Articles of Association

§ 1

1. The Company shall act under the name Polskie Górnictwo Naftowe i Gazownictwo Spółka Akcyjna.
2. The Company may use the abbreviated form of its name: PGNiG S.A. and
a distinguishing it graphic sign.
3. In commercial trading the Company may use the English version of itsname: Polish Oil and Gas Company" and the abbreviation "POGC".

§ 2

1. The seat of the Company shall be in Warsaw.
2. The Company shall run activity in the territory of the Republic of Poland and abroad.
3. TheCompany may establish and run branches, plants, offices, representativeoffices and other units, form and participate in other companies andventures in the territory of the Republic of Poland and abroad.

§ 3

1. The Company was created as a result ofcommercialization of the state-owned enterprise Polskie GórnictwoNaftowe i Gazownictwo in Warsaw.
2. The Company is a joint stock company with a special significance for the state economy.

§ 4

1. The Company was established for an unlimited period of time.
2. The Company performs tasks for assurance of energy security of the country within the scope of:
1) continuity of gas supplies to consumers and maintaining of necessary reserves, 
2) safe operation of gas networks,
3) equalizing the gaseous fuel balance and control over the operationand capacity of energy equipment connected to the common gas network,
4) gas production activity.

§ 5

In particular the provisions of the Act on Commercialization andPrivatization dated August 30, 1996 (Journal of Laws of 2002, No. 171,item 1397, as amended), the Act - Commercial Companies Code datedSeptember 15, 2000 (Journal of Laws No. 94, item 1037, as amended) aswell as the provisions of these Articles of Association shall apply tothe Company.

§ 6

The Company shall run production, service and trade activity within the following scope:

1) production of crude oil,
2) production of natural gas,
3) service activities connected with exploitation of oil and natural gas fields
4) quarrying of sulphur-containing minerals ,
5) other mining and quarrying not elsewhere classified
6) manufacture of refining and petroleum products
7) processing of refining and petroleum products
8) service activities in the area of installing, repair and maintenance
of machinery for mining, quarrying and construction
9) production of electricity
10) transmission of electricity
11) distribution of electricity
12) manufacture of gaseous fuels
13) distribution of gaseous fuels through grid systems
14) manufacture of heat (steam and hot water)
15) distribution of heat (steam and hot water)
16) performance of geological and engineering excavations and drillings
17) performance of general construction works within the scope of linedistribution facilities: pipelines, electric power lines, electrictraction lines as well as telecommunications and transmission lines
18) performance of central heating and ventilation installations
19) performance of gas installations
20) maintenance and repair of motor vehicles
21) retail sale of fuels
22) wholesale sale of solid, liquid and gaseous fuels and related products
23) wholesale sale of intermediate products
24) other specialized wholesale sale
25) hotels and motels, with restaurants
26) hotels and motels, without restaurants
27) land transport of goods by specialized vehicles
28) land transport of goods by universal vehicles
29) pipeline transport
30) storage and warehousing of goods in other warehouses
31) activities of travel agencies
32) wire telephony and telegraphy
33) mobile telephony
34) data transmission and teleinformatics
35) radiocommunications
36) research and experimental development on engineering
37) geological and exploring activity
38) activities relating to geodesy and cartography
39) letting of own or leased property
40) management of residential real estate
41) management of non-residential real estate
42) buying and selling of own or leased real estate
43) activities of libraries other than public libraries
44) archives activities
45) museum activities
46) technical research and analyses
47)  lease of particular constituents of property serving for transmission of power and gas
48) other financial intermediation
49) management activities of holding companies.

§ 7

The initial capital amounts to 5,900,000,000 zloty (say: five billion nine hundred million zloty) and shall be divided into:
(a) bearer’s shares of the series “A” in number 4,250,000,000 numbered from 00.000.000.001 to 04.250.000.000 with the nominal value of 1 zlotyeach as well as with
the joint nominal value of 4,250,000,000 zlotys;
(b) bearer’s shares of the series “A1” in number 750,000,000 numbered from 0.000.000.001 to 0.750.000.000 with the nominal value of 1 zlotyeach as well as with the joint nominal value of 750,000,000 zlotys;
(c) bearer’s shares of the series “B” in number 900,000,000  numbered from  0.000.000.001 to 0.900.000.000 with the nominal value of 1 zlotyeach  as well as with the joint nominal value of 900,000,000  zlotys;

§ 8

1. The Company’s shares may be  registered shares and bearer’s shares.
2. Subject to shares of the A1 series, issues of shares shall be denoted with consecutive letters of alphabet.

§ 9

/deleted/.

§ 10

1. The Company’s shares may be redeemed.
2. The shares may be redeemed subject to the consent of the shareholder.
3. Therules, procedure and conditions governing the redemption of sharesshall be determined each time by a resolution of the General Meeting.

§ 11

1. The share capital may be increased by aresolution of the General Meeting of Shareholders by issuance of newshares (either registered or bearer’s shares) or by increasing thenominal value of the existing shares.
2. The share capital may be increased by increase of the nominal value of the shares exclusively from the Company’s own funds.

§ 12

The Company may acquire own shares in the cases stipulated in Art. 362 § 1 of the Commercial Companies Code.

§ 13

The share capital may be decreased according to the principles set out in Art. 455-458 of the Commercial Companies Code.

§ 14

The Company’s supplementary capital shall be increased pursuant to Art. 396 of the Commercial Companies Code.

§ 15

The Company’s shares shall be negotiable.

§ 16

1. Authorized employees shall be vested with the right  to gratuitously acquire up to 15% of shares taken up by the State Treasury on the datethe Company is entered in the register according to the principles setout in the Act on Commercialization and Privatization and the Ordinance of the Minister of the State Treasury on Detailed Principles of Dividing Authorized Employees into Groups, Determining the Number of Shares Falling per Each such Group and the Manner of Acquiring Sharesby Authorized Employees dated 29 January 2003 (Journal of Laws of 2003,No. 35, item 303).
2. Shares acquired by authorized employees according to the principlesset out in section. 1 may not be the subject of public trading before the lapse of the period of two years from the disposal by the State Treasury of the first shares according to the general principles and -as regards the shares acquired by the employees performing the functions of the Company’s Management Board members - before thelapse of the period of three years from the disposal by the State Treasury of the first shares according to the general principles. Inthese periods these shares may not be exchanged for bearer shares.
3. Shares acquired by authorized employees in the periods referred to in section 2 may not be the subject of the obligatory redemption referred to in Art. 418 of the Commercial Companies Code.
4. The Company shall provide assistance to the State Treasury inconnection with the carrying out of the legal provisions referred to insection 1.

