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UNION BANK OF COLOMBO PLC

(PB 676 PQ)


CIRCULAR TO THE SHAREHOLDERS



Dear Shareholders,


ISSUE OF 742,156,249 ORDINARY SHARES AT LKR 15.30 EACH BY WAY OF A
PRIVATE PLACEMENT AND ISSUE OF 218,281,250 WARRANTS AT A
CONSIDERATION OF LKR 0.30

In its policy statement entitled The Central Bank Road Map: Monetary and Financial Sector
Policies for 2014 and Beyond (the Central Bank Road Map), the Central Bank of Sri Lanka
(the CBSL) stressed a need for consolidation in the banking and non-bank financial
institution sectors. Accordingly, local banks with asset bases of less than LKR 100 billion are
encouraged to merge with larger commercial banks or to grow organically to reach a
substantial size by 2016. The CBSL has also increased the minimum capital requirement for
local licensed commercial banks to LKR 5 billion with effect from January 1, 2015 and to
LKR 10 billion with effect from January 1, 2016. As at June 30, 2014, the Companys total
asset base stood at LKR 36,588.6 million, whilst total equity was recorded at LKR 5,388.1
million.

1. Issue of 742,156,249 ordinary voting shares of the Company for LKR 15.30 each
to Culture Financial Holdings Ltd. by way of a private placement (the Private
Placement)

In light of the above, the Board of Directors of the Company has decided to, subject to the
approval of the shareholders of the Company, issue by way of a private placement,
742,156,249 ordinary voting shares of the Company (Private Placement Shares) at a
consideration of LKR 15.30 per Private Placement Share to Culture Financial Holdings Ltd.
(the Investor).

Pursuant to the issue of the Private Placement Shares, the stated capital of the Company
will increase from LKR 4,979.8 million to LKR 16,334.8 million, thereby exceeding the
minimum capital requirement guidelines as outlined in the Central Bank Road Map, which
will come into force by 2016 as described above.

Each of the Private Placement Shares will, upon the issue thereof, rank paripassu in all
respects with the existing ordinary voting shares of the Company with a right to (i) one vote
on a poll at a meeting of the Company on any resolution, (ii) an equal share in dividends
paid by the Company and (iii) an equal share in the distribution of the surplus assets of the
Company on liquidation.



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Upon the issue of the Private Placement Shares, the Investor will hold 68% of the ordinary
voting shares of the Company.

The Private Placement Shares will be directly uploaded to the securities accounts
maintained by the Investor with the Central Depository Systems (Private) Limited.

Following the issue of the Private Placement Shares, the public holding of the Company
(within the meaning of the Listing Rules of the Colombo Stock Exchange) will be 29.9% of
the total ordinary voting shares of the Company.

2. Issue of 218,281,250warrants for LKR 0.30 per warrant

The Board of Directors has also decided to issue to the Investor, simultaneously with the
issue of new ordinary voting shares to the Investor under the private placement,
218,281,250 Warrants (Warrants) at a consideration of LKR 0.30 per Warrant conferring
the holder of the Warrants with the right to subscribe to one (1) new ordinary voting share
per Warrant (the Warrant Shares) within a period of six (6) years from issue of such
Warrants at a consideration of LKR 16.00 per share. The Warrants will entitle the holder
thereof to subscribe for up to a total of 218,281,250 ordinary voting shares in the Company.

The Warrants will also enable the Investor to support the future capital requirements of the
Company and to meet any potential future minimum capital requirements that might be
imposed by the CBSL. The Companys stated capital will be enhanced by a further LKR
3,492.5 million if the Warrants are exercised in full.

The holder of the Warrants may, at its option, exercise the Warrants in a single tranche
within a period of six (6) years from the date of issue of the Warrants. The investor has
informed the Company that the Warrants will not be exercised within a period of 24 months
following the Private Placement.

The ordinary voting shares to be issued pursuant to the exercise of Warrants will rank equal
and paripassu with the ordinary voting shares of the Company upon the issue thereof.

The terms and conditions subject to and upon which the Warrants are issued by the
Company are set out in Annexure 1 hereto. The form of the notice of exercise to be issued to
the Company by the holder of Warrants to exercise the Warrants is set forth in Annexure 2
hereto.

The Warrants will not be listed on the Colombo Stock Exchange but will be privately
transferable and tradable to any third party during their validity period.

If all of the Warrants are exercised, the stated capital of the Company will increase to LKR
19,892,766,098 and the public holding of the Company (assuming that (a) the Investor
acquires a maximum of 2% of the ordinary voting shares of the Company during the
mandatory offer from all of the remaining shareholders, (b) all of the Warrant Shares are
issued to the Investor and (c) the non-public shareholders of the Company and their
shareholding as at the completion of such mandatory offer remains otherwise unchanged)
will be approximately 23.3% of the total ordinary voting shares of the Company.

