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Corporate governance: principles and scope of application

Corporate governance principles for supervised institutions

On 22 July 2014, the Polish Financial Supervisory Authority (PFSA) adopted Corporate governance principles for supervised institutions, expecting their implementation as of 1 January 2015. Beginning from 2015, application of the principles will be included in supervisory review and assessment (BION) and regularly reviewed. The purpose of the principles is to improve corporate governance standards and transparency of operation of institutions supervised by PFSA.

Corporate governance principles issued by PFSA defined internal and external relationships of the supervised institutions, to include relations with shareholders and clients, organization, internal supervision and key internal systems and functions, as well as statutory bodies and their cooperation.

PFSA decided that the corporate governance principles should be adopted by the supervised institutions (banks), become a crucial program paper underlying their strategic corporate policy and form appropriate procedures and proceedings in these institutions.

Therefore, on 22 December 2014, Extraordinary Shareholders' Meeting of the Bank approved "Corporate governance principles for Bank Pocztowy S.A." (the "Principles") determining internal and external relationships of the Bank, including those with shareholders and clients. Further, the Principles regulate the operation of internal supervision, key internal systems and functions, as well as statutory bodies and their cooperation.

The Corporate governance principles for supervised institutions issued by PFSA state that the supervised institution should apply the principles determined therein to the widest extent possible, including the principle of proportionality arising from the scale of operations, business specifics and nature of each institution. Refraining from the full application of specific principles is allowed only if their comprehensive implementation would be impractical for the supervised institution.

The Principles introduce the following principles adjusted to the specifics of the Bank:

• Article 8.4 “If justified with the number of shareholders, the Bank shall attempt to help them participate in General Shareholders’ Meetings, among others allowing active participation through the Internet.”
• Article 21.2: “Supervisory Board includes the position of Chairman, who manages its work. The Chairman is appointed based on experience and team leadership skills”.
• Article 29.1: “Subject to relevant legal regulations, remuneration of Supervisory Board members is calculated adequately to their roles and to the scale of Bank’s operations. Members appointed to work in committees, including the Audit Committee, should be paid adequately to the additional tasks they perform in these committees."

The Bank does not apply principles referred to in section 9 “Exercise of titles arising from assets purchased at client's risk" since principles determined in Articles 53-57 do not apply to the Bank, since it does not perform services involving asset management at client’s risk.

As expected by PFSA, the Principles have been adopted as of 1 January 2015.

Pursuant to Article 27 thereof, the Supervisory Board shall evaluate implementation of the principles introduced thereby on a periodic basis, and the results of the evaluation shall be published on Bank’s website and communicated to the other bodies of the Bank.

The Bank’s Charter assumes annual evaluation of the Principles.

For alignment purposes, other corporate documents have been adjusted: the Bank’s Charter, Operating Rules of the Supervisory Board, and Operating Rules of the Management Board; besides, Operating Rules of the General Shareholders’ Meeting of Bank Pocztowy S.A. were adopted.

Application of the Principles took form of both amendments to internal regulations and activities undertaken by the Bank and its bodies with regard to organization and organizational structure, relations with Shareholders, compensation policy, information policy, promotion and client relations, as well as key systems and internal functions.

In Resolution no. XIV/20/X/2016 of 31 August 2016, regarding evaluation of the application of Corporate Governance Principles for Bank Pocztowy S.A. in 2015, the Supervisory Board approved the application of the Principles by the Bank in 2015.

The report evaluating application of the Principles in 2015 was distributed to other Bank’s bodies and disclosed on the website.

On 16 September 2016 Extraordinary Shareholders’ Meeting of the Bank acknowledged the Report evaluating application of Corporate Governance Principles for Bank Pocztowy S.A. in 2015 as proposed by the Supervisory Board.

 

Ethics in the Bank

On 11 June 2013, Bank Pocztowy implemented the Banking Code of Ethics (the “Code”) adopted by Polish Bank Association. The document, accepted by the General Shareholders’ Meeting of Polish Bank Association on 18 April 2013 is a set of good banking practices regarding banks themselves, their employees and agents.

According to the Code, banks, as public trust institutions, shall respect legal regulations regarding their operations, recommendations of PFSA, resolutions of the banking self-government, standards included in the Code and good commercial practices. Banks, their employees and agents follow the principles of professionalism, reliability, objectivity, due diligence and best knowledge. Carrying their business operations, banks should contribute to social and economic domestic growth and increase in social wellbeing through respecting CRS principles, innovative solutions and support of educational initiatives. Social responsibility is the fundamental principle underlying relations of banks and their employees with environment. When following their business strategy, banks should consider both economic conditions and legitimate interests of their clients, employees, shareholders, business partners and local communities. The Code includes principles of the Financial Market’s Code of Best Practices.

In August 2014, the Bank adopted an internal document entitled Code of Ethics for Employees of Bank Pocztowy S.A. The document describes key aspects of banking ethics, in particular relations with clients, employees, local environment, handling of complaints, avoidance of conflict of interests, non-competition clauses, transparency of purchase processes and informing about irregularities. The above aspects are regulated in details by separate internal principles and procedures.

Compliance Department of the Bank provides training on ethics both in the form of classroom courses and e-learning, also, it carries out regular surveys (questionnaires) of understanding of internal regulations on ethics and appropriate behavior of employees if put in a potentially unethical situation.

In 2016 the Bank amended its Whistleblowing Principles. Employees may use a variety of whistleblowing channels and manners, from informing direct supervisors all the way through a dedicated phone number and e-mail address and direct contact with a Management Board Member. All notifications are given proper attention, analyzed and solved.

 

Code of Best Practice for WSE Listed Companies

Since Bank’s securities are not traded on the regulated market (its bonds are listed with Catalyst, the over-the-counter trading system), it is not bound to follow the Code of Best Practice for WSE Listed Companies.

In 2016 the Bank followed principles included in the Code of Best Practice for WSE Listed Companies to the extent applicable to non-public companies. When preparing for IPO, on 24 April 2012 the Management Board passed a resolution to apply the Code of Best Practice for WSE Listed Companies. In the resolution, it declared the will to follow the principles and recommendation of the Code as of the date of approving the prospectus, except for principle IV.10 and recommendation I.5, I.9, I.11 and I.12. In the justification of the resolution, the Management Board provided a detailed explanation (technical reasons regarding principle IV.10 and formal reasons regarding the other) why the above principles and recommendations should not be followed.