POLAND – Best Practice for GPW Listed Companies 2016

I. Introduction:

Set of corporate governance principles and rules of conduct applicable to the relationships between listed companies and their market environment, the “Best Practice for GPW Listed Companies 2016” is an important contributor to the companies’ competitive position and a key driver of the attractiveness of the Polish capital market.  The “Best Practice for GPW Listed Companies 2016” and related regulations apply to issuers of shares admitted to trading on GPW’s regulated market.

II. Thematic Sections:

The “Best Practice for GPW Listed Companies 2016” includes the following sections:

1. Disclosure Policy, Investor Communications

   Listed companies should ensure adequate communications with investors and analysts by pursuing a transparent and effective disclosure policy. To this end, they should ensure easy and non-discriminatory access to disclosed information using diverse tools of communication.

   Detailed principles:

   1. A company should operate a corporate website and publish on it, in a legible form and in a separate section, in addition to information required under the legislation:
      1. basic corporate documents, in particular the company’s articles of association;
      2. the full names of the members of its management board and supervisory board and the professional CVs of the members of these bodies including information on the fulfillment of the criteria of independence by members of the supervisory board;
      3. a chart showing the division of duties and responsibilities among members of the management board drawn up;
      4. the current structure of shareholders indicating those shareholders that hold at least 5% of the total vote in the company according to information provided to the company by shareholders under the applicable legislation;
      5. current and periodic reports, prospectuses and information memoranda with annexes, published by the company at least in the last 5 years;
      6. information on the dates of corporate events leading to the acquisition or limitation of rights of a shareholder, information on the dates of publication of financial reports and other events relevant to investors, within a timeframe enabling investors to make investment decisions;
      7. information materials published by the company concerning the company’s strategy and its financial results.
      8. financial projections, if the company has decided to publish them, published at least in the last 5 years, including information about the degree of their implementation;
      9. information about the content of the company’s internal rule of changing the company authorised to audit financial statements or information about the absence of such rule;
      10. a statement on compliance with the corporate governance principles contained in the last published annual report;
      11. a statement on the company’s compliance with the corporate governance recommendations and principles contained herein, consistent with the information that the company should report under the applicable legislation;
      12. materials provided to the general meeting, including assessments, reports and positions referred to in principle II.Z.10, tabled to the general meeting by the supervisory board;
      13. information about the company’s diversity policy applicable to the company’s governing bodies and key managers; the description should cover the following elements of the diversity policy: gender, education, age, professional experience, and specify the goals of the diversity policy and its implementation in the reporting period; where the company has not drafted and implemented a diversity policy, it should publish the explanation of its decision on its website;
      14. information about the planned transmission of a general meeting, not later than 7 days before the date of the general meeting;
      15. justification of draft resolutions of the general meeting concerning issues and determinations which are relevant to or may give rise to doubts of shareholders, within a timeframe enabling participants of the general meeting to review them and pass the resolution with adequate understanding;
      16. information about the reasons for cancellation of a general meeting, change of its date or agenda, and information about breaks in a general meeting and the grounds of those breaks;
      17. shareholders’ questions asked to the management board pursuant to Article 428 § 1 or § 6 of the Commercial Companies Code together with answers of the management board to those questions, or a detailed explanation of the reasons why no answer is provided, pursuant to principle IV.Z.13;
      18. an audio or video recording of a general meeting;
      19. contact details of the company’s investor relations officers including the full name and e-mail address or telephone number.
   2. A company whose shares participate in the exchange index WIG20 or mWIG40 should ensure that its website is also available in English, at least to the extent described in principle I.Z.1. This principle should also be followed by companies not participating in these indices if so required by the structure of their shareholders or the nature and scope of their activity
2. Management Board, Supervisory Board

   A listed company is managed by its management board, whose members act in the interest of the company and are responsible for its activity. The management board is responsible among others for the company’s leadership, engagement in setting and implementing its strategic objectives, and ensuring the company’s efficiency and safety.

   A company is supervised by an effective and competent supervisory board. Supervisory Board members act in the interest of the company and follow their independent opinions and judgment. The supervisory board in particular issues opinions on the company’s strategy, verifies the work of the management board in pursuit of defined strategic objectives, and monitors the company’s performance.

   Detailed principles:

   1. The internal division of responsibilities for individual areas of the company’s activity among management board members should be clear and transparent, and a chart describing that division should be available on the company’s website.
   2. A company’s management board members may sit on the management board or supervisory board of companies other than members of its group subject to the approval of the supervisory board.
   3. The chair of the audit committee should meet the independence criteria.
   4. To enable the supervisory board to perform its duties, the company’s management board should give the supervisory board access to information on matters concerning the company.
   5. The supervisory board should review and issue opinions on matters to be decided in resolutions of the general meeting.
3. Internal Systems and Functions

   Listed companies should maintain efficient internal control, risk management and compliance systems and an efficient internal audit function adequate to the size of the company and the type and scale of its activity.

   Detailed principles:

   1. The company’s management board is responsible for the implementation and maintenance of efficient internal control, risk management and compliance systems and internal audit function.
   2. The independence rules defined in generally accepted international standards of the professional internal audit practice apply to the person heading the internal audit function and other persons responsible for such tasks.
   3. Where the company has no separate internal audit function in its organisation, the audit committee (or the supervisory board if it performs the functions of the audit committee) should review on an annual basis whether such function needs to be separated.
4. General Meeting, Shareholder Relations

   The management board and the supervisory board of a listed company should encourage the engagement of shareholders in matters of the company, in particular through active participation in the general meeting.

