Report on the compliance of AB S.A. with the corporate governance rules

Transcription

1 Report on the compliance of AB S.A. with the corporate governance rules

2 Contents 1. Indication of corporate governance rules applicable to AB S.A Indication of corporate governance rules which have not been applied by AB S.A Description of major features of internal control and risk management systems applied at the Company with respect to the process of preparing financial statements and consolidated financial statements Shareholders holding, directly or indirectly, large blocks of shares Holders of any securities with special control rights Limitations for the exercise of voting rights Limitations for assignment of the ownership title to the issuer s securities Description of the rules governing appointment and dismissal of managers and their rights Description of the rules governing changes in the Company s Articles of Association Description of the mode of functioning of the General Shareholders Meetings and its fundamental powers as well as shareholders rights and manner of their exercise Composition and the principles of functioning of the Company s governing bodies Composition and the principles of functioning of the Company s supervisory bodies...10

3 The legal basis for preparing this Report is art of the Stock Exchange Regulations adopted by way of resolution No. 1/1110/2006 of the Council of the Warsaw Stock Exchange of 4 January 2006 as amended. The Company s Management Board herewith informs that preparing this report the Company complied with guidelines included in art of the Regulation of the Minister of Finance of 19 February 2009 on current and periodical disclosure by issuers of securities and conditions to recognise as equivalent the information that is required by the law in Non-Member States (Journal of Laws of 2009, No. 33, item 259 as amended). 1. Indication of corporate governance rules applicable to AB S.A. AB S.A. is obliged to comply with a set of corporate governance rules called the Good Practises of WSE Listed Companies adopted by the Supervisory Board of the Warsaw Stock Exchange on 4 July The full text (consolidated after inclusion of amendments) is publicly available at the Warsaw Stock Exchange website in the Corporate Governance Rules section 2. Indication of corporate governance rules which have not been applied by AB S.A. Acting pursuant to art of the Warsaw Stock Exchange Regulations, the Issuer specifies corporate governance rules that have not been applied by it: No. RULE AB S.A. S COMMENTARY I. RECOMMENDATIONS REGARDING BEST PRACTICES FOR STOCK EXCHANGE LISTED COMPANIES 12. The Company should provide their shareholders with the possibility to exercise their voting rights personally or by proxy at General Shareholders Meetings outside of the meeting place, with the use of electronic communication means. The Company s corporate documents (Articles of Association, Regulations of the General Shareholders Meeting) do not provide for the possibility of participating in the General Meeting and exercising the voting rights using electronic communication means.

4 II. GOOD PRACTICES IMPLEMENTED BY MANAGEMENT BOARDS OF STOCK EXCHANGE LISTED COMPANIES 1. The Company runs a corporate website where it publishes the following information, apart from information required by the law: 2a) annually, in each fourth quarter information on the share of men and women in the composition of the Management Board and the Supervisory Board in the period of the last two years, and members of the Company s governing bodies 9a) recording the General Shareholders Meeting, in audio or video form Selection of candidates for the members of the Company s governing bodies is based only on professional criteria, that is qualifications and experience. The Company does not provide information on the percentage share of men and women in the composition of the Company s governing bodies so that investors do not get the impression that some other criteria, apart from professional factors, are taken into account in the selection of candidates. Apart from that, the composition of the Company s governing bodies is made public, therefore information on the percentage share of men and women in the governing bodies has no cognitive value. The Company does not provide for publication of the recording of the General Shareholders Meeting, in audio or video form, on its website. Resolutions adopted at the General Shareholders Meetings shall be immediately published by the Company in the form of current reports and published on the Company s website, which in the Company s opinion ensures a transparent access to material information in that respect. III. GOOD PRATCICES APPLIED BY MEMBERS OF SUPERVISORY BOARDS 9. Conclusion of an agreement/transaction with a subsidiary by the Company, fulfilling conditions specified in Rule No. 11, requires the approval of the Supervisory Board. The rule is applied, only it does not require the approval of the Supervisory Board for each conclusion of an agreement with a subsidiary. Rule No. II. 3. requires such approval only with respect to specific agreements, separated under criteria that are not strictly defined. The final decision belongs to the Management Board. Therefore, to have such a requirement in the Articles of Association is pointless in the opinion of the Company. Art. 14 of the Company s Articles of Association includes a number of limitations, as a result virtually every material agreement concluded by a subsidiary requires the approval of the Supervisory Board. IV. GOOD PRACTICES APPLIED BY SHAREHOLDERS

5 10. The Company should enable its shareholders to participate in the General Shareholders Meeting with the use of electronic communication means, consisting in: 1) broadcast of the General Shareholders Meeting in real time 2) bilateral communication in real time, in which shareholders may take the floor in the General Shareholders Meeting from a location other than the place of the meeting, The Company s corporate documents (Articles of Association, Regulations of the General Shareholders Meeting) do not provide for the possibility of participating and speaking at the General Meeting using electronic communication means. In the Company s opinion, implementation of this rule ensues technical and legal risks, which may affect the correct and uninterrupted course of General Meetings as well as a true, reliable and safe information flow during communication in real time.

