must be filed upon taking office and on a half-yearly basis, before January 31 and July 31
each year. The sworn statement about persons related to him by kinship must be filed upon taking
office and on an annual basis, before January 31 of each year. Should there be changes in the
information provided in the affidavits, they must be reported within 5 days of said change in a new
sworn statement.
To be filed with the CNV:
a)
With the Bank being a company that issues shares and securities admitted to public offering, an
individual file is to be submitted for each one of the members of the Board. The file must comprise
personal data and it must be also detail the positions occupied in the Boards and management of other
companies. The file must be submitted within 10 days of the appointment as Manager.
b) Initial and Annual sworn statement of the person’s holdings of securities, with details about the quantity
and class of shares, debt instruments, stock options and debt securities issued by Banco Hipotecario
that are directly or indirectly owned or managed by the person. The sworn statement must be filed
within the 10 days subsequent to taking office and each year, and it must disclose updated information.
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c)
Monthly sworn statement of changes in securities’ holdings: any changes in the holdings or stock
options and/or debt securities issued by Banco Hipotecario must be disclosed in this sworn statement. It
must be filed within 15 days after the end of the month for which the information is relevant.
To be filed with MAE:
a)
Information about the Managers discharging duties as MAE agents, who must provide their personal
details, their real domicile and their domicile of choice, whether they render services for other
companies, their related companies and an affidavit of their net worth. This information must be
provided within 10 days following their designation.
b) Information about the Managers, who must provide a detail of the securities held in their portfolios. This
information must be submitted annually, upon filing the financial statements.
Additionally, with the General Manager being the highest-ranking officer in the executive aspects of operations,
he/she shall have obligations and responsibilities including, though not limited to, the following:
a) Always attend the meetings of the Executive Committee and of the Board, where he/she may express
an opinion but not cast votes
b) Appoint personnel –except for the candidates to the highest ranking offices referred to in paragraph V,
sub-section c) of Section 19 of the By-laws, as these nominations are reserved to the Executive
Committee- and decide on lateral transfers, relocations and/or removals, as well as to impose any
applicable sanctions, save for the personnel discharging duties in the internal audit area, as their
designation, lateral transfer, relocation, removal or imposition of sanctions requires the previous
conformity of the highest ranking officer in the field of Audit.
c) Conduct the Bank’s ordinary businesses in conformity with the policies, strategies, budget and business
plan approved by the Board.
d) Take part in the implementation, management and follow-up on the Bank’s internal control minimum
requirements as well as in the respective decision-making processes.
e) Assume responsibility for the reasonableness of the Entity’s financial information. To that end, the
requisite internal control systems must be in place so as to obtain reliable financial information and
deploy an adequate internal control environment.
f) Perform the functions inherent in his/her capacity as general manager and chief executive officer of the
entity, overseeing the organization and operation of all its subdivisions, abiding by the rules and
regulations and in compliance with the resolutions adopted by the Board and the Executive
Committee.
g) Provide the Board and the Executive Committee with accurate and complete information on a regular
basis and as necessary to ensure good governance at the Bank and its subsidiaries.
h) Propose to the Board the general guidelines governing the credit policy and ensure that they should be
implemented.
i) Propose the creation of branches, agencies and other subdivisions to offer to the public any financial
transactions and services which could be of interest for the development of the Bank to the Board and
the Executive Committee.
j) Ultimately settle the matters that are not reserved to the decision of the Board and the Executive
Committee, and
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k) Delegate some of his/her powers to Bank managers, except when he/she is legally obligated to be
personally involved.
K.
Duties of the Members of the Organization.
K.1.
Duty of Diligence.
The members of the organization must, in the discharge of their duties, abide by the Duty of Diligence expected
from a good businessman and they must, at least, devote the time and effort necessary to keep abreast of the
matters posed by the Entity’s management, compiling sufficient information to do so and lending the
cooperation or assistance considered necessary and diligently perform any specific task that the Entity entrusts
them with in so far as it is reasonably within the dedication commitment assumed to the organization.
In the particular case of the directors and/or members of senior management, they must:
a) Participate actively in the Board meetings and, when applicable, in the meetings of the committees in
which they serve, familiarizing themselves with the issues discussed, expressing an opinion and
encouraging the remaining members of such governance bodies to agree with the decision
understood as most favorable to defend the interests of the Entity. When there are justified causes
that prevent them from personally attending the meetings to which they have been summoned, they
will seek to be represented by another member of the governance body and impart instructions about
the matters covered by the agenda or they shall seek to take part in the meeting through the remote
attendance modality.
b) Oppose any resolution contrary to the law, the by-laws and the internal rules and regulations and
request that the minutes of the meeting acknowledge the position adopted, when this attitude is the
most favorable to the Entity’s interests.
c) See to it that it should be, without exception, the corporate interest of the issuer in which they serve and
the common interest of all shareholders that prevail over any other interest, including the interests of
the controlling shareholder(s).
d) Abstain from seeking any personal benefit from the issuer other than the remuneration for the duties
discharged.
e) Organize and implement preventative systems and mechanisms for safeguarding the corporate
interests in a manner such as to reduce the risk of permanent or occasional conflicts of interest in
his/her personal relationship to the issuer or vis-à-vis other persons related to the issuer in connection
with the issuer. This duty is particularly associated to: activities in competition with those of the issuer,
the use or allocation of corporate assets, the establishment of remunerations or proposed
remunerations, the use of inside information, the utilization of business opportunities for his/her own
benefit or for the benefit of third parties, and, in general, any other situation that causes or may cause
a conflict of interest affecting the issuer.
f) Seek the means adequate to the conduct of the issuer’s activities and have the necessary internal
controls in place to guarantee prudent management and prevent the breaches of the duties imposed
by the rules and regulations of the CNV and the self-regulated entities, and
g) Act with the diligence of a good businessman in the preparation and dissemination of the information
supplied to the market and safeguard external auditors’ independence.
Besides, in order to abide by the diligence principle, the Board may delegate to the Executive Committee, the
other Committees, the Directors or other officers one or more of the powers conferred on the Board by Section
17 of the by-laws.
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As regards such delegated powers, the Board may at any time request all the information that it may consider
necessary in connection with the discharge of functions and demand accountability.
For the Board to comply with its duty of diligence, the Executive Committee and the different committees to the
extent of their duties, must hold sessions periodically and report to the Board, within a term of 5 days, what has
been discussed at the meetings and the matters as resolved, accompanying a copy of the relevant minutes,
and, when so requested, the documentation concerning the matters discussed.
The Directors who do not serve in the Executive Committee and the various committees may, after requesting
as much in writing to the Chairman, attend the meetings held by any of the committees, with permission to
express their opinions though not to cast votes, whenever the agenda calls for discussing matters that they
have proposed or that they have an interest in debating.
K.2.
Duty of Secrecy and Confidentiality.
The Directors shall keep in secret the debates maintained at the Board meetings and at the meetings of the
committees in which they serve and they shall abstain from disclosing the information to which they may have
access by reason of the performance of their functions, irrespective of the relationship that they have with the
shareholder who nominated them.
In particular, they must safeguard the secrecy of any information about events that have not been publicly
disclosed and which, given their importance, are apt to affect the placement of securities authorized for public
offering and/or forward contracts of futures and options or the course of their trading.
Besides, the members of the Board and of Senior Management shall, after stepping down from their offices,
keep in secrecy the information, data, documents or unpublished details that they may have learned in the
performance of their functions and they shall not disclose them to third parties or disseminate them when doing
so could have consequences prejudicial to the Company’s interests.
There are exceptions to the Duty of Secrecy and Confidentiality for the cases in which the laws permit
communication or dissemination to third parties or when the laws mandate that the information is to be
disclosed by virtue of orders issued by the courts or by the oversight agencies. In these cases, the manner of
disclosing the information shall abide by the provisions under such laws.
Additionally, in compliance with the provisions under Section 39 of Law No. 21,526, the personnel at Banco
Hipotecario must keep in absolute reserve the information that they may learn and the members of the Board
and of Senior Management shall be the officers responsible for ensuring that Banco Hipotecario shall, in its
capacity as a financial institution within the scope of Law No. 21,526 comply with its duty not to disclose the
borrowing transactions conducted by the Entity.
Only except from such duty are the reports that are required by:
a) the judges in court cases, subject to the provisions laid down by the respective laws.
b) the Argentine Central Bank in the exercise of its functions.
c) the agencies responsible for tax collections at the national, provincial or municipal levels subject to the
following conditions: (1) the request for information must refer to one given taxpayer; (2) there must be
a tax audit under way concerning such specific taxpayer, and (3) there must have been a previous
formal request. As regards the requests for information posed by the Tax Authorities [AFIP], none of
the first two conditions discussed in this paragraph shall apply, and
d) the financial institutions themselves, in special cases, in so far as there is a previous express
authorization of the Central Bank.
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K.3.
Duty of Loyalty and Non-Compete Obligation.
In the performance of their duties, the members of the organization must behave with loyalty towards the
Company.
To that end, and in addition to those discussed under the heading “Conflict of Interest”, the following behaviors
shall be understood as particularly included in the duty of loyalty:
a)
a prohibition against using the Company’s assets as well as any confidential information for personal
purposes.
b)
a prohibition against taking advantage of, or allowing a third party to take advantage of, the
Company’s business opportunities, either by action or omission.
c)
an obligation to exercise functions only for the purposes that the Law, the by-laws, the shareholders’
meeting or the Board have conferred them.
d)
an obligation to scrupulously ensure that their behavior is always free from conflicts of interest, direct
or indirect, with those of the Company.
e)
an obligation to see to it that it is the interest of the Company and of its shareholders that prevails,
within the framework of the legislation and the other rules and regulations discussed under the
heading “Applicable Legislation and Other Rules and Regulations” in this Code.
f)
an obligation to avoid situations in which their personal interests may conflict with those of the
Company.
g)
an obligation to immediately report to the Ethics Committee of the existence of a conflict between their
personal interests and those of the Company.
h)
an obligation to abstain from seeking any personal benefit at the Company’s expense, other than the
remuneration payable to them for their services.
i)
an obligation to obtain the means adequate for the Company to conduct its businesses;
j)
an obligation to make sure that the internal controls are in place as necessary to guarantee prudent
management and prevent instances of non-compliance with the duties imposed by the Board, the
applicable legislation and rules and regulations, and in particular, the provisions laid down by the
Argentine Central Bank and CNV.
k)
an obligation to preserve order in the Company’s corporate governance, and
l)
an obligation to respect and to have others respect order in the operation of the Company’s
governance bodies in which they serve, the exercise of management functions and the discharge of
the Company’s employees’ duties.
When it comes to their Non-Compete Obligation in particular, neither the Directors nor the members of
Management may be shareholders or directors, render their professional services or work for entities alien to
Banco Hipotecario pursuing a corporate purpose analogous or supplementary to that of Banco Hipotecario or its
subsidiaries nor engage, in their own name or through third parties, in the same or analogous businesses.
The Directors and the members of Management have a duty to disclose the situations herein discussed, which
duty shall be initially discharged upon submitting the previous statement in writing that all Directors and
members of management must prepare when they are appointed. Afterwards, either periodically or when the
circumstances so warrant, the Directors and the members of management must maintain the Ethics Committee
informed of matters including, without limitation, those listed hereinbelow, through the Board’s Secretary:
Page # 44
a) their intent to maintain holdings or to make acquisitions of any ownership interest in the capital of a
company alien to Banco Hipotecario where the hypothesis of activities analogous or supplementary to
BHSA’s corporate purpose is verified, except for the investments for less than 2% of capital stock in
companies whose shares are admitted to public offering.
b) the discharge of duties as officer or in any other capacity for a company alien to Banco Hipotecario, and
c) the conduct in their own names of activities that are analogous, or supplementary, to those constituting
the corporate purpose of Banco Hipotecario.
This prohibition shall not be enforced against the Directors and members of Senior Management when the
Ethics Committee is informed of this situation before they take office and this Committee does not oppose such
appointment within a term of 30 running days. When it comes to activities to be exercised and offices to be
taken in third-party companies or in the candidates’ own names after their appointment at Banco Hipotecario, or
in the event of supervening situations, the potentially concurrent conduct of business, supply of services or
discharge of duties shall be understood to have been authorized by the governance bodies when the Ethics
Committee and/or the Board have expressly stated as much in their resolution.
K.4.
Conflict of Interest.
The decisions and actions of the members of the organization, its managers, legal representatives and
employees must always be geared towards the satisfaction of the Entity’s best interests and they should never
be inspired by personal considerations. The relationships based on kinship, friendship or out of expectations visà-vis current or potential suppliers, contractors, customers, competitors or regulators shall never adversely
affect independence and the best judgment to safeguard the Bank’s interests.
Conflicts of interest between the Company and the Directors or members of management shall be understood
to arise when:
a)
the Director or the member of Management or, if applicable, his/her spouse or his/her lineal relatives
by consanguinity or adoption, or his/her collateral relatives up to the fourth degree, inclusive, or
his/her relatives by affinity within the second degree or a conglomerate in which the Director or
member of Management holds a significant ownership interest, or, in his/her own name or through
relatives he/she holds an ownership interest that conveys more than 10% of votes and/or capital, or,
when holding a smaller interest he/she is entitled to appoint at least one member of said company’s
board, receives inadequate personal benefits by reason of, or due to, his/her services as a director of
the Company.
b)
the hypotheses contemplated in Sections 271, 272 and 273 of Law No. 19,550 are verified.
c)
they are engaged in the same line of business as the Company or they have an equity interest in a
company that competes with the Company, save for investments for less than 2% of the capital stock
of companies whose shares are admitted to public offering.
d)
they take part in the process to place an issuance of securities, where they may only acquire or place
bids for acquiring such securities either directly or indirectly only in the conditions established by CNV
up and until their participation in such placement process is completed.
e)
deprive the Company, for their benefit or for the benefit of a third party, of opportunities to sell or buy
goods, products, services or rights.
f)
have a personal interest in a transaction involving the Company, a competitor, a customer or a
supplier.
Page # 45
g)
wield influence on the adoption of decisions or courses of action seeking to protect or improve specific
personal investments or financial interests in a company to which the Company is related.
h)
wield decisive influence for the Company to hire a company as a supplier, contractor, agent or
representative when such company is owned or run by close relatives or when close relatives are
employed in hierarchical or executive positions.
i)
act as a supplier of goods or services for the Company, except in the event of such Director being a
member of firms of professional services that provide advisory services to the Company on an
independent basis: when this were the case, this Director shall refrain from taking part in the
negotiation of the engagement, and
j)
borrow funds with preferential conditions in his/her own name or through a third-part legal entity or
individual when the Director and/or member of Management is related to the Company.
It shall be equally understood that there is a conflict of interest between the Company and the rest of the
organization’s members when:
a)
their personal interest is in opposition to, or interferes with, the Company’s interest in any way.
b)
the Company’s inside information is used for the members’ own benefit or for the benefit of third
parties.
c)
the members of the organization conduct in their own names transactions with the Bank’s customers
when these transactions are a part of the Bank’s habitual activities or business (for instance,
purchases and sales of foreign currency). Neither may the organization’s members borrow money
from the Bank’s customers or lend them money in their own names.
d)
work is performed, or services are rendered, in favor, or for the benefit, of companies that compete
with the Company or that may become the Company’s competitors.
e)
professional activities, or activities additional to those conducted by the Bank are exercised and this
entails a direct or indirect conflict of interest with the Company.
f)
labor activities in addition to those performed at the Bank are conducted within working hours and
Bank property or services are used to this end, and
g)
copies are made for themselves or for the Bank of printed material or of software applications that are
protected by copyright or intellectual property rights and/or under license agreements.
The Director or the member of Management is under a duty to advise the Ethics Committee and/or the Board
sufficiently in advance of the occurrence of any situation apt to generate a conflict of interest with the Company,
even when such situation were not within the preceding list.
The Director or the member of Management with an interest contrary to those of the Company shall abstain
from taking part in the debates concerning the matters associated to the conflict of interest and from voting the
ensuing resolutions.
To determine the existence of a conflict of interest in those cases where there are suspicions of non-compliance
by a Director or a member of Management with the rules laid down in this Code, the Board shall request an
opinion from the Audit Committee before debating and settling the matter.
Page # 46
The Director or the member of Management who does not avoid incurring conflicts of interest or fails to duly and
timely advise the Ethics Committee and/or the Board of the existence of conflicts of interest that affect such
Director or member or are apt to affect him, shall be deemed to have incurred serious misconduct, which may
be punished by the Company itself and/or by the regulatory bodies (Argentine Central Bank, CNV, Buenos Aires
Stock Exchange) as set forth in Section 59 of Law No. 19,550, Section 41 of Law No. 21,526, Section 125 et
seq of Law No. 26,831.
K.5.
Procurement Decisions.
Procurement decisions are solely inspired by the Bank’s best interests and the suppliers shall be awarded a
contract with the Bank if and only if their products and services are suitable to the Bank in terms of relevance,
price, delivery and quality, without any subjective and personal considerations about the person taking part in
the decision being allowed to distort these criteria.
Neither kinship, friendship relationships nor the expectations of shareholders vis-à-vis current or potential
suppliers, contractors, customers, competitors or regulators should affect independence and best judgment in
defense of the Bank’s interests. The transactions conducted in these circumstances shall require the unanimous
vote of the Board’s members for approval.
K.6.
Succession Planning Policy.
The replacement planning policy for management positions seeks that for each incumbent in a management
position there should be a person with the skills and experience required to step in for him/her in the event of
any unforeseen vacancy.
In this respect, the Entity has a scheme in place for annual assessments to identify potential candidates for the
renewal of management positions. Replacements at the management level are primarily sought from within the
ranks of those occupying positions within the line management community.
To this end, the personnel occupying positions within the line management community receives intense training
both in the Company and outside in order to further their skills through:
a) a strategic outlook.
b) human capital management skills.
c) the ability to manage multiple priorities.
d) productivity and outcomes.
e) risk management.
f) an industrial and process-based outlook.
g) familiarity with the risks and the operations.
h) an entrepreneurial spirit, and
i) analytical rigor.
Lastly, in the event of there being no suitable candidate within the ranks of the Company to fill the position
sought, the talent will be sought outside the Bank.
K.7.
Personnel Incentives Policy.
Page # 47
The system of financial incentives for personnel is aligned with criteria of prudence in risk taking. In this respect,
the system of incentives relies, in addition to currently applicable statutory provisions, on the following premises:
assess the risks assumed by personnel on behalf of the entity, considering both future risks and those
already assumed and incentives adjusted by all of the risks, including those that are difficult to measure,
such as the liquidity, reputation and cost of capital risks, with the Personnel Incentives Committee being
responsible for proposing the criterion to adjust by risk.
a)
b) abstain from allocating the same amount to officers or business units who generate similar revenues in
the short term though with different levels of risk.
tie the funds allocated to the payment of incentives to the general result posted by the entity, taking into
account:
c)
1.
the cost and the amount of capital required to face the risk assumed.
2.
the cost and the amount of liquidity risk assumed to conduct the business, and
3.
consistency with the timing and likelihood of potential future revenues in addition to current
revenues.
d) apportion the contribution made by each individual and business unit to the entity’s performance, with it
being reduced when the results of the entity or of the business unit decrease or eliminated when losses
are posted, and
see to it that the schedule of incentive payments is in line with the time horizon of the risks, with the
incentives being deferred to an extent in proportion to the realization of the results.
e)
In addition, the incentives for the personnel performing control tasks, be them financial or over any of the risks,
shall be determined separately from the business areas being supervised, taking into consideration the role that
they play for the organization and the attainment of the objectives with which their functions have been
entrusted.
L.
Transparency in Information; Fluency and Completeness.
L.1.
Annual Report.
Pursuant to the provisions in Section 66 of Law No. 19,550, the Board of Directors must report on the status of
the Company in its various operations, give an opinion about the future of these operations and communicate
other aspects considered necessary to present the Company’s present and future situation.
The annual report must, at minimum, deal with the following aspects:
a)
the reasons for any significant variations in assets and liabilities.
b)
an adequate explanation about the extraordinary expenses and revenues and their origin and the
adjustments due to revenues and expenses of previous fiscal years, when they are significant.
c)
the reasons for any proposed reserves, accompanied by a clear and founded explanation.
d)
the causes, thoroughly discussed, why the Board proposes payment of dividends or distribution of
earnings in a manner other than in cash.
e)
an estimate of, or guidance about, the prospects of future operations.
Page # 48
f)
relations with controlling, controlled or related companies and the variations in the various ownership
interests and in receivables and payables.
g)
when there is a subscription for a public offering and the use of the proceeds is different from that
announced, the annual report must justify the ultimate use except when the proceeds were already a
part of the Company’s equity due to their arising from irrevocable contributions on account of future
issuances or debts of the issuer, and
h)
in a separate exhibit, the Company is to prepare a report on Corporate Governance, as detailed under
the heading “Annual Report on Corporate Governance”.
The annual report must be submitted together with a report of the Supervisory Committee advising on
compliance with currently applicable rules and regulations.
Without prejudice to the obligations arising from legal provisions, the preparation of the annual report must
abide by the highest ethical standards and steps must be taken for the annual report to be clear, transparent
and complete in order to facilitate its use by the Bank’s relevant third parties.
L.2.
Financial Statements.
In its capacity as a financial institution and as a company listed on the stock exchange, Banco Hipotecario is
regulated by Laws No. 21,526 and 26,831, the rules of the Argentine Central Bank and the CNV and therefore,
it must issue its financial statements in accordance with the rules laid down by the Argentine Central Bank in its
CONAU Circular Letter both annually and quarterly.
According to Section 25 of the by-laws, the year-end date for these financial statements is December 31 of each
year and, depending on whether the information is for a fiscal year or for a quarterly period, they must be
accompanied by an external auditor’s report or by a limited review report and by the supervisory committee’s
report in accordance with the provisions of Section 294 of Law No. 19,550.
The submission of the financial statements to the oversight authorities must take place on the earliest of the
date regulated by the Argentine Central Bank or the CNV, where:
a) the due date for filing the annual and interim financial statements with the Argentine Central Bank falls
on the twentieth day of the month following that to which the data refer, and
b) (1) the annual financial statements must be filed with the CNV on the earlier of (a) within a term of 70
running days as from the year-end date, or (b) within 2 days of their approval by the Board and at least
10 days before the date for which the shareholders’ meeting that shall consider them has been
scheduled, and (2) the interim financial statements must be filed with the CNV on the earlier of (a)
within 42 running days from the date of closing of each quarter of the fiscal year or (b) within 2 days of
their approval by the Board.
Without prejudice to the obligations arising from legal provisions, the preparation of the financial statements
must abide by the highest ethical standards and steps must be taken for the financial statements to be clear,
transparent and complete in order to facilitate their use by the Bank’s relevant third parties.
Lastly, in order to allow the shareholders and investors to familiarize with the entity’s financial situation and the
various risks to which it is exposed, the Entity shall disclose reliable information through different mechanisms,
such as (a) Banco Hipotecario’s own web-page, (b) Argentina’s Official Gazette and the bulletin of the Buenos
Aires Stock Exchange and (c) the web page of the CNV and of the Buenos Aires Stock Exchange. In addition,
through its Capital Markets Department, the Entity deals with the enquiries and concerns posed by
shareholders, except for those that could affect the Company’s strategy or plans for the future.
L.3.
Regulatory Information required by the Control Authorities.
Page # 49
The Company shall strictly comply with the rules and regulations that govern the stock market, publishing all the
relevant information demanded by such rules and regulations through the means for transmission and
publication mandated by the CNV and the Buenos Aires Stock Exchange.
Relevant information is the information that would have been taken into account by a prudent and diligent expert
in purchasing, selling or keeping securities, as well as the information that would be taken into account by a
shareholder upon exercising his/her political rights in the respective shareholders’ meeting or other competent
governance body.
The Company has in place the procedures, the persons, the terms and in general, the structure necessary to
disclose, fully and timely, the relevant information that could be of interest to the market as well as the resources
necessary to update the Company’s basic information.
Besides, the Bank’s management must disclose to the market through its web page:
M.
a)
the contracts between its directors, managers, chief executives and legal representatives, including
their relatives, in conformity with the guidelines discussed under “Duties of the Members of the
Organization – Conflict of Interest”.
b)
internal rules about conflict resolution.
c)
the criteria applicable to the trades that its directors and managers undertake in connection with the
shares and other securities issued by the Bank.
d)
a biographical description of the members of the Board and of the governance bodies responsible for
internal control that conveys their qualifications and experience, and
e)
the Bank shall disclose the identity of its main shareholders, specifying the classes of shares and their
rights.
Policies in connection with the Shareholders, the Depositors and Relevant Third Parties.
M.1. Duties owed to the Shareholders
The Bank’s Directors, Managers, Administrators and Legal Representatives must abide by the duty of loyalty
and diligence expected from a good businessman in the exercise of their functions, which means that they must
safeguard the interests of shareholders and see to it that they receive an adequate return on their investment. In
particular, and as indicated by shareholders in Section 4, Sub-section a) of the By-laws, “The Company shall
primarily serve the needs of housing mortgage loans” and if they do not, they could incur serious misconduct,
entitling the shareholders to enforce the sanctions set forth in Section 59 of Law No. 19,550.
M.1.a. Information and Response to Enquiries.
The Capital Markets Department is the area primarily responsible for dealing with and responding to the
enquiries and concerns posed by the shareholders and investors in publicly offered debt securities, except if
such enquiries call for disclosing the strategy or the plans of the Company for the future.
Additionally, the shareholders may request in writing and prior to the Shareholders’ meeting within the terms
prescribed by the Law or verbally in the course of the shareholders’ meeting, any reports or clarification that
they see fit about the matters covered by the agenda for the meeting. These requests may not involve matters
concerning trade secrets or information considered strategic for the Bank’s performance.
In its capacity as issuer of shares and publicly offered securities, the Bank shall, at all times, disclose clearly
and objectively to the shareholders and investors all the financial information that they may request for decisionmaking purposes.
Page # 50
The information to be provided shall not include matters covered by bank secrecy, trade secrets or details
concerning the network’s commercial transactions.
Besides, the shareholders representative of no less than 2% of capital stock may, at any time, request from the
Company’s Statutory Auditors information about the matters within their purview and the statutory auditors are
under a duty to provide such information.
M.1.b.Fair Treatment.
Fair Treatment is the equal and/or transparent treatment received by all shareholders when it comes to
information.
Fair treatment must be present in the processes to issue, acquire and/or sell the Bank’s shares and convertible
negotiable obligations, which shall be conducted through mechanisms that guarantee equal conditions to all the
shareholders. These matters include the rights conferred by Section 194 of Law No. 19,550 –preemptive right
and accretion rights-, which, subject to the limitations imposed thereon by Section 197 of Law No. 19,550,
Section 20 of Law No. 20,643 and Section 11 of Law No. 23,576 call for considering the provisions under
Section 8 the by-laws, as follows:
a)
preemptive rights, whose general rule is that Holders of each class of common shares shall have
preemptive rights for the subscription of new shares of the same class in proportion to their respective
shareholdings. Such right shall be exercised under the conditions and within the terms set forth by
applicable laws and regulations.
The holders of preemptive rights, irrespective of the class of shares that gives rise to them, may
assign them to any third party, and in that case, the share that constitutes the subject matter of said
preemptive right shall be converted into, or consist in, a Class D share, and
b)
accretion rights, which shall be exercised within the same term established for preemptive rights and
with respect to all types of shares that have not been initially subscribed, in which case, the provisions
in paragraphs (i) to (v) of sub-section b) of this section of the by-laws shall apply.
In this respect, the shareholders are entitled to receive fair treatment from the Bank’s directors and other
administrators, abiding by the rights to information and to be called to meetings set forth in the Law.
Should the Bank consider that the response given to a shareholder is apt to place that shareholder at an
advantage, it shall immediately communicate such response to the other shareholders in accordance with the
mechanisms established by the Bank’s managers to that end.
M.1.c.Dividend Policy.
The Board of the Bank has in place a policy consisting in paying dividends to shareholders when its net income
allows it to do so and when the conditions and requirements imposed to that end by the rules of the Central
Bank of Argentina are complied with.
These rules prescribe that financial institutions must apply for approval to the SEFyC (Superintendency of
Financial and Exchange Institutions) to distribute dividends in cash, with the caveat that this will not be
permitted to those financial institutions that as of the month previous to that request:
a)
are within the scope of sections 34 on regularization and turnaround and 35 bis on institutions’
restructuring to safeguard credit and bank deposits under Law No. 21,526.
b)
have received financial aid from the Argentine Central Bank on grounds of illiquidity as per Section 17
of the Argentine Central Bank’s Charter.
Page # 51
c)
have incurred delays or failed to comply with the reporting requirements imposed by the Argentine
Central Bank
d)
are considered to have failed to comply in full with the minimum capital requirements –on either a
stand-alone or consolidated basis- (without computing the effect of the individual waivers granted by
the SEFyC to such end) or with the minimum cash requirements –on average-, in either Pesos, foreign
currency or Government securities.
Therefore, when the Board corroborates that the Bank does not fall within any of the situations listed above, it
may determine the amount that it will propose to distribute as dividends in cash to the Shareholders’ meeting
and the date for payment, making sure that such distribution does not cause a decrease in the Bank’s capital
that, given its size, could have the potential of hindering the Bank’s needs for growth through new businesses,
or the adequacy of such capital to face the risks that could be reasonably posed by unfavorable scenarios in the
systemic environment and in the country’s macroeconomic conditions.
In line with the above, the Board’s proposal must contemplate:
a)
that the request for authorization to the SEFyC should be made at least 30 business days ahead of
the Shareholders’ meeting and that as of the date of the meeting, the SEFyC’s express authorization
must have been granted, and
b)
that at the time the Shareholders’ meeting approves the distribution of dividends, the payment of
dividends must not affect the liquidity nor the solvency of the Company in accordance with the rules of
the Argentine Central Bank.
Therefore, when there are retained earnings at the end of the fiscal year, the Board must approve the Proposal
for Earnings Distribution and submit it to consideration by the Shareholders’ meeting together with the Financial
Statements.
According to the by-laws, this project must establish the application of earnings in accordance with the following
detail:
a)
the percentage fixed by the Argentine Central Bank in accordance with Section 33 of Law No. 21,256
for the Legal Reserve fund and the percentage necessary to raise special reserves in accordance with
the banking and insurance laws and regulations currently in force.
b)
remuneration for the Board and for the Supervisory Committee, when applicable.
c)
the fixed dividends payable on common shares, if any, with such preference, and, if applicable, the
cumulative outstanding dividends, and
d)
the balance, in whole or in part, shall be paid as cash dividend to common shareholders or to
voluntary reserve funds or carried forward or be otherwise allocated as the meeting may resolve.
In submitting the proposal for payment of dividends in cash on common shares to consideration by the
shareholders’ meeting, the Board may move for the Shareholders’ meeting to delegate to the Board the right to
determine the date of payment of such dividends, including or not the possibility of making such payments at
regular intervals within the fiscal year. In the event of a vote in favor of the payment of dividends in shares, or in
shares and in cash together, the relevant documents are to be filed with the CNV within 10 days after the
shareholders’ meeting that resolved such payment and the shares and cash are to be made available to the
shareholders within a term not in excess of three months after the notice authorizing the public offering.
M.2. Protection of Depositors’ Interests.
Page # 52
The Bank in its capacity as a financial institution, together with its personnel and the external auditors, must
abide by the banking secrecy provisions set forth in Section 39 of Law No.21,256, which prohibits the disclosure
of the borrowing transactions conducted by the Bank’s customers.
Besides, the Law No. 24,485 instituted the deposit guarantee system whereby depositors are entitled to be
reimbursed up to $ 120,000 if the Argentine Central Bank decides to suspend, in whole or in part, an institution’s
operations or revokes a financial institution’s authorization to operate.
