On 17 March 1998, the General Shareholders' Meeting of Telefónica, S.A. resolved to formally create a Foundation specifically for social involvement called 'Fundación Telefónica' with registered office in Madrid. The Articles of Association and an initial provision of three hundred million pesetas were approved with the foregoing being recorded in a public deed executed before a notary public on 25 June 1998.

The purpose of Fundación Telefónica is the promotion of activities of general interest, in particular: managing, promoting, disseminating, protecting and defending the artistic, cultural and historic-technological heritage of Telefónica, S.A. and its own. It is equally involved in the promotion and dissemination of science and technology and its impact on society, culture, contemporary art and the new technologies in any of its iterations.

This Good Governance Code interprets and implements the Articles of Association of Fundación Telefónica for the purposes of ensuring its compliance with the aims of the foundation, the transparency of its bodies, the members of the Board of Trustees and the employees of Fundación Telefónica.

This Code of Conduct will be applicable to the temporary investments made in real estate securities and financial instruments, which fall under the remit of the Comisión Nacional del Mercado de Valores (Spanish National Securities Marker Commission - CNMV); particularly, shares, fixed-income securities, shareholdings in collective investment institutions (hedge funds), deposits, loans, temporary cession of financial assets, and similar that have a remuneration obligation (fixed-term deposits).

The Board of Trustees of Fundación Telefónica at its meeting on 27 October 2014, resolved to agree to the express adhesion of this Fundación to the Guiding Principles of the Telefónica Group: these being the principles that inspire and define the way in which it carries out its activity, which should be applied by all the employees during the performance of its activities, and whose general principles are honesty and trust, respect for law and integrity, and a respect for human rights. These Principles, drafted taking into account the most demanding international ethical standards and principles, apply to Fundación Telefónica as a whole, and the functioning of its Board of Trustees in particular.

Using these General Guiding Principles as a basis, Fundación Telefónica has created a new list of Principles, adapted to the activities it carries out.

As a result of the foregoing, Fundación Telefónica is governed by the Guiding Principles of the Telefonica Group, and also, within the specific framework of its activity, by the Guiding Principles detailed in this document.

All these principles are also complemented by the Articles of Association of Fundación Telefónica which, together with the internal regulations approved by the Board of Trustees, and the Law, form the basis for the responsible management of its projects and interaction with society in general. At Fundación Telefonica we are building our reputation on the basis of these principles, we are becoming deserving of the trust that our stakeholders place in us and we are maximising the long-term value for society as a whole.

Our reputation is based on, and affected by, the decisions made and actions taken by each employee of Fundación Telefónica. Compliance with our Guiding Principles helps us to make decisions and act with integrity and professionalism.