PUBLIC DOCUMENT No.
ISAGEN S.A. E.S.P. BYLAW REFORM
In the municipality of Sabaneta, Department of Antioquia, Republic of Colombia
on the _________________ (
) day of April, two-thousand fifteen (2015), before
me, MARTHA LUCÍA CUARTAS VANEGAS, the Sole Notary of Sabaneta
(Antioquia) Notary District, appeared JOSE MAURICIO MAYA ACHICANOY, of
legal age from Medellín, holder of Colombian citizen ID 79.298.144 and expressed
that: ONE: She was acting as the Legal Representative of ISAGEN S.A. E.S.P.
incorporated by Public Document No. 230 / April 4, 1995 issued by the Sole Notary
of Sabaneta, registered with the Medellín Chamber of Commerce on April 17,
1995, in Book 9, Folio 519, under number 3,628, identified with Tax ID 8110007404, as recorded in the Medellín Chamber of Commerce Certificate attached hereto.
TWO: That, in the condition stated, she proceeded to: 1) Notarize the partial
reform to the Company Bylaws approved in the Ordinary General Meeting of
Shareholders held on March 25, 2015, as recorded in Minutes No. 035 attached
hereto, by means of which the following amendments are made: (i) Amend Article
6 of the Company Bylaws by increasing the authorized share capital by COP
65,425,728,000 (SIXTY FIVE BILLION, FOUR HUNDRED AND TWENTY FIVE
MILLION, SEVEN HUNDRED AND TWENTY EIGHT THOUSAND COLOMBIAN
PESOS) for a new value of COP 133,577,528,000 (ONE HUNDRED AND THIRTY
THREE BILLION, FIVE HUNDRED AND SEVENTY SEVEN MILLION, FIVE
HUNDRED AND TWENTY EIGHT THOUSAND COLOMBIAN PESOS), as a
result of the capitalization of such sum, which was held in a temporary reserve for
investments and maintenance of the debt rating with creditors. Also, increase the
nominal value of the Company shares from COP 25 (TWENTY FIVE COLOMBIAN
PESOS) to COP 49 (FORTY NINE COLOMBIAN PESOS) legal tender each. 2) In
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one notary instrument, incorporate ISAGEN S.A. E.S.P.'s Company Bylaws,
including this reform. THREE: That, due to the aforementioned, the Bylaws of
ISAGEN S.A. E.S.P. are as follows: ---------------- CHAPTER I. NAME, LEGAL
STRUCTURE, REGISTERED ADDRESS AND LIFE OF THE BUSINESS. ARTICLE
ONE - NAME: The company is called ISAGEN S.A. E.S.P., and it is a Colombian
business. -------------------ARTICLE TWO - LEGAL STRUCTURE: ISAGEN S.A.
E.S.P., which may also go by the acronym ISAGEN, is a mixed public utility
company, incorporated as a limited liability trading company subject to the legal
system established in the Law on Residential Public Utilities.---------ARTICLE
THREE - REGISTERED ADDRESS: The Company's registered address is in the
city of Medellín, Department of Antioquia, Republic of Colombia. However, subject
to the fulfillment of the legal requirements, the Company may establish business
establishments, agencies, branches and subsidiaries anywhere on national
territory or abroad.-------------------ARTICLE FOUR - LIFE OF THE BUSINESS:
The life of the Company is for an indefinite term.---------------------------------------------------------------------------------------------CHAPTER II. – PURPOSE. ARTICLE FIVE
- CORPORATE PURPOSE: The Company's primary business activity is
generating and selling electrical energy, selling natural gas through networks, and
selling coal, steam and other energy resources for industrial use. PARAGRAPH:
As part of its corporate purpose, the Company may carry out all the activities
related with complementary to its corporate purpose, particularly the following: 1.
Produce and sell electricity, sell natural gas, sell the capacity to transport natural
gas and sell coal, steam and other sources of energy for industrial use. 2. Build,
acquire, or promote power plants and generation projects as deemed necessary,
and carry out related and complementary activities required for doing so. 3. Carry
out the mine exploration and exploitation activities (mines and quarries),
necessary for the Development and Implementation of the Generation Projects. 4.
Manage energy efficiency projects. 5. Providing technical services and developing
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energy solutions directly and/or through third parties. 6. Carry out the civil and
commercial acts desirable or necessary to do so, such as acquire all kinds of
assets, lien them with pledges or mortgages, sell all kinds of assets, borrow
money, take on commercial and banking obligations, issue, accept, endorse and
release all kinds of securities. 7. Take part in the social development of the Areas
of Influence of its offices, production centers and projects by implementing social
and environmental action plans. 8. Take part in other businesses and other public
utility companies, or those whose main objective is to provide a service or supply
a good that is necessary to fulfill its corporate purpose, as well as partner with
Colombian or foreign individuals or form consortia with them to carry out its
corporate purpose. 9. In general, enter into any act or contract directly aiming to
fulfill the corporate purpose. 10. At the request of its shareholders, the Company
may support, promote and manage ISAGEN's Democratic Stock holding
Programs, as provided by the applicable regulations on the matter. To this effect,
it may enter into and form a part of agreements by virtue of which it is assigned
general or specific responsibilities, in accordance with the interests of the
shareholder and the corresponding transaction. To do so, it requires the approval
of the General Meeting of Shareholders, pursuant to the ordinary majority system
referred to in the Bylaws. 11. 10. Promote scientific and technological activities
related to its corporate purpose, as well use the products thereof and apply them
technically and economically. --------------------------------------CHAPTER III. CAPITAL, SHARES, SHAREHOLDERS. ARTICLE SIX – AUTHORIZED
CAPITAL: The Company has authorized capital of one hundred and thirty-three
billion, five hundred and seventy-seven million five hundred and twenty-eight
thousand Colombian pesos (COP 133,577,528,000) legal tender, divided in two
billion, seven hundred twenty-six million, seventy-two thousand (2,726,072,000)
shares with a nominal value of forty-nine Colombian pesos (COP 49) legal tender
each. All the authorized capital has been subscribed and paid in.----------------------
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--------------------------------------------------------------ARTICLE SEVEN - VARIATIONS
IN CAPITAL: The General Meeting of Shareholders may increase or decrease
company capital; however, in order to decrease, it will be required to meet the
requirements established by Article 145 of the Commerce Code and any
regulations that should modify, add to or replace it.--------------------------------------------------------------------------------------------ARTICLE
EIGHT
-
SHARE
CHARACTERISTICS: The shares into which Company capital is divided into are
registered and can be broken down into two categories: Ordinary Shares and
Preferred Shares. The shares into which Company capital is divided will circulated
in common shares. These are dematerialized form (not on paper).as required by
law: The shares shall be paid and will be represented by a global title. The
Preferred Shares that are issued or those that become Preferred shall
haveNotwithstanding the privileges orderedaforementioned, the General Meeting
of Shareholders. If can decree the Preferred Shares are created by virtue of the
conversion of Ordinary Shares to Preferred Shares, the privileges shall be
included in temporary articles of issue of preferred stock with no voting rights. This
is in agreement with the law and these Bylaws, while ifbylaws. When issuing
preferred stock, in the corresponding stock issue regulations, the Preferred Shares
are created under a new issue, saidBoard of Directors must expressly indicate
rights and/or privileges shall be reflected inconferred on the respective
Regulationsshareholder as established by the General Meeting of Shareholders.
