Attachment to the Draft Annual Report for the ordinary general meeting that
will be convened on April 19, 2007
Disclosure concerning the compliance with the Governance Code of SC Klaipėdos
nafta whose securities are traded on the regulated market as of the year ended
on Decemeber 31st, 2006
SC Klaipėdos nafta, following Article 21 paragraph 3 of the Law on Securities of
the Republic of Lithuania and item 20.5 of the Trading Rules of the Vilnius
Stock Exchange, discloses its compliance with the Governance Code, approved by
the VSE for the companies listed on the regulated market, and its specific
provisions.
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| 1.1. A company should adopt | Yes | The development strategy and |
| and make public the company's | | objectives of SC Klaipėdos nafta |
| development strategy and | | have been set up in its internal |
| objectives by clearly | | documents according to the |
| declaring how the company | | separate directions and |
| intends to meet the interests | | objectives of its activities. The |
| of its shareholders and | | Company updates its development |
| optimize shareholder value. | | plans subject to the situation on |
| | | the market as well as to the |
| | | changes in the regulatory |
| | | environment. |
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| 1.2. All management bodies of | Yes | |
| a company should act in | | |
| furtherance of the declared | | |
| strategic objectives in view | | |
| of the need to optimize | | |
| shareholder value. | | |
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| 1.3. A company's supervisory | Yes | The Board of the Company and |
| and management bodies should | | Director General implement this |
| act in close co-operation in | | recommendation. |
| order to attain maximum | | |
| benefit for the company and | | |
| its shareholders. | | |
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| 1.4. A company's supervisory | Yes | |
| and management bodies should | | |
| ensure that the rights and | | |
| interests of persons other | | |
| than the company's | | |
| shareholders (e.g. employees, | | |
| creditors, suppliers, clients, | | |
| local community), | | |
| participating in or connected | | |
| with the company's operation, | | |
| are duly respected. | | |
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| 2.1. Besides obligatory bodies | Yes | The Board and Director General |
| provided for in the Law on | | constitute the management bodies |
| Companies of the Republic of | | of the Company. |
| Lithuania - a general | | Separation of competence and |
| shareholders' meeting and the | | responsibility of the management |
| chief executive officer, it is | | bodies of the Company have been |
| recommended that a company | | determined by its Articles of |
| should set up both a collegial | | Association, operating |
| supervisory body and a | | regulations of the management |
| collegial management body. The | | bodies as well as by the |
| setting up of collegial bodies | | employment contract of Director |
| for supervision and management | | General. |
| facilitates clear separation | | |
| of management and supervisory | | |
| functions in the company, | | |
| accountability and control on | | |
| the part of the chief | | |
| executive officer, which, in | | |
| its turn, facilitate a more | | |
| efficient and transparent | | |
| management process. | | |
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| 2.2. A collegial management | Yes | |
| body is responsible for the | | |
| strategic management of the | | |
| company and performs other key | | |
| functions of corporate | | |
| governance. A collegial | | |
| supervisory body is | | |
| responsible for the effective | | |
| supervision of the company's | | |
| management bodies. | | |
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| 2.3. Where a company chooses | Yes | A collegial supervisory body - |
| to form only one collegial | | the Supervisory Board is formed |
| body, it is recommended that | | in the Company. |
| it should be a supervisory | | |
| body, i.e. the supervisory | | |
| board. In such a case, the | | |
| supervisory board is | | |
| responsible for the effective | | |
| monitoring of the functions | | |
| performed by the company's | | |
| chief executive officer. | | |
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| 2.4. The collegial supervisory | Yes | The Company follows the |
| body to be elected by the | | provisions of the great majority |
| general shareholders' meeting | | defined in Principle III but does |
| should be set up and should | | not follow the provisions set up |
| act in the manner defined in | | in Principle IV regarding |
| Principles III and IV. Where a | | formation of committees. |
| company should decide not to | | |
| set up a collegial supervisory | | |
| body but rather a collegial | | |
| management body, i.e. the | | |
| board, Principles III and IV | | |
| should apply to the board as | | |
| long as that does not | | |
| contradict the essence and | | |
| purpose of this body.1 | | |
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| 2.5. Company's management and | Yes | The Board of the Company is |
| supervisory bodies should | | composed of five members. |
| comprise such number of board | | |
| (executive directors) and | | |
| supervisory (non-executive | | |
| directors) board members that | | |
| no individual or small group | | |
| of individuals can dominate | | |
| decision-making on the part of | | |
| these bodies.2 | | |
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| 2.6. Non-executive directors | Yes | The members of the Board, of the |
| or members of the supervisory | | Supervisory Board are elected for |
| board should be appointed for | | the maximum term of four years |
| specified terms subject to | | provided for in the Law on |
| individual re-election, at | | Companies of the Republic of |
| maximum intervals provided for | | Lithuania. There are no |
| in the Lithuanian legislation | | limitations for reelection of the |
| with a view to ensuring | | members. |
| necessary development of | | |
| professional experience and | | |
| sufficiently frequent | | |
| reconfirmation of their | | |
| status. A possibility to | | |
| remove them should also be | | |
| stipulated however this | | |
| procedure should not be easier | | |
| than the removal procedure for | | |
| an executive director or a | | |
| member of the management | | |
| board. | | |
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| 2.7. Chairman of the collegial | Yes | Director General of the Company |
| body elected by the general | | is not a member of its Board. |
| shareholders' meeting may be a | | |
| person whose current or past | | |
| office constitutes no obstacle | | |
| to conduct independent and | | |
| impartial supervision. Where a | | |
| company should decide not to | | |
| set up a supervisory board but | | |
| rather the board, it is | | |
| recommended that the chairman | | |
| of the board and chief | | |
| executive officer of the | | |
| company should be a different | | |
| person. Former company's chief | | |
| executive officer should not | | |
| be immediately nominated as | | |
| the chairman of the collegial | | |
| body elected by the general | | |
| shareholders' meeting. When a | | |
| company chooses to departure | | |
| from these recommendations, it | | |
| should furnish information on | | |
| the measures it has taken to | | |
| ensure impartiality of the | | |
| supervision. | | |
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| 3.1. The mechanism of the | Yes | |
| formation of a collegial body | | |
| to be elected by a general | | |
| shareholders' meeting | | |
| (hereinafter in this Principle | | |
| referred to as the ‘collegial | | |
| body') should ensure objective | | |
| and fair monitoring of the | | |
| company's management bodies as | | |
| well as representation of | | |
| minority shareholders. | | |
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| 3.2. Names and surnames of the | Yes | |
| candidates to become members | | |
| of a collegial body, | | |
| information about their | | |
| education, qualification, | | |
| professional background, | | |
| positions taken and potential | | |
| conflicts of interest should | | |
| be disclosed early enough | | |
| before the general | | |
| shareholders' meeting so that | | |
| the shareholders would have | | |
| sufficient time to make an | | |
| informed voting decision. All | | |
| factors affecting the | | |
| candidate's independence, the | | |
| sample list of which is set | | |
| out in Recommendation 3.7, | | |
| should be also disclosed. The | | |
| collegial body should also be | | |
| informed on any subsequent | | |
| changes in the provided | | |
| information. The collegial | | |
| body should, on yearly basis, | | |
| collect data provided in this | | |
| item on its members and | | |
| disclose this in the company's | | |
| annual report. | | |
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| 3.3. Should a person be | Yes | |
| nominated for members of a | | |
| collegial body, such | | |
| nomination should be followed | | |
| by the disclosure of | | |
| information on candidate's | | |
| particular competences | | |
| relevant to his/her service on | | |
| the collegial body. In order | | |
| shareholders and investors are | | |
| able to ascertain whether | | |
| member's competence is further | | |
| relevant, the collegial body | | |
| should, in its annual report, | | |
| disclose the information on | | |
| its composition and particular | | |
| competences of individual | | |
| members which are relevant to | | |
| their service on the collegial | | |
| body. | | |
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| 3.4. In order to maintain a | Yes | |
| proper balance in terms of the | | |
| current qualifications | | |
| possessed by its members, the | | |
| collegial body should | | |
| determine its desired | | |
| composition with regard to the | | |
| company's structure and | | |
| activities, and have this | | |
| periodically evaluated. The | | |
| collegial body should ensure | | |
| that it is composed of members | | |
| who, as a whole, have the | | |
| required diversity of | | |
| knowledge, judgment and | | |
| experience to complete their | | |
| tasks properly. The members of | | |
| the audit committee, | | |
| collectively, should have a | | |
| recent knowledge and relevant | | |
| experience in the fields of | | |
| finance, accounting and/or | | |
| audit for the stock exchange | | |
