TERMS AND SCOPE OF COMPLIANCE WITH CORPORATE GOVERNANCE RULES

GPW accepted the corporate governance rules laid down in the Code of Best Practice for GPW Listed Companies, applicable until 31 December 2015, as of the date of admission of the Company’s shares to trading on the regulated market on 5 November 2015. GPW complied with all of the rules of the Code in 2015. The Code of Best Practice for GPW Listed Companies is available on the GPW website (http://www.gpw.pl) under the listed companies corporate governance tab. 

As of 1 January 2016, GPW follows the new rules published by the trading organiser, the Code of Best Practice for GPW Listed Companies 2016. The Code is available on the GPW website (http://www.gpw.pl) under the listed companies corporate governance tab.

GPW complies with most of the recommendations and rules of the Code of Best Practice for GPW Listed Companies 2016 with the exception of Rule VI.Z.2, which requires that the period between the allocation of options or other instruments linked to the company’s shares under the incentive scheme and their exercisability should be no less than two years. The non-compliance is due to the fact that the Company’s incentive scheme, approved before the effective date of the Code of Best Practice for GPW Listed Companies 2016, included phantom shares, where the exercise period is 1 year. However, the phantom shares are only one of three incentive measures with a minor weight. The biggest part of the Management Board incentive system in 2015 was the “bonus bank” paid out in equal parts over three consecutive years (for more information, see the Remuneration Policy section).

Furthermore, with respect to Recommendation I.R.2, GPW’s sponsoring and charity policy is not a formal document. The Company is planning to approve it as a formal document in 2016. However, in its sponsoring and charity activities, GPW follows the principle of focusing on the area of its core business. GPW’s donations amounted to PLN 648 thousand in 2015, including PLN 600 thousand of endowment of the GPW Foundation. The Group established the GPW Foundation whose mission it is to pursue educational activities, including programmes supporting the development of financial and commodity markets and promotion of economic education. The major part of the remaining PLN 48 thousand was donated to the Youth Entrepreneurship Foundation (PLN 20 thousand) and Caritas Diecezji Łowieckiej (PLN 14 thousand). Sponsorship costs amounted to PLN 657.7 thousand mainly including:

• direct support of sales of GPW products and services (mainly industry events: the Polish Capital Markets Day in New York co-organised by GPW, the FOW Derivatives World CEE, conferences and events of the Association of Individual Investors (SII) focused on promotion of the Exchange among individual investors);
• support of capital market events (including conferences of the Chamber of Brokerage Houses (IDM), the Association of Listed Companies (SIG) – the Investor Relations Congress, the Listed Companies CFO Congress, the Listed Companies Lawyer Congress).

Furthermore, GPW co-operated with many foundations, associations and organisations to hold events and conferences about the economy and the capital market. In particular, GPW worked with the Polish Directors’ Institute Foundation to organise conferences on corporate governance; the Lesław A. Paga Foundation (including training and education projects focused on the capital market); and the Polish Association for Entrepreneurship (PTWP) (European Economic Congress, Eastern Economic Congress).

In addition, GPW is subject to the Corporate Governance Rules for Supervised Institutions issued by the Polish Financial Supervision Authority on 22 July 2014 as a set of rules governing internal and external relations of supervised institutions, including relations with shareholders and clients, their organisation, the operation of internal supervision and the key internal systems and functions, as well as the statutory authorities and the rules of their co-operation. The Corporate Governance Rules for Supervised Institutions are available on the website of the Polish Financial Supervision Authority (http://www.knf.gov.pl).

The Exchange complies with the rules laid down in the Corporate Governance Rules for Supervised Institutions with the exception of the rules defined in § 10.2, § 12.1 and § 28.4, and except the rules defined in §53, §54.1-3, §55, §56, §57, which are inapplicable to GPW’s business profile as GPW does not manage assets on clients’ account.

Non-compliance with the rule defined in § 10.2, concerning the introduction of personal entitlements or other special entitlements for shareholders, and in § 12.1, which provides that shareholders shall be responsible for an immediate capital increase of the supervised institution, is due to the incomplete privatisation of the Company by the State Treasury. Non-compliance with the rule defined in § 28.4, which provides that the General Meeting shall assess whether the established remuneration policy contributes to the development and security of the operations of the supervised institution, is due to the excessively broad range of the remuneration policy to be assessed by the General Meeting. The remuneration policy for key managers other than the members of the supervisory board and the management board should be assessed by their employer, i.e., the Company represented by the Management Board and controlled by the Supervisory Board.

The full statement of the Exchange on compliance with the Code of Best Practice for GPW Listed Companies 2016 and the Corporate Governance Rules for Supervised Institutions is available on the Company’s website under the GPW corporate governance tab.