RAIFFEISENBANK (BULGARIA) EAD

Transcription

1 RAIFFEISENBANK (BULGARIA) EAD GENERAL TERMS AND CONDITIONS FOR DEALS WITH FINANCIAL INSTRUMENTS APPLICABLE TO AGREEMENTS CONCLUDED WITH CLIENTS Sofia 1504, Gogol Street

2 CHAPTER ONE I. GENERAL PROVISIONS INVESTOR INTERMEDIARY S DATA RAIFFEISENBANK (BULGARIA) EAD, further in this text: the Bank, is a Bulgarian financial institution with address: Sofia 1504, Gogol Str., contact phone: ; BULSTAT code: Ю ; tax number: ; company file No14195/94, batch No18414, volume 230 p 1, page 38; licensed by BNB with decision of the BNB s Management Board No198 of 16 June 1994, in accordance with Art. 9, Para. 1 of the Law on Banks and Art, 2, Para.2 of Ordinance No2 of the BNB dated 11 February 1993; Registration number with the Financial Supervision Commission: Р The Bank s scope of activity: RAIFFEISENBANK (BULGARIA) EAD has the right to perform, in both domestic and foreign currency, the following deals under Article 2, Paragraph 1-2 of the Law on Credit Institutions, at home and abroad: 1. Public accepting of deposits or other repayable funds, and extending loans and other financing for its own account and at its own risk; 2. Performing non-cash transfers and other forms of non-cash payments, like letters of credit or bills of collection; 3. Issuance and administration of means of payment, like electronic payment instruments, traveler s checks; 4. Acceptance of valuables on deposit; 5. Depository or custodian activities; 6. Funds transfers in cases other than those under item 2; 7. Financial leasing; 8. Guarantee transactions; 9. Trading for its own account or for customers account in: a) money market instruments checks, bills of exchange, deposit certificates, etc., b) foreign currency and precious metals; c) financial futures, options, exchange and interest-rate instruments, as well as other derivative instruments; 10. Trading for its own account or for customers account in transferable securities, underwriting issues in securities, and other services and activities under Article 5, Paragraph 2 and 3 of the Law on Markets in Financial Instruments; 11. Financial brokerage; 12. Consultancy on portfolio investments; 13. Purchase of accounts receivable for the delivery of goods or provision of services, and assumption of the risk related to the collection of these receivables (factoring); 14. Equity acquisition and management; 15. Providing bank safes to let; 16. Collecting and granting information and references on customers creditworthiness. II. SUBJECT The present General Terms and Conditions have been worded in compliance with the requirements of the Law on Markets in Financial Instruments (LMFI) and Ordinance No38 regarding the requirements towards the activities of the investment intermediaries (ORDINANCE No38). The present General Terms and Conditions are mandatory for the bank and the client when concluding deals in financial instruments. The present General Terms and Conditions are effective in the following specific cases: 2

3 II.1. Deals in financial instruments for another person s or its own account: - conclusion and execution - for its own or another person s account, - of deals in financial instruments issued by local or foreign entities, and intermediation in concluding such deals; - management of individual portfolios of financial instruments and/or money, except for the portfolios of investment companies or pension funds; - swap deals in financial instruments; - extension of non-banking loans for the purchase of financial instruments or borrowing financial instruments under the terms and procedures specified by an ordinance; - other deals subject of the particular agreement. In case the bank is acting on behalf of the client, the subject matter and the scope of the representation power are to be established in written form, by the respective investment services agreement. II.2. Activities related to underwriting issues of financial instruments: - underwriting issues of financial instruments II.3. Custodian activity: - storage of the clients financial instruments and clients money in safe-keeping custodian activity; - representation of the holders of financial instrument in front of the issuer thereof, or at general meetings of the holders of financial instruments. II.4. Investment and consultancy activity - investment consultancy regarding financial instruments; - consultancy and analyses of companies regarding the financing of their activity, their equity structure, their industrial strategy and the matters related thereto, as well as consultancy and services regarding the transformation of companies and deals concerning acquisition of enterprises; - preparing prospects for public offering of securities. III. APPLICABILITY The present General Terms and Conditions are applicable when concluding agreements with clients according to the cases described in items II.2 II.4. IV. TYPES OF FINANCIAL INSTRUMENTS The Bank, in its capacity of an investment intermediary, can conclude and execute deals on the client s behalf and/or its own behalf in all types of financial instruments under the terms of Article 3 of LMFI which can be publicly offered as: - securities; - instruments other than securities: a) instruments on the money market; b) units in collective investment undertakings; c) other rights related to financial instruments /options, futures, swaps, forward contracts, investment agreements, and other derivative agreements/. CONCLUSION OF CONTRACTS V.1. The Bank provides investment and ancillary services on behalf of clients based on a written contract with the client 3

