Regulations of the Supervisory Board of Izostal S.A.
I. GENERAL PROVISIONS
These regulations specify principles and the procedure of convening the Supervisory Board of IZOSTAL S.A. and its activities.
The following terms used in the regulations have the meaning given below:
1. Regulations - present regulations passed by the Supervisory Board
2. Company - IZOSTAL S.A.
3. Articles - articles of IZOSTAL S.A.
4. General Meeting - general meeting of IZOSTAL S.A.
5. Supervisory Board, Board - supervisory board of IZOSTAL S.A.
6. President - president of the Supervisory Board of IZOSTAL S.A.
7. Vice President - vice president of the Supervisory Board of IZOSTAL S.A.
8. Secretary - secretary of the Supervisory Board of IZOSTAL S.A.
9. Management Board - management board of IZOSTAL S.A.
10. Committee - committee formed by members of the Supervisory Board of IZOSTAL S.A.
11. President of the Committee - president of the committee formed by members of the Supervisory Board of IZOSTAL S.A.
II COMPOSITION AND THE TERM OF OFFICE OF THE SUPERVISORY BOARD
1. Supervisory Board is a collective body and is composed of five up to seven members.
2. Supervisory Board Members are appointed by the General Meeting.
3. Supervisory Board Members are appointed for a joint five-year term of office. (Joint Term).
4. Mandate of a Supervisory Board member expires:
1) upon the expiry of the term of office when the General Meeting is held during which the financial statement is approved and vote of approval is granted to Company's managing bodies for the last year of their work overlapping with a financial year,
2) upon the death of a Supervisory Board member,
3) as a result of a recall,
4) as a result of a resignation, with effect on the day on which a written statement on resignation is delivered to the Company.
5. The mandate of a Supervisory Board member appointed before the expiry of the Joint Term expires simultaneously with expiry of mandates of remaining Supervisory Board members.
6. Supervisory Board members may be recalled at any time before the expiry of the term.
7. A Supervisory Board Member should not resign from holding their function if it could have a negative effect on the functioning of the Supervisory Board, including the Supervisory Board's ability to pass resolutions.
III. PRESIDENT, VICE PRESIDENT, SECRETARY OF THE SUPERVISORY BOARD
1. At the first meeting of the new term the Supervisory Board appoints, in a secret ballot, the President, Vice President and Secretary of the Supervisory Board from among its members, by absolute majority of votes cast in the presence of at least half of the Supervisory Board members.
2. Supervisory Board may replace the person holding the position of the Supervisory Board President, Vice President and the Secretary during the term. A motion on recalling a Supervisory Board member from the position held must be combined with appointing a Supervisory Board member who will replace the person recalled from the position. The appointment is made through a secret ballot, by absolute majority of votes cast in the presence of at least half of the Supervisory Board members.
3. The President’s powers include:
1) managing and coordinating works of the Supervisory Board,
2) convening and chairing Supervisory Board meetings,
3) opening a General Meeting or indicating a person authorized to open and chair the meeting until a President of the General Meeting is appointed.
4. Vice President replaces the Supervisory Board President and chairs Supervisory Board meetings when the Supervisory Board President is not able to perform their duties, or does not wish to chair a Supervisory Board meeting.
5. Secretary's duties include:
1) exercising regular supervision over the keeping of Supervisory Board minute book and all documents concerning Supervisory Board activities,
2) maintaining regular contact with the Company's Management Board,
3) informing the Supervisory Board on the manner of implementing its resolutions,
4) signing Supervisory Board's outgoing correspondence.
6. Office assistance and technical services for the Supervisory Board are provided by the Management Board.
Should the number of the Supervisory Board members drop below the required five, the Supervisory Board President is obligated to initiate activities aimed at completing the composition of the Supervisory Board.
IV. SUPERVISORY BOARD PROCEDURES
§ 6 (Convening meetings)
1. Supervisory Board meetings are convened on an as-needed basis, however not less frequently than three times in a financial year.
2. The first meeting of a newly appointed Supervisory Board is convened by the Supervisory Board President of the previous term to be held on a day falling at the latest two weeks from the appointment of the Supervisory Board of the new term of office. Should the Supervisory Board President of the previous term fail to convene the meeting, the first meeting of the Supervisory Board is convened by the Company's Management Board.