If the guarantee described in the preceding paragraph in favor of the depositor were not honored, the depositor
will enjoy the privilege established in paragraph i), sub-section e) of Section 49 of Law No. 21,526 in the course
of the entity’s judicial liquidation proceedings.
M.3. Protection of the Interests of Relevant Third Parties.
Interactions with suppliers, sellers and customers, existing now or in the future, as well as with agents, public
authorities and others must proceed with transparency, honesty and in compliance with all the applicable laws
and regulations and with this Code.
The members of the Bank are prohibited from delivering anything of value (including gifts, loans, entertainment,
promises of future employment or other transfers of goods and/or services) to the Bank’s current or future
customers, suppliers and/or sellers as an incentive to obtain or keep businesses or obtain preferential
treatment. Particular care is to be exercised when relating to and interacting with government authorities and/or
public officials who interact with the Bank, avoiding all attitudes that could be interpreted as actions or omissions
aimed at wielding influence on any official action or at receiving differential treatment. The only corporate gifts
permitted on behalf of the Bank shall be authorized by the Manager in charge of the relevant area or by the
Manager in charge of the Department of Institutional and Community Relations.
The members of the Bank are prohibited from accepting anything of value (including gifts, loans, entertainment,
promises of future employment or other transfers of goods and/or services) –both directly and indirectly- from
either sellers, suppliers or possible suppliers, customers, any involved entity or individual or anybody looking to
do business with the Bank, or from any entity in which the Bank has an ownership interest as such acceptance
could give the impression that the grantor is receiving or will receive favorable prices, terms, conditions or
another preferential treatment from the Bank. The members of the Bank are only allowed to accept training
courses given by suppliers when they relate to the Bank’s activities, as well as corporate gifts with a small
monetary value (for instance, calendars, diaries, pens, to name but a few) and subject to a maximum monetary
value as periodically established and communicated by the Ethics Committee.
Neither may the members of the Bank take part in contests or incentive programs sponsored by sellers,
suppliers or possible suppliers, customers, any involved entity or individual or anybody looking to do business
with the Bank in exchange for, or based on, preferential treatment. This is inclusive of all payments, gifts or
prizes from third parties granted directly or indirectly even when this were permitted by applicable laws and
regulations.
Procurement decisions are solely inspired by the Bank’s best interests and the suppliers shall be awarded a
contract with the Bank if and only if their products and services are suitable to the Bank in terms of relevance,
price, delivery and quality, without any subjective and personal considerations about the person taking part in
the decision being allowed to distort these criteria.
Neither kinship, friendship relationships nor the expectations of shareholders vis-à-vis current or potential
suppliers, contractors, customers, competitors or regulators should affect independence and best judgment in
defense of the Bank’s interests. The transactions conducted in these circumstances shall abide by this Code’s
provisions.
The Company has adopted the procurement policies and parameters established in the Manuals of Purchases
and Procurement in accordance with the principles established in the Code of Ethics.
Page # 53
The Bank applies organization-wide criteria that govern the acquisition of goods and services so that this
acquisition is conducted in line with the following principles:
a)
to foster tendering whenever possible so that there should be a plurality of suppliers of goods and
services whose characteristics and conditions are in line, at each time, with the Company’s needs and
requirements.
b)
to make sure that acquisitions of goods and services are decided by combining the search for the
conditions that are most advantageous for the Bank in each transaction with the maintenance of the
value attributed to long-standing relationships with certain strategic suppliers.
c)
to guarantee objectivity and transparency in decision-making processes avoiding situations that might
affect the objectivity of the persons taking part in the processes, and
d)
in the pre-selection of suppliers, the Bank shall preferably enter into agreements with legal entities,
about which the Bank must analyze:
1.
technical and financial capacity.
2.
skills and track record in the market.
3.
operational infrastructure.
4.
financial stability.
5.
service quality, and
6.
guarantees offered.
The Bank must furthermore evaluate the shareholders, legal representative, and members of the Board of its
suppliers and contractors.
M.4. Social Balance Sheet.
It is an essential policy at the Bank to accompany the attainment of its financial and development objectives with
actions in the field of enterprise social responsibility and environmental responsibility.
In addition, according to the provisions of Law No. 25,877 of the Argentine Republic and Law No. 2,594 of the
City of Buenos Aires, the companies with a headcount of more than 300 workers with revenues in excess of the
values indicated for medium-sized enterprises under Resolution SEPyME 147/2006 of the Ministry of Industry’s
Secretariat of Small and Medium Enterprises are under a duty to prepare the Social Balance Sheet which must
be understood as a tool to convey the Company’s economic events that are presently not included in the annual
report and financial statements.
Therefore, the preparation of policies and the performance actions of enterprise social responsibility do not
entail only compliance with the law. Rather, the Company aspires to be considered a socially responsible
enterprise and therefore it seeks to enforce standards that surpass the rules and regulations and to act
responsibly both outside and inside the company at an organization-wide level.
The Social Balance Sheet is thus a management tool to plan, organize, direct, record, control and assess, in
quantitative and qualitative terms, the social management of a company for a certain period of time and vis-à-vis
pre-established goals. Knowledge of the social balance sheet is useful to directors, workers, trade unions, the
Government and the general public.
As is also the case with the annual report and the financial statements, the Law lays down that the social
balance sheet must be filed every year at the end of each fiscal year and that it must reflect the procedures
Page # 54
applied by the Company and must meet the following requirements: it must be objective, concrete and
measurable and apt to be traced and audited.
Its minimum contents have been established by the enforcement authorities and they are based on indicators
that provide an objective valuation and assessment in conditions of fairness and social, environmental and
financial sustainability with respect to the Company’s performance. To that end, the indicators may be as
developed by Brazil’s ETHOS Institute or Great Britain’s AA 1000 Accountability standards of the Institute of
Social and Ethical Accountability or the Global Reporting Initiative of the UN’s Global Compact.
In the main, the social balance sheet has 4 objectives and 5 areas of social responsibility as detailed
hereinbelow:
Objectives:
a)
to perform a diagnosis of management actions in the field of compliance with the Company’s
enterprise social responsibility in a given period in order to define policies, establish programs and
streamline the effectiveness of social investments with a view to fostering development for the
Company’s workers and society at large.
b)
as an enterprise management tool, the social balance sheet allows management to plan actions
aimed at increasing worker productivity and efficiency. In addition, it allows management to assess the
actions in terms of costs and benefits.
c)
to avail itself of information concerning the Company’s human resources and the sectors with which
the Company interacts and be able to adequately inform the public opinion about its social
performance as a company, and
d)
as a management tool it allows the company to update the policies and programs related to its social
responsibility as it provides tools with increased efficiency to measure and control the consequences,
costs and benefits resulting from the Company’s actions.
Areas of enterprise social responsibility:
a)
ethical values and principles: this refers to the manner in which the Company puts together a set of
principles in decision-making in its strategic processes and objectives. These basic principles refer to
the ideals and beliefs that serve as a frame of reference to make organizational decisions. This is
known as a “value-based approach to business” and it is, overall, based on the company’s mission
and vision.
b)
employment conditions and workplace atmosphere: this refers to the human resources policies that
have an impact on employees such as remunerations and fringe benefits, career planning, training,
the work environment, diversity, work-life balance, work and family, health, labor safety, etc.
c)
community support: this refers to the broad-ranging actions that the Company undertakes to maximize
the impact of its contributions, either in money, time, products, services, knowledge or other resources
oriented towards the communities in which it operates. It includes entrepreneurial spirit geared
towards increased financial prosperity for society at large.
d)
environmental protection: this is the commitment assumed by enterprises to the environment and
sustainable development. It comprises matters such as concern for waste management, personnel
training and awareness raising and
e)
responsible marketing: the policy that involves a set of company decisions mainly relating to
consumers and in connection with product integrity, commercial practices, prices, distribution,
dissemination of product characteristics, marketing and advertising.
Page # 55
The Bank describes its actions for the benefit of the community in its Annual Report and other publications.
N.
Supervision and Internal Control.
N.1.
General Principle of Internal Control.
Internal control is broadly defined as a process performed by the Board of Directors, the management and other
members of a Company, designed to provide reasonable safety with respect to the achievement of goals in the
following categories:
a) effectiveness and efficiency in the operations.
b) reliability on the accounting information, and
c) compliance with the applicable Laws and rules.
The first category deals with the basic business goals of a Company, including those related to performance,
profitability and protection of assets. The second one is related to the reliable preparation of financial statements
and supplementary information for the Argentine Central Bank, the CNV and other users. The third category
refers to compliance with the Laws and rules to which the Bank is subject.
Internal control is made up by five interrelated components, which are integrated with the management’s
process. Though the components are inherent in all the entities, small and medium entities may implement them
differently than large entities should do. Their controls may be less formal and less structured; even so those
Companies may and should carry out an effective internal control.
The components are:
a)
control environment: Control environment sets forth the way of operation of an organization, influencing the
control awareness of its staff. It is the basis of all other internal control components as it provides discipline
and structure. The factors comprising control environment include, among others, integrity, ethical values
and skills of the Company’s staff; the style and way of operation of Management; the way in which
Management confers authority and responsibility, organizes and develops its staff and the attention and
direction provided by the Board of Directors.
b) Risk assessment: Any Company faces a variety of risks from external and internal sources, which should be
assessed. The determination of goals relating to different levels and internally compatible is a condition
precedent to risk assessment. Risk assessment means identifying and analyzing material risks for the
achievement of goals, making up a basis to determine how risks should be managed. As economic,
financial, regulatory and operating conditions will continue to change, mechanisms for the identification and
management of special risks related to such change are necessary.
c)
Control activities: Control activities are the policies and procedures that help to ensure that management’s
directives are complied with. This implies taking such actions as may be necessary to face the risks towards
the achievement of the Company’s goals. Control activities are carried out throughout the organization, at all
levels and in all the positions. They include a wide range of activities such as approvals, authorizations,
verifications, conciliations, reviews of operating performance, protection of assets and segregation of duties.
d) Information and communication: The relevant information should be identified, gathered and communicated
in a manner and at a time enabling agents to comply with their obligations. Information systems generate
reports containing operating, financial and accounting information that enables the management and control
of the business. Not only does it involve internal information but also information on external matters,
activities and conditions necessary to take decisions and submit external reports. Effective communication
should also, in a broader sense, flow all over the organization. All the personnel should receive the
Management’s clear message on that control duties should be taken seriously, and
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e)
Monitoring: The internal control system should be monitored. Monitoring is a process that assesses the
quality of performance of the system over time. It is performed by monitoring activities in progress,
separated assessments or a combination of both.
The definition of internal control – with its main concepts underlying a process performed by people and
providing reasonable safety – jointly with the description of goals, components and the criteria for effectiveness,
as well as the related discussions constitute the basis of internal control.
The Board of Directors’ responsibilities include, among others, the definition, design and conservation of internal
control policies and procedures, as well as the supervision thereof for them to conform the Companies’ needs.
The Company’s Audit Committee is the main responsible for monitoring the adequate performance of the
internal control system. This committee supports the Board of Directors in the implementation and supervision
of internal control and in turn, it has the internal audit division, which serves as assessing entity of internal
control systems and is in charge of making recommendations for the improvement thereof.
N.2.
Supervisory Committee.
N.2.a. Composition.
In accordance with the provisions of Law 19,550 and the Bank’s by-laws, the corporate supervision shall be in
charge of an Auditing Body or a Supervisory Committee made up by 5 statutory auditors and 5 alternate
statutory auditors, where 3 statutory auditors and 3 alternate statutory auditors shall appointed by class D and C
shareholders, voting at the class shareholders’ meeting to that effect as members of a single class, 1 of the
statutory auditors and 1 of the alternate statutory auditors shall be appointed by class B shareholders, to the
extent such class represents more than 2% of the capital stock, and 1 of the statutory auditors and 1 of the
alternate statutory auditors shall be appointed by class A shareholders. In the event that class B shares do not
represent 2% of the capital stock and class C shares do not represent 3% of the capital stock, the number of
statutory auditors will be reduced to 3 statutory auditors and 3 alternate statutory auditors. Two statutory
auditors and 2 alternate statutory auditors shall be appointed by class B, C and D voting at the class
shareholders’ meeting to that effect as members of a single class, and 1 statutory auditor and 1 alternate
statutory auditor shall be appointed by class A shareholders.
In view of the election of statutory auditors by class, for so long as classes of shares exist, the election of
statutory auditors by cumulative vote shall not apply to the Company. Statutory auditors shall be elected for a
term of 2 years, however, they shall remain in office until their replacement.
N.2.b. Requirements to serve as Statutory Auditor.
The statutory auditor’s role, as from the express acceptance of the position and after setting up domicile,
basically implies carrying out legality and accounting controls
Legality control consists in monitoring compliance with the law, corporate by-laws, regulations and shareholders’
resolutions by the Board of Directors. In other words, it means overseeing that the Board of Directors exercise
its duties within the applicable legal framework.
Therefore, the statutory auditor shall review that the decisions taken by the Board of Directors comply with the
rules that are essentially inherent therein, that those decisions are adopted in accordance with the majorities
required by the Company’s by-laws or regulations; that they are transcribed to the relevant minute book; that the
effects thereof are properly recorded in the accounting books and that the relevant legal and regulatory
requirements are met.
If the conditions referred to in the two preceding paragraphs are not met, the statutory auditor shall report it to
the directors by means of a formal statement and, according to the circumstances, he/she shall give notice
thereof to the shareholders. The statutory auditor is not entitled to approve or disapprove the Board of Directors’
decisions, because his/her functions are of supervision rather than of management. In addition, the statutory
Page # 57
auditor shall put on record his/her points of view on the defaults observed and in due time and according to the
circumstances, he/she shall report it to the Shareholders’ Meeting.
The statutory auditor shall not control the advantage or disadvantage of certain acts or transactions – which
involves control over the management – but he/she shall control compliance with the law and by-laws, which
entails the legality control mentioned above, notwithstanding any act or transaction itself.
Accordingly, to serve as statutory auditors, any candidate must:
a) be a lawyer or accountant, with qualifying degree, o a civil company with joint and several liability
exclusively organized by these professionals.
b) have actual domicile set up in the country.
c) Not fall within any of the disqualifications described below:
1.
Those who may not act in commerce.
2.
Those adjudged bankrupt on grounds of negligence or fraud for up to 10 years after their discharge,
those adjudged unintentionally bankrupt or those against whom reorganization proceedings were
undertaken up to 5 years after their discharge; company directors and/or managers whose behavior had
been considered as negligent or fraudulent for up to 10 years after their discharge.
3.
Convicts who received an ancillary sentence of disqualification from service as public officials; those
convicted of theft, robbery, embezzlement, bribery, issuing checks without sufficient funds and of crimes
against public faith; those convicted of crimes perpetrated in the formation, operation and liquidation of
companies. In all the preceding cases, the inability shall subsist for up to 10 years after the sentence
was served;
4.
Public officials serving in positions related to the Company’s corporate purpose for up to 2 years after
they step down from such positions.
5.
Those disqualified from serving as public officials.
6.
Those who are non-performing debtors at financial institutions.
7.
Those disqualified from holding checking or other types of accounts in a similar nature for up to three
years after the lifting of such disqualification.
8.
Those disqualified pursuant to the application of Sub-section 5 of Section 41 of Law No. 21,526, in so
far as the sanction is in force, and
9.
Those who, following a decision by a competent authority, have been found guilty of misconduct in the
government and management of financial institutions.
d) Not have any independence incompatibility or issue with respect to the Company, such as:
1.
if he/she is under an employment agreement with the entity whose accounting information is
subject to supervision or with entities economically related to an entity where he/she serves as
statutory auditor, or if he/she has been under such an employment agreement during the fiscal
year for which the information subject to supervision is relevant.
2.
if he/she is spouse or blood relative in direct or collateral line up to and including the fourth
degree, or by way of affinity up to the second degree, of any of the owners, directors, general
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managers or managers of the entity whose accounting information is subject to supervision or of
entities economically related to that where he/she serves as statutory auditor.
3.
if he/she is partner, associate, director or manager of the entity whose accounting information is
subject to supervision, or of entities economically related to that where he/she serves as statutory
auditor, o if he/she has been a such a partner, associate, director or manager during the fiscal
year for which such information subject to supervision is relevant.
4.
if he/she has material interests in the entity whose accounting information is subject to
supervision, or in entities economically related to that where he/she serves as statutory auditor, or
if he/she has had such interests during the fiscal year for which such information subject to
supervision is relevant.
5.
if his/her remuneration is contingent upon or dependent upon the conclusions or results of his/her
supervision task, and
6.
if his/her remuneration is agreed upon on the basis of the results for the period to which the
financial statements subject to supervision refer.
Finally, within the independence criteria of the statutory auditor, the provisions of the rule issued by
CNV “Independence criteria of external auditors” mentioned under title “Requirements for the position”
of External Audit should also be considered.
On the other hand, the statutory auditor’s position is personal and not assignable. The supervision task is
remunerated and fixed by the Ordinary Shareholders’ Meeting within the limits set forth by the law in force. The
statutory auditor’s appointment may only be revoked by the shareholders’ meeting, which shall revoke it without
cause always provided that 5% of the capital stock does not object thereto. In the event of a vacancy, either
temporary or final, or upon the occurrence of a ground for disqualification from the office, the statutory auditor
shall be replaced by the relevant alternate statutory auditor. Should the alternate statutory auditor be unable to
serve, the Board of Directors shall immediately call to a class shareholders’ meeting in order to make the
relevant appointments up to the completion of the term. Upon the occurrence of any impediment during the term
of office, the statutory auditor shall immediately step down from his/her position and shall give notice thereof to
the Board of Directors within 10 days.
Finally, the obligations of the alternate statutory auditor shall be effective as from his/her acceptance, upon the
occurrence of the regular statutory auditor’s temporary or final vacancy, and until the statutory auditor resumes
his/her office or new statutory auditors are appointed by the Shareholders’ Meeting upon the expiration of the
general term of office.
N.2.c. Responsibilities, Powers and Duties.
Statutory auditors are unlimited and joint and severally liable for the non-performance of the obligations imposed
by law, the by-laws and the regulations. Their liability shall become effective by decision of the shareholders’
meeting. The shareholders’ meeting’s decision declaring the statutory auditor’s liability entails his/her removal
as well.
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They shall also be joint and severally liable with directors for their actions and omissions when the damage
would not have occurred if they had acted in accordance with the law, by-laws, regulations and shareholders’
decisions.
The powers and duties of the statutory auditor, notwithstanding others provided by the law in force, are as
follows:
a)
To supervise the company’s management, to which effect he/she shall review such books and
documentation as he/she may deem advisable, and at least, once every 3 months.
b)
To verify in the same manner and at the same intervals cash and cash equivalents and securities, as
well as obligations and their performance, and to request the preparation of trial balances.
c)
To attend with the right to voice his/her opinion, but not to cast any vote, meetings of the Board of
Directors, the Executive Committee and the Shareholders’ Meetings, to which he/she shall be
summoned.
d)
To control the creation and effectiveness of the Board of Directors’ bond and to take such measures
as may be necessary to correct any irregularity.
e)
To file with the Ordinary Shareholders’ Meeting a written and founded report on the company’s
economic and financial condition, giving an opinion on the annual report, inventory, balance sheet and
income statement.
f)
To provide the shareholders representing at least 2% of the capital stock, at any time upon their
request, with any information on matters of its jurisdiction.
g)
To call to an Extraordinary Shareholders’ Meeting, whenever he/she may deem it necessary and to
Ordinary or Special Shareholders’ Meetings, whenever the Board of Directors omits to do so.
h)
To cause that such business as he/she may deem proper be included in the Shareholders’ Meeting’s
agenda.
i)
To oversee that the corporate bodies duly comply with the law, by-laws, regulations and Shareholders’
decisions.
j)
To supervise the Company’s liquidation.
k)
To investigate written complaints made by shareholders representing at least 2% of the capital stock,
to mention them orally to the shareholders’ meeting and to express such considerations and motions
thereon as may be relevant. To immediately call to a shareholders’ meeting in order for it to resolve in
that respect, whenever the investigated matter is not dealt with by the Board of Directors as he/she
may deem it proper and whenever he/she may deems it necessary to act urgently.
l)
he/she may coordinate, without delegating any responsibility to the internal and external audit
divisions, the development of certain tasks subject to their future supervision and control.
m)
To issue a founded report to be filed with the Extraordinary Shareholders’ Meeting when the Company
wishes to voluntarily reduce its capital stock; and
n)
To issue a report on a monthly basis on the business relationships between the Company and related
individuals and legal entities.
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In turn, statutory auditors, either regular or alternate, shall have the following reporting obligations arising as
from the time of their appointment. This information shall be provided in the manner of an affidavit and binds
their signors, namely:
To be filed with the Argentine Central Bank:
a)
Form of “Background Information of Promoters, Founding Members, Directors, Managers, Members of
the Supervisory Committees, Statutory Auditors or Managers” including the personal details, labor
history in financial activities, statement of assets and sworn statement about the disqualifications of
Section 10 of Law No. 21,526. This form must be filed as soon as the person is designated by the
Bank’s shareholders’ meeting or relevant governance body and then once a year, after the due date for
filing the tax returns with the Tax Authorities (AFIP) for the duration of the term of office and/or for as
long as the person remains in office and within 5 days of any change in the personal details provided in
the form. All the statements of assets inserted in the form must coincide with the tax return most
recently filed with the Tax Authorities (AFIP) for income tax and personal property, when applicable.
b) Certificate of absence of criminal records issued by the Registry of Offenders with Prior Convictions
within the purview of the Ministry of Justice, where a certificate is issued to those who have or do not
have a criminal record. The certificate must be filed together with the personal background form.
c)
Sworn statements regarding the existence of related individuals or legal entities: each statutory auditor
must prepare an affidavit disclosing whether he/she does have related Argentine or foreign companies
or not, and if he/she does, he/she must identify them. Besides, each statutory auditor must provide: an
affidavit about the persons related to him/her by kinship. The sworn statement about related individuals
or legal entities must be filed upon taking office and on a half-yearly basis, before January 31 and July
31 each year. The sworn statement about persons related to him by kinship must be filed upon taking
office and on an annual basis, before January 31 of each year. Should there be changes in the
information provided in the affidavits, they must be reported within 5 days of said change in a new
sworn statement, and
d) Information related to transfers of shares of the Bank. Section 15 of Law 21,526 and Title 1 of Chapter
V of Circular CREFI-2 set forth that statutory auditors shall report any transfer of shares capable of
altering the composition of groups of shareholders of the financial institution or of shareholders
controlling the financial institution. Such obligation involves transactions representing 5% or more of the
capital stock and/or votes of the relevant Entity. The information must be filed within 10 days after
becoming aware of the transaction.
To be filed with the CNV:
a)
With the Bank being a company that issues shares and securities admitted to public offering, an
individual file is to be submitted for each one of the regular and alternate statutory auditors. The file
must comprise the statutory auditor’s personal data and it must also detail their independence condition
with respect to the Company. The file must be submitted within 10 days of the appointment as Statutory
Auditor.
b) Initial and annual sworn statement of the statutory auditor’s holdings of securities, with details about the
quantity and class of shares, debt instruments, stock options and debt securities issued by Banco
Hipotecario that are directly or indirectly owned or managed by him/her. The sworn statement must be
filed within the 10 days subsequent to taking office and each year, and it must disclose updated
information.
c)
Monthly sworn statement of changes in securities’ holdings: any changes in the holdings or stock
options and/or debt securities issued by Banco Hipotecario must be disclosed in this sworn statement. It
must be filed within 15 days after the end of the month for which the information is relevant.
To be filed with the BASE:
Page # 61
a) Information on the Bank’s statutory auditors related to their personal data and their independence
condition with respect to the Company. Such information must be filed within 10 days after the
shareholders’ meeting that appointed them.
To be filed with MAE:
Information about the statutory auditors discharging duties as MAE agents, who must provide their
personal details, their real domicile and their domicile of choice, whether they render services for other
companies, related companies and an affidavit of their net worth. This information must be provided
within 10 days following their designation.
a)
b) Information about the statutory auditors, who must provide a detail of the securities held in their
portfolios. This information must be submitted annually, upon filing the financial statements.
The Supervisory Committee shall be called upon by any of the statutory auditors and shall hold meetings with
the attendance of the absolute majority of its members and adopt resolutions by majority vote. The dissident
Statutory Auditor shall have the rights, powers and duties set forth in Law 19,550.
N.3.
External Audit.
N.3.a. Requirements for the position.
Banco Hipotecario’s external audit shall be exercised by public accountants not serving as statutory auditors of
the Bank and enrolled in the registry of auditors and/o associations of university professionals qualified by the
SEFyC.
The financial institution shall report to the Argentine Central Bank and the CNV the name of the public
accountant (regular external auditor) appointed to perform the external audit of its financial statements and other
information requested from time to time by those institutions, as well as his/her term of hiring and the start and
termination dates thereof, expressed in terms of fiscal years to be audited.
The financial institution shall, in the event of temporary absence from the country or long-term disease of the
external auditor appointed, appoint and report to the Argentine Central Bank and the CNV, a second external
auditor to act as alternate, who shall comply with the requirements necessary to exercise such position only
during the absence of the appointed regular external auditor, indicating the date on which the alternate external
auditor shall take office and, when appropriate, the termination date of such appointment due to the return of the
regular external auditor or for other reasons.
Public accountants may render external audit services in their own name or through professional firms or
associations of university professionals and must:
a)
be registered and qualified in the registry of external auditors of the Argentine Central Bank and the
CNV. Furthermore, the registration and continuance in the registry of the Argentine Central Bank shall
be contingent upon the analysis and consideration that the SEFyC makes with respect to the
professional’s personal and professional background and skills.
b)
Not be partners or shareholders, directors or managers of the Company, or of persons or companies
economically related thereto.
c)
Not be under an employment agreement with the Company or with companies economically related
thereto.
d)
Not fall under any of the prohibitions set forth in Section 10 of Law 21,526 for statutory auditors:
Page # 62
1.
Those who may not act in commerce.
2.
Those adjudged bankrupt on grounds of negligence or fraud for up to 10 years after their discharge,
those adjudged unintentionally bankrupt or those against whom reorganization proceedings were
undertaken up to 5 years after their discharge; company directors and/or managers whose behavior had
been considered as negligent or fraudulent for up to 10 years after their discharge.
3.
Convicts who received an ancillary sentence of disqualification from service as public officials; those
convicted of theft, robbery, embezzlement, bribery, issuing checks without sufficient funds and of crimes
against public faith; those convicted of crimes perpetrated in the formation, operation and liquidation of
companies. In all the preceding cases, the inability shall subsist for up to 10 years after the sentence
was served;
4.
Public officials serving in positions related to the Company’s corporate purpose for up to 2 years after
they step down from such positions.
5.
Those disqualified from serving as public officials.
6.
Those who are non-performing debtors at financial institutions.
7.
Those disqualified from holding checking or other types of accounts in a similar nature for up to three
years after the lifting of such disqualification.
8.
Those disqualified pursuant to the application of Sub-section 5 of Section 41 of Law No. 21,526, in so
far as the sanction is in force, and
9.
Those who, following a decision by a competent authority, have been found guilty of misconduct in the
government and management of financial institutions.
e) Not have been expressly disqualified from the profession by any of the Professional Councils in
Economic Sciences of the country.
f) Have a seniority of at least 5 years in the roll.
g) Have at least 3 years of experience in the performance of auditing tasks in financial institutions,
comprising the different matters subject to supervision, and
h) Have the independence required by the auditing standards in force. The independence requirements
are applicable to both the public accountant issuing the report and the members of the work-team
participating in the audit, whether they are professionals in economic sciences, professionals in other
disciplines or non-professionals. As regards professional associations, the incompatibilities described
below shall extend to all the members or associates of the public accountant. Accordingly, the auditor
will not be deemed independent in the following cases:
1.
if the professional or any of its partners, if acting an accounting firm, holds credit facilities of any
nature granted by the entities they audit.
2.
if he/she is under an employment agreement with the entity whose accounting information is
subject to audit or with entities economically related to that where he/she serves as auditor or if
he/she has been under such an employment agreement during the fiscal year for which the
information subject to audit is relevant.
3.
if he/she is spouse or blood relative in direct or collateral line up to and including the fourth
degree, or by way of affinity up to the second degree, of any of the owners, directors, general
managers or managers of the entity whose accounting information is subject to audit or of entities
economically related to that where he/she serves as auditor.
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4.
if he/she is partner, associate, director or manager of the entity whose accounting information is
subject to audit, or of entities economically related to that where he/she serves as auditor, or if
he/she has been such a partner, associate, director or manager during the fiscal year for which
the information subject to audit is relevant.
5.
If he/she has material interests in the entity whose accounting information is subject to audit, or in
entities economically related to that where he/she serves as auditor, or if he/she has had such
interests during the fiscal year for which the information subject to audit is relevant.
6.
if his/her remuneration is contingent upon or dependent upon the conclusions or results of his/her
audit task, and
7.
if his/her remuneration is agreed upon on the basis of the results for the period for which the
financial statements subject to audit is relevant.
In addition, according to the provisions of the CNV’s General Resolution 400 as regards the provision
of professional services other than external auditing services, the external auditor shall not be
regarded as independent if those services include any of the following tasks:
1.
to assume management activities such as, to authorize, carry out or consummate a transaction,
or otherwise exercise any kind of action on behalf of the entity or to have the power to do so.
2.
to take management or direction-related decisions for which he/she must liable vis-à-vis the
entity’s governance body.
3.
to have the custody of the entity’s assets.
4.
to prepare source documents or to originate electronic or other data supporting the performance
of a transaction.
5.
if the support services provided to the governance body, in view of the obligation to keep
accounting records in accordance with the legal provisions in force and to prepare financial
statements in accordance with the accounting standards adopted by the Commission, imply
taking management decisions or playing a role equivalent to that of the management,
6.
if the assessment services consist in allocating value to significant items of the financial
statements and such assessment includes a significant degree of subjectivity by the auditor,
7.
if the tax services imply that the external auditor take decisions on the policies to be implemented
in the entity’s tax area or if the preparation and presentation of returns and the adoption of tax
positions are not provided by the entity but by the external auditor,
8.
if the technology services, which include the design and implementation of technological systems
of accounting information for an entity, are used to generate information that forms part of the
financial statements, unless the following conditions are met: (a) if the Company acknowledges
that it shall establish, maintain and follow up the internal control system, (b) if the Company
appoints a competent employee, preferably member of the senior management, for him/her to
take all the management decisions with respect to the design and implementation of an
equipment and computer program system, (c) if the Company is in charge of taking all the
management decisions with the respect to the design and implementation process, (d) if the
Company assesses the adequacy and results of the system’s design and implementation, (e) if
the Company is responsible for the operation of the system (equipment and programs) and the
data used in or generated thereby, and (f) if the personnel of the external auditor that provides
these services does not perform management functions or play a role equivalent to that of the
senior management.
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9.
if the provision of legal services, pursuant to the existence of a lawyers’ professional association,
implies acting on behalf of the Company in the resolution of any dispute or lawsuit, and
10. if the financial services consist in the promotion, purchase or initial subscription and placement of
an entity’s shares, even if the transaction is performed on account and to the order thereof.
For the purposes of the provisions hereof, the calculation period for the incompatibilities shall be
counted as from the fiscal year in which the tasks are performed until the third year prior to the fiscal
year for which the audited financial statements are relevant.
