Bulgaria

GENERAL TERMS OF ING BANK N.V. – SOFIA BRANCH

APPLICABLE TO CONTRACTS WITH CLIENTS FOR INVESTMENT SERVICES AND ACTIVITIES PROVIDED BY

THE BANK UNDER THE MARKETS IN FINANCIAL INSTRUMENTS ACT

1 October 2007

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CHAPTER ONE

GENERAL PROVISIONS I. PARTIES 1. These General Terms applicable to contracts with Clients for investment services and

activities provided by the Bank under the Markets in Financial Instruments Act (MiFIA), hereinafter referred to as “General Terms”, are prepared by ING Bank N.V. – Sofia Branch, registered with the Commercial Register of Sofia City Court under company file No 11357/1994, record No. 18182, volume 227, register 1, p.168, BULSTAT К 831553811, registered with the financial Supervision Commission (“the Commission”) under No. РГ-03-0129 by Decision No. 05-237 of 08.08.1997, having its seat and registered office at Sofia, Triaditsa Municipality, Ivan Vazov district, 12 Emil Bersinski St. (“the Bank”).

2. The Bank has been granted authorization for conduct of Bank transactions in the country

under Art. 1, para. 2 of the Banks and Lending Activity Act pursuant to decision No. 199 of 16.06.1994 of the Governing Council of the Bulgarian National Bank. By Order No. 100-00563/ 22.12.1999 of the Governor of the BNB the authorization (license) for conduct of bank transactions is updated in accordance with the Banks Act. The Bank is authorized to conduct the transactions under Art. 2 of the Credit Institutions Act. The Bank’s subject of activity is as follows: receiving deposits or other repayable funds from the public and granting credits or other financing for its own account and at its own risk, purchase of bills of exchange and promissory notes, transactions in foreign instruments of payment and in precious metals, acceptance of valuables on deposit, investment services and activities under Art. 5, para. 2 of the Markets in Financial Instruments Act (MiFIA) provided by the Bank (reception and transmission of orders in relation to one or more financial instruments, including intermediating for conclusion of transactions in relation to financial instruments; execution of orders on behalf of Clients; dealing in financial instruments on own account; portfolio management; provision of investment advice to Clients; underwriting of issues of financial instruments and/or placing of financial instruments on the basis of an unconditional and irrevocable commitment to subscribe/acquire the financial instruments on own account; placing of financial instruments without an unconditional and irrevocable commitment to acquire the financial instruments on own account; operation of a multilateral trading facility), guarantee transactions, non-cash operations and clearing of checking accounts of other persons, purchase of accounts receivable arising from the supply of goods or the provision of services and assumption of the risk of collection of such receivables (factoring), financial lease, issue and management of bank cards, transactions in: financial futures and options, exchange and interest-rate instruments, provision of bank deposit boxes, acquisition and management of equity participations, advice to undertaking on capital structure, industrial strategy and related matters, advice and services for transformation of companies and company acquisition transactions, advice on portfolio investments. Pursuant to Art. 5, para. 3 of MiFIA, besides the above-mentioned services included in the Bank license, the Bank may furthermore provide ancillary services for safekeeping and administration of financial instruments for the account of Clients, including custodianship (holding Clients' financial instruments and cash at a depositary institution) and related services, such as management of received cash/provided collateral; granting loans for effecting transactions in one or more financial instruments, subject to the condition that the person granting the loan is involved in the transaction under terms and according to a procedure established in an ordinance; provision of foreign exchange services, insofar as they are connected with the investment services provided; investment research and financial analysis or other forms of general recommendations relating to transactions in financial instruments; services relating to underwriting of issues of financial instruments and/or placing of financial instruments on the

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basis of an unconditional and irrevocable commitment to subscribe/acquire the financial instruments on own account or placing of financial instruments without an unconditional and irrevocable commitment to acquire the financial instruments on own account; services under Art. 5, para. 2 and para. 3, items 1 – 6 of MiFIA in regard to the underlying asset of derivative financial instruments under Art. 3, para. 2, letters “d”, “e”, “f” and “i” of the same Act, insofar as they are related to the provision of services under Art. 5, para. 2, and Art. 5, para. 3, items 1 – 6 of MiFIA.

3. The persons with whom the Bank concludes specific transactions (contracts) to whom these

General Terms apply are referred to as “Clients”. 4. Clients under Chapter Three of these General Terms may be natural and legal persons, funds

and other non-personified companies with which the Bank has established specific contractual relationships in connection with its activity as investment intermediary. The Clients are investors which use or have interest in using the services provided by the Bank in relation to its activity as investment intermediary. In addition, a Client is considered another investment intermediary who places an order, for its account or on behalf of another person, for dealing in financial instruments or provides financial instruments and/or money for management, as well as a person whose investment portfolio is managed by management company. Investment companies and pension funds may not be a party to a contract for management of a portfolio of financial instruments and/or money.

5. When concluding a contract under Art. 24, para. 1of Ordinance No. 38 on the requirements

to the activity of investment intermediaries the Client may be represented before the Bank by the legal representatives or by persons authorized through a written power of attorney with notary certification of the Client’s signature, specifying the representative power for carrying out management and disposal actions in financial instruments and the representative shall submit a declaration that he does not carry out transactions in financial instruments as a regular occupation or a business on a professional basis and has not carried out such transactions one year before the conclusion of the contract.

II. SUBJECT MATTER 1. These General Terms shall apply to transactions in financial instruments for own account or on

behalf of Clients as well as for intermediation in concluding such transactions performed by the Bank.

2. These General Terms shall furthermore apply to specific transactions with Clients relating to

government securities, government long-term bonds issued under the Law on the Settlement of Non-performing Credits Agreed by 31 December 1990, government bonds on the external debt of the Republic of Bulgaria (Brady bonds), investment vouchers, compensatory notes and other similar dematerialised instruments for the Client’s account. In effecting transactions in government securities the Bank shall comply with all imperative provisions of the applicable legislation regarding the terms and procedure for acquisition, registration, redemption and trade in government securities.

3. These General Terms shall furthermore apply to contracts for management of portfolios of

financial instruments and/or money, including government securities but excluding portfolios of investment companies and pension funds, on its account or on other person’s behalf, if the Client has given a written consent to this effect in a specific contract with the Bank.

4. These General Terms shall also apply to ancillary services provided by the Bank under Art. 5,

para. 3 of MiFIA.

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5. If the Bank acts on behalf of the Client, it must be authorized through a written power of

attorney with notary certification of the Client’s signature. The scope of representative power shall be included as a clause in the specific contract with the Client.

6. Re-assignment may take place under the terms and procedure set out in the applicable

legislation. Another investment intermediary may be re-assigned to carry out certain actions under a contract provided that the Client has given his prior consent in writing in the contract or in each specific case. The liability of the Bank in such cases of re-assignment/replacement is described in Chapter Five, Section II of these General Terms.

7. If the Bank engages in public offering of securities within the meaning of the Public Offering of

Securities Act, the Bank shall publish a prospectus as approved by the Commission and a notice of the public offering under Chapter Six of the Public Offering of Securities Act.

III. TYPES OF FINANCIAL INSTRUMENTS 1. These General Terms shall apply to transactions and services relating to any type of financial

instrument within the meaning of Art. 3 of MiFIA such as:

а) securities;

b) instruments other than securities:

i) money market instruments;

ii) units in collective investment undertakings;

iii) options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, or other derivative instruments, financial indices or financial measures which may be settled physically or in cash;

iv) options, futures, swaps, forward rate agreements and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of a default or other termination event);

v) options, futures, swaps and any other derivative contracts relating to commodities that can be physically settled provided that they are traded on a regulated market and/or on a multilateral trading facility;

vi) options, futures, swaps, forwards and any other derivative contracts relating to commodities, outside those referred to in “v”, that can be physically settled and which are not commercial papers and which in accordance with Article 38, paragraph 1 of Commission Regulation (EC) No. 1287/2006 have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are cleared and settled through recognized clearing houses or are subject to regular margin calls;

vii) derivative instruments for the transfer of credit risk;

viii) financial contracts for differences;

ix) options, futures, swaps, forward rate agreements and any other derivative contracts relating to climatic variables, freight rates, emission allowances or inflation rates, or other official economic statistics that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason

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of a default or other termination event), as well as any other derivative contracts relating to assets, rights, obligations, indices and measures not otherwise mentioned in this Article, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are traded on a regulated market or an MTF, are cleared and settled through recognized clearing houses or are subject to regular margin calls, as well as derivative contracts pursuant to Article 38, paragraph 3 of Commission Regulation (EC) No. 1287/2006;

x) investment vouchers, compensatory notes and other book-entry instruments. IV. ENTRY INTO FORCE 1. These General Terms shall become effective upon their acceptance in writing by the Client

and shall be binding on the Bank and the Client until they are amended , adjusted , replaced or repealed , and also insofar as specific securities contracts ( transactions ) exist between the parties.

V. GENERAL TERMS AND SPECIFIC TERMS 1. The Bank shall put these General Terms at a visible and accessible place on the premises

where transactions in financial instruments are effected and provide free copies thereof at the request of its Clients in order to enable them to familiarize with them in a proper manner and shall give free advice on the General Terms.

2. When concluding contracts with Clients under these General Terms the Bank may not

conclude a specific contract with a retail investor if its content deviates from these General Terms as approved by the Commission, unless such deviation is in the apparent interest of the Client. In the latter case the following covenants in the interest of the Client shall prevail.

3. The conditions and terms of every specific transaction (contract) shall be laid down in its

content. The specific transaction (contract) with the Client must contain individualizing data about the persons concluding the contract, the capacity of the person representing the Bank, the date and place of conclusion and the General Terms effective at the time of conclusion if the contract is concluded in accordance with general terms, basic rights and obligations of the parties, specification of the information that the Bank must provide to the Client, other legally required information, including a clause that the Client is familiar with these General Terms if the contract is concluded in accordance with general terms, with the Tariff announced by the Bank, that the Client has received the information which the Bank is required to provide to the Client under the Markets in Financial Instruments Act, the Public Offering of Securities Act and the statutory instruments for their application, and that the Client is aware of the risks relating to investment in financial instruments. The Bank must notify the Client of the existing system for compensation of investors in financial instruments, including its scope and the guaranteed amount of Client assets, and the Bank shall provide data about the terms and procedure for compensation at request. Information about the existing system for compensation of investors in financial instruments, including its scope and guaranteed amount of Client assets, is presented in the form of Appendix to these General Terms.

4. In the cases of margin purchases, short sales and lending of securities under the terms of

an ordinance the Bank shall in addition provide the Client with general terms applicable to the contracts for such transactions, if applicable.

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5. In its relations with eligible counterparties and professional Clients the Bank may apply Wholesale Banking Terms of Business, approved and applied globally by ING Bank, comprising Appendix to these General Terms. Where certain provisions of the said terms prejudice the imperative provisions of Bulgarian legislation, the provisions in question shall be deemed superseded by right by the imperative provisions of Bulgarian legislation.

VI. SPECIMENS 1. The Client shall submit to the Bank notary certified specimens of the signatures of the

persons representing it. The signatures may be given also before authorised officials of the Bank, having verified the identity of the signing persons.

2. The Bank shall not have the obligation to fulfill instructions given by people whose

specimens have not been provided by the Client or who have no power of attorney as attested by the notary public duly given to delegate representative powers to manage or dispose of financial instruments, and a statement by the authorized person that he is not engaged in transactions in financial instruments as a regular occupation or a business on a professional basis and has not effected such transactions one year before the conclusion of the contract.

CHAPTER TWO RIGHTS AND OBLIGATIONS AND REQUIREMENTS TO

THE BANK’S ACTIVITY I. DUE CARE 1. In performing the services and activities under Art. 5, para. 2 and para. 3 of MiFIA the Bank

undertakes to act with due and fair care as a professional in accordance with the best interests of the Client, to conclude and effect specific transactions in financial instruments with due diligence, placing the interest of the Client before its own interest, as well as to notify the Client of the risks involved in transactions in financial instruments. When performing transactions in financial instruments, investment advice and other actions relating to financial instruments on behalf of Clients the Bank shall take due care to safeguard their interests.

2. The Bank shall execute with priority the orders of the Client before its proprietary transactions. 3. The Bank must meet its obligation for achieving the best result for the Client and shall

conclude the transactions on behalf of the Client under the best possible terms and at first opportunity unless this would be in apparent disadvantage to the Client. The Bank shall use best efforts to achieve best execution in accordance with the order placed by the Client. When executing an order placed by a retail Client the best order execution shall be determined by the total value of the transaction, including the price of the financial instrument and the costs for the execution. The costs for the execution shall include all costs directly relating to the execution of the order, including fees for the execution venue, fees for clearing and settlement as well as other fees and charges payable to third parties in relation to the execution of the order. To achieve best execution in the cases where more than one competitive execution venue exists for execution of an order relating to financial instruments and following assessment and comparison of the results which can be achieved for the retail Client in the order execution in any of the execution venues specified in the order execution policy of the Bank which are suitable for its execution, the commission of the Bank and the costs for order execution in any of the suitable execution

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venues shall be taken into account. The Bank may not set or charge commissions in a manner which unjustifiably differentiates individual execution venues. If the transaction is executed under more favourable terms than those stipulated by the Client, the whole benefit shall belong to the Client. Before effecting the transaction the Bank shall notify the Client of the risks stemming from transactions in financial instruments and shall notify him expressly that the risk from dealing in financial instruments is borne entirely by the Client. The Bank shall treat equally and fairly all its Clients in accordance with these General Terms and effective legislation.

4. The Bank must:

а) give advice to its Clients which is entirely in their interest;

b) not influence the Client acting in bad faith by giving him unsolicited advice;

c) invest for the account of the Client at best possible terms on the financial instruments market, gather the necessary documentation verifying execution of obligations, not enter into unfair agreements with the Clients;

d) create internal organization and conditions for identification of potential conflicts of interest between:

i) the Bank, including the members of its management and supervisory bodies and any other persons who may enter into transactions for the account of the Bank independently or jointly with another person, any other persons working under contract for it and any person linked to it by control, on one side, and its Clients, on the other side;

ii) individual Clients of the Bank;

and where, despite the application of the internal organisation rules of the Bank, still there is a risk for the interests of the Client, the Bank may not conduct activity on behalf of a Client if it has not informed the Client of the general nature and/or sources of potential conflicts of interest.

e) create internal organisation and conditions for fair treatment of Clients and disclosure of information where the conflicts of interest are inevitable, resolve any conflicts of interest with Clients taking into account the legal interests of the Clients, resolve existing conflicts of interest between the Clients by seeking mutually acceptable solutions, treating the Clients equally and fairly;

f) safeguard the financial instruments and other documents provided by the Clients;

g) make efforts to minimize the risk of adverse financial results;

h) have in place measures for reporting, security of information and internal control in accordance with applicable statutory provisions;

i) apply appropriate measures for safeguarding the financial instruments and funds of Clients and for segregation of its own portfolio of financial instruments from those of investors, account separately Clients’ funds from transactions in financial instruments, guarantee retention of the ownership rights of Clients relating to the financial instruments and funds held by them.

5. Where the Bank manages a portfolio, it shall meet the obligation to act in the best interest

of the Client when submitting execution orders to another person on decisions taken by it on trade in financial instruments on behalf of its Clients.

6. Where the Bank performs reception and transmission of orders in relation to one or more

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financial instruments, including intermediating for conclusion of transactions in relation to financial instruments and transmitting its Client’s execution orders to other persons, it shall act in the best interest of the Client.

