Banking Supervision Authority: Board of Directors

Bank of Israel Banking Supervision Fax: 02-6552596 Tel: 02-6552414/458 Jerusalem 91007, P.O.B. 780 25 December 2013 2 Tevet 5774 Circular No. 06-2405

To: Banking Corporations and Credit Card Companies

Subject: Board of Directors (Banking Supervision Ordinance (No. 301))

Introduction

1. The Banking Supervision Ordinance regarding the "Board of Directors" (hereinafter: the Ordinance) was updated in December 2010. The entry into force of the amendment to Section 31(3) (regarding parallel service in banking corporations) was deferred as part of the formulation of joint policy with the Capital Market, Insurance and Savings Authority regarding capital market institutions. On 5.5.13, a joint notice was published by the Supervisor of Banks and the Supervisor of the Capital Market, Insurance and Savings Authority on the principles of the formulated policy. Accordingly, the need arose to anchor this in the Ordinance, as detailed in the policy.

2. In addition, in light of legislative amendments and accumulated experience in implementing the Ordinance since the aforementioned amendment, the need arose to apply additional amendments specified in this circular. After consultation with the Advisory Committee on Banking Matters, and with the approval of the Governor, I have decided to update the Ordinance as specified below:

Amendments to the Ordinance 3. (Application) Section 2 of the Ordinance (the application of the Ordinance to certain provisions was expanded) the Supervisor's power to exempt or modify. Accordingly, the power of the Supervisor to grant relief in specific cases regarding a director or a banking corporation in the Ordinance was retained, based on individual considerations.

4. (Definitions) Section 3 of the Ordinance (the definition of "banking corporation" was expanded) so that the Ordinance applies also to credit card companies and payment system operators, whose regulation was done in the framework of legislative amendments, and in light of their importance and the shared services they provide in the payment system of the economy.

5. (Approval of Office Holders) Section 4 of the Ordinance (reference to Section 27 of Circular No. 06-2355 dated 31.12.12 was cancelled due to the cancellation of Section 31.12.12): (a) was deleted and is no longer relevant; (b) was deleted; (c) (amendment arising from the need to update questions regarding positions) was updated to be current.

6. (External Directors) Section 24 of the Ordinance: (1) (addition of paragraph (a) to the clarification) that a banking corporation may appoint external directors also from among non-directors, provided they meet the eligibility requirements according to the Companies Law; (2) (addition of paragraph (d) to the Supervisor's power to bring to the order of a banking corporation) if the general assembly of shareholders rejects the proposal of a shareholder to terminate the tenure of an external director, the Supervisor may, in accordance with the Companies Law, order the termination of the tenure of the external director; (3) (in the existing version of the Ordinance regarding the Supervisor's power to terminate) the tenure of an external director who is not an external director according to the Companies Law (in paragraphs (b) and (d)) was amended, as these paragraphs were also amended.

7. (Chairman of the Board) Section 28 of the Ordinance: (1) (addition of paragraph (g)) that the Chairman of the Board may also serve a close relative of a controlling shareholder; (2) (restriction in paragraph (d) that the Chairman of the Board shall not serve as an external director) was limited so that it applies only to banking corporations with a controlling core.

8. (Conflict of Interest Matters) Section 31 of the Ordinance (amendment to paragraph (b)(31)) regarding parallel service in capital market institutions (as defined in the amended section) as an office holder, in accordance with the principles of the joint policy formulated by the Supervisor of Banks and the Supervisor of the Capital Market, Insurance and Savings Authority. The schematic description of the restriction specified below:

Banking Corporation	Financial Institution
Large	Small
Large	X
Small not Large	V
Small	V

In addition, additional restrictions on parallel service apply, as specified in the amended section:

Comments on the section: (1) For the purpose of examining the realization of the restriction on parallel service as stated in Section 31(b)(3), one must examine the classification of each institution as "large" (over 10 billion NIS in AUM) or "small" (up to 2 billion NIS in AUM). For this purpose, the total assets under management must be included (AUM) through hand or control over other financial institutions. (2) The section establishes that parallel service is permitted if one of the conditions is met: the director may continue to serve until 6 months from the date of the parallel service or until the completion of three years, regarding an external director.

9. (Composition and Methods of Work of Board Committees) Section 34 of the Ordinance (amendment to paragraph (a)) regarding the composition of board committees: however, the board committees shall not be less than 3 members and shall not exceed half of the directors. The relief was now established that in a banking corporation where the number of board members does not exceed 11, the committee members shall not exceed half of the directors, rounded up. The section was further amended in accordance with the amendment to Section 28, that the Chairman of the Board shall not serve on the board committees, nor a close relative or controlling shareholder.

10. (Composition and Methods of Work - Audit Committee) Section 35 of the Ordinance: (1) (amendment to paragraph (a)) was amended by Circular No. 06-2313 dated 6.11.2011, which allows the tenure of an audit committee director employed by a controlling banking entity in a banking corporation. The additional amendment restricts the relief only to the case where the controlling banking entity is a private company that is solely controlled by the banking corporation. (2) (amendment to paragraph (e)) was amended regarding the obligation to hold meetings with the responsible party, subject to no dependency on the entity regarding the prohibition of money laundering.

11. (Quorum and Voting) Section 43 of the Ordinance (amendment to paragraph (a)) regarding the quorum: establishes that in the case of a committee composed of three, the quorum shall not be less than three members, provided that all members are directors.

12. (Proxy) Section 48 of the Ordinance (in addition to the prohibition established, the appointment of a proxy to serve as a director was prohibited) a director may participate in the meetings of the Board, including its committees. However, his participation shall not be as a member of the Board or a committee. This matter was already clarified in the file "Questions and Answers for the Implementation of the Ordinance" dated 28.4.2013, Question 4: The Chairman of the Board shall not be a proxy in the meetings of the Board committees. The Audit Committee shall not approve financial reports in the absence of the Chairman of the Board, and the decisions of the committee shall be taken in person.

13. (Conflict of Interest - Sectoral Matters) Section 55 of the Ordinance (amendment to paragraph (b)) regarding the existence of doubt: the establishment of the quantitative tests defined in the section. The committee's role is to examine whether the director's connection to the sector should be classified as such. It was also established that the committee should consider whether the quantitative tests are not met, and to take a conservative stance in classifying such connections as such. We further clarify that within the framework of determining the Board's policy on conflict of interest matters, the Board has the option to determine and expand additional cases beyond the Ordinance, to classify sectoral matters as conflicts.

14. (Questionnaire for Candidate for Office Holder in a Banking Corporation) The questionnaire for the candidate for office holder in a banking corporation was expanded in order to specify. In addition, the questionnaire was adapted to the extent possible to provide the banking corporation and the director with the required information. The questionnaire does not need to be expanded to include a candidate for tenure as a director in a banking corporation without a controlling core. The candidate is exempt from specifying any information that may be relevant for the examination of his candidacy, unless explicitly asked.

Commencement of Provisions Except as stated below, the commencement of this circular is from the date of its publication:

1. Section 31(b)(3) of the Ordinance (amendment to paragraph (1)) applies also to directors serving at the time of the entry into force of this amendment. Together with this, in the case where one of the conditions listed above prohibiting parallel service is met, the director may continue to serve until 6 months from the date of the change or until the completion of three years, regarding an external director. This provision applies immediately to directors appointed after the amendment.

2. The prohibition on the Chairman of the Board serving as a close relative or controlling shareholder (Section 34(a)(2)) enters into force six months from the publication date of this circular.

3. The amendment to the section restricting the relief previously granted (Section 35(a)(3)) applies only to the case where the controlling banking entity is a private company solely controlled by the banking corporation (as stated above). It enters into force six months from the publication date of this circular.

Update of the File Attached are pages of updates to the Banking Supervision Ordinance:

Page to Insert	Page to Remove
301-1-51 (19) [12/13]	301-1-43 (18) [11/13]

Respectfully, David Zuckerman Supervisor of Banks

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Board of Directors

Chapter A: General

301-3 Introduction .1 301-3 Application .2 301-3 Definitions .3 301-4 Approval of Office Holders .4

Chapter B: Functions and Powers of the Board of Directors

301-5 Functions of the Board of Directors .5 301-5 Subjects the Board of Directors Must Discuss and Decide .6 301-7 Deleted .7 301-7 Business Status of the Banking Corporation .8 301-8 Exceptional Events .9 301-8 Supervision and Control Mechanisms over Controlled Corporations .10 301-9 Audit and Control Functions .11 301-9 General Manager .12 301-9 Senior Management .13 301-9 Deleted .14 301-9 Code of Ethics .15 301-10 Conflicts of Interest .16 301-10 Activities Lacking Transparency .17 301-10 Frequency of Discussions .18 301-11 Approval of Follow-up and Implementation Means .19 301-11 Meetings Without the Presence of the Corporation's Management .20 301-11 Delegation of Powers to Board Committees .21

Chapter C: Composition of the Board of Directors

301-13 Number of Directors .22 301-13 Employees of the Banking Corporation as Directors .23 301-13 External Directors .24 301-14 Banking Experience and Financial and Accounting Expertise .25 301-14 Place of Meeting of Directors .26 301-14 Deleted .27

Chapter D: Chairman of the Board of Directors

301-15 Chairman of the Board of Directors .28 301-15 Non-Resident Chairman of the Board of Directors .29

Chapter E: Eligibility to Serve as a Director

301-16 Director Eligibility .30 301-16 Conflict of Interest Matters .31 301-18 Other Occupations .32

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Chapter F: Board of Directors Committees

301-19 Mandatory Committees .33 301-19 Composition and Methods of Work of Board Committees .34 301-19 Composition and Methods of Work - Audit Committee .35 301-20 Functions - Audit Committee .36 301-22 Transactions with Related Persons Committee .37 301-22 Composition and Methods of Work - Remuneration Committee .38 301-22 Functions - Remuneration Committee .A38 301-24 Risk Management Committee .39

Chapter G: Board of Directors Meetings

301-25 Frequency of Meetings .40 301-25 Attendance at Board of Directors Meetings .41 301-25 Notifications and Background Material for Meetings .42 301-26 Quorum and Voting .43 301-26 Agenda .44 301-26 Minutes .45 301-26 Participation of the Internal Auditor in Meetings .46 301-26 Determination of Additional Work Procedures .47 301-27 Proxy and Observer .48 301-27 Holding Meetings via Communication .49 301-27 Decision Making Without Assembly .50

Chapter H: Practices for Effective Functioning of the Board of Directors

301-28 Requirements from Directors .51 301-28 Right of Directors to Receive Information .52 301-28 Professional Assistance to the Board of Directors .53 301-29 Right of Signature .54 301-29 Sectoral Conflicts of Interest .55 301-30 Personal Conflicts of Interest .56 301-30 Connection with Employees of the Banking Corporation Outside Meetings .57 301-31 Professional and Expert Guidance .58 301-31 Evaluation of Board of Directors Work Effectiveness .59

Chapter I: Reporting to the Supervisor of Banks

301-32 Frequency of Reporting .60 301-32 Annual Reporting .61 301-32 Reporting on Non-Routine Events .62 301-33 Manner of Reporting .63

Chapter J: Miscellaneous

301-34 Incorporation Documents .64

Annex A: Questionnaire for Candidate for Office Holder in a Banking Corporation Annex B: Declaration of Office Holder When Updating Details Annex C: Capital Market Institutions

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Board of Directors

Chapter A: General

Introduction

1. (a) Effective corporate governance is a vital component of the proper and safe functioning of a banking corporation. Given the importance of their role, and to achieve the preservation of public confidence in the banking system, and due to the sensitivity of banking corporations to economic difficulties and the resulting challenges to corporate governance, the importance of efficient and proper corporate governance as part of the proper management and operation of the corporation at a high level by the Board of Directors has increased. Accordingly, provisions were established regarding its composition, functions, and methods of operation, in order for the Board of Directors to constitute the minimum required rules for proper management of the banking corporation.

