Supervisory Board and its committees

The Supervisory Board exercises ongoing supervision of the Company’s activities in all areas of its operations, and presents its opinions on all matters submitted by the Management Board for consideration to the General Meeting (GM). The powers and responsibilities of the Supervisory Board include in particular:

• Assessment of the Directors’ Report on the Company’s operations and of the financial statements for the preceding financial year, in terms of their consistency with the accounting books, supporting documentation, and the actual state of affairs;
• Assessment of the Management Board’s proposals concerning distribution of profit or coverage of loss;
• Submission to the General Meeting of written reports on results of the activities referred to in items 1 and 2;
• Assessment of the consolidated financial statements with respect to their consistency with the accounting books, supporting documentation, and the actual state of affairs, as well as assessment of the Directors’ Report on the Group’s operations, and reporting to the GM on the results of these assessments;
• Appointment of an auditor to audit the financial statements;
• Approval of business plans, including investment plans;
• Approval of the strategy for the Company and the PGNiG Group and long-term strategic plans;
• Adoption of detailed rules governing the Supervisory Board’s operation;
• Approval of the consolidated text of the Articles of Association, drawn up by the Company’s Management Board;
• Approval of the Rules of Procedure for the Management Board;
• Appointment and removal of Management Board members;
• Definition of rules and amounts of remuneration for Management Board members, unless applicable mandatory provisions of law state otherwise.

The Supervisory Board operates in accordance with the rules set out in the Commercial Companies Code, the Articles of Association and the Rules of Procedure for the Supervisory Board. The Rules of Procedure for the Supervisory Board have been adopted by a Supervisory Board resolution and are available on the Company’s website at http://pgnig.pl/lad-korporacyjny/rada-nadzorcza/regulamin.

The Company’s Supervisory Board consists of five to nine members appointed by the General Meeting. One Supervisory Board member should meet the independence criteria specified in the Articles of Association. As long as the State Treasury holds Company shares, the State Treasury, represented by the minister competent for matters pertaining to state assets, has the right to appoint and remove one member of the Supervisory Board. If the Supervisory Board consists of up to six members, two members are appointed from among persons elected by the Company’s employees and employees of all of its subsidiaries; if the Supervisory Board consists of seven to nine members, three members are appointed from among candidates elected by the employees.

Supervisory Board members are appointed for a joint term of office lasting three years.

Supervisory Board meetings are convened by the Chairman or Deputy Chairman of the Supervisory Board any time the Company’s interest so requires, but no less frequently than once every two months.

The Supervisory Board or its members delegated to individually perform certain supervisory functions are authorised to supervise all areas of the Company’s activity, and in particular to examine all of the Company’s documents, demand that the Company’s Management Board and employees produce reports and explanations, or review the Company’s assets.

The Supervisory Board may appoint standing or ad hoc committees (established as needed), to act as the Supervisory Board’s collective advisory and opinion-forming bodies.

In 2021, there were two committees of the Supervisory Board operating at the Company – the Audit Committee and the Strategy Committee.

Composition of the Audit Committee of the PGNiG Supervisory Board in 2021:

1. from January 1st 2021 to July 9th 2021 (eighth term of office of the Supervisory Board):
   • Grzegorz Tchorek – Chairman of the Audit Committee;
   • Piotr Broda – Deputy Chairman of the Audit Committee;
   • Bartłomiej Nowak – Member of the Audit Committee.
2. from July 30th 2021 to December 31st 2021 (ninth term of office of the Supervisory Board):
   • Grzegorz Tchorek – Member of the Audit Committee, from August 26th 2021 – Chairman of the Audit Committee
   • Roman Gabrowski – Member of the Audit Committee, from August 26th 2021 – Deputy Chairman of the Audit Committee
   • Mariusz Gierczak – Member of the Audit Committee
   • Bartłomiej Nowak – Member of the Audit Committee.

The Audit Committee is composed of at least three Supervisory Board members, of whom at least one has expertise and competence in accounting or auditing of financial statements.

All members of the Audit Committee submitted statements to the effect that they meet the independence criteria stipulated in Art. 129 of the Polish Act on Statutory Auditors, Audit Firms, and Public Oversight, of May 11th 2017, and Commission Recommendation 2005/162/EC of February 15th 2005. Two members of the Audit Committee have expertise and competence in accounting or auditing of financial statements:

Grzegorz Tchorek, Chairman of the Audit Committee, holds an MA in business management and marketing. He graduated from the Faculty of Management of the University of Warsaw, and holds a PhD in Economics in Management earned at the Faculty of Management of the University of Warsaw.

Roman Gabrowski, Member of the Audit Committee, is a graduate of the Faculty of Electrical Engineering at the Wrocław University of Technology, where he specialised in applied automation, and the Wałbrzych Higher School of Management and Enterprise, where his principal field of study was strategic management. He additionally completed post-graduate studies in management of state-owned energy companies organised by the Warsaw University of Technology, and studies in business finance management at the Wrocław University of Economics (Faculty of Management and Computer Science).

Pan Mariusz Gierczak, Member of the Audit Committee, is a graduate of the Faculty of Law and Administration of the University of Silesia in Katowice and the Faculty of Marketing and Management of the Częstochowa University of Technology (CUT). Participant of specialist training programmes and courses in the field of labour law.