| listed companies. | | |
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| 3.5. All new members of the | Yes | |
| collegial body should be | | |
| offered a tailored program | | |
| focused on introducing a | | |
| member with his/her duties, | | |
| corporate organization and | | |
| activities. The collegial body | | |
| should conduct an annual | | |
| review to identify fields | | |
| where its members need to | | |
| update their skills and | | |
| knowledge. | | |
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| 3.6. In order to ensure that | | Up to now the independence of the |
| all material conflicts of | | elective members of the Board was |
| interest related with a member | | not evaluated and the content of |
| of the collegial body are | | the notion sufficiency of |
| resolved properly, the | | independent members was not |
| collegial body should comprise | | discussed. |
| a sufficient3 number of | | |
| independent4 members. | | |
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| 3.7. A member of the collegial | Yes | |
| body should be considered to | | |
| be independent only if he is | | |
| free of any business, family | | |
| or other relationship with the | | |
| company, its controlling | | |
| shareholder or the management | | |
| of either, that creates a | | |
| conflict of interest such as | | |
| to impair his judgment. Since | | |
| all cases when member of the | | |
| collegial body is likely to | | |
| become dependant are | | |
| impossible to list, moreover, | | |
| relationships and | | |
| circumstances associated with | | |
| the determination of | | |
| independence may vary amongst | | |
| companies and the best | | |
| practices of solving this | | |
| problem are yet to evolve in | | |
| the course of time, assessment | | |
| of independence of a member of | | |
| the collegial body should be | | |
| based on the contents of the | | |
| relationship and circumstances | | |
| rather than their form. The | | |
| key criteria for identifying | | |
| whether a member of the | | |
| collegial body can be | | |
| considered to be independent | | |
| are the following: | | |
| He/she is not an executive | | |
| director or member of the | | |
| board (if a collegial body | | |
| elected by the general | | |
| shareholders' meeting is the | | |
| supervisory board) of the | | |
| company or any associated | | |
| company and has not been such | | |
| during the last five years; | | |
| He/she is not an employee of | | |
| the company or some any | | |
| company and has not been such | | |
| during the last three years, | | |
| except for cases when a member | | |
| of the collegial body does not | | |
| belong to the senior | | |
| management and was elected to | | |
| the collegial body as a | | |
| representative of the | | |
| employees; | | |
| He/she is not receiving or has | | |
| been not receiving significant | | |
| additional remuneration from | | |
| the company or associated | | |
| company other than | | |
| remuneration for the office in | | |
| the collegial body. Such | | |
| additional remuneration | | |
| includes participation in | | |
| share options or some other | | |
| performance based pay systems; | | |
| it does not include | | |
| compensation payments for the | | |
| previous office in the company | | |
| (provided that such payment is | | |
| no way related with later | | |
| position) as per pension plans | | |
| (inclusive of deferred | | |
| compensations); | | |
| He/she is not a controlling | | |
| shareholder or representative | | |
| of such shareholder (control | | |
| as defined in the Council | | |
| Directive 83/349/EEC Article 1 | | |
| Part 1); | | |
| He/she does not have and did | | |
| not have any material business | | |
| relations with the company or | | |
| associated company within the | | |
| past year directly or as a | | |
| partner, shareholder, director | | |
| or superior employee of the | | |
| subject having such | | |
| relationship. A subject is | | |
| considered to have business | | |
| relations when it is a major | | |
| supplier or service provider | | |
| (inclusive of financial, | | |
| legal, counseling and | | |
| consulting services), major | | |
| client or organization | | |
| receiving significant payments | | |
| from the company or its group; | | |
| He/she is not and has not | | |
| been, during the last three | | |
| years, partner or employee of | | |
| the current or former external | | |
| audit company of the company | | |
| or associated company; | | |
| He/she is not an executive | | |
| director or member of the | | |
| board in some other company | | |
| where executive director of | | |
| the company or member of the | | |
| board (if a collegial body | | |
| elected by the general | | |
| shareholders' meeting is the | | |
| supervisory board) is | | |
| non-executive director or | | |
| member of the supervisory | | |
| board, he/she may not also | | |
| have any other material | | |
| relationships with executive | | |
| directors of the company that | | |
| arise from their participation | | |
| in activities of other | | |
| companies or bodies; | | |
| He/she has not been in the | | |
| position of a member of the | | |
| collegial body for over than | | |
| 12 years; | | |
| He/she is not a close relative | | |
| to an executive director or | | |
| member of the board (if a | | |
| collegial body elected by the | | |
| general shareholders' meeting | | |
| is the supervisory board) or | | |
| to any person listed in above | | |
| items 1 to 8. Close relative | | |
| is considered to be a spouse | | |
| (common-law spouse), children | | |
| and parents. | | |
| 3.8. The determination of what | | |
| constitutes independence is | | |
| fundamentally an issue for the | | |
| collegial body itself to | | |
| determine. The collegial body | | |
| may decide that, despite a | | |
| particular member meets all | | |
| the criteria of independence | | |
| laid down in this Code, he | | |
| cannot be considered | | |
| independent due to special | | |
| personal or company-related | | |
| circumstances. | | |
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| 3.9. Necessary information on | No | The Company has not yet applied |
| conclusions the collegial body | | in practice disclosure of the |
| has come to in its | | criteria of independence set out |
| determination of whether a | | in the Code (See item 3.6). |
| particular member of the body | | |
| should be considered to be | | |
| independent should be | | |
| disclosed. When a person is | | |
| nominated to become a member | | |
| of the collegial body, the | | |
| company should disclose | | |
| whether it considers the | | |
| person to be independent. When | | |
| a particular member of the | | |
| collegial body does not meet | | |
| one or more criteria of | | |
| independence set out in this | | |
| Code, the company should | | |
| disclose its reasons for | | |
| nevertheless considering the | | |
| member to be independent. In | | |
| addition, the company should | | |
| annually disclose which | | |
| members of the collegial body | | |
| it considers to be | | |
| independent. | | |
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| 3.10. When one or more | No | Up to now the Company has not |
| criteria of independence set | | applied practice of evaluation |
| out in this Code has not been | | and disclosure of independence of |
| met throughout the year, the | | the members of the Board. |
| company should disclose its | | |
| reasons for considering a | | |
| particular member of the | | |
| collegial body to be | | |
| independent. To ensure | | |
| accuracy of the information | | |
| disclosed in relation with the | | |
| independence of the members of | | |
| the collegial body, the | | |
| company should require | | |
| independent members to have | | |
| their independence | | |
| periodically re-confirmed. | | |
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| 3.11. In order to remunerate | Not | The members of the Board are not |
| members of a collegial body | applica | remunerated from the Company's |
| for their work and | ble | funds for their participation in |
| participation in the meetings | | the meetings of the Board. |
| of the collegial body, they | | |
| may be remunerated from the | | |
| company's funds.5. The general | | |
| shareholders' meeting should | | |
| approve the amount of such | | |
| remuneration. | | |
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| 4.1. The collegial body | Yes | According to the information |
| elected by the general | | available to the Company all the |
| shareholders' meeting | | members of the Board act in good |
| (hereinafter in this Principle | | faith for the benefit and in the |
| referred to as the ‘collegial | | interests of the Company but not |
| body') should ensure integrity | | in their own or third parties' |
| and transparency of the | | interests seeking to maintain |
| company's financial statements | | their independence in |
| and the control system. The | | decision-making. |
| collegial body should issue | | |
| recommendations to the | | |
| company's management bodies | | |
| and monitor and control the | | |
| company's management | | |
| performance.6 | | |
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| 4.2. Members of the collegial | Yes | According to the information |
| body should act in good faith, | | available to the Company all the |
| with care and responsibility | | members of the Board act in good |
| for the benefit and in the | | faith for the benefit and in the |
| interests of the company and | | interests of the Company but not |
| its shareholders with due | | in their own or third parties' |
| regard to the interests of | | interests seeking to maintain |
| employees and public welfare. | | their independence in |
| Independent members of the | | decision-making. |
| collegial body should (a) | | |
| under all circumstances | | |
| maintain independence of their | | |
| analysis, decision-making and | | |
| actions (b) do not seek and | | |
| accept any unjustified | | |
| privileges that might | | |
| compromise their independence, | | |
| and (c) clearly express their | | |
| objections should a member | | |
| consider that decision of the | | |
| collegial body is against the | | |
| interests of the company. | | |
| Should a collegial body have | | |
| passed decisions independent | | |
| member has serious doubts | | |
| about, the member should make | | |
| adequate conclusions. Should | | |
| an independent member resign | | |
| from his office, he should | | |
