- JSW GROUP
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We apply the highest standards and best practices in the area of transparency and corporate governance. We are implementing solutions related to the management of ethics and responsibility in managing the supply chain. This enhances our credibility among business partners and investors. As a WSE-listed company, we are introducing the highest standards in reporting, including financial and non-financial reporting.
In 2018, the Parent Company applied the corporate governance rules set forth in the document entitled “Code of Best Practice for WSE Listed Companies 2016” adopted by Resolution no. 26/1413/2015 of the Warsaw Stock Exchange Supervisory Board on 13 October 2015. The text of the Code of Best Practice 2016 is published on the website of the Warsaw Stock Exchange at the following address: https://www.gpw.pl/dobre-praktyki
Moreover, the information on the status of the JSW’s observance of recommendations and rules included in the Code of Best Practice 2016 is available on the JSW corporate website at: http://www.jsw.pl/relacje-inwestorskie/lad-korporacyjny/dobre-praktyki/.
JSW does not apply any corporate governance rules going beyond the requirements prescribed by the document entitled “Code of Best Practice for WSE Listed Companies 2016”.
JSW does not apply any corporate governance rules going beyond the requirements prescribed by the document entitled “Code of Best Practice for WSE Listed Companies 2016”.
JSW does its utmost to apply the corporate governance rules prescribed by the document entitled Code of Best Practice for WSE Listed Companies 2016. In 2018, JSW resigned from applying the following rules:
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 shareholder meeting using such means, in particular through:
Explanation:
The Company is refraining from using that rule because of legal as well as organizational and technical risks which may threaten the correct course of the shareholder meeting if shareholders are provided with a possibility of participating in the meeting via remote channels. The rules for participating in shareholder meetings, which currently prevail in JSW, allow the shareholders to effectively exercise all their rights attached to shares and secure the interests of all shareholders.
In its internal regulations, the Company should define the criteria and circumstances under which a conflict of interest may arise in the company, as well as the rules of conduct where a conflict of interest has arisen or may arise. The company’s internal regulations should among others provide for ways to prevent, identify and resolve conflicts of interest, as well as rules of excluding members of the management board or the supervisory board from participation in reviewing matters subject to a conflict of interest which has arisen or may arise.
Explanation:
JSW is refraining from using that rule until proper changes are made to corporate documents prevailing in JSW.
Moreover, JSW does not use rules I.Z.1.10., III.Z.6., VI.Z.2. and recommendation IV.R.3 because they do not apply to the Parent Company.
For the purpose of procuring that the financial statements are true and fair and comply with the binding regulations of law and of generating high quality financial data, the Group has in place internal control and risk management systems. The Parent Company’s Management Board is responsible for the internal control system and its effectiveness in the process of preparing the financial statements and the periodic reports prepared and published in accordance with the principles of the Regulation.
Under the internal control and risk management system, in the process of preparing financial statements the Group applies a number of procedures and internal bylaws whose purpose is to procure effective and efficient control as well as identification and elimination of prospective risks. The system is implemented mostly on the basis of:
The process is also implemented through the Group companies using unified models of financial statements, audit and revision of the financial statements of the key Group companies by the same auditor, and through the process of authorizing and opining the financial statements prior to their publication.
The preparation of financial statements is supervised by the Vice-President of the Management Board for Financial Matters. The Chief Accountant Department is responsible for preparing the standalone and consolidated financial statements, and the Management Boards of the consolidated companies are responsible for preparing the reporting packages for the Group’s consolidated financial statements.
In order to ensure the application of uniform accounting principles, JSW adopted the IFRS-based Documentation of Accepted Accounting Policies, which is binding on JSW and Group companies (principally with respect to the preparation of consolidation packages for the purposes of the consolidated financial statements). The Group companies prepare IFRS-compliant financial statements. Amendments to IFRS are monitored on an ongoing basis, in order to update the Documentation of Accepted Accounting Policies and the scope of disclosures in the financial statements.
The Parent Company continuously employs cohesive IFRS-compliant accounting rules to present financial data in the financial statements, periodic reports and other reports conveyed to shareholders. The same rules are in force in the Group’s member companies in which JSW is the Parent Company.
The data disclosed in the financial statements come from JSW’s accounting records and additional information transmitted by JSW’s various organizational cells. However, the Group companies transfer the required data in the form of reporting packages to prepare consolidated financial statements.
The data from the accounting ledgers ensure the accuracy of the financial statements as they contain evidence entered on the basis of the appropriate source documentation, while using the most modern IT technology. The system’s modular structure provides for a transparent split of areas and competencies, the coherence of the records of operations in the accounting ledgers and control between the ledgers. Access to data in different cross-sections and layouts is achievable through an expanded reporting system. On an ongoing basis, JSW updates its IT system to the changing rules of accounting and other legal standards, which is supported by the high degree of flexibility in the functionalities of the system’s various modules. Consolidated financial statements are prepared using specialized IT tools. The IT solutions used by the Group secure control of access to the finance and accounting system and provide for the appropriate protection and archiving of the accounting ledgers. The security of operating the IT system is afforded by the relevant structure of authorization. Control of access is exercised at every stage of preparing the financial statements, starting from entering source data, through data processing to generating output information. The Group uses the security systems on the hardware and system levels.