(b) It is clarified herein, to remove doubt, that these provisions supplement the Companies Law, 5759 – 1999.

Application 2. These provisions shall apply to all banking corporations, as defined in the Ordinance. The Supervisor may determine that certain provisions shall apply to a specific banking corporation or to a specific director, or that a specific provision shall be exempted or modified in exceptional cases regarding a specific banking corporation or director, if satisfied that the circumstances justify this.

Definitions 3. "Companies Law" - the Companies Law, 5759 – 1999. "Internal Auditor" - the internal auditor of the banking corporation as defined in Section 14 of the Ordinance. "General Manager" - the holder of a single senior managerial position in the banking corporation, who shall be; "Office Holder" - as defined in the Companies Law, unless otherwise stated in these provisions. "Ordinance" - the Banking Ordinance, 1941. "Auditor" - the auditor of the banking corporation as defined in Section 302 of the Banking Supervision Ordinance and in the Ordinance No. 302. "Banking Corporation" - as defined in the Banking (Licensing) Law, 5741 – 1981, including but not limited to a banking corporation as defined in Section 36 of the Banking (Licensing) Law, 5741 – 1981, and a credit card company. "Controlled Corporation" - a corporation under the control of the banking corporation.

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Approval of Office Holders 4. (a) A person may not serve as an office holder in a corporation, pursuant to Sections 11A1 and 15B of the Ordinance, unless notice was given to the Supervisor at least sixty days prior to the commencement of the tenure. The notice shall be accompanied by a questionnaire to be filled out by the candidate (attached to Annex A), which the banking corporation shall attach to the notice. The Supervisor may amend and update the questionnaire from time to time.

(b) It is clarified herein, to remove doubt, that for the purpose of the requirement to give prior notice to the Supervisor as required by the Ordinance (paragraph (a) above), the following cases shall also be considered as appointment to the position: (1) Re-appointment to the same position or extension of tenure; (2) Appointment to a different office holder position; (3) Appointment of a director as Chairman of the Board. The banking corporation shall attach to the notice a list of changes, if any, in the details previously submitted, along with a declaration filled out by the candidate, in the same format as the questionnaire appearing in the banking corporation and the candidate's declaration.

(c) The banking corporation shall notify the Supervisor, through the office holder, of any changes or events regarding the office holder, as mentioned in Sections 4, 5, 6, and 7.10 of Annex A, from time to time. The Supervisor shall consider and decide whether to order the termination of the tenure of the office holder pursuant to Section 11A of the Ordinance; the banking corporation shall also attach to the notice a declaration in the format specified in Annex B.

(d) For the purpose of this section, "Office Holder" is as defined in Section 11A of the Ordinance.

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Chapter B: Functions and Powers of the Board of Directors

Functions of the Board of Directors 5. The Board of Directors shall bear responsibility for the business and financial soundness of the banking corporation. To fulfill its functions in accordance with the law and these provisions, the Board of Directors shall: (a) Outline the strategy of the banking corporation, including its risk strategy, and approve the risk appetite and policies that shall guide the banking corporation in its routine activities; (b) Supervise the actions of the management for consistency with the Board of Directors' policies; (c) Ensure the existence of clear areas of accountability and reporting; (d) Outline an organizational culture in the banking corporation requiring the implementation of high standards of professional conduct and integrity; (e) Ensure that the banking corporation operates in compliance with the law and regulation.

Subjects the Board of Directors Must Discuss and Decide 6. The Board of Directors shall discuss, decide, and approve guidelines and determine, in accordance with the matter: (a) The overall strategy, including the overall strategy of the banking corporation and its controlled corporations, including its subsidiaries, and the overall risk strategy, including the fundamental lines of action, and the overall risk appetite; (b) The framework for risk management, including the approval of the policy for the manner and scope of risk management for all controlled corporations, including the various risks of the banking corporation (credit risks, market risks, operational risks, liquidity risks, and risks of subsidiaries and branches abroad, etc.), as specified in Section 15 of the Banking Supervision Ordinance No. 310. The Board of Directors of the controlled corporation shall take into consideration the overall strategy of the group, as determined by the Board of Directors of the controlling banking corporation, to the extent that it aligns with the best interests of the controlled corporation and with the provision of Section 11 of the Companies Law; (1b) The approval of the policy for the examination and prior approval of new products, as specified in Section 15 of the Banking Supervision Ordinance No. 310; (c) The credit policy of the banking corporation, as specified in Ordinance No. 311; (d) The information technology policy of the banking corporation, as specified in Ordinance No. 357; (e) The process for assessing capital adequacy against the level of risk exposure, including the capital policy, and the changes thereto; (f) The adaptation and approval of the banking corporation's policies and the closeness of the implementation goals in the coming year, and the work in accordance with these goals; (g) The overall budget of the banking corporation (income and expenses, including investments), and its implementation follow-up; (h) Reports on the business status of the banking corporation, as specified in Section 8; (i) Material deviations from the limits established within the policy determined by the Board of Directors; (j) Discussion of the types of exceptional events that the Board of Directors should discuss, in accordance with the circumstances specified in Section 9; (k) Supervision and control mechanisms over controlled corporations, as specified in Section 10; (l) The work of the audit and control functions, as specified in Section 11; (m) Audit reports as stated in Section 36(a)(2), which the Supervisor requested to be discussed in the plenary session, including the actions to be taken in response to them, and the treatment of the audit report by the banking corporation until its conclusion; (n) The approval of the annual and quarterly reports of the banking corporation to the public; (o) Messages from the Auditor: (1) Notification regarding the correction of deficiencies, as specified in Section 3 of the Banking Supervision Ordinance No. 304; (2) Notification regarding doubts about the continuation of the banking corporation as a going concern, as specified in Section 6 of the Banking Supervision Ordinance No. 302; (p) Appointment of the General Manager, and the assessment of his performance and termination, as specified in Section 12; (q) The policy for the appointment and assessment of the performance of the senior management, as specified in Section 13; (r) The policy for the rotation and transfer of certain positions in the banking corporation, as specified in Ordinance No. 360; (s) The remuneration policy (as defined in the Banking Supervision Ordinance No. 301A), after considering the recommendations of the Remuneration Committee; (t) The contracting of the banking corporation with office holders (as defined) for their remuneration, after the approval of the Remuneration Committee and, when required, the approval of the General Assembly, the Internal Auditor, and the recommendation of the Audit Committee; (u) The principles of remuneration agreements for employees of the banking corporation who are not office holders, after considering the recommendations of the Remuneration Committee;

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(v) The issuance of shares, including value and option derivatives (both in Israel and abroad), except for the issuance of another corporation under the control of a controlled corporation, or the issuance of the parent corporation, or the issuance by the banking corporation itself or to the controlled corporation under its control; (w) Material changes in the control structure of the banking corporation over the controlled corporation, and the material activity of the controlled corporation; (x) The implementation of fixed investments and their realization, including investment in a controlled corporation, whether its domicile is in Israel or abroad, according to criteria determined by the Board of Directors, provided that the investment amount shall be one, and the criteria shall be determined in a manner that avoids the Board of Directors' involvement in the daily management of the banking corporation's activities; (y) The code of ethics of the banking corporation, as specified in Section 15; (z) The policy for preventing conflicts of interest and controls regarding them, as specified in Sections 16 and 312; (aa) The policy for "activities lacking transparency", as specified in Section 17; (ab) Any other matter of significant importance to the supervision or control of the banking corporation's activities or its management.

Deleted .7

Business Status of the Banking Corporation 8. The Board of Directors shall discuss the business status of the banking corporation, pursuant to Section 6(h), and the reports shall be submitted in writing and their format shall be determined by the Board of Directors. The reports shall include, at a minimum, the following details: (a) Monthly report: (1) Summary of profit and loss statement and balance sheet, including income, financial profits, and operating expenses and commissions; (2) The extent of the banking corporation's exposure to risks by type; (3) The treatment of debts with collection difficulties of material amounts; (4) Major changes in the status of controlled corporations and their material investments and fixed assets; (5) Material transactions or deviations from the banking corporation's business, in the opinion of the General Manager, in addition to the rules determined by the Board of Directors on this matter ("Nostro" account, banking activities in the capital market); (b) Quarterly report - in addition to the topics specified in the monthly report (paragraph (a)), the quarterly report shall include: (1) Major changes in assets and liabilities; (2) Quarterly information on provisions for credit losses, as required in Annex Y; (3) The quarterly risk document, as specified in Section 310 of the Banking Supervision Ordinance No. 310.

Exceptional Events 9. The Board of Directors shall discuss exceptional events, pursuant to Section 6(j): (a) Discuss any event included in a list of exceptional events to be determined in advance, including violations of the law or apparent violations of the proper banking procedure, and harm to purity, provided that any exceptional event that constitutes a suspicion of a criminal offense shall be immediately transferred to a criminal offense, and any exceptional event that constitutes a suspicion of embezzlement, according to the Internal Auditor, shall be reported to the Internal Auditor and to the Supervisor pursuant to Section 148 of the Ordinance, and to determine pursuant to Section 148 of the Ordinance; (b) Discuss immediately any event deviating from the routine activities of the banking corporation that may have a material impact on the business of the banking corporation, even if it is not included in the list mentioned in paragraph (a).

