UBS (UBS) F-4Registration of securities (foreign)

Abbreviations and definitions

Preamble by the Chairman

Introduction

1   Basis and purpose

2   Organization of the Group

Board of Directors

3   Membership

4   Constitution

5   Responsibilities and authorities

6   Meetings

7   Resolutions

8   Information rights

9   Self-assessment

10   Chairman

11   Vice Chairmen and Senior Independent Director

12   Group Company Secretary

13   Board Committees

Group Executive Board

14   Delegation

15   Group Executive Board

16   Group Chief Executive Officer

17   Group Chief Financial Officer

18   Group Chief Digital and Information Officer

19   Group Chief Risk Officer

20   Group General Counsel

21   Group Chief Compliance and Governance Officer

22   Regional Presidents

23   Divisional Presidents

Group Internal Audit

24   Scope, responsibilities, authorities and reporting

25   Head Group IA

Special provisions

26   Authority to sign

27   Form of signature

28   Conduct of Board and GEB members

29   Entry into force, amendments

Annexes

A  Organizational chart of UBS Group AG

B   Charter of the Committees of the Board

C   Key Approval Authorities (internal document)

The purpose of these ORs is:

(i) to implement and supplement requirements contained in applicable laws, stock exchange regulations, supervisory regulations and the AoA having regard to pertinent codes of best practice. In addition, these ORs constitute the corporate governance guidelines required by the New York Stock Exchange;

(ii)  to define the functions, responsibilities and authorities of UBS Group AG’s and the Group’s Corporate Bodies and their members; and

(iii)  to establish a coherent and efficient corporate governance structure by constituting the Group’s primary governance guidelines to be applied to all direct and indirect subsidiaries of UBS Group AG and which supersede any other regulations and shall prevail in case of a conflict with such documents, subject to local law.

Mandatory provisions of applicable laws, rules and regulations or rules contained in the AoA take precedence over the ORs.

The Group and its business are organized as follows:

(i) The Board, under the leadership of the Chairman, has the ultimate responsibility for the direction, supervision and control of the Group, and performs the other duties described herein or as prescribed by mandatory provisions of law. The Board is responsible for deciding all matters and taking business decisions where such decisions exceed the authority delegated by the Board to the Committees, the GEB or the Group CEO.

(ii)  As provided by mandatory law, rules and regulations, the AoA or these ORs, the executive management of the Group is delegated to the GEB under the leadership of the Group CEO.

(iii)  The following permanent Committees assist the Board in the performance of its responsibilities:

(a)   the Audit Committee;

(b)   the Compensation Committee;

(c)   the Corporate Culture and Responsibility Committee;

(d)   the Governance and Nominating Committee; and

(e)   the Risk Committee.

UBS Group AG, as the listed parent company of the Group, controls directly or indirectly all subsidiaries and leads the Group by setting a harmonized strategic direction. It further sets principles and organizational structures to enable efficient and coordinated management of the Group and control of its subsidiaries.

Notwithstanding these endeavors, the legal independence of all subsidiaries, including formal decision-making by the Corporate Bodies of the respective entities as required under applicable constitutional documents, and the provisions of applicable local laws, rules and regulations relating to them, must be observed to the extent legally required.

The banking business and support operations are performed by UBS Group AG’s direct or indirect subsidiaries within the scope of applicable licenses. The business of the Group is organized into:

(i) business divisions;

(ii)  Group Functions; and

(iii)  other structures as the Group CEO and the GEB consider appropriate for the effective management and supervision of the business.

This organization must be detailed in the Business Regulations.

The Board’s proposal for election ensures that three-quarters of the Board members will be independent. For this purpose, independence is determined in accordance with:

(i) the FINMA circular 2017/1 “Corporate governance – banks”; and

(ii)  the New York Stock Exchange rules.

Furthermore, there must be a sufficient number of Board members who meet the independence criteria for the Committee members set out in the annex “Charter of the Committees of the Board.” The Chairman does not need to be independent.

The Board, as a group, must have the necessary qualifications, skills and diversity to perform all Board duties. In particular, the Board must together possess financial literacy, experience in banking and risk management, as well as international experience, including experience of international financial matters, and knowledge of the duties of directors.

Candidates for election to the Board shall be considered in light of their personal experience and abilities, including any specialist knowledge or skills required to fulfill specific Board functions as outlined herein, as well as their ability to contribute to building a complementary and effective Board.

The Board constitutes itself at its first meeting following the AGM. In this meeting

(i) the Vice Chairmen;

(ii)  the SID;

(iii)  the Chairpersons of the Committees; and

(iv) the Committee members, with the exception of the Compensation Committee members, are appointed by the Board.

The Board may remove these Board members from their special functions at any time.

