Budapesti Ingatlan Hasznosítási es Fejlesztesi : Corporate Governance Report

Corporate Governance Report of the 2022 business year of Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt.

Corporate Governance Report

of Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt.

concerning business year 2022

Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt. (hereinafter: the Company) reports in this Corporate Governance Report regarding its corporate governance practices in a transparent manner. The textual part of the Corporate Governance Report presents the Corporate Governance Practice in accordance with the criteria set out in the Corporate Governance Recommendations. The Corporate Governance Statement and Report attached to the textual part cover the cases where the Company's practice differs from the recommendations contained in the Corporate Governance Recommendations. The reasons for the different practices are specified in the Report and the Statement.

1. A brief introduction to the functioning of the Board of Directors, presentation of division of responsibilities and tasks between the Board of Directors and the Management.

The Board of Directors

The Company operates in a unified control system, the Board of Directors performs the duties of the Governing Board and the Supervisory Board.

The Board of Directors is the management body of the Company, represents the Company before courts and other authorities, and towards third parties. The Board of Directors established the rules of its operation and operated according to its Rules of Procedure. The majority of the members of the Board of Directors is independent.

The Board of Directors performs its activities as a body. It designates the issues necessary to be scheduled for discussion at its meeting from the issues in its jurisdiction, appoints the Board of Directors and/or management member responsible for the preparation of the issue, discusses the issue presented at the meeting of the Board of Directors, passes a resolution in that regard, and has its execution checked. The Board of Directors determines the date of its regular sessions and the expected schedules to the necessary extent between the periods of the yearly balance closing general meetings.

The Board of Directors is responsible for resolving on matters outside the exclusive competence of the General meeting, in particular:

a.)	entitled to resolve on any matter not falling within the exclusive competence of the General
	meeting,
b.)	defines its business policy principles,
c.)	approves the organizational and operating rules,
d.)	ensures that the Company's books, accounting and other records (in particular the Record of
	Shareholders) are kept accordingly;
e.)	submits the Company's report pursuant to the Accounting Act and its proposal for the use of the
	after-tax profit,
f.)	prepares a report for the General meeting once a year on the management, and the financial
	position and the business policy of the Company;
g.)	performs all the tasks required by law;
h.)	determines the manner of exercising the employer rights over the employees of the Company;
i.)	operates the Company's internal control system;
j.)	resolves on the acquisition of treasury shares in the possession of the prior authorization of the
	General meeting; in this regard it is entitled to make every other decision specified in the Civil
	Code, the Articles of Association and the resolution of the General meeting;

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k.)	resolves on the acquisition of the Company's treasury shares, if the shares are acquired in order
	to avoid serious damage that is directly threatening the Company, or if the Company acquires
	the shares in the course of a legal proceeding or transformation aimed at settling the Company's
	claim.
	In such cases, the Board of Directors is required to provide information at the next General
	meeting on the reason for the acquisition of the treasury shares, the number of shares acquired,
	their total nominal value, and the proportion of these shares to the share capital of the Company
	and the consideration paid for them.
l.)	prepares its rules of operation (rules of procedure).

m.) on the basis of the authorisation set out in Section 9.2 of the Articles of Association, it amends the Articles of Association in the subjects specified therein.

n.) resolution on the acceptance of the public offer for treasury shares;

o.) resolution on taking measures suitable for disrupting the public offer procedure;

p.) resolution on any matter that is referred to it by law or the Articles of Association (unless the General meeting decided to resolve on the matter itself), or in respect of any matter that is not within the exclusive competence of the General meeting.

q.) in the possession of the authorization of the General meeting, it resolves on the increase of the Company's share capital.

The Board of Directors may delegate all tasks to subordinate bodies which are not within its exclusive competence or which are not delegated to it by the General meeting.

Operation of the Board of Directors

The Board of Directors was operating in 2022 according to its approved Rules of Procedure. Main points of the Rules of Procedure:

Convening the meeting:The Board of Directors meets as required, but at least 6 times a year. As the main rule, the chairman convenes the Board of Directors. The meeting shall be convened in writing at least 6 days prior to the commencement of the meeting, indicating the agenda, the venue and the date, and attaching the motions.

The Board of Directors may adopt its resolutions without holding a meeting, by electronic means. If the Board of Directors adopts its resolution without holding a meeting, the chairman of the Board of Directors shall invite the members of the Board of Directors by post, by electronic means of communication or by fax, to vote in writing or by electronic means within five working days, on the basis of the proposal and motion sent to them.

In case of urgency, the meeting of the Board of Directors may be convened directly by any two members, provided that it is properly done. Any Member of the Board of Directors or the Auditor of the Company may request a meeting of the Board of Directors in writing by simultaneously indicating the cause and purpose. In such a case, the chairman shall convene the Board of Directors to be held within 14 days of the written request. If the chairman does not fulfil such a request within 6 days of the date of receipt, the meeting may be convened directly by any member of the Board of Directors.

Participants of the meeting:In addition to the members of the Board of Directors, the Company's auditor is also permanently invited to the meetings of the Board of Directors. Other persons may also be invited to the Board of Directors meetings on an ad hoc basis, depending on the agenda. The permanent and ad hoc invitees participate in the board meeting with consultation right.

