A. Introduction

Preamble

The purpose of this company code of corporate governance (“Code”) is to develop and outline the company’s governance, make its governance more transparent and demonstrate the company’s commitment to good corporate governance by developing and furthering:

Responsible, accountable and value-based management;
Effective oversight and executive bodies that act in the best interests of the company and its shareholders, including minority shareholders, and seek to enhance shareholder value in a sustainable manner; and
Appropriate information disclosure and transparency, as well as an effective system of risk management and internal control.

By adopting, following and updating this Code, the company’s charter and by-laws on a regular basis, the company confirms its desire to demonstrably lead and promote good corporate governance. In order to foster the confidence of its shareholders, employees, investors, and the general public, this company Code goes beyond the established legal and regulatory framework in Kosovo and Albania today, and embraces both national and internationally recognized corporate governance principles and practices.

The company’s governing bodies and employees understand this Code as their joint obligation and accordingly, obligate themselves to ensure that its provisions and its spirit are adhered to and acted upon throughout the company [and its subsidiaries and dependent companies].

Background and Profile

The company’s vision is:

“By being honorable, innovative and responsive we will be the most preferred service provider in the industry…”

The company’s mission is: “Safety, health, customer focus, social and environmental responsibilities are the main drivers towards our reputation and success” and “to add value to all our stakeholders by providing quality, professional services and superior products through our highly organized and efficient teams”.

B. Commitment to Corporate Governance

Definition and Principles

The company defines corporate governance as a set of structures and processes for the direction and control of companies, which involves a set of relationships between the company’s shareholders, board and executive bodies with the purpose of creating long-term shareholder value. It views corporate governance as a means to improve operational efficiency, attract financing at a lower cost and build a better reputation. It also views a sound system of corporate governance as an important contribution to the rule of law in the countries in which it operates and an important determinant of the role of the company in a modern economy and society.

The Code sets out the company’s corporate governance framework and is based on established legislation and applicable codes of corporate governance, as well as internationally recognized best practices and principles, such as the OECD Principles of Corporate Governance.

The company’s corporate governance framework is based on the following principles:

Accountability: This Code establishes the company’s accountability to all shareholders and guides the company’s board in setting strategy and guiding and monitoring the company’s management.
Fairness: The company obligates itself to protect shareholder rights and ensure the equitable treatment of all shareholders, including minority [and foreign] shareholders. All shareholders are to be granted effective redress for violation of their rights through the board [or a shareholder rights committee, if established].
Transparency: The Company is to ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, performance, ownership and governance of the company, in a manner easily accessible to interested parties.
Responsibility: The Company recognizes the rights of other stakeholders as established by laws and regulations, and encourages co-operation between the company and stakeholders in creating sustainable and financially sound enterprises.

The company, its key officers and all employees act in accordance with all applicable laws and regulations and furthermore, shall comply with ethical standards of business conduct as defined by this company Code, the country’s code of corporate governance and internationally recognized best principles [such as OECD Principles of Corporate Governance].

Internal Corporate Documentation

This company Code is principle based. More specific corporate governance structures, processes and practices are regulated in the company’s articles of association and the company’s corporate charters including those of the board and board committees.
The company’s set of internal corporate documents follows legal and regulatory requirements and incorporate internationally recognized corporate governance practices. The above-mentioned corporate documents are published on the company’s website.

General Governance Structure

The company has the following governing and other bodies:

The General Assembly: The highest governing body of the company allows the shareholders to participate in the governance of the company;
The Board: The board is responsible for the strategic direction of the company, and the guidance and oversight of management. The company’s board will also establish committees on audit, corporate governance and nomination, and remuneration;
The Chief Executive Officer (CEO) and Management Team: Both are assigned the task of the day-to-day management of the company, and carrying out the strategy as approved by the board;
The Company Secretary: The company secretary ensures that the governing bodies follow internal rules and external regulations in order to facilitate clear communications between the governing bodies, and acts as an adviser to directors and senior executives;
The Internal Auditor: When established, the internal auditor develops and monitors internal control procedures for the business operations of the company. The internal auditor reports directly to the Board of Directors and reports administratively to the CEO.

Compliance with and Adherence to Corporate Governance Policies and Practices

The company secretary is responsible for ensuring the development of, compliance with and periodic review of corporate governance policies and practices in the company.

C. Good Board Practices

The company views an effective, professional and independent board as essential for good corporate governance. The board cannot substitute for talented professional managers, nor change the economic environment in which the company operates. It can, however, influence the performance of the company through its supervision, guidance and control of management in the interests and for the benefit of the company’s shareholders. Executive bodies also play a crucial role in the governance process. The effective interaction between the board and management and a clear separation of authorities is key to sound corporate governance.

