All shares of the Company are paid up.

On September 5, 2016 the Extraordinary General Meeting of PGE S.A. adopted resolution on increase of the Company’s share capital by PLN 467,440,207.25 from the Company’s reserve capital, through increasing the nominal value of shares from PLN 10.00 to PLN 10.25. The capital increase was registered in the National Court Register on November 25, 2016.

Raising the nominal value of the shares is an event that generates tax revenue on shareholders’ side. On September 5, 2016 the Extraordinary General Meeting of PGE S.A. adopted resolution on allocation of part of the reserve capital to cover the flat-rate income tax related to the increase of the share capital from the Company’s own funds, so the tax burden will be borne by the Company. PGE S.A. received tax interpretations in response to questions on the proper application of the provisions relating to corporate income tax and personal income tax. The analysis of received interpretations leads to the conclusion that the amount of tax which the Company is supposed to pay to the Tax Office due to the increase of the share capital amounts to PLN 110 million. As at December 31, 2016 that amount decreased the equity of the Group and is recognized in non-financial liabilities. Tax liability was paid on January 9, 2017.

After the reporting date until the date of preparation of these financial statements, there have been no changes to the Company’’s share capital.

Rights of the shareholders – Rights of the State Treasury regarding the Company’s operations

The Company is a part of the PGE Polska Grupa Energetyczna S.A. Group, to which State Treasury holds special rights as long as it remains a shareholder.

Special rights of the State Treasury that are applicable to the PGE Group entities derive from the Act of March 18, 2010 on special rights of the Minister of Energy and their performance in certain companies and groups operating in the electricity, oil and gaseous fuels sectors (Official Journal from 2016, item 2012). The aforesaid Act specifies the particular rights entitled to the Minister of Energy related to companies and groups operating in the electricity, oil and gaseous fuels sectors whose property was disclosed within the register of buildings, installations, equipment and services included in critical infrastructure.

Based on this act the Minister of Energy has the right to object to any resolution or legal action of the Management Board that relates to the ability to dispose a part of Company’s property, which may result in threat to functioning, continuity of operations and integrity of critical infrastructure. The objection can also be expressed against any resolution adopted that relates to:

• liquidation of the Company,
• changes of the use or discontinuance of exploitation of the Company’s asset, which is a component of critical infrastructure,
• change in the scope of activities of the Company,
• sale or lease of the enterprise or its organized part or establishment of legal restrictions,
• approval of operational and financial plan, investment plan, or long-term strategic plan,
• movement of the Company’s seat abroad,

if the enforcement of such a resolution resulted in an actual threat to the operation continuity or integrity of the critical infrastructure. The objection is expressed in the form of an administrative decision.

The Act of September 14, 2016 on change of Act on functioning of hard coal mining and some other acts changed also the Act of March 18, 2010 on special rights of the Minister of Energy and their performance in certain companies and groups operating in the electricity, oil and gaseous fuels sectors. The name of the Act was changed into the Act on special rights of the Minister of Energy and their performance in certain companies and groups operating in the electricity, oil and gaseous fuels sectors. Additionally previous rights of Minister of the State Treasury arising from this Act were attributed to the Minister of Energy.