7. To meet the obligations under items 5 and 6 of this Section the Bank shall:

а) use reasonable efforts to achieve the best result for the Client taking into account the factors under Art. 30, para. 1 of the MiFIA and the relative weight of these factors shall be determined in accordance with the criteria set out in item 9 of this Section, and for retail Clients, also in accordance with item 3 of this Section; it shall be deemed that the Bank has fulfilled its obligations under items 5 and 6 of this Section and is not obliged to observe the requirement under “a” where it follows specific instructions by the Client in executing the order or transmits the order for execution to another person;

b) adopt and apply a policy that ensures compliance with the requirement in “a” and the policy shall define the persons to whom the Bank shall submit or transmit execution orders in respect of every class of financial instruments; the Bank shall ensure that the persons to whom it submits or transmits execution orders have obtained the required agreements and arrangements for fulfilling the obligations of the Bank under items 5, 6 and 7 of this Section in submitting or transmitting Clients’ execution orders to those persons;

c) provide the Clients with relevant information on the policy it applies under “b” of this Section;

d) monitor on a regular basis the effectiveness of implementation of its policy under “b” of this Section, including the quality of execution by the persons to whom it submits or transmits execution orders, and, where appropriate, correct any deficiencies;

e) review the policy under “b” of this Section annually as well as in case of a material change which may affect its ability to provide best results to its Clients;

8. The Bank shall not apply items 5 –7 of this Section when it manages a Client portfolio

and/or receives and transmits orders and simultaneously executes the orders received or the decisions on entering into transactions regarding portfolio management. In these cases Chapter Three, Section II, items 1-5 of these General Terms shall apply.

9. When executing orders of Clients the Bank shall take into account the relative weight of the

execution factors under Art. 30, para. 1 of the MiFIA subject to the following criteria: the characteristics of the Client, including whether he is defined as retail or professional Client; the characteristics of the Client’s order; the characteristics of the financial instruments relating to the order; the characteristics of the execution venues to which the execution may be directed. In executing the order or a specific aspect of the order the Bank may follow special instructions of the Client.

II. COMMERCIAL SECRET 1. The Bank shall keep the commercial and other secrets of its Clients and their repute. To

this end, the Bank shall take adequate measures, including the execution of contracts or the requirement to sign non-disclosure affidavits so as to guarantee that the persons managing the Client's portfolio and making financial and other analyses, as well as the other persons designated by the Bank to have access to the Client's information shall not disclose the commercial and other secrets and the commercial good name of the Client.

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2. No member of the management and supervisory bodies of the Bank, no employee thereof, nor any other person working for it may disclose, unless authorized therefor, or use to their own benefit or to the benefit of any other persons any facts and circumstances regarding the balances and accounts for the operations in the financial instruments and funds held for Clients of the Bank, nor any other facts and circumstances constituting a trade secret, which may have come to the knowledge thereof in the performance of the official and professional duties. This obligation shall furthermore apply to the cases where the said persons are off duty or have been suspended. Upon assumption of position or commencing activity for the Bank, any person covered under this item shall sign a declaration, pledging to safeguard any trade secrets of the Client.

3. The Bank shall keep, in an appropriate manner, the information received from Clients with

regard to their financial capabilities, investment objectives, experience and preparedness to take risks, as well as to the advice and recommendations given to them, together with the reasons thereof.

4. The Bank and its employees may not use the information received in detriment to Clients,

to their own benefit or to the benefit of third parties. 5. The Bank may disclose the trade secret of the Client subject to the procedure and terms set

out in a normative act. III. PROVISION OF INFORMATION, ADVICE, CONSULTATIONS AND NOTICES 1. The Bank shall not give advice to retail Clients who have not requested such advice or

consultations on issues that have not been raised by the Client. The prohibition under this item shall not apply to the Bank’s advertising activity where advertising materials and public statements are addressed to unlimited number of persons and contain general information about the activity conducted. In addition, the prohibitions shall not apply to the Bank’s obligation to inform its Clients about the risks relating to transactions in financial instruments.

2. The information provided by the Bank to its Clients and potential Clients, including

advertising materials and public statements of the members of the management and supervisory bodies of the Bank and the persons working for it under contract shall be truthful, clear, understandable for the specific groups of addressees and shall not be misleading. The advertising materials of the Bank shall be clearly designated as such. The Bank shall provide the information in a manner which highlights sufficiently the essential elements of its content, without underestimating or omitting material facts, communications, statements and warnings and shall state clearly and at a visible place the risks relating to specific investment services and financial instruments. The information provided to the Clients, the advertising materials and public statements under Art. 7 of Ordinance No. 38 shall be designated clearly as such and shall be approved in advance by a person from the internal control department. The information containing a description of particular financial instruments or service provided by the Bank in relation to its subject of activity shall not emphasize the potential merits of the financial instruments or service without stating simultaneously the risk involved.

3.1. The Bank shall provide in accordance with the above item 2 in an appropriate manner by

means of which the information could reach different categories of Clients and potential Clients the following general information, if applicable:

а) data about the Bank, its name, address, telephone number and/or other information for contact concerning the services provided by it, including whether it performs activity or

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deals in financial instruments on own account;

b) the financial instruments the subject of the investment services provided by the Bank and the investment strategies offered as well as description of the risks relating to the financial instruments under “b” or in respect of specific investment strategies; the description shall correspond to the type of the Client (professional or retail) and shall contain a detailed explanation of the type and characteristics of the specific financial instrument and specific risks relating to it, and the information provided shall enable the Client to take an informed investment decision; the description of the risks shall include the following elements insofar as these are applicable to the specific type of financial instrument, the status and the level of knowledge of the Client:

(i) explanation of the risks relating to the specific type of financial instrument, including an explanation of the leverage and its effects and the risk of losing the whole investment;

(ii) volatility of prices of financial instruments and all market limitations concerning these instruments;

(iii) the circumstance that the investor may incur financial and other additional obligations as a result of dealing in financial instruments, including unforeseen obligations in addition to the costs for acquiring the instruments;

(iv) all margin requirements or similar obligations applicable to the financial instruments of that type;

(v) if the risks relating to a financial instrument comprising two or more different financial instruments or services are likely to be higher than the risks relating to any of its components – adequate description of the components of the financial instrument and of the reason for the higher risks resulting from their interaction;

(vi) other characteristics determined by the Deputy Chairman of the Commission heading the Investment Supervision Department or prescribed by applicable legislation.

c) the venues of execution of transactions;

d) the types of Client costs and fees and their amount and the following information shall be provided to retail Clients and potential retail Clients, if applicable:

(i) the total price to be paid by the Client in respect of the financial instrument or the investment or ancillary service provided, including all remunerations, commissions, fees and costs as well as all taxes payable through the Bank; if the specific price cannot be determined, the Bank shall state the basis for its calculation in a manner which the Client may check and confirm; the Bank shall specify its commissions separately in every specific case;

(ii) when any of the elements of the total price under sub-item (i) shall be paid in foreign currency or the equivalent of that currency – information about the currency of payment, the exchange rate and the costs for the exchange;

(iii) notification of the probability of incurrence of additional costs, including taxes relating to the transactions in financial instruments or investment services provided which are not paid through the Bank and are not charged by it;

(iv) the rules and methods of payment or other execution.

When providing financial services relating to units and shares of collective investment schemes the obligation of the Bank under “d” shall be deemed fulfilled if the Bank provides to the Client the information contained in the short prospectus in accordance with Art. 28 of Directive 85/611/EEC.

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e) the languages and means of communication, correspondence and exchange of information with the Client, the ways of sending and receiving orders;

f) express statement that the Bank is licensed, specifying the name and the authority which has granted the license;

g) the type, interval and deadline for submitting reports and confirmations to the Client regarding investment services provided and activities performed;

h) a short description of the measures taken by the Bank to guarantee financial instruments or money of the Client, if it holds such for the Client, including a short description of the investor compensation or deposit insurance systems in which the Bank participates in relation to its activity in a Member State within the meaning of § 1, item 28 of the Supplementary Provisions of the MiFIA;

i) summary description of the policy on treatment of conflict of interest applied by the Bank;

j) additional detailed information on the policy on treatment of conflict of interests which shall be provided at the request of the Client on a durable medium within the meaning of § 1, item 2 of the Supplementary Provisions of Ordinance No. 38 on the requirements to the activity of investment intermediaries or on the website of the Bank in compliance with the provisions of item 21 of this Section, where this does not constitute provision on a durable medium.

k) in individual portfolio management – besides the information under this item 3.1., also information about the appropriate method of assessment and comparison as a generally established benchmark depending on the investment objectives of the Client and the types of financial instruments in his portfolio, which enables the Client to assess the Bank’s provision of the services;

l) in a proposal to a retail Client or a potential retail Client of the individual portfolio management service – besides the information under this item 3.1., also information (if applicable) about:

(i) the method and interval of assessment of financial instruments in the Client portfolio;

(ii) data about any delegation of management of all or some of the financial instruments and/or money in the Client portfolio;

(iii) characteristics and data about every benchmark against which the results of the portfolio management will be compared;

(iv) types of financial instruments which may be included in the Client portfolio and types of transactions that may be concluded therein, including all limitations;

(v) the purposes of management, the level of risk in the judgement of the person managing the portfolio as well as any specific limitations of this judgement;

m) information to the retail Client and the potential retail Client about the place where the published prospectus for public offering of financial instruments can be accessed;

n) sufficient information for objective judgement to the retail Client and the potential retail Client regarding the guarantor and the guarantee where the financial instruments include a third party guarantee;

o) other circumstances set out in the applicable legislation.

3.2. When the information under item 2 of this Section contains comparison between investment

or ancillary services, financial instruments or persons providing investment or ancillary

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services, the information shall meet the following conditions:

а) the comparison must be meaningful and presented objectively and in a balanced manner;

b) shall specify the sources of information used for the comparison;

c) shall include the key factors and assumptions used in preparing the comparison. 3.3. When the information under item 2 of this Section contains reference to previous yield of a

financial instrument, financial index or investment service, it shall meet the following conditions:

a) reference to the previous yield shall not be the most essential part of the communication;

b) the information shall include appropriate data about the yield in the previous 5 years; when the period in which the financial instrument was provided/the financial index was formed/the investment service was provided is shorter or longer than 5 years, the information shall include data about the yield in that period; in any case data about yields shall be based on a full period of 12 months;

c) specification of the period for which the information refers and its source;

d) express warning that the data refer to a past period and are not a secure indicator of future results;

e) if data and values are stated in a currency other than the currency of the Member State in which the head office or the place of residence of the Client is located, the currency must be clearly designated and an express warning should be given that the yield could be reduced or increased as a result of a change in exchange rates;

f) when aggregate yield is stated, the amount of commissions, fees and other costs for the Clients shall be specified.

3.4. When the information under item 2 of this Section contains or refers to simulated past yield,

it shall meet the following requirements:

a) refer to a financial instrument or financial index;

b) the simulated past yield shall be based on actual past yield of one or more financial instruments or indices which are the same or which are an underlying asset of the financial instruments for which yield is simulated;

c) the requirements under item 3.3 of this Section, letters “a”, “b”, “c”, “e” and “f” shall be fulfilled for the actual past yield under letter “b”;

d) shall contain an express warning that data are based on simulated yield and that it is not a secure indicator of future yield.

3.5. When the information under item 2 of this Section contains information about future yield, it

must meet the following requirements:

a) shall not be based on or make reference to simulated past yield;

b) shall be based on reasonable assumptions supported by objective data and facts;

c) when the information is based on aggregate yield, the amount of commissions, fees and costs for the Clients shall be specified;

d) shall contain an express warning that the projections are not a secure indicator of future yield.

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3.6. When the information under item 2 of this Section is about specific type of tax, it shall contain the specification that taxation depends on the specific circumstances applicable to the Client and may be changed in the future.

3.7. The information under item 2 of this Section cannot include the name of the Commission or

another competent authority so as to state expressly or designate otherwise that the authority has confirmed or approved the products or services provided by the Bank.

3.8. The Bank shall provide promptly, before a retail Client or potential retail Client is bound with

it under a contract for provision of investment or ancillary services, the following information:

a) the conditions of the specific contract;

b) the information under item 3.1., letters “а” – “l” of this Section relating to the contract or the investment or ancillary services provided.

3.9. The Bank shall, within an appropriate time limit, before the provision of an investment or

ancillary service to a retail Client, submit to the retail Client or the potential Client the information under item 3.1 of this Section and items 16, 19, 20, 21 and 22 of Chapter Two, Section V of these General Terms.

3.10.The Bank shall, within an appropriate time limit, before the provision of an investment or

ancillary service to a professional Client, submit to the Client the information under items 21 and 22 of Chapter Two, Section V of these General Terms.

3.11.The Bank shall submit to the Client the information under items 3.8., 3.9. and 3.10. of this

Section on a durable medium or on the website of the Bank where this is not a durable medium, in accordance with the provisions of item 21 of this Section.

3.12.The Bank shall ensure correspondence of the information contained in its advertising

materials and public statements of the members of its management and supervisory bodies and the persons working under contract for it with the information it provides to its Clients when providing investment or ancillary services.

3.13.The Bank shall inform promptly the Client of any significant change in the circumstances

under item 3.1 of this Section and items 16, 19, 20, 21 and 22 of Chapter Two, Section V of these General Terms, relating to the service offered. The notification shall be made on a durable medium if the information for which it refers has been provided on a durable medium to the Client.

3.14.When advertising materials or public statements of the members of its management and

supervisory bodies and the persons working under contract for the Bank contain a proposal or invitation for:

a) conclusion of a contract relating to a financial instrument or investment or ancillary service with any person who responds to the communication, or

b) invitation to any person who responds to the communication to make a proposal for conclusion of a contract relating to a financial instrument or investment or ancillary service,

and the manner or format of the response are determined in the advertising materials or the public statements, they shall contain such part of the information under item 3.1 of this Section and items 16, 19, 20, 21 and 22 of Chapter Two, Section V of these General Terms which is relevant for the proposal or the invitation. This item shall not apply if the potential

14

retail Client shall be acquainted with documents containing the information under item 3.1 of this Section and items 16, 19, 20, 21 and 22 of Chapter Two, Section V of these General Terms to respond to the proposal or the invitation contained in the advertising materials or the public statements.

4. The Bank shall provide its Clients with sufficient information about the service provided,

including the costs for the transactions and services provided on behalf of the Client, where applicable. The information under the previous item 3 shall be provided to the Client in such a manner as to enable him to understand the nature and risks of the investment service and the specific financial instrument offered, ensuring the taking of an investment decision based on the information provided. The information may be provided in a standardized format.

5 The Bank shall notify every Client of the conditions and criteria applied by it to categorise

him as a professional or retail Client as well as of the circumstances under which he may be categorised as an eligible counterparty in accordance with the criteria set out in the MiFIA. In addition, the Clients shall be notified on a durable medium of their right to request a different status and of the restrictions to their protection when their status is changed.

6. Where the information provided by the Bank contains data about the yield of specific

financial instruments or service in the past or a projection of their future yield is made, the Bank shall specify the source of the data.

7. Advice shall be given verbally. The Bank shall give correct and full answers to the questions

asked and shall not conceal circumstances relating to those questions. 8. On key issues and at the express request of the Client, the Bank shall give advice and

consultations in writing. The advice and consultations shall be signed by the persons who manage and represent the Bank or by a person authorized by them.

9. When giving advice or consultations to its Clients, the Bank shall state its motives. The

Bank shall ensure fair presentation of the recommendations and disclose its interests or conflicts of interest relating to the financial instrument for which the recommendations refer. It may not give recommendations which are based on exaggerated favourable facts or unreported unfavourable facts as well as recommendations motivated only for the purposes of receiving remuneration. The advice and recommendations shall be objectively justified. Every recommendation shall state clearly and at a visible place the name and position of the natural person who made the recommendation as well as the name of the Bank responsible for its making. The recommendation shall also contain instruction for the authority exercising regulation and supervision on the activity of the Bank. The Bank shall take due care to ensure that:

а) the facts are clearly differentiated from interpretations, assessments, opinions or other type of information which is not related to the presentation of facts;

b) the sources of information are reliable, and if there is any doubt about reliability, that this circumstance is clearly indicated;

c) all projections, forecasts and expected prices are indicated clearly as such and the significant assumptions made in their calculation or use are specified;

d) all major sources of information are indicated, including the relevant issuer of financial instruments for whom the recommendation refers directly or indirectly as well as the circumstance of whether the recommendation was provided to the issuer and modified as a result of this before being circulated;

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e) the specific assessment basis or methodology used for assessment of financial instruments or issuer of financial instruments or for determining the expected price of financial instruments is specified in brief in a clear manner which is accessible for investors;

f) the meaning of every recommendation for purchase, sale or holding of financial instruments which may include the term of validity of the recommendation shall be explained in a clear and accessible for investors way and shall contain a warning of every relevant risk, including analysis of the sensitivity of relevant assumptions;

g) the frequency of updating the recommendation is indicated, if such update is planned, and any major changes in the scope of the already announced policy;

h) the date on which the recommendation was circulated for the first time is indicated as well as the relevant date and hour of every stated price of a financial instrument;

i) when the recommendation differs from a previous recommendation applying to the same financial instruments or to the same issuer made in the previous 12 months before the publication of the second recommendation, the difference and the date of the earlier recommendation are specified clearly and at a visible place.

