Principles of Governance

KGHM Polska Miedź S.A. has endeavoured at every stage of its operations to carry out the recommendations and principles respecting “Best Practice” for listed companies.

Principles of Governance

Corporate governance

KGHM Polska Miedź S.A., whose shares are listed on the Warsaw Stock Exchange, in 2019 was subject to the corporate governance principles described in the document “Code of Best Practice for WSE Listed Companies 2016” (hereafter “Best Practice”), which was adopted by Resolution No. 26/1413/2015 of the Warsaw Stock Exchange Supervisory Board on 13 October 2015. 

 These principles are available on the official website of the Warsaw Stock Exchange devoted to this subject (https://www.gpw.pl/dobre-praktyki) as well as on the website of KGHM Polska Miedź S.A. under the section devoted to corporate governance (https://kghm.com/pl/inwestorzy/lad-korporacyjny/stosowanie-ladu-korporacyjnego).

KGHM Polska Miedź S.A. has endeavoured at every stage of its operations to carry out the recommendations and principles respecting “Best Practice” for listed companies. KGHM Polska Miedź S.A. did not apply the Recommendation IV.R.2 belonging to the “Best Practice” in 2019, which states that, if justified, a company should enable its shareholders to participate in general meetings using electronic means of communication, in particular through the real-time broadcast of general meetings, real-time bilateral communication whereby shareholders may take the floor during a general meeting from a location other than the general meeting, and also exercise the right to vote during a general meeting either in person or through a proxy. In the Company's opinion, introduction of the possibility of participation in General Meetings using electronic means of communication may carry risk factors of a legal and technical nature leading to interference with the efficient conduct of general meetings, and as a result to the possible questioning of any resolutions adopted. In the Company’s opinion, current principles of participation in the general meetings of KGHM Polska Miedź S.A. enable all shareholders to exercise the rights attached to owning the shares and protect the interests of all shareholders. The Company is considering introducing the aforementioned recommendation in situations when their technical and legal aspect no longer raises any doubts, and when such introduction will be justified by a real need for this form of communication with shareholders. Since 2016 KGHM Polska Miedź S.A. has been providing real-time streaming webcasts of its general meetings.

Corporate governance structure in KGHM Polska Miedź S.A.

Principles of Governance

General Meeting

The General Meeting (GM) of KGHM Polska Miedź S.A. is the Company’s highest authority. It meets in either Ordinary or Extraordinary form, based on generally prevailing law, the Statutes of the Company and the “Bylaws of the General Meeting of KGHM Polska Miedź S.A. with its registered head office in Lubin”. 

General Meetings are convened by the Company’s Management Board. In situations defined by the Commercial Partnerships and Companies Code, General Meetings may be convened by the Supervisory Board or by shareholders. The Statutes of KGHM Polska Miedź S.A. also authorise the Polish State Treasury to convene a General Meeting. The General Meeting of the Company is convened by an announcement published on the Company website and in the manner set forth in the Act dated 29 July 2005 on public offerings and conditions governing the introduction of financial instruments to organised trading, and on public companies (Journal of Laws from 2005, No. 184, item 1539, with subsequent amendments). A General Meeting may adopt resolutions if at least one-fourth of the share capital is represented. Resolutions are adopted by a simple majority of votes cast, unless the law or the Company’s Statutes state otherwise. The principles for conducting a General Meeting are set forth by the Commercial Partnerships and Companies Code and the Company’s Statutes. Additional issues related to the functioning of the General Meeting are regulated by the “Bylaws of the General Meeting of KGHM Polska Miedź S.A. with its registered head office in Lubin” adopted by the GM on 17 May 2010, which are available on the Company’s website, www.kghm.com. 

The duties of the General Meeting include in particular:

  1. examining and approving the report of the Management Board on the Company's activity and the financial statements, including the financial statements of the Group, for the past financial year,
  2. adopting resolutions on the distribution of profits or coverage of losses,
  3. acknowledging the fulfilment of duties performed by members of the bodies of the Company,
  4. changing the subject of the Company's activity,
  5. changes in the Company Statutes,
  6. increasing or decreasing the share capital,
  7. the manner and conditions for retiring shares,
  8. merging, splitting and transforming the Company,
  9. dissolving and liquidating the Company,
  10. issuing convertible bonds or senior bonds,
  11. consenting to the disposal and lease of an enterprise or of an organised part thereof, as well as the attachment of limited property rights to same,
  12. all decisions relating to claims for redress of damage suffered during the foundation of the Company, or from management or supervisory activities,
  13. purchase of the Company's own shares, which are to be offered to employees or persons who were employed by the company or by related companies for a period of at least three years,
  14. establishing principles of the remuneration of members of the Supervisory Board, and
  15. establishing principles of the remuneration of members of the Management Board.

The schedule of work on organising the General Meetings of the Company is planned in such a way as to ensure that the obligations towards shareholders are properly met and to enable them to exercise their rights.

The introduction of changes to the Company Statutes requires a resolution by the General Meeting and an entry in the National Court Register. Changes in the Company Statutes are made by the General Meeting in accordance with generally prevailing laws, in the manner and form prescribed by the Commercial Partnerships and Companies Code, i.e. by a majority three-fourths of the votes cast in the presence of persons representing at least half of the share capital.

Amongst the regulations of the Commercial Partnerships and Companies Code, in respect of the organisation of General Meetings and shareholder rights, the Company applies the obligatory regulations, i.e. those which require the publication of announcements and relevant materials for the General Meeting on the Company website and the use of electronic forms of contact with shareholders. Regulations enabling shareholders to participate in General Meetings using electronic means of communication are not applied.

Shareholders and their rights

Shareholders of the Company exercise their rights in a manner and within the limits prescribed by prevailing law, the Statutes of the Company and the Bylaws of the General Meeting of KGHM Polska Miedź S.A.

Shareholders are entitled to exercise their voting rights either personally or through a proxy. The authority to participate in a General Meeting and to exercise voting rights should be granted in writing or in electronic form. All of the shares are bearer shares. Each share represents one vote.

There is no limitation to the transfer of ownership rights to the shares of the Company or with respect to the execution of voting rights on the shares of the Company, other than those generally prescribed by laws in force.

The Company has not issued securities which would grant special control rights in respect of the Company.

A shareholder is entitled in particular to the following:

  1. to convene an Extraordinary General Meeting if the said shareholder represents at least half of the share capital or has been authorised by a court of registration and represents at least one-twentieth of the share capital,
  2. to announce draft resolutions during a General Meeting which are in regard to matters introduced to the agenda,
  3. in accordance with the Statutes, the Polish State Treasury as a shareholder may convene an Ordinary General Meeting if the Management Board does not do so in the statutory timeframe as well as an Extraordinary General Meeting if it considers its convening as warranted,
  4. to request that a matter included in the agenda be removed or not considered,
  5. to order the convening of an Extraordinary General Meeting and to include specified matters on the agenda of this General Meeting, if the shareholder or shareholders represent at least one-twentieth of the share capital, and
  6. to order the inclusion of specified matters on the agenda of the next General Meeting, if the shareholder or shareholders represent at least one-twentieth of the share capital.
Principles of Governance

Supervisory Board

The Supervisory Board of KGHM Polska Miedź S.A. is the permanent supervisory authority of KGHM Polska Miedź S.A., in all of the Company’s functional areas. According to the Statutes of the Company, the Supervisory Board is composed of 7 to 10 members appointed by the General Meeting, 3 of whom are elected by the Company’s employees. The Members of the Supervisory Board are appointed for a mutual term in the office, which lasts three years. The Supervisory Board selects from among its members a Chairperson of the Supervisory Board, his/her Deputy and, if needed, a Secretary. The Supervisory Board should meet at least once a quarter. For resolutions of the Supervisory Board to be valid all of the members of the Supervisory Board must be invited to attend and resolutions must be adopted by an absolute majority of votes in the presence of at least one-half of the members. The Supervisory Board operates on the basis of generally prevailing law, the Statutes of the Company and the Bylaws of the Supervisory Board.

The Bylaws of the Supervisory Board and the Statutes of the Company are available on the Company’s website, www.kghm.com.

The following members of the Supervisory Board of KGHM Polska Miedź S.A submitted declarations on meeting independence criteria, specified in principle no. II.Z.4. of “Best Practice of GPW Listed Companies 2016”: Andrzej Kisielewicz, Jarosław Janas, Janusz Kowalski, Bartosz Piechota, Marek Pietrzak and Agnieszka Winnik-Kalemba. On 23 October 2019 Janusz Kowalski submitted his resignation from the function of Member of the Supervisory Board of KGHM Polska Miedź S.A. effective as of 11 November 2019.

Supervisory Board Committees

Within the structure of the Supervisory Board are three committees, which serve in an auxiliary role to the Supervisory Board in the preparation of assessments, opinions and other actions aimed at reaching decisions which must be made by the Supervisory Board. 

Audit Committee 

The Audit Committee is responsible for supervision in the areas of financial reporting, the internal control system, risk management and internal and external audits. The composition of the Audit Committee is presented in the following table:

The composition of the Audit Committee in 2019:

  1 January – 31 December 

Marek Pietrzak

Bogusław Szarek
Agnieszka Winnik-Kalemba (Przewodniczący)
Leszek Banaszak
Jarosław Janas
Ireneusz Pasis 
Bartosz Piechota

Remuneration Committee

The Remuneration Committee is responsible for supervising the performance of the duties set forth in the contracts signed with the Management Board, the remuneration system and benefits paid out in KGHM Polska Miedź S.A. and the Group, training and other benefits provided by the Company, as well as audits performed by the Supervisory Board in this regard.

Composition of the Remuneration Committee in 2019:

  1 January – 31 December 

Józef Czyczerski

Marek Pietrzak
Bogusław Szarek
Andrzej Kisielewicz (Przewodniczący)
Leszek Banaszak
Jarosław Janas
Ireneusz Pasis

Strategy Committee 

The Strategy Committee supervises the realisation of Company strategy, the Company's annual and multi-year operating plans, supervising the coherence of these documents, and also provides its opinion to the Supervisory Board on the strategic projects presented by the Management Board of the Company and any changes thereto, as well as on the Company's annual and multi-year operating plans. The composition of the Strategy Committee is presented in the following table:

Composition of the Strategy Committee in 2019:

  1 January – 10 November 11 November – 31 December 

Józef Czyczerski

Marek Pietrzak
Bogusław Szarek
Agnieszka Winnik-Kalemba
Bartosz Piechota (Przewodniczący)
Leszek Banaszak
Janusz Kowalski  
Ireneusz Pasis

The detailed rights, scope of activities and manner of work of these Committees are described by bylaws approved by the Supervisory Board. After the end of the year the Audit, Remuneration and Strategy Committees submit reports on their activities to the Supervisory Board.

