Bancolombia S A : Policy for the Election of Board Members Proposal

Policy for the Election of Board Members Proposal

For the purpose of moving towards strengthening corporate governance, the Board of Directors advises the General Shareholders Meeting to approve the following Regulations for Electing Members to the Board of Directors within the terms set forth in the Good Governance Code:

REGULATIONS FOR ELECTING MEMBERS TO THE BOARD OF DIRECTORS

For the election of members of the Board of Directors, the criteria of independence and the disqualifications and incompatibilities established in this Regulation for the Election of Board Members approved by the General Assembly of Shareholders shall be taken into account.

1.1. For the purpose of determining whether a member of the Board of Directors is independent or subject to disqualification or incompatibility, the following definitions shall be considered:

1. "Affiliate" means, with respect to a person, any person who controls, is controlled by, or is under common control with such first person. Forthe purposes of this definition, "control" means the ability to submit, directly or indirectly, individually or jointly, with another person or persons, the will of another person, and any word derived from the noun "control" will have the corresponding correlative connotation. Control is presumed in the cases provided under article 261 of the Commercial Code. With respect to any natural person, the term Affiliate refers to (a) any person controlled, directly or indirectly, individually or jointly with other persons, by such natural person, (b) their relatives up to the third degree of consanguinity, second by affinity 17 and first by civil law, (c) to the spouse, common-law spouse or any person who lives in the same residence as the natural person in accordance with the circumstances referred to in letter (b), and (d) to any person controlled, directly or indirectly, individually or jointly with other persons, by any of the persons referred to in letters (a), (b) and (c) above. For purposes of this definition, it is presumed that if a natural person and any of the persons referred to in letters (a) to (d) participate in the capital, have votes or otherwise participate in the same person there is an event of joint control.
2. "Management Officer" means, with respect to a corporation or other type of legal entity, its directors and members of senior management.
3. "Person" means any natural or legal person, including any company by shares, quotas, interest parties (or equivalent figures according to the legislation applicable to the constitution or operation of the respective Person) or any other form of participation in the corporate capital, as well as any entity assimilated to a person, or that may be the recipient of rights or obligations, in all the above cases in accordance with the law that applies to its constitution or operation, including, without limitation, any company, cooperative, union, trust , autonomous patrimony, trust, investment fund and any other analogous or equivalent figure.
4. "Competitive Situation" means that situation that occurs when a person is a Relevant Partner, or Management Official of one or several companies that are engaged in the same economic activities or participate in the same value chains as any of the Companies.

1. "Relevant Partner" means, with respect to any legal or similar person (including any entity that may be the recipient of rights or obligations, such as, without limitation, companies, cooperatives, unions, autonomous estates, trusts, investment funds and analogous or equivalent figures), the partner, associate, member, real beneficiary (as said term is defined in Decree 2555 of 2010) or equivalent figure of said legal or similar person that has, directly or indirectly, more than 10% of the voting interest in such Person.

1. Independent members of the Board of Directors ('Independent Members') shall be those members who, except for their membership in the Board of Directors, do not have, directly or indirectly, a material financial, commercial, or family relationship with (a) the Bank, (b) its respective Affiliates or Management Officers, or (c) with another member of the Board of Directors. In addition to the independence criteria set forth in Law 964 of 2005 for the issue of securities in Colombia, the election of a member independent from Bancolombia's Board of Directors shall comply with provisions set forth by New York Stock Exchange for US issuers, the independence criteria established in the bank's bylaws, and the following criteria shall apply.
2. Without limiting the generality of the definition of 'Independent Member' or the scope of disqualifications and incompatibilities established in Article 54 of the Bylaws, in no case shall be consider as Independent Members, individuals who are themselves, or whose Affiliates are:

1. Employees or managers of the companies, or former employees or managers during a two-year period immediately prior to the appointment, except in the case of the re-election of an independent person.
2. Any of the following persons: (a) any of the relevant shareholders (b) any person that determines the majority composition of the Bank's administrative or management bodies.
3. Shareholders, employees or advisers to shareholders, who directly or through an agreement, direct, guide or control more than ten percent (10%) of the voting rights of the entity or determine the majority of the entity´s administrative, management or control bodies.
4. Partners or employees of associations or companies that provide services or other concepts, or receive payments from Bancolombia Group, for: (i) an amount greater than the equivalent to US $ 250,000 or corresponding to two percent (2%) or more of the total income of the applicable association or company (whichever is higher) for the last three years, or (ii) when the income for said association or company represents a value corresponding to twenty percent (20%) or more of the association or company´s operating income for the prior year
5. Partners or employees of legal entities or similar (e.g. trusts) that have made payments to Bancolombia or its affiliates, subsidiaries or controllers, for a value greater than the equivalent to US $1 Million or corresponding to two percent (2%) of the total income of the respective company or association (whichever is higher) in the last three years, except for interest payments or financial services rendered by Bancolombia or its subsidiaries in the ordinary course of business.

