BOARD OF DIRECTORS JSC

1. BOARD OF DIRECTORSJSC

2. Challenges to the decision mechanism ofjointstockcorporations Board of directors Board of directors may be constituted solelyby one member (Art. m. 359/1 TCC). Legal persons may acquire the statute of aboard member (Art. m. 359/2 TCC). The requirement to be shareholder is nomore a must for the board members.

3. Delegation of powers TCC enacts a detailedlegal regime for the delegation of managementpowers to CEO’s and directors. As usual, thenewregimeclassifiesmanagementpowersas the administrative powers and power ofrepresentation (Art. 367 TCC). In the eventthat the power of representation shall beimposed on a sole person, this person shall bea board member (Art. 370/2 TCC). Contrarily,administrative powers may be delegated to aperson, who is not a member at the board (Art.367/1 TCC). As a consequence of this, all themembers of the board may function as nonexecutivemembers.

4. For the delegation of management powers, anevident regulation in the statute is necessary.In case of delegation, the board of directors isobligated to release a directive of organizationto enforce a management regime for thecorporation, which includes the powers of eachadministrative subject as well as the hierarchicalstructure between the board of directors andCEO’s and other management bodies.

5. Theobligation to release such a directive is in line withthe evolution of Modern Company Law throughcorporate governance principles. Through thesemechanisms, it is possible to achieve a moreeffective liability regime. On the other hand, inthe light of the principle of transparency, it willbe more evident for third parties, through whichmanagement mechanisms the corporation willadvance to achieve its own purposes.

6. Even in case that all the members of the boardshall function as non-executive directors; TCCunderlines the need for an efficient corporationamong the management units. The statute isthe exact instrument to achieve this functionalcooperation. Due to the management structure,TCC enables the monist as well as the dualiststructure. In other words, the managementstructure may solely consist of the board ofdirectors as well as of the board of directors andthesupervision board.

7. EXECUTIVE DIRECTOR-NON EXECUTIVE DIRECTORINDEPENDENT DIRECTOR/OUTSIDE DIRECTOR IndependentDirector is a member of BDswho does not have a material or pecuniary relationship with company or related persons, except sitting fees. Independent Directors do not own shares in the company.

8. Independentdirectorscannot; Be a recentemployee, Have a recentmaterialbusinessrelationshipwiththecompany, Haveclosefamilyties, Haveexecutivepowers.

9. LEGISLATION Decision of Council of Ministries: OG 23/01/2013, Nu.28537 DECISION OF COUNCIL OF MINISTRIES ON COMPANIES DEPEND ON INDEPENDENT AUDIT Decision of Council of Ministries, Institution of PublicSupervision, AccountandAuditStandards OG 12.March, 2013, Nu.28585 PROCEDURE AND FUNDAMENTALS RELATED TO STATUTORY DECREE ON COMPANIES DEPEND ON INDEPENDENT AUDIT

10. Responsibilities of independentdirectorsunderthe CMB Law Dutiesarisingfromcorporategovernancecommittees, Duty of stayingindependent Duty of protectingthebenefits of alltheshareholderswithoutmakinganydiscrimination at times of relatedpartytransactionsandsignificanttransactions, Duty of allocatingnecessary time Duty of objectiveanalysisandreview.

11. Committees Remuneration Risk management Auditing Corporategovernance Nomination

12. Duties of members of BOs Personallyperformingduties (proxiesare not permitted) (TCC, Art.375) Duty of care (TCC, Art.369) Duty of loyalty (TCC, Art.369-395) Duty of confidentiality (insidertrading) (TCC, Art.363) Duty of non-compete (TCC, Art.396) Duty of non-borrowing (TCC. Art.380-395)

13. SpecificLiabilities of Directors underthe TCC Incompliance of thecompanyDocumentsandStatementswiththeLaw (TCC, Art.549) FalseStatementsregardingtheShareCapitalandAwareness of PaymentDeficiency (TCC, Art.550) Corruption in Evaluation of Value (TCC, Art.551) General Liability (TCC, Art.553).»Intheeventthefounders, board members, managersandofficialliquidatorsbreachtheirobligationsarisingout of thelawandthearticles of associationbybeing at fault, theywill be responsibleforthedamagescausedtothecompany, shareholdersandcompanycreditors.»

14. Conditions of Liability: A breach of an obligationorduty, Being at fault, and Theexistence of a damage. Who can holdliable: Shareholders CMB Creditors

15. Quorums Art. 330 of the current TCC refersto meeting and decision quorums of board ofdirectors. As a consequence of the insufficientwording of this article, the practice has faceddifficulties in determining whether a valid decisionis formed in certain cases. The new formulation ofthe new TCC has a very definite and clear wordingand underlines the principle of majority (Art. 390 TCC).