Principles of Governance

Management Board

The duties of the Management Board include all matters pertaining to the functioning of the Company which have not been reserved by the Commercial Partnerships and Companies Code and the Statutes of the Company to the duties of the General Meeting and the Supervisory Board. A detailed description of the Management Board’s scope of duties and obligations and the manner in which it functions may be found in the Bylaws of the Management Board.

According to the Statutes of KGHM Polska Miedź S.A., the Company’s Management Board may be composed of 1 to 7 persons, appointed for a mutual term of office. The term of office of the Management Board lasts three consecutive years. The number of members of the Management Board is set by the Supervisory Board, which appoints and dismisses the President of the Management Board and the Vice Presidents. The Supervisory Board appoints the members of the Management Board following the conduct of qualification proceedings, the goal of which is to review and evaluate the qualifications of candidates and to select the best candidate for Member of the Management Board, with due regard being given to sec. 5 and sections 7 to 12 concerning the appointment or dismissal of an employee-elected member of the Management Board. The members of the Management Board, including any such chosen by the employees, may be dismissed by the Supervisory Board prior to the expiration of their term, which in no way shall interfere with their rights arising from their employment contract or other legal relationship relating to their functioning as a member of the Management Board. The result of elections of an employee-elected member of the Management Board, or the result of voting for their dismissing, shall be binding upon the Supervisory Board, as long as in the said voting for either their appointment or dismissing at least 50% of the Company’s employees have participated. The election and dismissal of an employee-elected member of the Management Board requires an absolute majority of the votes cast.

The Management Board operates based on generally prevailing law, the Statutes of the Company and the Bylaws of the Management Board of KGHM Polska Miedź S.A. For resolutions of the Management Board to be valid at least two-thirds of the members of the Management Board must be present. Resolutions of the Management Board are approved by a simple majority of the votes cast. In the case of a tie vote being cast either for or against a given resolution, the President of the Management Board casts the deciding vote.

The Management Board operates based on generally prevailing law, the Statutes of the Company and the Bylaws of the Management Board of KGHM Polska Miedź S.A. For resolutions of the Management Board to be valid at least two-thirds of the members of the Management Board must be present. Resolutions of the Management Board are approved by a simple majority of the votes cast. In the case of a tie vote being cast either for or against a given resolution, the President of the Management Board casts the deciding vote.

The authority of the Management Board to pass decisions on the issuance or redemption of shares is statutorily limited. The shares of the Company may be retired upon shareholder consent through acquisition by the Company. A resolution of the General Meeting on the retirement of shares may be preceded by an agreement entered into with a shareholder. In accordance with §29 sec. 1 point 6 of the Statutes of the Company, any increase in share capital or issuance of shares requires the approval of the General Meeting. The same holds true for the issuance of bonds (§29 sec. 1 point 10 of the Statutes of the Company). The Management Board of the Company does not have the authority to increase the share capital or issue the shares of the Company under conditions specified in art. 444–446 of the Commercial Partnerships and Companies Code.

Zarząd KGHM Polska Miedź S.A.

Marcin Chludziński

Marcin Chludziński

President of the Management Board
(Appointed as at 6 July 2018 r.) 

Graduate of the Institute of Social Policy and the European Institute of Regional and Local Development at the University of Warsaw. He finished his MBA at the Institute of Economics, Polish Academy of Sciences. He has experience in the management of commercial law companies, restructuring projects and corporate supervision. Since 2005 he has been on the management boards and supervisory boards of commercial law companies.

President of the Management Board of KGHM Polska Miedź S.A. and chairman of the Employers’ Organization of Polish Copper. In the years 2016–2018 President of the Management Board of Agencja Rozwoju Przemysłu S.A., where he successfully restructured the following companies: Przewozy Regionalne, H. Cegielski – Fabryka Pojazdów Szynowych and Świętokrzyskie Kopalnie Surowców Mineralnych. Since January 2016 a member of the Supervisory Board of PZU S.A. Co-founder and President of the Management Board of Invent Grupa Doradztwa i Treningu Sp. z o.o. in the years 2006–2015. President of the economic think tank Fundacja Republikańska (Republican Foundation) in the years 2011–2015.

The President of the Management Board is responsible for:

  • activities related to overall risk management at the corporate level as well as auditing and internal controlling within the Group,
  • the preparation, implementation and execution of the Company’s Strategy and Sustainable Development Policy,
  • activities related to comprehensive management of security and preventing losses in the Group,
  • corporate supervision standards and compliance with the corporate governance standards adopted by the Company,
  • overall corporate oversight over the Group’s subsidiaries in Poland and abroad,
  • compliance with formal reporting and publishing obligations within the scope required by law,
  • activities related to creating, updating and maintaining the uniformity of the organisation’s internal regulations to maintain consistent operating principles,
  • to maintain consistent operating principles,
  • providing organisational and legal services to the Company’s bodies,
  • activities related to communications and image-building within the Group,
  • corporate supervision standards and compliance with the corporate governance standards adopted by the Company,
  • on the Founder’s behalf – supervision of the functioning of the KGHM Polish Copper Foundation as well as other organisations serving the public, which support achievement of the Group’s business goals,
  • the activities of the Data Centre Division (COPI) with respect to: supplying and developing information and communication services required for the proper functioning of the Head Office, the management’s rational utilisation of ordered and contracted goods and services, and
  • activities related to human capital management.

 

Adam Bugajczuk

Vice President of the Management Board (Development) 
(Appointed as at 24 August 2018 r.)

Graduate of the Wrocław University of Economics, Faculty of Economics, Management and Tourism.

Involved with PKO Bank Polski S.A. from January 2011, where he served as a manager and director. Among others, he was responsible for supervision over the execution of investment projects and optimisation of business processes, as well the preparation of development plans and improvements in supervised areas. Co-responsible for execution of cost optimisation under the bank’s business strategy. Supported the process of business expansion of PKO Bank Polski S.A. Responsible for the implementation of procurement policy in the Group’s companies.

He was employed from 2002 to 2010 in Bank Zachodni WBK S.A., where he cooperated in the implementation of investment projects. He was also responsible for the optimisation and supervision over the realisation of network contracts.

He has extensive experience in the areas of standardisation and normalisation of business processes.

Adam Bugajczuk

The Vice President of the Management Board (Development) is responsible for:

  • advancement of the Company’s R&D policy,
  • advancement of the Company’s innovation and intellectual property protection policy,
  • coordination of the Company’s investments and development projects,
  • the development, updating and monitoring of execution of the Group’s equity investments plan,
  • shaping of the Company’s products portfolio,
  • initiation, development and implementation of management standards in the process of managing projects and programs,
  • acquisition and development of the mining resources base in Poland,
  • management of real estate,
  • overseeing the Company’s administrative services,
  • the work of the Procurement Unit.

 

Paweł Gruza

Paweł Gruza

Vice President of the Management Board (International Assets) 
(Appointed as at 10 September 2018 r.)

Graduate of the University of Warsaw, Faculty of Law and Administration.

An Undersecretary of State in the Ministry of Finance from November 2016 to September 2018. Co-author of the tax reform. As a representative of the minister responsible for financial institutions he was also a member of the Polish Financial Supervision Authority.

An Undersecretary of State in the Ministry of the State Treasury from April to November 2016. He managed a portfolio of companies with State Treasury ownership and state legal entities. He worked on reforming supervision over State Treasury companies. An expert and a management board member of Fundacja Republikańska (Republican Foundation) from 2007 to 2016. He was a shareholder and a management board member of MMR Consulting sp. z o.o., as well as a partner in the tax consultant office GWW Tax from 2007 to 2016. He worked for the Artur Andersen and Ernst & Young consultancy firms from 2000 to 2006. He managed interdisciplinary consultant projects for Polish and international companies from the industrial and financial sector.

Author and co-author of numerous publications on taxes and social security.

The Vice President of the Management Board (International Assets) is responsible for:

  • the preparation and implementation of strategy for international assets,
  • activities related to acquiring and developing the international resource base,
  • analysis, assessment and preparation of new international exploration projects,
  • preparation of studies and expert opinions concerning international resource base projects,
  • coordination of tasks with respect to the plan of the Company’s equity investments in international subsidiaries,
  • substantive oversight over the Group’s international production subsidiaries, including the creation and execution of their production plans,
  • the shaping of the Company’s commercial and logistics policies.

 

Katarzyna Kreczmańska-Gigol

Vice President of the Management Board (Finance) 
(Appointed as at 6 July 2018 r.)

Long-time employee in the banking sector in the area of corporate banking, member of company bodies (member of the Supervisory Boards of Bank Pocztowy S.A. and AMW Invest Sp. z o.o.). Experienced manager (Managing Director of the Finance Section and Director of the Treasury Office of Poczta Polska S.A.). Member of Stowarzyszenie Polskich Skarbników Korporacyjnych (Polish Corporate Treasurers Association). Combines business endeavours with academic work and teaching. Academic employee of the SGH Warsaw School of Economics since 2007 (Professor of Finance in Corporate Finance Unit of the SGH Institute of Finance).  Chairwoman of the judging committee of the periodical “Bank i Kredyt” for best article.

She has broad skills in financial management and financial consulting. An expert in financial liquidity, factoring, debt collection and sources of financing.

