Compliance Policy

COMPLIANCE POLICY

1. Purpose

Kuzey Star Shipyard Denizcilik San ve Tic. A.Ş. (“Kuzey Star Shipyard”) has established this policy as part of its Sanctions Compliance Program. This policy sets out minimum standards and guidelines to mitigate risks related to compliance with sanctions and the reputational risks associated with engaging in business relationships or transactions with sanctioned individuals and entities.

As a fundamental principle, Kuzey Star Shipyard is committed to conducting its operations in accordance with the Program outlined in this policy and ensuring compliance with the economic and export control regulations imposed by the Republic of Türkiye, the United Nations (UN), the European Union (EU), the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), and other relevant jurisdictions. This policy is designed to guarantee compliance with national and international laws, protect the company's reputation, manage counterparty risks, and facilitate rapid intervention in cases of potential non-compliance.

2.Scope

Kuzey Star Shipyard ensures full compliance with all applicable sanctions regulations in every jurisdiction where it operates. Regulatory requirements and relevant guidance on sanctions will be integrated into its business practices. These sanctions are imposed by various authorities, including but not limited to:

• Türkiye (Relevant Official Authorities)
• United States (OFAC)
• United Nations (UN)
• European Union (EU)
• United Kingdom (OFSI – Office of Financial Sanctions Implementation)

Kuzey Star Shipyard will continuously monitor updates to the sanctions imposed by these authorities and ensure its operations comply with these regulations.

2.1. Commercial Scope

This policy applies to all direct and indirect activities of Kuzey Star Shipyard, including customers, business partners, suppliers, and subcontractors. The following areas are covered under this policy:

• Shipbuilding and ship maintenance/repair projects.
• Supply chain and material procurement.
• Sales, marketing, and customer management.
• Financial transactions and payment processes.
• Training and awareness programs on sanctions regulations.

Kuzey Star Shipyard will conduct all its operations in full compliance with the defined sanctions and trade restrictions.

3. General Principles

Kuzey Star Shipyard considers ethical values (loyalty, reliability, fairness, human rights, environmental protection, sustainability, social responsibility, etc.) as an integral part of its corporate culture. Its code of conduct is based on applicable national and international laws, internal guidelines, and core ethical values.

The company’s compliance policy has a "preventive" structure, aiming to identify sanctions compliance risks and potential violations at an early stage and respond appropriately. Accordingly, Kuzey Star Shipyard is committed to full compliance with all applicable sanctions imposed by Türkiye, the UN, the EU, OFAC, and OFSI.

To ensure compliance, Kuzey Star Shipyard:

• Conducts due diligence on customers and business partners against international sanctions lists.
• Adheres to national and international laws, ethical values, and relevant sanctions policies.
• Ensures the accuracy of financial, commercial, and other records while securing compliance with sanctions obligations.
• Maintains secure and proper records of all activities and provides them to relevant authorities when necessary.
• Conducts risk assessments in case engaging in business with sanctioned individuals and entities.

This policy aims to protect the reputation of Kuzey Star Shipyard, manage counterparty risks, and facilitate rapid intervention in cases of non-compliance.

4. Policy

Kuzey Star Shipyard management and all employees commit to adhering to the following core principles

Compliant Operations:

• Ensure full compliance with the obligations of the Republic of Türkiye, the SDN List (Specially Designated Nationals List) published by OFAC, as well as the economic sanctions and export control obligations imposed by the United Nations, the European Union, and other jurisdictions.
• Act in compliance with the national and international sanction regulations in all regions where the company operates.

 Reputation Protection:

• Strengthen the company's reputation and increase its reliability in international trade by complying with national and international laws.
• Minimize reputational risks by avoiding cooperation with parties that are suspected of sanctions.

Counterparty Risk Management:

• To examine all customers, suppliers and business partners according to compliance procedures and to create risk profiles.
• Not to establish any commercial relations with risky countries or individuals and organizations under sanctions.

Training and Awareness:

• To regularly train all employees on sanction policies and their applications.
• To organize comprehensive training programs to increase awareness of compliance, company policies, and procedures.
• To create a strong compliance culture within Kuzey Star Shipyard.

Audit and Continuous Improvement:

• To regularly audit operational processes and swiftly integrate regulatory changes into Kuzey Star Shipyard procedures.
• To conduct thorough investigations when violations of national and international laws and regulations are suspected.
• To take appropriate corrective actions in cases of non-compliance and apply disciplinary actions when necessary.

