Statement of Compliance with Corporate Governance Rules

Terms and scope of compliance with corporate governance rules

GPW accepted the corporate governance rules laid down by the trading organiser as of the date of admission of the Company’s shares to trading on the regulated market on 5 November 2010. As of 1 January 2016, GPW follows the Code of Best Practice for GPW Listed Companies 2016. The Code is available on the GPW website (http://www.gpw.pl) under the listed companies corporate governance tab.

GPW in 2017 consistently complied with the rules and recommendations of the Code of Best Practice for GPW Listed Companies 2016 and the Corporate Governance Rules for Supervised Institutions issued by the Polish Financial Supervision Authority.

GPW complies with all of the recommendations of the Code of Best Practice for GPW Listed Companies 2016 applicable to the Company. GPW complies with the rules of the Code of Best Practice for GPW Listed Companies 2016 recommendations of the Code of Best Practice for GPW Listed Companies 2016 applicable with the exception of Rule VI.Z.2, which requires that the period between the allocation of options or other instruments linked to the company’s shares under the incentive scheme and their exercisability should be no less than two years. The non-compliance is due to the fact that the Company’s incentive scheme, approved before the effective date of the Code of Best Practice for GPW Listed Companies 2016, included phantom shares, where the exercise period is 1 year. The new remuneration system for the Members of the GPW Management Board includes a basic part and a variable part – supplementary remuneration which is no longer linked to the Company’s shares. However, as the payment of phantom shares is distributed over time, the last phantom shares awarded under the incentive scheme will be paid in July 2018, after which the Company will comply fully with Rule VI.Z.2. For more information about the phantom shares, see the Remuneration Policy section.

Furthermore, concerning Recommendation I.R.2, GPW announced that the Company’s sponsorship and charity policy is not a formal document. The Company is working to draft a regulation based on the Best Practice of Sponsorship for Companies with a Stake Held by the State Treasury released by the Ministry of Treasury and the Ministry of Sport and Tourism, but the regulation is in the process of internal consultations and not yet binding. In its sponsorship and charity activity, GPW focuses on its core business areas. GPW donated PLN 3.6 million in 2017, including PLN 3 million to the Polish National Foundation. Other donations were made to the GPW Foundation (PLN 414 thousand in total: PLN 350 thousand for its statutory activity and PLN 64 thousand for the organisation of the Exchange School Online Game), the Wolność i Demokracja Foundation (PLN 25 thousand), and the Archdiocese of Warsaw (PLN 140 thousand).

Sponsorship expenses stood at PLN 284.2 thous. including mainly support for events dedicated to the capital market, including the conference “Capital Market: Building Polish Wealth” organised by the Chamber of Brokerage Houses (IDM), the Sixth CFO Congress of Listed Companies organised by the Association of Listed Companies (SEG), the WallStreet 2017 conference addressed to individual investors and organised by the Association of Individual Investors (SII), the Stegersbach conference organised by Erste Group Bank AG, and the Fifteenth Local Government Capital and Finance Forum organised by Międzykomunalna Spółka Akcyjna „MUNICIPIUM”.

GPW worked with several partners in direct support for the sale of GPW’s products and services by co-organising industry conferences: Polish Capital Markets Day in Prague, Frankfurt, Paris, London, Warsaw and Stockholm, and Trading CEE: Equities and Derivatives, an event dedicated to the cash and derivatives market.

GPW partnered with many foundations, chamber of commerce and institutions in events and conferences dedicated to the economy and the capital markets, including the Eastern Studies Institute Foundation in the organisation of the Economic Forum in Krynica under the motto Europe in the Face of Challenges: United or Divided, the Lesław A. Paga Foundation (mainly training and educational projects devoted to the capital markets), the Regional Chamber of Commerce (Seventh SME Congress).

GPW also worked with foundations, associations and organisations in events and conferences dedicated to the economy and the capital markets, including the Polish Institute of Directors (organisation of corporate governance conferences) and the Impact Foundation (Impact fintech’17 Congress with presentations of the best CEE start-ups).

In addition, GPW is subject to the Corporate Governance Rules for Supervised Institutions issued by the Polish Financial Supervision Authority on 22 July 2014 as a set of rules governing internal and external relations of supervised institutions, including relations with shareholders and clients, their organisation, the operation of internal supervision and the key internal systems and functions, as well as the statutory authorities and the rules of their co-operation. The Corporate Governance Rules for Supervised Institutions are available on the website of the Polish Financial Supervision Authority (http://www.knf.gov.pl).

The Exchange complies with the rules laid down in the Corporate Governance Rules for Supervised Institutions with the exception of the rules defined in § 10.2, § 12.1 and § 28.4, and except the rules defined in § 53, § 54.1-3, § 55, § 56, § 57, which are inapplicable to GPW’s business profile as GPW does not manage assets on clients’ account. GPW does not comply with two additional rules defined in § 49.4 and § 52.2 which are inadequate in view of GPW’s organisational structure. GPW’s organisation includes the Internal Audit Department and the Compliance and Risk Department headed by the Compliance Officer.

Non-compliance with the rule defined in § 10.2, concerning the introduction of personal entitlements or other special entitlements for shareholders, and in § 12.1, which provides that shareholders shall be responsible for an immediate capital increase of the supervised institution, is due to the incomplete privatisation of the Company by the State Treasury. Non-compliance with the rule defined in § 28.4, which provides that the General Meeting shall assess whether the established remuneration policy contributes to the development and security of the operations of the supervised institution, is due to the excessively broad range of the remuneration policy to be assessed by the General Meeting. The remuneration policy for key managers other than the members of the supervisory board and the management board should be assessed by their employer, i.e., the Company represented by the Management Board and controlled by the Supervisory Board.

For more information on the Company’s compliance with the Code of Best Practice for GPW Listed Companies 2016 and the Corporate Governance Rules for Supervised Institutions, see the Company’s website under the GPW corporate governance tab.