§ 17

1. The shareholder, i.e. the State Treasury represented by the minister responsible for matters pertaining to the State Treasury, shall have the rights arising under these Articles of Association and separate provisions.
2. The shareholder, i.e. the State Treasury represented by the minister responsible for matters pertaining to the State Treasury, shall approvein writing:
1) any changes to material provisions of the existing trade agreementsfor import of natural gas to Poland, as well as conclusion of suchagreements,
2) any strategic investment projects or the Company’s involvement ininvestment projects which, permanently or temporarily, impair the economic efficiency of the Company’s business activities but which are necessary to ensure Poland’s energy security.
3. Motions concerning matters specified in Clause 2 should be submittedtogether with the Management Board’s statement of reasons and the Supervisory Board’s written opinion.

§ 18

The Company shall have the following authorities:
1) the Management Board,
2) the Supervisory Board,
3) the General Meeting of Shareholders.

§ 19

Subject to the mandatory legal provisions of the Commercial CompaniesCode and these Articles of Association, resolutions of the Company’sauthorities shall be passed with an absolute majority of votes, and theabsolute majority of votes shall be understood as the situation wherethe number of votes “for” exceeds the number of votes “against” and the“sustaining votes” taken together with the proviso that:
1) in the event that the number of votes “for” a resolution of theManagement Board is equal to the number of votes “against” and the“sustaining votes” taken together, the President of the ManagementBoard shall have the casting vote,
2) in the event that the number of votes “for” a resolution of theSupervisory Board is equal to the number of votes “against” and the“sustaining votes” taken together, the Chairman of the SupervisoryBoard shall have the casting vote.

A. THE MANAGEMENT BOARD.

§ 20

1. The Management Board shall manage the Company’s affairs and represent the Company in all court and off-court acts.
2. All matters connected with the running of the Company’s affairs not restricted by the provisions of law or these Articles of Association tothe competence of the General Meeting of Shareholders or the Supervisory Board shall fall within the competence of the Management Board.
3. The Management Board shall be headed by the President of the Management Board.

§ 21

1. Declarations shall be made on behalf of the Company by two Management Board members acting jointly or one Management Board member acting together with a proxy.
2. The appointment of a proxy shall require an unanimous resolution to be adopted by all Management Board members. The proxy may be recalled by any member of the Management Board.
3. In the meaning of special provisions of law the managing authority of an organizational entity shall be the Management Board.
4. Legal actions resulting from special provisions falling within the competence of the managing authority of an organizational entity shallbe performed solely by the Management Board member designated in theresolution referred to in § 22 section 2 point 5.
5. The Management Board may appoint proxies.
6. The mode of operation of the Management Board shall be specified bythe by-laws adopted by the Management Board and approved by theSupervisory Board.

§ 22

1. All matters going beyond the scope of the Company’s ordinary activities shall require a Management Board resolution.
2. A Management Board resolution shall be required in particular:
1) to adopt the Management Board by-laws,
2) to adopt the Company’s organizational by-laws,
3) to set up and close down branches,
4) to appoint a proxy,
5) divisionof powers between the Management Board members, with the proviso that arelevant resolution of the Management Board shall require approval ofthe Supervisory Board, pursuant to § 33 section 1 point 11
6) to contract and grant loans and to contract credits, subject to § 33 section 2 point 3 and § 33 section 3 point 16,
7) to adopt annual plans of business activities, including investmentplans and long-term strategic plans as well as investment plansconnected with the development of the transmission system, subject to §33 section 1 point 6,
8) to contract contingent obligations, including guarantees andsureties given by the Company, and to issue bills of exchange, subjectto § 33 section 2 point 3 and § 33 section 3 point 16,
9) to dispose of and to acquire fixed assets, including real estate,perpetual usufruct rights and interests in real estate, with the valueequal to or exceeding the Polish złoty equivalent of EUR 50,000,subject to § 33 section 2 points 1 and 2 and § 56 section 3 points 2and 3.
10) as regards all matters for the examination of which the ManagementBoard applies to the Supervisory Board or the General Meeting ofShareholders.
11) approval of the information specified in § 23 section 2.

§ 23

1. The Management Board shall be obliged to work out the plans referredto in § 22 section 2 point 7 and submit them to the Supervisory Boardfor approval.
2. The Company’s Management Board shall submit to the ministerresponsible for matters pertaining to the State Treasury and theminister responsible for the economy, each time at the demand of theseauthorities, detailed reports on the performance of tasks undertakenwith a view to ensuring the country’s energy security.
3. After the end of each quarter the Company’s Management Board shallprepare and submit to the minister responsible for matters concerningthe State Treasury and the minister responsible for the economy, by theend of the month immediately following the calculation period, aneconomic and financial analysis of the Company and the distributingcompanies referred to in § 66 of these Statutes, separated on the basisof a programme of the Council of Ministers in a form determined by theminister responsible for matters concerning the State Treasury, in theform of current report in the understanding of the Law on PublicTrading.

§ 24

1. The Company’s Management Board shall consist of 2 to 7 persons. Thenumber of members shall be determined by the authority appointing theManagement Board.
2. Management Board members shall be appointed for the common term of three years.
3. Management Board members should be higher education graduates andtheir length of employment shall not be shorter than five years.

§ 25

1. Individual Management Board members or the entire Management Board shall be appointed and recalled by the Supervisory Board.
2. AManagement Board member shall be appointed following a qualificationprocedure pursuant to the Ordinance of the Council of Ministers on theconducting of the qualification procedure for the function of aManagement Board Member in certain commercial companies, dated 18 March2003 (Journal of Laws of 2003 No. 55, item 476). This provision shallnot apply to a management board member elected by employees.
3. A Management Board member shall be obliged to submit his/herresignation to the Supervisory Board and to communicate this fact tothe shareholder, i.e. the State Treasury represented by the ministerresponsible for matters pertaining to the State Treasury. Theresignation shall be submitted in writing or else shall be ineffectivewith respect to the Company. The provisions of the Civil Code relatingto termination of contracts by contractors shall apply accordingly tothe resignation of a Management Board member.