Supervision and Control Mechanisms over Controlled Corporations 10. The Board of Directors shall discuss the supervision and control mechanisms over controlled corporations, pursuant to Section 6(k): (a) Establish guidelines for the corporate governance structure of controlled corporations that contribute to effective supervision, and establish supervision and control mechanisms over controlled corporations that shall include, at a minimum: (1) Guidelines ensuring that controlled corporations transfer the required information to the banking corporation, and maintain ongoing monitoring of the group's business and risks at the group level, subject to all laws; (2) Guidelines for the establishment of a central unit to analyze and report the information, including a summary of the information and its recommendations, and to approve the reporting format; (3) Guidelines ensuring that the Internal Auditor receives all the required information and documents, and to establish procedures for the existence of internal audit, in the opinion of the Internal Auditor, including work plans for controlled corporations where he does not serve as Internal Auditor, reports on exceptional events in controlled corporations, internal auditors of these corporations, and all required information and material from their management members or employees, subject to all laws; (b) The Board of Directors of the controlled corporation shall take into consideration the overall guidelines of the group, as determined by the Board of Directors of the controlling banking corporation, to the extent that it aligns with the best interests of the controlled corporation and with the provision of Section 11 of the Companies Law.

Audit and Control Functions 11. The Board of Directors shall discuss the work of the audit and control functions, pursuant to Section 6(l), and ensure the efficient use of the audit and control functions, providing adequate and independent verification and testing of the banking corporation's operations and executions, and in particular: (a) Ensure the independence of the audit and control functions; (b) Ensure the competence of the audit and control functions; (c) Ensure the efficient treatment of the management's findings of the audit and control functions.

General Manager 12. The Board of Directors shall discuss the appointment of the General Manager, pursuant to Section 6(p): (a) Appoint one General Manager to the banking corporation; (b) Define in detail the manner of work, duties, and responsibilities of the General Manager to the Board of Directors; (c) Impose on the General Manager the obligation to report to the Board of Directors on an ongoing basis on his actions, including the reports specified in Section 8.

Senior Management 13. The Board of Directors shall discuss the policy for the appointment and assessment of the performance of the senior management, pursuant to Section 6(q): (a) Approve the appointment of management members by the General Manager, to determine the appointments; approve additional senior positions; (b) Hold discussions on the termination of work in the circumstances of the central and control audit functions; (c) Determine criteria and threshold conditions ensuring that the candidates for senior positions possess appropriate and suitable qualifications for the management of the banking corporation's affairs; (d) Ensure that the banking corporation has a proper and adequate plan for the existence of suitable managerial succession.

Deleted .14

Code of Ethics 15. The Board of Directors shall discuss the Code of Ethics, pursuant to Section 6(aa): (a) Establish a Code of Ethics that defines values and high standards of professional conduct, and shall address issues such as business corruption, fair and non-unethical behavior towards customers, and privacy; (b) Ensure steps are taken to disseminate and implement the standards mentioned in paragraph (a) throughout the banking corporation; (c) Ensure the existence of mechanisms encouraging reporting of illegal or unethical acts, while providing adequate protection to complainants against negative consequences.

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Conflicts of Interest

The Board shall discuss the policy for preventing conflicts of interest between the Bank's activities and those of the Group to which the Banking Institution is connected, or between different sectors of the Banking Institution's activities, if they may give rise to conflicts of interest. Section 6(6)

The following shall be permitted: (a) The Board shall determine guidelines regarding transactions with related persons, as required by the Supervisory Guidelines for Banks. (b) The Banking Institution shall determine mechanisms for the separation of activities between the Banking Institution and the activities of the Group to which it is connected, or between different sectors of the Banking Institution's activities.

Non-Transparent Activities

The Board shall discuss "non-transparent activities" as defined in Section 6(27). Section 6(27)

The Banking Institution shall ensure the following: (a) Define the purpose of the activity and ensure its actual implementation aligns with the stated purpose, in accordance with the Banking Institution's policies and procedures. (b) Identify, measure, and manage all material risks arising from the activity, including reputational and legal risks. (c) Monitor regular assessments of compliance with all relevant laws, including compliance with the Banking Institution's internal policies.

"Non-transparent activities" include entities established for specific purposes, such as fiduciary entities or entities established for clients, as well as entities with weak transparency and enforcement mechanisms.

Frequency of Discussions

The Board shall discuss the topics specified in Section 6 at the following frequencies: (a) On matters discussed in Sections 6(5), 6(6), 6(7), 6(8), 6(9), and 6(10) regarding the assessment of performance: at least once a year. (b) On matters discussed in Sections 6(11) and 6(12) regarding significant exceptional events: as soon as possible after the occurrence of the event, in accordance with the circumstances, upon request, notification, or decision. (c) Regarding the appointment and dismissal of senior management: as soon as possible after the occurrence of the event, in accordance with the circumstances, upon request, notification, or decision.

Budget: (1) The budget for the current year shall be submitted no later than the end of December of the previous year; the budget for the following year shall be submitted no later than the end of January, provided that the budget for the current year has been approved by the end of December of the previous year. (2) The Board shall conduct a current follow-up on the actual implementation of the budget at least once per quarter.

Business Status of the Banking Institution: (1) The Board shall update the business status of the Banking Institution at least once every six weeks, based on the monthly report specified in Section 8(a). (2) The Board shall discuss the business status of the Banking Institution once every three months, based on the quarterly report specified in Section 8(b) and the document specified in Section 8(c). (3) The Board shall discuss the quarterly and annual reports to the public before their approval: quarterly reports once per quarter, and annual reports once per year. (4) If the external auditor issues a notice regarding doubts about the continuation of the entity as a going concern, as specified in Section 6(15)(2), the discussion shall be held no later than three days from the date of receipt of the notice, before the financial reports are approved. (5) The Board shall determine in advance the frequency of discussions on other sections, as soon as the conditions for their occurrence arise.

Approval of Implementation Measures and Follow-up

(a) The Board shall ensure the existence of adequate measures for the implementation of its decisions and follow up on their implementation. (b) In cases where the Board is required to determine guidelines, written procedures shall be established for dealing with the topics specified, defining the authorized body for dealing with these topics, the method of dealing with them, and the duty to report to the Board or another person on the handling of the topic within the Banking Institution.

Meetings Without the Presence of Management

The Board shall hold at least one meeting per year without the presence of management members, to discuss the following topics: (a) Assessment of the performance of the Executive Management and its overall functioning. (b) Assessment of the quality of information received by the Board from management during Board meetings. (c) Senior management compensation and remuneration. (d) Assessment of the effectiveness of controls within the Banking Institution. (e) Other related topics concerning the relationship between the Board and Management.

Delegation of Powers to Board Committees

The Board may assist itself with committees specializing in specific matters, as specified in Chapter V. Section 21

(a) The Board shall discuss and decide on these topics and delegate its authority to a committee, reporting to it. The Board shall not delegate its powers in a manner that is undefined or in a manner that reserves powers to the committee other than those specified in this guideline, unless it examines whether the concentration of authority in the committee is significant. The Board shall approve the powers of the committees as specified. (b) When the Board establishes a committee, the decision to establish the committee shall be determined by the Board in plenary session, determining its composition, functions, and powers, and approving its procedures. (c) Decisions received by the committees on the topics specified in Section 6 shall be submitted for approval by the Board in plenary session. The directors shall receive the minutes of the discussion regarding the decisions for the purpose of approval. In any case where an additional discussion is held by the plenary, only relevant background material and information shall be provided to the committee, if the directors require more. (d) Notwithstanding the above in Sections 6(a) to 6(c), the Board may not delegate its powers regarding the topics specified in Sections 6(a), 6(b), 6(g), 6(d), 6(e), 6(10), 6(11), 6(12), 6(13), 6(14), 6(15), 6(16), 6(19), 6(20), and 6(22). (e) Notwithstanding the above in Sections 6(g) and 6(h), no decision shall be made in the framework of a committee on topics that require prior written approval from the Supervisor or are subject to any law regarding topics for which the Board is permitted to grant approval.

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Chapter III: Composition of the Board

Number of Directors

(a) The Board shall consist of a number of members that encourages substantive and strategic discussion and efficiency, provided that the Board shall not include fewer than 7 directors and not more than 15 directors. (b) In a non-banking financial institution, where the nature and scope of its business do not justify appointing 7 members to the Board, the Supervisor may, with approval, appoint a smaller number of members to the Board.

Employees of the Banking Institution as Directors

Employees of the Banking Institution shall not be appointed as directors. Section 23

External Directors

(a) At least one-third of the directors shall be external directors. Section 24 The Banking Institution may appoint external directors as specified, unless they are dependent directors appointed under the Companies Law. In addition to the provisions of the relevant laws, the provisions regarding external directors shall apply to the directors specified, unless explicitly stated otherwise. This guideline applies to all provisions relating to external directors.

For the purpose of this guideline, an "external director" is one who meets the following conditions: (1) Professional Competence: Possesses an academic degree or professional competence as defined in Section 240 of the Companies Law, 5740-1980 (hereinafter: "Banking Law" - "Control"), and: (i) Possesses professional competence as defined in Sections 1 or 2 of Regulation 28 of the Companies Regulations (Director Qualifications), 5765-2005, and financial-accounting expertise as defined in Section 3 thereof; or (ii) Possesses professional competence and banking experience as approved by the Supervisor. (2) Relationship: No relationship as defined in Section 240 of the Companies Law exists, in addition to the relationship existing when holding more than 5% of a certain type of control means in the Banking Institution. (3) The provisions of Sections 241, 244, 245(a), 245(3a), 245(b), 246, 247, 249 of the Companies Law shall apply to an external director according to this guideline.

The Supervisor may, even according to Section 245(b) of the Companies Law, terminate the tenure of an external director who is not a dependent director appointed under the Companies Law, in accordance with Section 11(a1) of the Ordinance. The external director may also propose to the General Assembly to add to its agenda the approval of the termination of his tenure as an external director, if he holds shares in the Banking Institution, in accordance with the Companies Law and the Bylaws of the Banking Institution.

The Supervisor may, in exceptional cases, approve a candidate for the position of "external director", provided that all conditions specified in Section 24(b) are met, and that he is a dependent director appointed under the Companies Law or meets the conditions specified in this Companies Law for this purpose.

Banking Experience and Financial-Accounting Expertise

In addition to the eligibility conditions specified in Section 30, at least one-fifth of the directors specified in Section 30 shall have collective knowledge appropriate to at least one type of the Banking Institution's substantial activities it intends to conduct, provided that: (a) At least one-fifth of the directors shall have "banking experience". For this purpose, "having banking experience" means having served in a senior position in a banking institution or having equivalent experience approved by the Supervisor. (b) At least one-fifth of the directors shall have "financial-accounting expertise" as defined in Section 240 of the Companies Law. (c) To remove doubt, a director who has both "banking experience" and "financial-accounting expertise" may be counted towards the required one-fifth under both Section 24(a) and Section 24(b).

