Statement of Compliance with Corporate Governance Rules at Polskie Górnictwo Naftowe i Gazownictwo S.A. – Contents

10. The operation of the General Meeting, its basic powers and description of shareholders’ rights, with the procedure for their exercise, in particular the rules stipulated in the Rules of Procedure for the General Meeting, to the extent not prescribed directly by law

10.1. Description of the operation of the General Meeting

The General Meeting operates in accordance with the provisions of the Commercial Companies Code, the Articles of Association and the Rules of Procedure for the General Meeting. The Rules of Procedure for the General Meeting stipulate, in particular, the rules of conduct for convening meetings and adopting resolutions. The Rules of Procedure for the General Meeting are available on the Issuer’s website at www.pgnig.pl.

The General Meeting may be convened as either Annual or Extraordinary, and is held at the Issuer’s registered office. The General Meeting may only adopt resolutions on matters included in the detailed agenda, unless the entire share capital is represented at the General Meeting and no one present at the meeting objects to the adoption of a resolution which has not been included in the agenda. The agenda is proposed by the Management Board or by the party convening the General Meeting.

Pursuant to the provisions of the Commercial Companies Code, a shareholder or shareholders representing at least one twentieth of the share capital may request that certain matters be placed on the agenda of the forthcoming General Meeting. Moreover, the State Treasury, as a Company shareholder, is entitled to submit such a request, irrespective of its share in the share capital. A General Meeting is convened by the Management Board, which in this respect acts:

  1. On its own initiative;
  2. At the request of a shareholder or shareholders representing at least one-twentieth of the share capital, made in written or electronic form;
  3. At the request of the State Treasury as a Company shareholder, irrespective of its interest in the Company's share capital, made in written or electronic form;
  4. At the request of a Supervisory Board member appointed pursuant to Par. 36.1 of the Articles of Association (independent member), made in written or electronic form,
  5.  at the written request of the Supervisory Board.

If the Management Board does not convene the General Meeting within two weeks from the date of receiving the relevant request, the registry court may authorise the shareholders to convene an Extraordinary General Meeting.

Shareholders representing at least half of the share capital or at least half of the total vote may convene an Extraordinary General Meeting.

The Supervisory Board may convene an Annual General Meeting if the Management Board fails to do so within the time limit specified in the Commercial Companies Code or the Articles of Association, or an Extraordinary General Meeting, if the Supervisory Board deems it advisable.

General Meetings are convened by publishing notice on the Company’s website and in any other form prescribed for the purposes of current disclosures under the Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organised Trading, and Public Companies.

The notice should be published at least twenty-six days before the date of the General Meeting.

The Annual General Meeting is convened by the Management Board once a year, no later than within six months following the end of the financial year.

Votes at the General Meeting are cast in an open ballot. A secret ballot is ordered when voting on the election or removal from office of members of the Issuer’s governing bodies or on appointment of its liquidator, on bringing members of the Issuer’s governing bodies or its liquidator to account, and on personnel matters. Furthermore, a secret ballot is ordered if at least one shareholder present or represented at the General Meeting so demands.

The General Meeting adopts resolutions regardless of the number of shares represented at the meeting, unless the provisions of the Commercial Companies Code or the Articles of Association provide otherwise.

Any shareholder is entitled to object to a resolution of the General Meeting, and in accordance with the Rules of Procedure for the General Meeting, should be given an opportunity to concisely present the reasons for such objection. During the Company’s General Meeting, each shareholder may submit draft resolutions for the items on the agenda.

A General Meeting is opened by the Chairperson of the Supervisory Board or the Deputy Chairperson of the Supervisory Board, or in the event of their absence, by the President of the Management Board or a person appointed by the Management Board. The person opening the General Meeting should procure that the Chairperson of the Meeting is immediately elected and should refrain from any decisions on the substance of matters or on procedural issues. The Chairperson of the General Meeting is elected by secret ballot. The Chairperson’s role is to ensure that the meeting proceeds smoothly and that the rights and interests of all the shareholders are respected. The Chairperson should not resign from their function without a sound reason, and may not unreasonably delay the signing of the minutes of the General Meeting.

Apart from the shareholders, the following persons are entitled to participate in the General Meeting:

  1. Members of the Management Board and Supervisory Board, as well as candidates to the Supervisory Board (if the General Meeting is to deal with the appointment of a member or members of the Supervisory Board). The General Meeting may limit the right of Supervisory Board candidates to speak, to issues related directly to the candidacy;
  2. Guests invited by the body convening the General Meeting, as well as experts, including auditors of financial statements and members of the Company’s legal service, invited to present their opinions on and provide clarification of the issues included in the agenda, with the proviso that their right to speak may be limited by the General Meeting to those items on the agenda about which they have been invited;
  3. Notaries public drawing up the minutes of the General Meeting.

Short breaks in the meeting (technical breaks), which do not constitute adjournments, may be ordered by the Chairperson, provided that they are not aimed at hindering the exercise of rights by the shareholders.