Katarzyna Kreczmańska-Gigol

Author and co-author of numerous publications in finance, among others: “Finanse spółki akcyjnej” (“Finances of a joint-stock company”), “Podstawy finansowania spółki akcyjnej” (“Basics of financing a joint-stock company”), “Skarbnik korporacyjny” (“Corporate Treasurer”), “Płynność finansowa przedsiębiorstwa. Istota, pomiar, zarządzanie” (“Financial liquidity of a company. Essence, measurement, management”), “Windykacja polubowna i przymusowa. Proces, rynek, wycena wierzytelności” (“Amicable and compulsory collection of debt. The process, market and debt valuation”), “Windykacja należności – ujęcie interdyscyplinarne” (“Collection of debt – the interdisciplinary approach”), “Aktywne zarządzanie płynnością finansową” (“Active management of financial liquidity”), “Faktoring jako jeden z instrumentów zarządzania należnościami i zobowiązaniami handlowymi a struktura kapitału” (“Factoring as one of the instruments in managing trade receivables and payables, and capital structure”), “Faktoring w Polsce 2010” (“Factoring in Poland 2010”), “Faktoring w teorii i praktyce” (“Factoring in theory and practice”), “Faktoring w świetle prawa cywilnego, podatkowego i bilansowego” (“Factoring in civil, tax and balance sheet law”), “Opłacalność faktoringu dla przedsiębiorcy i faktora” (“Profitability of factoring for companies and factors”), “Bank a leasing (finansowanie, zabezpieczenie, dochodzenie, należności)” (“Bank and leasing (financing, security, investigation, receivables)”), “Opłacalność działalności kredytowej banku” (“Profitability of bank lending activities”) and “Podstawy tworzenia planu finansowego banku” (“Basics of creating a bank finance plan”).

The Vice President of the Management Board (Finance) is responsible for:

  • the shaping of the Group’s financial policy, 
  • review of the Main Strategy’s projects in terms of their financial feasibility, 
  • finances in all of the Group’s operations and activities,
  • the creation of Group’s tax policy and
  •  the Company’s accounting services.

 

Radosław Stach

Radosław Stach

Vice President of the Management Board (Production) 
(Appointed as at 6 July 2018 r.)

Graduate of the AGH University of Science and Technology in Kraków, Department of Mining and Geology – underground mining. He finished his MBA at the Wielkopolska Business School of the Poznań University of Economics and Business as well as the KGHM Executive Academy, managed jointly with IMD Business School in Switzerland. He completed the prestigious management program, “Personal Leadership Academy” at the ICAN Institute. 

Involved with the KGHM Polska Miedź S.A. Group since the beginning of his professional career. He was gradually promoted at the Polkowice-Sieroszowice mine: from intern, to senior miner, shift foreman, section foreman, manager of mining operations unit, chief mining engineer/ deputy manager of mining plant operation. He served in the function of vice president (operation development) in KGHM INTERNATIONAL LTD. in Canada, and was responsible for the portfolio of international assets in North and South America in the years 2015–2016. Subsequently, he was executive director in the Polkowice-Sieroszowice mine. He has also served as a vice president of the management board of MBA CLUB of the Wielkopolska Business School of the Poznań University of Economics and Business since 2017. 

An active member of KGHM’s rescue team since 2000. He achieved third place in team competition in the International Mines Rescue Competition, which took place in the USA (2008). As a captain, he led his team to victory in the competition called “Virtual Rooms” in the International Mines Rescue Competition in Australia (2010).

Co-author of the following publications: “Wdrożenie zarządzania procesowego w KGHM Polska Miedź S.A.” (“Implementation of process management in KGHM Polska Miedź S.A.”) and “Koncepcje biznesowe branży wydobywczej. Studium KGHM Polska Miedź S.A.” (“Business concepts of the mining industry. Study of KGHM Polska Miedź S.A.”).

The Vice President of the Management Board (Production) is responsible for:

  • the integrated planning and optimisation of the Company’s current production,
  • occupational health and safety and control of environmental risks,
  • activities with respect to maintaining readiness of the production and non-production assets and achievement of the main goals of the Energy Strategy;
  • activities with respect to manufacturing products and development of the primary mine and metallurgical production,
  • overseeing activities connected with the implementation, maintenance and improvement of management systems in the Company, and integrated supply chain management.
Principles of Governance

Biograms of members of the Supervisory Board

Andrzej Kisielewicz
Chairman of the Supervisory Board

Member of the Supervisory Board of KGHM Polska Miedź S.A. since 2018

A graduate of the Faculty of Mathematics and Computer Science of the University of Wrocław. Obtained a doctorate degree in mathematics at the Polish Academy of Sciences in Warsaw. He obtained his title of doctor habilitatus from the University of Wrocław, and he obtained the title of professor in mathematics in 2001. Currently, he is a professor at the University of Wrocław, and has worked there since 1993.

He gained professional experience in international science facilities: the University of Manitoba (Winnipeg, Canada, 1989–1990), Technische Hochschule Darmstadt (Germany, 1990–1992) and Vanderbilt University (Nashville, USA, 2001–2002). In addition, he has had many short-term international internships, among others in France, Italy, Austria and Israel. He obtained two of the most prestigious science scholarships in the world: the Alexander von Humboldt scholarship and the Fulbright scholarship.

He also has many years of experience in working in supervisory boards. Among others, he has been a member and chairman of the supervisory boards of companies such as “Spedtrans” sp. z o.o. and “Teta” S.A. Since 2016 he has been a member of the supervisory board of PKO BP S.A.  

He is an author of over seventy scientific publications in mathematics, logic and computer sciences in international publications, as well as an author of three books in Polish (“Logika i argumentacja” (“Logic and argumentation”), “Sztuczna inteligencja i logika” (”Artificial intelligence and logic”), “Wprowadzenie do informatyki” (”Introduction to computer science”).

Leszek Banaszak
Deputy Chairman of the Supervisory Board

Member of the Supervisory Board of KGHM Polska Miedź S.A. since 2018

Leszek Banaszak is a graduate of the University of Warsaw, with a Master’s Degree in Political Science. 

For the past 30 years he has been continuously associated with government administration (including nine years in the diplomatic service). Among others he has worked in the Governmental Press Office, the Ministry of Environmental Protection, Natural Resources and Forestry, the Ministry of International Economic Cooperation, the Ministry of the Economy, the Ministry of Energy and the Ministry of State Assets. 

He has been responsible among others for bi-lateral coordination of Poland in the area of environmental protection, coordination of activities by the Polish administration arising from the cooperation of Poland with international institutions and organisations in the area of environmental protection, among others for cooperation under the Organisation of Baltic Sea States (HELCOM), coordination of activities by Poland under the Pan-European Conference of Ministers of Environmental Protection, coordination of activities with respect to international cooperation in meeting the stipulations of the United Nation’s framework convention on climate change. Also cooperated under the European Economic Commission (EEC UN) in Geneva and the UN Commission on Sustainable Development (CSD UN) in New York.

He was the chief negotiator in the “Environment” area during the negotiations regarding Poland’s membership in the Organisation of Economic Cooperation and Development (OECD) in Paris.

He was also responsible for coordination of cooperation between the Republic of Poland and the OECD, the Republic of Poland and the WTO (World Trade Organisation) and oversaw cooperation with the World Bank and the European Bank for Reconstruction and Development.  

  Also connected with the Department of Energy of the Ministry of the Economy, responsible for international cooperation and European integration (was the chief negotiator in the “Energy” negotiating area during the negotiations regarding Poland’s membership in the European Union), also coordinated legislative work arising from the adaptation of Polish laws to those of the EU. Was also responsible for cooperation with international organisations and institutions, acting in the area of energy, among others the Organisation of Economic Cooperation and Development (OECD), the International Energy Agency (IEA), the European Economic Commission of the United Nations (UN ECE), the UN Commission on Sustainable Development (CSD UN), the Secretariat of the Energy Card Treaty (ECT), the Council of Baltic Sea States and the World Energy Council (WEC).

W latach 2004-2009 oraz 2012-2016 w służbie dyplomatycznej w wydziałach Ambasady RP w Londynie. 

In the years 2004–2009 and 2012–2016 worked in the diplomatic service in sections of the Polish Embassy in London. Since 2016 associated with the Department of Renewable Energy in the Ministry of Energy (currently in the Ministry of State Assets since November 2019).

Has many years of experience working in supervisory boards. Among others he has been chairman of the supervisory board of Krajowa Agencja Poszanowania Energii (The Polish National Energy Conservation Agency), currently he also serves in the function of chairman of the Supervisory Board of HUTMAR S.A.

Jarosław Janas
Secretary of the Supervisory Board

Member of the Supervisory Board of KGHM Polska Miedź S.A. since 2018

An attorney with a doctorate in law from Wrocław. From 2009 to 2010 he researched British public healthcare at the University of Exeter School of Law (UK), resulting in a doctorate, “Prywatyzacja brytyjskiego sektora publicznego na przykładzie National Health Service” (“Privatisation of the British public sector, illustrated by the National Health Service”). An entrepreneur continuously since 1999, an academic teacher, member of the management board of Fundacja Sancta Familia (Sancta Familia Foundation) in Wrocław since 2005, Chairman of the Estate Council of Biskupin-Sępolno-Bartoszowice-Dąbie in the years 2009–2013, a volunteer in Ilford Park Polish Home (UK) 2009–2010, member of the Wrocławska Rada ds. Budżetu Obywatelskiego (Wrocław Citizen’s Budget Council) in the years 2015–2017, member of the Supervisory Board of Polska Agencja Inwestycji i Handlu S.A. (State Treasury) in the years 2016–2018, and an expert in healthcare reform (2018–2019). In the years 2011–2019 he was an author of research papers on British law, privatisation of the public sector, judicial control of public administration and healthcare law. Co-author of comments to the Ustawa o pomocy państwa w wychowywaniu dzieci (Lex/el. 2019) (Act on State assistance in raising children). He has more than twenty years of experience in management.

Józef Czyczerski

Member of the Supervisory Board of KGHM Polska Miedź S.A. since 2012

Secondary technical education. Since 1979 employed in the Rudna mine of KGHM Polska Miedź S.A., an underground electromechanic. Chairman of the trade union Krajowa Sekcja Górnictwa Rud Miedzi NSZZ Solidarność. Employee-elected member of the Supervisory Board of KGHM Polska Miedź S.A. in the years 1999–2011, and then since 2014.

Ireneusz Pasis

Member of the Supervisory Board of KGHM Polska Miedź S.A. since 2018

Secondary technical education. Since 1988 a mining machinery operator in Przedsiębiorstwo Budowy Kopalń “PeBeKa” S.A. in Lubin (formerly called Zakład Robót Górniczych w Lubinie). Since 2012 Chairman of the Plant Committee of the trade union NSZZ “Solidarność” in PeBeKa S.A.; and since 2015 Secretary of the Employee Council in PeBeKa S.A. Since 2014 has served as Deputy Chairman of the trade union Krajowa Sekcja Górnictwa Rud Miedzi NSZZ “Solidarność”. Previously, in the years 2011–2015 was Chairman of the Employee Council in PeBeKa S.A.

