All translated documents relating to the Annual Shareholder s Meetings have originally been issued in Spanish. In the event of a discrepancy, the Spanish-language version prevails. REPORT ELABORATED BY THE BOARD OF DIRECTORS FROM HISPANIA ACTIVOS INMOBILIARIOS SOCIMI, S.A. IN RELATION TO THE PROPOSED APPOINTMENT OF MR. BENJAMIN D. BARNETT, INCLUDED IN THE POINT FIVE OF THE AGENDA OF THE GENERAL SHAREHOLDERS MEETING TO BE HELD ON THE 6 th AND 7 th OF APRIL 2017 IN FIRST AND SECOND CALL RESPECTIVELY 1. INTRODUCTION This justification report has been elaborated by the Board of Directors from Hispania Activos Inmobiliarios SOCIMI, S.A. (Hispania or the Company) pursuant to section 6 of the article 529 decies of the Spanish Companies Law regarding the proposal of appointment as Board Member of Mr. Benjamin D. Barnett and consequently the increase of the size of the Board of Directors to seven (7) members. Such proposal derives from the formal petition received from Soros Fund Management LLC, under its condition of fund manager and representative of various funds which together account for a shareholding in the Company of 16.56% (Soros Funds). 2. JUSTIFICATION OF THE CONVENIENCE TO ATTEND SOROS FUND MANAGEMENT LLC S PETITION The Board of Directors has analysed the convenience of attending Soros Fund Management LLC s petition, and thus proposes the appointment of a proprietary Board Member and the consequent increase in the number of Board Members. Given this, among other factors, the Board of Directors has taken into account that Soros Funds would have been, given the circumstances, entitled to designate directly a Board Member given the proportional representation system provided in the law, as well as to promote, if they deem so, a complementary call according to the article 519 of the Spanish Companies Law, requesting the increase in the number of members of Board of Directors in such way that, if to be approved in such agreement, they could have assigned a proprietary Board Member under the application of such right of proportional representation ruled by the article 243 of the Spanish Companies Law, the Board of Directors thus communicate it s the right moment to add a proprietary Board Member who provides the experience and viewpoint of an expert and sophisticated investor such as Soros Fund Management LLC, without jeopardizing or limiting the independence of the Board of Directors, which will continue to have a majority of independent members, or the External Manager s duties in relation to the Investment Managers Agreement in place. Furthermore, the Board Members understand that a Board of Directors comprised of seven (7) members allows continuing with an appropriate and reasonable size, in accordance with Best Corporate Governance Recommendations and without giving a preferential treat to Soros Funds under any circumstances in accordance to that stated in articles 97 and 514 of the Spanish Companies Law (especially if considering that this shareholder is currently the largest shareholder of the Company). Furthermore, if the proposal gets approved, the independent Board Members of the Company will continue to hold the majority of seats (57.14% of the Board members to be exact, against 14.29% proprietary and 28.57% external members) In relation to the above mentioned, the Board of Directors of the Company considers that it is totally justified from the Company s social interest point of view to attend the petition of Soros Fund Management LLC and by which to propose the General Shareholders Meeting the appointment of a new Board Member and the consequent increase in the number of members included in the Board of Directors to seven (7).
