Statutes
Investor relations
Statutes
Uniform text of the Articles of Association of the Bank Handlowy w Warszawie S.A. edited by the resolution of the Supervisory Board dated 26th of September 2006, amended on the 29th of September 2006 by resolution of the Extraordinary General Meeting of Shareholders and on 23rd of January 2007 by resolution of the Extraordinary General Meeting of Shareholders and on 23 June 2007 by the resolution  of the ordinary General Meeting of Shareholders and on 23 November 2007  of the Extraordinary General Meeting of Shareholders 

ARTICLES OF ASSOCIATION
OF THE BANK HANDLOWY W WARSZAWIE S.A.


I.  NAME  AND  SEAT

§ 1.

Bank Handlowy w Warszawie Spó³ka Akcyjna (hereinafter referred to as the "Bank"), established by virtue of original Articles of Association dated 24 February 1870, operates pursuant to the applicable laws and these Articles of Association.

§ 2.

  1. The name of Bank is: "Bank Handlowy w Warszawie Spó³ka Akcyjna".
  2. The Bank may use an abbreviated form of its name: "Bank Handlowy w Warszawie S.A.".

§ 3.

The seat of the Bank is in the Metropolitan City of Warsaw.

§ 4.

The activities of the Bank extend throughout the territory of the Republic of Poland and abroad. The Bank may establish branch offices and other agencies throughout of Poland and abroad.


II.  ACTIVITIES  OF  THE BANK

§ 5.

  1. The subject of activities of the Bank is to extend banking services in Poland and abroad and, within the provisions of applicable laws, to perform any other activities, which are related with bank activities.
  2. In relation to its business, the Bank is entitled to possess foreign exchange values and to deal in such values.
  3. The Bank may carry out the following activities:
    1)  accept cash deposits upon request or upon the specified deadline as well as maintain accounts for the deposits,
    2)  maintain other bank accounts,
    3)  perform settlements and effect payments in all forms accepted in domestic and international banking relations,
    4)  grant credits and cash loans,
    5)  perform cheque and bill of exchange  and warrant transactions,
    6)  grant and confirm sureties,
    7)  grant and confirm bank guarantees and open and confirm letters of credit,
    8)  purchase and sell foreign currencies,
    9)  act as an intermediary in dealing with money transfers and foreign exchange settlements,
    10)  issue bank's securities,
    11)  perform ordered activities related to issue of securities,
    12)  perform safe-keeping of valuables and securities and provide bank safes,
    13)  issue credit cards and perform the related operations,
    14)  acquire and sell receivables,
    15)  perform term financial operations.
  4. Additionally, the Bank is entitled to:
    1)  come into possession and purchase shares and rights to shares, shares of another legal person and participation units in investment funds,
    2)  organize and provide services in financial leasing,
    3)  render factoring services,
    4)   trade in securities,
    5)  maintain securities accounts,
    6)  render consulting and advising services on financial matters, including services in favour of companies associated with the Bank or with a dominant entity of the Bank within the scope of management oversight over the entities' business, which consists mainly in providing functioning of this entities in accordance with law, requirements of administrative or regulatory authorities and internal regulations applicable within the group of a dominant entity of the Bank,
    7)  contract liabilities due to issuance of securities,
    8)  play the role of a bank representative within the meaning of the Bond Act,
    9)  purchase and sell real estate, perpetual usufruct of or shares in real estate,
    10)  settle trading in securities, property rights and derivatives,
    11)  convert receivables into items of property subject to confiscation on the terms agreed with the debtor,
    12)  purchase and sell derivatives on its own account or by order of other parties,
    13)  render financial services with reference to canvassing activity in the understanding of the Law on organization and functioning of pension funds,
    14)  accept purchase and sale orders as well as maintain subscriptions for participation units or investment certificates in investment funds,
    15)  provide insurance brokerage services in the  form of agency services,
    16)  act as a depository for pension funds,
    17)  act as a depository for investment funds,
    18)  render in favour of companies associated with the Bank or with a dominant entity of the Bank the following services within the scope of auxiliary financial activity with the usage of informational systems and technologies, including services within the scope of the development and maintenance of software, informational infrastructure and data processing,
    19)  act as investment company agent, in the name and on behalf of  investment company, within the scope of agency for the activity of this company,
    20)  render financial services related to the trading on financial instruments issued abroad and their safe-keeping, including the maintenance of the register of financial instruments recorded by foreign financial and custody-settlement institutions.
    21)  perform brokerage activities consisting in accepting and transmitting orders for purchase or sale of brokerage financial instruments.
  5. The Bank may undertake cooperation within the group, including it may participate financially or operationally in projects implemented jointly with companies associated with the Bank or with a dominant entity of the Bank.