The Private Placement price and exercise price of the Warrants have been determined
based on the net asset value and the profitability of the Company on a consolidated basis.
The Company and its consolidated subsidiaries have posted earnings of 30 cents for every
share for the financial year ended December 31, 2013. The net asset value of the Company
and its consolidated subsidiaries was recorded at LKR 14.09 per share on the same date.
Accordingly, the Private Placement price of LKR 15.30 constitutes a premium of 9% to the


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net asset value of the Company and its subsidiaries and the exercise price of the Warrants
constitutes a premium of 14% on the same basis. Further, the Private Placement price is
equivalent to 51 times the Companys earnings per share, and the exercise price of the
Warrants is equivalent to 54 times the earnings reported for the financial year 2013.


3. Introduction to the Investor

The Investor is a Cayman Islands exempted company incorporated under the Companies
Law of the Cayman Islands on March 28, 2014 with company number MC-286507, whose
registered office address is c/o Maples Corporate Services Limited, P.O. Box 309, Ugland
House, Grand Cayman, KY1-1104, Cayman Islands. The principal activity of the Investor is
the carrying on of business as an investment holding company.

The directors of the Investor are as follows:

I. Ronald Cami; and
II. John Viola

TPG Asia VI, L.P., one of the flagship investment funds sponsored by TPG, and its related
entities indirectly hold a 100% equity interest in the Investor through TPG Asia VI SF Pte.
Ltd.

TPG is one of the largest diversified alternative investment firms in the world, with total
assets under management of approximately USD 59 billion as of December 31, 2013. Since
1992, TPG has had lead responsibility for more than 200 investments around the world.
TPGs founders, David Bonderman and James G. Coulter have worked together for over
twenty years, and have substantial experience investing globally, across investment stages,
within various capital structure elements and through differing economic cycles.

Certain affiliates of TPG are regulated by the United States Securities and Exchange
Commission. TPG Global Advisors, LLC, among other TPG affiliates, is registered as an
investment adviser with the United States Securities and Exchange Commission under the
United States Investment Advisers Act of 1940, as amended. TPG Global Advisors, LLC
provides investment advisory services to affiliated management companies (the TPG
Management Companies), including TPG Asia VI Management, LLC, and, together with the
TPG Management Companies, to investment funds (the TPG Funds). The investors in the
TPG Funds are primarily qualified purchasers, as defined in the United States Investment
Company Act of 1940, as amended, and include, among others, institutional investors, such
as government plans, sovereign wealth funds, funds of funds, insurance companies and
pension and endowment funds, as well as high net worth individuals and charitable
foundations.

As of September 30, 2013, TPG had over 250 investment and operating professionals in 17
offices across the globe. Its global footprint, expert professionals, and collaborative culture
have helped TPG build an integrated investment platform across geographical regions, skill
sets, and asset classes.

TPG is one of the longest standing private equity firms in Asia, having made its first
investment in the region (in China) in 1995. Collectively, TPG Asia funds have raised
approximately USD 7.0 billion in capital and made 58 investments as of December 2013.




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TPG Asia maintains one of the largest Asian private equity teams with 58 investment and
operational professionals (as of December 2013) throughout the region and across offices
located in Beijing, Chongqing, Hong Kong, Melbourne, Mumbai, Shanghai, Singapore and
Tokyo. Through its long history in the region, TPG Asia has helped to transform the private
equity landscape by executing transactions in each major region across Asia.

TPG Asia has defined itself as a regional leader in banking and financial services having
invested USD 2.3 billion in 13 financial service companies as of December 2013. In
connection with each investment opportunity, TPG Asia leverages knowledge and expertise
developed from prior transactions across the global TPG platform.

The founders of TPG initially gained bank restructuring experience through the
recapitalization of American Savings Bank in 1988, which in turn provided the firm with
sufficient confidence and expertise to make a contrarian call and pursue an investment in
Korea First Bank (KFB) in 2000, the first foreign acquisition of a Korean bank. The
successful turnaround and sale of KFB paved the way for TPGs second financial services
investment in Asia, and in December 2004, TPG acquired an interest in Shenzhen
Development Bank, the first control investment by foreign investors in the Chinese banking
industry since the founding of the Peoples Republic of China in 1949. As the virtuous cycle
continued, TPG made subsequent investments in Shriram Transport in 2006 in India, as well
as UniTrust in 2008 in China. TPG has continued to drive successful investments in the
sector with Shriram City Union Finance in 2009 and BFI in 2011.