Bartosz Piechota

Member of the Supervisory Board of KGHM Polska Miedź S.A. since 2018

Bartosz Piechota is a lawyer, a graduate of the Faculty of Law and Administration of the University of Warsaw and also of Cardiff University Law School (Diploma in Legal Studies). Also completed the School of American Law conducted by the University of Florida Levin College of Law and the University of Warsaw. Has many years of experience in providing legal services to the largest Polish and foreign companies, in particular with respect to resolving disputes and restructuring as well as with respect to corporate law. In recent years he has acted as a consultant, among others, in the realisation of a variety of key infrastructural investments.  Over a period of ten years, to September 2019, he was a founding partner of a leading law firm in Poland involved in resolving disputes and restructuring. Previously he worked in international and Polish law firms, among others Allen & Overy and Wardyński i Wspólnicy. In the period from 2014 to 2016 he served as Liaison Officer for the International Bar Association in the restructuring and bankruptcy section responsible for Central and Eastern Europe. He is a member of the International Bar Association and is also the author of publications, as well as a lecturer at international and Polish conferences. In the years 2016–2019 he was a member of the Supervisory Board of PLL LOT S.A., and from October 2018 to July 2019 was delegated to serve in the function of member of the Management Board of PLL LOT S.A. Currently he is a member of the Management Board of Polska Grupa Lotnicza S.A. For many years he has cooperated in the role of expert with Fundacja Republikańska (Republican Foundation).

Marek Pietrzak

Member of the Supervisory Board of KGHM Polska Miedź S.A. since 2016

Legal Adviser. A graduate of the Department of Law and Administration of the Lazarski University in Warsaw and the Economics Faculty of the Private Higher School of Business and Administration in Warsaw. In 2013, he finished his legal adviser apprenticeship in the District Chamber of Legal Advisers in Warsaw and was licensed to work in the profession. He also finished management and business studies (MBA) at the Warsaw Management University, accredited by the Apsley Business School of London and was granted the title of Executive Master of Business Administration. He has also completed post-graduate studies in accounting and corporate finance at the SGH Warsaw School of Economics.

He has professional experience in public administration and practical experience in supervision and management of commercial law companies, including those where the State Treasury is one of the shareholders.

In his professional practice he concentrates on providing legal services to economic entities. His chief specialisations are civil and economic law, in particular company law, as well as labour law.

Currently, Marek Pietrzak serves as President of the Management Board of Orlen Asfalt Sp. z o.o. and as Chairman of the Supervisory Board of Polskie Radio Regionalna Rozgłośnia w Warszawie Radio dla Ciebie S.A.

Bogusław Szarek

Member of the Supervisory Board of KGHM Polska Miedź S.A. since 2012

Secondary technical education. Since 1982 employed at the Sieroszowice Mine of KGHM Polska Miedź S.A. in the position: mining machinery and tools mechanic.

Since 1992 Chairman of the Plant Committee of the trade union NSZZ “Solidarność” in the Sieroszowice Mine, and following the merger of the Polkowice and Sieroszowice mines, since 1996 Chairman of the Plant Committee of the trade union NSZZ “Solidarność” in the Polkowice-Sieroszowice mine. Since 2012 an employee-elected Member of the Supervisory Board of KGHM Polska Miedź S.A.

Deputy Chairman of the Board of the trade union Sekcja Górnictwa Rud Miedzi NSZZ “Solidarność”. Treasurer of the Board of the Secretariat for Mining and Energy of the trade union NSZZ “Solidarność”. Member of the National Committee of the trade union NSZZ “Solidarność”.

Agnieszka Winnik-Kalemba

Member of the Supervisory Board of KGHM Polska Miedź S.A. since 2016

Attorney, graduate of the Department of Law of the University of Wrocław. Also a graduate of the faculty of Public Administration at Georgetown University in Washington D.C.; and of the faculty of Public Administration and Business Law at the University of Kentucky.

She passed her bar exam in 2003 under the District Bar Council in Wrocław and was licensed to work in the profession.

Since 2003 owner of a Law Office. In the years 2006–2010 served as an advisor and regular associate of the late Member of Parliament Aleksandra Natalli-Świat. In the years 1999–2003 gained experience as an apprentice attorney-at-law at Kazimierz Cyrklewicz’s Law Office in Wrocław. In addition, was previously Manager of the Legal Services Office of the Lower Silesia Marshal’s Office in Wrocław and was Legal Assistant to the Chairman of the Chamber of Regions of the European Council in Strasbourg, Parliament of the Voivodeship of Wrocław. Also gained experience as Legal Assistant in the Law Offices of Bowles, Keating, Matuszewich & Fiordalisi Chicago – Milan – Rome, a Partnership of Professional Corporation, Chicago USA.  

Was Deputy Chairwoman and member of the Supervisory Board of PKO BP S.A.

Changes in the Parent Entity’s bodies

Management Board of the Company

 In accordance with the Statutes of KGHM Polska Miedź S.A. the members of the Management Board are appointed and dismissed by the Supervisory Board. The composition of the 10th-term Management Board of KGHM Polska Miedź S.A. from 1 January 2019 to 31 December 2019 was as follows:

  • Marcin Chludziński - President of the Management Board,
  • Adam Bugajczuk - Vice President of the Management Board (Development),
  • Paweł Gruza - Vice President of the Management Board (International Assets),
  • Katarzyna Kreczmańska-Gigol - Vice President of the Management Board (Finance),
  • Radosław Stach Wiceprezes - Vice President of the Management Board (Production).

Supervisory Board of the Company

In accordance with the Statutes of the Company the members of the Supervisory Board are appointed and dismissed by the General Meeting.

As at 1 January 2019, the composition of the 10th-term Supervisory Board of KGHM Polska Miedź S.A. was as follows:

  • Andrzej Kisielewicz - Chairman,
  • Leszek Banaszak - Deputy Chairman,
  • Jarosław Janas - Secretary,
  • Janusz Marcin Kowalski,
  • Bartosz Piechota,
  • Marek Pietrzak,
  • Agnieszka Winnik–Kalemba,
  • And elected by employees:
  • Józef Czyczerski,
  • Ireneusz Pasis,
  • Bogusław Szarek.

W dniu 23 października 2019 r. Pan Janusz Marcin Kowalski złożył rezygnację z pełnienia funkcji Członka Rady Nadzorczej z dniem 11 listopada 2019 r.

Skład Rady Nadzorczej od dnia 11 listopada 2019 r. do dnia 31 grudnia 2019 r. przedstawiał się następująco:

  • Andrzej Kisielewicz - Przewodniczący,
  • Leszek Banaszak - Zastępca Przewodniczącego,
  • Jarosław Janas - Sekretarz,
  • Bartosz Piechota,
  • Marek Pietrzak,
  • Agnieszka Winnik–Kalemba,
  • wybrani przez pracowników:
  • Józef Czyczerski,
  • Ireneusz Pasis,
  • Bogusław Szarek.
Principles of Governance

The system of remuneration for the company's authorities

Remuneration of the Parent Entity’s bodies and of other key managers of the Group

Information on Remuneration of members of the Management Board of KGHM POLSKA MIEDŹ S.A.

As a result of the coming into force of the Act dated 9 June 2016 on the terms of setting the remuneration of individuals managing certain companies, the Supervisory Board, acting under the authority granted by the Extraordinary General Meeting of KGHM Polska Miedź S.A., established templates for the management services contracts for the Company’s Management Board setting the principles of employment and remuneration. Based on the aforementioned contract templates, management services contracts were signed with the members of the Management Board for the time in which they served as a member of the Management Board. This means that the termination of a contract will occur on the final day on which the function is served, with no notice period and without the need to take additional actions. 

The Members of the Management Board receive basic monthly remuneration as well as variable remuneration representing supplementary remuneration for the Company’s financial year.

The fixed monthly remuneration for individual members of the Company’s Management Board is within a range of seven- to fifteen times the basis for calculation, as described in art. 1 sec. 3 point 11 of the Act dated 9 June 2016 on the terms of setting the remuneration of individuals managing certain companies. 

Fixed remuneration is comprised of the following:

  • for the President of the Management Board: 15-times,
  • for other members of the Management Board: 14-times.

Variable remuneration depends on the level of achievement of the management goals set by the Supervisory Board for a given year and may not exceed 100% of the annual fixed remuneration for the time during which the subject of a given contract is performed, with the proviso that the contract was performed in a given year for a period longer than three months.

Based on the Statutes of KGHM Polska Miedź S.A., the Bylaws of the Supervisory Board, the management services contracts, resolution no. 8/2016 of the Extraordinary General Meeting and the Act on the terms of setting the remuneration of individuals managing certain companies, the Supervisory Board set Management Goals for the Members of the Management Board for 2019.

The Supervisory Board also set goals under which variable remuneration for the year 2019 may be received, contingent upon achieving the following conditions:

  • application of the principles of remunerating members of management and supervisory bodies, pursuant to the Act of 9 June 2016 on the terms of setting the remuneration of individuals managing certain companies, in all of the Group’s companies,
  • and execution of the duties described in art. 17–20, art. 22 and art. 23 of the Act dated 16 December 2016 on the principles of state assets management.

Payment of variable remuneration is made following the submission by individual members of the Management Board of reports on the achievement of the goals. Payment of this variable remuneration is contingent on the achievement by a Management Board member of the management goals, approval of the Management Board’s Report on the activities of the Company and the Company’s financial statements for the prior year, and the granting of approval by the General Meeting for the given Management Board Member’s performance of duties. On this basis, the Supervisory Board evaluates the execution of the aforementioned goals and, assuming the conditions have been met for granting the right to variable remuneration, sets the amount of the variable remuneration due.

Potentially-due remuneration of Members of the Management Board of KGHM Polska Miedź S.A. 

First, last name

Position

Potentially-due variable remuneration *1 (PLN thousand)

Marcin Chludziński

Member of the Management Board – President of the Management Board

792,7

Katarzyna Kreczmańska-Gigol

Member of the Management Board – Vice President of the Management Board

739,8

Radosław Stach

Member of the Management Board – Vice President of the Management Board

739,8

Adam Bugajczuk

Member of the Management Board – Vice President of the Management Board

739,8

Paweł Gruza

Member of the Management Board – Vice President of the Management Board

739,8

RAZEM

 

3 751,9

1) for 2019 based on management services contract

Members of the Management Board may join the Employee Pension Programme under the terms of the existing Collective Agreement, with the proviso that the amount of the monthly contribution under this Programme is included in the amount of the fixed remuneration for the given period.