§ 26

1. For as long as the State Treasury shall be ashareholder in the Company and provided that in a given year theCompany employs on average over 500 employees, the Supervisory Boardshall appoint as a Management Board member one person elected by theCompany’s employees for the term of the Management Board.
2. A candidate for the function of a Management Board member elected bythe employees shall be considered a person who obtained at least 50%plus 1 of validly cast votes in the election. The result of the voteshall be binding on the Supervisory Board, if at least 50% of allemployees have participated in it.
3. A candidate for the function of a Management Board member elected bythe employees does not have to meet the qualification requirements setout in § 24 sec. 3.
4. The voting shall be secret, direct and common and shall be organizedby the Electoral Commissions appointed by the Supervisory Board fromamongst the Company’s employees. The Commissions may not consist of thecandidates for the function of Management Board members.
5. The fact that a Management Board member is not elected by theCompany’s employees shall not prevent the Management Board fromadopting valid resolutions.
6. The Company’s Management Board shall be obliged to provide assistance necessary to carry out the election.
7. The Supervisory Board shall adopt detailed regulations governing theappointment and removal of a Management Board member elected by theemployees and the carrying out of additional elections according to theprinciples determined above.
8. The appointment of a candidate for the function of a ManagementBoard member elected by the employees shall be ordered by theSupervisory Board subject to § 27.
9. The following principles and manner of appointing and recallingManagement Board members elected by the employees and carrying outadditional elections shall be determined:
1) the election shall be organized and carried out by the ElectoralCommission. If the Company’s organizational structure consists ofseveral branches, the election shall be organized and carried out bythe Main Electorate Commission with the assistance of RegionalElectorate Commissions.
2) Electoral Commissions shall be responsible for an efficient carryingout of the election according to the existing legal provisions, theseArticles of Association and the by-laws governing the Commission’smanner of work.
3) The key tasks of the Main Electorate Commission shall include in particular:
a) working out and publishing the by-laws governing the works of the Commission,
b) creating the list of electoral districts and the election time-table,
c) checking and registering the lists of voters and establishing thenumber of employees having active electoral rights on the election date,
d) monitoring on a day-to-day basis the course of the election inelectoral districts and the activity of the Regional ElectoralCommissions and examining the complaints concerning the course of theelection,
e) registering the candidates and publishing the list of the candidates,
f) preparing voting cards and ballot-boxes,
g) supervising the course of the voting, counting the votes, preparingthe final protocol and establishing and announcing the election results,
h) supervising the strict observance of the Articles of Association asregards the election and interpreting the Articles of Association’provisions in relation to controversial issues,
i) determining the image of the special election seal.
4) The tasks of the Regional Electorate Commission shall include in particular:
a) checking the list of voters in the given electoral district andestablishing the number of employees having active electoral rights onthe election date in the given electoral district,
b) carrying out the voting and delivering the ballot-boxes to the Main Electorate Commission,
c) co-operating with the Main Electorate Commission, in particular as regards the calculation of the votes cast.
5) The passive electoral right shall be vested in any person registered according points 6 and 7.
6) Each trade union organization active at the Company and any group ofemployees consisting of at least 50 persons shall have the right toregister candidates. An employee may support only one candidate.
7) Candidates should be registered in writing at the Main ElectorateCommission not later than 14 days prior to the appointed voting date.
8) If no candidate is elected pursuant to § 26 sec. 2, the second roundof the election shall be ordered in which two candidates who obtainedthe largest number of votes in the first round shall participate.
9) The second round of the election shall be carried out according tothe procedure adopted for the first round, taking into account thechanges arising under point 8).
10) Having established the final election results, the Main ElectorateCommission shall confirm their validity and then place the relevantannouncement and deliver the election documentation to the SupervisoryBoard.
11) A motion for the removal of a Management Board member elected bythe employees shall be filed with the Company’s Management Board, whichshall promptly deliver it to the Supervisory Board.
12) Voting on the removal of a Management Board member elected by theemployees shall be carried out according to the procedure governinghis/her appointment, subject to § 28.

§ 27

1. The Supervisory Board shall order election by theCompany’s employees of the candidate for the position of a ManagementBoard member for the next term of office within two months from the endof the last full financial year in which such Management Board memberperformed his/her function. The election should take place within twomonths from the day it is ordered by the Supervisory Board.
2. In the case of removal, resignation or death of a Management Boardmember elected by the employees, additional election shall be conducted.
3. The additional election and voting on the removal of a ManagementBoard member shall be ordered by the Supervisory Board within themaximum period of one month from the day the Supervisory Board becomesaware of an event substantiating the need to carry out the election orvoting. Such election or voting should take place within two monthsfrom the day it is ordered by the Supervisory Board.
4. The provisions of § 26 shall apply to the additional election.

§ 28

At the written request of at least 15% of all the employees of theCompany the Supervisory Board shall order voting on the removal of aManagement Board member elected by the Company’s employees. The resultsof the voting shall be binding on the Supervisory Board provided thatat least 50% of all the employees have taken part in it and themajority equal to that required in the case of appointing a member hasbeen achieved.

§ 29

1. Following his/her appointment to the ManagementBoard, a candidate for the function of a Management Board memberelected by the employees, being the Company’s employee performing workon the basis of an employment contract, shall:
1) conclude with the Company an additional agreement for theperformance of the function of a Management Board member, and his/heremployment contract shall remain in force,
2) retain the acquired employee entitlements,
3) participate in the work of the Management Board according to theprinciples set out in the Commercial Companies Code, these Articles ofAssociation and the agreement referred to in point 1 above.
2. The total remuneration of a Management Board member elected by theemployees, due under his/her employment contract and the agreement forthe performance of the function of a Management Board member may notexceed the amounts fixed by the authority entitled to fix theremuneration of management board members pursuant to the Act onremunerating persons managing certain legal entities dated 3 March 2000(Journal of Laws No. 26, item 306, as amended).

§ 30

The principles and amount of remuneration of Management Board members shall be determined by the General Meeting.
§ 31
1. In the meaning of the Labour Code, the employer shall be the Company.
2. Labourlaw tasks shall be performed by the Management Board member designatedin the resolution referred to in § 22 section 2 point 5., subject to §45.