§ 6.

Pursuant to the applicable Laws, the Bank is bound to keep secret any information on the transactions or balances of accounts as well as any components of property entrusted to it by its customers.


III.  AUTHORITIES  OF  THE  BANK

§ 7.

The authorities of the Bank are:
1) General Meeting of Shareholders,
2) Supervisory Board,
3) Management Board.

A. General Meeting of Shareholders

§ 8.

  1. The ordinary General Meeting of Shareholders is convened by the Management Board. It shall be held within the first six months after the end of each financial year.
  2. The Supervisory Board is entitled to convene the Ordinary Meeting of Shareholders when it is not convened within the time period provided for in these Articles of Association.
  3. The Extraordinary General Meeting of Shareholders is convened by the Management Board itself or on demand of the Supervisory Board or on demand of Shareholders representing at least one tenth of the share capital. The demand to convene a General Meeting and to put particular items on its agenda should be justified.
  4. If the Management Board does not fulfil the demand within two weeks after submission of the demand, the Supervisory Board shall be vested into the right of convening the Extraordinary General Meeting of Shareholders. This shall not restrict the rights of Shareholders provided for in Art. 401 of the Commercial Companies Code to obtain a court decision authorizing them to convene the Extraordinary General Meeting of Shareholders.
  5. If the agenda of the General Meeting is to include certain issues motioned for by the authorized entities or if the General Meeting is convened at the request of the authorized entities, the Meeting may be called off exclusively at the consent of the movers. In all other cases the General Meeting may be cancelled only if unusual circumstances (force majeure) prevent holding the Meeting or if the Meeting is obviously pointless. The Meeting shall be cancelled in the same way it is convened, with the smallest possible negative impact on the Company and the shareholders, and the cancelling shall be made at least three weeks prior to the planned date of the Meeting. The change of the General Meeting date shall be made in the same way as the cancelling of the Meeting even if the planned agenda of the Meeting is to remain unchanged.
  6. The General Meeting may adopt a resolution on abandoning the consideration of any matter included on the agenda of the Meeting, or change the order of matters included on the agenda.  The prior consent of all the shareholders present at the Meeting who filed such motion, supported by 75% of the votes of the General Meeting, shall be required to cancel an item on the agenda or abandon the consideration of any matter included on the agenda.  Any motions regarding the same should be duly substantiated.

§ 9.

  1. The agenda of the Ordinary General Meeting of Shareholders shall include:
    1) examination and approval of the report from business of the Bank prepared by the Management Board and the financial statements for the previous financial year,
    2) adoption of resolution on the distribution of net profit or covering of net losses,
    3) absolve the authorities of the Bank from performance of their duties.
  2. Besides those issues, absolutely required by the applicable law, the General Meeting of Shareholders shall also have authority to:
    1) sell and lease the whole or any part of the Bank's enterprise or its organized part and to establish a restricted property title over it,
    2) amend these Articles of Association,
    3) increase or decrease the share capital of the Bank,
    4) define the date of determining the right to enlist for shares of any new issue,
    5) define the date of determining the right to dividend for the previous financial year and the date of dividend payment,
    6) create and liquidate special funds out of the net profit,
    7) appoint and recall members of the Supervisory Board,
    8) define the remuneration for members of the Supervisory Board,
    9) merge or liquidate the Bank,
    10) appoint and recall liquidators,
    11) redeeming of Bank's shares.

§ 10.

Motions in matters set forth in Section 9, except for Section 9 Item 2 Points 7 and 8, submitted to the General Meeting of Shareholders should have been previously submitted by the Management Board to the Supervisory Board for issue of an opinion by the latter.

§ 11.

  1. Shareholders may participate in and exercise voting rights at the General Meeting of Shareholders either in person or represented by attorneys.
  2. In order to be valid, the powers of attorney for participation in and voting at the General Meeting of Shareholders shall be made out in writing.