In 2020, the Supervisory Board, based on the wording of agreements connecting individual Members of the Management Board with the Company, gave consent for the Company to cover the cost of life insurance contracts under the group life insurance policies in place in the Company, including in the case of death, accident or illness. The scope of this insurance is analogous to that provided to the management, the sole difference being that in the case of the selection by a particular Management Board Member of life insurance with a so-called equity insurance fund (ubezpieczeniowy fundusz kapitałowy) that portion of the contribution under this option will not be financed by the Company.

The management services contracts also regulate issues involving the application (utilisation) of all of the Company’s resources (tools) required to carry out the contractual duties and to maintain the requirements of security in terms of collecting and transmitting data, including in particular:

  • office space together with technical equipment and infrastructure, including a personal computer with wireless Internet access and other necessary equipment, means of communication, including a mobile phone, 
  • local housing appropriate to the function served (in respect of which the Company covers the cost of such housing to the net amount of PLN 2,500),
  • participation in conferences, seminars or business meetings related to the Company’s operations and, if necessary to carry out these obligations, business trips in Poland and abroad,
  • the incurring by the Company of costs related to services performed outside of the Head Office which must be incurred to properly perform the services, in particular such as costs of travel and accommodation in a standard appropriate to the function performed,
  • use of a company car for business purposes,
  • civil liability insurance for the Management Board Member related to serving in the function, 
  • and incurring or refinancing costs of individual training for the Management Board Member related to the Contract in question and contractual obligations of the Management Board Member, in each case with the prior consent of the Chairman of the Supervisory Board.

The Contracts also provide that if the Management Board Member serves as a member of a body in a subsidiary of the Company within the Group, the Management Board Member will not receive additional remuneration for this function, apart from the remuneration provided for in the management services contract connecting the Member with the Company. 

In addition, the Management Board Member is obligated to inform the Supervisory Board of the possession of shares in publicly-listed companies and to gain the consent of the Supervisory Board for accepting a position or serving in a function in the body of another commercial law company – excluding companies of the Group, the acquisition or possession of shares in another commercial law company, as well as performing work or services on behalf of other entities based on a labour contract, mandate contract or based on any other legal relationship.

The contracts signed with the Members of the Management Board regulate the question of compensation in the case of termination, with or without notice, of the management services contract for reasons other than breach of the contract’s basic obligations. The contracts foresee that the Company will pay severance pay of three times the amount of the fixed part of remuneration (if the contract was in force for at least 12 months). 

The contracts with the Members of the Management Board – both during the period of employment as well as following the period of employment – contain also “no competition” clauses. In particular, they establish that for a period of six months from the date when employment in the function ceases, the Management Board Member is not allowed to engage in any competitive activities. For adherence to the “no competition” clause, KGHM pays the Management Board Member compensation in a total amount calculated as a multiple of the monthly fixed remuneration and the 6-month “no competition” period. The payment of compensation is conditional on the Management Board Member’s having served in the function for at least 3 months. If a Member of the Management Board breaches this clause in the contract, he or she will be required to pay a contractual penalty in the entire amount of the compensation received. Payment of the contractual penalty does not deprive the Company of the right to seek compensation in an amount exceeding that amount under general rules.

Information on remuneration of Supervisory Board Members

The remuneration of members of supervisory boards was set on 7 June 2019 by the General Meeting based on the Act dated 9 June 2016 on the terms of setting the remuneration of individuals managing certain companies. The amount of monthly remuneration of individual members of the Supervisory Board depends on the function served and is set as 2.2x or twice the average monthly remuneration in the corporate sector excluding payments from profit in the fourth quarter of the previous year, announced by the President of the Statistics Poland. Members of the Supervisory Board are not remunerated for any month in which they did not attend any of the formally convened meetings for unjustified reasons, which are assessed and qualified by the Supervisory Board.

The Company also covers or reimburses costs related to participation in the work of the Supervisory Board.

Detailed information on the amount of remuneration, bonuses or benefits for Supervisory Board members may be found in note 12.10 of the separate and consolidated financial statements.

Remuneration system for Key Managers

Key managers receive remuneration based on employment contracts. During the lives of these contracts employees receive:

  • basic monthly remuneration, which amounts – depending on the function served – from 5- to 11-times the average monthly remuneration in the corporate sector, excluding payments from profit, in the fourth quarter of the previous year, announced by the President of the Statistics Poland,
  • an annual bonus, paid in accordance with the principles for bonuses set by the Management Board, based on a system of business measures (KPIs) and individual goals (MBO). Principles for setting and granting annual bonuses (STIP - Short-Term Incentive Plan) in KGHM Polska Miedź S.A. have been functioning since 2013. This system is based on collective, individual and task-related KPIs, which were derived from the key performance indicators for the Management Board as well as on goals arising from the Company’s strategy.
  • additional benefits, such as life insurance, the Employee Pension Programme, a Health Care Package, 
  • a company car.

Diversity policy applied to the administrative, management and supervisory bodies of the Company

KGHM Polska Miedź S.A. applies best practice in promoting diversity with respect to its employees. As a global company, active on global markets, labour and employee relations standards are applied which are consistent with local laws in force, as well as with those defined by international institutions. Existing regulations and policies reflect the good of employees and mutual relations, based on best practice, regardless of the jurisdiction in which KGHM Polska Miedź S.A. operates.

KGHM Polska Miedź S.A. creates a non-discriminatory environment and workplace, and consequently no form of discrimination is tolerated, especially as regards gender, race, age, origin, religion, disability, philosophy, sexual orientation, social status, marital status, political party and trade union membership and manner of employment.

KGHM Polska Miedź S.A. manages diversity by aiming at creating an organisational culture based on mutual respect, equal treatment, access to development opportunities and the utilisation of employee potential. The approach to management of diversity is defined by the “Diversity Declaration of KGHM Polska Miedź S.A.”.

Moreover, in KGHM Polska Miedź S.A. the process of recruitment is conducted with full respect to the principles of diversity and equal access to employment. All candidates meeting the criteria set forth for a given recruitment process are treated equally. The participants in this process adhere to the ban on discrimination. They endeavour to ensure a rational degree of diversity in the process of selecting individual employees, while maintaining the primacy of knowledge, substantive skills and social ability.

The management of diversity also applies to members of the Supervisory Board and Management Board of KGHM Polska Miedź S.A. The management and supervisory staff are diverse in terms of gender, age and experience:

Structure of diversity amongst management and supervisory staff 

Structure of age diversity 

Staż pracy w KGHM Polska Miedź S.A

Principles of Governance

Organisational structure

Corporate structure of the KGHM Group

As at 31 December 2019, the Group was composed of KGHM Polska Miedź S.A. as the Parent Entity and 72 subsidiaries (including two closed-end, non-public investment funds) located on four continents: Europe, North America, South America and Asia.

Some of these subsidiaries formed their own groups. The largest of them, both in terms of the number of members and the value of equity, is the KGHM INTERNATIONAL LTD. Group, the main assets of which are located in Canada, the United States and Chile. It was comprised of a parent entity and 26 subsidiaries. As at the end date of the reporting period, the KGHM Polska Miedź S.A. Group held a stake in two joint ventures – Sierra Gorda S.C.M. and NANO CARBON Sp. z o.o.

The detailed structure of the KGHM Polska Miedź S.A. Group, along with interconnections between its members, is depicted in the two following diagrams. 

The Group’s main entities, which are engaged in the mining sector, comprise three primary reporting segments which are independently evaluated by management bodies. These are: KGHM Polska Miedź S.A., KGHM INTERNATIONAL LTD. and Sierra Gorda S.C.M. Other companies, excluding Future 1 Sp. z o.o., Future 2 Sp. z o.o., Future 3 Sp. z o.o., Future 4 Sp. z o.o., Future 5 Sp. z o.o., Future 6 Sp. z o.o. and Future 7 Sp. z o.o., are part of the segment called Other segments.

Organizational structure of the KGHM Polska Miedź S.A. Group, 
including the position of KGHM Polska Miedź S.A. as the Parent Entity and its stakes in each company

1/ joint venture accounted for using the equity method
2/ subsidiary that is not subject to consolidation

Organisational structure of the KGHM International Group

1/  joint venture accounted for using the equity method
2/ actual Group’s stake: 80%

Principles of Governance

Code of the Group

In order to ensure an optimal model for managing and supervising the business processes of the KGHM Polska Miedź S.A. Group, particularly in the context of its rapid development in recent years, the process of establishing a new corporate governance framework relying on systemic legal and corporate solutions was carried out.

The project was based on the KGHM Group’s values and the need for having in place a set of formal and legal regulations governing the principles of cooperation within the KGHM Polska Miedź S.A. Group. On this basis, the Code of the KGHM Polska Miedź S.A. Group was adopted.

The following are some of the benefits arising from having the Code in place:

  • Outlining the legal basis for a joint strategy of all members of the KGHM Group, making it possible to base the strategy of each subsidiary on the Strategy of KGHM Polska Miedź S.A. and forcing the requirement to maintain consistency.
  • Harmonizing the interests of each company with that of the KGHM Group as a whole.
  • Streamlining management in various business areas.
  • Integrating the KGHM Group’s operating rules, e.g. in terms of information transfer, reporting, etc.
  • Ensuring effective monitoring of key business decisions made by each company.
  • Ensuring the implementation of unified standards in the companies.
  • Elevating the level of security of the activities carried out by corporate authorities.

In 2019 there were no material changes introduced to the Management Rules of the Group. Actions undertaken aimed at improving the coordination of Group processes and enhancing the security of its operations included the introduction of new, or the improvement of existing, tools.  One of the most important actions was the establishment of an advisory body to the Management Board, i.e. the KGHM Group Council. 

The KGHM Group Council is a permanent team with advisory/consulting rights, facilitating the taking of organised actions within the KGHM Group. The Council cooperates with entities in the Group in a manner which does not conflict with the rights and entitlements of these companies’ statutory bodies. The KGHM Group Council’s mandate covers all matters of significance for the functioning of the Group. The Council comprises the management staff of the KGHM Head Office, which is responsible for managing all areas of substance. In justified cases, other persons may participate in the Council, including representatives of companies in the KGHM Group.