| explain the reasons in a | | |
| letter addressed to the | | |
| collegial body or audit | | |
| committee and, if necessary, | | |
| respective | | |
| company-not-pertaining body | | |
| (institution). | | |
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| 4.3. Each member should devote | Yes | The members of the Board duly |
| sufficient time and attention | | perform their functions: they |
| to perform his duties as a | | actively attend the meetings and |
| member of the collegial body. | | devote sufficient time to perform |
| Each member of the collegial | | their duties as members of the |
| body should limit other | | Board. |
| professional obligations of | | |
| his (in particular any | | |
| directorships held in other | | |
| companies) in such a manner | | |
| they do not interfere with | | |
| proper performance of duties | | |
| of a member of the collegial | | |
| body. In the event a member of | | |
| the collegial body should be | | |
| present in less than a half7 | | |
| of the meetings of the | | |
| collegial body throughout the | | |
| financial year of the company, | | |
| shareholders of the company | | |
| should be notified. | | |
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| 4.4. Where decisions of a | Yes | The Company follows the stated |
| collegial body may have a | | recommendations. |
| different effect on the | | |
| company's shareholders, the | | |
| collegial body should treat | | |
| all shareholders impartially | | |
| and fairly. It should ensure | | |
| that shareholders are properly | | |
| informed on the company's | | |
| affairs, strategies, risk | | |
| management and resolution of | | |
| conflicts of interest. The | | |
| company should have a clearly | | |
| established role of members of | | |
| the collegial body when | | |
| communicating with and | | |
| committing to shareholders. | | |
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| 4.5. It is recommended that | Yes | Transactions concluded between |
| transactions (except | | the Company and its shareholders, |
| insignificant ones due to | | members of the supervisory or |
| their low value or concluded | | managing bodies or other natural |
| when carrying out routine | | or legal persons that exert or |
| operations in the company | | may exert influence on the |
| under usual conditions), | | Company's management should be |
| concluded between the company | | approved following the Company's |
| and its shareholders, members | | Articles of Association. |
| of the supervisory or managing | | |
| bodies or other natural or | | |
| legal persons that exert or | | |
| may exert influence on the | | |
| company's management should be | | |
| subject to approval of the | | |
| collegial body. The decision | | |
| concerning approval of such | | |
| transactions should be deemed | | |
| adopted only provided the | | |
| majority of the independent | | |
| members of the collegial body | | |
| voted for such a decision. | | |
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| 4.6. The collegial body should | Yes | The Board of the Company is |
| be independent in passing | | provided with all the necessary |
| decisions that are significant | | financial conditions for its work |
| for the company's operations | | and is independent of the |
| and strategy. Taken | | Company's Managers. |
| separately, the collegial body | | |
| should be independent of the | | |
| company's management bodies8. | | |
| Members of the collegial body | | |
| should act and pass decisions | | |
| without an outside influence | | |
| from the persons who have | | |
| elected it. Companies should | | |
| ensure that the collegial body | | |
| and its committees are | | |
| provided with sufficient | | |
| administrative and financial | | |
| resources to discharge their | | |
| duties, including the right to | | |
| obtain, in particular from | | |
| employees of the company, all | | |
| the necessary information or | | |
| to seek independent legal, | | |
| accounting or any other advice | | |
| on issues pertaining to the | | |
| competence of the collegial | | |
| body and its committees. | | |
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| 4.7. Activities of the | No | Committees are not established, |
| collegial body should be | | however the Board performs their |
| organized in a manner that | | separate functions: it regularly |
| independent members of the | | evaluates skills, knowledge and |
| collegial body could have | | experience of separate directors; |
| major influence in relevant | | discusses general application |
| areas where chances of | | policy of remuneration (including |
| occurrence of conflicts of | | stimulation) systems; observes |
| interest are very high. Such | | the integrity of the financial |
| areas to be considered as | | information provided by the |
| highly relevant are issues of | | Company, paying special attention |
| nomination of company's | | to the relevance and transparency |
| directors, determination of | | of the accounting methods used by |
| directors' remuneration and | | the Company and its group. |
| control and assessment of | | |
| company's audit. Therefore | | |
| when the mentioned issues are | | |
| attributable to the competence | | |
| of the collegial body, it is | | |
| recommended that the collegial | | |
| body should establish | | |
| nomination, remuneration, and | | |
| audit committees. Companies | | |
| should ensure that the | | |
| functions attributable to the | | |
| nomination, remuneration, and | | |
| audit committees are carried | | |
| out. However they may decide | | |
| to merge these functions and | | |
| set up less than three | | |
| committees. In such case a | | |
| company should explain in | | |
| detail reasons behind the | | |
| selection of alternative | | |
| approach and how the selected | | |
| approach complies with the | | |
| objectives set forth for the | | |
| three different committees. | | |
| Should the collegial body of | | |
| the company comprise small | | |
| number of members, the | | |
| functions assigned to the | | |
| three committees may be | | |
| performed by the collegial | | |
| body itself, provided that it | | |
| meets composition requirements | | |
| advocated for the committees | | |
| and that adequate information | | |
| is provided in this respect. | | |
| In such case provisions of | | |
| this Code relating to the | | |
| committees of the collegial | | |
| body (in particular with | | |
| respect to their role, | | |
| operation, and transparency) | | |
| should apply, where relevant, | | |
| to the collegial body as a | | |
| whole. | | |
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| 4.8. The key objective of the | No | Committees are not established, |
| committees is to increase | | however the Board performs their |
| efficiency of the activities | | separate functions: it regularly |
| of the collegial body by | | evaluates skills, knowledge and |
| ensuring that decisions are | | experience of separate directors; |
| based on due consideration, | | discusses general application |
| and to help organize its work | | policy of remuneration (including |
| with a view to ensuring that | | stimulation) systems; observes |
| the decisions it takes are | | the integrity of the financial |
| free of material conflicts of | | information provided by the |
| interest. Committees should | | Company, paying special attention |
| present the collegial body | | to the relevance and transparency |
| with recommendations | | of the accounting methods used by |
| concerning the decisions of | | the Company and its group. |
| the collegial body. | | |
| Nevertheless the final | | |
| decision shall be adopted by | | |
| the collegial body. The | | |
| recommendation on creation of | | |
| committees is not intended, in | | |
| principle, to constrict the | | |
| competence of the collegial | | |
| body or to remove the matters | | |
| considered from the purview of | | |
| the collegial body itself, | | |
| which remains fully | | |
| responsible for the decisions | | |
| taken in its field of | | |
| competence. | | |
--------------------------------------------------------------------------------
| 4.9. Committees established by | No | Committees are not established, |
| the collegial body should | | however the Board performs their |
| normally be composed of at | | separate functions: regularly |
| least three members. In | | evaluates skills, knowledge and |
| companies with small number of | | experience of separate directors; |
| members of the collegial body, | | discusses general application |
| they could exceptionally be | | policy of remuneration (including |
| composed of two members. | | stimulation) systems; observes |
| Majority of the members of | | the integrity of the financial |
| each committee should be | | information provided by the |
| constituted from independent | | Company, paying special attention |
| members of the collegial body. | | to the relevance and transparency |
| In cases when the company | | of the accounting methods used by |
| chooses not to set up a | | the Company and its group. |
| supervisory board, | | |
| remuneration and audit | | |
| committees should be entirely | | |
| comprised of non-executive | | |
| directors. Chairmanship and | | |
| membership of the committees | | |
| should be decided with due | | |
| regard to the need to ensure | | |
| that committee membership is | | |
| refreshed and that undue | | |
| reliance is not placed on | | |
| particular individuals. | | |
--------------------------------------------------------------------------------
| 4.10. Authority of each of the | No | Committees are not established, |
| committees should be | | however the Board performs their |
| determined by the collegial | | separate functions: regularly |
| body. Committees should | | evaluates skills, knowledge and |
| perform their duties in line | | experience of separate directors; |
| with authority delegated to | | discusses general application |
| them and inform the collegial | | policy of remuneration (including |
| body on their activities and | | stimulation) systems; observes |
| performance on regular basis. | | the integrity of the financial |
| Authority of every committee | | information provided by the |
| stipulating the role and | | Company, paying special attention |
| rights and duties of the | | to the relevance and transparency |
| committee should be made | | of the accounting methods used by |
| public at least once a year | | the Company and its group. |