If the above-mentioned information is not proportionate to the volume of the order, it would be sufficient if the recommendation states clearly and visibly where this information is directly, easily and publicly accessible such as a direct internet link on the website of the Bank, provided that there is no change in the assessment basis or the methodology used.

When giving advice or recommendations to its Clients the Bank shall comply with the requirements set out in Art. 20 of the Measures against Market Abuse with Financial Instruments Act.

10. When providing advice on dealing in financial instruments the Bank shall inform the Client

of his rights attaching to the financial instruments, the market status of the financial instruments, as well as of significant changes or newly emerging circumstances that may affect the parameters of the transaction. The Bank shall inform the Client also of the risks relating to investment and transactions in financial instruments and the types of costs for the Client and the method of their calculation.

11. The Bank shall provide to the Client the above-mentioned information under item 10

together with the information about potential conflicts of interest between the Client and the Bank and between the Client and other Clients of the Bank in writing. A copy or another document certifying receipt of information by the Client shall remain for storage at the Bank. If the information is provided by phone or other remote means of communication, the person providing the information shall draw up a document by the end of the working day, verified by a person from the internal control department, certifying the contents of the remotely provided information. The Bank shall require from the Client to prove at first opportunity in writing or in another form of equivalent evidential value according to law that he has received the information. The information may be provided to the Client also on a durable medium, including by e-mail, when these General Terms are part of the contract between the parties and the provisions of applicable legislation are met.

12. When providing investment advice and portfolio management, the Bank shall require from

the Clients or the potential Clients written information establishing material facts about their financial position, investment purposes, knowledge, experience concerning portflio management services and provision of investment advice and their willingness to take risks as well as require from them to update such information and give advice and

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recommendations on the basis of such information. The Bank shall not have the right to provide portfolio management and investment advice to a Client who has not provided said information as described in detail in item 13 of this Section or services which are not suitable for the Client based on the information received under this item or other relevant information which has come or should have come to the Bank’s knowledge.

13. The Bank shall require from the Client or the potential Client to submit and update the

information under item 12 of this Section for the purpose of conducting a reasonable substantiated assessment under Chapter Three of Ordinance No. 38 on the requirements to the activity of investment intermediaries of whether the transaction to be recommended or concluded in the portfolio management is suitable for the Client and meets the following criteria:

а) meets the investments objectives of the Client;

b) the Client has the financial ability to bear all relevant investment risks involved in his investment purposes;

c) the Client has the necessary experience and knowledge to understand the risks related to the transaction or to the management of its portfolio.

The information about the financial position of the Client or the potential Client shall include, where applicable, information about:

а) the sources and amount of his fixed income;

b) his assets, including liquid assets, investments and real estate;

c) his regular financial obligations.

The information about the investment objectives of the Client or the potential Client shall include, where applicable, information about:

а) the period of time during which the Client wants to hold the investment;

b) his preferences regarding the risk assumed, his risk profile and the objectives of the investment.

The information about the experience and knowledge of the Client or the potential Client in the field of investment activity shall contain suitable information in accordance with the characteristics of the Client or the potential Client, the contents and the scope of the services provided and the types of products or services envisaged, including their complexity and related risks regarding:

а) the type of services, transactions and financial instruments with which the Client is acquainted;

b) the contents, volume and frequency of transactions in financial instruments on behalf of a Client and the period when they will be concluded;

c) the level of education, profession or relevant previous profession of the Client or the potential Client.

The Bank shall require such part of the information about the experience and knowledge of the Client or the potential Client as may be appropriate in view of the characteristics of the Client, the contents and scope of the services provided and the types of products or services envisaged, including their complexity and related risks.

Based on the received information the Bank shall decide whether the investment service offered is suitable for the Client or the potential Client. If on the basis of the information received the Bank determines that the investment service offered is not suitable, it shall

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warn the Client or the potential Client thereof in writing. If the Client or the potential Client does not provide the information under this item or where he provides insufficient information to make the judgement whether the investment service offered is suitable for him the Bank shall notify the Client or the potential Client in writing that it cannot determine whether the investment service offered is appropriate for him.

14. When providing investment services other than investment advice or portfolio management

the Bank shall require from the Client or the potential Client information about his knowledge and experience in the field of investment activity and the service provided as well as to update such information so as enable it to make assessment of whether the Client or the potential Client has the required knowledge and experience to understand the risks involved in the product or the investment service offered or requested. Based on that information the Bank shall judge whether the investment service is suitable for the Client or the potential Client. If on the basis of the information received the Bank determines that the investment service offered is not suitable, it shall warn the Client or the potential Client thereof in writing. If the Client or the potential Client does not provide the information or where he provides insufficient information to make the judgement whether the investment service offered is suitable for him the Bank shall notify the Client or the potential Client in writing that it cannot determine whether the investment service offered is appropriate for him. When providing investment services for receipt or transmission of orders in respect to one or more financial instruments, including intermediation in concluding transactions in financial instruments, and/or investment services for execution of orders on behalf of Clients, the Bank may provide such services to a Client where the latter has failed to provide the information about his knowledge or experience in the specific service offered if:

a) the above services relate to shares admitted to trading on a regulated market or in an equivalent third country market as per the list of the European Commission, bonds or other securitised debt, excluding those bonds or securitised debt that embed a derivative instrument, money market instruments, units in collective investment schemes and other non-complex financial instruments;

b) the service is provided at the initiative of the Client or a potential Client;

c) the Client or the potential Client has been notified in writing that the Bank shall not meet the obligations for assessment of whether the investment service offered is suitable for him and warn him in writing if it deems that the investment service is not suitablefor him;

d) the Bank shall comply with the requirements for treatment of conflicts of interest. 15. The Bank may not encourage its Clients or potential Clients not to provide the required

information for the purposes of Art. 28 of the MiFIA described in the previous items 12, 13 and 14 of this Section. The Bank shall be guided by the information provided by Clients or potential Clients, unless it knows or should have known that the information is incorrect, incomplete or not updated. The requirements under the previous items 12, 13 and 14 of this Section shall not apply where the investment service is offered as part of a financial product regulated by Community law or by common European standards in connection with credit institutions or consumer credits regarding assessment of risk for the Client and/or the requirements for provision of information.

16. In the cases prescribed by applicable law the Bank shall provide to the Client accessible

information, which is important for the formation of the price of the financial instruments relating to specific transactions, unless this violates a statutory prohibition.

17. The risk from the transactions in financial instruments is borne by the Client and the Bank

shall notify him thereof.

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18. The Bank shall notify the Client within the legally prescribed time limit of any significant

change in its organisation and activity which may affect adversely the execution of a concluded contract.

19. The Bank shall report to the Client in accordance with the procedure set out in Chapter

Three, Section VII of these General Terms. 20. Where it is normatively required that particular information be provided to the Client on a

durable medium, the Bank shall provide information on paper or otherwise, meeting the following conditions:

а) provison of the information by this means is appropriate in view of the existing or future relations with the Client;

b) the Client has stated expressly that he prefers this means of providing the information to its provision on paper.

21. When the information is provided on the website of the Bank and is not addressed to a

specific Client it shall meet the following conditions:

а) provison of the information by this means is appropriate in view of the existing or future relations with the Client;

b) the Client has agreed expressly with this means of providing the information;

c) the Client is notified electronically about the website of the Bank and the place on the website where this information is located;

d) the information is current;

e) the information is accessible continuously on the website of the Bank during the period normally necessary for the Clients to get acquainted with it.

22. When providing information to the Client by electronic means of communication the Bank

shall require in advance from the Client to make sure that he has regular access to internet by providing an e-mail address for the purposes of the established relations with the Bank.

23. In addition the Bank shall require from the Clients and shall provide them with other

information stipulated in these General Terms and the applicable legislation. IV. REPORTING 1. The Bank shall keep day-to-day reporting in accordance with the provisions of Ordinance No.

38 on the requirements to the activity of investment intermediaries and applicable legislation. The Bank shall keep in a special order-book all orders made by its Clients in accordance with the time of their reception and shall execute without delay, fairly and orderly the Client orders received. The reporting shall be kept by an authorised person and the entries made shall be valid only if said person or the person (persons) managing and representing the Bank validate the entry with their signatures. In case of lost information caused by a technical fault the Bank shall take immediate actions to remove the fault and recover the information in compliance with the internal rules and procedures for risk management and shall notify the Commission of actions undertaken and of the result.

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2. The rule in the previous item shall also apply to comparable orders which the Bank executes in the order of their entry. Comparable shall be the orders which are identical as to the type and manner of execution, the time of execution and the price parameters.

3. The Bank shall register in the order-book, in accordance with the time of their execution, the

transactions in financial instruments no later than by the close of the working day. The obligation for reporting set out in Ordinance No. 38 on the requirements to the activity of investment intermediaries and applicable legislation shall be performed immediately after occurrence of the circumstance subject to registration.

4. For every transaction, the name or the names of the parties thereto shall be indicated, the time

of conclusion, the price and the method of payment as well as any other conditions set out in the applicable legislation.

5. At request, the Bank shall provide to the Client information and statement of the reporting kept

on the transactions in financial instruments of the Client. 6. The Bank shall keep the statutory reporting on paper and or magnetic (electronic) data storage

medium and shall store for a period of 5 years the documentation and the information relating to its activity at an accessible and easy to use place in a manner allowing their preservation on backup medium or retrival in case of loss due to technical faults. Documents and information establishing rights and obligations of the Bank or the Client in relation to provided services or the conditions under which the Bank shall provide services to Clients shall be stored for the entire period of existing relations with the Client but not less than 5 years.

7. The Bank shall maintain permanent records of all transactions, services and activities

performed by it so as to enable the Commission and its Deputy Chairperson to exercise their supervisory functions under the MiFIA and the statutory instruments for its application to ascertain compliance of the Bank with its obligations in respect of its Clients and potential Clients as provided in the Act and the in the statutory instruments for application of the Act.

8. The Bank shall comply with all the other requirements for keeping of books, reporting and

internal organisation set out in the MiFIA, Ordinance No. 38 on the requirements to the activity of investment intermediaries and applicable legislation.

V. PORTFOLIO SEGREGATION 1. The Bank shall segregate its portfolio of financial instruments and money from those of its

Clients. In addition, the Bank shall segregate the portfolios of financial instruments of its other Clients from those of every individual Client. The Bank shall report and keep accounts of Client assets held in a manner allowing it to differentiate one Client’s assets from the assets of the other Clients of the Bank and from its own assets. The Bank shall reconcile on a regular basis the reporting and accounts kept by it of Client assets held from those kept by third parties safeguarding Client assets.

2. The Bank shall not be responsible to its creditors with the financial instruments and funds of

its Clients as well as with underlying securities in respect of depository receipts. 3. The Bank shall deposit the funds provided by its Clients or received as a result of

investment services provided on behalf of Clients at the Bank in individual accounts, separately from the funds of the Bank. The Clients shall give their written consent therefor on establishing contractual relations with the Bank. The Bank shall keep Clients’ funds in

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relation to settlement on government securities operations in its current accounts at the Bulgarian National Bank.

4. The Bank shall keep the financial instruments of its Clients in a depository institution in

Client accounts to the account of the Bank or in accounts opened to the account of a third party, under conditions and procedure set out in the applicable legislation.

5. When opening an account for financial instruments of its Client with a third party the Bank

shall use reasonable standard of care for the interests of the Client in designating that party and assigning the said party to safeguard the financial instruments of the Client. Periodically but at least once annually the Bank shall review with the same care the election of that party and the conditions under which it safeguards the financial instruments of the Client. When performing these obligations the Bank shall take into account the professional skills and market reputation of the third party as well as the normative requirements and market practices for holding such financial instruments that could prejudice the rights of the Client.

6. If the Bank envisages safeguarding of a Client’s financial instruments by a third party in a

country whose legislation provides for a special regulation and supervision regarding the safeguarding of financial instruments on behalf of another person, the Bank shall provide for safeguarding of Client financial instruments only with a person from that country which is subject to the regulation and supervision provided for by the local legislation.

7. The Bank may not safeguard financial instruments of a Client with a third party in a third

country whose legislation does not regulate the safeguarding of financial instruments on behalf of a third party.

8. The restriction under item 7 of this Section shall not apply if any of the following conditions

obtains:

а) the nature of the financial instruments or investment services provided in relation with such instruments requires their safeguarding with a third party in a third country under item 7 of this Section;

b) a professional Client requests in writing that his financial instruments are safeguarded with a third party in a third country under item 7 of this Section.

9. The Bank shall be responsible to the Client and take appropriate steps for safeguarding of

his financial instruments in a manner that ensures identification of Client financial instruments from the financial instruments of the Bank and the third party by keeping separate accounts by said party or by applying other measures ensuring the same level of protection.

10. If the applicable legislation of the said third party does not allow compliance of the

requirements referred to in item 9 of this Section, the Bank shall take appropriate measures to guarantee the rights of the Client in respect of the financial instruments safeguarded with the third party, including by opening separate accounts from its account for the financial instruments of its Clients kept by the third party in the name of the Bank but for other person’s account.

11. The Bank shall keep informed its Clients of balances and operations on the funds and

financial instruments accounts kept by it, and of the conditions of the contracts for their safekeeping.

12. Except in the cases set out in the applicable legislation, the Bank may not use:

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а) for its account the funds and/or financial instruments of its Clients;

b) for the account of its Client funds and/or financial instruments of other Clients;

c) for the account of its Client its own funds and/or financial instruments. 13. The Bank may conclude transactions for securities financing with financial instruments of

Clients held by it or use otherwise for its account or for the account of another Client such financial instruments, provided that the Client has given his prior express consent for the use of its financial instruments under specific conditions and they are used in accordance with these conditions. The consent under the previous sentence shall be given in writing if the Client whose financial instruments are used is a retail Client.

14. The Bank may conclude transactions for securities financing with financial instruments of

Clients held in a common Client account with a third party or use otherwise for its account or for the account of another Client such financial instruments, provided that the provisions of item 13 of this Section and at least one of the following conditions are met:

а) all Clients whose financial instruments are held together in the common account have given their prior consent in accordance with item 13 of this Section;

b) the Bank has put in place procedures ensuring that only financial instruments of Clients who have given their prior express consent therefor in accordance with item 13 of this Section as well as control mechanisms for compliance with this requirement are used.

15. In the cases of item 14 of this Section the reporting kept by the Bank shall include

information about the Client on whose order the financial instruments are used as well as about the number of financial instruments used by every Client for the purpose of correct allocation of potential losses.

16. Before entering into a transaction for securities financing with financial instruments held for the account of a retail Client or before using any other of these financial instruments for its account or for the account of another Client the Bank shall provide to the retail Client on a durable medium and within a reasonable time limit before using the financial instruments clear, complete and accurate information about the obligations and responsibilities of the Bank associated with the use of the financial instruments, including the conditions for their return and associated risks.

17. Financial instruments issued by the Bank and held by its Clients may be registered with Client sub-accounts to the account of the Bank with the Central Depository or with another depository institution, if applicable.

18. Government securities issued on the domestic market shall be kept and registered in

accordance with the terms and procedure set out in the applicable legislation. 19. The Bank shall notify its retail Clients or potential retail Clients of the third party (if

applicable) and the place where the funds and/or financial instruments provided to it may be safeguarded. The notification under sentence one shall furthermore include reference to the Bank’s responsibility under national legislation for any act or omission of the person holding the Client funds and/or financial instruments and the consequences for the Client from that party’s insolvency.

20. The Bank shall notify its retail Clients or potential retail Clients of the possibility for their

financial instruments to be kept in a common account with a third party where national

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legislation provides for such possibility. The Bank shall notify its retail Clients or potential retail Clients of the cases where the national legislation does not allow the financial instruments of the Client kept by a third party to be segregated from the financial instruments of said third party or of the Bank. The notifications shall state expressly the risks for the Client stemming from the circumstances under this item.

