Code of Corporate Governance


Introductory Provisions

The Code of Corporate Governance (hereinafter referred to as The Code) defines the principles of corporate governance and supervision over the governance in Metalac a.d. and its subsidiaries (hereinafter referred to as The Company), on the basis of principles recommended by The OECD Principles of Corporate Governance, especially in relation to issues such as the following:

• Rights of shareholders
• Majority participation of non-executive members, as well as independent members, in the bodies of corporate governance (the Managing Board and the Supervisory Board)
• Separation of the roles of the chairman of the Managing Board and the General Director, as the chairman of the Executive Board
• Establishment of committees of the Managing Board
• Protection of interests of small shareholders
• Frequency of meetings of the Managing Board, the procedure of scheduling such meetings, and presentation of the conclusions adopted by the Board
• Transparency of work and the use of the internet


The Code supplements the current regulations established by the provisions of the Law, the Founding Act and the Articles of Association of the Company, in such a way that none of the provisions of the Code can repeal any of the rules stipulated by the aforementioned acts which may differently regulate the same issue; at the same time, the Code does not repeat any of the obligations, rules and principles established by the provisions of these acts, which the Company respects and observes.

Since the principles of corporate governance defined by this Code are aimed at improving the economic efficiency, growth and development of the Company and its competitive advantages, as well as strengthening the confidence of shareholders and investors, these principles that comprise the Code have an evolutionary character and are subject to change.

Taking into account the latest global trends and exchange of experiences in the aforementioned areas, as well as the developmental achievements in the field of macroeconomic policy, market economy and the culture of values and business ethics of the Company, the Managing Board will adopt all necessary amendments or additions to the Code and timely and thoroughly inform the public about such changes via the Company’s website.


Rights of Shareholders and Key Functions

The Company makes it possible for the shareholders to exercise their fundamental rights, which include the rights to the following:

1. Secure method of registration of ownership;
2. Transfer of shares;
3. Timely and regular delivery of relevant information about the Company via the Company’s website;
4. Participation and voting at the assembly of shareholders;
5. Election of the president of the Company and members of the Managing Board and the Supervisory Board;
6. Participation in the distribution of the Company’s profit.

The Company enables shareholders to participates in decision-making and have sufficient information about decisions that are related to crucial corporate changes, such as:

1. Amendments to the Articles of Association or the Founding Act of the Company;
2. Approval of the issuance of additional shares;
3. Extraordinary transactions, including the transfer of all or nearly all assets, which would actually result in the sale of the company.

The shareholders will have the opportunity to participate in an effective manner and vote at the annual assembly or any extraordinary assembly of shareholders, and to receive information about the rules of the assembly that regulate its proceedings, as well as the voting procedure, through the following:

1. Comprehensive and timely information about the date, place and agenda of the assembly, as well as comprehensive and timely information about the agenda items and the issues that will be decided at the assembly;
2. Opportunity to ask questions to the Managing Board and the Supervisory Board, including questions that are related to the audit of annual financial reports, as well as the opportunity to include certain issues in the agenda of the assembly in accordance with the Law, the Founding Act and the Articles of Association of the Company;
Facilitation of successful participation in adoption of important decisions related to corporate governance, such as the election of the President of the Company and members of the Managing Board and the Supervisory Board, and adoption of the Policy of Remuneration of members of these boards and members of the Executive Board, including the expenditure component based on rewards for members;
4. Opportunity for shareholders to vote in person or in absence, so that both methods of voting have the same effect .

Shareholders should be aware of the capital structure and the arrangements that allow individual shareholders to acquire a degree of control that is proportional to their share in the capital.


The Company will ensure that the mechanisms of corporate control are not used in a manner that would prevent the corporate control market from functioning in an efficient and transparent way:

1. Rules and procedures that regulate the acquisition of corporate control in the market of capital, as well as extraordinary transactions like integration and sale of significant parts of corporate assets, will be clearly defined and disclosed so that investors can clearly understand their rights and legal protection;
2. Transactions will be performed at clear prices and under fair conditions so that rights of all shareholders are protected in accordance with the class of the shares that they own;
3. Anti-takeover assets of the Company will not be used to protect the management and the Managing Board from liability.

All shareholders, including institutional investors, should have an opportunity to exercise their rights of ownership:

1. Institutional investors acting in a fiduciary capacity should completely disclose their policy of corporate governance and voting in relation to their investments, including the procedures for deciding on the use of their voting rights.

2. Institutional investors acting in a fiduciary capacity should disclose how they regulate material conflicts of interest which may affect the exercise of crucial rights of ownership that are related to their investments.

Shareholders, including institutional investors, should be allowed to consult each other about the rights that are related to their fundamental rights as shareholders, in a manner defined by the corporate governance principles, with exceptions that prevent abuse.


Equal Treatment of Shareholders

The Company ensures that all shareholders who are owners of the same class of shares are treated equally:

1. Within each series or class of shares, all shares have equal rights. All investors will have a chance to get information about the rights that are related to all series and classes of shares before their purchase. All changes in relation to voting rights will be adopted with approval by the owners of those classes of shares that are adversely affected by such changes.

2. Minority shareholders will be protected from abuse by shareholders who are in majority and act directly or indirectly, and they should have access to efficient legal protection.

3. Voting by shareholders’ proxy should be performed in a manner that is agreed with the actual owner of the shares.

4. The Company will eliminate the obstacles to cross-border voting.

5. Procedures of convening and voting at the assembly allow all shareholders to be treated equally, while the procedure of voting is organized in such a manner as not to make the voting unnecessarily difficult and expensive.

The Company prohibits illegal trading of shares on the basis of confidential information, as well as the abuse which consists of self-dealing.