| (as part of the information | | |
| disclosed by the company | | |
| annually on its corporate | | |
| governance structures and | | |
| practices). Companies should | | |
| also make public annually a | | |
| statement by existing | | |
| committees on their | | |
| composition, number of | | |
| meetings and attendance over | | |
| the year, and their main | | |
| activities. Audit committee | | |
| should confirm that it is | | |
| satisfied with the | | |
| independence of the audit | | |
| process and describe briefly | | |
| the actions it has taken to | | |
| reach this conclusion. | | |
--------------------------------------------------------------------------------
| 4.11. In order to ensure | No | Committees are not established, |
| independence and impartiality | | however the Board performs their |
| of the committees, members of | | separate functions: regularly |
| the collegial body that are | | evaluates skills, knowledge and |
| not members of the committee | | experience of separate directors; |
| should commonly have a right | | discusses general application |
| to participate in the meetings | | policy of remuneration (including |
| of the committee only if | | stimulation) systems; observes |
| invited by the committee. A | | the integrity of the financial |
| committee may invite or demand | | information provided by the |
| participation in the meeting | | Company, paying special attention |
| of particular officers or | | to the relevance and transparency |
| experts. Chairman of each of | | of the accounting methods used by |
| the committees should have a | | the Company and its group. |
| possibility to maintain direct | | |
| communication with the | | |
| shareholders. Events when such | | |
| are to be performed should be | | |
| specified in the regulations | | |
| for committee activities. | | |
--------------------------------------------------------------------------------
| 4.12. Nomination Committee. | No | Committees are not established, |
| 4.12.1. Key functions of the | | however the Board performs their |
| nomination committee should be | | separate functions: regularly |
| the following: | | evaluates skills, knowledge and |
| • Identify and recommend, for | | experience of separate directors; |
| the approval of the collegial | | discusses general application |
| body, candidates to fill board | | policy of remuneration (including |
| vacancies. The nomination | | stimulation) systems; observes |
| committee should evaluate the | | the integrity of the financial |
| balance of skills, knowledge | | information provided by the |
| and experience on the | | Company, paying special attention |
| management body, prepare a | | to the relevance and transparency |
| description of the roles and | | of the accounting methods used by |
| capabilities required to | | the Company and its group. |
| assume a particular office, | | |
| and assess the time commitment | | |
| expected. Nomination committee | | |
| can also consider candidates | | |
| to members of the collegial | | |
| body delegated by the | | |
| shareholders of the company; | | |
| • Assess on regular basis the | | |
| structure, size, composition | | |
| and performance of the | | |
| supervisory and management | | |
| bodies, and make | | |
| recommendations to the | | |
| collegial body regarding the | | |
| means of achieving necessary | | |
| changes; | | |
| • Assess on regular basis the | | |
| skills, knowledge and | | |
| experience of individual | | |
| directors and report on this | | |
| to the collegial body; | | |
| • Properly consider issues | | |
| related to succession | | |
| planning; | | |
| • Review the policy of the | | |
| management bodies for | | |
| selection and appointment of | | |
| senior management. | | |
| 4.12.2. Nomination committee | | |
| should consider proposals by | | |
| other parties, including | | |
| management and shareholders. | | |
| When dealing with issues | | |
| related to executive directors | | |
| or members of the board (if a | | |
| collegial body elected by the | | |
| general shareholders' meeting | | |
| is the supervisory board) and | | |
| senior management, chief | | |
| executive officer of the | | |
| company should be consulted | | |
| by, and entitled to submit | | |
| proposals to the nomination | | |
| committee. | | |
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| 4.13. Remuneration Committee. | No | Committees are not established, |
| 4.13.1. Key functions of the | | however the Board performs their |
| remuneration committee should | | separate functions: regularly |
| be the following: | | evaluates skills, knowledge and |
| • Make proposals, for the | | experience of separate directors; |
| approval of the collegial | | discusses general application |
| body, on the remuneration | | policy of remuneration (including |
| policy for members of | | stimulation) systems; observes |
| management bodies and | | the integrity of the financial |
| executive directors. Such | | information provided by the |
| policy should address all | | Company, paying special attention |
| forms of compensation, | | to the relevance and transparency |
| including the fixed | | of the accounting methods used by |
| remuneration, | | the Company and its group. |
| performance-based remuneration | | |
| schemes, pension arrangements, | | |
| and termination payments. | | |
| Proposals considering | | |
| performance-based remuneration | | |
| schemes should be accompanied | | |
| with recommendations on the | | |
| related objectives and | | |
| evaluation criteria, with a | | |
| view to properly aligning the | | |
| pay of executive director and | | |
| members of the management | | |
| bodies with the long-term | | |
| interests of the shareholders | | |
| and the objectives set by the | | |
| collegial body; | | |
| • Make proposals to the | | |
| collegial body on the | | |
| individual remuneration for | | |
| executive directors and member | | |
| of management bodies in order | | |
| their remunerations are | | |
| consistent with company's | | |
| remuneration policy and the | | |
| evaluation of the performance | | |
| of these persons concerned. In | | |
| doing so, the committee should | | |
| be properly informed on the | | |
| total compensation obtained by | | |
| executive directors and | | |
| members of the management | | |
| bodies from the affiliated | | |
| companies; | | |
| • Make proposals to the | | |
| collegial body on suitable | | |
| forms of contracts for | | |
| executive directors and | | |
| members of the management | | |
| bodies; | | |
| • Assist the collegial body in | | |
| overseeing how the company | | |
| complies with applicable | | |
| provisions regarding the | | |
| remuneration-related | | |
| information disclosure (in | | |
| particular the remuneration | | |
| policy applied and individual | | |
| remuneration of directors); | | |
| • Make general recommendations | | |
| to the executive directors and | | |
| members of the management | | |
| bodies on the level and | | |
| structure of remuneration for | | |
| senior management (as defined | | |
| by the collegial body) with | | |
| regard to the respective | | |
| information provided by the | | |
| executive directors and | | |
| members of the management | | |
| bodies. | | |
| 4.13.2. With respect to stock | | |
| options and other share-based | | |
| incentives which may be | | |
| granted to directors or other | | |
| employees, the committee | | |
| should: | | |
| • Consider general policy | | |
| regarding the granting of the | | |
| above mentioned schemes, in | | |
| particular stock options, and | | |
| make any related proposals to | | |
| the collegial body; | | |
| • Examine the related | | |
| information that is given in | | |
| the company's annual report | | |
| and documents intended for the | | |
| use during the shareholders | | |
| meeting; | | |
| • Make proposals to the | | |
| collegial body regarding the | | |
| choice between granting | | |
| options to subscribe shares or | | |
| granting options to purchase | | |
| shares, specifying the reasons | | |
| for its choice as well as the | | |
| consequences that this choice | | |
| has. | | |
| 4.13.3. Upon resolution of the | | |
| issues attributable to the | | |
| competence of the remuneration | | |
| committee, the committee | | |
| should at least address the | | |
| chairman of the collegial body | | |
| and/or chief executive officer | | |
| of the company for their | | |
| opinion on the remuneration of | | |
| other executive directors or | | |
| members of the management | | |
| bodies. | | |
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| 4.14. Audit Committee. | No | Committees are not established, |
| 4.14.1. Key functions of the | | however the Board performs their |
| audit committee should be the | | separate functions: regularly |
| following: | | evaluates skills, knowledge and |
| • Observe the integrity of the | | experience of separate directors; |
| financial information provided | | discusses general application |
| by the company, in particular | | policy of remuneration (including |
| by reviewing the relevance and | | stimulation) systems; observes |
| consistency of the accounting | | the integrity of the financial |
| methods used by the company | | information provided by the |
| and its group (including the | | Company, paying special attention |
| criteria for the consolidation | | to the relevance and transparency |
| of the accounts of companies | | of the accounting methods used by |
| in the group); | | the Company and its group. |
| • At least once a year review | | |
| the systems of internal | | |
| control and risk management to | | |
| ensure that the key risks | | |
| (inclusive of the risks in | | |
| relation with compliance with | | |
| existing laws and regulations) | | |
| are properly identified, | | |
| managed and reflected in the | | |
| information provided; | | |
| • Ensure the efficiency of the | | |
| internal audit function, among | | |
| other things, by making | | |
| recommendations on the | | |
| selection, appointment, | | |
| reappointment and removal of | | |
| the head of the internal audit | | |
| department and on the budget | | |
| of the department, and by | | |
| monitoring the responsiveness | | |
| of the management to its | | |
| findings and recommendations. | | |
| Should there be no internal | | |
| audit authority in the | | |
| company, the need for one | | |
| should be reviewed at least | | |
| annually; | | |
| • Make recommendations to the | | |
| collegial body related with | | |