B. SUPERVISORY BOARD

§ 32

The Supervisory Board shall exercise an on-going supervision of each sphere of the Company’s activity.

§ 33

1. The following matters shall fall within the scope of the Supervisory Board’s competence:
1) examiningthe Management Board report on the Company’s activity and assessingwhether the data included in the financial statement for the previousfinancial year within the scope of their compliance with accountingbooks, documents as well as with the facts,
2) examining the motions of the Management Board in respect of distribution of profit and coverage of losses,
3) submitting to the General Meeting of Shareholders a writtenstatement of the results of the activities referred to in points 1 and2,
4) assessing of the consolidated financial statement both concerningthe compliance with accounting books and documents as well as with thefacts, examining the Management Board’s consolidated report on theCompany’s activity and submitting to the General Meeting ofShareholders a report of the results of these activities,
5) electing an expert auditor to examine the financial statement,
6) adopting annual plans of business activities, including investmentplans and long-term strategic plans as well as investment plansconnected with the development of the transmission system,
7) adopting the by-laws regulating in detail the manner of work of the Supervisory Board,
8) adopting the unified text of the Company’s Articles of Association prepared by the Company’s Management Board,
9) approving the by-laws of the Company’s Management Board,
10) approving the organizational by-laws of the Company,
11) approval of the Management Board’s resolution on the division of powers between the Management Board members,
12) opining all matters submitted by the Management Board to the General Meeting of Shareholders for examination,
13) opining the information specified in § 23 section 2,
14) opining the motions specified in § 17 section 3.
2. It belongs to the competences of  the Supervisory Board giving its consent to the Management Board’s for:
i. acquiring fixed assets, including real estate, perpetual usufructrights and interests in real estate, with the value representing thePolish złoty equivalent of EUR 500,000 to EUR 2,000,000, except fortransactions concluded on the basis of the plans approved by theSupervisory Board and specified in section 1 point 6,
ii. disposal of fixed assets, including real estate, perpetual usufructrights and interests in real estate, with the value representing thePolish złoty equivalent of EUR 500,000 to EUR 1,000,000, except fortransactions concluded on the basis of the plans approved by theSupervisory Board and specified in section 1 point 6,
iii. assuming other obligations with the value exceeding 20% of theCompany’s share capital, except for obligations assumed on the basis ofthe plans approved by the Supervisory Board, referred to in section 1point 6,
iv. /deleted/
v. concluding the agreement referred to in Art. 19b of the Act onCommercialization and Privatization (Journal of Laws of 2002, No. 171,item 1397, as amended).
3. In addition, it belongs to the competences of the Supervisory Board in particular:
1) appointing and removal of  Management Board members,
2) filing motions pertaining to the determination of the principles and amounts of remuneration of Management Board members,
3) suspending of Management Board members in their duties for material reasons by an absolute majority of votes,
4) delegating to Supervisory Board members for  temporary performanceof  the duties of Management Board members who are unable to performtheir duties, 
5) conducting of the qualification procedure referred to in § 25 sec. 2of these Articles of Association and Art. 19a of the Act onCommercialization and Privatization (Journal of Laws of 2002, No. 171,item 1397, as amended)
6) giving consent to the setting up and closing down of the Company’s branches abroad,
7) giving consent to Management Board members’ holding posts in theauthorities of other companies in cases where consent to holding suchposts is required under the law,
8) giving consent to the Company’s creating another company with ashare capital of up to the Polish zloty equivalent of EURO 1,000,000,
9) monitoring of the Company’s indebtedness,
10)  passing opinion on recommendations of the Company’s ManagementBoard concerning direction of representatives of PGNiG SA to theManagement Board and Supervisory Board or dismissal from thecomposition of
the Management Board and Supervisory Board of the company under thename: System Gazociągów Tranzytowych EuRoPol Gaz SA and presentation ofthis opinion to the shareholder, i.e. the State Treasury represented bythe minister responsible for matters pertaining to the State Treasuryfor approval,
11) passing opinion on the manner of exercising of voting right by arepresentative of PGNiG SA at the General Meeting of the company underthe name: System Gazociągów Tranzytowych EuRoPol Gaz SA.
12) approval of the manner of exercising the voting right by the PGNiGrepresentative at the general shareholders meetings of the distributioncompanies with respect to matters concerning approval of suchcompanies’ financial plans,
13) approval of the manner of exercising the voting right by arepresentative of PGNiG S.A. at the general shareholders meetings ofdistribution companies with respect to matters concerning approval ofsuch companies’ long-term strategic business plans,
14) approval of the manner of exercising the voting right by arepresentative of PGNiG S.A. at the general shareholders meetings ofdistribution companies with respect to matters concerning:
a) amendments to a company’s statutes or articles of association,
b) increase or reduction of a company’s share capital,
c) merger, transformation or division of a company,
d) sale of a company shares,
e) sale and lease of a company’s enterprise or an organized part thereof and establishing limited rights in property thereon,
f) dissolution and liquidation of a company.
15) approval of the manner of exercising the voting right by arepresentative of PGNiG S.A. at the general shareholders meetings ofthe companies in which the Company holds at least 50% of shares,subject to point 14, with respect to matters concerning:
a) amendments to a company’s statutes or articles of association,
b) increase or reduction of a company’s share capital,
c) merger, transformation or division of a company,
d) sale of a company shares,
e) sale and lease of a company’s enterprise or an organized part thereof and establishing limited rights in property thereon,
f) dissolution and liquidation of a company,
g) establishing pledges or other encumbrances on a company shares,
h) obligations to make additional payments,
i) issue of bonds.
16) Opining the Management Board’s motions concerning the assumption ofobligations with the value exceeding the Polish złoty equivalent of EUR100,000,000, subject to section 2.
4. The Supervisory Board shall substantiate in writing its refusal to consent to any of the matters listed in sec. 2 and 3.
5. Resolutions concerning matters specified in section 1 point 5)require, for their validity, voting for their acceptance by a member ofthe Supervisory Board appointed according to § 36 section 1 of theArticles of Association.
6. The Management Board shall be obliged to deliver to the SupervisoryBoard the copies of information submitted to the Minister of Financeconcerning all sureties and guarantees given pursuant to Art. 34 of theAct on sureties and guarantees given by the State Treasury and certainlegal entities dated 8 May 1997 (Journal of Laws of 2003 No. 179, item1689, as amended).