The Board’s ultimate responsibility for strategy and financial success includes in particular:

(i) deciding the strategy of the Group upon recommendation of the Group CEO, taking into account the proposals and alternatives presented;

(ii)  approving the risk management and control framework of the Group, including the overall risk appetite of the Group and BDs;

(iii)  deciding whether the Group should enter substantial new business areas or exit an existing business area, in cases where the entry or exit is not covered by the current approved strategic framework; and

(iv) approving major acquisitions, mergers, disposals or capital expenditure, including decisions on major changes to the company and Group structure, major changes in Significant Group Entities, and other projects of strategic importance for the Group.

With respect to the ultimate responsibility for the financial situation, the Board has in particular the following duties:

(i) approving the applicable accounting standards and financial control frameworks, as well as significant changes to them;

(ii)  annually reviewing and approving the three-year strategic plan and one-year operating plan of the Group, including the financial objectives and a capital allocation framework, as well as the capital and liquidity plans;

(iii)  annually reviewing and approving the Group ICAAP;

(iv) reviewing and approving the annual financial statements of UBS Group AG; and

(v)   reviewing and approving the consolidated annual and quarterly financial statements, as well as the consolidated annual report of the Group prior to its submission to the AGM.

The Board is responsible for establishing an appropriate business organization, including in particular:

(i) approving and regularly reviewing the governance principles and the management structures as set out herein;

(ii)  appointing and removing GEB members, the Group Company Secretary and the Head Group IA and reviewing their performance;

(iii)  overseeing the effectiveness of the business organization and management information system implemented by the GEB;

(iv) supervising the internal control system;

(v)   approving the charter for Group IA and monitoring Group IA; and

(vi) approving the compensation and benefits principles of the Group.

Within the limits of applicable law, regulations and the AoA, the Board may delegate part of its responsibilities and authorities to:

(i) the Committees;

(ii)  individual Board members;

(iii)  the GEB; and

(iv) individual GEB members.

The invitation contains the agenda and must be sent to Board members and other attendees as a rule at least five business days prior to the date of the Board meeting together with all necessary supporting material. In exceptional cases, supporting material may be sent later to allow the Board to receive the latest available information. This applies in particular to updates on financial data.

In time-critical cases (as determined at the Chairman’s discretion), a Board meeting may be held and the supporting material may be sent at shorter notice.

The Board may hold Board meetings as determined by the Chairman:

(i) with or without the participation of the Group CEO and all or some of the other GEB members; and

(ii)  with the participation of other persons, who are invited to attend.

Board resolutions may be passed in writing (including by e-mail or other electronic means) if no material discussions are required, the matter is time-critical or has been prediscussed. A proposal for a circular resolution must be communicated to all Board members and is only deemed to have passed if:

(i) more than two-thirds of all Board members cast a vote or give written notice that they abstain; and

(ii)  an absolute majority of all Board members participating in this circular resolution approve the proposed resolution; and

(iii)  no Board member requests a Board meeting in relation to the subject matter of the proposed Board resolution within three business days of receiving notice of the proposal.

The Chairman leads the Board, in this regard he has in particular the following responsibilities:

(i)  to call Board meetings and set their agenda;

(ii)  to coordinate the tasks within the Board and together with the Chairpersons the work of all Committees;

(iii)   to ensure that Board members receive accurate, timely, clear and necessary material and information to enable the Board and its Committees to make sound decisions, monitor the management of the Group effectively and promote the success of the Group;

(iv) to manage the Board, its meetings and resources to ensure its effectiveness by balancing the time allocated to its strategic and supervisory functions, as well as ensuring sufficient time is allowed for discussion of complex or contentious matters and arranging, if necessary, informal meetings among Board members;

(v)   to encourage active engagement by all Board members in all matters concerning the Board;

(vi) to ensure that Board resolutions are accurate in form and content and that they are implemented properly;

(vii)  to build, together with the GNC, an effective and highly complementary Board with an appropriate balance of skills and experience, and to initiate changes in and planning Board succession and appointments;

(viii)  to ensure the operation of a clear Committee structure;

(ix) to provide guidance to other Board members about what is expected of them and take into full account their issues and concerns; and

(x)   to consider and address, together with the GNC, the development needs of individual Board members and the Board as a whole to ensure the necessary depth and breadth of knowledge and experience and to enhance the effectiveness and efficiency of the Board as a team through the establishment of an induction program for new Board members and a satisfactory ongoing training and education program for existing Board members, and organize, together with the GEB members, an annual seminar on the Group’s strategy.

The Chairman, together with the Group CEO, undertakes responsibility for UBS’s reputation, is further closely involved in and responsible for ensuring effective communication with shareholders and stakeholders, including government officials, regulators and public organizations. The Chairman maintains close contact with the Group’s principal regulators.

The Chairman is the primary representative of the Board and, together with the Group CEO, of the Group with the media. Other Board members may only discuss Group matters with the media with the approval of the Chairman. The SID ensures communication with those shareholders who wish to conduct discussions with an independent Board member.

Each of the Vice Chairmen is required to:

(i) lead the Board in the absence of the Chairman;

(ii)  provide support and advice to the Chairman; and

(iii)  undertake such specific additional duties or functions as the Board may entrust to him from time to time.

