Based on the listing standards of the NYSE, our BoD has established specific criteria for defining the independence of our external members. Each external director has to personally confirm his or her compliance with the criteria, which are published on our website under www.ubs.com/governance.

All current external members have been confirmed by the BoD as having no material relationship with UBS, either directly or as a partner, controlling shareholder or executive officer of a company that has a relationship with UBS. Currently all BoD members are external, with the exception of the Chairman. Each of the external members has also met all the BoD and NYSE requirements with respect to independence.

The NYSE has more stringent independence requirements for members of audit committees. All four members of our AC are external BoD members who, in addition to satisfying the above criteria, do not receive, directly or indirectly, any consulting, advisory or other compensatory fees from UBS other than in their capacity as directors; do not hold, directly or indirectly, UBS shares in excess of 5% of the outstanding capital; and (except as noted below) do not serve on the audit committees of more than two other public companies. These members are Michel Demaré, Rainer-Marc Frey, Ann F. Godbehere and William G. Parrett. The NYSE guidelines allow for an exemption for AC members to sit on more than three audit committees of public companies, provided that all BoD members determine that the candidate has the time and the availability to fulfill his or her obligations. Considering the credentials of William G. Parrett, and the fact that he has retired from his executive functions, the BoD has granted this exemption in his case.

Board of Directors and its Committees
We operate under a strict dual board structure mandated by Swiss banking law. No GEB member may also be a BoD member and vice versa. This structure ensures the institutional independence of the entire BoD from the day-to-day management. UBS has established Committees for the following BoD mandates: audit; human resources and compensation; governance and nominating; risk and corporate responsibility.

In addition, the BoD appoints a Vice Chairman and an SID. Both the Vice Chairman and the SID must be independent. Michel Demaré is the Vice Chairman and David Sidwell is the SID. Both assumed their role in April 2010. More details about the responsibilities and authorities of the Vice Chairman and the SID can be found in the Organization Regulations, which are published at www.ubs.com/governance.

The BoD has adopted Organization Regulations that constitute our corporate governance guidelines, which include all matters required by the NYSE rules. The BoD has also adopted the UBS "Code of Business Conduct and Ethics" (the Code). Both the Organization Regulations and the Code are available on our website at www.ubs. com/governance. In addition, the AC has established rules for the handling of complaints related to accounting and auditing matters, the internal policies on “Whistleblowing Protection for Employees” and “Compliance with Attorney Standards of Professional Conduct”.

According to the NYSE listing standards on corporate governance, foreign private issuers are required to disclose any significant ways in which their corporate governance practices differ from those to be followed by domestic companies.

Responsibility of the Audit Committee for appointment, compensation, retention and oversight of the independent auditors
The AC has been assigned all the abovementioned responsibilities, except for appointment of the independent auditors, which are elected by the shareholders as per Swiss company law. The AC assesses the performance and qualification of the external auditors and submits its proposal for appointment, re-appointment or removal to the full BoD, which brings its proposal to the shareholders for vote at the AGM.

Discussion of risk assessment and risk management policies by the Risk Committee
In accordance with our Organization Regulations, the RC has the authority to define our risk principles and risk capacity. The RC is responsible for monitoring our adherence to those risk principles and for monitoring whether business and control units run appropriate systems for the management and control of risks.

Assistance by the Risk Committee of the internal audit function
Both the Chairman and the RC have the responsibility for and authority to supervise the internal audit function.

Responsibility of the Human Resources and Compensation Committee for oversight of management and evaluation by the Board of Directors
Performance evaluations of our senior management, comprising the Group CEO and the GEB members, are completed by the Chairman and the HRCC and reported to the full BoD. All BoD Committees perform a self-assessment of their activities and report back to the full BoD. The BoD has direct responsibility and authority to evaluate its own performance, without preparation by a BoD Committee.

Proxy statement reports of the Audit and Human Resources and Compensation Committees
Under Swiss company law, all reports addressed to shareholders are provided and signed by the full BoD, which has ultimate responsibility vis-à-vis shareholders. The Committees submit their reports to the full BoD.

Shareholders' votes on Equity Compensation Plans
Swiss company law authorizes the BoD to approve compensation plans. Though Swiss law does not allocate such authority to the AGM, it requires that Swiss companies determine capital in their articles of association and each increase of capital is required to be submitted for shareholders' approval. This means that, if equity- based compensation plans result in a need for a capital increase, AGM approval is mandatory. If, however, shares for such plans are purchased in the market, shareholders do not have the authority to vote on their approval.