ARTICLES. of the Joint-Stock Company STATE SAVINGS BANK OF UKRAINE

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1 REGISTERED with the National Bank of Ukraine on February 28, 2003 Registration Number 4 Deputy Chairman of the National Bank of Ukraine [Signature] O.V. Shlapak [Impression of the official seal with inscription: National Bank of Ukraine * 1] ARTICLES of the Joint-Stock Company STATE SAVINGS BANK OF UKRAINE APPROVED by Decree of the Cabinet of Ministers of Ukraine of February 25, 2003, No. 261

2 General Provisions 1. The Open Joint-Stock Company State Savings Bank of Ukraine (hereinafter referred to as the Bank) is a state bank incorporated in compliance with Order of the President of Ukraine of May 20, 1999, No. 106, Decree of the Cabinet of Ministers of Ukraine of May 21, 1999, No. 876 through transformation of the State Specialized Commercial Savings Bank of Ukraine into the State Savings Bank of Ukraine, whose organizational and legal pattern is the Open Joint-Stock Company, which is registered with the National Bank of Ukraine on May 26, 1999 under file number 4 and whose name is changed for the Open Joint-Stock Company State Savings Bank of Ukraine, which is registered with the National Bank of Ukraine on December 28, The Bank is an assignee of the State Specialized Commercial Savings Bank of Ukraine, registered with the National Bank of Ukraine on December 31, 1991 under file No The Bank in its activity is guided by the Constitution and Laws of Ukraine On Banks and Banking Activities, On the National Bank of Ukraine, On Economic Societies, other laws of Ukraine, standard and legal acts of the National Bank of Ukraine and these Articles of the Bank. 4. The full name of the Bank is: in Ukrainian відкрите акціонерне товариство Державний ощадний банк України ; in English Joint-Stock Company State Savings Bank of Ukraine ; in Russian открытое акционерное общество «Государственный ощадный банк Украины». The abbreviated name is: in Ukrainian - ВАТ Ощадбанк ; in English JSC Oschadbank ; in Russian ОАО «Ощадбанк». 5. The founder of the Bank is the State in the person of the Cabinet of Ministers of Ukraine. The State exercises and realizes powers of the holder regarding the stocks, which belong to the State in the authorized capital of the Bank, through the administrative bodies of the Bank. 6. The Bank is a legal entity, it has its separate assets, is entitled to acquire on its behalf any interest and personal non-property rights, including the right to conclude and make contacts (agreements), act as a plaintiff and defendant (being a party to a legal process) in the courts of general jurisdiction, including economic court, or arbitration courts. Assets (interest) acquired by the Bank as an assignee are the Bank s property. The Bank acquires the status of a legal entity from the moment of entering the respective record into the State Register of Banks by the National Bank of Ukraine. 7. The Bank and its branches have official and other seals, stamps, official letterheads. 2

3 Territorially separated subdivisions without balance and representative offices have seals with their official names and stamps. 8. The legal address of the Bank is: 12г Hospital na Street, Kyiv 01023, Ukraine. 9. Except as required by law or contract, the Bank does not bear responsibility for liabilities of the State and the State does not bear responsibility for liabilities of the Bank. Except as required by law or contract, the Bank does not bear responsibility for liabilities of the National Bank of Ukraine and the National Bank of Ukraine does not bear responsibility for liabilities of the Bank. Deposits of individuals in the Bank are under the State s guarantee. 10. The Bank makes its business on commercial basis, it possesses, uses and manages its assets, including buildings, constructions, facilities, equipment, resources and money funds, which belong to it under proprietary title, pursuant to the law. The Bank may possess immovable property of total value, which does not exceed 25 per cent of the Bank s capital. This restriction is not applied to: premises, which assure technical execution of banking activities; assets, which became the Bank s property as result of lien under terms and conditions of Pledge agreement; assets, acquired by the Bank with the purpose to prevent any losses, provided that such assets shall be alienated by the Bank within one year from the moment of acquisition of property right to them. 11. The Bank has the status of a specialized savings bank in accordance with the structure of its liabilities, over 50 % of them are composed by deposits of individuals, and forms part of the banking system of Ukraine. The Bank independently determines guidelines of its activity and its operational specialization and is entitled to execute them in compliance with the law. The Bank may form part of one of such banking associations as banking corporation, banking holding group, financial holding group, it also may be a member of an industrial and financial group with observance of requirements of antimonopoly law. 3