3. Meetings of the Supervisory Board are convened by the President of the Supervisory Board.
4. President of the Supervisory Board ,and if it is impossible to contact the President or if they refuse to convene the meeting, the Vice President is obligated to convene it, also at the written request of the Management Board or a Supervisory Board Member. A meeting should be convened within two weeks from filing the request and should be held on a day falling not later than twenty one days from the expiry of the two-week deadline. Should it be impossible to contact the President, or should they refuse to convene the meeting under this procedure, the meeting is convened by the Vice President,
5. Supervisory Board meetings are convened based on a written invitation prepared by the Supervisory Board President to be effectively distributed to all Board members at least seven days before the date of the meeting. Notices may be distributed by electronic mail (provided that a Supervisory Board member gave a prior written consent thereto), to addresses given to the President by the remaining Supervisory Board members.
6. The invitation includes:
• Suggested agenda,
• draft resolutions,
• date and time of the meeting,
7. Supervisory Board meetings should be available and open for Management Board members except for matters concerning directly the Management Board or its members and in particular: recalling Management Board members, responsibility and determining remuneration.
§ 7 (Passing resolutions)
1. For resolutions to be valid, all Supervisory Board members must be invited to a Supervisory Board meeting, with the invitation meeting requirements defined in § 6 above.
2. Supervisory Board meeting is valid even if it was not convened based on a written notice provided that all its members grant their consent thereto on the day of the meeting at the latest and confirm it in writing or sign the attendance list. A resolution on a matter not included in the agenda may not be passed unless all Supervisory Board members attend the meeting and none of the members present raises an objection therereto.
3. Supervisory Board members may pass resolutions under a special procedure i.e.:
a) by casting their vote in writing through the agency of another Supervisory Board member. Votes in writing may be cast on issues which do not concern issues introduced to the agenda at the Supervisory Board meeting.
b) by circulation (written procedure),
c) through remote telecommunication means i.e. phone and fax.
4. Resolution passed by circulation (written procedure) referred to in item 3 letter b and through remote telecommunication means i.e. a resolution referred to in item 3 letter c is valid if all Supervisory Board members were advised on the content of the draft resolution.
5. For resolutions passed by circulation (written procedure) referred to in item 3 letter b, the date on which a resolution is passed is deemed the date on which the Supervisory Board President receives a resolution signed by the last of the Supervisory Board members participating in voting, including information whether a given member votes for, against or abstains. President of the Supervisory Board distributes a draft resolution by registered mail to all Supervisory Board members, and informs them that they expect the signed resolution to be sent back within 7 days from the date on which the draft resolution was distributed.
6. Resolution referred to in item 3 letter c is passed based on the following procedure and order:
1) President contacts all other Supervisory Board Members, either one by one or all at the same time (conference call),
2) President advises Board members on the draft resolution,
3) President obtains the consent of Supervisory Board members to pass a resolution by means of remote telecommunication means,
4) President waits for particular Supervisory Board members to cast their votes on a resolution through the agreed telecommunication means for a defined period of time which may not be shorter than 30 minutes counting from the moment a given Supervisory Board member is advised on the content of a draft resolution,
5) a failure to cast a vote within the defined period of time is tantamount to abstaining from voting.
6) President prepares minutes from voting,
7) minutes are signed at the next meeting by Supervisory Board members who participated in voting.
7. Passing resolutions under a special procedure may not apply to the election of the President and Vice President of the Supervisory Board, appointing a Management Board member, as well as recalling or suspending those persons from their functions.
8. Agenda may not be changed or supplemented during the meeting it refers to unless all Supervisory Board members are present and consent to the agenda being changed or supplemented. This requirement does not apply if it is necessary for the Supervisory Board to take certain actions to protect the Company against loss, and in case of a resolution on assessing whether there is a conflict of interest between a Supervisory Board member and the Company.
§ 8 (Voting)
1. Supervisory Board passes resolutions by absolute majority of votes cast in the presence of at least half of the Supervisory Board members.
2. In the event of a tie vote, the vote of the Supervisory Board President is decisive, except for voting referred to in § 4 clause 2 above.
§ 9 (Conflict of Interests)
A Supervisory Board member should inform the Supervisory Board about an existing conflict of interest or a possibility that one will occur and refrain from discussion and abstain from voting on a resolution concerning a matter involving a conflict of interest.