Members of the Managing Board and the Executive Board are required to disclose to the Managing Board if they have material interests, directly or indirectly, in any transaction or matter that directly affects the Company.


The Role of Stakeholders in Corporate Governance

The Company will respect the rights of all shareholders, investors and any other stakeholder that are stipulated by law or by mutual agreement.

The Company will develop mechanisms that will allow improvement of the Company’s results on the basis of participation of employees.

The Company will provide the stakeholders who participate in the process of corporate governance with a timely and regular access to relevant, required and reliable information in a manner that is stipulated by the Law and Company’s acts.

The Company will allow shareholders, employees and all other stakeholders to freely tell their opinion about possible illegal or unethical practice to the Managing Board, without their rights being jeopardized because of that.

The Company will add to the framework of corporate governance an effective and efficient framework mechanism that is intended for the case of bankruptcy, as well as effective realization of creditors’ rights.


Information Disclosure and Transparency

Disclosure of information by the Company includes, without limitation, significant information about the following matters:

1. Financial and business results of the Company;
2. Business plans and goals of the Company;
3. Significant ownership of shares and voting rights;
4. Policies of remuneration for members of the Managing, Supervisory and Executive Boards, as well as information about board members, including their qualifications, membership in managing boards of other companies, and whether the board considers them independent;

5. Transactions performed by affiliated parties;
6. Predictable risk factors;
7. Issues that are related to employees and other stakeholders;
8. The structure and policy of governance, especially the provisions of all rules and policies of corporate governance and the process of their implementation.

The Company will prepare and disclose the aforementioned information in accordance with accounting standards and standards of disclosure of high-quality financial and non-financial information.

The annual audit of financial reports and operations of the Company will be performed by an independent, competent and qualified auditor, with the aim to provide an objective evidence proving to the board and shareholders that financial reports impartially represent, in all significant aspects, the financial condition and results of the Company.

External auditors are obliged to shareholders and the Company to perform the audit in a proper and professional manner.

The Company will communicate information via its website, as well as the daily press with wide circulation in cases prescribed by law, thereby ensuring an equal, timely and efficient access to information for shareholders and other users in a manner that does not entail high and unreasonable costs for the Company.

The Company will make additions to the corporate governance framework by providing analyses or advice from analysts, brokers, rating agencies and others, which are relevant to decisions of investors, without any significant conflicts of interest that may jeopardize the integrity of their analyses or advice.


Responsibilities of the Managing Board

Members of the Managing Board will act on the basis of complete information, in good faith, with due diligence and concern, in the best interest of the Company and shareholders.

If the decisions made by the Managing Board may differently affect various groups of shareholders, the Board will treat all shareholders in a fair manner.
The Managing Board will apply high moral standards and standards defined by the Code of Business Ethics, and will take into account the interests of all stakeholders.

In addition to other functions defined as the scope of its work by Law, the Founding Act and the Articles of Association, the Managing Board will also perform the following crucial roles:

1. Reviewing and management of corporate strategy, definition of business policies and annual business plans, risk policy, specification of business targets, as well as the supervision of major capital expenditures, takeover of other companies and sale of assets;

2. Monitoring of implementation of corporate governance principles and making of necessary changes to the Code;

3. Selection of members of the Executive Board, participation in the selection, remuneration, monitoring and, if necessary, replacement of other top managers, as well as supervision over the preparation of plans for top executives;

4. Harmonization of remuneration of top executives and members of the Managing and Executive Boards with the long-term goals of the Company and the goals of its shareholders;

5. Establishment of a formal and transparent process of proposal and election of members of Managing Board;

6. Monitoring and management of possible conflicts of interest between the management, members of the Managing Board and shareholders, including the improper use of the assets of the Company and abuse in transactions of affiliated parties;

7. Ensuring the integrity of the system of accounting and financial reporting of the Company, including independent auditing and the existence of appropriate control systems, especially the system of risk management, financial and operational control, and compliance with laws and appropriate standards; Monitoring of the process of information disclosure and communication.

8. Monitoring of the process of information disclosure and communication.

The Managing Board will be able to judge the corporate affairs without bias and independently:

1. The Managing Board will consider assigning tasks which involve a possibility of a conflict of interest to a sufficient number of board members who are not executive managers and are capable of making independent judgments;

2. When establishing committees, the Managing Board will define and disclose their authorities, composition and working procedures;

3. Members of the Board will perform their duties efficiently.

In order to ensure that members of the Managing Board are capable of performing their duties, the Company will provide them with access to accurate, relevant and timely information.


Concluding Provisions

Principles of corporate governance from this Code are implemented and enforced by:


1. The Company – Metalac a.d. and its subsidiaries

2. Assembly of Shareholders and shareholders

3. Members of the Managing, Supervisory and Executive Board

4. The management and other key executives in the Company and its subsidiaries

5. Auditors

6. Employees of Metalac a.d. and its subsidiaries

7. Investors, consultants and business partners


The Managing Board will take care about the implementation and enforcement of the Code, as well as the compliance of conduct and operations with the principles of corporate governance.

In order to ensure efficient management, the Managing Board will give or provide interpretation of any principle that is a part of this Code if its incorrect interpretation, made by shareholders or any other stakeholders for any reason, in any way hinders, slows down or prevents the adoption of business decisions by the management of bodies of the Company.

In the event of a dispute related to implementation, interpretation or application of the adopted principles, aiming to solve the dispute in the most efficient manner and strengthen confidence in the Company, the Managing Board will propose the other party an agreement on arbitration in order to solve the dispute in the best interest of all involved parties.

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The Code of
Corporate Governance

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