A significant characteristic that should be noted is that the main company controlled by GrupoFinanciero Galicia, i.e. Banco Galicia, is also a listed company at the Buenos Aires StockExchange. As it is widely known, in 2000 Grupo Financiero Galicia successfully launched an exchangeoffer of its own shares for Banco Galicia’s shares, what made it possible for Grupo FinancieroGalicia to significantly increase its holdings. Upon doing so, and with the purpose of protectingthe shareholders that accepted such exchange offer, Grupo Financiero Galicia undertook thecommitment that the companies directly or indirectly controlled by it would conduct business withabsolute transparency. That transparency policy largely exceeds the duty to provide information inthe Financial Statements and the Annual Report. Directors and senior officers of eachof the controlled companies attend all the Ordinary Shareholders’ Meetings held by Grupo FinancieroGalicia, provide explanations and answer all the questions on their respective corporate businessthe shareholders may want to ask. As regards Banco de Galicia in particular, one of its directorssubmits a detailed report to Grupo Financiero Galicia’s shareholders, and then the Board ofDirectors submits to the meeting’s vote which shall be Grupo Financiero Galicia’s vote at BancoGalicia’s Shareholders’ Meeting.It is also worth noting that Grupo Financiero Galicia is a company which purpose is solely toconduct financial and investment activities as per Section 31 of the Law on Corporations, that isto say, it is a holding company that, apart from managing its equity investments, assets andresources, does not take part in any other activity directly. This explains its limited personnelstructure, as well as the fact that many of the business organization requirements, common for bigproductive institutions, cannot be applied to the company.To conclude, one should note that, even though Grupo Financiero Galicia is technically underthe control of other pure holding company, EBA Holding S.A., because the latter holds the majorityof votes at the Shareholders’ Meetings, EBA Holding S.A. does not have any managerial functionsover Grupo Financiero Galicia. Therefore, and pursuant to the definitions provided for byspecialized doctrine, Grupo Financiero Galicia has no group relationship with EBA Holding S.A. Nodirector of EBA Holding S.A. is a director of Grupo Financiero Galicia.*2) Inclusion in the Corporate Bylaws.*The need to include certain corporate governanceguidelines in corporate bylaws can be understood within the framework of laws that are not asstrict as Argentine laws with regard to the definition of the Board of Directors’ duties andresponsibilities. In Argentina, the Law on Corporations, the Delegated Decree No. 677/01, theregulations set by the National Securities Commission and, additionally, the variety of specificregulations in other areas of law, provide for a very complete framework and, therefore, anyaddition to the bylaws is unnecessary.In the specific case of Banco Galicia, the main company controlled by Grupo FinancieroGalicia, such duties and responsibilities are legally increased by the regulatory framework offinancial institutions.As regards compensation for directors, to date only independent directors and one director whosimultaneously acts as Managing Director receive compensation.Finally, after a detailed analysis, the Board of Directors has come to the conclusion that, asregards prevention of conflicts of interest, the applicable regulations are so stringent (refer toSections 271 to 273 of the Law on Corporations and Section 8 of the Delegated Decree No. 677/01)that any addition to the bylaws is as well unnecessary.
 
 