4 The Bank has its independent balance sheet, correspondent accounts with the National Bank of Ukraine and other banks. Objectives and Subject of the Bank s Activity 12. The objectives of the Bank s activity are: to get profit on banking operations and effectuate different kinds of business pursuant to the law; create favorable conditions for economics development and support national manufacturer, especially, small and middle enterprises; grant credits and finances to support processes of structural reconstruction; strengthen and realize productive and commercial potential of different sectors of economy; develop savings business; provide a comprehensive banking servicing of legal entities and individuals. 13. The subject of the Bank s activity is: to carry on banking and other operations in accordance with licenses and permits granted by the National Bank of Ukraine; to execute various activities which are not prohibited for the banks, in the order established by the law. Capital, Funds and Reserves of the Bank 14. To assure its statutory business activity the Bank pursuant to the law and these Articles of the Bank shall form its capital, which consists of principal and additional. 15. The authorized capital of the Bank equals 200 mln. (two hundred million) hryvnyas. 16. The Bank may change (increase or reduce) the amount of its authorized capital in such a way as it is determined by the law. Formation of and increase in the Bank s authorized capital is effectuated by financial contributions in hryvnyas according to the law. The authorized capital of the Bank increases either by increase in quantity of stocks of actual par value or by increase in their par value. The Bank s losses do not prevent from inviting the public to subscribe for stocks and do not impede any increase in the Bank s authorized capital. Reduction of the authorized capital is effectuated either by decrease in par value of the stocks or by decrease in quantity of the stocks at the expense of partial redemption of stock from its holder for further cancellation. 17. Decision on any change in the Bank s authorized capital shall be taken by the Cabinet of Ministers of Ukraine provided that the National Bank of Ukraine gives its positive conclusion about such intention to change the amount of authorized capital. 18. The Bank shall create its reserves to cover unexpected losses on all assets and off-balance liabilities. 4

5 The amount of deductions to the reserve fund equals at least 5% income of the Bank up to 25% amount of the authorized capital of the Bank. The Bank forms the fund of general provisions at the expense of income after deductions specified by the law. The amount of the fund and the procedure of deductions to it are established by the Supervisory Board of the Board. Utilization of the fund of general provisions shall be effectuated on the requests applied by the Management Board of the Bank and in accordance with a resolution of the Supervisory Board. The fund shall be used for covering any losses on assets and off-balance liabilities. The Bank shall form other funds and provisions to cover any losses on assets in accordance with normative and legal acts of the National Bank of Ukraine. Formation and utilization of such funds and provisions is effectuated in accordance with the law. The funds shall be at the Bank s disposal for covering any losses and are intended for unlimited and immediate utilization in any occurrence of losses. Any losses are not subject to immediate covering by funds but are to be recognized in profit and loss account. Bank s Stock 19. The Bank shall issue its stocks in accordance with the law, taking into account all peculiarities specified by the Law of Ukraine On Banks and Banking Activities. The Bank shall issue 200 ordinary registered stocks at par value 1 mln (one million) hryvnyas each, in non-documentary form for the total amount of authorized capital. Each stock is nondivisible. Bank s Profit and Order of Loss Covering 20. The Bank s profit is generated and shall be generated from incomes received as a result of its operations, and shall be calculated in accordance with the law. Banks revenue after taxation and other mandatory payments is subject to allocation in terms and according to the order of Bank s profit allocation which are fixed by the Supervisory Board, and taking into account its decision about profit allocation. The Bank shall not pay any dividends or allocate capital if such payments or allocation may cause any infringement of capital adequacy normative. 5

6 If the Bank s business during the previous year was not profitable, the Bank may pay dividends or allocate capital in any form to the amount, which does not exceed 50 per cent difference between Bank s capital and the level of its regulatory capital. Any losses are covered at the expense of reserves, other funds and provisions for covering losses from assets pursuant to the law, by the decision of the Supervisory Board. Bank s Activity 21. The Bank provides expansion and improvement of actual forms and implementation of new progressive forms of banking services for clients, taking into account the objects of its activity: attracts and allocates credits; accepts deposits of individuals and legal entities; effectuates operating activity, specifically, keeping client s deposits, settlement and cash servicing of clients etc.; effectuates investment business, specifically, attracts and allocates funds at domestic and external market, etc.; acquires at its own expense means of production for their further lease; effectuate financial activity, including own and attracted capital management; issues securities and promotes their turnover; develops, manufactures, uses, operates, imports, exports cryptosystems and means of cryptographic protection of information, renders services on cryptographic data protection for the Bank and its clients; acts as an insurance intermediary, as well as a registrar of state register of movable assets pledges; issues payment documents (checks, letters of credit, etc.), buys, sells and keeps them, executes other operation with them; buys from enterprises, institutions, organizations and individuals foreign currency in cash and currency on accounts and deposits, and sells it to them; buys and sells in Ukraine and abroad banking metals; attracts and allocates precious metal (including banking metals) to accounts and deposits, executes various operations with the said valuables in accordance with international banking practice; executes operations on state budget cash servicing under agreements made with the State Treasury; renders consulting and information services concerning operations on stock market; effectuates other operations not prohibited by the law. 6