10.2. Description of key powers of the General Meeting

The General Meeting is the Issuer’s constituent body and has the power to adopt resolutions on the following matters:

  1. Review and approval of the financial statements for the preceding financial year and the Directors’ Report on the Issuer’s operations;
  2. Approval of performance of duties by members of the Issuer’s governing bodies;
  3. Distribution of profit or coverage of loss;
  4. Determination of the dividend record date or a decision on payment of dividend in instalments;
  5. Appointment and removal of Supervisory Board members;
  6. Review and approval of the Group’s consolidated financial statements and the Directors’ Report on the Group’s operations for the preceding financial year;
  7. Suspension of members of the Management Board from their duties, or their removal from office;
  8. Disposal or lease of the Issuer’s business or its organised part, or creation of proprietary interests therein;
  9. Acquisition of non-current assets, including property, perpetual usufruct rights to property or interest in property with a value higher than the PLN equivalent of EUR 2,000,000;
  10. Disposal of non-current assets, including property, perpetual usufruct rights to property or interest in property, with a value higher than the PLN equivalent of EUR 1,000,000;
  11. Contribution to another company of non-current assets, including property, perpetual usufruct rights to property or interest in property, with a value exceeding the PLN equivalent of EUR 1,000,000;
  12. Conclusion by the Issuer of a loan, borrowing, surety or similar agreements with or for the benefit of a member of the Management or Supervisory Board, a commercial proxy or a liquidator;
  13. Increase or reduction of the Issuer’s share capital;
  14. Issue of convertible bonds or bonds with pre-emptive rights, issue of subscription warrants;
  15. Acquisition of the Issuer's own shares for the purpose of offering them to the Issuer’s employees or to persons who were employed by the Issuer or its related entities for at least three years;
  16. Mandatory buy-back of shares;
  17. Creation, use and liquidation of capital reserves;
  18. Use of statutory reserve funds;
  19. Decisions on claims for redress of any damage caused in connection with the Issuer’s formation or the exercise of management or supervisory duties;
  20. Merger, transformation or demerger of the Issuer;
  21. Relocation of the Issuer’s registered office abroad;
  22. Establishment of preference on shares;
  23. Establishment of an EU-registered company, transformation into or joining such company;
  24. Amendments to the Issuer’s Articles of Association and changes in its business profile;
  25. Dissolution and liquidation of the Issuer;
  26. Definition of the rules of remuneration for Supervisory Board members.
  27. Subscription, acquisition or disposal of shares in companies of the PGNiG Group which function, pursuant to generally applicable laws, as a distribution system operator or storage system operator, including definition of the terms and procedures for the disposal;
  28. Formation of a company, or acquisition of or subscription for shares in a company other than the company referred to in item 27 above, except if :
    1. made in exchange for the Company’s claims as part of settlement or arrangement proceedings;
    2. made with a view to implementing the strategy approved in accordance with Article 33.1.6a and related to a company whose business consists in:
      • production or generation of fuels or energy, or
      • trading in fuels or energy, or
      • transmission, distribution or transport of fuels or energy, or
      • construction of buildings and structures used for the production, generation, transmission, distribution or transport of fuels or energy, or
      • production or supply of steam, hot water or air for air-conditioning systems, or
    3. is related to a company in which the Company holds at least a 50% interest; or
    4. is related to acquisition of or subscription for shares in other companies which have not yet commenced operations; or
    5. is made with a view to implementing the strategy approved in accordance with Article 33.1.6a and related to the acquisition of or subscription for shares in a company that owns, as part of a holding company structure, shares in the companies referred to in Article 56.6.2.b; or
    6. is made in the primary or secondary trading of securities on the public market;
  29. disposal of shares in a company other than the company referred to in item 27 above, including definition of the terms and procedure for the disposal, except for:
    1. disposal of shares traded on the public market;
    2. disposal of shares held by the Company if the holding does not exceed 10% of the share capital of a given company;
    3. disposal of shares acquired in exchange for the Company’s claims as part of settlement or arrangement proceedings.

10.3. Shareholders’ rights at General Meetings and their exercise

Shareholders have the right to participate in the General Meetings and to exercise the voting rights attached to their shares.

Each shareholder of the Issuer has the right to participate in the General Meetings, with one share conferring the right to one vote.

Only persons who have been the Issuer's shareholders for at least sixteen days prior to the date of the General Meeting (the record date for participation in the General Meeting) are entitled to participate in the General Meeting. The record date for participation in the General Meeting is the same for the holders of rights under bearer shares and under registered shares.
Holders of rights under registered shares or provisional certificates as well as pledgees and usufructuaries holding voting rights are entitled to participate in the General Meeting, provided that they are entered in the share register on the record date for participation in the General Meeting.

Bearer shares in certificated form entitle their holders to participate in the General Meeting if the share certificates are submitted with the Company no later than on the record date for participation in the General Meeting and are not collected prior to the end of that day. In place of their shares, a shareholder may submit a document confirming that their shares have been deposited with a notary public, bank or investment firm having its registered office or a branch in the European Union, or in a state which is a party to the treaty on the European Economic Area, as indicated in the notice of the General Meeting. The document should specify the serial numbers of the share certificates and should state that the share certificates will not be released prior to the end of the record date for participation in the General Meeting.