21. The Bank shall notify expressly its Clients or potential Clients when the accounts in which

their funds or financial instruments are held are subject or will be subject to regulation by the law of a country other than a Member State within the meaning of § 1, item 28 of the Supplementary Provisions of the MiFIA. In these cases the notification shall specify that the rights of the Client associated with the financial instruments or the funds may differ because of the enforceability of the law of the third country.

22 The Bank shall notify expressly the Client of:

а) existing security interest or right of lien on Client funds or financial instruments for the Bank and of the conditions in which such a right arises or may arise;

b) existing right of offset against Client funds or financial instruments for the Bank and of the conditions in which such a right arises or may arise;

c) existence and terms whereunder the Bank has or may have the right to offset against Client funds or financial instruments;

d) the possibility for the depository institution to have security interest, right of lien or offset on Client funds or financial instruments, if applicable.

VI. SELF-DEALING 1. The Bank may not enter into and effect a transaction in financial instruments agreed with the

Client either with itself or with another Client on whose behalf it acts unless the first Client has given its written consent for this.

VII. DISCLOSURE OF INFORMATION TO THE FINANCIAL SUPERVISION COMMISSION 1. The Bank which is licensed for conduct of activity as investment intermediary shall submit

to the Commission within 7 days:

а) a copy of a decision of the district court on registration of the company with the commercial register or change of the subject of activity;

b) a list of the addresses of premisses where the relevant activity will be carried out, a copy of a document (a title deed or another act of title, a title deed of established real right of use, a rent contract) certifying rights in the premises where relevant activity will be carried out and a fire safety certificate for the premises;

c) written data about the hardware and software necessary for carrying out the activity.

A copy of the decision under “a” shall be submitted to the Financial Supervision Commission within 7 days and the documents under “b” and “c”, within 14 days from entry into force of the decision on registration with the commercial register.

2. The Bank shall notify the Commission of:

а) any change in the subject of activity, the name, seat and registered office, the

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BULSTAT identification code or the tax number;

b) opening or closing of a branch or office;

c) any change in the manner of representation;

d) any amendment and/or supplement of the articles of association and the applied rules, procedures and systems of the Bank;

e) any change in the circumstances recorded in documents which have served as a ground for granting a license for conduct of activity as investmenmt intermediary and in the documents under item 1 of this Section;

f) occurrence or a change of a circumstance as a result of which the normative requirements to the members of the management or superviory body, to other persons entrusted with the management of the company or to other persons working under contract for the Bank are no longer complied with;

g) any change of a person entrusted with the management of the company, of the persons under Art. 39, para. 1 of Ordinance No. 38 on the requirements to the activity of investment intermediaries, of the head and employees of the internal control department, internal audit department and the risk management department;

h) withdrawal of the license for conduct of activity as well as imposition of other enforcement measures, administrative and other sanctions for gross violations relating to the company’s subject of activity, by the Bulgarian National Bank, by other government authorities, by the regulated market in financial instruments, or by the depository institution to the management and supervisory bodies and to employees working under contract for the investment intermediary;

i) institution of bankruptcy poroceedings;

j) a decision on dissolution;

k) institution of liquidation proceedings;

l) occurrence of other circumstances subject to registration with the register of the Commission or changes in such circumstances.

3. The obligation under item 2 of this Section shall be fulfilled by the Bank within 7 days from:

а) taking the decision by the competent authority under item 2 “a”, “b”, “c”, “d”, “g” and “j” and where the circumstance is subject to registration with the commercial register, from the registration thereof;

b) becoming aware of the occurrence or the change in the circumstance under item 2 ”e”, “f”, “h”, “i” and “k”;

c) taking the decision by the competent authority under item 2 “l” and where the circumstance is subject to registration with the commercial register, from registration thereof or becoming aware of the occurrence or the change in the circumstance.

4. After every change under item 2 “d” the Bank shall submit a full wording of the respective

document with the amendments as of the respective date under item 3 ”а”.

5. By making the notification under item 2 the Bank declares that no other circumstances have occurred, including changes in already occurred circumstances.

6. The Bank shall pay within the time limit set the annual fee for exercise of common financial

supervision, including for handling of mandatory current and periodic information and inspections.

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7. By the 15th day of the month in which a new quarter begins the Bank shall notify the

Commission of the number and summary content of:

а) any written complaints filed in the past quarter by its Clients, if any, as well as of the results of examination of such complaints;

b) any court proceedings relating to its subject of activity as investment intermediary instituted in the past quarter by it or against it, against members of its management and supervisory bodies and against persons working under contract for it, as well as of any decisions issued on pending cases, if any.

8. The Bank shall notify the Commission of the transactions in financial instruments admitted

to trading on a regulated market concluded on the territory of the Republic of Bulgaria at earliest opportunity but not later than by the close of the working day following the day of concluding the transaction.

9. Where the Bank concludes transactions in shares admitted to trading on a regulated market

outside a regulated market or a multilateral trading facility, it shall disclose publicly information about the type, issue, number and unit price of the financial instruments relating to the transaction, the currency of the transaction, the date and hour of conclusion, specifying that the transaction is concluded outside a regulated market and multilateral trading facility. Disclosure shall be carried out in accordance with the procedure set out in the applicable legislation.

10. The Bank shall notify the Commission of any acquisition or transfer of holding in

accordance with Art. 26, paras. 1 - 3 of the MiFIA within one day of becoming aware. The Bank shall submit from time to time to the Commission data about the persons holding direct or indirect qualified holding as well as about their votes in the general meeting of the Bank, in accordance with the terms and procedure set out in the applicable legislation.

11. If the Bank operates a multilateral trading facility within the meaning of Art. 51 and following

of the MiFIA, it shall also disclose to the Commission the information referred to in Chapter Two, Section ХІ, items 5 and 9 of these General Terms.

12. If ING Bank N.V. – Sofia Branch undertakes transactions and activities in financial

instruments in a third country, it shall notify the Commission within 3 working days of the transactions and activities abroad in the past week undertaken for its own account or on behalf of Clients, of the market status, of the safeguarding and exercise of the rights in foreign financial instruments held by the Bank for its account or on behalf of Clients or held directly by its Clients.

13. The Bank shall comply with all the other requirements to the activity of investment

intermediaries aimed at protecting the interests of Clients and the stability of the market in financial instruments, including a specific internal organisation and prevention of conflicts of interest, prevention and detection of market abuse in financial instruments, reporting, handling and storage of information, conclusion and execution of contracts with Clients, their content and disclosure of information to the Commission and to the Clients in accordance with the MiFIA, the Measures against Market Abuse with Financial Instruments Act and secondary legislation.

VIII. PROHIBITIONS 1. The Bank may not:

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1.1. carry out activity on behalf of a Client if it has not informed the Client in an appropriate manner of the potential conflicts of interest where this will not violate an existing non-disclosure obligation or threaten the interests of another Client, including the cases where:

а) the Bank or its broker has acquired or may acquire financial instruments and recommends to the Client to purchase them or effects transactions in these financial instruments for its own account;

b) a special remuneration is provided for the Bank or the broker if the recommended transaction is effected;

c) a conflict of interest has arisen or may arise with another Client of the Bank.

1.2. provide untrue information about the price or value of the financial instruments, the issuer or the property obligations arising from transactions in financial instruments;

1.3. carry out, for its account or on behalf of other persons, actions with financial instruments of the Client for which it is not authorised by the Client, deviate from the order placed, unless the deviation is in the apparent interest of the Client;

1.4. effect transactions on behalf of a Client in a volume or interval, at prices or with specific counterparty in respect of which, depending on the circumstances may be considered to be carried out solely in the interest of the Bank. This prohibition shall not apply to transactions for the execution of which the Client has given express instructions at his initiative;

1.5. buy for its account financial instruments for which a Client of the Bank has placed an order for purchase and sell them to the Client at a higher price than the price at which it has purchased them; this ban shall furthermore apply to the members of the management and supervisory bodies of the Bank, for the persons who manage the activity of the Bank as well as to all persons working for the Bank under contract and related parties thereto;

1.6. make simulative bids to conclude transactions in financial instruments, conclude transactions in financial instruments creating untrue picture of the price or volume of trade in financial instruments or fake transactions, disseminate untrue rumours and unjustified forecasts, or engage in any other misleading activities in connection with the price or volume of transactions in financial instruments. This prohibition shall apply also to the members of the managing and supervisory bodies of the Bank, the persons working for the Bank on the basis of a contract and the related parties;

1.7. conclude agreements on prior fixing of the price of financial instruments, including prices in bids or quotations;

1.8. lend money or provide loans in any other way for purchase of financial instruments as well as sell for its account or on behalf of other persons financial instruments which the Bank or its Client does not hold, except in accordance with the terms and the procedure of an ordinance on the application of the MiFIA and the applicable legislation; this ban shall not apply to credits granted by the Bank under the Credit Institutions Act in a capacity other than the capacity of investment intermediary;

1.9. use the financial instruments and money of the Clients for purposes not related to the activity carried out by it for their account, including to use for the account of its Client its own or another Client’s money or financial instruments except in accordance with the terms and the procedure of an ordinance on the application of the MiFIA and in the applicable legislation;

1.10.pay, provide and receive fees, commissions or non-monetary benefits with the exception of:

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а) fees, commissions or non-monetary benefits paid or provided by or to the Client or its representative;

b) fees, commissions or non-monetary benefits paid or provided by a third party or its representative, provided the following conditions obtain:

(i) the existence, nature and amount of the fees, commissions or non-monetary benefits have been indicated to the Client before provision of the respective investment or ancillary service clearly, accessibly, orderly and in an intelligible manner, honestly and fairly in the interest of the Client (including fees due to depository institutions and regulated markets in financial instruments) and where the amount cannot be determined, the method of its calculation is specified; the essential terms of the contracts regarding the fees, commissions or non-monetary benefits are presented in summary and detailed information about the fees has been provided to the Client upon request;

(ii) payment or delivery of the fees, commissions or non-monetary benefits is made in order to enhance the quality of the service and does not prejudice the obligation of the Bank to act in the best interest of the Client;

c) inherent fees which secure or are necessary in regard to the provision of the investment services such as costs for custodian services, settlement and exchange services, fees for legal services and public charges, which in their nature do not conflict with the obligation of the Bank to act honestly, fairly and professionally in the best interest of the Client;

1.11.execute orders for purchase, sale or swap of financial instruments admitted to trading outside the regulated market, as well as participate in the execution of, including as a registration agent, of hidden purchases or sales of financial instruments;

1.12.receive all the benefit or part of it if it has entered into or effected the transaction under conditions more favourable than those stipulated by the Client;

1.13. carry out activity in violation of the provisions of the applicable legislation, the rules of the Central Depository or another depository institution and the rules of the regulated markets in financial instruments or any other activity which jeopardizes the interests of Clients or the stability of the market in financial instruments.

IX. OBLIGATIONS OF THE BANK UNDER THE MEASURES AGAINST MONEY

LAUNDERING ACT AND THE MEASURES AGAINST TERRORIST FINANCING ACT 1. The Bank shall identify its Clients when entering into long-term relationships with them.

Long-term relationship exists in all cases where the Bank and the Client have concluded a contract. When the Bank cannot identify the Client in accordance with the provisions of the Measures against Money Laundering Act and the statutory instruments for its application and upon a failure to file a declaration of the origin of funds the Bank shall refuse effecting the operation or transaction or establishment of business or professional relationships, including opening an account. If the Bank cannot identify the Client in the cases of already established business or professional relationships, it shall terminate such relationships.

2. The Bank shall also identify its Clients if the value of the effected operation or transaction

exceeds BGN 30,000 or its equivalent in foreign currency and when effecting an operation or transaction in cash, when its value exceeds BGN 10,000, as well as in case of another value set out by a statutory instrument.

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3. The rule under item 2 shall also apply in the cases of effecting more than one operation or transaction which separately do not exceed the legally prescribed value under item 2 but data exist that the operations or transactions are connected.

4. If the operation or transaction is effected through a representative, the Bank shall require

evidence of the representative power and shall identify the represented person as well. 5. Client identification shall be carried out as follows: 5.1. for natural persons – by producing an identity document and recording its type, number and

issuer, as well as the name, address, personal identification number, date of birth and other details prescribed by law. The documents under item 5.2 shall also be required from sole proprietors.

5.2. for legal persons – by producing an official transcript from the relevant register or, where

the person is not subject to registration, a copy of the instrument of association or other documents and by collecting details of the name, principal office of business, address, objects of activity, the persons representing it, other data prescribed by law, as well as a copy of the BULSTAT registration.

5.3. The requirements under items 5.1. and 5.2. shall also apply to the representative.

5.4. The persons who are legally required to register for tax purposes shall submit a copy of the

tax registration.

6. Where circumstances change in the course of the operation or transaction, natural persons shall produce copies of the relevant certification documents within seven days of the change.

7. Where circumstances change in the course of the operation or transaction, legal entities

and sole proprietors shall produce official transcripts from the respective register within seven days of the registration of the change in the register.

8. When establishing business or professional relationships or effecting an operation or

transaction through an electronic statement, electronic document or electronic signature or another Client non-attendance form the Bank shall take appropriate measures for verifying the identification data of the Client. These measures may include a check of the presented documents, demanding additional documents, confirmation of identity by another person under Art. 3, paras. 2 and 3 of the Measures against Money Laundering Act or by a person obligated to apply measures against money laundering in a Member State of the European Union or establishing a requirement that the first payment on the operation or transaction to be effected through an account opened in the name of the Client at a Bulgarian Bank, a branch of a foreign Bank licensed by the Bulgarian National Bank to conduct activity in the country through a branch, or a Bank in a Member State of the European Union.

9. The Bank shall store documents and data about the Clients and about operations and

transactions collected under this Section IX for a period of 5 years which in respect of Clients shall be effective from the date of termination of their contractual relationships and in respect of transactions shall be effective from the date of their execution. Data and documents shall be stored in a manner that allows access to them upon request in accordance with the legally prescribed procedure.

10. Where money laundering or terrorist financing is suspected, the Bank shall inform the

competent authorities in the way prescribed by law prior to the carrying out of the operation

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or transaction. Where the Bank deems that a delay of the operation or transaction is impossible or its nature may prevent the detection of money laundering or financing of terrorism, the Bank shall inform the competent authorities immediately after the operation or transaction is carried out.

11. The Bank shall not be liable for any damage caused due to delay or non-performance of the

operation or transaction as a result of its suspension by the competent authorities given in writing.

12. The Bank shall not notify its Clients or third parties of the disclosure of information under

the terms of the Measures against Money Laundering Act, the Measures against Terrorist Financing Act and the statutory instruments for their application.

13. Disclosure of information under the terms of items 12 and 14 shall not lead to civil,

disciplinary or criminal liability for violation of prohibitions set out in other laws.

14. The rights and obligations of the Bank relating to the application of the Measures against Money Laundering Act, the Measures against Terrorist Financing Act and the statutory instruments for its application are set out in detail in the Internal Rules of the Bank governing the relationships arising from the effect of the Measures against Money Laundering Act, the statutory instruments for its application and the Measures against Terrorist Financing Act. In carrying out its activity the Bank shall comply with all legally prescribed requirements relating to the measures against money laundering and terrorist financing.

X. RULES FOR PUBLIC AVAILABILITY OF QUOTES 1. This Section shall apply where the Bank acts as a systematic internaliser on a market in

financial instruments and trades only within the standard market size. Within the meaning of § 1, item 5 of the Supplementary Provisions of the MiFIA “systematic internaliser” is an investment intermediary which, on an organized, frequent and systematic basis, deals on own account in financial instruments by executing Client orders outside a regulated market or a Multilateral Trading Facility.

2. Where the Bank acts as a systematic internaliser for shares admitted to trading on a

regulated market and for which there is a liquid market, it shall publish its quote for such shares. In the case of shares for which there is no liquid market, the Bank shall disclose quotes to their Clients upon request.

