1.1. Corporate governance rules applicable to the Company Indication of provisions abandoned by the Issuer

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1 Company statement on the application of corporate governance, included in the annual report of BEST S.A. for 2015 (rule I.Z.1.12) I. CORPORATE GOVERNANCE IN THE COMPANY 1.1. Corporate governance rules applicable to the Company In 2015, BEST was subject to the set of corporate governance rules Best Practice for GPW Listed Companies, whose recent version, effective as of 1 January 2013, was adopted on 21 November 2012 by way of resolution no. 19/1307/2012 of WSE s Supervisory Board. The rules are available on the website dedicated to corporate governance rules for public companies: praktyki/dobre praktyki pdf As of 1 January 2016, BEST is subject to the set of corporate governance rules Best Practice for GPW Listed Companies 2016, whose recent version was adopted on 13 October 2015 by way of resolution no. 25/1412/2012 of WSE s Supervisory Board. The rules are available on the website dedicated to corporate governance rules for public companies: GPW.pdf. According to the answer to question 6 in FAQ QUESTIONS ON THE PUBLICATION OF REPORTS CONCERNING BEST PRACTICE, which is available at the information on the application of corporate governance rules, which is a part of the annual report, is historic information. Therefore, in the statement on the application of corporate governance rules published in the annual report for 2015, the Company discusses the rules applicable in Best Practice 2016 will be referred to in the statement on the application of corporate governance rules published in the annual report for The company may revise its application of corporate governance according to WSE s new corporate governance rules. BEST has used this option and in item 2 below we present information on the provisions of Best Practice for GPW Listed Companies 2016 which BEST currently does not intend to apply, which was announced according to the respective regulations Indication of provisions abandoned by the Issuer Best Practice for GPW Listed Companies in force until 31 December 2015 In current report no. 9/2009, we announced that we do not apply the whole of item 1 of part II of the Best Practice for GPW Listed Companies, which concerns operating a corporate website in English, due to the high costs related to its implementation and the translation of all corporate documents. In current report no. 4/2013, we announced the non-application of the provision of item 1.9a part II of the Best Practice for GPW Listed Companies, regarding the audio or video recording of the proceedings of the general meeting, and item 10 part IV of the of Best Practice for GPW Listed Companies, regarding real-time broadcast of the general meeting and two-way real-time communication, due to the fact that, in the opinion of the Management Board, it is not justified to incur additional significant costs related to the implementation of the above-mentioned principles, considering that the Company s shareholding structure is not very dispersed, and the lack of interest of the Company s shareholders in participating in the General Meeting. In the case of a change of the above-mentioned circumstances, the Management Board will consider applying the rules Best Practice for GPW Listed Companies 2016, effective from 1 January 2016 In current report no. 1/2016 of 5 January 2016, we publicly announced the report on abandoning the application of three detailed rules from the document Best Practice for GPW Listed Companies I.Z A company should operate a corporate website and publish on it, in a legible form and in a separate section, in addition to information required under the legislation: information about the company s diversity policy applicable to the company s governing bodies and key managers; the description should cover the following elements of the diversity policy: gender, education, age, professional experience, and specify the goals of the diversity policy and its implementation in the reporting period; where the company has not drafted and implemented a diversity policy, it should publish the explanation of its decision on its website. JUSTIFICATION FOR NOT APPLYING THE RULE: The Company has not developed and does not implement a formal diversity policy with regard to the Company s corporate bodies and its key managers due to a very stable composition of the Management Board and a low number of key managerial positions, where changes are very infrequent. Decisions on the 1

2 composition of the Supervisory Board are made by the General Meeting, which, when appointing a member of the Supervisory Board, considers in particular their education and professional experience. Where it is possible to apply diversity, the Company applies such rules, even though it does not have a formal policy in that regard. An example of diversity in the Company s bodies are the Management Board and the Supervisory Board, whose members are diversified in terms of education, professional experience, age and gender. I.Z A company should operate a corporate website and publish on it, in a legible form and in a separate section, in addition to information required under the legislation: an audio or video recording of a general meeting. JUSTIFICATION FOR NOT APPLYING THE RULE: Given the current shareholding structure and the fact that the shareholders have not reported such a need, the