Management of a conflict of interest
Conflict of interest
In its operations, PZU avoids conflicts of interest which is understood as situations in which there is or may be a discrepancy between the legal, financial or other legally protected interest between:
- PZU or a person affiliated with PZU (i.e. Management Board member, PZU employee, entity providing services to PZU) and the client;
- person affiliated with PZU and PZU. To this end, “Rules for managing conflicts of interest” are in force in PZU.
The “Rules for managing conflicts of interest” are in force in PZU and PZU Życie. This regulation aims to ensure professional, reliable and fair treatment of all clients and persons related to the company in a conflict of interest situation. According to this regulation an employee should report a potential conflict of interest to his or her superior and the compliance unit in a given company for that unit to be able to analyze that situation thoroughly from the standpoint of risk. When a potential or actual conflict of interest is identified, mitigating mechanisms are used to eliminate or reduce the conflict of interest and counteract its negative effects. There is also a conflict of interest register. PZU limits the possibility of a conflict of interest arising and counteracts its consequences, especially by:
- informing clients using financial instruments about the adopted regulations on managing conflicts of interest;
- acting in the interest of the client and promoting fair and professional conduct among persons affiliated with PZU, who participate in the honest product life cycle;
- limiting the scope of persons with access to certain information and resources;
- enforcing persons affiliated with PZU to comply with restrictions on accepting and giving gifts in business relationships;
- limiting the possibility to represent PZU interests by employees who are affiliated with persons in business relations with PZU;
- limiting and monitoring the implementation by employees and Management Board members, in particular those responsible for investment activities, of certain transactions entered into on their own account, in particular by prohibiting transactions involving the disclosure or use of information on financial instruments that violate generally applicable laws;
- entering into non-competition agreements with employees with access to material, protected information on PZU.
To mitigate the risk of conflict of interest, members of PZU bodies are obliged to:
- avoid activities that may give rise to conflicts of interest;
- take necessary measures to identify conflicts of interest;
- obtain approval (from the Management Board or the Supervisory Board or the Shareholder Meeting, as appropriate) for membership on the supervisory or management boards of public companies other than PZU Group companies, and entities whose operations may potentially be deemed as competitive;
- strive to eliminate or reduce the negative impact of conflicts of interest on the operation of the PZU Group company and its relations with the remaining PZU Group companies, clients and other external entities;
- inform (the Management Board or the Supervisory Board or the Shareholder Meeting, as appropriate) of a conflict of interest or the possibility of a conflict of interest, and to refrain from taking part in discussions and voting on a matter in which a conflict of interest has arisen;
- to inform the compliance units of the possibility of a conflict of interest and the measures taken.
Issues of possible conflict of interest for members of the Management Board and the Supervisory Board are also reviewed as part of an assessment of suitability prior to appointment to these bodies and as part of regular secondary assessment of suitability. An annual analysis of additional actions taken by members of corporate bodies is also carried out.
Rules for acceptance and giving of gifts
The rules in PZU regulate in transparent and very detailed terms the categories and types of gifts, including permissible and impermissible gifts, and they prescribe the procedure for accepting or offering gifts and the rules for registering gifts.
Transfer pricing documentation
Transactions of PZU Group entities with related parties are concluded on an arm’s length basis, regardless of their value. This applies both to transactions carried out within the PZU Tax Group (PGK PZU) and to transactions with related parties outside PGK PZU. The PZU Group has Transfer Pricing Procedures in place, adopted by resolution of the Management Boards, which specify the principles for conducting analyses and preparing documentation in this regard.
The Transfer Pricing Procedure stipulates that any transaction with related parties, whether inside or outside PGK PZU, is subject to preliminary analysis for transfer pricing regulations. This analysis includes an assessment of the need for the reasons or analysis of the market nature of the terms of the transaction.
For transactions subject to documentation requirement under the Corporate Income Tax Act, the Tax Policy Department, in cooperation with substantive units, prepares local transfer pricing documentation. This documentation applies to transactions with entities outside PGK PZU and entities that do not enjoy the exemptions provided for by the act. Transactions subject to documentation requirement and those benefiting from the so-called domestic exemption are then reported within the statutory deadline to the tax authorities in the TPR-C information filed by PZU.
In addition, PZU Tax Policy Office prepares Group Documentation (Masterfile) for the entire PZU Group, ensuring comprehensive tax compliance. In addition, PZU, as the parent company of PZU Group, shall file information on the CBC-R group of entities in a timely manner.
Furthermore, in accordance with other PZU procedures, in the case of a transaction with a related party whose value exceeds 5% of total assets, the Supervisory Board of PZU is obliged to decide whether to approve the transaction. The Supervisory Board also has the option of using external experts to provide opinions on the valuation and analysis of the economic impact of a given transaction.
The 2024 Transfer Pricing documentation was prepared in accordance with the rules set out in the table alongside.
| Transfer Pricing Documentation | Responsible entities | Unit preparing the Documentation | Deadline for preparation of the Documentation |
| Comparative analysis
Description of the compatibility of the terms of the transaction with market conditions |
Substantive units responsible for concluding the transaction regardless of its value | Substantive units with support from the Tax Policy Department | prior to the conclusion of the Transaction |
| Local Documentation | Related Entities that have entered into a Transaction with a value exceeding the Documentation Threshold | Tax Policy Department | until 31 October 2024 |
| Group Documentation | Entities consolidated using the full or proportional method if they belong to a group for which consolidated financial statements are prepared, whose consolidated revenues exceeded PLN 200,000,000 or its equivalent in the previous fiscal year | Tax Policy Department | until 31 December 2024 |
| TPR-C information | Entities obliged to prepare local transfer pricing documentation and/or entering into controlled transactions with a value exceeding the documentation thresholds but benefiting from the exemptions from preparing the documentation indicated in the act | Tax Policy Department | until 30 November 2024 |
| CBC-R information | Entities consolidated using the full or proportional method if they belong to a group for which consolidated financial statements are prepared, whose consolidated revenues exceeded EUR 750,000,000 or its equivalent in PLN in the previous fiscal year | Tax Policy Department | until 31 December 2024 |