Quorum, adoption of resolution:According to the Rules of Procedure in force, the Board of Directors has a quorum if more than half of its members are present at the meeting. The Board of Directors may resolve at any of its meetings on matters falling within its competence without the above preparation, if the preparation is not necessary or impossible.

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The members of the Board of Directors have the same voting rights at the meetings of the Board. The Board of Directors adopts its resolutions by a simple majority of the votes cast. In the event of a tie vote, the vote of the elected chairman of the meeting shall decide.

Voting against the motion and abstaining from voting does not mean in itself an objection, it shall be expressly referred to and recorded in the minutes.

The Board of Directors may also adopt resolutions in writing, without holding a meeting. In this case, the members have the opportunity to cast their votes electronically at the invitation of the chairman of the Board of Directors in accordance with the Rules of Procedure in force.

Documentation:Minutes shall be taken of the Board of Directors' meeting.

The Management

The Management is the operative governing body of the Company. The CEOs are leaders of the body further members are the CFO, and other specialty leaders: (head of finance and accounting department, head of controlling department, head of property operating department, head of service and maintenance department- from the 3rd of February 2023 head of CAPEX and fit out department -, head of property development and construction department, head of sales and marketing department, head of legal department, head of operations department, head of HR department).

The Management is responsible of the governance of the operative operation of the Company. the execution of the operative tasks, and the controlling of the execution, the reporting of the specialties, the preparing and submission of that documents which are submitted before the Board of Directors, and any other tasks which are delegated to them by the General meeting or the Board of Directors or necessary to achieve of these bodies' resolutions.

2. Introduction of the members of the Board of Directors and the Management (in case of members of the Board by indicating the independent status of certain member), description of the structure of the committees.

Member of the Board of Directors in 2022:

• dr. Anna Ungár, Chairwoman of the Board of Directors
• Kristóf Berecz, deputy chairman of the Board of Directors
• Tzvetkov Julian (independent)
• dr. Frigyes Hárshegyi (independent)
• Miklós Vaszily (independent)

Member of the Management on 31.12.2022:

• Dr. Anna Ungár CEO
• Kristóf Berecz CEO
• Róbert Hrabovszki Deputy CEO, CFO
• Katalin Dr. Horváthné Kalácska head of finance and accounting department
• Attila Seres head of property development and construction department
• Győző Marton head of controlling department
• dr. Anita Kalicz head of legal department
• Attila Fábián head of service and maintenance department
• László Mészáros head of operations department

The position of the head of sales department is vacant on 31st of December 2022.

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3. Information on the number of meetings held by the Board of Directors and the committees over the subject period by indicating the attendance rate.

The Board of Directors held 3 meeting in 2022 with an average attendance rate of 100 %., furthermore The Board of Directors resolved electronically 10 times in 2022. In addition to the meetings of the Board of Directors, the Audit Committee held 1 meeting in 2022 with an average attendance rate of 100 % and resolved electronically three times in 2022.

4. Presentation of the aspects taken into account during the evaluation of the work of the Board of Directors, the Management and the individual members. Indication of whether the evaluation performed during the subject period resulted in any change.

The Board of Directors acting on behalf of the General meeting with the decision No. 16/2020.04.29. approved the renumeration policy, and its 1st amendment in common structure with the decision No. 16/2021.04.27 of the Board of Directors acting on behalf of the General meeting by a non-binding basis. The General meeting of the Company with the decision No. 32/2022.04.29. approved the 2nd amendment of the renumeration policy ("Remuneration Policy") in common structure by a non-binding basis. The Remuneration Policy had to be applied first in the business year 2021.

In relation to 2022 the Remuneration Policy includes directives on evaluation and remuneration of the work of the Board of Directors, Audit Committee, CEOs, Deputy CEO (CFO). Therefore, the Company shall lay down and publish remuneration report on the year 2022 in accordance with the relevant laws in force.

At the extraordinary General meeting of the Company on August 15, 2017, the General meeting approved the Executive Share Ownership Programme proposed by the Board of Directors and effective from the date of the resolution. In the context of the Executive Share Ownership Programme, no issue of shares took place in the year 2022.

At the Company the evaluation and remuneration of the Management with the exception of the CEO and Deputy CEO (CFO) in the year 2022 was carried out according to the individual CEO's decision, the result of the evaluation does not differ from the practice of the previous years.

5. Report on the functioning of the committees, including the professional description of the committee members and information on the number of meetings held, the attendance rate, the main topics discussed at the meetings and the general functioning of the committee. When describing the functioning of the Audit Committee, it should be pointed out if the Board of Directors has decided on a matter contrary to the proposal of the Committee (including the reasons of the Board of Directors). It is advisable to refer to the Company's website where the tasks delegated to the committees, the rules of procedure of the committees and the date of the appointment of the members shall be disclosed. (If these information are not found on the Company's website, then they shall be included in the Corporate Governance Report.

An Audit Committee operated at the Company in the year 2022.

Nomination Committee did not operate at the Company, the Board of Directors exercised the legal powers and tasks related to nomination.

In relation to the year 2022 the remuneration committee did not operate at the Company.

The remuneration of the members of the Board of Directors and the members of the Audit Committee was approved by the General meeting.

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