16. Invalidity of BOD decisions ThecurrentTCC does not include any articles referring the validityof board of director’s decisions. The jurisprudencehas evolved a theory of invalidity, based on thegeneral principles of Civil Law. Regarding thisfact, TCC adopts to enact a specific article forthe invalidity of these decisions.

17. Inthisrespect, decisions invading the principle of equality,conflicting with the essential character of thecorporation, invading the fundamental rights ofthe shareholders or further invading the definiteallocation of powers between the generalassembly and the board of directors shall bedeemed invalid (Art. 391 TCC).

18. Online BOD meetings Due to the modern needsof business, TCC enables online meetings of boardof directors (Art. 1527 TCC).

19. Information Technology Services Jointstockcompanies and LLCs shall arrange a web site andinform its stakeholders through this web site.It is the board of director’s liability to arrangeand conduct this web site and to renew itscontent continuously. Every joint stock companyand limited liability company shall announce itsaudited statement of accounts in its web site. The corporate web site shall bear comprehensiveinformationforitsstakeholders. Benefitingfrominformation technologies will help the corporationto review and reflect his own corporategovernanceperformance.

20. Division of powers between BOD andgeneral assembly Confusion of authorities between the generalassembly and board of directors threatensthe efficient performance of the governancemechanisms. In order to prevent such confusion, TCC advances to enumerate certain powersof the general assembly and of the board ofdirectors and to determine the mutual position ofbothdecisionmechanisms.

21. Accordingtotheseregulations, Absolute and inalienable powers of the board ofdirectors have been enumerated in Article 375 TCC. Similarly, absolute and inalienable powers ofthe general assembly have been enumerated inArticle 408 TCC and in some other articles. For decisions which are not within the absolutearea of each organ, the statute may appointthe competent organ. In the absence of such aregulation, the board of directors is competenttoresolvethematter.

22. D&O ınsurance

23. General assembly :A shareholder-orientedperspective Articles 407-451 TCC, which are regulatingthe legal regime for the general assembly andobviously preserving the essence of TCC, evaluateshareholder’s rights much more as a centralpoint. In TCC, shareholder is not considered as anobligatory body for the existence of the corporationbut it is evaluated as a “conditio sine qua non” forthe effective conduction of the corporation. Thisnew characteristics of the mentioned rules may beobserved in the following mechanisms.

24. Representation of the management in the general assembly CEO’s, at least one memberof the board of directors and the independentauditor appointed for the inspection of a certaintransaction such as mergers shall participate in thegeneral assembly (Art.407 / 2 TCC). This regulationis oriented to enable an efficient coordinationamong several units of the corporation and to servefor a better information service to shareholders.

25. By-Laws The board of directors shall arrangeby-laws referring the mechanisms and theconduction of general assembly and registerthese by-laws with the commercial registry ( Art.419/2 TCC). The preparation of by-laws as acomplementing source in addition to the statute ofthe corporation will serve to the establishment of atransparent and efficient corporate organization.

26. Quorums in respect with the statutory amendments (Art. 421 TCC). a. As of the statutory amendments, TCC differsbetween listed companies and private (unlisted)joint stock companies. In listed companies,decisionssuch as capitalaugmentation, particularly the augmentation of the authorizedshare capital and the transformation of thecompany shall be formed with usual quorums (Art. 418 TCC).

27. b. Statutory amendments which impose secondaryobligations or the obligation to cover thebalance losses on shareholders may be solelyformed with unanimity (decision quorum).

28. c. The amendment of the subject of the company,the creation of preference stocks, restrictionsreferring the transfer of the shares shall bedecided and resolved with the votes of theshares amounting to 75 % of the whole capital (decisionquorum).

29. d. All other sorts of statute amendments shall bedecided on a basis of 50 % of the whole capital (decisionquorum). e. Contrarily to TCC, in the event that the statuteamendment shall not be decided at the firstgeneral assembly, the quorums at the secondassembly are the same as the ones at the first general assembly.

30. Representation of the shareholder in the general assembly For achieving a more efficientparticipation, TCC appraises a comprehensiveregulation for the representation of theshareholder at the general assembly. In thiscontext, the representatives are classified as corporaterepresentative, independentrepresentative and institutional representative (Art. 427 TCC). Besidesefficientparticipation, therulesin respect with representation of the shareholdersequivalently aim to draw the framework of the representatives.

31. Law No. 2499 CAPITAL MARKET LAW Capital Market Law No. 2499 published in the Official Gazette number 17416 on July 30, 1981. Article 3 – Certain terms used in this Law are defined as follows: b) “Capital Market Instruments” : Securities and Other Capital Market Instruments. “Securities” : Negotiable instruments which, represent a share or participation in the property of theissuer or an obligation of the issuer, represent a specified quantity of money, are of a series of instruments of thesame nature, have the same wording, are dealt in as a medium for investment, are fungible, earn periodic incomeand have the terms and conditions determined by the Board. “Other Capital Market Instruments” :Instruments which are not Securities and which have terms andconditions determined by the Board, excluding cash, checks, bills of exchange, promissory notes and certificates of deposit.