4 V.2. The Bank must conclude its contracts with the clients based on the General Terms and Conditions for Deals with Financial Instruments, whereas the agreements shall enter into force on the day of signing and shall bind the parties until the agreements are not amended, supplemented, substituted or terminated, and also as far as particular agreements on /deals with/ financial instruments are in force between the parties. V.3. Client or his representative shall sign the contract in the presence of a person under Art. 39, para. 1 of Ordinance 38 of 2007 on the activities of investment intermediaries, after verifying the identity of the client or his representative. V.4. Copy of identity card of the client or his representative, certified by him and the person under Art. 39, para. 1 of Ordinance 38 of 2007 on the activities of investment intermediaries remained in the records of the Bank. Validation is done by taking the words "true copy" signed and dated by the person making the certification. V.5. Conclusion of contract by proxy is permissible only if a notarized power of attorney, representing powers for management or disposal of financial instruments and a declaration by the proxy that does not carry on business transactions with financial instruments and that is not performed such transactions within one year prior to the contract is concluded. V.6. The contract may be concluded by exchange of electronic messages signed with qualified digital signature. Client or his representative shall send the Bank signed under the preceding sentence, a copy of his/her identity and for clients - legal entities - a copy of commercial registration documents containing information on the formation and representation of the company. The provisions of section V.3. and V.4. not apply. V.7. Upon conclusion of the contract and under the conditions of paragraph V.6. the person under Art. 39, para. 1 of Ordinance 38 of 2007 on the activities of investment intermediaries verifies the identity of the client or his representative by checking the data available in the digital signature V.8. When checking in items V.7. establish that there is a discrepancy in the identity of that person in the electronic statement and the holder of the qualified digital signature or a discrepancy between the holder of the qualified electronic signature and the representative of the legal entity, which assumes the electronic statement, shall be deemed that the contract is not concluded. The Bank shall immediately notify the signatory and author of the electronic statement by the provider of certification services for the fact of the previous sentence. V.9. Providing all necessary information from the client according to the requirements of Ordinance 38 of 2007 on the activities of investment intermediaries and the provision information needed for assessing appropriate service can be done through electronic statement signed by the client with qualified digital signature. V.10. The contract may be concluded in absentia by an exchange of required documents signed by the parties, provided that the customer holds a bank account opened in the credit institution that meets the following requirements - is based in state member of the Europian Union, state - party to the European Economic Area Agreement, the United States or Switzerland, or branch of a credit institution of another country, found in one of those countries, provided that the credit institution or the branch where the account is opened, observes the requirements for identification of the customers set out in the European legislation. V.11. In the cases under item V. 10. customer or his representative shall send to the Bank: - signed contract - original document issued by the credit institution, verifying that the customer holds a bank account - a certified copy of his ID card and for clients - legal entities - a certified copy of documents for commercial registration, containing data on the formation and representation. Validation is done by taking the words "true copy" signed and dated by the customer. The provisions of section V.3. and V.4. not apply. 4

5 V.12. Remittances in connection with obtaining and providing investment and ancillary services by the client under paragraph V.10. of the contract are made only to and from the bank account under paragraph V.10. V.13. Conclusion of a contract under paragraph V.10. by proxy is not allowed. V.14. The contract may be concluded in absentia by an exchange of required documents signed by the parties as the customer makes his signature in the presence of a notary, stating that fact. When the contract is concluded with a notarized signature of the client, the provisions of section V.3. and V.4. not apply. Providing all necessary information from the customer pursuant to Ordinance 38 of 2007 on the activities of investment intermediaries and the provision of customer information needed for assessing appropriate service can be done remotely from the client by signing the necessary documents before a notary. V.15. In the cases of paragraph V.14. the customer or his representative shall send to the bank the signed contract with a notarized signature of the client, a certified copy of his ID card and for clients - legal entities - a certified copy of documents for commercial registration containing data on the formation and representation. Validation of the ID and the documents for commercial registration is done by taking the words "true copy" signed and dated by the customer. V.16. The Bank may not conclude a contract if the customer or his representative has not submitted and has not signed all necessary documents under item V.1 - V.15., has submitted documents with apparent discrepancies or data is incomplete, have errors or inconsistencies, or there is another circumstance which gives rise to suspicion of undue identification or representation. The Bank may not conclude a contract if the counterparty is represented by proxy who declares carrying out by way of business transactions with financial instruments. V. GENERAL AND SPECIAL CONDITIONS VI. 1. The Bank must display the present General Terms and Conditions in a prominent and accessible place on the premises where it conducts transactions with financial instruments; upon request, it must provide free copies to the clients, allow them to get acquainted with the document in an appropriate way, and to grant free consultancy on the General Terms and Conditions. VI. 2. The client and the bank may write down in the specific transaction /agreement/ special terms and conditions differing from the present General Terms and Conditions. In such a case, effective are the special terms and conditions, albeit the General Terms and Conditions are not explicitly cancelled. VI. 3. The conditions and the period of each particular transaction /agreement/ are to be specified in its contents. VI. 4. The Bank shall conclude and execute in person the assigned transaction in financial instruments. It may assign the deal to another investment intermediary only in case the client has empowered it to do so. The Bank must notify the client about the substitution. VI. 5. The Bank shall conclude the deals with financial instruments for the clients account on the best conditions and striving to achieve the best performance according to the order placed by the client. When executing an order placed by a retail client, the best performance is to be defined by the overall value of the transaction, including the financial instrument s price and the expenses related to the execution. VI. 6. The Bank is to execute the clients orders at its earliest convenience; respectively, when managing a client s individual portfolio of financial instruments, it is to conclude the deals at its earliest convenience, unless in cases when this would be overtly disadvantageous to the client. 5

