Articles of Association. BVR Institutssicherung GmbH

Transcription

1 Articles of Association BVR Institutssicherung GmbH

2 Last revised: August 24, 2016

3 Articles of Association BVR Institutssicherung GmbH

4 Articles of Association I. General provisions 7 Section 1 Company name and registered Office 7 Section 2 Object of the company 7 Section 3 Nominal capital 7 Section 4 Duration of the company and financial year 7 Section 5 Management and representation 9 Section 6 administrative board 11 Section 7 Assets of the company and administration 12 Section 8 Confidentiality obligation 13 Section 9 Annual financial statements, management report and annual report 13 Section 10 Auditing of the company II. Bank-related protection system 1. General section 14 Section 11 Bank-related protection system 2. Compensation for depositors 15 Section 12 Entitlement to compensation 15 Section 13 Compensation procedure 3. Preventive action vis-à-vis CRR banks 15 Section 14 CRR banks duty of care 17 Section 15 Fundamental decision about taking preventive action 17 Section 16 Action to encourage a change in operating policy 17 Section 17 Restructuring plan 18 Section 18 Monitoring of restructuring 18 Section 19 Updating of the restructuring plan 19 Section 20 Personnel or material requirements 4. Restructuring measures for CRR banks a. Funding measures to be reported in the annual accounts 19 Section 21 Funding measures 20 Section 22 Criteria for the implementation of funding measures 20 Section 23 Use of equity 21 Section 24 Conditions 21 Section 25 Debtor warrant obligations of the CRR banks 22 Section 26 Assignment of damages claims to the company 22 Section 27 Decision on funding measures and conditions 22 Section 28 Entry into an agreement on funding measures 23 Section 29 Ongoing monitoring 23 Section 30 Procedure for funding measures

5 b. Turnaround measures to re-establish the fundamental profitability of the business 24 Section 31 Devising turnaround plans 25 Section 32 Ongoing monitoring of the restructuring plan 25 Section 33 Updating of the restructuring plan 37 Section 44 Payment on first demand, contribution guarantee 37 Section 45 Contribution assessment method 37 Section 46 Additional contributions to the BVR-ISG guarantee fund 37 Section 47 Funding agreements with the BVR 5. Committees 26 Section 34 Central committee 28 Section 35 Regional restructuring committees 6. Membership of the bank-related protection scheme 30 Section 36 Joining, declaration of accession and general undertaking 31 Section 37 Exit 32 Section 38 Exclusion 33 Section 39 Increases in contributions in the event of breaches of duty 33 Section 40 Penalty 7. Funding 8. Risk monitoring and assessment, audits and reporting obligations 38 Section 48 Risk monitoring and assessment 38 Section 49 General audits 39 Section 50 Audits according to section 35 of the german deposit insurance act 40 Section 51 Authority to collect and pass on confidential information 41 Section 52 Reporting obligations of the auditing associations 42 Section 53 Reporting obligations of the company to the auditing associations 9. Other duties of the CRR banks belonging to the bank-related protection scheme 34 Section 41 Funding, target volume and use of resources 35 Section 42 Annual contributions, one-off payments and payment obligations 42 Section 54 Information, notification and reporting duties 44 Section 55 Organizational duties 35 Section 43 Special contributions, credit authorization and special payments

6 10. Cooperation with other deposit guarantee schemes 44 Section 56 Branch offices of german CRR banks in another member state of the european economic area 45 Section 57 Branch offices of CRR banks domiciled in another member state of the european eco nomic area 45 Section 58 Payment of contributions where the activities of a CRR bank are transferred 11. Winding up of the bank-related protection scheme 45 Section 59 End of recognition; Use of BVR-ISG guarantee fund resources III. Cost Reimbursement 46 Section 60 Audit costs and other expenses IV. Concluding provisions 46 Section 61 Company formation expenses 47 Section 62 Amendments to the articles of association 47 Section 63 Severability clause

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8 Note: The English version of the Articles of Association is used exclusively for representative purposes and presentation of the BVR Institutssicherung GmbH in an international environment. If legally relevant, only the German version of the Articles of Association is valid. Both documents can be found at

9 Articles of Association I. General provisions Section 1 Company name and registered office (1) The name of the company is: BVR Institutssicherung GmbH. (2) The company is domiciled in Berlin, Germany. 7 Section 2 Object of the company The object of the company is the operation of a bank-related protection scheme within the meaning of article 113 (7) of regulation (EU) no. 575/2013 that has been recognized as a deposit insurance scheme pursuant to section 43 German Deposit Insurance Act (EinSiG). The company is authorized to undertake any business that is directly or indirectly in furtherance of the company s object. ARTICLES OF ASSOCIATION Section 3 Nominal capital The company s nominal capital is 25, (in words: twenty-five thousand euros). Section 4 Duration of the company and financial year (1) The company is formed for an indefinite period. (2) The financial year is the calendar year. The first financial year is a short financial year that begins when the company is entered in the commercial register and ends on the December 31 that follows the date of entry in the commercial register. Section 5 Management and representation (1) The company should have a board of managing directors consisting of a minimum of three members. The members of the board of managing directors are appointed and dismissed by the administrative board. They should also be members of the board of