Unless expressly indicated otherwise, stock is issued in common shares only
conferring the rights established by law for the Issue and Placementthis type of
Sharesshares to the shareholder. Each share class must be registered in a
separate shareholder’s register.------- ARTICLE NINE – STOCK CERTIFICATES:
The certificate corresponding to the shares issued, transferred or encumbered,
that are circulating in dematerialized form, will remain under the custody and
administration of a specialized entity or a Centralized Share Deposit with
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experience in this type of activities previously selected by the Board of Directors..-------------------------------------------PARAGRAPH
ONE.
APPLICABLE
LAW:
Except as provided in this article, the circulation, charges and other matters and
operations relating to the dematerialized shares shall be governed by the
provisions established in the legal regulations applicable thereto, as well as all the
current and future regulations that may complement, modify or add to them.---------------------------------------------------------------------------------------------PARAGRAPH
TWO. POSSIBILITY OF MATERIALIZING THE SHARES: If so authorized by the
Board of Directors, the Company may decide that all or part of the shares will
circulate in physical form, in which case the regulations that govern the listing,
transfer and registration of physical or materialized shares will be applied.--------------------------------------------------------------------------------------ARTICLE
TEN
-
SHARE SUBSCRIPTION: The subscription, placement and payment of new
shares, whose issue has been authorized by the General Meeting of Shareholders
shall be in accordance with the regulations adopted by the Board of Directors,
which shall be issued subject to the law and as provided in these Bylaws.---------------------------------------------------------------------ARTICLE ELEVEN - RULES FOR
THE SUBSCRIPTION OF SHARES HELD IN RESERVE: 1. The total amount of
an issuance of Shares held in Reserve will be offered to the Company's
Shareholders in the same percentage represented by the number of shares owned
thereby in relation to all the Company shares in circulation at the time of issue. 2.
Once the regulations for the Issue and Placement of Shares Held in Reserve have
been approved by the Board of Directors, the Company's Chief Executive Officer
will offer them to the shareholders in the respective proportions, within the
following ten (10) days, indicating the value per share and the terms of payment
thereof. The offer will be made in general to all shareholders by publishing a notice
in a National newspaper. 3. The shareholders benefiting from the offer will have a
term of thirty (30) days as of the date of the offer to accept it, by written
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communication to be sent to the Company's legal representativeregistered agent
within the period provided herein. 4. The shares that are not subscribed based on
the above may be offered to individuals or legal entities of any kind, whether they
are shareholders or not, using the mechanism established by the Board of
Directors in the corresponding Stock Issue Regulations in accordance with the
law. The final balance of the shares issued but not subscribed will return to the
Company's reserve. PARAGRAPH ONE: The Regulations for the Issue and
Placement of Shares Held in Reserve to be approved by the Board of Directors in
accordance with Section 2 of this article shall contain: (a) the number of shares
offered, which can be no less than the number issued; (b) the proportion and form
in which they can be subscribed; (c) the term of the offer, which can be no less
than fifteen (15) days, and no more than one year; (d) the price at which they will
be offered, which shall be the result of a study conducted in accordance with
technically recognized procedures, unless determined otherwise by the General
Meeting of Shareholders; and (e) the deadlines for payment of the shares.---------------------------------------------------------PARAGRAPH TWO: The; and (f) when
issuing preferred stock with no voting rights, the rights and/or privileges conferred
on the shareholder as established by the General Meeting of Shareholders can
decide whether or not.----------------------------------------------------------PARAGRAPH
TWO: When issuing stock, the General Meeting of Shareholders is free to issue
shares without them being subject to the right of first refusalgranting any
preferential rights as long as at least seventy percent (70%) of the shares
represented at said meeting vote in favor.--------------------------------------------------------------------------PARAGRAPH THREE: In the event that the regulations adopted
by the Board of Directors provide for the payment of the subscribed shares in
installments, the provisions of Article 387 of the Commerce Code shall not apply.
As a result, the issue and placement regulation will provide that part of the price
must be paid at the time of subscription, as well as the deadline to pay the
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installments due.-----------------------------------------------------------------PARAGRAPH
FOUR. PROCEDURE TO COLLECT FROM DEFAULTING SHAREHOLDERS:
The respective Issuance and Placement Regulation will provide the procedure to
collect the charges and apply the mechanisms established in Article 397 of the
Commerce Code with respect to all any shareholders who should fall into arrears
in the payment of their shares.-------------ARTICLE TWELVE - RULES FOR
SHARE TRADING: The Company shares shall be freely traded, subject to the
limitations provided by Law for trading shares held by public entities.--------------------------------------------------------------ARTICLE THIRTEEN - SHARE LEDGER: If so
decided by the Board of Directors, the Company may delegate the administration
of the share ledger to the specialized entity or the Centralized Share Deposit
selected in the terms of Article 9 of these Bylaws; said entity will make the
corresponding annotations of the underwriters of the shares. Shareholders may
request a certificate of proof in order to exercise their inherent rights as such. The
content and characteristics of the certificates will be subject to the relevant legal
provisions. Until the value of the shares has been paid in full, only provisional
certificates will be issued.----------------------------------------------------------------------------------------PARAGRAPH. LOSS OR MISPLACEMENT OF CERTIFICATES OR
CERTIFICATES OF DEPOSIT: The theft or loss of a certificate or certificate of
deposit will not entail any legal consequences and the shareholder may simply
request a new certificate through the direct depositor.
----------------------------------
--------------------------------------------ARTICLE FOURTEEN - CAPITALIZATION:
The decision to capitalize the Company shall be made by the General Meeting of
Shareholders by the affirmative votes of the shares attending the respective
meeting.-------ARTICLE FIFTEEN - SHAREHOLDERS' RIGHTS: Shareholders
will have the rights contained in Article 379 of the Commerce Code and any
regulations that may modify, replace or add to them in the future, in addition to
those contained in these Bylaws. In addition to the rights contained in the above
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regulations, Shareholders will be entitled to: 1. Requesting and receiving material
information in order to make decisions regarding their investment. 2. A plural
number of Shareholders representing at least ten percent (10%) of the Company's
subscribed shares, may request, at their own expense and responsibility, a
specialized audit of the Company's financial statements pursuant to the rules and
procedures established in the Good Governance Code. 3. Exercising their rights
to claims and information, regardless of the value of their investment or the number
of shares they represent, within the limits established by Law. 4. Requiring the
Board of Directors to comply with the Corporate Governance Code, by submitting
their properly grounded requirements in writing. 5. Calling for a General Meeting
of Shareholders when requested by multiple Company Shareholders representing
at least ten percent (10%) of the total subscribed shares. 6. Freely trading shares.
