Statement on the principles of corporate governance applied in 2021

Corporate governance is a set of rules addressed to governing bodies of companies and their members as well as defining relations with shareholders and investors.

The set of rules covering the area of Polish financial institutions and companies listed on the Warsaw Stock Exchange (GPW) are in particular ‘Best Practice for GPW Listed Companies 2016’ (hereinafter referred to also as ‘Best Practice’) adopted by the Board of the Warsaw Stock Exchange, binding from 1 January 2016, as well as the ‘Principles of Corporate Governance for Supervised Institutions’ (hereinafter referred to as the ‘Principles’) adopted by the Polish Financial Supervision Authority by its resolution of 22 July 2014, which have been binding since 1 January 2015. 

On 29 March 2021 the Supervisory Board of the Warsaw Stock Exchange adopted resolution no. 13/1834/2021, by a virtue of which it adopted “Best Practice for GPW Listed Companies 2021” (hereinafter referred to also as ‘Best Practice 2021’), that entered into force on 1 July 2021. On that date they replaced the current version of the Best Practice. However, in 2021 the Bank was obliged to follow both Best Practice (from 1 January to 30) and Best Practice 2021 (from 1 July to 31 December). 

The application of corporate governance principles guarantees the transparency of company operations and strengthens the protection of shareholder rights, also with respect to issues not regulated by generally applicable laws. 

The complete text of the document „Best Practice for GPW Listed Companies 2016” and “Best Practice for GPW Listed Companies 2021” is published on the GPW website and on the Bank’s website.

The most important standard of the above-mentioned Best Practice, Best Practice 2021 and Principles is the ‘comply or explain’ rule, This rule means that a company is obliged to apply the principles stipulated in the document, and in the event of deviation from use of a particular principle the company must clarify the causes of such conduct and make this fact publicly known in the form of a report by using the GPW Electronic Information Database (in the case of Best Practice and Best Practice 2021) or by means of a website (in the case of the Principles). 

As regards recommendation IV.R.2 item 2 and 3, regarding ensuring for the shareholders the opportunity to participate in a General Meeting of Shareholders (hereinafter, also ‘General Meeting’ or ‘GM’) with the use of real-time two-way electronic communication where shareholders may address a General Meeting of Shareholders from a location other than the General Meeting and exercise, in person or through a plenipotentiary, their voting rights in the course of the General Meeting – in the Bank’s opinion – the implementation of this rule during a General Meeting carries technical and legal risks to the correct and efficient conducting of a General Meeting. Avoiding these risks constitutes a bigger value for the shareholders than the implementation of the rule from part IV, Recommendation IV.R.2, item 2 of Best Practice. The Bank, ever since 2008, has been providing real-time online broadcasts of the proceedings of General Meetings, in accordance with the requirement specified in part IV, Recommendation IV.R.2 item 1 of Best Practice. At the same time, the Bank, within implementing Best Practice 2021, provided shareholders with a technical possibility of real-time, two-way communication during the proceedings of General Meeting. Hence the aforementioned recommendation, previously not met by the Bank, since 1 July 2021 will be feasible to implement and exercise. 

As regards Best Practice 2021, the Bank was required to notify WSE of its compliance status no later than 31 July 2021. The Bank made the notification earlier, i.e. on 28 July, indicating full compliance of the Bank’s conduct with all the rules contained therein. The application of the recommendations included in the Best Practice 2021 is confirmed by the document published on the Bank’s website entitled „A statement on the company’s compliance with the corporate governance principles contained in Best Practice for GPW Listed Companies 2021„. 

The Bank as a financial institution has been subject, since the beginning of 2015, also to the ‘Principles of Corporate Governance for Supervised Institutions’ referred to at the outset, which are available on the website of the Polish Financial Supervision Authority and on the Bank’s website.

The Bank’s Management Board and the Supervisory Board took resolutions on the application of the Principles, with the exception of § 16 sect. 1 and § 24 sect. 1, concerning the holding of meetings of the Bank’s governing bodies (Management Board and Supervisory Board) in the Polish language. 

The knowledge of the English language by members of the Management Board enables full mutual understanding and a proper level of communication during meetings. Moreover, the practically implemented principle of holding meetings of the Supervisory Board both in Polish and in English, with the assurance of essential assistance of an interpreter, also ensures mutual understanding and a proper level of communication. 

The General Meeting in its resolution passed on 21 May 2015 expressed a positive opinion regarding the position of the Management Board and Supervisory Board of the Bank about the scope of application of the Principles. 

In successive years General Meetings accepted the assessment of employing the Principles and assessment of the manner of carrying out the information duties relating to the employment of Best Practice. Likewise, in 2021 the General Meeting by its Resolution of 24 March 2021 accepted the Report on the Activity of the Bank Millennium S.A. Supervisory Board in 2020 covering the assessment of compliance with the ‘Principles of Corporate Governance for Supervised Institutions’ and of assessment the manner of carrying out the information duties regarding the compliance with the ‘Code of Best Practice for WSE Listed Companies (2016)’, the Bank’s Supervisory Board by its Resolution No 6/2021 of 29 January 2021 found that the Bank in 2020 correctly implemented the Principles to the extent established by resolutions of the Bank’s governing bodies. The respective General Meeting’s resolution on the application of Best Practice 2021 will be adopted at the first planned shareholders’ meeting in 2022. 

Bank Millennium has been included in the WIG-ESG index since 2019.  Previously, for 12 years, it belonged to the Respect index, which was withdrawn on January 1, 2020 and was replaced by the WIG-ESG index. The companies included in the Index operate on the basis of best standards of corporate governance, information policy and investor relations, including ecological, social and employee issues. index WIG-ESG comprising 60 companies included in the WIG20 and mWIG40 indices. Weights of companies in WIG-ESG depend on the number of free float shares adjusted for the results of the ESG ranking prepared by Sustainalytics and the assessment of the application of the principles of corporate governance.