In accordance with the §29 section 5 of the Rules of the Warsaw Stock Exchange adopted pursuant to the resolution No. 12/1170/2007 of the Supervisory Board of the Warsaw Stock Exchange dated 4 July 2007, acting in accordance with the provisions of the resolution No. 1013/2007 of the Management Board of the Warsaw Stock Exchange dated 11 December 2007, the Management Board of Kredyt Inkaso S.A. hereby presents the report on the rules of corporate governance applied by the Company in the year 2007 set forth in the document " Best Practices in Public Companies 2005".
a) Presentation of corporate governance rules which were not applied by the issuer, including the information on the circumstances and reasons for not applying a certain rule and in what way the company intends to remove possible results of not applying a given rule or what steps it is going to take to reduce the risk of not applying a given rule in the future
In accordance with the resolution No. 3/2007 of the General Assembly of the Company dated 15 February 2007, as of the date of receiving the status of a public company, we started applying rules of corporate governance defined in "Best Practices in Public Companies 2005" adopted pursuant to the resolution No. 44/1062/2004 of the Supervisory Board of WSE dated 15 December 2004 and the resolution No. 445/2004 of the Management Board of WSE dated 15 December 2004 on adopting the rules of corporate governance for the companies being issuers of shares, variable bonds and bonds with priority right which are admitted to trading on the stock exchange on the regulated market with the exception of the rules No. 20, 24, 25, 28 and 43. The rules which were not adopted by the Company related to:
Rule 20 – Best practices of Supervisory Boards – there are no independent members of the Supervisory Board since the Company has the leading shareholder and it is he who bears the greatest economic risk. In the opinion of the Company, the mentioned fact enables the Company to effectively and properly implement the Company’s strategy and it protects sufficiently interests of all groups of shareholders.
Rule 24 – Best practices of Supervisory Boards – there is no public information on personal, factual and organizational connections of a member of the Supervisory Board with a certain shareholder, in particular with the majority shareholder (due to ownership structure of the Company it is obvious that members of the Supervisory Board are related to the leading shareholder. In the case of election of members of the Supervisory Board by way of a vote in groups the situation is the same).
Rule 25 – Best practices of Supervisory Boards – no participation of other members of the Management Board in meetings of the Supervisory Board since it would limit the possibility of free discussion and working out a common position by the Supervisory Board.
Rule 28 – Best practices of Supervisory Boards – there are no separate audit and remuneration committees since the Supervisory Board consists of 5 persons and from the organizational of view, it is pointless to set up two committees. The Supervisory Board as the whole shall perform duties of both committees.
Rule 43 – Best practices in relations with third parties and third party institutions – there is no recommendation of the audit committee on selection of the entity performing the function of the statutory auditor due to the fact that the previous rules were not accepted. Since there are no committees there are no recommendations.
In connection with the entry into force as from 01 January 2008 of "Best Practices of WSE Listed Companies", implemented pursuant to Resolution No. 12/1170/2007 of the Supervisory Board of the Warsaw Stock Exchange of 04 July 2007, on 02 January 2008 with our Current Report No. 3/2008 we notified about the corporate governance rules that we would not apply on a permanent basis, namely:
Part II Rule 1 item 6 – as there are no separate committees of the Supervisory Board, the annual report of the Supervisory Board as published on our Website will not provide for operation of those committees,
Part III Rule 6 – no two independent members of the Supervisory Board as decided by the shareholders. Shareholders decided that each of them should have an active right to propose a candidate for a member of the Supervisory Board. Exercise of one of shareholder’s rights – care of the Company’s interests, consists also in presenting such candidates for the positions in the Company’s governing bodies who in their opinion are able to perform in the best way the duties entrusted with them.
Part III Rule 7 – no audit committee with minimum one independent member. Since there are no independent members of the Supervisory Board it is impossible to comply with the above requirement.
Part III Rule 8 – as there are no committees in the Supervisory Board, it is impossible to describe the operations of such committees.
Furthermore, as of the date of the report, temporarily we were not applying the following principles:
Part III Rule 2 in connection with Part II Rule 1 item 11 – on our Website we were not publishing information on relations of members of the Supervisory Board with a shareholder representing minimum 5 % votes as we had not received respective statements from members of the Supervisory Board,
Part II Rule 1 item 12 – we did not specify the forecast expenses to be incurred by the Company in connection with the incentive program, since the Company is in the course of work which will enable it to estimate the amount of costs, so such information shall be published on the website later.
b) Description of the way in which the General Assembly operates and its fundamental powers and the shareholders’ rights as well as the way of exercising them.