7. Taking part in the distribution of Company profits, in accordance with their
shareholding and these Bylaws. 8. Participating and voting in the Ordinary and
Extraordinary Meetings of Shareholders, acting on their own behalf or represented
by their proxies or legal representatives.registered agents. 9. Considering the
reports and proposals submitted by the Board of Directors, including those related
to good governance practices and its compliance within the context of the General
Meeting of Shareholders. 10. Participating in the election of Board members and
the Statutory Auditor at the General Meeting of Shareholders. 11. Submitting
proposals to the Board of Directors pursuant to Article 40 of Law 964 of 2005.----------------------------------- PARAGRAPH ONE: Shareholder representation and the
indivisibility of shares shall be subject to the provisions of Articles 184 and 378 of
the Commerce Code and any regulations that may modify, replace or add to them
in the future.- --------------------------------------------------------------------------------------PARAGRAPH TWO: A plural number of Investors holding at least twenty percent
(20%) of the total of the securities issued by the Company to the Public Securities
Exchange, may request, at their own expense and responsibility, a specialized
8
audit of the Company's financial statements, in accordance with the regulations
and procedures established in the Corporate Governance Code.----------------------------------------------ARTICLE SIXTEEN - SHAREHOLDER DUTIES: In addition to
the duties established by Law, Shareholders shall have the obligations of: 1.
Acting loyally to the Company. 2. Abstaining from disclosing Company information
or information relating thereto, learned while exercising rights, to third parties, or
using it for their own or another's benefit, other than the benefits resulting from the
rights inherent to their capacity as shareholders. 3. Responding to any requests
for information from the Company in a timely manner.---------------------------------------------------------------CHAPTER
IV.
-
COMPANY
MANAGEMENT,
ADMINISTRATION AND REPRESENTATION. GENERAL MEETING OF
SHAREHOLDERS, BOARD OF DIRECTORS, GENERAL MANAGEMENT.
ARTICLE
SEVENTEEN- CORPORATE
BODIES:
For its management,
administration and representation, the Society has the following bodies, among
others: (a) General Meeting of Shareholders, (b) Board of Directors, and (c)
General Management. Each of the bodies shall act in accordance with the powers
and functions specified in these Bylaws and the Law. In addition, the Company will
have a Statutory Auditor to act as a permanent surveillance authority, in addition
to an Audit Committee. Company management will be exercised first by the
General Meeting of Shareholders, and second by the Board of Directors, as a
delegate thereof. The Chief Executive Officer will be in charge of legal
representation, administration and the management of company business.---------------------------ARTICLE
EIGHTEEN
-
GENERAL
SHAREHOLDERS, COMPOSITION AND FUNCTIONS:
MEETING
OF
All shareholders
registered in the Shareholder LedgerRegister make up the General Meeting, and
may attend either in person or through proxies or legal representativesregistered
agents, meeting according to the terms of the bylaws, or according to Law if not
stated in the bylaws. The functions of the General Meeting of Shareholders will
9
include the following, in addition to those that are not expressly assigned in the
Bylaws to other Company bodies: 1. Make its own regulations. 2. Establish
measures to ensure compliance with the Company's corporate purpose. 3. Reform
the Company Bylaws. 4. Designate for terms of two (2) years primary and alternate
members of the Board of Directors and set fees for attending Board of Directors
and its Committees' meetings. 5. Freely appoint and remove the Statutory Auditor
and his alternate, in accordance with the provisions in force. 6. Consider the
reports and projects submitted to it by the Board of Directors from the Chief
Executive Officer, the Statutory Auditor or the Committees designated by the
General Meeting of Shareholders itself, including those related to corporate
governance practices and compliance therewith. 7. Examine, approve or reject the
year-end Financial Statements and the specific reports to be presented or
submitted by the Administrators. 8. Order the constitution or application of the legal
reserves as well as those considered advisable, subject to the Law and these
Bylaws. 9. Order, pursuant to the Law and these Bylaws, the distribution of profits
for the fiscal year being approved, after deducting the amounts to be taken to the
legal reserve or those set by the General Meeting of Shareholders itself;
determining the amount of profit to be distributed, the term and the form of payment
of the dividends. The General Meeting of Shareholders may determine that the
amounts available at any time for distribution will be capitalized in full or in part
and that the amount is to be distributed in Company shares among the
shareholders and prorated to those held at the time of capitalization. 10. Agree on
how to write off losses, if any. 11. Order capital increases other than those
stipulated in Article 19.4 of Law 142 / 1994 or the regulations that modify it. 12.
Authorize the issue and placement of Shares Held in Reserve and bond issues,
subject to the issuance of non-convertible bonds that may be authorized by the
Board of Directors according to the Law and these Bylaws. 13. Authorize the
issuance of preferred shares and order the decrease in or removal of privileges.
10
14. Approve the disposal of assets whose amount is greater than or equal to fifteen
(15%) percent of ISAGEN's market capitalization. 15. Order the early dissolution
and authorize its transformation or merger with one or more other companies, or
its spin-off. In the event of Company liquidation, designate one or more liquidators
and set their corresponding remuneration. 16. Delegate one or more of its
functions in the Board of Directors or the Chief Executive Officer, whenever
deemed necessary, provided they have not been expressly reserved and the
delegation thereof is not prohibited. 17. Deal with and resolve impediments in the
event of a conflict of interest on the part of Board members, in the event that the
quorum cannot be met on the Board on the occasion of the conflict of interest. 18.
Any other functions assigned thereto by the Law or these Bylaws.-----------------ARTICLE NINETEEN - ANNOUNCEMENT AND GENERAL MEETING OF
SHAREHOLDERS: Announcements will be made by publishing a notification in a
national newspaper at least fifteen (15) business days in advance when a yearend balance sheet is to be discussed; in all other cases, five (5) calendar days'
notice shall be given.------------------------------------------------- PARAGRAPH ONE.
ORDINARY MEETINGS: The General Meeting of Shareholders shall be held
every year within the first three (3) months at the Company's headquarters, on the
date and time announced. If it is not announced, it shall meet by its own right on
the first business day of April, at 10:00 a.m., at the headquarters of Company
management.----------------------------------------------PARAGRAPH
EXTRAORDINARY
MEETINGS:
TWO.
The Extraordinary General Meeting of
Shareholders shall be held when called for by the Board of Directors, the Chief
Executive Officer, the Statutory Auditor or at their request when so requested by
a plural number of shareholders representing at least ten percent (10%) of the total
subscribed shares or when so ordered by the competent Superintendence in a
judicial order. The announcement shall indicate the date, time and place of the
meeting. --------------------------------------------------------------------------------.--------------
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------------------------------------------------------------------PARAGRAPH
THREE.
DOCUMENTS: The documents referred to in Article 446 of the Commerce Code
and those considered in any other legal regulations and the Company's Corporate
Governance provisions, will be made available to shareholders for inspection
during the term set forth in the announcement.
