The significant differences between Telecom Argentina s corporate governance practices and NYSE standards for listed companies are as follows:

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Piers Dennis
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1 Significant Differences between the corporate governance practices of Telecom Argentina S.A. and those followed by U.S. Companies under NYSE Standards LAST UPDATE: APRIL 2017 The corporate governance practices of Telecom Argentina S.A. ( Telecom Argentina or the Company ) are governed by the applicable Argentine law; particularly, the General Companies Law, Capital Markets Law N 26,831 and the Rules of Comisión Nacional de Valores (the CNV ), as well as by Telecom Argentina s Corporate Bylaws. Telecom Argentina has securities registered with the Securities and Exchange Commission (the SEC ) and listed on the New York Stock Exchange (the NYSE ), and is therefore subject to corporate governance requirements applicable to NYSE listed non-u.s. companies (a NYSE listed company). NYSE listed non-u.s. companies may, in general, follow their home country corporate governance practices in lieu of most of the NYSE corporate governance requirements (the NYSE Standards ) codified in Section 303A of the NYSE Listed Company Manual. However, NYSE listed non-u.s. companies must comply with NYSE Sections 303A.06, 303A.11 and 303A.12 (b) and (c). NYSE listed non-u.s. companies must comply with NYSE Section 303A.06 since July 31, 2005 and with Sections 303A.11 and 303A.12(b) since the first Annual General Shareholders meeting held after January 15, 2004, or since October 31, NYSE Listed Company Manual Section 303A.11 requires that non-u.s. companies disclose any significant ways in which their corporate governance practices differ from those of U.S. companies under NYSE standards. A NYSE listed non-u.s. company is simply required to provide a brief, general summary of such significant differences to its U.S. investors either 1) on Form 20-F filed with the SEC or 2) on the company s website (in English) in case it is not required to file Form 20-F with the SEC. Telecom Argentina complies with Section 303A.11 by providing the following information on its annual Form 20F and on its website. The significant differences between Telecom Argentina s corporate governance practices and NYSE standards for listed companies are as follows: 1

2 NYSE Standards for U.S. companies Listed Company Manual Section 303.A Section 303A.01 NYSE-listed companies must have a majority of independent directors. Telecom Argentina Corporate Practices Under Argentine law, the Board is not required to consist of a majority of independent directors. However, when directors are appointed, each shareholder who nominates a director is required to report at the Shareholders Meeting whether or not the nominated director is independent. Argentine companies are required to have at least two independent directors to form in the Audit Committee. As of the date of this summary, the eleven regular members and seven alternate members Board of Telecom Argentina has four directors and two alternate directors who qualify as independent according to SEC Rules. Section 303A.02 This section establishes general standards to evaluate directors independence (no director qualifies as independent unless the board of directors affirmatively determines that the director has no material relationship with the listed company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company)), and emphasizes that the concern is independence from management. When evaluating directors serving on a compensation committee, the board must consider any consulting, advisory or compensation fees that the company pays the director. The board is also required to express an opinion, on a case-bycase basis, with regard to the independence of each individual director. CNV rules (General Resolution No. 622/2013) qualifying directors as independent or non-independent are substantially similar to NYSE standards. CNV standards require independence of directors with respect to the Company itself and to its shareholders with significant direct or indirect holdings (15% or more). To qualify as an independent director, a person must not, presently have, or must not have had an employment relationship with the Company in the past three years, nor have any professional relationships with the Company or its shareholders with significant holdings. Additionally, the individual must not have received from the Company any compensation other than what is due for performance as a member of the Board. Moreover, such person shall not be a supplier of goods or services to the Company or to its shareholders with significant direct or indirect holdings, for amounts substantially higher than the amount of

