A new provision in the Act on Public Offers (Ustawy o Ofercie Publicznej) has introduced a new obligation on Polish PIEs to prepare an annual report on the remuneration of the management board and supervisory board and to submit this report to the auditor’s assessment.
Art. 90g of the Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organized Trading, and Public Companies” introduces the new Remuneration Report. The supervisory board of a public company must prepare a report on the remuneration of the management board and the supervisory board each year. The scope of the report is specified in the provision cited above. The report has to be “assessed” by a statutory auditor to ensure that the information it contains is accurate and complete.
The first such annual Remuneration Report will be prepared jointly for the years 2019-2020 and the audits of them will be carried out for the first time in 2021.
The Remuneration Report will be prepared separately from the financial statements and the company’s annual report, and its “assessment” will be classified technically as “an assurance service, other than an audit of the financial statements”, and considered by the Regulator as part of the auditing business of a licensed firm. Only registered auditors and their companies licensed to audit Public Interest Entities should be engaged to perform these assurance services. The purpose of the auditor’s assessment is to confirm that the remuneration report contains all the elements required by law. Responsibility for the substantive correctness of the information indicated in the remuneration report rests solely with the members of the company’s supervisory board, and the auditor should be independent to the entity. It may indeed be the same auditor which carries out the audit of the Financial Statements, according to Art. 136 paragraph. 1 of the Act on Statutory Auditors, therefore in most cases it will be the same auditor which you already have.
The above has been confirmed by the Financial Market Development Department at the Ministry of Finance in response to a query by the Chamber of Auditors in Poland (PIBR).
Should you be in a situation where your financial statements auditor is reluctant to carry out this review, they are not obliged to as it is separate to the existing contracts in place currently. You may prefer, for the sake of good corporate governance, to engage a smaller Firm which is able to carry out PIE audits for this task. Please contact us and we will assist you to a good offer from a reputable Firm for the audit, or alternatively if you would like help with the report itself, this ca also be done with Quoracy Consulting and our partners.
For further help, please use the contact form below. It emails direct to me at the audit firm Grupa Strategia, which has been developing a competence in this area in anticipation of the changes.
The Ministry of State Assets has prepared a draft amendment to the Code of Commercial Companies. The project is currently at the stage of public consultations, which will last until September 19, 2020. The changes include introducing regulations to the holding law, but also strengthening the role of the Supervisory Board.
The most important changes are:
- The Supervisory Board has the right to request from members of the management board, liquidators, proxies, employees of the company (including those employed under civil law contracts) to prepare or submit any information, documents, reports or explanations needed for supervision over the company. The completion date is set at max. 2 weeks with the possibility of its extension by the Supervisory Board.
introduces the obligation to inform the key statutory auditor about the meetings of the Supervisory Board, the subject of which are issues discussed before the AGM and the obligation for the statutory auditor to participate in such meetings.
The Supervisory Board will be able to appoint an advisor to the Supervisory Board to investigate, at the company’s expense, a specific issue related to the company’s operations or its financial standing.
the principle of open voting of the Supervisory Board is introduced, with the possibility of a different regulation in the statute or the SB regulations.
meetings of the Supervisory Board will have to be convened at least once a quarter (currently three times a year).
the draft explicitly provides for the possibility of appointing Supervisory Board committees. Until now, the provisions did not regulate this issue, with the exception of obligatory committees (eg the Audit Committee).
the role of the chairman in organizing the work of the Supervisory Board was underlined. The statutory requirements for convening Supervisory Board meetings were made more precise.
Invitations will need to contain the information we already provide (date, time and place of the meeting and the proposed agenda
the meeting) and the way of using means of distance communication when holding the meeting. The minimum notice period will be specified in the statutes.
it is proposed to clarify the issue of liability of Supervisory Board members. The draft stipulates that a member of the Supervisory Board should, in the performance of his duties, exercise due diligence resulting from the professional nature of his activity and be loyal to the company. The obligation to keep the company’s secrets will also apply after the mandate has expired.
At the same time, it is proposed to add a provision according to which: “A member of the management board, supervisory board, audit committee and liquidator does not violate the obligation to exercise due diligence if acting loyally to the company, he acts within the limits of justified economic risk, including on the basis of information, analyzes and opinions which, in the circumstances, should be taken into account when making a careful assessment. “
Information courtesy of chudzik.pl, in my opinion an excellent law firm, based in Lodz, for corporate legal and CoSec issues in Poland at the highest level.
From myself, I would just add that this is what is already in place in most advanced economies, and that there is nothing unhelpful, for once, in this draft legislation.