---------------------------------------
-------------------------------------------PARAGRAPH FOUR. RULES OF PROCEDURE
FOR THE GENERAL MEETING OF SHAREHOLDERS: The Rules of Procedure
for the General Meeting of Shareholders shall contain these Bylaws, the
Company's Corporate Governance provisions and the rules to announce and
execute the meetings. ---------------------------------------------------------------------------------------ARTICLE TWENTY - CHAIRMANSHIP OF THE GENERAL MEETING
OF SHAREHOLDERS: The General Meeting of Shareholders will be chaired by
the person designated by the Meeting itself.--------------------------------------------------ARTICLE TWENTY ONE - VOTES: In the case of decisions to be made by the
General Meeting of Shareholders, each share will be entitled to one vote.--------------------------------ARTICLE TWENTY TWO - QUORUM TO DELIBERATE: The
General Meeting of Shareholders shall deliberate in its ordinary or extraordinary
sessions with the participation of a plural number of persons holding or
representing an absolute majority of the subscribed shares.------------------------------------------------ ARTICLE TWENTY THREE – QUORUM TO DECIDE: In order for
the decisions of the General Meeting of Shareholders to be valid, the vote of at
least half plus one of the attending shares will be required, except for cases in
which the law requires a qualified quorum.---------------------------------------------------------PARAGRAPH: If a Ordinary or Extraordinary General Meeting of
Shareholders has been called for and the quorum to deliberate is not met, another
General Meeting of Shareholders will be announced. The meeting held as a result
of the latter announcement will deliberate and decide with a plural number of
personsshareholders, regardless of the number of shares represented. This
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second meeting shall be held at least ten (10) days and no more than thirty (30)
business days following the date set for the first meeting.--------------------------ARTICLE TWENTY FOUR - SUSPENSION AND TERM OF DELIBERATIONS:
The General Meeting of Shareholders may be suspended to resume as many
times as so decided by the vote of a plural number of those attending,
corresponding to at least fifty-one (51%) percent of the shares represented at the
meeting. Notwithstanding this rule, the chairman may order the usual recesses
for this kind of meetings.-------------------------------------------------------------------------ARTICLE TWENTY-FIVE - ELECTIONS: The electoral quotient system will be
applied whenever two (2) or more persons are to be elected as members of the
Board of Directors, Committee or Collegiate Body. The quotient will be determined
by dividing the total number of valid votes cast by the number of persons to be
elected. The counting will begin on the list with the highest number of votes and
so on in descending order. From each list, a number of names is declared elected,
as many times the the quotient fits into the number of votes cast thereby. If there
are any seats remaining, they will be filled by the highest remainders, counted in
the same descending order. In the event of a tie, winners shall be decided at
random. Blank votes are only be counted to determine the electoral quotient. The
persons elected cannot be replaced in partial elections without a new election
based on the electoral quotient system, unless the vacancies are proposed
unanimously. PARAGRAPH: The candidate list and candidates nominated for the
Board of Directors by shareholders must be presented to Company Management
at least eight (8) work days prior to the Meeting in which said body will be decided.
The Board of Directors nominees must present their curriculum vitae and a
declaration that they meet the necessary qualifications to sit on the Company's
Board at least three (3) business days prior to the Meeting in which said body will
be decided. The terms above are respectively reduced to three (3) and two (2)
business days when the Extraordinary Meetings are held to elect Board Members.
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Both the proposed candidate list and candidates with their respective curriculum
vitae and declarations will be at the disposition of the shareholders once they have
been reviewed by Management. ------------------ARTICLE TWENTY SIX MINUTES: Meetings, deliberations, decisions and other General Meeting of
Shareholders actions shall be recorded in minutes that shall be inserted in
chronological order into a book registered with the Chamber of Commerce. The
form and content of the minutes shall adhere to the relevant legal regulations. The
minutes shall be approved by the Committee designated by the General Meeting
of Shareholders for this purpose and signed by those empowered to approve
them, as well as the Chairman and Secretary of the meeting or, in their absence,
the Statutory Auditor. A duly authenticated copy of these minutes shall be
forwarded to the Superintendence of Residential Public Services. PARAGRAPH
ONE: The Minutes corresponding to the ordinary meetings will contain written
evidence of the presentation and approval of the financial statements and the
Auditor's report, if these documents are not included therein.
----------------------
----------------------------------------------------------------------PARAGRAPH TWO: The
Company's Secretary General Counsel will act as the secretary of the General
Meeting of Shareholders.------------------------------ARTICLE TWENTY SEVEN BOARD OF DIRECTORS: The Board of Directors will consist of seven (7) primary
members and their respective alternates, elected by the electoral quotient system
for two (2) year periods; they may be reelected or removed at any time by the
General Meeting of Shareholders. Alternate members will decide if primary
member is absent or has a conflict of interest. The Board members shall be elected
bearing in mind the proportional representation of each Shareholders' share, in
accordance with the following criteria: They are required to be professionals with
high moral and ethical standards, with analytical, management and leadership
skills, and as a whole, they should have knowledge of and experience in the
energy industry, finance, risk, strategy, law and business. At least three (3)twenty
14
five percent (25%) of the primaryprincipal members and their respective alternates
shall be independent.------------------------------------------------------------------------------------PARAGRAPH ONE: Appointment as a member of the Company's Board of
Directors canshall be based on a person or a specific position.---------PARAGRAPH TWO: INDEPENDENCE: In addition to the applicable legislation,
the Company considers a person an "independent" who in no case is: 1. A partner
or employee of a supplier of goods or services, when the value of the goods or
services acquired represents more than twenty percent (20%) of ISAGEN's
operating expenses or they represent twenty percent (20%) or more of the income
of the supplier of goods or services. 2. A partner or employee of a client when the
income from purchases represents more than twenty percent (20%) of ISAGEN's
total
sales.------------------------------------------------------PARAGRAPH
THREE:
Persons with an employment contract with the Company cannot be members of
the Board of Directors. PARAGRAPH FOUR. CHAIRMANSHIP: The Board of
Directors shall elect the person who will preside over their meetings from among
its
members.---------------------------------------------------------------------------ARTICLE
TWENTY EIGHT - FUNCTIONS OF THE BOARD OF DIRECTORS: In addition
to the statutory and special functions entrusted by the General Meeting of
Shareholders, the Board of Directors shall have the following functions: 1. Set the
course and general guidelines to manage the company's business, pursuant to
guidelines established by the General Meeting of Shareholders. 2. Comply with
and enforce the Bylaws and promote the reforms deemed appropriate. 3. Adopt
its regulations and those of its committees. 4. Appoint the Company's CEO and
his/her alternates, remove them, re-elect them and establish the CEO's
remuneration.
