You are here

Declaration of the application of corporate governance rules

The set of principles applied

Creating values for shareholders, also through the Company's transparency, is one of Enea Capital Group's priorities. Having that in mind, the Management Board of Enea SA represents that in 2016 the Company applied the corporate governance rules being the Attachment to the Resolution No. 26/1413/2015 of the Supervisory Board of the Warsaw Stock Exchange of 13 October 2015, titled "Best Practices of WSE Listed Companies 2016" (BPLC, corporate governance), published on WSE website under https://www.gpw.pl/regulations_best_practices.

Principles and recommendations of corporate governance the application of which was waived

Enea SA’s Management Board's intention is to apply all the principles of the corporate governance. Due to the fact however, that some principles may pose the necessity to incur excessive burdens by the Company which could exceed potential benefits resulting from market needs, in 2016 the Company waived the application of some principles and recommendations of the corporate governance indicated below.

I. Management Board and the Supervisory Board

II.Z.3. At least two members of the supervisory board should meet the criteria of being independent referred to in principle II.Z.4.

Company’s comment: The Company explains that pursuant to the Statute of Enea SA the independence criteria should be satisfied by at least one member of the Supervisory Board. The Company’s Statute does not secure the observance of the said principle. However, the Board declares that the circumstances mentioned in the content of this principle are deemed best corporate practice. Therefore, the Management Board declares the possibility of applying to relevant authorities of the Company with a motion to consider the introduction of adequate amendments to the Company’s by-laws with a relevant recommendation.

II.Z.5. Each supervisory board member should provide the other members of the supervisory board as well as the company’s management board with a statement of meeting the independence criteria referred to in principle II.Z.4.

Company’s comment: The Company explains that according to the Company’s Statute, an independent member of the Supervisory Board is obliged to submit a written statement to the Company relating to the satisfaction of all the independence criteria - along with the obligation to immediately notify the Company on cessation to meet the said criteria. Enea SA’s Statute does not however foresee any obligation to submit such statements to the other members of the Supervisory Board. However, the Board declares that the circumstances mentioned in the content of this principle are deemed best corporate practice. Therefore, the Management Board declares the possibility of applying to relevant authorities of the Company with a motion to consider the introduction of adequate amendments to the Company’s by-laws with a relevant recommendation.

II.Z.7. Annex I to the Commission Recommendation referred to in principle II.Z.4 applies to the tasks and the operation of the committees of the Supervisory Board. Where the functions of the audit committee are performed by the supervisory board, the foregoing should apply accordingly.

Company’s comment: The Company explains that in relation to the tasks and the operation of the committees of the Supervisory Board the provisions of the Annex I to the Commission Recommendation referred to in the analysed principle apply, provided that the Company’s by-laws do not require the majority of the members of these committees to meet the independence criteria. The Board declares at the same time that the circumstances mentioned in the content of this principle are deemed best corporate practice.

Therefore, the Management Board declares the possibility of applying to relevant authorities of the Company with a motion to consider the introduction of adequate amendments to the Company’s by-laws with a relevant recommendation.

II.Z.8. The chair of the audit committee should meet the independence criteria referred to in principle II.Z.4.

Company’s comment: The Company explains that according to the Rules of the Supervisory Board in force in the Company, at least one member of the Audit Committee should be an independent member. The Company’s by-laws do not however foresee that this requirement must be met by the chair of that committee.

Pursuant to the said Rules, committee members elect the chair from among their number. The Board declares at the same time that the circumstances mentioned in the content of this principle are deemed best corporate practice. Therefore, the Management Board declares the possibility of applying to relevant authorities of the Company with a motion to consider the introduction of adequate amendments to the Company’s by-laws with a relevant recommendation.

IV. General meetings and relations with shareholders

IV.R.2. If justified by the structure of shareholders or expectations of shareholders notified to the company, and if the company is in a position to provide the technical infrastructure necessary for a general meeting to proceed efficiently using electronic communication means, the company should enable its shareholders to participate in a general meeting using such means, in particular through: 1) real-life broadcast of the general meeting; 2) real-time bilateral communication where shareholders may take the floor during a general meeting from a location other than the general meeting; 3) exercise of the right to vote during a general meeting either in person or through a plenipotentiary.

Company’s comment: The Company explains that the Company’s Statute does not allow for the participation in General Meetings by means of electronic communication. Notwithstanding the foregoing, as a rule, the Company’s Management Board is positive about making it possible, in the future, for the Company’s shareholders to participate in a General Meeting by means enabling a real-time transmission of data, when relevant legal regulations are introduced.