§ 10 (Minutes)
1. Minutes are kept to record the course of Supervisory Board meetings.
2. Minutes should at least specify: the date of the meeting, names of Supervisory Board members and other persons present at the meeting, agenda, number of votes cast on particular resolutions, dissenting opinions and objections.
3. Minutes are signed by Supervisory Board President and the recording clerk. An attendance list signed by all Board members present at the meeting should be attached to the minutes. Should any Supervisory Board members refuse to sign the list, the President will include relevant information on the list and specify the reason for such a refusal.
4. Supervisory Board approves minutes of the previous Board meeting by a resolution.
5. Members absent acknowledge and agree at the next meeting to implement resolutions passed confirming it by a signature affixed to the minutes.
6. Minutes should be collected in a minute book.
7. Minutes are kept at the Company's seat.
V. DUTIES AND POWERS OF THE SUPERVISORY BOARD
§ 11 (General Rules)
Each Supervisory Board member should act in line with the Company's interests, and follow independent opinions, in particular they:
• should not demand or accept unjustified advantages which could have a negative impact on the independence of their opinions and judgments,
• should object clearly and express a dissenting opinion if they believe that a decision of the Supervisory Board is in conflict with the Company's interests.
§ 12 (Statutory powers)
1. The Supervisory Board supervises activities of the Company.
2. Supervisory Board powers include in particular:
1) examining and assessing the Company's financial statement,
2) examining and assessing the Management Board's report and the Management Board's proposals concerning distribution of profit or coverage of loss,
3) presenting the Annual General Meeting with a written annual report on the results of activities referred to in items 1) and 2),
4) preparing and presenting the Annual General Meeting with a brief assessment of the Company's situation, including assessment of the internal control system and the risk management system,
5) assessing its own work and presenting the assessment to the Annual General Meeting,
6) appointing and recalling Management Board members and suspending them,
7) determining the principles and the amount of remuneration for Management Board members,
8) granting consent for the Company to provide Management Board members with benefits other than those on account of remuneration for work,
9) approving the regulations of the Company's Management Board and the Organizational By-laws.
10) concluding contracts between the Company and Management Board members, and representing the Company in other issues related to work performed by a Management Board member in favor of the Company; in such cases the Company is represented by the President of the Supervisory Board, or other Supervisory Board members authorized by a Board's resolution - Company's declarations of will related to the performance or termination of such contracts are submitted based on the same procedure,
11) appointing a chartered auditor to audit the Company’s financial statement,
12) approving the Company's annual financial plans,
13) granting consent for the Company to acquire and dispose of real property, perpetual usufruct or share in real property,
14) considering and expressing opinions on motions or matters requiring resolutions of the General Meeting,
15) determining the manner of exercising a voting right in the managing bodies of companies in which the Company holds shares or stocks, on issues concerning:
a) amendment to the articles or memorandum of association,
b) increasing or decreasing the Company's capital,
c) mergers, transformations, dissolution or liquidation of the Company,
d) selling Company's shares or stocks,
e) selling or leasing the undertaking of the Company, establishing a usufruct right or selling the Company's real property,
16) establishing a consolidated text of the amended Company's articles, or introducing other editorial changes specified in a resolution of the General Meeting
17) granting consent for the Company to:
a) conclude a significant agreement with affiliated entities in the meaning of the regulation of the Minister of Finance issued based on art. 60 clause 2 of the act of July 29, 2005 on public offering and conditions of offering securities in an organized market, and public companies (Journal of Laws no. 184 item 1539 with further amendments) - from the moment the Company's shares are launched on the stock exchange and for so long as the Company remains a listed company, and subject to provisions of clause 2 item 10). Consent is not required for typical transactions concluded on an arms-length basis with a subsidiary entity in which the Company has a majority capital share, as a part of operating activity run by the Company. Consent for transactions concluded with a parent entity that are typical and are concluded on an arms-length basis as a part of the Company's operating activity may be expressed jointly for a given type of transactions in a given financial year without the need to pass Supervisory Board resolutions separately for each such transaction;
b) conclude long-term contracts incurring obligations for the Company in a period longer than one year, the value of each exceeds each time the equivalent of 20% of the equity as per the last approved financial statement of the Company, and which are not covered by the Company's financial plan approved by the Board;
c) raise credits and loans, and perform other legal activities aimed at obtaining debt financing if the total value of such an operation exceeds 20% on a one-off basis, or 50% of the Company's equity jointly in a financial year as per the last approved financial statement of the Company;
d) purchase, sell, rent, exchange, establish a pledge or a mortgage the Company's property if the total value of such an arrangement exceeds 30% of the Company's equity as per the last approved financial statement of the Company;
e) organize another company, subscribe or acquire and sell shares or stocks in other companies, except for cases when the subscription or acquisition is effected in exchange for the Company's liabilities as a part of bankruptcy proceedings with a possibility to reach an agreement or initiate enforcement proceedings,
18) from the moment the Company obtains the status of a public company: (1) preparing and presenting the Annual General Meeting with a brief assessment of the Company's situation, including assessment of the internal control system and the risk management system; (ii) performing annual assessment of the Supervisory Board's activities and presenting the results to the Annual General Meeting (self-assessment);
3. Remuneration of the Management Board should be related to its scope of duties and responsibilities arising from functions held, should correspond to the size of the Company and should remain reasonably proportional to its business results.