5. Approve the Institutional Development Plan and define the
guidelines for the management and approval of the budget. 6. Adopt the
Contracting Regulations, indicating the criteria, procedures and authorities to
15
which the Company shall be subjected in contractual matters. 7. Carry out
collective bargaining directly or by delegation in bargaining committees, Company
Management and/or third parties. In the second case, the delegation will contain
the guidelines that the delegate(s) are required to adhere to when bargaining;
these guidelines may include the Board of Directors' right to reserve the final
approval of the decisions to be made. 8. Judge the absences and leaves
presented by the Chief Executive Officer. 9. Approve6. Propose the guidelines for
the Company's labor management, the number of personsemployees to make up
the staff and the remuneration parameters 10thereof, for approval by the Board of
Directors. Regulate the subscription, placement and payment of new shares and
other securities authorized by the General Meeting of Shareholders or the Board
of Directors, as applicable. 11. Approve the Company's corporate governance
practices, evaluate, and enforce compliance therewith, deal with the claims filed
on the matter and report them at the General Meeting of Shareholders. 12. Monitor
the Company's economic and financial standing as well as its management. 13.
Evaluate the Company's management as well as that of the Chief Executive
Officer, and define the action to be taken as a result of this evaluation. 14. Monitor
enterprise risk management. 15. Decide on the conflicts of interest submitted to
the Board of Directors members or the Chief Executive Officer. 16. Evaluate the
effectiveness of the Corporate Control System. 17. Examine, at any time, the
accounting books and in general, the Company documents, as well as the status
of its assets. 18. Indicate the date for the ordinary General Meeting of
Shareholders and convene extraordinary meetings thereof. 19. CallCalling for a
General Meeting of Shareholders when requested by multiple Shareholders
representing at least ten percent (10%) of the total subscribed shares. 20. Create
temporary or permanent Committees to directly deal with the issues for which it is
responsible. 21. Appoint the advisers required by the Board of Directors for the
proper performance of its functions. 22. Annually, submit the Company's year-end
16
financial statements and the proposal for profit sharing or to write off losses, for
consideration by the General Meeting of Shareholders at its regular session with
the Chief Executive Officer. 23. Submit to the General Meeting of Shareholders,
every year, in its ordinary meetings, a report on the Company's economic and
financial standing and on the management of the corresponding period, along with
the relevant recommendations, pursuant to Articles 46 and 47 of Law 222 of 1995
or the rules which modify, add to or replace it. 24. Authorize the creation as well
as participation in other public utility companies or those whose main objective is
to provide a service or supply a good that is necessary to fulfill its corporate
purpose, both in Colombia and abroad. 25. Delegate one or more of the Board's
functions that may be delegated according to law to the Chief Executive Officer.
26. Authorize the Chief Executive Officer to delegate some of his/her statutory or
legal functions, including that of the legal representation of the Company before
certain domestic or foreign organizations or public or private entities, or for specific
projects. 27. Consider and respond to the proposals made by a plural number of
Shareholders representing at least five percent (5%) of the subscribed shares. 28.
Define the Company's accounting and internal control policies in accordance with
the legal regulations. 29. Authorize the issuance of bonds not convertible into
shares, commercial papers and the contracting of collective loans in accordance
with the legal regulations. 30. Set guidelines for the management of surplus cash
and carrying out the financial coverage operations to be performed by the
Company. 31. Order capital increases stipulated in Article 19.4 of Law 142 of 1994
or the regulations that amend or add to it. 32. Approve the valuation of assets in
kind received as payment for the subscription of shares, in accordance with the
law and the Commerce Code. 33. Approve the availability of assets with a value
of less than fifteen (15%) percent of ISAGEN's market capitalization. 34. Approve
new generation projects and the investments associated therewith. 35. To approve
the concession of sponsorships that are over one hundred seventy-six official
17
minimum monthly salaries in force, meeting the criteria of corporate convenience,
ethics and fairness. 36. Approve donations of which the authorization is not
designated to the CEO in the bylaws. This will require an affirmative vote of the
majority of independent members of the Board of Directors. 37. Set the guidelines
and monitor the execution of corporate sustainability practices, relations with
stakeholders and the economic, social and environmental impacts thereon or
thereby, as a result of the fulfillment of the corporate purpose.------------------------------------------------------------------------ARTICLE
29
-
INELIGIBILITY
AND
CONFIDENTIAL INFORMATION: When the Board of Directors' discuss and make
decisions regarding issues involving the strategy of ISAGEN or others that give it
a competitive advantage, the Board members that represent or belong to
companies of the competition are ineligible to participate and decide on these
issues, so they must withdraw from the meeting temporarily, and note will be made
thereof in the minutes and, in any case, the legislation in force, these Bylaws and
ISAGEN's Corporate Governance Code will apply in regard to conflicts of interest
for administrators. The information provided and disclosed to Board members to
carry out their activities as Company managers is to be used by them only for the
purpose for which it was provided, and they will be required to maintain the
required confidentiality to protect Company interests. Without prejudice to the
above the members of the Board of Directors will be subject to the ineligibilities
and incompatibilities indicated in Articles 44.3 and 44.4 of Law 142 / 1994 and all
other
legal
provisions
applicable
thereto.-------------------------------ARTICLE
THIRTY - ANNOUNCEMENT, INFORMATION, AND MEETINGS OF THE
BOARD OF DIRECTORS: Announcement of Board meetings shall be given at
least three (3) business days in advance. However, the Board of Directors may
meet without giving notice if all its members are attending. The announcement
shall include the agenda.------------------------------------------PARAGRAPH ONE.
INFORMATION: In order to facilitate decision-making by the Board members,
18
provided there has been an announcement of a meeting, the information regarding
the decisions to be made at the respective meeting will be made available
following the announcement thereof.-----------------------PARAGRAPH TWO.
ORDINARY MEETINGS: The Board of Directors will hold regular meetings at least
once a month, on the date and time indicated by the Board or pursuant to the
needs of the Company. PARAGRAPH THREE. EXTRAORDINARY MEETINGS:
Extraordinary Board meetings may be called for by the Company's Chief Executive
Officer, the Statutory Auditor, or at least three (3) Board members acting as
principal members, to deal with any urgent matters.----PARAGRAPH FOUR.
TELECONFERENCE
MEETINGS:
The
Board
of
Directors
may
hold
teleconference meetings and make decisions based on the terms provided in
Articles 19 and 20 of Law 222 / 1995 or the rules which modify, add to or replace
it.------------------------------------------------PARAGRAPH
FIVE.
BOARD
OF
DIRECTORS' RULES OF PROCEDURE: The Board of Directors' Rules of
Procedure shall contain these Bylaws, the Company's Corporate Governance
provisions and the rules to announce and execute the meetings.---------------------------ARTICLE THIRTY-ONE - VOTES: Each of the Board members, principal or
alternate, as applicable, will be entitled to one vote for the purposes of decisionmaking.------------------------------------------------------------------------------------------------ARTICLE THIRTY-TWO - QUORUM AND MAJORITIES: The Board shall
deliberate when at least six (6) members are in attendance and at least one must
be a primary member. Decisions can be made with the affirmative vote of at least
four (4) members. ---------------------------------TRANSITIONAL PARAGRAPH: If
one of the decisions contained in (5.6.1) of the Shareholders' Agreement signed
by the Government on December 29, 2006, while it is in force, is to be made during
the meeting and the quorum required to make decisions as provided herein has
not been met, the Government may call for another meeting in the terms set forth
in these Bylaws, and at that meeting, the Board may deliberate with the presence
19
of the majority of its members and decide with the affirmative vote of four (4)
members. This paragraph includes a provision contained in (4.1.2) of the
Shareholders' Agreement signed by the Government on December 29, 2006, and
it will remain in force until said agreement is terminated--------------------------------TRANSITIONAL PARAGRAPH: If in the meeting, one of more of the following
decisions is proposed, and the quorum required as provided herein is not
achieved, two (2) of the Board Members can directly call another Board Meeting
to deliberate and decide on the matters. The Board of Directors can hold this
meeting as long a majority of its members is present, and it can decide on the
matters if four (4) members vote in favor. Said decisions include the following: 1.