IV.Z.2. If justified by the structure of shareholders, companies should ensure publicly available real-time broadcasts of general meetings.

Company’s comment: The Company explains that presently it does not enable real-time broadcasts of General Meetings. However, the proceedings of General Meetings are recorded, in the form of sound and image, and next such a record is subject to publication on the Company’s corporate website.

V. Conflict of Interest, Related Party Transactions

V.Z.5. Before the company concludes a significant agreement with a shareholder who holds at least 5% of the total vote in the company or with a related party, the management board should request the supervisory board’s approval of the transaction. Before giving its approval, the supervisory board should evaluate the impact of the transaction on the interest of the company. The foregoing does not apply to typical transactions and transactions at arm’s-length made as part of the company’s operations between the company and members of its group.

If the decision concerning the company’s significant agreement with a related party is made by the general meeting, the company should give all shareholders access to information necessary to assess the impact of the transaction on the interest of the company before the decision is made.

Company’s comment: The Company explains that according to Enea SA’s Statute the competence of the Supervisory Board includes e.g. approving the conclusion of a significant agreement with a related party, provided that in order to adopt a valid resolution in this field a voting must be conducted for the adoption of such a resolution by the majority of members of the Supervisory Board meeting the independence criteria. "Related party" and "significant agreement" are defined in accordance with the provisions of the Regulation of the Minister of Finance relating to current and periodic information. The Board declares, however, that the circumstances mentioned in the content of the principle are deemed best corporate practice. Therefore, the Management Board declares the possibility of applying to relevant authorities of the Company with a motion to consider the introduction of adequate amendments to the Company’s by-laws with a relevant recommendation.

VI. Remuneration

VI.R.1. The remuneration of members of the company’s governing bodies and key managers should follow the approved remuneration policy.

Company’s comment: The Company explains that no remuneration policy is adopted in Enea SA.

VI.R.2. The remuneration policy should be closely tied to the company’s strategy, its short- and long-term goals, long-term interests and results, taking into account solutions necessary to avoid discrimination on whatever grounds.

Company’s comment: The Company explains that no remuneration policy is adopted in Enea SA. The Management Board declares the intention for the remuneration policy implemented in the Company to include, in a far-reaching scope, the circumstances mentioned in the content of the recommendation.

VI.R.3. If the supervisory board has a remuneration committee, principle II.Z.7 applies to its operations.

Company’s comment: The Company explains that in relation to the tasks and the operation of the committees of the Supervisory Board the provisions of the Annex I to the Commission Recommendation referred in the analysed principle apply, provided that the Company’s by-laws do not require the majority of the members of these committees to meet the independence criteria. The Board declares at the same time that the circumstances mentioned in the content of this principle are deemed best corporate practice. Therefore, the Management Board declares the possibility of applying to relevant authorities of the Company with a motion to consider the introduction of adequate amendments to the Company’s by-laws with a relevant recommendation.

Description of the key features of the issuer's internal control and risk management systems in relation to the process of preparing consolidated financial statements

Principles and procedure of preparing financial statements are in particular regulated by the International Financial Reporting Standards, act on accounting and internal procedures functioning in Enea SA.

Establishment of systems of internal control and risk management as regards the process of preparation of consolidated financial statements aims particularly at guaranteeing the completeness and correctness of financial information included in financial statements and interim reports.

The Management Board of Enea SA is responsible for the internal control system in Enea Capital Group and its effectiveness in the process of drawing up financial statements and periodic reports. The task of an effective internal control system in financial reporting is to ensure that the financial information set out in financial statements and periodic reports is complete and correct.

Financial statements and periodic reports and monthly management and operating reporting applied by Enea SA are based on data derived from the financial and bookkeeping system of the Company. After all the predetermined processes of closing the books of account at the end of each month have been carried out, detailed management reports on financial and operational matters are drawn up. Those reports are drawn up by the Control Department, with the participation of middle and senior managers from individual organisational units. In relation to the completed reporting periods, not only financial results of the Company are subject to a detailed analysis, but also particular business areas.

The Company also carries out annual reviews of business and financial strategies and plans. Middle and senior management personnel are particularly engaged in the process of detailed planning and budgeting, which covers all the areas of Enea Capital Group's operations. The Company's Board adopts the material and financial plan prepared by the Controlling Department, and the Supervisory Board approves that plan. During the year, the Company's Board supervises the realisation of goals specified in the approved material and financial plan. The management cockpit developed by the Controlling Department constitutes a valuable source of information for the Supervisory Board on the current financial situation, environment and the level of realisation of goals in the critical areas.

The Company applies coherent accounting principles and presents financial data in financial statements, periodic financial reports and other reports disclosed to the shareholders.