10 managing directors of the shareholder Bundesverband der Deutschen Volksbanken und Raiffeisenbanken e. V., Berlin (BVR) [National Association of German Cooperative Banks]; if a member leaves the board of managing directors of the BVR, his or her membership of the board of managing directors of the company also ends. (2) Resolutions of the board of managing directors require the participation of a minimum of two members of the board of managing directors. The board of managing directors adopts its resolutions by a simple majority of the votes cast. 8 (3) The company is represented either by two members of the board of managing directors acting jointly or by one member acting in conjunction with a holder of full commercial power of attorney (Prokurist). If only one member has been appointed to the board of managing directors, this person is authorized to represent the company alone. With respect to transactions with the BVR, the board of managing directors is exempted from the restrictions in section 181, second alternative, of the German Civil Code (BGB). (4) The board of managing directors requires the prior consent of the shareholder BVR for the decisions listed below: a) fundamental decisions pursuant to section 15 about the taking of preventive action by the bank-related protection scheme; b) fundamental decisions pursuant to section 22 (1) sentence 1 no. 2 about the taking of funding measures by the bank-related protection scheme; c) decisions about the updating of the accumulation plan pursuant to section 45 (2) EinSiG, d) setting of the management fee pursuant to section 42 (3) sentence 1. To approve decisions pursuant to sentence 1 letter b, the shareholder BVR is required by section 17 (4) of its by-laws to obtain a resolution giving consent from the central committee of the BVR protection scheme. To approve decisions pursuant to sentence 1 letters c and d, the shareholder BVR is required by section 17 (3) letters c and d of its by-laws to obtain a resolution giving consent from the BVR Association council. (5) The issuing of rules of procedure by the board of managing directors for the BVR-ISG central committee pursuant to section 34 (10) and for the BVR-ISG regional restructuring committees pursuant to section 35 (10) requires the prior written consent of the administrative board. (6) The shareholder BVR formally approves the actions of the board of managing directors; to this end it requires a resolution giving consent from the general meeting of members of the BVR pursuant to section 17 (2) letter a of the BVR by-laws. (7) The administrative board decides on the rules of procedure for the board of managing directors.

11 Section 6 Administrative board (1) The company has an administrative board consisting of twelve members. The members of the administrative board and their personal deputies are appointed and dismissed by the shareholder BVR; to this end it requires a resolution giving consent from the BVR Association council pursuant to section 17 (3) letter a of the BVR by-laws. They should also be members/personal deputies of members of the administrative board of the shareholder BVR. The term of appointment of the members of the administrative board of the company corresponds to the term of appointment of the members of the administrative board of the BVR. If a member steps down from the administrative board of the BVR before his or her term of appointment expires or if the appointment as a personal deputy on the administrative board of the BVR ends before the term of appointment expires, his or her membership or appointment as a personal deputy on the company s administrative board will also end. A personal deputy is only entitled to attend meetings of the administrative board and vote if the ordinary member is prevented from attending. If an ordinary member steps down from the administrative board before his or her term of appointment has expired, his or her personal deputy takes his or her place for the remainder of the term of appointment. (2) The chairman of the administrative board of the shareholder BVR should be the chairman of the administrative board of the company. The deputy chairman of the administrative board of the shareholder BVR should be the deputy chairman of the administrative board of the company. 9 ARTICLES OF ASSOCIATION (3) The administrative board is the supervisory body within the meaning of section 43 (2) no. 2 EinSiG and has the following remit: a) appointing and dismissing the members of the board of managing directors; b) concluding and terminating any service contracts with members of the board of managing directors and setting any remuneration for the members of the board of managing directors; c) monitoring the members of the board of managing directors; d) making decisions about funding measures and conditions in accordance with the provisions of section 27 letters b and c; e) adopting rules of procedure for the board of managing directors; f) appointing and dismissing the members of the BVR-ISG central committee and their deputies; g) appointing and dismissing the members of the BVR-ISG regional restructuring committees and their deputies; h) resolving on consent for rules of procedure for the BVR-ISG central committee; i) resolving on consent for rules of procedure for the BVR-ISG regional restructuring committees; j) engaging the auditor of the annual financial statements, the management report, and the annual report.

