Grupa Kolastyna Corporate Governance

The intention of Grupa Kolastyna is to comply with all corporate governance rules adopted by the Corporate Governance Good Practice Committee on 29 October 2004 in the document titled “Good Practices in Public Companies 2005”, except for rules No. 20, 28 and 43; therefore, the company provides the following explanations:

Rule 20
a) Subject to item d), independent members shall account for at least one half of the supervisory board members. Independent supervisory board members shall have no such links with the company, its shareholders or employees which could have material impact on the independent member’s ability to make unbiased decisions.
b) Detailed criteria of independence shall be set out in the company’s Articles of Association.
c) No resolutions can be passed on the following issues without the consent of the majority of independent supervisory board members:
- any performances rendered for the benefit of the management board members by the company or any of its related entities on any grounds whatsoever;
- giving consent on behalf of the company or its related entity to execute a material agreement with an entity related to the company or to any supervisory board or management board member thereof or with entities related thereto;
- the choice of a chartered auditor to audit the company’s financial statements.
d) In companies where a shareholder holds a block of shares giving the right to over 50% of the total number of votes, the supervisory board shall have at least two independent members, including the independent chairman of the audit committee, provided that such committee was appointed.

The company does not intend to apply rule 20 since the company’s major shareholders have sufficient expertise and experience in exercising efficient and proper ownership supervision through their representatives in whose expertise and qualifications they have full confidence. In the opinion of the Issuer’s Management Board, the company’s Supervisory Board composition properly secures the interests of all shareholder groups.

Rule 28
The supervisory board shall act in accordance with its regulations, which shall be publicly available. The regulations shall stipulate appointing at least two committees, namely:
- an audit committee, and
- a remuneration committee.
The audit committee shall have at least two independent members and at least one member qualified in the field of accounting and finance. Responsibilities of the committees shall be specified in detail in the regulations of the supervisory board. The supervisory board committees shall submit annual reports on its operations to the supervisory board. The company shall provide its shareholders with access to the reports.
Due to the size of the company’s operation, the Issuer does not intend to apply rule 28 and is of the opinion that there are no grounds for appointing a remuneration committee or an audit committee in its Supervisory Board composed of 5 members.

Rule 43
A chartered auditor shall be selected by the supervisory board upon presentation of the audit committee’s recommendations or by the general meeting upon presentation of the supervisory board’s recommendations including the audit committee’s recommendations. If the supervisory board or the general meeting chooses a chartered auditor other than recommended by the audit committee, detailed grounds for such decision shall be presented. The information on the choice of the entity to act in its capacity as a chartered auditor with the grounds therefor shall be contained in the annual report.
The rule provides for obtaining the audit committee’s recommendations regarding the choice of the entity to act in its capacity as a chartered auditor; since the company is not currently intending to apply rule 28 stipulating, inter alia, the appointment of an audit committee, it is not possible to fully implement rule 43.
The Issuer’s intention is to publish the entire statement of compliance with the corporate governance rules in the form of a current report prior to the subscription to E-series shares.

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