The SID is required to:

(i) create an appropriate information flow and communication system among the independent Board members;

(ii)  collect and relay any issues or concerns of independent Board members to the Chairman;

(iii)  handle communication on behalf of the independent Board members and facilitate communication, where appropriate, between shareholders and independent Board members; and

(iv) be available to act as a point of contact for shareholders and stakeholders who wish to conduct discussions with an independent Board member, including with concerns that have not been resolved or are not raised through the normal channels.

Further responsibilities and authorities of the SID follow from sections 6.7, 10.5 and 15.9.

The Group CEO sets the business and corporate agenda, ensures sound and timely decision-making and controls the implementation of decisions made. The Group CEO is in particular responsible for the following:

(i) ensuring the GEB fulfills its tasks and assumes its responsibilities;

(ii)  ensuring alignment of the individual GEB members to the business and corporate agenda;

(iii)  planning succession at GEB level;

(iv) supporting and advising senior management, as well as fostering an integrated entrepreneurial leadership spirit across the Group;

(v)   assuming a leading role in preparation of strategy, risk, compensation and governance principles for the Board’s consideration; and

(vi) together with the Chairman, undertaking responsibility for UBS’s reputation and ensuring effective communications with shareholders and stakeholders (see also section 10.5).

The Group CEO ensures that the Chairman and the Board are kept informed in a timely and appropriate manner on all matters falling within the scope of their responsibilities, as well as important business developments, issues or decisions taken by the GEB in particular with regard to matters which may have a material financial, operational or reputational impact on the Group.

Further, the Group CEO (either personally or through any other GEB member) regularly informs the Board on:

(i) key performance indicators and other relevant financial data of the Group;

(ii)  existing and emerging risks, issues and mitigating measures;

(iii)  updates on developments in important markets and on peers; and

(iv) information on all issues which may affect the supervisory or control function of the Board.

The Group CFO has in particular the following responsibilities:

(i) managing the Group’s financial accounting, controlling, forecasting, planning and reporting processes;

(ii)  ensuring transparency in and assessing the financial performance of the Group and the BDs;

(iii)  developing the Group’s inorganic strategy in collaboration with the GEB and supporting GEB members in mergers and acquisitions, as well as equity investment topics, by monitoring the progress of key inorganic growth initiatives;

(iv) managing and controlling the Group’s tax affairs, treasury and capital management, including funding and liquidity risk, and regulatory capital ratios;

(v)   ensuring asset and liability management by balancing consumption of the Group’s financial resources;

(vi) consulting with the AC to make proposals to the Board regarding the standards for accounting to be adopted by UBS Group AG and the Group and defining the standards for financial reporting and disclosure;

(vii) managing relations with analysts and investors in coordination with the Group CEO;

(viii)under the supervision of the AC, coordinating the working relationships with the external auditors; and

(ix) managing the function “Group Finance”.

The Group CDIO has in particular the following responsibilities:

(i) formulating the approach, objectives, financial and execution plans for the Group CDIO area in support of the BDs and GF;

(ii)  driving Group-wide digitalization, delivering IT services, tools and infrastructure, including cyber protection and IT security, in line with the needs of the BDs and GF;

(iii)  overseeing the prioritization of the technology enabled change initiatives;

(iv) directing and governing all IT development and engineering management activities;

(v)   supplying real estate infrastructure and general administrative services to the Group;

(vi) directing and controlling all supply and demand management activities, supporting the Group with its third-party risk and sourcing strategies and managing the Group’s near-/ offshore, outsourcing and supplier-related processes;

(vii) delivering shared operational services, maintaining and overseeing the Group’s crisis management operations and providing Group-wide data governance; and

(viii)managing the function “Group CDIO”.

The Group CRO has in particular the following responsibilities:

(i) the development of the Group’s risk management and control framework (including risk principles and risk appetite)for the credit, market, country, liquidity, funding, model, and environmental and social risk categories, as well as the implementation of independent control frameworks for these risk categories, on the basis of and in accordance with the framework approved by the Board, including:

(a)   risk measurement, aggregation, portfolio controls and risk reporting; and

(b)   taking decisions on transactions, positions, exposures, portfolio limits and allowances in accordance with the risk control authorities delegated to the Group CRO;

(ii)  monitoring and challenging the Group’s risk-taking activities for the risk categories under Group CRO responsibility; and

(iii)  managing the function “Group Risk Control”.

The Group GC has in particular the following responsibilities:

(i) managing the Group’s legal affairs and ensuring effective and timely assessment of legal matters impacting the Group or its businesses;

(ii)  providing the legal advice required by the Group;

(iii)  management and reporting of all litigation and other significant contentious matters, including all legal proceedings, that involve UBS; and

(iv) managing the function “Group General Counsel”.