Company decided not to make audio or video recordings of the general meeting. Therefore, this rule was not applied. Payroll VI.Z.2. To tie the remuneration of members of the management board and key managers to the company s long-term business and financial goals, 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. JUSTIFICATION FOR NOT APPLYING THE RULE: The Company operates an incentive scheme for the members of the Company s Management Board for In each year of the scheme, an entitled person may be granted subscription warrants which are convertible to shares. The final tranche of the warrants will be granted by mid One year after that date, the entitled persons can demand that the warrants be converted to shares. Thus, the period between allotting the warrants as part of the final tranche and their fulfilment may be shorter than 2 years. However, the Company would like to point out that the period between allotting the warrants under the first tranche and their fulfilment is more than 3 years. Furthermore, to apply rule I.Z.1.13, we published on BEST s website the document Information on the company s application of recommendations and rules of Best Practice for GPW Listed Companies 2016, in which BEST specifies and explains which rules and recommendations do not apply to the company. I.Z A company should operate a corporate website and publish on it, in a legible form and in a separate section, in addition to information required under the legislation: financial projections, if the company has decided to publish them, published at least in the last 5 years, including information about the degree of their implementation. Company s comment: At present, considering its shareholding structure, the Company did not decide to publish financial projections. If this decision is changed, the Management Board will promptly announce it in a current report, according to separate regulations. IV.R.2. If justified by the structure of shareholders or expectations of shareholders notified to the company, and if the company is in a position to provide the technical infrastructure necessary for a general meeting to proceed efficiently using electronic communication means, the company should enable its shareholders to participate in a general meeting using such means, in particular through: 1) real-life broadcast of the general meeting, 2) real-time bilateral communication where shareholders may take the floor during a general meeting from a location other than the general meeting, 3) exercise of the right to vote during a general meeting either in person or through a plenipotentiary. Company s comment: The Company does not apply this rule because it is not justified by the shareholding structure (currently, over 97% of the Company s shares are held by the President and Vice-President of the Company s Management Board), and the remaining shareholders have not reported such a need to the Company. If any of these factors changes, the Company will consider applying this rule. IV. R.3. Where securities issued by a company are traded in different countries (or in different markets) and under different legal systems, the company should strive to ensure that corporate events related to the acquisition of rights by shareholders take place on the same dates in all the countries where such securities are traded. 2

3 Company s comment: The securities issued by the Company are not traded in different countries (or in different markets) or under different legal systems. General meeting and shareholder relations IV.Z.2. If justified by the structure of shareholders, companies should ensure publicly available real-time broadcasts of general meetings. Company s comment: The Company does not apply this rule because it is not justified by the shareholding structure (currently, over 97% of the Company s shares are held by the President and Vice-President of the Company s Management Board), and the remaining shareholders have not reported such a need to the Company. If any of these factors changes, the Company will consider applying this rule. In addition, for recommendation III.R.1, BEST explained how it is applied in the company: III.R.1. The company s structure should include separate units responsible for the performance of tasks in individual systems or functions, unless the separation of such units is not justified by the size or type of the company s activity. Company s comment: Within its structure, the Company has separated an internal audit unit. Fulfilling the compliance function is partly the responsibility of external parties, such as the law firm providing legal services to the Company. The Company has not separated a unit responsible for the risk management system because, in the Management Board s opinion, it is not justified; this function is fulfilled by the Company s Management Board Shareholding information List of shareholders holding, directly or indirectly, at least 5% of the total number of votes at the general shareholders meeting (GSM) Shareholders holding, directly or indirectly, at least 5% of the total number of votes within the meaning of Article 4 item 17 of the Act of 29 July 2005 on public offering, terms of introducing financial instruments to organised trading and on public companies (Journal of Laws No. 184, item 1539): Krzysztof Borusowski Marek Kucner Item Number of shares held 17,160,236 3,120,000 Share in the Issuer s share capital 82.29% 14.96% Number of votes Share in the total