4. Supervisory Board may express opinion on all matters concerning the Company, and file motions and initiatives with the Company's Management Board, and at the General Meeting.
§ 13 (Rules for the performance of duties)
1. The Supervisory Board performs its obligations collectively, however it may delegate its members to individually perform certain supervisory activities.
2. For contracts concluded between the Company and Management Board members, the Supervisory Board may by virtue of a resolution authorize one or more of its members to perform such legal activities.
3. Members of the Supervisory Board exercise their rights and duties personally.
§ 14 (Co-operation with the Management Board)
1. Supervisory Board members take the necessary action to receive regular and exhaustive information about all significant matters concerning the Company's activity, risk related to the activity run and strategies for managing the risk.
2. Supervisory Board may at any time request the Management Board and the Company's employees to present reports, explanations, provide access to books and documents, and directly verify the Company's material situation and control the activity of plants; if such a review requires specialist knowledge, qualifications or specialist activities, the Board may obligate the Management Board to hire an expert to prepare an expert opinion for its use.
§ 15 (Confidentiality and loyalty principle)
1. Supervisory Board members are required to maintain the confidential character of all information concerning the Company's matters obtained while holding their functions.
2. Each Supervisory Board member will submit a written statement on confidentiality referred to in clause 1.
3. Supervisory Board members are obliged to be loyal to the Company and refrain from taking any action of competitive nature towards the Company i.e. in particular they cannot be members of managing bodies or partners in companies whose scope of activity is similar to that of the Company, except for activities taken within the Capital Group to which the Company belongs.
§ 16 (Participation in the General Meeting)
Supervisory Board members should participate in the General Meeting and the members present should be able to give a substantive response to questions asked during the General Meeting. It is obligatory for the Supervisory Board President to participate in the General Meeting.
§ 17 (The right to convene a General Meeting and request for particular matters to be included in the agenda)
1. Supervisory Board may file a written request with the Management Board for an Extraordinary General Meeting to be convened.
2. Supervisory Board convenes the Extraordinary General Meeting:
a) if the Management Board did not convene the Extraordinary General Meeting within the deadline specified in the Commercial Companies Code even though the request referred to in clause 1 was filed,
b) if it deems it necessary to convene an Extraordinary General Meeting.
3. Supervisory Board may convene the Annual General Meeting if it is not convened by the Management Board within the time limit specified.
§ 18 (Principles of appointing a Committee and its work)
1. Supervisory Board may appoint regular or ad hoc committees from among its members, functioning as collective advisory and opinion-making bodies of the Supervisory Board.
2. A committee is composed of 3 up to 5 members who appoint a Committee President from among themselves.
3. President of the Committee convenes Committee meetings to which they invite Committee members, and informs all other Supervisory Board members about the meeting. All Supervisory Board members have a right to participate in the Committee meetings.
4. Information on convening a Committee meeting should be passed to its members and the remaining Supervisory Board members not later than 7 days before a Committee meeting, and in urgent matters not later than one day before the Committee meeting.
5. Committee President may invite Management Board members, Company employees and other persons, whose participation in the meeting is necessary for the performance of the Committee tasks, to Committee meetings.
