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Application of Corporate Governance Principles to Supervised institutions

The Management Board and the Supervisory Board of PZU declared their readiness to apply the Principles to the furthest objectively possible extent, taking into account the principle of proportionality and the ”comply or explain” rule, arising from their content.

Detailed information about the application of the Rules by PZU can be found on PZU’s website. That includes the principles whose application is partial, that is:

  • in relation to the principle contained in § 8.4 of the Principles, facilitating the participation of all shareholders in the General Shareholders’ Meeting i. a. by ensuring the active electronic participation in meetings; it should be emphasized that the current shareholders of PZU can follow the broadcast of the meeting, but the Company decided not to introduce the so-called e-GSM; in the assessment of PZU, there are many technical and legal factors that could affect the proper conduct of the General Shareholders’ Meeting. The legal concerns are related to the possibility of identifying shareholders and inspecting the ID cards of the GSM’s participants; the risk of technical problems, e.g. with the Internet connection or a potential intrusion into information systems, can disrupt the work of the General Shareholder’s Meeting and raise doubts about the effectiveness of the resolutions adopted during the meeting; the occurrence of the above-mentioned risks may affect the correct application of the principle in full;

  • in relation to the principle contained in § 12.2 of the Principles, which states that in the composition of the supervisory body there should be a separate function of a chairperson who manages the works of the supervisory body and that the choice of the chairperson of the supervisory body should be made based on the experience and team leadership skills, taking into account the criterion of independence; it must be emphasized that, in accordance with the Code of Commercial Companies and the Articles of Association of PZU, there is a separate function of a chairperson in the Supervisory Board of PZU; the composition of the Supervisory Board of PZU, including the function of the chairperson, are shaped according to the criterion of independence set out in the Act on statutory auditors; the election of the chairperson of the Supervisory Board is made on the basis of their knowledge, experience and skills, which confirm that the chosen person has the competencies necessary for the proper performance of their supervising duties; the application of the criterion of independence in the case of the chairperson in accordance with the PFSA’s explanation of the principle may raise doubts about the potential conflicts of law relating to shareholders’ rights;

  • in relation to the principle specified in § 49.3 of the Good Governance Principles concerning appointment and dismissal in supervised institutions of the person heading the internal audit unit or the person heading the compliance unit, it should be noted that PZU complies with the principles specified in § 14 of the Principles fully, which means that PZU’s Management Board is the only one entitled to and responsible for management of the operations of the company; furthermore, in accordance with the provisions of the labour law, the activities related to the labour law are performed by the governing body; in view of the above, PZU adopted a solution according to which the decision about appointment and dismissal of the person heading the internal audit unit is made, taking into account the opinion of the Audit Committee of the Supervisory Board; the same applies to the appointment and dismissal of the person heading the compliance unit; the Management Board consults the Audit Committee about such decisions.

Moreover, the following rules do not apply to PZU:

  • rule specified in § 11.3:
    “In the event that the decision concerning a transaction with a related party was made by the General Shareholders’ Meeting, all shareholders should have access to any information necessary for assessment of the terms on which the transaction is to be executed and its impact on the situation of the supervised institution.” – in PZU the General Shareholders’ Meeting does not make decisions concerning transactions with related parties;

  • rule specified in § 49.4:
    “In a supervised institution, where there is no internal audit unit or compliance unit, the entitlements referred to in items 1-3 shall be held by the people responsible for performance of those functions.” – there is both an internal audit unit and a compliance unit in PZU;

  • rule specified in § 52.2:
    “In a supervised institution, where there is no audit unit or compliance assurance unit, and where no unit responsible for that area has been appointed, the information referred to in item 1 shall be submitted by the people responsible for fulfilling those functions.” – there is both an internal audit unit and a compliance unit in PZU;

  • rules specified in Chapter 9 – Execution of Rights Resulting from Assets Acquired at Client’s Risk, as PZU offers no products which involve managing assets at client’s risk.