vested with shares number of votes at held the Issuer s GSM 23,880, % 3,120, % Identification of holders of all securities with special control rights and description of these rights BEST has not issued any securities vested with special control rights Indication of restrictions on exercising the right to vote, such as the right to vote reserved for holders of a certain share or number of votes, time limits in exercising the right to vote or provisions pursuant to which, in collaboration with the company, equity rights connected with securities are separated from holding securities To the knowledge of BEST s Management Board, the securities issued by BEST are not restricted with respect to exercising the right to vote. BEST s Management Board is not aware of any provisions under which equity rights connected with securities are separated from holding securities Indication of restrictions on transferring the ownership title to the issuer s securities According to information available to BEST s Management Board, the securities issued by BEST are not restricted in terms of transferring the ownership title, except for subscription warrants issued based on resolution no. 2 of BEST s Extraordinary General Meeting of 16 November 2015 on: (i) issuing series A subscription warrants with the right to acquire series C shares, (ii) conditional increase of the share capital, (iii) excluding the pre-emptive right to series C subscription warrants and the pre-emptive right to series C shares, and (iv) authorising the Company s bodies, where such warrants are not transferrable to third parties, i.e. parties other than the Company, and are subject to inheritance. The restriction on the trade in warrants 3

4 results from the purpose for which the warrants were issued, i.e. to fulfil resolution no. 1 of the Company s Extraordinary General Meeting of 16 November 2015 on adopting the Incentive Scheme for the Company s Management Board members for Operating procedures of the General Meeting and its main powers as well as description of shareholders rights and the manner of exercising those rights, in particular the principles resulting from the regulations of the General Meeting Operating procedures of the General Meeting and its main powers The General Shareholders Meeting is convened by the Management Board as an ordinary or extraordinary meeting. The Supervisory Board has a right to convene the Annual General Meeting if the Management Board does not convene it on the date determined by the principles of the Commercial Companies Code or the provisions of the Statute, and the Extraordinary General Meeting, if it deems it justified. The General Meeting takes place in the registered office of the Company, in Gdańsk, in Sopot, in Warsaw or in another place indicated in the notice on convening the General Meeting. The Ordinary General Meeting takes place not later than by the end of June each year. The Extraordinary General Meeting is convened by the Management Board: a) on its own initiative, b) at the request of the Supervisory Board, c) at the request of Shareholders representing in total at least 1/20 of the share capital. Shareholders representing at least a half of the share capital or at least a half of the total number of votes in the Company may convene the Extraordinary General Meeting. Shareholders appoint the chairman of the meeting. It is the sole competence of the General Shareholders Meeting to: a) examine and approve the Company s management report and the financial statements for the previous financial year, b) adopt resolutions on profit distribution or loss coverage, c) acknowledge the fulfilment of duties by members of the Company s authorities, d) amend the Company s statute and adopt its complete text, e) decide on compensation claims for damage caused while incorporating, managing or supervising the Company, f) sell or lease the enterprise or its organised part and establish a limited property right thereon, g) increase or decrease the Company s share capital, h) issue convertible bonds and bonds with pre-emptive rights, i) redeem shares and determine the detailed conditions of such redemption, j) merge, de-merge or liquidate the Company, appoint liquidators and select the manner of conducting liquidation, k) appoint and dismiss Supervisory Board members, l) set out the principles for remuneration and the remuneration amount for members of the Supervisory Board. Resolutions of the General Meeting are passed by an absolute majority of votes, unless the Statute provides otherwise. Each share carries one vote at the General Meeting, unless it is a voting-preference share. Each series A or B registered share carries up to five votes at the General Meeting. Voting is open. Voting by secret ballot is ordered in a situation provided for by the Act or the Statute or at the request of at least one Shareholder who is present or represented at the General Shareholders Meeting Description of shareholders rights and the manner of exercising those rights Property rights of shareholders to BEST s shares include in particular: a) the right to dividend, i.e. a share in the Company s profit disclosed in the financial statements, audited by the statutory auditor, earmarked by the General Meeting for payments to the shareholders (Article 347 of the Commercial Companies Code, CCC). The profit is distributed proportionately to the number of shares. The Company s Statute does not provide for any privileges with regard to this right, which means that the dividend amount is the same for each share; b) pre-emptive right to new shares in proportion to the number of shares held (subscription right); c) the right to participate in the Company s assets remaining after satisfying or securing creditors in the case of 4