 
**As regards the Board of Directors in general***3) It is responsible for the Company’s Strategy.*In this item, the Board of Directors isrequired to undertake the company’s administration and the approval of the policies and strategiesin general and, in particular, the aspects included therein, as follows:a) The strategic or business plan, as well as the annual management and budget goals;b) The policy on investments and financing;c) The Corporate Governance policy;d) The policy on corporate social responsibility;e) Policies on risk control and management and any other policy aimed at the periodicmonitoring of the internal information and control systems; andf) The development of ongoing training programs for directors and management officers.Grupo Financiero Galicia strictly complies with these requirements. The Board of Directors isresponsible for the administration of corporate business, to the above-mentioned extent in GrupoFinanciero Galicia’s capacity as a holding company. The Board of Directors performs all of theaforementioned duties, except those that, due to their nature, are carried out by the ManagingDirector and the Chief Accounting Officer. The former is one of the directors. Nevertheless, it isemployed by the Company. In any case, the Board of Directors, as a body, approves the respectiveguidelines and strategies.Regarding the required items, the following is reported in particular:a) The Board of Directors, as a body, approves the annual budget and monitors the compliancetherewith. Furthermore, in its capacity as a holding company, Grupo Financiero Galicia receives thebusiness plans of the controlled companies and prepares a consolidated business plan taking intoconsideration the goals set, the business condition and the budgets submitted.b) Policies on investments and financing are approved by the Board of Directors.c) Grupo Financiero Galicia monitors the corporate governance policies provided for by theregulations in force through the Audit Committee and the Disclosure Committee. There also existmatrices specially designed for the monitoring of certain aspects such as internal controls,independence of directors and regulatory updating.d) The policies on corporate social responsibility are defined and carried out by each of theoperating companies.e) The policies on risk management control, as well as any other which purpose is to monitorinternal information and control systems, are defined within the framework of each of theaffiliated operating companies. Nonetheless, and in addition to that, the Audit Committee and theDisclosure Committee monitor the actions taken by the main controlled companies.f) Training of directors and managers, obviously to an extent that cannot be compared to whatis required in the case of operating companies, is carried out pursuant to what the Board ofDirectors deems necessary.*4) Management Control.*Grupo Financiero Galicia strictly complies with the verification, bythe Board of Directors, of the implementation of strategies and policies, and of compliance withthe budget and the operations plan. Apart from that, the Board monitors the divisions in all theaspects provided for in the regulations. This is explained in the previous item.
 
 

 
*5) Information and Internal Control. Risk Management.*Grupo Financiero Galicia fully complieswith the requirement as regards updated policies on risk control and management, in line with thebest practices.The tasks related to risk information and internal control of each of the controlled companiesare defined and carried out, rigorously, in each of them. This is particularly strict in the maincontrolled company, Banco Galicia, where the requirements to be complied with are extreme as it isa financial institution supervised by the Argentine Central Bank. Apart from the applicabledomestic regulations, Grupo Financiero Galicia, in its capacity as a listed company at the marketsof the United States of America, complies with the certification of its internal controls pursuantto Section 404 of the Sarbanes Oxley Act (SOX). Corporate risk management is monitored by the AuditCommittee, which as well gathers and analyzes the information submitted by the main controlledcompanies.*6) Audit Committee.*The Audit Committee set by Delegated Decree No. 677/01 and the regulationsof the National Securities Commission, mainly Resolutions No. 400, 402 and supplementaryregulations issued by the CNV, is formed by three directors, all of them independent directors. Themembers of the Committee are appointed by the Board of Directors, upon the proposal of any of theBoard’s members. It has not been common that the Chairman made a proposal to appoint a member ofthe Committee. Special attention has always been given to the education, knowledge, skills andexperience of the candidates for members of the Committee in the areas of accounting, financialanalysis, law, audit and risk management.*7) Number of Directors.*Grupo Financiero Galicia complies with the appropriate standardsregarding total number of directors, as well as number of independent directors. Its bylaws providefor the flexibility necessary to adapt the number of members to the possible variation of theconditions in which the company carries out its activities. Generally, there are between three andnine directors, as determined by the Shareholders’ Meeting in each opportunity. The Shareholders’Meeting can also appoint alternate directors in the number it may decide, up to a maximum thatshall be equal to the number of regular directors appointed. In order to guarantee the continuousperformance of its corporate business, the Board of Directors can be renewed partially, as long asthe number of candidates proposed is enough so that shareholders may exercise their cumulativevoting right. The drawing-up of the corresponding bylaws has been adopted in recent years, aftercareful studies had been carried out for the good performance of the body.Nowadays, the Board of Directors is made up of nine directors, three of which are independentdirectors. It is not deemed necessary or else convenient to propose a modification in this regardto the Shareholders’ Meeting.As mentioned above, there are two committees the Board of Directors has decided to create:Audit Committee and Disclosure Committee. Periodically, the Committees provide the Board ofDirectors with information, and the Board gets to know the decisions of each Committee. What isappropriate is transcribed in the Board of Directors’ minutes book.
 
