Risk associated with changes in the law
The operation of each Company is closely related to the legal environment in which it operates. It is characterised by a significant rate of change, especially in the area of tax regulations and regulations concerning the functioning of the capital market, business operations and the alignment of national legislation with EU standards. Additionally, the Company’s operations are regulated mainly by the following legal Acts: 1) The Act on Waste Electrical and Electronic Equipment: Dz. U. of 11 September 2015, item 1688, as amended. 2) The Act on packaging and packaging waste: Dz. U. of 13 June 2013 Dz. U. [Journal of Laws] item 888 as amended. In the case of changes to the above-mentioned legal Acts, as well as the entire legal environment in which the Company operates – in a manner unfavourable to the Company – there is a risk of incurring higher expenditures (e.g. resulting from increasing fees), which can have a negative impact on the Company’s financial results. In addition, the lack of an unambiguous interpretation of the provisions and changes and amendments introduced cause frequent problems related to their interpretation, which results in potential administrative and financial penalties. The Company minimises the above risk by monitoring on an ongoing basis the changes taking place in the legal system, and uses qualified lawyers.
Risk related to the macroeconomic situation
The Company’s operations are based on the production and sales of consumer goods, and depend largely on the macroeconomic situation in Poland and abroad. The Company’s operations are affected by many factors, including, but not limited to, the level of investment, tax policy, inflation, the unemployment rate, the personal income of the population, and the fiscal and monetary policy of the State. Negative changes in Poland’s economic situation, understood, among other things, as a negative dynamics of changes in the level of gross domestic product, an increase in the unemployment rate, and a decrease in consumer wealth, can adversely affect Company’s financial results, as well as the achievement of the adopted strategic objectives. It can be said that the Company’s operations are dependent on the country’s economic situation. Changes in the economic situation have an impact on consumer purchasing activity in relation to the Company’s products.
Risk associated with potential changes in tax regulations, accounting rules and differences in interpretations
Changes in the tax system and the corresponding regulations, as well as changes in the activities of State bodies are likely the most-important factors which may affect the Company’s operations. Additionally, the Polish tax system is characterised by a lack of interpretation and unambiguity of certain provisions, therefore there is a risk that the tax authorities might adopt a different interpretation from the one applied by the Company. If the tax risk became reality, it could significantly affect the financial and asset situation, as well as the Issuer’s development prospects. The Company makes every effort to cooperate with eminent tax advisers regarding the key tax issues of the Company in order to identify and eliminate potential tax risk.
Risk related to the seasonality of sales
The Company experiences normal seasonal cycle of economic conditions during the year, similar to which of other entities related to the construction / electrical installation industry. The nominal value of income generated by the Company is usually lowest in the 2nd quarter, which translates into financial results obtained in which period. In order to minimise the impact of seasonality on Company’s results, they adjust the range economic operations to the outlook for revenue. The Company believes which the seasonality of generated revenues does not represent a risk which could materially affect the results of their operations.
Risk associated with changes in consumer trends
The Company’s core business consists of the manufacture and sales of electronic devices. The Company offers products significantly exposed to changes of general world trends in lighting – the market is in transition from traditional lighting to energy-efficient lighting (CFL) and LED. Incorrectly planned sales of products can expose the Company to the loss of customers, whose preferences can change. Thiscan result in a decrease in revenues and consequently lead to a deterioration in the Company’s financial result.
Risk relating to competition
The main competitors of the Company are the following businesses: Zamel, BEMKO, Vossloh, Mean Well, Snappy, Brilum, Osram and Philips. In addition, it should be pointed out that there is a growing number of Asian manufacturers, mainly from China, offering cheaper substitutes for the Company’s products. However, it should be that the lower prices often means the quality of products is also lower. The Company reduces the above risk by constantly expanding its product range, improving the products they sell, and guaranteeing their quality, which begins with the appropriate standards, attestations and patents.
