Consolidated financial statement of JSW S.A. Capital Group for 2012

5.2. Employee package for ineligible employees

On 12 May 2011, the Extraordinary Shareholder Meeting adopted a resolution to issue 3,954,210 series C shares with a par value of PLN 5.00 each. The share capital increase associated with the issue of new series C shares, which was used to distribute shares to ineligible employees of JSW S.A. and related companies, was registered on 19 September 2011. The share capital increase was funded with the reserve capital established by with Resolution no. 4 adopted by the Extraordinary Shareholder Meeting on 12 May 2011 and charged to the reserve capital established from the Company's profit.

According to the provisions of IFRS 2, in 2011 JSW S.A. measured its employee share ownership plan. The difference amount between the par value of the issued series C shares and their fair value, determined on the basis of the Parent Company's market value, was recognized as the surplus of the issue price of the shares over their par value. The effects of the measurement are included in the financial result item “Employee share ownership plan”. The plan was fully settled in the year in which it was implemented.

The following table presents the financial effect of the share issue carried out in 2011:

	Share capital	Share premium account	Retained earnings	Financial result
Measurement of the employee share ownership plan	19.8	282.2	(9.0)	(293.0)

download table

On 27 February 2012, the Supervisory Board approved the JSW S.A. Management Board's resolution setting the number of shares earmarked for each group of Ineligible Employees grouped by periods of employment. In effect of the distribution of series C shares among respective employee tenure groups eligible to receive shares in this series, 2,157,886 out of 3,954,210 issued series C shares were designated for gratuitous disposal. Accordingly, there will be 1,796,324 unused series C shares remaining. The Supervisory Board issued a positive opinion on the Management Board's proposal to recommend retirement of 1,796,324 series C shares to the Shareholder Meeting of JSW S.A. On 17 April 2012, the Extraordinary Shareholder Meeting adopted a resolution to retire the surplus shares. The allocation process of series C shares started on 1 March 2012.