Corporate Governance Procedures 1

CORPORATE GOVERNANCE
PROCEDURES
EMPRESAS COPEC S.A.
CORPORATE GOVERNANCE PROCEDURES
INDEX
1. DIRECTOR INDUCTION PROCEDURE ....................................................................3
2. BOARD TRAINING PROCEDURE ..............................................................................9
3. POLICY ON HIRING BOARD ADVISORY SERVICES ....................................... 12
4. DIRECTOR APPLICATION POLICY AND PROCEDURE .................................. 15
5. ANALYSIS AND ASSESSMENT MANUAL ON INFORMATION OF
MARKET INTEREST ..................................................................................................... 18
6. CEO AND/OR SENIOR MANAGER REPLACEMENT PROCEDURE ............ 23
7. GUIDELINES AND POLICY ON SALARIES, SEVERANCE AND
INCENTIVES FOR SENIOR MANAGERS AND MANAGERS ........................ 27
2
1. DIRECTOR INDUCTION PROCEDURE
1.1 Introduction
This document sets out the induction process for new directors joining
the Company.
The aim of the induction process for a new Director is for him or her to
get to know and understand the Company, its business, risks, including
sustainability, policies, procedures, main accounting principles and the
most important current legal framework applicable to the Company and
Board of Directors.
This process as a minimum entails delivering an Informative Dossier about

the Company, conducting induction talks, interviews and possibly visits to
facilities.
The Company CEO is the person in charge of the induction process. For
this, he must co-ordinate with staff under his direct supervision the
delivery of information on the important specific aspects mentioned in
this Procedure.
3
1.2 Informative Dossier about the Company
As part of the induction process and so the new Director knows the legal
framework applicable to the Company and Board, and how its
organization is structured, the director will receive the Informative Dossier
about the Company from the CEO, which shall at least contain the
following:
a) Regulations:
• Law N°18.045 – Law on the Securities Market
• Law N°18.046 – Law on Corporations
• Regulation on Corporations
• Law Nº20.393 and its amending laws– Law that establishes the
criminal liability of companies
• Decree Law Nº211 – Promotion and Defense of Free Competition
• SVS-NCG Nº30: Regulations for the registry of issues and securities

of public offering in the Securities Registry, their dissemination,
placement and information obligations. This also includes
regulations on essential events and of market interest and their
disclosure.
• SVS-NCG Nº270: Dissemination of policies and procedures on the

purchase or sale of securities of the entity and the handling and
disclosure of information for the market.
4
• SVS-NCG Nº385: Disclosure of information on the corporate

governance standards embraced by publicly traded corporations.
• SVS-NCG Nº386: This adds the requirement of information on

corporate social responsibility and sustainable development in the
annual report of publicly traded corporations.
b) Corporate Documents:
• By-laws
• Code of Ethics
• Offence Model and Prevention Policy
• Manual on Handling Information of Market Interest
• Annual Report of the last three years
• Risk Management Policy
• Updated Risk Matrix
• Community Contribution Policy
• Sustainability Policy
• Non-discrimination and Diversity Policy (if it exists)
• Internal Control Policy
• Board Advisory Policy
• Order, Hygiene and Safety Regulation
5
• Whistleblowing channel – “Hotline”
• Board meeting minutes of the last two years
• Directors’ Committee minutes of the last two years
• Any other procedure, policy or manual on the framework of NCG

Nº385
1.3 Induction Talks
The CEO, eventually with the support of senior managers, must make a
presentation to the new Director which at least addresses the following
issues:
• Company history/description
• Mission/vision and strategic objectives
• Ownership structure
• Company organization chart, including descriptions of the key

functions
• Code of Ethics
• Conflicts of interest and how they are resolved
• Business environment: markets, competition, trends, etc.
• Significant stakeholders and mechanisms for getting to know their

expectations
• Review of the balance sheet, statements of income and cash flows
6
• Review of cash management and the treasury
• Main investment projects
• Main accounting principles
• Investment policy
• Audit reports
• Internal control model
• Risk management
• Applicable legal and regulatory framework
• Offense prevention model
1.4 Interviews
The CEO shall, upon the request of a new director, arrange interviews
with the senior managers indicated by him. The aim of these interviews
shall be to provide further information about the financial statements,
performance of the main businesses, investments, and projects of the
company, and financial investment policy, among others.
1.5 Visits
Likewise, the CEO may arrange visits to the facilities of subsidiaries when
he deems it fit for suitable understanding of their business.
7
1.6 Approval and Modifications
This procedure was approved by the Company Board in a meeting held

