Management Board Report on the activity of the JSW S.A. for 2012

5.10. Manner of operation of the Shareholder Meeting, its basic powers and a description of shareholder’s rights and how they are exercised

The manner of operation of the JSW S.A. Shareholder Meeting and its powers are defined in the Company's Articles of Association and in the JSW S.A. Shareholder Meeting Bylaws (adopted by the Shareholder Meeting) available at www.jsw.pl.

A Shareholder Meeting is convened in accordance with the procedure and rules set forth in the provisions of law. Shareholder Meetings are held in Warsaw, in Katowice or at the Company’s seat.

A Shareholder Meeting is convened by way of an announcement published on the Company's website and in the form of a current report. The announcement is posted on the Company's website and the current report is sent no less than 26 days before the date of the Shareholder Meeting. The persons or the body other than the Management Board that individually convenes the Shareholder Meeting shall promptly notify the Company’s Management Board about this fact and deliver in writing or electronically a relevant resolution or statement on convening the Shareholder Meeting, the agenda, draft resolutions and justifications. If the Shareholder Meeting is convened by Shareholders then they shall also deliver documents confirming the mandate the convene the Shareholder Meeting. The Management Board performs all the activities defined by the law in order to hold an effective Shareholder Meeting.

The Shareholder Meeting shall be opened by the Supervisory Board Chairman or, in his/her absence, the following persons shall be authorized to open the Shareholder Meeting in the following order: a person named by the Supervisory Board Chairman, the Supervisory Board Deputy Chairman, the President of the Management Board, a person appointed by the Management Board or the shareholder who has registered shares at the Shareholder Meeting entitling him/her to exercise the largest number of votes. Subsequently, the Chairman of the Shareholder Meeting shall be elected from among the persons authorized to participate in the Shareholder Meeting.

Resolutions of the Shareholder Meeting are adopted by an absolute majority of votes, unless the Articles of Association or the Commercial Company Code set forth other conditions for adopting a particular resolution.

A Shareholder Meeting may be held if at least 50% of the share capital is represented at the Shareholder Meeting. Any adjournments in the meeting that go beyond a “short technical break” are ordered by the Shareholder Meeting by way of adopting a resolution by a majority of two thirds of the votes. The total duration of the breaks may not exceed 30 days.

Each shareholder who intends to take part in the Shareholder Meeting, directly or by proxy, is obligated to notify the Management Board or the Shareholder Meeting Chairman that he/she holds directly or indirectly more than 10% of total votes in the Company.

Powers of the Shareholder Meeting

Without prejudice to §33 item 2, §34 item 1 and §34 item 3 of the Company’s Articles of Association, the following matters shall require a resolution of the Shareholder Meeting:

1. examination and approval of the Company’s Management Board activity report and the financial statements for the previous financial year and discharging members of the Company’s corporate bodies on the performance of their duties,
2. distributing profits or covering losses,
3. changing the Company’s line of business,
4. amending the Company’s Articles of Association,
5. increasing or decreasing the share capital,
6. authorizing the Management Board to purchase the Company’s treasury stock for retirement and specifying the manner and conditions for retiring stock,
7. merging, splitting up or transforming the Company,
8. dissolving or liquidating the Company,
9. appointing or dismissing Supervisory Board members,
10. setting remuneration for Supervisory Board members,
11. allowing the Company to enter into a loan agreement, a surety agreement or another similar agreement with a Management Board member, a Supervisory Board member, a general proxy or a liquidator or in favor of any such person,
12. allowing a subsidiary to enter into a loan agreement, a surety agreement or another similar agreement with a Management Board member, a Supervisory Board member, a general proxy or a liquidator or in favor of any such person,
13. issuing bonds,
14. selling or leasing an enterprise or an organized part thereof and establishing a limited right in rem thereon,
15. making decisions on claims to remedy damages incurred during the establishment of the Company or in its management or oversight,
16. establishing or dissolving the Company’s capitals and funds.

The purchase or sale of a real property or a right of perpetual usufruct or of a share in a real property or in a right of perpetual usufruct shall not require consent of the Shareholder Meeting.

Rights of Shareholders

The rights of JSW S.A. shareholders are set forth in the Company's Articles of Association.