5 liquidation (Article 474 of the CCC); the Issuer s Statute does not provide for any privileges in that regard. Corporate entitlements of shareholders related to BEST s shares include in particular: a) the right to participate in the General Meeting (Article 412 of the CCC) and to exercise the right to vote at the General Meeting (Article of the CCC), b) the right to request to convene the Extraordinary General Meeting and to request to include specific matters in the agenda granted to shareholders holding at least 1/20 of the Company s share capital (Article of the CCC), c) the right to appeal against the resolutions of the General Meeting, d) the right to request that the Supervisory Board be elected in separate groups, e) the right to receive information on the Company to the extent and in the manner provided by the laws, f) the right to a registered deposit certificate issued by an entity maintaining a securities account, in accordance with the provisions on trading in financial instruments, and to a registered certificate of the right to participate in the general meeting of a public company, g) the right to request the issue of copies of the Company s management report and financial statements together with a copy of the Supervisory Board s report and the opinion of a statutory auditor, not later than 15 days before the General Meeting (Article of the CCC), h) the right to view, at the Management Board s premises, the list of shareholders entitled to participate in the General Meeting and to request a copy of that list against a reimbursement of the costs of its preparation (Article and 11 of the CCC) or that the list be sent free of charge by , i) the right to request the issue of a copy of motions on issues on the agenda within a week before the General Meeting (Article of the CCC), j) the right to request verification of the attendance list at the General Meeting by a committee elected for that purpose, composed of at least three persons. The motion may be submitted by shareholders holding 1/10 of the share capital represented at the General Meeting. The requestors have a right to appoint one member of the committee (Article of the CCC), k) the right to review the book of minutes and to request the issue of copies of resolutions certified by the Management Board (Article of the CCC), l) the right to file a claim for damage suffered by the Company under Article 486 and 487 of the CCC if the Company does not file a claim for damage it suffered within one year from the date of disclosure of the act causing damage, m) the right to review documents and request the free provision on the premises of the Company of copies of the documents referred to in Article of the CCC (in the case of a merger of companies), Article of the CCC (in the case of a demerger of the issuer), and in Article of the CCC (in the case of a transformation of the issuer), n) the right to review the share register and request the provision of a copy of the register against a reimbursement of the costs of its preparation (Article of the CCC), o) the right to request that an expert audits, at the Company's cost, a given matter related to the incorporation of the Company or the management of its affairs (auditor for special cases) (Article 84 of the Act on public offering) Company s corporate bodies Composition of the Issuer s management, supervisory and administrative bodies and their changes in the last financial year In the period covered by these financial statements and by the date of their preparation, the composition of BEST s Management Board did not change, and it is as follows: 1. Krzysztof Borusowski President of the Management Board 2. Marek Kucner Vice-President of the Management Board 3. Barbara Rudziks Member of the Management Board In the period covered by these financial statements and by the date of their preparation, the composition of BEST s Supervisory Board changed: Until 5 January 2016, the composition of the Supervisory Board was as follows: 1. Sławomir Lachowski Chairman of the Supervisory Board 2. Dr hab. Leszek Pawłowicz, prof. UG Vice-Chairman of the Supervisory Board 3. Dr hab. Dariusz Filar, prof. UG Member of the Supervisory Board 5

6 4. Dr hab. Pasąuale Policastro, prof. US Member of the Supervisory Board 5. Katarzyna Borusowska Member of the Supervisory Board 6. Patrycja Kucner Member of the Supervisory Board On 5 January 2016, BEST S.A. s Extraordinary General Meeting appointed Krzysztof Kaczmarczyk to sit on the Supervisory Board, thus increasing the number of the Supervisory Board s members to 7 people Share in the shareholding As of 31 December 2015, BEST s managers held the following stakes of BEST s shares: Item Number of shares held Number of votes Share in the Issuer s vested with shares share capital held Share in the total number of votes at the Issuer s GSM* Krzysztof Borusowski 17,160, ,880, Marek Kucner 3,120, ,120, Barbara Rudziks 53, , * within the meaning of Article 4 item 17 of the Act of 29 July 2005 on public offering, terms of introducing financial instruments to organised trading and on public companies (Journal of Laws No. 184, item 1539) According to information