on April 30, 2020, and it shall replace the previous document that was in
force as of December 30, 2015. Should any modifications be made, the
date of the Company Board meeting approving such modification shall
be stated in this section.
1.7 Effectiveness
This document shall come into force as of the date indicated above and
shall have indefinite duration unless the Company Board reaches another
decision about it.
1.8 Disclosure Mechanisms
The full and updated text of this document shall be made and kept
available for Directors.
1.9 Safekeeping
The Secretary to the Board shall be responsible for the safekeeping of the
Director Induction Procedure.
8
2. BOARD TRAINING PROCEDURE
2.1 Introduction
This document sets out the permanent training procedure for the
members of the Board.
The aim of the training procedure is once a year to update the

knowledge of each one of the members of the Board on the following
issues:
• The best corporate governance practice embraced by other Chilean

and international entities.
• Main Chilean and international progress on inclusion, diversity and

sustainability reports.
• Main risk management tools, including those for sustainability, put
in place in Chile and internationally.
• The most important court verdicts, penalties or judgements that

have occurred in Chile and abroad on obligations of care,
confidentiality, loyalty, diligence and reporting.
• Situations that could lead to a conflict of interest and how they can
be avoided or resolved in the best social interest.
9
2.2 Procedure
Once a year, the Company shall conduct with at least three consultants a
tender for the Board training program on the issues mentioned.
The bids shall be presented to the Board for its choice and approval.
Details about the topics and dates of the training program selected and
undertaken by the Board shall be published on the Company website.
This procedure was approved by the Company Board in a meeting held

on December 30, 2015. Should any modifications be made, the date of
the Company Board meeting approving such modification shall be stated
in this section.
2.4 Effectiveness
decision about it.
10
2.6 Safekeeping
Board Training Procedure.
11
3. POLICY ON HIRING BOARD ADVISORY SERVICES
3.1 Scope
The Board may hire consultants for accounting, economic, tax, financial,
investment and legal issues, or for those it deems it is necessary to get
the opinion of an expert. The fact that the company management already
has an advisory service for this does not limit this faculty of the Board.
In any case, the Board shall have the expertise and experience of its
members, striving so the specific competencies that its own members
may have make a contribution to the development of corporate activities.
Notwithstanding the foregoing, it should be recalled that it is the

company managers who, as part of their faculties, usually request
advisory services on specific issues when they ask for the opinion of an
expert. The result of such advisory services shall be made available to

directors, if they so require.
3.2 Policy
It is the Company’s policy that advisors be selected from entities or

experts with renowned prestige and experience on issues to be consulted
so as to get a top-rate service.
Advisors must be independent when giving their opinion. The Company

will therefore give preference to hiring advisors with no conflicts of
interest.
12
When selecting the advisory service provider, the Company will give
preference to technical aspects and suitability over economic factors.
The cost of the advisory service commissioned must be in line with

market values and the works requested must be documented suitably.
3.3 Advisory Service Hiring Procedure
To agree on the hiring of advisory services, any director is entitled to

propose this in a Board meeting. The Board shall assess the merits of the
request and the estimated cost. The agreement or rejection reached,
which shall be stated in the Board meeting minutes, shall be made by
simple majority.
3.4 Budget
The Board shall always have a sufficient and suitable budget to hire
advisory services.
This policy was approved by the Company Board in a meeting held on

December 30, 2015. Should any modifications be made, the date of the
Company Board meeting approving such modification shall be stated in
this section.
13
3.6 Effectiveness
decision about it.
3.8 Safekeeping
Advisory Service Hiring Procedure.
14
4. DIRECTOR APPLICATION POLICY AND PROCEDURE
4.1 Policy
Any natural person who is the free administrator of his or her goods and
is not included in any of the cases expressly indicated in articles Nº35
and Nº36 of Law Nº18.046 can be elected a company director. To be an
independent director, the conditions set out in article 50 bis of Law
N°18.046 must also be met.
Shareholders who wish to promote an application by anyone to be a

director or who wish to apply directly, can send their personal
information or that of the person they are proposing to the Company
CEO at least two business days before the Shareholders’ Meeting is held,
be this by means of electronic mail to the address:
[email protected], or by letter delivered directly in person.
To such end, applicants shall provide the following information:
• Candidate’s experience and professional profile.
• Declaration by the candidate stating acceptance of his or her