As regards associations of university professionals enrolled in the registry of associations of university
professionals of the Argentine Central Bank, the name of the responsible member appointed shall be informed
to the SEFyC – whether or not he/she is the external auditor of the financial institution-, considering as such the
member who meets the following conditions: (a) to be enrolled in the registry of auditors; (b) to be in charge of
financial entities’ accounts and to keep in permanent contact with the relevant financial institution; (c) to appear
before the SEFyC for the purposes of filing the paper work supporting the external auditor’s report and to
provide such extensions or clarifications as may be deemed necessary; and (d) to participate in meetings with
the SEFyC’s inspectors in order to provide all such data as may be deemed necessary for the purposes of
determining the rating to be allocated to the financial institution.
The Company shall inform the appointment of the external auditor and the alternate external auditor by means
of a notice to:
a)
the Argentine Central Bank within 15 business day after the appointment, accompanied by the 3830 A,
3831 A forms and the Certificate issued by the Registry of Offenders with Prior Convictions issued
with no observations within the year of such filing. In addition, such documentation shall be filed
annually before the end of the first fiscal quarter and should there be any changes before the
expiration of the hiring term, the entities shall describe the grounds that gave rise thereto, and
b)
the CNV at least 10 business days prior to the Shareholders’ Meeting, enclosing the affidavits of the
external auditor and the alternate external auditor and the Company’s Audit Committee’s opinions,
which shall at least include: (1) names and last names, type and number of identity document; (2)
professional domicile; (3) university that granted the degree and date of graduation; (4) other
university degrees awarded; (5) experience in auditing financial statements of other companies or
entities; (6) detail of the Professional Councils where he/she is enrolled; (7) the company or
professional association of which he/she is a member, as appropriate, indicating the domicile thereof
and details of the respective enrollment or registration with the competent Professional Council; (8)
detail of penalties imposed on the professional individually or on the company or professional
association of which he/she is a member; indicating those that would have been qualified as private by
the acting Professional Council; and (9) detail of his/her professional relationships or those of the
company or association of which he/she is a member with the issuer or shareholders thereof having a
significant interest therein or with companies where the shareholders also have a significant interest
as concerns external audit functions or otherwise.
N.3.b.Rotation and Hiring Regime.
In accordance with currently applicable rules and regulations, external auditors are subject to the following
restrictions: (a) pursuant to a Central Bank provision, they may not personally serve at the same time in more
than one financial institution where they will not hold office for more than 5 consecutive years. Upon the
termination of his/her office due to the expiration of the maximum term or a shorter term, a period at least
equivalent to his/her term of office shall elapse in order for him/her to be appointed again to such position (b)
pursuant to a CNV rule, the maximum period during which an association or firm may conduct audit work for an
Entity authorized to trade its negotiable instruments on the stock exchange may not exceed 3 years. The
professionals who are members of an association or firm may not act as such for a term in excess of 2 years.
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Since the external auditor is another service provider of the Company, he/she is included within the general
regime of purchases and hiring set forth by the Bank. Such hiring regime ensures the transparency requested
by Law No. 26,831 for the appointment of the accountant certifying the financial statements so as to provide
reliability to the financial statements for the users thereof or the relevant third parties of the Company, including
majority shareholders, minority shareholders and depositors.
Finally, as a regulatory condition the Argentine Central Bank requires that the agreement between the financial
institution and the professionals accepting to render external auditing services shall include express clauses
whereby:
a)
the professionals declare to know and accept the obligations set forth in the regulations of the Argentine
Central Bank.
b) the entities authorize the professionals and the latter, in turn, covenant to deal with inquiries, arrange
access to the paper work and/or make available copies thereof to the SEFyC; and
c)
N.4.
associations of university professionals promise to act as joint and severally liable sureties expressly
waiving their division and excussion rights with respect to such obligations as may be imposed as
penalties by the Argentine Central Bank, either to the external auditor and/or the responsible partner.
Internal Auditor.
N.4.a. Independence.
The internal auditor responsible for the group shall functionally report to the Board of Directors and whenever
his/her position is not covered by a Director, for the purposes of contributing to an adequate independence of
judgment, his/her position shall be served by personnel employed by the Company acting with independence
from the remaining areas that make up the organizational structure thereof, and shall perform his/her work in an
objective and unbiased manner when rendering his/her opinions on his/her plans and reports.
The auditor’s objectivity shall consist in a performance founded in the reality of facts and other circumstances
related thereto (acts, situations, evidences, unrestricted access to areas and information) allowing him/her to
keep his/her criteria and opinions on a solid basis, without any distortions caused by particular conditions. It is
essential that auditors keep and evidence an objective and independent attitude with respect to the audited
documents, and that in turn, he/she be regarded as such by third parties. Such independence of judgment is a
mental attitude characterized by the existence of a high level of ethical sense, expressed by means of a
respectful conduct towards the expression of the truth and aware of the responsibility that entails the task of
Corporate control towards the community.
The auditor shall consider if there is any interference or impediment, either internal or external, affecting his/her
attitude and his/her conviction to perform his/her work in an objective and unbiased manner, without giving rise
to any questionings as regards his/her independent criteria in the performance of his/her functions.
The intellectual honesty implied in objectivity may only be strengthened on the basis of conditions that allow to
recognize such mental attitude in the internal auditor. The auditor shall at all times avoid acting in circumstances
where he/she may feel unable to render unbiased professional opinions.
Below are internal or personal impediments that may determine actual or potential prejudices or conflicts of
interests:
a) close relationship, either by consanguinity or affinity, with the persons whose information or business
the internal auditor should review.
b) close friendship or notorious enmity with those whose business he/she examines or reviews.
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c) significant economic-financial interests in the Company where he/she acts.
d) prejudices, favoritisms or hostilities on adopted decisions.
e) intervention in auditing tasks in an area or sector where the auditor would have recently served as
decision-maker or operator.
f) allocation of line, operating, co-management or pre-control tasks, and
g) lack of independence in the preparation of planning and the budget thereof in connection with the
control tasks to be developed.
Any of these situations shall be reported to the Audit Committee whenever they are verified and affect
objectivity.
The following activities do not affect the auditor’s objectivity:
a) to recommend certain methods of control, or to review the design of the procedures to be implemented.
b) to collaborate with the managerial levels in the performance of their duties through independent
assessments and improvement recommendations, and
c) to support the drafting of governance, risk management and internal control policies.
By contrast, his/her participation in the design, implementation and operation thereof does indeed affect his/her
objectivity. Therefore, the top officer responsible for audit activities shall be on the alert and shall also be
informed about his/her personnel whenever its objectivity or impartiality may be affected, and shall act in
advance in order to avoid any possible conflicts of interests or other obstacles.
N.4.b. Requirements and Obligations.
In order to serve as Internal Auditor of the Bank and each of the Subsidiaries companies thereof, candidates
must: (a) be independent according to the terms described under the title “independence” of the chapter
“Internal Auditor”; (b) not fall under any of the prohibitions or incompatibilities set forth in Section 264 of Law
19,550 and Section 10 of Law 21,526; and (c) have previous and demonstrable experience in the subject and
on the other hand, for so long as the National State holds a majority of the capital stock, he/she must comply
with the requirements detailed in Decree 971/1993 and in Resolution 17/2006 issued by the Argentine General
Accounting Office (Sindicatura General de la Nación), which in particular are:
a)
to be holder of a national university degree in economic sciences, law or in accordance with the
incumbencies or principal purpose of the jurisdiction or the audited company, corresponding to a
course of studies with a curriculum of at least 5 years.
b)
to have 5 years of professional experience.
c)
to have 3 years of experience in internal or external audit activities, either in the public or private
sector, and
d)
to have experience in managing work teams.
Besides, the Bank shall send, within 10 business days after the appointment, a notice addressed to the SEFyC
including personal details and labor background of the highest-ranking responsible officer of internal audit. Any
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removal or resignation shall also be informed to the SEFyC within 10 business days thereof indicating the
grounds that gave rise to such measure.
N.4.c. Planning and Reports.
As a result of planning and the work performed in order to assess internal control, the internal audit division
shall prepare reports according to such formalities as may be deemed convenient and that, therefore, may
reflect partial aspects of the controlling task. Those reports shall include a description of the scope of the tasks
performed, deficiencies observed, their effects on the Company’s controlling structure or accounting
information, as appropriate, as well as any recommendations to cure them.
At least once year or more often if the auditor deems it necessary, he/she shall issue a report for each relevant
cycle assessed and on the management of risks thereof.
The Company’s highest-ranking officer in internal audit shall issue a report to the Audit Committee at least
every two months. Such report shall include a summary of the cycles assessed, control and substantive tests
carried out during the period according to the expected work plan, degree of scope and an opinion on the
results thereof, with indication of the branches and/or divisions of the entity where those tasks have been
performed.
At least twice a year, with an interval of at least six months, the internal auditor shall submit to the Audit
Committee a report showing the review of the documentation filed with the Argentine Central Bank as regards
compliance with the following regulations: fixed assets and other items, fractioning of credit risk, loans to
related customers and credit rating. In the event of non-compliance with the referred regulations, the increase
in the minimum capital required due to credit risk shall be taken into account – even when arising in prior
periods – and, if appropriate, such circumstance shall be included in the notes to the financial statements.
Those reports shall mention the partial reports prepared during the period and shall be transcribed into the
Committee’s Minute Book and signed by the Company’s highest-ranking officer in internal audit. Partial reports
shall be kept as an exhibit to the Minute Book, to that effect they shall be bound and numbered according to
such procedure as may be deemed convenient.
The term for filing the reports with the Audit Committee shall be 15 calendar days, counted as from the first day
following the two-month period for which the information is relevant.
N.5.
Compliance with Internal Controls
The Bank has not deemed convenient to establish a specific unit to monitor on a regular basis compliance with
the corporate governance rules and the regulations, codes and policies to which the entity is subject, taking into
account that it has officers responsible for the control functions in its operating and administration areas, all in
accordance with the definition set forth in Communication “A” 5201 where the relevant Corporate Governance
Committee ensures that the entity has available the adequate means to promote decision making and
compliance with the internal and external regulations.
O.
Review and Report on Corporate Governance.
With the purpose of continuing its experience as a financial institution recognized by the community in different
social aspects, Banco Hipotecario shall review and assess from time to time the application of its Corporate
Governance policies and whether they are aimed at complying with the interest of relevant third parties in a
reasonable manner, including, for example, shareholders, depositors, employees, customers, suppliers and
the community.
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In order to evidence the result of the assessment performed, the Company shall issue a report, which
according to the provisions of the CNV, shall accompany the annual report.
This Code shall be updated at least once a year if required and mainly in accordance with the dynamics and
evolution of the legislation on the subject and pursuant to the results obtained during its
development and the recommendations made on the best practices of Corporate Governance
adapted to its social reality.
In addition, this report on the Corporate Governance Code shall be reviewed by the Entity’s Supervisory
Committee, as set forth in the CNV rules.
P.
Relationship of the Company with its Subsidiaries.
P.1.
Supervision and Coordination Structure.
In order for the Board of Directors and the Senior Management of Banco Hipotecario to comply with the
responsibilities assigned to them by the laws in force, the Corporate Supervision and Coordination Structure
which is applicable to the subsidiaries companies as well is defined below.
Level 1: Board of Directors of each Company.
Level 2: Executive Committee of Banco Hipotecario.
Level 3: Senior Management: General Management of each Company or officer with similar powers.
This structure allows the Board of Directors of each Company:
a) To review from time to time the general business strategies and policies in force, including those related
to risks and the determination of its acceptable levels.
b) To control that managers take the necessary steps in order to identify, assess, monitor, control and
mitigate the risks assumed.
In turn, this structure helps the Senior Management of each Company, among other aspects, to implement the
strategies and policies approved by its relevant Board of Directors, develop processes aimed at identifying,
assessing, monitoring, controlling and mitigating the risks incurred by the entity, implement appropriate systems
of internal control and monitor the effectiveness thereof, reporting the achievement of goals to the Board of
Directors on a periodical basis.
P.1.a. Supervision of Subsidiaries.
Once the Purposes, Policies, Strategies, Business Plans and Budget of each subsidiary are defined by its Board
of Directors; and approved by the Board of Directors of Banco Hipotecario, they are sent out from the Boards of
Directors to the different organizational levels of each Company.
The purpose thereof is to ensure that the operation of the business flow within the approved guidelines:
a) respecting the risk levels assumed by the group.
b) respecting the necessary safety levels in order to ensure the achievement of defined goals.
c) protecting the interests of Banco Hipotecario’s depositors, and
d) protecting the interests of shareholders and other relevant third parties.
P.1.b. Internal Supervision and Coordination Mechanisms.
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For the purposes of reviewing on a periodical basis goals, strategies and general business plans, compliance
with the budget and policies of each subsidiary, and in order for managerial positions to take the necessary
steps in order to identify, assess, control and mitigate the risks assumed, the following supervision and/or
coordination mechanism is defined and/or proposed:
P.1.b.1. The functional management divisions of each company of the group shall be responsible for obtaining,
analyzing, consolidating and filing management information corresponding to its scope of application with its
relevant Senior Management on a monthly basis.
This information shall clearly and precisely expose the degree of compliance and/or deviation as regards
compliance with the guidelines defined in due course by the Board of Directors of Banco Hipotecario (Purposes,
Policies, Strategies, Business Plans, Budget). Should there be any deviation or risk, they shall be duly justified
so as to be able to identify causes and propose the relevant mitigating actions.
P.1.b.2. The Senior Management of each company shall prepare an Executive Report with the most relevant
information filed by each functional management division.
Then, it shall file the Executive Report with its respective Board of Directors for its review.
P.1.b.3. The Board of Directors of each company shall evaluate said Executive Report and in view of the results
obtained, it shall take such measures as may be necessary to correct the detected deviations and mitigate the
identified risk.
For such purpose, the Board of Directors shall instruct the Senior Management in order for it to adjust the
strategies and policies in force, modify processes and improve internal control systems.
P.1.c. Supervision and Coordination Mechanisms of Subsidiaries
As regards subsidiaries’ supervision and control, the Board of Directors and the Senior Management of Banco
Hipotecario shall mainly focus on the following axes, even though they may require additional information on
other areas of the business:
•
Business Strategical Plan of each subsidiary.
•
Budget of each subsidiary, and
•
General policies and guidelines applicable to the subsidiaries, including becoming aware of such
companies’ corporate governance policies.
In order to exercise this supervision and coordination task with respect to Subsidiaries, both the Board of
Directors and the Senior Management of Banco Hipotecario shall take into account two sources of information,
one internal and another external.
P.1.c.1. Internal information
As concerns the three axes of Supervision and Control of Subsidiaries mentioned herein, the Senior
Management of each company shall provide the General Management of Banco Hipotecario with Monthly
Executive Management Reports that allow to evaluate degrees of progress, deviations from planning and
identify risks.
Based on these reports, the Senior Management of Banco Hipotecario shall monitor compliance with the
Business Plans, Budget and Policies applicable to subsidiaries, and individual and consolidated compliance with
technical regulations and prudential rules issued by the Argentine Central Bank. Should the Senior Management
detect any deviation, risk or improvement opportunity, it shall propose correcting measures aimed at
overcoming the problems detected and improving the performance of subsidiaries in particular and of the group
in general, reporting to the Board of Directors of Banco Hipotecario in order for it to take the relevant measures.
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P.1.c.2. External information
On the other hand, the Board of Directors of Banco Hipotecario, with the prior opinion of the General
Management, shall evaluate the Executive Report to be filed by the Board of Directors of each subsidiary on a
monthly basis, review the actions taken for the purposes of correcting any detected deviations and mitigating
the risks identified. In addition, it shall cross-check this information with that obtained according to the preceding
paragraph, and if deemed necessary, it shall propose supplementary actions aimed at ensuring the
achievement of the proposed goals for each subsidiary and at group level.
P.1.d. Corporate Audit
The purpose of Corporate Audit is to verify compliance with the Policies, external and internal Rules, other
regulations applicable to all the companies of the group, and to identify any risk in the strategical and/or relevant
businesses and processes.
This function shall cover all the companies of the group and shall functionally depend on the Board of Directors
of Banco Hipotecario.
For the purposes of achieving the intended goal, the Corporate Audit division shall design, validate and perform
an Annual Audit Plan over all the Group’s companies and the result thereof shall be presented to the Board of
Directors of the audited companies, Banco Hipotecario’s Board of Directors as main responsible for the correct
operation of the group and to the Audit Committee.
P.1.e. Annual Approval of the Business Plan and Budget
One of the main axes of subsidiaries’ Supervision and Coordination is composed of the following pillars:
•
Business Plan, and
•
Budget.
Each subsidiary shall prepare on an annual basis the Business Plan to be executed the next year, and the
Budget supporting the development of the planned business.
Both shall be prepared in compliance with the general guidelines set forth by Banco Hipotecario, as the
reference point of the economic group.
Both the Business Plan and the Budget of each Subsidiary shall be approved by:
First: the Board of Directors of the relevant Subsidiary.
Second: the Board of Directors of Banco Hipotecario.
Each company shall establish non-formal interim review stages prior to the approval of each Board of Directors.
In turn, the Business Plans and Budgets may be subject to such reviews during the year as any of the Board of
Directors mentioned above may deem it appropriate.
Once these pillars are approved, both shall operate as the principal measures to determine the adequate
performance of Subsidiaries in particular and the group in general.
P.2.
Responsible of Relationships.
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The General Manager of Banco Hipotecario shall keep in contact with the Senior Management of subsidiaries in
order to coordinate the implementation of the Strategical Business Plan, the Budget, and the General Policies
and Guidelines approved by Banco Hipotecario’s Board of Directors.
In view of the foregoing, they shall meet on a monthly basis and shall summon the general managers of Banco
Hipotecario and its subsidiaries and discuss specific guidelines on the size, complexity and assessment of
financial and economic risks.
Once implemented, they shall continue with the meetings in order to keep adjusting the strategies and policies
in force by developing changes to the processes and implementing improvements to the systems.
The Executive Committee of Banco Hipotecario shall be responsible for supervising the management of
subsidiaries, pursuant to the power set forth in the By-laws, in order for it to become aware of the decisions
adopted thereby with respect to the business plan, the budget and the policies and so as to report its results to
the Board of Directors.
Should it be detected or identified that any of the decisions taken implies a financial/economic risk for the
subsidiary, a report shall be submitted to the Board of Directors for its review and discussion.
Banco Hipotecario’s Board of Directors shall be responsible for implementing an information channel with the
Boards of Directors of subsidiaries through the coordination of monthly or quarterly meetings so as to control
and monitor the management of the economic-financial risk of the group Companies and so as to ensure
compliance with the corporate policies.
P.3.
Corporate Policies
The definition of corporate policies shall be in charge of Banco Hipotecario’s Board of Directors. When
developing those policies, the Board of Directors takes into account the policies defined by the Board of
Directors of each subsidiary and the companies of the group. The purpose thereof is to set guidelines to be
followed in order to avoid taking economic-financial risks that may prejudice the entire group.
Corporate Policies shall be applicable to Banco Hipotecario and its Subsidiaries as well.
In accordance with the provisions of this Code, all the personnel of Banco Hipotecario and its subsidiaries shall
be responsible for complying with the Corporate Policies defined by the Board of Directors of Banco
Hipotecario.
P.4.
Information and Reports.
Additionally to the duties mentioned in “Supervision and Coordination Mechanisms of Subsidiaries – Internal
Information”, subsidiaries shall have available all such information as may be required to be filed with Banco
Hipotecario, with their respective formats and with such frequency as may be agreed upon.
P.5.
Conflict Resolution.
As regards transactions or activities between companies of one same group, if the Senior Management areas
of those companies are unable to reach an agreement in that respect, such conflict shall be escalated to a
higher managerial level.
Notice of the conflict shall be given to the General Managers and the Board of Directors of Banco Hipotecario
and the subsidiary, and a report indicating the managerial levels involved and a description of the issue shall be
attached thereto.
Thereafter, the escalation mechanisms for the resolution of conflicts shall start according to the level of authority
set forth below:
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Level 1 of conflict resolution: Board of Directors of Banco Hipotecario.
Level 2 of conflict resolution: Executive Committee of Banco Hipotecario.
Level 3 of conflict resolution: Board of Directors of each Company.
Level 4 of conflict resolution: Senior Management: General Management of each Company.
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EXHIBIT A
CODE OF ETHICS
INTRODUCTION
Banco Hipotecario S.A. is committed to conducting its business and social responsibility activities abiding by the
highest ethical standards and endeavoring for efficiency, quality, unwavering effort and transparency in all its
affairs.
It is of the utmost importance that each member of Banco Hipotecario understandshis/herresponsibility in
complying with the ethical standards and values upheld by the Bank.
This Code of Ethics summarizes the general guidelines that must govern Banco Hipotecario S.A.’s behaviors as
well as the behaviors of all of its members in the discharge of their functions and in their commercial and
professional relations.
No person, irrespective of the work performed or the office served in at the Bank, is empowered to draw
exceptions to this Code of Ethics.
Any deviation from these standards could leave the Entity outside its legitimate sphere of action thus exposing it
to undesired situations in the ordinary course of business. Therefore, any breaches of this Code precepts could
result in the relevant disciplinary actions, which go as far as dismissal and/or termination of the contractual
relation without prejudice to the civil and/or criminal liability that could ensue.
Should doubts arise concerning the words or the spirit of the Code of Ethics, they should be channeled through
the immediate supervisor, Manager and/or the Manager in charge of the Organizational Development and
Quality area. If necessary, the latter area shall request the involvement of the Legal Affairs department and/or
the Audit department.
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CONTENTS
Statement of Principles.
Ethics Committee.
Treatment afforded BHSA employees and applicants.
Safety in the workplace.
Bank members with different abilities.
Foundational Ethical Standards:
a)
Honesty.
b)
Conflict of interest.
c)
Commercial Relations.
d)
Commercial practices, laws and other commercial rules and
regulations.
e)
International transactions.
f)
Relations with customers, suppliers, sellers, agents, public
officials and government entities.
g)
Entertainment.
h)
Political contributions.
i)
Purchase and sale of securities.
Confidentiality.
Prevention of Money Laundering.
Information Security.
Transparency Line.
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Statement of Principles
Banco Hipotecario S.A. (hereinafter “BHSA” or the Bank), demands from all of its members, irrespective of the
functions discharged, the position occupied and/or the office, strict compliance with the rules detailed in this
Code of Ethics (hereinafter, “the Code”).
In addition, we expect all of the members of the Bank to comply with the laws, rules and regulations applicable
to the businesses that BHSA conducts. As much as it is critical to BHSA success that it should provide high
quality products and services, it is equally critical to conduct businesses taking into account the rules and
regulations that guide us with integrity and mutual respect. By the same token, we must respect those with
whom we do business on behalf of BHSA.
Our customers, investors, suppliers, regulators as well as all of the members of the Bank, without exception,
must place full reliance on our word and on our behavior.
The reputation and integrity of the Bank must have absolute priority.
BHSA’s Board aspires to comply strictly with the rules comprised in this Code and to cause others to comply
with them as well. The Code applies throughout the Argentine territory but does not affect the enforcement of
mandatory provisions in any jurisdiction.
As soon as BHSA sees the need for it, it shall amend any of the precepts that make up this Code as required by
changes in the legislation or in the circumstances.
When faced with questions, feedback or suspicious of a breach of the precepts enshrined in this Code, the
Manager shall submit them to the Manager in charge of the Organizational Development and Quality area who
will immediately summon the Legal Affairs department and/or the Audit department.
Ethics Committee
BHSA shall create and maintain an “Ethics Committee”. For increased effectiveness, the Committee shall
operate in two different instances, as follows:
(1) The first instance shall be made up by no less than 3 and no more than 7 regular Directors elected for a
minimum period of 2 years in so far as their mandate as Directors does not come to an end sooner. The term in
office as member of the Committee must not coincide with the term in office of the other Directors serving on the
Committee in a manner such that the Committee shall always have amongst its members at least one Director
with experience and knowledge of the subject. A majority of the Directors who are members of the Committee
shall qualify as independent.
This instance must assess all the cases involving members of the Board, of the office of the General Manager
and of Department Managers. In addition, apart from its member Directors, the highest-ranking officer in the
Organizational Development and Quality area shall participate in the Ethics Committee, and if deemed
necessary in light of the matters to be dealt with, the highest-ranking officer in the Regulatory Compliance area
may be also summoned. These two officers shall be entitled to voice their opinions but not to cast votes.
(2) The second instance shall comprise the Manager in charge of the Organizational Development and Quality
area, the Manager in charge of the Audit area, the General Manager and the Manager in charge of the Legal
area, with the first acting as secretary to the committee. This second instance shall deal with the cases involving
the members of the Bank that are not included in the preceding paragraph (1).
Moreover, if deemed suitable, the Supervisory Committee may attend all meetings of the Ethics Committee,
being empowered to voice opinions but not to cast votes.
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In both instances, all types of decisions are to be adopted by a majority vote.
The Ethics Committee shall hold meetings only in the event that reports related to the matters within its authority
are filed and shall settle matters concerning the interpretation of this Code. In addition, the Ethics Committee
may recommend improvements and must maintain the Board’s Audit Committee abreast of any observations
arising from the application of this Code.
BHSA’s employees may place their enquiries or reports about suspected deviations from the Code of Ethics
directly with the Transparency Line in place to such end. The Ethics Committee shall treat all cases as
CONFIDENTIAL. Under no circumstances shall the Ethics Committee take measures against the
person placing an enquiry or reporting, in good faith, a potential offence or abnormality which in that
person’s opinion deviates from the precepts of this Code, the laws and regulations or any internal
procedure of the Bank.
Upon receiving a request, the procedures shall start to respond to the enquiries and/or to corroborate the
reports. BHSA’s Board is intent on affording a formal treatment to all the enquiries and reports received and on
settling them all. The final resolution shall be formally communicated through the channel deemed as fittest to
each circumstance.
Treatment afforded BHSA employees and applicants
BHSA aspires to all its members being respectful of each other, observant of all the precepts comprised in this
Code and abiding by all the applicable legislation and regulations. Therefore, any and all injurious expressions
uttered by the Bank’s members, be them verbal or written, shall be regarded with disapproval and deemed as
breaches of our Code of Ethics.
BHSA prohibits child labor in its premises and it is bound by all human and civil rights and by all applicable labor
legislation.
The Bank demands that all of its units provide good conditions of hygiene and safety in the workplace and that
all of its members receive all the benefits conferred under applicable legislation.
BHSA seeks to recruit and hire job applicants and develop and retain employees within a framework of diversity,
irrespective of their age, color, origin, marital status, religion, gender, sexual orientation or any other
characteristic protected by the law. BHSA further aspires to provide equal opportunity when it comes to
promotions and to maintain diversity in a workplace free from discrimination, harassment, bullying, threatening
and retaliation. All recruitment decisions are based on the skills of the applicants and promotion decisions are
based on the skills of an individual employee to the extent that such competencies are related to the position to
be occupied and the tasks to be performed in particular.
It is BHSA policy not to hire new recruits who are relatives of BHSA’s members or suppliers. The Organizational
Development and Quality area shall evaluate, if necessary, exceptional cases of kinship relationships with
BHSA members or suppliers.
It is BHSA policy to admit to family ties with existing personnel or relationships established after joining BHSA.
To prevent conflicts of interest between the functions performed by Bank employees in these situations at any
particular point in time, all of BHSA employees must report to the Organizational Development and Quality area
on any family relationship or cohabitation arrangement with other members of the Bank or with suppliers of the
Bank.
Bank members who have family ties or cohabit with other Bank members may not discharge duties entailing the
supervision of one member by the other or those that may, in any way, adversely affect the Entity’s control
environment.
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There is no area or department at the Bank authorized to hire personnel in its own name, irrespective of
whether the recruitment is for permanent, temporary or contract-based positions or through staffing agencies.
The Organizational Development and Quality area is the only area in the Bank empowered to do that.
The Bank prohibits HIV testing on any of its current or potential employees.
BHSA extends the prohibition against discrimination, harassment, bullying, threats and retaliation to the sales
reps, professionals and other suppliers of goods and services external to the Bank who interact with any of the
Bank’s premises, either at BHSA’s Head Office or at its Contact Points. This policy applies to the workplace as
well as to work-related environments, as would be the case of business trips, social events or meetings held
outside the Bank premises though sponsored or authorized by BHSA or other occasions.
All of BHSA employees must strive for a workplace free from discrimination, harassment, bullying, threatening
and retaliation. BHSA encourages its members to report on these cases to the Ethics Committee. All situations
shall be immediately and confidentially handled and the Bank member reporting on these situations shall be
notified of the final resolution handed down in each case.
Safety in the workplace
BHSA demands in all of its offices compliance with the applicable laws and regulations concerning health,
safety and the well-being of their members and of other persons present in the Bank’s premises.
Should a member of the Bank become aware of any actual or potential safety incident or if he/she harbored
concerns in that respect, he/she must immediately notify such situation to its Supervisor/Leader or Manager, to
the Organizational Development and Quality area or to the Manager in charge of Physical and Logical Safety
and Security.
BHSA does not tolerate threats (direct or indirect) of damages or any other behavior aimed at jeopardizing,
intimidating or damaging persons or property nor any other specific behavior that bullies, interrupts or interferes
with the work or the performance of another Bank member or that creates an intimidating, offensive or hostile
labor environment.
BHSA prohibits its members, contractors, sales reps, customers and visits from carrying weapons and other
hazardous materials at any time whilst in the Bank’s premises or other properties, which include the parking
spaces, and/or whilst conducting BHSA business and/or whilst taking part in social events or other occasions
sponsored or authorized by the Bank. This rule applies to all of the Institution’s members (save for the
authorized security personnel), contractors, sales reps and visits, whether or not they are licensed to carry
firearms. Should any person learn of any incident involving an act of violence perpetrated or threatened, any
threatening statement or behavior or the unauthorized possession of a weapon or another hazardous
instrument, the person must immediately notify this situation to his/her Supervisor/Leader or Manager, to the
Organizational Development and Quality area or to the Manager in charge of Physical and Logical Safety and
Security.
Bank members with different abilities
BHSA complies with all the laws and regulations entitling individuals with different abilities to be provided with
the space and comfort reasonable and necessary to perform their work in the workplace.
If a member of BHSA believes that he/she needs differential spaces or amenities, he/she must inform his/her
Supervisor/Leader or Manager or the Organizational Development and Quality area of this situation.
Foundational Ethical Standards
BHSA demands that all its members adhere to the highest ethical standards in all the businesses and affairs
relating to BHSA, that they avoid conflicts at all times and that they uphold the reputation and integrity of the
Page # 78
Bank. Furthermore, BHSA demands that all its members comply with all applicable laws and regulations in the
performance of their activities.
a) Honesty
BHSA forges business and other relations, and maintains communications, with customers, investors, suppliers,
sales representatives, governmental authorities and other entities and individuals throughout Argentina and
abroad. In all their interaction and communications with these parties or groups, BHSA members must:
I- Always act sincerely. Abstain from tendering dishonest or false statements or misleading statements to
deceive or misinform. If under the impression that what has been said has been misinterpreted, BHSA members
must immediately rectify their statements.
II- Always respond expeditiously and accurately to all requests of information or of documents from any
governmental organization and previously inform the Legal Department of any such request to make sure that
the Bank’s responses are in agreement with legal requirements and that BHSA’s rights and resources are
protected.
III- Previously agree with the Department of Institutional and Community Relations on any public statements
requested by the media. Any statements by the media must be addressed to the Department of Institutional and
Community Relations as well.
IV- BHSA members shall never tender false, misleading or pejorative statements about competitors and their
products or services. Instead, BHSA members must emphasize with accuracy and truthfulness the advantages
of the products and services of BHSA.