7 Activities and banking operations subjected to licensing or getting permits for their execution, shall be carried out by the Bank after getting the corresponding license or permit. The Bank in accordance with the banking license issued by the National Bank of Ukraine is entitled to carry out such banking operations: reception of deposits of individuals and legal entities; opening and keeping of current accounts of clients and correspondent banks, including money transfer from their accounts using payment instruments, and enter money funds to their accounts; allocation of attracted funds on its behalf, under its own terms and conditions and at its own risk. In addition to the said operations the Bank is entitled to carry out and execute the following operations and transactions: granting guarantees and security, as well as other commitments on behalf of third persons, their fulfillment in cash form being stipulated; acquisition of right of claim for fulfillment of commitments in cash form for delivered goods or rendered services, bearing risks for fulfillment of these commitments, and receiving payments (factoring); leasing; rendering services in the form of responsible guarding and rent of safes for keeping valuables and documents; issuance, purchase, sale and servicing of checks, promissory notes and other current payment instruments; issuance of banking charge cards and marking operations using these cards; rendering information and consulting services related to banking operations. Given banking license and on the assumption of receipt of written permit from the National Bank of Ukraine the Bank has the right to carry out the following operations: operations with currency values; issuance of its own securities; arrangement of purchase and sale of securities on the instructions of clients; carrying out operations on the security market (including underwriting) in its own name. On the assumption of receipt of written permit from the National Bank of Ukraine the Bank has also the right to carry out the following operations: to make investments into statutory funds and stocks of other legal entities; 7

8 to issue, make circulate and repay (distribute) state cash lottery and other cash lotteries; to transport currency values and collect money funds; to carry out depository activity and act as registrar of holders of registered securities. On the instructions of clients or in its own name fulfills operations: with instruments of money market; with interest and exchange rate instruments; with financial futures and options; trust management of money funds and securities pursuant to contracts concluded with legal entities and individuals. The Bank is entitled to execute other transactions in accordance with the law and taking into account the restrictions, specified by the law of Ukraine On Banks and Banking Activities. The Bank s Rights 22. To carry out its business activity the Bank has the following rights in accordance with the law and these Articles of the Bank: to open on the territory of Ukraine and with the consent of the National Bank of Ukraine affiliates, separate non-balance branches and representative offices, and reorganize and liquidate them; to establish, reorganize and liquidate affiliated banks, affiliates and representative offices of the Bank on the territories of other countries; to act as a founder of or a participant in enterprises of any organizational legal forms, to gain stocks (shares) of economic partnerships excluding enterprises and partnerships of unlimited responsibility, which is specified in their Articles; to establish non-profitable unions or associations with the purpose of protection and representation of its own interests, development of interregional and international connections, to ensure scientific and information interchange and protect professional interests, working out of recommendations related to banking business on the territory of Ukraine and abroad; to implement and render new banking services for its clients including new types of savings and credits for the population; for carrying out its banking business to open and operate correspondent accounts with the National Bank of Ukraine and other banks in Ukraine and abroad, bank accounts for individuals and legal entities in national and foreign currency; to use as payment instruments drafts, payment requests, request-drafts, promissory notes, checks, banking charge cards and other payment instruments which are used in international banking practice; 8

9 to conclude agreements of consortium crediting to effectuate joint financing; to issue an order for mandatory repayment of a debenture in case of undue repayment of credit or interest on its use, if it is provided for by an agreement; to fix the interest rates of operations with assets and liabilities as well as amounts of commission for its operations; to receive from enterprises, institutions and organizations accounting reports, balance sheets, financial plans and other information needed for crediting, settlement of accounts and confirmation of clients solvency; for securing credits, guarantees and commitments related to various operations, to take in pledge assets (interests) subjected to lien, receive pledged assets (interests) as its ownership, secure fulfillment of commitments in any way used in banking practice; to survey the proper use of credits given for definite purposes, as well as presence and keeping conditions of assets which serve as covering funds for fulfillment of obligations under the terms and conditions of given credits (guarantees); to examine entities of potential investment business, establish the corresponding database, provide the participants of investment process with information; to acquire real estate, means of communication, equipment, means of transport as its property; to act as agent or intermediary, including insurance intermediary; to serve clients using electronic banking documents and electronic means of communication in compliance with the law and normative and legal acts of the National Bank of Ukraine; to acquire, keep, use and transport fire-arms and ammunition, special means of individual protection and active defense, as well as equipment for in-bank guard and Bank s collector service in order specified by the law; to use own transport means for collection of client s money funds, transportation of cash and valuables, as well as transportation of employees and cargoes for its needs; to carry out various activities not prohibited by the law. 23. The Bank s branches shall be entitled on its behalf to settle disputes before commencement of legal proceedings, file, contest claim, file various procedural instruments at courts of general jurisdiction, including economic and arbitration courts, and carry out procedure actions stipulated by the law. 24. The Bank shall establish its relations with clients and correspondent banks on the ground of agreements of rendering of banking and other services, which specify mutual commitments and 9