The Company conducts import and export transactions in foreign currencies (USD, EUR, GBP). In 2016, foreign sales corresponded to 26% of revenues. A change in the exchange rate of currencies against the zloty can therefore lead to results lower than expected. Since the Company conducts foreign transactions, in terms of both exports and imports, the risk of exchange rate fluctuations is, to some extent, compensated. Trade transactions in foreign currencies (import and export) are part of the normal business of the Company. Significant fluctuations in currency-exchange rates give rise to the risk of an impact on both financial results achieved by the Company.
Risk associated with operations
Govena Lighting S. A. is a production company which makes it particularly exposed to the realisation of risk connected with extraordinary events: fires, floods, and explosions, as well as irregular events with an adverse impact on operational activity: e.g. equipment failures, power outages, employee disputes. Each of these factors can have a negative impact on the Company’s operations, leading to production slowdowns, and thus lead to a deterioration in the financial results generated by the Company and even to a loss of reputation. The Company minimises the above risk by concluding insurance contracts, as well as by observing internal regulations and introducing contingency plans. However, it cannot be ruled out that the materialisation of any of the above risk might be not paid from the given insurance limits, or might be not covered by insurance protection, and thus might cause damage to the Company.
Risk related to development activity
In addition to its manufacturing activities, the Company also conducts research, which is related to two groups of risk.
Development work generates the risk of failure to meet the market’s expectations regarding developed products. The Company limits this risk by analysing the needs and requirements of the market in terms of product features, and gains knowledge and experience in this field. However, there is a risk that the significant amounts usually invested in product development will prove unjustified, and the product will not be put into production. At the next stage of development, a finished electronic product has a short life cycle. Components for production are purchased well in advance, and in large batches, taking into account the pricing policy of the suppliers offering substantial discounts only for large orders. Therefore, there is a risk that the Company will incur expenditures which are not fully used in production. If new products are placed on the market by competitors, or if consumers’ preferences change, old products or components might not be sold, or might be sold below the cost of manufacture. To limit this risk, the Company keeps track of the development of the market, and new technologies, and pursues a purchasing policy aimed at maintaining the lowest-possible stock levels in the stores.
The Company is engaged in production and trading activities, and selling and purchasing with deferred payment terms. This practice entails the risk of failure to timely collect receivables from counterparties for products sold or services performed. Govena Lighting manages this credit risk through detailed analyses of each counterparty and drafting contracts in the manner most optimal for the Company. Due to its low creditworthiness resulting from the lack of property to serve as collateral for bank loans, the Company has no long-term bank debt. Apart from liabilities in respect of deliveries and services, the Company’s liabilities result from loans taken out, which are being gradually restructured, thus reducing the credit risk understood as the probability of defaulting on loan agreements.
The reasons for the risk of the loss of liquidity are diverse. The Company is exposed to the risk of becoming unable to settle its financial liabilities at the time of their maturity, despite the fact that it will have funds to settle them in the future. The Company is therefore exposed to liquidity risk, which demonstrates the Company’s ability to settle its liabilities. As at 31.12.2016, the current liquidity ratio (the ratio of current assets to short-term liabilities) was 3.58, which means that the Company’s current liquidity is at a safe level. However, it should be noted that the quick liquidity ratio (the sum of investments and short-term receivables to short-term liabilities) at the end of 2016 was 0.79. At the end of the first quarter of 2017, the current liquidity ratio amounted to 1.88, while the quick liquidity ratio was 0.33. The increase in the liquidity risk is to a great extent influenced by a significant contribution to receivables by the four main counterparties of the Company. Their total contribution to revenues in 2016 was 44%. The Company has consistently pursued a policy of diversifying its customer base in order to limit the negative impact on its own liquidity of the loss of payment capacity of one of them.