3 his/her compensation as a member of the Board. Close relatives of any person who, if acting as a director would not qualify as independent, shall not be considered independent. Section 303A.03 Non-management directors must meet at regularly scheduled executive sessions without management. Section 303A.04 (a) NYSE listed companies shall have a nominating/ corporate governance committee comprised entirely of independent directors. Section 303A.05(a) Listed companies shall have a compensation committee comprised entirely of independent directors. Neither Argentine law nor Telecom Argentina s Bylaws require that any such meetings be held. As of the date of this summary, only one of the members of the Board holds an employment relationship with the Company. Neither Argentine law nor Telecom Argentina s Bylaws require the creation of a nominating/corporate governance committee. In Argentina, it is unusual (though possible) for the Board to propose the appointment of certain individuals as new directors. The Board of Directors of Telecom Argentina refrains from making such proposals. The right to nominate and appoint directors is vested in the shareholders of Telecom Argentina who nominate and appoint regular and alternate directors at their Shareholders Meetings. Pursuant to CNV Standards, the person who nominates a director shall report at the shareholders meeting whether or not the nominee is an independent person, based on criteria established by the CNV (which are substantially similar to NYSE standards). Compliance with the independence requirements of Rule 10 A-3 under the Exchange Act by regular or alternate director nominees is also reported at Telecom Argentina s Shareholders Meeting. Neither Argentine law nor Telecom Argentina s Bylaws require the creation of a compensation committee. As of the date of this summary, general policy matters regarding executive compensation are undertaken by the Steering Committee (structured within the Board of Directors), of whose four members, only one holds an employment relationship with the

4 Company.. Section 303A.05(b). The compensation committee must have a written charter that addresses the committee s purpose and certain minimum responsibilities as set forth in Section 303A.05(b)(i) and (ii). NYSE Section 303A.05(c). The Compensation Committee has sole discretion whether to hire compensation advisors, consultants or counsel, which the Compensation Committee will oversee, and which the company must fund Section 303A.06 NYSE listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 under the 1934 Exchange Act (the Exchange Act ). Foreign private issuers must comply with the requirements of Rule 10A-3 under the Exchange Act starting July 31, Section 303A.07(a) The audit committee shall consist of at least three members. All members of the audit committee are required to be independent. All of its members must be financially literate or must become financially literate within a reasonable period of time. In addition, at least one member of the audit committee must have accounting or related financial management expertise, as the listed company's board interprets such qualification in its business judgment. If an audit committee member simultaneously serves on the audit committees of more than three public companies, and the NYSElisted company does not limit the number of audit committees on which its members may serve, then in each case, the board must determine that such simultaneous service would not impair the ability of such member to effectively serve on the listed company s audit committee, and disclose such determination in Neither Argentine law nor Telecom Argentina s Bylaws require the creation of a compensation committee. Neither Argentine law nor Telecom Argentina s Bylaws require the creation of a compensation committee. Since April 29, 2004, Telecom Argentina has an Audit Committee composed of three of the members of the Board of Directors. Members of the Audit Committee qualify as independent according to the criteria of Rule 10 A-3 under the Exchange Act. Telecom Argentina has a three-member Audit Committee. As of the date of this summary, all the members of Telecom Argentina s Audit Committee qualify as independent according to the criteria of Rule 10A-3 under the Exchange Act The three members of Telecom Argentina s Audit Committee have financial and accounting knowledge, and the Company has made arrangements to provide regular training in financial literacy matters. Telecom Argentina s Board of Directors has determined that one member (Esteban Gabriel Macek) meets all the requirements set by the SEC to qualify as an Audit Committee Financial Expert. Neither Argentine law nor the internal rules of Telecom Argentina limit the number of audit committees on which the members of its Audit Committee may serve. However, when appointing its present members, the Board has verified that none

5 the company s annual proxy statement or, if the company does not file an annual proxy statement, in the company s annual report (Form 10-K filed with the SEC). Section 303A.07(b) The audit committee must have a charter that addresses the purpose and the duties and responsibilities of its members, including the duties and responsibilities required, at a minimum, by Section 10A-3 (b) (2), (3), (4) and (5) of the Exchange Act and as set forth in Section 303A.07(b) of the NYSE Listed Company Manual. of them are simultaneously members of the audit committees of other public companies. In addition, the members of Telecom Argentina s Audit Committee have agreed to inform the Board should they serve on the audit committees of more than three companies. In such event, the Board shall analyze whether such concurrent membership impairs the ability of such director to effectively serve on the Audit Committee of Telecom Argentina. The purpose, duties and responsibilities of Audit Committee members in Argentina, established by Law N 26,831 and CNV Rules, are essentially the same as those provided for under Rule 10A-3(b)(2), (3), (4) and (5) of the Exchange Act and Section 303A.07(b)(i) and (ii) of the NYSE manual. Telecom Argentina s Regulations for Audit Committee Implementation, (the Regulations ), approved by the Board of Directors, govern such duties and responsibilities. The Regulations have been aligned with the requirements of Rule 10A-3 under the Exchange Act, particularly paragraphs (b)(1) and (b)(3)(i) and (ii) of such Rule. In addition, the Audit Committee has issued its Internal Regulations. At the beginning of each fiscal year, the Audit Committee submits to the Board of Directors an Action Plan of activities which it intends to perform throughout the year. At year end, the Audit Committee submits its Annual Report which deals with all the activities it has carried out to comply with its duties and assesses its performance. Such Audit Committee s Annual Report may be accessed through the Comisión Nacional de Valores website The Audit Committee of Telecom Argentina has a budget determined by the Shareholders Meeting and has the authority to engage independent counsel and other advisors. Pursuant to Argentine laws, external auditor fees are approved at the Shareholders Meeting, and the Audit Committee must issue a prior opinion about the reasonableness of such fees.