The General Assembly of Shareholders of Kredyt Inkaso S.A. acts in accordance with the provisions of the Commercial Companies Code and the Statutes. The General Assembly may be ordinary or extraordinary. Ordinary General Assembly is held not later than 6 (six) months after the end of the Company’s financial year. The Extraordinary General Assembly is convened by the Management Board on its own initiative, at the request of the Supervisory Board or at the request of a shareholder or shareholders representing not less than one tenth of the Company’s share capital, within 14 (fourteen) days of submission of such a request. The request to convene the General Assembly shall define matters proposed to be considered; the request does not need to contain justification. The Supervisory Board is entitled to convene the Extraordinary General Assembly whenever a shareholder submits the request to convene it and the Management Board fails to convene it within the stipulated time. Shareholders may participate in the General Assembly and exercise the voting in person or by proxy. The proxy to participate in the General Assembly should be granted in writing. Without prejudice to different provisions of the Commercial Companies Code and the Statutes, resolutions of the General Assembly are passed by the majority of over 60% (sixty percent) of votes cast, whereby votes cast are deemed votes "in favor", "against" and "abstaining". Voting at the General Assembly is open. Secret vote is ordered on elections or on motions to dismiss members of the Company’s governing bodies or liquidators or to bring them to justice, as well as on personal matters. Neither a pledgee nor a user of shares has the voting right at the General Assembly of Shareholders.
The powers of the General Assembly shall in particular include the following matters:
1) consideration and approval of the financial statements for the last financial year, report of the Management Board on the operations of the Company; as well as consolidated financial statements of the capital group and report on the operations of the capital group for the previous financial year;
2) granting of approval of the performance by the members of the Supervisory Board and the Management Board of their duties;
3) decisions concerning distribution of profit and coverage of losses, as well as appropriation of funds established out of profit, without prejudice to special provisions regulating in a different manner the procedure of appropriation of such funds;
4) appointing members of the Supervisory Board and deciding about the rules of remunerating the members of the Supervisory Board;
5) increasing and reducing the share capital, unless the provisions of commercial companies code do not stipulate otherwise;
6) all decisions relating to claims for redress of damage caused upon formation of the Company and in the course of management and supervision;
7) granting consent to transfer or tenancy of the enterprise of the Company or its organized part and creation of a limited right in rem on them;
8) amendment to the Statutes;
9) establishing and liquidation of capital reserves and other reserves and funds of the Company;
10) decisions concerning redemption and acquisition of shares in order to redeem them and defining terms of their redemption;
11) issue of convertible bonds or bonds with the priority right;
12) dissolution, liquidation and transformation of the Company and its merger with the other company;
13) adopting regulations for the Supervisory Board and the General Assembly of Shareholders.
Prior to each General Assembly the list of the shareholders entitled to participate in the General Assembly is drawn up. The list is signed by the Management Board and it is available for reviewing in the premises of the issuer for three working days preceding the date of the General Assembly. Shareholders may review the list in the premises of the issuer or request the copy of the list reimbursing its cost. At the General Assembly immediately after the Chairman of the General Assembly has been elected, the attendance list is drawn, containing the list of participants and the number of shares represented by each of them and the number of votes ascribed to them, signed by the Chairman of the General Assembly. On the motion of the shareholders owning at least one tenth of the share capital represented at the General Assembly, the attendance list should be checked by the commission elected for this purpose, consisting of at least three persons. Requesting shareholders shall be entitled to elect one member of the commission. The General Assembly shall be convened by an announcement in Monitor Sądowy i Gospodarczy (Court and Economic Gazette), published at least three weeks prior to the date of the assembly. The announcement should specify date, time and venue of the General Assembly as well as the detailed agenda. In the case of intended amendment to the Statutes, the provisions in force should be referred to and the contents of proposed amendments should be presented. The Supervisory Board and shareholders representing at least 10% (ten percent) of the share capital may request including certain matters into the agenda of the next General Assembly. The request submitted after notice of convening the General Assembly has been delivered is treated as the request to convene the Extraordinary General Assembly. The General Assembly is held in the Company’s registered office in Zamość or it may be held in Warsaw. Resolutions may be adopted only on matters on the agenda, unless the whole capital is represented at the General Assembly and no participant has raised objection to adopting the resolution. Pursuant to art. 405 of the Commercial Companies Code, the General Assembly may adopt resolutions without formal convening if the whole share capital is represented, and nobody present raises objection to holding the General Meeting or including certain matters in the agenda. The General Assembly is valid regardless of the number of shares represented, unless otherwise provided by the Commercial Companies Code or the Statutes.
c) Composition and rules of the Company’s managing and supervision bodies and their committees.