Risk related to suppliers
The Company makes purchases from both domestic and foreign component manufacturers and suppliers of materials directly used in the production process. This means that most of the Company’s supplies are made from a wide range of suppliers, so there is no risk of dependence on the main supplier. In the structure of the Company’s suppliers for 2016, there are seven entities which contribute to more than 5% of supplies, and who jointly provide 47% of all deliveries. However, the number of producers and alternative suppliers on the market makes it possible, in a relatively short period of time, to find a new partner in place of a potentially lost one. However, it cannot be excluded that in the case any of the suppliers important to the Company having to be changed, such a situation can temporarily adversely affect the continuity of supplies, production and sales of some of the Company’s products, which can have a negative impact on the level of sales.
Risk related to customers
The Company has many trade contracts under which it distributes its products to numerous customers in Poland and abroad. The business model adopted by the Company requires constant supervision over the proper fulfilment of product deliveries and good relations with customers. In the structure of customers in 2016, there are two entities with a contribution exceeding 5% of the value of revenues generated and with a total contribution to revenues in the analysed periods at the level of 35%. The loss of one of these indicated customers can have a negative impact on the Company’s financial situation and its development prospects.
Risk related to stores
As regards business activity, there is a risk associated with stores held. In accordance with the applicable regulations, the Company ensures that the book value of stores reflects their real market value. The specificity of the materials used in the production process makes the stores of raw materials and work in progress available for liquidation at different stages of production. As regards to finished products and goods, systematic actions are taken in order to optimise their rotation. In the event of a decrease in demand for certain products, the Company reduces prices and sells out. However, the Company cannot exclude a situation where, as a result of changes in market trends, the value of a part of the material stores, work in progress, finished products or goods can permanently drop. As regards the valuation of stores and their possible impact on financial results, the Company is aware of the risk related to the possible impact of currency-exchange rate fluctuations on the valuation of import deliveries. There is a risk that in the fulfilment of import deliveries temporary fluctuations of currency-exchange rates can significantly affect the level of valuation of the stores of materials and goods, which can result in significant increases in the costs of product manufacturing and decreases in operational margins. Due to possible factors that can cause disruptions in seasonal cycles (temporary sudden weakening of demand, possible disruptions in delivery timeliness, etc.), the risk of a temporary increase in stores cannot be excluded, which can increase the associated costs.
Risk related to component delivery
An Italian Company is the supplier of one of the top components in terms of the Company’s product sales volume, namely transformers. Currently, the supplier (manufacturer) has a monopoly on this particular component. Therefore, there can be a risk of component unavailability in a time specified by the customer, which can result in long lead times on the part of Company and therefore customer dissatisfaction. Such a situation can have a negative impact on the Company’s financial standing.
The risk of penalties for failure to fulfil orders or fulfilling orders with delays
The Company’s operations do not involve any risk of being subject to penalties for failure to fulfil orders or for the delayed fulfilling of orders, which can have a material impact on its financial standing and results generated. In trade agreements made with key partners, there are insignificant provisions concerning penalties for failure to complete individual deliveries, the single value of which is not significant for the Company. In the Company’s opinion, the risk of any potential penalties would not have a material impact on the results achieved.
Risk related to product quality and warranty service
The Management Board of the Company currently does not observe any significant risk related to warranty service which might have any substantial impact on the Company’s financial standing and results achieved. However, it should not be excluded that in the future there might be a risk of additional cost burdens related to, inter alia, service repairs or the withdrawal of products from the market as a result of possible defects in product design, the use of defective materials and components, changes in formal requirements for the admission of electrical-installation materials for trading, and other similar events. The construction department continuously supervises the production process, taking care of the quality of the components used and the correctness of the technology employed. As a result, the risk of the occurrence of warranty defects should be assessed as minimal.