3. The procedure for determining the Clients who may receive quotes under the previous item

2 of this Section, the conditions for refusing establishment or termination of relations with such Clients, restrictions on the number of transactions per Client, as well as restrictions on the total number of transactions of all Clients for a certain period of time where the number and/or volume of Client orders considerably exceeds the norms shall be established in adopted and disclosed rules of the Bank, which shall regulate in an objective and nondiscriminatory way the described relationships with Clients.

4. The Bank may refuse to enter into or terminate existing commercial relations with investors for commercial reasons such as investor credit status, risk of default on obligations under a transaction by a counterparty and final settlement of the transaction.

5. In respect of a particular share the Bank’s quote shall include information about the type of the quote, “bid” and/or “offer” price for a size which is not higher than the standard market

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size for the class of shares to which the share belongs, size of the quote. 6. The Bank shall keep the prices of the shares under item 2 of this Section in conformity with

the market conditions for the particular share and shall comply with the provisions of the MiFIA regarding the formation of classes of shares and determination of the standard size for each class of shares. The Bank may decide the size or sizes at which it will quote provided that they are close to the prices of comparable quotes for the same shares published on a regulated market, multilateral trading facility or by another systematic internaliser.

7. The Bank shall store the information about the quoted prices for a period of at least one

year from the quote. 8. The Bank shall make public its quotes on a regular and continuous basis in a manner which

is easily accessible and on a reasonable commercial basis during normal trading hours in any of the following means:

а) publication of the information using technical means of the regulated market on which the shares are traded if said market allows such disclosure;

b) through the technical means of the multilateral trading facility on which the shares are traded;

c) through publication of the information on the website of the Bank or in other generally accessible means.

9. The Bank shall be entitled at any time to update its quotes. It may, under exceptional

market conditions, withdraw its quote. 10. Upon placement of orders by a retail Client for conclusion of transactions in shares in

respect of which the Bank acts as a systematic internaliser, it shall execute such orders at the quoted prices at the time of receipt of the orders in the best interest of the Client and in accordance with the rules of Chapter Three, Section Two, item 2 of these General Terms.

11. Upon placement of orders by a professional Client for conclusion of transactions in shares

in respect of which the Bank acts as a systematic internaliser, it shall execute such orders at the quoted prices at the time of receipt of the orders.

12. The Bank may enter into transactions on behalf of a professional Client and at a better price

than the quoted one provided that this price falls within a public range close to market conditions and provided that the orders are of a higher size than the size customarily undertaken on behalf of retail Clients.

13. The Bank may execute orders of a professional Client at a price other than the quoted one

in respect of transactions where execution in several securities is part of one transaction or in respect of orders that are subject to conditions other than the current market price.

14. The Bank may execute an order of a Client of a total value higher than the total value of the

only quote published thereby or of the quote of the highest total value, but lower than the standard market size, at the full amount of the price quoted provided that the conditions under the previous items 11 – 13 of this Section do not exist.

15. If the Bank has quoted in different sizes and receives an order from a Client between those

sizes, it shall execute the order at one of the quoted prices in compliance with the provisions of Chapter Three, Section IV, item 1, sentence two of these General Terms if the

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conditions under the previous items 11 – 13 of this Section do not exist. 16. The Bank shall comply with all the other requirements to the activity of investment

intermediaries acting as systematic internalisers in accordance with the applicable legislation.

17. The provisions of Chapter Three, Section Iv, item 23, Chapter Two, Section IV, item 7 of these General Terms, the obligations under items 2, 3, 4, 5, 6, 7, 12 and 13 of this Section as well as the provisions of Art. 38, paras. 2, 3 and 4 of the MiFIA concerning the obligations of the Bank for disclosure of information shall be applied in compliance with the provisions of Regulation (ЕC) No. 1287/2006 of the European Commission.

ХІ. RULES FOR OPERATION OF A MULTILATERAL TRADING FACILITY 1. This Section shall apply where the Bank operates a multilateral trading facility. Within the

meaning of § 1, item 19 of the Supplementary Provisions of the MiFIA “multilateral trading facility” is a multilateral system, operated by an investment intermediary or a market operator, which brings together multiple third party buying and selling interests in financial instruments in the system and in accordance with non-discretionary rules in a way that results in a contract in accordance with the provisions of this Section of the General Terms and the provisions of Chapter Three, Section IV of the MiFIA.

2. When the Bank operates a multilateral trading facility it shall act honestly, fairly and

professionally in accordance with the best interests of the Clients, notify them of the risks involved in transactions in financial instruments as well as establish the required internal organisation for its activity and adopt and apply clear and compulsory rules for all participants in the multilateral trading facility to ensure legal, fair and orderly organised trade and objective criteria for order execution.

3. The Bank shall maintain the required arrangements for facilitating the settlement of the

transactions concluded through the multilateral trading facility operated thereby. The Bank shall apply clear rules for:

а) the requirements to the participants in a multilateral trading facility;

b) the instruments that may be traded through the multilateral trading facility operated thereby, including the rules that ensure publicly accessible information allowing participants in the facility to make informed investment decision in accordance with the type of participants and the instruments traded through the facility;

c) settlement of the transactions concluded through the multilateral trading facility and informing participants in the facility of their obligations regarding the settlement of the transactions concluded thereby.

4. The provisions of Chapter Three, Section IV, items 18-19, Chapter Two, Section I, item 1,

and Section III, items 2, 3, 4 and 5 and Chapter Two, Section IV, item 1, sentence two of these General Terms shall not apply to transactions concluded through a multilateral trading facility in accordance with the rules of the facility as well as to relations between participants in the facility and between said persons and the operator of the multilateral trading facility regarding the use of the multilateral trading facility. Participants in the facility shall not be exempt from compliance with the above requirements in relations with their Clients where they conclude transactions on their behalf through such a system.

5. The Bank shall notify the Commission without delay of:

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а) breaches of the rules under Article 51, paras. 1 and 3 of the MiFIA by the participants in the multilateral trading facility organized by it;

b) conditions for breaching the rules under Article 51, paras. 1 and 3 of the MiFIA, created by the persons under “a”;

c) the actions of the persons under “a” constituting market abuse.

6. The Bank shall make public and on a reasonable and continuous commercial basis in the normal hours for trading on the multilateral trading facility organized by it the current “offer” and “bid” prices as well as the quantity of quotes made through the system of shares traded on a regulated market, unless it is exempted from this obligation under the terms of Art. 53, para. 2 of the MiFIA.

7. The Bank shall make public and on a reasonable commercial basis information about the

issue, number and unit price of shares traded on a regulated market the subject of the transaction, the currency of the transaction, the date and hour of conclusion in compliance with the provisions of Articles 27 and 30 of Commission Regulation (EC) No. 1287/2006.

8. The requirement under the previous item 7 of this Section shall not apply where in respect

of a particular transaction rules for deferred disclosure of information, including transactions of higher volume than the normal market volume for particular type of shares, approved by the Deputy Chairperson of the Commission, may apply and in this case the time limits stipulated in these rules shall apply. The requirement under item 7 shall not apply to transactions which are disclosed publicly through the means of a regulated market.

9. The Bank shall notify the Commission of the transactions in financial instruments concluded thereby on the multilateral trading facility organized by it no later than by the close of the following working day. The notifications under paragraph 1 shall contain for every transaction:

а) type and issue of the financial instrument;

b) type of transaction;

c) number of financial instruments the subject of the transaction;

d) unit price;

e) date and hour of transaction conclusion;

f) data about the parties to the transaction;

g) other information set out in an ordinance. 10. The Bank shall comply with all the other requirements to its activity relating to the operation

of a multilateral trading facility in accordance with the applicable legislation. XII. SPECIAL RULES WITH REGARD TO BUSINESS RELATIONS WITH ELIGIBLE

COUNTERPARTIES AND PROFESSIONAL CLIENTS 1. When concluding and executing transactions in financial instruments and performing activities

in accordance with these General Terms wherein a Client is an eligible counterparty or a professional Client the Bank may apply the provisions set out in this Section ХІІ.

2. Pursuant to § 1, item 29 of the Supplementary Provisions of the MiFIA “eligible

counterparty” is an investment intermediary, credit institution, insurance company, collective

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investment scheme, management company, pension fund, pension insurance fund, other financial institutions, the persons under Article 4, para. 1, items 11 and 12 of the MiFIA, national governments, public bodies that deal with public debt, central banks and supranational organisations, as well as such entities from third countries, if they have requested explicitly to be treated as such.

3. According to Section I of the Appendix to the MiFIA Clients considered professional Clients in

respect of all investment services, investment activities and financial instruments are:

а) persons for which granting of authorization is required for conduct of business on the financial markets or whose activity is regulated otherwise by the national law of a Member State, whether or not in conformity with Directive 2004/39/EC of the European Parliament and of the Council, as well as persons which are granted authorization for conduct of said business or regulated otherwise by the national law of a third country shall be as follows:

i) credit institutions;

ii) investment intermediaries;

iii) other institutions subject to authorization or regulation otherwise;

iv) insurance undertakings (companies);

v) collective investment undertakings and their management companies;

vi) pension funds and pension insurance companies;

vii) persons trading in commodities or derivative financial instruments relating to commodities as a regular occupation or a business on a professional basis;

viii) legal persons which provide investment services or perform investment activities consisting exclusively in dealing on own account on markets in financial futures or options or other derivatives and on cash markets for the sole purpose of hedging positions on derivatives markets or which deal for the accounts of other members of those markets or make prices for them and which are guaranteed by clearing members of the same markets, where responsibility for ensuring the performance of contracts entered into by such persons is assumed by clearing members of the same markets;

ix) other institutional investors.

b) large companies which meet at least two of the following conditions:

i) total assets – the lev equivalent of EUR 20,000,000 at a minimum;

ii) net turnover - the lev equivalent of EUR 40,000,000 at a minimum;

iii) own funds - the lev equivalent of EUR 2,000,000 at a minimum.

c) national and regional government bodies, public bodies charged with or intervening in the management of the public debt, central banks, international and supranational institutions such as the World Bank, the International Monetary Fund, the European Central Bank, the European Investment Bank and other similar international organizations;

d) other institutional investors whose primary business is investment in financial instruments, inter alia persons dealing in securitisation of assets or other financial transactions.

4. When providing investment services for reception and transmission of orders relating to one

or more financial instruments, including intermediation for conclusion of transactions in

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financial instruments, execution of orders on behalf of Clients and conclusion of transactions on own account in financial instruments the Bank may enter into transactions with eligible counterparties without being obligated to meet the requirements under Art. 27, paras. 4 and 7 of the MiFIA regarding provision of information to Clients, Art. 28 of the MiFIA regarding request of information from Clients, Art. 30 and Art. 33, para. 2 of the MiFIA regarding specific transactions or the relevant ancillary service directly relating to these transactions.

5. The Bank shall notify the Client on a durable medium of the circumstances under which it

may be classified as an eligible counterparty as well as of its right to request to be classified otherwise and of the restricted protection when classified otherwise. Any Client classified as eligible counterparty under the MiFIA may request explicitly not to be deemed such a party for all or for specific transactions and be classified as a professional Client, and upon an express request by the Client it may be treated as retail Client. In this case the provisions of item 7 of this Section shall apply.

6. The Bank shall notify the Client on a durable medium of the circumstances under which it

may be classified as a professional Client as well as of its right to request to be classified otherwise and of the restricted protection when classified otherwise. When providing investment services to a professional Client within the meaning of the MiFIA the Bank shall notify the professional Client before the beginning of provision of investment services that based on the information received by the Client it is deemed a professional Client and in respect of it the rules for professional Clients shall apply unless the Bank and the Client agree otherwise. Any Client classified as a professional Client may request expressly to be considered as retail Client for all or for specific transactions.

7. The Bank shall inform the professional Client that it may request a change in the terms of

the contract in order to ensure a higher degree of protection for the Client. The higher degree of protection means that the Client shall not be considered a professional Client for the purposes of the regime applicable to the activity of the Bank. The Bank shall ensure a higher degree of protection for a professional Client at its request where the Client judges that it cannot assess and manage adequately risks relating to investment in financial instruments. The higher level of protection shall be afforded on the basis of a written agreement between the Bank and the Client, specifying expressly the specific services, activities, transactions, financial instruments or other financial products in respect of which a higher degree of protection will be afforded.

8. Clients which are not professional Clients within the meaning of Section I of the appendix to

the MiFIA, including government bodies and private individual investors, may request that the rules for carrying out activity by the Bank which ensure higher degree of protection for Clients not be applied to them.

9. The Bank may treat a Client under item 8 of this Section as a professional Client if the

identification criteria under Section II, item 1 of the appendix to the MiFIA are fulfilled and the procedure under Section II, item 2 of the appendix to the MiFIA is complied with as follows:

а) the Client has requested in writing from the Bank to be treated as a professional Client for all or for specific investment services or transactions or specific types of transactions or investment product;

b) the Bank has warned the Client in writing that it will not be afforded the relevant degree of protection in providing the services and performing the activities by the Bank and shall not enjoy the right of compensation from the Fund for Compensation of Investors in Financial Instruments;

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c) the Client has declared in writing that he is notified of the consequences under “b”;

d) the Bank has taken the necessary steps to assure itself that the Client meets the requirements referred to in Section ІІ, item 1 of the appendix to the MiFIA.

10. A Client in respect of whom the terms referred to in the previous item 9 of this Section are

fulfilled, shall not be deemed to have the knowledge and experience of a professional Client.

11. The Bank shall not apply the rules providing a higher degree of protection for the Client only

where, on the basis of its assessment of the experience, knowledge and skills of the Client, it can draw a reasoned conclusion that, in light of the nature of the transactions or services the Client intends to use or enter into, the Client is capable of making his own investment decisions and understanding the risks involved. When providing investment advice or portfolio management to a professional Client the Bank may assume that in respect of the products, transactions and services for which the Client is classified as professional it has the required experience and knowledge to understand the risks relating to the transaction or to the management of its portfolio. When providing investment advice to a professional Client who is considered such in respect of all investment services, investment activities and financial instruments, the Bank may assume that this Client has the financial ability to take all related risks consistent with its investment objectives. When providing to a professional Client services other than investment advice or portfolio management the Bank may assume that the professional Client has the required experience and knowledge to understand the risks related to the specific investment service, transaction or product for which the Client is classified as professional.

12. The assessment of the Bank under the previous item 11 of this Section may be conducted

in accordance with the terms and procedure for assessment of the persons who manage the activity of investment intermediaries, insurance companies or credit institutions in accordance with Community law. Where the Client under item 9 of this Section has no management body of its own, subject to assessment shall be the person who is authorized to enter into transactions on behalf of the legal person.

13. Where a Client of the Bank is defined as a professional Client in accordance with a

procedure and criteria analogous to those under section II of the appendix to the MiFIA, the rules under the previous items 8 – 12 shall not apply.

14. The Bank shall define its Clients as professional in accordance with written internal

procedures and policies. The Clients of the Bank defined as professional under items 8 – 14 of this Section shall notify the Bank of any change in the data that served as a ground for their defining as professional Clients.

15. In the cases where the Bank in the course of the activity performed by it establishes that a

Client defined as professional under items 8 - 14 of this Section no longer meets the conditions under item 1 of Section II of the appendix to the MiFIA, under which it has been defined as a professional Client, the Bank shall take the necessary measures for application of a higher degree of protection in respect of said Client in accordance with the internal procedures and policies referred to in item 14 of this Section.

16. The Bank may agree on a specific transaction (contract) with an eligible counterparty or

professional Client specific terms other than these General Terms, provided that this does not violate the legal provisions. In this case the agreed special terms will prevail.

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17. The information under Art. 9, paras. 1 and 3 of Ordinance No. 38 on the requirements to the activity of investment intermediaries may also be provided by the Bank verbally to eligible counterparties and professional Clients.

18. Where the Bank performs portfolio management, investment advice, undertakes issues of

financial instruments under the conditions of unconditional and irrevocable subscription/acquisition of financial instruments for own account, operation of a multilateral trading facility, its obligation to require information from its Clients about their financial ability, investment purposes, knowledge, experience and willingness to take risks does not apply to eligible counterparties and professional Clients which refuse in writing to provide such information.

19. Where eligible counterparties and professional Clients are Clients of the Bank and have

given their prior express written consent therefor, the Bank may purchase for its own account financial instruments for which such Clients have placed purchase orders and sell them to such Clients at a higher price than it purchased them.