12 Section 112 German Stock Corporation Act (AktG) applies mutatis mutandis to the representation of the company by the administrative board vis-à-vis the members of the board of managing directors. (4) The administrative board is quorate if at least half of its members are present. The administrative board adopts its resolutions by a simple majority of the votes cast. In the case of subsection (3) letter a, a majority of at least two third of the votes cast is required. 10 (5) Between meetings, votes on resolutions required in urgent exceptional cases may be cast electronically, in writing, by telegram, by telex, or by fax, provided no member of the administrative board objects to this type of voting proposed by the chairman of the administrative board. (6) The board of managing directors must report to the administrative board on all matters concerning the bank-related protection scheme, in particular: a) the proposals of the board of managing directors for the collection of contributions; b) changes in the BVR-ISG guarantee fund; c) the measures pursuant to section 16; d) any business scenarios as defined in section 14 (3) at CRR banks; e) the activities of the committees in accordance with sections 34 and 35; f) progress in the restructuring of CRR banks; g) measures of the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) [German Federal Financial Supervisory Authority] in respect of the company pursuant to section 50 (2) and (3) EinSiG; h) the results of stress tests pursuant to section 54 EinSiG; i) reviews by BaFin pursuant to article 113 (7) sentence 2 letter i of Regulation (EU) no. 575/2013. The administrative board can also request that the board of managing directors submit reports on other matters relating to the company in accordance with section 90 (3), (4), and (5) sentences 1 and 2 AktG. The administrative board has rights of inspection and examination pursuant to section 111 (2) sentences 1 and 2 AktG. (7) The administrative board reviews the annual financial statements, the management report, and the annual report, taking account of the audit report. It proposes a motion to the shareholder BVR on the adoption of the annual financial statements and the appropriation of profits. (8) Individual members of the administrative board do not take part in the administrative board s discussions and adoption of resolutions on matters concerning a member of the

13 board of managing directors of the company, particularly those matters set forth in subsection (3) letters a and b, if the affected member of the board of managing directors is a member of the supervisory body of the company in which the member of the administrative board is also a member of the board of managing directors. (9) The members of the administrative board and their personal deputies are unsalaried. Travel and accommodation costs are reimbursed in accordance with the tax rules or on presentation of individual receipts, unless the costs are also incurred in connection with work for the shareholder BVR or the BVR protection scheme and should preferably be reimbursed by the shareholder BVR. (10) Section 116 in conjunction with section 93 (1) and (2) sentences 1 and 2 AktG apply mutatis mutandis to the administrative board s duty of care and responsibility. The shareholder BVR formally approves the actions of the administrative board; to this end it requires a resolution giving consent from the general meeting of members of the BVR pursuant to section 17 (2) letter b of the BVR by-laws. (11) The administrative board draws up its own rules of procedure in which its working methods are defined in more detail. (12) The AktG provisions set forth in section 52 (1) German Private Limited Companies Act (GmbHG) do not apply, unless otherwise expressly stipulated in these articles of association. 11 ARTICLES OF ASSOCIATION Section 7 Assets of the company and administration (1) The company holds the assets that are allocated to the bank-related protection scheme pursuant to subsection (2) and also holds other assets. (2) To fulfill the tasks of the bank-related protection scheme pursuant to section 11, the company maintains a guarantee fund (BVR-ISG guarantee fund), which comprises the available financial resources as defined in section 41 (1) sentence 1 and other resources. (3) The available financial resources as defined in section 41 (1) sentence 1 must be managed separately from the other resources in the BVR-ISG guarantee fund and the other assets of the company.

14 Section 8 Confidentiality obligation (1) The company, the members of the decision-making bodies and committees of the company, and the other persons who are employed by or work for the company must not, without authorization, disclose or utilize information about the work of the company and of the bank-related protection scheme, or others secrets, particularly the trade and business secrets of the company and the CRR banks that belong to the bank-related protection scheme. This also continues to apply when the persons specified in sentence 1 cease to be members of the decision-making bodies and committees specified therein and when they cease to work for the company. 12 The passing on of facts to BaFin, the resolution authority, Deutsche Bundesbank, the European Central Bank as the regulator within the meaning of section 1 (5) no. 1 German Banking Act (KWG), the European Banking Authority, or the BVR as part of these persons work specifically does not constitute unauthorized disclosure or utilization of information and others secrets as defined in sentence 1. (2) Subsection (1) sentence 3 applies mutatis mutandis if the company and the persons set forth in subsection (1) sentence 1 pass on information and secrets as defined in subsection (1) sentence 1 to the auditing associations involved in fulfilling the tasks of the bank-related protection scheme pursuant to section 11 (4) and/or to DZ BANK AG Deutsche Zentral-Genossenschaftsbank and/or to WGZ BANK AG Westdeutsche Genossenschafts-Zentralbank, provided the aforementioned information recipients have contractually undertaken to the company to maintain confidentiality pursuant to subsection (1) sentences 1 and 2, and themselves have undertaken to impose a corresponding confidentiality obligation on the persons employed by or working for them, to the extent that these persons have access to processes and others secrets as defined in subsection (1) sentence 1. (3) Subsection (1) sentence 3 applies mutatis mutandis if the BVR, the members of the decision-making bodies and committees of the BVR, and the other persons employed by or working for the BVR pass on information and secrets as defined in subsection (1) sentence 1 to the auditing associations involved in fulfilling the tasks of the BVR in connection with the BVR protection scheme and/or to DZ BANK AG Deutsche Zentral-Genossenschaftsbank and/or to WGZ BANK AG Westdeutsche Genossenschafts-Zentralbank and/or to auditors and/or rating agencies engaged by the BVR for the Cooperative Financial Network, and the persons passing on the information and the aforementioned information recipients have a professional obligation or have contractually undertaken to the BVR to maintain confidentiality pursuant to subsection (1) sentences 1 and 2 and themselves have undertaken to impose a corresponding confidentiality obligation on the persons employed by or working for them, to the extent that these persons have access to information and secrets as defined in subsection (1) sentence 1.