32. Article 13- Issuance of Debentures and other Debt Instruments Article 13/A- Mortgage Covered Bonds Article 13/B- Asset Covered Bonds Article 14- ConvertibleBonds Article 14/A- NonvotingShares Article 15- Principles concerning the Distribution of Dividends and Bonus Shares

33. 6362 numbered CAPITAL MARKET ACT The New Capital Markets Law has been published in the Official Gazzette on 30 December 2012.

34. HYPOTHECARY CAPITAL MARKET INSTRUMENT Art.3 (i) İpotekli sermaye piyasası aracı: İpotek teminatlı menkul kıymetler, ipoteğe dayalı menkul kıymetler, ipotek finansmanı kuruluşları tarafından ihraç edilen pay dışındaki sermaye piyasası araçları ve konut finansmanından kaynaklanan alacaklara dayalı olarak veya bu alacakların teminatı altında ihraç edilen diğer sermaye piyasası araçlarını MortgageCoveredBonds (Art.13/A, 2499)

35. SECURITIES Art.3 (o) Menkul kıymetler: Para, çek, poliçe ve bono hariç olmak üzere; 1) Paylar, pay benzeri diğer kıymetler ile söz konusu paylara ilişkin depo sertifikalarını, 2) Borçlanma araçları veya menkul kıymetleştirilmiş varlık ve gelirlere dayalı borçlanma araçları ile söz konusu kıymetlere ilişkin depo sertifikalarını,

36. CAPITAL MARKET INSTRUMENTS Art.3 (ş) Sermaye piyasası araçları: Menkul kıymetler ve türev araçlar ile yatırım sözleşmeleri de dâhil olmak üzere Kurulca bu kapsamda olduğu belirlenen diğer sermaye piyasası araçlarını Capital market ınstrumentscover; - Securities, - OtherCapital Market Instruments; derivativeinstruments-investmentcontracts…

37. Art.3 (u) Türev araçlar: Aşağıda sayılan veya Kurulca bu kapsamda olduğu belirlenen diğer türev araçları: 1) Menkul kıymetleri satın alma veya satma veya birbirleri ile değiştirme hakkı veren türev araçları, 2) Değeri, bir menkul kıymet fiyatına veya getirisine; bir döviz fiyatına veya fiyat değişikliğine; faiz oranına veya orandaki değişikliğe; bir kıymetli maden veya kıymetli taş fiyatına veya fiyat değişikliğine; bir mal fiyatına veya fiyat değişikliğine; Kurulca uygun görülen kurumlarca yayınlanan istatistiklere veya bunlardaki değişikliğe; kredi riski transferi sağlayan, enerji fiyatları ve iklim değişkenleri gibi ölçüm değerleri olan ve bu sayılanlardan oluşturulan bir endeks seviyesine veya seviyedeki değişikliğe bağlı olan türev araçları, bu araçların türevlerini ve sayılan dayanak varlıkları birbirleri ile değiştirme hakkı veren türevleri,

38. CAPITAL MARKETS INSTRUMENTS http://www.cmb.gov.tr/regulations/regulations_index.html CommonStocks Bonds : Refers to debt certificates of equal face value and bearing the same expression, issued by corporations with the purpose of borrowing, ParticipatedDividendShares Profit andLossSharingCertificates AssetBackedSecurities Real EstateCertificates ForeignCapital Market Instruments İTMK House FinancingFundsand IDMK AssetCoveredBonds

39. IjoraCertificates Warrants

40. ShareCertificates Article 484 of the New TCC governs about share certificates. This article reaffirms the basic principle set forth in Article 409 of the TCC, which allows share certificates to be issued either as registered or bearer share certificates. However, the New TCC has coined a new wording with regards to the term of share certificate, and opted to use the term “share certificate” instead of “stock certificate”.

41. Pursuant to Article 484/2 of the New TCC, bearer share certificates may not be issued for the shares fully unpaid shares. The bearer share certificates, which have been issued contrarily to this rule are void, on the other hand, compensation rights of bona fide persons are reserved.

42. CONVERSION Pursuant to Article 485 of the New TCC, unless stated otherwise in the articles of association, the type of a share certificate maybe modified by means of conversion. The relevant article brings clarification to the issue, which had been left obscure to understand by the TCC, and states that the conversion may only be realized by amendment to the articles of association. Moreover, the relevant article regulates that, in the event that the conversion is a legal requirement the board of directors’ resolution is an essential condition for the execution of conversion transaction, and it shall be reflected to the articles of association at a later stage.