§ 12.

  1. The General Meeting of Shareholders shall be valid irrespectively of the number of shares in attendance, unless applicable laws require otherwise.
  2. Resolutions of the General Meeting of Shareholders shall be adopted by an absolute majority of votes present, unless otherwise provided by law or the provisions hereof.

§ 13.

  1. Voting at the General Meeting of Shareholders is open. Closed ballot is ordered during elections, as well as on voting motions for the recalling of members of the Bank's authorities or liquidators, on making them accountable, and in voting on private matters. Moreover, a secret ballot shall be ordered on request of at least one Shareholder present or being represented at the General Meeting of Shareholders.
  2. A General Meeting of Shareholders is opened by the Chairman of the Supervisory Board and in case of his absence, by the Vice-Chairman of the Supervisory Board or one of the members of the Supervisory Board in succession.
  3. The General Meeting of Shareholders elects its Chairman from among persons entitled to participate in the General Meeting.
  4. The detailed procedure thereof shall be provided for in regulations to be resolved upon by the General Meeting of Shareholders.

B. Supervisory Board

§ 14.

  1. The Supervisory Board shall consist of five to twelve members elected by the General Meeting of Shareholders.  Each member of the Supervisory Board shall be elected for a term of office of three years. At least a half of the members of the Supervisory Board, including its Chairman, should be Polish citizens.
  2. The number of members of the Supervisory Board is determined by the General Meeting of Shareholders within the bounds provided for in Item 1.
  3. The procedure of appointing members of the Supervisory Board shall be provided for in the regulations of the General Meeting of Shareholders.
  4. The independent Supervisory Board member shall be deemed the Supervisory Board member that:
    1) is not and was not, during the last three years, an employee of the Bank, its subsidiaries or dominant companies,
    2) does not and did not hold, during the last three years, the position of Management Board member or any other managerial position (whatever the legal basis thereof) at the Bank, its subsidiaries or dominant companies,
    3) is not a Bank shareholder holding more than 5% of votes and is not employed by a Bank shareholder holding more than 5% of votes,
    4) does not receive any additional remuneration (except the remuneration due for Supervisory Board membership) or any other financial benefits from the Bank, its dominant companies or subsidiaries, save for benefits due to the Supervisory Board member as a consumer that executed an agreement with the Bank, its dominant entity or subsidiary, on standard terms and conditions,
    5) is not and was not, during the last three years, an auditor of the Bank, its dominant companies or subsidiaries, or an employee of an entity providing auditing services to the Bank, its dominant companies or subsidiaries,
    6) is not and was not a spouse, common law spouse, direct or other relative of the Bank's Management Board member or an employee holding a managerial position at the Bank during the last three years,
    7) is not a management board member in another company in which a Management Board member of the Bank is a supervisory board member.

§ 15.

The mandate of a Supervisory Board member expires:
1) on the day the General Meeting of Shareholders approving the Management Board's report, the balance-sheet and profit-and-loss account for the full last year of fulfilling the functions of members of the Board,
2) due to death of a member of the Board,
3) on the date of recalling the Board member by the General Meeting of Shareholders,
4) on the day of submitting resignation in writing to the Chairman or Vice-Chairman of the Board.

§ 16.

  1. The Supervisory Board elects its Chairman and Vice-Chairmen's of the Supervisory Board from among its members.  Such election shall take place during a meeting of the Supervisory Board, in secret ballot.
  2. The Supervisory Board shall adopt is regulations, which shall in detail provide for its proceedings.

§ 17.

Members of the Board may exercise their duties in person, only.

§ 18.