Given the above mentioned, and in accordance with the article 529 decíes of the Spanish Companies Law, the Board of Directors must elaborate a justification report in which to judge the competence, experience and merits of the candidate proposed, which will be presented along with a report elaborated by the Appointments and Remuneration Committee pursuant the candidate would ascribe to the category of proprietary Board Member. This report also includes the information referred to in article. 7.2 (e) of the Regulations of the General Shareholders Meeting and article 518 of the Spanish Companies Law. 3. DESCRIPTION OF THE PROPOSED CANDIDATE (A) Professional and biography profile of Mr. Barnett The candidate to take the new Board member seat in the Company proposed by Soros Fund Management LLC is Mr. Benjamin D. Barnett. Mr. Barnett studied in the Phillips Academy Andover and has a bachelor in mathematics by the Middlebury College in Vermont, United States of America. Mr. Barnett started his professional path in New York as analyst in CSFB (before Donaldson, Lufkin & Jenrette) in the area of investment banking restructuring. He then worked for Fortress Investment Group, firstly in New York and afterwards in London where he had the role of Vicepresident of the private equity area. In 2009 he took over the role of Managing Director of Capital Markets in BECM in London, after which he became Managing Partner in San Vicente Capital in Los Angeles in 2012. Currently Mr. Barnett is analyst in Soros Fund Management UK Management LLP in London since 2014 and Trustee of the RCRT Foundation. (B) Member of other Board of Directors According to the provided information, Mr. Barnett is Trustee of the RCRT Foundation since 2015, where he heads the strategic department of this British non-profit organization focused on child education and health programs. Furthermore, between 2012 and 2014, Mr. Barnett was the Managing Partner of a private equity firm called San Vicente Capital, located in Los Angeles, California (USA). (C) Availability It has been verified with the candidate his availability to provide the required dedication to fulfil the position. (D) Category of Board Member to which he should ascribe Given the fact that Mr. Barnett is currently employee of a Company associated with Soros Fund Management LLC, asset managing company representing various funds which together own a group of a total shareholding in the Company of 16.56%, in relation to the article 529 duodecies of the Spanish Companies Law and by the article 5.3 (b) of the Regulations of the Board of Directors of the Company, Mr. Barnett should be ascribed to the category of Proprietary Board Member.
4. REPORT OF THE APPOINTMENTS AND REMUNERATION COMMITTEE Attached to this report as Appendix, is the report elaborated by the Appointments and Remuneration Committee dated 2 March 2017 regarding the candidate proposed as new Proprietary Board Member Mr. Benjamin D. Barnett. 5. EVALUATION OF THE PROPOSED CANDIDATE The Board of Directors understands that, in order for a Board Member to execute appropriately its supervisory and controlling role should account for adequate capacities and sufficient competences in the following areas. (i) proven competences and experience; (ii) knowledge in the area in which the Company develops its business; (iii) possibility of dedication and involvement in the businesses of the Company; and (iv) additional and complementary knowledge to those of the activity of the Company such as financial aspects. Taking into account the abovementioned professional and biographical profile of Mr. Barnett (section three), and the fact that during these past years Mr. Barnett has been the main link between the Company and Soros Fund, by which he not only has a deep knowledge of the Company but a relevant professional relationship with the Company, the Board of Directors understand that the appointment of Mr. Barnett as Board Member in the Company will revert in the benefit of the Company and all interested parties, thus achieving a wider variety of profiles within the Board of Directors, within an optimized size which enables an efficient and participant functioning of the body. The above mentioned, along with the reasons contemplated for such Appointment by the Appointments and Remuneration Committee (reasons which this corporate governance body makes theirs), makes the Board of Directors understand as justified and convenient to attend the petition of Soros Fund Management LLC to propose the appointment of Mr. Benjamin D. Barnett as Board Member of the Company, and thus proceed with the corresponding increase in the number of Board Members to seven (7). 6. OTHER CONSIDERATIONS Its worth mentioning that the appointment of Mr. Barnett as Board Member of the Company does not require any changes in the By-laws as the number of Board Member would become seven (7), and thus remain within the maximum limit contemplated with the article 35 of the By-laws. Furthermore, and pursuant to the article 38 of the By-laws of the Company, Mr. Barnett will not have the right to receive any remuneration for the duties attached to his Board Member role, as he will hold a Proprietary Board Member category. 7. AGREEMENT PROPOSAL After all the above, the Board of Directors considers that the proposal to nominate Mr. Barnett as Proprietary Board Member of the Company is justified, and thus setting the number of members of the Board of Directors as seven (7).