43. Pursuant to Article 486 of the New TCC regulating the principles pertaining to the printing of share certificates, similarly to Article 412 of the TCC, share certificates printed prior to the incorporation of the company are void, however, obligations resulting from the undertakings of subscription remain valid. Additionally, those who print share certificates prior to incorporation are required to compensate the damages resulting therefrom. The second and third paragraphs of Article 486 of the New TCC contain new provisions that were not included in the TCC. Accordingly, for bearer certificates, the board of directors shall, within three months following the payment in full of the share price, print the share certificates and deliver them to shareholders. With the said provision, a printing requirement with regards to bearer share certificates has been adopted. The board of directors’ resolution pertaining to printing the bearer share certificates shall be registered and announced, and published in the web site of the company. Moreover, the relevant article regulates that interim certificates may be issued until the issuance of original share certificates and shall be subject to the same the provisions as registered share certificates..

44. Pursuant to Article 486/3 of the New TCC, upon request of minority shareholders, registered share certificates shall be printed and delivered to shareholders. This provision is one of the innovations brought by the New TCC. With the statutory printing requirement of registered share certificates, inconsistent share ledger problems that may arise from not updated ledger records, are staved off. A very unbecoming practice, especially in closely-held joint stock companies, that unprinted share certificates may cause considerable obstacles of proving shareholding status. In the justification of the New TCC, it is stated that in case of infringement of the said article, shareholders are endowed to initiate a lawsuit. By this way, shareholders may benefit from an efficient statutory protection.Articles in the New TCC concerning the rules for the form of share certificates, reaffirm the relevant articles in TCC about the worn-out or defaced share certificates.

45. Transfer of ShareCertificates Pursuant to Article 489 of the New TCC, the basic principle concerning the transfer of ownership of bearer share certificates is that the transfer of the share is only valid with regards to the company and third persons by the transfer of possession of the share. While the relevant disposition is identical with Article 415 of the TCC, the term “delivery” was used instead of the term “transfer of possession” in the TCC. The New TCC preferred the latter term in order to describe the concept more clearly.

46. Pursuant to Article 490 of the New TCC governs the transfer of registered share certificates, and states that the transfer of share is realized with the convey of possession of the registered and endorsed share certificate. This article clarifies that the transfer of possession of the endorsed share certificate is a requirement for completion of legally binding transfer transaction. With this article, confusions about the statutory transfer requirement for the endorsed share certificate are prevented.

47. DividendRight Certificates Provisions concerning dividend right certificates are set forth in Articles 502 and 503 of the New TCC. Pursuant to Article 502 of the New TCC, the general assembly may, in accordance with the articles of association or by amending the articles of association, decide on the issuance of dividend right certificates in favor of the shareholders whose shares have been extinguished by legal provisions, creditors or persons related to the company. In the relevant article, the basic principle laid down under Article 402 of the TCC is repeated. However, unlike the TCC, the New TCC regulates that the dividend right certificates may be issued as payable to bearer or payable to order of specified person.

48. RIGHTS Article 503 of the New TCC contains dispositions similar to Article 403 of the TCC. Pursuant to the said article, holders of dividend right certificates cannot be granted with shareholding rights; however, they may be granted with other rights; to participate to net profit, to the remaining amount after liquidation, to acquire newly issued shares.

49. Debt Instruments and Securities Containing Right to Purchase and Exchange Article 504 and following articles of the New TCC regulate debt instruments and securities containing right to purchase and exchange which were not regulated under the TCC.Upon the exercise of the right to purchase or right to exchange of the holders of the said rights, the company’s capital increases in proportion to these rights. The capital increase upon the exercise of the right to purchase or right to exchange occurs automatically, without further operation. Right to purchase and right to exchange are creative positive rights. Therefore, the relevant declaration generates its consequences once it is received by the other party, it cannot be revoked and it cannot be bound to a specific condition.

50. Pursuant to Article 504 of the New TCC, debt instruments - bills of exchange and commercial bills, securities- containing right to purchase and right to exchange and every kind of securities may be issued upon the resolution of general assembly, unless stated otherwise by legal provisions. Article 504 of the New TCC makes reference to Article 421/3 and 421/4 with regards to the resolution of general assembly to be adopted. Pursuant to the said provisions, these resolutions should be adopted by the votes of shareholders holding at least seventy five percent of the capital or their representatives. In the event that this quorum is not reached in the first general assembly meeting, the same quorum should be obtained for the following meetings. However, a provision on the contrary may be embodied to the articles of association (New TCC Article 504). Pursuant to the justification of the articles of the New TCC, it is possible to increase or decrease the quorum provided by the relevant article.