Ethical standards

GHM is a company with nearly 60 years of history, operating on the basis of deeply rooted values and principles which its Employees follow in their daily work. Zero harm, teamwork, results driven, accountability and courage – these values bind all of KGHM’s employees, regardless of whether they work in a mine, processing plant or smelter, in Poland or in other parts of the world. KGHM builds its global position in the world as a reliable producer, trusted business partner and a company pursuing a sustainable development policy. 

Key Ethical Standards translating into principles of conduct in KGHM Polska Miedź S.A.

 

Good of the Human

Human capital is our crucial and most important resource and as such people are subject to special protection and are at the centre of attention of the Company’s corporate bodies. KGHM Polska Miedź S.A. aspires to create an organizational culture whose cornerstone is cultivating relations predicated on absolute respect for employees’ dignity and personal rights regardless of their place of work and professional status.

Good of the Company

We take care of the KGHM Polska Miedź S.A. Group’s good by striving for securing the stable development of individual Companies and ensuring the process continuity and by mitigating the risk of losses.

Good of the Stakeholders

A good relationship with stakeholders based on mutual understanding and trust are of crucial importance to KGHM Polska Miedź S.A. as an organisation exerting a significant impact on its economic, social and natural environment.

The fundamental Ethical Standards are implemented through the principles of ethical conduct, which are described in the diagram below:

Division of ethical conduct rules

For the purposes of communication and implementation of the Ethical Standards, the KGHM Polska Miedź S.A. Group operates a system of codes, policies and procedures, introduced and maintained by properly trained Ethics and Anticorruption Representatives and Ethics Committees. Their implementation meets world corporate governance standards as well as the increasing demands of stakeholders, including above all customers and financial institutions.

Based on best practices in corporate governance, the following principles, policies and instructions are in force, introducing global, unified standards which have been adapted to the laws applicable in all of the jurisdictions in which the KGHM Polska Miedź S.A. Group operates.

Competition Law Policy in the KGHM Polska Miedź S.A. Group

The goal of the Competition Law Policy is to create a functional framework for a system that will enable the KGHM Polska Miedź S.A. Group to remain in conformity with the competition laws which are applicable in all of the countries in which the KGHM Polska Miedź S.A. Group operates.

Anticorruption Policy in the KGHM Polska Miedź S.A. Group

The Anticorruption Policy establishes basic principles and standards, whose goal is to prevent any breaches of the anticorruption laws in the jurisdictions in which the KGHM Polska Miedź S.A. Group operates. The Group applies a zero tolerance policy towards corruption and bribery.

Responsible Supply Chain Policy in the KGHM Polska Miedź S.A. Group

The Responsible Supply Chain Policy is aimed at securing the selection of only responsible suppliers, especially in the case of acquiring so-called conflict minerals (gold, tin, tungsten and tantalum) and at ensuring that the merchandise and services purchased by the KGHM Polska Miedź S.A. Group are not utilised to finance terrorism, and are manufactured or provided in accordance with laws respecting basic human rights, labour standards, protecting the environment and counteracting corruption.

Security Policy in the Group

The Security Policy sets forth common principles and goals for the entities and organisational units of the KGHM Group related to security and loss prevention. Pursuant to its clauses, all of the KGHM Group’s employees operate in accordance with basic principles: professional integrity, accuracy in the execution of official duties, loyalty to the employer, a results oriented approach, courage, teamwork, accountability, shared responsibility for security and loss prevention and avoidance of actions harmful to the employer.

 

In 2019, the “Procedure for assessing the supply chain for gold and silver in KGHM Polska Miedź S.A.” was updated in the Company in order to assure its compliance with the current LBMA Responsible Gold Guidance V8 and LBMA Responsible Silver Guidance V1.  The system for managing the responsible gold and silver supply chain is subject to an annual, independent, external audit to confirm the Company’s adherence to the principles of conflict-free gold and silver under the LBMA Responsible Gold Guidance and the LBMA Responsible Silver Guidance.

In 2018, the Management Board of KGHM Polska Miedź S.A. adopted GRI 102-16 a new Code of Ethics of the KGHM Polska Miedź S.A. Group. In order to comply with the most important principles related to counteracting corruption in the KGHM Polska Miedź S.A. Group and in the companies of the KGHM Polska Miedź S.A. Group located in Poland and abroad, the Anticorruption Policy and the Procedure for Counteracting the Threat of Corruption in the KGHM Polska Miedź S.A. Group were updated. The Procedure sets forth in detail the standards of behaviour in situations where corruption may arise and informs about criminal penalties for abuse. It is applied in order to minimise the risk of Corruption and to limit all corruption-related phenomena which could arise in relation to the functioning of the KGHM Group. The Procedure regulates the management of the risk of conflict of interest. The Business Gifts Instruction constitutes an integral part of it.

In 2019, the KGHM Group adopted a Security Policy that establishes the common rules and objectives for entities and organizational units of the KGHM Group relating to security and loss prevention. KGHM’s domestic and international entities also adopted a procedure for reviewing business partners in procurement, sales and investment proceedings, which sets out consistent and uniform rules for reviewing the performance of counterparties in connection with the processes of procurement, sales and investment.

In 2019, the wording of the procedure regulating conflicts of interest and acceptable gifts was updated. In the Divisions and in seven of the domestic companies, units for overseeing security and loss prevention were created. Ethics and Anticorruption Representatives are in place in all of KGHM’s entities, domestic and international. In 2019, the Procedure for Disclosing Improprieties and Protecting Whistleblowers in the KGHM Group was also updated, adapting it to the requirements of the amended Act on public offerings and conditions governing the introduction of financial instruments to organised trading, and on public companies. This procedure is aimed at enhancing the effectiveness of detecting and resolving situations related to the occurrence of irregularities, which represent an abuse of regulations applied in the KGHM Group, in particular the Code of Ethics of the KGHM Group, the Security Policy, the Anticorruption Policy and the Procedure for Counteracting the Threat of Corruption.

In 2019, an additional channel for whistleblowers was implemented – the “KGHM Ethics Line” GRI 102-17 platform, available on the corporate website for both employees and third parties, including contractors and customers. The platform is available in four languages – Polish, English, Spanish and Russian. It enables the anonymous disclosure of improprieties and is an alternative channel for other forms of contact – telephone lines, email addresses and addresses for correspondence. In the entities of the KGHM Group an Internal Control Procedure for the Security and Loss Prevention Section of KGHM Polska Miedź S.A. was implemented. Audits conducted by the Security and Loss Prevention Section comprise the identification and uncovering of fraud, improprieties, abuse, corruption, personal abuse and breaches of the Group’s Code of Ethics. Also implemented was an Anti-Personal Abuse Procedure, enabling the effective prevention of personal abuse in the workplace. A tool which supports the employer in the question of prevention of personal abuse, discrimination and breaches of employee rights are the Ethics Committees appointed in the entities of the KGHM Group.

Moreover, work supporting and raising ethical standards and corporate governance will be continued in 2020.  

Security and Loss Prevention System in the KGHM Polska Miedź S.A. Group

In 2018, KGHM Polska Miedź S.A. started the implementation of a global Security and Loss Prevention System in the KGHM Polska Miedź S.A. Group.

The system is designed to protect the employer’s interest by preventing acts that expose the company to material loss and reputational harm, as well as by the optimization of expenses and investments, which generates savings for the KGHM Polska Miedź S.A. Group. The key elements of the system include:

  • defined procedures and control mechanisms,
  • standardisation of procedures and processes in the aforementioned area across the KGHM Group,  
  • effective prevention of abuse that can lead to losses for the KGHM Group.
  • effective detection of committed abuse, inspection and control activities and implementation of corrective mechanisms,
  • counteracting corruption, and
  • improving the ethical awareness of employees.

The Security and Loss Prevention Section in the KGHM Polska Miedź S.A. Head Office is responsible for the implementation, functioning and oversight of the system. Currently, the Section is made up of two Departments: 

  1. the Security Department, comprising, among others, the Ethics and Anticorruption Procedures Unit, the Security and Loss Prevention Unit, and the Physical and Technical Security Unit.
  2. The Supply Chain Security Department, consisting of the Supply Chain Monitoring Unit and the Analyses Unit. 

In 2018, Ethics and Anticorruption Representatives were appointed in the Divisions and the Polish and international subsidiaries of the KGHM Group. Their work is monitored, supervised and coordinated by the Ethics and Anticorruption Representative for the KGHM Group (as per the applicable procedure, the function is discharged by the Director of the KGHM Security Department). 

In 2019, security and loss prevention units were established in KGHM Polska Miedź S.A. Divisions and in seven companies in Poland selected on the basis of their level of expenses and domestic threats. The unit heads are responsible for implementation and supervision over the security and loss prevention system, ethics and anticorruption procedures, supply chain security and physical and technical security. They report to the Executive Director for Security and Loss Prevention in KGHM Polska Miedź S.A.

Since 2017, regular anticorruption training has been organised for the employees of all KGHM entities. In 2018, a specialised training course was carried out, addressed to senior management and their representatives (40 people). All materials and instructions are readily available to Employees through the internal corporate Intranet, via a dedicated tab, devoted to the issues of ethics and anticorruption.

In 2019, on-site training on anticorruption was conducted by an expert from the Central Anticorruption Bureau for persons in managerial and executive positions as well as persons responsible for the procurement processes in companies in the KGHM Group. 5 training courses were held in total, attended by 143 persons.

Regular meetings and training sessions are organised for the Ethics and Anticorruption Representatives (40 persons). In 2019, 3 such sessions were held. The objective was to improve the abilities of the Representatives and to share knowledge. The Representatives are responsible for the organisation and performance of training sessions on ethics and anticorruption in KGHM’s companies. 

In 2020, KGHM Polska Miedź S.A. launched two e-learning training modules on ethics, prevention of irregularities (in particular, corruption, abuse, and discrimination) and receiving whistleblower reports in its Head Office and Divisions:

  1. for senior management, the Ethics and Anticorruption Representatives and Members of the Ethics Committee (695 persons).
  2. for the remaining employees with access to the e-learning platform (5818 persons).