6 VII. SPECIMENS The client is to provide to the Bank specimens of their signature and/or the signatures of the persons entitled to represent them. The Bank is not obligated to execute orders from persons for whom the client has not provided specimens. CHAPTER TWO RIGHTS AND OBLIGATIONS OF THE BANK VIII. GENERAL OBLIGATIONS OF THE BANK VIII. 1. The bank shall conclude and execute the specific deals with financial instruments with the good merchant s care, preferring the client s interest to its own interest. VIII. 2. The bank grants to the execution of the client s orders priority over those for its own account. VIII. 3. The bank must be authorized in written when it acts on behalf of the client and for their account. The authorization and the scope of the representation power are to be included as a separate clause in the agreement between the Bank and the Client. VIII. 4. When the bank acts on its behalf and for the client s account, the rights and obligations under the deal are to go to the client after being transferred by the investment intermediary. The transfer is to be considered done: (1) in case of dematerialized securities when the client s sub-account with the investment intermediary s account at the Central Depository AD is credited with the purchased securities; (2) in case of money when the client s money account is credited; (3) in case of materialized securities when endorsement is made. VIII. 5. The execution of orders for the purchase of financial instruments is not allowed if there are not sufficient funds on the client s account at the Bank. The deadline until which the client is to have deposited the money for the executions of a buy order, is: (1) by 4.00 pm on the day when the order was placed; (2) within the deadline agreed upon in the agreement with the client, in the cases envisaged by the Ordinance under Art. 5, Para.3, Item 2 of LMFI; (3) on a later stage explicitly specified in written form by the parties (seller and buyer) in case the regulation of the regulated market of financial instruments allows a deal in which the payment for the financial instruments does not take place simultaneously with the transfer thereof. VIII. 6. The Bank is to notify all clients about the conditions and the criteria according to which the clients are defined as professional clients or retail clients, as well as about the circumstances under which the clients may be defined as eligible counterparty, as well as about the clients right to demand another categorization, and about the limitation of their protection in case they are classified into another category (Appendix No3 to the present General Terms and Conditions). VIII. 7. When rendering investment services other than portfolio management or investment consultancy to a client, the Bank is to request information from the client about their knowledge and experience regarding the service to be granted, and to also update this information. VIII. 8. Based on this information, the Bank is to assess whether the offered investment service is appropriate for the client, and in case it deems the offered investment service inappropriate, it is to notify the client in written. VIII. 9. In case the client has not provided any information or the information provided is not sufficient for the assessment, the Bank shall notify the client in written that it cannot assess whether the offered investment service is appropriate for them. VIII. 10. When rendering investment services acceptance or delivery of orders related to one or more financial instruments, including intermediation for the conclusion of deals with 6

7 financial instruments and/or execution of orders for the client s account, - the Bank may render such services to a client who has not provided the information under item VIII.6., if: (1) the subject of the deal are shares admitted to trading on a regulated market or an equivalent market of a third country according to a list by the European Commission, or bonds, or other debentures, except for those bonds or other debentures that are pegging a derivative instrument, instruments on the money market, stakes in collective investment schemes, and other non-complex financial instruments; (2) the service is rendered by the client s initiative or to a potential client; (3) the client/potential client has been advised in written, that the Bank will not keep the obligations under item VIII.7.; (4) the Bank meets the requirements of the conflict of interest management. VIII The Bank has adopted and is applying a conflict of interest management policy which ensures that the persons who work for the investment intermediary on a contractual base conduct all activities involving conflict of interest with a degree of independence adequate to the size of the investment intermediary and the group to which it belongs, and also to the significance of the risk of damaging the client s interest. The procedures and measures include part of the following which is necessary in order to ensure the required degree of independence: 1. Effective procedure to prevent respectively, to control the exchange of information between the persons who carry on activities involving conflict of interest, when the exchange of this information may damage the interest of one or more clients of the Bank; 2. Individual control of the persons whose core functions include the rendering of services on behalf and/or for the account of clients the provision of services to clients, when conflict of interest may arise between the clients interests or persons who otherwise represent various conflicting interest, between which conflict may arise, including the interest of the Bank; 3. The direct relation is missing between the remuneration of the persons conducting one core activity, and the remuneration of the persons conducting another activity for the Bank or between the incomes generated by the latter, if a conflict of interest may arise in relation to these activities; 4. Measures to prevent or restrict the possibility of inappropriate influence from the part of any person over the way in which a person who works for the Bank on a contractual base carries on services and activities under Art. 5, Para. 2 and 3 of the LMFI; 5. Measures to prevent respectively, to control the simultaneous or consecutive participation of a person who works for the Bank on a contractual base in the execution of particular investment or ancillary services or activities, when such participation can damage the due management of the conflicts of interest; 6. Other needed and appropriate measures and procedures, alternative or supplementary to the ones listed above, if the latter cannot provide the required degree of independency; 7. Measures and procedures with a view to guarantee that the requirements are met under Art. 42, Para. 3 of Ordinance No38. VIII Further detailed information on the conflicts of interest management policy is to be provided to the client upon request, on a permanent bearer or the webpage of the Bank. VIII In the cases when the Bank concludes a deal for the account of a retail client, which deal is not performed under an agreement for individual portfolio management, it is to send a confirmation of the concluded deal on a permanent bearer, at its earliest convenience, but not later than on the first business day following the conclusion of the deal. If the confirmation has been accepted form the bank through a third party, the notification of the client is to take place not later than on the first business day following the day when the bank received the confirmation from the third party. The confirmation should contain information under the terms of Art. 45, Para.2, Items 1 14 of Ordinance No38. 7