15 (4) Subsection (1) sentence 3 applies mutatis mutandis if the auditing associations and the persons employed by or working for the auditing associations pursuant to subsection (2) pass on information and secrets as defined in subsection (1) sentence 1 to the information recipients defined in subsection (1) sentence 3 and/or in subsection (2) and/or in subsection (3), and the persons passing on the information and the information recipients have a professional obligation or have contractually undertaken to the auditing associations to maintain confidentiality pursuant to subsection (1) sentences 1 and 2 and themselves have undertaken to impose a corresponding confidentiality obligation on the persons employed by or working for them, to the extent that these persons have access to information and secrets as defined in subsection (1) sentence 1. (5) The company guarantees the confidentiality and the protection of the data relating to depositors accounts. The collection, processing, and use of such data is governed by the provisions of the German Federal Data Protection Act (BDSG). 13 Section 9 Annual financial statements, management report, and annual report (1) The board of managing directors must prepare annual financial statements (balance sheet, income statement, and notes to the financial statements), including a management report in accordance with commercial-law requirements, and an annual report, in the first three months of the financial year following the end of the previous financial year. (2) The annual report must contain the following disclosures: a) information on the activities and the financial circumstances of the bank-related protection scheme, particularly the amount of available financial resources pursuant to section 41 (1) sentence 1, the investment of these resources, and their use for compensation events; b) information on the amount of contributions pursuant to sections 42, 43, and 46; c) information on the cost of managing the bank-related protection scheme; and d) an update of the accumulation plan pursuant to section 45 (2) EinSiG. ARTICLES OF ASSOCIATION (3) The board of managing directors must submit the annual report to both BaFin and Deutsche Bundesbank by May 31. Section 10 Auditing of the company (1) The annual financial statements, the management report, and the annual report must be audited by an auditor within the first five months of the new financial year in accordance with commercial-law requirements. (2) The board of managing directors sends the audit report (section 321 German Commercial Code (HGB)) to the auditing associations acting in accordance with section 11 (4), the BVR-ISG central committee, and the administrative board.

16 II. Bank-related protection system 1. General section Section 11 Bank-related protection system 14 (1) The company operates a bank-related protection scheme within the meaning of section 2 (2) EinSiG that has been recognized as a deposit insurance scheme pursuant to section 43 EinSiG. The bank-related protection scheme does not have a separate legal personality. Rights and duties of the bank-related protection scheme under EinSiG and these articles of association are solely rights and duties of the company. The BVR-ISG guarantee fund pursuant to section 7 (2) sentence 1 and the liability agreement pursuant to section 47 (3) are assigned to the bank-related protection scheme. (2) By operating the bank-related protection scheme, the company fulfills the task of averting or remedying impending or existing financial difficulties at the CRR banks that belong to the bank-related protection scheme (bank protection). For this purpose, the company takes preventive action and restructuring measures pursuant to sections 14 to 33. If, in accordance with section 10 EinSiG, BaFin ascertains a compensation event in a CRR bank that belongs to the bank-related protection scheme, the company will provide compensation to that bank s customers in accordance with sections 12 and 13. (3) CRR banks that belong to the BVR, are affiliated with the BVR protection scheme, join the bank-related protection scheme pursuant to section 36 and have not left this scheme pursuant to section 37 or been excluded pursuant to section 38, belong to the bank-related protection scheme. (4) The auditing associations to which primary institutions within the meaning of section 3a (1) sentence 1 of the statutes of the BVR protection scheme, version dated May 16, 2014, (primary institutions) belong pursuant to section 6 no. 1 of the by-laws of the BVR participate in the tasks of the bank-related protection scheme in accordance with sec - tions 14 to 35 and 48 to 53 (responsible auditing associations). The participation of the auditing associations is agreed upon in a contract between the company and the audi - ting associations that must contain confidentiality rules pursuant to section 8 (2) to (4).