4. Amendment to the Articles of Association of the Company

One of the conditions to be satisfied by the Company prior to the investment by the Investor,
as set out in the investment agreement entered into between the Company and the Investor,
is the amendment of the articles of association of the Company (the Articles of
Association), to reflect certain provisions of the investment agreement.

Accordingly, the Board has resolved to amend the Articles of Association to include
provisions relating to the issue of shares if and upon the exercise of the Warrants, subject to
obtaining the necessary regulatory and corporate approval therefor.

5. The purposes for which the proceeds of the private placement, the issue of
Warrants and the shares to be issued upon the exercise of the Warrants are to be
utilized

The proceeds of the private placement, the issue of the Warrants and the shares to be
issued upon the exercise of the Warrants will be used to enhance the Tier 1 capital of the
Company and will also enable the Company to meet the minimum capital requirements
imposed by the Central Bank of Sri Lanka, which will come into effect from January 1, 2016.

6. The benefit of the private placement and the issue of Warrants to the existing
Shareholders and the Company

Based on its discussions with TPG, the Company believes that the Investors investment
would bring the following benefits to the Company, its subsidiaries and the shareholders of
the Company.

Strong capital support:

The Central Bank Road Map anticipates the increase of capital in licensed commercial
banks to a minimum of LKR 10 billion in the next two years. The Investors proposed


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investment will ensure that the Company satisfies the increased capital requirements
anticipated by the policy statement in the current financial year. The Company currently has
one of the smallest balance sheets among private sector licensed commercial banks in Sri
Lanka, and the proposed investment will strengthen the capital of the Company thereby
benefitting its shareholders as well.

TPG believes in partnership and a value-added approach:

TPG is a leading global private investment firm founded in 1992 with total assets under
management of approximately US$59 billion as of December 31, 2013 and has extensive
experience with global public and private investments executed through growth investments,
leveraged buyouts, recapitalizations, spinouts, joint ventures and restructurings. It is
understood that TPG has defined itself as a regional leader in financial services having
invested US$2.3 billion in 13 financial service companies as of December 2013. TPGs
value-added approach is unique, with operational professionals who support TPGs portfolio
companies across the spectrum, including but not limited to corporate governance, risk
management, asset growth, liability management and human resources.

Rerating of credit profile and ability to access longer term, low cost funding:

In addition to the capital injection, TPG will invest in strengthening the Companys risk
management systems to allow for scalability over TPGs investment horizon. The
strengthened balance sheet and operations should enable the Company to obtain an
improved credit rating and thereby create access to longer term, lower cost funding, both
rupee and dollar denominated.

Strengthen the Risk Management System and Internal Control Systems:

TPG intends to strengthen the risk management systems of the Company and work closely
with the Companys internal IT team, the core banking service provider and external IT
consultants to improve the Management Information Systems and to ensure scalability in
line with the business plan TPG has for the Company.

Introduce new products, both in terms of assets and liabilities, to enhance the
profitability of Union Bank:

The Companys product portfolio is currently limited due to scale and capital constraints (e.g.
constraints on large ticket corporate and infrastructure loans given single borrower limits) as
well as technology constraints (e.g. the Companys current core banking platform does not
support debit cards). Following the Investors investment, the Company believes that its
product suite can be enhanced.

Expansion of the network:

The Company currently has one of the smallest branch networks among private sector
licensed commercial banks in Sri Lanka, primarily on account of capital constraints. TPG
plans to expand the branch network and also work on increasing ATM penetration
throughout the country, in order to offer better service and convenience to customers.



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Aligning the interests of management and the long term growth of the Company by
introducing an employee stock option plan:

The Company does not currently have an employee share ownership plan (ESOP). In past
investments, TPG has preferred to initiate ESOPs in order to better align the interests of
management and the long term growth of the relevant portfolio company. The Company
proposes to introduce an ESOP that would confer the relevant employees with the right to
subscribe for up to 5% of the total number of shares in issue of the Company.

A larger market cap bank would provide for greater institutional investor participation:

The current market capitalization of the Company does not allow access for larger local and
foreign institutional investors. A larger capitalization, and the reputation of TPG as the main
shareholder, would provide more liquidity for the shares of the Company and confidence for
institutional investors.

Positive impact on Union Banks subsidiaries:

Following the Investors investment, the Company also expects that its subsidiaries will
benefit from enhanced capital support, management upgrades, expertise provided by TPGs
senior advisors, improved systems and processes, and synergies from the TPG platform. In
particular, the Investors investment should improve the ability of UB Finance Limited to meet
the minimum core capital requirement of LKR 1 billion by 2016, as outlined by the Central
Bank Road Map. In addition, the Company believes that a stronger bank platform will
provide enhanced cross-selling opportunities for its non-bank finance and asset
management businesses.