nomination and meeting the requirements to fill the position laid
down by law and its regulation.
The Company shall not be responsible for the truth of the information
provided but shall be limited to receiving it and making it available to
shareholders through the website.
15
It is the Company’s policy not to influence its shareholders by indicating

the skills, conditions, experience and vision candidates must have to be a
director. It is understood that shareholders have the knowledge and
criteria to define the director profile.
4.2 Procedure
The CEO shall make available the information received about the
experience and professional profile of candidates to shareholders on the
Company’s website at least two business days before the Shareholders’
Meeting.


this section.
4.4 Effectiveness
This document shall come into force as of December 30, 2015 and shall
have indefinite duration unless the Company Board reaches another
decision about it.
16
available for directors and shall be posted on the website.
4.6 Safekeeping
Director Application Policy and Procedure.
17
5. ANALYSIS AND ASSESSMENT MANUAL ON INFORMATION

OF MARKET INTEREST
5.1 Definitions
For the effects and purposes of this document, the terms and
abbreviations indicated below are defined and shall be construed as
follows:
• Stock Markets or Stock Exchanges: these are the stock markets in
which the company operates or is registered.
• Company: Empresas Copec S.A.
• Board of Directors: the Company Board of Directors.
• Information: essential information, information of market interest,

that which is for shareholders, and that delivered to the
Superintendency of Securities and Insurance (SVS), insider
information and confidential information, as such terms are defined
in the Information Handling Manual.
• LMV: Law N°18.045 on the Securities Market.
• LSA: Law N°18.046 on Corporations.
• Information Analysis and Assessment Manual: This manual
approved by the Board on this date, issued pursuant to section 2.f)

of NCG N°385.
18
• Information Handling Manual: the manual approved by the Board

in a meeting held on March 30, 2010, issued pursuant to NCG 270
of the SVS.
• NCG: General Regulation.
• SVS: Superintendency of Securities and Insurance.
Other terms not defined in this section shall, for the effects and purposes
of this Manual, have the meanings given them in the Information
Handling Manual, the LMV, LSA, SVS and other applicable laws and
regulations.
5.2 Purpose
The purpose of this manual is to create mechanisms that facilitate the

analysis, detection and assessment of there being enough, timely,
pertinent and easiness of knowledge of the various disclosures the
Company makes to the market so the Board possibly determines the
need of improving the information provided.
19
5.3 Application and Implementation Scope
• The provisions of this manual apply to any disclosure of

information to the market made in accordance with the Company’s
Manual on Handling Information of Market Interest.
• The provisions of this manual shall be mandatory for directors, the
CEO, senior managers, administrators, employees and advisors with

access to confidential information, and the Company’s internal and
external auditors.
• The CEO, and replacing him the CFO, shall be in charge of

disseminating, enforcing and safeguarding the execution of the
regulations and procedures of this manual. Notwithstanding this,
and only in qualified and extraordinary cases, such managers may

delegate one or more of their functions under this manual to other
company managers, but they are always responsible for such
delegation to the Board and must inform it of the or those
delegations in the next Board meeting closest to the date of the
delegation date.
• The content of this manual shall be construed notwithstanding the

legal obligations and responsibilities applicable to the Company, its
directors, managers and senior executives.
• The provisions of this manual shall come into force when it has
been approved by the Board.
20
5.4 Procedure
a) The analysis and assessment of whether there is sufficient, timely,

pertinent and easiness of understanding of the information shall be
undertaken according to the following procedure:
The CEO shall maintain a chronological, physical or virtual record of
any disclosure of information to the market made by the Company,

which shall contain (i) the date and time of the disclosure and its
publication if this is different from the former1; (ii) medium or media
to which the disclosure is made; and (iii) the person that made the
disclosure.
Likewise, the CEO shall maintain a chronological, physical or virtual
record of all communications received from the SVS, Stock Markets or

similar public bodies concerning information that has been disclosed,
which shall contain (i) the date and time of the communication; (ii)
medium or media in which the communication was received; and (iii)
the person that made the communication.
The CEO shall inform the Board of the information disclosed by the
Company.
The Board may request additional or complementary information from

the CEO and shall analyze whether the information disclosed is
sufficient, clear, timely and pertinent.
1
For example, the date and time when the communication is made to a newspaper, and date and time
when it is published.
21
b) In the January Board meeting of each year, the Board shall review
whether there is sufficient, timely, pertinent and easiness of
understanding of the information disclosed to the market and, should
it deem it necessary, it shall propose improvements of such
information.