Place of Residence of Directors

At least two-thirds of the directors shall have their permanent residence in Israel. Section 26

Approval of Appointment Renewal as Director

The approval of appointment as a director is void. Section 27

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Chapter IV: Chairman of the Board

Chairman of the Board

(a) The Board shall have a Chairman. The function of the Chairman of the Board is to ensure the proper and efficient functioning of the Board. The duties imposed on the Chairman of the Board apply to him; he is responsible for the fulfillment of all duties imposed on the Board. (b) In the absence of the Chairman of the Board, one of the directors shall fill his position. (c) A close relative or controlling shareholder shall not serve as Chairman of the Board. (d) An external director shall not serve as Chairman of the Board of a Banking Institution with a control block.

Non-Resident Chairman of the Board

A non-resident shall not serve as Chairman of the Board, unless he participates in meetings on a regular basis. Section 29

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Chapter V: Eligibility to Serve as a Director

Eligibility to Serve as a Director

(a) A director in a Banking Institution shall be an individual. (b) Each director shall have qualifications appropriate for his position, including knowledge, experience, education, and expertise in at least one of the following fields: banking, finance, money, business or economic activity, law, accounting, risk management, regulatory compliance, or information technology approved by the Supervisor.

Determination of Conflicts of Interest

(a) A person shall not serve as a director if his regular activities or business create conflicts of interest, or if there is a suspicion that he may create conflicts of interest between himself and the Banking Institution. Section 31 (b) Notwithstanding the above, a person shall not be appointed or serve as a director of a Banking Institution if he holds a position in any of the following bodies: a member of the Credit Committee, a member of the Investment Committee, a director, or an employee of: (1) Another banking institution controlled by the Banking Institution or another banking institution, or a banking group not included in the controlling banking institution of the Banking Institution. It is clarified that nothing in the above shall constitute permission for disqualifying service according to Section 27(b)(2) below. (2) Another banking institution controlled by the Banking Institution, or a controlling banking institution of the Banking Institution, or a controlling financial body in the same case as the Banking Institution, or a large financial body. It is clarified that nothing in the above shall constitute permission for concurrent service in parallel companies, provided there are no conflicts of interest between them. (3) A controlling financial body in the same case as the Banking Institution, or a large financial body, or a controlling financial body in the same case as the large financial body. Notwithstanding the above, the appointment or service of a director of a large banking institution concurrently with a position in a controlling financial body in the same case as a small financial body, or a small financial body, is permitted, and vice versa. For the purpose of this paragraph, if the candidate concurrently serves as a director of a large banking institution, his concurrent service in a number of small financial bodies in the same group, or in the same financial bodies whose total assets exceed 2 billion NIS, shall be permitted. If during the tenure one of the conditions becomes applicable, the director may continue to serve concurrently until the end of 6 months from the date of the change or until the next Annual General Assembly, whichever is later, and with regard to an external director, until the completion of three years of tenure. (4) More than two directors from the bodies listed in Appendix G belonging to the same group shall not serve concurrently in any banking group. It is clarified that nothing in the above shall constitute permission for disqualifying service according to Sections 27(b)(1) and 27(b)(6) above.

For the purpose of this small section: "Financial Body": (1) An institutional body as defined in the Supervision of Financial Services Law, 5765-2005; (2) A manager of a mutual investment fund as defined in the Mutual Investment Funds Law, 5754-1994. "Small Financial Body": A financial body whose total assets do not exceed 2 billion NIS. "Large Financial Body": A financial body whose total assets exceed 10 billion NIS. "Total Assets": As defined in the last annual financial report, including assets managed by others on behalf of the body, and financial assets under its control. "Employee": Including anyone who has professional connections with the body. "Banking Group" or "Group": Banking institutions or controlled bodies listed in Appendix G, directly or indirectly, under the control of the same controlling shareholder. "Small Banking Institution": A banking institution whose total assets on a consolidated basis do not exceed 2 billion NIS. "Large Banking Institution": A banking institution whose total assets on a consolidated basis exceed 10 billion NIS.

(c) A person who served as a director of another banking institution shall not be appointed as a director of a Banking Institution, unless with the consent of the Board of which he was a member, or after consultation with the Chairman of the Board of the Banking Institution and with the consent of the Supervisor. (d) The Board shall determine guidelines regarding potential conflicts of interest, which shall relate to: (1) The scope of business in which conflicts of interest exist; (2) The materiality of the business in which conflicts of interest exist for the Banking Institution and the director.

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Other Activities

A person shall not serve as a director if his other activities do not leave him sufficient time to fulfill his duties as such. Section 32

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Chapter VI: Board Committees

Mandatory Committees

(a) The Board shall appoint the committees specified in Sections 35 and 36: Audit Committee. (b) The Board shall appoint the committees specified in Section 38: Remuneration Committee. (c) The Board shall appoint the committees specified in Section 39: Risk Management Committee.

Composition and Procedures of Board Committees

(a) The committees of the Board shall consist only of directors, and the number of members in a committee shall not be less than 3 and shall not exceed more than half of the directors. Notwithstanding the above, if the number of members of the Board in the Banking Institution does not exceed 11, the number of members in the committee shall not exceed more than half of the directors, rounded up. The ratio specified in Sections 24(a) and 26 shall apply to the committees, and the provisions of Section 28(g) shall also apply regarding the tenure of a committee member. (b) Notwithstanding the above in Section 34(a), the following committees shall have a majority of external directors: (1) Audit Committee; (2) Related Party Transactions Committee (if established); (3) Remuneration Committee, except as specified in Section 38(e). (c) When assigning directors to committees, the Board shall take into account the directors' expertise and experience, relating them to the topic in which the committee specializes. (d) The Board shall examine the need for rotation among committee members and among the chairmen of the committees. (e) The provisions of Chapter VII regarding Board meetings shall apply to Board committees, unless the provision explicitly states that it applies only to the Board plenary.

Composition and Procedures - Audit Committee

(a) The Board shall appoint an "Audit Committee" upon which the provisions of Section 115 of the Companies Law shall apply, and also upon which the provisions of Section 3 of Chapter 9, Part 3 of the Companies Law, regarding mandatory changes, shall apply. However, in a Banking Institution that is a private company, a director employed by the controlling banking institution of the Banking Institution or by a controlling banking institution alone shall not serve on the Audit Committee, as specified. (b) In addition to what is specified in Section 34(b)(1), the Chairman of the Audit Committee shall be an external director, and the directors shall have financial-accounting expertise. (c) The quorum for meetings and decisions of the Audit Committee shall be a majority of its members, provided that the majority are external directors. (d) The Chairman of the Audit Committee shall convene the committee for discussion, even at the request of the Internal Auditor, within a reasonable time from the date of the request, on the topic specified by the Internal Auditor. Documentation shall be kept regarding the reasons for not convening the meeting as specified, for the knowledge of the directors, according to Section 116(b) of the Companies Law. (e) The Audit Committee shall hold meetings at least once a year with each of the following holders of positions, provided that the relevant position holder is present at the meeting: (1) The Internal Auditor; (2) The External Auditor; (3) The Compliance Officer as defined in the Supervisory Guidelines for Banks No. 308; (4) The Legal Counsel; (5) The Chief Accountant as defined in the Supervisory Guidelines for Banks No. 305; (6) The Person Responsible for Anti-Money Laundering appointed according to Section 8 of the Prohibition on Money Laundering Law, 5760-2000; (7) The Chief Risk Officer as defined in the Supervisory Guidelines for Banks No. 310. (f) Decisions of the Audit Committee regarding transactions with related persons shall, in principle, be made in the presence of a member of the committee, except for the persons specified in Section 34(e)(1) and their professional managers. (g) The Audit Committee shall hold at least six meetings per year. (h) The Audit Committee shall determine the necessary budget for the employment of independent external consultants, to the extent it deems necessary to fulfill its duties.

Functions - Audit Committee

(a) The Audit Committee is responsible for dealing with internal and external audit reports: (1) The Audit Committee shall discuss the findings of internal and external audit reports and decide on them. The Committee shall ensure that a discussion on the findings takes place within a reasonable period from their submission by the auditors. (i) Internal Audit Reports: The Chairman of the Audit Committee, in consultation with the Internal Auditor, shall determine which of the substantial internal audit reports shall be submitted in full, and which may be submitted in summary form to the Audit Committee. The full reports or other audit reports of the Internal Auditor shall be brought before the Committee as it deems appropriate. (ii) External Audit Reports: The Committee shall discuss the Supervisor's audit reports, and those of the External Auditor and other regulatory authorities. The discussion regarding the Supervisor's audit reports shall be held within a period not exceeding 45 days from the date of receipt of the report by the Banking Institution. The provisions regarding the supplementary report specified by the External Auditor shall apply to the report specified in the Supervisory Guidelines for Banks No. 303. (2) The Audit Committee, in consultation with the Chairman of the Board, shall forward audit reports for discussion in the Board plenary on material issues. (3) The Audit Committee shall ensure that Management has taken appropriate actions in a timely manner to correct the deficiencies noted in the audit reports. (4) The Audit Committee shall discuss the Internal Auditor's report once every six months, regarding the status of requirements arising from external audit reports that have not yet been addressed, and in cases of delay in addressing them, the reasons for the delay and the timelines for completing the addressing. (b) The Audit Committee is responsible for supervising the Internal Auditor of the Banking Institution, including: (1) The Internal Audit function shall be subordinate to the Chairman of the Board and the Audit Committee, and shall report to the Board through the Audit Committee. (2) The Audit Committee shall recommend to the Remuneration Committee the Internal Auditor's salary and remuneration, and his promotion. (3) The Audit Committee shall discuss and recommend to the Board the Internal Auditor's work plan, including the scope and frequency of audits, and may address the desired framework for Internal Audit in controlled institutions. (4) The Audit Committee shall conduct follow-up on the implementation of the Internal Auditor's work plan. (1b) The Audit Committee may impose on the Internal Audit function, upon reasonable notice, in addition to the tests specified in the work plan, special tests. (c) The Audit Committee is responsible for supervising the work of the External Auditor of the Banking Institution, including: (1) The Audit Committee shall discuss the possibility of replacing the External Auditor of the Banking Institution, as specified in Section 4 of the Supervisory Guidelines for Banks No. 302. (2) The Audit Committee shall bring its position before the General Assembly of the Banking Institution on the agenda of the day, regarding the renewal or non-renewal of the tenure of the External Auditor. (3) The Audit Committee shall recommend to the Board or the General Assembly of the Banking Institution the remuneration of the External Auditor. (4) Additional provisions regarding the supervision of the Audit Committee over the External Auditor shall be as specified in other Supervisory Guidelines for Banks, such as reporting on his engagement. (d) The Audit Committee shall examine the annual and quarterly reports of the Banking Institution to the public and recommend to the Board their approval. (e) The Audit Committee shall use the work of the Audit function to examine the effectiveness of the central internal controls of the Banking Institution. The Audit Committee shall determine procedures, if necessary, to regulate the effectiveness assessment of internal controls for audit or financial reporting, including: (1) The manner of receiving and dealing with complaints regarding internal controls related to audit or financial reporting. (2) Confidential and anonymous transmission of concerns of employees of the Banking Institution regarding internal controls related to audit or financial reporting.

