Following significant consultation with investors, issuers and director associations, the revised Code of Best Practice for WSE Listed Companies has been released, effective as of January 1, 2016, in advance of the upcoming Proxy Season. Although some changes move corporate governance practices closer to international best practice norms, the revision does little to tackle some of the most pressing issues for global institutional investors, such as improving transparency of the supervisory board nomination process.
The WSE has mostly updated the overall layout of the 
Code, dividing it into six clear sections: (i) Disclosure Policy and Investor Communication; (ii) Management and Supervisory Board; (iii) Internal Control Systems and Functions; (iv) General Meeting and Shareholder Relations; (v) Conflicts of Interest and Related Party Transactions; and (vi) Remuneration. These sections are further divided into recommendations (“Rekomendacje”) and specific rules (“Zasady szczegółowe”), the latter falling under the “Comply-or-Explain” principle.
Recommendation vs. Obligation
In order to improve the appropriateness of the Code, specific rulings have been amended in consideration of various factors including company size, industry and shareholder structure. A notable change relates to the introduction of an obligation for companies trading on the WIG20 and/or MWIG40 indices to establish an English version of their website. The Code provides that other companies should implement such measures depending on shareholder structure and the nature of the company’s activities.
Similarly, the requirement for issuers to enable its shareholders to participate at the general meeting through electronic means has seemingly been dropped, and replaced with a recommendation to implement such provisions if justified by the shareholder structure, shareholder expectations, and available infrastructure.
Supervisory Board Independence
While the 2005 Corporate Governance Principles recommended a supervisory board comprised of at least 50% independent members, subsequent revisions, including the new version, have retained an independence requirement of just two members. In comparison to some neighbouring markets, this recommendation may seem low; the recently amended Code of Corporate Governance for Romania recommends the majority of non-executive members be independent, while the Riga Stock Exchange endorses a minimum independence threshold of least 50% of supervisory board members.
Apart from the audit committee, the establishment of which is required by law, there remains no specific obligation to establish a remuneration or nominating committee under the new Code, aside from reference to the current recommendations of the European Commission.
Remuneration
A new chapter has been introduced providing clearer recommendations surrounding executive and supervisory board remuneration. In an effort to ensure incentive plans are focused on the long-term, the Code now sets a minimum two-year vesting period.
The end is seemingly nigh for any variable remuneration paid out to supervisory board members as the new Code recommends against any performance-based pay for supervisory board members, bringing Poland in line with a number of other European markets.
Looking forward to 2016, the implementation of the revisions should not cause too much upset; the emphasis on greater transparency through improved disclosure on the part of issuers should be nothing but a welcomed improvement in an ever-developing market.