Corporate governance at PKN ORLEN

Corporate Governance

General Meeting

The powers and responsibilities of the General Meeting include in particular:

- Reviewing and approving the full-year financial statements of the Company, the Directors’ Report on the Company’s operations, the consolidated financial statements of the ORLEN Group, and the Directors’ Report on the ORLEN Group’s operations, for the previous financial year;

- Granting discharge to Members of the Management Board and the Supervisory Board in respect of their duties;

- Deciding on the allocation of profit or coverage of loss, as well as application of funds created from profit, subject to any special provisions which provide for a different application of such funds;

- Appointing Members of the Supervisory Board, subject to Art. 8.2 of the Articles of Association, and defining rules for their remuneration;

- Increasing and reducing the Company’s share capital, unless the Commercial Companies Code or the Articles of Association provide otherwise;

- Decisions concerning claims for redress of any damage caused upon formation of the Company or when managing or supervising the Company;

- Approving disposal or lease of, or creation of limited property rights in, the Company’s business or its organised part;

- Approving any disposal of real property, perpetual usufruct rights or interest in real property, whose net carrying amount exceeds one-twentieth of the Company’s share capital;

- Amending the Articles of Association;

- Creating and releasing the Company’s capital reserves, funds and special accounts;

- Deciding on cancellation of Company shares and buy-back of shares for cancellation and defining rules for their cancellation;

- Issuing convertible bonds, bonds with pre-emptive rights and subscription warrants;

- Dissolving, liquidating or transforming the Company, or merging it with another entity;

- Concluding a parent/subsidiary agreement within the meaning of Art. 7 of the Commercial Companies Code.

Rules governing the operation of the PKN ORLEN General Meeting and its powers are defined in the Company Articles of Association and the Rules of Procedure for the General Meeting of Shareholders of PKN ORLEN. The documents are available at the PKN ORLEN corporate website, at www.orlen.pl http://www.orlen.pl/EN/Company/Pages/CorporateBylaws.aspx and http://www.orlen.pl/EN/Company/SupervisoryBoard/Pages/default.aspx

Supervisory Board

The PKN ORLEN Supervisory Board exercises ongoing supervision over the Company’s activities in all areas of the Company’s operations; in particular, the Supervisory Board’s powers are specified in the Commercial Companies Code and the Company Articles of Association. The Supervisory Board takes relevant action to ensure that the Management Board provides it with regular and exhaustive reports on all matters of importance and risks connected with the operations of PKN ORLEN, as well as the manner of managing such risks.

For more information on the PKN ORLEN Supervisory Board, visit: http://www.orlen.pl/EN/Company/SupervisoryBoard/Pages/default.aspx and http://www.orlen.pl/EN/InvestorRelations/GeneralMeetings/Pages/default.aspx

Supervisory Board Committees

The Supervisory Board of PKN ORLEN may appoint standing or ad hoc committees, to act as its collective advisory and opinion-giving bodies.

The PKN ORLEN Supervisory Board has appointed the following standing committees from among its members:

- the Audit Committee;

- the Strategy and Development Committee;

- the Nomination and Remuneration Committee;

- the Corporate Governance Committee.

On November 25th 2014, the Supervisory Board also resolved to appoint the Corporate Social Responsibility Committee.

  • Audit Committee

The Audit Committee has been established to advise the PKN ORLEN Supervisory Board on proper implementation of the budget reporting, financial reporting and internal control standards at the Company and the ORLEN Group, and to collaborate with the Company’s auditors. Duties of the Audit Committee include in particular:

- Monitoring the work of the Company’s auditors and giving recommendations to the Supervisory Board on selection of auditors for the Company and on auditor fees;

- Before each audit of the full-year financial statements − discussing the nature and scope of the audit with the Company’s auditors and monitoring the coordination of work between the Company’s auditors;

- Reviewing the Company’s interim and full-year financial statements (separate and consolidated).

  • Strategy and Development Committee

The Strategy and Development Committee’s role is to provide the Supervisory Board with opinions and recommendations regarding any planned investments and divestments with a potentially material effect on the Company’s assets. Duties of the Strategy and Development Committee include in particular:

- Assessing the effect of proposed and actual investments and divestments on the Company’s assets;

- Reviewing actions, contracts, letters of intent and other documents related to intended acquisition, sale, encumbrance or any other form of disposal of the Company’s material assets;

- Issuing opinions on all strategic documents submitted to the Supervisory Board by the Management Board;

- Issuing opinions on the Company development strategies and long-term budgets.