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The Audit Committee shall discuss transactions as specified in Section 7 of the Supervisory Guidelines for Banks No. 312. The Committee shall also discuss transactions with related persons not discussed by the Related Party Transactions Committee, as specified below: (1) A transaction, including debt forgiveness or write-off, with a person holding a position in the Banking Institution or another, exceeding the amounts specified in Section 7(a)(1)-(3), in which the Banking Institution has a personal interest. (2) For the purpose of this section, notwithstanding Section 7(a)(1) of the Supervisory Guidelines for Banks No. 312, the minimum amount regarding a transaction with an individual shall not exceed 1 million NIS.

Related Party Transactions Committee

(a) The Board may appoint a Related Party Transactions Committee to discuss the topics specified in Section 7 of the Supervisory Guidelines for Banks No. 312 and Section 36(v), which were not discussed by the Audit Committee. (b) The provisions and restrictions applicable to the Audit Committee shall apply correspondingly to the Related Party Transactions Committee.

Composition and Procedures - Remuneration Committee

(a) In a Banking Institution or a credit card company to which Section 118A of the Companies Law applies, the Remuneration Committee shall consist of at least one member of the committee, as defined in the said Section of the Companies Law, and shall have expertise in risk management and control activities. (b) In a Banking Institution or a credit card company to which Section 118A of the Companies Law does not apply, the Remuneration Committee shall have a majority of external directors as its members, and its Chairman shall be an external director. At least one member of the committee shall be an external director with expertise in risk management and control activities. (c) The quorum for meetings and decisions of the Remuneration Committee shall be a majority of its members, provided that the majority are external directors. (d) Decisions of the Remuneration Committee shall be made in the presence of a member of the committee. (e) Notwithstanding the above in Sections 38(a) and 38(b), the Remuneration Committee may include in its discussions the Remuneration Policy specified in Sections 38(a) and 38(b), and the Remuneration Committee may be expanded to include additional directors and employees, excluding senior employees, provided that the expanded Remuneration Committee is not required to have a majority of external directors as members.

Functions - Remuneration Committee

(a) The Remuneration Committee shall discuss and recommend to the Board the Remuneration Policy as defined in the Supervisory Guidelines for Banks No. 301A, consistent with the organizational culture of the Banking Institution, its long-term strategic goals, and its control environment. The remuneration incentives shall not encourage risk-taking beyond the Banking Institution's risk appetite. (b) The Committee shall approve the Remuneration Policy before it is approved by the Board and the General Assembly, including agreements with senior position holders of the Banking Institution regarding their remuneration, within the meaning of these terms in the Supervisory Guidelines for Banks No. 301A. (c) The Committee shall also recommend to the Board the principles of remuneration agreements for employees of the Banking Institution who are not senior position holders, ensuring that the agreements are not unbalanced and do not endanger its stability. The Committee's recommendations shall be justified. (d) The Committee shall be responsible for planning the Remuneration Policy and shall dedicate special attention to ensuring the effectiveness of the remuneration mechanisms and compliance with supervisory requirements, including assessing the implemented mechanisms, in addition to the types of risks they reflect, capital and liquidity levels, and all liabilities up to and including indemnification insurance. The Committee shall examine up-to-date data on the existing insurance policies of position holders in the Banking Institution, including estimates of alternative costs, such as the cost of premiums required by insurance companies for prior commitment to indemnification (parallel to the indemnification terms). (e) The Committee shall formally examine how the remuneration mechanisms respond to future events, through analysis of various scenarios, internal or external. (f) The Committee shall additionally define which periodic reports shall be submitted to it and their frequency. The Committee shall discuss the specific information to be submitted prior to a discussion with an employee, group of employees, or individual employee, regarding remuneration as defined in the Supervisory Guidelines for Banks No. 301A. A reasonable time before the Committee grants approval or recommendation, the main points of the proposed agreements and the previous agreements shall be submitted to the Committee.

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The Committee) v( will ensure that at least once a year an examination is conducted of the remuneration mechanism and its operation:

1. Compliance with the mechanism established in the remuneration policy;
2. Compliance with the requirements set forth in this directive and in Supervision over Banks: Management Regulations, Instruction 301A, and whether it conforms to accepted practices;
3. Completeness of the remuneration mechanism;
4. The extent of the remuneration mechanism's impact on risk profile and employee behavior, and its adaptation for organizational goals regarding risk appetite and corporate banking.

The Committee) z( will work in close cooperation with the Board of Directors' Risk Management Committee. The Committee) ch( will have limited access to information and analyses from the internal audit, compliance, and risk management functions, and will assist in these functions through human resources and internal audit. The Committee) t( may engage external advice, provided that consultants are appointed in a manner that ensures no conflict of interest arises from reliance on advice received by senior management.

Risk Management Committee .39 The Risk Management Committee shall discuss the policy on exposure to various risks and recommend it to the Board of Directors. It shall oversee the implementation of the policy as determined by the Board of Directors in accordance with Instruction 310.

Chapter Z: Board of Directors Meetings

Frequency of Meetings Generally, the plenary of the board of directors of a banking entity shall hold a meeting at least once a month) a (.40. A banking entity whose business nature and scope do not justify this may determine, with the Supervisor's approval, a lower number of meetings than specified in this subsection, but not less than once per quarter. In a banking entity, the plenary of the board of directors shall convene a meeting within 14 days from the relevant date in the circumstances specified in Section 98(b)(d)(-b) ) b (

Attendance at Board of Directors Meetings A director shall participate in at least two-thirds of the meetings of the plenary of the board of directors during a calendar year) a (.41. He shall not be absent from any of the meetings held during a period of 3 consecutive months. If a director fails to attend meetings beyond the level permitted below, his resignation shall take effect no later than from the date of the first board of directors meeting after he exceeded the permitted absence levels) b (– the termination of tenure – hereinafter). His tenure shall expire at the time of termination of tenure if he does not resign before then.

Notices and Background Material for Meetings Notice of a board of directors meeting shall be sent to all directors a reasonable time before the meeting date) a (.42. The notice shall specify the date and place of the meeting and a reasonable detail of all subjects on the agenda of the day. Background material, including written background material) b (sub-section (a) above), shall be attached to the aforementioned notice, allowing significant reference to the matters under discussion, including financial implications. This background material shall be kept in the offices of the banking entity together with the minutes of the meeting. The background material relates to the matters discussed in the meeting. In exceptional cases only, the board of directors may convene a meeting without notice to all directors, provided that the circumstances constituting the exception are specified in the minutes of the meeting) c (in sub-sections (a) and (b) above).

Quorum and Voting The quorum for meetings of the board of directors and its decisions is the majority of the directors, provided that the ratio between directors is as defined in Sections 24(a)-26) a (.43. If composed of three directors only, all members constitute the quorum. Each director shall have one vote in the board of directors) b (. There shall be no additional casting vote for the Chairman of the board of directors when votes are equal, preventing Section 107 of the Companies Law. A director present in a discussion due to a personal interest under Section 56 shall not be appointed for the purpose of determining the required quorum) g (. There is no such provision in this subsection.

Agenda of the Day The agenda of the board of directors meetings shall include, inter alia, any director holding the position of General Manager or who requested, a reasonable time before the convening of the board of directors meeting, that the Chairman of the board of directors include the matter in the agenda of the day .44

Minutes The Chairman of the meeting shall be responsible for recording the minutes of the discussions at the meeting) a (.45. The Chairman of the board of directors shall ensure that the minutes are typed or recorded. The minutes shall reflect the main points of the matters discussed at the meeting, as stated by them) b (, including the text of decisions taken at the meeting, as expressed in the meeting, and the entry and exit stage of each participant in the meeting. The Chairman of the board of directors shall establish guidelines for approving the minutes, provided that the following conditions are met:

1. The minutes shall be submitted for approval by the directors at the next meeting or no later than 30 days from the date of the meeting to which the minutes relate;
2. Within 3 business days after the meeting, the Chairman of the meeting shall distribute to the directors a draft document specifying the decisions taken at the meeting. Background documents used for the adoption of the board of directors' decisions shall be attached to the minutes) d(

Participation of the Internal Auditor in Meetings The plenary of the board of directors may invite the Internal Auditor to participate in a meeting where a matter of interest to him is discussed .46. This applies to meetings where there is a discussion of audit reports of the auditor of accounts or supervision authorities.

Establishment of Work Procedures Without prejudice to the above, the board of directors shall establish work procedures for its meetings and those of its committees, including reporting procedures to the board of directors and delivery of materials for review by the directors .47

Alternate and Observer Directors No alternate or observer director may be appointed to the board of directors of a banking entity .48. Their participation shall not be through a member who is not a director, provided that their participation is in a meeting of a committee of the board of directors as determined.

Holding Meetings via Communication The board of directors shall establish procedures for holding meetings using communication means .49. These procedures shall also address the following matters:

1. In special cases only, meetings of the board of directors may be held without convening, except for consultation via communication means (hereinafter "communication");
2. The board of directors of the banking entity shall define in the procedure the order of execution of the meeting, such as: initiation, quorum, receipt of background material, taking decisions, documentation (including minutes), and any other matter the board of directors determines; the procedure shall stipulate that efforts be made to involve all directors in the communication meeting;
3. The minutes of the communication meeting shall be brought to the relevant forum for knowledge of the first decision after the meeting;
4. Despite the above, decisions may not be taken on the following subjects in a communication meeting:
   1. Decision of the Audit Committee;
   2. Transaction with a "related person" as defined in paragraphs (a)(b)(c)3 of Section 312 'm of Supervision over Banks: Management Regulations Instruction 3;
   3. Terms of employment and departure of office holders;
   4. Decision on a material deviation from the policy according to Section 6(t) of this instruction.

Adoption of Decisions Without Convening The board of directors may adopt decisions without actual convening, according to its bylaws .50. Those entitled to participate in the discussion and vote on the matter brought for decision may agree to adopt the decision. Decisions shall not be adopted unless in special cases, with details of the special circumstances in the minutes.

