Implementation of the new GPW Data reporting system

Disclosure requirements for companies, tools supporting the assessment of compliance and the verification of declarations

The corporate governance disclosure requirements for listed companies are laid down in the Exchange Rules. Each company is required to publish up-to-date information regarding compliance with the principles on terms defined by the Exchange Management Board. If a company does not comply with any of the principles, its disclosure should specify the circumstances and reasons of such non-compliance. The explanations should exhaustively and constructively clarify the reasons of a non-compliance and support assessment of the company’s approach to the application of the principles of the Best Practice and its commitment to high quality corporate governance. Irrespective of the foregoing, in the event of any incidental breach of a principle following prior declaration of regular compliance, companies are required to immediately disclose such event.

The application of the corporate governance principles continues to follow the comply-or-explain approach; however, to improve the accessibility and clarity of corporate governance disclosures, the Best Practice 2021  are accompanied by an amendment of the terms of disclosing compliance with the Best Practice under § 29 of the Exchange Rules. Companies  are not only  required to disclose permanent non-compliance with or incidental breach of principles but also to publish comprehensive compliance disclosures. Under the amended § 29(3) of the Exchange Rules, all listed companies  are required to publish reports on compliance with the Best Practice. To ensure that such disclosures are kept up to date, the Exchange Rules require companies to disclose any changes to the scope of compliance with the principles and any circumstances which require modification of explanations of non-compliance or the methods of compliance with the principles of the Best Practice 2021.

The modification of the disclosure requirements for companies eliminates the presumption that companies which publish no reports under § 29 of the Exchange Rules comply with all the principles of corporate governance.

Steps taken by companies to comply with the Best Practice 2021

Some of the Best Practice 2021 principles are addressed to supervisory boards and their members, general meetings, as well as shareholders. Consequently, the management board as well as all corporate bodies should take measures in order to ensure that the principles of the Best Practice are applied to the best possible extent by all concerned parties. Where the application of a principle requires new internal regulations, amendments to existing corporate documents or specific decisions of competent bodies, such initiatives should be taken as soon as possible. The upcoming general meeting season is a good opportunity to take the initiative.

Following coming into force of  the Best Practice 2021, the Exchange monitors issuers’ compliance with corporate governance regulations, in particular by reviewing the quality of explanations published by companies in accordance with the comply-or-explain approach. However, the engagement of all directly concerned parties, including investors, analysts and experts, as well as other corporate governance stakeholders in listed companies,  are directly relevant to the impact of those measures.