17 2. Compensation for depositors Section 12 Entitlement to compensation The company pays compensation for the deposits and liabilities arising from securities transactions that are eligible for compensation of the customers of the CRR banks belonging to the bank-related protection scheme in accordance with the provisions of the EinSiG. The grounds for and amount of the entitlement to compensation are based on sections 5 to 9 EinSiG as amended. Section 13 Compensation procedure 15 The compensation procedure is based on sections 12 to 16 EinSiG as amended. 3. Preventive action vis-à-vis CRR banks Section 14 CRR banks duty of care (1) The CRR banks belonging to the bank-related protection scheme are obliged to conduct their business in accordance with the duty of care applicable to them in order to prevent the need for financial support from the scheme. The CRR banks satisfy their duty of care, in particular: ARTICLES OF ASSOCIATION a) if, with a view to successful performance and early identification of any adverse trends, the CRR banks set up a planning, management, and control system reflecting the nature and risk content of their business to ensure that the potential risks and rewards inherent in their business are adequately determined, assessed, and managed; b) if the CRR banks establish the necessary personnel, technical, and organizational frameworks required by their business to enable them to manage the risks inherent in the business; c) if, in their respective businesses, the CRR banks comply with the relevant applicable guidelines and recommendations that have been adopted by the BVR Association council based on proposals submitted by the board of managing directors of the BVR. (2) All of the CRR banks customary banking business, supplementary operations, and associated competitive activities that comply with the duty of care specified in subsection (1) and that, foreseeably, comprise only normal and/or average banking risks are compatible with the purpose of the bank-related protection scheme.

18 (3) Business scenarios involving risks that may result in financial instability in the CRR bank are not compatible with the purpose of the bank-related protection scheme. Such scenarios may arise in particular from the following: 16 if the planning, monitoring, and control systems as well as the operational and organizational structure are not consistent with the CRR bank s business and risk structures; if the risks assumed by the CRR bank, in particular the acute and significant latent risks in lending, are inadequately covered by the CRR bank s available risk coverage potential; above-average lending growth without appropriate corresponding growth in the risk coverage potential and in the personnel and organizational structures of the CRR bank; the extending of loans without adequate collateral or evidence of sufficient debt service capacity; an imbalance in the lending structure in terms of loan size or sector distribution; the extending of interrelated loans, for example in which the borrowers lodge collateral for each other or in which the borrowers are dependent on each other; the commencement of new types of business without adequate prior analysis of the inherent revenue-earning opportunities and potential risks; the raising of funds from institutional investors or deposit brokers on terms that are not on an arm s length basis; above-average expansion and an imbalance in the distribution of dividend-bearing and/or interest-bearing equity; capital investments involving follow-up costs that are not economically sustainable for the CRR bank. (4) If, in particular, a business scenario arises as defined in subsection (3), the supervisory board of the CRR bank must carry out a review to establish whether and to what extent the emergence of this business scenario is attributable to a breach of the duty of care under company law by the management body of the CRR bank. For this purpose, and in consultation with the company, the supervisory board may engage the services of an expert at the expense of the CRR bank. If the review establishes that the management body of the CRR bank has breached its duty of care under company law, the supervisory board is under an obligation, in accordance with its own duty of care under company law, to take appropriate action against the members of the management body responsible for the situation or to encourage such action to be taken. (5) If the primary institutions conduct business via subsidiaries, such activities must always be consistent with the customary banking or supplementary activities specified in section 2 of the articles of association template for local cooperative banks and the subsidiaries must always observe the duty of care applicable to the CRR banks themselves. Subsidiaries within the meaning of these articles of association are affiliated companies pursuant to section 15 AktG.

19 Sentence 1 applies mutatis mutandis to network institutions within the meaning of section 3a (2) of the statutes of the BVR protection scheme, version dated May 16, 2014, (network institutions), taking their business model into account. Section 15 Fundamental decision about taking preventive action If the company believes that the operating policy of a CRR bank belonging to the bank-related protection scheme is not consistent with the principles laid down in section 14 or if there are business scenarios as defined in section 14 (3) at a CRR bank, the board of managing directors will resolve that the company shall take preventive action pursuant to sections 16 to 20 vis-à-vis the CRR bank if corresponding measures are not taken by the BVR protection scheme. The resolution requires the consent of the shareholder BVR. 17 Section 16 Action to encourage a change in operating policy (1) Should the company become convinced that the operating policy of a CRR bank belonging to the bank-related protection scheme is inconsistent with the principles in section 14, it has the right, and is under an obligation, to notify in good time the board of managing directors or the supervisory board, or the general meeting/general assembly/shareholders meeting of the CRR bank of the possible implications as set forth in sections 39 and 40 and to take action to encourage a change in the operating policy. ARTICLES OF ASSOCIATION (2) The procedure for action to be taken under subsection (1) is that the company initially contacts the board of managing directors and, if necessary, the supervisory board of the CRR bank concerned. If this does not result in a change to the CRR bank s operating policy (that is incompatible with the principles in section 14), the company makes an approach to the CRR bank s general meeting/general assembly/shareholders meeting. Section 17 Restructuring pwlan (1) If a business scenario arises as defined in section 14 (3), a CRR bank must, at the request of the company, draw up restructuring measures in the form of a restructuring plan in accordance with subsection (3) in order to correct these developments in the business. (2) The company is entitled to be involved in the preparation of the restructuring plan in an advisory capacity to the CRR bank concerned. (3) The restructuring plan must specifically include a description of the measures that are both necessary and appropriate in order to bring about a correction of the business scenario as defined in section 14 (3), and a description of the effects of these measures on financial position and financial performance.

