The Management Board of Impel SA, pursuant to Art. 29.5 of the Rules of the Warsaw Stock Exchange, submits a report on observance of the Corporate Governance Rules in 2007.
Part a) INDICATION OF THE CORPORATE GOVERNANCE RULES WHICH WERE NOT APPLIED BY THE ISSUER, SPECIFYING THE CIRCUMSTANCES AND REASONS FOR NON-OBSERVANCE OF RESPECTIVE RULES, AND THE COMPANY’S INTENDED WAY OF ELIMINATING POTENTIAL EFFECTS OF NON-OBSERVANCE OF A GIVEN RULE IN THE FUTURE
The Management Board of Impel SA declares that in 2007 the Company observed the Corporate Governance Rules included in “Best Practices in Public Companies 2005”, in compliance with the Company’s statement presented in Current Report No 32/2007 of June 21 st 2007 , except for:
II. Majority Rule and Protection of the Minority
A joint-stock company is a capital venture, therefore it must respect the principle of capital majority rule and the primacy of majority over minority. A shareholder who contributes more capital also bears a greater economic risk. It is, therefore, justified that his interests be considered in proportion to the capital he contributes. The minority must have a guarantee that their rights will be properly protected within the limits set by the law and commercial integrity. When exercising his rights, a majority shareholder should take into account the interests of the minority .
Company’s comment: Present majority shareholders hold registered preference shares Series C, where the preference means that one share grants a right to two votes.
14. A resolution not to consider an issue on the agenda may be adopted only if it is supported by sound reasons. Any motion in this respect should be accompanied by a detailed justification.
A decision to remove an item from the agenda or not to consider an issue put on the agenda at a shareholder’s request requires a general meeting resolution, once all the shareholders present who put the issue on the agenda have given their consent, supported by 75% of the votes present at the meeting.
Company’s comment: Pursuant to Art. 7.6 and 7.7 of the Rules of the General Shareholders Meeting, a resolution not to consider an issue on the agenda of the General Shareholders Meeting may be adopted only if it is supported by sound and tangible reasons, and a motion in this respect should be justified in detail by the mover. The General Shareholders Meeting may not adopt a resolution on removing or desisting from consideration of an issue put on the agenda at the shareholders’ request without consent from all shareholders present at the meeting.
Pursuant to the provisions of Art. 24.2 of the Impel SA’s Articles of Association, resolutions of the General Meeting are adopted by an absolute majority vote, unless the Articles of Association or mandatory legal provisions provide for stricter requirements regarding adoption of a given resolution.
Since neither the provisions of the Polish Code of Commercial Partnerships and Companies nor the Impel SA’s Articles of Association provide for the requirement that a resolution not to consider an issue on the agenda of the General Shareholders Meeting should be adopted by 75% of the votes it is not possible to adopt the rule in question.
20.a) At least half the members of the supervisory board should be independent members, subject to point (d) below. Independent members of the supervisory board should not have relations with the company and its shareholders or employees which could significantly affect the independent member’s ability to make impartial decisions;
Company’s comment: The rule has been applied in the Company (at present the Supervisory Board is composed of four independent members). The Management Board does not recognise any need for amending the provisions of the Articles of Association.
20 c) Without the consent of the majority of independent supervisory board members, no resolutions should be adopted on the following issues:
- performances of any kind by the company and any entities associated with the company in favour of management board members;
- consent to the execution by the company or a subsidiary of a key agreement with an entity associated with the company, a member of the supervisory board or management board, or with their associated entities; and
- appointment of an auditor to audit the company’s financial statements.
Company’s comment: Owing to the scale of commercial and organisational relations between the Impel Group’s undertakings, the application of this rule would considerably hinder current operations. The Issuer devotes much attention to carrying out transactions between the Company and its related undertakings at arms’ length. In addition, Impel SA describes all transactions with related undertakings and stores the relevant documentation, in compliance with the requirements of Art. 9a of the Act on Corporate Income Tax (Dz.U. of 2000 No 54 item 654 as amended).
28. The supervisory board should operate in accordance with its by-laws, which should be publicly available. The by-laws should stipulate that at least two committees should be set up:
- audit, and
- remuneration.
The audit committee should consist of at least two independent members and at least one person possessing the relevant qualifications and experience in accounting and finance. The committee’s tasks should be specified in the board by-laws. The committees should present reports on their activities to the supervisory board every year. The company should then make these reports available to its shareholders
43. The auditor should be selected by the supervisory board on the recommendation of the audit committee, or by the general meeting on the recommendation of the supervisory board containing the audit committee recommendation. If an auditor other than the one recommended by the audit committee is chosen by either the board or the general meeting, detailed reasons should be given. Information on the selection of an auditing entity together with the relevant justification should be disclosed in the annual report.