Enea Capital Group regularly assesses the quality of its internal control and risk management systems with regard to the process of drawing up financial statements. On the basis of an assessment, the Management Board of Enea SA confirms that as at 31 December 2016 there were no irregularities that could significantly affect the effectiveness of internal control as it relates to financial reporting.

As part of the risk management process related to the procedure of preparing financial statements, one of the basic elements of the external control is verification of the financial statements by an independent auditor. The tasks of the auditor include in particular: a review of the mid‐year

financial statements and an audit of the non‐consolidated and consolidated annual financial statements. The independent auditor is selected by the Supervisory Board. Once the auditor has completed auditing the financial statements, they are sent to the members of the Company's Supervisory Board, which assesses the non-consolidated and consolidated financial statements with regard to their compliance with the books of account, documents and the factual status. Under the provisions of the Accountancy Act, the members of the Management Board and the Supervisory Board are obliged to ensure that the financial statements and the report on operations fulfil the requirements set out in that act.

The internal audit function, performed by the Audit Management Division is an important element of the internal control system. The internal audit in Enea Capital Group is independent, and accountable to the Audit Committee acting as part of the Supervisory Board. The basic tasks of the internal audit include e.g. the audit and assessment of the control mechanism processes in Enea Capital Group, supporting the internal control system effectiveness, risk management and Compliance system, through their independent and objective assessment and recommendation of improvements within the corporate governance and monitoring.

Information on shares and shareholding

The detailed description of the structure of the share capital, shareholding structure, changes in its structure in 2016 and potential changes within its structure is to be found in Chapter 4 - Shares and shareholding on page 91.

Securities with special control authorisation

Until the date of preparation of this report Enea SA has not issued any securities that could give special inspection rights with respect to the Issuer.

Restrictions on exercising voting rights

Till the date of preparation of this report there are no restrictions on exercising voting rights in the Company, other than those provided for in generally applicable provisions of law.

Restrictions on transferability of securities

As at the date of preparation of this report the Company has no limitations concerning transfer of the title to securities of the Issuer.

Enea SA's Management Board

Personal composition

Pursuant to the Company's Statute, the Company’s Management Board is composed of 3 to 8 persons, including the President of the Management Board. The number of Management Board members is determined by the Supervisory Board.

Currently, the Management Board of Enea SA is composed of four people. The composition of the Company’s Management Board as at the publication date of this report, i.e. as at 30 March 2017, with information on the changes in the authorities in 2016 and until the date of publication of the statements is presented in Chapter 5 - Authorities of Capital Group on page 95.

Principles relating to appointing and recalling management personnel

Pursuant to the Company's Statute members of the Board or the whole Board are nominated and dismissed by the Supervisory Board, subject to a possibility of electing one member by the Company's employees complaint with the provisions of § 14 of the Company's Statute.

§ 14 of the Company's Statute provides that when the annual average employee count in the Company exceeds 500 employees, the Supervisory Board will appoint one person elected by the employees to the Management Board for the term of the Management Board.

In appointing management and supervisory board members application is made of the principles contained in the regulation of the Council of Ministers of 18 March 2003 concerning qualification proceedings for management board members of certain commercial companies (Journal of Laws No. 55, item 476 as amended).

Competences and powers of the Management Board

The Management Board transacts business of the Company and represents it. Entitlements, organisation and principles of operations of the Management Board are specified by the Commercial Companies Code, Company's Statute and the Rules of the Management Board. Any matters that exceed the scope of the Company's normal business require a resolution of the Management Board, in particular:

  • adopting the Company's organisational regulations, subject to approval by the Supervisory Board
  • creating and liquidating branches
  • appointing an authorised signatory or an authorised representative, except for an attorney ad litem; appointing an authorised signatory requires the consent of all the members of the Management Board
  • taking out loans or credit facilities
  • adopting annual material and financial plans, including investment plans, and long-term strategic plans, subject to approval by the Supervisory Board
  • contracting contingent obligations, including the Company granting guarantees and sureties and issuing promissory notes
  • acquiring, disposing of or encumbering real property, rights of perpetual usufruct or shares in real property, on the basis of one or more legal acts in a period of 12 consecutive months, with a value greater than or equal to the equivalent of EUR 50,000
  • giving over the Company's real property under a leasing, tenancy, lease, lending or usufruct agreement or for any other use
  • taking over real property under a leasing, tenancy, lease or usufruct agreement or for any other use, on the basis of one or more legal acts in a period of 12 consecutive months, where
  • the value of the rent for 12 consecutive months is greater than or equal to the equivalent of EUR 50,000
  • acquiring, disposing of or encumbering a fixed asset, except for real property, rights of perpetual usufruct or shares in real property, on the basis of one or more legal acts in a period of 12 consecutive months, with a value greater than or equal to the equivalent of EUR 50,000
  • any instance of offering fixed assets, except for real property, for leasing, lease, rent, borrowing, usufruct or any other use
  • taking over a fixed asset, except for real property, under a leasing, tenancy, lease or any other use, on the basis of one or more legal acts in a period of 12 months, where the value of the rent for 12 consecutive months is greater than or equal to the equivalent of EUR 50,000
  • matters that the Management Board requests that the Supervisory Board or General Meeting of Shareholders consider
  • determining the manner in which the Company exercises its voting rights at the General Meeting of Shareholders or at shareholders meetings of Significant Subsidiaries, subject to § 20 item 6(5) of the Statute