  1. Besides the rights and obligations provided for in applicable laws and other matters provided for in these Articles of Association, the Supervisory Board is authorized to resolve upon:
    1) appointing and recalling the President of the Management Board in a secret ballot,
    2) appointing and recalling on the President's motion in secret ballot of Vice-Presidents and other members of the Bank's Management Board,
    3) determine terms and conditions of agreements which cover contracts of employment or other legal relationship among members of the Management Board and the Bank,
    4) consent to the opening and closing of  a branch office abroad,
    5) resolving upon regulations of the Supervisory Board and approving the following regulations adopted by the Bank's Management Board:
    a) regulations of the Management Board,
    b) regulations for the application of special funds created out of the net profit,
    6) granting prior consent to any disposition of the Bank's fired assets with value in excess of 1/10 of the Bank's share capital,
    7) appointing auditors,
    8) granting consent for the employment and dismissal of the person in charge of the internal Audit Department upon the motion of the Management Board,
    9) any performance to be made by the Bank or any of its associated entities for any reason whatsoever, to the benefit of any of the Management Board's members and granting consent for the conclusion by the Bank or its subsidiary of a material agreement with any entity associated with the Bank, the Supervisory Board member, the Management Board member or entities associated with them.
    10) performing supervision over the introduction and monitoring of the management system in the Bank, including in particular performing supervision over the management of the non-compliance risk, and conducting, at least once a year, the assessment of the adequacy and effectiveness of such system,
    11)  approving a strategy of the Bank's  activity and the rules of prudent and stable management of the Bank,
    12)   approving the fundamental organizational structure of the Bank, harmonized with the size and profile of incurred risk and determined by the Bank's Management Board,
    13) accepting a general level of the Bank's risk,
    14) approving foundations of the Bank's policy on non-compliance risk,
    15) approving the Bank's internal procedures on processes for the assessment of internal capital, capital management and capital planning,
    16) approving the Bank's information policy,
    17)  approving of an internal control procedure.
  2. A material agreement, referred to in Item 1 Point 9 above, is an agreement:
    1) with a value having influence on the Bank's financial results exceeding 5% of the net income presented in the last annual standalone financial statement of the Bank, reviewed by an auditor, or
    2) with a value exceeding 0.5% of the balance sheet sum presented in the last annual standalone financial statement of the Bank, reviewed by an auditor, or
    3) with which high legal, regulatory or reputation risk is connected, or
    4) to be concluded with an entity associated with the Bank with a value exceeding the equivalent of EUR 500,000,
    except for agreements concluded within the day-to-day operational activity, in particular connected with liquidity management.
  3. A value of a material agreement, referred to in Item 1 Point 9 above, shall mean a value of cash and non-cash charges determined during the negotiations of such agreement that the Bank will be obliged to pay under the agreement. If an agreement is to be concluded for an indefinite period of time or a period exceeding 1 year, for the determination of its value for the above purposes the estimated charges for a 1-year period shall be taken into account.
  4. The resolutions of the Supervisory Board regarding the matters, referred to in Item 1 Item 7 and 9 above, may not be adopted without consent of the majority of independent Supervisory Board's members.

§ 19.

  1. Meetings of the Board are held at least once every quarter year. The Chairman of the Board or, failing him, one of the Vice-Chairmen of the Board shall convene a meeting of the Board either on their own initiative or at the motion of a Board member or of the Management Board.
  2. The Supervisory Board shall meet on the date of the General Meeting of Shareholders provided for in Section 21 Item 2 of these Articles of Association for the purpose of electing members of the Bank's Management Board.
  3. Members of the Supervisory Board may participate in adopting resolutions by casting their vote in writing through another member of the Supervisory Board. Casting of a vote in writing may not be done in matters introduced into the Agenda at the Supervisory Board meeting.
  4. The Supervisory Board may adopt resolutions according to a written procedure or using means of direct distance communication. The resolution shall be binding when all members of the Supervisory Board have been notified of the wording of the draft resolution, and an absolute majority of them had been in favour thereof.

C. Management Board

§ 20.

  1. The Management Board is composed of five to nine members.
  2. Members of the Management Board include: The President of the Management Board of the Bank, Vice Presidents of the Management Board of the Bank and other members of the Management Board.
  3. At least a half of members of the Management Board should be Polish citizens.

§ 21.

  1. Each member of the Management Board is appointed by the Supervisory Board for tenure of three years.
  2. The tenure of the members of the Management Board shall expire:
    1) on the date of holding the General Meeting, which approves the Management Board's report from business of the Bank and financial statements for the last full year of fulfilment by them of the function of member of the Management Board,
    2) upon death of a member of the Management Board,
    3) upon being recalled,
    4) on the day of submitting a written resignation to the Chairman of the Supervisory Board.


§ 22.

The Management Board adopts decisions in matters, which have not been reserved by the applicable law and by these Articles of Association to authority of other authorities of the Bank.

§ 23.

The Management Board shall proceed according to the regulations of the Management Board.