Company’s comment: Within the Supervisory Board of Impel SA there is no audit committee – at the meeting held on December 19 th 2007 the Management Board of Impel SA handed over to the Supervisory Board Members the text of “Best Practices of WSE Listed Companies”, and after consultations with the Supervisory Board it will decide on the possibility of applying the above-mentioned rule.
Part b) DESCRIPTION OF THE GENERAL SHAREHOLDERS MEETING’S OPERATION AND FUNDAMENTAL POWERS, AND THE SHAREHOLDERS’ RIGHTS AND THE MANNER OF EXERCISING THEM
The General Shareholders Meeting of Impel SA operates pursuant to the provisions of the Polish Code of Commercial Partnerships and Companies, the Company’s Articles of Association, and the Rules for the General Shareholders Meeting of Impel SA.
The General Shareholders Meeting is convened by way of an announcement in Monitor Sądowy i Gospodarczy.
Shareholders who submitted in the Company registered certificates of deposit, issued by the entity keeping a securities account in accordance with the provisions on public trading in securities, at least one week before the date of the General Shareholders Meeting, and would not collect them before the conclusion of the General Shareholders Meeting have a right to take part in the General Shareholders Meeting, as well as Members of the Management Board and Supervisory Board or other persons, if their presence results from the provisions of law. Furthermore, the Management Board may invite guests and experts, in the capacity of observers.
The General Shareholders Meeting may adopt resolutions only with regard to the issues put on the agenda, unless the whole share capital is represented at the General Shareholders Meeting and none of the attendees objected to passing a resolution.
Resolutions are adopted by an absolute majority vote, unless the Articles of Association or mandatory legal provisions provide for stricter requirements regarding adoption of a given resolution. Voting over resolutions is open, except for the circumstances referred to in Art. 420 of the Polish Code of Commercial Partnerships and Companies, i.e. during elections and when voting over motions regarding dismissal of members of the Company ‘s bodies or liquidators, over motions regarding holding members of the Company’s bodies or liquidators liable as well as when voting over personnel issues, and at a request of even one of the shareholders, present or represented at the General Meeting of Shareholders. Resolutions regarding a material change in the scope of the Company’s business are always adopted by open voting by roll call.
Participants of the General Shareholders Meeting have a right to object to the Chairman’s decision regarding disciplinary issues. In the case of objection the General Shareholders Meeting resolves to sustain or revoke the Chairman’s decision.
At each item on the agenda and with regard to each disciplinary issue a participant of the General Shareholders Meeting has a right to one address and one reply. The Chairman may limit the time of address to 5 minutes and the time of reply to 3 minutes.
Participants of the General Shareholders Meeting have a right to propose changes and addenda to draft resolutions put on the agenda of the General Shareholders Meeting – by the time of closing discussion on the item on the agenda including the draft resolution to which such proposal applies. Proposals accompanied by a brief justification should be submitted to the Chairman in writing, separately for each draft resolution, and specifying the name of the person putting forward the proposal.
In 2007, the General Shareholders Meetings of Impel SA were held on May 21 st and September 17 th, at the Company’s registered seat. The General Shareholders Meetings were convened by the Company’s Management Board. The shareholders of Impel SA did not place a request to convene the General Meeting. The sessions of the general Shareholders Meeting were not cancelled or discontinued. Members of the Company’s Management Board and Supervisory Board were present at the sessions.
All resolutions passed by the General Shareholders Meeting of Impel SA in 2007 are available on the Company’s website.
Part c) COMPOSITION AND RULES OF OPERATION OF THE COMPANY’S MANAGEMENT AND SUPERVISION BODIES AND THEIR COMMITTEES
MANAGEMENT BOARD
The Management Board of Impel SA operates pursuant to the provisions of the Polish Code of Commercial Partnerships and Companies, the Company’s Articles of Association, and the Rules for the Management Board of Impel SA. In accordance with the Articles of Association the Management Board is composed of three to seven members. The list of the Management Board Members and their positions are determined by the Supervisory Board. The term of office of the Management Board lasts for three subsequent years. The mandate of a Member of the Management Board expires on the date of the General Shareholders Meeting which approves the financial statements for the last full financial year during which the function of a Management Board Member was fulfilled.
The Management Board powers include managing all Company’s activities except for the issues which, pursuant to the provisions of the Polish Code of Commercial Partnerships and Companies or the Company’s Articles of Association, fall within the exclusive competence of the General Shareholders Meeting or the Supervisory Board. Respective Members of the Management Board manage respective areas of the Company’s business entrusted to them, and their work is coordinated by the President of the Management Board.