An Extraordinary Shareholder Meeting may be convened by:

• The Management Board - at its own initiative or at the request of the Shareholders representing at least one-twentieth of the share capital;
• The Supervisory Board - if it considers it necessary to convene it;
• Shareholders representing at least one-half of the share capital or at least one-half of all the votes in the Company;
• The Shareholder Meeting - following the procedure set forth in Art. 404 §2 of the Commercial Companies Code.

The request to convene a Shareholder Meeting, place an item in the agenda of a Shareholder Meeting, draft resolutions concerning the items included in the agenda of the closest Shareholder Meeting or the items which will be included in the agenda should be submitted to the Management Board in writing or in the electronic form. Authorization documents of the persons authorized to take action should be attached to the request.

A Shareholder or Shareholders representing at least one-twentieth of the share capital may request that the specified items be placed in the agenda of the closest Shareholder Meeting. The request should be submitted to the Management Board no later than twenty one days before the set date of a Shareholder Meeting. The request should contain a justification or draft resolution pertaining to the proposed item on the agenda. The Management Board is obligated to announce changes to the agenda made upon request of the Shareholders immediately, but no later than eighteen days before the set date of a Shareholder Meeting. Announcement is done following the same procedure as for convening a Shareholder Meeting.

A Shareholder or Shareholders representing at least one-twentieth of the share capital may submit to the Company - before the date of a Shareholder Meeting - the draft resolutions concerning the items included in the agenda of a Shareholder Meeting or the items which will be included in the agenda. The Company will immediately post the draft resolutions on the website.

Every Shareholder may, during a Shareholder Meeting, submit draft resolutions on matters included in the agenda. Draft resolutions and motions submitted during a Shareholder Meeting should be prepared in writing.

 

A Shareholder has the right to request copies of motions concerning items included in the agenda within one week prior to the date of holding a Shareholder Meeting.

Persons who are Company's Shareholders sixteen days before the date of a Shareholder Meeting (date of registration of participation in a Shareholder Meeting – “record date”) and who satisfy the following conditions have the right to participate in the Shareholder Meeting:

• in case of persons authorized on the basis of dematerialized bearer shares – they have submitted to the entity keeping the securities account, no earlier than after the announcement on convening the Shareholder Meeting and no later than on the first business day after “record date”, the request to issue a name-specific certificate on the right to participate in a Shareholder Meeting.
• in case of persons authorized on the basis of bearer shares in the form of a certificate – they submitted the share certificates to the Company no later than on the “record date” and did not collect them before closing of that day. Certificates attesting that shares have been deposited with a notary, a bank or an investment firm having its place of business or branch on the territory of the European Union or the state which is a party to the European Economic Area agreement specified in the notice on convening a Shareholder Meeting, may be deposited in lieu of shares. Such certificate should specify the numbers of share certificates and contain a statement that the share certificates will not be released before closing of the “record date”.
• in case of persons authorized on the basis of registered shares and interim certificates as well as pledgees and users who have the right to vote – will be entered in the share book on “record date”.

Shareholders may familiarize themselves with the list of the authorized persons which will be displayed in the Management Board's offices for three business days preceding the date of the Shareholder Meeting and may demand a copy of the list against the cost of preparing such a list. Moreover, each Shareholder may request the list of authorized shareholders to be sent to it free of charge by e-mail, specifying the address to which the list should be sent.

Each participant of a Shareholder Meeting may submit one candidate to become the Shareholder Meeting Chairperson. Election is carried out with participation of the candidates who expressed their consent for being candidates.

The Shareholder Meeting may appoint the Election Committee consisting of up to 3 persons. Voting at a Shareholder Meeting is conducted taking into account the limitations in exercise of voting right resulting from §9 of the Company's Articles of Association. Voting on the given item is conducted after holding the discussion. The formulated statements should be specific and they should unequivocally refer to the item which is currently being examined. A Shareholder may vote in a different way from each of the shares held by it. Votes are cast in an open ballot. Secret balloting is ordered for elections, dismissals, in personal matters and on the motions to charge the members of governing bodies or liquidators with accountability. Secret balloting should be also ordered at the request of at least one Shareholder in attendance.