In 2019, a number of communication activities were also carried out, addressed to the employees of the KGHM Group, promoting ethical standards and contributing to the culture of the organization:

  • 5 educational films on the Code of Ethics, abuse prevention, the Whistleblower Platform and protection of Whistleblowers, rules of acceptance and giving of business gifts, as well as corruption prevention were broadcast,
  • 6 articles on the related topics were published in Curier,
  • a special supplement focusing on Whistleblowers was published in Curier,
  • the updated Anticorruption Manual was published in an electronic version.

The Code of Ethics of the KGHM Polska Miedź S.A. Group

The primary document of the Security and Loss Prevention System of the KGHM Group is the KGHM Polska Miedź Code of Ethics, the amended and extended version of which was adopted pursuant to the Resolution of the Management Board of KGHM Polska Miedź S.A. in June 2018. Hence the frequent reference to the Code in this document.

The KGHM Group’s Code of Ethics is based on the aforementioned values and constitutes a guidepost for all the decisions and actions taken in the Parent Entity and the KGHM Polska Miedź S.A. Group. There are supporting acts regulating the areas of: prevention of corruption, prevention of conflict of interests, security and transparency of procurement processes, verification of external counterparties and prevention of employee rights violations, including discrimination and abuse. The KGHM Group’s Code of Ethics is a collection of rules applicable to the employees of the Parent Entity, the KGHM Group and cooperating entities. It is one of the pillars of KGHM’s organisational culture, which is deeply rooted in the mining and metallurgical traditions. They constitute the genetic code of our community, building its professional identity.

 Miedź S.A. Group. There are supporting acts regulating the areas of: prevention of corruption, prevention of conflict of interests, security and transparency of procurement processes, verification of external counterparties and prevention of employee rights violations, including discrimination and abuse. The KGHM Group’s Code of Ethics is a collection of rules applicable to the employees of the Parent Entity, the KGHM Group and cooperating entities. It is one of the pillars of KGHM’s organisational culture, which is deeply rooted in the mining and metallurgical traditions. They constitute the genetic code of our community, building its professional identity. The KGHM Group’s Code of Ethics aims to ensure that the employees follow the highest standards based on the adopted values. The status of a global leader and international corporation obligates us to keep the highest business ethics standards. It is also related to the challenges resulting from the richness of national cultures within which we operate.

KGHM Polska Miedź S.A. Code of Conduct 

In keeping with current business practice, including in the mineral resource industry, our business partners, suppliers, customers and Stakeholders expect companies to have clearly declared ethical regulations. 

In June 2018, the Management Board of KGHM Polska Miedź S.A. adopted the KGHM Polska Miedź S.A. Code of Conduct. By doing this, the Company declared its orientation towards sustainable development, based on respect for ethical principles, transparency and best industry practice, and commitment to being a socially and environmentally responsible enterprise. The Code of Conduct is based on the KGHM Group Code of Ethics. Both documents regulate behaviour standards by which the Company is guided. The Codes are an integral, mutually interconnected whole, based on consistent assumptions and values followed by the Company.

The Code of Conduct is a powerfully practical document. Its purpose is to be a guide and support for the employees, showing where to look for answers and who to approach if in doubt about decisions made in everyday situations. The Code of Conduct provides an easy to understand presentation of the Company’s values for all employees, regardless of their position. 

The Code of Conduct is a product of efforts in several parallel areas. On the one hand, a benchmarking analysis of similar competitors’ documents was carried out. The top 10 copper producers worldwide were analysed to see if they apply a Code of Conduct and what scope is covered. On the other hand, an internal analysis of the Company was performed. The normative acts in effect at KGHM were catalogued, and those of special importance from the perspective of the future Code of Conduct were selected. Those which might provide the employees with the instructions on how to proceed in a number of everyday situations were selected in agreement with the relevant organisational units. Finally, consultations with senior management made it possible to establish the ultimate Code of Conduct.

The adoption and functioning of the Code of Conduct and the Code of Ethics was presented to KGHM Polska Miedź S.A.’s employees both via the internal portal (intranet: “KGHM to My” at extranet.kghm.com), as well as distributed with monthly payment slips. The Codes are distributed in the printed version during training sessions held by the Ethics and Anticorruption Representatives in all Divisions and Companies of the KGHM Polska Miedź S.A. Group. The Code of Conduct and the Code of Ethics are published for the general audience on www.kghm.com, in the Investors/Corporate Governance/Code of Ethics tab https://kghm.com/pl/inwestorzy/lad-korporacyjny/kodeks-etyki-i-kodeks-postepowania 

Ethics Committees in the KGHM Polska Miedź S.A. Group 

Every KGHM Group Entity establishes an Ethics Committee. The primary task of the Committee is to conduct investigations in response to reports on irregularities consisting in violation of the ethical standards defined in the Code of Ethics, and to recommend corrective and disciplinary actions to the workplace manager.

A report can be filed by:

  1. Every Employee who has been harmed by actions described in the list of issues reportable to the Ethics Committee,
  2. Every person who has witnessed actions described in the list of issues reportable to the Ethics Committee.

The list of issues reportable to the Ethics Committee is as follows: 

  1. Actions displaying features of abuse, discrimination, harassment or other type of unequal treatment of the Company’s employee or a group of employees;
  2. Breaches of employee duties arising from the Labour Code as well as internal regulations of a given KGHM Group Entity, regardless of the position held;
  3. Breaches of the rules of community life;
  4. Improper performance of professional duties;
  5. Unethical behaviour towards other employees and third persons in the work place and outside of the working hours;
  6. Exposing the good name of the Company to harm.

The Procedure of Disclosing Irregularities and Protection of Whistleblowers in the KGHM Polska Miedź S.A. Group

In order to enable effective detection of breaches, confidential channels for reporting of irregularities by so called Whistleblowers have been created, both within the company, as well as from outside of its organisation. Persons who report irregularities and who do so in good faith and non-anonymously (Whistleblowers) are protected under the KGHM Group Procedure of Disclosing Irregularities and Protection of Whistleblowers. Anonymous reports are also accepted and followed up. The channels allow reporting without disclosing one’s personal details.

In 2019, the KGHM Group Procedure of Disclosing Irregularities and Protection of Whistleblowers was updated, account being taken of the requirements of the amended Act on public offering, conditions governing the introduction of financial instruments to organised trading, and public companies. This procedure is aimed at enhancing the effectiveness of uncovering and resolving situations related to the occurrence of improprieties representing an abuse of regulations applied in the KGHM Group, in particular the Code of Ethics of the KGHM Group, the Security Policy, the Anticorruption Policy and the Procedure for Counteracting the Threat of Corruption. In 2019, an additional channel for whistleblowers was implemented – the “KGHM Ethics Line” platform, available on the corporate website for both employees and third parties, including contractors and customers. The platform is available in four languages – Polish, English, Spanish and Russian. It enables the anonymous disclosure of improprieties and is an alternative channel for other forms of contact – telephone lines, email addresses and addresses for correspondence.

The chart below shows the growth of Whistleblower reports in the period 2018–2019, with events that affected the result marked on the timeline:

  1. January 2018 r. – Establishment of the Security and Loss Prevention Section.
  2. June and July 2018 r. – Adoption of the Code of Ethics and the Code of Conduct, implementation of the Anticorruption Policy and the Corruption Threat Prevention Procedure.
  3. September 2018 r. – Implementation of the Procedure of Disclosing Irregularities and Protection of Whistleblowers and the Anti-Abuse Procedure.
  4. October 2018 r. – Appointment of Ethics and Anticorruption Representatives in the KGHM companies and establishment of the Ethics Committee.
  5. Juny 2019 r. – Opening of the Whistleblower Platform (online), publication of the special supplement.
  6. November 2019 r. – Launch of training on the e-learning platform.

Chart depicting the course of action in the event of a violation of ethical principles

Anticorruption Policy in the KGHM Polska Miedź S.A. Group

The Anticorruption Policy in effect in the KGHM Polska Miedź S.A. Group was adopted in July 2018, pursuant to the Resolution of the Management Board of KGHM Polska Miedź S.A. The Policy establishes detailed standards of conduct in corruption-prone situations and identifies the criminal liability in case of abuse. The KGHM Polska Miedź S.A. Group underscores its commitment to fighting corruption in business, by way of adoption and uncompromising observance of the “zero tolerance for corruption and bribery” rule. Employees are prohibited from offering or accepting any material benefits in relation to the performance of professional duties.

The only exception is giving and accepting business gifts in line with the local norms and cultural customs, provided that the giving and accepting of gifts cannot lead to a situation in which such behaviour could be considered as an attempt to exert pressure or persuade the recipient to act against their duties. Detailed rules pertaining to giving and acceptance of customary business gifts have been defined as an instruction under the Corruption Threat Prevention Procedure. Employees are required to avoid any actions or decisions in a situation of a conflict of interests. Particular control under the Policy is over business procurement transactions, including an option of a third party audit, in order to ensure that such transactions meet the highest standards of ethical and transparent business operations. The KGHM Polska Miedź S.A. Group Entities and their Employees may be held accountable for actions of persons or entities acting on their behalf or for them. 

The Policy also states that the Group Entities and their representatives are obliged to observe all statutory provisions, guidelines of administration bodies and other state authorities, as well as domestic and international legal acts designed to fight corruption. The Policy also states that KGHM Polska Miedź S.A. and the Group Entities and cooperating entities are obliged to follow international legal acts designed to fight corruption, e.g. the U.K. Bribery Act of 2010, the U.S. Foreign Corrupt Practices Act, Canadian Corruption of Foreign Public Officials Act of 1999 and guidelines contained in international agreements, e.g. the OECD Convention or the guidelines of UN Global Compact as regards responsible business and fight with corruption.

The document stipulates that Employees of the Group and external partners are obliged to report any suspicion of breaches to the Policy and the Corruption Threat Prevention Procedure, directly to the Security Department of KGHM Polska Miedź S.A. or via the dedicated channels of reporting irregularities. Every report is confidential and followed up with due diligence. The KGHM Polska Miedź S.A. Group uses a range of tools to effectively implement the Policy’s objectives, including first of all procedures, instructions, remedies and control mechanisms, which specify in detail the standards of conduct in corruption-prone situations and situations in which accountability for abuse may be involved.

The Group’s employees and its representatives are obliged to follow and apply both the Anticorruption Policy as well as the accompanying documents referred to above, in particular the Corruption Threat Prevention Procedure.