The list of entities entitled to participate in the General Meeting as holders of rights under bearer shares is determined based on the shares submitted with the Company and on a list prepared by Krajowy Depozyt Papierów Wartościowych S.A. (Polish National Depository for Securities), in accordance with the provisions of the Act on Trading in Financial Instruments.

Shareholders may participate in the General Meetings and exercise their voting rights in person, through a representative or through a proxy. Powers of proxy should be granted in written or electronic form. A written or electronic document confirming the right to represent a shareholder at the General Meeting is deemed legally valid and needs no other confirmation, unless the Management Board or the Chairperson of the General Meeting has doubts, prima facie, about its authenticity or validity.

Shareholder(s) representing at least one twentieth of the Issuer’s share capital, as well as the State Treasury (irrespective of its equity interest in the Issuer), may demand that the General Meeting be convened, provided that they submit the request in a written or electronic form. If the Management Board fails to convene the General Meeting at the request of the shareholder(s) within two weeks from the date the request was submitted, the registry court may, after demanding a relevant representation from the Management Board, authorise the shareholder(s) to convene the meeting. Additionally, shareholders representing at least one twentieth of the Issuer's share capital may request that certain matters be placed on the agenda of the forthcoming General Meeting. The same right is held by the State Treasury, irrespective of its equity interest in the Issuer. Any such request must be made in the Polish language and be sent to the Issuer in a written or electronic form. The request should contain the grounds for, or draft resolutions of, the proposed agenda items and should be submitted to the Management Board no later than 21 days before the planned date of the General Meeting. A shareholder or shareholders representing at least one twentieth of the Issuer’s share capital may, before a General Meeting, submit to the Company, in written or electronic form, draft resolutions on items which have been, or are to be, entered on the agenda of the General Meeting. Any item included in the agenda of the General Meeting may, at the request of the shareholder(s), be removed or abandoned only if a relevant resolution is passed by a majority of three quarters of votes and if all the shareholders that made the request and attend the meeting consent to such removal or abandonment.
The Company's Articles of Association do not provide for the possibility of participating in the General Meeting by means of electronic communication (including speaking at the General Meeting by means of electronic communication), or of exercising voting rights by postal ballot or by means of electronic communication.

At the request of shareholders representing at least one-fifth of the share capital, the Supervisory Board is elected by way of block voting. Shareholders at the General Meeting representing that portion of the shares resulting from division of the total number of represented shares by the number of Supervisory Board members, may form a block to elect one member of the Supervisory Board, but do not then participate in the elections of other members. Shareholders that belong to a block may exercise their voting rights exclusively within the block, which means that the shares held by them cannot be divided. The number of Supervisory Board members that may be elected within a block is determined by dividing the number of shares represented by the block by the minimum number of shares necessary to form a block. If a position on the Supervisory Board that should be filled by an appropriate block remains vacant, it is filled by the vote of all shareholders not participating in the block voting.

At the General Meeting, the Management Board is required to provide shareholders – at their request – with information on the Issuer, if such information is needed to assess an item on the Meeting’s agenda. The Management Board may refuse to provide information if this could adversely affect the Issuer, its affiliate, or its subsidiary company or co-operative, especially through disclosure of any technical, trade or organisational secrets.

A Management Board member may refuse to provide information if this could lead to their criminal, civil or administrative liability.

In justified cases, the Management Board may provide the information in writing within two weeks of being requested to do so at the General Meeting.

An answer is deemed to have been given if the relevant information is available on the Issuer’s website in the section dedicated to shareholders' questions and answers to the questions.

Information on the Issuer may also be provided outside the General Meeting. Such information, along with indication of when and to whom it was provided, should be disclosed by the Management Board in writing in the materials to be presented at the next General Meeting. These materials need not include such information which has been made publicly available, including by way of current reports issued pursuant to Par. 38.1.12 of the Regulation, or in the information provided at the General Meeting.

A shareholder may require that a list of shareholders be sent to him/her free of charge by e-mail, may inspect the book of minutes or demand to be given copies of the resolutions of the General Shareholders Meetings certified as true copies by the Management Board.

Moreover, a shareholder may request to be provided with certified copies of proposals to the items included in the agenda one week before a General Meeting. Copies of the Directors' Report on the Company's operations and of the financial statements, along with copies of the Supervisory Board's report and the auditor’s opinion are provided to the shareholders at their request, not later than fifteen days before the Annual General Meeting.

At General Meetings, attending shareholders may propose procedural motions, including motions to change the sequence of items on the agenda, or to order a break. Each shareholder may also request that a matter be voted on by way of secret ballot.
The Issuer has its own website, where the following information is made available from the date of the convening of a General Meeting:

  1. Notice of the General Meeting;
  2. Information on the total number of Company shares and the number of votes attached to such shares as at the notice date, and on types of shares and the number of votes attached to the shares of each type (if such variety exists);
  3. The documents to be presented to the General Meeting;
  4. Draft resolutions or – if no resolutions are planned to be adopted – comments by the PGNiG SA Management or Supervisory Board on matters which have been placed on the agenda or are to be placed on the agenda prior to the General Meeting.

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