Rules of Procedure of the Supervisory Board (consolidated text)

GENERAL PROVISIONS

 

§ 1

The present Rules of Procedure of the Supervisory Board hereinafter referred to as the "Rules of Procedure" shall specify the organization and means of operation of the Supervisory Board hereinafter referred to as the "Supervisory Board" or the "Board" of BUDVAR Centrum Spółka Akcyjna hereinafter referred to as the "Company".

 

§ 2

The Supervisory Board shall act pursuant to the Commercial Companies Code and other legal regulations, the Company Articles of Association, resolutions of the General Meeting and provisions of the Rules of Procedure.

 

DUTIES AND POWERS OF THE SUPERVISORY BOARD

 

§ 3

  1. The special powers of the Supervisory Board shall include:
    1. approving economic and financial plans of the Company and the inspection of their performance;
    2. granting permission to take up, acquire or dispose of shares or stocks in other companies and also to join a civil law partnership,
    3. granting permission to acquire and dispose of real property, perpetual usufruct or shares in real property;
    4. granting permission to dispose of the Company assets of which value shall exceed 10% of the Company equity capital according to the last financial statement announced to the public;
    5. granting permission to incur liabilities or adopt a regulation of which amount - on the basis of one or more connected legal actions - shall exceed 10% of the Company equity capital according to the last financial statement announced to the public unless those actions were foreseen in the approved economic and financial plan of the Company or refer to acquisition of raw materials and materials for production;
    6. granting permission to the members of the Management Board to conduct competitive business activities to the Company, participate in a competitive company, acquiring shares or stocks entitling to at least 10% of votes during the meeting of stockholders or the general meeting of a competitive company and also a membership in a competitive Company authorities or any other competitive enterprise;
    7. determination of rules and conditions regarding the remuneration of the Company Management Board and also of its members;
    8. electing an expert auditor to examine the Company financial statement and of the group;
    9. preparation and submitting to the General Meeting a brief assessment of the Company situation every year with regard to the assessment of internal supervision system and risk management system important to the Company;
    10. granting permission to the Company to conclude a contract/transaction with an affiliated entity excluding typical transactions concluded on market terms and conditions within the Company operational activities conducted with the affiliated entity in which the Company owns a majority capital share;
    11. preparing an assessment of its work and submitting it once a year to the Ordinary General Meeting;
    12. considering and giving opinions about issues that shall be the subject of the General Meeting's resolutions.
  2. The Supervisory Board appoints the Audit Committee whose tasks shall include the following:
    1. to monitor the financial reporting process,
    2. to monitor the effectiveness of the systems of internal control, internal audit and risk management,
    3. to monitor the financial statement audit process,
    4. to monitor the independence of chartered auditors.
  3. The Supervisory Board Committees should submit an annual report on its operation to the Supervisory Board. Those reports should be made available to stockholders.

 

RIGHTS AND OBLIGATIONS OF THE MEMBERS OF THE SUPERVISORY BOARD

 

§ 4

  1. Member of the Supervisory Board should first of all have regard to the Company interests.
  2. Members of the Supervisory Board cannot without the permission of the Supervisory Board conduct competitive business activities in relation to the Company, participate in a competitive company, acquire shares or stocks entitling to at least 10% of votes during the meeting of stockholders or the general meeting of the competitive company and also become a member of the competitive Company authorities or any other competitive enterprise.
  3. Member of the Supervisory Board should enable the Company Management Board to publicly and according to proper procedures provide information about disposing of or acquiring stocks of the Company or a company dominant or subsidiary to the Company and also about transactions with such companies if they shall be important for its financial situation.
  4. Member of the Supervisory Board delegated by a group of stockholders for permanent supervision should submit a detailed report of the performed function to the Supervisory Board.
  5. Member of the Supervisory Board shall be obliged to keep secret the information regarding the Company of which unauthorized disclosure could prejudice the Company.
  6. Members of the Supervisory Board should be present at the General Meeting in the composition enabling to give competent answers to questions posed during the General Meeting. If one member of the Supervisory Board cannot be present at the General Meeting, he shall obliged to inform the Management Board about it explaining the reasons for the absence within at least 3 working days prior to the date of the General Meeting, and if the circumstances justifying the absence shall occur later - with immediate effect.
  7. Member of the Supervisory Board may resign from his function only for an important reason. The member of the Supervisory Board who resigned, shall be obliged to inform about it the Management Board in writing. Member of the Supervisory Board should not resign from the function during the term of office if it could prejudice the operation of the Supervisory Board and in particular if it could prejudice the timely adoption of an important resolution.