V- Uphold the same honesty principle in all of the Bank’s internal communications and record keeping. The
forgery, alteration or unauthorized destruction of documents, or the misstatement of information, provided or
requested by the Bank or on its behalf for any purpose whatsoever (or required by law or by any BHSA policy or
which BHSA’s legal counsel indicates that must be retained) could result in the imposition of relevant
disciplinary actions, including dismissal and/or termination of the contractual relationship.
b) Conflict of interest
BHSA members must stay clear of situations in which their personal interests could conflict with the Bank’s
businesses. Therefore, BHSA members are prohibited from acquiring ownership interests, be them direct or
indirect, in the businesses of customers, advisors, suppliers or competitors of BHSA unless such ownership
interest is disclosed to the Ethics Committee and is approved by this Committee. This restriction does not apply
to the holdings in mutual funds or the possession of nominal quantities of shares in publicly listed companies.
The members of the organization may not conduct in their own names transactions with the Bank’s customers
when these transactions are a part of the Bank’s habitual activities or business (for instance, purchases and
sales of foreign currency). Neither may the organization’s members borrow money from the Bank’s customers
or lend them money in their own names.
The members of the Bank may not perform tasks, work for, or render services to, or for the benefit of,
companies that are now BHSA competitors or that could become BHSA competitors.
The members of BHSA may not perform professional activities, or activities additional to those conducted by the
Bank to the extent that this entails a direct or indirect conflict of interest with BHSA.
The members of BHSA may not undertake labor activities in addition to those performed at the Bank within
working hours or use Bank property or services to this end.
No Bank member is allowed to copy for himself or for BHSA printed material or of software applications that are
protected by copyright or intellectual property rights and/or under license agreements.
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Bank members are prohibited from owning interests as partners or shareholders in companies that provide
services to BHSA and from working as sales representatives for said companies, unless such situation is
reported to the Ethics Committee and it is previously approved by the Ethics Committee.
c) Commercial Relations
BHSA members are prohibited from forging business relations on behalf of BHSA with their immediate family
members (including spouses, life partner, grandparents, parents, siblings, children, grandchildren, uncles and
aunts, nieces and nephews of the Bank member; the grandparents, parents, siblings, children, grandchildren,
uncles and aunts, nieces and nephews of the spouse or life partner of the Bank member) and they are equally
prohibited from doing business with companies in which the Bank member or a close relative of his/her has a
substantial ownership interest or financial ties unless such relationship has been previously reported to the
Ethics Committee and it has been approved by the Ethics Committee.
Employees must inform the Ethics Committee and/or consult with it in the event of a conflict of interest or of
doubt about whether the situation or transaction entails an actual or apparent conflict of interest.
d) Commercial practices, laws and other commercial rules and regulations
BHSA expects the whole organization to be fully compliant with all the applicable laws and regulations, including
antitrust legislation or laws enacted to prevent unethical businesses, unfair competition and/or misleading
advertising.
BHSA members are prohibited from communicating and/or undertaking joint action with its competitors in order
to fix or restrict prices or price competition, divide territories for selling purposes, allocate markets, unduly
manipulate bids, boycott third parties and in any other way unlawfully restrict or eliminate competition. Neither
may BHSA members engage in false or misleading advertising or in any other unlawful or unethical commercial
practices.
In case of doubt about whether a given commercial practice, communication or advertisement is compliant with
this Code, the Bank’s members must consult with the Ethics Committee.
e) International transactions
Many countries apply controls and/or prohibit certain international transactions relating to exports, imports, reexports and disclosure of technical data to foreign persons. BHSA members must observe all the legislation
applicable in the matter. Failure to comply with the legislation and regulations may result in the imposition on
BHSA of severe criminal, civil and/or administrative sanctions and/or result in the attribution of legal liability to
the Bank member, which may in turn lead to the imposition of the relevant disciplinary action, which may go as
far as dismissal and/or termination of the contractual relationship.
Prior to conducting an international transaction, BHSA members must make sure that it is in compliance with all
the applicable laws and regulations.
The Bank members wishing to make an enquiry about the legality of an activity or transaction in particular must
submit the enquiry to the Ethics Committee.
f) Relations with customers, suppliers, sellers, agents, public officials and government entities
Interactions with existing and/or potential suppliers, sales representatives, customers, agents, public officials
and others must be inspired by transparency, honesty and observance of all the laws, applicable regulations
and this Code.
The members of BHSA are prohibited from delivering anything of value (including gifts, loans, entertainment,
promises of future employment or other transfers of goods and/or services) to BHSA’s current or future
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customers, suppliers and/or sellers as an incentive to obtain or keep businesses or obtain preferential
treatment. Particular care is to be exercised when relating to and interacting with government authorities and/or
public officials who interact with BHSA, avoiding all attitudes that could be interpreted as actions or omissions
aimed at wielding influence on any official action or at receiving differential treatment. The only corporate gifts
permitted on behalf of the Bank shall be authorized by the Manager in charge of the relevant area or by the
Manager in charge of the Department of Institutional and Community Relations.
The members of BHSA are prohibited from accepting anything of value (including gifts, loans, entertainment,
promises of future employment or other transfers of goods and/or services) –both directly and indirectly- from
either sellers, suppliers or possible suppliers, customers, any involved entity or individual or anybody looking to
do business with BHSA, or from any entity in which BHSA has an ownership interest as such acceptance could
give the impression that the grantor is receiving or will receive favorable prices, terms, conditions or another
preferential treatment from BHSA. The members of BHSA are only allowed to accept training courses given by
suppliers when they relate to the Bank’s activities, as well as corporate gifts with a small monetary value (for
instance, calendars, diaries, pens, to name but a few) and subject to a maximum monetary value as periodically
established and communicated by the Ethics Committee.
Neither may the members of BHSA take part in contests or incentive programs sponsored by sellers, suppliers
or possible suppliers, customers, any involved entity or individual or anybody looking to do business with BHSA
in exchange for, or based on, preferential treatment. This is inclusive of all payments, gifts or prizes from third
parties granted directly or indirectly even when this were permitted by applicable laws and regulations.
Sales of property to governmental agencies are regulated by the laws. The members of BHSA taking part in
sales to governmental customers must make sure that such transactions comply with all the rules and
regulations applicable in the matter.
g) Entertainment
In the conduct of business, the members of BHSA may take part in entertainment activities with customers,
suppliers and other parties outside the work environment. In all these cases, the entertainment activities are to
be appropriately undertaken and comply with all the applicable laws and regulations and the principles arising
from this Code.
All the expenses must be documented and, following the Representation Expenses Policy, it is only original
receipts that must be submitted.
h) Political Contributions
BHSA abides by all the laws and regulations that limit, or in any other way govern, contributions to political
parties or candidates.
The use of properties, premises or other assets of the Bank in activities that may be directly or indirectly tied to
the objectives pursued by political parties or candidates is strictly prohibited.
It is at the sole criterion of the Bank’s Board that funds may be applied, or contributions made, to causes that
could be either directly or indirectly related to the activities and objectives of political parties or candidates.
i) Purchase and sale of securities
The laws that govern the issuance and trading of securities admitted to Public Offering prohibit the employees of
the issuers whose shares or debt securities are listed on the Stock Exchange –as is the case with BHSA- from
disclosing and/or purchasing and/or selling securities based on Inside Information. BHSA policy also prohibits
such behaviors. Inside Information also refers to non-public material information about BHSA and its businesses
or the acquisitions it plans to conduct. Non-public information acquired in the performance of activities at BHSA
must be always treated as confidential. If a member of the Bank were to acquire non-public information, the
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member must abstain from purchasing or selling securities based on that information (not even in the case of
the employee already owning shares and/or bonds of a particular issuer). Neither may the employee share the
information with anybody else, including his/her co-workers. Any BHSA member who has purchased or sold
securities based on inside information or who has violated other legal provisions, whether or not prosecuted,
could be susceptible to immediate dismissal and an actions for any damages caused by such instances of
insider trading.
Confidentiality
BHSA is fully committed to the principle of full, accurate and correct disclosure of its situation in the local and
international capital markets. The Bank applies this policy for the benefit of its shareholders and also in
compliance with the rules in force in the stock exchanges and the laws governing these markets as well as
those regulating the issuance, offering and trading of securities.
To be continuously compliant with such public disclosure duty, Banco Hipotecario has strived to:
•
•
•
Implement strict procedures and legal reviews geared towards the early identification of occurrences
that must be publicly disclosed to the market and to the relevant control authorities.
Ensure accuracy in the accounting records and the adequate operation of the procedures and controls
in place which, together, constitute the Entity’s control environment, with this being equally reviewed by
the Internal Audit and the Board’s Audit Committee.
Establish procedures to be followed at regular intervals for adequately preparing and distributing to the
public reports and press releases, with these authorized channels being able to convey Banco
Hipotecario’s confidential information.
All of the Bank’s members must treat the information that has not been labeled as confidential. This information
must be carefully safeguarded and disclosed only to the member of the Bank who needs to know it in order to
discharge functions related to the deal. To discharge the mission with which they have been entrusted, it is
highly likely that BHSA members should have or gain access to confidential information or inside information
about the Bank, other members of the Organization, customers or suppliers. The disclosure by a member of the
organization of confidential information that is considered relevant to Banco Hipotecario may have grave legal
consequences and/or inflict severe commercial damage on the Bank, its shareholders or third parties.
In particular, whilst in possession of confidential information that is relevant to securities trading, none of the
following behaviors shall be accepted, either from the members of the organization themselves or from third
parties on their behalf:
•
•
•
•
•
•
•
To prepare, facilitate, take part in or conduct market transactions of any sort involving the securities,
futures or options to which the information refers.
Communicate such information to third parties, except in the ordinary course of their work, exercise of
their professions, service in office or discharge of functions.
Recommend to a third party to acquire or dispose of securities, futures or options or to have others
acquire or dispose of them based on that information.
Purchase or sell Company securities, including options to buy or sell said securities, in their own names
and/or participating through third parties.
Transmit BHSA confidential information to another person, save in the normal conduct of their work,
practice of their professions, service in office or discharge of functions.
Recommend to a third party to acquire or dispose of securities, futures or options or to have others
acquire or dispose of them based on the use of confidential information.
Purchase or sell securities in another company whose value could be affected by measures taken by
Banco Hipotecario that have not yet been publicly disclosed as well as options to buy or sell such
securities.
The personal details obtained by BHSA about the Organization members shall also be confidential and will be
subject to legal safeguards. The members of BHSA must respect the rights to privacy of others and they may
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not disclose any personal information about their co-workers, BHSA’s trade secrets and inside information and
other details acquired in the course of their employment.
Prevention of Money Laundering
BHSA designs the internal actions, measures and procedures required by the rules to combat the laundering of
the proceeds from unlawful activities issued by the Argentine Central Bank, the Financial Information Unit (UIF)
and by federal, provincial and municipal laws aimed at minimizing risks to the Bank (legal breaches, reputation
risks, sanctions, fines, to name but a few).
All of the Bank’s members, irrespective of their hierarchy, must be familiar with, understand, develop, comply
with the Anti-Money Laundering Policy, keep it updated, aspire to the solid application of the “Know Your Client”
standard and see to it that sufficient resources are allocated to the implementation of the relevant prevention
and control actions, receiving training and then training the organization members accordingly.
All of BHSA members are obligated to: (I) Report to the Anti-Money Laundering Department on all the
transactions that they consider to be unusual, accompanying the relevant background information and (ii)
maintain reserve and cooperate with the proceedings undertaken in that respect. These proceedings are to be
governed by professional criteria, staying clear at all times of personal considerations.
Protection of Information Assets
All of the members of BHSA must abide by currently applicable policies, rules and regulations in connection with
the Protection of Information Assets.
The authentication process in BHSA’s different systems is equal to a person’s signature. The identity of those
who operate information systems is preserved in audit records.
The following are the main guidelines to bear in mind when it comes to protecting information security:
•
•
•
•
•
•
•
•
Passwords for accessing systems are private, confidential and non-transferable, with their holders being
responsible for maintaining their confidentiality.
Immediately change the password initially allocated by Information Security entering another known
only to the user.
Avoid the use of simple passwords (stay away from passwords that are associated to personal
characteristics, name, surname, date of birth, etc.)
In the event of doubt or suspicion of the password having been tampered with, users must change the
password.
Sessions must be closed when the PC terminal is no longer in use.
Both e-mail and the Internet are tools that BHSA provides to its workers for work purposes and the email belongs to BHSA.
The transmission of massive, offensive or inappropriately worded e-mails is strictly prohibited.
The undue use of the Internet, as well as browsing sites offensive to BHSA’s norms and decency, is
prohibited.
Transparency Line
BHSA’s employees may channel their enquiries and/or reports of possible breaches of the Code of Ethics
directly through the Transparency Line in place to that end.
Transparency Lines constitute a habitual practice, widespread all over the world as an aid to an organization’s
internal controls and management.
The Transparency Line is a channel for communication so that the Bank’s employees have at their disposal, 24
hours a day, 7 days a week, a confidential and safe means to anonymously report on incidents of corruption or
situations adverse to an adequate ethical environment.
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These reports are directly relayed to the Ethics Committee, which will decide which actions to take.
Workers play an authentically lead role in these reports because of their proximity to the information and it is for
this reason that the Committee maintains such contacts confidential.
The Transparency Line presently relies on two means of communication:
I -Telephone: 0800 222 3368
II- e-mail: [email protected]
In both cases, the Committee vouches for the transparency of the process and the anonymity of the reports for
those who do not wish to identify themselves upon reporting an incident.
Each case shall be confidentially treated by the Ethics Committee. Under no circumstances shall adverse
measures be implemented against the person posing the enquiry or the person who in good faith reports
suspicions of a potential crime or irregular situation in breach of the provisions laid down by this Code, a law,
regulation or internal procedure at the Bank.
After the request is received, the process required to respond to the enquiries and/or to corroborate the reports
shall start. It is a declared objective of BHSA’s Board to afford a formal treatment to all the enquiries and reports
received, adopting, in all cases, a resolution. This resolution shall be communicated through a formal response
via the channel considered relevant in each case.
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EXHIBIT B
CODE OF BANKING PRACTICE
CONTENTS
PREFACE
SECTION ONE: GENERAL PART
CHAPTER I: INTRODUCTION
CHAPTER II: COMMITMENTS TO CUSTOMERS
CHAPTER III: TRANSPARENT INFORMATION
CHAPTER IV: CUSTOMER SERVICE
CHAPTER V: CUSTOMERS’ COMPLAINTS
CHAPTER VI: MONITORING
CHAPTER VII: TREATMENT OF CUSTOMERS’ PERSONAL DATA
CHAPTER VIII: UPDATES OF THE CODE
SECTION TWO: PRODUCTS
CHAPTER I: GENERAL CONSIDERATIONS
1. Products: application and Agreement
1.1. Terms and Conditions of the Agreement
1.2. Amendments to the Agreement
1.3. Commitment to Customer Satisfaction
1.4. Deposit Guarantee
2. Product Operation
2.1. Interest, commissions and charges
2.2. Information to Customers
2.3. Safe Use of Magnetic Cards
2.4. Automatic Debit Service
2.5. Insurance
3. Product Protection
4. Service Cancellation
5. Non-Payment
CHAPTER II: SPECIAL CONSIDERATIONS
1. Checking Account and Check
1.1. Check Service
1.2. Overdraft Service
1.3. Debits
1.4. Absence of Movements in the Checking Account
2. Savings Account
2.1. Cash and Check Deposits
2.2. Closure of the Savings Account
3. Term Deposits
3.1. Term Deposit Set-up
3.2. Automatic Rollover
3.3. Matured Term Deposits
4. Loans in Installments
4.1. Obtaining a loan in installments
4.2. Amortization Systems
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4.3. Loan Repayment
CONTENTS
5. Credit Card
5.1. Activating the Account
5.2. Purchase Financing Service
5.3. Debiting the Credit Card statement balance from the account
6. Electronic Funds Transfers
6.1. General Conditions
SECTION THREE: MANAGEMENT AND MONITORING
CHAPTER I: IMPLEMENTATION AND INTERNAL CONTROL
1. About the Adopting Institution
1.1. Compliance Officer
1.2. Report on Compliance
1.3. Corrective Action Plans
CHAPTER II: MANAGEMENT AND MONITORING
1. Self-Regulation Board
1.1. Composition
1.2. Mission and functions
1.3. Control Mechanisms
1.4. Monitoring Powers
1.5. Non-Compliances
1.6. Sanctions
1.7. Notices
1.8. Section included for formal purposes only.
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PREFACE
With all of the associations of banks and financial institutions of Argentina taking part in its preparation, this
Code embodies a self-regulation initiative aimed at fostering the best banking practices in Argentina.
We, the institutions that have voluntarily adopted this Code of Banking Practice, have done as much in the belief
that by adopting this Code we will be helping to strengthen the rights of the users of financial services and
products and to increase, at the same time, transparency in the information provided by the financial institutions
to their customers and the ties between us, in our roles as providers of financial services and the communities
where we operate.
In this respect, we understand that the incorporation of a Code into financial activities will help consumer rights,
which have only recently being recognized as such in our legislation, to further consolidate until they become a
tradition that goes far beyond the legal framework that regulates them.
This Code results from a meeting of the minds that recognizes that the relationships arising from the formation
of banking contracts and transactions carry an ethical content that goes beyond formal commitments.
We also believe that the conditions offered by a market economy where competition prevails constitute the most
favorable context for the rights of customers to be fully protected.
The adoption of the banking practices that supplement this preface serves as dynamic tool that will undoubtedly
grow richer with the passage of time.
Besides, this Code will be a distinctive mark of quality. The institutions that adopt the Code will be entitled to
advertise this adoption and will be permitted to include the distinction conferred by the adoption of this Code in
all their communications.
Measures have been taken for the observance of this Code to be permanently monitored by both the institution
itself through a Compliance Officer and by an independent body, namely, the Self-Regulation Board, which will
represent the interests of the banking industry vis-á-vis application of the Code. Repeated breaches of Code
provisions will result in the breaching institution losing its capacity as Adopter institution.
SECTION ONE: GENERAL PART
CHAPTER I: INTRODUCTION
1.1. The Code of Banking Practice (hereinafter, “the Code”) shall apply to the financial institutions of the
Argentine Republic that have adhered to the Code (hereinafter, the “Adopters”). The aim pursued by the Code is
to lay down benchmarks for the relationships between Customers and the Adopters in the supply of the banking
services inherent in Individual Banking. For purposes of this Code, the term “Customer” refers to individuals,
irrespective of their activities, who use the services of an Adopter, irrespective of whether the individual acts in
his/her own name or on behalf of another individual.
1.2. The application of this Code shall be oriented by the commitment assumed by Adopters to use the code for
improving transparency in the information provided to customers and the quality of banking services.
1.3. The Code establishes a general standard of good banking practices that the Adopters must observe.
However, this circumstance is no obstacle to permanent improvement in the levels of transparency and quality
of the services that this Code aspires to promote amongst its Adopters and neither does it prevent such
institutions from individually adopting in the future commitments that surpass those established in the Code.
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1.4. The adoption of this Code embodies the Adopter’s commitment to adapt its behaviors to the rules
prescribed by the Code and to comply with faithfulness and loyalty the obligations herein assumed for the
benefit of the Customer. Additionally, the Code aspires to provide guidance to customers by informing them on
how Adopters are expected to act in connection with the products and/or services acquired, both in terms of
supply of services and complaint handling.
1.5. The adoption of this Code seeks to serve as a distinction of quality for the Adopters and Customers must be
encouraged to verify whether their financial institutions have adopted the Code, irrespective of said financial
institution being a commercial bank, an investment bank, a mortgage bank, a financial institution, a savings and
loan association or a credit union.
1.6. Although the spirit of the Code applies to banking operations overall, this Code comprises the following
products and services:
1.6.1. Checking Accounts;
1.6.2. Savings Accounts;
1.6.3. Term Deposits;
1.6.4. Loans in Installments, secured and/or unsecured;
1.6.5. Credit Card; and
1.6.6. Electronic Funds Transfers.
1.7. Adoption of this Code by the financial institutions entails acceptance of and compliance with the Rules for
Adoption and Withdrawal laid down in the Code Administration Rules issued by the Self-Regulation Board as
defined and set forth in numeral 6.2. of this Section of the Code.
1.8. The Adopters shall take all necessary steps for their personnel to abide by this Code.
1.9. Inquiries into the identity of the financial institutions that have adopted this Code may be channeled through
the Self-Regulation Board as defined and set forth in numeral 6.2. of this Code.
1.10. The financial institutions that adopt this Code shall by bound by it as from the date of adhesion.
1.11. The Adopters which, for any reason, revoke their adhesion, shall communicate such change to their
Customers and shall remove any mention to their capacities as Adopters of this Code from any media used to
sell and/or promote their products.
CHAPTER II: COMMITMENTS TO CUSTOMERS
2.1. The commitments that the Adopters of this Code assume to their Customers are:
2.1.1. To act before the Customer with loyalty, diligence, fairness and transparency in connection with the
products and services offered and/or acquired, in full compliance with the applicable statutory and regulatory
provisions as well as with the principles laid down in this Code.
2.1.2. To inform Customers in a truthful, objective, adequate, complete and accurate manner about the
operation of the products and services that the financial institution sells in order to make it easier for the
customer to choose the product or service that will best meet the customer’s needs.
2.1.3.To diligently receive and respond to any complaint and/or claim posed by the Customers to the Adopter by
providing systems to receive complaints and claims and have in place corrective mechanisms for adequate
complaint handling.
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2.1.4. To publish the existence of this Code and to promote its dissemination in the communications with their
Customers, providing copies on request.
2.1.5. To use clearly worded, easy-to-read clauses in the agreements made with Customers so as to facilitate
the performance and interpretation of the agreements and to adequately harmonize the interests of both parties.
2.1.6. To honor the commitments assumed under the agreements with professionalism, good faith, diligence,
loyalty and probity.
CHAPTER III: TRANSPARENT INFORMATION
3.1. In promoting financial products and services through communications or offerings addressed to the general
public, the Adopters must accurately and clearly inform the term of validity of the offering, as well as its
modalities, conditions or limitations and provide any other detail as necessary for those interested to understand
them better.
3.2. Upon contracting for a new product or service, the Adopters shall undertake to:
3.2.1. Transparently provide the Customers with clear and sufficient information about the products or services
being offered.
The information offered must contain the essential characteristics of each product or service and all the charges
(interest, commissions, expenses, etc.) to be applied. In the case of Loans in Installments, the total financial
cost must be informed as well.
3.2.2. Inform on the variations or modalities of the products and/or services being offered to the Customers,
clarifying, as applicable, whether they are or not a suite of products and services and their scope.
3.2.3. Keep Customers informed about the type of information and documentation necessary to verify their
identities, letting them know that such requirement is imposed by the laws and regulations that the Adopters
must comply with and that it seeks to protect both the Customer and the Adopter.
3.2.4. Keep Customers informed about the basic requirements that the Adopter imposes on access to products
or services, including the estimated response time when the approval is subject to the Adopter’s acceptance.
3.2.5. Let Customers know that, when applicable, information will be required from credit bureaus in order to
assess potential customers’ credit history when a product is requested.
3.2.6. Keep Customers informed about the customer service alternatives for the different products and services
(for instance, Internet, telephone, branches, etc.).
3.2.7. Keep Customers informed of the cases in which certain features of the product or service originally
contracted could be reduced, restricted, cancelled or not renewed by the Adopter, in so far as any such change
were due to a legal provision or had been contractually stipulated.
CHAPTER IV: CUSTOMER SERVICE
4.1. The Adopters shall offer Customer Service lines to deal with any inquiries that the customer may wish to
make.
4.2. Access to such help alternatives may be in person, in writing, by telephone or through the Internet when
this latter channel is available.
4.3. The functions of customer service lines include the clarification of any doubts that the customers may have,
including, without limitation, matters concerning the provisions of this Code.
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CHAPTER V: CUSTOMERS’ COMPLAINTS
5.1. The Adopters shall inform about all the channels available for serving customers and for handling
complaints.
5.2. The Adopters shall handle customers’ complaints diligently according to the circumstances in each case.
5.3. Should Customers wish to file a complaint, they could do so personally, by telephone or by mail.
Complaints may also be filed through the Internet site or by e-mail if the Adopter has in place customer service
channels for receiving complaints.
5.4. The Adopters shall record Customers’ complaints in order to facilitate their follow-up and they shall provide
a code for identifying the complaint.
5.5. Unless a legal provision lays down a different term, within thirty (30) running days as from the moment a
complaint is received, the Adopters must (i) have the final response to the complaint filed; or (ii) if unable to
provide a final response at the expiration of said term, they shall communicate, with proper grounds, the
extension of the above-mentioned term, which may not be in excess of twenty (20) running days. When the
response is negative, the Adopter shall notify the Customer through the fittest channel. The above-mentioned
terms shall be no obstacle to the Adopter conveying a final response in the shortest term possible in view of the
possibilities of communicating with the Customer, the location of its domicile and the distance to the location
where the complaint was filed.
5.6. The Adopters undertake to constantly supervise the status of the complaints filed in order to ensure prompt
responses.
CHAPTER VI: MONITORING
6.1. The Adopters shall designate a Compliance Officer for this Code. This officer shall be responsible for
supervising observance of the Code provisions (the “Compliance Officer”).
6.1.1. The Compliance Officer shall be entrusted with the duty to supervise that his/her institution should comply
with the provisions of this Code and he/she must report to the Adopter’s Board.
6.1.2. Through its Compliance Officer, the Adopter will issue an annual statement of compliance with the
banking practices arising from this Code (the “Statement of Compliance”).
6.1.3. The Adopters will communicate to the Self-Regulation Board the name of the Compliance Officer and his/her contact details.
6.2. Compliance with the provisions of this Code shall also be externally overseen by the Self-Regulation Board
(the “Self-Regulation Board”).
6.2.1. The domicile of the Self-Regulation Board shall be, indistinctly, that of any of the four banking
associations (the Association of Banks of the Argentine Republic [ABA – Asociación de Bancos de la
Argentina]; the Association of Private and State-run Banks of the Argentine Republic [ABAPPRA – Asociación
de Bancos Públicos y Privados de la República Argentina]; the Association of Specialized Banks [ABE –
Asociación de la Banca Especializada] and the Association of Private Banks with ADEBA – Asociación de
Bancos Privados de Capital Argentino), where all notices served shall be deemed to be received. These
domiciles shall be published at the Adopters’ premises.
6.2.2. Once designated, the members of the Self-Regulation Board must issue the Code Administration Rules.
6.3. Section Three of the Code deals in detail with all the matters concerning compliance with its provisions.
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CHAPTER VII: TREATMENT OF CUSTOMERS’ PERSONAL DATA
7.1. At all times, even when the relationship with the Customer has ceased, the Adopters shall treat customers’
personal information with the utmost prudence and confidentiality in the terms and with the scope of the banking
secrecy contemplated by the Law of Financial Institutions and in line with the Law for the Protection of Personal
Data.
7.2. Confidential information may only be disclosed to third parties if the Adopter were legally obligated to do so
or if there were an express authorization or request on the part of the Customer. To this end, the suppliers of the
Adopter who may take part in its processes will not be deemed to be third parties and they shall, instead, be
under a duty to maintain the secrecy of the information of which they become aware as if they were the Adopter
itself.
7.3. When contact with Customers takes place via the telephone, the Adopters shall specify if there is the
possibility that the conversation is being recorded.
CHAPTER VIII: UPDATES OF THE CODE
8.1. This Code shall be updated at intervals not in excess of three (3) years, with the first update taking place in
a term not in excess of one (1) year as from the moment the code comes into force. These updates shall be
proposed by the Self-Regulation Board and they shall require the approval from all of the associations of
financial institutions.
8.2. In order to make the relevant updates, the Self-Regulation Board shall take into consideration the
suggestions made by the Customers, the Adopters, the associations of financial institutions and nongovernmental organizationsSECTION TWO: PRODUCTS
CHAPTER I: GENERAL CONSIDERATIONS
1. Products: application and agreement
1.1. Terms and Conditions of the Agreement
1.1.1. In response to applications for products, Adopters shall inform all those interested of the relevant terms
and conditions, including:
1.1.1.1. All of the costs of the product contracted;
1.1.1.2. The guidelines governing interest rate variations in the case of floating interest rates; and
1.1.1.3. The term estimated for acceptance or rejection of the application filed.
1.1.2. When it comes to credit products, the Adopter shall clarify that compliance by the borrower with its duties
to the institution may be informed, as permitted by currently applicable laws and regulations, to any of the credit
bureaus, run by the State or private, rendering services to the Adopters. In addition, the Adopters undertake to
inform Customers at the time of the loan application that they are entitled to access the credit information about
them at the Financial System Debtor Center and they must also explain to customers how to access this center.
In the event of falseness or error, the Customer is entitled to request the entity generating such information to
suppress, amend or update the erroneous information.
1.1.3. All of the terms and conditions of the agreement shall be agreed by any legal means currently in force
and they will stipulate the rights and responsibilities clearly and accurately.
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1.1.4. The Adopter undertakes to make available a copy of the agreement made between the parties to the
Customer at the time of the agreement or as soon as possible.
1.1.5. The institutions that adopt the Code shall make sure that the agreements for the products covered by the
Code, as well as their terms and conditions should abide by all the rules and regulations currently associated to
them. As regards agreements made before the coming into force of this Code, and in the event of any of its
clauses failing to comply with currently applicable laws and regulations, the Adopter undertakes not to abide by
that clause.
1.2. Amendments to the Agreement
1.2.1. In the case of agreements for indefinite periods of time, Adopters agree that in so far as there is prior
consent, any changes to the agreement required during its effective term and performance shall be
communicated at least sixty (60) days in advance.
1.2.2. Those Customers who do not accept the amendment to the contract shall be entitled to terminate the
agreement with no additional cost. Said power may be exercised within the term indicated in the preceding
paragraph.
1.2.3. Also in the hypothesis described in the preceding paragraph, Adopters shall make their best efforts to
offer alternative products to the Customers.
1.3. Commitment to Customer Satisfaction
1.3.1. If the Customer were not satisfied with the choice of his/her Checking Account, Savings Account or Credit
Card, he/she may rescind the agreement within thirty (30) running days as from its opening or grant with no
additional charge by the Adopter.
1.4. Deposit Guarantee
1.4.1. In entering into an agreement for a Checking Account, Savings Account or Term Deposit, the Adopter
agrees to inform the Customer of the scope of the coverage provided by the deposit guarantee system.
2. Product Operation
2.1. Interest, commissions and charges
2.1.1. The Adopter shall not apply interest, commission or charges if they have not been previously agreed with
the Customer and only if they apply to services actually rendered or agreed.
2.1.2. Neither shall Adopters communicate the costs of the products in a manner such that the information
provided could be misleading or incomplete for Customers.
2.1.3. If the interest rate agreed upon is variable, the Adopter agrees to:
•
•
•
Base the variation in the interest rates on objective, public and well-known indices.
Inform changes to its Customers, clearly and in the media habitually used by the Customer; and
Explain during the selling process and in the application, the guidelines concerning interest rate
variations as well as the minimum and maximum variation limits, if any.
2.1.4. All the interest, commissions and/or expenses shall be clearly detailed in the statement of account or in
the settlement practiced.
2.1.5. Adopters who authorize or allow the Customers to exceed the limits or the terms originally established or
agreed must have previously communicated to the Customers the additional costs that such situations may
cause.
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2.1.6. Adopters agree not to institute legal proceedings without previous demands of payment.
2.2. Information to Customers
2.2.1. Adopters agree to inform the rules and regulations governing cash transactions to the holder/s of the
products.
2.2.2. Adopters agree to provide Customers with complete and timely information about the movements and
balances in their products.
2.2.3. Adopters agree to include clear legends in the account statement and in all other written communications
so as to allow the Customers to understand the items making up such statements.
2.2.4. Upon entering an agreement for a product, Customers will be informed of the periodicity with which they
will receive the statements or settlement information concerning such product.