8 VIII In the cases when the Bank concludes a deal for the account of a professional client, the Bank is to immediately provide to them on a permanent bearer the essential information about the deal concluded. VIII The Bank is to notify the client under the terms and procedure specified in the agreement, - when obligation arises for the client under Art. 145 of the Law on Public Offering of Securities as a result form deals with financial instruments concluded for their account, including in cases of management of individual portfolio of financial instruments and/or money. VIII The notification under item VIII has to contain that part of the following information which is relevant to the specific deal: 1. Identification of the investment intermediary providing the information; 2. Name of the client, or other form of identification of the client; 3. Trading day and time; 4. Type of the order placed; 5. Essence of the order ( buy, sell, etc.); 6. Order execution venue; 7. Identification of the financial instruments; 8. Buy/Sell indicator; 9. Number of pieces; 10. Unit price; 11. Overall value of the transaction; 12. Total of the commissions and expenses to be borne by the client plus individualization of each expense item, upon the client s request; 13. The client s obligations regarding the settlement of the deal, including the deadline for payment or delivery, or data about the account to which the transfer should be executed when these details have not been disclosed to the client earlier; 14. Announcement that counterparty under the deal with the client is the investment intermediary, another entity from the investment intermediary s group, or another client of the investment intermediary unless when the order has been executed through a trading facility allowing anonymous trading. VIII. 12. In cases when the Bank holds client s money or financial instruments, it is to provide to the client, on a permanent bearer, to the address provided by the client and on annual basis at least, a report containing the minimum information according to Art. 46, Para.1, items 1-3 of Ordinance No38, unless the contents of this report has been announced by another periodical report to the client. VIII When rendering the portfolio management service to the client, the Bank is to provide to each client, on a permanent bearer, a periodical report on the portfolio management-related activities performed for the client s account, unless such report is provided to the client by a third party. For a retail client, the report is to contain the minimum information according to Art. 46, Para.2, items 1-8, when applicable. VIII The Bank has to provide the report under item VIII to the retail clients on a semiannual basis, unless: 1. If the client has placed a request to receive the report on a quarterly basis; 2. In the cases under Art. 46, Para.5 of Ordinance No38, when the report should be provided on an annual basis; 3. When leverage is allowed in the portfolio management under the agreement between the bank and the client; in this case, the report should be provided on a monthly basis at least. VIII. 13. The Bank is to notify its clients about the existence of a Compensatory Fund for Investments in Financial Instruments. The Funds is to provide payment of compensation to the Bank s retail clients under the terms and procedure of the Law on Public Offering of Securities, 8

