Corporate governance

The PZU joint stock company was established on 23 December 1991, transformed from the state-owned Państwowy Zakład Ubezpieczeń. PZU conducts its operations under the Insurance and Reinsurance Act of 11 September 2015 (Journal of Laws of 2017, item 1170, as amended). A milestone in the PZU Group development was the public offering of its shares on the Warsaw Stock Exchange, which took place on 10 May 2010. PZU follows the Best Practices of Companies Listed on the WSE.

Since 31 January 2012, PZU has been included in the RESPECT Index - the first index of socially responsible companies in Central and Eastern Europe. Since that time, the areas of Environment, Social and Governance (ESG) have been subject to independent verification under the RESPECT Index audits.

In PZU, ethical matters are managed by the Compliance Department - an independent organizational unit reporting to the President of the Management Board. The Compliance Department is responsible for system-based management of compliance risk and other quality-related risks. The Director of the Compliance Department is responsible for oversight over the key compliance function. The Managing Director for Regulations, overseeing the Compliance Department, as well as the Director of the Compliance Department, have direct access to the members of the Company’s Management Board and Supervisory Board, to whom the compliance function reports. The reporting proceeds in monthly and annual reports for the Management Board and quarterly risk reports to the Audit Committee of the Supervisory Board and the Supervisory Board itself, as well as in the form of ad hoc information provided to the members of the Company’s statutory bodies if need arises. At the same time, every year the PZU Management Board approves a Compliance Analysis Plan for a given year, which specifies additional areas to be subject to analysis, including the ethical matters.

Bank Pekao, as well as Alior Bank, have designated an independent organizational unit reporting directly to the President of the Management Board. In Bank Pekao, ethical matters are managed by the Compliance Department; in Alior Bank, they are managed by the of Regulation Compliance Department. These Departments prepare and present to the Bank’s Management Board and the Audit Committee of the Supervisory Board (quarterly) reports of compliance risk monitoring, including information on the identified compliance risk level in the individual area and the recommendations made to mitigate or eliminate the identified risk. Furthermore, the Departments present an Annual Plan of the Compliance unit activities and an annual Report on compliance risk management to the Bank’s Management Board, the Audit Committee of the Supervisory Board and the Supervisory Board.

Compliance and ethical matters management structure:

Group’s Organizational Structure

Shareholder Meeting

The highest corporate body of PZU is the Shareholder Meeting, operating pursuant to the Commercial Company Code and the Articles of Association. The Shareholder Meeting adopts decisions regarding PZU organization and operation. Resolutions are adopted by an absolute majority of votes, except in special cases provided for in the relevant laws.

Supervisory Board

The Supervisory Board exercises continuous oversight over PZU operations. It is composed from seven to eleven members. The Board’s organization and work are defined in the Rules and Regulations of PZU Supervisory Board, adopted in February 2016.

Supervisory structure of PZU and PZU Życie

Management Board

The Management Board exercises any and all rights related to managing PZU which are not otherwise reserved for the Shareholder Meeting or the Supervisory Board by law or by the provisions of the Articles of Association. Two Management Board members acting jointly or one Management Board member acting with a commercial proxy, are authorized to represent the Company. The Management Board adopts its rules and regulations, which are approved by the Supervisory Board. The Management Board is composed of three to seven members appointed for a shared term of three years.

Management structure of PZU and PZU Życie

Audit Committee

The Audit Committee is appointed by the PZU Supervisory Board. The majority of the Audit Committee members, including the chairperson, satisfy the independence criteria defined in the Act on Statutory Auditors, Audit Firms and Public Supervision, and at least one member has knowledge and skills of accounting or audit of financial statements in accordance with the Act. The Audit Committee is an advisory and consultative body to the Supervisory Board and is appointed to improve the effectiveness of the Supervisory Board’s oversight activities in respect of the correctness of financial reporting, the effectiveness of internal control system, including internal audit, and the risk management system.

Compliance

PZU operates a compliance system, which supports the organization in conducting its business in a purposeful, lawful an ethical way. This system comprises standards of conduct and ethical norms, which support the organization in the mitigation of compliance, corruption and conflict of interests risks, and in the identification and prevention of irregularities.

In 2018, PZU and PZU Życie updated, inter alia, the anti-corruption program, the conflict of interests management rules and the whistleblowing procedure, which in principle have been or will be updated in the remaining PZU Group companies, including Link4. Information about the updated standards of conduct and compliance risk was presented to the organization, inter alia, at the annual Compliance Week, organized by the Compliance Department.

The compliance system in PZU’s direct or indirect subsidiaries, with which agreements have been concluded on cooperation or exchange of information, is based on, and consistent with, the principles deployed by PZU.

More information about the system of management for ethical matters, compliance and corporate governance of the Alior Group and the Pekao Group can be found in separate reports on the operation of those entities.