10 liabilities of the parties, rates, commission fees, ways of credit repayment securing, getting necessary information from clients and other terms and conditions. Bank s Resources 25. The Bank s resources are composed of own and attracted funds in national and foreign currency. 26. The Bank may obtain credits from the National Bank of Ukraine and other banks on contractual basis. 27. The Bank carries out active operations within the limits of its own and attracted resources. Protection of Clients Interests, Bank s Employees and Assets Guarding, Non-disclosure of Banking Secrets 28. With the purpose to protect clients, employees, visitors, valuables and assets from illegal actions in Bank s premises, guarding, including in-bank guarding in accordance with the category established by the National Bank of Ukraine is organized by the decision of Bank s administrative bodies and in compliance with normative and legal acts of the National Bank of Ukraine and other enactment. 29. The Bank shall ensure non-disclosure of banking secret by all its employees in compliance with the law of Ukraine On Banks and Banking Activities. The top officers and employees of the Bank are required not to disclose and use for their benefit or benefit of third persons any confidential information, which becomes known to them in process of execution of the duties. The Bank s employees on assuming their office sign obligations to keep banking secret. Persons guilty of infringement of order of disclosure and use of banking secret, bear responsibility in accordance with the law of Ukraine. 30. Bank s depositors individuals have the right to make testamentary disposition in case of their death to repay deposit to any person, organization or state, and power of attorney for execution of operations on accounts which may be notarized or certified by the authorized person of the Bank in accordance with the law of Ukraine. 31. Lien on own funds and assets of the Bank, funds and various valuables of individuals and legal entities kept in the Bank, attachment of assets and valuables of the Bank kept on its account, as well as attachment of funds and various valuables of individuals and legal entities kept in the Bank, and lifting of attachment of assets or funds shall be made in accordance with the law. 10

11 Managerial Structure of the Bank. Administrative Bodies, their Authority and Order of Taking Decisions 32. The managerial structure of the Bank includes administrative and control bodies. The administrative bodies of the Bank are: The Supervisory Board; The Management Board of the Bank. The control body of the Bank is the Audit Commission. The Supervisory Board of the Bank is its supreme managerial body which supervises the activity of the Management Board of the Bank with the aim to keep money funds attracted in form of deposits, ensure repayments to depositors and protect interests of the State as a Bank s stockholder, it exercises other powers stipulated by the Law of Ukraine On Banks and Banking Activities. The Supervisory Board in its activity is guided by the Law of Ukraine On Banks and Banking Activities, other legislative acts and these Articles of the Bank. The Supervisory Board does not interfere into the operational activity of the Bank. The competence of the Supervisory Board includes: taking decisions on: - determination of guidelines in Bank s business and approval of reports about their execution; - approval of annual statements of the Bank, including its subsidiaries; - working out and approval of regulations concerning the Bank s Audit Commission, appointment of personal and numerical strength of the Audit Commission, prescheduled withdrawal of the appointed personnel of the Audit Commission or any its member; - approval of reports and conclusions of the Audit Commission and external auditor; - making investments to authorized capital of legal entities (in form of acquisition of stocks, interest, shares); - participation of the Bank in banking holding groups, financial holding groups and making decisions about the list of powers assigned by the Bank to such banking associations; - issue of Bank s stocks on the basis of Decrees of the Cabinet of Ministers; - distribution of profit and covering of losses; approval of the regulations concerning the Management Board of the Bank and determination of the numerical strength of the Management Board of the Bank; 11

