Colombian Regulations vs. US Regulations (NYSE)

• Colombian Regulations vs. US Regulations (NYSE)

Bancolombia, as a listed company that qualifies as a foreign private issuer under the NYSE listing standards in accordance with the NYSE corporate governance rules, is permitted to follow home-country practice in some circumstances in lieu of the provisions of the corporate governance rules contained in Section 303A of the NYSE Listed Company Manual that are applicable to U.S. companies. The Bank follows corporate governance practices applicable to Colombian companies and those described in the Bank‘s Corporate Governance Code (the “Corporate Governance Code”) which in turn follows Colombian corporate governance rules. An English translation of the Corporate Governance Code is available at Bancolombia‘s website at www.grupobancolombia.com.co. The Spanish version will prevail for all legal purposes. In Colombia, a series of laws and regulations set forth corporate governance requirements. External Circular 056 of 2007 issued by the Superintendency of Finance, contains the corporate governance standards to be followed by companies issuing securities that may be purchased by Colombian pension funds. Under External Circular 056 of 2007, entities under supervision of the Superintendency of Finance, when taking investment decisions, must take into account the recommendations established by the “Country Code” and the corporate governance standards followed by the entities beneficiaries of the investment. Additionally, External Circular 055 of 2007 establishes that entities under the supervision of the Superintendency of Finance must adopt mechanisms for the periodic disclosure of their corporate governance standards.

Additionally, Law 964 of 2005 established mandatory corporate governance requirements for all issuers whose securities are publicly traded in the Colombian market, and Decree 3139 of 2006 regulates disclosure and market information for the Colombian securities market SIMEV (Sistema Integral de Información del Mercado de Valores).

Bancolombia‘s corporate governance standards comply with these legal requirements and follow 161 regional recommendations, including the OECD‘s White Paper on Corporate Governance for Latin America and the Andean Development Corporation‘s (CAF) Corporate Governance Code. The following is a summary of the significant differences between the corporate governance practices followed by Bancolombia and those applicable to domestic issuers under the NYSE listing standards:

• Independence of Directors. Under NYSE corporate governance rules, a majority of a U.S. company‘s board of directors must be composed of independent directors. Law 964 of 2005 requires that at least 25% of the members of the Bank‘s board of directors are independent directors, and Decree 3923 of 2006 regulates their election. Additionally, Colombian law mandates that all directors exercise independent judgment under all circumstances. Bancolombia‘s Corporate Governance Code includes a provision stating that directors shall exercise independent judgment and requires that Bancolombia‘s management recommends to its shareholders lists of director nominees of which at least 25% are independent directors. For the independence test applicable to directors of Bancolombia see “Item 10. Additional Information. – B. Memorandum and Articles of Association – Board of Directors”.

• Non-Executive Director Meetings. Pursuant to the NYSE listing standards, non-executive directors of U.S. listed companies must meet on a regular basis without management present. The non-executive directors of Bancolombia do not meet formally without management present. There is no prohibition under Colombian regulations for officers to be members of the board of directors, however it is customary for Colombian companies to maintain separation between the directors and management. Bancolombia‘s board of directors does not include any management members, however the CEO attends the monthly meetings of the Bank‘s board of directors (but is not allowed to vote) and committees may have officers or employees as permanent members to guarantee an adequate flow of information between employees, management and directors. In accordance with the Law 964 of 2005 and the Bank‘s by-laws, no executive officer can be elected as chairman of the Bank‘s board of directors.

• Committees of the Board of Directors. Under NYSE listing standards, all U.S. companies listed on the NYSE must have an audit committee, a compensation committee, and a nominating/corporate governance committee and all members of such committees must be independent. In each case, the independence of directors must be established pursuant to highly detailed rules promulgated by the NYSE and, in the case of the audit committee, the NYSE and the SEC. The Bank‘s board of directors has a “Board Issues Committee”, a “Designation, Compensation and Development Committee”, a “Corporate Governance Committee” and an “Audit Committee”, each of which is composed of both directors and officers, except the audit committee which is composed by three directors but no officers. These committees have their own charters which address various corporate governance subjects, in accordance with NYSE Corporate Governance Standards. Bancolombia‘s audit committee complies with NYSE Corporate Governance Standards applicable to foreign private issuers. For a description of these committees see “Item 6. Directors, Senior Management and Employees – C. Board Practices”.

• Shareholder Approval of Equity Compensation Plans. Under NYSE listing standards, shareholders of U.S. companies must be given the opportunity to vote on all equity compensation plans and to approve material revisions to those plans, with limited exceptions set forth in the NYSE rules. Under Colombian laws applicable to Bancolombia, such approval from shareholders is also required.

• Shareholder Approval of Dividends. While NYSE corporate governance standards do not require listed companies to have shareholders approve or declare dividends, in accordance with the Colombian Code of Commerce, annual dividends must be approved by Bancolombia‘s shareholders.