| selection, appointment, | | |
| reappointment and removal of | | |
| the external auditor (to be | | |
| done by the general | | |
| shareholders' meeting) and | | |
| with the terms and conditions | | |
| of his engagement. The | | |
| committee should investigate | | |
| situations that lead to a | | |
| resignation of the audit | | |
| company or auditor and make | | |
| recommendations on required | | |
| actions in such situations; | | |
| • Monitor independence and | | |
| impartiality of the external | | |
| auditor, in particular by | | |
| reviewing the audit company's | | |
| compliance with applicable | | |
| guidance relating to the | | |
| rotation of audit partners, | | |
| the level of fees paid by the | | |
| company, and similar issues. | | |
| In order to prevent occurrence | | |
| of material conflicts of | | |
| interest, the committee, based | | |
| on the auditor's disclosed | | |
| inter alia data on all | | |
| remunerations paid by the | | |
| company to the auditor and | | |
| network, should at all times | | |
| monitor nature and extent of | | |
| the non-audit services. Having | | |
| regard to the principals and | | |
| guidelines established in the | | |
| 16 May 2002 Commission | | |
| Recommendation 2002/590/EC, | | |
| the committee should determine | | |
| and apply a formal policy | | |
| establishing types of | | |
| non-audit services that are | | |
| (a) excluded, (b) permissible | | |
| only after review by the | | |
| committee, and (c) permissible | | |
| without referral to the | | |
| committee; | | |
| • Review efficiency of the | | |
| external audit process and | | |
| responsiveness of management | | |
| to recommendations made in the | | |
| external auditor's management | | |
| letter. | | |
| 4.14.2. All members of the | | |
| committee should be furnished | | |
| with complete information on | | |
| particulars of accounting, | | |
| financial and other operations | | |
| of the company. Company's | | |
| management should inform the | | |
| audit committee of the methods | | |
| used to account for | | |
| significant and unusual | | |
| transactions where the | | |
| accounting treatment may be | | |
| open to different approaches. | | |
| In such case a special | | |
| consideration should be given | | |
| to company's operations in | | |
| offshore centers and/or | | |
| activities carried out through | | |
| special purpose vehicles | | |
| (organizations) and | | |
| justification of such | | |
| operations. | | |
| 4.14.3. The audit committee | | |
| should decide whether | | |
| participation of the chairman | | |
| of the collegial body, chief | | |
| executive officer of the | | |
| company, chief financial | | |
| officer (or superior employees | | |
| in charge of finances, | | |
| treasury and accounting), or | | |
| internal and external auditors | | |
| in the meetings of the | | |
| committee is required (if | | |
| required, when). The committee | | |
| should be entitled, when | | |
| needed, to meet with any | | |
| relevant person without | | |
| executive directors and | | |
| members of the management | | |
| bodies present. | | |
| 4.14.4. Internal and external | | |
| auditors should be secured | | |
| with not only effective | | |
| working relationship with | | |
| management, but also with free | | |
| access to the collegial body. | | |
| For this purpose the audit | | |
| committee should act as the | | |
| principal contact person for | | |
| the internal and external | | |
| auditors. | | |
| 4.14.5. The audit committee | | |
| should be informed of the | | |
| internal auditor's work | | |
| program, and should be | | |
| furnished with internal | | |
| audit's reports or periodic | | |
| summaries. The audit committee | | |
| should also be informed of the | | |
| work program of the external | | |
| auditor and should be | | |
| furnished with report | | |
| disclosing all relationships | | |
| between the independent | | |
| auditor and the company and | | |
| its group. The committee | | |
| should be timely furnished | | |
| information on all issues | | |
| arising from the audit. | | |
| 4.14.6. The audit committee | | |
| should examine whether the | | |
| company is following | | |
| applicable provisions | | |
| regarding the possibility for | | |
| employees to report alleged | | |
| significant irregularities in | | |
| the company, by way of | | |
| complaints or through | | |
| anonymous submissions | | |
| (normally to an independent | | |
| member of the collegial body), | | |
| and should ensure that there | | |
| is a procedure established for | | |
| proportionate and independent | | |
| investigation of these issues | | |
| and for appropriate follow-up | | |
| action. | | |
| 4.14.7. The audit committee | | |
| should report on its | | |
| activities to the collegial | | |
| body at least once in every | | |
| six months, at the time the | | |
| yearly and half-yearly | | |
| statements are approved. | | |
--------------------------------------------------------------------------------
| 4.15. Every year the collegial | No | The internal documents of the |
| body should conduct the | | Company do not provide for a |
| assessment of its activities. | | separate assessment of the |
| The assessment should include | | Board's activities because it was |
| evaluation of collegial body's | | not required by the legal acts of |
| structure, work organization | | the Republic of Lithuania. |
| and ability to act as a group, | | Decisions on the Company's |
| evaluation of each of the | | activities are made by the Board |
| collegial body member's and | | of the Company which reports to |
| committee's competence and | | the shareholders' meeting. |
| work efficiency and assessment | | |
| whether the collegial body has | | |
| achieved its objectives. The | | |
| collegial body should, at | | |
| least once a year, make public | | |
| (as part of the information | | |
| the company annually discloses | | |
| on its management structures | | |
| and practices) respective | | |
| information on its internal | | |
| organization and working | | |
| procedures, and specify what | | |
| material changes were made as | | |
| a result of the assessment of | | |
| the collegial body of its own | | |
| activities. | | |
--------------------------------------------------------------------------------
| 5.1. The company's supervisory | Yes | A collegial body of management - |
| and management bodies | | the Board implements this |
| (hereinafter in this Principle | | provision in the Company. |
| the concept ‘collegial bodies' | | |
| covers both the collegial | | |
| bodies of supervision and the | | |
| collegial bodies of | | |
| management) should be chaired | | |
| by chairpersons of these | | |
| bodies. The chairperson of a | | |
| collegial body is responsible | | |
| for proper convocation of the | | |
| collegial body meetings. The | | |
| chairperson should ensure that | | |
| information about the meeting | | |
| being convened and its agenda | | |
| are communicated to all | | |
| members of the body. The | | |
| chairperson of a collegial | | |
| body should ensure appropriate | | |
| conducting of the meetings of | | |
| the collegial body. The | | |
| chairperson should ensure | | |
| order and working atmosphere | | |
| during the meeting. | | |
--------------------------------------------------------------------------------
| 5.2. It is recommended that | Yes | Meetings of the Company's Board |
| meetings of the company's | | are convened not less than once a |
| collegial bodies should be | | month. |
| carried out according to the | | |
| schedule approved in advance | | |
| at certain intervals of time. | | |
| Each company is free to decide | | |
| how often to convene meetings | | |
| of the collegial bodies, but | | |
| it is recommended that these | | |
| meetings should be convened at | | |
| such intervals, which would | | |
| guarantee an interrupted | | |
| resolution of the essential | | |
| corporate governance issues. | | |
| Meetings of the company's | | |
| supervisory board should be | | |
| convened at least once in a | | |
| quarter, and the company's | | |
| board should meet at least | | |
| once a month9. | | |
--------------------------------------------------------------------------------
| 5.3. Members of a collegial | Yes | The Company observes provisions |
| body should be notified about | | stated in this recommendation. |
| the meeting being convened in | | |
| advance in order to allow | | |
| sufficient time for proper | | |
| preparation for the issues on | | |
| the agenda of the meeting and | | |
| to ensure fruitful discussion | | |
| and adoption of appropriate | | |
| decisions. Alongside with the | | |
| notice about the meeting being | | |
| convened, all the documents | | |
| relevant to the issues on the | | |
| agenda of the meeting should | | |
| be submitted to the members of | | |
| the collegial body. The agenda | | |
| of the meeting should not be | | |
| changed or supplemented during | | |
| the meeting, unless all | | |
| members of the collegial body | | |
| are present or certain issues | | |
| of great importance to the | | |
| company require immediate | | |
| resolution. | | |
--------------------------------------------------------------------------------
| 5.4. In order to co-ordinate | Yes | The Company observes provisions |
| operation of the company's | | stated in this recommendation. |
| collegial bodies and ensure | | |
| effective decision-making | | |
| process, chairpersons of the | | |
| company's collegial bodies of | | |
| supervision and management | | |
| should closely co-operate by | | |
| co-coordinating dates of the | | |
| meetings, their agendas and | | |
| resolving other issues of | | |
| corporate governance. Members | | |
| of the company's board should | | |
| be free to attend meetings of | | |
| the company's supervisory | | |
| board, especially where issues | | |
| concerning removal of the | | |
| board members, their liability | | |
| or remuneration are discussed. | | |
--------------------------------------------------------------------------------
| 6.1. It is recommended that | Yes | The Company's capital consists of |
| the company's capital should | | ordinary registered shares that |
| consist only of the shares | | grant the same rights to all |
| that grant the same rights to | | their holders. |
| voting, ownership, dividend | | |
| and other rights to all their | | |
| holders. | | |
--------------------------------------------------------------------------------
| 6.2. It is recommended that | Yes | The Company observes provisions |