§ 24.

  1. The Management Board shall by way of a resolution:
    1) determine strategy of the Bank,
    2) establish and liquidate committees of the Bank and defines their authorities,
    3) determine its regulations and submit them for approval to the Supervisory Board,
    4) determine regulations for the application of special funds created out of net profit submit them for approval to the Supervisory Board,
    5) determine the date of dividend payment within the period defined by the General Meeting,
    6) appoint registered proxies, general attorneys and general attorneys entitled to appoint further attorneys,
    7) decide in matters provided for in regulations of the Management Board,
    8) resolve in matters submitted by the President of the Management Board, Vice-President or member of the Management Board,
    9) self-dependently decides on the acquisition and disposal of real properties, perpetual usufruct of or  shares in real properties,
    10) adopt a draft of the annual financial projections for the Bank, investment plans and reports on the completion thereof,
    11) endorse reports on the Bank's operations as well as the financial statements,
    12) prepare motions for the distribution of profits or the covering of losses,
    13) endorse the human resource and crediting policy as well as the legal principles for the Bank's operations,
    14) endorse the principles for managing the Bank's capitals,
    15) endorse the employment structure,
    16) determine the core organizational structure of the Bank, appoint and dismiss Sector Managers and Division Managers as well as define the scope of the powers vested in them,
    17) endorse the principles for inspection operations within the Bank, as well as approve reports on the completion of any audits,
    18) resolve any other issues which, pursuant to the Articles of Association, must be submitted for approval to the Supervisory Board and the General Meeting,
    19) decide to incur obligations or dispose of assets whose aggregate value, in relation to one entity, exceeds 5% of the Bank's equity or shall authorize designated persons to make such a decision, provided that decisions in matters within the powers vested in Committees formed in the Bank are made upon consultation with the relevant Committee.
  2. The acquisition and transfer of a real property, the right of perpetual usufruct or a share in a real property by the Bank shall not require a resolution by the General Meeting or a resolution by the Management Board as long as it is connected with the Bank's seeking collection of debts resulting from banking operations, unless the value of the real property, the perpetual usufruct or the share in a real property exceeds the value of PLN 10,000,000.
  3. The Management Board of the Bank shall design, implement and assure operation of management system in the Bank.

§ 25.

  1. The President of the Management Board:
    1) manages the activities of the Bank's Management,
    2) convenes meetings of Management and presides the meetings,
    3) presents views of the Management in respect to other bodies of the Company, authorities of the State and to the public,
    4) files motions with the Supervisory Board regarding the appointment or dismissal of Vice Presidents and other members of the Bank's Management Board and determining the remuneration thereof,
    5) issues internal regulations controlling activities of the Bank and may authorize remaining members of the Management or other employees of the Bank to issue such regulations,
    6) performs other authorities provided for in the regulations specified in § 24.
  2. The Management member appointed as the Bank's CFO manages the Financial Division, whose responsibilities include in particular:
    1) financial planning processes within the Bank,
    2) accountancy and financial statements,
    3) tax settlements and other public charges,
    4) auditing the Bank's hedging processes relating to the Bank's financial and operational risk exposure.


§ 26.

Other members of the Management Board manage activities of the Bank as provided for in the regulations of the Management Board.


IV.  TERMS  AND CONDITIONS  FOR  ADOPTING  DECISIONS  AND  MAKING REPRESENTATIONS  AS  TO  MATERIAL  RIGHTS  AND  OBLIGATIONS

§ 27.

  1. The following persons are authorized to make statements in respect of material rights and obligations of the Bank and to sign on behalf of the Bank:
    1) the President of the Management Board and Vice Presidents of the Management Board - each individually,
    2) two persons acting jointly from among remaining members of the Management Board, holders of procuration or attorneys acting within the limits of authority accorded to them.
  2. For the execution of the activities of defined nature or specific nature, there may be appointed attorneys acting individually within the limits of their authorization.
  3. Procurators may be appointed only on principles of joint procuration (authorizing to act together with another person). A general power of attorney may be issued by the Management Board only when it is limited by the requirement of acting jointly with another authorized person.
  4. Decisions on matters in which no resolution of the Management Board is required and which are not reserved for other competent authorities shall be adopted by persons in managerial positions in the Bank, within the scope of powers vested in them and the tasks assigned to the organizational unit managed by them.
  5. Statements in respect of material rights and obligations of the Bank in the implementations of the decisions made are submitted on behalf of the Bank pursuant to the rules described in Items 1-3 of this Section.


