Corporate Governance Compliance Report - Zorlu Enerji

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Zorlu Enerji Elektrik Üretim A.fi. Corporate Governance Compliance Report 1- Declaration of Corporate Management Zorlu Enerji Elektrik Üretim A.fi. is at the stage of completion of Corporate Management mechanisms in the company, started in 2005 and implemented in the concept of Conformity with Principles of Corporate Management. In this declaration, there are information about the conformity level of the company to these principles, and subjects that are not in conformity. In order to perform its liabilities to corporate and individual shareholders, Zorlu Enerji Elektrik Üretim A.fi. has decided to implement the Principles of Corporate Management. During the works done, great amount of effort is used in order to conform to the Principles of Corporate Management, all administrative staff and employees believed in necessity of implementing these principles at all levels of activities, and they worked together with the principles of transparency, equality, responsibility and accountability. Following the adaptation of Principles of Corporate Management to the company, Corporate Governance Report stating that the company activities will be performed in conformity to principles of transparency, equality, responsibility and accountability has been disclosed to public. Through the previous works done and its determination about conforming the Principles of Corporate Management, Zorlu Enerji Elektrik Üretim A.fi. has shown its awareness for company’s responsibilities to all shareholders, without the consideration of the amount of shares held. In this declaration, together with the conformity to Principles of Corporate Management of SPK (Capital Markets Committee), the subjects that are not in conformity with the principles are explained with the reasons. The works done in Zorlu Enerji Elektrik Üretim A.fi. for the implementation of Principles of Corporate Management are as follows: In order to increase the effectiveness of Board of Directors, Zorlu Enerji Elektrik Üretim A.fi. implemented some arrangements through the Principles of Corporate Management. By means of these arrangements, two independent members assigned to take part in the Board of Directors and the Board is structured in conformity with Principles of Corporate Management. In order to perform the Board of Directors meetings in an organized way, to keep and to archive the minutes of meetings and to allow easy access by Members to company information, a secretariat connected with the Board of Directors has been formed. In order to organize the relations with the investors, an “Investor Relations Department” has been formed in the company, as well as the responsibility of any publicized information, responsibility of the website has been given to this department. Company policy for releasing information has been prepared written and presented to attendants in General Meeting. Website has been recreated in conformity with the Principles of Corporate Management. Scheduled General Meeting held on May 16, 2006, Main Contract of the company has been amended in accordance to Principles of Corporate Management, with the acceptance of the majority of shareholders. The outlines of amendments made on Company’s Main Contract are as follows: • New rights are entitled to the minority shareholders, the rate of 10% of the capital stated in Turkish Trade Law for representation of minor share holders has been changed, and in accordance to the article 11 of Law of Capital Markets amended by law no.4487, “minority shareholders rights are used by shareholders representing the minimum 1/20 of the paid capital of the Company” has been added to main contract (Article 20). • Shareholders representing minimum of 1/20 of company capital are entitled with the right of calling Board of Directors Meeting, by means of a written summon stating the reason of call (Article 9). • An article stating, “the transfer of company shares is unrestricted” has been added to the Main Contract of the Company (Article 21). • The subject of disclosure of the reasons of the independent members’ negative votes in Board of Directors has been regulated in the Main Contract (Article 9). 30 Zorlu Enerji 2006 Annual Report
Zorlu Enerji Elektrik Üretim A.fi. Corporate Governance Compliance Report • The subject of assigning independent members of Board of Directors has been added to main contract as “the number of independent members will be 1/3 of total members of board, but not less than 2” (Article 7). • The decision about the subject that the majority of the Members of the Board of Directors will not take part of execution, and different persons will perform duties of Chairmanship and Executive Chairmanship has been added to the Main Contract. Also, the principle of age limit for Member, which is not one of the Principles of Corporate Management of CMC (Capital Markets Committee), however, one of the principles recognized internationally, has been started being implemented by the company and this subject also has been added to the main contract (Article 7). • In accordance to Principles of Corporate Management, the subject of monthly wages of independent members of Board of Directors assigned, or, the subject that their welfare rights are not going to affect their independency has been added to the Main Contract (Article 12). • The subject that the permissions for Members’ right of conducting business and competition granted by the General Board Meeting of Shareholders can only be granted with the approval of the 2/3 majority of shareholders attended to the General Board Meeting of Shareholders has been added to the Main Contract (Article 13). • Committees connected with the Board of Directors and regulations about these committees have been added to the Main Contract (Article 13A) • General Board Meeting of Shareholders will elect two company auditors out of shareholders or people nominated by the shareholders, for maximum three years, and, the General Board Meeting of Shareholders will determine their salaries; this subject has been added to the Main Contract. Also, shareholders representing the 5% of the public shares of the Company can request from General Board Meeting of Shareholders to assign special auditor for investigation of a specific financial situation. In case that request is rejected by the General Board Meeting of Shareholders, shareholders representing the 1/20 of Company capital will have the right to go to the competent court with the request of assigning an auditor to investigate the specific situation and reach a result; this subject is clearly stated in the Main Contract (Article 14). • The subject that the company’s annual financial reports and other interval reports required by Capital Markets Regulations are to be audited by an independent audition firm approved by General Board Meeting of Shareholders and company can work maximum five consecutive fiscal years with the same independent audition firm has been added to the Main Contract of the Company (Article 15A). • The subject that other assigned shareholders or persons out of shareholders at General Board Meeting of Shareholders can represent the shareholders is stated in the Main Contract. The subject that the type of Authorization Document for Representation and implementation in accordance to Capital Markets Committee regulations will be based on Board of Directors decision has been stated in the Main Contract (Article 19). • In order to encourage and increase the attendance to General Board Meeting of Shareholders, it has been decided that an announcement should be made three weeks prior to the Meeting and this subject is stated in the Main Contract. Also, together with this announcement, information and documents related to the agenda should be provided in company center, branches and should be informed to the public (Article 23). During the process of implementing Principles of Corporate Management, some principles that don’t match with the Company structure and some that may have negative effects on activities are not applied. Respective principles and reasons for no implementation are summarized below: Accumulated vote implementation: Company does not apply the method of accumulated vote. However, by means of the independent members in the Board of Directors representation that can be achieved by accumulated vote method is provided. In the Main Contract, any amendment about some important subjects, such as “division and transfer of shares, purchase/sale of tangible/intangible assets at high value, rent to/from such, transfer of any immovable by method of donation or issuing bail, lien for the benefit of third parties” are not made. The reason of that is the Company makes lots of sale/purchase and rent because of the nature of the business sector, which the Company is in. Since that will not be possible for General Meeting of Board of Shareholders to get together for each conduct, this subject was not added to Main Contract. In order to accelerate the business transactions and avoid missing the opportunities, this subject is not placed in the Main Contract. With this declaration, Zorlu Enerji adopts a method of transparent and open management, and targets to form a responsible, accountable method of management for all its shareholders especially for the minority shareholders. Improvements that will be done in time in accordance to Principles of Corporate Management will be disclosed on Company’s website. Zorlu Enerji 2006 Annual Report 31
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Corporate Governance Compliance Report - Zorlu Enerji

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