| investors should have access | | stated in this recommendation. |
| to the information concerning | | |
| the rights attached to the | | |
| shares of the new issue or | | |
| those issued earlier in | | |
| advance, i.e. before they | | |
| purchase shares. | | |
--------------------------------------------------------------------------------
| 6.3. Transactions that are | No | According to the Law on Companies |
| important to the company and | | of the Republic of Lithuania and |
| its shareholders, such as | | Articles of Association important |
| transfer, investment, and | | transactions are approved by the |
| pledge of the company's assets | | Board. |
| or any other type of | | |
| encumbrance should be subject | | |
| to approval of the general | | |
| shareholders' meeting.10 All | | |
| shareholders should be | | |
| furnished with equal | | |
| opportunity to familiarize | | |
| with and participate in the | | |
| decision-making process when | | |
| significant corporate issues, | | |
| including approval of | | |
| transactions referred to | | |
| above, are discussed. | | |
--------------------------------------------------------------------------------
| 6.4. Procedures of convening | Yes | All the shareholders of the |
| and conducting a general | | Company are informed about the |
| shareholders' meeting should | | venue, date and time of the |
| ensure equal opportunities for | | general shareholders' meeting. |
| the shareholders to | | Prior to the general |
| effectively participate at the | | shareholders' meeting all the |
| meetings and should not | | shareholders of the Company are |
| prejudice the rights and | | furnished with opportunity to |
| interests of the shareholders. | | receive information on issues on |
| The venue, date, and time of | | the agenda of the general |
| the shareholders' meeting | | shareholders' meeting. |
| should not hinder wide | | |
| attendance of the | | |
| shareholders. Prior to the | | |
| shareholders' meeting, the | | |
| company's supervisory and | | |
| management bodies should | | |
| enable the shareholders to | | |
| lodge questions on issues on | | |
| the agenda of the general | | |
| shareholders' meeting and | | |
| receive answers to them. | | |
--------------------------------------------------------------------------------
| 6.5. It is recommended that | No | The Company discloses the |
| documents on the course of the | | documents on the course of the |
| general shareholders' meeting, | | general shareholders' meeting, |
| including draft resolutions of | | including draft resolutions of |
| the meeting, should be placed | | the meeting, through the |
| on the publicly accessible | | information disclosure system of |
| website of the company in | | the Vilnius Stock Exchange. |
| advance11. It is recommended | | |
| that the minutes of the | | |
| general shareholders' meeting | | |
| after signing them and/or | | |
| adopted resolutions should be | | |
| also placed on the publicly | | |
| accessible website of the | | |
| company. Seeking to ensure the | | |
| right of foreigners to | | |
| familiarize with the | | |
| information, whenever | | |
| feasible, documents referred | | |
| to in this recommendation | | |
| should be published in English | | |
| and/or other foreign | | |
| languages. Documents referred | | |
| to in this recommendation may | | |
| be published on the publicly | | |
| accessible website of the | | |
| company to the extent that | | |
| publishing of these documents | | |
| is not detrimental to the | | |
| company or the company's | | |
| commercial secrets are not | | |
| revealed. | | |
--------------------------------------------------------------------------------
| 6.6. Shareholders should be | Yes | The shareholders of the Company |
| furnished with the opportunity | | can implement their right to |
| to vote in the general | | participate at the shareholders' |
| shareholders' meeting in | | meeting both in person and |
| person and in absentia. | | through a representative should |
| Shareholders should not be | | he be duly authorized. The |
| prevented from voting in | | Company also furnishes its |
| writing in advance by | | shareholders with the opportunity |
| completing the general voting | | to vote by completing the general |
| ballot. | | voting ballot. |
--------------------------------------------------------------------------------
| 6.7. With a view to increasing | Not | Taking into account the structure |
| the shareholders' | applica | of shareholders and the valid |
| opportunities to participate | ble | regulations for organization of |
| effectively at shareholders' | | the shareholders' meeting there |
| meetings, the companies are | | is no necessity to additionally |
| recommended to expand use of | | install costly system of IT. |
| modern technologies in voting | | |
| processes by allowing the | | |
| shareholders to vote in | | |
| general meetings via terminal | | |
| equipment of | | |
| telecommunications. In such | | |
| cases security of | | |
| telecommunication equipment, | | |
| text protection and a | | |
| possibility to identify the | | |
| signature of the voting person | | |
| should be guaranteed. | | |
| Moreover, companies could | | |
| furnish its shareholders, | | |
| especially foreigners, with | | |
| the opportunity to watch | | |
| shareholder meetings by means | | |
| of modern technologies. | | |
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| 7.1. Any member of the company's supervisory and management | Yes |
| body should avoid a situation, in which his/her personal | |
| interests are in conflict or may be in conflict with the | |
| company's interests. In case such a situation did occur, a | |
| member of the company's supervisory and management body | |
| should, within reasonable time, inform other members of the | |
| same collegial body or the company's body that has elected | |
| him/her, or to the company's shareholders about a situation | |
| of a conflict of interest, indicate the nature of the | |
| conflict and value, where possible. | |
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| 7.2. Any member of the company's supervisory and management | Yes |
| body may not mix the company's assets, the use of which has | |
| not been mutually agreed upon, with his/her personal assets | |
| or use them or the information which he/she learns by | |
| virtue of his/her position as a member of a corporate body | |
| for his/her personal benefit or for the benefit of any | |
| third person without a prior agreement of the general | |
| shareholders' meeting or any other corporate body | |
| authorized by the meeting. | |
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| 7.3. Any member of the company's supervisory and management | Yes |
| body may conclude a transaction with the company, a member | |
| of a corporate body of which he/she is. Such a transaction | |
| (except insignificant ones due to their low value or | |
| concluded when carrying out routine operations in the | |
| company under usual conditions) must be immediately | |
| reported in writing or orally, by recording this in the | |
| minutes of the meeting, to other members of the same | |
| corporate body or to the corporate body that has elected | |
| him/her or to the company's shareholders. Transactions | |
| specified in this recommendation are also subject to | |
| recommendation 4.5. | |
--------------------------------------------------------------------------------
| | The members of the Company's |
| | supervisory and management bodies |
| | have been acting in such a manner |
| | so as to avoid conflict of |
| | interests. Therefore such |
| | conflicts have never occurred in |
| | practice. |
| | The Company observes these |
| | recommendations. |
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| 7.4. Any member of the | Yes | The members of the Company's |
| company's supervisory and | | Board have been familiarized with |
| management body should abstain | | these provisions and they must |
| from voting when decisions | | observe these recommendations. |
| concerning transactions or | | |
| other issues of personal or | | |
| business interest are voted | | |
| on. | | |
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| 8.1. A company should make a | No | The Company has not made any |
| public statement of the | | public statement of its |
| company's remuneration policy | | remuneration policy during the |
| (hereinafter the remuneration | | year of review because it was not |
| statement). This statement | | foreseen by the legal acts of the |
| should be part of the | | Republic of Lithuania. The |
| company's annual accounts. | | Company's remuneration policy is |
| Remuneration statement should | | determined by analyzing situation |
| also be posted on the | | on Lithuanian labour market. |
| company's website. | | |
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| 8.2. Remuneration statement | No | Refer to the comment in item 8.1 |
| should mainly focus on | | above. |
| directors' remuneration policy | | |
| for the following year and, if | | |
| appropriate, the subsequent | | |
| years. The statement should | | |
| contain a summary of the | | |
| implementation of the | | |
| remuneration policy in the | | |
| previous financial year. | | |
| Special attention should be | | |
| given to any significant | | |
| changes in company's | | |
| remuneration policy as | | |
| compared to the previous | | |
| financial year. | | |
--------------------------------------------------------------------------------
| 8.3. Remuneration statement | No | Refer to the comment in item 8.1 |
| should leastwise include the | | above. |
| following information: | | |
| • Explanation of the relative | | |
| importance of the variable and | | |
| non-variable components of | | |
| directors' remuneration; | | |
| • Sufficient information on | | |
| performance criteria that | | |
| entitles directors to share | | |
| options, shares or variable | | |
| components of remuneration; | | |
| • Sufficient information on | | |
| the linkage between the | | |
| remuneration and performance; | | |
| • The main parameters and | | |
| rationale for any annual bonus | | |
| scheme and any other non-cash | | |
| benefits; | | |
| • A description of the main | | |
| characteristics of | | |
| supplementary pension or early | | |
| retirement schemes for | | |
| directors. | | |
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--------------------------------------------------------------------------------