7. Compliance with the law

The Company will obtain all necessary regulatory approvals, consents, authorisations and
waivers required for the issue of Private Placement shares and Warrants and for the issue of
shares pursuant to the conversion of the Warrants, if any, prior to the issue of the same.
Without limitation to the aforesaid, a statement of compliance by the Company with several
applicable laws is set out below.

(i) Approval from the Monetary Board of Sri Lanka

In terms of section 12(1C) of the Banking Act No. 30 of 1988 as amended read with the
Banking Act Directions No. 1 of 2007, individuals, partnerships or corporate bodies are
prohibited from acquiring a material interest (i.e. holding of over ten per centum (10%) of the
issued capital carrying voting rights) in a licensed commercial bank incorporated or
established within Sri Lanka by or under any written law without the prior written approval of
the Monetary Board given with the concurrence of the Minister in charge of finance.

The Central Bank of Sri Lanka has by letter dated August 6, 2014, informed the Investor that
approval has been granted in terms of section 12(1C) of the Banking Act No. 30 of 1988 (as
amended) for the Investor to (i) acquire a material interest in Union Bank of up to 75% of the
issued shares of Union Bank, and (ii) divest (whether gradually over a period of time or
otherwise) the material interest referred to in (i) above to 15% of the share capital of Union
Bank by the fifteenth anniversary of the date of the initial investment referred to in (i) above.
The above approval under section 12(1C) has been granted on the basis that the Investor
will initially acquire a 68% stake in Union Bank by subscribing for new ordinary voting


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shares, and subsequently increase this stake up to 70% through the mandatory general offer
and finally up to 75%, if required, by exercising the Warrants.

As required in terms of the Banking Act, the Company also sought the approval of the
Monetary Board for the amendment of the Articles of Association as aforesaid in Section 4
above, and the amendment to the Articles of Association in the manner aforesaid will be as
and to the extent approved by the Monetary Board.

(ii) Compliance with the provisions of the Listing Rules of the Colombo Stock
Exchange

Rule 5.4.b. of the Listing Rules of the Colombo Stock Exchange (the CSE Listing Rules)
provides that the percentage of shares to be issued by a listed entity through a private
placement must not exceed 20% of the shares in issue immediately following such issue of
shares through the private placement. The said Rule further provides that the Securities and
Exchange Commission of Sri Lanka may waive the application of this Rule under exceptional
circumstances. As mentioned above, the number of shares that the Investor proposes to
subscribe to under the private placement is 742,156,249, which will amount to 68% of the
issued shares of the Company immediately following the issue of the Private Placement
Shares.

Further, according to Rule 5.10.1(iii) of the CSE Listing Rules, the number of shares to be
listed by exercising the warrants to be issued (together with the warrants already issued
which have not been exercised) must not exceed 15% of the listed entitys total number of
voting shares in issue, at the time of the submission of the listing application for the
warrants. The Warrants will not be listed. The maximum number of shares that may be
issued and listed upon the exercise of the Warrants would amount to 61% of the total
number of issued voting shares of the Company at the time the Company proposes to issue
the Warrants.

Finally, Rule 5.10.1(iv) of the CSE Listing Rules provides that the tenure of any warrants to
be issued by a listed company must not exceed two (2) years from the date of issue.The
tenure of the Warrants to be issued to the Investor is six (6) years from the date of issue.

By a letter dated April 30, 2014, the Securities and Exchange Commission of Sri Lanka
granted the following waivers to the Company for the purpose of facilitating the investment of
the Investor:

1. Waiver of the application of Rule 5.4.b of the CSE Listing Rules in respect of the
issue, by way of a private placement, of the Private Placement Shares, amounting to
68% of the issued shares of the Company immediately following the issue of the
Private Placement Shares;

2. Waiver of the application of Rules 5.10.1(iii) and 5.10.1(iv) of the CSE Listing Rules
in respect of the issue of the Warrants, with a tenure of up to six (6) years from the
date of the issue.

The Company has taken all necessary steps to comply with all relevant provisions of Section
5 of the CSE Listing Rules in relation to the private placement and issue of the Warrants,
including obtaining the approval, in principle,of the Colombo Stock Exchange for the issue
and listing of the Private Placement Shares and the issue and listing of shares to be issued
upon the exercise of the Warrants.

In terms of the CSE Listing Rules, the issue of the Private Placement Shares requires the
approval of the shareholders of the Company by special resolution.


