About the Group

Corporate Governance Principles

Collection of the corporate governance principles

As a company listed on Warsaw Stock Exchange, KOGENERACJA S.A. was subject to the Best Practice for the WSE Listed Companies 2016, which were effective from 1 January 2016 to 30 June 2021.

On 29 March 2021, the Supervisory Board of the WSE adopted Resolution No. 13/1834/2021 introducing new corporate governance rules for companies listed on the WSE Main Market – Best Practice for GPW Listed Companies 2021 (Best Practice 2021). Best Practice 2021 entered into force on 1 July 2021 and the following Company’s Statement on the application of corporate governance rules applies to them.

The documents are available at the dedicated WSE website www.gpw.pl/lad-korporacyjny .

Application of best practice in corporate governance and election not to use the corporate governance principles

Information on the principles followed by the Company, contained in the Best Practice for GPW Listed Companies 2021 was published in EBI 2/2021 report. According to the current status of compliance with the Best Practice, the Company does not apply 8 principles: 1.3.2., 1.4.2., 1.6., 2.1., 2.2., 4.1., 4.3., 6.4.

In connection with the adoption of the Business Strategy for 2022-2026 of KOGENERACJA Group (Current Report 30/2022) principle 1.4 was adopted for use. Full text of the report is available on the corporate website.

Explanation of the principles of the 2021 Best Practices not applied by the Company (in accordance with the comply or explain principle)

	PRINCIPLE		COMMENT OF KOGENERACJA S.A.
1	1.3.2. Companies integrate ESG factors in their business strategy, including in particular: (...) social and employee factors, including among others actions taken and planned to ensure equal treatment of women and men, decent working conditions, respect for employees’ rights, dialogue with local communities, customer relations.	The principle is not followed.	The principle is partially implemented, i.e. in terms of: ensuring decent working conditions, respect for employees' rights, dialogue with local communities, customer relations. In terms of ensuring equal treatment of women and men, the Company does not have separate policies regulating this issue.
2	1.4.2. Information about the strategy in the ESG areas present, among other things (...) the equal pay index for employees, defined as the percentage difference between the average monthly pay (including bonuses, awards and other benefits) of women and men in the last year, and present information about actions taken to eliminate any pay gaps, including a presentation of related risks and the time horizon of achieving the equality target.	The rule is partially followed.	Starting from the Management Board Report for 2023, the Company will publish an equal pay index. Due to the specific nature of the energy industry (15% of the Company's employees are women, 85% are men), no formal steps have been taken by the Company to eliminate any potential pay gaps. The principles of employment and remuneration in the Company are based on standards of conduct aimed at preventing unequal treatment and these principles are included in the Code of Ethics.
3	1.6. Companies participating in the WIG20, mWIG40 or sWIG80 index hold on a quarterly basis and other companies hold at least on an annual basis a meeting with investors to which they invite in particular shareholders, analysts, industry experts and the media. At such meetings, the management board of the company presents and comments on the strategy and its implementation, the financial results of the company and its group, and the key events impacting the business of the company and its group, their results and outlook. At such meetings, the management board of the company publicly provides answers and explanations to questions raised.	The principle is not followed.	The principle is partially followed. The company belongs to sWIG80. Each time after publication of periodic reports, a commentary on the results is provided in the form of a press release. Once a year, the company organises a meeting with investors and analysts.
4	2.1. Companies should have in place a diversity policy applicable to the management board and the supervisory board, approved by the supervisory board and the general meeting, respectively. The diversity policy defines diversity goals and criteria, among others including gender, education, expertise, age, professional experience, and specifies the target dates and the monitoring systems for such goals. With regard to gender diversity of corporate bodies, the participation of the minority group in each body should be at least 30%.	The principle is not followed.	KOGENERACJA S.A. has not developed a diversity policy for the management and supervisory board. The process of selecting candidates for the above-mentioned positions takes into account such elements as education, professional experience, qualifications and competences of candidates and in no way disqualifies candidates due to the elements of the diversity policy indicated in principle.
5	2.2. Decisions to elect members of the management board or the supervisory board of companies should ensure that the composition of those bodies is diverse by appointing persons ensuring diversity, among others in order to achieve the target minimum participation of the minority group of at least 30% according to the goals of the established diversity policy referred to in principle 2.1.	The principle is not followed	KOGENERACJA S.A. has not developed a diversity policy for the management and supervisory board. The process of selecting candidates for the above-mentioned positions takes into account such elements as education,  professional experience, qualifications and competences of candidates and in no way disqualifies candidates due to the elements of the diversity policy indicated in principle.
6	4.1. Companies should enable their shareholders to participate in a general meeting by means of electronic communication (e-meeting) if justified by the expectations of shareholders notified to the company, provided that the company is in a position to provide the technical infrastructure necessary for such general meeting to proceed.	The principle is not followed.	The company does not allow shareholders to participate in the general meeting by means of electronic communication. In the opinion of the Management Board, the non-application of the above-mentioned principle will not affect the reliability of the information policy, nor does it pose a risk of limiting or hindering shareholders' participation in general meetings.
7	4.3. Companies provide a public real-life broadcast of the general meeting.	The principle is not followed.	In the opinion of the Management Board, the non-application of the above-mentioned principle will not affect the reliability of the information policy, nor does it pose a risk of limiting or hindering shareholders' participation in general meetings. The Company does not exclude the possibility of applying this principle in the future.
8	6.4 As the supervisory board performs its responsibilities on a continuous basis, the remuneration of supervisory board members cannot depend on the number of meetings held. The remuneration of members of committees, in particular the audit committee, should take into account additional workload on the committee.	The principle is not followed.	The remuneration of Supervisory Board members does not depend on the number of meetings held and in this respect the principle is complied with. Remuneration of members of committees, in particular of the audit committee, is at the level of remuneration of other members of the supervisory board, in this respect the principle is not met.