The appointment proposal taken for approval of the General Shareholders Meeting is the following: In relation to the proposal from the Board of Directors, after receiving the Appointments and Remuneration Committee s report, the appointment of Mr. Benjamin D. Barnett, U.S. citizen, and with business address at 56 Conduit Street, W1S2YZ, London, UK, as Board Member of the Company for the statutory period of two (2) years, with the category of Proprietary and thus fix at seven (7) the number of members included in the Board of Directors Madrid, 2 March 2017.
Appendix Report elaborated by The Appointments and Remuneration Committee in relation to the appointment of Mr. Benjamin D Barnett, as Proprietary Board Member, by the General Shareholders Meeting
REPORT OF THE APPOINTMENTS AND REMUNERATION COMMITTEE ON TO THE APPOINTMENT OF MR. BENJAMIN BARNETT, AS PROPRIETARY BOARD MEMBER, BY THE GENERAL SHAREHOLDER S MEETING 1. INTRODUCTION The Board of Directors of Hispania Activos Inmobiliarios SOCIMI, S.A. (Hispania of the Company) is considering presenting the General Shareholder s Meeting the appointment of Mr. Benjamin Barnett as a proprietary board member. Pursuant to section 6 of the article 529 decies of the Spanish Companies Law and in the section 4 of the article 38 of the Regulations of the Board of Directors of the Company, it is deed of the Appointment and Remuneration Committee to inform of the appointment of non-independent Board Members for its approval by the Shareholder s Meeting. With regards to the above, and in need to analyze the appointment as Board Member of the Company of Mr. Benjamin Barnett, the Appointments and Remuneration Committee has verified the appropriateness of the candidate, as well as the convenience of his appointment, which conclusions are included in this report. In its analysis this Commission has considered the needs of the Board of Directors. 2. EVALUATION AND APPROPRIATNESS OF THE CANDIDATE The Appointments and Remuneration Committee has considered the following main aspects in relation to the candidate: (i) (ii) (iii) (iv) the appropriateness of the professional profile towards the peculiarities of the business carried by the Company ad in particular, the experience and merits of the candidate; the close professional relationship between Mr. Barnett and the Company in the past years due to the fact that he has been the main link between the Company and the investment held by QP SFM Capital Holding Limited and QPB Holdings Ltd in the Company; the honorability, solvency and competence of Mr. Benjamin Barnett; and the availability and compromise with his position, needed for the Board Member s position. For such purpose, it is also noted that this Committee has analyzed the composition of the Board of Directors, composed of six (6) members (two (2) of which are considered external board members and four (4) independent), and the conditions and knowledge of each of the members, together with the needs of the Company and the structure of its business. Given the above mentioned, this Committee understands and considers that Mr. Barnett has the competence requirements, experience and the necessary merits to become Board Member of the Company, taking into consideration his wide experience and knowledge, in particular in the
investment segment, and there for his appointment as proprietary Board Member of the Company will add unquestionable benefits to the Board of Directors. 3. BOARD MEMBER CATEGORY TO WHICH HE SHOULD BE ASCRIBED Given the fact that Mr. Barnett is currently employee of a Company associated with Soros Fund Management LLC, asset managing company representing of various funds owner as a group of a total shareholding in the Company of 16.56%, in relation to the article 529 duodecies of the Spanish Companies Law and by the article 5.3 (b) of the Regulations of the Board of Directors of the Company, Mr. Barnett should be attached to the category of Proprietary Board Member. 4. VERIFICATION OF THE FULFILLMENT OF THE REQUIREMENTS TO BE BOARD MEMBER OF THE COMPANY The Appointments and Remuneration Committee has verified that the candidate complies with the general requirements due by any Board Member of the Company according to the requirements of the law and the internal regulations, and in particular that he is not in breach, directly or indirectly of any cause for incompatibility, prohibition, conflict or social interests opposition. 5. CONCLUSION In relation to the above stated, the Appointments and Remuneration Committee has concluded to favorably inform of the appointment of Mr. Benjamin D. Barnett as Board Member of the Company as Proprietary Board Member. Madrid, 2 March 2017.