- WSE approved amendments to the “Code of Best Practice for WSE Listed Companies” on 31 August 2011;
- The amendments mainly concern issues of the reporting practice of public companies, a special priority to the Exchange
- The Exchange introduced some of the amendments in response to new trends, often resulting from a quest for effective solutions to events and developments reaching beyond the scope of generally applicable legislation.
The amendments to the “Code of Best Practice for WSE Listed Companies” derive from the ambition of the Exchange to ensure possibly most effective, honest, transparent and efficient communication between listed companies and investors, comprising the broadest possible scope of activities pursued by issuers, reaching beyond the scope of mandatory disclosures. High transparency standards are in line with global trends and constitute a factor which attracts investors to a regulated market, which is one of the WSE’s priorities.
The approved amendments to the “Code of Best Practice for WSE Listed Companies” include in particular the following:
- Addition of a recommendation which obligates companies to comment on their websites on any published untrue or out-of-date information which could impact the supply of or demand for the company’s financial instruments, where such information could be misleading as concerns the issuer’s actual situation.
The introduction of this recommendation to the “Code of Best Practice” aims to further raise the transparency standards of public companies and, consequently, improve the safety of investments on the regulated markets.
Manipulation of information involving the dissemination of false or misleading information in the mass media have a huge potential impact. In some cases, unreliable or untrue (possibly out-of-date) information concerning a company reaches beyond the scope of mandatory disclosures but makes a real impact on the company’s image and, consequently, investment decisions concerning listed financial instruments. In the absence of good market practice, the existing information gap undermines the safety of investors. Measures involving reporting practice, which can foster active investor communication efforts of public companies, match the overarching objectives of the “Code of Best Practice for WSE Listed Companies”.
Full wording of the rule:
“As part of a listed company’s due care for the adequate quality of reporting practice, the company should take a position, expressed in a communication published on its website, unless the company considers other measures to be more adequate, wherever with regard to the company:
- published information is untrue or partly untrue from the beginning or at a later time;
- publicly expressed opinions are not based on material objective grounds from the beginning or as a result of later circumstances.
This rule concerns opinions and information expressed publicly by company representatives in the broad sense or by other persons whose statements may have an opinion-making effect, whether such information or opinions contain suggestions advantageous or disadvantageous to the company.”
- Introduction of a recommendation to publish information about the rules of the company’s activities supporting culture, education, science or sports.
Economic operators including public companies are increasingly interested to support activities beyond the scope of their business operation, in particular scientific and educational activities, artistic and cultural activities, as well as sports. Such initiatives pursued by companies are indispensible to the development of active social life and merit full appreciation. However, in the absence of legal solutions in this area, information about the rules of financial support granted to such activities is not available to the shareholders. The recommendation aims to initiate the development of rules of supporting broadly understood cultural, educational, scientific and sport activities by listed companies in a way enabling exchange investors to evaluate the rationale of such activities of listed companies, and to foster the belief that supporting these areas of social activity may be in the interest of listed companies and their shareholders.
Full wording of the rule:
“If a company supports different forms or artistic and cultural expression, sport activities, educational or scientific activities, and considers its activity in this area to be a part of its business mission and development strategy, impacting the innovativeness and competitiveness of the enterprise, it is good practice to publish, in a mode adopted by the company, the rules of its activity in this area.”
- Postponement until 1 January 2013 of the effective date of the rule concerning the option of participation in general meetings of listed companies via electronic means; the application of the rule is recommended as of 1 January 2012.
The Exchange has decided to change the effective date of Rule IV.10 of the Code of Best Practice to 1 January 2013. However, considering that, in the opinion of the Exchange, the introduction of electronic means of participation in general meetings could help to increase the involvement of shareholders of public companies in corporate affairs, a compromise solution has been adopted by putting the issue of allowing electronic participation in general meetings in the Recommendations section of the “Code of Best Practice”. As a result, the Exchange recommends that companies enable their shareholders to participate in general meetings via electronic means of communication specified in the “Code of Best Practice” already as of 1 January 2012.
- Deletion of the rules obligating the Supervisory Board to prepare an annual evaluation of its work, to present it to the general meeting and to publish it on the company’s website.
The “Code of Best Practice for WSE Listed Companies” adopted on 31 August 2011 takes effect on 1 January 2012.