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(iii) Compliance with the Company Takeovers and Mergers Code 1995

Upon the subscription to the Private Placement Shares under the private placement, the
Investor will become obliged to make a mandatory general offer to the other shareholders of
the Company under Rule 31 of the Company Takeovers and Mergers Code 1995
promulgated under the Securities and Exchange Commission of Sri Lanka Act No. 36 of
1987 to acquire the shares held by them.

As stated in (i) above, in terms of section 12(1C) of the Banking Act no person can acquire a
material interest (i.e. holding more than ten per centum (10%) of the issued capital carrying
voting rights) in a licensed commercial bank incorporated or established within Sri Lanka by
or under any written law without the prior written approval of the Monetary Board given with
the concurrence of the Minister in charge of finance.

The approval of the Monetary Board referred to above is for the Investor to acquire only up
to 70% of shares of the Company and to acquire up to a further 5% of the shares of the
Company pursuant to the exercise of Warrants, which would increase the Investors
shareholding in the Company to up to 75%.Therefore, the Board of Directors understands
that the Investor is prohibited by the provisions of the Banking Act and the directions issued
thereunder from acquiring shares over and above the shareholding percentage approved by
the Monetary Board (i.e. 70%, if the Warrants have not been exercised).

The Investor has informed the Company that the Investor will acquire up to such number of
shares as is permitted by law under such mandatory offer, at an offer price of LKR 25.00 per
share, as will provide the Investor with an aggregate shareholding of up to a maximum of
70% of the issued shares of the Company.

(iv) Compliance with the Companies Act No 7 of 2007 (the Companies Act)

In terms of section 52 of the Companies Act, the Board of Directors has decided that the
consideration for which the Private Placement Shares will be issued will be LKR 15.30 per
share and has opined that the aforesaid consideration LKR 15.30 per share is fair and
reasonable to the Company and to all existing shareholders of the Company.

The Board of Directors has also decided in terms of section 52 of the Companies Act, that
the exercise price of the Warrants will be LKR 16.00 per share and has opined that the
aforesaid exercise price of LKR 16.00 per share is fair and reasonable to the Company and
to all existing shareholders of the Company.

(v) Compliance with Articles of Association

Article 12(i) of the Articles requires that, notwithstanding anything to the contrary, unless
approved by a special resolution of the relevant interest group, the directors of the Company
must in the issue of shares which rank equally with or above existing shares in relation to
voting or distribution rights, first offer those shares to the holders of existing shares (being
the relevant interest group) in a manner as would, if the offer was accepted (fractions being
ignored), maintain the relative voting and distribution rights of those shareholders.

Accordingly, the Company may, if approved by the shareholders of the Company by special
resolution, issue the Private Placement Shares to the Investor, without offering such shares
to the existing shareholders of the Company in a manner as would, if the offer was accepted,
maintain the relative voting and distribution rights of those shareholders.





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The above matters which require the approval of the Company will be taken up at the
extraordinary general meeting of the shareholders of the Company to be held on
17
th
September 2014 as per the notice of meeting attached as Annexure 3.



By order of the Board


Sgd/Nirosha Kannangara
Secretary
Union Bank of Colombo PLC



22
nd
August 2014.











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Annexure 1: TERMS AND CONDITIONS APPLICABLE TO WARRANTS


1. Warrants

1.1 Each Warrant shall confer on the holder thereof the right (but not the obligation) to
subscribe for one (1) ordinary share at a consideration of Sri Lanka Rupees sixteen
(LKR 16.00) per ordinary share (the Exercise Price).

An ordinary share means a share in the Company conferring on the holder thereof
the right to (i) one vote on a poll at a meeting of the Company on any resolution, (ii)
an equal share in dividends paid by the Company and (iii) an equal share in the
distribution of the surplus assets of the Company on liquidation.

1.2 The Exercise Price of the Warrants is subject to adjustment as provided in Section 7
below.

1.3 The Warrants shall not confer on the holder any rights to distributions to be made by
the Company to its ordinary shareholders and/or to participate in any offers of further
securities made by the Company and/or the right to attend meetings of the
shareholders and/or any right to vote at shareholder meetings and/or to share in the
proceeds of any liquidation of the Company.

2. Listing of the Warrants

The Warrants are not and will not be listed on the Colombo Stock Exchange during
the tenure of the Warrants.