12 appointment and dismissal of the Chairman of the Management Board of the Bank, signing contract with him/her; approval of the members of the Management Board of the Bank, appointment and dismissal of the Deputy Chairman of the Management Board of the Bank and members of the Management Board of the Bank, including such appointments and dismissals on the basis of application submitted by the Chairman of the Management Board of the Bank, signing contracts with them; control of activity of the Management Board of the Bank; appointment of an external auditor; establishment of the order of holding inspection and supervision over financial and economic activity of the Bank; approval of the terms of remuneration and material encouragement of the Chairman, Deputy Chairman and members of the Management Board of the Bank; taking decision on imposing material and disciplinary liability on the Chairman, Deputy Chairman and members of the Management Board of the Bank in the cases specified by the law; hearing of the Management Board s reports concerning principal issues of the Bank s business and approval of consolidated balance-sheet of the Bank; setting a term, amount and order of payment of dividends; arrangement, if necessary, of extraordinary financial audit of the results of the Bank s financial activity; establishing, reorganization and liquidation of subsidiaries, affiliates and representative offices of the Bank, approval of their Articles and regulations, including those interceded for by the Management Board of the Bank; approval of agreements (transactions) on alienation of property, concluded to a sum, which exceeds 10 per cent authorized capital of the Bank; approval of regulations related to granting credits to legal entities and commercial banks by the Bank; execution of other functions in accordance with the law and the Articles of the Bank. The Supervisory Board has the right to delegate certain authorities to the Management Board of the Bank. 33. The Supervisory Board is established in the quantity of fourteen persons, who shall be appointed by the Verkhovna Rada of Ukraine and the President of Ukraine for a period of five years in accordance with the law of Ukraine On Banks and Banking Activities. The members of the Supervisory Board fulfil their functions without obtaining any material remuneration. 12

13 The Supervisory Board of the Bank is headed by its Chairman, who is elected from its members. The Chairman of the Supervisory Board has a Deputy Chairman, who is elected by the Supervisory Board at the suggestion of its Chairman. Meetings of the Supervisory Board are competent provided that they have a quorum which consists of ten its members or more. Decisions of the Supervisory Board shall be approved by the majority of votes of those present at the meeting and are binding. Meetings of the Supervisory Board shall be convened at least twice a year. Extraordinary meetings shall be convened at the request of the Chairman of the Supervisory Board or at the proposal of at least five its members as well as at the request of the Management Board of the Bank. The members of the Supervisory Board shall be notified personally of the meeting at least 10 days prior to the established date of the meeting. Internal issues of activity arrangement of the Supervisory Board of the Bank and issues of clerical work are specified by regulations concerning the Supervisory Board of the Bank, which are approved at its meeting. Powers of all assigned members of the Supervisory Board of the Bank and / or each of its members may be cancelled pursuant to a decision of the Supreme Council of Ukraine and the President of Ukraine related to the persons, appointed by them, but not earlier than in a year from the day of the appointment. Should a temporary administrator of the Bank be appointed, authorities of the Supervisory Board of the Bank shall be cancelled. In accordance with the law the members of the Supervisory Board are liable for protection of interests of the state and the Bank, for safe keeping of banking secret and other confidential information which may be known to them because of their exercising powers. In the event a member of the Supervisory Board infringed these or other requirements, the Management Board of the Bank may apply to the Supervisory Board for dispensing this member from his duties. On considering this application and taking appropriate decision the Supervisory Board may apply to the Supreme Council of Ukraine or the President of Ukraine to raise a question on cancellation of powers of the members of the Supervisory Board appointed by them, who made infringements, but not earlier than in a year from the day of the appointment. Appeal of members of the Supervisory Board to the Management Board of the Bank on any matters shall be considered at a meeting of the Supervisory Board and, should a positive decision be approved, it is brought to the notice of the Management Board of the Bank. Meetings of the Supervisory Board shall be organized by the Bank. 13

14 34. The Management Board of the Bank is a standing executive body. The Management Board of the Bank carries out management of operating (current) activity of the Bank, fund formation and is liable for efficiency of its work in accordance with these Articles of the Bank and regulations concerning the Management Board of the Bank. The Management Board of the Bank acts in the name of the Bank within the competence specified by the law and these Articles of the Bank, on the ground of regulations, which shall be approved by the Supervisory Board and which define numerical strength of the Management Board of the Bank, and is accountable to the Supervisory Board. The term of office of members of the Supervisory Board is 5 years. The Chairman of the Management Board of the Bank directs the work of its executive body and has the right to represent the Bank without any Power of Attorney. Members of the Management Board of the Bank are to belong to its staff. The Management Board of the Bank consists of the Chairman of the Board of the Bank, his/her Deputies and other members of the Management Board of the Bank. The Chairman of the Management Board of the Bank shall be appointed and dismissed by the Supervisory Board. Deputy Chairman and other members of the Management Board shall be appointed and dismissed by the Supervisory Board and also at the suggestion of the Chairman of the Management Board of the Bank. Candidatures of Chairman of the Management Board of the Bank, his Deputies and other members of the Management Board of the Bank shall be coordinated with the National Bank of Ukraine in accordance with the law of Ukraine On Banks and Banking Activities. The competence of the Management Board of the Bank includes: organization of execution of decisions of the Supervisory Board related to the Bank s activity; preparation of appropriate materials and proposals on the issues which are to be considered and decided by the Supervisory Board of the Bank in accordance with the law, these Articles of the Bank and resolutions of the Supervisory Board; consideration of draft documents of the Bank, approval of which is within the competence of the Supervisory Board; approval of strategic and current plans of the Bank s activity, business-plans, planned balance and budget; consideration of annual financial statement and balance-sheet of the Bank, their submission to the Supervisory Board for their approval; 14