§ 34

1. For material reasons the Supervisory Board may delegate itsparticular members to certain supervisory activities to be carried outby them individually on a temporary basis.
2. The Supervisory Board member to whom certain activities have beendelegated shall be obliged to submit to the Supervisory Board a writtenreport of the activities carried out.

§ 35

1. The Supervisory Board shall consist of 3 to 9members appointed by the General Meeting of Shareholders, subject to §36 sec. 1 of the Articles of Association. Independently from the aboveso long as the State Treasury remains the shareholder of the Company,the State Treasury represented by the minister competent to matters ofthe State Treasury acting within this scope in agreement with theminister competent to matters of economy is entitled to appoint andrecall one member of the Supervisory Board.
2. Supervisory Board members shall be appointed for the common terms of three years
3. A Supervisory Board member may be recalled by the General Meeting at each time.
4. Supervisory Board members, except for members appointed in themanner of § 36 item 1, should meet requirements indicated in theordinance of the Council of Ministers dated December 7, 2004 ontrainings and exams for candidates for members of supervisory boards ofthe companies in which the State Treasury is the sole shareholder.(Journal of Laws of 2003 No. 198, item 2038).
5. A Supervisory Board member shall submit his/her resignation to theManagement Board and shall communicate the fact to the State Treasury(the Shareholder) represented by the minister responsible for matterspertaining to the State Treasury. The resignation shall be made inwriting or else shall be ineffective with respect to the Company.
The provisions of the Civil Code relating to termination of contractsby contractors shall apply accordingly to the resignation of aSupervisory Board member.

§ 36

a. One from members of the Supervisory Board appointed by the General Meeting should meet all the following conditions:
i. a member has been elected in the manner referred to in section 3;
ii. a member may not be an Entity connected with the Company or an entity dependent on the Company ;
iii. a member may not be an Entity connected with a dominant entity or other entity dependent on dominating entity, or
iv. amember may not be a person who remains in any relation with the Companyor with any of entities mentioned in point 2) and 3) which couldsubstantially influence the ability of such person as a member of theSupervisory Board to take impartial decisions
b. For avoidance of doubt, connections referred to in section 1 point2) -4) do not relate to the membership in the Company’s SupervisoryBoard.
c. Election of a member of the Supervisory Board that must meetconditions described in section 1 takes place in a separate voting.Shareholders present at the General Meeting, the subject of which iselection of a member of the Supervisory Board referred to in section 1,are vested with the  right to notify candidates for a member of theSupervisory Board meeting conditions specified in section 1.Notifications are made to the Chairman of the General Meeting in thewritten form together with written declaration of a respectivecandidate on consent to candidate as well as on fulfillment ofconditions specified in section 1 point 2) -4). If candidatures are notnotified in the manner provided in the previous sentence are notnotified by shareholders, candidates to the Supervisory Board meetingthe conditions described in the section 1 point 2) -4) are notified bythe Supervisory Board.

§ 37

1. In the case of the Supervisory Board composed of up to six members,two of them shall be appointed from amongst the candidates elected bythe Company’s employees. In the case of the Supervisory Board composedof seven to nine members, three of them shall be appointed from amongstthe candidates elected by the Company’s employees.
2. The candidates elected by the employees shall be considered thepersons who have obtained at least 50% plus 1 of validly cast votes inthe election. The result of the vote shall be binding on the GeneralMeeting of Shareholders, if at least 50% of all employees haveparticipated in it.
3. The provisions of § 26 sec. 4 shall apply to the election of a candidate for a post of a Supervisory Board member.
4. The Supervisory Board shall order the election of the candidates forthe posts of Supervisory Board members. In this case the provisions of§§ 26 and 27 shall apply respectively.
5. The Supervisory Board shall adopt the Election By-Laws describing indetail the manner of appointing and recalling Supervisory Board membersfrom amongst the candidates elected by the employees.

§ 38

At a written request of at least 15% of theCompany’s employees the Supervisory Board shall order voting on theremoval of the employees’ representative from the Supervisory Board.The result of the vote shall be binding on the General Meeting ofShareholders, provided that at least 50% of all the employees havetaken part in it and the majority equal to that required in the case ofappointing a member has been achieved.

§ 39

In the case of removal, resignation or death of aSupervisory Board member appointed from amongst the candidates electedby the employees, a new person shall be appointed who has obtained thesecond largest number of votes in the last election. If there is nosuch opportunity, an additional election shall be carried out and theprovisions of § 27 sec. 3 and sec. 4 and § 37 sec. 4 shall applyrespectively.

§ 40

/deleted/

§ 41

1. At the first meeting Supervisory Board membersshall appoint from amongst themselves the Chairman, the Deputy Chairmanand the Secretary of the Supervisory Board.
2. Supervisory Board meetings shall be chaired by the Chairman and, in his/her absence, by the Deputy Chairman.
3. Declarations addressed to the Supervisory Board between meetingsshall be filed with the Chairman of the Supervisory Board and, if thisis not possible, the Deputy Chairman or the Secretary of theSupervisory Board.

§ 42

1. The Supervisory Board shall hold meetings at least every two months.
2. Thefirst meeting of the Supervisory Board of a new term of office shall beconvened by the Chairman of the Supervisory Board of the previous termwithin one month from the date of holding the Ordinary General Meetingof Shareholders, unless a resolution of the General Meeting stipulatesotherwise. If the meeting is not convened according to the aboveprocedure, it shall be convened by the Management Board.
3. Supervisory Board meetings shall be convened by the Chairman orDeputy Chairman of the Supervisory Board, who shall present a detailedagenda.
4. A Supervisory Board meeting should be convened at the request of anySupervisory Board member or on the motion of the Management Board.
5. In the case of death, removal from office or resignation of theChairman and Deputy Chairman of the Supervisory Board during the termof office, a Supervisory Board meeting may be convened by any member ofthe Supervisory Board. The provisions of § 43 shall apply accordingly.In the event of failure to convene a meeting in accordance with theprocedure set forth above within one month of the death, removal fromoffice or resignation of the Chairman and Deputy Chairman of theSupervisory Board, the Supervisory Board meeting shall be convened bythe Management Board.
6. Supervisory Board meetings shall be recorded in the form of minutespursuant to the provisions of Art. 391 § 2 of the Commercial CompaniesCode.

