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INA’s corporate governance structure is in line with Croatian regulation

INA’s corporate governance structure is in line with Croatian regulation

As described above the current corporate governance structure of INA is in line with the First Amendment to the Shareholders Agreement (FASHA) concluded between Government of Croatia and MOL Plc.:

7.5.1.    Executive Directors, including the Chief Executive Officer, will be appointed by the Management Board and shall be responsible for day-to-day operation of each business and function (“Executive Directors”). The Management Board members shall not be Executive Directors at the same time.

7.5.2.    The key selection criteria for the appointment of the Executive Directors shall be the relevant business expertise and knowledge. Their tasks and responsibilities will be regulated and controlled by the Management Board.

7.5.3.    Executive Directors shall form an Executive Board. The Executive Board will be headed by the Chief Executive Officer.

7.5.4.    The Management Board shall issue the Rules of Procedure of the Executive Board, which in any case can not hurt the fulfilment of the Management Board's obligation with respect to the necessary prior approval of the Supervisory Board in case of Reserved Matters.

The FASHA was discussed on a few occasions by the Croatian Government in 2008 and 2009 and was unanimously approved by the Government of Croatia during its 67th session on 29th of January 2009.

The prescriptions of FASHA implementing the new corporate governance system, i.e. the position of executive directors were subject of evaluation and legal check on both sides during the negotiation and neither side has ever had objection to the solution of having executive directors, which is withal the best practice of the largest regional and global oil companies. Moreover, the text of the proposed amendment (FASHA) was seen and approved by Legislation Office of the Government, a unit which is responsible for full compliance of contract to be signed by the Government with Croatian laws and regulations.

In May 2011, INA commissioned an independent legal opinion on whether the corporate governance structure of INA, d.d. is in compliance with the statutory requirements of Croatian law and whether the Management Board is authorized to delegate daily business management to Executive Directors. INA engaged the distinguished and reputable law firm Madirazza & Partneri to issue such a legal opinion.

The mentioned legal opinion confirmed that the corporate governance structure system of INA is in compliance with the mandatory provisions of Croatian legislation in force and that the Management Board of INA, by appointing Executive Directors authorizing them to manage the business activities, acted in accordance with the applicable laws and within its authorities.

The Management Board unanimously rendered the decision on revision of regulations which, among other items, included Introduction of new terminology relating to the 2nd level managers and which was effective as of January 1, 2017:

Executive Director – Operating Director

Executive Director for Finance Business Function – Chief Financial Officer

Executive Board – Council of Directors (CoD sessions are headed by the President of the Management Board)