15 arrangement of the Bank s activity, accounting and reporting, internal banking supervision over automation of banking operations; approval of rules, procedures and other internal documents of the Bank, excluding those, which are to be approved by the Supervisory Board; approval of a program of internal supervision with the aim to prevent legalization (whitewashing) of money, obtained in criminal way; consideration of issues of operating activity of the Bank and its structural subdivisions; approval of maximal number of the Bank s staff; approval of organizational structure of the headquarter and typical structure of the Bank s affiliates; control of observance of requirements of the law by the Bank s staff; approval of the order of fixing interest rates on operations with assets and liabilities, amounts of commission and other remuneration for servicing and / or fixing such interest rates, amounts of commission and other remuneration; determination of main principles of execution of operations with assets and liabilities; taking decisions on usage of the Bank s funds, excluding the fund of general provisions, on the basis of the order of profit allocation and covering losses, established by the Supervisory Board of the Bank; determination of the terms of remuneration for the Bank s staff excluding those, which are determined by the Supervisory Board; approval of credit agreements (transactions), which are subject to the authority of the Management Board of the Bank on the ground of the regulations approved by the Supervisory Board on crediting legal entities and commercial banks by the Bank; taking decisions on conclusion of agreements on alienation of fixed assets to a sum from 5 to 10 per cent authorized capital of the Bank in accordance with the law and these Articles of the Bank; taking decisions on the issues of social maintenance and stimulation of the Bank s staff; taking decisions on the issues of granting charitable help and assistance; consideration of reports on audit and inspection of the Bank s institutions, reports of their top officers and taking appropriate decisions; taking proposals concerning creation in established order of branches, representative offices, associated enterprises and associated banks, as well as their reorganization and liquidation, consideration of their Articles and regulations with further submission to the Supervisory Board of the Bank on taking decisions thereon; 15

16 determination of the order of engagement and dismissal of employees, form, system, order of remuneration of labor and encouragement of employees according to the law; taking decisions about the numerical strength of the internal audit service and approval of its regulation; appointment and dismissal of the administrator of the internal audit service; taking decision about participation of the Bank on banking corporations and industrial and financial groups and about list of powers which are given by the Bank to such banking associations; taking decisions about Bank s joining any non-profit unions, other profit and non-profit associations; taking decisions about appointment and dismissal of managers of branches, representative offices, structural subdivisions of the Head Office of the Bank and other managers in accordance with nomenclature approved by the Management Board of the Bank, as well as managers of associated enterprises and associated banks; determination of order of appointment and dismissal of managers of territorially separated subdivisions of the Bank, which have no balance; taking decision on any issues concerning management of branches, representative offices, associated enterprises and other structural subdivisions of the Bank, control over fulfillment of their tasks; taking proposals about introduction of any changes and supplements to these Articles of the Bank; taking decisions about writing-off of bad actives of the Bank out of the reserves, shortage and losses of its inventory holdings, as well as expenses related to suspended capital investments in accordance with the law; establishment of the procedure of writing-off of obsolescent and useless equipment and means of transport; formation of standing labor bodies (committees, commissions), which may be vested with some powers of the Management Board of the Bank, if necessary; taking decisions about opening and closing of territorially separated subdivisions of the Bank, which have no balance, and approval of their regulations; approval of standard regulations concerning a branch of the Bank and territorially separated subdivision of the Bank, which has no balance; taking decisions about granting branches and territorially separated subdivision of the Bank, which has no balance, permits for carrying out of banking and other operations specified in corresponding regulations, within the limits of banking license and written permit received by the Bank; approval of Bank s corporative symbols; 16