Disposal of assets whose amount is greater than three percent (3%) and less than
fifteen (15%) percent of ISAGEN's Market Capitalization. 2. Making investments
in other companies or partners of any nature, or undertaking new energy
generation projects, whether the investment is made in one single transaction or
a series of related transactions in a term of twelve (12) consecutive months, when
the amount of said investment is greater than three percent (3%) of ISAGEN's
Market Capitalization. 3. Approval of the Institutional Development Plan and
Annual Expenses and Investment Budget, or any amendment to the latter, in an
amount greater than five percent (5%). 4. Authorization by ISAGEN's Chief
Executive Officer allowing him or anyone authorized to hire to begin the
procedures to enter into contracts the execution of which includes resources not
listed in ISAGEN's Annual Expenses and Investment Budget, or duly constituted
future versions thereof, having already received the corresponding amendment to
the Annual Expenses and Investment Budget. 5. Capital increases set forth in
Article 19.4 of Law 142/1994; in any case, the price established in the respective
stock subscription regulation must be the result of a study carried out in
accordance with technically recognized procedures.--------- ARTICLE THIRTY
THREE - MINUTES: The deliberations and decisions made by the Board shall be
20
recorded in minutes, which will be inserted in chronological order in a book
registered with the ChamberCompany's Book of Commerce. Minutes. Said
minutes shall be approved at the meeting or at the following session and signed
by the President and the Secretary.--------------------------------------------------------------------------------------------..--------------------------------------------------------------------------------------------ARTICLE THIRTY-FOUR - GENERAL MANAGEMENT: Company
Management, its legal representation and the management of its business will be
the responsibility of the CEO, who will have four (4) alternates to substitute him
during any temporary or permanent absences.--------------------------------------PARAGRAPH: The Chief Executive Officer will have a voice but no vote in the
decisions made during the meetings of the Board of Directors.----------------------------------------------------ARTICLE THIRTY-FIVE - FUNCTIONS OF THE CHIEF
EXECUTIVE OFFICER: In addition to the powers and duties assigned by Law, the
General Meeting of Shareholders or the Board of Directors, the Chief Executive
Officer shall have the following functions: 1. Comply with and enforce the
Company Bylaws and regulations, the Corporate Governance Code, as well as
the decisions of the General Meeting of Shareholders and the Board of Directors.
2. Take responsibility for the Company's internal control. 3. Compile and submit
for approval by the Board of Directors, the governance practices in the Company's
Corporate Governance Code, ensure its compliance, handle the claims filed on
the matter within his competence, and report to the Board of Directors on these
issues. 4. Enter into contracts and incur in obligations on behalf of the Company
based on the criteria approved by the Board of Directors. Delegate the processing
and signing of these contracts and obligations in employees holding positions at
the executive level, in accordance with the contracting regulations issued by the
Board of Directors. 5. Take responsibility for contracting and ensure that the
Company complies with the contracting procedures established by the Board of
Directors. 6. Propose the guidelines for the Company's labor management, the
21
number of employees to make up the staff and the remuneration parameters
thereof, for approval by the Board of Directors. 7. Grant power of attorney for
proxies to deal with legal affairs and other matters, as well as for the paperwork to
be processed with authorities. 8. Delegate functions for specific issues. 9. Submit
the Institutional Development Plan and the annual budget to the Board of Directors
for approval and execute them once they have been approved. 10. Define the
Company's organizational structure, select and designate the persons to hold the
positions in accordance with the personnel approved by the Board of Directors,
decide on resignations and manage labor relations in accordance with the
guidelines issued by the Board of Directors. 11. Decide on the Company's
commercial, financial, technical and administrative matters. 12. Ensure that the
Company's accounting and books are properly kept, authorize and sign the
general and specific financial statements and submit them for consideration by the
Board of Directors. 13. Submit reports on the Company's progress and its
commercial, technical, administrative and financial standing for consideration by
the Board of Directors. 14. Submit the year-end financial statements along with a
general report on the course of business for the preceding year to the Board of
Directors and the General Meeting of Shareholders on a yearly basis. 15.
Determine the investment of surplus cash and carry out financial hedging within
the guidelines issued by the Board of Directors. 16. Announce the annual Ordinary
General Meeting of Shareholders for the date previously determined by the Board
of Directors, and call for extraordinary sessions as required. 17. Call the Board of
Directors to Ordinary and Extraordinary General Meetings of Shareholders. 18.
Appear before a notary public, to legalize the decisions of the General Meeting of
Shareholders or the Board of Directors that require notarization.19. Post the
Corporate Governance Code on the Company website for reference by
Shareholders and Investors. 20. Ensure respect for the rights of its Shareholders
and other Investors, in accordance with the parameters set by the market
22
controlling authorities. 21. Provide timely, complete and truthful information to the
market regarding the acts or events, including decisions, with the potential to affect
the company and its business or to influence the determination of the price or the
circulation of the shares and other securities issued by the Company. 22. Submit
to the Board of Directors a semi-annual report on operations with subsidiaries
carried out during the period, as well as the conditions thereof. 23. Certify that the
financial statements and other relevant public reports do not contain flaws,
inaccuracies or errors that obscure the true nature of the Company's assets,
liabilities or operations. 24. Any others assigned by Law, these Bylaws, and the
Corporate Governance Code. -----------------------------------------------------------------------PARAGRAPH: In carrying out the Plans and Programs for the Company's
policy on social and environmental responsibility, the Chief Executive Officer may
authorize donations to the territorial entities, organized communities and legal
entities in the areas of influence of the Company's headquarters, production
centers and projects, up to a total of five hundred (500) legal minimum monthly
salaries when it comes to assets previously written off. In all other cases, the
donation must be authorized by the Board of Directors and must have an
affirmative vote of the majority of its independent members.----------------------------- CHAPTER V. STATUTORY AUDITOR. ARTICLE THIRTY SIX - STATUTORY
AUDITOR: The Company shall have one (1) Statutory Auditor and one (1)
alternate to replace in during temporary or permanent absences. PARAGRAPH
ONE: Auditing Firm will be carried out by a firm that meets the requirements of the
Law and those established in the Corporate Governance Code. The selected firm
will assign a professional to act on its behalf as the Statutory Auditor and his
alternate, both of which must meet the legal requirements established in this
regard.--------PARAGRAPH TWO. TERM: The term of the Statutory Auditor and
his/her alternate shall be the same as that of the Board of Directors as of the
election thereof. PARAGRAPH THREE. ELECTION: The General Meeting of
23
Shareholders shall designate the Statutory Auditor from among the various
alternatives presented, based on an objective evaluation in accordance with the
principles and procedures set forth in the Contracting Regulations.----------------------------------------------------------ARTICLE THIRTY-SEVEN - FUNCTIONS: The
Statutory Auditor will have the functions contained in Article 207 of the Commerce
Code and Law 43 / 1990, those provided for in these Bylaws and the Corporate
Governance Code, those indicated by the General Meeting of Shareholders and
those contained in the rules that modify, replace or add to them, and in particular
the following: 1. Evaluate the Corporate Control System. 2. Collaborate with
government authorities of regulation, control and reporting, or third parties as
required, following assessment of the applicability thereof. 3. Review and sign the
tax return, responses to requisitions and other certifications that require the
signature of the Statutory Auditory, in accordance with legislation in force. 4.
