B Communications : Q3 2

Update of Chapter A (description of the corporation's business) to the periodic report for 2019

Significant Events Since the Publication of the Annual Report for 2019

of B. Communications Ltd. (the "Company")

1. Significant events since the publication of the Company's annual report for 2019.

Delisting of the Company's shares from trading on the Nasdaq Stock Exchange

On September 9, 2020, the Company published a Form 25 in connection with the voluntary delisting of its shares from trading on the Nasdaq Stock Exchange, and from that date, the Company's shares are only traded on the Tel Aviv Stock Exchange, and the company became a "reporting corporation" within the meaning of this term in the Securities Law, 5728-1968 (subject to the transitional period stipulated in the regulations).

The Company's control permit in Bezeq

On October 28, 2020, the Company applied to the Ministry of Communications to eliminate the condition stipulated in the control permit given to the Company in connection with its holdings in Bezeq shares to amend Bezeq's articles of association and the subsidiaries' articles of association, after Bezeq's general meeting rejected the amendment to the control permit as required by the control permit.

Among other reasons, the Company claims that the requested amendments anchor provisions that in any case exist in the Communications Ordinance and in other laws, and therefore do not create a new law and are not required.

Amendment of the terms of the Company's debentures (Series C and E)

On September 17, 2020, the meetings of the Company's bondholders (Series C and E) approved the amendment of the trust deeds of the said series, in a manner that will allow the Company to raise additional debt that will be secured by a lien on Bezeq shares pledged in favor of Series C, pari passu with Series C, under the following restrictions:

1. The additional debt raised by the Company (less the issuance expenses) will first repay the debentures (Series D) and the debentures (Series E) in full, so that after its raising and after the completion of the conditions required for the release in exchange for issuing the additional series and amending existing liens in favor of Series C, a first-degree lien will be registered on the pledged Bezeq shares (as defined in the trust deed) for the benefit of the holders of the debentures (Series C) instead of the second-degree lien currently registered in their favor (as long as the debentures (Series E) are in circulation).
2. After the full repayment of the debt in respect of the debentures (Series D) and the debentures (Series E), the balance of net proceeds from the issue of the additional debt will be used for the purpose of repayment of the debentures (Series C), by means of early redemption (full or partial) in accordance with the terms of the existing trust deed.
3. The duration of the new series issued by the Company will be longer than that of the debentures (Series C), and the first payment of the principal in respect of the debentures

from the new series as aforesaid will take place only after full repayment of the debentures (Series C).

The early repayment amount to be paid to the bondholders in the event of early repayment of the bonds by the Company was also amended as follows:

With respect to the debentures (Series C) - in the case of a partial early repayment of the debentures (Series C), the price of the partial early repayment will be the highest of the par value of the debentures (Series C) or their market value according to the - 30 trading days preceding the early redemption.

In relation to the bondholders (Series E) - the full early repayment price will be the highest of:

1. the market value of the bonds according to the price of the bonds on the stock exchange in the 30 trading days preceding the early repayment, but not more than a total of 103.5% of the early repayment price, or (2) the par value of the debentures (Series E).

For further details, see the convening of a meeting of bondholders (Series C) dated September 10, 2020 (reference number 2020-10-091018) and the convening of the meeting of bondholders (series E) from the same date (reference number 2020-10-091000), the mentions of which are presented here by way of reference.

Termination of the Rating of the Company's Debentures

On August 13, 2020, Midroog announced the termination of the rating of the debentures (Series C) issued by the Company in light of the Company's request. On the eve of its termination, the Company's debentures (Series C) were rated Caa2.il with a stable rating horizon.

Legal proceedings

On June 2, 2020, the Company and the Company's former directors signed a settlement agreement as part of the Horev claim, according to which the directors will pay NIS 2.5 million (hereinafter "the Directors' Settlement Amount") to the Company in order to settle all derivative claims in this matter. In July 2020, the District Court approved the settlement agreement, and the directors' insurance paid the Company the Directors' Settlement Amount in full. As part of the settlement, the Company paid the derivative plaintiff and his attorney a total of NIS 720,000. The net amount received by the Company was charged directly to the Company's shareholders' equity under the item Accumulated Deficit.