20. In its activity the Bank may apply other simplified procedures where a Client is a specific

type of eligible counterparty or professional Client, provided that the applicable legislation expressly permits application of such rules.

21. Where the Bank has established long-term relations with Clients and has classified them as

professional Clients in accordance with criteria and in compliance with requirements equivalent to those provided for in the MiFIA, it may continue to treat such Clients as professional without applying the procedure laid down in these General Terms and in the MiFIA. In these cases the Bank shall notify said professional Clients of the requirements laid down in the MiFIA.

XIII. CONFLICTS OF INTEREST 1. Within the meaning of these General Terms a conflict of interest is a situation which arises

in regard to the provision of investment and/or ancillary services by the Bank and which may prejudice the interest of the Bank.

2. When establishing the types of conflicts of interests arising as a result of provision of

investment and/or ancillary services whose existence may prejudice the interest of a Client the Bank shall decide whether it, a person working under contract for it or a person related directly or indirectly to it through control falls within the scope of one of the following hypotheses:

а) is capable of realizing financial profit or avoiding financial loss at the expense of the Client;

b) has an interest in the result of the provided service to the Client or the transaction concluded on behalf of the Client, other than the interest of the Client in this result;

c) has a financial or other incentive to prefer the interest of the Client or a group of Clients to the interest of another Client;

d) performs the same activity as the Client;

e) receives or will receve from a person other than the Client benefits in regard to a service provided to the Client in the form of monetary funds, goods or services in violation of Chapter Two, Section VІІІ, item 1.10. of these General Terms or other than the standard fee or commission for such service.

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3. The Bank shall adopt effective procedures and measures for treatment of conflict of interests laid down in the rules under Art. 75 of Ordinance No. 38 on the requirements to investment intermediaries, whose content shall be in compliance with the effective legislation and best international practices.

CHAPTER THREE

TRANSACTIONS IN FINANCIAL INSTRUMENTS I. TYPES OF TRANSACTIONS 1. The rules set out in this Chapter shall apply to transactions (contracts) in financial instruments

specified in Chapter One, Section II of these General Terms. Other terms and conditions as well as the remuneration of the Bank for the investment services provided and investment activities performed as investment intermediary and the costs for the Client when they are not included in the remuneration shall be determined by a contract.

II. OBLIGATIONS OF THE BANK 1. The Bank shall fulfill its obligations orderly by means of intermediation, conclusion and

execution for the account of the Client of the transactions (contracts) in financial instruments assigned to it by the Client.

2. The Bank shall execute the orders of the Client in the best interest of the Client. The Bank has

fulfilled this obligation when it has used reasonable efforts to establish the best price for the Client, in accordance with the terms of the order, amount of costs, probability of execution, as well as all the other circumstances relating to the execution of the order. In the event of specific instructions by the Client the Bank shall execute the order following these instructions.

3. The Bank shall adopt, update and notify its Clients of its client order execution policy,

ensuring performance of the obligations under the previous item 2, as well as of any material changes in such policy. The Bank shall provide to its retail Clients within an appropriate time period before it starts providing investment services, including execution of orders on their behalf, the following information on the order execution policy:

а) description of the relative importance of the factors for execution under Art. 30 of the MiFIA, detemined by the Bank in accordance with the criteria under Art. 5, para. 1 of Ordinance No. 38 on the requirements to the activity of investment intermediaries or the method applied by the Bank to determine the relative importance of these factors;

b) a list of the execution venues on which the Bank relies most for achieving the best execution of the orders of Clients;

c) clear and express warning that all special instructions of the Client may prevent the Bank from taking necessary actions for achieving the best execution of orders of Clients in accordance with the order execution policy, for that part of the order to which the special instructions apply.

The listed information shall be provided to the Client on a durable medium. If the website of the Bank does not meet the requirements of a durable medium, the information may also be provided via the website if the conditions under Chapter Two, Section Three, item 21 of these General Terms obtain.

The client order execution policy shall include information about the venues of execution of client orders (type of financial instrument), advantages and disadvantages of individual execution venues (according to volume, price and execution costs) and about the venues on which the Bank can achieve best execution. Included in the execution policy shall be at

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least execution venues which allow the Bank to receive continuously the best possible results for the execution of its Client orders. The Bank may not execute orders on behalf of Clients if it has not obtained their prior consent to the Bank’s policy.

4. The Bank shall execute Client orders in accordance with the adopted execution policy and

shall inform promptly the Client of any changes in such policy. Where the order execution policy provides for the possibility that Client orders may be executed outside a regulated market or a multilateral trading facility, orders may be executed this way provided the Clients of the Bank have been informed in advance and have given their express consent therefor. At the request of a Client the Bank shall demonstrate that it has executed its orders in accordance with the announced policy.

5. The Bank shall monitor the effectiveness of implementation of the order execution policy

and, where appropriate, correct any deficiencies. The Bank shall assess, on a regular basis, whether the execution venues included in the order execution policy provide for the best possible execution of the order of the Client or whether it needs to make changes to its execution arrangements.

6. When the transaction is concluded and executed on a stock exchange or another regulated

market in financial instruments, the rules of the relevant stock exchange or regulated market shall also apply to it even if the contract between the Bank and the Client stipulates otherwise.

7. The Bank may not deviate from the placed order unless the deviation is in the apparent

interest of the Client. If the Bank concludes and executes the transaction under more favourable terms than those stipulated by the Client, the whole benefit shall belong to the Client. The Client may not withdraw from the transaction in respect of which the Bank has deviated from the order, if the Bank states that it will assume the unfavourable for the Client difference in the price.

8. The Bank shall conclude and execute the assigned transactions in financial instruments

itself. It may also assign this to another investment intermediary if it is authorized for this by the Client. The Bank shall notify immediately the Client of the replacement. When providing investment services under Art. 5, para. 2 of the MiFIA or ancillary services for the account of a third party by order of another investment intermediary the Bank shall have the right to receive the information about the third party collected by said investment intermediary. The investment intermediary on whose order the respective services are provided shall be responsible for the completeness and accuracy of the provided information.

9. In the hypothesis under the previous item 8 of this Section the Bank shall have the right to

receive and refer to the recommendations provided to a third party by the other investment intermediary in respect of the specific services. The investment intermediary on whose order the respective services are provided shall be responsible for the completeness and accuracy of the recommendations provided to the Client.

10. The Bank shall be responsible for the execution of the order on which a transaction is

concluded based on the information and recommendations received under the previous items 8 and 9 of this Section.

11. The Bank may not assign execution of investment and ancillary services on behalf of a Client to another investment intermediary as well execution of important operational functions to a third party if by doing so it will prevent the exercise of effective internal control or the ability of the Commission to exercise its supervisory functions. The cases in which the Bank may transfer important operational functions and execution of investment services on behalf of a Client to another investment intermediary shall be set out in an ordinance.

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12. The Bank shall execute additional instructions of the Client if they are placed not later than 24

hours before the conclusion of a transaction agreed between the Client and the Bank and their execution does not cause any damages to the Bank. If any of the above requirements does not exist, the Bank shall notify the Client within 24 hours of its refusal to execute the additional instructions.

13. The Bank shall refuse to accept an order placed by a Client if execution of the order would

violate imperative provisions of the applicable legislation or the operating rules of an organized market in financial instruments, of the Central Depository, of another depository institution or another government body. If, despite the explanations provided by the Bank in this regard, the Client confirms in writing its order, the Bank shall prepare a written refusal for execution of the order and shall send it to the Client not later than the close of the working day in which the order is placed, by advice of delivery or by other means certifying receipt. Apart from the above-mentioned cases, the Bank may refuse execution of an order on the grounds prescribed by law and these General Terms. The refusal shall be stated in writing, including sent by fax or e-mail. If the refusal is not valid and the Bank does not notify promptly the Client thereof, it shall owe indemnity for the damages caused by the refusal.

14. The Bank shall keep the financial instruments, money and other assets it has received or

acquired in regard to the assigned transaction separately from its portfolio of financial instruments and money, as well as from the financial instruments and money of its other Clients. The Bank shall open one or more sub-accounts of the Client to its account of dematerialised financial instruments with the Central Depository or another depository institution, if applicable. The documents (including those certifying rights over the financial instruments of the Client) and the other assets received from the Client shall be kept in suitable premises in the office of the Bank under conditions excluding unauthorized access by third parties. Money shall be kept on individual Bank accounts for cash of Clients.

IІІ. PORTFOLIO MANAGEMENT 1. When the Client has given a written consent for this in the specific contract with the Bank,

these General Terms shall also apply to management of portfolios of financial instruments and/or money, with the exception of portfolios of investment companies and pension funds. When managing a portfolio the Bank shall require from the Client or the potential Client the information under Chapter Two, Section Three, items 12 - 13 of these General Terms in order to assess whether the service is suitable for the Client under Chapter Three of Ordinance No. 38 on the requirements to the activity of investment intermediaries.

2. Under the contract for management of portfolios of financial instruments the Client shall

provide to the Bank money and/or financial instruments to be managed by the Bank at its discretion without receiving special orders from the Client, who shall confirm in advance every transaction performed by the Bank in accordance with the General Terms and the provisions of the specific contract.

3. The scope of management and specific transactions and actions which the Bank is authorized

to perform shall be stipulated in the specific contract. Standard operations for which the Client authorizes the Bank include placement of the money provided by the Client in financial instruments, exercise of the rights in the financial instruments, including collection of revenues, conversion of financial instruments from one type into another, disposal of financial instruments, unless agreed otherwise in the specific contract or where the investment objectives and strategy provide otherwise.

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4. The Bank shall form for the Client an individual portfolio of financial instruments which are

the subject of the contract for portfolio management, segregating it from its own portfolio and from the portfolios of the other Clients. The portfolio shall be a set of financial instruments whose main purpose is to gain economic benefit through sale and distribution.

5. The Bank shall keep the financial instruments of the Client’s portfolio on a batch opened with it

in the name of the Client in compliance with the relevant statutory requirements. 6. The money provided for management or acquired as a result of the management of money

shall be kept in a separate account with the Bank in the name of the Client or in a common bank account of the Bank in which only money of its Clients is kept, for which the Client shall give an express written consent. When performing management the Bank shall receive money of the Client only for effecting transactions in financial instruments and shall account separately the money of Clients on transactions in financial instruments.

7. Portfolio management may be carried out both in the name of the Client and in the name of

the Bank. In the first case the provisions of Chapter One, Section II, items 2 and 3 of these General Terms shall apply. Unless agreed otherwise, the Bank shall act in its name.

8. The Bank may not promise interest and other fixed positive income, nor promise an

unjustifiably high income from the management of the financial instruments under the circumstances.

9. The Bank may not enter into transactions with the money and assets provided to it for

management where the Client is not entitled to perform such transactions. 10. The provided money and assets shall be managed for the account and at the risk of the Client

and the Bank shall notify him thereof upon conclusion of the specific contract. 11. Where the Bank has concluded a contract for management of a portfolio of financial

instruments and/or money at its own discretion without an order of the Client, it shall submit to the Client reports and information under Chapter Three, Section VII of these General Terms.

12. Upon request, the Bank shall attach to the reports under the previous item 11 of this

Section copies of the documents it has signed, received and transmitted for the account of the Client as well as those certifying legal actions conducted on behalf of the Client.

13. The Bank shall notify the Client immediately in case of danger for damage of his interest. 14. The specific contract for portfolio management shall be entered into in writing and shall

contain: individualizing data about the persons concluding the contract, the capacity of the person representing the Bank, the date and place of conclusion and the General Terms effective at the time of conclusion if the contract is concluded in accordance with general terms, basic rights and obligations of the parties, specification of the information that the Bank must provide to the Client, other legally required information such as stating the fact that the risk is borne by the Client and the management of the portfolio is carried out on account of the Client, a clause that the Client is familiar with these General Terms, with the Tariff of the Bank, that the Client has received the information which the Bank is required to provide to the Client under the Markets in Financial Instruments Act, the Public Offering of Securities Act and the statutory instruments for their application, and that the Client is aware of the risks relating to investment in financial instruments. At the parties’ discretion, the contract may also contain information about the investment objectives and the

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limitations of investment activity, if any, the type of provided funds and financial instruments, the terms under which they may be transferred, the type of the funds and financial instruments and the terms under which they may be acquired by the Bank on behalf of the Client, the time limits and the manner of reporting and transfer of the rights and obligations from the Bank to the Client, etc.

15. The specific contract for portfolio management may contain also a description of the

methods of valuation of the financial instruments in the portfolio. Corporate securities shall be valued on the basis of their stock exchange value, according to the bulletin of the Bulgarian Stock Exchange – Sofia or another regulated market in financial instruments, or by taking into account the price that can be obtained from a sale of a specific investment on an active stock exchange market, and government securities shall be valued in accordance with the data provided in the bulletin of the Bulgarian National Bank at the close of every working day. The other financial instruments shall be valued in accordance with the applicable norms of the effective legislation and/or generally established in international practice standards of valuation.

16. When managing portfolios of financial instruments and/or money at its discretion, without

special instructions from the Client, the Bank shall use the services of an investment adviser who shall work under contract for the Bank.

IV. EXECUTION OF CLIENT ORDERS FOR CONCLUSION OF TRANSACTIONS IN

FINANCIAL INSTRUMENTS ON A REGULATED MARKET

1. The Bank shall conclude transactions in financial instruments on behalf of Clients, including management of portfolio of financial instruments and/or money on behalf of Clients, on the grounds of a concluded contract with them. When concluding a specific contract the Bank shall open simultaneously a sub-account for:

а) financial instruments of the Client;

b) money of the Client. 2. A copy of the identity document of the Client or his representative, certified by him and by a

person from the internal control department shall remain in the archives of the Bank. Certification shall be made in accordance with Art. 24, para. 5 of Ordinance No. 38 on the requirements to the activity of investment intermediaries. The Bank shall collect and store furthermore the documents certifying actions taken in pursuance of the Measures against Money Laundering Act and the Measures against Terrorist Financing Act.

3. Indicated in the contract under item 1 shall be the full name, the personal identification

number and/or other individualizing data of the persons concluding the contract, the capacity of the person representing the Bank, the date and place of conclusion and the General Terms effective at the time of conclusion, if any, basic rights and obligations of the parties, specification of the information that the Bank must provide to the Client.

4. The Bank shall open a sub-account to its account for dematerialised securities with the

Central Depository or with the relevant depository institution in compliance with the requirements in the rules and regulations of the Central Depository or of the relevant depository institution.

5. When in pursuance of the contract under item 1 the Client provides dematerialised

government securities, they shall be recorded in accordance with the legally prescribed procedure in the registers of the Bulgarian National Bank or a primary dealer of government

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securities respectively in the name of the Client or the Bank, in accordance with the agreement of the parties and the provisions of Ordinance No. 5 of 2002 on the terms and procedure for acquisition, redemption and trade in government securities.

6. The money of the Clients shall be kept on individual bank accounts opened in their name

and managed by the Bank by virtue of specific authorization.

7. Cash received from Clients shall be deposited to the relevant bank accounts under the previous item 6 not later than the close of the next working day.

8. The Bank shall not sign a contract with a Client who has failed to produce the required

documents or has produced irregular documents or documents containing apparently inaccurate, incomplete or contradictory data.

9. The Bank may not request registration with the Central Depository or another depository

institution of a transfer of dematerialised financial instruments from a personal account of the Client to a client sub-account with the Bank if the Client has not submitted a proper certification document of the financial instruments or if another circumstance exists which raises doubts about invalid legitimation or representative power.

10. The Bank shall store in its archives the certification documents under the previous item 9

and shall deliver them to the Central Depository or the relevant depository institution in accordance with a procedure laid down in the applicable legislation and in the rules and regulations of the Central Depository or of the relevant depository institution.

11. The Bank may not enter orders of a Client for execution on a regulated market in financial

instruments before it has opened a sub-account of the Client to its account for dematerialised financial instruments with the Central Depository or with the relevant depository institution, if the opening of such account is required in accordance with the Rules of the Central Depository or of the relevant depository institution.