| 8.4. Remuneration statement should also summarize and | No |
| explain company's policy regarding the terms of the | |
| contracts executed with executive directors and members of | |
| the management bodies. It should include, inter alia, | |
| information on the duration of contracts with executive | |
| directors and members of the management bodies, the | |
| applicable notice periods and details of provisions for | |
| termination payments linked to early termination under | |
| contracts for executive directors and members of the | |
| management bodies. | |
--------------------------------------------------------------------------------
| 8.5. The information on preparatory and decision-making | No |
| processes, during which a policy of remuneration of | |
| directors is being established, should also be disclosed. | |
| Information should include data, if applicable, on | |
| authorities and composition of the remuneration committee, | |
| names and surnames of external consultants whose services | |
| have been used in determination of the remuneration policy | |
| as well as the role of shareholders' annual general | |
| meeting. | |
--------------------------------------------------------------------------------
| | Refer to the comment in item 8.1 |
| | above. |
--------------------------------------------------------------------------------
| 8.6. Without prejudice to the | No | Refer to the comment in item 8.1 |
| role and organization of the | | above. |
| relevant bodies responsible | | |
| for setting directors' | | |
| remunerations, the | | |
| remuneration policy or any | | |
| other significant change in | | |
| remuneration policy should be | | |
| included into the agenda of | | |
| the shareholders' annual | | |
| general meeting. Remuneration | | |
| statement should be put for | | |
| voting in shareholders' annual | | |
| general meeting. The vote may | | |
| be either mandatory or | | |
| advisory. | | |
--------------------------------------------------------------------------------
| 8.7. Remuneration statement | No | Refer to the comment in item 8.1 |
| should also contain detailed | | above. |
| information on the entire | | |
| amount of remuneration, | | |
| inclusive of other benefits, | | |
| that was paid to individual | | |
| directors over the relevant | | |
| financial year. This document | | |
| should list at least the | | |
| information set out in items | | |
| 8.7.1 to 8.7.4 for each person | | |
| who has served as a director | | |
| of the company at any time | | |
| during the relevant financial | | |
| year. | | |
| 8.7.1. The following | | |
| remuneration and/or | | |
| emoluments-related information | | |
| should be disclosed: | | |
| • The total amount of | | |
| remuneration paid or due to | | |
| the director for services | | |
| performed during the relevant | | |
| financial year, inclusive of, | | |
| where relevant, attendance | | |
| fees fixed by the annual | | |
| general shareholders meeting; | | |
| • The remuneration and | | |
| advantages received from any | | |
| undertaking belonging to the | | |
| same group; | | |
| • The remuneration paid in the | | |
| form of profit sharing and/or | | |
| bonus payments and the reasons | | |
| why such bonus payments and/or | | |
| profit sharing were granted; | | |
| • If permissible by the law, | | |
| any significant additional | | |
| remuneration paid to directors | | |
| for special services outside | | |
| the scope of the usual | | |
| functions of a director; | | |
| • Compensation receivable or | | |
| paid to each former executive | | |
| director or member of the | | |
| management body as a result of | | |
| his resignation from the | | |
| office during the previous | | |
| financial year; | | |
| • Total estimated value of | | |
| non-cash benefits considered | | |
| as remuneration, other than | | |
| the items covered in the above | | |
| points. | | |
| 8.7.2. As regards shares | | |
| and/or rights to acquire share | | |
| options and/or all other | | |
| share-incentive schemes, the | | |
| following information should | | |
| be disclosed: | | |
| • The number of share options | | |
| offered or shares granted by | | |
| the company during the | | |
| relevant financial year and | | |
| their conditions of | | |
| application; | | |
| • The number of shares options | | |
| exercised during the relevant | | |
| financial year and, for each | | |
| of them, the number of shares | | |
| involved and the exercise | | |
| price or the value of the | | |
| interest in the share | | |
| incentive scheme at the end of | | |
| the financial year; | | |
| • The number of share options | | |
| unexercised at the end of the | | |
| financial year; their exercise | | |
| price, the exercise date and | | |
| the main conditions for the | | |
| exercise of the rights; | | |
| • All changes in the terms and | | |
| conditions of existing share | | |
| options occurring during the | | |
| financial year. | | |
| 8.7.3. The following | | |
| supplementary pension | | |
| schemes-related information | | |
| should be disclosed: | | |
| • When the pension scheme is a | | |
| defined-benefit scheme, | | |
| changes in the directors' | | |
| accrued benefits under that | | |
| scheme during the relevant | | |
| financial year; | | |
| • When the pension scheme is | | |
| defined-contribution scheme, | | |
| detailed information on | | |
| contributions paid or payable | | |
| by the company in respect of | | |
| that director during the | | |
| relevant financial year. | | |
| 8.7.4. The statement should | | |
| also state amounts that the | | |
| company or any subsidiary | | |
| company or entity included in | | |
| the consolidated annual | | |
| financial statements of the | | |
| company has paid to each | | |
| person who has served as a | | |
| director in the company at any | | |
| time during the relevant | | |
| financial year in the form of | | |
| loans, advance payments or | | |
| guarantees, including the | | |
| amount outstanding and the | | |
| interest rate. | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 8.8. Schemes anticipating remuneration of directors in shares, share options |
| or any other right to purchase shares or be remunerated on the basis of |
| share price movements should be subject to the prior approval of |
| shareholders' annual general meeting by way of a resolution prior to their |
| adoption. The approval of scheme should be related with the scheme itself |
| and not to the grant of such share-based benefits under that scheme to |
| individual directors. All significant changes in scheme provisions should |
| also be subject to shareholders' approval prior to their adoption; the |
| approval decision should be made in shareholders' annual general meeting. In |
| such case shareholders should be notified on all terms of suggested changes |
| and get an explanation on the impact of the suggested changes. |
--------------------------------------------------------------------------------
| 8.9. The following issues should be subject to approval by the shareholders' |
| annual general meeting: |
| • Grant of share-based schemes, including share options, to directors; |
| • Determination of maximum number of shares and main conditions of share |
| granting; |
| • The term within which options can be exercised; |
| • The conditions for any subsequent change in the exercise of the options, |
| if permissible by law; |
| • All other long-term incentive schemes for which directors are eligible and |
| which are not available to other employees of the company under similar |
| terms. Annual general meeting should also set the deadline within which the |
| body responsible for remuneration of directors may award compensations |
| listed in this article to individual directors. |
--------------------------------------------------------------------------------
| 8.10. Should national law or company's Articles of Association allow, any |
| discounted option arrangement under which any rights are granted to |
| subscribe to shares at a price lower than the market value of the share |
| prevailing on the day of the price determination, or the average of the |
| market values over a number of days preceding the date when the exercise |
| price is determined, should also be subject to the shareholders' approval. |
--------------------------------------------------------------------------------
| 8.11. Provisions of Articles 8.8 and 8.9 should not be applicable to schemes |
| allowing for participation under similar conditions to company's employees |
| or employees of any subsidiary company whose employees are eligible to |
| participate in the scheme and which has been approved in the shareholders' |
| annual general meeting. |
--------------------------------------------------------------------------------
| 8.12. Prior to the annual general meeting that is intended to consider |
| decision stipulated in Article 8.8, the shareholders must be provided an |
| opportunity to familiarize with draft resolution and project-related notice |
| (the documents should be posted on the company's website). The notice should |
| contain the full text of the share-based remuneration schemes or a |
| description of their key terms, as well as full names of the participants in |
| the schemes. Notice should also specify the relationship of the schemes and |
| the overall remuneration policy of the directors. Draft resolution must have |
| a clear reference to the scheme itself or to the summary of its key terms. |
| Shareholders must also be presented with information on how the company |
| intends to provide for the shares required to meet its obligations under |
| incentive schemes. It should be clearly stated whether the company intends |
| to buy shares in the market, hold the shares in reserve or issue new ones. |
| There should also be a summary on scheme-related expenses the company will |
| suffer due to the anticipated application of the scheme. All information |
| given in this article must be posted on the company's website. |
--------------------------------------------------------------------------------
| | No | 8.8. During the year under review |
| | | the Company has not applied any |
| | | schemes anticipating remuneration |
| | | of directors in shares, share |
| | | options or any other right to |
| | | purchase shares or be remunerated |
| | | on the basis of share price |
| | | movements. This has not been |
| | | provided for by the existing |
| | | remuneration procedure and |
| | | employment contracts with |
| | | directors and other employees. |