  • Nomination and Remuneration Committee

The Nomination and Remuneration Committee is responsible for supporting the Company’s strategic goals by providing the Supervisory Board with opinions and recommendations regarding the Company’s management structure, including organisational solutions, remuneration schemes and choice of personnel with qualifications relevant to the Company’s success. Duties of the Nomination and Remuneration Committee include in particular:

- Initiating and providing opinions on the process of nominating Management Board members;

- Issuing opinions on management solutions proposed by the Management Board, designed to ensure efficient, coherent and secure management of the Company;

- Periodically reviewing and recommending rules of incentive remuneration schemes for Management Board members and senior management staff in the light of the Company’s best interests;

- Periodically reviewing the remuneration system for Management Board members and management staff reporting directly to Management Board members, including management contracts and incentive schemes, and submitting to the Supervisory Board proposals concerning such contracts and schemes in the context of the Company’s strategic objectives;

- Submitting to the Supervisory Board opinions on the grounds for awarding performance-based remuneration in view of performance of the Company’s objectives and targets;

- Assessing HR management systems in place at the Company.

  • Corporate Governance Committee

The Corporate Governance Committee is responsible for:

- Implementing corporate governance standards;

- Submitting to the Supervisory Board recommendations on introduction of corporate governance standards;

- Issuing opinions on corporate governance documents;

- Assessing reports on compliance with corporate governance standards drafted for the Warsaw Stock Exchange;

- Issuing opinions on proposed amendments to the Company’s corporate documents and drafting such amendments for the Supervisory Board’s own documents;

- Monitoring Company management procedures in terms of compliance with legal and regulatory requirements, including the 'Core Values and Standards of Conduct of PKN ORLEN' and corporate governance principles.

  • Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee is responsible for supporting the Company’s strategic goals by incorporating social, ethical and environmental objectives in its operations and relations with stakeholders. The Committee also supervises the implementation of the Corporate Social Responsibility Strategy and monitors corporate management practices for compliance with the 'Core Values and Standards of Conduct of PKN ORLEN'. The Committee’s responsibilities further include a periodic assessment of the Company’s CSR activity and approval of the annual CSR report.

For more information on the committees, see the Rules of Procedure for the Supervisory Board at http://www.orlen.pl/EN/Company/Pages/CorporateBylaws.aspx.

Management Board

The Management Board has authority over all matters at PKN ORLEN which are not reserved for other governing bodies of the Company under the Commercial Companies Code or the Articles of Association. All Management Board Members are obliged and authorized to manage the Company’s affairs.

All matters falling outside the scope of the ordinary course of business require a resolution by the Management Board. However, the Management Board’s approval is not required for actions taken as part of another action already approved by the Management Board, unless otherwise stated in a resolution of the Management Board. Ordinary course of business covers all activities pertaining to trade in fuels as defined in the Company Articles of Association (i.e. crude oil, petroleum products, biocomponents, biofuels and other fuels, including natural gas, industrial gas and fuel gas), and all other activities not listed in the Rules of Procedure for the Management Board.

The Management Board is obliged to provide regular and exhaustive information to the Supervisory Board on all matters of importance and risks connected with the operations of PKN ORLEN, as well as the manner of managing such risks. The Management Board is also obliged to prepare and adopt the Company’s annual and long-term budgets and development strategies, whose form, scope and submission dates are defined by the Supervisory Board. In addition, the PKN ORLEN Management Board is obliged to prepare and present to the Supervisory Board the full-year financial statements of PKN ORLEN and the full-year financial statements of the ORLEN Group for the past financial year.

For more information, see the Rules of Procedure for the Management Board at http://www.orlen.pl/EN/Company/Pages/CorporateBylaws.aspx.       

The rules of operation for PKN ORLEN’s governing bodies are specified in:

  • The Company’s Articles of Association,
  • Rules of Procedure for the General Meeting of Shareholders of PKN ORLEN,
  • Rules of Procedure for the Supervisory Board of PKN ORLEN, and
  • Rules of Procedure for the Management Board of PKN ORLEN.

The documents are available on PKN ORLEN’s website, at www.orlen.pl, in the Company section (under Corporate bylaws) and Investor Relations section (under General Meetings).

For an amendment to PKN ORLEN’s Articles of Association to take effect, a relevant resolution must be adopted by the General Meeting and a relevant entry must be made in the Register of Entrepreneurs. The General Meeting’s resolution to amend the Articles of Association is passed by a majority of three-quarters of votes. The General Meeting may authorise the Supervisory Board to prepare the consolidated text of the amended Articles of Association or to make other wording amendments, as specified in a resolution of the General Meeting. Following entry of the amended Articles of Association in the Register of Entrepreneurs, a relevant current report on the subject is published by PKN ORLEN.

Sections Company and Investor Relations of the PKN ORLEN corporate website contain the most current information on the composition of the Company’s Supervisory Board and Management Board, as well as annual reports on the Company’s compliance with the Code of Best Practice for WSE Listed Companies.