§ 43

1. A written notification shall be required toconvene a Supervisory Board meeting, which shall be served on allSupervisory Board members at least 7 days prior to the meeting. Formaterial reasons the Chairman of the Supervisory Board may shorten theabove period to 2 days and determine the manner the invitation toattend the meeting shall be delivered.
2. In the invitation to a Supervisory Board meeting the Chairman shalldetermine the date, place and detailed draft agenda of the meeting.
3. The proposed agenda may be changed, if all Supervisory Board membersare present at the meeting and none of the persons present raises anyobjections to the agenda.

§ 44

1. The Supervisory Board shall adopt resolutions, ifat least half of the Supervisory Board members are present at themeeting and all the members have been invited.
2. The Supervisory Board adopts resolution in open voting.
3. Secret voting shall be ordered on the motion of a Supervisory Boardmember and in personal matters. If secret voting is ordered, theprovisions of sec. 4 shall not apply.
4. The Supervisory Board may adopt resolutions in writing or by meansof distant communication devices, subject to Art. 383 § 4 of theCommercial Companies Code. Each resolution adopted in this manner shallrequire to be justified and presented earlier to all Supervisory Boardmembers in the form of a draft.
5. Resolutions adopted according to sec. 4 shall be presented and thevoting results shall be announced at the nearest Supervisory Boardmeeting.

§ 45

1. In a contract between the Company and a Member ofthe Management Board as well in dispute with this Member the Company isrepresented by the Supervisory Board or  an Attorney appointed by aresolution of the General Meeting.
2. All activities performed between the Company and Management Boardmembers other than those listed in sec. 1 shall be carried outaccording to the same procedure.

§ 46

1. Supervisory Board members shall perform their rights and duties personally.
2. ASupervisory Board member shall be obliged to participate in SupervisoryBoard meetings. A Supervisory Board member must state in writing thereasons of his/her absence at a meeting. A Supervisory Board resolutionshall be required to justify the absence of a Supervisory Board member.
3. Pending the binding force of the Act on remunerating personsmanaging certain legal entities dated 3 March 2003 (Journal of Laws of2000, No. 26, item 306, as amended). Supervisory Board members shall beentitled to a monthly remuneration in the amount fixed by the GeneralMeeting , subject to the provisions of this Act.
4. The Company shall cover the costs borne in connection with theperformance of duties by Supervisory Board members such as inparticular costs of traveling to the Board meeting, costs of exercisingindividual supervision, costs of accommodation and meals.

A. GENERAL MEETING OF SHAREHOLDERS

§ 47

1. The General Meeting of Shareholder shall be convened by the Company’s Management Board:
1) on its own initiative,
2) at the written request of the Supervisory Board,
3) atthe written request of a shareholder or shareholders representing atleast one tenth of the share capital, made at least one month prior tothe proposed date of the General Meeting,
4) at the written request of the shareholder – the State Treasury –irrespective of its share in the share capital, made at least one monthprior to the proposed date of the General Meeting,
5) at the written request of the Supervisory Board member, appointedaccording to § 36 section 1 of the Articles of Association.
2. The General Meeting should be convened within two weeks from the date the request referred to in sec. 1 points 2-4 is made.
3. If the General Meeting is not convened within the time limits set out in sec. 2, then:
1) if the request to convene the General Meeting has been made by theSupervisory Board – the Supervisory Board acquires the right to convenethe General Meeting,
2) if the request to convene the General Meeting has been made by theshareholders specified in sec. 1 point 3 or 4, the registry court may,following the Management Board’s call to make a statement, authorizethese shareholders to convene the extraordinary general meeting ofshareholders.

§ 48

The General Meetings of Shareholders shall be held at the seat of the Company.

§ 49

1. The General Meeting may adopt resolutions only inmatters covered by the detailed agenda, subject to Art. 404 of theCommercial Companies Code.
2. The agenda shall be proposed by the Company’s Management Board or the entity convening the General Meeting of Shareholders.
3. A shareholder or shareholders representing at least one tenth of theshare capital may demand that individual items be included in theagenda of the nearest General Meeting. This right shall be vested alsoin the shareholder – the State Treasury – irrespective of its share inthe share capital.
4. If the request referred to in sec. 3 is made after the convention ofthe General Meeting is announced, then it shall be treated as a motionto convene the Extraordinary General Meeting of Shareholders,
5. The General Meeting may remove an issue included in its agenda fromthe agenda or may elect not to consider such an issue by way of aresolution adopted with a majority of three-quarters of votes. If anissue has been included in the agenda for the General Meeting upon ashareholder’s motion, its removal or decision not to consider it shalladditionally require the consent of all shareholders who submitted sucha motion and are present at the General Meeting. The motion concerningthe removal of an issue included in the agenda of the General Meetingor decision not to consider such an issue should be accompanied by adetailed justification.

§ 50

The General Meeting of Shareholders shall be openedby the representative of the State Treasury, the Chairman or the DeputyChairman of the Supervisory Board and, if the above persons are notpresent, by the Chairman of the Management Board or person appointed bythe Management Board. Then, subject to Art. 401 § 1 of the CommercialCompanies Code, the Chairman of the Meeting shall be appointed fromamongst the persons authorized to participate in the General Meeting.

§ 51

The General Meeting shall adopt resolutions irrespective of thenumber of shares represented thereat, unless the provisions of theCommercial Companies Code or these Articles of Association provideotherwise.

§ 52

One share shall give the right to one vote at the General Meeting.

§ 53

1. The General Meeting may order recesses in sessions by a majorityof two thirds of votes. All recesses taken together may not last longerthan thirty days.
2. /deleted/.

§ 54

Voting at the General Meeting of Shareholders shall be open. Secretvoting shall be ordered in connection with matters pertaining toelections to the Company’s authorities or appointment of the Company’sliquidator and in connection with requests for removal of members ofthe Company’s authorities or the Company’s liquidator or requests forholding them liable, or in personal matters. Furthermore, secret votingshall be ordered at the request of at least one shareholder present orrepresented at the General Meeting.

§ 55

An ordinary General Meeting of Shareholders shall beconvened annually by the Management Board. It should take place withinsix months after the end of a financial year.