Check the correct calculation and timely payment of benefits to the
Comprehensive Social Security System. 5. Make sure Management fulfills the
specific duties established by supervisory authorities, particularly those associated
with informational obligations and the application of the Corporate Governance
Code. 6. Hear the complaints regarding violations of Shareholders' rights.
PARAGRAPH. INELIGIBILITIES AND INCOMPATIBILITIES: Persons who have
incurred in the ineligibilities or incompatibilities provided by Law cannot be elected
as Statutory Auditor. In addition, the Statutory Auditor's work must be free from
any conflict of interest that may reduce their independence and may not have any
kind of subordinate relationship with members of the Company's Board of
Directors members or Managers.-------------ARTICLE THIRTY-EIGHT - LISTING
IN THE BUSINESS REGISTRY: The Business Registry shall list the names of
the members of the Board of Directors, the Chief Executive Officer and their
alternates, and the Statutory Auditor and his alternate, based on a copy of the
relevant part of the minutes of the General Meeting of Shareholders or Board of
24
Directors' Meeting, as applicable, in which said designation or appointment was
made, which must be duly approved and signed by the Chairman and the
Secretary.--------------------------------------------------------------------------------------------CHAPTER VI. -
RESERVES. ARTICLE THIRTY NINE - RESERVES: The
Company shall establish a Legal Reserve of at least fifty percent (50%) of the
subscribed capital, made up of ten percent (10%) of the net profits of each fiscal
year. Should this reserve fall below the limit set by law, the General Meeting of
Shareholders shall again allocate ten percent (10%) of said profits, until the limit
has been reached. In addition to reserves ordered by law, the General Meeting of
Shareholders may establish occasional reserves as it deems necessary, provided
they are for a special purpose and follow the procedure established in Article Fortyone of these Bylaws to do so. These reserves will only be mandatory for the period
in which they are made and the General Meeting of Shareholders may change
their purpose or to distribute them if proven unnecessary.--------------------------------------------CHAPTER VII. OTHER PROVISIONS. ARTICLE FORTY - PROFITS:
Following approval of the financial statements, the General Meeting of
Shareholders shall distribute the profits, making the relevant provisions in terms
of reserves and dividends. Profits will be distributed in proportion to the amount
paid of the nominal value of the shares. The total amount of profits distributed to
Shareholders each year can be no less than the minimum percentage of
mandatory distribution according to the law, unless otherwise specified by the
General Meeting of Shareholders, in authorized cases, based on the favorable
vote of a plural number of persons representing at least seventy-eight percent
(78%) or more of the Company's subscribed shares; however, the profits that are
not distributed are to be allocated as reserves, subject to the legal and statutory
requirements. TRANSITIONAL PARAGRAPH: The Company's net profits shall
be calculated as follows: 1. The profit produced before taxes is taken, based on
the real, reliable Financial Statements of each accounting period; then, the
25
following items are subtracted from that amount: (a) the provision for income tax
and complementary taxes; (b) the amount to cover the losses from previous years
that affect capital under the terms of the paragraph in Article 151 of the Commerce
Code; and (c) reserves in accordance with legal requirements. 2. The percentage
to be distributed in accordance with Articles 155 and 454 of the Commerce Code
will be applied on the balance thus determined, according to the applicable
standard, or the rules which modify, add to or replace it. This will be the minimum
amount to be distributed as the dividend for each period. 3. Subject to the above,
the General Meeting of Shareholders may order the establishment of an
occasional reserve with the simple majority of the shares present at the meeting,
which can also be subtracted from profit before taxes to calculate net profit,
whenever necessary in order for the Company retain its financial strength and
keep its corporate debt rating at Triple A ("AAA"), or in order to fulfill contractual
commitments with financial institutions or investors. Therefore, only in this case,
the occasional reserve ordered by the General Meeting of Shareholders will be
included as an additional item to be subtracted in calculating net profit in the terms
described above. The amounts resulting after ordering the minimum dividends in
accordance with (1), (2) and (3) of this paragraph shall be made available to the
General Meeting of Shareholders to make the statutory or voluntary reserves, or
to be distributed as dividends. This paragraph includes a provision contained in
(4.1.2) of the Shareholders' Agreement signed by the Government on December
29, 2006, and it will remain in force until said agreement is terminated.--------------------------------------------------------------------------------------------------ARTICLE
FORTY-ONE - LOSSES: The losses, if any, will be covered by the reserves
established for such purpose and, in their absence, with the Legal Reserve. The
reserves, whose purpose is to absorb specific losses, cannot be used for other
purposes, unless otherwise agreed by the General Meeting of Shareholders. If the
Legal Reserve is insufficient to cover the decrease in capital, the profits of the
26
following accounting periods will be applied thereto, until the decrease has been
covered completely, prior to which they can be used for no other purpose. The
General Meeting of Shareholders may take or order measures to reestablish net
equity in the event of losses that have decreased equity to less than fifty percent
(50%) of the Company's subscribed capital, such as the sale of corporate assets
that have increased in value, the reduction of subscribed capital pursuant to the
Law or the issuance of new shares. Any of these measuresThe cause for
dissolution must be taken within six (6sent with eighteen (18) months followingfrom
the determinationdate when the General Meeting of Shareholders becomes aware
of the losssaid event. Otherwise, the Company must go into liquidation.---------------------------------------------------ARTICLE FORTY-TWO - DISSOLUTION OF THE
COMPANY: The Company shall be dissolved: 1. If it is impossible to fulfill its
corporate purpose. 2. Due to a reduction in the number of shareholders to less
than the legal minimum. 3. Based on the decision of the General Meeting of
Shareholders with the favorable vote of the majority of shares attending the
respective meeting. 4. Based on the decision of a competent authority. 5. In the
event of losses that reduce net equity to less than fifty percent (50%) of the
subscribed capital. 6. Any other grounds provided for by law.----------------------------------------------------------ARTICLE FORTY-THREE - LIQUIDATION OF THE
COMPANY: Once the Company has been dissolved, its liquidation will begin
immediately, subject to the measures provided in Article 61 of Law 142 / 1994 to
ensure continuity in the provision of services. Unless there is an express legal
exception, any act that is not directed to the liquidation will make the Liquidator or
Liquidators and the Statutory Auditor that did not oppose to it, joint and severally
liable. The company name must include the words: UNDER LIQUIDATION; if this
requirement is not met, the Liquidator or Liquidators and the Statutory Auditor that
did not oppose to it, will be joint and severally liable for any damages caused.-----------------ARTICLE FORTY-FOUR - DISPUTE RESOLUTION: Any controversies
27
arising during the development of the contract, between the Company and the
Shareholders, or among Shareholders, that have to do with topics inherent to the
contract, will attempt to be resolved in the first instance by direct settlement,
through the action of mediators or reconciliation.