Corruption Threat Prevention Procedure in the KGHM Polska Miedź S.A. Group

The Procedure was adopted in July 2018 in accordance with a Resolution of the Management Board of KGHM Polska Miedź S.A. The provisions of the Corruption Threat Prevention Procedure are applied in order to minimize the risk of corruption and limit any corruptive practices that may arise in connection with the operations of the KGHM Group. The Procedure further elaborates on the provisions of the KGHM Group Anticorruption Policy. The rules defined in the Procedure are addressed to all Employees, as well as Representatives, and are applicable in contacts with clients, counterparties and State authorities. The Procedure stipulates precisely the proper manner of conduct, remedies and control mechanisms, which together with other regulations of the Policy make up the Corruption Threat Prevention System. The KGHM Group’s employees and its representatives are obliged to observe all statutory provisions, guidelines of government bodies and other State authorities, as well as legal acts of the relevant organisations, of which a given KGHM Group Entity is a member, related to anticorruption rules and actions. Employees are familiarised with the content of the Anticorruption Policy and the Corruption Threat Prevention Procedure at the time of hiring and periodically, as part of classroom and e-learning training courses. 

The Security Department Director plays the role of the Ethics and Anticorruption Representative in the KGHM Group and is responsible for supervision of the implementation of and compliance with the Procedure. The Ethics and Anticorruption Representatives were appointed in the Polish and international subsidiaries, the KGHM Polska Miedź S.A. Head Office and the KGHM Polska Miedź S.A. Divisions in order to monitor the implementation of the anticorruption regulations.

Undertaking, participating in, promoting, and inciting to any kind of corruptive actions is strictly forbidden. In the KGHM Polska Miedź S.A. Group, corruptive action is in particular:

  • bribery, 
  • influence peddling; unacceptable preferential treatment – an action leading to putting a counterparty, product or service in a privileged position, extended against the interests of the KGHM Group, in return for providing, or a promise to provide, material benefit,
  • abuse of authority,
  • negligence,
  • receipt of benefits,   
  • receipt of a promise, 
  • making performance of a professional duty conditional, 
  • demand of benefits,
  • conflict of interests,
  • nepotism,
  • cronyism,
  • thwarting or impeding a public tender.

The algorithm for reporting conflicts of interests, including a list of situations that may lead to a conflict of interests

* other connections – family and social connections

Procurement Policy of the KGHM Polska Miedź S.A. Group

KGHM Polska Miedź S.A. is guided by high ethical standards across the procurement process. The Code’s main message is to guarantee the professionalism and honesty of the persons responsible for the procurement processes. The document also contemplates issues such as preventing conflicts of interest as well as equal treatment of suppliers to ensure compliance with the principles of fair competition.

The procurement procedures in effect in KGHM are precisely defined in the Procurement Policy and business partners are selected in accordance with the principle of equal treatment.

In tender documentation, the Company reserves the right to audit its suppliers and to assess their activities in terms of compliance with human rights and regulations governing the hiring of minors. External entities are also checked in order to secure the interests of KGHM, in the context of money laundering, breaches of fair competition rules, prevention of conflict of interests, etc.

Information on the procedure for counteracting money laundering and prevention of fraud and extortion in trading transactions regarding the sale of products and the procurement of ore and copper-bearing materials in KGHM Polska Miedź S.A.

KGHM uses a diverse range of external counterparty verification in the procurement, sales and investment processes, which are regulated by a number of consistent and uniform internal policies and procedures. This procedure covers verification methods used for the purposes of trading transactions. 

To protect its image and the Company’s security, KGHM takes measures to prevent the Company from being used by third parties for unlawful purposes, such as money laundering, financing of terrorism, or VAT extortion. 

The security measures undertaken in this respect consist of:

  • Client identification and verification of its identity based on the data provided by the Client, publicly available information and/or reports of credit bureaus,
  • undertaking, with due diligence, actions to determine the Client’s ownership and organizational structures, 
  • Owner of the transaction and verify its identity, using publicly available information and/or reports of credit bureaus,
  • obtaining information on the Client’s objective and intended character of the business relationship, using publicly available information;
  • monitoring the business relationship with the Client, including completed transactions, in order to check if they are consistent with the Company’s knowledge of the Client and its business profile, and, if possible, examining the source of funds.

Procurement Process Control Instruction of the Supply Chain Security Department of the KGHM Polska Miedź S.A. Group

The Instruction has been issued as an Appendix to the Internal Control Procedure of the Security and Loss Prevention Section of the KGHM Polska Miedź S.A. Group. Pursuant to the Organisational Regulations of KGHM Polska Miedź S.A., tasks of the Supply Chain Security Department include: control of the transparency of procurement processes, monitoring of procurement processes with increased risk of abuse and control of completed procurement processes – if abuse is suspected – to verify the correctness of those processes and detect corruption threats.

The document regulates a detailed scope of activities of the Supply Chain Security Department, resulting from the aforelisted tasks, and incorporating the stipulations of the KGHM Polska Miedź S.A. Procurement Policy. The Instruction also applies to procurement excluded from the Procurement Policy which has not been regulated in other internal Company acts – to the extent allowed by the unique specificity of individual procurement processes. For procurement excluded from the Procurement Policy which is regulated by other internal Company acts, the control activities proceed in accordance with those acts.

Anti-Abuse Procedure of the KGHM Polska Miedź S.A. Group

The Procedure was adopted in accordance with the Resolution of the Management Board of KGHM Polska Miedź S.A. in September 2018. The objective of the Procedure is to prevent abuse at work, by way of implementation of a prevention system and definition of a procedure to be followed if abuse does occur. The procedure is designed to build and enhance an organisational culture based on good interpersonal relations between and among employees.

The procedure describes a catalogue of actions designed to prevent abuse, actions to be taken if abuse does occur, and defines obligations of the employer and employees in this respect. The Procedure applies to all employees of the KGHM Polska Miedź S.A. Group, regardless of the type of contract or position held. Every employee who believes they have experienced abuse or have witnessed behaviour displaying features of abuse, has the right to lodge an Abuse Report. An Abuse Report is lodged in a process defined in the Procedure of Disclosing Irregularities and Protection of Whistleblowers, using dedicated channels, subject to the stipulation that in this case the personal details of the reporting employee, the employee/employees who may have been subjected to abuse and the employee/employees who have committed actions or behaviour displaying the features of abuse, must be disclosed. The case is examined by the Ethics Committee of the relevant entity of the KGHM Group.

Employees are familiarised with the content of the procedure at the time of hiring and periodically, as part of classroom and e-learning training courses. 

Compliance with the Procedure is supervised by the work place manager, who is also responsible for the appointment of the Ethics Committee members. The Committee carries out the proceedings related to abuse initiated on the basis of an Abuse Report. The Ethics and Anticorruption Representative plays an important role in counteracting abuse. The Ethics and Anticorruption Representative conducts preventive actions, including organisation of training for Employees, participates in investigation of the abuse reports, is responsible for receiving the reports and initiating further proceedings in accordance with the Procedure of Disclosing Irregularities and Protection of Whistleblowers. A number of abuse reports that have been examined by the Ethics Committee pertained mostly to conflicts at the work place. Early detection of such cases, possible thanks to the solutions implemented by KGHM, has helped to avoid escalation and prevented occurrence of abuse.

Personal Data Protection Policy in KGHM Polska Miedź S.A.

In 2018, the Management Board of KGHM Polska Miedź S.A. adopted a Personal Data Protection Policy. The Policy lays down the rules of processing and securing personal data in KGHM Polska Miedź S.A., pursuant to Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation, hereinafter: GDPR). The Policy has been adopted to ensure that data processing in KGHM proceeds in compliance with the GDPR and other personal data protection regulations, and to be able to demonstrate this compliance. The Policy is subject to reviews and updates, in keeping with the rules laid down therein. Under the Policy, the object of protection is personal data, processed in IT systems, as well as recorded otherwise on media, including paper form and electronic media. The places where personal data is so processed must be secured in a manner defined by the Policy. The Policy applies to all the personal data processed in KGHM for the purposes of the Company’s activities. The duty to protect personal data processed by KGHM and to apply the Policy covers all persons with access to personal data, regardless of their position, place of work and type of employment relationship. Every person about to have access to personal data may process the data exclusively based on an authorisation (delegation). All persons having access to personal data are obliged to familiarise themselves with the Policy and other related documents, and to apply the provisions thereof.

The Policy is consistent with other internal regulations regarding security of information and IT systems applicable in KGHM. Updates to the Policy are supervised by the Data Protection Officer of KGHM Polska Miedź S.A.

Procedure for Verification of Compliance with the Ethical Principles of KGHM Polska Miedź S.A.

As a socially responsible company, KGHM Polska Miedź S.A. applies due diligence procedures. In doing so, it attaches importance not only to respect for human rights, lawful terms of employment, environmental norms, freedom of establishing trade unions, compliance of operations with generally applicable laws, no child labour and no extraction of production raw materials from conflict sources (the so-called conflict minerals) but also wants to cooperate with business partners who share these values. For this reason, KGHM’s customers and suppliers are obligated to declare in writing their compliance with the aforementioned principles, by signing the so-called Customer Card and Supplier Card, which is an important factor of the business decisions on undertaking cooperation with the given partner.

Internal Audit Rules (for Ethics) in KGHM Polska Miedź S.A.

The Internal Audit Department follows the international internal audit standards. The standards cover 14 areas, with ethics being one of them. When performing internal audit tasks, the risks of potential fraud, conflict of interests or other activities which are not compliant with the Code of Ethics and other internal regulations are analysed. Any areas with increased risk of unethical behaviour are consistently identified and taken into account in the development of the annual audit plan.

Internal Control Procedure of the Security and Loss Prevention Section of KGHM Polska Miedź S.A.

The purpose of the Procedure is to define consistent and uniform rules for conducting Internal Control by the Security and Loss Prevention Section.

The Procedure defines how the Control Process is performed by the Section’s units, defines and assigns roles in the Control Process, delineates the framework of cooperation of its participants, as well as lists the scope of activities to be performed in the Process. The scope of control carried out by the Security and Loss Prevention Section includes identification and detection of fraud, irregularities, malpractice, corruption, abuse, breaches of the Code of Ethics in the Group, as well as threats related to IT and information security.

Raport 2019 KGHM

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