6 3. Description of major features of internal control and risk management systems applied at the Company with respect to the process of preparing financial statements and consolidated financial statements Pursuant to the Regulation of the Minister of Finance of 19 February 2009 on current and periodic information published by issuers of securities and on conditions under which information required by legal regulations of a third country may be recognised as equivalent, the Management Board of AB S.A. is responsible for the internal control system and its effectiveness in the process of preparing financial statements. The non-consolidated financial statements of AB S.A. are prepared in accordance with the Accounting Act (Journal of Laws of 1994 No. 121 item 591). The consolidated financial statements of AB S.A. Group are prepared on the basis of the financial statements of the parent company and respective financial statements of the entities controlled by the parent company. Financial statements of the subsidiaries, with adjustments to ensure compliance with the International Financial Reporting Standards ( IFRS ), are prepared in accordance with uniform accounting rules applied for transactions and economic events of a similar nature. To ensure uniform accounting rules, the accounting policy applied in the Company is to be applied by companies of AB S.A. Group when preparing consolidation packages. Both consolidated and non-consolidated annual financial statements are subject to audit, and semi-annual financial statements to review by an independent statutory auditor. The results of the audit are presented at the General Shareholders Meeting. 4. Shareholders holding, directly or indirectly, large blocks of shares As at Number of shares Shareholding structure by the number of shares Number of votes Shareholding structure by the number of votes Andrzej Przybyło % % Iwona Przybyło % % Aviva Otwarty Fundusz Emerytalny Aviva BZ WBK % % Aviva Investors Poland S.A % % ING OFE % % PKO BP OFE % % Other % % Total % % In the period from the balance sheet date to the date of publication hereof there were no changes in the shareholding structure of major shareholders or the number of voting rights at the GSM.

7 5. Holders of any securities with special control rights ARTICLES OF ASSOCIATION OF AB S.A. Art. 5.1b As long as B series shares are held by Mr. Andrzej Przybyło, they shall be privileged with respect to voting rights in such a way that every B series share shall carry two votes at General Meetings. 6. Limitations for the exercise of voting rights There are no limitations with respect to the exercise of voting rights. 7. Limitations for assignment of the ownership title to the issuer s securities ARTICLES OF ASSOCIATION OF AB S.A. Art. 5.1b Privileged character of all B series shares shall expire: (i) when at least one B series share is transferred to any person other than Mr. Andrzej Przybyło, unless the ownership of registered B series shares is transferred to the spouse or descendants of Mr. Andrzej Przybyło or unless they are acquired by inheriting by Mr. Andrzej Przybyło's heirs ( ) 8. Description of the rules governing appointment and dismissal of managers and their rights Pursuant to Art. 9.1 of AB S.A. s Articles of Association, the Management Board is appointed and dismissed by the Supervisory Board. 9. Description of the rules governing changes in the Company s Articles of Association The rules governing changes in the Company s Articles of Association are provided in Art. 430 and of the Code of Commercial Companies. 10. Description of the mode of functioning of the General Shareholders Meetings and its fundamental powers as well as shareholders rights and manner of their exercise. AB S.A. s General Shareholders Meeting (GSM) functions in line with the provisions of the Code of Commercial Companies and AB S.A. s Articles of Association. The detailed mode of functioning is specified in the Regulations of the General Shareholders Meeting. The General Shareholders Meeting appoints the Management Board at its own initiative or at the request of a Shareholder/Shareholders representing at least one-twentieth of the share capital. In certain cases the Supervisory Board, as well as a Shareholder/Shareholders representing at least half of the share capital or at least half of the total number of votes in the Company, have the right to convene the General Shareholders Meeting, and in the case of Shareholders authorised by a registry