3. Exercise of the Warrants and issue and listing of the shares underlying the
Warrants

3.1 The right to subscribe for ordinary shares may be exercised by a holder of Warrants
at any time within a period of six (6) years from the date of issue of the Warrants at
the option of the holder of the Warrants by the surrender to the Company of the
certificates issued by the Company to the holder/s of the Warrants (Warrants
Certificate), together with a duly completed notice of exercise, the form of which is
attached to this circular to shareholders dated [22
nd
August 2014] as Annexure 2 (the
Circular), and the payment of an amount equal to the Exercise Price multiplied by
the number of Warrants to be exercised to the Company, subject to adjustment in
accordance with Section 7 below.

3.2 Upon receipt of the notice of exercise from the holder of the Warrants, the Company
shall, within twelve (12) market days from the date of issue of the notice of exercise:
(i) allot and issue to the holder/s of the Warrants the number of ordinary shares to
be issued pursuant to the exercise of the Warrants (the Warrant Shares);
(ii) upload the Warrant Shares to the securities accounts maintained by the
holder/s of the Warrants with the Central Depository Systems (Private) Limited,
details of which shall be provided in the notice of exercise;
(iii) submit a declaration to the Colombo Stock Exchange in the form set out in
Appendix 5C of the Listing Rules of the Colombo Stock Exchange, at the time
of listing the Warrant Shares; and
(iv) enter the holder/s of the Warrant Shares in the Companys register of
shareholders as the holder of the Warrant Shares.




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3.3 The Company has and shall at all times maintain, in full force and effect, all corporate
approvals for the issue of the Warrant Shares. All Warrant Shares issued under
Section 3.2 shall (i) be duly and validly issued; (ii) be fully paid; (iii) rank paripassu
and form one class with the fully paid ordinary shares of the Company then in issue;
(iv) be free from all and any liens and charges with respect to the issue thereof and
(v) be listed on the Colombo Stock Exchange.

3.4 Warrants in respect of which the right to convert into ordinary shares is not exercised
on or before 4.00 p. m. on [ ], being the date of expiry of the said six (6) year
period, shall expire and cease to be exercisable (the Expiration).

3.5 The exercise of the right to subscribe for Warrant Shares is subject to any restrictions
on share ownership which may be imposed by the Monetary Board of the Central
Bank of Sri Lanka or any other regulatory restrictions applicable in Sri Lanka at the
time of such exercise.

4. Registration and Transfer of the Warrants

4.1 The Company shall maintain a register of the holders of the Warrants and enter
therein particulars of the issue and all changes of ownership of such Warrants. Such
register shall at all reasonable times during business hours be open to the inspection
of the holders of the Warrants and their legal representative or any other person
authorised in writing by such holders of the Warrants.

4.2 Any transfer of the Warrants may only be effected by a duly executed instrument in
writing in a form acceptable to the board of directors of the Company accompanied
by the Warrants Certificate evidencing title to the Warrants transferred and registered
in the books of the Company. No change of ownership in contravention of the
procedure set forth herein will be recognised by the Company.

4.3 If and upon the listing of the Warrants, the board of directors of the Company may
register without assuming any liability therefor, any transfer of Warrants which is in
accordance with the rules and regulations in force for the time being and from time to
time as laid down by the Colombo Stock Exchange and any agency whose primary
object is to act as Central Depository for such exchange.

The Warrants, if and upon the listing thereof on the Colombo Stock Exchange, shall
be freely transferable and registration of the transfer of such listed Warrants shall not
be subject to any restriction, save and except to the extent required for compliance
with statutory requirements.

5. Warrant Certificate

5.1 So long as the Warrants are not listed on the Colombo Stock Exchange, the
Warrants Certificate shall be prima facie evidence of ownership of the holder of
Warrants to the Warrants.

5.2 The Warrants Certificate shall be deemed to be cancelled upon the conversion of all
of the Warrants into Warrant Shares or on the Expiration, whichever is earlier.

5.3 The Warrants are issued subject to and upon the terms and conditions set out in the
Warrants Certificate and in the Circular. In the event of an inconsistency between the
Warrants Certificate and the Circular, the Circular shall prevail.




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6. Loss or mutilation and re-issue of Warrants Certificates

6.1 Upon receipt by the Company of reasonable evidence of the ownership or the loss,
theft, destruction or mutilation of any Warrants Certificate and in the case of loss theft
or destruction, of indemnity reasonably satisfactory to the Company, or in the case of
mutilation, upon surrender and cancellation of the mutilated Warrants Certificate, the
Company shall execute and deliver in lieu thereof a new Warrants Certificate
representing an equal number of Warrants on the payment of out of pocket expenses
and on such other terms as to evidence and indemnity as the Board shall think fit.