available to the Company, none of BEST s supervisors holds BEST shares or interests in BEST s related parties. As of 31 December 2015, Krzysztof Borusowski held interests in the following parties with no capital ties to BEST: Ravioni k.s, with its registered office in Slovakia % of interests. Ravioni k.s. held 100% of interests in Ravioni Holdings Limited, with its registered office in Cyprus. As at 31 December 2015, Marek Kucner held shares in the following entities with no capital ties to BEST: Marcus Capital k.s, with its registered office in Slovakia % of interests. Marcus Capital k.s. held 100% of interests in Fermio Holdings Limited, with its registered office in Cyprus. As of the preparation date of this report, the above companies are in liquidation Description of principles regulating the appointment and dismissal of managerial staff and their rights, in particular, the right to decide on the issue or purchase of shares BEST s Management Board is composed of 1 to 3 persons appointed and dismissed by the Supervisory Board in a secret ballot by an absolute majority of votes for a joint term of office. The term of office of the Management Board lasts three years. A Management Board Member may be dismissed at any time. The Management Board manages the activities of BEST, adopts resolutions and makes decisions in all matters not restricted to the competencies of the General Meeting or the Supervisory Board. The responsibilities of the Supervisory Board include suspending, for important reasons, individual or all members of the Management Board and delegating members of the Supervisory Board for a period not longer than three months to temporarily perform functions of members of the Management Board who were dismissed, resigned or cannot perform their duties for other reasons. The Management Board has a right to decide on the issue of shares because in BEST there is the instrument of authorised capital. Pursuant to 7b section 1 of the Statute, BEST s Management Board is authorised, by 16 November 2018, to increase the share capital by not more than PLN 5,000,000 (five million zlotys 00/100) (authorised capital). The Management Board may exercise its power by increasing the share capital on one or several consecutive occasions; however, shares may be acquired both in exchange for contributions in cash and contributions in-kind. Pursuant to 7b section 2 of BEST s Statute, the Management Board shall adopt resolutions on all matters related to increasing the Company s share capital within the 6

7 authorised capital. The Management Board s resolutions on setting the issue price and on issuing shares in return for contributions in kind require a consent of the Supervisory Board. Pursuant to 7b section 2 of BEST s Statute, in the case of a share capital increase according to section 1, the Management Board is authorised to deprive the existing shareholders of their pre-emptive right in full or in part, with the Supervisory Board s consent. The Management Board does not have a right to decide on the repurchase of shares because this right is reserved for the General Meeting Activity of the Issuer s management, supervisory and administrative bodies and their committees Functioning of the Management Board The Management Board manages the Company, adopts resolutions and makes decisions in all matters not reserved for the General Meeting or the Supervisory Board. A detailed assignment of competencies and responsibilities of Members of the Management Board, the procedure for adopting resolutions by the Management Board and its operating procedures are defined in the Management Board s Regulations. In relations with employees, the Management Board represents the employer within the meaning of the Labour Code, according to general principles. The following matters require a resolution by the Management Board: a) matters beyond the scope of normal activities of the Management Board and matters to which at least one Member of the Management Board objects, b) convening and determining the agenda of the General Shareholders Meeting in the case when the body convening the General Shareholders Meeting is the Company s Management Board, c) including particular issues on the agenda of the Supervisory Board and preparing written proposals to the Supervisory Board, d) establishing commercial representation, e) adopting internal normative acts not restricted to the competence of other bodies of the Company, f) accepting the financial statements of the Company and the capital group as well as the management report of the Company and the capital group for a given financial year, g) preparing a proposal on profit distribution or loss coverage, h) determining the date of dividend payouts, into consideration the dates set by the General Shareholders Meeting, i) adopting the Company s budget for a given year, j) approving orders for goods or services not included in the budget, with a value in excess of PLN 1,000 (one thousand zloty). Resolutions of the Management Board are adopted by an absolute majority of votes, and in the event of a tied vote, the President of the Management Board shall have the decisive vote. Before the Company concludes a significant agreement with a related party, the Management Board in each case presents a proposal to the Supervisory Board for the approval of such a transaction. The meetings of the Management Board are held when needed, but not less frequently than once a month in the