The Supervisory Board evaluates the standalone and consolidated financial statements and has appointed an Audit Committee, which is an advisory and opinion-giving body. The primary objective of the Audit Committee’s operation is to support the Supervisory Board in exercising financial supervision and delivering to the Supervisory Board accurate information and opinions, enabling the making of the right decisions on financial reporting, internal control and risk management, as well as to monitor independence of the audit firm auditing the financial statements.
According to the binding regulations, JSW submits its financial statements to an audit (annual statements) and a review (interim semi-annual statements) by an independent statutory auditor. The JSW Supervisory Board selects the statutory auditor from among reputable audit firms based on the Audit Committee’s recommendations. Within the framework of its audit work, the statutory auditor makes an independent evaluation of the accuracy and correctness of the standalone and consolidated financial statements and confirms the effectiveness of the internal control and risk management system.
The fundamental element of risk management in the process of preparing financial statements is to audit the control mechanisms and the occurrence of risks in JSW’s operations. In performing these duties, the internal audit division assists the Audit Committee by conducting the relevant work to check the effectiveness of control and the efficiency of processes. The Internal Audit division performs audit tasks of an assurance and consulting nature and ad hoc audits.
The internal control system covers all the JSW operations contemplated in the Articles of Association and all the levels of organizational structure, and thereby all the processes in JSW, including areas having a direct or indirect impact on the correctness of preparing the financial statements. The Internal Control System (“ICS”) encompasses the system of financial and IT solutions related to control as well as relevant regulations, procedures and organizational structures. Activities of ICS serve the purpose of ensuring the organization’s effective and efficient operations, credibility of financial reporting and compliance of the operations with laws and internal regulations. The Parent Company checks the functioning of the ICS and its control mechanisms on a regular basis and indicates potential risks in the processes.
The Company’s Articles of Association are amended by way of a resolution adopted by the Shareholder Meeting where a subsequent decision of a relevant court must be issued to enter the amendment in the national court register. An amendment to the Articles of Association materially changing the Company’s line of business (Article 416 § 1 of the Commercial Companies Code) shall not require a buyout of the shares held by shareholders objecting to such an amendment if the relevant resolution of the Shareholder Meeting is adopted by a majority of two thirds of the votes in the presence of shareholders representing at least one half of the share capital.
The diversity policy has been expressed in the Ethics Code adopted by the Group. The document contains the most essential features of ethics, anti-corruption and anti-discrimination policy as well as principles of respect for diversity and tolerance. The Ethics Code also contains the rules for reporting irregularities, the duty to comply with occupational health and safety rules, minimizing impact on the natural environment and local community, refraining from activities competing with or prejudicial to the Group, and building honest relations with partners. In anticipation of new requirements and expectations resulting from standards recommended for compliance management systems as regards preventing corruption and protection of whistleblowers in listed companies, a change of the Code of Ethics is also planned to extend the above principles and standards of conduct.
In respect to JSW’s authorities and its key managers, the selection process includes elements such as: education, professional experience and competence and it does not disqualify the candidates in any way by any of the diversity policy elements specified in this principle.
| DIVERSITY IN MANAGEMENT BOARDS AND SUPERVISORY BOARDS OF GROUP COMPANIES | 2018 | 2017 | GROWTH RATE 2017=100 |
|---|---|---|---|
| MANAGEMENT BOARDS | 25 | 30 | 83.3 |
| Women | 8 | 5 | 160.0 |
| Men | 17 | 25 | 68.0 |
| SUPERVISORY BOARDS | 50 | 59 | 84.7 |
| Women | 10 | 12 | 83.3 |
| Men | 40 | 47 | 85.1 |
The internal control system in operation in JSW covers all JSW operations contemplated in the Articles of Association and all levels of organizational structure, and thereby impacts all processes taking place at JSW. The system defines activities in the areas of internal control, risk management, compliance, internal audit and others that have direct or indirect influence on correctly compiled financial statements. The system involves numerous implemented control mechanisms and internal regulations.
The internal control system area is subject to the Internal Control System Operation Bylaws, a set of regulations and principles underlying the construction, operation and usage of the internal control system at JSW in accordance with the Company’s Articles of Association.
The Company’s internal control system is permanently embedded in the management process. and based on identification and assessment of risk related to processes and activities conducted in all organizationally separate units. Identified risk is used to design and implement respective internal control mechanisms. The mechanisms should protect the Company against the risk that identified threats for achieving JSW objectives will materialize.
The Company’s internal control system comprises all regulations, procedures and organizational structures that act together to ensure:
The internal control system, permanently and consistently embedded in the JSW management system, allows supervising conducted activities as a whole and is oriented on recognizing and assessing the entirety of risk at JSW, including risk related to each operation. The impact of risk on individual Group areas of activity is assessed with respect to its importance.
The purpose of the internal control system is to support management, achieve set goals, increase the efficiency of tasks and ensure its safe and stable operation.