Resolutions of the Management Board are passed by a simple majority vote. Each Member of the Management Board is individually authorised to make declarations on behalf of the Company, with the reservation that two Members of the Management Board jointly are authorised to
assume financial obligations concerning the funds obtained as a result of public issue of the company’s shares.
Scope of operation of the Management Board of Impel SA in 2007
The Company’s Management Board operated pursuant to the provisions of the Polish Code of Commercial Partnerships and Companies, the Articles of Association, and the Rules for the Management Board of Impel SA, and in compliance with the rules of “Best Practices in Public Companies in 2005”.
When taking decisions on issues regarding the Company the Members of the Management Board acted within the limits of justified economic risk, i.e. having considered all information, analyses, and opinions which in the Management Board’s reasonable judgement should have been taken into account in a given case with respect to the Company’s interest. Upon determination of the Company’s interest they took into account the interests, justified in a long tem perspective, of its shareholders, creditors, employees, and other entities and persons cooperating with the Company in the scope of its business operations as well as the interest of local communities.
The Management Board acted with extreme care to conclude transactions with shareholders and other persons whose interests affected the Company’s interest at arm’s length.
Remunerations for Members of the Management Board were determined on the basis of transparent procedures and rules, taking into consideration their motivational nature and assurance of effective and smooth management of the Company. Remunerations met the criteria for the scope of accountability resulting from the fulfilled function, remaining in a reasonable relation to the level of remuneration of management board members in similar companies on a comparable market. The total amount of all remunerations as well as individual amounts of remuneration of each Member of the Management Board were disclosed in the Company’s annual report.
In 2007 the following personnel changes took place in the composition of the Management Board of Impel SA:
As at the date of publication of this report the composition of the Management Board is as follows:
|
Name |
Position |
Year of the first appointment |
Year of appointment for the present term |
Year of the term expiry |
|
Grzegorz Dzik |
President, General Director |
2004 |
2007 |
2010 |
|
Józef Biegaj |
Member, Commercial Director |
2005 |
2005 |
2008 |
|
Wojciech Rembikowski |
Member, Financial Director |
2007 |
2007 |
2010 |
SUPERVISORY BOARD
The Supervisory Board of Impel SA operates pursuant to the provisions of the Polish Code of Commercial Partnerships and Companies, the Company’s Articles of Association, and the Rules for the Supervisory Board of Impel SA. Pursuant to the Articles of Association the Supervisory Board consists of five members, including Chairman, Deputy Chairman, and Secretary. Members of the Supervisory Board are appointed and dismissed in the following manner:
The Supervisory Board exercises permanent supervision over the Company’s operations in all their areas.
Members of the Supervisory Board are appointed for the common term lasting three subsequent years. The mandate of a Supervisory Board Member, appointed before the end of a given term of the Supervisory Board expires upon expiry of mandates of the other Members of the Supervisory Board.
The Supervisory Board adopts resolutions if at least a half of its members are present at the meeting and all members have been invited. Resolutions of the Supervisory Board are passed by an absolute majority vote. In the case of a deadlock (equal number of votes), the Chairman of the Supervisory Board has the casting vote.
Voting is open, except for voting on appointment, dismissal or suspension of a Member of the Management Board.
The Supervisory Board holds its meetings as required, however, at least once a quarter.
The Rules for the Supervisory Board of SA do not provide for the functioning of an audit committee or a remuneration committee.
The scope of operation of the Supervisory Board of Impel SA in 2007
The Company’s Supervisory Board operated pursuant to the provisions of the Polish Code of Commercial Partnerships and Companies, the Articles of Association, and the Rules for the Supervisory Board of Impel SA and in compliance with the rules of “Best Practices in Public Companies in 2005”.
The meetings of the Supervisory Board took place on a regular basis, and the selected members of the Management Board participated in them. In 2007 the Supervisory Board held 7 meetings. The Management Board provided the Supervisory Board with sufficient information about all important issues regarding the Company’s operations. At the Supervisory Board’s meetings resolutions were adopted regarding the issues put on the agenda sent to Members of the Supervisory Board in the notification of the meeting.
The Supervisory Board focused on the issues of crucial importance for the operation of Impel SA.
Having got acquainted with the financial statements of Impel SA and the Impel Group the Supervisory Board made a brief assessment of the Company’s situation, as part of the Supervisory Board’s report on exercising supervision over the Company in 2006. Concurrently, it stated that the situation of the whole Impel Group, both regarding its market position and achieved financial results, was satisfactory. Members of the Supervisory Board expressed also their opinion on the Management Board’s proposal regarding profit distribution for 2006.