6 Section 303A.07(b)(iii) Paragraph (A) This section establishes, among the objectives of the audit committee, the following: at least annually, obtain and review a report by the independent auditor describing: the firm s internal quality-control procedures; any material issues raised by the most recent internal qualitycontrol review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues; and (to assess the auditor s independence) all relationships between the independent auditor and the listed company. Section 303A.07(b)(iii) Paragraph (B) This section establishes, among the objectives of the audit committee, the following: to review and discuss the annual audited financial statements and quarterly financial statements of the company with management and the independent auditor, including the information disclosed under Management s Discussion and Analysis of Financial Condition and Results of Operations. Paragraph (C): to discuss the company s earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies. Paragraph (D): discuss policies with respect to risk assessment and risk management. Paragraph (E): meet separately, periodically, with management, with internal auditors (or other personnel responsible for the internal audit function) and with independent auditors. Paragraph (F): review with the independent auditor any audit problems or difficulties and management's response. The Audit Committee complies with all tasks and responsibilities described in this Section 303A.07(b)(iii) Paragraph (A) regarding independent auditors, their duties, independence and internal quality-control procedures and reports the information to the Board of Directors in its Annual Report, which is made public with its annual financial statements. Furthermore, the CNV has implemented a Registry of independent auditors to control the professional performance of the firms and people performing such duties and has issued rules so that independent auditing firms establish quality-control systems to allow them to know if their members observe the professional and legal standards applicable to such activity and to ensure the quality of the independent audit services rendered. Argentine law and the Regulations for Audit Committee Implementation approved by Telecom Argentina s Board provide for similar duties for the Audit Committee, such as to verify the reliability of the administrative-accounting system, and of all financial data, or any significant data submitted to CNV and to self-regulated exchanges, in compliance with the applicable reporting regime. Its duties also include supervising the application of disclosure policies with regard to Company risk management. Thus, the Audit Committee of Telecom Argentina complies with all objectives, duties and responsibilities described in this Section 303A.07(b)(iii)(B), (C), (D) and (F) regarding the Company financial statements, the financial and profit information distributed to the markets and appraisal and risk management policies. The Audit Committee reviews with independent auditors audit problems or difficulties and management s response to those. For all these purposes, the Audit Committee regularly holds meetings with management, independent auditors and internal audit officers and reports on

7 these matters in its Annual Report, which it submits to the Board of Directors and is made public with its annual financial statements. Section 303A.07(b)(iii)(G) This section provides that the audit committee must set clear hiring policies for employees or former employees of the independent auditors. Section 303A.07(b)(iii)(H) This section provides that the audit committee must report regularly to the board of directors. Section 303A.07(c) This section provides that each company must have an internal audit function in order to provide the management and the audit committee with ongoing assessments of the company s risk management processes and internal control system. No such provision regarding the hiring of external auditors employees is contained in Argentine law or Telecom Argentina s Bylaws. Telecom Argentina saudit Committee regularly reports to the Board of Directors on relevant significant matters and prepares a general summary of its activities in the Annual Report submitted to the Board of Directors. Telecom Argentina has always had an Internal Audit Department solely reporting to the Chairman of the Board of Directors. One of the duties of the Internal Audit Department is to provide the Audit Committee and management with assessments on the Company s risk management processes and internal control system. In 2012, the Board of Directors of the Company approved the creation of a Risk Committee and a Risk Management Policy for the Telecom Group. This policy is focused on establishing a general framework to identify, measure and mitigate the risks of any nature that the Company faces or could face. The Audit Committee Regulations approved by the Board of Directors provide that the Internal Audit Director shall act as Secretary of the Audit Committee and under its directives. In addition, the Internal Audit Director shall act independently, hierarchically reporting to the Board Chairman and functionally reporting to the Audit Committee as a whole and not to any individual member.