registered office of the Company or in another place indicated in the notice on the planned meeting. Each Member of the Management Board has a right to convene the meeting, but each Member of the Management Board shall receive the notice at least one day before the planned date of meeting. Moreover, each Member of the Management Board has a right to convene a meeting of the Management Board ad hoc at any time, provided that the convocation of the meeting in such manner requires the consent of the other Members of the Management Board Functioning of the Supervisory Board The functioning of the Supervisory Board is regulated in the Supervisory Board Regulations adopted on 21 February 2012, which are available at the Issuer s website in the tab Information for investors/corporate Governance. The resolutions of the Supervisory Board may be adopted if at least half of its Members are present at the meeting, and all Members of the Supervisory Board have been informed of the meeting. The notification on the date of meeting is deemed effective if it is sent to the address for service of telegram, telex, fax, registered letter or notification made in another written 7

8 form with acknowledgement of receipt provided by the Member of the Supervisory Board or if it is sent to the address indicated by the Member of the Supervisory Board seven (7) days before the date of meeting. In justified cases, the Chairman may reduce this period to 3 days. The resolutions of the General Meeting are passed by an absolute majority of votes, unless the Statute stipulates otherwise. In the event of a tied vote, the Chairman of the Supervisory Board shall have the casting vote. The meetings of the Supervisory Board are held when needed but not less frequently than three times per financial year, and are convened by its Chairman, on their own initiative, at the request of the Management Board or at least one Member of the Supervisory Board. The Members of the Supervisory Board may participate in passing the Supervisory Board s resolutions through voting in writing via another Member of the Supervisory Board. It is not possible to vote in writing on matters included in the agenda at the meeting of the Supervisory Board. The Supervisory Board may adopt resolutions in writing or using means of direct remote communication. A resolution is valid if all members of the Supervisory Board have been notified of the contents of the draft resolution. Adopting resolutions (i) in writing via another Member of the Supervisory Board, (ii) in writing or using means of direct remote communication may not concern: a) electing the Chairman and the Vice-Chairman of the Supervisory Board, b) dismissing and suspending Members of the Management Board. The Members of the Supervisory Board can fulfil their duties in the Supervisory Board only in person. The Supervisory Board performs its duties collectively; however it may delegate its Members to independently perform supervisory activities. The members of the Supervisory Board delegated to permanently and individually perform supervisory tasks receive separate remuneration whose amount is determined by the General Meeting. The General Meeting may delegate this power to the Supervisory Board. The Supervisory Board adopts its Regulations, which determine the organisation and manner of performance of activities by the Supervisory Board. There are two committees in the Supervisory Board: the Audit Committee and the Remuneration Committee, which are advisory and opinion-giving bodies. The Remuneration Committee is composed of dr hab. Pasquale Policastro, prof. US Chairman of the Committee, dr hab. Leszek Pawłowicz, prof. UG Member of the Committee and Patrycja Kucner Member of the Committee, and the Audit Committee is composed of dr hab. Dariusz Filar, prof. US Chairman of the Committee, Sławomir Lachowski Member of the Committee, and Katarzyna Borusowska Member of the Committee. Since 15 January 2016, Krzysztof Kaczmarczyk has also been a member of the Audit Committee. The Audit Committee is an opinion-giving and advisory body of the Supervisory Board which supervises the following activities of BEST: 1) the process of financial reporting, in particular through: a) issuing opinions regarding the accounting policy functioning in the Company and the applied principles of preparing financial statements, b) verifying financial statements, including the correctness and completeness of their contents, c) analysing the a statutory report on the audit of the financial statements, d) assessing the process of communicating financial information; 2) the functioning of the internal control system through: a) assessing the effectiveness of individual elements of the system, including elements regarding financial reporting and security of the IT solutions used, b) analysing any disclosed irregularities in the internal control system; 3) the process of risk management in the area of: a) assessing the effectiveness of risk management by the Management Board in the areas of financial, operating and strategic risks of the Company, b) understanding the impact of business risk on the financial statements, c) assessing the Company s policy regarding property insurance and civil liability insurance for members of its bodies; 4) the functioning of the internal audit, in particular through: a) issuing opinions regarding candidates for the post of the head of the division responsible for internal audit, requesting/giving opinion regarding their dismissal, b) reviewing and giving opinions regarding the regulations, work plan, budget analysis and the structure of internal 8