Risk related to staff
The Company currently employs 109 employees on the basis of employment contracts and 6 on the basis of commission contracts/work contracts. Additionally, the Company intends to employ 3 people with technical education in the research-and-development centre, provided that a subsidy is granted. At the moment, the Company employs approx. 10 persons with higher education in electronics, which are the backbone of the Company’s operations, because their knowledge and experience are the basis the Company’s product-development strategy. Competitors’ operations, and consequently the possible resignation of a given employee from his or her position, can lead to the loss of key employees. Their leaving might directly affect the Company’s operational activities and, consequently, its financial results. In order to reduce the risk related to employees, the Company constantly monitors the labour market, but also partially exchanges its personnel, which in turn convinces the employer that the risk related to fluctuations, even in these positions, is not dangerous for the Company.
Risk related to EU funding
Some of the investments undertaken by the Company assume EU funding. The Company intends to acquire EU funds in order to expand its R&D facilities in the field of lighting electronics with new test benches and measuring equipment. This is intended to facilitate new and upgraded measurement techniques used so far in the field of lighting electronics, as well as to provide an opportunity to enhance the product range. Therefore, there is a risk that if the Company is not granted the said subsidy, it will not be possible to carry out the investment.
Risk related to development strategy and the scale of operations
The Company’s Management Board believes that the development strategy mapped out will allow them to see an increase in the market value of Govena Lighting S.A. The strategic objective for the years 2017-2022 is to build a strong position as a leading manufacturer of and supplier renowned for industrial electronics solutions, gradually enhancing the scale of operations in the process. There is a risk that the Company will not implement its development strategy to the extent necessary to achieve satisfactory market success. Moreover, given the high dynamics of changes in the Company’s market environment, there is a risk that the strategic objectives will change and be adjusted to the current market situation. The Company’s Management Board believes that, due to the high flexibility of the Company, it is well prepared to adapt to changing market conditions.
Risk related to the shareholding structure
Europejski Fundusz Energii S.A. directly owns 45.97% of the share capital and votes at the General Meeting of Shareholders of Govena Lighting S.A., and, indirectly, through the subsidiary Discovery Sp. z o.o., 5.82% of the share capital and votes at the GMoS. In total, directly and indirectly, EFE S.A. owns 51.79% of the share capital and votes at the GMoS of Govena Lighting S.A. Because of the high concentration of shareholders, there is therefore a risk that the interests of the dominant shareholders will be contrary to the interests of other shareholders. Minority shareholders will not be able to effectively influence resolutions adopted at the General Meeting of Shareholders of the Company, and thus will not be involved in making strategic decisions concerning the Company’s operations. In order to minimise this risk, the Company intends to ensure the proper protection of the rights of all shareholders, within the limits set by the law, and the Best Practices of companies listed on the NewConnect market.
Risk relating to the lease
The Company’s operations are conducted in a leased building. On 24 October 2016 between Govena Lighting S.A. and Villa Park Investment S.A. a new lease agreement for the building was concluded between Govena Lighting S.A. and Villa Park Investment S.A. The agreement was concluded for a fixed period of time, i.e. from 24.10.2016 to 30.09.2031. There is a risk that in the event of the termination of the lease agreement, the scale of the Company’s operations will be significantly reduced. The Company’s Management Board considers this risk to be minimal, due to the fact that the owner of the property, Villa Park Investment S.A., financed the purchase of the said building with a loan arranged between Govena Lighting S.A. and Villa Park Investment. In addition, Villa Park Investment is a subsidiary of the Europejski Fundusz Energii S.A., which is also the parent entity of Govena Lighting S.A.
The risk related to the Issuer’s share listing at NewConnect – the future share price and trading liquidity
The share price and liquidity of shares of companies listed on NewConnect depends on the number and size of buy and sell orders placed by investors. There is no certainty as to the future evolution of the Company’s share price after the shares are listed for trading, or as to the liquidity of the Company’s shares. For this reason, it cannot be guaranteed that the investor purchasing the shares will be able to sell them at any time at a satisfactory price.
