Stara Planina Hold : Auditor Selection Procedure

STARA PLANINA HOLD

AUDITOR SELECTION PROCEDURE

I. GENERAL PROVISIONS

1. This procedure has been adopted by the Board of Directors of Stara Planina Hold PLC in its capacity as an audited entity.
2. The selection procedure is organized by Stara Planina Hold Plc when appointing a statutory auditor or an auditor company, unless it concerns the renewal of an audit engagement.

The selection procedure is organized by Stara Planina Hold PLC respecting the following criteria:

1. the audited entity may invite any qualified registered auditor or auditor company to submit proposals for the provision of statutory audit service;
2. the organization of the procedure does not in any way preclude the participation of an auditor or an auditor company, which received less than 15 % of their total audit fees from other public-interest entities in the previous calendar year.

The audited entity is free to conduct direct negotiations with interested tenderers in the course of the procedure.

II. TENDER DOCUMENTS

Important features of the audited entity's business.

1. Stara Planina Hold Plc is:

а) a public-interest entity - a public company whose operations are governed by

the Public Offering of Securities Act and other applicable regulations;

1. an entity which applies the international accounting standards;
2. a parent company which, in addition to the separate financial statements, also prepares consolidated financial statements;
3. an enterprise which is not "small or medium-sized" as defined in article 2, paragraph 1(f) of Directive 2003/71/EC.

1. The statutory audit must be conducted based on the features specified in item 1.
2. The selected auditor must enter into the engagement to audit and certify the separate and consolidated annual financial statement.

Selection criteria and quality standards

1. When applying, the registered auditor or the audit company shall also present to the entity the documented assessment pursuant to article 6, paragraph of 1 Regulation (EU) No 537/2014.

1. Besides the requirements specified in the existing regulatory documents, the audited entity does not have additional special selection criteria to be used when evaluating the proposals submitted by the applicant auditor or auditor companies.
2. Besides the requirements specified in the second part of the Independent Financial Audit Act and the other applicable regulations, the audited entity does not have additional special requirements to the quality standards in relation to the the applicant auditor or auditor companies.

III. EVALUATION OF PROPOSALS

Art. 7. (1) The audited entity evaluates the proposals made by the registered auditors or auditor companies in accordance with the requirements specified in art. 5 and prepares a report on the conclusions of the conducted selection procedure which it presents to the audit committee.

1. The report under paragraph 1 takes into consideration any findings or conclusions of the inspections published by the supervisory body pursuant to art. 77, paragraph 2, item 3 of IFAA.

Art. 8. (1) The audit committee validates the report on the conclusions of the conducted selection procedure and based on it prepares a recommendation to the company shareholders to appoint a statutory auditor or auditor company.

1. The recommendation shall be justified and it shall contain at least two choices for the audit engagement and the audit committee shall express a duly justified preference for one of them.
2. In its recommendation, the audit
   committee shall state that the recommendation has not been influenced by a third party and that no clause of the kind referred to in article 16, §6 of Regulation (EU)
   No 537/2014 on the specific requirements

regarding statutory audit of public-interest entities has been imposed upon it.

1. The audit committee shall present the recommendation to the Board of Directors not later than the convocation date of the General Meeting of Shareholders.

IV. FINAL PROVISIONS

Art. 9. (1) The agenda of the General Meeting of Shareholders the Board of Directors shall include an item to select a statutory auditor or auditor company and the draft resolution shall list all selection choices along with the preference as indicated in the recommendation of the audit committee.

1. The proposal of the Board of Directors may depart from the preference of the audit committee only if the proposal contains justification of the reasons for not following the recommendation. In such case, the the statutory auditor or audit company recommended by the Board of Directors must have participated in the selection procedure.

Art. 10. The entity shall inform the supervisory body directly and without delay of any attempt by a third party to impose such a contractual clause or to otherwise improperly influence the decision of the General Meeting of Shareholders on the selection of a statutory auditor or an audit company.

Board of Directors 15.02.2017

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