9 audit, c) periodically assessing the implementation of the audit plan and actions taken by the Management Board in response to issues identified by internal audit; 5) the process of auditing financial statements, in particular through: a) recommending an entity to audit the financial statements, b) giving opinions regarding the amount of remuneration for the entity authorised to audit financial statements, c) assessing the independence of the statutory auditor, d) communicating regarding the scope of the plan, methods and results of the statutory auditor s work, e) giving opinions regarding additional services provided to the company by the entity authorised to audit, f) auditing matters which are the reason for resigning from the services of an external auditor and making recommendations regarding required actions. The Remuneration Committee is a consultative and opinion-giving body of the Supervisory Board with the following competencies: 1) presenting the Supervisory Board with proposals regarding the rules of remunerating Members of the Management Board, 2) presenting the Supervisory Board with proposals regarding the remuneration of individual Members of the Management Board, 3) presenting the Supervisory Board with proposals regarding relevant forms of agreements between the Company and a Member of the Management Board, 4) presenting the Supervisory Board with proposals regarding rules of implementing systems based on share options or other incentives based on shares. Both Committees submit an annual report on their operations to the Supervisory Board Principles of amending the Issuer s statute or articles of association An amendment to the statute requires a resolution of the General Meeting and an entry to the register. A resolution on amending the statute requires a ¾ majority of votes at the General Meeting. A resolution regarding amendments to the statute, increasing shareholders contributions or limiting rights granted personally to individual shareholders requires the consent of all shareholders concerned Major characteristics of the Issuer s business as regards systems of internal audit and risk management applicable to the process of preparation of financial statements and consolidated financial statements. The Group companies prepare their financial statements based on various legal regulations, which, for consolidation purposes, are restated according to the International Financial Reporting Standards. 9

10 Party BEST S.A. BEST TFI S.A. BEST Capital FIZAN BEST 1NSFIZ BESTII NSFIZ Best Capital (CY) Ltd. Kancelaria Radcy Prawnego Rybszleger Sp. k. Best Nieruchomości Sp. z o.o. Actinium Inwestycje sp. z o.o. Actinium sp. z o.o. Gamex sp. z o.o. Regulations based on which separate financial statements are prepared IFRS Regulations of the European Commission IFRS Regulations of the European Commission Ordinance of the Minister of Finance concerning accounting rules for investment funds Ordinance of the Minister of Finance concerning accounting rules for investment funds Ordinance of the Minister of Finance concerning accounting rules for investment funds IFRS Regulations of the European Commission Preparing financial statements and consolidated financial statements is a multi-step process. Each stage ends with a verification and confirmation of data consistency. We constantly monitor significant factors of legal, tax, economic and operating risks. Those individuals responsible for managing assets verify them for completeness, usefulness and impairment. Individuals responsible for carrying out contracts and individuals conducting court cases identify the potential risks related to their course and implementation. Many processes of processing accounting data are automated, which minimises the risk of errors. Financial data and descriptive data for the purposes of the financial statements of BEST, BEST TFI, BEST Nieruchomości, the law firm, Actinium Inwestycje, Actinium sp. z o.o., Gamex sp. z o.o. and Gamex Inwestycje sp. z o.o. are prepared by the employees of the Financial and Accounting Division of BEST on the basis of entries in the general ledger and information received from individuals responsible for managing assets, performing contracts, managing court cases, and from the management board members of these companies. Financial data and descriptive data for the purposes of financial statements of the remaining Group entities are provided by the entities entrusted with bookkeeping, supervised by the employees of the Financial and Accounting Division of BEST. Before preparing individual elements of the financial statements, the employees responsible for that task confirm the consistency of accounting data with the factual status and the completeness of the recognition of financial operations in the accounting books. The Chief Accountant supervises the process of preparing the financial statements in terms of the correctness of their contents. The prepared statements are subject to verification and approval by the management boards of individual entities, and in the case of BEST I NSFIZ, BEST II NSFIZ and BEST Capital FIZAN, by the management board of BEST TFI. Before approval, the financial statements undergo assessment, the financial data are analysed in comparison to the assumptions and all deviations are explained. 10