§ 56

1. The following shall constitute the subject of an ordinary General Meeting of Shareholders:
1) reviewingand approving the financial statement for the previous financial yearand the Management Board report on the Company’s activity,
2) acknowledging the fulfillment of duties by members of the Company’s authorities,
3) adopting resolutions on the allocation of profits or coverage of losses,
4) adopting resolutions on the fixing of the dividend payment date or on the payment thereof in installments.
2. The following matters shall require a resolution of the General Meeting of Shareholders:
1) appointing and recalling Supervisory Board members,
2) examining and approving the consolidated financial statement of thecapital group and the report on the activity of the capital group forthe previous financial year,
3) suspending Management Board members in their duties,
4) determining the principles and amounts of remuneration of Management Board members.
3. The following maters pertaining to the Company’s assets shall require a resolution of the General Meeting of Shareholders:
1) a sale or lease of the Company’s enterprise or an organized part thereof and establishing limited rights in property thereon,
2) acquisition of fixed assets, including real estate, usufruct rightor interests in real estate with a value exceeding the Polish złotyequivalent of EUR 2,000,000,
3) sale of fixed asset, including real estate, usufruct right orinterests in real estate with a value exceeding the Polish złotyequivalent of EUR 1,000,000,
4) a conclusion of a credit, loan, surety or similar agreement betweenthe Company and any member of the Management Board, Supervisory Board,proxy or liquidator, or in favour of any of the above persons,
5) an increase and decrease of the Company’s share capital,
6) an issue of convertible bonds or bonds with pre-emptive rights andan issue of subscription warrants, specified in Art. 453 § 2 of theCommercial Companies Code ,
7) an acquisition of own shares in the case provided for in Art. 362 § 1 point 2 of the Commercial Companies Code,
8) an obligatory redemption of shares pursuant to Art. 418 of the Commercial Companies Code,
9) a creation, use and liquidation of the reserve funds,
10) use of the supplementary capital,
11) provisions concerning claims for the redress of damage caused at the Company’s creation, management or supervision.
12) expression of consent to conclude the contract of lease by virtueof which the Company will give fixed assets in form of the transmissiongrid to use by other entity.
13) expression of consent to notice of termination, substantial changeof the object, duration or provisions concerning notice of terminationand termination of the contract of lease concluded with the operator ofthe transmission system in connection with §6 point 47 of the Articlesof Association.
4. In addition, a resolution of the General Meeting of Shareholders shall be required in the case of:
1) a merger, transformation or division of the Company,
2) relocation of the Company’s seat abroad
3) preference of shares
4) formation of an European company, transformation into such company or joining it.
5)  formation of another company by the Company, if the initial capitalof such formed company exceeds the Polish zloty equivalent of EURO1,000,000,
6) an amendment to the Articles of Association and change in the Company’s subject of activity,
7) a dissolution and liquidation of the Company,
8) the determination of the principles of remunerating the Supervisory Board members.
5. Subject to different provisions of the Commercial Companies Code orthe after-mentioned provisions, resolutions of the General Meeting arepassed by absolute majority of votes. Resolutions related to thefollowing matters may be adopted if at least half of the Company’sinitial capital is represented at the General Meeting and they requirethe majority of four fifths in situation when the share of the StateTreasury in the initial capital falls below 51%;
1) dissolution of the Company,
2) relocation of the Company’s seat abroad,
3) change of the subject of the Company’s enterprise limiting thepossibility of running the activity  within the scope of exploration,production and trading of petroleum and natural gas,
4) a sale or lease of the Company’s enterprise or an organized partthereof, the activity of which includes exploration, production andtrading of petroleum and natural gas as well as and establishinglimited rights in property on the Company’s enterprise or on such itsorganized part,
5) merger of the Company through transfer of its entire assets to other company,
6) division of the Company,
7) preference of shares,
8) formation of an European company, transformation into such company or joining it,
9) amendment of this section of the Articles of Association
10) taking decision referred to § 56 section 3 point 13.
6. The taking up or acquisition of stocks or shares in other companiesotherwise than in exchange for the company’s receivables undersettlement or arrangement proceedings shall require a resolution of theGeneral Meeting of Shareholders. A resolution of the General Meeting ofShareholders shall be required also to:
1) dispose of these stocks or shares and to determine the terms and manner of their disposal, except for:
a) the disposal of stocks in public trading in securities,
b) the disposal of stocks or shares held by the Company in the amountnot exceeding 10% of shares in the initial capital of individualcompanies,
c) the disposal of stocks and shares taken up in exchange for theCompany’s receivables under settlement or arrangement proceedings.
2) /deleted/.
7. /deleted/.
8. Drafts of resolutions concerning amendment of these Articles ofAssociation and change of subject of the Company’s activity requireexpressing an opinion by the minister competent to the matters ofeconomy. In order to obtain the a/m opinion the Company’s ManagementBoard is committed to hand over a/m drafts of resolutions to theminister competent to the matters of economy on the day they were madepublicly known in a form of current report according to the relevantprovisions regulating information obligations of the public companies.An opinion of the minister competent to the matters of economy iscommunicated to the General Meeting. Absence of an opinion of theminister competent to the matters of economy or a negative opinion doesnot exclude subjecting the a/m resolutions to voting by the GeneralMeeting.

§ 57

1. Applications concerning the matters specified in§ 56 should be filed together with a justification and written opinionof the Supervisory Board. No opinion of the Supervisory Board shall berequired for applications concerning Supervisory Board members, inparticular in the cases referred to in § 56 sec. 1 point 2, sec. 2point 1 and sec. 4 point. 8. No justification by the Management Boardshall be required for applications concerning Management Board members,in particular in the case referred to in § 56 sec. 1 point 2.
2. The requirement to issue an opinion on an application shall notapply in the case referred to in Art. 384 § 2 of the CommercialCompanies Code.

§ 58

The Company’s subject of activity may be changedwithout the obligation to redeem shares, subject to meetingrequirements specified in  Art. 417 § 4 of the Commercial CompaniesCode.

§ 59

The Company’s financial year shall be a calendar year.

§ 60

The Company’s accounting shall be kept according to accounting regulations.

§ 61

1. The Company shall create the following funds:
1) the initial capital,
2) the supplementary capital ,
3) the revaluation reserve  fund,
4) other reserve funds,
5) the Company’s social benefits fund.
2. By way of a resolution of the General Meeting of Shareholders the Company may establish and liquidate other funds to cover special lossesor expenditures both at the beginning and during the financial year.