6. Resolutions of the Committee are passed by ordinary majority of votes. In the event of a tie vote, the President of the Committee shall have the casting vote.
7. Committee members may vote on resolutions personally by participating in the Committee meeting or under a special procedure defined in § 7 clause 3 above.
8. Committees should provide the Supervisory Board with annual reports on their activity which the Management Board will then make available to shareholders.
§ 19 (Audit Committee)
1. if the Supervisory Board is composed of more than five members, an Audit Committee is appointed as a part of the Supervisory Board when the Company's shares are introduced for trade on the regulated market (stock exchange).
2. If the Supervisory Board is composed of five members, the tasks of the Audit Committee are performed by the Supervisory Board.
3. Audit Committee is composed of three up to five members, with at least one member required to satisfy the condition of independence and be qualified in accounting or financial audit.
4. The requirement of independence referred to in clause 3 above is not satisfied if a Supervisory Board member:
1) holds shares or has other ownership titles in the Company or an affiliated entity,
2) was involved in bookkeeping or preparing the Company's financial statements over the last three years,
3) is a spouse, relative or a relative-in-law related up to the second degree or is related through custody, adoption or guardianship of a person being a member of the Company's supervising, managing or administration bodies, or employs such persons to conduct a financial audit;
5. Audit Committee duties include:
1) recommending a chartered auditor to audit the Company's financial statements to the Supervisory Board, including the monitoring of the independence of the chartered auditor and an entity authorized to audit financial statements,
2) discussing the type and scope of the audit with the Company's chartered auditors before each audit of an annual financial statement, and monitoring the work of experts,
3) discussing all problems and objections which may arise in connection with the audit of financial statements,
4) analyzing comments addressed to the Management Board made by the Company's chartered auditors, and the Management Board's response,
5) monitoring the effectiveness of internal control systems, internal audit and risk management,
6) monitoring the financial reporting process;
7) monitoring the performance of financial audit activities,
8) considering all other issues related to the Company's audit.
6. Audit Committee meetings should be held not less frequently than once every six months, in particular in the period of preparing annual and interim financial statements of the Company.
7. Entity authorized to audit financial statements notifies the Audit Committee of important issues concerning financial audit activities, including in particular considerable irregularities in the internal control system related to the financial reporting process.
VII. INFORMATION PROVIDED BY SUPERVISORY BOARD MEMBERS
1. A Supervisory Board member is obligated to provide the Company with the following personal details immediately after their appointment (however not later than within 24 hours): curriculum vitae, contact addresses (correspondence address, telephone number, including mobile phone number, fax number and e-mail address for correspondence).
2. A Supervisory Board Member should provide the Management Board with information on their relation with a Company's shareholder holding shares representing not less than 5% of the general number of votes at the General Meeting. The above obligation applies to economic, family or other relations that could possibly have impact on a Supervisory Board member’s opinion on an issue considered by the Supervisory Board. A Supervisory Board member is also obligated to submit a statement on the number of shares held in the Company or its subsidiary.
3. A Supervisory Board member is obligated to immediately inform the Management Board about transactions involving purchase or sale of the Company's shares, its parent company or a subsidiary, and on transactions with such companies if they are significant for their financial situation. This obligation does not exclude information obligations of Supervisory Board members arising from effective law regulations, and in particular
under art. 160 of the Act of July 29, 2005 on trade in financial instruments
(Journal of Laws 2005.183.1538).
4. Information specified in clause 1 should be updated by a Supervisory Board member without a delay if the actual situation changes by providing relevant information to the Management Board.
5. Supervisory Board member is also obligated to submit declarations referred to in clause 2 above at each request of the Management Board.
VIII. FINAL PROVISIONS
1. Supervisory Board members receive remuneration for work in the Supervisory Board in an amount and on principles defined by the General Meeting.
2. A Supervisory Board member delegated to temporarily perform duties of a Management Board member receives remuneration in an amount defined by the Board.
Relevant regulations of law, in particular provisions of the Commercial Companies Code and the Articles, apply in issues not governed by these regulations.
The regulations come into force on the day they are approved by the Supervisory Board and are available for inspection at the Company's seat, and on the Company's website after Company's shares are introduced for trade on the regulated market.