6.2 A holder of Warrants holding one (01) Warrant Certificate representing several
Warrants may apply in writing to the Company for the issue to him of several
Warrants Certificates covering some or all of such Warrants held by such holder and
on such written application together with the Warrants Certificates which are applied
to be replaced being surrendered to the Company and on payment of out of pocket
expenses, the Company shall issue to the applicant Warrant holder several Warrants
Certificates for such value of Warrants as the applicant may apply for which shall in
all respects, except for its number and the amount of the Warrants held, be identical
in value to the Warrants Certificates in issue.

7. Adjustment of Exercise Price

7.1 In the event of (i) a declaration of dividends on the ordinary shares of the Company,
a distribution to the holders of ordinary shares of the properties or assets of any kind
of the Company, a transfer or disposal of substantially all the properties and assets of
the Company, or a consolidation or merger of the Company with another body
corporate (other than a consolidation or merger in which the ordinary shares are not
converted or exchanged for other rights and interests), or (ii) an increase or
decrease in the total number of ordinary shares in the Company due to any reason
whatsoever including a rights issue of shares, a subdivision of shares, a
consolidation of shares, an issue of shares by way of dividend or distribution or an
issue of shares by way of a capitalization of profits or reserves, an issue of shares to
employees under an employee share ownership scheme or a repurchase of shares
(each, a Relevant Change)

(a) the number of Warrant Shares to be issued pursuant to the exercise of the
Warrants shall be adjusted so that the ratio between (A) the number of Warrant
Shares that the holder is entitled to receive immediately after the Relevant
Change and (B) the aggregate of the total issued shares of the Company and the
number of Warrant Shares immediately after the Relevant Change is equivalent
to the ratio between (x) the number of the Warrant Shares that the holder would
have been entitled to receive immediately before the Relevant Change and (y)
the aggregate of the total number of ordinary shares of the Company and the
Warrant Shares that the holder would have been entitled to receive immediately
before the Relevant Change; and

(b) the Exercise Price shall also be adjusted so that the product of the Exercise Price
immediately after the Relevant Change and the number of Warrant Shares that
the holder would have been entitled to receive immediately after the Relevant
Change is equivalent to the product of the Exercise Price immediately before the
Relevant Change and the number of Warrant Shares that the holder would have
been entitled to receive immediately before the Relevant Change.



Page 13 of 16



If any adjustment made to the number of Warrant Shares pursuant to Section 7.1(a)
requires a fraction of a Warrant Share to be allotted, the aggregate number of
Warrant Shares so allotted to a holder of Warrants shall be rounded up to the nearest
whole Warrant Share.

7.2 Any adjustment made pursuant to 7.1 above shall become effective automatically on
the effective date of the Relevant Change.

7.3 Whenever the Exercise Price and/or number of Warrant Shares issuable upon the
exercise of Warrants is adjusted as provided in this Section 7, the Company shall
deliver to the holders of the Warrants at the address shown in the books of the
Company a notice of such adjustment or adjustments, prepared and signed by the
Secretaries of the Company with a brief statement of the facts requiring such
adjustment and the computation by which such adjustment was made.

7.4 The form of Warrants Certificate need not be changed because of any adjustment to
the Exercise Price and/or the number of Warrant Shares issuable upon the exercise
of Warrants, as the case may be, and Warrant Certificates issued before or after
such adjustment may state the same Exercise Price and the number of Warrant
Shares issuable upon the exercise of a Warrant as are stated in the Warrants
Certificates theretofore issued.
















Page 14 of 16



Annexure 2: FORM OF NOTICE OF EXERCISE



[Date]

Union Bank of Colombo PLC,
No. 64, Galle Road,
Colombo 3,
Sri Lanka.


Dear Sirs

WARRANTS ISSUED BY UNION BANK OF COLOMBO PLC


I/We am/are the holder/s of [ ( )] warrants issued by Union Bank of
Colombo PLC (Warrants) which confers the holder thereof with the right (but not the
obligation) to subscribe for one (1) ordinary share per Warrant at a consideration of Sri
Lanka Rupees sixteen (LKR 16.00) per ordinary share.

In pursuance of the terms and conditions of the Warrants as set forth in the Circular to
Shareholders of Union Bank of Colombo PLC dated [ ] and the warrants certificate
held by me/us in respect of the Warrants, I/We now wish to exercise [ ( )]
Warrants held by me/us as aforesaid and subscribe for and purchase a total of [
( )] shares in the Company at a consideration of Sri Lanka Rupees sixteen (LKR 16.00)
per ordinary share. Accordingly, I/We hereby request the Company to issue to me/us [
( )] shares in the Company and to upload such shares directly to the account maintained
by me/us at the Central Depository Systems (Private) Limited bearing no. [ ].