20 (4) Primary institutions must submit the restructuring plan to the relevant auditing association and the company for verification; the auditing association will send an opinion on the restructuring plan to the company. Network institutions must submit the restructuring plan to the company for verification. (5) The restructuring plan requires the consent of the company. (6) The CRR bank must implement the restructuring plan. Section 18 Monitoring of restructuring 18 (1) The implementation and outcomes of the restructuring plan must be subject to ongoing financial control. (2) As part of the ongoing financial control, the CRR bank must prepare quarterly financial control reports, specifically addressing the implementation and outcomes of the restructuring plan, and deliver them to the competent auditing association and the company. (3) The ongoing monitoring of the implementation of the restructuring plan is carried out, in particular, on the basis of an analysis of the financial control reports. In the case of the primary institutions, the analysis of the financial control reports is carried out by the relevant auditing association and by the company; the auditing association informs the company of the results of its analysis of the financial control reports. In the case of network institutions, the analysis of the financial control reports is carried out by the company. Section 19 Updating of the restructuring plan (1) If it becomes apparent during the course of the ongoing monitoring in accordance with section 18 that the restructuring plan needs to be updated, the CRR bank must prepare the updates if requested to do so by the company. (2) A primary institution must submit the updates to the relevant auditing association and the company for verification; the auditing association will send an opinion on the updates to the company. The network institutions must submit the updates to the company for verification. (3) The updates require the consent of the company. (4) The CRR banks must implement the updates.

21 (5) Section 18 applies mutatis mutandis for the monitoring of the implementation and outcomes of the updates. Section 20 Personnel or material requirements (1) If a business scenario arises as defined in section 14 (3), the board of managing directors, after first hearing the opinion of the relevant committee in accordance with sections 34 and 35, can impose personnel or material requirements on the basis of the documents and audits, as specified in sections 17 to 19, section 54 (11) or section 54 (12). The CRR banks must satisfy the requirements without delay. (2) If, in the event of a business scenario as defined in section 14 (3), the board of managing directors of the CRR bank is unable to submit a workable plan in accordance with sections 17 to 19, the CRR bank must, at the request of the board of managing directors and subject to the opinion of the relevant committee in accordance with sections 34 and 35, appoint further personnel to the board of managing directors in consultation with the company. (3) In the case of primary institutions, the relevant auditing association and the company monitor implementation to ensure the requirements are satisfied; the auditing association informs the company of the results of its monitoring activities. In the case of network institutions, the monitoring of implementation to ensure the requirements are satisfied is carried out by the company. 19 ARTICLES OF ASSOCIATION 4. Restructuring measures for CRR banks a. Funding measures to be reported in the annual accounts Section 21 Funding measures (1) The company may implement the funding measures referred to in subsections (2) to (4) to avert any threats posed to the continued existence as a going concern of CRR banks belonging to it, in particular to secure the liquidity and solvency of the CRR banks. (2) The following will be taken over with funding from the BVR-ISG guarantee fund: Guarantees Indemnities Grants

22 Loans Investments in CRR credit institutions for recapitalization. (3) If a loan is taken over (financed by the BVR-ISG guarantee fund pursuant to sub - section (2)), agreement must be reached with the CRR bank on the repayment details and if the loan is interest-bearing on the rate of interest. 20 (4) For the purposes of recapitalization, investments in CRR banks in accordance with subsection (2), in particular shares, silent partnerships, or other elements of equity, can be acquired if there is no better or more economical way of achieving the ultimate purpose using other funding measures. An agreement must be reached with the CRR bank regarding the consideration to be paid by the bank and the other terms and conditions of recapitalization. Section 22 Criteria for the implementation of funding measures (1) Funding measures to be provided by the company for a CRR bank belonging to the bank-related protection scheme require that 1. the criteria set forth in section 49 EinSiG are met and; 2. the board of managing directors has adopted a resolution agreeing that the company should implement funding measures. The resolution referred to in sentence 1, no. 2 requires the consent of the shareholder BVR, taking account of the provision set forth in section 5 (4) sentence 2. (2) Funding measures should only be implemented if the CRR banks themselves are no longer in a position to overcome imminent or existing financial difficulties from their own resources. Section 23 Use of equity (1) In the event of any requirement for funding, a test must be carried out to establish whether and to what extent the CRR bank s equity can be used to cover a net loss for the year in the bank s annual financial statements. (2) Hidden reserves must be reversed and, in the same way as other reserves, used to cover a net loss for the year in the annual financial statements. The only situation in which such reserves must not be used in this way is if such a reversal of reserves would place the CRR bank in breach of relevant provisions of KWG and of Regulation (EU) no. 575/2013, as amended.