Settlement using these
alternatives is to be achieved within thirty (30) business days following the date
upon which the grounds of the controversy is notified by one party to the other;
otherwise, they will go to Arbitration. The thirty (30) day term can be extended by
mutual agreement between the parties. PARAGRAPH ONE: Arbitration will be
legal and will be carried out at the Center for Reconciliation, Arbitration and
Amicable Settlement of the Medellín Chamber of Commerce, through a Court of
Arbitration or a single arbitrator. PARAGRAPH TWO: The Court of Arbitration
shall consist of three (3) arbitrators, who are required to be Colombian exercising
their civil rights as citizens and registered lawyers, because their ruling will be
made in accordance with the law. The same requirements are to be met in the
case of a single arbitrator. PARAGRAPH THREE: The arbitrators are to be
appointed by the parties by mutual agreement. If an agreement cannot be reached
in this regard, either party may go to the Center for Reconciliation, Arbitration and
Amicable Settlement of the Medellín Chamber of Commerce to designate the court
or arbitrator, pursuant to the applicable legislation, from the list available for this
purpose.-----------------------------------------------------------------ARTICLE
FORTY-
FIVE - PROHIBITIONS: Subject to the provisions set forth in the Laws and these
Bylaws, the Company is prohibited from acting as a guarantor for the obligations
of its partners or third parties, except in the cases of: 1. Obligations to support
companies or associations in which the Company has shares, limited to the
percentage of its holding in the capital thereof, for the obligations incurred by them
with legally constituted financial entities or insurance companies monitored by the
competent authorities in Colombia or abroad, subject to approval by the Board. 2.
Obligations to back specific-purpose companies, in which the Company has
28
shares, limited to the percentage of such holding in the capital thereof, for
obligations incurred by them with suppliers of goods and/or services for the
construction of the projects assigned to the Company and developed through this
type of companies.------------------------------------------ARTICLE FORTY SIX BYLAW REFORMS: The reforms of these Bylaws are to be approved by the
General Meeting of Shareholders in just one ordinary or extraordinary session,
based on the corresponding number of votes. The reforms are to be submitted for
the study by the competent Superintendence, in cases that prior authorization is
required, and once authorized, they are to be notarized by the Chief Executive
Officer.
-------------------------------------------------------------------------------ARTICLE
FORTY-SEVEN - DISCLOSURE OF INFORMATION: The Company shall
disclose all the information to be sent to the Financial Superintendence at the
frequency required in accordance with the existing regulations. TRANSITIONAL
PARAGRAPH: Subject to the above, the Company will be required to comply with
the policy on disclosure of information established in (5.1) of the Shareholders
Agreement signed by the Government on December 29, 2006, during the term
thereof.-----------------------------ARTICLE FORTY-EIGHT - OPERATIONS WITH
SUBSIDIARIES: ISAGEN's operations and relations with Affiliates for the
procurement and sale of goods and services will be carried out in compliance with
objective criteria and market conditions, under the terms and conditions and with
the costs usually agreed to by ISAGEN with unrelated third parties. For the
purposes of these bylaws, the following are considered subsidiaries: (I) The
Government and the other shareholders holding more thanAccionistas que
posean más del 10% ofde las acciones de ISAGEN stock;; y, (II) Companies in
which the government or any shareholder holding more thanEmpresas en las
cuales cualquier accionista que posea más del 10% ofde las acciones de ISAGEN
stock, hold more than, tengan una participación accionaria superior al 50%, and;
(III) the companies or assigned to the different Ministries or administrative
29
departments.-------------------------------------------------------------------------------------%.--------------------------------------------------------------------------------------CHAPTER
VIII. - THE AUDIT COMMITTEE. ARTICLE FORTY-NINE - AUDIT COMMITTEE:
The Company shall have an Audit Committee appointed by the Board of Directors
and consisting of at least three (3) members thereof, including, if possible, all the
independent members. The chairman of the Audit Committee shall be an
independent member of the Board of Directors. The members of the Audit
Committee are required to have sufficient experience to comply fully with the
corresponding functions. As prescribed by Law 142 / 1994, the Chief Executive
Officer will attend the meetings of the Audit Committee with the right to a voice
and vote. As prescribed by Law 964 / 2005, the Company's Statutory Auditor will
attend with the right to a voice but no vote. The decisions of the Audit Committee
will be approved by simple majority. The Audit Committee shall meet at least once
every three (3) months. A record of the Audit Committee's decisions will be made
in the minutes, for which the provisions of Article 189 of the Commerce Code shall
apply.----------------------------------------------------------ARTICLE
FIFTY
-
FUNCTIONS: The Audit Committee handles aspects relating to the corporate
control system; corporate risk; agencies providing external control, the evaluation
of financial results and any others contained in the Company Bylaws and
Colombian Law. In order to carry out its functions, the Audit Committee may hire
independent experts in the specific cases in which it deems appropriate, taking
into account the Company's general contracting policies. The financial statements
shall be submitted for consideration by the Audit Committee before the Board of
Directors and the General Meeting of Shareholders.------------------------------------------------------------CHAPTER IX. CONFLICTS OF INTEREST. ARTICLE FIFTYONE - HANDLING CONFLICTS OF INTEREST: A conflict of interest is when the
Board of Directors members and its Committees, the CEO and employees, directly
or through third parties, find themselves in a situation that reduces their
30
independence or objectivity or are asked to make a decision and/or seek
alternative actions, where they have the possibility of choosing between the
interests of the Company and their own personal benefit or that of a third party.
Should a conflict of interest arise while a manager or employee carries out their
functions, he or she should act according to the parameters established in
Corporate Governance Code. In the event that a conflict of interest should arise
involving the Board Members, and for that reason there is no quorum, the points
shall be reviewed in the General Meeting of Shareholders. -----------------------------------------------------------TRANSITIONAL ARTICLE- TERM OF THE BOARD OF DIRECTORS ELECTED
FOLLOWING THE DEMOCRATIZATION PROGRAM: Subject to the provisions
of Article Twenty-seven of these Bylaws on the term of the Board of Directors, the
term of the Board of Directors elected by the second Extraordinary General
Meeting of Shareholders in 2007, will be up to the Ordinary General Meeting of
Shareholders in 2009.
31