I/We enclose herewith, the said warrant certificate and [the sum of LKR ]
/[cheque/bank draft] bearing no. [ ] for the sum of LKR ] which is the full
value of the consideration for the shares in respect of which this notice of exercise is given.

Yours faithfully,


..










Page 15 of 16



Annexure 3


NOTICE OF EXTRAORDINARY GENERAL MEETING

UNION BANK OF COLOMBO PLC

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of the holders of
ordinary shares of Union Bank of Colombo PLC will be held on 17
th
September 2014 at 2.00
p.m. at the Auditorium of Sri Lanka Foundation at No. 100, Sri Lanka Padanama
Mawatha, Independent Square, Colombo 07 for the purpose of considering and, if thought
fit, passing the resolutions which are substantially in the form set forth below, as special
resolutions:

IT IS HEREBY RESOLVED AS A SPECIAL RESOLUTION THAT, subject to obtaining all
necessary approvals, consents, authorisations and waivers:

(1) RESOLUTION NO. 1

The Company do issue Seven Hundred and Forty Two Million One Hundred and Fifty Six
Thousand Two Hundred and Forty Nine (742,156,249) ordinary voting shares of the
Company by way of a private placement to Culture Financial Holdings Ltd. at a consideration
of Sri Lankan Rupees Fifteen Cents Thirty (LKR 15.30) per ordinary voting share amounting
to a total consideration of Sri Lanka Rupees Eleven Billion Three Hundred and Fifty Four
Million Nine Hundred and Ninety Thousand Six Hundred and Nine Cents Seventy (LKR
11,354,990,609.70) and Stamp Duty be paid to the Department of Inland Revenue on the
issue of the said shares, the name of the said Culture Financial Holdings Ltd. be entered in
the Share Register of the Company in relation to the said shares, and a direct upload of the
said shares be made to the Central Depository Systems (Pvt) Ltd;

(2) RESOLUTION NO. 2

The Company do (i) issue Two Hundred and Eighteen Million Two Hundred and Eighty One
Thousand Two Hundred and Fifty (218,281,250) warrants (Warrants) to Culture Financial
Holdings Ltd. at a consideration of Cents Thirty (LKR 0.30) per Warrant, each of which will
confer the holder of the Warrants with the right to subscribe to one (1) new ordinary voting
share per Warrant (Warrant Shares) at any time within a period of six (6) years from issue
of such Warrants at a consideration of Sri Lankan Rupees Sixteen (LKR 16.00) per ordinary
voting share and (ii) issue up to a total of Two Hundred and Eighteen Million Two Hundred
and Eighty One Thousand Two Hundred and Fifty (218,281,250) Warrant Shares to the
holder/s of Warrants at the said consideration of Sri Lankan Rupees Sixteen (LKR 16.00) per
ordinary voting share upon the exercise of the Warrants held by such holder/s, subject to
and upon the terms and conditions set forth in Annexure 1 of circular to shareholders dated
[August 22, 2014].

(3) RESOLUTION NO. 3

The Seven Hundred and Forty Two Million One Hundred and Fifty Six Thousand Two
Hundred and Forty Nine (742,156,249) ordinary voting shares to be issued to Culture
Financial Holdings Ltd. by way of the private placement as aforesaid may be issued by the
Company without offering such ordinary voting shares to the holders of the existing ordinary
voting shares of the Company in a manner which would, if accepted, maintain the relative
voting and distribution rights of such shareholders, as set out in Article 12 (i) of the Articles of
Association of the Company;



Page 16 of 16



(4) RESOLUTION NO. 4

Article 12(i) of the Articles of Association of the Company be amended by the insertion
of the following paragraph as a proviso thereto:

Provided however that the Company may issue any shares to any person whomsoever
pursuant to the exercise of any warrants issued by the Company, without offering such
shares to the holders of existing shares in a manner which would, if the offer was
accepted, maintain the relative voting and distribution rights of those shareholders.





By order of the Board
Union Bank of Colombo PLC



Sgd/NiroshaKannangara
Company Secretary

22
nd
August 2014




NOTES :

1 A shareholder entitled to attend, speak and vote at the meeting is entitled to appoint
a proxy holder to attend, speak and vote in his/her stead.

2 A proxy need not be a shareholder of the Company. The Form of Proxy accompanies
this Notice.

3 The completed Form of Proxy should be deposited at the Registered Office of the
Company, No. 64, Galle Road, Colombo 3 not less than 36 hours before the time
appointed for the holding of the Meeting.

3 Copies of the existing Articles of Association will be available for inspection at the
registered office from the date of this notice and at the meeting itself.