this section.
5.6 Effectiveness
decision about it.
5.8 Safekeeping
Analysis and Assessment Manual on Information of Market Interest.
22
6. CEO AND/OR SENIOR MANAGER REPLACEMENT

PROCEDURE
6.1 Definitions
For the effects and purposes of this document, the terms and
abbreviations indicated below are defined and shall be construed as
follows:
• Company: the publicly traded corporation called Empresas
Copec S.A., registered in the Securities Registry of the SVS.
• Board of Directors: the Company Board of Directors.
• Senior managers: just for the effect of this procedure, the CEO and
those managers who report directly to him are the senior
managers.
• LMV: Law N°18.045 on the Securities Market.
• LSA: Law N°18.046 on Corporations.
Other terms not defined in this section shall, for the effects and purposes
of this document, have the meanings given them in the LMV, LSA, Code
of Trade, the SVS and other applicable laws and regulations.
23
6.2 Purpose
The Company’s Board has approved the following CEO and/or Senior
Manager Replacement Procedure.
Its aim is to have a mechanism that facilitates the right operation of the
Company in the absence of the CEO or senior managers.
6.3 Application and Implementation Scope
The provisions of this manual apply to the CEO and senior managers.
6.4 Procedure
In cases of unforeseen non-appearance, need of replacement, absence,

resignation or for any other case or circumstance entailing the absence of
the CEO or one or more of the senior managers of the Company, the
following procedure shall be applied:
a) The CEO, who is appointed by the Board, shall propose a potential

replacement for his position and for the senior managers. The
person may be different from the one replacing him in usual
situations, like vacations or sick leave.
b) The Board shall issue a decision on the CEO’s proposal. If it rejects

the proposal, other alternatives shall be presented. Notwithstanding
this, the CEO or corresponding senior manager shall be responsible

for keeping the person who usually replaces him duly trained and
informed about his work in usual situations, such as vacations or
24
sickness, and must in any case not breach the confidentiality

obligations inherent to the exercise of his position.
c) In cases of non-appearance, absence, resignation or for any other

case or circumstance entailing the permanent and unforeseen
absence of the CEO or one or more of the senior managers of the
Company from their functions in the company, the person

appointed for this as stated in letters a and b shall temporarily act
in such position.
d) For the definitive appointment, and in the case of the CEO, the
Board shall ratify the person appointed to act temporarily or will
launch a process to find other candidates, be they internal or

external, with or without the help of professional headhunting
companies.
e) In the case of senior managers, the Board, knowing the opinion of

the CEO, shall ratify the person appointed to act temporarily or will
ask for a process to be started to find other candidates, be they
internal or external, with or without the help of professional

headhunting companies.
f) Lastly, and notwithstanding the foregoing, the foreseeable

replacement processes, or which can be managed in due advance,
shall be undertaken by means of normal job position selection
systems, which shall be managed by the Board for the case of the
CEO, and by the latter for senior managers.
25

this section.
6.6 Effectiveness
This document shall come into force as of the approval date already
indicated and shall have indefinite duration unless the Company Board
reaches another decision about it.
6.8 Safekeeping
CEO and/or Senior Manager Replacement Procedure.
26
7. GUIDELINES AND POLICY ON SALARIES, SEVERANCE AND

INCENTIVES FOR SENIOR MANAGERS AND MANAGERS
7.1 Objective
To align, with the right compensation policy, the quality of the

management and priorities of the Company’s senior managers to the
Company’s mid- and long-term objectives.
As a result of this, the acts of senior managers that are not in keeping
with the Company interests should be eliminated, or those that expose it

to risks that breach the Company’s policies, and cases when this occurs
should be detected timely.
7.2 Scope
These guidelines particularly apply to the CEO and senior managers of

the Company.
7.3 General Policies
a) The salaries of the CEO and senior managers must essentially be