23 Section 24 Conditions (1) Funding measures are linked to personnel or material conditions. (2) The CRR banks are required to meet without delay the personnel or material conditions imposed by the company in connection with funding measures financed by the BVR-ISG guarantee fund. (3) In connection with measures and actions that are subject to the consent of the company or consultation of the company in accordance with the agreement on funding measures entered into between the company and a primary institution, the company must first obtain an opinion from the relevant auditing association. (4) If a CRR bank fails to satisfy, wholly or in part, the conditions imposed in association with a funding measure, the company has the right to take appropriate action to enforce the conditions. Section 25 Debtor warrant obligations of the CRR banks (1) If the resources of the BVR-ISG guarantee fund are used to finance a guarantee or indemnity, the CRR banks benefiting from the measure must release the company from the liability arising from the guarantee or indemnity by recognizing provisions, specific valuation allowances or write-downs for the risk pursuant to subsection (3) using earnings before tax in their future annual financial statements. The obligation of the company under the guarantee or indemnity reduces accordingly. 21 ARTICLES OF ASSOCIATION (2) If a claim is made against the company in connection with a guarantee or indemnity or the provision of a grant from the BVR-ISG guarantee fund, the beneficiary CRR banks must repay the amounts received from their future annual net income in accordance with subsection (3). (3) The company determines the start date, the duration and the scope of the obligations under subsections (1) and (2), taking account of the financial and legal circumstances of the CRR bank and the specific restructuring requirements. The obligations should generally end no more than 15 years after the date on which the agreement pursuant to section 28 was entered into, so as to support the positive future development of the beneficiary CRR banks. The company is entitled to adjust the duration and the scope of the obligations if this appears necessary during the term of the obligations owing to a change in the criteria referred to in sentence 1 and sentence 2, 2nd half-sentence.

24 Section 26 Assignment of damages claims to the company At the request of the company, the CRR banks must assign to the company any claims for damages to which they may be entitled against persons who have caused and are liable for the restructuring requirement at the banks. The company will utilize this right to demand assignment only to the extent to which it has provided funding measures for the CRR bank concerned. Section 27 Decision on funding measures and conditions 22 Notwithstanding section 22, the following applies to decisions on funding measures and conditions for CRR banks: a) The board of managing directors will decide on the type and scope of funding measures and the associated conditions based on the recommendation of the relevant committee in accordance with sections 34 and 35. b) If, in its decision, the board of managing directors intends to deviate on a material issue from the recommendation of the relevant committee, it must notify this intention to the administrative board. The subsequent procedure is governed by the provisions specified under letter c. c) The board of managing directors and the administrative board will hold joint deliberations regarding matters specified in letter b and will reach their decision in separate votes. The chairman of the administrative board or his/her deputy will convene joint meetings. The joint meetings will be chaired by the chairman of the administrative board or his/her deputy. The board of managing directors and the administrative board will also hold deliberations on the basis of the recommendation of the relevant committee in accordance with sections 34 and 35. Section 5 (2) sentence 1 and section 6 (4) sentence 1 apply with regard to the rules on a quorum; sections 5 (2) sentence 2 and section 6 (4) sentence 2 apply with regard to the rules on the majorities required in any voting. Decisions of both the board of managing directors and the administrative board require a majority of votes. Section 28 Entry into an agreement on funding measures (1) The company and the CRR bank enter into an agreement on funding measures. The agreement defines, in particular, the funding requirement, the type and scope of funding measures, and the conditions attached to the funding measures. (2) Agreements on funding measures must be signed by the CRR bank s board of managing directors and by all members of the CRR bank s supervisory board. In justified exceptional cases, the chairman of the supervisory board and an additional member of the

25 supervisory board may sign the agreement on behalf of all the members of the supervisory board on the basis of a resolution passed by the supervisory board of the CRR bank. Section 29 Ongoing monitoring (1) The implementation and processing of the agreement on funding measures are subject to ongoing monitoring. Ongoing monitoring must specifically include activities to establish: whether the CRR banks satisfy without delay the personnel and/or material conditions imposed by the company in connection with funding measures; whether the preconditions for the funding measures implemented for the benefit of the CRR banks still apply; the extent to which the financial circumstances of the CRR banks mean that they are in a position to satisfy the debtor warrant obligations, i.e. release the company from guarantees and indemnities taken over from the banks and/or repay amounts received; whether the CRR banks meet their debtor warrant obligations, guarantee release obligations, and repayment obligations in accordance with section 25. (2) In the case of the primary institutions, the relevant auditing association and the company carry out this ongoing monitoring. The relevant auditing association reports its findings to the company. In the case of network institutions, the ongoing monitoring is carried out by the company. 23 ARTICLES OF ASSOCIATION Section 30 Procedure for funding measures (1) After the primary institution has determined the funding requirement, a process in which the company can be involved, the primary institution submits its application for funding measures to the relevant auditing association and to the company. (2) The relevant auditing association and the company check the primary institution s application for funding measures. The auditing association takes a view on the application for funding measures and distributes proposals for funding measures. It forwards its opinion and its proposals to the company. (3) The relevant committee in accordance with sections 34 and 35 also reviews the application from the primary institution on the basis of the opinion and proposals from the relevant auditing association as specified in subsection (2). This committee forms its own opinion and decides on a proposal for funding measures for the primary institution concerned. It forwards its opinion and its proposal to the company; if a BVR-ISG regional