2.2.5. Adopters agree to send account statements or settlement information containing deadlines to the domicile
indicated by the Customers sufficiently in advance for them to be received before the expiration of the deadline.
2.2.6. Adopters agree to offer to their Customers a remote attention service (via telephone and/or Internet, if in
place) where they may enquire into the details, conditions and maturity dates for their products.
2.3. Safe Use of Magnetic Cards
2.3.1. Adopters agree to implement the safety measures necessary to guarantee the secrecy of the PIN
(Personal Identification Number) that permits customers to use their debit and credit cards.
2.3.2. Adopters agree to provide their Customers with the relevant PIN (Personal Identification Number) in order
to safeguard customers’ security.
2.3.3. Adopters agree to inform their Customers of the mechanisms available to allow them to choose or change
their PINs.
2.3.4. To ensure proper use of automatic teller machines, Adopters shall provide their Customers with all the
information they consider necessary about ATM use and they further agree to provide their customers, in
addition to the magnetic card, with a leaflet containing the recommendations for proper ATM use emphasizing
the importance of protecting the plastic card and of not disclosing the PIN.
2.3.5. Adopters agree to thoroughly inform their Customers of all the charges applicable on the use of automatic
teller machines, clarifying the differences existing between the use of the institution’s own ATMs and the use of
other entities’ ATMs.
Besides, Adopters will see to it that the account statements should detail the charges for the use of automatic
teller machines.
2.4. Automatic Debit Service
2.4.1. Adopters shall inform Customers about the operation of the automatic debit service and the steps to be
taken to cancel it when Customers no longer need the service.
2.4.2. If the Customers requested, at their sole responsibility, a suspension in the automatic debit of third-party
services one business day in advance, Adopters shall not debit said amounts from their accounts.
2.4.3. Adopters shall, within the following seventy-two (72) business hours, revert any automatic or direct debit
from Customers’ accounts as collections in favor of third parties if Customers, at their sole responsibility,
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imparted instructions in that respect within thirty (30) days from the date of the debit, except in the cases in
which the debit Originating Merchant were to oppose to that reversal and the amount of the reversal were in
excess of $ 750.
2.5. Insurance
2.5.1. Adopters shall inform Customers of the charges, expenses and other features that Customers must pay
for the insurance purchased. Adopters shall give Customers the option to choose between at least two (2)
insurance companies.
3. Product Protection
3.1. At the time of the agreement, Adopters undertake to inform their Customers of the measures to be taken in
order for the products being acquired to be well protected.
3.2. When the products are held by more than one holder or are to the order of more than one person, Adopters
undertakes to adequately control the use of the signature in conformity with the modality agreed with the
Customers.
3.3. As soon as Customers report the loss, theft or robbery of any instrument to access their products, Adopters
shall immediately take all the relevant measures to prevent harmful consequences. In turn, Adopters shall
inform Customers of the proceedings to be followed and filings to be made by reason of the loss, theft or
robbery.
3.4. When the product incorporates coverage or insurance against loss, theft or robbery, Adopters undertake to
provide Customers with the information relevant to its operation.
4. Service Cancellation
4.1. In those cases in which Adopters decide to cancel the service and terminate the agreement in line with
contractual stipulations or as permitted by the law, they shall first communicate said decision to the Customers
no less than ten (10) days in advance, except if a different term had been agreed upon or if a different term
applied by operation of law.
4.2. When Adopters are prevented from continuing operating a product, they will endeavor to offer substitute
alternatives to their Customers.
5. Non-Payment
5.1. Adopters agree to diligently inform Customers when the amounts they owe under their loans are not repaid
and to be well-predisposed to an analysis of the instances of non-performance searching for alternatives for
solving the situation posited.
CHAPTER II: SPECIAL CONSIDERATIONS
1. Checking Account and Check
1.1. Check Service
1.1.1. Adopters shall render check services assuming responsibility for any undue payment.
1.1.2. Customers shall be informed, on request, about the clearing cycle applicable to the checks they deposit
or present for payment, including the date when the funds shall be available in the account to be withdrawn or to
be applied otherwise.
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1.1.3. Adopters agree to inform the checking account holders of dishonored checks, their causes, the legal
consequences that non-sufficient funds cause, the charges and fees that will be collected, the debits for legal
fines to be imposed as well as their inclusion in the Argentine Central Bank’s List of Dishonored Checks.
1.1.4. When Adopters corroborate, conclusively and undoubtedly, that there has been an erroneous
disqualification and/or an undue inclusion in the Argentine Central Bank’s List of Dishonored Checks caused by
an involuntary error on their part, they agree to remedy the situation as soon as possible.
1.2. Overdraft Service
1.2.1. Adopters agree to inform customers of the changes in the authorized overdraft limit. In the event of
reductions, customers will be informed as soon as possible based on the date of expiration of the overdraft
agreement.
1.3. Debits
1.3.1. Adopters shall abstain from debiting transactions that are not in agreement with the transactions currently
conducted by the Customers, that have not been previously authorized by the Customers and/or contractually
stipulated or imposed by the law, from the bank checking accounts.
1.4. Absence of Movements in the Checking Account
1.4.1. When there have been no movements in checking accounts for more than six (6) months other than
debits for interest and fees, Adopters shall communicate such situation to the Customers.
2. Savings Account
2.1. Cash and Check Deposits
2.1.1. Adopters undertake to keep the holders informed of all the restrictions, be them temporary or permanent,
on deposits of checks in Savings Accounts.
2.2. Closure of the Savings Accounts
2.2.1. When Adopters decide to close Savings Accounts and terminate the agreements, they will first
communicate this decision to the Customers, at least thirty (30) days in advance, except if a longer term had
been contractually stipulated. At the expiration of said period, Adopters may transfer the balances remaining in
the account, if any, to a restricted balances account and inform the customers of the fees payable for that
reason.
2.2.2. When the accounts go idle for more than 6 months, Adopters may proceed to close them following the
procedure stipulated in 2.2.1. above.
2.2.3. When accounts carry a balance of zero (0) for more than 6 months, Adopters may close them, notifying
such situation through a general public media.
3. Term Deposits
3.1. Term Deposit Set-up
3.1.1. Adopters shall very clearly state whether the Term Deposit agreement may be transferred by
endorsement or not. Should early cancellations be allowed, the Customers shall be advised in due time.
3.1.2. Where the Customers and the Adopters agree on the creation of a Term Deposit with checks or other
financial instruments such as certificates of deposit with other institutions, Adopters shall inform customers of
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the date when they are actually credited, and thus, when the Term Deposit is deemed to have been made and
interest accrual starts.
3.2. Automatic Rollover
3.2.1. Adopters shall inform Customers on request on the operation of the Automatic Rollover service and how
to cancel it at the customers’ discretion.
3.3. Matured Term Deposits
3.3.1. Should Customers fail to collect on their term deposits at maturity, within thirty (30) days after the maturity
date, Adopters shall communicate such situation to the customers at the domicile they have indicated and they
shall also refer to the availability of the funds. Should charges be imposed on the restricted balance account,
this circumstance must be notified to the customers in the above-mentioned communication, with the relevant
debit being applied thirty (30) days after the issuance of the communication.
4. Loans in Installments
4.1. Obtaining a loan in installments
4.1.1. Adopters shall accurately inform Customers of the requirements and conditions to be met and the steps to
be taken to be granted a loan.
4.1.2. If Adopters require that an account be opened for debiting the installments, they shall very clearly
describe the costs associated to said procedure, if any, and shall inform customers that the account is
operational for all intents and purposes.
4.1.3. Adopters shall answer all the applications, informing customers of the decision made in that respect within
a reasonable term.
4.1.4. When customers so request, the institutions must return to the customers the documentation filed upon
applying for the loan.
4.2. Amortization Systems
4.2.1. Adopters shall inform customers about the different principal amortization systems available, explaining in
plain language the differences between them to facilitate customers’ elections.
4.3. Loan Repayment
4.3.1. If and when Adopters permit loans to be repaid early, either in whole or in part, they will clearly explain the
minimum costs and requirements that shall apply at the time of such early repayment in the terms and
conditions of the applications.
4.3.2. Adopters will always apply the early repayments to the reduction of the balances outstanding at the time
of receiving payment. Therefore, in the case of partial pre-payments, they will recalculate the loans in
accordance with the contractual stipulations, reducing the amount of the remaining installments or the quantity
of the remaining installments.
4.3.3. Once all the amounts owed by the customers receiving the loans have been paid, Adopters shall issue,
on request, the relevant final settlement certificate and shall follow all the proceedings that are the entity’s
responsibility to release the guarantees tendered. Adopters shall proceed to return the relevant promissory
notes, to cancel the mortgage before a notary public or to return the movable property pledged for management
by the customers, according to whether the loan was a personal loan, a mortgage loan or a pledge loan,
respectively.
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5. Credit Card
5.1. Activating the Account
5.1.1. Adopters undertake to start performing the agreement only after the Customer has signed the instrument
embodying the contract and the cards have been received by the Customer at his/her satisfaction.
5.1.2. Adopters undertake to take the adequate safety measures in sending the plastic cards to the Customers.
5.1.3. If the Credit Card had been sold subject to a reduction in any of its fees, the Customer shall be notified
sixty (60) days in advance of any change in such situation. At the time of entering into the agreement, Adopters
shall inform Customers of any temporary fee reduction schemes and their scope.
5.2. Purchase Financing Service
5.2.1. Any substantial change in the services offered to the Customer, as they know and receive them, must be
communicated by the Adopters in advance and, when applicable and if possible, Customers will be supplied
with alternatives.
5.2.2. At the time of signing the agreements, Adopters shall adequately convey to the Customers the different
limits on purchases in cash, in installments, financing, applicable interest rate in force, etc. and the manner in
which they operate.
5.2.3. Adopters undertake to find a solution to Customers’ objections to the account statements in the shortest
time possible and within the terms prescribed by the law.
5.2.4. Adopters who receive from their Customers “unknown charge or consumption” complaints must, in
general, credit the Customers’ accounts with the amount corresponding to the relevant charge for as long as the
investigation is ongoing and its origin is determined. It is only when the institution verifies that the Customer has
not been a customer for a long time, that it is a Customer with an irregular credit history and/or a Customer who
has filed this type of objections on reiterated occasions that Adopters may delay a credit for said amount until
the investigation has concluded.
5.2.5. Adopters undertake to maintain normal operations with the Customers who have disputed account
statements in so far as the Customer pays the minimum required balance for the undisputed items in the
account statement.
5.3. Debiting the Credit Card statement balance from the account
5.3.1. If Adopters offer their Customers the possibility of automatically debiting the balance payable as per the
credit card statement from their Checking Accounts or their Savings Accounts, this service must:
a.
Allow Customers to choose whether they want the minimum payment or the total payment to be
debited.
b.
Allow Customers to change their election as many times as they desire.
c.
Proceed with the automatic debit only on the due date for payment established in the credit card
statement.
6. Electronic Funds Transfers
6.1. General Conditions
6.1.1. Adopters will provide their Customers with clear and accurate information about the steps to be taken
when transferring funds electronically in any of the modalities available: between accounts held by the same
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person at the same institution, between accounts held by different persons at the same institution and between
accounts at different entities, irrespective of whether they are held by the same or by different holders.
6.1.2. In each case, Adopters shall provide the data required to order an electronic fund transfer, the costs of
each, the places or channels where transfers may be ordered, the maximum amounts that can be transferred in
each transaction, per day or per month, if applicable, and the time frame for the amounts to be credited and
debited.
SECTION THREE: MANAGEMENT AND MONITORING
CHAPTER I: IMPLEMENTATION AND INTERNAL CONTROL
1. By Adopters
1.1. Compliance Officer
1.1.1. Adopters shall implement the practices set forth in this Code. To that end, they shall appoint a
Compliance Officer who will directly report to the Adopters’ Board of Directors and who will perform the following
functions:
•
•
•
•
•
Oversee that the institution complies with the provisions of this Code.
Report to the Adopter’s Board on the outcome of the controls in place to engage in a thorough follow-up
of the level of compliance with the Code.
Require the relevant areas to implement the applicable Corrective Action Plans and/or Adjustment
Plans when weaknesses are identified in the implementation of a practice.
Supervise the implementation of the Corrective Action Plans and of the Adjustment Plans.
Issue the annual Statement of Compliance of his/her institution.
1.1.2. The financial institution shall communicate the name of the designated Compliance Officer to the SelfRegulation Board.
1.2. Report on Compliance
1.2.1. Every year, each financial institution shall issue, through its Compliance Officer, a Statement of
Compliance with the Banking Practices set forth in this Code.
A signed copy of the Statement of Compliance shall be sent to the Self-Regulation Board which shall
acknowledge receipt of the Statement in the Internet site hosting the Code of Banking Practice.
1.3. Corrective Action Plans
1.3.1. The Adopters undertake to implement the Corrective Action Plans (hereinafter “Corrective Action Plans”)
whenever internal weaknesses are identified in the implementation of the Practices.
1.3.2. The Corrective Action Plans must be approved by the Compliance Officer and they must contain a
description of the banking practice/s that are not being implemented as prescribed by this Code as well as the
date estimated for implementation, by which date they undertake to have cured the deficiencies identified.
1.3.3. The Corrective Action Plans shall be communicated to the Adopters’ Boards within thirty (30) days
following the moment when Adopters have concluded with the internal development and approval process
under the charge of the Compliance Officer.
CHAPTER II: MANAGEMENT AND MONITORING
1. Self-Regulation Board
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1.1. Composition
1.1.1. Compliance with the provisions of this Code shall be externally supervised by the Self-Regulation Board,
a body made up by persons sufficiently experienced in these matters.
1.1.2. The members of the Self-Regulation Board shall be designated by the associations of financial institutions
as follows: one by each association and in conformity with the Code Administration Rules. The minimum
number of members of the Self-Regulation Board may not be less than (4) members.
1.1.3. None of the Self-Regulation Board members may be in an employment relationship with any of the
Adopters.
1.2. Mission and functions
1.2.1. The following shall be the primary responsibilities and functions of the Self-Regulation Board:
•
•
•
•
•
Interpret and advocate the Code.
Keep records of the institutions which adopt the Code, those that desist from adopting the Code and
those whose status as Adopter is cancelled.
Enforce disciplinary action in the event of non-compliances and request the implementation of the
respective Plans of Adjustment that they consider appropriate.
Propose amendments to the Code; and
Advise the associations of financial institutions and their members on the banking practices covered by
the Code.
1.3. Control Mechanisms
1.3.1. To gain knowledge about the degree of compliance by the Adopters and to act accordingly, the SelfRegulation Board shall rely on information from:
•
•
•
•
•
The Statements of Compliance issued by the Adopters.
Any ad hoc notice served by the Adopters.
Information provided by the competent regulatory authorities.
Information provided by Non-Governmental Organizations (NGOs), and
Reports of Code breaches filed by the Adopters’ Customers.
1.3.2. The Self-Regulation Board shall develop and run an Internet site for receiving complaints about Code
breaches from the Adopters’ Customers. This communication channel shall not seek to find a solution to the
claim but to allow the Self-Regulation Board to effectively oversee compliance with the Code. For a report about
a Code violation to be effectively considered by the Self-Regulation Board, the affected Customer must have
previously filed a complaint with the Adopter involved and this Adopter must have failed to cure the breach in
the terms stipulated for the resolution of complaints.
1.3.3. It is only within one year following the date of submission of a complaint to the relevant institution that
complaints may be filed with the Self-Regulation Board.
1.4. Monitoring Powers
1.4.1. The Self-Regulation Board may request information and/or apply the controls it considers necessary to
supervise the Adopters, either to verify, in general, the degree of compliance with the Code or for specific cases
originating in a report or complaint concerning some specific banking practice.
1.5. Non-Compliances
1.5.1. Any behavior in breach of an obligation regulated by the Code shall constitute a non-compliance.
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1.5.2. None of the behaviors listed below constitutes a non-compliance and thus, none will be addressed by the
Self-Regulation Board:
1.5.2.1. Matters being heard in court, by arbitrators or by administrative authorities.
1.5.2.2. Complaints that neither belong to, nor arise from banking operations vis-á-vis customers, such as
suppliers, employees, directors and shareholders.
1.5.2.3. The complaints seeking compensation for loss of profit, emotional distress or those involving tortious
liability.
1.5.2.4. The issues associated to the grant of all types of loans and any other transaction that constitutes a
banking contract, subject to banks’ discretionary powers to reach agreements with their customers.
1.6. Sanctions
1.6.1. The Self-Regulation Board shall administer disciplinary action in line with the provisions of the Code
Administration Rules adopted by the institutions simultaneously with the adoption of the Code.
1.6.2. The Self-Regulation Board shall be notified of non-compliances through the media described previously in
this Chapter and it shall provide the Adopter involved with an opportunity to present its defenses. From then on,
if applicable and in accordance with the Code Administration Rules, the Self-Regulation Board shall sanction the
Adopter with powers ranging from the issuance of a recommendation, a request for the adoption of adjustment
plans (hereinafter, the “Adjustment Plans”) for the Adopter to abide by the Code precepts, and in severe,
repeated cases, the cancellation of the status as Adopter.
1.7. Notices
1.7.1. Once the procedure has concluded, the Self-Regulation Board shall notify the complainant, the adopter
and the association(s) of which the adopter is a member of the resolution handed down.
1.7.2. Given the characteristics of the Self-Regulation Board, there is no appellate instance against its
decisions.
1.8. Section included for formal purposes only.
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EXHIBIT C
RULES OF OPERATION OF THE BOARD AND ITS COMMITTEES
CONTENTS
BOARD OF DIRECTORS
EXECUTIVE COMMITTEE
AUDIT COMMITTEE
COMMITTEE FOR CONTROLLING AND
LAUNDERING AND TERRORISM FINANCING
PREVENTING
MONEY
INFORMATION TECHNOLOGY COMMITTEE
CREDIT COMMITTEE
PERSONNEL INCENTIVES COMMITTEE
RISK MANAGEMENT COMMITTEE
CORPORATE GOVERNANCE COMMITTEE
ETHICS COMMITTEE
FINANCE COMMITTEE
COMMITTEE OF HOMES
COMMITTEE OF SOCIAL AND INSTITUTIONAL AFFAIRS
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BANCO HIPOTECARIO S.A.
RULES OF OPERATION OF THE
BOARD OF DIRECTORS
Banco Hipotecario S.A.’s Board of Directors shall discharge its duties in accordance with (i) currently applicable
laws and regulations, (ii) the Company’s By-laws and (iii) the Bank’s Corporate Governance Code.
1.
Composition.
By virtue of Section 21 of Law No. 24,855 and of its by-laws, Banco Hipotecario’s Board of Directors comprises
13 regular members who serve as such for two-fiscal-year terms following their designation by shareholders’
meetings held by classes of shares. Directors can be indefinitely re-elected and on a step-wise basis.
Each class of shares appoints a quantity of regular directors that is equal to or less than the number of regular
directors that the class of shares is entitled to appoint. Alternate directors, in turn, fill in the vacancies taking
place within their respective classes in the order in which they were designated at the time of the vacancy, be it
due to absence, resignation, leave of absence, disability, disqualification or death, subject to the Board of
Directors having previously approved the grounds for substitution when the vacancy is temporary.
Directors are appointed by a majority vote within each one of the classes of ordinary shares as follows:
a)
class A elects 2 Regular Directors and 2 Alternate directors.
b) class B elects 1 Regular Director and 1 Alternate director in so far as class B shares are representative
of more than 2% of the capital stock issued at the time of the call to the respective shareholders’
meeting.
c)
class C elects 1 Regular Director and 1 Alternate director in so far as class C shares are representative
of more than 3% of the capital stock issued at the time of the call to the respective shareholders’
meeting.
d) the election of the rest of the Regular and Alternate Directors (which under no circumstances shall be
less than 9 regular directors and an equal or smaller number of alternate directors) is in the hands of
class D shares. If any of class B or C share were, for any reason, to lack or lose its rights to elect, or
take part in the election of, directors, said class may vote together with the D class shares at the special
class D shareholders’ meeting called for electing directors, and
e)
in so far as classes of shares continue to exist, the system of cumulative voting for the appointment of
directors even within the same class shall not apply to the Company by virtue of the Argentine
Companies Law’s sections 262 and 263.
In the event of absolute absence of shares from a given class at a shareholders’ meeting held on second call for
the purpose of appointing directors, the directors pertaining to such class shall be elected by the shareholders
from the remaining classes voting jointly as if they were an only class, save for the absences of shareholders at
Class A shares shareholders’ meetings: in these cases the Syndic appointed by Class A shares shall appoint
the regular and alternate directors of said Class A shares absent from the shareholders’ meetings.
Pursuant to the provisions of Section 24, Sub-section d) of the Company’s by-laws, in so far as the holder of
Class A shares is the Argentine State, a communication signed by the competent public official to vote for such
shares may substitute for the special class A shareholders’ meeting.
The Director designated by each class of shares is under an obligation to formally accept that he/she accepts
the directorship, stating also whether he/she is an independent director as described under the heading
“Eligibility Requirements for Independent Directors.
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In the opinion of the Board of Directors and in order to fortify decision objectiveness and to prevent conflicts of
interest, it is advisable that some of its members should be independent directors.
2.
Eligibility Requirements for Directors.
In order to be a member of the Company’s Board of Directors, the candidate shall not be subject to the
disqualifications set forth in Section 264 of Law No. 19,550 and Section 10 of Law No. 21,526, shall have
experience in the financial business and shall not take office until he/she is so authorized by the Argentine
Central Bank.
The following persons are not permitted to act as Directors on grounds of disqualification or incompatibility:
a)
Those who may not act in commerce.
b) Those adjudged bankrupt on grounds of negligence or fraud for up to 10 years after their discharge,
those adjudged unintentionally bankrupt or those against whom reorganization proceedings were
undertaken up to 5 years after their discharge; company directors and/or managers whose behavior had
been considered as negligent or fraudulent for up to 10 years after their discharge.
c)
Convicts who received an ancillary sentence of disqualification from service as public officials; those
convicted of theft, robbery, embezzlement, bribery, issuing checks without sufficient funds and of crimes
against public faith; those convicted of crimes perpetrated in the formation, operation and liquidation of
companies. In all the preceding cases, the inability shall subsist for up to 10 years after the sentence
was served.
d) Public officials serving in positions related to the Company’s corporate purpose for up to 2 years after
they step down from such positions.
e)
Those disqualified from serving as public officials.
f)
Those who are non-performing debtors at financial institutions.
g) Those disqualified from holding checking or other types of accounts in a similar nature for up to three
years after the lifting of such disqualification.
h) Those disqualified pursuant to the application of Sub-section 5 of Section 41 of Law No. 21,526, for as
long as the disqualification is in force, and
i)
Those who, following a decision by a competent authority, have been found guilty of misconduct in the
government and management of financial institutions.
The Argentine Central Bank reviews the Directors’ background information and considers their competence and
experience for the office based on: (i) their previous experience in the conduct of financial businesses and/or (ii)
their professional skills and experience in performing public or private services in related areas or fields that are
relevant to the Institution's business profile. In addition, the Argentine Central Bank regulations require that at
least 80% of all Directors show evidence of experience in the financial business when the Board is elected.
3.
Eligibility Requirements for Independent Directors.
To be nominated as Independent Director, the following conditions set out in Law No. 19,550, Law No. 26,831-,
the CNV and the Argentine Central Bank rules and regulations shall be met:
a)
not to be a member of the management body or an employee of holders of significant share interests in
the Company or in other Companies in which such shareholders hold, directly or indirectly, significant
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share interests or on which such shareholders have significant influence in relation to the management of
such companies, pursuant to Section 33 of Law No. 19,550.
b) not to be engaged in professional relationships with the Company or be a member of a Company or
professional association engaged in professional relationships with or receiving compensation or fees
from the Company or shareholders holding, directly or indirectly, significant share interests therein or with
companies in which such shareholders hold significant share interests, either directly or indirectly, or
otherwise having a significant influence on the management thereof.
c)
not to be a seller or supplier of goods and services of the Company, directly or indirectly, or of the
shareholders who directly or indirectly hold significant share interests therein or exercise significant
influence.
d) not to hold, directly or indirectly, any significant interest in the Company or in a Company which holds a
significant interest therein or exercises a significant influence thereon.
e)
not to have been employed by the Company, mainly in executive offices, in the last 3 years prior to
nomination.
f)
if there is no control relationship and he/she is not related to the financial institution in accordance with
the following guidelines:
1. any company or person who, directly or indirectly, exercises control over the financial institution
or any company or person who is, directly or indirectly, controlled by a person(s) controlling the
financial institution.
2. any company or person who is, directly or indirectly, controlled by the financial institution, which
shall take into account the provisions of Section 28(a) of Law No. 21,526 and the regulations
thereunder.
3. any company having directors in common with the company that exercises control over the
financial institution or with the financial institution, provided that such directors comprise a simple
majority in the management bodies of each of such companies or financial institution.
4. exceptionally, pursuant to a resolution of the Board or upon motion made by the Superintendent
of Financial and Exchange Institutions, any company or person who is held to be engaged in a
relationship with the financial institution or the person controlling it, which may give rise to
financial damages to the financial institution.
5. such company or person holding or controlling, directly or indirectly, 25% or a higher
percentage of the aggregate number of votes under any voting instrument in the other company.
6. such company or person has directly or indirectly held 50% or a higher percentage of the
aggregate number of votes under voting instruments in shareholders’ meetings or meetings at
which their directors or other persons performing similar functions have been elected.
7. such company or persons holds, directly or indirectly, an interest in the other company under
any right or title, even if its votes account for less than 25%, so as to have the necessary votes to
adopt resolutions at shareholders’ meetings or at meetings of the Board of Directors or a
comparable body, and/or
8. pursuant to a resolution adopted by the Board of Trustees of the Argentine Central Bank, such
company or person is held to exercise, directly or indirectly, controlling influence on the
management and/or the policies of the other company. The following are examples of
controlling influence: (a) holding a share interest in the capital stock of a related company
conferring the voting power required to exercise influence on the approval of its financial
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statements and in the distribution of profits, for which purpose, the manner in which the
remaining capital is distributed should be taken into account; (b) representation in the Board of
Directors or senior management bodies of the related company, for which purpose the
existence of agreements, circumstances or situations under which the management could
become vested in some minority group should be also taken into account; (c) corporate policymaking powers; (d) the existence of significant transactions with related companies; (e) the
exchange of management personnel; (f) the related company’s technical-administrative
dependence.
g) not to be a spouse, a relative within the fourth degree of kinship or adopted relative or within the second
degree of affinity of individuals who do not meet the conditions set forth in the foregoing subsections.
h) having available time and such dedication required to ensure unrestricted performance of the functions
and responsibilities of his/her office, and
i)
4.
receiving a fair and equitable compensation excluding pension or stock option plans.
Rules governing the Appointment and Reelection of the Board Members.
In order to take office, newly appointed directors and/or directors reelected to serve a new term at the
Shareholders’ Class Meetings shall comply with the requirements set forth in the by-laws and the BCRA Circular
CREFI-2 as follows:
a)
they shall post the performance bond set forth in Section 12 of the by-laws.
b) they shall set up domicile.
c)
the Directors elected for the first time at a Special Class D Shareholders’ Meeting shall not take office
until the Board of Trustees of the Argentine Central Bank issues a favorable opinion as to their
competence and experience in the financial business and failure to be subject to any disqualification.
The directors whose term of office is renewed shall only be subject to such requirement if so resolved
by the Superintendent of Financial and Exchange Institutions, and
d) the Directors elected for the first time at Special Class A Shareholders’ Meetings, and Class B and C
Shareholders’ Meetings (so long as their voting powers are exercised by the Argentine State), whose
appointments depend on an action taken by the Argentine Executive Branch, may take office and serve
in commissions, subject to the relevant resolution of the Argentine Central Bank, notwithstanding the
validity of any actions in which they may participate during such term.
5.
Rules governing Directors’ Removal, Vacancies, Absences, Resignations, Termination of Office.
In the events of: (a) removal pursuant to Section 11(i) of the by-laws; (b) resignation pursuant to Section 259 of
Law No. 19,550 if such resignation does not disrupt normal operations and is neither fraudulent nor untimely; (c)
vacancy; (d) absence, regular Directors shall be replaced by alternate directors of the relevant class and in the
order of their appointments:
Alternate Directors shall take office as regular Directors in the following events:
a)
permanently, due to resignation, removal, termination, incapacity, disqualification or death of the regular
Director. The incoming alternate director shall hold office until the next Special Meeting for the relevant
class is held, and
b) temporarily, due to the regular Director’s absence or leave, in which case the Board shall previously
approve the reason for substitution. The incoming alternate director shall hold office until the regular
Director resumes his/her duties.
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If the Directors' absence affects the minimum quorum required to hold a meeting, after an hour has elapsed
from the time indicated in the notice of the meeting, the Chairman may invite to the meeting the alternate
Director(s) of the relevant class(es) consistent with such of the absent Directors until a quorum is reached.
The alternate Director shall only take office in the event referred to above, upon the Board's prior resolution and
compliance with the requirements set forth in “Rules governing the Appointment and Reelection of the Board
Members”. If the alternate director were working as a manager at the Company and he/she were to take office
as a regular director, he/she must apply for a leave of absence from his/her managerial position for as long as
he/she serves as a Director.
In addition, if the number of vacancies arising in the Board prevents meetings from being validly held despite the
incorporation of the alternate directors, pursuant to Section 13 of the by-laws, the Supervisory Committee shall
appoint the number of Directors required to constitute a quorum. They shall hold office until new Directors are
elected at a Special Meeting of Shareholders representing the respective classes. The statutory auditors
appointed by each class of shares shall appoint the Director(s) of the same class in consultation with the
respective shareholders. For such purpose, the Supervisory Committee shall comply with the rules governing
such appointment and nominees shall only take office if they meet the requirements set forth in “Rules
governing the Appointment and Reelection of the Board Members”.
Besides, if any Director resigns, is removed or ceases to hold office for any reason, notice thereof shall be given
by the Company to the CNV and to the Argentine Central Bank within 2 days of occurrence.
6.
Authority and Powers.
The Board shall have the authority and powers to organize, manage and administrate the Company, including
those actions for which special powers are required under Section 1881 of the Civil Code and Section 9 of
Decree-Law No. 5965/1963 and such powers are listed in Section 17 of the by-laws.
In turn, the Board members appointed by Class D shares shall appoint the Chairman of the Board of Directors,
who has the authority and powers listed in Section 18 of the by-laws.
The Board of Directors vests the regular conduct of business in the Executive Committee consisting of Directors
appointed by Class D shares and entrusted with the authority set forth in Section 19 of the by-laws, including the
appointment of the General Manager and other Senior Management officers.
Notwithstanding the authority to adopt resolutions concerning the matters exclusively entrusted to them, as
defined in the by-laws, the Board approves the purposes and strategies of the Bank and its Subsidiaries, as well
as the most suitable organization and structure to deploy them; and further makes arrangements with the
Executive Committee in supervising and controlling the achievement of purposes and the execution of actions in
the best interest of the company by the General Management and the Senior Management. For such purposes,
the Board of Directors has the authority to issue general policies and strategies in furtherance of the corporate
purposes, ensuring that the institution’s activities meet the necessary safety and solvency standards and are in
compliance with the laws and regulations in force, to determine the risks to be assumed, to protect the interests
of depositors, shareholders and other relevant third parties, for which purpose it shall:
a)
approve and monitor the implementation of the corporate governance code and the corporate principles
and values governing the entity and the economic group it controls, and supervise and evaluate on an
annual basis whether it is suitable to its profile, complexity and importance.
b) approve the strategic plan and management goals.
c)
approve the business plan and the annual budget.
d) approve the investment and financing policies.