Chapter H: Practices for Effective Functioning of the Board of Directors

Requirements of Directors Each director shall understand and perform his duties, including his supervisory role, understanding the risk profile of the entity) a (.51. He shall exercise appropriate judgment on matters of the banking entity) b (. He shall devote sufficient time and effort to fulfill his responsibility) c (. He shall raise questions so that comprehensive explanations are given by the management and he can properly evaluate the performance of the banking entity and its management) d (. He shall understand the regulatory environment and his corporate governance role) e (

Right of Director to Receive Information A director wishing to use his right to receive information under Section 265 of the Companies Law shall submit a written request to the board of directors .52. The information requested shall be brought for discussion in the board of directors.

Professional Assistance to the Board of Directors In cases justifying this, the board of directors may engage external consultants as follows .53: Assistance to a Director) a (: A director wishing to obtain professional assistance may engage consultants for this purpose. He shall first submit a reasoned request to the board of directors under Section 266 of the Companies Law. If the board of directors does not approve covering the expenses, the director shall refer the request to the Court of Law at least 21 days before seeking approval to employ the expert. Assistance to the Board of Directors) b (: The board of directors shall establish procedures for engaging external consultants for professional assistance to the board of directors and its committees, addressing at least the following topics:

1. Approval of the advice (definition of the purpose and content of the advice, discussion of the need for advice);
2. Selection of the consultant (examining alternatives, professionalism, absence of conflicts of interest);
3. Engagement practice with the consultant (budget, fee, duration, confidentiality, professional liability); In cases involving recurring or long-term advice, they shall be reviewed annually. Renewal of engagement shall be subject to rotation.

Signing Authority A director shall not be authorized to sign on behalf of the banking entity in matters during the course of business) a (. Unless regular. Where the plenary believes that signing authority should be granted for a specific matter) b (, a director shall be specifically authorized for this matter; in this case, the senior office holder shall be the one with dual signing authority in the banking entity. This section does not apply in cases where the signature of a director is required by law, such as prospectus, financial report, etc.) g (

Conflicts of Interest in Related Industries Without prejudice to general law on conflicts of interest, a director related to an entity in a secondary industry shall not participate in discussions of the board of directors or its committees regarding matters relating to clients of the banking entity, nor receive information or reports from the banking entity regarding the same client, even if he is a director of another entity in the same secondary industry) a (.55. In cases of doubt regarding the application of the quantitative criteria specified in sub-section (d), the director shall be exempt from this provision if a committee composed of at least three external directors has decided that in that case the director's connection to the entity in the secondary industry is not significant. The committee shall also consider whether the quantitative criteria are not met in those cases, and take a conservative position regarding the matter. The banking entity shall prepare and update every six months a list of directors with connections to entities in secondary industries) g (. For the purposes of this section) d (: "Secondary Industry": One industry among the uniform classification of economic sectors (SIC) (the Economy); "Entity in Secondary Industry": An entity whose activity includes directly or indirectly through companies; "Significant Connection to Entity in Secondary Industry": A director who meets one of the following criteria:

1. Holds more than 5% of control means of an entity in a secondary industry;
2. Holds an office in an entity in a secondary industry.

Personal Conflicts of Interest A director who has a direct or indirect personal interest in a proposed or existing transaction of the entity shall declare his personal interest in the board of directors before the decision or discussion is brought to the board of directors) a (.56. He shall not delay the discussion of the transaction in which his personal interest is involved. A director with a personal interest shall not receive information from the banking entity regarding the transaction) b (, nor participate in the discussion or vote on the decision concerning his interest from the date of his declaration. The board of directors shall establish guidelines for cases involving personal conflicts of interest for a director, including examples such as the type and closeness of connection to the transaction) g (

Contact with Employees of the Banking Entity Outside Meetings A director shall not approach employees of the banking entity on business matters outside the framework of meetings, particularly on the following subjects) a (.57:

1. Business initiatives of the banking entity;
2. Business matters of specific clients;
3. Investments in certain aspects of the banking entity. The provisions of sub-section (a) above shall not apply in the following cases) b (:
4. Approach to the General Manager regarding a business initiative of the director without personal interest, provided it is documented generally;
5. Approaches under paragraphs 2 and 3 of sub-section (a) above to the General Manager, provided they are documented generally;
6. Approach to the General Manager regarding potential clients of the banking entity, provided the director does not discuss details of transactions with such potential clients or participate in discussions thereof;
7. Approach to an appropriate body for resolving personal accounts, such as a bank account of the director or his spouse, or a banking entity under their control;
8. Clarification approach made through the Chairman of the board of directors or the head of a committee, relating directly to a topic for discussion in the plenary or committee of the board of directors. The documentation of the approach shall be immediately transferred to the Chairman of the board of directors, who shall decide whether to distribute it to the General Manager or inform the relevant committee members or directors;
9. Approach made by the Chairman of the board of directors or head of a committee regarding the submission of documents to the committee or board of directors ahead of the meeting;
10. Approach on general business matters and obtaining professional explanations, coordinated through the Bank Secretary and brought to the knowledge of the directors, provided it is coordinated with the Chairman of the board of directors.

All approaches referred to in sub-section (g) shall be centralized by the banking entity) 1) (including copies of documentation) (5)-(v); All documentation referred to in this section shall be forwarded promptly to the Head of the Audit Committee) 2 (. For the purposes of this section) 3 (, "documentation" refers to a written document prepared by the employee of the banking entity, including the names and positions of the approaching employee and the employee approached, and the substance of the treatment carried out as a result of the approach, as far as possible, avoiding participation in operational roles in the daily management of the banking entity) d (. A director holding an operational role in the banking entity shall not participate in discussions of the management committees, except for presence in discussions concerning the strategy of the banking entity) e (

Professional Training and Expertise The board of directors shall establish an annual professional training program for continuous professional education for directors, tailored to the development of the banking entity and its complexity) a (.58. The training program shall address professional topics related to the duties of the board of directors, including corporate governance) b (. The training program shall consider the needs of all directors, including individual needs, such as the needs of new directors) c (. The board of directors shall update the training program according to changing needs) d (

Evaluation of Board of Directors' Work Effectiveness The board of directors shall conduct a self-evaluation process for its internal needs once every two years) a (.59. The board of directors shall identify weaknesses in its work and propose changes accordingly. The board of directors shall appoint a body to coordinate the process and analyze findings on its behalf, such as the Corporate Governance Committee or the Bank Secretary) b (. The board of directors shall discuss the findings arising from the evaluation process) g (

Chapter T: Reporting to the Supervisor

Frequency of Reporting The banking entity secretary or such person as the board of directors shall submit to the Supervisor) 60 . Annual Report) a (: An annual report shall be submitted by the end of January each year for the year ending December 31 of the preceding year, according to Section 61 . Reporting on Non-Routine Events) b (: Reporting on non-routine events shall be submitted as soon as possible after sending, according to Section 62 .

Annual Report The report shall include the following details) 61 :

1. Names and location of the directors;
2. Names of members of the various committees of the board of directors;
3. Frequency of meetings of the board of directors and its committees, as follows:
   1. Number and dates of meetings of the plenary of the board of directors during the past year;
   2. Number and dates of meetings of each committee of the board of directors, and participation of each member in them;
4. Description of the main occupation of each director, serving as a manager or director in other entities;
5. Additional details as determined by the Supervisor from time to time) e (

Reporting on Non-Routine Events The report shall include the relevant details specified below in the occurrence of one or more of the following cases) 62 :

1. Change in composition of the board of directors or its committees, including resignation, death, dismissal of a director, or change in Chairman of the board of directors; reporting to the Supervisor regarding dismissal or resignation of a director, and reasons for dismissal or resignation;
2. Appointment of the General Manager, approval of appointment of management members, appointment of internal auditor and auditor of accounts, or cessation of their work for any reason;
3. Reported irregular events to the board of directors due to deviation from Supervision over Banks: Management Regulations or legal provisions, causing significant harm to shareholders or clients;
4. Notice by the Internal Auditor on taking appropriate steps to correct defects according to Section 7(g) of Instruction 304 'm;
5. Notice of termination of tenure of the Internal Auditor with or without consent according to Section 10 of the Banking (Internal Audit) Regulations, 5752-1992;
6. Receipt of notice from the Auditor of Accounts according to Section 3(b) of Instruction 304 'm of Supervision over Banks: Management Regulations;
7. Approval of action according to Section 255 of the Companies Law;
8. Approval of transaction of a banking entity occurring under Section 270(1)(2) of the Companies Law, being a transaction deviating from Section 272 of the Companies Law;
9. Transaction according to Sections 274-275 of the Companies Law;
10. Summons to meeting of board of directors requiring director approval according to Section 257 of the Companies Law;
11. Reporting on one of the following events: "Capital" as defined in Appendix 'A to Instruction 202 'm of Supervision over Banks: Management Regulations (capital components):
    1. Accumulated losses of the banking entity since the end of the quarter exceeding 5% of its capital;
    2. Loss resulting from a single transaction or operation exceeding 1% of capital;
    3. Loss of a controlled entity abroad or branch exceeding 3% of capital, or loss of a controlled entity abroad or branch resulting from a single transaction or operation exceeding 3% of conceptual capital, or 5% of capital of the controlled entity or branch, whichever is higher, published in the last financial report;
    4. Liability classified as debt, partially or fully provided, exceeding 5% of capital of the banking entity;
    5. Notice from Auditor of Accounts according to Section 6(g) of Instruction 302 'm of Supervision over Banks: Management Regulations (Auditor of Accounts of banking entity);
    6. Exercise of powers of the General Assembly by the board of directors according to Section 52(a) of the Companies Law;
    7. Exercise of powers of the General Manager by the board of directors according to Section 52(b) of the Companies Law;
    8. Cancellation of decision of the Audit Committee and/or Committee on Transactions with Related Persons according to Section 113 of the Companies Law;
12. Any other material event, including immediate reporting requirement for irregular event, under supervision authority in Israel and abroad.

Manner of Reporting Reports under this chapter shall be in writing and made available for review by all directors .63

Chapter Y: Amendments

Amendment of Incorporation Documents The incorporation documents of the banking entity and its controlled entities shall be amended to the extent necessary to align them with these regulations and the law) a (.64. Notwithstanding the above, in a banking entity under Sections 50(a)-58 of the Companies Law) b (:

1. Powers assigned to the General Assembly shall not be transferred to another organ;
2. Powers of the General Manager shall not be transferred to the board of directors.