Risk associated with issuing a decision on suspending or delisting the Company’s shares from the Alternative Trading System
Pursuant to § 11 of the Alternative Trading System Rules (ATS), the Stock Exchange, as an ATS Organiser, may suspend trading in financial instruments, subject to other provisions of the Alternative Trading System Rules, in accordance with § 11 of the Alternative Trading System Rules. The Organiser may suspend trading in financial instruments for a period not longer than 3 months
(a) at the issuer’s request;
(b) if it considers that the safety of the trading or the interests of the trading participants so require,
(c) if the issuer breaches the rules applicable in the alternative system. According to §11(2) of the Alternative Trading System Rules, in cases set out by the law, the Alternative System Organiser shall suspend trading in financial instruments for the period resulting from these provisions of law or specified in a decision of the responsible authority. Subject to the other provisions of the Alternative Trading System Rules, pursuant to § 12(1) of the Alternative Trading System Rules, its organiser may delist financial instruments from trading
(a) at the issuer’s request, subject to the capability of making the decision dependent on the issuer’s fulfilment of additional conditions;
(b) if it considers that the safety of the trading or the interests of the trading participants so require;
(c) if the issuer persistently breaches the rules of the Alternative Trading System;
(d) as a result of the opening issuer’s liquidation;
- e) as a result of a decision to merge the issuer with another entity, divide or transform them, whereby financial instruments may be delisted from trading not earlier than on the date of the merger, on the date of the division (spin-off) or on the date of the transformation. Subject to the other provisions of the Alternative Trading System Rules, pursuant to § 12(2) of the Alternative Trading System Rules, its organiser shall delist the financial instruments from trading 1. in cases set out by the law;
- if the marketability of those instruments has become limited;
- in the event of the dematerialisation of these instruments’ being abolished;
- after 6 months from the date on which the decision to declare the issuer’s bankruptcy becomes binding, or after a decision to dismiss the petition for bankruptcy by the court due to lack of funds in the issuer’s assets to cover the costs of proceedings, or due to the fact that the issuer’s assets are sufficient only to cover these costs, provided that the organiser may refrain from delisting financial instruments from trading
On this basis, if before the lapse of the period referred to in this point, the court will issue a decision
(a) on the commencement of expedited composition proceedings, composition or recovery proceedings with the issuer; or
(b) on the approval of the composition in the restructuring proceedings, or
(c) on the approval of the composition agreement in bankruptcy proceedings.
In the three cases below, subject to §12(2b) of the Alternative Trading System Rules, the Organiser shall delist financial instruments from trading after the lapse of one month after the court’s decision on the following has become final
(a) the refusal by court to approve the composition in expedited composition proceedings, composition proceeding, or recovery proceedings;
(b) the court has discontinued restructuring proceedings;
(c) the revocation by the court of, or termination of, the composition right.
Subject to the § 12(3) of the Alternative Trading System Rules, the Alternative System Organiser may suspend trading in financial instruments before taking a decision to delist financial instruments from trading, and until the time of such an exclusion. The provisions of §11(1) shall not apply to the period of suspension in this case (the suspension of trading may last longer than 3 months). Pursuant to §12a of the Alternative Trading System Rules, when making a decision to delist financial instruments from trading, the Alternative System Organiser shall be obliged to substantiate the decision and immediately provide the Issuer and its Authorised Adviser with a copy of the decision, together with the reasons for the decision, by fax or e-mail to the address recently submitted to the Alternative System Organiser. Within 10 working days from the date of notifying the Issuer of the decision on delisting from trading, the Issuer may submit a written petition for the reconsidering of the case. The petition shall be deemed to have been submitted on the date of the receipt of the original petition by the post room of the Alternative System Organiser. The Alternative System Organiser shall immediately examine the petition for reconsidering the case, but not later than within 30 business days from its filing, after prior consultation with the Exchange Board. If it is necessary to obtain additional information, declarations or documents, the period for the examination of such a petition shall start from the date of the submission of the required information. If the Alternative System Organiser considers that the application