Bank Ownership KEY BANKING REGULATIONS A. Regulations on Institution, Management, and Ownership

91 conducting business activities based on sharia principles. • Managing Director of banks must come from the party which is independent to the controlling shareholders. • Majority members of Board of Directors are prohibited to have a family relationship up to second degree with fellow members of Board of Directors andor with members of Board of Commissioners. • Members of Board of Directors are prohibited to have a double function as members of Board of Commissioners, Board of Directors or Executive Officers in banks, companies andor other institutions. • The members of Board of Directors shall not be considered as having a double function if the board of directors responsible for supervising the investment in the bank subsidiary perform functional duties as a member of board of commissioners in a non-bank subsidiary controlled by banks, provided that the double function referred to does not lead the person in question to neglect the implementation of duties and responsibilities as a member of the bank board of directors. • Members of Board of Directors both individually or collectively are prohibited to have shares more than 25 from the paid-up capital in another company. • Members of Board of Directors are prohibited to give general power to other parties which might lead to a transfer of duties and functions of Board of Directors. • Board of Directors shall be fully responsible for the execution of its Bank management. • Board of Directors must manage the Bank in accordance with their authorities and accountabilities as referred to in the Byelaw and the applicable laws and regulations. • Board of Directors must be accountable for the 92 execution of their duties to the shareholders through the General Meeting of Shareholders. • Board of Directors must disclose to employees any Bank policy strategic on personnel. • Every decision of the Board of Directors taken in accordance with the guidelines and code of conduct shall be binding and of the responsibility of the entire Board of Directors. • Former Board of Directors or Executive Officers of the Bank or other parties having connection with banks, that can influence their ability to act independently are not allowed to become Independent Parties as the members of audit committee and risk monitoring committee in the relevant banks prior to going through cooling off waiting period for six months. This regulation is not applicable for former members of Board of Directors or Executive Officers who perform supervisory function Banks must apply risk management related to the Bank management, Executive Officers, as well as the opening, change of status, change of address andor closing office of the Bank, at least covering: a. Active supervision of Board of Commissioners and Board of Directors; b. Adequate policy, procedure, and limit setting; c. Adequate identification, measurement, monitoring and risk control as well as risk management information system processes; d. Comprehensive Internal control system. One of the considerations in giving approvals for the next year plan on opening, change of status, change of address andor closing of office based on study submitted by banks which at least contains: a. A suitability with business strategy and impact to financial projection; b. A mechanism of supervision and evaluation of bank office performance; c. A comprehensive analysis bank wide covering