 

ORGANIZATION OF THE SUPERVISORY BOARD AND PERFORMANCE OF ITS DUTIES

 

§ 5

  1. The chairperson of the Supervisory Board and the vice- chairperson of the Supervisory Board shall be elected by the members of the Supervisory Board from among themselves.
  2. The duties of the chairperson of the Supervisory Board and in the case of his absence - the vice- chairperson, shall involve convening the session of the Supervisory Board and managing its works and in particular:
    1. giving the floor during the Board sessions, ordering voting and announcing its results,
    2. signing the correspondence on behalf of the Board.
  3. The Supervisory Board may establish a position of a secretary of the Supervisory Board and vest one of the Board members with it. The Secretary of the Board shall supervise the organizational, technical and documentary assistance of the Board operations. Within the scope of performing those functions, the Secretary shall be directly responsible to the chairperson of the Board.
  4. The Audit Committee should be comprised of at least two independent members and at least one having qualifications and experience regarding accountancy and finances.
  5. In the case of the Supervisory Board delegating its members to independent performance of specified supervisory duties, those members shall be entitled to enter the Company, request reports and explanations from the Company Management Board and its employees, inspect every department of the Company enterprise and to revise the property and examine its books and documents within the scope specified in the Supervisory Board resolution.
  6. Member of the Supervisory Board delegated by a group of stockholders to permanent individual supervisory activities and the member of the Supervisory Board delegated by the Board to individual performance of supervisory activities shall be obliged to submit a detailed report of their performed functions to the Board.

 

§ 6

  1. Members of the Supervisory Board should undertake relevant actions in order to obtain from the Company Management Board regular and exhaustive information about all important issues concerning the Company activities and about the risk connected with the conducted activity and means for managing that risk.
  2. The Management Board shall be obliged to make available to the Board its offices, equipment, materials and services necessary to perform its duties. The Management Board shall appoint from among the Company employees persons directly responsible for technical assistance and documentation of the Board operations. Contacts with the Company Management Board within this scope shall be maintained by the chairman or the secretary of the Board. Costs of operations of the Supervisory Board shall be born by the Company.

 

§ 7

  1. Election of an entity to perform the function of an expert auditor within the Company should be made in such a way as to provide independence while performing his duties.
  2. Election of an entity to perform the function of an expert auditor should be made by the Supervisory Board after submitting recommendations by the Audit Committee. Other selection than recommended by the Audit Committee should be justified in detail. Information regarding the entity to perform the function of an expert auditor with justification should be included in the annual report.
  3. In order to ensure independent opinion, the Company should change expert auditors at least once in five years. Changing of expert auditor shall also involve changing of a person performing the examination. Furthermore, the Company should not use the services of the same entity performing examinations for longer periods.
  4. The entity performing currently or within the period the examination refers to the function of an expert auditor in the Company or in subsidiaries, cannot be the auditor for special issues.

 

CONVENING MEETINGS AND CONDUCTING SESSIONS

 

§ 8

  1. Meetings of the Supervisory Board shall be convened if needed, however, at least once a quarter.
  2. The first meeting of the Supervisory Board of which chairman was not chosen, shall be convened by the Company Management Board.
  3. Meetings of the Supervisory Board shall be held in the Company registered office. For important reasons, the entity convening the meeting of the Board may specify other location of the meeting.
  4. Meetings of the Supervisory Board shall be convened by means of written notices which should be sent to the members of the Board within at least 3 days prior to the date of the meeting. The notice should include the agenda, location and date of the meeting. Materials regarding issues included in the agenda shall be sent with the notice. In the case of non-observance of this condition, the chairperson of the Supervisory Board session may take a decision not to consider this issue for the reason of lack of materials or untimely delivery.
  5. Notices shall be sent by means of a registered letter, fax or electronic mail to the addresses and numbers indicated to the chairperson of the Supervisory Board by its members. Notices shall be also submitted to the Company Management Board.
  6. Meetings of the Supervisory Board with the exception of issues referring directly to the Management Board or its members, in particular: dismissal, responsibility and determination of remuneration should be available and open to the members of the Management Board.