9 through the money accepted at the fund, in the cases when the Bank is unable to fulfill its obligations to the retail clients for reasons directly related to its financial status. VIII In cases when the Bank holds, administrates or manages retail clients money and/or financial instruments, and when liabilities towards them are likely to arise for this reason, the Bank must pay contributions to the Compensatory Fund in accordance with Art. 77, Para. 1 and 2 of the Law on Public Offering of Securities. VIII The Fund is to pay compensation to each retail client of the Bank at the amount up to 90 per cent of the claim, but not more than BGN 40,000. IX. TRADE SECRET IX. The Bank must preserve the client s trade secrets and other secrets, as well as their prestige as merchants. To this end, the Bank must undertake the respective measures, inclusively by way of signing agreements or requesting declarations to be signed with obligation of secrecy, which to guarantee that the persons who manage the client s portfolio, prepare financial and other analyses, as well as the other persons designated by the Bank to have access to the information about this client, will preserve the client s trade secrets and other secrets, along with their prestige as merchants. X. NOTIFICATIONS X.1. The Bank must provide to the client a general description of the financial instruments and the risks related thereto (Appendix No1 to the present General Terms and Conditions). The description is compliant with the client s category (professional or retail client), whereas its contents meets the requirements of Art. 10 of Ordinance No38. X.2. When providing investment consultancy, the Bank is to require from the client the information needed in order to ascertain material facts about the client, which gives the Bank reasonable grounds that the deal to be suggested meets the requirements of Art. 19 of Ordinance No38. X.3. When accepting orders placed by the client on their initiative exclusively, the Bank is to inform the client by way of providing the information required under Art. 8 and Art. 9, as well the information under Articles 10, 18 and 32 of Ordinance No38, - about the risks related to the deal in question, about the types of expenses and the amount thereof, and also about by which third party and where the money/financial instruments provided by the Bank may be stored. X.4. The Bank must notify the client if it is buying or selling financial instruments for its own account or for another person s account. XI. REAUTHORISATION AND SUBSTITUTION XI.1. The Bank may assign to a third party the performance of important operative functions or investment services/activities. The assignment is to take effect based on a written agreement between the Bank and the third party, where the right and obligations of the parties are exhaustively specified. XI.2. The assignment of important operative functions and investment services/activities is to be made in a way that does not lead to the Bank s exemption from its obligations according to the regulatory acts, and also meets the requirements under Art. 51 and Art. 52 of Ordinance No38. XI.3. The Bank is to execute the client s order in the client s best interest, while making reasonable effort to ascertain the best price for the client, according to the order conditions, the amount of expenses, the probability of execution and the other circumstances related to the order execution. In relation to this, the Bank adopts a Policy for Execution of Client Orders 9

10 (Appendix No 2 to the present General Terms and Conditions), which meets the requirements of Art. 30 of the Law on Public Offering of Securities. XII. JOURNAL XII.1. The Bank is to enter all orders by the clients into a special journal, in the same succession in which these have reached the Bank, and to execute the orders while following the same succession. At the end of each business day, the Bank prints out the Journal and states the date and time of the printout, which is to be certified by the person who has entered the data and by a person from the Internal Control Department, by way of writing down the date and the signatures of these persons. XII.2. The regulation under the previous item is also valid for the identical orders. Those orders are to be considered identical which are the same regarding their type, execution method, execution period and price parameters. XII.3. The Bank must register in the journal all deals concluded with financial instruments, not later than the end of the business day. XII.4. For each deal, the names of the involved parties are to be entered, the time when the deal was concluded and also the other conditions specified under the terms of Art. 33, Para.1 of the LMFI and Art. 63 of Ordinance No38. XII.5. The Bank must keep the journal for a five-year period, in a place accessible and appropriate to use, and in such a way that ensures its preservation on a second bearer or its restoration in case of loss due to technical reasons. XIII. SEPARATION OF THE PORTFOLIO The Bank must keep its own portfolio of financial instruments separated from the portfolios of its clients. XIV. NEGOTIATING WITH ITSELF The Bank is not allowed to conclude and execute a financial instruments deal negotiated with the client either with itself or with other party for whose account it is acting, unless the client has provided in advance their written consent to that. XV. LIMITATIONS UNDER THE LMFI AND THE BY-LAWS RELATED TO THE ENFORCEMENT THEREOF. OBLIGATIONS OF THE BANK UNDER THE ANTI MONEY LAUNDERING LEGISLATION XV.1. The Bank does not have the right to execute the client s order in case the client respectively, their representative, - has refused to submit the declaration under Article 35, Paragraph 1 of Ordinance No38; in case it is declared that the client possess insider information; or in case that declare that the deal subject of the order is a hidden purchase or sale of financial instruments. The refusal under the above statement is to be certified by a separate document signed by the client. XV.2. The Bank does not have the right to execute the client s order for the sale of financial instruments in case it has been ascertained that the financial instruments in question are not available on the client s account or are blocked at the Central Depository AD, and also in case of pledge or distress registered on these financial instruments. XV.3. The Bank does not have the right to sign agreement for the performance of transactions with financial instruments as well as for the management of an individual portfolio of financial instruments for the client s account in case the client or their representative has submitted documents with obvious irregularities, or has not submitted all the required documents, or the 10

