Proposed Amendment to the Issue and Placement Rules and Regulations for the Company´s Preferred Shares Issued in 2011
In addition to the information published on March 9th, 2017 with regard to Proposal No. 9., as contained in the agenda of the upcoming meeting of the General Assembly of Shareholders to be held on March 31, which was announced in the corresponding Notice of said meeting, and in keeping with current reporting requirements, Grupo de Inversiones Suramericana S.A. hereby informs that: 1. Based on that published in the form of relevant information reporting requirements on March 9th, the purpose of one of the proposed amendments to the Issue and Placement Rules and Regulations for the Company´s Preferred Shares issued in 2011, is to raise the minimum preferred dividend from zero point five percent (0.5%) to one percent (1%) per year, as calculated on the subscription price of said Preferred Shares issued in 2011, this based on the updated price of these preferred shares, that is to say their Reference Subscription Price. This Reference Subscription Price corresponds to the subscription price for the Company's preferred shares in any placement of preferred shares on the part of the Company as a result of the most recent primary market transaction carried out, as approved by the General Assembly of Shareholders, including, but not limited to, issues and public offerings, private issues, credit capitalizations, payments of scrip dividends, among other items. As can be seen, the formula for calculating the minimum preferred dividend would then be determined by two variables, namely (i) the applicable percentage, which would be increased to a fixed percentage of one percent (1%) per year; and (ii) the reference price on which that percentage applies, which shall be the Reference Subscription Price as explained above. The primary market transaction that would serve to establish the corresponding Reference Subscription Price would always be that duly approved by the General Assembly of Shareholders. With this new proposal, and based on current market conditions, this would imply an increase in the minimum guaranteed preferred dividend corresponding to FY 2016, since this would (i) increase the percentage used for the respective calculation; and (ii) result in the reference price being adjusted based on the increase in the value of these preferred shares since they were first created and issued in 2011. This new guaranteed minimum dividend shall remain in effect until the General Assembly of Shareholders approves a new primary market transaction with a different Reference Subscription Price. Should this proposal be approved, the second variable, that is to say, the Reference Subscription Price may be adjusted over time in accordance with the price that the General Assembly of Shareholders should approve for conducting operations on the primary market or placing new preferred shares. This being the case, since the General Assembly of Shareholders would have to give their approval to the value of these preferred shares, the Company's value and the minimum return obtained from these same would remain aligned over time. It is also to be noted that at the corresponding Shareholders' Meeting at which a new Reference Subscription Price is to be approved, only the holders of ordinary shares may vote, and consequently any decisions made with regard to the Reference Subscription Price would govern both the preferred shares currently outstanding as well as all any new preferred shares that should be issued and placed. However, the Company does not guarantee that, in the event of such issues, the Reference Subscription Price may not be reduced in the future, which in any event would require due approval from the holders of the Company's ordinary shares. 2. In the event of the proposal being approved for the holders of preferred shares regarding their right to vote on "(...) Change in the number of preferred shares outstanding (...)", as voluntarily granted by the Company as part of the corresponding Issue and Placement Rules and Regulations for the Company´s Preferred Shares issued in 2011, without this being one of the rights stipulated in Article 63 of Law 222 of 1995, this would not alter the exercising of their pre-emptive rights with regard to new subscriptions of this same type of share, which would continue to prevail pursuant to that stipulated in the Company's by-laws. 3. It should also be noted that the decision to amend said Issue and Placement Rules and Regulations as indicated in aforementioned Agenda Point 2 requires a majority vote consisting of seventy percent (70%) of the outstanding shares, including in such percentage and in the same proportion the affirmative vote on the part of holders of Preferred Shares. On the other hand, the decision regarding the payment of dividends in the form preferred shares is to be made solely by the holders of ordinary shares for which a majority vote of eighty percent (80%) of the ordinary shares duly represented at this meeting. 4. We also hereby announce that Grupo de Inversiones Suramericana S.A. has already published the document "DIVIDEND PAYMENT INSTRUCTIONS CORRESPONDING TO THE PROPOSED DIVIDEND DISTRIBUTION FOR FY 2016 "in the form of Relevant Information Reporting Requirements. These instructions concern the payment of a scrip dividend in the form of preferred share and contain the means, mechanisms and the terms for the shareholders to inform the Company of whether they wish a dividend payment in the form of cash, as indicated in Section 2 of the Dividend Distribution Proposal published on February 24, 2017.These instructions have also been made available on the Company's website. As therein indicated, in the event that any shareholder should fail to clearly or opportunely give such instructions in writing by 5:00 p.m. on April 7, 2017, it shall be understood that they agree to receive their dividends in the form of preferred shares freed up by the Company. The same shall apply to all those written payment instructions that are either incomplete or illegible 5. We also hereby announce that the text corresponding to Section 4 of the Dividend Distribution Proposal shall be adjusted to read the preferred shares held "in reserve and at the disposal of the Company's Board of Directors of the Company since October 2011" instead of "issued and not placed". This change was made to clarify the terminology used. Consequently, this Proposal shall be disclosed again in the form of Relevant Information Reporting Requirements.