Grupa LOTOS follows the principles of corporate governance published in the Code of Best Practice for WSE Listed Companies. The Code was adopted by the Supervisory Board of the Warsaw Stock Exchange on 4 July 2007. A complete text of the code is available on the website of the
Warsaw Stock Exchange.
In 2008, Grupa LOTOS published two memoranda concerning non-compliance with the principles of the Code.
Principles not applied by Grupa LOTOS with comments
Principle No. 1.11, Section II
‘A company should operate a corporate website and publish (…) information known to the Management Board based on a statement by a member of the Supervisory Board on any relationship of a member of the Supervisory Board with a shareholder who holds shares representing not less than 5% of all votes at the company’s General Meeting.’
The above principle is not followed due to the fact that Grupa LOTOS does not have access to information on any relations of the Supervisory Board members with stockholders who hold stocks representing not less than 5% of all votes at the General Meeting. The Company is planning to introduce a procedure of obtaining such information, which will provide compliance with the principle.
Principle No. 6, Section III
‘At least two members of the Supervisory Board should meet the criteria of being independent from the company and entities with significant connections with the company. The independence criteria should be applied under Annex II to the Commission Recommendation of 15 February 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board. Irrespective of the provisions of point (b) of the said Annex, a person who is an employee of the company or an associated company cannot be deemed to meet the independence criteria described in the Annex. In addition, a relationship with a shareholder precluding the independence of a member of the Supervisory Board as understood in this rule is an actual and significant relationship with any shareholder who has the right to exercise at least 5% of all votes at the General Meeting.’
The above principle is not followed because Grupa LOTOS does not have access to information concerning the independence of the Supervisory Board members. Moreover, due to the present stockholding structure of the Company and its role on the Polish fuel market, there has been no institution of independent Supervisory Board members.
The Company will start to follow the above principle after obtaining information concerning the appointment and recognising at least two Supervisory Board members as independent members in the meaning of Schedule II to the Commission Recommendation of 15 February 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board.
Principle No. 7, Section III
‘The Supervisory Board should establish at least an audit committee. The committee should include at least one member independent of the company and entities with significant connections with the company, who has qualifications in accounting and finance. In companies where the Supervisory Board consists of the minimum number of members required by law, the tasks of the committee may be performed by the Supervisory Board.’
The above principle is not applied due to the lack of independent Supervisory Board members who could serve in the present audit committee.
The Company will start to follow the above principle after obtaining information on the appointment to the present Supervisory Board audit committee of a member fulfilling the independence criteria according to Schedule II to the Commission Recommendation of 15 February 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board.
Principle No. 8, Section III
‘Annex I to the Commission Recommendation of 15 February 2005 on the role of non-executive or supervisory directors… should apply to the tasks and the operation of the committees of the Supervisory Board.’
The above principle is not applied due to the lack of independent Supervisory Board members who, according to Schedule II to the Commission Recommendation of 15 February 2005 on the role of non-executive directors (…), should serve in committees of the Supervisory Board.
The Company will start to follow the above principle after obtaining information on the appointment to the present Supervisory Board audit committees of the adequate number of members fulfilling the criteria of independence and the compliance of tasks and operation of the above committees listed in the above-mentioned Schedule II to the Commission Recommendation of 15 February 2005.