The Group CCGO has in particular the following responsibilities:

(i) developing the Group’s risk management and control framework (including taxonomies and risk appetite) for non-financial risks as well as implementing the independent control frameworks for these risks;

(ii)  developing the Group’s governmental policy and regulatory approach;

(iii)  coordinating external governmental and regulatory relations and overseeing important regulatory matters, including key regulatory change programs across the Group;

(iv) managing the firm’s new business governance process;

(v)   developing global and local recovery and resolution plans and defining adequate resolvability improvement measures;

(vi) developing the Group’s organization and legal entity structure, as well as corporate governance standards;

(vii) governing the Group’s internal and external investigations portfolio and performing important investigations; and

(viii)managing the function “Group Compliance, Regulatory & Governance”.

The Regional Presidents have in particular the following responsibilities:

(i) cross-divisional collaboration;

(ii)  representing the Group to the broader public in their region;

(iii)  providing input to and facilitating the implementation of the Group’s strategy; and

(iv) for Significant Group Entities, Significant Regional Entities and Significant Branches, the Regional Presidents assume responsibility for certain entity governance processes.

The Divisional Presidents have in particular the following responsibilities:

(i) proposing BD strategies in line with the Group strategy taking into account input from the Regional Presidents;

(ii) the operation and management of their BD;

(iii) controlling and administering the dedicated financial resources, risk appetite, people and infrastructure of the BD;

(iv) collaborating with the Regional Presidents to support them in the exercise of their competences with regard to certain key entity governance processes; and

(v) the success, risks, results and value of their BD.

They are further accountable for the front-to-back control environment of the respective BD and are supported by the Group Functional Heads, who are accountable for confirming end-to-end completeness and effectiveness of the respective Group Function.

Group IA independently, objectively and systematically assesses the:

(i) soundness of the Group’s risk and control culture;

(ii)  reliability and integrity of financial and operational information, including whether activities are properly, accurately and completely recorded, and the quality of underlying data and models; and

(iii)  design, operating effectiveness and sustainability of:

(a)   processes to define strategy and risk appetite, as well as the overall adherence to the approved strategy;

(b)   governance processes;

(c)   risk management, including whether risks are appropriately identified and managed;

(d)   internal controls, specifically whether they are commensurate with the risks taken;

(e)   remediation activities; and

(f)   processes to comply with legal and regulatory requirements, internal policies, and the Group’s constitutional documents and contracts.

Group IA also conducts special audits at the request of the AC or other Board members, Committees or the Group CEO in consultation with the AC.

The Head Group IA is responsible for:

(i) maintaining and developing a professional audit team with sufficient knowledge, skills and experience to meet the requirements of these ORs, the audit charter, future challenges and emerging risks;

(ii)  developing an annual audit plan based on an annual risk assessment;

(iii)  continuously considering the firm’s risk profile and audit universe;

(iv) reviewing and assessing the audit plan at least quarterly as well as implementing the approved annual audit plan (including any changes and special projects)and covering the audit universe in a risk-based audit cycle, in accordance with the budget and resource plan approved by the AC;

(v)   delivering assurance over the effective and sustainable remediation of issues, taking a risk-based approach;

(vi) issuing quarterly governance and annual activity reports which provide an overview of significant audit results and other key developments;

(vii) coordinating the scope of Group IA’s work with external auditors to provide optimal audit coverage;

(viii)maintaining effective relationships with UBS’s regulators; and

(ix) leveraging Group IA’s audit results with the activities of other control functions within UBS, while maintaining independence.

Signing in the name of UBS Group AG requires two authorized signatures to be binding.

The Board shall designate those persons authorized to sign on behalf of UBS Group AG.

Unless exceptional circumstances dictate that in the best interests of UBS, a Board or GEB member with a conflict of interest shall not participate in the discussions and decision-making involving the interest at stake, the Board or GEB member with a conflict of interest shall participate in discussions and:

(i) a double vote (a vote with and a vote without the conflicted individual) shall take place;

(ii)  a binding decision on the matter requires the same outcome in both votes;

(iii)  the Chairman or the Group CEO must advise the respective Corporate Body of the conflict of interest; and

(iv) the existence of the conflict must be recorded in the meeting minutes.

In the event of doubt, the Chairman or the Group CEO shall request the respective Corporate Body to determine whether a conflict of interest or exceptional circumstances exist.

Further, section. 2.5 applies where GEB members have additional reporting lines within legal entities of the Group

If a Board or a GEB member becomes aware of the fact that they may receive a financial or non-financial benefit other than any salary, remuneration or other benefit from UBS, as a result of employment within the Group, that person must:

(i) promptly inform the Board, in the case of a Board member or the Group CEO; and

(ii)  promptly inform the Group CEO, in the case of a GEB member other than the Group CEO.

Introduction

Membership and constitution

Responsibilities and authorities

Meetings and resolutions of the Committees

Reporting

Special provisions

1

Basis and purpose

1.1

1.2

The purpose of this Committees’ charter is to set out the objectives, composition and responsibilities of the permanent Board Committees, being:

(i) the Audit Committee;

(ii)  the Compensation Committee;

(iii)  the Corporate Culture and Responsibility Committee;

(iv) the Governance and Nominating Committee; and

(v)   the Risk Committee.