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Appendix 'A Questionnaire for Candidate for Office in Banking Entity (Director, CEO, Internal Auditor, Legal Counsel, Other) Guidance Sheet for Candidate

1. You must respond to all questions appearing in the questionnaire and attach all required documents. This questionnaire is an integral part of the notification of appointment of office holder and commencement of the verification procedure. You must print the answers to the questionnaire itself.
2. When answering a question requiring detailed information or negative response, you must explicitly state so.
3. The terms defined in this questionnaire under the Banking Ordinance or the Banking Law (Licensing) shall have the meaning attributed to them under those laws, unless expressly stated otherwise.
4. You must attach updated current resume and copy of ID card as of the date of filling the questionnaire. If the candidate is a foreign resident, attach copy of passport. Attach copies of academic certificates establishing the details required in the questionnaire.
5. You must provide a declaration before me regarding the truthfulness and completeness of the details submitted in the questionnaire, commitment to update details, and waiver of any privilege to remove confidentiality. The Supervision over Banks may rely on your opinion regarding additional information about you as it deems appropriate.
6. The information requirements in the questionnaire are standard. You may be required to supply additional information according to circumstances. The Supervision over Banks may also refer to other sources for information. Therefore, the period for receiving additional details shall not count from the date of referral until now.
7. The questionnaire shall not be filled in accordance with requirements or attached to it, or examined by the Supervision over Banks.
8. You must notify of any change in details in the questionnaire after appointment. It is clarified that you must update other answers in the questionnaire affected by the details, referring again to questions 7.3-7.5, for example, upon notification of appointment as director in another entity.
9. You must specify any information relevant to the examination of your candidacy, including information that may prevent your tenure.

___________________________ To the Banking Entity Submitting Candidacy Candidate Details

1. Personal Details of Candidate 1.1 Name in Hebrew _____________ : in English _____________ : 1.2 Family Name in Hebrew _____________ : in English _____________ : 1.3 Father's Name in Hebrew _____________ : in English _____________ : 1.4 Citizenship _____________________________ 1.5 Residence _____________________________ 1.6 ID Number / Passport Number for Foreign Resident / (including check digit) .1.6 1.7 Date of Birth _____________________________ 1.8 Place of Birth _____________________________ 1.9 Residential Address: Street, House Number, Entrance, Zip Code, City

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1.10 Phone Number _____________________________ 1.11 Mobile Phone Number _____________________________ 1.12 Email Address _____________________________ 2. Position Regarding Which Candidacy Submitted 2.1 Description of Position: External Director, Director, Chairman of Board, CEO, External Director under Instruction 301, Legal Counsel, Internal Auditor, Other ______________________________________ 2.2 Expected Appointment Date _____________________________. 2.3 Appointment by General Assembly or Board of Directors of Banking Entity? ______________________ ? Also answer questions 2.4-2.5 if appointment as director: 2.4 Status (Other, Employee of Banking Group, License Holder) _________________________ 2.5 Membership in Committees of Board of Directors, if known ___________________________________

3. Education Refer to each type of education in this section (indicate one for each): Certificates/Degrees Academic Other Professional Main Specialization Institution Name and Address Number of Years of Study Year Degree Obtained .a .b .c
4. Employment Details Refer to all positions held during the last 10 years in this section (indicate one for each, including current positions): Employment Period Employer Name Nature of Employment Was Employer Subject to Regulatory Supervision? If Yes, What? Positions Held Responsibilities and Fields Additional Connections with Employer or Controlling Shareholder (including partnerships, etc.) Reason for Leaving (Resignation, Dismissal, Retirement, Contract End – Specify) .a .b .c .d .e
5. Personal and Business Integrity Attach positive response details – Did any of the following events occur in the past? 5.1 Were you convicted in Israel or abroad of an offense? Yes/No Specify ____________________________________________________ 5.2 Was an indictment filed against you? Yes/No Specify ____________________________________________________ 1 Specify if no degree.

5.3 Were you investigated for suspicion of involvement in a crime to be committed? Yes / No Details: ____________________________________________________

5.4 Were you fined? Yes / No Details: ____________________________________________________

5.5 Were you imposed a monetary fine or other sanction in administrative proceedings, including? Yes / No Details: ____________________________________________________

5.6 Were you, or were you, a controlling or senior position holder (e.g., "CEO", Director) in a company during the period in which the event referred to occurred, against which an indictment was filed? Yes / No Details: ____________________________________________________

5.7 Were you, or were you, a controlling or senior position holder in the company referred to in Section 5.6 above, during the period in which the event referred to occurred, against which a monetary fine or penalty was imposed? Yes / No Details: ____________________________________________________

5.8 Were you, or were you, a controlling or senior position holder in the company referred to in Section 5.6 above, during the period in which the event referred to occurred, against which an investigation for suspicion of involvement in a crime to be committed was conducted? Yes / No Details: ____________________________________________________

5.9 Were you convicted by a disciplinary body? Yes / No Details: ____________________________________________________

5.10 Were disciplinary or criminal investigations conducted against you or against a business in which you held a controlling or senior position referred to in Section 5.6 above, during the period of your tenure? Yes / No Details: ____________________________________________________

5.11 Were any disciplinary or criminal investigations, or any supervisory proceedings abroad or in Israel, or any regulatory standards or requirements of the Israeli regulatory system, or any breach thereof, conducted against you or against a business in which you held a controlling or senior position referred to in Section 5.6 above, during the period of your tenure? Yes / No Details: ____________________________________________________

5.12 Was your employment or membership in a corporation suspended or cancelled, or was your holding of shares in a corporation suspended or cancelled, as a result of the revocation of the relevant license of the corporation by a regulatory body? Was your ability to operate in the field requiring a license restricted or revoked? Yes / No Details: ____________________________________________________

5.13 Was your tenure as a director or manager in a body terminated, or were you disqualified from serving as a director or in any other managerial position? Yes / No Details: ____________________________________________________

5.14 Were you given a restriction order by the Court under Section 7 of the Companies Law? Yes / No Details: ____________________________________________________

5.15 Was a report of the State Comptroller published, including findings personally affecting you? Yes / No Details: ____________________________________________________

5.16 Was a civil lawsuit filed against you by authorities of the State, due to your position or tenure? Yes / No Details: ____________________________________________________

5.17 Do you have a monetary liability to a third party, under Israeli or foreign law, as a result of a judgment against you? Yes / No Details: ____________________________________________________

5.18 Did you enter into arrangements with creditors, file for bankruptcy, or have attachment levied on your assets, or were your assets confiscated, or were you declared bankrupt, in Israel or abroad, in connection with these matters? Yes / No Details: ____________________________________________________

5.19 Were you, or were you, a controlling or senior position holder in the company referred to in Section 5.6 above, during the period in which the event referred to occurred, in proceedings of liquidation, other than voluntary liquidation, in receivership, or having made an arrangement with creditors? Yes / No Details: ____________________________________________________

6. Conflicts of Interest and Connections

6.1 Are there any business, professional, employment, or family connections (including between you and your close relative, or between controlling shareholders of the Bank, or through any other means, or between you and joint ventures/businesses managed jointly) with the Bank? Yes / No Details: ____________________________________________________

6.2 Are you, or is your spouse, a partner in a corporation or entity in which one of you is the controlling shareholder, or do you hold a position directly subordinate to the "CEO" or "Managing Director" as defined, or are you a controlling shareholder of a banking corporation or a corporation controlled by a banking corporation, or a member of the Board of Directors of the banking corporation? Yes / No Details: ____________________________________________________

6.3 Are you a holder of shares in the banking corporation or a company of the banking corporation? Yes / No If yes, specify the name of the shares held by you and the percentage:

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6.4 In the case of appointment as a director in a banking corporation without core control, as defined in Section 11(b)(1) of the Banking Ordinance, you must also answer the following questions:

6.4.1 Who is the party that proposed your candidacy for appointment as a director (General Meeting)? Specify the appropriate answer: 6.4.1.1 The Committee for the Appointment of Directors in Banking Corporations, established under Section 36 of the Banking (Regulation) Law (hereinafter: "the Committee"). 6.4.1.2 A holder of more than two and a half percent of a certain type of control means in the banking corporation. Specify the name of the holding and the percentage:

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6.4.1.3 A member of the "Holders" as defined in Section 11(d)(3)(a) of the Banking Ordinance. Specify the names of the holdings and their percentages:

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6.4.2 You are requested to indicate, in each of the following cases, if one of them applies to you, and to specify the details below, if necessary: Specify the relevant case: 6.4.2.1 You or your close relative hold more than four percent of the following:

1. In the banking corporation (specify the name of the holder or the corporation, the percentage of the holding, and your family connection to the holder): Yes / No
2. In a corporation controlled by the banking corporation: Yes / No
3. A "Significant Holder" as defined in Section 11(h) of the Banking Ordinance: Yes / No

6.4.2.2 You or your close relative hold, as far as is known to you, more than one of the following types (excluding share trading):

1. In the banking corporation (specify the name of the holder or the corporation, the type of control means, and the percentage of the holding, and your family connection to the holder): Yes / No
2. In a corporation controlled by the banking corporation: Yes / No
3. A "Significant Holder" as defined in Section 11(h) of the Banking Ordinance: Yes / No

Note: "Holders" means two or three holders of a certain type of control means in a banking corporation, who together hold less than two and a half percent, and none of them holds more than two and a half percent of a certain type of control means in the banking corporation. "Significant Holder" means one who holds more than two and a half percent of a certain type of control means in the banking corporation. "Holders" means members of the "Holders" as defined in Section 11(d)(3)(a) of the Banking Ordinance, who control corporations controlled by them, and who are controlled by them. See the list of holders on the corporation's website, exceeding 2.5%. Also refer to the list of holders and the list of beneficial owners according to Section 11 of the Ordinance.

6.4.2.3 Do you currently, or in the last two years, have a connection to a person or to you, defined as "Connection" or "Close Relative" under Section 11(h) of the Banking Ordinance? Specify the type of connection, the name of the person or corporation, and the nature of the connection to you:

1. To the banking corporation: Yes / No
2. To a corporation controlled by the banking corporation: Yes / No
3. To a position holder in the banking corporation: Yes / No
4. To a "Significant Holder" as defined in Section 11(h) of the Banking Ordinance: Yes / No

6.4.2.4 Do you currently have a "Connection" as defined in Section 11(h) of the Banking Ordinance? Specify the type of closeness, if necessary:

1. To a close relative (4): Yes / No
2. To a "Significant Holder" as defined in Section 11(h) of the Banking Ordinance: Yes / No
3. To a partner of a "Significant Holder" as defined in Section 11(h) of the Banking Ordinance: Yes / No

6.4.2.5 Do you currently have a connection to a person or to you, defined in Section 8 as "Close Relative" or "Connection", or do you have professional or business connections with them that are not of the types mentioned above? Specify the name of the person or corporation and the nature of the connections with them:

1. With the banking corporation: Yes / No
2. With a corporation controlled by the banking corporation: Yes / No
3. With a position holder in the banking corporation: Yes / No
4. With a "Significant Holder" as defined in Section 11(h) of the Banking Ordinance: Yes / No
5. With the party that proposed your candidacy for appointment as a director in the banking corporation: Yes / No

Note 8: "Close Relative" means a relationship with a person who is directly or indirectly subordinate to him, or to his employer, partner, or close relative, and also to the corporation in which he has control. Note 9: "Connection" means the existence of employment relations, professional or business connections, or control, and also holding a position. Note 10: Including a corporation controlled by the banking corporation at any time in the last two years.