   The general meeting should proceed by respecting the rights of shareholders and ensuring that passed resolutions do not infringe on reasonable interests of different groups of shareholders.

   Shareholders who participate in a general meeting should exercise their rights in accordance with the rules of good conduct.

   Detailed principles:

   1. Companies should set the place and date of a general meeting so as to enable the participation of the highest possible number of shareholders.
   2. If justified by the structure of shareholders, companies should ensure publicly available real-time broadcasts of general meetings.
   3. Presence of representatives of the media should be allowed at general meetings.
   4. The rules of general meetings and the method of conducting the meeting and adopting resolutions must not restrict the participation of shareholders in general meetings and the exercising of their rights. Amendments of the rules of the general meeting should take effect at the earliest as of the next general meeting.
   5. Companies should strive to ensure that the cancellation of a general meeting, change of its date or break in its proceedings do not prevent or limit the exercising of the shareholders’ rights to participate in the general meeting.
   6. A break in the proceedings of the general meeting may only take place in special cases, defined at each time in the justification of the resolution announcing the break, drafted on the basis of reasons provided by the shareholder requesting the break.
   7. A resolution of the general meeting announcing a break should clearly set the date and time when the proceedings recommence, and such date and time must not be a barrier for most shareholders, including minority shareholders, to participate in the continuation of the proceedings.
   8. Companies should strive to ensure that draft resolutions of the general meeting contain a justification, if it helps shareholders to pass a resolution with adequate understanding. If a matter is put on the agenda of the general meeting at the request of a shareholder or shareholders, the management board or the chair of 15 the general meeting should request presentation of the justification of the proposed resolution. In important matters and matters which may give rise to any doubt of shareholders, the company should provide a justification, unless it otherwise provides the shareholders with information necessary to pass a resolution with adequate understanding.
   9. Members of the management board and the supervisory board should participate in a general meeting as necessary to answer questions asked at the general meeting.
   10. The management board should present to participants of an ordinary general meeting the financial results of the company and other relevant information contained in the financial statements to be approved by the general meeting.
5. Conflict of Interest, Related Party Transactions

   Companies should have in place transparent procedures for preventing conflicts of interest and related party transactions where a conflict of interest may occur. The procedures should provide for ways to identify, disclose and manage such cases.

   Detailed principles:

   1. No shareholder should have preference over other shareholders in transactions concluded by the company with shareholders or their related parties.
   2. Members of the management board or the supervisory board should notify the management board or the supervisory board, respectively, of any conflict of interest which has arisen or may arise, and should refrain from voting on a resolution on the issue which may give rise to such a conflict of interest in their case.
   3. Members of the management board or the supervisory board must not accept any benefits which might affect their impartiality and objectivism in making decisions or reflect unfavorably on the assessment of the independence of their opinions or judgements.
   4. Where a member of the management board or the supervisory board concludes that a decision of the management board or the supervisory board, respectively, 18 is in conflict with the interest of the company, he or she may request that the minutes of the management board or the supervisory board meeting show his or her position.
6. Remuneration

   A company should have a remuneration policy applicable at least to members of the company’s governing bodies and key managers. The remuneration policy should in particular determine the form, structure, and method of determining the remuneration of members of the company’s governing bodies and key managers.

   Detailed principles:

   1. Incentive schemes should be constructed in a way necessary among others to tie the level of remuneration of members of the company’s management board and key managers to the actual long-term financial standing of the company and long-term shareholder value creation as well as the company’s stability.
   2. To tie the remuneration of members of the management board and key managers to the company’s long-term business and financial goals, the period between the allocation of options or other instruments linked to the company’s shares under the incentive scheme and their exercisability should be no less than two years.
   3. The remuneration of members of the supervisory board should not be linked to options or other derivatives or any other variable components, and neither should it be linked to the company’s results.
   4. In this activity report, the company should report on the remuneration policy including at least the following:
      1. general information about the company’s remuneration system;
      2. information about the conditions and amounts of remuneration of each management board member broken down by fixed and variable remuneration components, including the key parameters of setting the variable remuneration components and the terms of payment of severance allowances and other amounts due on termination of employment, contract or other similar legal relationship, separately for the company and each member of its group;
      3. information about non-financial remuneration components due to each management board member and key manager;
      4. significant amendments of the remuneration policy in the last financial year or information about their absence;
      5. assessment of the implementation of the remuneration policy in terms of achievement of its goals, in particular long-term shareholder value creation and the company’s stability.

III Conclusion:

Practices by GPW Listed Companies 2016 ensures transparency. Each part of the Best Practice states the general description of the goals to be pursued by listed companies through compliance with the provisions of the section. The detailed provisions of the Best Practice follow the ‘comply or explain’ approach. The structure of the Best Practice is transparent, which avoids excessive barriers by ensuring that most of the principles are worded so as to allow for flexible implementation, and frequently refers to the principle of adequacy, should support possibly broadest implementation of this code of best practice by a possibly biggest group of issuers.