At the Board Level

Authority: The board’s scope of authority is set forth in the articles of association and charter.
Composition and Independence: The composition of the board is determined in such a manner that combines the representatives of various shareholder groups, including minority shareholders.

The board’s composition (competencies, skills and appropriate mix) is adequate for oversight duties, and the development of the company’s direction and strategy. Each individual member of the board has the experience, knowledge, qualifications, expertise and integrity necessary to effectively discharge board duties and enhance the board’s ability to serve the long-term interests of the company and its shareholders. The board has a broad range of expertise that covers the company’s main business, sector and geographical areas and includes experienced experts who are non-executive, independent directors.

A full and complete set of information on the directors’ qualifications is set forth and annually reviewed by the board upon the recommendation of its corporate governance and nomination committee.

In order to enhance unbiased oversight, the company believes that a non-executive director should chair the board.

The company’s board is composed of not more than 50% of executive directors who are employees of the company with the Chairman having the casting vote.
To ensure the impartiality of decisions and to maintain the balance of interests among various groups of shareholders, at least 25% of the board’s members are independent directors. The company defines those directors who have no material relationship with the company as independent. The board ascertains which members are to be deemed independent during the first board meeting. The definition of director independence shall be based on internationally recognized definitions and specified in the board’s charter and annual report.

Structure and Committees: The company has established the following committees:
The Board of Directors,
Other committees deemed necessary by the board.

All committees have charters containing provisions on the scope of authority, competencies, composition, working procedures, as well as the rights and responsibilities of the committee members. The board’s chairman assigns directors to chair committees as necessary. Each committee is to provide provisional consideration of the most important issues that fall within the authority of the board. After each of its meetings, the committee shall report on the meeting to the board.

Size: Achieving the required number, quality and mix of directors is the primary consideration of the board.

Working Procedures: The board meets according to a fixed schedule, set at the beginning of each year, which enables it to properly discharge its duties. As a rule, the board shall meet at least 4 (four) times a year.

Detailed procedures for calling and holding meetings of the board are defined in the board’s charter. All directors are provided with a concise but comprehensive set of information by the company secretary in a timely manner, concurrently with the notice of the board meeting, but no less than 14 (fourteen) calendar days before each meeting. This set of documents is to include: an agenda, minutes of the prior board meeting, key performance indicators, including relevant financial information prepared by management and clear recommendations for action.

The board keeps detailed minutes of its meetings that adequately reflect board discussions, signed by the chairman.

Self-Evaluation: The board conducts a yearly self-evaluation. This process is to be organized by the chairman or other committee and the results are to be discussed by the full board. Independent consultants may also be invited to assist the board in this process.

Training and Access to Advisers: The Company offers an orientation program for new board members on the company, its business and on other subjects that will assist them in discharging their duties. The company also provides general access to training courses to its board members as a matter of continuous professional education. The board and its committees shall also have the ability to retain independent legal counsel, accounting or other consultants to advise the board when necessary.

Remuneration: The remuneration of (non-executive) board members is comprised of an agreed participation based fee (part of which may be paid in the form of shares in lieu of cash) and/or an additional fee for the chairmanship of committees or the board itself. The remuneration package shall, however, not jeopardize a director’s independence. Executive directors are not paid beyond their executive remuneration package. The board or respective committee periodically reviews the remuneration paid to directors. All board members sign a letter of appointment with the company.

The company publicly discloses the remuneration of each director on an individual basis. The company will not provide personal loans or credit to its directors. Further, the company shall not provide stock options to its directors unless approved by the general assembly.

Duties and Responsibilities: Members of the board act in good faith, with due care and in the best interest of the company and all its shareholders–and not in the interests of any particular shareholder-on the basis of all relevant information. Each director is expected to attend all board and applicable committee meetings.

The board must decide as to whether its directors can hold positions in the governing bodies of other companies. The company shall not unreasonably prohibit its directors from serving on other boards. Directors are expected to ensure that other commitments do not interfere in the discharge of their duties. Board members shall not divulge or use confidential or insider information about the company.

Members of the board shall abstain from actions that will or may lead to a conflict of interest with the company. When such a conflict exists, members of the board shall disclose information about the conflict of interest to the other board members and shall abstain from voting on such issues.

The Management Team

The company understands that the day-to-day management of the company requires strong leadership from the CEO and the management team. It also recognizes the challenge and complexity of running a company and believes in teamwork, a collective rather than individual approach. The company has thus established a management team led by the CEO.

