PASHA_BANK_ANNUAL REPORT 2022

73 PASHA Bank 2022 Annual Report General Information Information on Management and Corporate Governance Principles Financial Information and Risk Management Review It is decided to submit the Corporate Governance Compliance Report – which has to be prepared as per Resolution of the Capital Markets Board dated 10.01.2019 and numbered 2/49 and as required by Corporate Governance Communiqué II-17.1 – via the Public Disclosure Platform (“PDP”), by using the templates of the Corporate Governance Compliance Reporting (“CRF”) and of the Corporate Governance Information Form (“CGIF”). The said templates as well as the explanations made according to Corporate Governance Communiqué II-17.1’s Article 8 with the heading “Corporate Governance Principles Compliance Report” are presented below. CRF templates are used in order to report the compliance status with the voluntary principles, CGIF templates are used to inform about the corporate governance practices, and the related forms are announced to the public at least three weeks before the General Assembly Meeting on the PDP. The information in the CRF and CGIF templates announced at PDP have been assessed by the Corporate Governance Committee, Audit Committee and accepted by the resolution of the Board of Directors. The Corporate Governance Compliance Report was prepared as annexed in accordance with the formats determined by the Capital Markets Board’s decision. The fields indicated by (X) represent the Bank’s compliance status, and necessary explanations have been made for the implementations other than yes. With the awareness of the importance of corporate governance practices as well as financial performance, PASHA Bank improves its internal practices to establish an effective, adequate and consistent corporate structure with regard to the “Bylaw on the Corporate Governance Principles for Banks” issued by the Banking Regulation and Supervision Agency (“BRSA”). On the other hand, it has been working voluntarily to ensure maximum compliance with the Corporate Governance Principles contained in the attachment to the “Corporate Governance Communiqué” no. II-17.1 that was published by the Capital Markets Board (“CMB”), and continues to strengthen corporate governance mechanisms in this endeavor. PASHA Bank believes that the existence of independent members in the Board of Directors as part of the Corporate Governance Principles will contribute to the development and strengthening of the Bank’s activities, and the establishment of a more professional management approach. Two members at the Board of Directors possess the qualities of independent Board members. PASHA Bank’s determination to implement corporate governance principles, and its willingness to manage this process dynamically and continuously, were confirmed in 2022 by an independent rating agency and JCR Eurasia Rating has revised PASHA Bank’s overall compliance score with CMB Corporate Governance Principles upwards to (9.24) along with a (Stable) outlook. The discrepancies arising between the CMB’s Corporate Governance Principles and the practices by the Bank were included in the report under the relevant subject headings. In 2022, PASHA Bank adhered compliance to the “Corporate Governance Principles” published by the CMB with the exception of certain principles provided below that were not required to be implemented. There is no conflict of interest stemming from the matters outlined below that were not implemented. As required by the Corporate Governance Communique numbered II-17.1, article 11 and clause 2, “The manager of the investor relations department that possesses the necessary CMB licenses mentioned in the Communiqué has not been placed as a member of the Corporate Governance Committee. With respect to the principle numbered 1.5.2.; Minority rights have not been recognized by the Articles of Association for those who hold less than one-twentieth of the capital. With respect to the principle numbered 2.1.2; information about the real persons who own more than 5% of the issued capital is not published on the corporate web page. With respect to the principle numbered 3.3.1.; there is no official succession plan for the key posts. However, activities to develop an official succession plan for the key posts has continued throughout 2022 within the scope of an action plan regarding enhancement of the corporate governance processes before the controlling shareholder and the approach for succession planning of the Board and Committees’ members and chairpersons was approved by the Group ExCo. With respect to the principle numbered 3.3.8.; there is no union organization among the Bank’s employees and the Bank does not have an action plan for such arrangement in this regards. With respect to the principle numbered 4.2.8.; The limit of the directors’ and officers’ liability insurance does not exceed 25% of the paid-up capital of the Bank, and no explanation has been made in this regard at the PDP. Statement of Compliance with Corporate Governance Principles