§ 62

The Company’s Management Board shall be obliged to:
1) preparethe financial statement together with the report on the Company’sactivity for the previous financial year within three months from thebalance sheet date,
2) submit the financial statement to an auditor for examination ,
3) submit to the Supervisory Board for assessment the documents listedin point 1 together with the opinion and report of the auditor,
4) provide to the Ordinary General Meeting of Shareholders thedocuments listed in point 1, the opinion and the report of the auditorand the Supervisory Board report referred to in § 33 sec. 1 point 3,
5) prepare the consolidated financial statement of the capital groupand the report on the activity of the capital group by not later thantwo months from the deadline for the preparation of the Company’sfinancial statement, if such obligation is imposed by the AccountancyAct dated 29 September 1994 (Journal of Laws of 2002, No. 76, item 694,as amended),
6) submit the consolidated financial statement to the auditor for examination,
7) submit to the Supervisory Board for approval the documents listed inpoint 5 together with the opinion and report of the auditor,
8) provide to the Extraordinary General Meeting of Shareholders thedocuments listed in point 5, the opinion and the report of the auditorand the Supervisory Board report referred to in § 33 sec. 1 point 4.

§ 63

1. The manner of allocation of the Company’s netprofit shall be determined by a resolution of the General Meeting of Shareholders.
2. The General Meeting of Shareholders shall make write-offs fromprofit to the supplementary fund in the amount representing at least 8%of profit for the given financial year until the amount of the fundattains the level of at least one third of the share capital.
3. The General Meeting of Shareholders may allocate a part of the profit to:
1) dividends for the shareholders,
2) other capitals and funds,
3) other purposes.
4. The dividend day and the day of dividend payment shall be determinedby an Ordinary Meeting of Shareholders. The dividend day may beappointed for the day of adoption of resolution or within the period ofsubsequent three months counting from this day.
5.  /deleted/.
6. Payment of dividend for the years 2005-2010 may also be effected in non-pecuniary form.
7. The Meeting of Shareholders shall determine the subject ofnon-pecuniary dividend specifying the manner of valuation of itselements.
8. The General Meeting of Shareholders determines the dividend policy of PGNiG SA for the years 2005-2010. The General Meeting may indicate as hareholder for the benefit of which a non-pecuniary dividend may be paid out.

§ 64

1. The Company shall publish its announcements in the Monitor Sądowy iGospodarczy /the Court and Economic Monitor/ and also hang them at theCompany’s seat at a place accessible to all employees.
2. The company’s Management Board shall file with a registry courtcompetent with respect of the Company’s seat the annual financialstatements, the opinion of the auditor, a copy of the resolution of theGeneral Meeting of Shareholders approving the financial statement anddetermining the manner of dividing profits and covering losses and thereport on the Company’s activity, within fifteen days from the date theGeneral Meeting of Shareholders approves the Company’s financialstatement. If the financial statement is not approved within six monthsfrom the balance sheet date, it should be filed within fifteenth daysafter this date.
3. The Company’s Management Board shall be obliged to submit thedocuments referred to in Art. 70 of the Accountancy Act dated 29September 1994 (Journal of Laws of 2002, No. 76, item 694) forpublication in Monitor Polski B, within fifteen days from the date theGeneral Meeting of Shareholders approves the Company’s financialstatement,
4. The Company’s Management Board shall be obliged to deliverinformation within the scope and the dates provided in the Polish Acton Public Offering, Conditions Governing the Introduction of FinancialInstruments to Organised Trading, and Public Companies, dated July 29th2005 (Journal of Laws No. 184, item 1539), and in the ordinance of theMinister of Finance on current and periodic information to be publishedby issuers of securities, dated October 19th 2005 (Journal of Laws No.209, item 1744), or in other relevant legal acts which will replace theindicated law or ordinance.

§ 65

1. For reasons stipulated in the provisions of law the Company shall be dissolved.
2. The liquidators shall be the members of the Company’s ManagementBoard, unless a resolution of the General Meeting of Shareholdersstipulates otherwise.
3. Assets remaining after the creditors have been satisfied or secured shall be taken up by the shareholders.
4. Each time these Articles of Association refer to the given amountexpressed in EURO and there are no statutory provisions to thecontrary, it shall mean the equivalent of this amount in Polish zlotycalculated on the basis of the average exchange rate of domesticcurrency to EURO announced by the National Bank of Poland on the datepreceding the adoption of a resolution by the Company’s relevantauthority authorized to consent to the carrying out of the action inconnection with which the equivalent is calculated,
5. Whenever the Company Articles of Association refer to the value ofthe object of a transaction conducted by the Company, such value shallcomprise VAT and excise tax if, pursuant to separate regulations, sucha transaction is subject to VAT and excise tax.

§ 66

1. In the meaning of these Articles of Association adistribution company is a company running distribution and deliveringnatural gas through grids to its consumers and trading in gas,separated from the structures of Polskie Górnictwo Naftowe iGazownictwo S.A. on the basis of the “Programme of the Restructuringand Privatization of the Gas Sector” adopted by the Council ofMinisters on 13 August 2002 (point 25 of the Protocol No. 33/2002 ofthe arrangements made at the meeting of the Council of Ministers).
2. In the meaning of these Articles of Association the company –transmission  system operator shall mean a company responsible for thetransport of gaseous fuels through transmission networks to thedistribution network or to end consumers connected to the transmissionnetwork, separated from the structures of Polskie Górnictwo Naftowe iGazownictwo S.A.
3. For the needs of these Articles of Association:
a. /deleted/.
b. Commercial Companies Code” means the law dated September 15, 2000 –Commercial Companies Code (Journal of Laws No. 94 item 1037 as amended),
c. Connected Entity” means in relation to the respective entity“connected entity” according to the definition in the Ordinance of theMinister of Finance on current and periodic information to be publishedby issuers of securities (Journal of Laws No. 209, item 1744), datedOctober 19th 2005,
d. the terms “dominant entity’ and “dependent entity” should beinterpreted according to the provisions of the Polish Act on PublicOffering, Conditions Governing the Introduction of FinancialInstruments to Organised Trading, and Public Companies, dated July 29th2005 (Journal of Laws No. 184, item 1539),
e. /deleted/
f. /deleted/