Authority: The CEO and senior managers carry out the company’s day-to-day management, implementing its goals and objectives, and carrying out its strategy.

Size: The CEO, in close cooperation with the board and other committees, proposes the appropriate number of management team members. Achieving the required quality and mix of managers will be the primary consideration in arriving at the overall number.

Composition: The management team’s composition (competencies, skills and mix) is suited to the effective and efficient running of the company’s day-to-day operations. Each member, including the CEO, has the experience, knowledge, qualifications and expertise necessary to effectively discharge his or her duties.

All managers have the:
Trust of the company’s shareholders, board members, other managers and employees of the company;
Ability to relate to the interests of all shareholders and to make well-reasoned decisions;
Professional expertise and education to be an effective manager;
Business experience, knowledge of national issues and trends and knowledge of the market, products and competitors; and
Capacity to translate knowledge and experience into solutions that can be applied to the company.

Working Procedures: The management team meets regularly as specified by the CEO and agenda issues are communicated in advance. The working procedures of the management team are decided by the CEO.

Succession Planning: The board is to adopt a succession plan that outlines how it will effectively deal with the either the temporary or permanent loss of the CEO and other senior managers. To assist in this process, the CEO is to provide the board with a list of individuals best suited to replace the company’s key managers including the position of the CEO. The succession plan goes beyond simply naming a deputy and entails coaching, mentoring and exposure to the board of directors.

Remuneration and Evaluation: The amount of remuneration of the CEO is set by the board. The remuneration of the management team is set by the CEO. .

The remuneration of the CEO shall have a fixed and variable component, and the latter is tied to key performance indicators as set by the board, in-line with the input into the company’s long-term development and creation of shareholder value. The company will not provide personal loans or credit to its executive officer or managers.

Duties and Responsibilities: The CEO and members of the management team shall  act in good faith and with due care in the best interests of the company and all its shareholders – and not the interests of a particular shareholder–on the basis of all relevant information.

The CEO and members of the management team shall abstain from actions that will, or may lead to a conflict between their and the company’s interests. When such a conflict exists, members of the management team shall disclose information about the conflict of interest to the CEO, and shall abstain from deliberating and voting on such issues.

Interaction between the Board and Management Team and the Role of the Company Secretary

Good corporate governance provides for an open dialogue between the company’s board and management team. The company has thus developed a procedure for periodic reports (information briefs) from the CEO and management team to the board. The board shall further have unrestricted access to the company’s management and its employees. The company secretary plays a key, overall role in facilitating this process.

The company secretary is employed on a full-time basis. The company secretary possesses the necessary qualifications and skills to ensure that the governing bodies follow internal rules and external regulations, facilitates clear communications between the governing bodies in-line with the company’s articles of association, charters, by-laws and other internal rules and keeps the board and the company’s key officers abreast of the latest corporate governance developments.

Senior managers are presented with ample opportunity to present during board meetings, so that managers gain the necessary exposure and experience in interacting with the board and the board in turn can obtain direct information and better gauge the next generation of managers and future leaders.

D. Shareholder Rights

All shareholders have the right to participate in the governance and the profits of the company. All rights are regulated in the company’s articles of association.

The General Assembly

The company’s articles of association provide a detailed description of all the procedures for the preparation, holding and decision-making at the general assembly.

Preparation. Every shareholder that holds voting shares is entitled to participate and vote during the general assembly, and receive advance notification, an agenda, as well as accurate, objective and timely information sufficient for making an informed decision about the issues to be decided at the general assembly. The company’s management will be responsible for this process, which is to be implemented by the company secretary.

The company has a fair and effective procedure for submitting proposals to the agenda of the general assembly, including proposals for the nomination of board members. The agenda of the general assembly is not changed after the board approves it.

Holding the general assembly. The company takes all the steps necessary to facilitate the participation of shareholders in the general assembly and vote on the agenda items.

The venue of the general assembly is easily accessible for the majority of shareholders. Registration procedures are convenient and allow for quick and easy admittance to the general assembly.

The company ensures that all members of the board and the external auditor are present during the general assembly to answer questions. Each shareholder has the right to take the floor on matters on the agenda, and submit relevant proposals and questions three days before the general assembly. The chairman of the general assembly conducts the meeting professionally, fairly and expeditiously. Voting is conducted by ballot. The company has effective shareholder voting mechanisms in place to protect minority shareholder against unfair actions. The procedures for counting votes at the general assembly are transparent and exclude the possibility of manipulating voting results.

