Ministry of the Treasury Anita Ryng Director of the Department of European Integration and Foreign Relations Luxembourg, 28 June 2005 Special rights in privatised companies in Poland

15 Years of Polish Privatisation approx. 8,500 state enterprises approx. 1, 800 Treasury corporations and state enterprises 366 operating state-owned enterprises (in 113 privatisation advanced) 1,519 Treasury corporations 0%-50%967 50%-75%61 75%-99%38 100%453

Transformation of Ownership Structure in the Years COMPLETED AND ADVANCEDPRIVATISATION Banking Trade and services Telecommunication Household goods industry Automotive industry Building industry Electrical engineering Nonferrous metallurgy Cement industry Wood and furniture industry Food processing Breweries Tobacco industry ADVANCED AND CONTINUED PRIVATISATION CONTINUED RESTRUCTURING, INITIATED AND PLANNED PRIVATISATION Insurance Steel sector Shipbuilding industry Sugar industry Spirits industry Transport (LOT, PKS) Oil sector Pharmaceutical sector Mining (minerals) Light industry Media and publishing Hard coal mining Power sector (electricity) Gas sector (PGNiG - Polish Oil and Gas Company) PKP (Polish railways) Defence sector Heavy chemicals sector Shipping Health resorts sector Research and Development Units

Why golden share in Poland? At the beginning of the transformation: Large scale of privatisation Large scale of privatisation Inefficient civil courts Inefficient civil courts Mechanism of control: Stakeholders rights (social contracts) Stakeholders rights (social contracts) Investment commitments of the investors Investment commitments of the investors Public perception of the privatisation process

Investors social and investment commitments in privatised companies

Public Opinion: positive or negative impact of privatisation on the Polish economy (in %)

Examples of Polish golden shares Right to nominate part of the Supervisory Board (sometimes also the chairperson of the SB) Consent of the Treasury to major corporate decisions (mergers, changes in the statutes, disposal of assets and rights to appoint members of the board)

Number of golden shares Before accession: approx. 90 cases cancelled : golden shares in 73 companies 24 of them removed (by ) 17 time limited instruments - will expire in the next two -tree years remaining cases: sale of shares or changes of the Articles of Association in 2005 a few - modified according to the Law on special rights of the Treasury and their Exercising in Companies of Special Importance for public order and public security – (final stage in the Parliament)

Problems No clear definition: No clear definition: what is a special power? What is a restriction? if we sell: lack of investors wish to buy remaining Treasury stakes (and "golden share") if we would like to change the Articles of Association: lack of investors' co-operation no other investor interested in buying shares (minority stakes) without the chance of exercising control Investors obviously do not feel harmed by the Treasury's special rights, otherwise they would co-operate

New regulation Very limited and precisely defined number of companies exerting substantial influence on public order or public security The Minister may object to: dissolution of the company, transfer of the registered seat of the company abroad, change in the object of the companys enterprise, transfer or lease of the companys enterprise BUT...

New regulation - -exclusively consequent review (ex post intervention) - -a very short period of time within which the veto right may be exercised by the minister - -judicial review of veto decisions as the ministers decisions can be appealed against in courts Justification: introduction of a transparent instrument intervention in certain decisions but predictable and transparent for potential investors;