8 court to convene a General Shareholders Meeting (GSM) Shareholders representing at least onetwentieth of the share capital. GSM is called by an announcement published on the Company s website at least twenty six days prior the scheduled date of the General Shareholders Meeting and in a manner specified for distribution of current information in line with provisions on the Act on Public Offer and the Conditions for Admitting Financial Instruments to the Regulated System of Trading and on Publicly Traded Companies. General Meetings shall be held in Wrocław or Warsaw. A Shareholder or Shareholders representing at least one-twentieth of the share capital are entitled to, however no later than 21 days prior the scheduled date of the GSM, request that certain items be introduced to the agenda of the General Meeting as well as to submit to the Company, prior the scheduled date of the General Meeting, draft resolutions concerning items introduced to the agenda or items that are to be introduced in the agenda. Each Shareholder may also submit drafts of resolutions regarding the issues introduced to the agenda during the General Meeting. The following persons are entitled to participate in the GSM and exercise their voting rights: a) Authorised under registered shares and scrip certificates as well as pledges and users with voting rights provided that they were entered into the share register no later than sixteen days before the date of the General Shareholders Meeting b) Shareholders authorised under bearer shares, in cases provided for in art. 406[3] of the Code of Commercial Companies, The right to participate in the GSM and the voting right may be exercised in person or through a proxy with a power of attorney granted in paper or electronic form. The General Shareholders Meeting requires the presence of members of the Supervisory Board, and where financial matters are to be discussed, also a statutory auditor must be present. In accordance with the Company s Articles of Association, the powers of the General Meeting shall include, in particular: adoption of resolutions on profit distribution or loss coverage, merger or transformation of the Company, dissolution and winding up of the Company, increase or decrease of the share capital, establishment of principles for remuneration of members of the Supervisory Bard, creating and cancelling special purpose funds, change of the Company's scope of business, change of the Company's Articles of Association, issue of bonds convertible to shares, bonds with priority rights or subscription warrants, appointment of liquidators, decisions regarding claims for damages made on the establishment of the Company or in the course of the company s business or supervision,

9 examination of the issues submitted by the Supervisory Board, Management Board or shareholders, undertaking the steps to introduce Company's shares to organised trading. 11. Composition and the principles of functioning of the Company s governing bodies The Management Board of AB S.A. functions in line with the provisions of the Code of Commercial Companies and AB S.A. s Articles of Association. The detailed mode of functioning is specified in the Regulations of the Management Board. The Management Board manages the Company s affairs and represents it in external relations. It also ensures transparency and effectiveness of the Company's management system and managing its affairs in line with the law and good practices. The Management Board is responsible for: the strategy and main objectives of the Company, periodic financial statements, non-audited monthly financial statements, annual financial plans of the Company (budget), strategic economic plans of the Company (business plan). All actions undertaken by the Management Board are presented to the Supervisory Board. The Management Board shall adopt relevant resolutions especially with respect to the following issues: submission to the Supervisory Board and the General Shareholders Meeting of the Management Board's report on the Company's operations and financial statements, convention of the Ordinary Shareholders Meeting and Extraordinary Shareholders Meeting at own initiative or at written request of the Supervisory Board or shareholders representing at least one-twentieth of the share capital, and establishment of the agenda for the General Meeting, preparation of draft resolutions and motions in all issues, pursuant to art of the Articles of Association and provisions of the Code of Commercial Companies, all matters where decisions, pursuant to the provisions of the Articles of Association and the Code of Commercial Companies, depend on the approval of the Supervisory Board or the General Meeting.

10 As at 30 June 2013 the composition of the Management Board of AB S.A. was as follows: Mr. Andrzej Przybyło President of the Management Board Mr. Zbigniew Mądry Member of the Management Board, Commercial Director Mr. Krzysztof Kucharski Member of the Management Board Director for Corporate and Legal Matters Mr. Grzegorz Ochędzan Member of the Management Board, Financial Director In the period from the balance sheet date to the publication of the report there were no changes in the composition of the Company s Management Board. 12. Composition and the principles of functioning of the Company s supervisory bodies The Supervisory Board of AB S.A. functions in line with the provisions of the Code of Commercial Companies and AB S.A. s Articles of Association. The detailed mode of functioning is specified in the Regulations of the Supervisory Board. The Supervisory Board shall exercise constant supervision over the Company's operation. Apart from other issues stipulated in the provisions of the Articles of Association or legal regulations, the special rights of the Supervisory Board shall include: examination of the balance sheet and of the profit and loss statement, examination of the report of the Company's Management Board and Management Board's requests pertaining to profit distribution and loss coverage; appointment and dismissal of members of the Company's Management Board and suspending a member of the Company's Management Board or the entire Management Board of the Company; approving the Regulations of the Management Board; determining the remuneration Policy of the Management Board; approving the appointment of a Proxy; approval of annual financial plans (budget) and strategic economic plans (business plans) of the Company; the budget should include at least one operational plan of the Company, the plan of revenues and costs for a given accounting year (with respect to the entire year and to separate calendar months), balance sheet forecast for the end of the accounting year, plan of cash flow for the accounting year (with respect to the entire year and to separate calendar months) and plan of the Company's expenditures other than usual costs of operation; granting approval for incurring obligations, by the Company or Company's subsidiary, related to a single transaction or a series of related transactions with the total value exceeding, in a single