V.  THE  ORGANIZATIONAL  STRUCTURE  OF  THE  BANK

§ 28.

  1. The Bank's Management Board manages the Bank's affairs through the organizational units comprising the Bank's organizational structure.
  2. The Bank's Management Board may appoint Committees to perform internal decision-making, advisory and controlling tasks within the Bank.
  3. The Bank's organizational structure shall be comprised of Sectors.
  4. As regards the geographic division within the organizational structure of the Bank, branches that provide regular services to the Bank's clients constitute the Bank's basic organizational units.
  5. The Bank's organizational rules and regulations set forth its organizational structure.


VI.  PROCEDURE  FOR  PROMULGATING  INTERNAL  REGULATIONS

§ 29.

  1. Internal regulations of the Bank shall be issued in the form of:
    1) ordinances of the President of the Bank's Management Board,
    2) decisions issued by Sector Managers, Division Managers, Chairmen of the Committees operating within the Bank and the directors of organizational units within the Bank, on the basis of the powers vested in them pursuant to a relevant ordinance of the President of the Bank's Management Board.
  2. The President of the Bank's Management Board shall issue ordinances pursuant to the resolutions of the Bank's Management Board or at his own initiative.
  3. The detailed principles, procedures and techniques for the issue of internal regulations in the Bank shall be specified in an ordinance of the President of the Bank's Management Board.


VII.  FUNDS  OF  THE  BANK

§ 30.

  1. The statutory financial resources of the Bank are composed of:
    1) share capital,
    2) reserve capital,
    3) reserve funds,
    4) general risk fund.
  2. The Bank may create and liquidate during and at the end of the financial year special funds pursuant to resolutions of the General Meeting of Shareholders.
  3. The Bank creates funds provided for in the applicable Laws.

§ 31.

  1. The Bank's share capital shall amount to PLN 522,638,400  (five hundred twenty two million six hundred thirty eight thousand four hundred Polish Zloty) and shall be divided into 130,659,600 (one hundred and thirty million six hundred and fifty nine thousand six hundred) bearer shares, each with a nominal value of PLN 4 (four Polish Zloty), including:
    1) 65,000,000 (sixty five million) A Series bearer shares,
    2) 28,000,000  (twenty eight million) B Series bearer shares,
    3) 37,659,600 (thirty seven million six hundred and fifty nine thousand six hundred) C Series bearer shares.
  2. Shares may be issued in collective units.
  3. Share capital of the Bank may be increased through the issue of new shares, which may be registered or bearer shares, or through the increase in the nominal value of the existing shares.
  4. Bearer shares are not convertible into registered shares.
  5. The Bank is entitled to issue bonds convertible into shares or bonds with preference rights.
  6. Shares of the Bank may be redeemed on consent of the Shareholder by acquisition of shares by the Bank (voluntary redeeming).
  7. Redeeming of shares required a resolution of the General Meeting of Shareholders. The resolution shall in particular specify the legal basis of redeeming shares, amount of remuneration due to the Shareholder of redeemed shares or justification for redeeming of shares without payment for such chares and manner of decreasing the share capital.

§ 32.

  1. The supplementary capital shall be created out of annual write-offs from the net profit of no less than 8% of the net profit for a given fiscal year, until the supplementary capital reaches at least one-third of the share capital.  The General Shareholders' Meeting may adopt a resolution ordering that further write-offs be made.
  2. The supplementary capital is supplied also from additional payments to be made by the Shareholders in consideration of special rights vested onto the shares hitherto held, as long as such additional payments are not used to recover extraordinary deductions or losses defined by the General Meeting of Shareholders.
  3. The supplementary capital shall also be supplemented with surplus attained by issue of shares above their par price, and remaining after covering the costs of share issue.
  4. The supplementary capital shall be used to cover any balance sheet losses incurred by the Bank or for any other purposes, including the payment of dividends to shareholders. The General Shareholders' Meeting shall decide how to appropriate the supplementary capital, provided that the portion of the supplementary capital, which equals one-third of the share capital may only be used to cover losses reported in the financial statements.

§ 33.