| | | 8.9. The stated issues were not |
| | | discussed at the general |
| | | shareholders' meeting because it |
| | | is not provided for by the |
| | | Articles of Association of the |
| | | Company. |
| | | 8.10. The stated issues were not |
| | | discussed at the general |
| | | shareholders' meeting because it |
| | | is not provided for by the |
| | | Articles of Association of the |
| | | Company. |
| | | 8.11-12. During the year under |
| | | review the Company has not |
| | | applied any schemes anticipating |
| | | remuneration of directors or |
| | | employees in shares, share |
| | | options or any other right to |
| | | purchase shares or be remunerated |
| | | on the basis of share price |
| | | movements. This has not been |
| | | provided for by the Articles of |
| | | Association of the Company, the |
| | | existing remuneration procedure |
| | | and employment contracts with |
| | | directors and other employees. |
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--------------------------------------------------------------------------------
| 9.1. The corporate governance framework should assure that the rights of |
| stakeholders that are protected by law are respected. |
--------------------------------------------------------------------------------
| 9.2. The corporate governance framework should create conditions for the |
| stakeholders to participate in corporate governance in the manner prescribed |
| by law. Examples of mechanisms of stakeholder participation in corporate |
| governance include: employee participation in adoption of certain key |
| decisions for the company; consulting the employees on corporate governance |
| and other important issues; employee participation in the company's share |
| capital; creditor involvement in governance in the context of the company's |
| insolvency, etc. |
--------------------------------------------------------------------------------
| 9.3. Where stakeholders participate in the corporate governance process, |
| they should have access to relevant information. |
--------------------------------------------------------------------------------
| | Yes | The execution of this |
| | | recommendation is ensured by the |
| | | accurate supervision and control |
| | | of the state institutions and |
| | | associated consumer organizations |
| | | regulating the Company's |
| | | activities. |
| | | The publicity of the Company's |
| | | activities creates conditions for |
| | | the stakeholders to participate |
| | | in corporate governance in the |
| | | manner prescribed by law, by the |
| | | Articles of Association and the |
| | | Collective Agreement. The |
| | | management bodies consult with |
| | | the employees on corporate |
| | | governance and other important |
| | | issues, employee participation in |
| | | the Company's share capital is |
| | | not limited. |
--------------------------------------------------------------------------------
| 10.1. The company should | Yes | Information regarding the |
| disclose information on: | (except | Company's financial situation, |
| • The financial and operating | item 4) | performance and corporate |
| results of the company; | | governance is regularly disclosed |
| • Company objectives; | | by distributing press releases |
| • Persons holding by the right | | and notifying about material |
| of ownership or in control of | | events, in Company's annual |
| a block of shares in the | | reports, financial statements, |
| company; | | presentations. |
| • Members of the company's | | The documents are published in |
| supervisory and management | | Lithuanian and English on the |
| bodies, chief executive | | publicly accessible website of |
| officer of the company and | | the Vilnius Stock Exchange. |
| their remuneration; | | The Company prepares financial |
| • Material foreseeable risk | | statements according to the |
| factors; | | International Financial |
| • Transactions between the | | Accounting standards. |
| company and connected persons, | | |
| as well as transactions | | |
| concluded outside the course | | |
| of the company's regular | | |
| operations; | | |
| • Material issues regarding | | |
| employees and other | | |
| stakeholders; | | |
| • Governance structures and | | |
| strategy. | | |
| This list should be deemed as | | |
| a minimum recommendation, | | |
| while the companies are | | |
| encouraged not to limit | | |
| themselves to disclosure of | | |
| the information specified in | | |
| this list. | | |
| 10.2. It is recommended that | | |
| consolidated results of the | | |
| whole group to which the | | |
| company belongs should be | | |
| disclosed when information | | |
| specified in item 1 of | | |
| Recommendation 10.1 is under | | |
| disclosure. | | |
| 10.3. It is recommended that | | |
| information on the | | |
| professional background, | | |
| qualifications of the members | | |
| of supervisory and management | | |
| bodies, chief executive | | |
| officer of the company should | | |
| be disclosed as well as | | |
| potential conflicts of | | |
| interest that may have an | | |
| effect on their decisions when | | |
| information specified in item | | |
| 4 of Recommendation 10.1 about | | |
| the members of the company's | | |
| supervisory and management | | |
| bodies is under disclosure. It | | |
| is also recommended that | | |
| information about the amount | | |
| of remuneration received from | | |
| the company and other income | | |
| should be disclosed with | | |
| regard to members of the | | |
| company's supervisory and | | |
| management bodies and chief | | |
| executive officer as per | | |
| Principle VIII. | | |
| 10.4. It is recommended that | | |
| information about the links | | |
| between the company and its | | |
| stakeholders, including | | |
| employees, creditors, | | |
| suppliers, local community, as | | |
| well as the company's policy | | |
| with regard to human | | |
| resources, employee | | |
| participation schemes in the | | |
| company's share capital, etc. | | |
| should be disclosed when | | |
| information specified in item | | |
| 7 of Recommendation 10.1 is | | |
| under disclosure. | | |
--------------------------------------------------------------------------------
| 10.5. Information should be | Yes | The Company discloses information |
| disclosed in such a way that | | in Lithuanian and English |
| neither shareholders nor | | simultaneously through the |
| investors are discriminated | | information disclosure system of |
| with regard to the manner or | | the Vilnius Stock Exchange so |
| scope of access to | | that the Stock Exchange could |
| information. Information | | simultaneously place the |
| should be disclosed to all | | submitted information on its |
| simultaneously. It is | | website and sales‘ system thus |
| recommended that notices about | | guaranteeing its simultaneous |
| material events should be | | dissemination to everybody. |
| announced before or after a | | |
| trading session on the Vilnius | | |
| Stock Exchange, so that all | | |
| the company's shareholders and | | |
| investors should have equal | | |
| access to the information and | | |
| make informed investing | | |
| decisions. | | |
--------------------------------------------------------------------------------
| 10.6. Channels for | Yes | The Company discloses information |
| disseminating information | | in Lithuanian and English |
| should provide for fair, | | simultaneously through the |
| timely and cost-efficient | | information disclosure system of |
| access to relevant information | | the Vilnius Stock Exchange so |
| by users. It is recommended | | that the Stock Exchange could |
| that information technologies | | simultaneously place the |
| should be employed for wider | | submitted information on its |
| dissemination of information, | | website and sales system thus |
| for instance, by placing the | | guaranteeing its simultaneous |
| information on the company's | | dissemination to everybody. |
| website. It is recommended | | |
| that information should be | | |
| published and placed on the | | |
| company's website not only in | | |
| Lithuanian, but also in | | |
| English, and, whenever | | |
| possible and necessary, in | | |
| other languages as well. | | |
--------------------------------------------------------------------------------
| 10.7. It is recommended that | Yes | The Company observes this |
| the company's annual reports | | recommendation and it is planned |
| and other periodical accounts | | to place the information on the |
| prepared by the company should | | Company's website in the future. |
| be placed on the company's | | |
| website. It is recommended | | |
| that the company should | | |
| announce information about | | |
| material events and changes in | | |
| the price of the company's | | |
| shares on the Stock Exchange | | |
| on the company's website too. | | |
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| 11.1. An annual audit of the | Yes | The Company observes this |
| company's financial statements | | recommendation when an |
| and report should be conducted | | independent firm of auditors |
| by an independent firm of | | conducts an audit of the |
| auditors in order to provide | | Company's annual financial |
| an external and objective | | statements and report. |
| opinion on the company's | | |
| financial statements. | | |
--------------------------------------------------------------------------------
| 11.2. It is recommended that | Yes | The Company's Board proposes a |
| the company's supervisory | | candidate firm of auditors to the |
| board and, where it is not set | | general shareholders' meeting. |
| up, the company's board should | | |
| propose a candidate firm of | | |
| auditors to the general | | |
| shareholders' meeting. | | |
--------------------------------------------------------------------------------
| 11.3. It is recommended that | Not | The firm of auditors is not paid |
| the company should disclose to | applica | by the Company for consultations |
| its shareholders the level of | ble | on tax and business issues. |
| fees paid to the firm of | | |
| auditors for non-audit | | |
| services rendered to the | | |
| company. This information | | |
| should be also known to the | | |
| company's supervisory board | | |
| and, where it is not formed, | | |
| the company's board upon their | | |
| consideration which firm of | | |
| auditors to propose for the | | |
| general shareholders' meeting. | | |
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Irena Barauskaite - Gaiziuniene
8 (46) 391 626