Company Management Structure
The term and legal position of the Company is regulated by the Companies Act, which regulates, amongst else, matters of incorporation, general acts, capital, management organisation and internal supervision. The Companies Act provides for a possibility for joint stock companies to organise their management with a choice between a single-tier system or a twotier system. There is no single answer as to which Corporate Governance system is better.
Sunce hotels d.d. has been, in accordance with domestic practice, incorporated as a two-tier system wherein the supervisory board and the management board are separate bodies. In this system, the management board is entrusted with day-to-day company management. It is, in turn, controlled by the supervisory board, whose members are elected by the general assembly.
Apart from the ability to choose between two different structures of management organisation, companies which are listed on the capital market’s regulated market must form certain bodies and panels for matters of internal supervision and audit of operations.
General Assembly (Shareholders’ Assembly)
The general assembly is the Company’s highest ranking management body. Shareholders pass and approve basic corporate decisions through the assembly. The general assembly appoints members of the company’s supervisory board. In addition, after the management board and the supervisory board establish annual financial statements and auditor’s reports, the general assembly decides on the use of profits and coverage of losses (including distribution of dividends), elects an outside auditor, decides on the increases and decreases of share capital, as well as on other matters defined by law and the Company’s articles of association.
Articles of association
Articles of association is the company’s basic general act regulating the management of the Company and other key matters related to organisation and operations. It also serves an important public role in the matter of relationship towards third parties since it provides information about the Company, and especially about its Corporate Governance system. The Articles of Association of Sunce hotels is aligned with best market practice. Amongst others, the Articles of Association defines elements of best market practice, i.e. minority shareholder protection by requiring a higher majority for adoption of certain decisions of the general assembly than as prescribed by the Companies’ Act (being: exclusion of pre-emption rights of shareholders in subscription of new shares and delisting the Company’s stock from the regulated market), as well as introducing (i) prior consent of the Supervisory Board for taking material actions, especially for related party transactions, and (ii) joint representation of the Company. The Articles of Association of the company Sunce hotels d.d. may be downloaded here.
The Supervisory Board is responsible for the appointment, direction, control of work and removal of the management board, i.e. for supervision of the Company’s management. The Supervisory Board has a role of directing strategic decision-making and establishing a management framework, and not direct Company management. The Supervisory Board’s Rules of Procedure regulates the manner of work, rights and obligations of members thereof, manner of decision-making and other matters which are important for the work of the Supervisory Board. The Rules of Procedure of the Supervisory Board of Sunce hotels d.d. may be downloaded from the Company’s Investor Website (Croatian version only).
The Management Board manages and represents the Company. The Management Board manages the Company independently and at its own responsibility. In performance of its work, the Management Board is not bound by instructions of other company’s bodies nor instructions provided by the majority shareholders or the supervisory board. The Management Board has the duty to always act exclusively in the interests of the company and its shareholders, taking into account the interests of the employees and the wider community, with the goal of increasing the Company’s value. The Management Board’s Rules of Procedure regulate, amongst else, tasks, accountability, organisation, manner of work and decision-making of the Company’s Management Board. The Rules of Procedure of the Management Board of Sunce hotels d.d. may be downloaded from the Company’s Investor Website (Croatian version only).
The Company’s Committees
The Company’s Committees are envisaged by the law and the Corporate Governance code recommendations. The Audit Law requires each Croatian company whose securities are listed on the regulated market (as defined by the law regulating capital markets) to appoint an Audit Committee, and provides for a possibility to form other committees as well.
The tasks of and membership in an audit committee is also regulated by the Audit Law. The purpose of the Audit Committee is to assist the company’s supervisory board in supervising (i) the integrity of financial statements, (ii) compliance with legal and regulatory requirements, (iii) qualifications and independence of the audit company, and if applicable (iv) the function of the company’s internal audit. The Audit Committee’s Rules of Procedure regulates, amongst other, the purpose, tasks, duties and responsibilities and the committee’s reporting. The Rules of Procedure of the Audit Committee of Sunce hotels d.d. may be downloaded from the Company’s Investor Website (Croatian version only).
For the purposes of preparation and drafting of certain decision proposals or for execution of a task, the management board may form temporary or permanent professional bodies, panels or advisory bodies. In accordance with its Rules of Procedure, the Management Board has formed the Investment Committee as an advisory body whose purpose is to assist the work and activities of the Management Board in decision-making related to the company’s investments. In more detail, the Investment Committee has the goal of: (i) Considering and evaluating capital needs of the company’s hotel portfolio and other assets, and defining long-term investment plans; and (ii) Monitoring, considering and recommending appropriate actions or activities related with mergers, acquisitions, material sales or purchases of assets and other extraordinary transactions for the company’s account. The Rules of Procedure of the Investment Committee of Sunce hotels d.d. may be downloaded from the Company’s Investor Website (Croatian version only).
External supervision of the company’s operations primarily includes the audit of annual financial statements. This work is performed by an independent external audit company in accordance with regulations governing accounting and audit. Independent external auditors must, in the most possibly clear and certain way, express their opinion on whether the financial statements prepared by management adequately reflect the capital position and financial condition of the company, and the results for a given time period. The Group’s independent external auditor is Ernst & Young d.o.o. Zagreb, Radnička cesta 50, 10000 Zagreb (EY). EY’s first year of engagement was the audit of financial statements for the year ended 31 December 2017.