8 Section 303A.08 Shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions thereto. Section 303A.09 Companies must adopt guidelines and disclose the main aspects of their corporate governance practices, including several key issues where reporting is mandatory. Such information must be available on the company s website, which should also include the charters of the audit committee, the nominating committee and the compensation committee. Furthermore, the board of directors should conduct a selfevaluation at least annually, and report thereon, determining whether it and its committees are functioning effectively. Telecom Argentina has not implemented any equitycompensation plan. If one is established, it would require approval by the Shareholders Meeting. Since 2001, Argentine law has broadened the scope of information that Companies must include in the Annual Reports they file with the CNV, including information relating to the decision-making of the organization (corporate governance), the Company s internal control system, rules for director and manager compensation, stock-options, and any other compensation applying to Board members and managers. This information is included in the Company s Annual Report on Form 20-F filed with the SEC. In its Annual Report filed with the CNV, company boards regulated by the CNV must include a report about the compliance level of the Corporate Governance Polices, detailing whether those CNV Polices are being followed. The CNV s Corporate Governance Policies were modified, increasing reporting requirements on corporate governance of Public Companies, and as of today they are included in Resolution CNV 622/2013. All relevant information sent by the Company to the CNV is forwarded to the CNV through the CNV s Financial Reporting Highway and is accessible on the CNV s website ( The Annual Report (including the report about the compliance level with the CNV s Corporate Governance Policies) and the Financial Statements may also be viewed on the Company s website ( Under Argentine law, the board s performance is evaluated at the Annual Ordinary Shareholders Meeting. Telecom Argentina s Audit Committee conducts a self-evaluation which is reviewed by management and by the Company s Independent Auditors. The conclusions of this self-evaluation are included in the Audit Committee s Annual Report attached to the Board s Annual

9 Report. Section 303A.10 This section provides for the adoption of a code of business conduct and ethics and sets out the topics that such code must contain. Section 303A.12(a) The CEO must certify to NYSE each year that he/she is not aware of any violation by the company of NYSE corporate governance standards. Telecom Argentina s Board of Directors, on its meeting held on November 2, 2015, has approved a New Code of Business Conduct and Ethics, a New Code of Ethics and Conduct, a Conflict of Interests Policy and an Anticorruption Policy, documents that provide, respectively: i) the ethical principles to which Telecom Argentina and all directors, trustees, officers and in general all those who work in the Company must abide; ii) regulations to prevent and manage conflicts of interests; and iii) the framework for the prohibition of corrupt practices. Taken together, these documents replace the Code of Business Conduct and Ethics that was originally approved by the Board in 2003 with modifications that were introduced both in 2005 and Telecom Argentina understands that the New Code meets all NYSE requirements. The New Code includes the procedures set by the Audit Committee for receipt and consideration of reports and questioning on accounting, audit and internal control matters, as required by Rule 10 A-3(b)(3)(i) and (ii) of the Exchange Act. The New Code provides that any waiver of compliance therewith granted to a director, member of the Supervisory Committee, CEO or member of the management depending on the CEO may only be granted by the Audit Committee or by the Board of Directors and such waivers shall be reported to regulatory bodies. As of the date of this report, no waiver had been applied for or granted. The New Code is available on Telecom Argentina s website ( No such certification is required by Argentine law or Telecom Argentina s Bylaws.

10 Section 303A.12(b) The CEO must promptly notify NYSE in writing after any executive officer of the company becomes aware of any non-compliance of any applicable provisions under Section 303A. Section 303A.12(c) Listed companies must submit a Written Affirmation annually to the NYSE and an interim Written Affirmation as required by Section 303A. Telecom Argentina shall comply with such default notice provisions as set forth under this Section 303A.12(b). Telecom Argentina has complied and shall comply with the provisions relating to this Section 303A.12(c).

The most relevant differences between Nortel Inversora s corporate governance practices and NYSE standards for listed companies are as follows:

The most relevant differences between Nortel Inversora s corporate governance practices and NYSE standards for listed companies are as follows: Significant Differences between Nortel Inversora s corporate governance practices and US Companies practices under NYSE Sections Last modification April 2017 Nortel Inversora s corporate governance practices