for reconsideration of the case deserves to be granted in its entirety, it may revoke or amend the appealed resolution, without consultation with the Exchange Board. The decision on delisting from trading shall be implemented within 10 working days after the lapse of the deadline for filing the petition for the reconsideration of the case, and in the case of filing it, within 10 working days from the date of its consideration and upholding the decision on the delisting. Trading in the financial instruments in question is suspended until these deadlines expire. A repeated petition for the delisting of the same financial instruments for trading in the alternative system may be submitted not earlier than 12 months after the date of the delivery of the resolution on their delisting from trading, or if a petition for reconsidering the case has been filed – not earlier than 12 months after the date of the delivery to the issuer of the resolution on upholding the decision on delisting. This provision shall apply mutatis mutandis to the other financial instruments of that issuer. This limitation shall not apply if the financial instruments in question were delisted from trading at the Issuer’s request. According to §17b(3) of the Alternative Trading System Rules, if the Issuer fails to sign an agreement with an authorised advisor within 30 days from the date of the making by the Alternative Trading System Organiser of the decision on the subject matter in question (§ 17b(1)), or within 30 business days from the date of the termination or expiry of the previous agreement referred to in § 17b(2) of the Alternative Trading System Rules, the Alternative System Organiser may suspend trading in the financial instruments of that Issuer for a period of up to 3 months. If no relevant agreement with an authorised advisor has been concluded and entered into force before the end of the suspension period, the Alternative System Organiser may delist the financial instruments of that Issuer from trading in the alternative system. Pursuant to §17d of the Alternative Trading System Rules, the Alternative System Organiser may publish on its website information on the Issuer’s infringement of the rules or the regulations applicable in the Alternative Trading System, on the failure to meet or improper fulfilment of the Issuer’s obligations. The Alternative System Organiser may specify the name of the entity performing the duties of the Authorised Adviser in relation to that Issuer. Pursuant to Art. 78(2) of the Trading Act, if the safety of trading in the Alternative Trading System so requires, or if the interests of investors are threatened, the Stock Exchange, as an organiser of the Alternative Trading System, at the Commission’s request, shall suspend the listing of financial instruments for trading in this Alternative Trading System, or suspend the commencement of trading in the indicated financial instruments for a period not longer than 10 days. In accordance with Article 78(3) of the Trading Act, if trading in certain financial instruments is carried out in circumstances indicating a possible threat to the proper functioning of the Alternative Trading System, or to the security of trading in this Alternative Trading System, or impairing the interests of investors, the Exchange, as an organiser of the Alternative Trading System, shall, at the Commission’s request, suspend trading in such financial instruments for a period not longer than one month. In accordance with Article 78(4) of the Trading Act, at the Commission’s request, the Exchange, as the Alternative Trading System Organiser, shall delist the financial instruments indicated by the Commission from trading in the case where trading in them poses a significant threat to the proper functioning of the Alternative Trading System or to the security of trading in this ATS, or impairs the investors’ interests. Information on the suspension or delisting of financial instruments from trading shall be promptly published on the website of the Alternative Trading System Organiser.
Risk related to investing in the Issuer’s Shares
In the case of the acquisition of the Company’s Shares, it should be borne in mind that the risk of direct investment in shares on the capital market is incomparably higher than the risk associated with investments in treasury securities or investment-fund shares, due to the unpredictable volatility of share prices in both the short and long terms.
Risk related to the capability of the imposing of an admonition or a penalty by the Organiser of the Alternative Trading System
Pursuant to §17c of the Alternative Trading System Rules, if the Issuer fails to comply with the rules or regulations applicable in the Alternative Trading System, or fails to meet or unduly fulfils the obligations existing in the Alternative Trading System, in particular those set out in §15a to 15c or §17 to 17b of the Alternative Trading System Rules, the Alternative System Organiser may, depending on the degree and extent of the breach or infringement which has occurred,
- a) issue an admonition to the issuer;
- b) impose on the issuer a penalty of up to PLN 50,000.