Management Board's principles of operation

The Management Board represents the Company in any court and out-of-court actions, transacts business of the Company.

The Management Board operates based on the provisions of the Commercial Companies Code, Company's Statute and Rules of the Management Board of Enea SA. The Rules of the Management Board are adopted with a resolution of the Management Board and approved by the Supervisory Board. The Rules of the Management Board of Enea SA in force in the Company were adopted with the resolution of the Board of 22 June 2010, as amended.

Two Management Board members acting jointly or one Management Board member and an authorised signatory acting jointly are authorised to make declarations of will on behalf of the Company.

Pursuant to the Rules of the Management Board, meetings of the Management Board take place at the registered office of the Company on Tuesdays, unless the President of the Board or a Member of the Board assigned by him decides otherwise.

Meetings of the Management Board of the Company are convened by the President of the Board or a Member of the Board designated by him, at the President's own initiative or upon a motion by two Members of the Board. Participation in meetings of the Management Board is compulsory. A Member of the Board substantiates their absence during the Board's meeting in writing or using means of remote communication. Absence during the Board meeting is substantiated by the meeting Chairman. Employees of the Company, experts and external advisers may be invited

to attend Management Board meetings. The agenda and the necessary documents for a Management Board meeting are provided by the Company's Governing Bodies Office at least two business days before the meeting. For valid reasons, a meeting can be convened immediately and without materials being provided. For a meeting to be held, all the members of the Management Board must be effectively notified of the meeting.

Decisions of the Management Board associated with transaction the Company's business, as referred to in § 11 item 2 of the Statute, require a resolution of Management Board. The Management Board can adopt resolutions if at least half of its members are present at the meeting and all of the members have been correctly notified of the meeting. In the event of an equal number of votes in adopting a Management Board resolution, the casting vote is held by the President of the Management Board.

The Management Board can adopt resolutions in writing or remotely using means of direct remote communication. Adopting resolutions in this manner requires a justification and that the draft resolution be presented in advance to all the members of the Management Board. Resolutions adopted in writing or remotely using means of direct remote communication are presented at the next meeting of the Management Board with the outcome of the vote.

The complete text of the Statute and Rules of the Management Board of Enea SA with the description of the operations of the Management Board is published on www.enea.pl under "Investor Relations" -> "Corporate governance".

Enea SA's Supervisory Board

Personal composition

Pursuant to the Company's Statute, the Supervisory Board is composed of 6 to 15 members appointed by: (i) General Meeting, (ii) Company's employees and (iii) the State Treasury. The Supervisory Board should be as a minimum composed of one person nominated by the General Meeting from among the persons satisfying the independence criterion specified in the corporate governance rules adopted by the Supervisory Board of WSE.

Presently, the Supervisory Board of Enea SA is composed of ten members and operates in the 9th term. The composition of the Company’s Supervisory Board as at the publication date of this report with information on the changes in the authorities in 2016 and until the date of publication of the statements is presented in Chapter 5 - Authorities of Capital Group on page 96.

Operations

The Supervisory Board operates based on the provisions of the Commercial Companies Code, Company's Statute and Rules of the Supervisory Board of Enea SA adopted with the resolution of the Supervisory Board of 15 December 2009, as amended.

The Supervisory Board supervises all the operations of the Company on an ongoing basis. Special duties of the Supervisory Board include the assessment of the Management Board's report on the Company's operations and financial statements for the previous financial year as regards their compliance with the accounts and documents, and with the current situation.

Additionally, the Supervisory Board's competences include the assessment of the Management Board's motions relating to the distribution of profit or coverage of a loss, and also presenting an annual written statement of such an assessment to the General Meeting.