2

Number of Committee members, their independence and knowledge

2.1

2.2

Each Committee must consist of members of the Board who:

(i) with respect to the Compensation Committee, are all independent as defined by section 3.2 of the ORs;

(ii)  with respect to the GNC and CCRC, are independent, in a majority, as defined by section 3.2 of the ORs;

(iii)  with respect to the AC, fulfill the independence criteria set out in sections 2.3 and 2.4 of this Committees’ charter; and

(iv) with respect to the RC, are independent, in a majority, as defined by section 3.2 of the ORs and fulfill the independence criteria set out in section 2.4 of this Committees’ charter.

At least one member of the RC must also be a member of the Compensation Committee.

2.3

2.4

Each AC and RC member must:

(i) not be an affiliated person of UBS; for the avoidance of doubt, serving as a member of the Board of a subsidiary of UBS Group AG or an affiliated company of the Group and receiving remuneration for such activity does not, of itself, make an AC or an RC member an affiliated person; and

(ii)  not receive any consulting, advisory or other compensatory fees from UBS or any of its affiliated persons other than in their capacity as a Board member or a Committee member.

Each AC member must not serve on the audit committee of more than two other public companies, unless the Board has made a determination that such AC member or prospective AC member has the availability to properly fulfill their duties with UBS.

2.5

At least one of the Vice Chairmen and/or the SID is a member of the GNC.

2.6

2.7

3

Constitution

3.1

4

Delegation of responsibilities and authorities

4.1

5

5.1

The function of the AC is to support the Board in fulfilling its oversight duty relating to financial reporting and internal controls over financial reporting, the effectiveness of the external and internal audit functions, and the effectiveness of whistleblowing procedures.

Management is responsible for the preparation, presentation and integrity of the financial statements, while the external auditors are responsible for auditing financial statements. The AC’s responsibility is one of oversight and review.

5.2

Responsibilities and authorities

The AC’s responsibilities and authorities for UBS Group AG and the Group are to:

(i) Financial reporting:

(a)   monitor the integrity of the financial statements and any announcements related to financial performance, and review significant financial reporting judgements contained in them, before recommending their approval to the Board;

(b)   advise the Board on whether the annual report and financial statements, taken as a whole, are fair, balanced and understandable, and provide the information necessary for shareholders to assess the company’s position and performance, business model and strategy;

(c)   review the organization and completeness of the financial reporting process, including the Group’s internal control system and procedures as they relate to the integrity of the financial statements, taking into account the reports provided by the GEB, the external auditors, Group IA, regulators or other information as determined by the Committee to be appropriate;

(d)   review management’s SOX 404 report in relation to internal controls over financial reporting;

(e)   review significant accounting policies and practices and compliance with accounting standards; and

(f)   review arrangements for compliance with the Group’s legal, regulatory and other requirements (including tax matters) as they relate to the integrity of the financial statements or financial report;

(ii)  External audit:

(a)   oversee the Group’s relationship with and assess the qualifications, expertise, effectiveness, independence and performance of the external auditors and their lead audit partner; support the Board in reaching a decision in relation to the appointment, reappointment or dismissal of the external auditors and the rotation of the lead audit partner;

(b)   approve the engagement letter of the external auditors, including the scope of the audit and the fees and terms for the planned audit work;

(c)   oversee all audit and permitted non-audit services provided by the external auditors and establish such policies as the Committee deems appropriate;

(d)   annually review the external auditors’ summary of adjusted and unadjusted differences; and

(e)   review the regulatory audit plan and the results of regulatory audits;

(iii)  Group IA:

(a)   monitor and assess the effectiveness, independence and performance of the Head Group IA and Group IA;

(b)   approve Group IA’s annual audit plan and objectives including subsequent important amendments;

(c)   monitor Group IA’s discharge of its annual audit objectives; and

(d)   order special audits to be conducted either by Group IA or by mandating third parties and review and approve such requests from other Board members, Committees or the Group CEO;

(iv) Whistleblowing and investigations:

(a)   review the effectiveness of the firm’s whistleblowing policies and procedures and ensure that appropriate whistleblowing mechanisms are in place;

(b)   review on a quarterly basis the levels of new and pending whistleblowing cases and reports on complaints made regarding accounting, auditing or other matters;

(c)   review on a quarterly basis reports on internal investigations; and

(d)   conduct or direct any investigation, including the retention of external advisors and consultants (at UBS’s expense), as it considers necessary to discharge its responsibilities; and

(v)   Human Resources:

(a)   annually provide input on the performance of the Group CFO, Group GC, Group CRO and Group CCGO to the Group CEO; and

(b)   review and make recommendations to the Board regarding decisions relating to the hiring and dismissal of the Group CFO.