On August 10, 2020, the U.S. District Court for the Southern District of New York approved the settlement in the class action lawsuit filed against the Company, under which, among other things, the insurance company that insured the Company paid a total of USD 1.2 million. See the Company's immediate report dated August 12, 2020 (Reference No. 2020-02-087540).

On September 14, 2020, a settlement agreement was completed in a derivative lawsuit against the Company in connection with claims regarding the distribution of a dividend of NIS 113 million by the Company, of which approximately NIS 73 million was paid to Internet Gold - Gold Lines Ltd. ("Internet Gold") in 2016. As part of the settlement agreement, the Company

received debentures (Series C) of the Company worth approximately NIS 22 million (principal and accrued interest) which were held by Internet Gold, in exchange for waiving the claim against Internet Gold. The Company also paid the derivative plaintiff a total of approximately NIS 4.23 million for expenses, attorneys' fees and remuneration.

In November 2020, a lawsuit with a motion for approval as class action was filed with the Tel Aviv District Court (Economic Department) by a private person who claims to be a shareholder in the Company ("the Applicant"), against the Company, Bezeq, the Company's CEO and members of the Company's Board of Directors ("the Respondents"). The matter of the motion is the approval of a class action for compensation of the Applicant and the members of the represented group for damages caused to them, according to the motion, "due to Bezeq's failure to report and disclose on the Tel Aviv Stock Exchange (hereinafter: "TASE") and concealment of material information from the investing public", in connection with a public report "on the Ministry of Communications' moves to eradicate the phenomenon of dual subscribers in the field of ISP Internet services, on the extensive and significant scope of the phenomenon of dual subscribers in the subsidiary Bezeq International ("Bezeq International") and their significant negative impact on the business of the subsidiary and Bezeq". The definition of the class according to the motion is anyone who purchased Bezeq shares between August 17, 2020 until October 30, 2020 and held said shares or any of them on October 30, 2020, except for the Respondents and / or anyone acting on their behalf and / or entities related to them. According to the claim in the motion, the damage caused to the class members as a result of the events that are the subject of the lawsuit amounts to approximately NIS 55 million to NIS 65 million, based on an expert opinion attached to the motion.

In November 2020, a lawsuit with a motion for approval as class action was filed with the Tel Aviv District Court (Economic Department) by a private person who claims to be a shareholder in the Company ("the Applicant"), who claims to hold shares in the Company and in Bezeq, against the Company, Bezeq, and 72 additional respondents, including past and present officers in the two companies ("the Respondents"). The matter of the motion is the approval of a class action for compensation of the Applicant and the members of the classes represented for damages caused to them, as alleged in the motion, as a result of acts and omissions of the Respondents in failing to disclose to the investing public seemingly material information that they were required to disclose in accordance with the provisions of the law, in connection with the two companies' report dated November 9, 2020, according to which Bezeq International's books have unexplained net asset balances (receivables minus payables) in the tens of millions of shekels, a considerable part of which originates, apparently, in past periods of more than 15 years ago. The definition of the classes according to the motion is: (a) everyone who purchased Bezeq shares between November 8, 2005 and November 9, 2020, except for the Respondents or those on their behalf, and (b) everyone who purchased the Company's shares on the Tel Aviv Stock Exchange between November 8, 2007 and November 9, 2020, except for the Respondents or those on their behalf. The amount of the class action specified in the statement of claim is "over NIS 2.5 million (for the purposes of substantive authority)", while in accordance with the economic opinion attached to the motion, "the estimate for the plummet in the price of the security" in respect of the information included in the immediate report of November 9, 2020 is 5.40% -5.26% in relation to Bezeq, and about 9.36% - 9.07% in relation to the Company.

Officers