1. Employees or directors of legal entities or similar (e.g., trusts) that receive significant donations from Bancolombia, or from individuals or corporate entities that own shares of the Bank that represent zero-point five percent (0.5%) or more of the voting rights of Bancolombia. A donation will be considered significant when it represents more than twenty percent (20%) of donations received by the cemployee, director of the non-profit entity, association or society.
2. Directors, senior management or key executives of an entity whose board of directors includes a legal representative of Bancolombia.
3. People who receive from Bancolombia Group any remuneration other than fees as members of the board of directors, the audit committee or any other committee created by the board of directors, or who have received remuneration for an amount greater than the equivalent to US $120,000 for 12 months, in the last three years, other than payments for being a member of the Board of Directors or a Board committee.
4. Current partners or employees, or individuals who were, within the past three years, partners or employees of the external auditors.
5. Management Officer, senior management or key executives or legal representatives of another entity with respect to which any of the current Management Officer, senior management or key executives or representatives of Bancolombia is a member of the compensation committee.

1.4. No person who is not considered an Independent Member pursuant to the preceding paragraphs (1.2) and (1.3) may acquire the status of Independent Member by virtue of not being Colombian or being domiciled abroad, or by virtue of the fact that the Related Person or Affiliate to which they are linked is not a Colombian national or domiciled abroad.

2.1. Additionally, a person may not be a member of the Board of Directors if they are in any of the following situations of disqualification and incompatibility:

i. Belongs, as a member, to the board of directors of other four (4) Colombian public limited companies (sociedades anónimas), in addition to the respective company.

1. In the case of financial entities that are credit institutions (establecimientos de crédito), (a) Directors can neither be nor have been , withing the previous two (2) years, members of the Board of Directors of other credit institutions, in jurisdictions in which the Group has presence, (b) be or have been president, legal representative, administrator or employee of other financial groups, or entities whose purpose or that of their Affiliates is the provision of financial services rendered by the Companies during the two (2) years prior to his or her appointment as Director. In (a) and (b) except in the case of companies of the Bancolombia Group or of the Financial Conglomerate to which the Grupo Bancolombia belongs.

1. Have rendered services or received any remuneration, directly or indirectly, for an annual amount greater than the equivalent of USD $120,000, from financial groups or conglomerates other than the one to which Bancolombia belongs, during the two (2) years prior to his or her appointment.
2. That the candidate, directly or in conjunction with its Affiliates, has direct or indirect equity participation or be beneficial owners of an equity participation equal to or greater than 0.5% of the voting rights of financial entities other than Bancolombia or of broker dealers (intermediarios del mercado de valores) in Colombia or any of the countries in which the Group operates.
3. To be a counterparty, directly or through its Affiliates or entities in which the candidate or its Affiliates hold a position of Management official, in judicial, administrative or arbitration proceedings, or in judicial or extrajudicial conciliation proceedings, in which the counterparty is any of the Companies or any of the entities of the Conglomerate to which the Grupo Bancolombia belongs.
4. Be an Affiliate, of a member of the Board of Directors associated with Bank or credit establishments or its equivalent to the Grupo Bancolombia , who exercises functions as a director on the date on which the election of the respective candidate is submitted to the consideration of the general shareholders' meeting or with another candidate for member of the Board of Directors of Bancolombia in the same election.
5. To be in a competitive situation, directly or through its affiliates, with the financial entities of the Grupo Bancolombia.
6. Be involve in a situation of material and permanent conflict of interest, as determined by the Board of Directors..
7. Having been convicted or found guilty, in Colombia or in another jurisdiction, in judicial or administrative proceedings, within the ten (10) years prior to the date of the general shareholders' meeting at which the Board of Directors would be elected for: (a) violation of the rules regulating the securities market, (b) violation of the rules regulating the activity of financial institutions, as well as having been disqualified, totally or partially, by public or private entities, to engage in commercial activities in any jurisdiction.
8. Having been a Director Officer of Persons who incurred, within the ten (10) years prior to the date of the general shareholders' meeting at which the Board of Directors is to be elected, in the disqualifications contemplated in the preceding paragraph, provided that the candidate has been a Director Officer of the respective Person at the time the events constituting the infraction occurred.
9. Having been convicted in a criminal proceeding within the ten (10) years prior to the date of the general shareholders' meeting at which the Board of Directors is to be elected.

1. The Boards of Directors shall never be made up of a number of members working for the applicable company, who may form themselves a majority necessary to make decisions.

1. If the Board is elected in contravention of the provisions of this Regulation, it shall not be able to act, and the previous Board shall continue to exercise its functions, immediately convening the Assembly for a new election. The decisions adopted by the Board with the vote of a majority that contravenes the provisions of the bylaws shall be ineffective.
2. If a director elected subsequently becomes subject to a disqualification or incompatibility cause provided for in this Regulation, duly proven before the Board of Directors without the presence of the member in question, the position shall become vacant, and proceedings shall be carried out in accordance with Article 63 of the Bylaws.