11 data in these documents are not complete, contain inaccuracies or contradictions; or in case the proxy declares that he/she has not explained to the authorizer the consequences of the authorization. XV.4. The Bank is to refuse to sign an agreement or to execute an order for the performance of transactions in financial instruments in case this would lead to non-fulfillment of the requirements of the Law on Anti Money Laundering Measures and the by-laws related to the enforcement thereof and according to the Bank s internal regulations. XV.5. The Bank must fulfill the requirements of Art. 13, Para. 1, and Art. 14 of Ordinance No38. XVI. ADDITIONAL INSTRUCTIONS XVI.1. The Bank shall fulfill additional instructions by the client regarding the execution of their order only in case these additional instructions have been given in written form or other suitable form verifying the issuance of the instructions a telex message, fax message or message. These additional instructions are binding for the Bank only in case they have been received before the latter proceeded to order execution according to the initial instruction by the client. XVI.2. The specific conditions and deadline for the executions of the client s assignment are to be defined for each individual agreement, in written form, in an order or annex to a placed order. XVI.3. The other conditions and deadlines, as well as the remuneration for the investment intermediary and the expenses to be borne by the client unless these are included in the remuneration, - are to be specified in the agreement between the bank and the client. XVII. ACCOUNTABILITY OF THE BANK XVII.1. The Bank is to render account to the client for each individual transaction and order, and to hand over all receipts thereof to the client. XVII.2. Notification is to be understood as notification after the conclusion of the deal or the execution of the transaction. The notification is to take place by letter, by the S. W. I. F. T. system, by telex, by telefax, by or by phone within the deadline stipulated in Ordinance No38, and is to contain the minimum of parameters prescribed thereby. The notification may contain further information which is specified in the particular agreement, provided this is not conflicting with the legislation of the Republic of Bulgaria. The notification by phone, fax, e- mail or telefax /?/ is considered duly submitted in case due evidence has been preserved in written form or another form of equivalent value pursuant to the law. XVII.3. In case the Bank is acting on the client s behalf and for the client s account, the rights and obligations after the deal conclusion arise directly for the client. XVII.4. In case the Bank is acting on its own behalf and for the client s account, the rights and obligations go to the client after the Bank has transferred these according to the conditions, standard deadline and settlement terms of the Bulgarian Stock Exchange and the Central Depository AD. XVIII. STORAGE OF SECURITIES, MONEY AND OTHER ASSETS RECEIVED IN RELATION TO THE ORDER OR ACQUIRED UNDER THE CONCLUDED DEAL XVIII.1. The clients money and financial instruments are to be stored as follows: the materialized securities are to be kept in a safe at the bank; the client s money are to be kept on an individual client s account with the bank; the dematerialized financial instruments are to 11

12 be stored at the Central Depository AD under an agreement signed with the bank, on the client s sub-account with the Bank s account for dematerialized securities. The dematerialized shares issued by the Ministry of Finance are to be recorded in the registers of the Bank in its capacity of primary dealer of securities, or in the register of another primary dealer of securities in case the Bank is not a one. The storage and the transactions in favour of the clients are to be performed while abiding by the requirements of Ordinance No5/4 October 2007 regarding the terms and procedures for acquisition, payment and trade with state securities. XVIII.2. The Bank must safe-keep the financial instruments, money and other assets is has received in relation to the order assigned by the client. XVIII.3. The Bank is to explicitly notify the client in case the accounts holding their money or financial instruments are subject to or will be subject to some legislative provision of another country which is not a member state; and also to notify that the client s right related to the financial instruments/money may differ because if the applicability of the law in a third country. XVIII.4. In case of termination of the Agreement signed between the Bank and the Client, within the period framework set forth in Chapter 7, p.2, the latter is obliged to indicate place where the financial instruments held with the bank should be transferred. The Client s financial instruments could be transferred either: 1. To a Client s account held with another Investment Intermediary, member of the Depository Institution, or 2. To a Client s account with the relevant Depository Institution, including by the opening of a new account in the name of the Client. In case when the Client does not instruct the transfer of the financial instruments within the above mentioned time frame, the Bank within five working days after its expiration shall have the right to transfer the financial instruments to a Client s account with the relevant Depository Institution, including by opening a new account in the name of the Client. The Client shall bear all transfer expenses, as the Bank shall have the right to debit the Client s accounts with the amount due. XIX. DEFAULT In case of default on obligations stipulated in these General Terms and Conditions or a particular agreement, the provisions should be applied as envisaged by the particular agreement with regard to the consequences of the default on obligations. XX. RISKS XX.1. The Bank must inform the client that the investment in financial instruments as well as the purchase and sale of financial instruments is a high-risk activity which can lead to losses on the price of securities, impossibility to liquidate the assets or impossibility to liquidate the assets without having to suffer material losses on the price. XXI. COLLATERAL XX.1. The right to demand collateral: XX.1.1. The Bank, at its own discretion, can demand from the client to deposit assets with the Bank or another entity as collateral for their liability towards the Bank for each transaction, according to the applicable regulatory provisions or otherwise, in order to protect itself against the risk of loss regarding the transaction. The Bank may demand the collateral to be in the form of cash, letter of credit or other types of financial instruments possessed by the client. XX.2. The power over the collateral: XX.2.1. The Bank will have all rights over the collateral as a secured party, and has the right to at its own discretion, - sell it, dispose of it, realize its value or set off the client s liabilities 12

