The Supervisory Board is responsible for monitoring and supervising the Board of Directors on behalf of the shareholders (general meeting). Members of the Supervisory Board shall be elected by the general meeting for a definite period, but for a maximum of five (5) years, the present membership is twelve. In accordance with the Civil Code, 1/3 of the members shall be representatives of the employees, accordingly four members of the MOL Supervisory Board are employee representatives while the other eight external persons are appointed by the shareholders.
The members of the Supervisory Board and their independence status:
|György Mosonyi, Chairman||non-independent|
|Dr. Attila Chikán, Deputy Chairman||independent|
|John I. Charody||independent|
|Piroska Bognár||non-independent (employee representative)|
|András Tóth||non-independent (employee representative)|
|Dr. Sándor Puskás||non-independent (employee representative)|
|István Tibor Ördög||non-independent (employee representative)|
|Dr. Norbert Szivek||independent|
The Chairman of the Supervisory Board is a permanent invitee to the meetings of the Board of Directors, Finance and Risk Management Committee and Sustainable Development Committee meetings.
Regular agenda points of the Supervisory Board include the quarterly report of the Board of Directors on the Company’s operations and the reports of Internal Audit and Corporate Security, furthermore it is informed on other relevant topics. In addition, the Supervisory Board reviews the proposals for the Annual General Meeting. The Supervisory Board reviews its annual activity during the year.
In 2016 the Supervisory Board held 5 meetings with a 91% average attendance rate.
In 2006, the general meeting appointed the Audit Committee comprised of independent members of the Supervisory Board. The Audit Committee strengthens the independent control over the financial and accounting policy of the Company.
The independent Audit Committee’s responsibilities include the following activities among others:
- providing assistance to the Supervisory Board in supervising the financial report regime, in selecting an auditor and in working with the auditor;
- carrying out the tasks of the audit committees of its subsidiaries which are consolidated by the Company, operate as public limited companies or issue securities admitted to trading on regulated market, if the relevant laws allow that and the subsidiary in question does not operate a separate audit committee.
Members of the Audit Committee and dates of their appointment (professional CVs of members are available on the Company’s website):
- Dr. Attila Chikán - chairman, 27 April, 2006
- John I. Charody, 27 April, 2006
- Dr.sc. Žarko Primorac (as alternate member) – acting from 29 April, 2015 till 13 April, 2016*
- Dr. Norbert Szivek, 14 April, 2016**
- Ivan Mikloš (as alternate member), 1 May, 2016***
* As the mandate of István Töröcskei expired on 28 April, 2015, Dr.sc. Žarko Primorac, as alternate Audit Committee member, was invited to the Audit Committee until the AGM elects a new permanent Audit Committee member. He resigned from his position as member of the Supervisory Board as of 30 April 2016.
** Dr. Norbert Szivek was elected by AGM as member of the Audit Committee from 14 April 2016
*** Ivan Mikloš was elected by the general meeting as an alternate member of the Audit Committee from 1 May 2016
Report of the Audit Committee on its 2016 activities
In 2016, the Audit Committee held 5 meetings with an 87% average attendance rate. In addition to the regular items on the agenda, including the audit of all public financial reports, providing assistance to the auditor’s work and the regular monitoring of Internal Audit, the Committee reviewed the major risk factors of the Company, considering the changed international financial situation and the status reports on risk management actions attached to these factors. The Audit Committee continuously monitored the Company’s financial position. The Audit Committee reviewed the materials of the Annual General Meeting (i.e. financial reports, statements of the auditor). The Audit Committee participated in the procedure of selecting an auditor and made a recommendation to the Supervisory Board regarding the appointment of the auditor.
MOL Group was audited by Ernst & Young (“EY”) in both 2016 and 2015, excluding FGSZ Zrt. (audited by Pricewaterhouse Coopers) and some other non-significant subsidiaries.
Within the framework of the audit contract, EY performs an audit of consolidated and statutory financial statements, and interim financial statements of MOL Plc. The auditors ensure the continuity of the audit by scheduling regular on-site reviews during the year, participating in the meetings of MOL’s governing bodies and through other forms of consultation.
EY also provided other services to MOL Group. Summary of the fees paid to them in 2015 and 2016 are as follows:
|Fees paid to the auditors (HUF mn):||2015||2016|
|Audit fee for MOL (including audit fees for interim balance sheets)||151||147|
|Audit fee for subsidiaries||577||557|
|Other audit related services||18||48|
|Other non-audit services||48||53|
|Tax advisory services||432||409|
|TOTAL||1 226||1 214|
The decrease of the audit fee for subsidiaries is due to the cease of some international Upstream operations. Other audit-related services includes primarily the assurance services relating to the Sustainable Development Report in both years. In both years tax advisory services include mainly personal income tax related services and also minor corporate income tax and VAT-related services which will completely cease in 2017 due to EU audit reform regulation.
The Board of Directors confirms that non-audit services provided by EY complied with auditor independence rules and policies applicable in 2015 and 2016.
Compliance & Ethics
MOL Group is committed to pursue ethical and fair conduct in all activities. In order to achieve the above aim MOL Group started its Compliance Program and established compliance organization responsible for its execution, furthermore, in order to enforce the Code of Ethics and Business Conduct, allocated the task of supporting the operation of the Ethics Council in its competence.
Group Compliance and Ethics’ activities include operation of the whistleblowing system (’SpeakUp!’), conducting internal inspections, preparation of risk analysis and training of employees. Whilst taking the specific nature of business into consideration, Group Compliance and Ethics reviews internal processes and risk factors and makes recommendations in order to ensure compliance, furthermore provides assistance for their execution.
Group Compliance and Ethics carries out its task in accordance with the laws of each country, taking EU and international expectations as minimum standards. The organization’s competence covers the whole MOL Group through local compliance officers and local ethics officers.
Group Compliance and Ethics annually reports to the Supervisory Board and the Board of Directors on its activities.
Internal Audit provides an independent and objective evaluation of financial, operational and control activities executed within the whole MOL Group and report on the adequacy of internal controls, the level of compliance with internal and external regulations directly to the Finance and Risk Management Committee, Audit Committee and Supervisory Board following the Executive Board’s acknowledgement of the audit reports.
There are no restrictions placed upon the focus and scope of internal audit’s work, the scope of the Internal Audit function within MOL Group covers all operations including any activities and subsidiaries controlled by MOL Group. The Head of Group Internal Audit is responsible for determining the scope of internal audit reports.
The main focus of Internal Audit is to review operational and functional activities executed within the whole MOL Group, and to identify, understand, test and evaluate associated controls to ensure that identified risks are mitigated in the most favourable cost-benefit ratio from a business perspective.
Internal Audit applies standard risk assessment principles when evaluating the residual and inherent risks of control weaknesses. The applied MOL Group internal audit risk assessment principles are approved by the Finance and Risk Management Committee.
Internal Audit operates under an audit plan approved by the Supervisory Board and agreed with the Audit Committee at the end of the year for the next one. If there is a request to modify the approved annual audit plan during the year, the C-CEO has the authority to approve any mid-year modifications to the annual audit plan.
To provide the independence of the Internal Audit function the Head of Group Internal Audit is accountable to the Finance and Risk Management Committee, Audit Committee and Supervisory Board and has direct access to their chairmen (for daily operational matters the Head of Group Internal Audit reports directly to the C-CEO of MOL Group). The Supervisory Board shall form opinion on the appointment and recall of the Head of Group Internal Audit.
MOL Group Internal Audit department shall be organized and operated according to the professional auditing and internal audit ethical standards of the Institute of Internal Auditors (IIA), the authoritative body for internationally recognized internal audit standards.