Results. The voting results and other relevant materials are distributed to shareholders, either at the end of the general assembly or very soon after the general assembly is held, as well as to the general public by posting them on the company’s internet site and publishing in the mass media in a timely manner.

(Minority) Shareholder Rights Protection

The company has a system of registering shareholder complaints and effectively regulating corporate disputes. Moreover, the company has put in place the following minority shareholder rights protection mechanisms:

Related Party Transactions: The Company avoids related party transactions where possible. When this is not possible, the company discloses all relevant information on related party transactions including information on the affiliated parties and the affiliation of members of the board and other governing bodies.

Pre-emptive rights: The Company has adopted pre-emptive rights, in line with local legislation, allowing the company’s shareholders to maintain a proportionate share of the ownership of a corporation when the company issues new shares and thus avoiding dilution.

Tag-along rights: The company has adopted tag-along rights, in line with local legislation, allowing minority shareholders to join a transaction and sell their minority stake in the company at the same price as the majority owner selling his or her stake to a third party.

Cumulative voting: The Company practices cumulative voting, allowing that minority shareholders have a representative on the board who pays particular attention to minority shareholder rights.
Independent registrar: The Company engages an independent registrar to maintain the shareholder register. The company ensures a reliable and efficient ownership registration system of shares and other securities through the selection and appointment of an independent registrar that has proper technical equipment and an excellent reputation.

Takeover policy: The Company has a clearly articulated and enforceable policy in place that protects the rights of minority shareholders in special circumstances, such as a change of control.

Dividend Policy

The company has formally developed and follows a written dividend policy. This dividend policy is publicly disclosed on the company’s internet site.

The procedure for determining the amount of dividends on preferred shares does not violate other shareholder rights. The company’s dividend policy:

Establishes a transparent, understandable and predictable mechanism for determining the payment procedure and the amount of the dividends;
Ensures that the dividend payment procedure is easy and efficient; and
Provides for the complete and timely payment of declared dividends.

E. Control Environment and Processes

Internal Audit and Control

The audit committee: The Company may establish a separate audit committee to focus on three key areas: financial reporting, risk management, and internal and external audit {and legal compliance and risk management}. This committee is to be chaired by an independent director and composed of non-executive directors. Its exact authority, composition, working procedures and other relevant matters are regulated in its charter.
Risk management: The company places great importance on a risk management and it is the board of directors that is tasked with ensuring that appropriate risk management systems are established. Among other things, the board (i) approves risk management procedures and ensure compliance with such procedures; (ii) analyzes, evaluates, and improves the effectiveness of the internal risk management procedures on a regular basis; (iii) develops adequate incentives for the CEO, managers, departments and employees to apply internal control systems; (iv) establishes a risk management committee of the board when necessary; and (v) ensures that the company complies with legislation and charter provisions.

The internal auditor: The Company may establish an internal auditor that is responsible for the daily internal control of the company’s finances and operations. The internal auditor shall be  a highly respected and reputable person, and who shall report to the audit committee functionally and to the CEO administratively..

The External Audit

An external auditor audits the company’s financial statements. The external auditor is a publicly recognized independent auditing firm, where independent means independence from the company, the company’s management and major shareholders. The remuneration of the auditor is disclosed to shareholders. The external auditor is selected by the general assembly following an open tender and upon the recommendation of the board.

F. Information Disclosure and Transparenc

Transparency, and timely and accurate information disclosure, is a key corporate governance principle for the company.

Disclosure Policies and Practices

The company discloses and provides easy access to all material information, including the financial situation, performance, ownership and the governance structure of the company to shareholders free of charge. The board prepares and approves a policy on information disclosure and makes it publicly available on the company’s internet site. The company publishes a comprehensive annual report that includes a corporate governance section. The company discloses its corporate governance practices, corporate events calendar and other material information on its internet site in a timely manner.

The company takes measures to protect confidential information as defined in its policy on information disclosure. Any information obtained by the company’s employees and the members of the governing bodies may not be used for their personal benefit.

Financial Reporting

The company keeps records and prepares a full set of financial statements in accordance with International Financial Reporting Standards. Detailed notes accompany financial statements so that the users of the statements can properly interpret the company’s financial performance. A management discussion and analysis (MD&A), as well as the opinions of the external auditor, shall complement all financial information.

Ownership Structure

The company ensures that beneficial owners of five percent or more of the voting shares are disclosed. Any corporate relations in case of groups of companies are also clearly identifiable and disclosed to the public.

28 August 2014 Prishtinë
Hymeri Kleemann LLC