The Compensation Committee’s responsibilities and authorities are to:

(i) Group compensation strategy and principles:

(a)   periodically review the Group compensation strategy and principles and propose any material changes to the Board for approval; and

(b)   evaluate the effectiveness of pay for performance results across the Group;

(ii)  GEB performance targets and objectives:

(a)   propose, upon proposal of the Chairman, financial and non-financial performance targets and objectives for the Group CEO for approval by the Board;

(b)   review, upon proposal of the Group CEO, the performance framework for the other GEB members; and

(c)   inform the Board of the Group CEO’s financial and non-financial performance targets and objectives, as well as the performance framework for the other GEB members;

(iii)  GEB performance assessments:

(a)   propose, upon proposal of the Chairman, the Group CEO’s performance assessment for approval by the Board;

(b)   propose, upon proposal of the Group CEO, the performance assessments of the other GEB members for approval by the Board; and

(c)   inform the Board of the performance assessments of all GEB members, including the Group CEO;

(iv) Compensation framework and plans:

(a)   approve key features of the compensation framework and plans for the non-independent Board members and GEB members;

(b)   be informed of key features of the compensation framework and plans for employees other than GEB members;

(c)   approve key terms of any new or amended compensation plans or other compensation arrangements with a material financial, reputational or strategic impact or significant use of UBS Group AG shares;

(d)   be informed of key terms of any new or amended pension and benefit plans with a material financial, reputational or strategic impact;

(e)   approve the share ownership policy for GEB members;

(f)   propose, upon proposal of the Chairman, the remuneration/fee framework for independent Board members for approval by the Board; and

(g)   approve, upon proposal of the Chairman and Group CEO, the remuneration/fee frameworks for external supervisory board members of Significant Group Entities and be informed of remuneration/fee frameworks for external supervisory board members of Significant Regional Entities;

(v)   Compensation governance:

(a)   approve key terms for material individual variations to standard employment and termination agreements for non-independent Board members and, upon proposal of the Chairman, for the Group CEO and, upon proposal of the Group CEO, for other GEB members;

(b)   approve the engagement of and fees for any external advisors/consultants retained by the Compensation Committee; considering factors relevant to the advisors’ independence from management and any requirements under New York Stock Exchange listing standards prior to selecting, or receiving advice from any such advisor/consultant;

(c)   propose to the Board for approval the annual compensation report and approve other material public disclosures on UBS compensation matters;

(d)   approve the peer group framework used for non-independent Board and GEB members’ pay comparison purposes;

(e)   meet with the RC annually to ensure that the compensation framework supports appropriate risk awareness and management, as well as appropriate risk-taking; and

(f)   be informed of major regulatory developments, shareholder initiatives and best practices in executive compensation;

(vi) Other compensation competencies:

(a)   approve the total compensation for the Chairman and the non-independent Board members;

(b)   propose, upon proposal of the Chairman, the total compensation for the Group CEO for approval by the Board;

(c)   propose, upon proposal of the Group CEO, the individual total compensation for the other GEB members for approval by the Board;

(d)   approve, upon proposal of the Chairman, the total compensation for the Head Group IA, the Group Company Secretary and, upon proposal of the Group CEO, the total compensation for former GEB members for the first financial year after leaving the GEB;

(e)   propose, to the Board, for approval by the general meeting of the shareholders and subject to the relevant periods as outlined in the AoA:

a.   the maximum aggregate amount of compensation for the Board;

b.  the maximum aggregate amount of fixed compensation for the GEB; and

c.   the aggregate amount of variable compensation for the GEB;

(f)   For employees within the Group:

a.   approve the total individual compensation for the 50 highest-paid employees (excluding GEB members) at year-end compensation review;

b.  be informed of all employees with an annual total compensation of USD 3 million or more, and approve all employees with an annual total compensation of USD 5 million or more;

c.   be informed of or approve retention awards, severance payments, replacement awards and sign-on payments above internally defined thresholds, including commitments to compensate new hires; and

d.  approve the total individual compensation of certain employees based on additional regulatory requirements;

these approval authorities can be delegated to the Chairperson of the Compensation Committee;

(g)   be informed of business performance progress and other variables that impact the funding of the performance award pool; and

(h)   propose, upon proposal of the Group CEO, the final annual Group performance award pool to the Board for approval and approve, upon proposal of the Group CEO, the performance award pools for the BDs and GF.

The CCRC’s responsibilities and authorities are to:

(i) General:

(a)   monitor and advise the Board on current and emerging societal trends and developments of potential relevance for the Group;

(b)   review and assess the current state and implementation of the corporate culture and corporate responsibility programs and initiatives within the Group; and

(c)   monitor the consistent application of the behaviors of accountability with integrity, collaboration and innovation within UBS;

(ii)  Frameworks and regulations:

(a)   monitor and advise the Board on evolving external corporate culture and corporate responsibility regulations, standards and practices;

(b)   conduct the annual review process for the Code of Conduct and Ethics of UBS and make proposals for amendments to the Board; and

(c)   reaffirm UBS’s frameworks pertaining to the programs and initiatives outlined below on an annual basis;