13 with it. The Bank may also unite the client s accounts or transfer funds from one account of theirs to another, with the purpose to fulfill the client s obligations to deposit collateral, or with another purpose, if this purpose has been agreed upon with the client in advance. XX.3. Further guarantees: XX.3.1. The client is to agree to sign further documents and to undertake further measures which the Bank can be justified to demand, in order to entirely guarantee its right, as a secured party, to be registered as the owner or to obtain statutory title of ownership over the collateral. XX.4. The collateral must be exempt form encumbrances: XX.4.1. The assets that are provided as collateral should be entirely free of encumbrances in any form a claim, a third party s right, mortgage, account receivable, pledge, cession, or other form of guaranteed interest which is in favour of, or is said to be in favor of, a third party. In case that no collateral has been provided to the Bank, or the asset provided as collateral has been burdened with encumbrances, the Bank, at its own discretion, may demand from the client to substitute the collateral burdened with encumbrances by one exempt form encumbrances or close the transaction with this client. XX.5. The right to sell: XX.5.1. In case of default on obligations, the Bank may exercise its right to sell an arbitrary portion of the collateral and to use the receipts from the sale (or another type of collateral realization) to cover the expenses related to this sale (or another type of collateral realization) and to perform the client s liabilities towards itself. CHAPTER THREE I. RIGHTS AND OBLIGATIONS OF THE CLIENT I.1. The client has the right to demand from the Bank to accurately fulfill its contractual obligations concerning which they have provided clear, accurate and exhaustive instructions in written form. I.2. The client is to place their instructions to the Bank in the form of a standardized order containing transaction data complied with the regulatory requirements. The Bank is to provide a sample to the client. The orders and all amendments and confirmations thereto must be submitted in written form. I.3. The Bank may accept orders for deals with transaction instruments by phone or another remote means of communication with the client. In this case, the Bank is to draft by the end of the business day, - a document containing all data regarding the order and the data subject of the declarations submitted by the client under Article 35, Paragraph 1 of Ordinance No38, which document is to certify the contents of remotely placed order. I.4. For the performance of transactions with financial instruments, the client of the Bank must place instruction which is an integral part of the agreement, which instruction specifies the parameters of each particular order. I.5. Instruction/orders already placed by the client can only be cancelled in the form and under the procedure stipulated regarding the placement of orders, whereas the cancellation may take place on condition that the Bank has not proceeded to the execution of orders already placed. The client it to be charged for the actions the Bank has performed in execution of the order while being unaware and unable to know about the cancellation of the order. I.6. The Bank is to accept for execution and to conclude deals with financial instruments, and to manage individual portfolios of financial instruments subject of the particular agreements, entirely for the client s account and at the client s risk. 13

14 I.7. Objection terms and procedures are to be specified in the particular agreement. I.8. The report adoption procedure is to be defined in the particular agreement. I.9. In the particular agreement between the Bank and the client, the latter is to declare that they are familiar with the standard commission remuneration on the various types of client agreements, as published in the Bank s Tariff, and with the further expenses (not included in the remuneration) to be borne by the client, and to also declare they have received the information which the Bank must provide to them according to the law, inclusively, that they are aware of the risks related to their investment in financial instruments. I.10. The client is not allowed to place orders regarding financial instruments: (1) about which they possess insider information; or (2) which are not available on their account, or have been blocked at the Central Depository, and also in case distress or pledge has been registered on these instruments; (3) the deals with which would represent a hidden purchase and sale. I.11. The circumstances under the previous item are to be certified by the client s declaration thereof to the Bank. II. PORTFOLIO MANAGEMENT AND GRANTING INVESTMENT SERVICES TO THE CLIENT II.1. In case of management of an individual portfolio of financial instruments at the Bank s own discretion and without special instructions of the client, or in case of granting investment consultancy to a client, the specific operations for the performance of which the Bank is to be empowered shall be specified in a particular agreement. II.1.1. In case of management of an individual portfolio of financial instruments at the Bank s own discretion and without special instructions of the client, the latter, by signing the agreement, gives in advance their confirmation to each operation of transaction performed by the Bank under the agreement. II.1.2. In case of management of an individual portfolio of financial instruments at the Bank s own discretion and without special instructions of the client, or in case of granting investment consultancy to a client, the Bank is to request information from the client about their financial means, investment experience, knowledge and experience regarding this service, about their willingness to risk, and the Bank is to also update this information. The Bank is not allowed to render the service management of individual portfolio of financial instruments or granting investment services to a client if the client has not provided the information under the above statement. II.1.3. In case of management of an individual portfolio of financial instruments at the Bank s own discretion and without special instructions of the client, or in case of granting investment consultancy to a client, the Bank is guided by the information received as per item II.1.2. above. II.1.4. In case of management of an individual portfolio of financial instruments at the Bank s own discretion and without special instructions of the client, the financial instruments and the money possessed by the latter are to be managed entirely for the client s own account and at the client s own risk. II.1.5. In case of management of an individual portfolio of financial instruments at the Bank s own discretion and without special instructions of the client, the value of the portfolio is to be assessed at the end of each month, or in case no deals have been concluded, - at the end of each quarter, on the base of the real value of the assets in the portfolio, in accordance with the Bulgarian Accountancy Act and the domestic standards of financial reporting, whereas the overall value of the portfolio is presented in the beginning and at the end of the period. II.2. The client is to declare they are familiar with the risks related to the investment in and the deals with financial instruments. In the process of execution of the particular agreement, the 14