11 financial year, the equivalent of EUR 200, (two hundred thousand), not provided for in the budget approved in accordance with the provisions of the Company's Articles of Association and which are activities that go beyond ordinary management. The equivalent shall mean an equivalent in PLN or in another exchangeable currency expressed in EUR, converted in accordance with the average EUR exchange rate and average exchange rate of the currency other than PLN published by the President of the National Bank of Poland on the date immediately preceding the date on which the Management Board of the Company submits a request to the Supervisory Board for approving such a transaction, granting approval for incurring loans or credits or issuing debt securities by the Company or the Company's subsidiary, if as a result, the total value of the Company's debt would exceed the equivalent of EUR 8,000, (eight million); granting approval for issuing sureties by the Company or the Company's subsidiary and for incurring guarantee obligations and other off-balance sheet obligations, by the Company or the Company's subsidiary, not provided for in the budget approved in accordance with provisions of the Company's Articles of Association, except for the operations to secure the Company's own liabilities; granting approval for establishing a pledge, mortgage or transfer of title to secure a debt or other charges to the assets of the Company or the Company's subsidiary, not provided for in the budget approved in accordance with provisions of the Company's Articles of Association; granting approval for expenditures made by the Company or the Company's subsidiary (including capital expenditures) related to a single transaction or a series of related transactions with the total value exceeding, in a single financial year, the equivalent of EUR 200, (two hundred thousand), not provided for in the budget approved in accordance with provisions of the Company's Articles of Association and which are activities that go beyond ordinary management; granting approval for purchase or takeover of shares in other commercial companies, by the Company or the Company's subsidiary, and for entering into partnership with other business entities by the Company or the Company's subsidiary; granting approval for concluding contracts by the Company on profit distribution of legal persons or business entities without legal personality; granting approval for selling the fixed assets of the Company or the Company's subsidiary the value of which exceeds 10% (ten percent) of the net book value of fixed assets of the Company or Company's subsidiary, respectively, established on the basis of the last verified financial statements of the Company or the Company's subsidiary, respectively, from the marketable inventory within the scope of normal business operation; granting approval for the sale or transfer of copyrights or any other intellectual property rights, in particular the rights to the company name and to the AB device mark as well as rights to trademarks;

12 granting approval for concluding contracts between the Company or Company's subsidiary and members of the Company's Management Board, Company's shareholders or entities related to any of the Company's shareholders or members of the Company's Management Board. Whereas the term related entity shall mean a person, company or any other entity which has economic or family associations with any shareholder of the Company, member of the Company's Management Board, including, in particular (i) his/her spouse, or (ii) his/her children, or (iii) grandchildren, or (iv) parents, or (v) grandparents, or (vi) siblings, and any company or any other entity controlled directly or indirectly by the persons referred to above, or in which the persons referred to above have significant economic interest, granting approval for employment by the Company or the Company's subsidiary of advisers and other persons who are not employees of the Company or the Company's subsidiary, as consultants, lawyers, agents, if the annual remuneration, not provided for in the budget approved in accordance with provisions of the Company's Articles of Association, exceeds the equivalent of EUR 200, (two hundred thousand); granting approval for pledging the Company's shares in the situations provided for in the Articles of Association; granting approval for the sale of the Company's registered shares in the course of enforcement proceedings; selection of a statutory auditor for reviewing the Company's financial statements; granting approval for acquisition or sale of real estate, right of perpetual usufruct or share in real estate. As at 30 June 2013 the Supervisory Board of AB S.A. was composed as follows: Ms. Iwona Przybyło Mr. Jacek Łapiński Mr. Jan Łapiński Mr. Radosław Kiełbasiński Mr. Andrzej Bator Ms. Katarzyna Jażdrzyk In the period from the balance sheet date to the publication of the report there were no changes in the composition of the Company s Supervisory Board. Date First and last name Position / function Signature Andrzej Przybyło PRESIDENT OF THE MANAGEMENT BOARD

13 Krzysztof Kucharski MEMBER OF THE MANAGEMENT BOARD Zbigniew Mądry MEMBER OF THE MANAGEMENT BOARD Grzegorz Ochędzan MEMBER OF THE MANAGEMENT BOARD