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e)
approve the corporate governance, corporate responsibility, risk control and management policies and
dividend policies.
f)
promote and review on a regular basis the business general strategies and the institution’s policies,
including the risk policy and determination of acceptable levels of risk.
g) follow up on internal information and control systems on a regular basis.
h) approve the entity’s level of risk tolerance and monitor its risk profile.
i)
ensure that managerial positions take the necessary steps to identify, assess, monitor, control and
mitigate assumed risks.
j)
determine whether the capital amount is commensurate with the assumed risks.
k) supervise the Company’s Senior Management, exercising its authority to obtain sufficient information as
and when required to evaluate performance.
l)
approve, monitor and review design and operation of the personnel compensation system and the
financial incentive system, in accordance with applicable laws, ensuring that they are implemented in
accordance with provisions and that they are not inconsistent with the entity's credit risk strategy, and
m) become aware of its subsidiaries' corporate governance policy.
Lastly, for the actions required by the exercise of their powers and the discharge of their functions, the Directors
shall be entitled to be reimbursed for the expenses they incur in the performance of their duties based on the
expense reports that they formally submit.
7.
Responsibilities and Functions.
7.1.
Principles.
The Directors are responsible for complying with applicable rules and regulations, particularly Laws No. 24,855,
24,240, 21,526, 19,550 and 26,831, regulatory and supplementary decrees, the rules of the Argentine Central
Bank and the CNV and the by-laws.
The Directors must act with loyalty and with the diligence of a good businessman. Those who breach their
obligations are unlimitedly and jointly and severally liable for the damages resulting from their action or
omission.
The delegation of duties to Directors and exercise of the authority conferred on the Executive Committee under
Section 19 of the by-laws, as well as the actions taken by the various Committees do not release other Directors
from liability for the actions taken by them.
The Directors shall be released from liability for the resolutions adopted by the Board of Directors and/or for the
actions taken by the Executive Committee and/or the other Committees and/or Directors or officers who are
personal delegatees only in the following events:
a)
if the duties have been personally assigned to one or more Director(s) under the by-laws or pursuant to
a resolution adopted at a Shareholders' Meeting duly registered with the Public Registry of Commerce, in which
case liability shall be attributed taking into account individual actions only, and
b)
if the Director who took part in discussions or in the resolution had stated his/her dissenting opinion in
writing and given notice thereof prior to his/her liability being reported to the Board, to the Supervisory
Committee, to the Shareholders' Meeting, to the competent authorities or prior to a legal action being filed.
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In connection with the Bank’s internal controls and risk management, the Board shall provide for and approve
internal control and risk management rules and procedures, vesting the Audit Committee with the authority to
monitor the implementation of and compliance with the procedures across the organization.
7.2.
Risk Management, Definition and Identification.
The Board of Directors shall be responsible for the Company’s having designed an appropriate and duly
documented framework, with the implementation of procedures to monitor the effectiveness and consistency of
internal controls and comprehensive risk management (including credit, liquidity, market, interest rate and
operational risks).
Accordingly, it shall approve risk management strategies; it shall have a process in place to evaluate the capital
suitability to the entity’s risk profile; it shall have suitable information available to measure and evaluate risks
and to report the level, composition and quality of exposure.
In addition, it shall establish policies and procedures to approve new products and initiatives related to risk
management; it shall have one or more unit(s) responsible for identifying, assessing, following up on, controlling
and mitigating risks, which shall be separate from risk-originating divisions; it shall approve stress-testing
programs to identify any potential events or changes in the market conditions that may have a significant
negative impact on the entity, and a contingency plan that establishes the strategies to be implemented to tackle
emergency situations and policies to manage ranges of potential stress situations as well as lines of
responsibility for each level of stress.
The main responsibilities inherent to management of each risk are described below.
1.
Credit Risk:
The credit risk is defined as the possibility of suffering losses due to a debtor or counterparty's failure to comply
with its contract obligations; while in most financial institutions the loan portfolio is the main source of credit risk,
there are other activities that also entail this risk, for example: sureties, guarantees, investments, government
securities and other credits involving financial intermediation.
In managing the credit risk, its responsibilities shall include:
a)
to approve significant credit strategies, policies and practices and to review them at regular intervals
every time that in its opinion any relevant events or situations occur in relation to this risk.
b) to approve the Company’s level of risk tolerance.
c)
to approve the organizational structure for credit risk management avoiding conflicts of interest.
d) to ensure that Senior Management is qualified to manage the Company's credit transactions and that
they are consummated in line with the strategy, policies and the level of risk tolerance as approved.
e)
to ensure that the personnel financial incentive policy is not inconsistent with the Company’s credit risk
strategy.
f)
to determine whether the Company’s capital level is adequate in the face of the risks assumed.
g) to approve the launching of new products and Company's businesses.
h) to follow up on exposures with related persons or companies.
i)
to approve exemptions from policies and limits implying a significant departure therefrom.
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j)
to receive on a regular basis reports to become aware of the credit risk related to financing and
compliance with established limits, and
k) to receive timely information and, in the event that any issue arises in relation to credit risk
management, ensure that the Senior Management takes any appropriate corrective actions to deal with
such issues.
2.
Liquidity Risk:
Liquidity means the financial institutions’ capacity to fund asset increases and meet their liabilities as they
become due, without incurring significant losses. And liquidity risk is mainly defined as the funding liquidity risk
defined as such risk where an entity is unable to effectively meet expected and unexpected, current and future
cash flows and the guarantees without affecting for such purpose its daily operations or financial position.
In managing the liquidity risk, its responsibilities shall include:
a)
to approve the significant liquidity strategy, policies and practices, and to review them at regular
intervals every time that in its opinion any relevant events or situations occur in relation to this risk.
b) to approve the Company’s level of risk tolerance defined as the highest risk level that the Company is
willing to assume, which level shall be in line with its business strategy and importance in the financial
system and reflect its financial position and funding capacity.
c)
to ensure that Senior Management reports the liquidity strategy through clear and operative guidelines
and that it manages the risk effectively.
d) to approve the organizational structure for an adequate management of the liquidity risk.
e)
to ensure that the Company is staffed with qualified personnel and that it has the resources required to
manage the liquidity risk.
f)
to ensure that the Company has processes and systems in place to identify, assess, follow up on,
control and mitigate liquidity risk sources.
g) to assess the incidence of existing interactions between funding liquidity risk and market liquidity risk
and analyze the incidence on the Company’s global liquidity strategy.
h) to receive reports on a regular basis to become aware of the Company’s liquidity position.
i)
to receive immediate information in the event that any issues arise in connection with liquidity, including
matters such as an increase in costs of funding, concentrations, increases in cash flows gaps, shortage
of alternative liquidity sources, significant and repeated failures to comply with the limits, significant
reductions in the support for liquid assets or changes in external market conditions which may be
indicative of future difficulties.
j)
to ensure that Senior Management takes the appropriate corrective actions to handle any issues arising
in relation to liquidity matters, and
k) to approve exemptions from policies and limits implying a significant departure therefrom.
In addition, the Board is required to take actions to ensure that sufficient liquidity exists –including high
quality liquid asset support not encumbered as security of any transaction-, so that the Company may face
a range of stress events including those events involving the loss of traditional funding sources. For these
purposes, the Senior Management shall make available the outcomes of the stress tests and the applicable
contingency plan.
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3.
Market Risk:
The market risk is defined as the possibility of incurring position-related in- and off-balance sheet losses
resulting from adverse fluctuations in market prices of various assets; it includes the exchange rate risk defined
as the possibility of incurring position-related in- and off-balance sheet losses resulting from adverse fluctuations
in exchange rates for foreign currency.
In managing the market risk, its responsibilities shall include:
a)
to approve the strategy for market risk management, which shall clearly determine the administrative
structure related to risk management and be duly documented.
b) to approve the significant policies and practices, and to review them at regular intervals every time that
in its opinion any relevant events or situations occur in relation to this risk.
c)
to approve exemptions from policies and limits implying a significant departure therefrom.
d) to ensure that Senior Management reports the market risk management strategy through clear and
operative guidelines and that it manages the risk effectively.
e)
receive information on a regular basis to become aware of the Company’s trading portfolio, and
promptly receive information in the event that adverse situations arise, in which case it shall ensure that
the Senior Management takes any appropriate corrective actions to deal with such issues.
f)
to ensure that the Senior Management and the personnel from the concerned areas have the necessary
experience to manage the market risk and that the institution has processes and systems in place to
identify, assess, follow up on, control and mitigate market risk sources.
g) to understand existing interactions between the market risk and the other risks of the Company; and
h) to ensure that the personnel financial incentive policy is not inconsistent with the institution’s market risk
strategy.
4.
Interest Rate Risk:
The interest rate risk is defined as the possibility of occurrence of changes in the financial position of an entity
as a result of fluctuations in the interest rates, which may have adverse effects on net financial income and/or
the institution’s economic value –i.e., the current value of its assets and liabilities.
In managing the interest rate risk, its responsibilities shall include:
a)
to approve the strategy for interest rate risk management, which shall be duly documented.
b) to approve and review, at least on an annual basis, the interest rate risk policies and practices and the
business strategies affecting the Company’s exposure to this risk.
c)
to establish the Company's level of risk tolerance defined as the highest risk level that it is willing to
assume, which should be adequate to its business strategy and significance in the financial system and
reflect its financial position. For such purposes, it shall approve aggregate limits related to the risk
amount acceptable to the institution.
d) to define the authority lines and levels of responsibility in managing interest rate risks, and to clearly
establish the persons and/or committees responsible for managing the key components of the risk
management system.
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e)
to ensure that the Company has personnel trained and skilled in identifying, assessing, following up on,
controlling and mitigating the interest rate risk.
f)
to promote among its members and management members fluid communication in connection with
exposures and the interest rate risk management scenario.
g) to ensure that Senior Management reports the interest rate risk management strategy through clear and
operative guidelines and that it manages the risk effectively.
h) to receive reports on a regular basis to become aware of the exposure to the interest rate risk, which
reports shall be promptly reviewed if any issues arise in connection with interest rate risks.
i)
to understand how the other risks affect the Company’s global interest rate risk strategy.
j)
to receive reports on a regular basis on the outcome of stress tests.
k) to ensure that the Senior Management takes the appropriate corrective actions to deal with stress
situations and that related contingency plans are effective.
l)
to assess whether the risk assumed is in line with the allocated capital, and
m) to ensure that the personnel financial incentive policy is not inconsistent with the Company’s interest
rate risk strategy.
5.
Operational Risk:
Operational risk is the risk of losses resulting from non-adequacy or failure of internal processes, the
personnel's actions or systems, or those resulting from external events. Pursuant to internationally accepted
standards, there are 7 kinds of operational risk incidents as follows: (i) internal fraud, (ii) external fraud, (iii)
employment and workplace safety, (iv) client, product and business practices, (v) business alterations and
technological failures, (vi) execution, management and compliance with process deadlines.
In managing the operational risk, its responsibilities shall include:
a)
to approve the framework that will govern operational risk management subject to annual revisions
or every time any relevant events or situations occur in relation to this risk.
b) to become aware of any procedures developed to manage the operational risk and the level of
compliance.
c)
to ensure that the framework governing operational risk management is subject to an internal audit
process contemplating an adequate coverage and in-depth revisions, as well as timely adoption of
corrective measures by audited divisions.
d) to approve policies providing for dissemination of the framework governing operational risk
management and training policies, addressed to all divisions and officers of the financial institution;
e)
to establish policies for management of operational risks resulting from subcontracted activities and
services provided by suppliers.
f)
to approve a policy for dissemination to third parties of the relevant information on the operational
risk management framework.
g) to ensure that the Company has qualified personnel and any resources required to manage the
operational risk, and
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h) to check that any person in charge of such management does not perform other tasks in other
areas that may result in conflicts of interest with his/her task.
8.
Right to be Informed.
For Directors to be able to fulfill the duties described under “Duties of the Members of the Organization” and the
conducts mentioned under “Responsibilities” they have a right to be informed of any matters related to the
corporate operations and risk management by requesting it in writing to the Chairman or Vice Chairman, as the
case may be.
Any gathered information may be related, among other matters, to:
a)
the meetings held by the Committees other than those of which they are members.
b) the corporate books and other additional documents related to issues discussed or to be discussed by
the Board.
c)
the items included on the agenda of the meetings.
d) information on the discharge of duties by the Senior Management and other officers of the Company,
and
e)
the Company’s facilities, including both the Headquarters and its branches.
In this case, the President or Vice President, as the case may be, will evaluate the appropriateness of the
request for information and cause the General Manager or relevant officers to provide such requested
information within the applicable period.
In exercising this right, the Directors will refrain from taking any action that may in any way disrupt the
Company’s course of business, in view of the fact that their modus operandi is jointly and not individual, except
for the discharge of duties expressly delegated by the Board.
9.
Board of Directors’ Meetings: rules governing sessions.
9.1.
Places and Dates of Board Meetings. Quorum.
The Board shall meet at least once a month at the Bank’s registered office and/or anywhere else in the
Argentine Republic and an absolute majority of its members shall constitute a quorum. For such purposes the
directors who are present in person or capable of communicating with each other by any simultaneous means of
transmission of sound, images or voice shall be counted, provided that the members who attend on a remote
basis and the means used for that purpose are put on record in the meeting’s minutes. In the case of meetings
regularly convened, those directors who expect to be absent from the registered office on the date scheduled for
the meeting shall give written notice in advance of their remote attendance and their means of communication,
in order to ensure their effective connection.
The Board of Directors may, with a simple majority of the Directors in attendance, adjourn the meeting subject
to a decision on the date and time when such meeting shall be resumed.
9.2.
Calling a meeting of the Board of Directors.
The Chairman shall summon the Regular directors and members listed under the heading “Members in
attendance at a Board Meeting” for them to attend a Board meeting on the dates and at the times fixed. The
Chairman must send to each regular Director and member of the Supervisory Committee an Agenda with the
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Order of Business as well as background information concerning the matters to be submitted to the meeting for
consideration desirably 5 days in advance.
The call will be sent by regular mail or by e-mail. To that end, the regular and alternate directors and the
members of the Supervisory Committee must keep the Chairman informed of their address for regular mail and
for e-mails as well as any changes thereto.
A regular director who, for any reason, is prevented from attending a meeting in person or on a remote basis
shall give written notice thereof (by mail or e-mail) to the Chairman or Secretary of the Board within 2 business
days following the date on which notice of the meeting is received. If so decided, he/she shall further state in
such notice the name of the Director authorized to vote on his/her behalf.
9.3.
Members in attendance at a Board Meeting.
The following persons shall attend Board Meetings:
a)
Regular Directors.
b) regular members of the Supervisory Committee.
c)
the General Manager.
d) the Secretary of the Board, and
e)
9.4.
the Company’s officers and advisors, if so recommended by the Chairman or any Director for the sole
purpose of submitting any requested reports.
The Order of Business at Board Meetings.
Board meetings’ orders of business shall be prepared by the Chairman. The directors and the members of the
Supervisory Committee may propose to the Chairman that he includes matters for discussion in the order of
business at least 7 days in advance of the date fixed for the meeting.
The Board of Directors may consider matters not included in the order of business that arise after its preparation
when the Chairman considers that, in view of their urgency, such matters warrant discussion.
9.5.
Voice, Vote and Resolutions at Board Meetings.
Each Director shall have a right to discuss and vote the items on the Agenda of the order of business, except:
a)
if such matters may give rise to a conflict of interest between the Director and the Company.
b) if the item discussed concerns the compensation payable to executive Directors and to those
performing technical and administrative duties and the Director in question performs such duties,
pursuant to Section 14(b) of the by-laws.
c)
if the resignation, reason for permanent removal or request for leave of the Director in question is being
discussed, in which case he/she shall be entitled to voice his/her opinion but not to cast votes, and
d) if so provided for by the applicable laws and by-laws.
Resolutions shall be adopted by a majority of Directors present in person or communicated on a remote basis
and they will be reflected in the meeting’s minutes together with the identity of the member casting the vote
except when a different majority is required by Law or the by-laws. The Chairman’s vote will be considered as
double in the event of a hung vote. A specific reason is to be provided for each abstention.
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Any director who does not attend a meeting in person or on a remote basis may authorize another Director to
vote on his/her behalf. Such authorization shall be given in writing, refer to a specific meeting and be signed by
the authorizing director. He/she shall be liable in the same manner as any present Directors.
9.6.
Board Meeting Minutes
The Secretary of the Board shall be in charge of preparing the minutes of Board's meetings and shall record
discussions and resolutions by manual or electromagnetic means.
Within 2 business days following a relevant meeting, draft minutes thereof shall be prepared and sent by e-mail
to the Directors and members of the Supervisory Committee who have attended the meeting, for further revision
and correction. Attendants shall reply to the Secretary of the Board by the same means of communication within
2 business days following receipt of the draft minutes.
The following day, the proposed final version shall be transcribed by the Secretary of the Board onto the Book of
Board of Directors’ Meetings Minutes as officially signed and sealed, and the Secretary shall cause it to be
signed by those who attended the relevant meeting.
The minutes shall be drafted in Spanish language and shall be brief and clear. Reference shall be made to each
item discussed, the discussions, the opinions of officers and advisors invited to the meeting, the motions made
by the Directors and members of the Supervisory Committee and the resolutions adopted by the Board.
The Secretary of the Board shall be in charge of filing any supplementary and additional documents used at the
Board’s meetings.
10.
Functions of the Chairman of the Board of Directors.
The functions to be discharged by the Chairman are:
a)
to put together the Agenda with the Order of Business for ordinary Board meetings when it is the
Board that proposes such Agenda; once the Agenda with the Order of Business has been closed,
the Chairman may request that matters not included therein be debated anyway in so far as he
deems them to be urgent.
b)
to call meetings and if there were reasons to so warrant and sufficiently in advance, the Chairman
may change the date and time of the meetings.
c)
to Call extraordinary Board meetings as set forth in the by-laws and when the Chairman considers
that it is necessary or when there is a request from any of the regular directors and the
extraordinary urgency of the matter means that treatment thereof on the date set forth for the next
ordinary meeting will constitute an inadmissible delay given the nature of the matter up for
discussion. When this is the case, there will be no need for abiding by the formalities of the call and
the agenda.
d)
to preside over, bring debate to a conclusion and decide to vote on the matters discussed at the
meetings.
In addition, according to Section 16 of the by-laws, the Chairman of the Board shall be responsible for taking the
exceptional steps described in “Rules governing Directors’ Removal, Vacancies, Absences, Resignations,
Termination of Office” to constitute quorum.
The Chairman may ask the Secretary of the Board of Directors for assistance with his various duties.
11. Directors’ Duties.
11.1.
Duty of Diligence.
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Directors must, in the discharge of their duties, abide by the Duty of Diligence expected from a good
businessman and they must, at least, devote the time and effort necessary to keep abreast of the matters posed
by the Entity’s management, compiling sufficient information to do so and lending the cooperation or assistance
considered necessary and diligently perform any specific task that the Entity entrusts them with in so far as it is
reasonably within the dedication commitment assumed to the organization.
Therefore, they must:
a.
Participate actively in the Board meetings and, when applicable, in the meetings of the
committees in which they serve, familiarizing themselves with the issues discussed, expressing
an opinion and encouraging the remaining members of such governance bodies to agree with
the decision understood as most favorable to defend the interests of the Entity. When there are
justified causes that prevent them from personally attending the meetings to which they have
been summoned, they will seek to be represented by another member of the governance body
and impart instructions about the matters covered by the agenda or they shall seek to take part
in the meeting through the remote attendance modality.
b.
Oppose any resolution contrary to the law, the by-laws and the internal rules and regulations
and request that the minutes of the meeting acknowledge the position adopted, when this
attitude is the most favorable to the Entity’s interests.
c.
See to it that it should be, without exception, the corporate interest of the issuer in which they
serve and the common interest of all shareholders that prevail over any other interest, including
the interests of the controlling shareholder(s).
d.
Abstain from seeking any personal benefit from the issuer other than the remuneration for the
duties discharged.
e.
Organize and implement preventative systems and mechanisms for safeguarding the corporate
interests in a manner such as to reduce the risk of permanent or occasional conflicts of interest
in his/her personal relationship to the issuer or vis-à-vis other persons related to the issuer in
connection with the issuer. This duty is particularly associated to: activities in competition with
those of the issuer, the use or allocation of corporate assets, the establishment of
remunerations or proposed remunerations, the use of inside information, the utilization of
business opportunities for his/her own benefit or for the benefit of third parties, and, in general,
any other situation that causes or may cause a conflict of interest affecting the issuer.
f.
Seek the means adequate to the conduct of the issuer’s activities and have the necessary
internal controls in place to guarantee prudent management and prevent the breaches of the
duties imposed by the rules and regulations of the CNV and the self-regulated entities, and
g.
Act with the diligence of a good businessman in the preparation and dissemination of the
information supplied to the market and safeguard external auditors’ independence.
Besides, in order to abide by the diligence principle, the Board may delegate to the Executive Committee, the
other Committees, the Directors or other officers one or more of the powers conferred on the Board by Section
17 of the by-laws.
As regards such delegated powers, the Board may at any time request all the information that it may consider
necessary in connection with the discharge of functions and demand accountability.
For the Board to comply with its duty of diligence, the Executive Committee and the different committees to the
extent of their duties, must hold sessions periodically and report to the Board, within a term of 5 days, what has
been discussed at the meetings and the matters as resolved, accompanying a copy of the relevant minutes,
and, when so requested, the documentation concerning the matters discussed.
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The Directors who do not serve in the Executive Committee and the various committees may, after requesting
as much in writing to the Chairman, attend the meetings held by any of the committees, with permission to
express their opinions though not to cast votes, whenever the agenda calls for discussing matters that they
have proposed or that they have an interest in debating.
11.2.
Duty of Secrecy and Confidentiality.
The Directors shall keep in secret the debates maintained at the Board meetings and at the meetings of the
committees in which they serve and they shall abstain from disclosing the information to which they may have
access by reason of the performance of their functions, irrespective of the relationship that they have with the
shareholder who nominated them.
In particular, they must safeguard the secrecy of any information about events that have not been publicly
disclosed and which, given their importance, are apt to affect the placement of securities authorized for public
offering and/or forward contracts of futures and options or the course of their trading.
Besides, the members of the Board and of Senior Management shall, after stepping down from their offices,
keep in secrecy the information, data, documents or unpublished details that they may have learned in the
performance of their functions and they shall not disclose them to third parties or disseminate them when doing
so could have consequences prejudicial to the Company’s interests.
There are exceptions to the Duty of Secrecy and Confidentiality for the cases in which the laws permit
communication or dissemination to third parties or when the laws mandate that the information is to be
disclosed by virtue of orders issued by the courts or by the oversight agencies. In these cases, the manner of
disclosing the information shall abide by the provisions under such laws.
Additionally, in compliance with the provisions under Section 39 of Law No. 21,526, the personnel at Banco
Hipotecario must keep in absolute reserve the information that they may learn and the members of the Board
and of Senior Management shall be the officers responsible for ensuring that Banco Hipotecario shall, in its
capacity as a financial institution within the scope of Law No. 21,526 comply with its duty not to disclose the
borrowing transactions conducted by the Entity.
Only except from such duty are the reports that are required by:
a)
the judges in court cases, subject to the provisions laid down by the respective laws.
b) the Argentine Central Bank in the exercise of its functions.
c)
the agencies responsible for tax collections at the national, provincial or municipal levels subject to the
following conditions: (1) the request for information must refer to one given taxpayer; (2) there must be
a tax audit under way concerning such specific taxpayer, and (3) there must have been a previous
formal request. As regards the requests for information posed by the Tax Authorities [AFIP], none of the
first two conditions discussed in this paragraph shall apply, and
d) the financial institutions themselves, in special cases, in so far as there is a previous express
authorization of the Central Bank.
11.3.
Duty of Loyalty and Non-Compete Obligation.
Directors are bound to act loyally towards the Company.
To that end, and in addition to those discussed under the heading “Conflict of Interest”, the following behaviors
shall be understood as particularly included in the duty of loyalty:
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a)
a prohibition against using the Company’s assets as well as any confidential information for
personal purposes.
b) a prohibition against taking advantage of, or allowing a third party to take advantage of, the
Company’s business opportunities, either by action or omission.
c)
an obligation to exercise functions only for the purposes that the Law, the by-laws, the
shareholders’ meeting or the Board have conferred them.
d) an obligation to scrupulously ensure that their behavior is always free from conflicts of interest,
direct or indirect, with those of the Company.
e)
an obligation to see to it that it is the interest of the Company and of its shareholders that prevails,
within the framework of the legislation and the other rules and regulations discussed under the
heading “Applicable Legislation and Other Rules and Regulations” in this Code.
f)
an obligation to avoid situations in which their personal interests may conflict with those of the
Company.
g) an obligation to immediately report to the Ethics Committee of the existence of a conflict between
their personal interests and those of the Company.
h) an obligation to abstain from seeking any personal benefit at the Company’s expense, other than
the remuneration payable to them for their services.
i)
an obligation to obtain the means adequate for the Company to conduct its businesses;
j)
an obligation to make sure that the internal controls are in place as necessary to guarantee prudent
management and prevent instances of non-compliance with the duties imposed by the Board, the
applicable legislation and rules and regulations, and in particular, the provisions laid down by the
Argentine Central Bank and CNV.
k) an obligation to preserve order in the Company’s corporate governance, and
l)
an obligation to respect and to have others respect order in the operation of the Company’s
governance bodies in which they serve, the exercise of management functions and the discharge of
the Company’s employees’ duties.
When it comes to their Non-Compete Obligation in particular, the Directors may be neither shareholders or
directors, render their professional services or work for entities alien to Banco Hipotecario pursuing a corporate
purpose analogous or supplementary to that of Banco Hipotecario or its subsidiaries nor engage, in their own
name or through third parties, in the same or analogous businesses.
The Directors have a duty to disclose the situations herein discussed, which duty shall be initially discharged
upon submitting the previous statement in writing that all Directors must prepare when they are appointed.
Afterwards, either periodically or when the circumstances so warrant, the Directors and the members of
management must maintain the Ethics Committee informed of matters including, without limitation, those listed
hereinbelow, through the Board’s Secretary:
a)
their intent to maintain holdings or to make acquisitions of any ownership interest in the capital of a
company alien to Banco Hipotecario where the hypothesis of activities analogous or supplementary to
BHSA’s corporate purpose is verified, except for the investments for less than 2% of capital stock in
companies whose shares are admitted to public offering.
b) the discharge of duties as officer or in any other capacity for a company alien to Banco Hipotecario, and
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c)
the conduct in their own names of activities that are analogous, or supplementary, to those constituting
the corporate purpose of Banco Hipotecario.
This prohibition shall not be enforced against the Directors when the Ethics Committee is informed of this
situation before they take office and this Committee does not oppose such appointment within a term of 30
running days. When it comes to activities to be exercised and offices to be taken in third-party companies or in
the candidates’ own names after their appointment at Banco Hipotecario, or in the event of supervening
situations, the potentially concurrent conduct of business, supply of services or discharge of duties shall be
understood to have been authorized by the governance bodies when the Ethics Committee and/or the Board
have expressly stated as much in their resolution.
11.4.
Conflict of Interest.
The decisions and actions of the members of the organization’s Board of Directors must always be geared
towards the satisfaction of the Entity’s best interests and they should never be inspired by personal
considerations. The relationships based on kinship, friendship or out of expectations vis-à-vis current or
potential suppliers, contractors, customers, competitors or regulators shall never adversely affect independence
and the best judgment to safeguard the Bank’s interests.
Conflicts of interest shall be understood to arise when:
a)
the Director or, if applicable, his/her spouse or his/her lineal relatives by consanguinity or adoption, or
his/her collateral relatives up to the fourth degree, inclusive, or his/her relatives by affinity within the
second degree or a conglomerate in which the Director holds a significant ownership interest, or, in
his/her own name or through relatives he/she holds an ownership interest that conveys more than 10%
of votes and/or capital, or, when holding a smaller interest he/she is entitled to appoint at least one
member of said company’s board, receives inadequate personal benefits by reason of, or due to,
his/her services as a director of the Company.
b) the hypotheses contemplated in Sections 271, 272 and 273 of Law No. 19,550 are verified.
c)
they are engaged in the same line of business as the Company or they have an equity interest in a
company that competes with the Company, save for investments for less than 2% of the capital stock of
companies whose shares are admitted to public offering.
d) they take part in the process to place an issuance of securities, where they may only acquire or place
bids for acquiring such securities either directly or indirectly only in the conditions established by CNV
up and until their participation in such placement process is completed.
e)
deprive the Company, for their benefit or for the benefit of a third party, of opportunities to sell or buy
goods, products, services or rights.
f)
have a personal interest in a transaction involving the Company, a competitor, a customer or a supplier.
g) wield influence on the adoption of decisions or courses of action seeking to protect or improve specific
personal investments or financial interests in a company to which the Company is related.
h) wield decisive influence for the Company to hire a company as a supplier, contractor, agent or
representative when such company is owned or run by close relatives or when close relatives are
employed in hierarchical or executive positions.
i)
act as a supplier of goods or services for the Company, except in the event of such Director being a
member of firms of professional services that provide advisory services to the Company on an
independent basis: when this were the case, this Director shall refrain from taking part in the negotiation
of the engagement, and
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j)
borrow funds with preferential conditions in his/her own name or through a third-part legal entity or
individual when the Director is related to the Company.
It shall be equally understood that there is a conflict of interest when:
a)
their personal interest is in opposition to, or interferes with, the Company’s interest in any way.
b) the Company’s inside information is used for the members’ own benefit or for the benefit of third parties.
c)
the Directors conduct in their own names transactions with the Bank’s customers when these
transactions are a part of the Bank’s habitual activities or business (for instance, purchases and sales of
foreign currency). Neither may the Directors borrow money from the Bank’s customers or lend them
money in their own names.
d) work is performed, or services are rendered, in favor, or for the benefit, of companies that compete with
the Company or that may become the Company’s competitors.
e)
professional activities, or activities additional to those conducted by the Bank are exercised and this
entails a direct or indirect conflict of interest with the Company.
f)
labor activities in addition to those performed at the Bank are conducted within working hours and Bank
property or services are used to this end, and
g) copies are made for themselves or for the Bank of printed material or of software applications that are
protected by copyright or intellectual property rights and/or under license agreements.
The Director is under a duty to advise the Ethics Committee and/or the Board sufficiently in advance of the
occurrence of any situation apt to generate a conflict of interest with the Company, even when such situation
were not within the preceding list.
The Director with an interest contrary to those of the Company shall abstain from taking part in the debates
concerning the matters associated to the conflict of interest and from voting the ensuing resolutions.
To determine the existence of a conflict of interest in those cases where there are suspicions of non-compliance
by a Director with the rules laid down in this Code, the Board shall request an opinion from the Audit Committee
before debating and settling the matter.
The Director who does not avoid incurring conflicts of interest or fails to duly and timely advise the Ethics
Committee and/or the Board of the existence of conflicts of interest that affect such Director or are apt to affect
him, shall be deemed to have incurred serious misconduct, which may be punished by the Company itself
and/or by the regulatory bodies (Argentine Central Bank, CNV, Buenos Aires Stock Exchange) as set forth in
Section 59 of Law No. 19,550, Section 41 of Law No. 21,526, Section 125 et seq of Law No. 26,831, and/or the
rules and regulations in force at that time.
RULES OF OPERATION
OF THE EXECUTIVE COMMITTEE
1.
Banco Hipotecario S.A.’s Executive Committee will serve its purpose within the framework of: (i) Section
19 of the Company’s By-laws and (ii) the Bank’s Corporate Governance Code.
2.