15 client is to accept and understand the risk of potential losses due to unexpected and unfavourable changes in the prices of the investments. II.3. In the particular agreement between the Bank and the client, the latter is to declare they have received the information the Bank must provide to them under the LMFI and the by-law related to the enforcement thereof. CHAPTER FOUR REMUNERATIONS 1. The Bank has the right to demand remuneration from the client for any bank transaction performed or financial service rendered, with the form, amount, deadline and way of payment of the remuneration being specified in the particular agreement. 2. When the amount of the remuneration has not been specified, the due amount is the one usually paid for this type of transaction /order/. 3. When the Bank has committed to be personally accountable for the performance of the liabilities under the concluded deal, it is entitled to a separate remuneration as well, which remuneration is to be agreed upon in written form. 4. The Bank is entitled to remuneration for the client s receipts it has collected, which remuneration is to be agreed upon separately. 5. In case of intermediation, the Bank is entitled to remuneration from both counterparties. 6. The remuneration is to be paid not later than on the day when the deal settlement took place, unless otherwise agreed upon by the parties. 7. Non-cash payment is to be considered done at the moment when the bank account of the Bank was credited. CHAPTER FIVE EXPENSES, INTERESTS, DAMAGES The client must refund to the Bank the expenses made, plus interests and damages suffered by the Bank in relation to the execution of the order of the performance of the activity, within deadlines as per the regulatory acts effective to date. CHAPTER SIX RISK AND IMPOSSIBILITY. LIABILITY AND PENALTY I. RISK AND IMPOSSIBILITY OF EXECUTION The risk of the impossibility of execution of the particular deal /agreement/ is to be borne by the client. If the fulfillment of the Bank s obligation becomes partially or entirely impossible, the client is to repay to the Bank the expenses the latter has made as well as remuneration adequate to the work done. II. LIABILITY II.1. If the Bank assigns the performance of important operational functions, as well as of investment services and activities to another investment intermediary, this should be done in a way that will not lead to the Bank s exemption of its obligations under the LMFI and the by-laws on the enforcement thereof. II.2. When assigning important operational functions, as well as investment services and activities to another investment intermediary, the Bank is to be guided by the provisions of Articles 51 and 52 of Ordinance No38. 15

16 II.3. The Bank and the individuals, who are members of the Bank s managing bodies and employees of the Bank, are liable under the terms and procedures of Article 127 of the Law on the Markets in Financial Instruments for any violation of the provision of said Law when concluding and executing deals with financial instruments. III. PENALTIES III.1. In case of completely culpable default on the obligations under a particular agreement, the default party ought to pay a penalty at the amount of 20 percent of the defaulted obligation. III.2. In case of delay of an obligation under a particular agreement, the default party ought to pay a penalty at the amount of 1 percent for each day of the delay, but not more than 20 percent of the value of the defaulted obligation. CHAPTER SEVEN AMENDMENTS, SUPPLEMENTS, SUBSTITUTION AND TERMINATION OF THE GENERAL TERMS AND CONDITIONS AND THE PARTICULAR AGREEMENTS I. The Bank is to notify the client about each amendment and supplement to the present General Terms and Conditions, either in written form or by publishing on its webpage / /. If the client does not object in written within 7 days following the receipt of the notification, it is considered that they accept the amendments made. II. The particular agreements between the parties can be amended and/or supplemented or terminated by mutual written consent of the parties. It is also admissible that either party may terminate the agreement unilaterally, by way of sending a one-month written notice to the other party. III. The client may cancel an order an authorization, respectively, - regarding a particular deal with financial instruments not later than 24 hours before the execution. IV. The Bank may refuse a particular deal not later than 24 hours before the execution. In case the refusal is not justified and the Bank has not timely advised the client thereof, it ought to pay indemnity for the damages caused by the refusal. V. The amendments/supplements to and the termination of a particular agreement are not in force regarding the present General Terms and Conditions. The consequences under item V shall be also applicable to the termination of the particular agreement. VI. In case a particular order /agreement/ has been cancelled, each of the parties has to render an account to the other and to hand over all receipts in relation to the agreement within 7 days. VII. Neither party is allowed to transfer its rights under a particular order /agreement/ to a third party, unless following the receipt of the other party s written consent. CHAPTER EIGHT FINAL PROVISIONS I. NOTIFICATIONS I.1. All notifications between the parties will take place in written form (in Bulgarian and/or English language) to the addresses of the client and the investment intermediary as stated in the particular agreement, or by phone, fax, or telefax, whereas dye evidence is to be preserved in written form or another form of equivalent value pursuant to the law. 16