(iii)  Strategy:

(a)   monitor the effectiveness of actions taken by UBS relating to the corporate culture and corporate responsibility regulations and policies, as well as the objectives of UBS;

(b)   support the GEB, if required, in the adjustment of processes pertaining to corporate culture and corporate responsibility;

(c)   approve Group Sustainability and Impact’s overall strategy and annual objectives;

(d)   reaffirm the Group’s memberships in organizations, as well as commitments with a sustainability and/or impact topic focus, on an annual basis; and

(e)   support a strong and responsible corporate culture firmly founded in a spirit of long-term thinking;

(iv) Programs and initiatives:

oversee UBS’s corporate culture and corporate responsibility programs and initiatives, including:

(a)   Group Sustainability and Impact;

(b)   three keys to success;

(c)   sustainable finance (including sustainable and impact investing);

(d)   client and corporate philanthropy;

(e)   environmental and social risk management;

(f)   climate strategy (including net zero commitment);

(g)   human rights (including modern slavery prevention);

(h)   in-house environmental management;

(i) responsible supply chain management;

(j) diversity, equity and inclusion;

(k)   client satisfaction;

(l) talent management;

(m) working environment; and

(n)   other evolving initiatives;

(v)   Reporting, communications and engagements:

(a)   advise the Board on the reporting of the Group’s corporate culture and corporate responsibility strategy and activities;

(b)   review and propose to the Board for approval the annual sustainability report including the relevant sections of the Group’s annual reporting;

(c)   provide oversight of the annual sustainability report related disclosures and the sustainability disclosure assurance audit process; and

(d)   monitor and review communications on corporate culture and corporate responsibility with stakeholders (including relevant organizations and sustainability rating and ranking bodies) and their effectiveness with regard to the reputation of the Group.

The GNC’s responsibilities and authorities are to:

(i) Corporate governance:

(a)   address all significant corporate governance issues affecting the Group;

(b)   develop, maintain and review these ORs and make proposals to the Board for approval;

(c)   make recommendations to the Board concerning further corporate governance matters and practices;

(d)   review the corporate governance section of the Group’s annual report;

(e)   coordinate as required the work of the other Committees regarding corporate governance in their specific areas of expertise;

(f)   plan and manage proposals for changes in Board membership, taking into account factors including:

a.   the size and composition of the Board, as well as its Committees; and

b.  the skill mix, industry experience, diversity considerations and responsibilities of Board members;

(g)   annually review the Board members’ independence and present its assessment to the Board for approval;

(h)   approve mandates of Board and GEB members pursuant to articles 31 and 36 of the AoA and applicable internal policies; and

(i) approve the appointment of supervisory board members for Significant Group Entities upon proposal by the Group CEO and ensure the Chairperson of the respective Board Committee of UBS Group AG is consulted on the appointment of Chairpersons to equivalent committees for Significant Group Entities;

(ii)  annually review the Committees’ charter, taking into account best practices;

(iii)  Identification and nomination of new Board members:

(a)   develop, maintain and review principles and criteria regarding the recruitment and nomination of new Board members and Committee members, approve their existing mandates, assess their independence pursuant to section 3.2 of the ORs and provide specific proposals to the Board for approval;

(b)   review and propose new candidates for membership of the Board to be recommended for election by the shareholders at an AGM or EGM in accordance with selection criteria approved by the Board; and

(c)   manage a succession plan for Board and Committee membership;

(iv) Board education:

(a)   ensure the establishment of a satisfactory induction program for new Board members and a satisfactory ongoing training and education program for existing Board members and Committee members; and

(b)   maintain a list of trainings attended by individual Board members (maintained by the Group Company Secretary on behalf of the GNC);

(v)   Performance evaluation:

(a)   set the criteria for and oversee the annual assessment of the performance and effectiveness of the Chairman, the Board as a whole and each Committee;

(b)   conduct an annual assessment of the performance and effectiveness of the Chairman and of the Board as a whole (which includes an appraisal by an external expert at least every three years) , report to the Board the conclusions and recommendations and assess on a timely basis whether or not Board members are to be proposed for re-election by the AGM;

(c)   ensure that each Committee carries out and oversees a self-assessment of its performance and reports the conclusions and any recommendations for change to the Board; and

(d)   ensure that each Committee is subject to an external assessment every three years; and

(vi) Human resources:

supervise and approve, together with the Chairman, the succession planning for all GEB members and propose their appointment for approval by the Board (for this purpose, the GNC receives information from the Compensation Committee on its performance evaluation of the GEB members).

In accordance with section 2.5 of this Committees’ charter, at least one of the Vice Chairmen and/or the SID is a member of the GNC. The respective GNC member is required:

(i) together with the GNC, to lead the Board in the ongoing monitoring and annual evaluation of the Chairman; and

(ii)  in conjunction with the Chairman and the GNC, to ensure good corporate governance, balanced leadership and control within the Group, the Board and the Committees.