12. For the purpose of effecting transactions in financial instruments the Clients of the Bank shall

place orders (requests) for execution of transactions in financial instruments. The minimum content of client orders, the document circulation, the procedure and manner of placing orders, including the possibility for using distance means of communication with Clients, are set out in Ordinance No. 38 on the requirements to the activity of investment intermediaries and in the applicable legislation. The Bank shall provide to the Client a signed copy of the received order. On receipt of the order the person who receives it shall complete a declaration that he has verified the identity of the Client or his representative respectively.

13. The Bank shall require from the Client to declare whether:

а) he holds inside information about the financial instruments included in the order and about their issuer, if the financial instruments for which the order refers or on the basis of which the financial instruments the subject of the order are traded on a regulated market;

b) the financial instruments subject of an order for sale or swap are blocked with the Central Depository or another depository institution;

c) the transaction which is the subject of the transaction represents hidden purchase or sale of financial instruments.

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14. The Bank shall check with the Central Depository or with the relevant depository institution whether the financial instruments for which the order for sale refers are available on the sub-account of a Client and whether a pledge is established or a lien is perfected.

15. Where the Client or his representative refuses to declare the circumstances under item 13

or declare under Art. 35, para. 1 of Ordinance No. 38 on the requirements to the activity of investment intermediaries that he holds inside information or declares that or it is established that the financial instruments which are the subject of an order for sale or swap are blocked with the Central Depository or with another depository institution or a pledge is established or a lien is levied on them or the Client declares that the transaction the subject of the order is the case of a hidden purchase or sale of financial instruments or the order does not meet the provisions of Art. 34 of Ordinance No. 38 on the requirements to the activity of investment intermediaries or the order is placed by a representative who has no representative power for carrying out disposal actions in financial instruments in the form prescribed under Art. 34, para. 3 of Ordinance No. 38 on the requirements to the activity of investment intermediaries or other imperative provisions of statutory instruments are not complied with, the Bank may not execute the order. In these cases the Bank shall draw up and submit to the Client a document for the refusal against signature.

16. The prohibition for order execution of pledged financial instruments shall not apply in the following cases:

а) the transferee is notified of the established pledge and has given his express consent to acquire the pledged financial instruments, there is an express consent of the pledge creditor where the Registered Pledges Act requires so.

b) залогът е учреден върху съвкупност по смисъла на Закона за особените залози. 17. The prohibition for order execution of sale of finanacial instruments which are not available

on a Client’s account shall not apply in the cases set out by an ordinance.

18. The Bank shall refuse to enter into a specific transaction or execute an order of a Client respectively, if this would result in a failure to fulfll its obligations relating to the measures against money laundering and terrorist financing and shall notify the relevant authorities thereof in accordance with the established procedure. Furthermore, the Bank shall refuse to execute the Client’s order where the latter fails to provide proper documents within seven days from receipt of a notification from the Bank that the documents provided are inconsistent or that the data contained therein are incorrect, incomplete or contradictory.

19. The Bank shall require from a Client who places an order for purchase of financial

instruments to deliver to it the money necessary for payment on the transaction which is the subject of the order upon placement of the order, unless the Client verifies that he will perform his obligation for payment within the normal period for settlement as well as in other cases set out in an ordinance. If the rules of the venue where the transaction will be entered into and the applicable legislation allow a transaction to be effected whereon payment of the financial instruments is not made simultaneously with their transfer, the Bank may not require payment from the buyer of the financial documents if there is an express written consent of the seller. This provision shall also apply in other transactions for transfer of financial instruments.

20. The Bank shall execute client orders under the following terms:

а) prompt and proper registration and distribution of orders for execution;

b) prompt execution of comparable client orders according to the time of their receipt unless the characteristics of the order or prevailing market conditions make this

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impossible or the interests of the Client require otherwise;

c) the Bank shall inform the retail Client of existing objective difficulties impeding the proper execution of the orders, immediately after becoming aware of them.

21. In the cases where the Bank has assumed an obligation to organize or monitor the settlement of an order executed by it on behalf of a client, it shall take the required actions to ensure that all client financial instruments or money received in the settlement are promptly and properly transferred to the accounts of the relevant Client.

22. In case a Client has placed a limit order relating to shares admitted to trading on a

regulated market which is not executed promptly in accordance with applicable market conditions, the Bank shall, unless the Client gives expressly other instructions, facilitate the earliest possible execution of the placed order by disclosing it publicly in a manner accessible to the other market participants. This obligation shall be considered fulfilled by the Bank upon transmission of the limit order to a regulated market and/or multilateral trading facility.

23. The Bank is not obligated to fulfill the obligation under item 22 of this Section if the size of

the order does not conform to the normal market volume provided that such a possibility is laid down expressly in an ordinance and in accordance with the conditions laid down in such an ordinance.

24. The Bank may execute an order of a Client or a transaction on its own account by

aggregating them with other client orders, provided that the following conditions are met:

а) the aggregation of the orders and transactions does not damage any of the Clients whose orders are aggregated;

b) the Bank has explained to every Client whose order is aggregated that the aggregation may be to the disadvantage of the Client regarding the specific order;

c) the Bank has adopted and applies effectively a policy of order segregation which contains sufficiently detailed, clear terms for fair segregation of aggregated orders and transactions, including specification of the way the volume and price of the orders determine their segregation and settlement of the cases of partial execution.

25. Where the Вank aggregates an order of a Client with one or more orders of other Clients

and the aggregated order is executed partially, it shall distribute related transactions resulting from the order execution in accordance with the policy on order segregation.

26. When aggregating a transaction on its account with one or more orders of Clients, the Bank

may not segregate the transactions in a manner which operates to the disadvantage of the Client.

27. The Bank shall apply a procedure for avoiding redestribution of transactions on its account

executed jointly with Client orders when this operates to the disadvantage of the Client. This procedure shall be part of the policy on order segregation under item 24, “c” of this Section.

28. In the cases where the Bank aggregates a Client order with a transaction on its account

and the aggregated order is executed partially, it shall distribute the transactions on account of the Client with priority. If the Bank can prove reasonably that without the aggregation it cannot execute the Client’s order under so favorable conditions for him or that it cannot execute it at all, the Bank may distribute the concluded transaction proportionally between itself and the Client in accordance with the policy under item 25 of this Section.

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V. SPECIAL REQUIREMENTS FOR CONCLUDING TRANSACTIONS OUTSIDE

REGULATED MARKETS IN FINANCIAL INSTRUMENTS

1. Where the Bank enters into transactions outside a stock exchange or another regulated market in financial instruments it shall observe the rules of trading on the relevant venues for execution of transactions and the provisions of the applicable legislation and shall provide to its Clients the information laid down by law.

2. The Bank may conclude transactions in financial instruments without relevant payment

subject to an express written consent of the transferor of financial instruments, provided that the rules of the execution venue where the transaction will be concluded allows conclusion of a transaction whereof payment of financial instruments is not made simultaneously with their transfer. This provision shall also apply to other transactions for transfer of financial instruments.

3. If in pursuance of a contract under Art. 24, para. 1 of Ordinance No. 38 on the requirements

to the activity of investment intermediaries the Client provides to the Bank physical securities, the contract shall stipulate the venue and manner of their safekeeping.

VI. ACTIVITY FOR SAFEGUARDING AND ADMINISTRATION OF FINANCIAL INSTRUMENTS. ACTING AS A REGISTRATION AGENT

1. The Bank shall carry out safeguarding and administration of financial instruments of Clients

(holding of financial instruments and money of Clients at a depository institution) and related services such as management of money received/collateral provided in accordance with these General Terms.

2. The Bank shall act as a registration agent when on the basis of a written contract with the

Client submits to the relevant depository institutions data and documents for registration of:

а) transactions in financial instruments concluded directly in advance between the parties;

b) transfer of dematerialized financial instruments upon donation and inheritance;

c) change of data about holders of dematerialized financial instruments, correction of wrong data, issue of transcripts of certification documents and other actions set out in the rules of the relevant depository institution and in these cases the persons or their representatives shall sign the required documents in the presence of a person under Art. 39, para 1 of Ordinance No. 38 on the requirements to the activity of investment intermediaries subject to verification of their identity.

3. A person from the internal control department of the Bank shall check whether the contract

under item 2 of this Section meets the requirements of MiFIA, the statutory instruments for its application and the internal acts of the Bank. In this case the person from the internal control department shall draw up a document by the end of the working day certifying the check.

4. The Bank shall keep in its archive a copy of the identity document of the persons or their

representatives, as the case may be, certified by them and by the person under Art. 39, para. 1 of Ordinance No. 38 on the requirements to the activity of investment intermediaries, who signs the contract for the Bank under the terms of Art. 24, para. 5 of the said Ordinance and in the cases of registration of transactions in financial instruments entered directly in advance between the parties, a declaration by the parties to the

45

transaction or their representatives, as the case may be, that they do not carry out and have not carried out transactions in financial instruments as a regular occupation or on a professional basis one year before the conclusion of the contract, as well as declarations under Art. 35, para. 1 of Ordinance No. 38 on the requirements to the activity of investment intermediaries.

5. The transferor and transferee of financial instruments in the cases referred to in Art. 56,

para 1 of Ordinance No. 38 on the requirements to the activity of investment intermediaries may be represented before the Bank, which acts as a registration agent, by persons expressly authorized by notary certified power of attorney in accordance with the provisions of Art. 25 of the said Ordinance.

6. When acting as a registration agent the Bank shall refuse to sign a contract with the Client

and accept documents for registration under item 2 of this Section if:

а) the required data and documents are missing, the documents provided contain apparent irregularities or the data contain inaccuracies and deficiencies;

b) a party to the transaction declares that it has inside information about the financial instruments relating to the transaction where they are traded on a regulated market or about their issuer;

c) a cirumstance exists which gives rise to a suspicion of irregular legitimation or representation;

d) the party to the transaction or its representative declares conduct of transactions in financial instruments in professional capacity in the cases of Art. 56, para 1 of Ordinance No. 38 on the requirements to the activity of investment intermediaries;

e) the party to the transaction or its representative declares that the transaction constitutes a hidden purchase or sale of financial instruments.

7. At the request of the seller and upon consent of the buyer in a purchase-sale of

dematerialized financial instruments under Art. 56, para 1 of Ordinance No. 38 on the requirements to the activity of investment intermediaries the amount comprising the selling price on the transaction shall be deposited with the Bank acting as a registration agent until the transaction is registered with the Central Depository. The Bank shall notify the parties to the transaction of this possibility.

8. The Bank shall disclose the information about the transactions under Art. 56, para 1, item 1

of Ordinance No. 38 on the requirements to the activity of investment intermediaries in accordance with the procedure for disclosure of transactions by the Bank set out in Regulation 1287/2006/EC.

9. The provisions of Chapters Two, Three and Four of Ordinance No. 38 on the requirements

to the activity of investment intermediaries shall not apply to the persons using only the registration agent services of the Bank.

VII. CURRENT AND PERIODIC INFORMATION TO CLIENTS 1. The Bank shall provide to its Client timely, accurate and complete information about the

investment services provided. The Bank must notify the Client of order execution and other acts performed by it in accordance with the terms of Chapter Four, Section IV of Ordinance No. 38 on the requirements to the activity of investment intermediaries.

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2. Where the Bank enters into a transaction on account of a retail Client other than a contract for individual portfolio management it shall send on a durable medium at first opportunity but not later than the first working day following the conclusion of the transaction a confirmation of the concluded transaction. If the confirmation is received by the Bank through a third party, the Client shall be notified not later than the first working day following the day in which the Bank received the confirmation of the third party.

3. The confirmation under item 2 of this Section shall contain part of the information described

below which is relevant to the specific transaction by applying table 1 of Appendix 1 of Regulation 1287/2006/EC:

а) identification of the Bank providing the information;

b) the name or another form of Client identification;

c) date and time of transaction conclusion;

d) type of the placed order;

e) content of the order (buy, sell etc.);

f) venue of order execution;

g) identification of financial instruments;

h) buy/sell indicator;

i) number;

j) unit price;

k) total value of the transaction;

l) total amount of commissios and expenses for the account of the Client and at Client request, breakdown of expenses;

m) obligations of the Client for the settlement of the transaction, including the deadline for payment or delivery and data about the account to which transfer shall be made where such details have not been communicated to the Client;

n) a notice that a counterparty to the transaction with the Client is the Bank, another person from the Bank group or another Client of the Bank, except for the cases where the order is executed through a trading system which allows anonymous trade.

4. In the event of partial order execution the Bank may provide to the Client information under

item 3, “i” of this Section about the price of every transaction or an average price; where an average price is provided the Bank shall provide, at the request of a retail Client, information about the price of every transaction.

5. The procedure under item 2 of this Section shall not apply if the confirmation contains the

same information as the information sent promptly to the Client by another person.

6. Where the transaction under item 2 of this Section is concluded on account of the retail Client the Bank shall provide to him promptly on a durable medium the essential information about the concluded transaction.

7. If no settlement is performed on the stipulated date or another change occurs in the

information contained in the confirmation, the Bank shall notify the Client in an appropriate manner by the close of the working day in which it became aware of the change.

8. At request, the Bank shall provide to the Client information about the status of the order and

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its execution. 9. The rules under items 2 and 6 of this Section shall not apply to orders of Clients relating to

bonds for financing mortgage loan agreements to which such Clients are a party if the confirmation of the transaction will be made simultaneously with the notification of the mortgage loan terms but not later than one month after the execution of the order.

10. The Bank may provide information under item 3 of this Section using standard codes,

provided that it provides to the Client explanations of the codes used. 11. Where a retail Client has placed orders relating to units or shares in collective investment

schemes which are executed periodically, the Bank shall take actions under item 2 of this Section or shall provide to the Client at least semi-annually the information under item 3 of this Section in relation to the above-mentioned transactions.

12. The Bank may provide to the Client through an electronic trading system the confirmation

under item 2 of this Section or the information under items 4 - 6 of this Section where the Client’s access to the electronic system and entry of client orders is effected through an electronic certificate issued in the name of the Client.

13. When managing a portfolio the Bank shall provide on a durable medium to every Client a

periodic report on the portfolio management activities carried out for the account of the Client unless such a report is provided to the Client by a third party. In respect of retail Clients the report shall contain the following information, where applicable:

а) name of the Bank;

b) name or another indication of the Client’s account;

c) data about the portfolio content and assessment, including detailed information about every financial instrument included in it, market price of every financial instrument or the fair price if the market price cannot be determined, the cash balance at the beginning and at the end of the reporting period as well as the activities relating to the portfolio management in the relevant period;

d) total amount of fees and charges paid in the reporting period specifying at least the total amount of the management fee and general costs for the execution; where applicable, it shall specify that a more detailed report on expenses will be provided at request;

e) comparison of the portfolio management activities in the reporting period against a benchmark, if any, specified by agreement between the parties;

f) total amount of dividends, interest and other payments received by the Bank relating to the management of the Client portfolio in the reporting period;

g) information about other corporate actions affording specific rights relating to the financial instruments in the portfolio;

h) the information under item 3 “c” – “k” of this Section shall be provided about any transaction concluded in the reporting period, if applicable; the requirement shall not apply when the Client has opted to receive notifications for every concluded transaction under item 16 of this Section.

14. The periodic report under item 13 of this Section shall be provided to the retail clients semi-

annually, unless:

а) the Client has requested to receive the report on a quarterly basis;

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b) in the cases under item 16 of this Section where the report is submitted once a year;

c) the contract between the parties provides for a leverage in the portfolio management and the report shall be provided at least once monthly.

15. The Bank shall notify expressly the retail Client of his right to request a periodic report on a

quarterly basis. The exception under item 14, “b” of this Section shall not apply to transactions in financial instruments under Art. 3, item 2, “c” – “i” and § 1, item 1, “c” of MiFIA.

16. The Client has the right to choose to receive a report on every concluded portfolio

management transaction after its conclusion. In these cases the Bank shall provide to the Client the essential information about the transactions on a durable medium immediately after their conclusion. Where the Client is a retail Client the Bank shall send him a confirmation of the transaction containing the information under item 3 of this Section not later than the first working day following the conclusion of the transaction and if the Bank has received the confirmation through a third party, not later than the first working day following the receipt of confirmation. The previous sentence three shall not apply if the confirmation contains the same information as that contained in the confirmation sent immediately to the Client by another person.