The Alternative System Organiser, when deciding on the imposition of an admonition or a pecuniary penalty, may set a deadline for the issuer to desist from their infringements or take actions aimed at preventing such infringements in the future; in particular, it may require the issuer to publish certain documents or information in a manner and under the conditions applicable in the Alternative Trading System. If the Issuer fails to exercise the penalty imposed on it or, despite the imposition, still fails to comply with the rules or regulations applicable in the Alternative Trading System, or fails to meet or unduly fulfils the obligations under the Alternative Trading System or fails to meet the obligations imposed on them as referred to in the preceding subparagraph, the Alternative System Organiser may impose a penalty on the Issuer, where this penalty combined with the penalty imposed pursuant to §17(1)(2) may not exceed PLN 50,000. The Alternative System Organiser may decide to impose a penalty irrespective of making the decision, on the basis of the relevant provisions hereof, to suspend trading in the given financial instruments, or to delist them. Pursuant to §17d of the Alternative System Rules, the Alternative System Organiser may publish on its website information on imposing a penalty on the Issuer. The Alternative System Organiser may specify the name of the entity performing the duties of the Authorised Adviser in relation to that Issuer.
Risk related to the absence of a valid obligation by the market maker to perform market-making tasks in relation to the issuer’s shares on the principles specified by the Trading Organiser
Subject to the provisions of the Alternative Trading System Rules, a condition for trading in financial instruments in the Alternative Trading System shall be the existence of a valid obligation on the Market Maker to perform the tasks of the Market Animator in relation to those instruments on the terms specified by the Alternative System Organiser. Subject to §9(2a) of the Rules, the Alternative System Organiser may decide to delist financial instruments in the Alternative Trading System without the need for satisfying the condition referred to in the preceding subparagraph: a) in particular due to the nature of these financial instruments, their listing on a regulated market, or on the market, or in an Alternative Trading System other than those operated by the Alternative System Organiser. In the above cases, the Alternative System Organiser may call the issuer to fulfil the condition related to entering into an appropriate agreement with the market maker so that the latter performs the market-maker’s tasks in relation to the issuer’s financial instruments within 30 days of the said request, if it deems it necessary to improve the liquidity of trading in the financial instruments of that issuer. According to §9(2e) of the Rules, after a lapse of 30 days from the termination or expiry of the agreement with the market maker, the Alternative System Organiser shall suspend trading in meet or unduly fulfils the obligations financial instruments of a given issuer until a new agreement with a market maker has entered into force, unless such an agreement has been previously concluded. According to §9(2g) of the Rules, after a lapse of 60 days from the date of the suspension of the right to perform the market-maker’s tasks in the Alternative Trading System the Alternative System Organiser shall suspend trading in the financial instruments of the given issuer until a new agreement with the market maker enters into force, unless such an agreement has been previously concluded.
Risk related to investing in the Company’s Shares
In the case of the acquisition of Company’s Shares, it should be borne in mind that the risk of direct investment in shares on the capital market is incomparably higher than the risk associated with investments in treasury securities or investment-fund shares, due to the unpredictable volatility of share prices in both the short and long terms.
The risks of the imposing of possible administrative penalties on the Company by the PFSA (KNF)
If the Issuer fails to meet, or improperly performs in respect of, the obligations referred to in Article 96 (1) of the Act on Public Offerings, the Commission can
(a) decide to delist, for a definite or an indefinite period of time, its securities from trading on the regulated market, or
- b) impose, taking into account in particular the financial standing of the entity on which the penalty is to be imposed, a penalty up to the amount of PLN 1,000,000, or
(c) apply both sanctions jointly.
If the issuer fails to meet, or improperly performs in respect of, the obligations referred to in Article 17 (1) and (4-8) of the Regulation 596/2014, the Commission can issue a decision on delisting its securities from trading in the Alternative Trading System or impose a penalty of up to PLN 10,364,000, or an amount equivalent to 2% of the total annual income shown in the last audited financial reports for the financial year, if it exceeds PLN 10,364,000, or apply both sanctions jointly.