  1. The reserve capitals (funds) are built up of the annual deductions made out of the net profit or from other sources, apart from the reserve capital.
  2. The reserve capitals shall be used to cover any balance sheet losses incurred by the Bank or for any other purposes, including the payment of dividends to shareholders. The General Shareholders' Meeting shall decide how to appropriate the reserve capital.
  3. The Bank may establish a capital (fund) for accumulating retained profit (not allocated to dividend). The decision on the allocation of the reserve fund shall be taken by the General Meeting of Shareholders.

§ 34.

  1. The general risk fund is created from net profit earmarked for unidentified risks of banking activity.
  2. Sums to supply the fund are annually deducted from net profit in the amount resolved upon by the General Meeting.
  3. The use of the fund is decided upon by the General Meeting on the basis of applicable regulations.


§ 35.

The use of special funds established out of net profit takes place on the basis of respective regulations.


VIII.  MANAGEMENT  OF  FINANCE

§ 36.

  1. The General Meeting of Shareholders shall decide on the distribution of net profit, determining the amount of deductions to be made to:
    1) the reserve capital, subject to the provisions of Section 32 Item 1,
    2) the reserve fund,
    3) the general risk fund,
    4) dividend,
    5) other special funds,
    6) for other purposes.

§ 37.

The dividend on shares is paid on dates fixed by the Management Board of the Bank within the period defined by the General Meeting of Shareholders. Dividend not collected within the period of three years is transferred into favour of the Bank. The Bank does not pay any interest on uncollected dividends.

§ 38.

  1. Management Board shall assure preparation of the annual financial statements and the consolidated financial statements of the Bank's capital group.
  2. The annual report, and the consolidated financial statements of the Bank's capital group shall be submitted by the Management Board to the General Meeting of Shareholders upon their consideration by the Supervisory Board of the Bank.

 


IX.  INTERNAL  AUDIT  SYSTEM

      § 39

  1. The Bank shall have an internal control system which shall verify the operations of the Bank, both in terms of their legality and correctness, as well as the accuracy of the statements and information submitted by the Bank.
  2. The internal control system covers risk control mechanisms, examining compliance of Bank's operations with provisions of laws and internal regulations and internal audit.
  3. The internal control system is aimed at supporting decision making processes which are contributory to ensuring effectiveness and efficiency of the Bank's operations, credibility of financial statements and compliance of Bank's operations with provisions of laws and internal regulations.
  4. The internal audit in the Bank is performed by the Audit Department which shall constitute a separate organizational unit operating as part of the Bank's structure and directly dependent on the Management Board. The task of the Audit Department shall be to examine and assess, independently and objectively, the adequacy and efficiency of the internal audit system, as well as to issue opinions on the Bank's management system, including the efficiency of the management of risk resulting from the Bank's operations.
  5. The functional internal control at the Bank shall be performed by each employee and, additionally, by such employee's direct superior and persons cooperating with the superior, as well as by managers of organizational units of the Bank, in terms of the quality and correctness of tasks performed by individual employees in order to ensure the compliance of their tasks with the Bank's control procedures and mechanisms.
  6. The Supervisory Board shall perform supervision over the Audit Department activity. The Supervisory Board may appoint an internal audit committee from among its members to perform supervisory activities in this regard.
  7. The head of the Audit Department shall regularly, at least once a year, provide the Supervisory Board and the Management Board with information about the discovered irregularities and conclusions from internal audits conducted and measures taken to remedy such irregularities or implement such conclusions.  The head of the Audit Department shall be authorized to participate in the Management Board and Supervisory Board meetings at which matters pertaining to the Bank's internal audit will be discussed.
  8. The Management Board of the Bank shall determine the detailed rules of the internal audit at the Bank and the organization and scope of activity of the Audit Department.


X.  FINAL  PROVISIONS

§ 40.

In case of liquidation of the Bank, the General Meeting of Shareholders appoints, at the motion of the Supervisory Board, one or more liquidators and determines the method of liquidation.

§ 41.

Financial statements of the Bank shall be published by the Management Board in the Official Gazette of the Republic of Poland  "Monitor Polski B", whereas announcements on other matters will be made public in the "Monitor S±dowy i Gospodarczy".

§ 42.

The applicable laws shall prevail in all matters not provided for in these Articles of Association.