17. The Bank shall notify the Client on whose account it manages a portfolio of existing

uncovered open positions on contingency transactions.

18. Where the Bank effects transactions relating to portfolio management on the account of a retail Client or keeps accounts for such Clients that include uncovered positions on transactions or transfers contingent on future conditional events, it shall notify the retail Client when the losses exceed the thresholds agreed in advance with the Client. The notification shall be made not later than the close of the working day in which such thresholds have been exceeded and when this is a non-working day, by the close of the next working day.

19. The Bank shall notify the Client under the terms and procedure set out in a contract where an obligation arises for the Client for disclosure of a holding under Art. 145 of the Public Offering of Securities Act as a result of concluded transactions in financial instruments on his behalf, including management of individual portfolio of financial instruments and/or money.

20. When holding money and financial instruments of a Client the Bank shall provide to him on

a durable medium at least once a year a report with the following content, unless the content of this report is not included in another periodic report to the Client:

а) data about the financial instruments or money held by the Bank on behalf of the Client at the end of the reporting period;

b) the amount to which Client financial instruments or money have been subject of a transaction of securities financing;

c) the amount of dividends and other payments received by the Client as a result of a transaction for securities financing as well as the basis of their determination.

The requirement under this item shall not apply to client deposits. 21. If one or more transactions in the Client’s portfolio are concluded but the settlement is not

completed yet, the information under item 20 of this Section may be specified as of the date

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of transaction conclusion or settlement date and the selected approach shall apply to the provision of information about all such transactions in the report under item 20 of this Section.

22. The Bank shall furthermore report to the Client in all other cases set out in the MiFIA, the

Public Offering of Securities Act, statutory instruments for their application and applicable legislation, including in the relevant reports and in the information provided data about all mandatory circumstances set out in a statutory instrument.

23. The Bank must provide access to the Client for conducting checks without impeding the

Bank’s operability. 24. If the Bank acts on behalf of the Client, the rights and obligations on the transaction shall

arise directly in the legal domain of the Client upon the conclusion of the transaction. 25. Where the Bank acts on its own behalf and on account of the Client, the rights and

obligations under the transaction shall be generated directly in the legal domain of the Client after their transfer by the Bank in accordance with the procedure set out by law and the specific contract. The rights in registered shares shall be transferred by endorsment in force for the joint-stock company upon its entry into the Book of Registered Shareholders. Bearer securities shall be transferred upon their delivery. Issuance and disposal of dematerialized financial instruments shall be effective following their registration with the Central Depository or another statutory register in accordance with the procedure and terms set out in the Public Offering of Securities Act and the other statutory instruments. Money shall be transferred to the Client’s bank account. In these cases the Bank shall report to the Client on the transactions and the transfer of the rights in favour of the Client under the terms and procedure set out in this Section and in the specific contract. The rights shall be transferred to the Client within 7 days from the date of their acquisition by the Bank, unless the transfer of rights requires action on the part of government institutions and/or third parties and/or cooperation of the Client and observance of the time limit is impossible due to action or omission of said government institutions and/or third parties and/or non-cooperation of the Client for which the Bank shall not be responsible. In the latter case, the Bank shall use reasonable efforts and shall, within the stipulated 7-day time limit, undertake the necessary action so as to request the government institutions and/or third parties and/or the Client to transfer the rights to the benefit of the Client as prescribed by law.

VІІІ. RIGHTS AND OBLIGATIONS OF THE CLIENT 1. The Client shall be entitled to demand accurate fulfillment of the obligations of the Bank,

providing it with the necessary assistance, including by giving clear, complete and accurate instructions in writing on the specific transactions in financial instruments during the working hours of the Bank, by submitting regular documents and valid securities to the Bank, etc. The Client shall be responsible for the validity of the financial instruments and documents submitted to the Bank. The parties to the specific transaction (contract) shall agree on the terms and conditions for replacement of irregular financial instruments and documents.

2. The instructions under the foregoing paragraph shall be given in writing, including via

SWIFT, encrypted telex or telefax messages. They shall specify the type and quantity of financial instruments, the issuer, the minimum and maximum price of the transaction and other details as prescribed by law. Where the Bank uses an electronic system for entry of orders for sale or purchase of financial instruments placed by Clients as approved by a regulated market, the Bank may conclude contracts with Clients for the placement of orders

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through the said electronic system. The electronic system and the procedure for the Client’s access to it shall meet the requirements set out in the applicable legislation.

3. The Client shall be entitled to withdraw his instructions. The withdrawal shall be made in

writing not later than 24 hours prior to the deadline for execution of the order. Where an order of a Client for registration of a transfer of financial instruments is sent to the electronic system for trade in financial instruments, he may not withdraw his order after the deadline stipulated in the operational rules of said system.

4. The Client shall not be entitled to place orders with regard to financial instruments,

compensatory instruments or investment vouchers, for which he holds insider information, or with regard to financial instruments, compensatory instruments or investment vouchers blocked with the Central Depository or with another depository institution, or to place orders with regard to transactions constituting cases of hidden purchase or sale of financial instruments, compensatory instruments or investment vouchers.

5. The Client shall provide the Bank with the money needed for payment on the transaction

relating to the order on placement of the order, unless he certifies that he will fulfill his obligation for payment within the period of normal settlement as well as in the cases laid down in an ordinance.

6. Where the Client places the orders for the conclusion of transactions in financial

instruments through a representative, the representative shall produce power of attorney given in writing and the signature of the Client attested by the notary public or with the signature of the Client given in the presence of an authorised officer of the Bank, specifying the representative powers to undertake actions for the management or disposal of financial instruments, as well as an affidavit that the representative does not engage in transactions in financial instruments by occupation and has not engaged in such transactions for a period of one year prior to the date of signing the contract.

7. The Client or his representative shall declare in writing all circumstances set out in these

General Terms, the MiFIA, the Public Offering of Securities Act, Ordinance No. 38 on the requirements to the activity of investment intermediaries and applicable legislation.

CHAPTER FOUR REMUNERATION AND COSTS

I. REMUNERATION 1. The Client shall pay the Bank remuneration for each order concluded and executed on a

specific transaction under the terms and conditions agreed therein. 2. Where the amount of the remuneration has not been agreed upon, the remuneration

specified in the Tariff of the Bank under item 3 of this Section shall be paid. 3. The Bank shall announce in its Tariff its standard commission fee by type of investment

services and activities provided, as well as the type and amount of costs for Clients, where the latter are not included in the remuneration. The Tariff shall be displayed at a visible and accessible place on the premises where the Bank operates with clients.

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4. Where the Bank undertakes to be personally liable for the fulfillment of the obligations under the concluded transaction, it shall be entitled to a separate remuneration to be agreed in writing.

5. The Bank shall be entitled to remuneration for the amounts it has collected for the Client,

which shall be agreed separately. 6. In the case of intermediation, the Bank shall be entitled to remuneration from both parties to

the transaction. 7. The remuneration shall be paid within three days of the carrying out of the transaction,

unless the parties agree otherwise. 8. Any payment on the basis of clearing shall be deemed effected as of the time of crediting

the Bank's bank account. 9. The Bank's remuneration and the costs for the Client, where the latter are not included in

the remuneration, shell be laid down in the contract with the Client. II. COSTS, INTEREST AND DAMAGES 1. The Client shall provide the Bank, upon request, with the funds needed for the carrying out

of the transaction or activity and pay the costs, together with the interest and damages incurred in connection with the carrying out of the transaction or activity, provided that the latter amounts have not been included in the agreed remuneration.

CHAPTER FIVE RISK, FORCE MAJEURE AND LIABILITY

I. RISK AND FORCE MAJEURE 1. The risk of force majeure in the carrying out of the specific transaction (contract) and order

shall be borne by the Client. Where the fulfilment of the Bank's obligations becomes impossible in whole or in part, the Client shall pay the Bank the costs incurred by it and remuneration in proportion to the work done.

II. LIABILITY 1. Where the Bank assigns the order or operation to another investment intermediary, without

being entitled to be replaced, the Bank shall be liable for the actions of the replacement like for its own actions.

2. Where the Bank assigns the order or operation to another investment intermediary, while

being entitled to be replaced, the Bank shall be responsible for the completeness and accuracy of the information about the Client provided to its replacement and for the correctness of the recommendations made by it to the Client.

3. In case of full culpable non-performance under a specific contract, the defaulting party shall

pay a penalty of 20 percent of the value of the non-performed obligation, unless agreed otherwise.

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4. In case of delayed performance under a specific contract, the defaulting party shall pay a

penalty of 1 percent for each day of delay but not more than 20 percent of the value of the non-performed obligation, unless agreed otherwise.

5. The Bank and the natural persons, who are managers of the Bank, as well as its

employees, shall be liable under the terms and conditions laid down in the MiFIA and the Public Offering of Securities Act for any breach of law in the conclusion and carrying out of transactions in financial instruments.

6. The Bank shall not be responsible for delayed settlement of a transaction in financial

instruments for a reason for which the counterparty to the transaction or the Bank’s Client himself is responsible.

7. The Client shall pay or refund to the Bank any penalty or default payment made by it, imposed

by an organized market in financial instruments, by the Central Depository or another depository institution in relation to delayed settlement of transactions in financial instruments or actions relating to administration or safekeeping of financial instruments for reasons for which the Client is responsible. The Client shall be liable to the Bank for any direct and indirect damages caused to the Bank as well as for damaging its reputation as a result of non-performance of contractual obligations.

CHAPTER SIX AMENDMENTS AND SUPPLEMENTS TO, REPLACEMENT AND

TERMINATION OF THE GENERAL TERMS AND SPECIFIC TRANSACTIONS (CONTRACTS)

1. Any amendment and supplement to, or replacement of these General Terms and the Tariff

of the Bank shall be effective for the Client under an existing contract, if they have been duly communicated to him, including via e-mail or on the website of the Bank, and the Client has not objected in writing within the stipulated reasonable time limit depending on the circumstances.

2. Any amendment and supplement to, or replacement of these General Terms shall be

effective only upon the prior approval of the Deputy Chairman of the Commission in charge of the Investment Supervision Department issued as prescribed by law.

3. The specific transactions (contracts) may be terminated by mutual consent or by either

party by sending a one-month notice in writing. 4. The Client may withdraw a transaction or authorization respectively on a specific

transaction in financial instruments not later than 24 hours prior to its carrying out. Notwithstanding this, the provision of Chapter Three, Section VІІІ, item 3, sentence two of these General Terms shall apply as well.

5. The Bank may reject in writing (including through SWIFT, encrypted telex or telefax

message) an order placed not later than 24 hours prior to its fulfilment. The Bank shall be entitled to reject an order placed, where the Client fails to provide the necessary assistance to the Bank, including the cases of failure to provide clear, complete and accurate instructions on the specific transactions in financial instruments or failure to provide the Bank with regular documents and valid securities and others. Where the refusal is ill-

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grounded and the Bank fails to communicate it to the Client in due course, the Bank shall pay damages as a result of its refusal.

6. Where a specific transaction (contract) is terminated, each party shall report to the other

one and deliver everything received in connection with the contract within seven days. 7. Neither party may assign its rights under a specific transaction (contract) to a third party

without the consent of the other party given in writing.

CHAPTER SEVEN SUBSIDIARY APPLICATION OF THE GENERAL TERMS FOR

ANCILLARY SERVICES UNDER ART. 5, PARA. 3 OF THE MARKETS IN FINANCIAL INSTRUMENTS ACT

1. These General Terms shall have subsidiary application also to the written contracts concluded between the Bank and its Clients, where the subject-matter is one or more of the ancillary services set out in Art. 5, para. 3 of the MiFIA.

2. The Bank may give investment advice, conduct investment research, financial analyses of

financial instruments or other forms of general recommendations relating to transactions in financial instruments with regard to financial instruments only upon the request of the Client to get such advice. The Bank shall provide the Client with the complete information the latter needs to have, while acting with the due diligence of a bona fide professional consultant. When submitting analyses and forecasts, the Bank shall attach reasons thereof. The Bank shall be liable for any damage caused to the Client through its fault in direct causal link to the provision of untrue, inaccurate and/or incomplete data, analyses and forecasts in the specific investment advice. The Bank may engage in investment advice within the meaning of § 1, item 2 of the MiFIA or manage portfolios of financial instruments at its own discretion without any special instructions by the Client only where it has concluded a contract with an investment consultant. When providing investment advice the Bank shall require from the Client or the potential Client the information under Chapter Two, Section Three, items 12 - 13 of these General Terms in order to assess the Client’s suitability for the respective service in accordance with Chapter Three of Ordinance No. 38 on the requirements to the activity of investment intermediaries.

3. While applying the requirements under the foregoing paragraph, the Bank may also give

advice and perform analyses of companies with regard to the financing of their operations, their capital structure, industrial strategy and related issues, as well as advice and services in connection with mergers and take-over of enterprises.

4. The Bank may prepare prospectuses for the public offering of securities in pursuance of the

Public Offering of Securities Act and related secondary legislation. The prospectuses shall contain the statutory information about issuers, the securities offered and any other necessary information as prescribed by law. In the cases set out in the existing laws, the Bank shall make the necessary adjustments and amendments to the prospectuses and inform the bodies and persons mentioned in the law accordingly. The Bank shall be liable under the Public Offering of Securities Act for any damage caused by the provision of untrue, misleading and/or incomplete data in the prospectuses.

5. The Bank may engage in activities for holding and administration of financial instruments on

behalf of clients, including custody (holding of client financial instruments and money with a

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depository institution) and related services such as management of money received/collateral provided in accordance with the provisions of Chapter Three, Section VІ of these General Terms.

6. The Bank may provide its Clients also cash for the purchase of securities under terms and

procedures laid down in an ordinance. 7. The Bank may provide investment services in relation to the underlying asset of derivative

financial instruments under Art. 3, item 2, “d”, “e”, “f” and “i” of the MiFIA insofar as they are related to the provision of services within the subject of activity of the Bank under Art. 5, paras. 2 and 3 of MiFIA.

CHAPTER EIGHT FINAL PROVISIONS

I. NOTICES 1. All notices shall be communicated between the parties in writing to the addresses of the

Client and the Bank specified in the specific contract. They shall be deemed given in writing also when communicated by mail, SWIFT, encrypted telex or telefax message, by e-mail, on the website of the Bank or by any other means agreed with the Client. Oral notices shall be confirmed in writing. This notification procedure shall apply where Ordinance No. 38 on the requirements to the activity of investment intermediaries and/or the existing laws do not provide for any special procedure to communicate information. Where such a special procedure to communicate information has been provided for, the notices shall be communicated between the parties in strict compliance with the relevant provisions. Any notices communicated in deviation from the prescribed form, manner and procedure and/or not sent to the address specified by the Client shall be invalid.

II. SETTLEMENT OF DISPUTES 1. The parties shall seek to settle any disputes arising between them by mutual consent. In

case of a dispute the Bank shall discuss with the Client the nature of the dispute not later than 3 working days after occurrence of the dispute. During the discussion of the dispute the Bank shall provide to the Client all documents relating to the dispute and all the available information on the case. Where necessary, the Bank shall ensure the presence of persons with expertise in the relevant field who shall provide the Client with necessary explanations. In case of the Client’s disagreement with the explanations provided to him, the latter may refer the case to the Financial Supervision Commission. Notwithstanding this, the parties may exercise all statutory rights to safeguard their legal interests.

2. Failing to reach agreement, the dispute shall be settled by the competent court in Sofia,

Republic of Bulgaria. III. GOVERNING LAW 1. The existing legislation in the Republic of Bulgaria shall apply to all cases that have not been

laid down in these General Terms.

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IV. ADOPTION 1. These General Terms were adopted on 10 July 2000 and amended and supplemented on

23 October 2000, 18 December 2000, 16 July 2001, 10 January 2004, 5 March 2004, 17 April 2007 and 1 October 2007 by the Managing Directors of ING Bank N.V., Sofia Branch.

The last version of the General Terms shall enter into force and shall apply upon entry into force of the MiFIA and Ordinance No. 38 on the requirements to the activity of investment intermediaries, subject to its approval under the statutory procedure by the Deputy Chairman of the Financial Supervision Commission.