 

 
*8) Integration of the Board of Directors.*The Board of Directors is asked to analyze theconvenience of a policy aimed at including former executives. Grupo Financiero Galicia complieswith this policy. Some former executives of the controlled companies are members of the Board ofDirectors. This is an advantage for the company due to their experience, knowledge of business andavailability to perform their duties in a professional manner.*9) Participation in Several Companies.*The Board of Directors is asked to analyze whether itis convenient that directors and/or syndics carry out duties in other institutions, or else it isirrelevant. This issue has been analyzed by Grupo Financiero Galicia repeatedly. Due to the factthat directors do not carry out full-time duties (except for the director who at the same time isthe Managing Director), and it is enriching that they be acquainted with the Board dynamics inother companies; limiting the number of institutions where they can be members of the Board ofDirectors is not deemed convenient. In general, even though it may be important that in GrupoFinanciero Galicia’s controlled companies, and in the companies Grupo Financiero Galicia owns astake in, the companies’ interests be represented through the participation of their own directorsin the Board of Directors of the former, the policy has been that the Board of Directors ofcontrolled companies and of companies Grupo Financiero Galicia owns a stake in be structured withtheir own management teams. As a special case, it is worth noting that one of the directors, theChairman, also takes part in the Board of Directors of the main controlled company: Banco Galicia.As regards syndics, whereas Argentine laws provide them a legality control function, GrupoFinanciero Galicia considers there are no impediments for directors to take part in differentcompanies, and if that happens in companies related by control relationships, it is a considerableadvantage when analyzing businesses or activities that are common between them and theirinteraction in the bodies.*10) Assessment of the Board of Directors’ Performance.*The Board of Directors is required toassess its performance before the Annual Ordinary Shareholders’ Meeting. Pursuant to the legalstructure of corporations in Argentina, the Board of Directors can only explain its performance inorder that other bodies be able to assess it (for instance the Supervisory Syndics’ Committee orthe Oversight Committee as bodies in charge of supervising the corporate management, or theShareholders’ Meeting, senior body with power to decide on the issue).This is such in Argentine law that the Law on Corporations expressly prohibits in Section 241that directors who are shareholders take part in the voting regarding their performance andresponsibility.For that reason, Grupo Financiero Galicia’s Board of Directors provides thorough explanationsin its Annual Report and answers all the questions asked at the Shareholders’ Meeting, but itrefrains from expressing an opinion on its performance in any form whatsoever. The assessment isconducted by shareholders at the Shareholders’ Meeting, taking as well intoconsideration the informed opinion of the Supervisory Syndics’ Committee (Grupo Financiero Galiciadoes not have an Oversight Committee).
 
 