6.4.2.6 In the case where you are a candidate for appointment to the position by the Committee for the Appointment of Directors in Banking Corporations, you must also answer the following questions:

1. Do you have a "Connection" as defined in Section 11(h) of the Banking Ordinance with a member of the Committee for the Appointment of Directors in Banking Corporations at the time of the appointment? Yes / No
2. Are you a member of the Knesset, a Deputy Minister, a Minister, a State employee, a Deputy Minister, or a Minister, or an employee of a corporation established by law for political or business purposes? Yes / No

7. Additional Details Please answer the following questions, specifying details as necessary.

7.1 Are you aware of any regulatory or professional requirements, or requirements arising from the Banking (Supervision) Law, that apply to you in your capacity as a director, or in another position / internal auditor, and are you committed to acting according to them? Yes / No Details: ____________________________________________________

7.2 Are you aware of any impediment that may limit your ability to comply with the above obligations? Yes / No Details: ____________________________________________________

7.3 Do your other occupations pose a risk of creating (or are likely to create) a conflict of interest between you and the banking corporation? Yes / No Details: ____________________________________________________

7.4 What is the nature and frequency of the conflict of interest referred to in Section 7.3 above? Yes / No Details: ____________________________________________________

7.5 Do your other occupations leave you with sufficient time to perform your duties as a director in the banking corporation? Yes / No Details: ____________________________________________________

7.6 Are you serving as a director, as a member of the Credit Committee, as a member of the Investment Committee, or as one of the following bodies: a management company of a mutual fund, a joint investment trust, a pension fund, an insurance company, a portfolio manager, an investment advisor, a listed company, or a corporation whose main business is in the capital market or a sponsor, as mentioned in the corporation? Details: ____________________________________________________

7.7 Do you possess the necessary skills, knowledge, education, expertise, or experience in one or more of the following areas: banking, finance, law, economics, business activity, accounting, risk management, regulatory compliance, or information technology, to serve as a director in a banking corporation? Yes / No Details: ____________________________________________________

7.8 Have you previously served in a senior management position (including as a director in a banking corporation) or in another banking experience (e.g., partner in an accounting firm, head of internal audit in a banking corporation)? Yes / No Details: ____________________________________________________

7.9 Do you possess professional competence or financial accounting expertise as defined in Section 240(2)(a) of the Companies Law? Yes / No Details: ____________________________________________________

7.10 Do you meet the conditions of Section 24(b) of the Banking Supervision Standard 301, to answer the questions 7.10-7.16 for a candidate for the position of external director? Yes / No Details: ____________________________________________________

7.11 Are you an employee of the Securities Authority or the Stock Exchange? Yes / No Details: ____________________________________________________

7.12 Are you serving as a director in another corporation, other than as an external director in the banking corporation? Yes / No Details: ____________________________________________________

7.13 Are you a close relative of the controlling shareholder? Yes / No Details: ____________________________________________________

7.14 Do you have a connection, directly or indirectly, to your employer, partner, or to a person subordinate to him, or to a corporation in which you have control, or to a close relative, in the last two years, with one of the following bodies:

1. The banking corporation: Yes / No
2. The controlling shareholder of the banking corporation: Yes / No
3. A holder of more than 5% of a certain type of control means in the banking corporation: Yes / No
4. A close relative of the controlling shareholder: Yes / No
5. A person holding more than 5% of a certain type of control means in the banking corporation, who is a close relative: Yes / No

7.15 Are you, your spouse, your parents, or your descendants, holders of more than 1% of listed shares in one of the following bodies:

1. The banking corporation: Yes / No
2. A corporation controlled by the banking corporation: Yes / No
3. A controlling corporation of the banking corporation: Yes / No
4. A banking corporation controlled by the bodies mentioned above: Yes / No

7.16 Are you, your spouse, your parents, or your descendants, holders of non-listed shares in one of the following bodies:

1. The banking corporation: Yes / No
2. A corporation controlled by the banking corporation: Yes / No
3. A controlling corporation of the banking corporation: Yes / No
4. A banking corporation controlled by the bodies mentioned above: Yes / No

7.17 Specify the additional bodies in which you serve as a member of the Board of Directors or "CEO": Details: ____________________________________________________

7.18 Specify the bodies in which you served as a member of the Board of Directors or "CEO" in the last five years: Details: ____________________________________________________

7.19 Specify the businesses in which you are a controlling shareholder, and specify the percentage of holding: Details: ____________________________________________________

7.20 Specify the businesses in which you are a "beneficial owner" as defined in the Securities Law, 1968, and specify the percentage of holding: Details: ____________________________________________________

7.21 Specify the connection of the corporation in the industry to you, for the purpose of candidacy for the position of director, under Section 55 of the Banking Supervision Standard 301: Details: ____________________________________________________

7.22 Specify any other relevant information about you, which you believe should not be omitted for the purpose of examining your candidacy: Details: ____________________________________________________

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Candidate's Declaration I, the undersigned, holder of ID No. _________________ Having been warned that I may be liable to punishment prescribed by law if I do not tell the truth, I hereby declare as follows:

1. I am a candidate for the position of Director / External Director / Board Member / "CEO" in the company _________________ (delete as unnecessary), and I am aware that I am required to report any changes in the information provided in this questionnaire, which are complete and true, in accordance with the Banking Supervision Standard 301, within 30 days of their occurrence.
2. I agree that the Israel Police will transfer to the Supervisor of Banks any criminal information about me that I am entitled to receive under the Criminal Record Law, 1981. I further agree that by receiving the information, the Police is released from sending it to me. I am aware that the information may be used for the purpose of examining my candidacy.
3. I waive any right to confidentiality or privilege regarding any information about me held by bodies, including domestic or foreign police or regulatory authorities, such as the Supervisor of Banks, the Supervisor of Insurance, the Supervisor of the Capital Market, the Tax Authorities, the Interpol, or banking or financial corporations abroad, and I agree that they may transfer the material in their possession to the Supervisor of Banks. The information requested under Sections 2 and 3 above shall be used only for the purpose of examining my candidacy and shall remain valid throughout my tenure in the banking corporation. I declare that this is my signature and the content of my affidavit is true.

Signature _________________ Date _________________

Notary Public Certification I, the undersigned Notary Public, hereby certify that _________________ appeared before me on _________________ at my office located at _________________, and identified himself/herself to my satisfaction by presenting ID No. _________________. Having warned him/her that he/she may be liable to punishment prescribed by law if he/she does not tell the truth, I have verified the correctness of the declaration and he/she signed it.

Signature _________________ Date _________________ Notary Seal

Banking Corporation Declaration Name of Banking Corporation _________________ Code _________________ We believe that the candidate possesses the necessary qualifications to serve in the proposed position, and that the information provided by the candidate in the questionnaire is, to the best of our knowledge, complete and true, and that there is no violation of any legal provisions that would prevent his/her appointment.

In the case where the candidate is or was an employee of the banking corporation, the declaration also refers to the following: Regarding the internal audit reports conducted by the Internal Auditor on the areas of responsibility of the candidate, were any material findings of a personal nature discovered? (Delete as unnecessary) If yes, please specify, to the extent relevant to the candidate, including those affecting his/her performance: Line _________________

Signature _________________ Name of Authorized Signatory _________________ Title _________________ Date _________________

Completeness Check of Submitted Material This check will be conducted by the Banking Corporation. Check V if the requested information is present in the questionnaire:

1. Answers to all questions.
2. Candidate's Declaration before a Notary Public.
3. Banking Corporation Declaration.
4. Curriculum Vitae.
5. Copy of Passport / ID.
6. Additional Material.

Appendix 'B' Update Declaration of Position Holder I, the undersigned, holder of ID No. _________________ Having been warned that I may be liable to punishment prescribed by law if I do not tell the truth, I hereby declare that all the information and details provided in this update notification are complete and true, and I undertake to report any changes in accordance with the Banking Supervision Standard 301, as soon as they occur. I declare that this is my signature and the content of my affidavit is true.

Signature _________________ Date _________________

Notary Public Certification I, the undersigned Notary Public, hereby certify that _________________ appeared before me on _________________ at my office located at _________________, and identified himself/herself to my satisfaction by presenting ID No. _________________. Having warned him/her that he/she may be liable to punishment prescribed by law if he/she does not tell the truth, I have verified the correctness of the declaration and he/she signed it.

Signature _________________ Date _________________ Notary Seal

Banking Corporation Declaration Name of Banking Corporation _________________ Code _________________ We believe that the position holder possesses the necessary qualifications to continue serving in his position, and that the information and details provided by him in this update notification are, to the best of our knowledge, complete and true, and that there is no violation of any legal provisions or the Banking Supervision Standard of the Supervisor of Banks that would prevent his continued service.

Signature _________________ Name of Authorized Signatory _________________ Title _________________ Date _________________

Appendix 'G' Capital Market Corporations

1. A mutual fund or a joint investment trust as defined in the Mutual Funds Law, 1954.
2. A management company of a mutual fund or a pension fund as defined in the Supervision over Financial Services Law (Insurance), 2005.
3. An insurer as defined in the Supervision over Business Insurance Law, 1981.
4. A portfolio manager as defined in Section 8(b) of the Regulation of the Profession of Investment Advice and Portfolio Management Law, 1995.
5. An investment advisor or investment marketer as defined in Section 7(g) of the Regulation of the Profession of Investment Advice and Portfolio Management Law, 1995.
6. A listed company.
7. A sponsor who meets the suitability conditions under Section 56(g) of the Securities Law, 1968.
8. A corporation whose main business is in the capital market.

Updates Version No. Date Details 1 13/9/85 Original Circular 2 11/1/95 Update 3 19/6/89 Update 4 13/8/90 Update 5 8/91 Insertion of Banking Supervision Standard ----- 6 21/7/92 Update 1582 7 8/11/92 Update 1606,1609 8 3/1/93 Update 1615,1616 9 11/7/94 Update 1715 10 2/1/95 Update 1739 11 12/95 Revised version of Banking Supervision Standard ----- 12 21/6/98 Update 1928 13 10/1/01 Update 2021 14 22/8/01 Update 2038 15 30/11/03 Update 2122 16 28/2/05 Update 2161 17 29/12/10 Update 2287 18 6/11/11 Update 2313 19 25/12/11 Update 2320 20 30/4/12 Update 2332 21 31/12/12 Update 2355 22 19/11/13 Update 2403 23 25/12/13 Update 2405