 

§ 9

  1. The chairperson of the Board, and in the case of his absence - the vice-chairperson, shall be obliged to convene the meeting of the Supervisory Board upon a written request submitted by at least two members of the Board or the Management Board. Request to convene a meeting of the Supervisory Board should be submitted to the president of the Board and In case of his absence - the vice-president and should include the suggested agenda. Meeting should be convened within a week since the day of submitting the request and on a day within two weeks since the request was submitted.
  2. If the meeting of the Supervisory Board shall not be convened with the agenda indicated in the notice within the time limits specified in § 8 item 4, the entity or entities submitting the request shall be entitled to convene the meeting of the Supervisory Board.
  3. The notice about the meeting of the Supervisory Board shall not be required if the date and agenda of the next meeting were settled during the previous meeting on which all members of the Board were present and they expressed their consent not to submit notices. It shall not refer to submitting notices to the Company Management Board.
  4. Meeting of the Supervisory Board may be held without formal notice if all members of the Board shall be present and express their consent to convene the meeting and include specified issues in the agenda.

 

§ 10

  1. The agenda of the Supervisory Board session may be changed or supplemented only when all members of the Board shall be present at the meeting and express their consent to the above and also when undertaking of specified action by the Supervisory Board shall be necessary to prevent the Company from damage and also in the case of a resolution of which the subject shall be the assessment whether there is a conflict of interests between a member of the Supervisory Board and the Company.
  2. Each member of the Supervisory Board present at the meeting shall be entitled to speak regarding all issues included in the agenda. It shall also refer to the members of the Company Management Board.
  3. Member of the Supervisory Board should inform the Supervisory Board about the existing conflict of interests or the possibility of its occurrence and refrain from speaking during discussions and from voting upon a resolution regarding the issue which created the conflict of interests.
  4. Information about personal, actual and organizational relation of the member of the Supervisory Board with a specified stockholder and in particular with the majority stockholder should be made available to the public.

 

ADOPTING RESOLUTIONS

 

§ 11

  1. Members of the Supervisory Board may participate in adopting resolutions by the Board by casting their votes in writing via other member of the Supervisory Board. Casting a vote in writing cannot refer to issues included in the agenda during the session of the Supervisory Board.
  2. The Supervisory Board may adopt resolutions in writing or by means of direct remote communication. A resolution shall become valid if all members of the Supervisory Board were informed about the content of the resolution draft.
  3. In order to adopt a resolution in writing, it shall be necessary to inform all members of the Supervisory Board about the content of the resolution draft by means of a registered letter, fax or electronic mail. Casting a vote in written voting shall be effected by sending to the Company address a registered letter, fax or electronic mail including the position of the member of the Supervisory Board prior to the date indicated in the registered letter, fax or electronic mail with the resolution draft. Lack of answer of the member of the Supervisory Board within the indicated time limits shall be considered as a vote "against".
  4. Adopting resolutions according to item 1 and 2 cannot refer to the election of the chairperson and vice-chairperson of the Supervisory Board, to the appointment of a member of the Management Board and dismissal or suspension of those persons.
  5. The Supervisory Board shall adopt resolutions with the absolute majority of votes.
  6. Without the permission of the majority of independent members of the Supervisory Board, resolutions regarding the following issues should not be adopted:
    1. benefits for the members of the Management Board of any right by the Company or any other companies affiliated to the Company,
    2. expressing permission to conclude by the Company or a subsidiary an important contract with an entity affiliated to the Company, member of the Supervisory Board or the Management Board and to affiliated entities,
    3. election of an expert auditor for performing examination of the Company financial statement and the group's financial statement.
  7. Remuneration of the members of the Management Board should be determined on the basis of clear procedures and principles with regard to its motivation character and providing effective and efficient management of the Company. Remuneration should correspond to the scale of the Company enterprise, remain in reasonable relation to the economic results and also should be connected with the range of responsibilities resulting from the performed function with regard to the level of remuneration of members of the Management Boards in similar companies on comparable market.
  8. Voting shall be open. Secret voting shall be ordered when electing and upon applications for dismissal of members of the Management Board, holding them liable and also upon personnel matters.

 

§ 12

  1. Minutes of the meeting of the Supervisory Board shall be prepared. The minutes should include location and date of the meeting, the agenda, first and last names of persons present at the meeting, course of the session, content of adopted resolutions and results and means of voting and also reservations and different opinions reported by members of the Board.
  2. The Minutes shall be signed by the chairperson of the Supervisory Board session and the secretary of the Supervisory Board if appointed. List of persons present at the meeting should be enclosed to the minutes.
  3. The Supervisory Board shall maintain a minute book and a book with its resolutions where the texts of the Board resolutions shall be kept signed by the chairperson and the secretary of the Board.
  4. Members of the Supervisory Board and the Management Board shall be entitled to familiarize with the content of the minutes prepared during the meetings of the Supervisory Board.

 

FINAL PROVISIONS

 

§ 13

These Rules of Procedure shall become effective on the day of their adoption by the Supervisory Board.