4.1. Objectives of the Policy

This policy aims to achieve the following objectives for Kuzey Star Shipyard:

• Demonstrating its commitment to sanctions compliance.
• Defining compliance controls and aligning them with the risk profile.
• Identifying high-risk areas in operations.
• Establishing appropriate controls for customer and transaction screening processes.
• Ensuring that potential sanctions violations are reported to the relevant authorities.
• Clarifying the duties and responsibilities of individuals responsible for the compliance process.
• Ensuring a swift and effective response to changes in national and international sanctions regulations.

This policy aims to ensure Kuzey Star Shipyard’s full compliance with national and international laws, safeguard it’s reputation, manage counterparty risks, and enable rapid intervention in cases of non-compliance.

4.2. Non-Compliance with Policy

If work is requested by Kuzey Star Shipyard that is contrary to sanction controls or if it is determined that the service to be provided is contrary to sanction controls as a result of new sanction regulations following the continuation of the work, Kuzey Star Shipyard reserves the right to terminate the contract without penalty. Additionally, Kuzey Star Shipyard commits to taking disciplinary actions against employees who act in violation of this policy and to implementing all necessary measures to ensure compliance with sanctions.

4.3. Prohibited Transactions and Compliance Obligations

Kuzey Star Shipyard is committed to full compliance with all national and international sanction regulations in the course of it’s operations. In this regard, the following transactions are strictly prohibited and will not be permitted under any circumstances:

• Conducting business with individuals, companies, or any legal entities listed on the OFAC SDN List (Specially Designated Nationals and Blocked Persons List) or other sanction lists published by OFAC is strictly prohibited.
• Engaging in business with individuals, companies, or other entities listed on sanction lists announced by the UN, EU, or the Republic of Turkey is also strictly forbidden.
• Establishing direct financial relationships, entering into commercial contracts, or engaging in any trade with sanctioned individuals or companies, as well as conducting business with them indirectly, is not allowed.
• No business relationships or financial transactions can be conducted with sanctioned countries (those under sanctions by OFAC, the UN, or the EU). Governments, state institutions, or sanctioned entities within these countries cannot be engaged with directly or indirectly.
• Any commercial transactions with these countries will be considered legally prohibited due to the serious risks they pose to the company's reputation and compliance obligations.
• No financial agreements or commercial activities will be carried out with sanctioned organizations or government sponsored enterprises. This restriction applies not only within the company's operating countries but also on a global scale.
• Additionally, establishing any business relationship with assets controlled by a sanctioned entity is strictly prohibited.
• Disciplinary actions may be taken against individuals who violate the company’s legal compliance policy, business relationships may be terminated, or legal processes may be initiated due to sanction violations.

Kuzey Star Shipyard considers avoiding prohibited transactions essential to ensure full compliance with sanction policies and maintain its credibility and reputation in international trade.

5.Customer and Supplier Due Diligence (Know Your Customer) Process

Kuzey Star Shipyard implements the following measures to ensure full compliance with national and international laws, regulations, rules, and sanctions while maintaining high standards in assessing its customers and suppliers:

5.1. List Screening and Monitoring

• Customers, suppliers, contractors, and all business partners will be screened against the OFAC SDN List and all other national and international sanctions lists before initiating any commercial relationship or service. This screening ensures that business is not conducted with sanctioned individuals or entities.
• These screenings will not only be conducted at the beginning of a relationship but will also be performed continuously to prevent any cooperation with sanctioned parties. This ensures that all relationships remain in compliance with the most up-to-date sanctions.

5.2. Know Your Customer (KYC)

• In all international transactions, comprehensive know your customer procedures will be implemented. Accordingly, customers will be required to provide identity verification information, ownership and control structures, business activities, and other necessary documents.
• KYC processes serve not only to meet legal requirements but also as a critical measure for identifying and mitigating potential risks. Furthermore, these processes will be carried out comprehensively to protect the company’s reputation, not just to fulfill legal obligations.

5.3. Transaction and Contract Monitoring

• Kuzey Star Shipyard continuously monitors all its transactions. This monitoring will be done to detect suspicious activities and prevent situations that violate national and international regulations.
• If a suspicious business or transaction is detected, an internal review will be initiated immediately and the transaction will be reviewed in accordingly with the company's compliance policies.
• Necessary reports will be made regarding such suspicious transactions, and effective measures will be taken to prevent potential sanction violations.

Kuzey Star Shipyard conducts it’s customer and supplier relationships not only in accordance with legal requirements, but also with the aim of protecting it’s international reputation. The customer and supplier due diligence process is a critical tool to identify and appropriately manage risks in advance and will be implemented as a priority in all company operations.

6. Roles and Responsibilities

For Kuzey Star Shipyard’s compliance policy to be effectively implemented, employees and management at all levels have specific duties and responsibilities. Below are the duties and responsibilities at various levels.