governed by market factors.
b) The salaries of the CEO and senior managers shall have a fixed
component and may also have a variable one too. The Company
should strive for the variable salary to motivate managers to obtain
large achievements that meet the company’s mid- and long-term
expectations.
27
c) The fixed salaries of the CEO and senior managers should be for
performance that leads to reasonably satisfactory achievements of
profitability and sustainability of the company in the long term,
with the variable salaries related to getting large benefits above the
basic performance expected.
d) On determining the salaries of senior managers, the general

interests of the Company should be considered, along with the
specific targets and incentives for the respective areas.
e) The performance of senior managers shall, whenever possible, be

assessed with measurable performance factors of an objective
nature that are related to the Board’s guidelines.
f) When variable salaries are established, the Company should take

special care for this not to lead to managers to tend to present
inflated profits, or endanger the company’s financial health or
sustainability.
g) Due to this, it is the Company’s policy not to establish incentives or
severance based on achieving profits or accrued but unrealized

benefits, whose final situation could change in the future. The
Company will also strive to avoid establishing incentives based on
measuring partial aspects, whose achievement could lead to the
deterioration of other aspects that are also necessary for the
Company. An illustration of this is the incentive to increase sales

without a suitable price policy, or in the credit quality of the
28
portfolio, or achieve project termination dates without considering

the quality of their design and construction.
h) The severance pay for senior managers for termination of work

contracts shall be subject to market conditions for managers of a
similar level in equivalent companies.
This policy was approved by the Company board in a meeting held on

Company board meeting approving such modification shall be stated in
this section.
7.5 Effectiveness
decision about it.
29
7.7 Safekeeping
Guidelines and Policy on Salaries, Severance and Incentives for managers
and/or senior managers.
30

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CORPORATE GOVERNANCE

1. DIRECTOR INDUCTION PROCEDURE ....................................................................3

2. BOARD TRAINING PROCEDURE ..............................................................................9

3. POLICY ON HIRING BOARD ADVISORY SERVICES ....................................... 12

4. DIRECTOR APPLICATION POLICY AND PROCEDURE .................................. 15

5. ANALYSIS AND ASSESSMENT MANUAL ON INFORMATION OF

MARKET INTEREST ..................................................................................................... 18

6. CEO AND/OR SENIOR MANAGER REPLACEMENT PROCEDURE ............ 23

7. GUIDELINES AND POLICY ON SALARIES, SEVERANCE AND

INCENTIVES FOR SENIOR MANAGERS AND MANAGERS ........................ 27

1. DIRECTOR INDUCTION PROCEDURE

This process as a minimum entails delivering an Informative Dossier about

1.2 Informative Dossier about the Company

• Law N°18.045 – Law on the Securities Market

• Law N°18.046 – Law on Corporations

• Decree Law Nº211 – Promotion and Defense of Free Competition

• SVS-NCG Nº30: Regulations for the registry of issues and securities

• SVS-NCG Nº270: Dissemination of policies and procedures on the

• SVS-NCG Nº385: Disclosure of information on the corporate

• SVS-NCG Nº386: This adds the requirement of information on

• Offence Model and Prevention Policy

• Manual on Handling Information of Market Interest

• Annual Report of the last three years

• Risk Management Policy

• Updated Risk Matrix

• Community Contribution Policy

• Non-discrimination and Diversity Policy (if it exists)

• Internal Control Policy

• Board Advisory Policy

• Order, Hygiene and Safety Regulation

• Whistleblowing channel – “Hotline”

• Board meeting minutes of the last two years

• Directors’ Committee minutes of the last two years

• Any other procedure, policy or manual on the framework of NCG

1.3 Induction Talks

• Mission/vision and strategic objectives

• Company organization chart, including descriptions of the key

• Conflicts of interest and how they are resolved

• Business environment: markets, competition, trends, etc.

• Significant stakeholders and mechanisms for getting to know their

• Review of the balance sheet, statements of income and cash flows

• Review of cash management and the treasury

• Main investment projects

• Main accounting principles

• Internal control model

• Applicable legal and regulatory framework

• Offense prevention model

he deems it fit for suitable understanding of their business.

1.6 Approval and Modifications

This procedure was approved by the Company Board in a meeting held

be stated in this section.

1.8 Disclosure Mechanisms

2. BOARD TRAINING PROCEDURE

The aim of the training procedure is once a year to update the

• The best corporate governance practice embraced by other Chilean

• Main Chilean and international progress on inclusion, diversity and

• Main risk management tools, including those for sustainability, put

in place in Chile and internationally.

• The most important court verdicts, penalties or judgements that