26 restructuring committee is responsible for this part of the process, its opinion and proposal is forwarded to the company by the relevant auditing association. (4) Subsections (1) to (3) apply mutatis mutandis to the procedure governing funding measures for network institutions with the exception of the involvement of an auditing association; in this case the committee pursuant to section 34 is responsible for the proposal on funding measures in accordance with subsection (3). b. Turnaround measures to re-establish the fundamental profitability of the business 24 Section 31 Devising turnaround plans (1) If funding measures are implemented for a CRR bank as specified in section 21, the bank must prepare a turnaround plan in accordance with subsection (2). The company is entitled to be involved in the preparation of the turnaround plan by advising the bank concerned. (2) The turnaround plan consists of the analysis of the current situation and the restructuring plan. a) The analysis of the current situation must specifically include a description of: the causes of the adverse trend in the CRR bank; any responsibility for the need for the restructuring; the current position of the CRR bank. b) The restructuring plan itself must specifically include: a strategic and operational plan, including business and profit planning for the entire bank; a comprehensive and binding action plan; a schedule for the introduction and completion of restructuring measures. (3) A primary institution must submit the analysis of the current situation and the restructuring plan to the relevant auditing association and the company for verification; the auditing association will send an opinion on the analysis of the current situation and on the restructuring plan to the company. Network institutions must submit the analysis of the current situation and the restructuring plan to the company for verification. (4) The restructuring plan requires the consent of the board of managing directors. (5) The CRR bank must implement the restructuring plan.

27 Section 32 Ongoing monitoring of the restructuring plan (1) The implementation and outcomes of the restructuring plan must be subject to ongoing financial control. (2) As part of the ongoing financial control, the CRR bank must prepare quarterly financial control reports, specifically addressing the implementation and outcomes of the restructuring plan. (3) The ongoing monitoring of the implementation of the restructuring plan is carried out, in particular, on the basis of an analysis of the financial control reports. The analysis of the financial control reports for the primary institutions is carried out by the relevant auditing association and by the company; the auditing association informs the company of the results of its analysis of the financial control reports. In the case of network institutions, the analysis of the financial control reports is carried out by the company. Section 33 Updates to the restructuring plan (1) If it becomes apparent during the course of the ongoing monitoring in accordance with section 32 that the restructuring plan needs to be updated, the CRR bank must prepare the updates if requested to do so by the company. (2) A primary institution must submit the updates to the relevant auditing association and the company for verification; the auditing association will send an opinion on the updates to the company. The network institutions must submit the updates to the company for verification. 25 ARTICLES OF ASSOCIATION (3) The updates require the consent of the company. (4) The CRR banks must implement the updates. (5) Section 32 applies mutatis mutandis for the monitoring of the implementation and outcomes of the updates.

28 5 Committees Section 34 Central committee (1) A central committee of the company s bank-related protection scheme (BVR-ISG central committee) will be formed. It will be made up of: six representatives from primary institutions; two representatives from auditing associations; one representative from DZ BANK AG Deutsche Zentral-Genossenschaftsbank and one 26 representative from WGZ BANK AG Westdeutsche Genossenschafts-Zentralbank, one representative of the company. (2) The members of the BVR-ISG central committee and their deputies are appointed and dismissed by the administrative board. They should be the same persons as the representatives on the central committee of the BVR protection scheme and their deputies. A deputy is only entitled to attend meetings if the member is prevented from attending. Members of the administrative board cannot also be members of the BVR-ISG central committee. (3) Members of the BVR-ISG central committee and their deputies are appointed for a term of three years. If the term of the members of the central committee of the BVR protection scheme and their deputies ends, the membership of or appointment as deputy on the BVR-ISG central committee also ends. (4) The BVR-ISG central committee is specifically responsible for: a) matters of fundamental importance for the bank-related protection scheme, in particular: aa) monitoring the financial performance of the bank-related protection scheme and preparation of related proposals; ab) advice on basic principles for the investment of BVR-ISG guarantee fund resources; ac) discussions on fundamental issues regarding restructuring plans (sections 17 to 19); ad) discussions on fundamental issues regarding turnaround plans and the implementation of these (sections 31 to 33); b) giving its opinion before the board of managing directors imposes personnel or material requirements on a CRR bank (section 20); c) submitting proposals for: ca) funding measures (section 21) for primary institutions, with a value in excess of 25 million per funding event and associated conditions (sections 24 and 27); cb) funding measures (section 21) for network institutions and the associated conditions (sections 24 and 27);