Conflict of interest and Duty of Non-competition

A person with special duties towards the Company is obliged to immediately inform the Board of Directors of the existence of personal interests (or the interests of a person related to him/her) in a legal transaction entered into by the Company, and/or legal action undertaken by the Company.

The Company identifies legal transactions and legal actions with affiliated persons to ensure their occurrence only if they are not harmful to the Company. Legal transactions and legal actions with affiliated persons are approved by the Board of Directors in accordance with the law.

The Board of Directors reports to the Shareholders’ Assembly on the approval of entering into transactions involving personal interest at the regular session of the Shareholders’ Assembly on the annual basis. In case of legal transactions and legal actions with affiliated persons concluded within a group of affiliated companies (with a parent or subsidiary company), both companies must take care of their own interests, but also of the interests of another company, taking into account their economic relations and mutual risks.

The law stipulates that if there is a personal interest of directors in certain legal transaction, during the approval process by the Board of Directors, the decision is adopted by the majority of votes of all directors who have no personal interest in the transaction, i.e., the director whose personal interest has been identified does not take part in voting.

Members of the Board of Directors may not directly or indirectly engage in the activities of another competitive company at the time of appointment to the Board of Directors, as well as during his/her mandate in the Board of Directors, unless it has been approved by the Company.

In order to monitor potential competition, the Company surveys the members of the Board of Directors on quarterly basis regarding the circumstances of their current engagement, as well as regarding their memberships in the board of directors and supervisory boards of other companies. Information on membership in the management bodies of other companies are regularly published in the Annual and Quarterly reports.

By entering the Agreement on regulation of mutual rights and obligations with the Company, the members of the Board of Directors are familiarized with the obligation to notify the Company in case of potential conclusion of a legal transaction with the Company as well as with the obligation to eliminate competition and other special duties of the members of the Board of Directors.

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