The Executive Committee shall be made up by a minimum of 5 and a maximum of 9 directors chosen
by Class D shareholders and a number of alternate directors appointed by the same class of shares to
be determined by the Board. The Supervisory Committee will be also in attendance, with voice though
without vote. Besides, the General Manager may, if summoned, participate in the Executive Committee
and he/she shall be entitled to voice his/her opinion but not to cast votes.
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3.
The Directors serving on this Committee will remain members of the Committee for a minimum 2-year
period provided that their term in office does not come to an end before then, and they can be
indefinitely re-elected in those conditions.
4.
The Directors serving on this Committee must: (i) actively participate in matters related to the
responsibilities contemplated by the Corporate Governance Code, these Rules and any additional
standards that may govern it; (ii) attend Committee meetings; (iii) obtain training in the matters
associated to the functions of the Committee; and (iv) obtain training for knowledge of the Bank and its
businesses.
5.
The Executive Committee shall appoint, from amongst its number, the persons who will act as its
Chairman and Vice-chairman. The term of office of the chairman shall be 1 year with the possibility of
his/her reelection subject to the general restrictions described in paragraph 3 above. In the event of
absence of the Chairman, the Vice-chairman shall step in as his/her replacement for the duration of said
absence. The chairman of the Committee shall have the following powers and functions: (i) preside over
meetings, (ii) define which matters shall be debated at meetings, (iii) coordinate committee operation,
(iv) represent the committee before the competent authorities, and (v) call extraordinary meetings.
6.
The Chairman of the Committee shall communicate in writing or by e-mail to all the committee members
the Order of Business stating the matters up for debate at the meeting as well as any background
information, supplementary details or any other documentation whose previous knowledge were
required for discussing and adopting a resolution on the matters to be considered. The Chairman may
turn to the Board Secretary for assistance.
7.
The Committee shall hold periodical meetings and at least once a month either at the Entity’s premises
and/or anywhere else in Argentina. The date for each ordinary meeting shall be fixed by the Committee
itself each time. When the urgency of the matter so warrants, the Committee’s Chairman shall call
extraordinary meetings. To validly session, the Committee needs the simple majority of its member
directors. The Committee shall adopt its decisions, render opinions or make recommendations by a
majority vote of the designated directors in attendance, in the event of a hung vote, the Chairman’s vote
shall count as double.
8.
Overall, the Executive Committee is entrusted with the supervision of the Bank’s ordinary conduct of
business. Pursuant to the Bank’s by-laws, the following are some of the duties and powers of the
Executive Committee:
a) Be liable for the conduction of the Company’s ordinary business and all matters delegated to it
by the Board of Directors.
b) Develop the Company’s commercial, credit and financial policies subject to the objectives
resolved upon by the Board of Directors.
c) Create, maintain, and restructure the Bank’s administrative activities.
d) Create Special Committees, approve structures or functional levels and determine the scope of
their duties.
e) Appoint General Managers, Executive Vice Presidents and other senior management
members.
f) Propose to the Board the creation of branches, agencies or representative offices within
Argentina or abroad.
g) Supervise the performance of the Bank’s subsidiaries.
h) Submit to the Board for review the rules for the hiring of services by the Company, annual
budget, expenditures and investment estimates, necessary indebtedness levels and action
plans to be developed.
i) Approve novations, refinancing processes, debt remissions etc., whenever deemed necessary
in the ordinary course of business.
j) Issue its internal regulations.
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9.
Any proposals, opinions and recommendations handed down by the Executive Committee in the
discharge of its functions as outlined in paragraph 8 of these rules shall be channeled and performed
through the General Manager.
10. When the Committee sees it fit, it may invite any Banco Hipotecario S.A. officer, its External Auditor
and/or representatives of other external or internal entities to attend its meetings, when they relate to
aspects meaningful to the Bank, asking them for assistance and requesting access to the information in
their possession.
11. The Committee shall draw up minutes recording the matters discussed at each meeting and shall
submit them to the Board for its information and/or consideration. The Minutes shall be transcribed unto
the special book provided for such purpose and they must be signed by the members and officers in
attendance at the meeting.
RULES OF OPERATION
OF THE AUDIT COMMITTEE
1.
Banco Hipotecario S.A.’s Audit Committee will serve its purpose within the framework of: (i) the
Minimum Requirements on Internal Controls issued by the Argentine Central Bank; (ii) Law No. 26,831
and the CNV’s General Resolution 622 and any supplementary resolutions or amendments thereto and
(iii) Banco Hipotecario S.A.’s Corporate Governance Code.
2.
The Audit Committee shall be made up by no less than 3 and no more than 7 Regular Directors and the
highest-ranking internal audit officer shall be in attendance at its meetings entitled to voice his/her
opinion though not to cast votes.
3.
The Directors serving on this Committee will remain members of the Committee for a minimum 2-year
period (provided that their term in office does not come to an end before then) and a maximum 3-year
period. This term may be extended in each case only following an express decision of the Board. The
term in office as member of the Audit Committee must not coincide with the term in office of the other
Directors serving on the Committee in a manner such that the Committee shall always have amongst its
members a Director experienced in the matter. A majority of the Directors serving on the Audit
Committee must meet the independent director requirements as outlined in the Corporate Governance
Code and they must also satisfy the other conditions and principles laid down in such Code.
4.
By a simple majority vote, the Board of Directors shall determine the number of members who will serve
on the Audit Committee and shall designate the directors who will serve on it from amongst the regular
directors seasoned in business, financial or accounting matters. The Directors serving on this
Committee must: (i) take an active role in the matters associated to the duties imposed by the
Corporate Governance Code, these Rules and any additional standards that may govern it; (ii) attend
Audit Committee meetings; (iii) obtain training in the matters associated to the functions of the
Committee, and (iv) obtain training for knowledge of the Bank and its businesses.
5.
The Committee shall be chaired by one of the Directors serving on this Committee who shall be chosen
from amongst its number and must qualify as an independent director. The Chairman shall be in office
for one year with the possibility of his/her reelection subject to the general restrictions described in
paragraph 3 above. In the event of absence of the Chairman, the Directors serving on this Committee
shall designate the person who shall step in as Chairman for the duration of the absence. The following
are the Chairman’s functions and powers: (i) preside over meetings, (ii) coordinate committee operation,
(iii) define which matters shall be debated at meetings, (iv) represent the committee before the
competent authorities and (v) call extraordinary meetings. The highest-ranking internal audit officer may
suggest to the Chairman of the Committee which matters must be discussed at the Committee
meetings.
6.
The Chairman of the Committee shall communicate in writing or by e-mail to all the committee members
the Order of Business stating the matters up for debate at the meeting as well as any background
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information, supplementary details or any other documentation whose previous knowledge were
required for discussing and adopting a resolution on the matters to be considered. The Chairman may
turn to the Board Secretary for assistance.
7.
The Committee shall hold periodical meetings and at least once a month at the Bank’s premises. The
date for each ordinary meeting shall be fixed by the Committee itself each time. When the urgency of
the matter so warrants, the Committee shall be summoned for an extraordinary meeting by its
Chairman. To validly session, the Committee needs the simple majority of its member directors and the
highest-ranking internal audit officer to be in attendance. In addition, all of the Audit Committee
meetings shall be equally attended by the members of the Supervisory Committee who are authorized
to take part in the Committee’s discussions but are not entitled to cast votes. The Committee shall adopt
its decisions, render opinions or make recommendations by a majority vote of the Directors serving on
this Committee who are in attendance and in the event of a hung vote, the Chairman’s vote shall count
as double.
8.
The functions of the Audit Committee shall be discharged by the members of this Committee with the
aid of the Internal Audit Department.
9.
The powers and duties inherent in the functions of the Audit Committee are as follows:
a)
To oversee the operation of the Bank’s risk management, internal control and administrative and
accounting systems, as well as the reliability of the accounting system and of all the information
filed with the CNV, the Argentine Central Bank and the self-regulated entities, be it financial or
about other events, in the discharge of reporting obligations.
b) To contribute to an improvement in control effectiveness.
c)
To follow up on the implementation of the observations made by the internal and external audits.
d) To review and approve the work plan of the internal audit and its degree of completion.
e)
To coordinate the tasks between the internal audit and the external audit.
f)
To familiarize with the outcomes obtained by the Statutory Auditors or Supervisory Committee.
g) To familiarize with the annual and quarterly financial statements and the external auditors’ reports
issued on them and with all the relevant accounting information.
h) To issue an opinion about the Board’s proposal concerning the appointment of the external
auditors and the lead partner of the firm of university professionals to be hired by the Company (or,
when applicable, the revocation of the firm currently appointed) and to make sure that they remain
independent.
i)
To watch over compliance with Banco Hipotecario’s currently applicable Code of Ethics.
j)
To familiarize with the External Audit’s annual plan, the reports on internal controls prepared by the
external auditors, the results of the verifications performed by the SEFyC (Superintendency of
Financial and Exchange Institutions) regarding the external auditors’ performance and to assess
their performance.
k) To consider the outcomes of the SEFyC’s verifications in the field of internal controls, to propose
an answer to the Board, and, when applicable, the measures to solve the observations made.
l)
To supervise the application of policies governing information on the Company’s risk management.
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m) To provide the market with complete information about transactions apt to cause conflicts of
interest with the members of the Company’s governance or with controlling shareholders.
n) To issue an opinion about the reasonableness of the Board’s proposals concerning fees and stock
option plans for the Company’s directors and managers.
o) To issue an opinion about compliance with legal requirements and the reasonableness of the
conditions for issuing shares or convertible securities in the event of capital increases with limited
or null preemptive rights.
p) To issue a duly founded opinion on transactions with related parties in accordance with the
provisions laid down by the CNV.
q) To prepare an annual plan of the main tasks to be performed and the resources required to do as
much in order to submit it to the Board’s consideration and approval, and
r)
To appoint one of the members of the Committee as the person responsible for implementing the
annual training plan for all the members.
10. Any proposals, opinions and recommendations handed down by the Audit Committee in the discharge
of its functions as outlined in paragraph 9 of these rules shall be submitted to the Board of Directors for
it to channel them, and/or to the General Manager following a delegation of power by the Board. The
Board of Directors or, when applicable, the General Manager, will be the only officers responsible for
proceeding with the recommendations of the Audit Committee deriving from the discharge of its
functions.
11. The Committee must consider the recommendations made by both the Internal Audit and by the
External Audit and may require the Bank’s Departments, in so far as the Office of the General Manager
is made aware of it and coordinates it, to submit plans for proceeding to correct the observations and
heed the recommendations with the expression of terms and the identification of those responsible for
compliance. This notwithstanding, it is only the Board of Directors and the Office of the General
Manager who will be responsible for execution of said plans.
12. When the Committee sees it fit, it may invite any Banco Hipotecario S.A. officer, its External Auditor
and/or representatives of other external or internal entities to attend its meetings, when they relate to
aspects meaningful to the Bank, asking them for assistance and requesting access to the information in
their possession. This Committee’s meetings may be attended by the Directors who do not serve on it
who will be entitled to voice their opinions though not to vote.
13. The Committee shall draw up minutes recording the matters discussed at each meeting and shall
submit them to the Board for its information and/or consideration. The Minutes, the Internal Audit plans,
the reports on internal control reviews and the Committee’s planning actions shall be transcribed unto
the special Internal Control Book and they must be signed by the members and officers in attendance at
the meeting.
RULES OF OPERATION OF THE
COMMITTEE FOR CONTROLLING AND PREVENTING MONEY LAUNDERING AND TERRORISM
FINANCING
1.
Banco Hipotecario S.A.’s Committee for Controlling and Preventing Money Laundering and Terrorism
Financing will serve its purpose within the framework of: (i) the Argentine Central Bank’s Rules to
Prevent and Control Money Laundering, Terrorism Financing and Other Illegal Activities; and (ii)
Resolution 2/2002 of the Financial Information Unit (UIF), Laws No. 25,246 and 26,268 as well as any
other concurrent laws and their regulatory decrees, (iii) the decrees of the Argentine Executive Branch
concerning the decisions adopted by the United Nations’ Security Council to combat terrorism and to
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abide by the resolutions adopted by the Ministry of Foreign Relations, Foreign Trade and Religion, and
(iv) Banco Hipotecario S.A.’s Corporate Governance Code.
2.
The Committee for Controlling and Preventing Money Laundering and Terrorism Financing shall be
composed of no less than 2 regular Directors: the highest-ranking officer in the unit in charge of
preventing money-laundering and the director at the helm of the unit in charge of preventing and
controlling money-laundering and combating terrorism financing and by a senior officer seasoned and
knowledgeable in financial intermediation operations; these will participate with voice but without vote.
3.
The Directors serving on this Committee will remain members of the Committee for a minimum 2-year
period (provided that their term in office does not come to an end before then) and a maximum 3-year
period. This term may be extended in each case following an express decision of the Board. The term in
office of the Directors serving on this Committee must not coincide with the term in office of the other
Directors serving on the Committee in a manner such that the Committee shall always have amongst its
members a Director knowledgeable in financial intermediation operations and experienced in the
matter.
4.
By a simple majority vote, the Board of Directors shall determine the number of members who will serve
on this Committee and shall designate its members from amongst regular Directors. The Directors
serving on this Committee for Controlling and Preventing Money Laundering and Terrorism Financing
must: (i) take an active role in the matters associated to the duties imposed by the Corporate
Governance Code, these Rules and any additional standards that may govern it; (ii) attend Committee
meetings; (iii) obtain training in the matters associated to the functions of the Committee, and (iv) obtain
training for knowledge of the Bank and its businesses.
5.
The Committee shall be chaired by one of the Directors serving on this Committee and shall be elected
from amongst its number. The term of office of the chairman shall be 1 year with the possibility of
his/her reelection subject to the general restrictions described in paragraph 3 above. The following are
the Chairman’s functions and powers: (i) preside over meetings, (ii) coordinate committee operation, (iii)
define which matters shall be debated at meetings, (iv) represent the committee before the competent
authorities, and (v) call extraordinary meetings. The officer in charge of the unit for preventing and
controlling money laundering and terrorism financing may suggest to the Chairman of the Committee
the matters to be debated at the Committee meetings.
6.
The Chairman of the Committee shall communicate in writing or by e-mail to all the committee members
the Order of Business stating the matters up for debate at the meeting as well as any background
information, supplementary details or any other documentation whose previous knowledge were
required for discussing and adopting a resolution on the matters to be considered. The Chairman may
turn to the Board Secretary for assistance.
7.
The Committee shall hold periodical meetings and at least once a month, except for the holiday season
when the periods between meetings may exceed a month. Meetings will be held at the Bank’s
premises. The date for each ordinary meeting shall be fixed by the Committee itself each time. When
the urgency of the matter so warrants, the Committee’s Chairman shall call extraordinary meetings. To
validly session, the Committee needs the simple majority of its member directors. In attendance at its
meetings will be the officer responsible for the unit that prevents and controls money laundering and
terrorism financing and the highest-ranking officer knowledgeable into financial intermediation
transactions and experienced in the field. In addition, all of this Committee’s meetings shall be equally
attended by the members of the Supervisory Committee who are authorized to take part in the
Committee’s discussions but are not entitled to cast votes. The Committee shall adopt its decisions,
render opinions or make recommendations by a majority vote of the Directors serving on this
Committee who are in attendance, in the event of a hung vote, the Chairman’s vote shall count as
double.
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8.
The functions of this Committee shall be discharged by the members of the Committee with the
assistance of the Department in charge of Controlling and Preventing Money Laundering and Terrorism
Financing.
9.
The powers and duties inherent in the functions of the Committee for Controlling and Preventing Money
Laundering and Terrorism Financing are as follows:
a)
To plan, coordinate and oversee the application of the policies approved by the Board to
prevent money laundering and terrorism financing.
b) To impart instructions on the Compliance Officer.
c)
To consider the reports on the transactions classified as unusual to be filed with the control
authorities.
d) To report on the breach of policies and/or procedures for adopting the relevant corrective
measures.
e)
To submit the annual plan of the tasks to be performed by the Committee and the resources
required for its operation to consideration by the Board, and
f)
To propose to the Board any changes and/or updates required by the Manual for the Prevention
and Control of Money Laundering and Terrorism Financing
g) To consider permanent training plans for personnel
10. Any decisions, opinions and recommendations handed down by the Committee for Controlling and
Preventing Money Laundering and Terrorism Financing in the discharge of its functions as outlined in
paragraph 9 of these rules shall be submitted to the Board of Directors for it to channel them, and shall
be implemented through the General Manager.
11. When the Committee sees it fit, it may invite any Banco Hipotecario S.A. officer, its External Auditor
and/or representatives of other external or internal entities to attend its meetings, when they relate to
control aspects meaningful to the Bank and to this matter, asking them for assistance and requesting
access to the information in their possession. This Committee’s meetings may be attended by the
Directors who do not serve on it who will be entitled to voice their opinions though not to vote.
12. The Committee shall draw up minutes recording the matters discussed at each meeting and shall
submit them to the Board for its information and/or consideration. The Minutes shall be transcribed unto
the special book provided for such purpose and they must be signed by the members and officers in
attendance at the meeting.
RULES OF OPERATION OF THE
INFORMATION TECHNOLOGY COMMITTEE
1.
Banco Hipotecario S.A.’s Information Technology Committee will serve its purpose within the framework
of: (i) the Argentine Central Bank’s Communication "A” 4609 as supplemented or amended and (ii)
Banco Hipotecario S.A.’s Corporate Governance Code.
2.
The Information Technology Committee shall be made up by no less than 2 and no more than 5 regular
directors and by the highest-ranking officers in the area of systems and the area of information security
who will attend meetings with the right to voice their opinions though not to cast votes. Moreover, if
deemed suitable, the Supervisory Committee may attend all meetings of the Information Technology
Committee, being empowered to voice opinions but not to cast votes.
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3.
The Directors serving on this Committee will remain members of the Committee for a minimum 2-year
period provided that their term in office does not come to an end before then. This term may be
extended in each case following an express decision of the Board. The term in office as member of the
Information Technology Committee must not coincide with the term in office of the other Directors
serving on the Committee in a manner such that the Committee shall always have amongst its
members a Director knowledgeable and experienced in the matter.
4.
By a simple majority vote, the Board of Directors shall determine the number of members who will serve
on the Information Technology Committee and shall designate the directors who will serve on it from
amongst the regular directors. The Directors serving on this Committee must: (i) take an active role in
the matters associated to the duties imposed by the Corporate Governance Code, these Rules and any
additional standards that may govern it; (ii) attend Committee meetings; (iii) obtain training and
independent advice should this be required by the matters associated to the Committee’s functions; and
(iv) obtain training and independent advice should they need it for knowledge into the Bank and its
businesses.
5.
The Committee shall be chaired by one of the Directors serving on this Committee who shall be chosen
from amongst its number. The term of office of the chairman shall be 1 year with the possibility of
his/her reelection subject to the general restrictions described in paragraph 3 above. In the event of
absence of the Chairman one of the Directors serving on this Committee for the duration of said
absence. The chairman of the Committee shall have the following powers and functions: (i) preside over
meetings, (ii) define which matters shall be debated at meetings, (iii) coordinate committee operation,
(iv) represent the committee before the competent authorities, and (v) call extraordinary meetings. The
highest-ranking officer (or officers) in the area of Information Technology may suggest to the Chairman
of the Committee those matters to be discussed at the Committee meetings.
6.
The Chairman of the Committee shall communicate in writing or by e-mail to all the committee members
the Order of Business stating the matters up for debate at the meeting as well as any background
information, supplementary details or any other documentation whose previous knowledge were
required for discussing and adopting a resolution on the matters to be considered. The Chairman may
turn to the Board Secretary for assistance.
7.
The Committee shall hold periodical sessions and shall meet at least once every three months at the
Bank’s premises. The date for each ordinary meeting shall be fixed by the Committee itself each time.
When the urgency of the matter so warrants, the Committee’s Chairman shall call extraordinary
meetings. To validly session, the Committee needs the simple majority of its member directors and to
have the highest-ranking officer (or officers) in attendance. The Committee shall adopt its decisions,
render opinions or make recommendations by a majority vote of the designated directors in attendance,
in the event of a hung vote, the Chairman’s vote shall count as double.
8.
The powers and duties inherent in the functions of the Information Technology Committee are as
follows:
a) To provide for, and see to, the existence of policies and procedures in the field of Information
Technology, Information Systems and Physical and Logical Safety and Security as well as to
have said policies and procedures approved in line with the guidelines laid down by the Board
and the rules issued by the Argentine Central Bank.
b) To approve the Annual Plan of Systems, Technology and Physical and Logical Safety and
Security as well as the 3-Year Strategic Plan in accordance with the strategic guidelines laid
down by the Board, which must contemplate the nature, scope and timing of the various stages
and the follow-up on compliance.
c) To familiarize with all the matters related to the investments and the budget appropriations in
terms of Information Technology, Information Systems and Physical and Logical Safety and
Security in line with the plans deployed and with any particular need that may arise.
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d) To make sure that it is in control of the activities delegated to it and that they are conducted in
harmony with the Bank’s internal guidelines and the Argentine Central Bank’s rules.
e) To approve and follow up on the Contingency Plans for the Bank’s Electronic Data Processing
activities and to be advised of the outcome of the continuity tests run on such processes.
f) To advise on new implementations and strategic procurement relating to Information
Technology, Information Systems and Physical and Logical Safety and Security and to the
services supplied by the Bank itself and those outsourced.
g) To coordinate the operational and technological actions that ensure the implementation and
operation of the operational model defined.
h) To watch over the adequate operation of the information technology environment.
i) To contribute to improved effectiveness in the information technology environment.
j) To review the reports issued by the audits in connection with the Information Technology,
Information Systems and Physical and Logical Safety and Security environments and to ensure
that corrective actions are taken to correct or minimize any weakness observed.
k) To be in contact with the officials of the SEFyC’s Department in charge of External Audit over
Systems in connection with the problems identified during their inspections at the Bank and with
a follow-up on the actions undertaken to solve such problems.
l) To be on the watch-out for any significant changes in the risks that may affect the Bank’s
informational assets vis-à-vis the most significant threats.
m) To be advised of, and to supervise investigations into and monitoring over, security-related
incidents, and
n) To evaluate and coordinate specific controls for information security as soon as the Bank
adopts new systems or procures new services.
9.
Any proposals, opinions and recommendations handed down by the Information Technology Committee
in the discharge of its functions as outlined in paragraph 8 of these rules, shall be submitted to the
Board of Directors, channeled through it and performed through the General Manager.
10. When the Committee sees it fit, it may invite any Banco Hipotecario S.A. officer, its External Auditor
and/or representatives of other external or internal entities to attend its meetings, when they relate to
aspects meaningful to the Bank, asking them for assistance and requesting access to the information in
their possession. This Committee’s meetings may be attended by the Directors who do not serve on it
and the General Manager who will be entitled to voice their opinions though not to vote.
11. The Committee shall draw up minutes recording the matters discussed at each meeting and shall
submit them to the Board for its information and/or consideration. The Minutes shall be transcribed unto
the special book provided for such purpose and must be signed by its members.
RULES OF OPERATION OF THE
CREDIT COMMITTEE
1.
Banco Hipotecario S.A.’s Credit Committee will serve its purpose within the framework of: (i) the rules
issued by the Argentine Central Bank and (ii) the Bank’s Corporate Governance Code.
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2.
The Credit Committee shall be made up by no less than 3 and no more than 7 regular Directors, and by
the highest ranking officers in the area of credit risk, both at the retail banking segment and at the
corporate banking segment who will attend its meetings allowed to voice their opinions but not to cast
votes. Moreover, if deemed suitable, the Supervisory Committee may attend all meetings of the Credit
Committee, being empowered to voice opinions but not to cast votes.
3.
The Directors serving on this Committee shall serve on the Committee for a minimum period of 2 years
in so far as their term of office as a regular director does not come to an end sooner. This term may be
extended in each case following an express decision of the Board. The term in office as member of the
Committee must not coincide with the term in office of the other Directors serving on the Committee, in
a manner such that the Committee shall always have a Director amongst its members knowledgeable
and experienced in the matter.
4.
By a simple majority vote, the Board of Directors shall determine the number of members who will serve
on the Committee and shall designate the regular directors who will serve on it. The Directors serving
on this Committee must: (i) take an active role in the matters associated to the duties imposed by the
Corporate Governance Code, these Rules and any additional standards that may govern it; (ii) attend
Committee meetings; (iii) obtain training in the matters associated to the functions of the Committee;
and (iv) obtain training for knowledge of the Bank and its businesses.
5.
The Committee shall be chaired by one of the Directors serving on this Committee and shall be elected
from amongst its number. The term of office of the chairman shall be 1 year with the possibility of
his/her reelection subject to the general restrictions described in paragraph 3 above. In the event of
absence of the Chairman, one of the Directors serving on this Committee shall step in as a substitute
for the duration of such absence. The chairman of the Committee shall have the following powers and
functions: (i) preside over meetings, (ii) define which matters shall be debated at meetings, (iii)
coordinate committee operation, (iv) represent the committee before the competent authorities, and (v)
call extraordinary meetings. The highest-ranking credit risk officers from both the retail banking and
corporate banking segments may suggest to the Chairman of the Committee which matters must be
discussed at the Committee meetings.
6.
The Chairman of the Committee shall communicate in writing or by e-mail to all the committee members
the Order of Business stating the matters up for debate at the meeting as well as any background
information, supplementary details or any other documentation whose previous knowledge were
required for discussing and adopting a resolution on the matters to be considered. The Chairman may
turn to the Board Secretary for assistance.
7.
The Committee shall hold periodical meetings and at least once a month at the Bank’s premises. The
date for each ordinary meeting shall be fixed by the Committee itself each time. When the urgency of
the matter so warrants, the Committee’s Chairman shall call extraordinary meetings. To validly session,
the Committee needs the simple majority of its member directors and to have the highest-ranking credit
risk officers from both the retail banking and corporate banking segments in attendance. The Committee
shall adopt its decisions, render opinions or make recommendations by a majority vote of the
designated directors in attendance, in the event of a hung vote, the Chairman’s vote shall count as
double.
8.
The Credit Committee’s functions shall be discharged by the members of this Committee with the
assistance of the credit risk departments, both from the retail and the corporate banking segments.
9.
The powers and duties inherent in the functions of the Credit Committee are as follows:
a) To submit the Credit Policies concerning the whole loan cycle for the Personal Banking and
Corporate Banking segments to consideration and approval by the Board.
b) To recommend approval of the Credit Programs that supplement the Product Programs
prepared when launching new products and/or deals that entail credit risk.
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c) To approve funding for Legal Entities and for the Public Sector for up to the amount defined by
the Board.
d) To approve funding for Individuals for up to the amount defined by the Board with mortgagesecured products.
e) To approve funding for Individuals for up to the amount defined by the Board for loans not
secured with a mortgage (personal loans, pledges, credit card limits or limits on checking
accounts).
f) To issue an opinion on the types of funding not described in the preceding paragraphs and on
all the other funding in excess of the basic margin established by the credit rating rules and
2.5% of the Bank’s regulatory capital for consideration by the Executive Committee/Board.
g) To approve, every month, the levels of loan loss provisions applicable to the loan portfolio in
accordance with the rules of the Central Bank and prudential criteria.
h) To propose to the Board the criteria to be adopted in the sale of loan portfolios.
i) To take part in decisions concerning credit aid to related individuals and legal entities and,
accompanied by an opinion, submit them to consideration by the Board when applicable.
j) To familiarize with the Management Reports concerning loan portfolio performance at the
intervals established in each case and to recommend actions when applicable, and
k) To familiarize with the Bank’s situation vis-à-vis prudential ratios in terms of credit fractioning,
concentration and rating.
10. Any proposals, opinions and recommendations handed down by the Credit Committee in the discharge
of its functions as outlined in paragraph 9 of these rules shall be submitted to the Board of Directors for
it to channel them and implemented through the General Manager.
11. When the Committee sees it fit, it may invite any Banco Hipotecario S.A. officer, its External Auditor
and/or representatives of other external or internal entities to attend its meetings, when they relate to
aspects meaningful to the Bank, asking them for assistance and requesting access to the information in
their possession. This Committee’s meetings may be attended by the Directors who do not serve on it
and the General Manager who will be entitled to voice their opinions though not to vote.
12. The Committee shall draw up minutes recording the matters discussed at each meeting and shall
submit them to the Board for its information and/or consideration. The Minutes shall be transcribed unto
the special book provided for such purpose and they must be signed by the members and officers in
attendance at the meeting.
RULES OF OPERATION OF THE
PERSONNEL INCENTIVES COMMITTEE
1.
Banco Hipotecario S.A.’s Personnel Incentives Committee will serve its purpose within the framework
of: (i) Communication "A” 5201, its supplementary rules and the amendments thereto and (ii) the Bank’s
Corporate Governance Code.
2.
The Personnel Incentives Committee shall be made up by 3 regular Directors and by the highestranking officer in the area of organizational development, who will attend the meetings with the right to
voice opinions though not to vote. Moreover, if deemed suitable, the Supervisory Committee may attend
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all meetings of the Personnel Incentives Committee, being empowered to voice opinions but not to cast
votes.
3.
The Directors serving on this Committee for a minimum 2-year period provided that their term in office
does not come to an end before then. This term may be extended in each case following an express
decision of the Board. The term in office as member of the Committee must not coincide with the term in
office of the other Directors serving on the Committee, in a manner such that the Committee shall
always have a Director amongst its members knowledgeable and experienced in the matter.
4.
By a simple majority vote, the Board of Directors shall determine the number of members who will serve
on this Committee and shall designate its members from amongst regular Directors. The Directors
serving on this Committee must: (i) take an active role in the matters associated to the duties imposed
by the Corporate Governance Code, these Rules and any additional standards that may govern it; (ii)
attend Committee meetings; (iii) obtain training in the matters associated to the functions of the
Committee; and (iv) obtain training for knowledge of the Bank and its businesses.
5.
The Committee shall be chaired by one of the Directors serving on this Committee and shall be elected
from amongst its number. The term of office of the chairman shall be 1 year with the possibility of
his/her reelection subject to the general restrictions described in paragraph 3 above. In the event of
absence of the Chairman, one of the Directors serving on this Committee shall step in as a substitute
for the duration of such absence. The chairman of the Committee shall have the following powers and
functions: (i) preside over meetings, (ii) define which matters shall be debated at meetings, (iii)
coordinate committee operation, (iv) represent the committee before the competent authorities, and (v)
call extraordinary meetings. The highest-ranking officer in charge of organizational development may
suggest to the Chairman of the Committee the matters to be debated at the Committee meetings.
6.
The Chairman of the Committee shall communicate in writing or by e-mail to all the committee members
the Order of Business stating the matters up for debate at the meeting as well as any background
information, supplementary details or any other documentation whose previous knowledge were
required for discussing and adopting a resolution on the matters to be considered. The Chairman may
turn to the Board Secretary for assistance.
7.
The Committee shall hold sessions at the Bank’s premises when there are matters to discuss within its
purview or at least once a year. The date for each ordinary meeting shall be fixed by the Committee
itself each time. When the urgency of the matter so warrants, the Committee’s Chairman shall call
extraordinary meetings. To validly session, the Committee needs the simple majority of its member
directors and to have the highest-ranking officer in charge of organizational development in attendance.
The Committee shall adopt its decisions, render opinions or make recommendations by a majority vote
of the designated directors in attendance, in the event of a hung vote, the Chairman’s vote shall count
as double.
8.
The functions of the Committee shall be discharged by its members with the assistance of the
organizational development department.
9.
The powers and duties inherent in the functions of the Personnel Incentives Committee are as follows:
a) To lay down the policies and practices to financially incentivize personnel to manage risk,
capital and liquidity.
b) To establish that the policy to financially incentivize personnel should be in harmony with the
guidelines set forth in the laws and regulations that currently govern these matters
c) To establish that the financial incentives for the benefit of the organization’s members:
1. should be tied to the contribution by each individual and each business unit to the Company’s
performance.