6.1 Duties of the Compliance Officer and Team

A Compliance Officer has been appointed by Kuzey Star Shipyard to monitor and oversee the processes related to the compliance policy. The Compliance Officer assumes the following responsibilities:

• Inspecting the implementation of the compliance policy and continuous compliance. Monitoring the effectiveness of all measures taken within the Program of the policy.
• Providing training to company employees on the compliance policy and increasing awareness among employees on this matter.
• Ensuring that suspicious transactions or violations are reported and cooperates with relevant authorities if necessary. Ensuring that suspicious activities are investigated immediately.
• Responding to all questions from outside regarding the compliance policy. Establishing the necessary communication with regulatory authorities, reporting violations or non-compliance situations, and monitoring changes in sanctions regulations and ensuring that they are notified to relevant parties in a timely manner.
• Identifies areas at risk of sanctions violations and conducts regular risk assessments for these areas. Strategies are developed to reduce risks.
• Checking whether all regulations are complied with in order to ensure Kuzey Star Shipyard's compliance with national and international legislation. Communicating with regulatory authorities and providing up-to-date information on sanctions regulations and changes in legislation.
• Compliance officer monitors and audits all transactions performed, checks the compliance of these transactions with compliance procedures. They ensure the reporting of irregularities, non-compliance, and violations, and recommend  precautions.

6.2. Duties of the Departments:

Kuzey Star Shipyard’s departments contribute to the implementation of compliance policies with the following duties:

• Conducting material and technology inspections to prevent the use of products within the scope of sanctions.
• Reporting projects and customers with potential sanctions risk to the compliance team.
• Checking compliance with new customers and new regions of operation.
• Ensuring that compliance clauses are added to new contracts.
• Reporting suspicious payments and transactions to the compliance team so that potential non-compliances can be detected in a timely manner.
• Auditing all financial transactions in accordance with the compliance policy and taking necessary measures to prevent these transactions from leading to sanctions violations.

7. Reputation Management

Kuzey Star Shipyard adopts the following strategies in order to protect and strengthen it’s reputation in international trade;

• Avoiding doing business with customers and projects listed on sanction lists, engaged in suspicious activities, or posing a reputation risk. This ensures the protection of the company's reputation and helps avoid legal risks.
• Conducting regular audits to ensure the effective implementation of compliance policies. These audits are crucial for detecting and preventing violations in advance.
• Kuzey Star Shipyard aims to be a reliable and respected partner of international trade. In line with this goal, it conducts business in accordance with the standards of international trade and adopts high ethical and compliance standards in all processes.

8. Counterparty Risk Management

Kuzey Star Shipyard follows the following strategies to effectively manage counterparty risks:

• Customers and suppliers are regularly scanned with automated systems. These scans minimize risks by checking compliance with sanction lists and other regulations.
• Business is not conducted with high-risk areas or sanctioned parties. This is a measure to limit the company’s financial and operational risks and avoid legal non-compliance.
• Risk analysis results are regularly reported to the board of directors and strategies that guide the workflow are developed. In this way, potential risks are detected early and necessary measures are taken.
• Regular risk assessments are conducted to determine potential areas that may be exposed to sanction violations. These assessments are important in order to ensure the security of operational processes and minimize risks.
• Professional law firms are worked with to properly manage legal compliance processes. Legal consultancy services play an important role in reducing sanction violations and non-compliance risks.

9. Emergency Controls and Measures

Kuzey Star Shipyard implements the following procedures to respond quickly and effectively to potential non-compliance situations and suspicious transactions:

• When suspicious transactions are detected, the Compliance Officer is immediately notified and the relevant transaction is immediately stopped. These transactions are examined in detail to make a risk assessment. After the project or transaction is reviewed, appropriate actions are determined according to the results.
• Potential violations are rapidly reported by the Compliance Officer. The reporting process ensures communication with local and international regulatory authorities, depending on the severity of the violation. This ensures compliance with all regulations.
• In cases of non-compliance, existing processes are analyzed to identify root causes. Corrective actions are taken to prevent similar non-compliance issues in the future, contributing to the improvement of operational processes and strengthening compliance with legal and ethical standards.
• All employees are provided with adequate training on compliance policies and procedures. Trainings provide information on changes in regulations, how to detect non-compliances and how to manage such situations, and ensure that employees are aware of their responsibilities. Training strengthens the culture of compliance and helps all employees effectively manage compliance risks.

This policy is a basic guide to ensure that Kuzey Star Shipyard’s operations comply with international laws, minimize potential risks, protect the company’s reputation and create a sustainable business model.

KUZEY STAR BOARD OF DIRECTORS