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Independence Criteria

The following criteria are to be used for the determination of the independence of the members of the Board of Directors:

Employee relationship:

A Director is not considered as independent if he/she or his/her spouse has been a Senior Manager of the Bank or the Group, or his/her spouse has been a member of the Board of Directors of the Bank or the Group at anytime during the past five years.

Affiliated company relationship:

A Director is not considered as independent if he/she is or has been during the past 12 months, an executive managing Director or executive member of the Board of Directors of a directly or indirectly associated or subsidiary company.

Business relationship:

A Director is not considered as independent if he/she:

  •  Maintains or maintained (either himself/herself or his/her spouse) during   the past three years a material business relationship[1] with the Group, either directly, or as a substantive shareholder, partner, director or senior manager of an entity which maintains such a relationship with the Group.
  •  Receives or has received any material additional remuneration from the Group apart from the usual fees as a non-executive member of the Board of Directors (and Board Committees). Additional remuneration includes the participation in the Group’s share options or any other performance related incentive or target granted to the Director.  Additional remuneration does not include a fixed income from a retirement scheme, including post dated income regarding previous services to the Group provided that this income does not relate in any way with the continuation of these services.
  •  Was granted credit facilities (loans or guarantees) from / by the Group, either personally, or his/her spouse, their children who are minors, their parents as well as companies in which they hold a percentage of over 20% of their share capital and in which they exercise material control, of a total amount which exceeds €500.000.
  • Has exposure with the Bank either personally, or their connected persons that constitute a group of connected persons[2], their spouse and their children who are minors.

Family relationship:

 A Director is not considered as independent if he/she has close family ties[3] with any of the other members of the Board of Directors or with any of the Bank’s Senior Executive Managers.

Relationship with advisors:

 A Director is not considered as independent if he/she:

  • Has any business relationship or close family ties (up to first degree) with any of the company’s advisers.
  • Is or has been during the past three years an external consultant or an external auditor or partner or senior manager (directly responsible for the affairs of the Bank) of external consultants or auditors of the Bank or the Group.

Tenure:

A Director is not considered as independent if he/she has served on the Board of Directors for a period exceeding nine years, consecutive or not.

Shareholder relationship:

A Director is not considered as independent if he/she is a major shareholder[4] or represents a major shareholder or has close family ties with a major shareholder.

Relationships with other Directors:

A Director is not considered as independent if he/she has any other connection with the Senior Executive Management or with members of the Board of Directors of the Bank or the Group through any business relationship (for example, through common ownership, directly or indirectly, of 20% or more of voting rights or share capital of a company and/or through cross-directorships in a company, excluding non-profit making organisations).

Where the Board of Directors considers that a Director is independent, even though not all the independence criteria are satisfied, it may classify him/her as independent provided it can adequately justify its view.  It must explain its position to the Central Bank of Cyprus and to the shareholders of the Company in the Annual Corporate Governance Report.

  


[1] “Material business relationship” is the business relationship with a supplier of goods or a provider of services which involves a total financial transaction, on a consolidated basis, which exceeds the sum of €100.000 or 2% of the consolidated turnover of the preceding financial year of the supplier, whichever is smaller.  Organisations which receive from the Group significant contributions (more than 3% of the consolidated income of the organization in the preceding year), and providers of financial, legal, accounting and other related consulting services, independent of the fees of such service.

[2]  “Connected persons or group of connected persons”

    a) Two or more natural or legal persons, unless it is shown otherwise constitute a single risk because one of them, directly or indirectly, has control over the other or others; or

     b) Two or more natural or legal persons, between whom there is no relationship of control as described in paragraph a) but who are to be regarded as constituting a single risk because they are so interconnected that, if one of them were to experience financial problems, in particular funding or repayment difficulties, the other or all of the others would also be likely to encounter funding or repayment difficulties

[3]  “Close family ties” include the parents, the husband/wife, the children, the brother or sister, the father or mother in law and the brother or sister of the husband/wife

[4] “Major shareholder” means a person who possesses five per cent (5%) or more to the shares or the voting rights