 
*11) Training and Development of Directors.*As regards this item, the Board of Directors shallestablish an ongoing training program for its members and for the management officers. GrupoFinanciero Galicia, as an exclusively holding company, does not need to establish and have such aprogram as operating companies do. Notwithstanding the foregoing, the Board of Directors analyzesthe specific needs on the issue.**Independence of Directors***12) Independent Directors.*The Board of Directors shall decide on the need to provide enoughreasons to consider a candidate for director as an independent director. Grupo Financiero Galiciabelieves this requirement is fulfilled through the definitions of independence of directorsincluded in the rules and regulations issued by the National Securities Commission. As is known,the criteria for assessing the independence of a candidate to take part in a corporate body aredifferent between the legislations of comparative law. The Board of Directors cannot depart fromwhat is provided for by the laws in force in Argentina, by trying, at its discretion, to add orelse remove requirements that may have been considered more appropriate in other countries but notin Argentina.*13) Appointment of Management Officers.*Grupo Financiero Galicia’s Board of Directors hasassessed whether it is convenient to disclose the reasons for the appointment of managementofficers. After analyzing and discussing whether it is convenient to make innovations on what hasbeen a national tradition on the issue, the Board of Directors deems it is inconvenient. Thereasons for the appointment of officers, whether as a result of internal promotions or else theselection of candidates from the market, shall be kept confidential, mainly in order to preventdisturbances among staff members. This is as well grounded on the need to be reserved in relationto competitors, who may use such reasons in order to take advantage as regards obtaining humanresources. However, the technical suitability and morality of candidates is always taken intoaccount. The same criteria are applicable to controlled companies.*14) Proportion of Independent Directors.*The policy on the appointment of directors, bothindependent and not independent, is the responsibility of the Shareholders’ Meeting. GrupoFinanciero Galicia’s Board of Directors does not take part in such decisions as its members have nodecision-making power at the Shareholders’ Meeting. At Shareholders’ Meetings, the one who proposesthe appointment of candidates for director (the same happens with syndics) tells whether candidatesare for one or the other category. Nowadays, of the nine directors that form the Board ofDirectors, six are not independent, of which one has managerial duties and is an employee, andthree are independent. The latter form the Audit Committee.*15) Meeting of Independent Directors.*Due to the fact that in Grupo Financiero Galicia theAudit Committee is exclusively made up of independent directors, the chairman thereof holds theposition of “*leading independent director*”. Independent directors hold meetings when they believeitis necessary to do so and, for that purpose, they are free to invite, and have all the resourcesnecessary and the possibility to invite, whoever they consider appropriate (other directors,syndics, members of the top level staff, etc.).
 
 

 
**Relationship with Shareholders***16) Information to Shareholders and 17) Answers to Shareholders’ Questions and Concerns.*GrupoFinanciero Galicia’s Board of Directors has an Investor Relations Department. This department holdsmeetings and carries out conference calls with shareholders and holders of other securities, inwhich a director or top officer participates. This department is also at the disposal ofshareholders and investors to answer questions.It is important to point out that this department is in no case authorized to provideinformation that may place the person who requests such information in a privileged or advantageousposition in comparison to the other shareholders or investors.Soon, and due to the frequency and importance of the information requests received andanswered, the Board of Directors shall analyze whether it may be of interest to publish a periodicsummary of the issues that lead to questions or concerns.*18) Participation of Minority Shareholders at the Shareholders’ Meeting.*In the particularcase of Grupo Financiero Galicia, it seems it is not necessary to offer incentives aimed atpromoting attendance to Shareholders’ Meeting, because during recent years attendance has been ofapproximately 75% of the capital stock, percentage considered a very significant participation fora public company.*19) Market for Corporate Control.*The idea of “market for corporate control” that has beenused widely in countries with capital markets very different to the Argentine market, both asregards magnitude and depth, does not seem to be realistic in the local markets. The Shareholders’Meeting had to take a decision on the issue when Grupo Financiero Galicia made use of the optiongranted by Section 24 of Delegated Decree 677/01 and chose not to be included in the compulsory OPAsystem. Besides, unlike what happens in foreign legislations, the Board of Directors’ duties areonly secondary as regards the relations among shareholders. Its main duty is the administration ofthe company and of corporate business. Therefore, the Board of Directors believes it is notnecessary to have an influence, or else give advice, on Grupo Financiero Galicia’s adhering to thecompulsory OPA system.*20) Policy on Dividends.*Historically, before the financial system crisis unleashed at the endof 2001 and the beginning of 2002, Grupo Financiero Galicia had followed a policy for the regulardistribution of dividends in cash. The consequences of the crisis still make it temporarilyimpossible for Grupo Financiero Galicia to make such distributions. This is mainly due to therestrictions placed on its main controlled company, Banco Galicia, by the regulations of theArgentine Central Bank, and to its liabilities refinancing agreements under foreign laws.
 