The Supervisory Board convenes at least once every two months. Meetings of the Supervisory Board are convened by the Chairman or Vice-Chairman of the Board, who will also present a detailed agenda. A Supervisory Board's meeting should be convened at the request of any Supervisory Board member or at the request of the Management Board.

Participation in Supervisory Board meetings is obligatory for Board members. Supervisory Board members are required to justify their absence from a Meeting in writing. The Supervisory Board Member absence reconciliation requires a resolution of the Supervisory Board.

A meeting of the Board will be convened within two weeks from the date when a request is received. For a meeting of the Supervisory Board to be convened, all the members of the Board must be invited in writing at least seven days before the meeting. For valid reasons, the Chairman of the Supervisory Board can reduce that period to two days, specifying the manner of delivering the invitations. In an invitation to a meeting of the Supervisory Board, the Chairman will specify the time and venue of the meeting and include a detailed draft agenda. He/she will also enclose materials with the invitation relating to the matters included on the agenda.

In cases indicated in the Rules of the Supervisory Board meetings of the Supervisory Board may also be held with no formal convening.

Supervisory Board meetings are chaired by its Chairman, or, in his/her absence, by the Vice-Chairman or other Supervisory Board member appointed at the meeting. The Chairman of the Supervisory Board, and in his/her absence, a Vice-Chairman or another Supervisory Board member chairing the meeting, ensures an efficient and proper course of the Supervisory Board's meetings, in accordance with the adopted agenda, legal regulations, the Statute and the Rules of the Supervisory Board of Enea SA, and in particular he/she has an exclusive right to:

  • open, proceed and close meetings of the Supervisory Board,
  • give and take back the floor to members of the Supervisory Board,
  • issue standing orders
  • order a voting, supervise its proper progress and announce results
  • settle order issues
  • order breaks in meetings of the Supervisory Board
  • issue instructions to a keeper of the minutes of the meeting of the Supervisory Board
  • distribute written resolutions of the Supervisory Board
  • undertake other actions necessary for an efficient operation of the Supervisory Board

On recognition of each submitted matter members of the Supervisory Board are entitled to assess draft resolutions in a discussion and submit amendments to them, however the discussion should proceed in accordance with the following principles:

  • a Member of the Supervisory Board may speak exclusively on matters included in the agenda within the scope of the item of the agenda under discussion
  • on considering each business from the agenda, depending on its nature, the Chairman may set a time limit for its discussion by each speaker
  • the Chairman shall have the right to instruct the speaker who diverges from the topic, exceeds permitted time limits, or makes prohibited utterances
  • the Chairman shall have the right to take the floor back from speakers who do not adhere to the Chairman’s remarks or to the provisions of the Regulations
  • the Chairman shall decide on termination of the discussion

The proposed agenda can be changed if all the members of the Supervisory Board are present at the meeting and no one objects to the agenda. Any matters that are not included on the agenda will be included on the agenda of the next meeting.

The Supervisory Board can adopt resolutions if at least half of its members are present at the meeting and all of the members have been correctly notified of the meeting. The Supervisory Board shall adopt resolutions by an absolute majority of votes cast. In the event of an equal number of votes in adopting a Supervisory Board resolution, the casting vote is held by the Chairman of the Supervisory Board.

Subject to the cases described in the Commercial Companies Code the Supervisory Board can also adopt resolutions without holding a meeting, by signing the same copy (or copies) or the draft resolution or separate documents with the same content, or by telephone or by other means of remote communication, in a manner that allows all the Members participating in the meeting to directly communicate with each other.

Adopting a resolution by this procedure requires that a justification for the resolution be drawn up in advance and that a draft resolution be presented to all the members of the Supervisory Board together with the justification. Resolutions adopted in writing or remotely using means of direct communication are presented at the next meeting of the Supervisory Board with the outcome of the voting. Supervisory Board members may participate in adopting resolutions by casting votes in writing through another Supervisory Board Member, subject to Article 388 § 2 and 4 of the Commercial Companies Code.

Full text of the Statute and Rules of the Supervisory Board of Enea SA covering the detailed description of the operations of the Supervisory Board is published on www.enea.pl under "Investor Relations" -> "Corporate governance".

Supervisory Board's Committees

Pursuant to the provisions of the Rules of the Supervisory Board, the following permanent committees operate within the Supervisory Board:

  • Audit Committee
  • Nominations and Remuneration Committee

The committee consists of at least three members appointed by the Supervisory Board from among its members for a period corresponding to the length of the Board's term. The members of the committee elect a chairman of the committee from among their number. The chairman of the committee directs and supervises the committee's work, particularly the organisation and procedure of committee meetings.