Bartłomiej Nowak, Member of the Audit Committee, has the expertise and skills required in the industry in which the Company operates. He holds a PhD in law from the Polish Academy Sciences (Institute of Legal Sciences), in business law, and a PhD in law from EUI FLORENCE. He was an adviser to the President of the Energy Regulatory Office (URE) in 2007−2009 and worked for Directorate General for Transport and Energy of the European Commission in 2007–2008.

The Audit Committee operates within the Supervisory Board as a standing committee, advising the Supervisory Board on matters for which the Board is responsible. Meetings of the Audit Committee are held as needed, but at least once every six months, and are convened by the Chair of the Committee. Every six months, the Audit Committee submits reports on its activities to the Supervisory Board. Each report is made available to the Company’s shareholders at the next General Meeting. The Audit Committee’s responsibilities include in particular those set out in Art. 130 of the Act on Statutory Auditors, Audit Firms, and Public Oversight, of May 11th 2017, e.g.

• Monitoring of:
  • the financial reporting process,
  • effectiveness of the internal control and risk management systems and the internal audit function, including with regard to financial reporting,
  • performance of financial audit tasks, including the audit of financial statements performed by an audit firm, with account taken of all conclusions and findings from an inspection of the audit firm by the Polish Audit Oversight Commission;

• Oversight and monitoring of the statutory auditor’s and the audit firm’s independence in the context of fee caps on permitted non-audit services provided to the audited Company;
• Informing the Supervisory Board or other supervisory or control body of the Company of the audit findings and explaining how the audit contributed to the reliability of the Company’s financial reporting and what role the Audit Committee played in the audit;
• Assessing the auditor’s independence and approving the provision of permitted non-audit services by the auditor;
• Developing a policy for selection of an audit firm to perform audits;
• Developing a policy for the provision of permitted non-audit services by the audit firm, its related entities, or members of its network;
• Establishing an audit firm selection procedure for the Company;
• Submitting to the Supervisory Board or other supervisory or control body, or the governing body referred to in Art. 66. 4 of the Accounting Act of September 29th 1994, a recommendation referred to in Art. 16.2 of Regulation (EU) No 537/2014, in accordance with the policies referred to in items e and f;
• Submitting recommendations to ensure the reliability of the financial reporting process at the Company.

In 2021, the Audit Committee held ten meetings and passed six resolutions. At three of its meetings, the Audit Committee met with the auditor.

Following selection made by the PGNiG Supervisory Board on January 23rd 2020, PKF Consult Sp. z o.o. Sp.k. was appointed as the auditor to audit and review the financial statements of PGNiG S.A. and some of the subsidiaries as well as the consolidated financial statements of the PGNiG Group. The engagement letter, signed on May 20th 2020, covers the years 2021–2022.

In 2021, the audit firm provided the following permitted non-audit services to PGNiG:

• Review of the quarterly separate and consolidated financial statements for the periods ended March 31st 2021 and September 30th 2021.
• Review of the interim separate and consolidated financial statements for the six months ended June 30th 2021.
• Review, for the needs of banks providing financing to PGNiG, of agreed procedures concerning financial covenants specified in the credit facility agreements signed by PGNiG, as well as notes subscription agreements and the terms and conditions of such notes for the 12 months ended December 31st 2020 and June 30th 2021.
• Assessment of the Report on Remuneration of Members of the Management Board and Supervisory Board for 2019–2020

Composition of the Strategy Committee of the PGNiG Supervisory Board in 2021:

1. from January 1st 2021 to July 9th 2021 (eighth term of office of the Supervisory Board):
   • Piotr Sprzączak – Chairman of the Strategy Committee
   • Sławomir Borowiec – Member of the Strategy Committee
   • Roman Gabrowski – Member of the Strategy Committee
   • Mieczysław Kawecki – Member of the Strategy Committee
   • Stanisław Sieradzki – Member of the Strategy Committee
   • Grzegorz Tchorek – Member of the Strategy Committee.
2. from July 30th 2021 to December 31st 2021 (ninth term of office of the Supervisory Board):
   • Piotr Sprzączak – Chairman of the Strategy Committee
   • Cezary Falkiewicz – Member of the Strategy Committee
   • Roman Gabrowski – Member of the Strategy Committee
   • Tomasz Gabzdyl – Member of the Strategy Committee
   • Mieczysław Kawecki – Member of the Strategy Committee

The Strategy Committee is composed of at least three members of the Supervisory Board. The Chairman of the Strategy Committee and its other members are appointed by the Supervisory Board from among its members on a rotating basis.

The Strategy Committee provides support to the Supervisory Board in the performance of its tasks. Meetings of the Audit Committee are held as needed, but at least once every six months. The Strategy Committee submits an annual report on its activities to the Supervisory Board.

The tasks of the Strategy Committee are:

• Giving opinions and recommendations to the Supervisory Board on strategic proposals or information addressed to the Supervisory Board and requiring its approval or opinion, in particular concerning:
  • Strategies for the Company and the PGNiG Group, and long-term strategic plans;
  • Management objectives (MBOs) for members of the Company’s Management Board;
  • Business plans, including investment plans;
  • Planned and actual investments and divestments;
  • Other strategic matters;
• Performing any other tasks assigned by the Supervisory Board.

In 2021, the Strategy Committee held five meetings.