17 solution of other issues related to Bank s activity, put to a meeting of the Management Board of the Bank pursuant to the decision of the Chairman of the Management Board of the Bank, with exception of those issues which are of competence of the Supervisory Board of the Bank; execution of powers vested by the Supervisory Board. The meetings of the Management Board of the Bank are convened when necessary but not less than once a month. The Management Board of the Bank is entitled to take decisions if at least two thirds of its members are present at the meeting. The resolution of the Management Board of the Bank is carried by a majority of votes present at the meeting. In case of an equality of votes the Chairman of the Management Board of the Bank has a casting vote. At any meeting of the Management Board of the Bank the minutes are kept. The resolutions of the Management Board of the Bank are implemented through decrees, orders and instruction of the Bank. 35. The Chairman of the Management Board of the Bank: manages the Management Board of the Bank and bears personal responsibility for execution of tasks, the Management Board is entrusted with; acts without any power of attorney on behalf of the Bank, represents interests of the Bank in all institutions and organizations in Ukraine and abroad; manages assets and funds of the Bank in accordance with the law and the Articles of the Bank; submits proposals to the Supervisory Board concerning the personal commission of the Management Board, appointment and dismissal of the Deputy Chairman of the Management Board and members of the Management Board; distributes duties among the Deputy Chairman and other members of the Management Board of the Bank, determines their functional powers and is entitled within the limits of his/her powers specified by the Articles of the Bank, to vest his/her deputies with individual powers; issues powers of attorney on behalf of the Bank, signs contracts (agreements), including foreign economic contracts, on behalf of Bank s administration concludes the collective agreement, is entitled to establish another order of signing contracts (agreements), as well as various liabilities and documents on behalf of the Bank; 17

18 makes decisions about conclusion of agreements of amortization according to the law and these Articles of the Bank, to the amount which does not exceed 5 per cent of the authorized capital of the Bank; signs claims on behalf of the Bank; issues orders and instructions within the limits of his/her powers, specified by these Articles of the Bank and the law; approves regulations for structural subdivisions of the Head Office of the Bank; approves roles, procedures and other internal normative and methodological documents, if their approval is not of competence of the Management Board of the Bank; approves the list of staff members of the Head Office of the Bank; makes decision about granting allowance to the employees of the Bank; appoints and dismisses employees of the Bank, determines salaries, bonus, encourages employees materially, calls them to account administratively and materially, if necessary; exercises other powers on behalf of the Bank. The Chairman of the Management Board exercises also other functions on the instructions of the Supervisory Board of the Management Board of the Bank. Organizational Structure of the Bank 36. The united system of the Bank is composed by its Head Office, branches, territorially separated subdivisions, which have no balance, and representative offices. 37. The Bank s structure is based on the principle of centralization with vertical subordination and consists of: Head Office; Bank s branches which have their individual balance; regional branches, Main Board in the city of Kyiv and Kyiv region, Crimean Republican Board; subdivisions; territorially separated subdivisions, which have no balance; representative offices. Branches, territorially separated subdivisions, which have no balance, and representative offices of the Bank are not legal entities, they act on behalf of the Bank on the grounds of their regulations. Such regulations specify their competence, functions, various issues of the activity, 18

19 as well as their subordination. The regulations are approved in order specified by these Articles of the Bank. The branches, territorially separated subdivisions, which have no balance, and representative offices of the Bank are registered by means of entry of appropriate information into the State Register of Banks. 38. At the head of branches and representative offices of the Bank there are managers, appointed and dismissed by the Management Board of the Bank. The territorially separated subdivisions, which have no balance, are headed by managers, appointed and dismissed in order, established by the Management Board of the Bank. 39. The branches of the Bank on behalf of the Bank carry out banking and other transactions specified in the regulations concerning branches on the basis of written permit given by the Bank, within the limits of banking license and written permit, received by the Bank. The territorially separated subdivisions, which have no balance, on behalf of the Bank carry out banking and other transactions specified in the regulations concerning such subdivision on the basis of written permit given by the Bank, within the limits of banking license and written permit, received by the Bank. Control, Inspection and Audit of Bank s Activity 40. The control over financial and economic activity of the Bank is made by the Audit Commission, whose personal and numerical strength is approved by the Supervisory Board. 41. Regulations concerning the Audit Commission are approved by the Supervisory Board. 42. Any member of the Supervisory Board, Management Board of the Bank and employees of the Bank cannot be members of the Audit Commission. The Audit Commission may engage independent experts on paid contractual basis in order specified in the regulations concerning Audit Commission, with the purpose to exercise vested powers. The Audit Commission: inspects observance of the law and normative and legal acts of the National Bank of Ukraine by the Bank; examines reports of internal and external auditors and submits appropriate proposals to the Supervisory Body; submits to the Supervisory Board of the Bank its proposals concerning any issues related to the competence of the Audit Commission concerning financial safety and good standing of the Bank and protection of interests of its clients. 19