1. The Management Board of our Company may be composed of 1 to 3 members, appointed and dismissed by the Supervisory Board (the first Management Board was appointed pursuant to the resolution on transformation of the Company). The term of office of the Management Board lasts three years and is a common term of office. The President and Vice Presidents of the Management Board may be dismissed at any time before lapse of their term of office.
The Management Board shall obtain approval of the Supervisory Board for the following actions:
- opening a branch office abroad;
- disposal or encumbrance, pursuant to one or more legal operations, of fixed assets whose net book value exceeds one fifth of the Company’s share capital;
- performance of an investment project and contracting relevant obligations if resulting in expenses or liabilities in excess of equivalent of one half of the Company’s share capital;
- contracting other than investment obligations that pursuant to one or more related legal operations exceed one fifth of the share capital with the exception of operations performed within ordinary management, in particular operations relating to trading in receivables as well as operations with positive opinions of the Supervisory Board in annual plans;
- purchase or disposal of real estate properties or a participation in real estate properties or perpetual usufruct rights or a participation in perpetual usufruct rights; however, the purchase of real estate properties or a participation in real estate properties or perpetual usufruct rights or a participation in perpetual usufruct rights that form part of assets of a debtor of the Company for an amount up to one tenth of the Company’s share capital may be executed by the Management Board pursuant to a resolution of the Management Board without a need to obtain the consent of the Supervisory Board;
- performance by the Company of capital or asset investments abroad for amounts exceeding one twentieth of the share capital;
- establishment of companies and joining companies as well as making contributions to acquire shares in companies and disposal of shares.
If the Supervisory Board does not consent to a specific operation, the Management Board may request the General Assembly to take a resolution consenting to such operation.
At present the Management Board is not entitled to take decisions on share issues or redemption.
At present the Management of the Company consists of:
1) President of the Management Board Artur Maksymilian Górnik
2) Vice President of the Management Board Sławomir Ćwik
During the period from 28 December 2006 to the day of drawing up the report, the composition of the Issuer’s Management Board did not change.
1. Our Supervisory Board may comprise 5 to 9 members, including the Chairman, Vice- Chairman and Secretary. Members of the Supervisory Board are designated for a common term of office of 3 years; members of the Supervisory Board may be dismissed at any time before lapse of their term of office. On 26 November 2007 an amendment to the Statutes was registered, resolved by the Extraordinary General Assembly of 30 August 2007. Pursuant thereto, in case of death or resignation of a member of the Supervisory Board, the other members of the Supervisory Board – within 15 days from learning of the fact – may co-opt a member from among candidates proposed by members of the Supervisory Board. The mandate of such co-opted person shall be approved by the next General Assembly and ends along with the term of office of the entire Supervisory Board or at the next General Assembly that failed to approve such co-opted member.
As of the date of drawing up the report the Supervisory Board consisted of:
1) Chairman of the Supervisory Board Ireneusz Andrzej Chadaj
2) Vice-Chairman of the Supervisory Board Piotr Rybojad
3) Secretary of the Supervisory Board Sławomir Aleksander Górnik
4) Member of the Supervisory Board Agnieszka Buchajska
5) Member of the Supervisory Board Piotr Zawiślak
In the period from 28 December 2006 to 31 March 2008 the composition of the Supervisory Board changed in the following manner.
On 16 July 2007 Mr. Jarosław Pawełczuk, Member of the Supervisory Board resigned from its function. On 30 August 2007 the General Assembly of Kredyt Inkaso S.A. appointed Ms. Agnieszka Buchajska as the Member of the Supervisory Board. On 05 March 2008, Mr. Stanisław Ferenc, the President of the Supervisory Board resigned from his function in the Supervisory Board. On 05 March 2008 other members of the Supervisory Board co-opted Mr. Piotr Rybojad to the Supervisory Board of Kredyt Inkaso S.A.
c) Description of the main features of internal control systems and systems of risk management applied in the Company with reference to the financial statements preparation.
The Management Board of the Company is responsible for the internal control systems and their effectiveness in the process of drawing up the financial statements. Financial data that is the basis of financial statements and interim reports comes from financial and accounting system in which transactions are recorded in accordance with the accounting policy of the Company approved by the Management Board and based on the provisions of the Accounting Act and the National Accounting Standards. Annual and half year financial statements are subject to independent audit and review carried out by the statutory auditor.