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2. should be established in line with the objectives sought by the Company’s shareholders, and
3. should be sensitive to the time dimension of risks.
d) To promote and coordinate the annual assessment of the system of financial incentives to
personnel, which must be conducted by an independent area of the Company or an external
entity.
10. Any proposals, opinions and recommendations handed down by the Personnel Incentives Committee in
the discharge of its functions as outlined in paragraph 9 of these rules, shall be submitted to the Board
of Directors, channeled through it and performed through the General Manager.
11. When the Committee sees it fit, it may invite any Banco Hipotecario S.A. officer, its External Auditor
and/or representatives of other external or internal entities to attend its meetings, when they relate to
aspects meaningful to the Bank, asking them for assistance and requesting access to the information in
their possession. This Committee’s meetings may be attended by the Directors who do not serve on it
and the General Manager who will be entitled to voice their opinions though not to vote.
12. The Committee shall draw up minutes recording the matters discussed at each meeting and shall
submit them to the Board for its information and/or consideration. The Minutes shall be transcribed unto
the special book provided for such purpose and they must be signed by the members and officers in
attendance at the meeting.
Page # 131
RULES OF OPERATION OF THE
RISK MANAGEMENT COMMITTEE
1.
Banco Hipotecario S.A.’s Risk Management Committee will serve its purpose within the framework of:
(i) Communications "A” 5201 and “A” 5203 and the rules that supplement and/or amend them and (ii)
the Bank’s Corporate Governance Code.
2.
The Risk Management Committee shall be made up by no less than 3 and no more than 5 regular
Directors and by the highest-ranking officer in the area of risk management who will attend the meetings
with the right to voice opinions though not to vote.
3.
The Directors serving on this Committee for a minimum 2-year period provided that their term in office
does not come to an end before then.This term may be extended in each case following an express
decision of the Board. The term in office as member of the Committee must not coincide with the term
in office of the other Directors serving on the Committee, in a manner such that the Committee shall
always have a Director amongst its members knowledgeable and experienced in the matter.
4.
By a simple majority vote, the Board of Directors shall determine the number of members who will serve
on the Committee and shall designate the directors who will serve on it from amongst the regular
directors. The Directors serving on this Committee must: (i) take an active role in the matters associated
to the duties imposed by the Corporate Governance Code, these Rules and any additional standards
that may govern it; (ii) attend Committee meetings; (iii) obtain training in the matters associated to the
functions of the Committee; and (iv) obtain training for knowledge of the Bank and its businesses.
5.
The Committee shall be chaired by one of the Directors serving on this Committee and shall be elected
from amongst its number. The Chairman shall discharge his/her functions subject to the general
restrictions described in paragraph 3 above. In the event of absence of the Chairman, one of the
Directors serving on this Committee shall step in as a substitute for the duration of such absence. The
chairman of the Committee shall have the following powers and functions: (i) preside over meetings, (ii)
define which matters shall be debated at meetings, (iii) coordinate committee operation, (iv) represent
the committee before the competent authorities, and (v) call extraordinary meetings. The highestranking risk management officer may suggest to the Chairman of the Committee which matters must be
discussed at the Committee meetings.
6.
The Chairman of the Committee shall communicate in writing or by e-mail to all the committee members
the Order of Business stating the matters up for debate at the meeting as well as any background
information, supplementary details or any other documentation whose previous knowledge were
required for discussing and adopting a resolution on the matters to be considered. The Chairman may
turn to the Board Secretary for assistance.
7.
The Committee shall hold periodical meetings and at least once every two months. The date for each
ordinary meeting shall be fixed by the Committee itself each time. When the urgency of the matter so
warrants, the Committee’s Chairman shall call extraordinary meetings. To validly session, the
Committee needs the simple majority of its member directors and to have the highest-ranking risk
management officer in attendance. The Committee shall adopt its decisions, render opinions or make
recommendations by a majority vote of the designated directors in attendance, in the event of a hung
vote, the Chairman’s vote shall count as double.
8.
The Directors serving on this Committee may attend meetings remotely through means of simultaneous
transmission of sound, images or voice provided that the members who attend on a remote basis
communicate this circumstance in advance of the time fixed for the meeting as well as the means of
communication that they will use. This manner of meeting attendance is put on record in the meeting’s
minutes.
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9.
The functions of this Committee shall be discharged by the members of the Committee with the
assistance of the risk management departments.
10. The powers and duties inherent in the functions of the Risk Management Committee are as follows:
a) To monitor risk management in terms of credit, market, liquidity, interest rate and operational
risks, using as a benchmark the best practices in the field of risk management.
b) To propose risk tolerance levels and risk management strategies to the Board.
c) To propose risk management policies to the Board and to review them at regular intervals, at
least annually, and whenever in the opinion of the Committee events or situations occur that
warrant as much.
d) To propose a stress testing program and contingency plans and to review them at regular
intervals -at least once a year.
e) To monitor that there should be sufficient dissemination of information about the Entity’s risk
management framework.
f) To propose to the Board the exceptions to the strategies, policies and limits in force when they
entail a significant deviation.
g) To make sure that both senior management and the personnel working in the areas involved
rely on the skills and experience required for managing risk.
h) To assess the risk profile based on the definitions in the business plan and, when applicable, to
see to it that corrective actions are undertaken.
i) To assess the outcome of any comprehensive stress tests run and the contingency plans in
force and to propose that corrective actions are implemented in the event of stress situations.
j) To evaluate that the general guidelines of the personnel economic incentive policies does not
conflict with the Entity’s risk strategy.
k) To submit the evaluation as to whether the Entity’s capital levels are adequate in the face of the
risks assumed to consideration by the Board, and
l) To familiarize with the outcomes of the internal audit reviews to which the risk management
framework may be subject and, whenever applicable, to see to it that all measures are taken
to solve the observations made.
11. Any proposals, opinions and recommendations handed down by the Risk Management Committee in
the discharge of its functions as outlined in paragraph 10 of these rules shall be submitted to the Board
of Directors for it to channel them, and shall be implemented through the General Manager.
12. When the Committee sees it fit, it may invite any Banco Hipotecario S.A. officer, its External Auditor
and/or representatives of other external or internal entities to attend its meetings, when they relate to
aspects meaningful to the Bank, asking them for assistance and requesting access to the information in
their possession. This Committee’s meetings may be attended by the Directors who do not serve on it
and by the General Manager who will be entitled to voice their opinions though not to vote. Besides,
also in attendance at these meetings will be the members of the Supervisory Committee, who may take
part in the Committee’s discussions without the right to cast votes.
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13. The Committee shall draw up minutes recording the matters discussed at each meeting and shall
submit them to the Board for its information and/or consideration. The Minutes shall be transcribed unto
the special book provided for such purpose and they must be signed by the members and officers in
attendance at the meeting.
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RULES OF OPERATION OF THE
CORPORATE GOVERNANCE COMMITTEE
1.
Banco Hipotecario S.A.’s Corporate Governance Committee will serve its purpose within the framework
of: (i) the Argentine Central Bank’s Communication "A” 5201 and the rules that supplement and/or
amend them and the Argentine Securities Commission’s General Resolution 516 and the rules that
supplement and/or amend them, and (ii) the Bank’s Corporate Governance Code.
2.
The Corporate Governance Committee shall be made up by the number of regular directors as
established by the Board of Directors from a minimum of 3 and a maximum of 5 directors: at least one
of them shall meet the independent director requirement. Moreover, if deemed suitable, the Supervisory
Committee may attend all meetings of the Corporate Governance Committee, being empowered to
voice opinions but not to cast votes.
3.
The Directors serving on this Committee for a minimum 2-year period provided that their term in office
does not come to an end before then. This term may be extended for each case only following an
express decision of the Board. The term in office as member of the Committee must not coincide with
the term in office of the other Directors serving on the Committee, in a manner such that the Committee
must at all times be composed of a majority of Directors knowledgeable in the matter.
4.
By a simple majority vote, the Board of Directors shall determine the number of members who will serve
on the Committee and shall designate the regular directors who will serve on it. The Directors serving
on this Committee must: (i) take an active role in the matters associated to the duties imposed by the
Corporate Governance Code, these Rules and any additional standards that may govern it; (ii) attend
Committee meetings; (iii) obtain training in the matters associated to the functions of the Committee;
and (iv) obtain training for knowledge of the Bank and its businesses.
5.
The Committee shall be chaired by one of the Directors serving on this Committee and shall be elected
from amongst its number. The term of office of the chairman shall be 1 year with the possibility of
his/her reelection subject to the general restrictions described in paragraph 3 above. In the event of
absence of the Chairman, one of the Directors serving on this Committee shall step in as a substitute
for the duration of such absence. The chairman of the Committee shall have the following powers and
functions: (i) preside over meetings, (ii) define which matters shall be debated at meetings, (iii)
coordinate committee operation, (iv) represent the committee before the competent authorities, and (v)
call extraordinary meetings..
6.
The Chairman of the Committee shall communicate in writing or by e-mail to all the committee members
the Order of Business stating the matters up for debate at the meeting as well as any background
information, supplementary details or any other documentation whose previous knowledge were
required for discussing and adopting a resolution on the matters to be considered. The Chairman may
turn to the Board Secretary for assistance.
7.
The Committee shall hold periodical meetings and at least once every three months at the Bank’s
premises except for the holiday season when the periods between meetings may exceed three months.
The date for each ordinary meeting shall be fixed by the Committee itself each time. When the urgency
of the matter so warrants, the Committee’s Chairman shall call extraordinary meetings. To validly
session, the Committee needs the simple majority of its member directors. The Committee shall adopt
its decisions, render opinions or make recommendations by a majority vote of the designated directors
in attendance, in the event of a hung vote, the Chairman’s vote shall count as double.
8.
The powers and duties inherent in the functions of the Corporate Governance Committee are as
follows:
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a) To supervise the application of the Corporate Governance Code and adherence to the
corporate principles of “full disclosure”, “transparency”, “efficiency”, “investor protection”,
“equal treatment amongst investors” and “protection of the entity’s stability”;
b) To submit to the Board the reports concerning Board and Senior management performance for
review;
c) To take part in all changes in the organization’s structure, rendering an opinion about their
effects vis-à-vis the corporate governance policy;
d) To oversee implementation of the policies and rules governing the relationships between the
issuer and the conglomerate and with its components;
e) To gather information about the transactions with affiliates, related companies, the shareholders
and the members of management and, overall, those that may be relevant in determining the
degree of effectiveness and adherence to the duties of loyalty, diligence and independence;
f) To see to it that the shareholders, investors and the market in general have full and timely
access to any information that the issuer is duty-bound to truthfully disclose;
g) To monitor any trades conducted by Company’s Directors, statutory auditors and managers
involving the securities issued by the Bank and its subsidiaries as well as any agreements with
related parties;
h) To supervise application of the policies dealing with the remuneration of Board and General
Management members;
i) To become aware of the Corporate Governance Codes of the Bank's Subsidiaries;
j) To propose changes to the Corporate Governance Code of the Bank and its Subsidiaries, and
k) To become aware of the regulatory compliance risks associated to the business including those
related to the development of new products and commercial practices through the reports
produced by the relevant areas.
9.
Any proposals, opinions and recommendations handed down by the Corporate Governance Committee
in the discharge of its functions as outlined in paragraph 8 of these rules, shall be submitted to the
Board of Directors for it to channel them and for their implementation through the General Manager.
10. When the Committee sees it fit, it may invite Banco Hipotecario S.A.’s General Manager and the
highest-ranking officer in charge of Regulatory Compliance and may also invite other members of
Management as well as the External Auditor and/or representatives of other external or internal entities
to attend its meetings, when they relate to aspects meaningful to the Bank, asking them for assistance
and requesting access to the information in their possession. This Committee’s meetings may be
attended by the Directors who do not serve on it who will be entitled to voice their opinions though not to
vote.
11. The Committee shall draw up minutes recording the matters discussed at each meeting and shall
submit them to the Board for its information and/or consideration. The Minutes shall be transcribed unto
the special book provided for such purpose and they must be signed by the members and officers in
attendance at the meeting.
RULES OF OPERATION OF THE
ETHICS COMMITTEE
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1.
Banco Hipotecario S.A.’s Ethics Committee will serve its purpose within the framework of: (i) the Ethics
Code and (ii) the Bank’s Corporate Governance Code.
2.
The Ethics Committee shall be composed of at least 3 regular directors and a maximum of 7 regular
directors. Moreover, if deemed suitable, the Supervisory Committee may attend all meetings of the
Ethics Committee, being empowered to voice opinions but not to cast votes.
3.
The Directors serving on this Committee for a minimum 2-year period provided that their term in office
does not come to an end before then. This term may be extended for each case only following an
express decision of the Board. The term in office as member of the Committee must not coincide with
the term in office of the other Directors serving on the Committee, in a manner such that the Committee
shall always have a Director amongst its members knowledgeable and experienced in the matter. A
majority of the Directors serving on this Committee must be Independent Directors in accordance with
the criteria laid down in the Corporate Governance Code and they must also satisfy the other conditions
and principles laid down in such Code.
4.
By a simple majority vote, the Board of Directors shall determine the number of members who will serve
on the Ethics Committee and shall designate the directors who will serve on it from amongst the regular
directors seasoned in business, financial or accounting matters. The Directors serving on this
Committee must: (i) take an active role in the matters associated to the duties imposed by the
Corporate Governance Code, these Rules and any additional standards that may govern it; (ii) attend
Committee meetings; (iii) obtain training in the matters associated to the functions of the Committee;
and (iv) obtain training for knowledge of the Bank and its businesses.
5.
The Committee shall be chaired by one of the Directors serving on this Committee and shall be elected
from amongst its number. The term of office of the chairman shall be 1 year with the possibility of
his/her reelection subject to the general restrictions described in paragraph 3 above. In the event of
absence of the Chairman, one of the Directors serving on this Committee shall step in as a substitute
for the duration of such absence. The chairman of the Committee shall have the following powers and
functions: (i) preside over meetings, (ii) define which matters shall be debated at meetings, (iii)
coordinate committee operation, (iv) represent the committee before the competent authorities, and (v)
call extraordinary meetings.
6.
The Chairman of the Committee shall communicate in writing or by e-mail to all the committee members
the Order of Business stating the matters up for debate at the meeting as well as any background
information, supplementary details or any other documentation whose previous knowledge were
required for discussing and adopting a resolution on the matters to be considered. The Chairman may
turn to the Board Secretary for assistance.
7.
The Committee shall hold meetings at the Bank’s premises when there are matters to be discussed
within its purview. The date for each ordinary meeting shall be fixed by the Committee itself each time.
When the urgency of the matter so warrants, the Committee’s Chairman shall call extraordinary
meetings. To validly session, the Committee needs the simple majority of its member directors and to
have the highest-ranking officer in charge of Organizational Development and Quality in attendance
and, when deemed necessary given the nature of the matters up for discussion, the highest-ranking
officer in charge of Regulatory Compliance in attendance, who will be allowed to take part in the
meetings with right to voice their opinions though not to cast votes. The Committee shall adopt its
decisions, render opinions or make recommendations by a majority vote of the designated directors in
attendance, in the event of a hung vote, the Chairman’s vote shall count as double.
8.
The powers and duties inherent in the functions of the Ethics Committee are associated to resolving
issues concerning the interpretation of the Ethics Code as they apply to the actions of the Directors, the
Office of the General Manager or department managers or commence investigations based on
complaints received from Bank employees on grounds of possible departures from the Ethics Code
attributable to these officers through the transparency line provided to that end, and, when applicable, to
enforce the provisions of the Ethics Code. Each case shall be confidentially treated by the Committee.
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Under no circumstances shall adverse measures be implemented against the person posing the enquiry
or against whom there are suspicions of a potential crime or irregular situation in breach of the
provisions laid down by the Code of Ethics, a law, regulation or internal procedure at the Bank. After the
request is received, the process required to respond to the enquiries and/or to corroborate the reports
shall start.
9.
Any proposals, opinions and recommendations handed down by the Ethics Committee in the discharge
of its functions as outlined in paragraph 8 of these rules, shall be submitted to the Board of Directors for
them to channel them and for their implementation through the General Manager.
10. When the Committee sees it fit, it may invite any Banco Hipotecario S.A. officer, its External Auditor
and/or representatives of other external or internal entities to attend its meetings, when they relate to
aspects meaningful to the Bank, asking them for assistance and requesting access to the information in
their possession. This Committee’s meetings may be attended by the Directors who do not serve on it
who will be entitled to voice their opinions though not to vote.
11. The Committee shall draw up minutes recording the matters discussed at each meeting and shall
submit them to the Board for its information and/or consideration. The Minutes shall be transcribed unto
the special book provided for such purpose and they must be signed by the members and officers in
attendance at the meeting.
RULES OF OPERATION OF THE
FINANCE COMMITTEE
1.
Banco Hipotecario S.A.’s Finance Committee will serve its purpose within the framework of: (i) the
Argentine Central Bank’s rules and (ii) the Bank’s Corporate Governance Code.
2.
The Finance Committee shall be made up by no less than 3 and no more than 7 regular Directors and
by the highest ranking officers in the Departments of Finances, Financial Operations and Market Risk,
who will participate with permission to voice their opinions though not to cast votes. Moreover, if
deemed suitable, the Supervisory Committee may attend all meetings of the Finance Committee, being
empowered to voice opinions but not to cast votes.
3.
The Directors serving on this Committee for a minimum 2-year period provided that their term in office
does not come to an end before then. This term may be extended for each case only following an
express decision of the Board.The term in office as member of the Committee must not coincide with
the term in office of the other Directors serving on the Committee, in a manner such that the Committee
shall always have a Director amongst its members knowledgeable and experienced in the matter.
4.
By a simple majority vote, the Board of Directors shall determine the number of members who will serve
on this Committee and shall designate its members from amongst regular Directors. The Directors
serving on this Committee must: (i) take an active role in the matters associated to the duties imposed
by the Corporate Governance Code, these Rules and any additional standards that may govern it; (ii)
attend Committee meetings; (iii) obtain training in the matters associated to the functions of the
Committee; and (iv) obtain training for knowledge of the Bank and its businesses.
5.
The Committee shall be chaired by one of the Directors serving on this Committee and shall be elected
from amongst its number. The term of office of the chairman shall be 1 year with the possibility of
his/her reelection subject to the general restrictions described in paragraph 3 above. In the event of
absence of the Chairman, one of the Directors serving on this Committee shall step in as a substitute
for the duration of such absence. The chairman of the Committee shall have the following powers and
functions: (i) preside over meetings, (ii) define which matters shall be debated at meetings, (iii)
coordinate committee operation, (iv) represent the committee before the competent authorities, and (v)
call extraordinary meetings. The highest-ranking officers in charge of finances, financial operations and
market risk may suggest to the Chairman of the Committee the matters to be debated at the Committee
meetings.
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6.
The Chairman of the Committee shall communicate in writing or by e-mail to all the committee members
the Order of Business stating the matters up for debate at the meeting as well as any background
information, supplementary details or any other documentation whose previous knowledge were
required for discussing and adopting a resolution on the matters to be considered. The Chairman may
turn to the Board Secretary for assistance.
7.
The Committee shall hold periodical meetings and at least once a month. The date for each ordinary
meeting shall be fixed by the Committee itself each time. When the urgency of the matter so warrants,
the Committee’s Chairman shall call extraordinary meetings. To validly session, the Committee needs
the simple majority of its member directors and to have the highest-ranking officers in charge of
finances, financial operations and market risk in attendance. The Committee shall adopt its decisions,
render opinions or make recommendations by a majority vote of the designated directors in attendance,
in the event of a hung vote, the Chairman’s vote shall count as double.
8.
The Directors serving on this Committee may attend meetings remotely through means of simultaneous
transmission of sound, images or voice provided that the members who attend on a remote basis
communicate this circumstance in advance of the time fixed for the meeting as well as the means of
communication that they will use. This manner of meeting attendance is put on record in the meeting’s
minutes.
9.
Should extraordinary or emergency circumstances emerge that prevent summoning a Finance
Committee meeting, the decisions concerning the consummation of financial transactions shall be
temporarily delegated to the Company’s Chairman or Vice-chairman or a Director serving on the
Committee, if applicable. The departments involved in the decision and taking part on the Committee
will be under a duty to account for the decisions made before the directors serving on this Committee.
10. The functions of this Committee shall be discharged by the members of the Committee with the
assistance of the Finance, Financial Operations and Market Risk Departments.
11. The powers and duties inherent in the functions of the Finance Committee are as follows:
a) To control the Entity’s liquidity and solvency.
b) To define the levels of tolerance to liquidity risk in the light of the business strategy, systemic
conditions and other relevant considerations.
c) To define the limits and/or zones for early alerts in the case of financial risks, including though
not limited to imbalances in cash flows, exchange rate and interest rate.
d) To determine the level of liquid asset surpluses that should be maintained in order to face a
range of stress events.
e) To participate in the assessment and approval of financial products.
f) To define strategies for investing in liquid assets and to be familiar with financial assets
management and with the entity’s general foreign exchange position.
g) To approve limits on the exposure to Government and private debt securities, shares, metals
and currencies.
h) To authorize, within the limits delegated to it by the Board of Directors, operations involving
futures, forwards and other derivatives both for hedging and arbitrage strategies.
i) To fix, assess and control the financial risk of the different portfolios of investments.
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j) To be familiar with financial liabilities management.
k) To propose to the Board of Directors transactions involving the issuance and placement of debt
within the framework and following the modalities laid down by the Shareholders’ Meeting.
l) To foster the establishment of financial trusts.
m) To recommend the banks, rating agencies, law firms and auditors or due diligence providers to
be hired for issuing and placing debt securities.
n) To propose debt repurchase transactions and refinancing processes.
o) To receive reports on a regular basis to learn about the Entity’s liquidity position, and
p) To verify that the managers of the finance department should deploy the strategies conceived
by the Committee.
12. Any proposals, opinions and recommendations handed down by the Finance Committee in the
discharge of its functions as outlined in paragraph 11 of these rules, shall be submitted to the Board of
Directors for it to channel them and for their implementation through the General Manager.
13. When the Committee sees it fit, it may invite any Banco Hipotecario S.A. officer, its External Auditor
and/or representatives of other external or internal entities to attend its meetings, when they relate to
aspects meaningful to the Bank, asking them for assistance and requesting access to the information in
their possession. This Committee’s meetings may be attended by the Directors who do not serve on it
who will be entitled to voice their opinions though not to vote.
14. The Committee shall draw up minutes recording the matters discussed at each meeting and shall
submit them to the Board for its information and/or consideration. The Minutes shall be transcribed unto
the special book provided for such purpose and must be signed by the members and officers in
attendance at the meeting.
RULES OF OPERATION OF THE
COMMITTEE OF HOMES
1.
Banco Hipotecario S.A.’s Committee of Homes will serve its purpose within the framework of: (i) Section
4, sub-section a) of the Company’s By-laws and (ii) the Bank’s Corporate Governance Code.
2.
The Committee of Homes shall be made up by no less than 3 and no more than 13 regular Directors
and by the highest ranking officer in the area of Homes, who will attend its meetings with permission to
voice his/her opinions though not to cast votes. Moreover, if deemed suitable, the Supervisory
Committee may attend all meetings of the Committee of Homes, being empowered to voice opinions
but not to cast votes.
3.
The Directors serving on this Committee for a minimum 2-year period provided that their term in office
does not come to an end before then. . This term may be extended for each case only following an
express decision of the Board.The term in office as member of the Committee must not coincide with
the term in office of the other Directors serving on the Committee, in a manner such that the Committee
shall always have a Director amongst its members knowledgeable and experienced in the matter.
4.
By a simple majority vote, the Board of Directors shall determine the number of members who will serve
on this Committee and shall designate its members from amongst regular Directors. The Directors
serving on this Committee must: (i) take an active role in the matters associated to the duties imposed
by the Corporate Governance Code, these Rules and any additional standards that may govern it; (ii)
attend Committee meetings; (iii) obtain training in the matters associated to the functions of the
Committee; and (iv) obtain training for knowledge of the Bank and its businesses.
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5.
The Committee shall be chaired by one of the Directors serving on this Committee and shall be elected
from amongst its number. The term of office of the chairman shall be 1 year with the possibility of
his/her reelection subject to the general restrictions described in paragraph 3 above. In the event of
absence of the Chairman, one of the Directors serving on this Committee shall step in as a substitute
for the duration of such absence. The chairman of the Committee shall have the following powers and
functions: (i) preside over meetings, (ii) define which matters shall be debated at meetings, (iii)
coordinate committee operation, (iv) represent the committee before the competent authorities, and (v)
call extraordinary meetings. The highest-ranking officer in charge of Homes may suggest to the
Chairman of the Committee the matters to be debated at the Committee meetings.
6.
The Chairman of the Committee shall communicate in writing or by e-mail to all the committee members
the Order of Business stating the matters up for debate at the meeting as well as any background
information, supplementary details or any other documentation whose previous knowledge were
required for discussing and adopting a resolution on the matters to be considered. The Chairman may
turn to the Board Secretary for assistance.
7.
The Committee shall hold periodical sessions and shall meet at least once every three months at the
Bank’s premises. The date for each ordinary meeting shall be fixed by the Committee itself each time.
When the urgency of the matter so warrants, the Committee’s Chairman shall call extraordinary
meetings. To validly session, the Committee needs the simple majority of its member directors and to
have the highest-ranking officer in charge of Homes in attendance. The Committee shall adopt its
decisions, render opinions or make recommendations by a majority vote of the designated directors in
attendance, in the event of a hung vote, the Chairman’s vote shall count as double.
8.
The powers and duties inherent in the functions of the Committee of Homes are as follows:
a)
b)
c)
d)
To perform, or have others perform, research work concerning systems aimed at facilitating
access to home loans.
To evaluate and render opinions on proposals of plans aimed at financing homes.
To represent the Bank before agencies in the public and/or private sector and international
credit agencies in the aspects relating to the Committee’s mission.
e)
To design and propose to the Board of directors special policies for financing homes.
f)
To provide the Board with relevant information.
g)
h)
i)
9.
To foster the development of home financing throughout the country.
To propose to the Board changes in the organization and functions of the Department of
Homes.
To supervise the performance of the Department of Homes, and
To coordinate with the other Bank committees the financial aspects and the assessment of
credit risk in the various lines of home loans.
Any proposals, opinions and recommendations handed down by the Committee of Homes in the
discharge of its functions as outlined in paragraph 8 of these rules, shall be submitted to the Board of
Directors for it to channel them and for their implementation through the General Manager.
10. When the Committee sees it fit, it may invite any Banco Hipotecario S.A. officer, its External Auditor
and/or representatives of other external or internal entities to attend its meetings, when they relate to
aspects meaningful to the Bank, asking them for assistance and requesting access to the information in
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their possession. This Committee’s meetings may be attended by the Directors who do not serve on it
and by the General Manager who will be entitled to voice their opinions though not to vote .
11. The Committee shall draw up minutes recording the matters discussed at each meeting and shall
submit them to the Board for its information and/or consideration. The Minutes shall be transcribed unto
the special book provided for such purpose and they must be signed by the members and officers in
attendance at the meeting.
RULES OF OPERATION OF THE
COMMITTEE OF SOCIAL AND INSTITUTIONAL AFFAIRS
1.
Banco Hipotecario S.A.’s Committee of Social and Institutional Affairs shall serve its purpose within the
framework of the Bank’s Corporate Governance Code.
2.
The Committee of Social and Institutional Affairs shall be made up by no less than 2 regular directors
and no more than 5 regular directors, and by the highest-ranking officer in the area of institutional
relations and relations with the community who will attend these meetings with permission to voice
opinions though not to vote. Moreover, if deemed suitable, the Supervisory Committee may attend all
meetings of the Committee of Social and Institutional Affairs, being empowered to voice opinions but
not to cast votes.
3.
The Directors serving on this Committee for a minimum 2-year period provided that their term in office
does not come to an end before then. This term may be extended for each case only following an
express decision of the Board.The term in office as member of the Committee must not coincide with
the term in office of the other Directors serving on the Committee, in a manner such that the Committee
shall always have a Director amongst its members knowledgeable and experienced in the matter.
4.
By a simple majority vote, the Board of Directors shall determine the number of members who will serve
on this Committee and shall designate its members from amongst the regular directors. The Directors
serving on this Committee must: (i) take an active role in the matters associated to the duties imposed
by the Corporate Governance Code, these Rules and any additional standards that may govern it; (ii)
attend Committee meetings; (iii) obtain training in the matters associated to the functions of the
Committee; and (iv) obtain training for knowledge of the Bank and its businesses.
5.
The Committee shall be chaired by one of the Directors serving on this Committee and shall be elected
from amongst its number. The term of office of the chairman shall be 1 year with the possibility of
his/her reelection subject to the general restrictions described in paragraph 3 above. In the event of
absence of the Chairman, one of the Directors serving on this Committee shall step in as a substitute
for the duration of such absence. The chairman of the Committee shall have the following powers and
functions: (i) preside over meetings, (ii) define which matters shall be debated at meetings, (iii)
coordinate committee operation, (iv) represent the committee before the competent authorities, and (v)
call extraordinary meetings. The highest-ranking officer in charge of institutional relations and relations
with the community may suggest to the Chairman of the Committee which matters must be discussed at
the Committee meetings.
6.
The Chairman of the Committee shall communicate in writing or by e-mail to all the committee members
the Order of Business stating the matters up for debate at the meeting as well as any background
information, supplementary details or any other documentation whose previous knowledge were
required for discussing and adopting a resolution on the matters to be considered. The Chairman may
turn to the Board Secretary for assistance.
7.
The Committee shall hold periodical meetings and at least once a month at the Bank’s premises. The
date for each ordinary meeting shall be fixed by the Committee itself each time. When the urgency of
the matter so warrants, the Committee’s Chairman shall call extraordinary meetings. To validly session,
the Committee needs the simple majority of its member directors and to have the highest-ranking officer
in charge of institutional relations and relations with the community in attendance. The Committee shall
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adopt its decisions, render opinions or make recommendations by a majority vote of the designated
directors in attendance, in the event of a hung vote, the Chairman’s vote shall count as double.
8.
The powers and duties inherent in the functions of the Committee of Social and Institutional Affairs are
as follows:
a) To define the policies for granting gifts and subsidies and submit them to approval by the Board.
b) To grant subsidies for social and/or cultural purposes.
c) To approve the donation of real estate not currently in use.
d) To take part in all matters concerning the Bank’s image and/or its insertion in the community.
e) To consider the environmental impacts of the construction projects or civil works funded by the
Bank.
f) To consider the Annual Social Balance Sheet in the terms discussed under the heading “Social
Balance Sheet” and the report issued on it and to submit it to approval by the Board, and
g) To familiarize with all relevant information in connection with the enterprise social responsibility
of Banco Hipotecario and its subsidiaries.
9.
Any proposals, opinions and recommendations handed down by the Committee of Social and
Institutional Affairs in the discharge of its functions as outlined in paragraph 8 of these rules, shall be
submitted to the Board of Directors for it to channel them and for their implementation through the
General Manager.
10. When the Committee sees it fit, it may invite any Banco Hipotecario S.A. officer, its External Auditor
and/or representatives of other external or internal entities to attend its meetings, when they relate to
aspects meaningful to the Bank, asking them for assistance and requesting access to the information in
their possession. This Committee’s meetings may be attended by the Directors who do not serve on it
and by the General Manager who will be entitled to voice their opinions though not to vote.
11. The Committee shall draw up minutes recording the matters discussed at each meeting and shall
submit them to the Board for its information and/or consideration. The Minutes shall be transcribed unto
the special book provided for such purpose and they must be signed by the members and officers in
attendance at the meeting.
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