20 43. The Audit Commission reports the results of its inspections and revisions to the Supervisory Board of the Bank. The Audit Commission submits in advance the results of inspection and its conclusion on the annual financial statement and balance sheet to the Management Board of the Bank. 44. The report of the Audit Commission of the Bank shall be considered and approved by the Supervisory Board. 45. The Bank shall establish the internal audit administration, which is the body of operative control of the Management Board of the Bank. The internal audit administration is subordinated to the Management Board of the Bank, reports to it, acts in accordance with regulations, approved by the Management Board of the Bank and exercises the following powers: supervises the current activity of the Bank; controls observance of the law, other enactment, normative and legal acts of the National Bank of Ukraine and resolutions of the managerial bodies of the Bank; inspects the results of current financial activity of the Bank; analyzes information and data concerning Bank s activity, professional activity of its staff, cases when the Bank s officers exceed their commissions; submits conclusions and proposals related to the results of inspection to the Management Board of the Bank; other powers, related to supervision over and inspection of the Bank s activity. 46. Audit and inspections of business of the Bank s structural subdivisions shall be executed by the Bank s inspection and auditing service, which acts in correspondence with the respective regulations approved by the Management Board of the Bank. 47. Inspection of the Bank s business shall be made by external auditors (auditing firms). State bodies inspect the Bank s business within their competence in accordance with the law. 48. The National Bank of Ukraine regulates and supervises the Bank s business in the order specified by the law. Accounting and Reporting 20

21 49. The Bank organizes accounting in accordance with its internal accounting policy, worked out on the basis of rules established by the National Bank of Ukraine pursuant to international accounting standards and regulations (standards) of Ukraine. 50. The financial year of the Bank is a calendar year which begins on the 1 st of January. 51. Financial statements of the Bank reflect state of assets and liabilities and results of its activity for the accounting period. 52. The Bank submits to the National Bank of Ukraine financial statements and statistical reports on Bank s activity, its operations, liquidity status, solvency, profitability with the purpose to estimate its financial standing. 53. Accounting form, methods of its drawing up, periodicity and terms of submission of reports are established by the National Bank of Ukraine in accordance with the law. 54. Annual financial statements of the Bank shall be examined by the independent auditor. On confirmation by auditor of reliability and completeness of information given in annual financial statements, the Bank publishes it not later than on the 1 st of June of the year next to the accounting period, in the newspapers Uryadovyi Kur yer or Holos Ukrayiny. The Bank publishes quarter balances, as well as the income (losses) statement in the newspapers Uryadovyi Kur yer or Holos Ukrayiny within one month next to the accounting quarter. Introduction of Changes and Amendments to the Articles of the Bank 55. Any changes and amendments to the Articles of the Bank shall be approved by a decree of the Cabinet of Ministers of Ukraine. Any modifications and supplements to the Articles of the Bank shall be submitted for their registration to the National Bank of Ukraine and come into force after making an entry in the State Register of Banks. Termination of Bank s Activity 56. The Bank s activity shall be terminated by its reorganization or liquidation. The Bank may be liquidated on initiative of the Cabinet of Ministers of Ukraine and on initiative of the National Bank of Ukraine (as well as on the request of its creditors). The liquidation of the Bank on initiative of the Cabinet of Ministers of Ukraine shall be made in order, established by the law concerning economic societies, taking into account peculiarities specified by the Law of Ukraine On Banks and Banking Activities, and with the consent of the National Bank of Ukraine. 21

22 The liquidation of the Bank in case of its insolvency on initiative of the National Bank of Ukraine shall be made pursuant to the Law of Ukraine On Banks and Banking Activities and normative and legal acts of the National Bank of Ukraine. Any reorganization of the Bank shall be made voluntary by a resolution of the Cabinet of Ministers of Ukraine or forcedly by a resolution of the national Bank of Ukraine. In case of Bank s reorganization by an order of the Cabinet of Ministers of Ukraine the respective procedure is made pursuant to the law concerning economic societies given prior permit of the National Bank of Ukraine. In case of Bank s reorganization on initiative of the National Bank of Ukraine the respective procedure is made pursuant to the Law of Ukraine On Banks and Banking Activities and normative and legal acts of the National Bank of Ukraine. Mandatory reorganization shall be effectuated in case of considerable threat for the Bank s solvency. 57. In case of Bank s reorganization all necessary modifications shall be introduced to its Articles of the Bank, and all Bank s rights and liabilities shall be transferred to its assignees. The Bank is deemed reorganized from the moment of entering by the National Bank of Ukraine respective modifications to the State Register of Banks. 58. The liquidation of the Bank is deemed completed and the Bank is deemed liquidated from the moment of entering respective record to the State Register of Banks after approval of the liquidator s report. The documents of the liquidated Bank shall be kept in the archives of the National Bank of Ukraine. Chairman of Management Board Of the Bank [Signature] A.V.Shapovalov [Impression of the official seal with inscription: Joint-Stock Company State Savings Bank of Ukraine * Identification Code ] 22