 

 
**Relationship with the Community***21) Communications through the Internet.*Grupo Financiero Galicia’s Board of Directors has acorporate website (www.gfgsa.com) at the disposal of its shareholders. This website can be freelyaccessed and is permanently updated. This corporate website is in line with the regulations inforce; and legal, statutory and regulatory information required is at the disposal of the publictherein. Apart from that, the website has a channel for inquiries.*22) Website Requirements.*As indicated in this item, Grupo Financiero Galicia assuresinformation transmitted through electronic means is subject to the highest confidentiality andintegrity standards, and the website is as well designed for the efficient conservation and saferecording of such information.**Committees***23) Independent Director as Chairman of the Committee.*The Board of Directors is required todecide on whether it is convenient that the Audit Committee be presided by an independent director.Even though in the opinion of Grupo Financiero Galicia’s Board of Directors (mainly in the light ofthe Committee’s rules and regulations) such issue is not relevant (the Chairman of the Committeedoes not have double vote and just has power to provide instructions) due to the fact that theAudit Committee is made up only of independent directors, its Chairman is an independent directoras well.*24) Rotation of Syndics and/or External Auditors.*The Board of Directors shall analyze whethersuch rotation is convenient or else useful.As regards syndics, the conclusion of the analysis is that such rotation is neither useful norconvenient, mainly due to the complexity of businesses to be controlled and the lengthy period oftime it would take a person acting as syndic for the fist time to start to understand suchbusinesses.As regards External Auditors, the Board of Directors reached the conclusion that it is notconvenient to rotate the External Auditors’ firms for the same reasons explained regarding syndics.It is worth noting that the following are applicable: legal regulations in force in Argentina(Decree 677/2001 — Transparency System of Public Offering (*Régimen de Transparencia de la OfertaPública*), Sections 12 and 13 of Chapter III on External Auditors and Audit Committee), technicalregulations issued by the National Securities Commission (N.T. 2001, Book 1, Chapter III, SectionIII.9. on “External Auditors”), the regulations of the Argentine Central Bank (Conau-1, Section1.1. of the “Minimum Regulations on External Audits” (*Normas Mínimas sobre Auditorías Externas*),those regulations applicable to external auditors’ firms of issuing companies registered in theUnited States of America (Securities Exchange Act of 1934, Section 10-A, Paragraph j. on “AuditPartner Rotation”; Sarbanes-Oxley Act of 2002, Title II, Section 203. “Audit Partner Rotation”; andthe Code of Federal Regulations, Title 17, Chapter II, Section 210.2-01, paragraph (c)(6) of theSecurities and Exchange Commission), and the best practices existing in the area.In turn, the Audit Committee carries out an annual assessment of the suitability, independence andperformance of the external auditor and the members of the audit team.
 
 

 
*25) Dual Position as Syndic and Auditor.*Grupo Financiero Galicia’s Board of Directorsconsiders those are positions that are in the border between compatibility and incompatibility. TheGeneral Shareholders’ Meeting shares such criterion and, therefore, does not appoint the sameperson to perform duties as Syndic and External Auditor. In fact, no member of the SupervisorySyndics’ Committee carries out External Audit tasks or else belongs to the firm that rendersexternal audit services to the company.*26) Compensation Systems.*Grupo Financiero Galicia has no Compensation Committee, and theBoard of Directors considers it is not convenient to create one due to the reduced size of thecompany, as was mentioned before. Grupo Financiero Galicia’s Audit Committee expresses its opinionon whether compensation proposals for Directors and top officers are reasonable, taking intoconsideration market standards.Due to the fact that no Compensation Committee has been set up, there are no comments to makeon the duties mentioned in this item of the Schedule.*27) Appointment and Corporate Governance Committee.*Grupo Financiero Galicia understands that,within the framework of the legal structure in Argentina and market reality, it is not appropriateto create such a committee with the duties mentioned in this item. It should be noted that, unlikeother legislations, under Argentine law the Shareholders’ Meeting has the exclusive power toappoint directors. Therefore, the recommendations regarding such a Committee would not be bindingand could be even abstract. With regard to Corporate Governance, all aspects are dealt by the Boardof Directors in general.*28) Policy on Non-discrimination regarding the Integration of the Board of Directors.*Asexpressed in the above items, the power to appoint members of the Board of Directors is exclusiveof the Ordinary Shareholders’ Meeting. Therefore, it is difficult that a Committee such as thatunder discussion could be effective for the control of possible discriminatory behaviors. Theappointment is made with regard to the suitability of each candidate.”