Remunerations for the Supervisory Board Members did not represent a material cost item in the Company’s operations, and they did not affect significantly its financial results. The total amount of all remunerations, and individual amounts for each Member of the Supervisory Board were disclosed in the annual report of Impel SA.
During the year 2007 and up to the date of this report’s publication no personnel changes occurred in the composition of the Supervisory Board. As at the date of publication of this report the composition of the Supervisory Board of Impel SA is as follows:
|
Name |
Position |
Year of the first appointment |
Year of appointment for the present term |
|
Krzysztof Obłój |
Chairman, Independent Member |
2003 |
2006 |
|
Piotr Pawłowski |
Deputy Chairman, Independent Member |
2003 |
2006 |
|
Sylwester Cacek |
Independent Member |
2004 |
2006 |
|
Andrzej Malinowski |
Independent Member |
2002 |
2006 |
|
Mariusz Matlakiewicz |
Secretary |
2002 |
2006 |
On March 20 th 2008 the Company received Mr Sylwester Cacek’s resignation from his membership in the Company’s Supervisory Board. The resignation was filed with effect on the day preceding the day of holding the next General Shareholders Meeting of Impel SA, the subject matter of which will be to consider and approve the Management Board’s Report on Operations and the financial statements for the accounting year from January 1 st 2007 to December 31 st 2007 . The resignation was filed on the grounds of assuming by Mr Sylwester Cacek new duties and the fact of his permanent residence outside Poland .
Part d) DESCRIPTION OF THE BASIC CHARACTERISTICS OF THE INTERNAL AUDIT AND RISK MANAGEMENT SYSTEMS ADOPTED IN THE COMPANY WITH REGARD TO DRAWING UP FINANCIAL STATEMENTS
The Management Board of Impel SA is responsible for the internal audit system in the Company and its effectiveness in the process of drawing up financial statements and periodical reports prepared and published pursuant to the provisions of the Regulation of the Council of Ministers of October 19 th 2005 on current and periodical information provided by issuers of securities.
In the process of financial reporting the Company’s effective internal audit and risk management systems operate by way of:
- rules set down in the Company’s internal procedures and the scope of reporting and accountability in respect of drawing up periodical reports and financial statements, including assurance of their quality and correctness, approval and publication;
- regular reviews of the Company’s published financial statements by a registered auditor.
The accounting function, managed by the Accounting Director of the Impel Group, reporting directly to the Financial Director – Vice-President of the Management Board of Impel SA, is responsible for drawing up the Company’s financial statements and periodical reports.
Books of accounts of the Group’s respective undertakings are kept by the Accounting Centre operating within Impel Accounting sp. z o.o., which renders accounting and bookkeeping services for the benefit of Impel SA and other Group’s undertakings. The books of accounts are kept in accordance with uniform rules and the Holding Chart of Accounts binding in the Group. As part of the Centre there operate respective accounting departments responsible for uniform transactions: GK1-asset accounting and employee-related settlements, GK2-purchase and sale accounting, and GK3-bank accounting and other. Such division ensures consistency of solutions applied in the Group.
For drawing up financial statements a uniform tool format is binding, applicable also for tax calculations (corporate income tax and VAT).
The structure of Impel Accounting sp. z o.o. includes a tax department which provides tax advice and carries out audits of the books of accounts of the Group’s undertakings. The tax department comprises also a transfer prices department whose tasks include supervision over the policy regarding transfer prices in the Group and exercising control over the applied prices as well as preparation of the relevant documentation.
In Impel SA strategies and long-term business plans are reviewed annually. The annual budget prepared for the following year is accepted by the Management Board of Impel SA and presented to the Company’s Supervisory Board. In the course of the year the Management Board analyses current financial results comparing them against the accepted budget by means of management accounting applied in the Company.
Every calendar month, upon closing of the books, the middle and senior level management staff in the accounting function, supervised by the Accounting Director of the Impel Group, analyse together the Company’s financial results against the budget assumptions.
Pursuant to the binding provisions of law the Company’s financial statements are subject to review or audit, respectively, conducted by an independent registered auditor. Reviews focus in particular on adequacy of financial data and the scope of necessary disclosures. The results of such review or audit are presented by the auditor to the Accounting Director of the Impel Group and to the Financial Director – Vice-President of the Management Board.
Following a review or audit conducted by a registered auditor financial statements and periodical reports are submitted to the Management Board of Impel SA for approval.
Approval of periodical financial reporting for publication takes place after its acceptance by the Financial Director – Vice-President of the Management Board.
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Impel Group
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fax: +48 (071) 711 00 01
