Ministry of the Treasury

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

2. 15 Years ofPolishPrivatisation 1990 2005 • 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

3. Transformation of Ownership Structure in the Years 1990 - 2005 COMPLETED AND ADVANCED PRIVATISATION ADVANCED AND CONTINUED PRIVATISATION CONTINUED RESTRUCTURING, INITIATED AND PLANNED PRIVATISATION • 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 • 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

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

5. Investors’ social and investment commitments in privatised companies

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

7. 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) Examples of Polish golden shares

8. Number of golden shares • Before accession: approx. 90 cases cancelled • 1.05.04: golden shares in 73 companies • 24 of them removed (by 30.03.05) • 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)

9. Problems • 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

10. Newregulation • 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 company’s enterprise, • transfer or lease of the company’s enterprise • BUT...

11. 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 minister’s decisions • can be appealed against in courts • Justification: • introduction of a transparent instrument • intervention in certain decisions but • predictable and transparentfor potential investors;