The function of the RC is to oversee and support the Board in fulfilling its duty to set and supervise an appropriate risk management and control framework in the areas of:

(i) financial and non-financial risks; and

(ii)  balance sheet, treasury and capital management, including funding, liquidity and equity attribution.

The RC considers the potential effects of the aforementioned risks on the Group’s reputation.

The RC’s responsibilities and authorities are to:

(i) Risk management and control:

(a)   review and propose to the Board the guiding principles and framework for risk management and control (including risk appetite, delegation of risk authorities and major risk limits)relative to UBS’s operations, assess management’s respective proposals and recommend any required changes to the Board;

(b)   review and approve the risk appetite methodology (including objectives and binding scenarios)relative to the Group’s activities and risk profiles, including allocation of responsibilities within the risk management and control framework;

(c)   review and propose to the Board the risk, capital, liquidity and funding, and balance sheet section of the annual report of the Group;

(d)   periodically assess the appropriateness of major policies and procedures adopted by the GEB relating to the risk management and control of significant risks;

(e)   review and make recommendations to the Board based on proposals from the GEB in relation to material risk limits and periodically review allocations and authority levels relating to those limits. Material risk limits include those relating to portfolios, concentrations, products, sectors or other categories relevant to the strategy, risk profile and risk capacity of UBS Group AG and the Group as approved by the Board;

(f)   review and approve the principal characteristics of the Group’s risk measurement framework (including changes thereto)used to identify, model, measure, monitor and report risks;

(g)   monitor and oversee the risk profile of UBS Group AG and the Group within the context of the Board-determined risk profile, risk capacity and limit structure;

(h)   systematically review high-risk areas of the Group and assess the effectiveness of the steps taken by the GEB to manage or mitigate such risks;

(i) review and assess the asset and liability management framework, including allocation of responsibilities, limits, capital allocation to BDs and GF, liquidity and funding;

(j) review regulatory framework reforms affecting areas within the scope of the RC’s mandate and recommend any required changes to the Board;

(k)   consider the Group’s strategy to deal with anticipated or existing high-level risks and assist the Board by reviewing and assessing management’s proposals in relation to strategy;

(l) review management’s proposals and as appropriate propose to the Board for approval a global recovery plan and global resolution strategy;

(m) review management’s assessments of UBS’s non-financial risk exposures and related risk-oriented activity plans;

(n)   periodically review material communications (including formal assessments)between UBS and its principal regulators;

(o)   review projects and remediation activities (as determined by the RC)undertaken by the management to address critical changes to the risk management/control environment; and

(p)   periodically meet with the Compensation Committee to ensure that the compensation framework appropriately reflects risk awareness and management, and ensures appropriate risk-taking;

(ii)  Risk reporting:

(a)   determine risk reporting requirements that allow for an effective oversight by the RC and communicate changes to report owners if reporting requirements are not met or change;

(b)   review risk reports, including reports from management that assess the likelihood of risks materializing, the monitoring of emerging trends via forecasts or stress tests, the adequacy and appropriateness of the internal controls to manage those risks and that contain agreed measures to reduce risks or deal with specific risk situations including stress situations; and

(c)   receive periodic updates on limitations that prevent full risk data aggregation in the risk reports; and

(iii)  Human Resources:

(a)   annually provide input on the performance of the Group CRO, Group CFO, Group GC and the Group CCGO to the Group CEO; and

(b)   review and make recommendations to the Board regarding decisions relating to the hiring and dismissal of the Group CRO and the Group CCGO.

Meetings

Each Committee meets as often as its business requires, but at least:

(i) four times a year for the AC, the RC and the Compensation Committee; and

(ii)  twice a year for the CCRC and the GNC.

The AC and RC hold at least four joint meetings a year.

The Compensation Committee and RC periodically hold joint meetings.

The AC holds Committee meetings:

(i) normally with the participation of the Head Group IA, representatives of the external auditors, the Group CEO, the Group CFO, and the Group Controller and Chief Accounting Officer; and

(ii)  periodically, only with the participation of the Head Group IA, the external auditors, or with members of management, or a combination of any of the aforementioned.

Each Chairperson ensures that the Chairman and the Board are kept informed in a timely and appropriate manner. Each Chairperson (either personally or through another Committee member) regularly reports to the Board at the Board meetings on the current activities of their Committee and on important Committee issues, including all matters falling within the duties and responsibilities of the Board, namely:

(i) proposals for resolutions to be considered, or other action to be taken by the Board;

(ii)  resolutions and decisions made by the Committee and the material considerations that led to such resolutions and decisions; and

(iii)  activities and important findings of the Committee.

Following the completion of the audit and the annual financial statements, the AC Chairperson submits annually to the Chairman, for the attention of the Board:

(i) the AC’s assessment of the qualification, independence and performance of the external auditors;

(ii)  the AC’s assessment of the design of the Group’s internal control system for financial reporting and the coordination and interaction between Group IA and the external auditors; and

(iii)  a recommendation regarding the audited financial statements in UBS’s annual report.