PGE Polska Grupa Energetyczna S A : Justification for the draft resolutions for Ordinary General Meeting convened for June 26, 2020

A justification for the draft resolutions to be considered and voted on by the Ordinary General Meeting of the company PGE Polska Grupa Energetyczna Spółka Akcyjna ("Company", "PGE") convened for 26 June 2020:

1. concerning the consideration and approval of the financial statements as well as the reports on the activities of the Company and the PGE Capital Group.

Pursuant to Article 395 § 1 item 1 and § 5 of the Commercial Companies Code, the agenda of the Ordinary General Meeting should include the consideration and approval of the Management Board's report on the Company's activities and its financial statements for the previous financial year as well as the consolidated financial statements. The necessity of the approval of these documents by the General Meeting results also from the Accounting Act. Pursuant to the Accounting Act, a report on the activities of a capital group can be prepared jointly with a report on the activities of a parent company as one document. The Company took advantage of this possibility.

On 31 March 2020 the Management Board adopted resolution no. 172/24/2020 concerning the approval of "The EU-IFRS-compliant standalone financial statements of the company PGE Polska Grupa Energetyczna S.A. for the year ended 31 December 2019 (in million zlotys)", "The EU-IFRS- compliant consolidated financial statements of the PGE Capital Group for the year ended 31 December 2019 (in million zlotys)" and the Management Board's report on the activities of the company PGE Polska Grupa Energetyczna S.A. and the PGE Capital Group for the year ended 31 December 2019, as well as the motion to the Supervisory Board requesting an evaluation of the aforementioned documents.

On 31 March 2020 the Supervisory Board evaluated positively "The EU-IFRS-compliant standalone financial statements of the company PGE Polska Grupa Energetyczna S.A. for the year ended 31 December 2019 (in million zlotys)", "The EU-IFRS-compliant consolidated financial statements of the PGE Capital Group for the year ended 31 December 2019 (in million zlotys)" and the Management Board's report on the activities of the company PGE Polska Grupa Energetyczna S.A. and the PGE Capital Group for the year ended 31 December 2019.

1. concerning the granting of discharge to the members of the Company's governing bodies for the performance of their duties.

Pursuant to Article 395 § 1 item 3 of the Commercial Companies Code, the agenda of the Ordinary General Meeting should include the granting of discharge to the members of the Company's governing bodies for the performance of their duties in the previous financial year.

On 26 May 2020 the Supervisory Board recommended that the General Meeting grant discharge to the members of the Management Board and submitted a motion requesting discharge for the members of the Supervisory Board for the performance of their duties in the year 2019.

1. concerning the allocation of the Company's net loss for the financial year 2019.

On 31 March 2020 the Management Board made a decision to submit a motion to the Ordinary General Meeting proposing that the General Meeting allocate the Company's net loss for the financial year 2019 in the amount of PLN 1,259,598,461.78 (say: one billion two hundred and fifty- nine million five hundred and ninety-eight thousand four hundred and sixty-one zlotys and seventy-eight groszy) to the Company's supplementary capital, whose value is PLN

19,669,355,043.27 (say: nineteen billion six hundred and sixty-nine million three hundred and fifty-five thousand and forty-three zlotys and twenty-seven groszy).

On 26 May 2020 the Supervisory Board evaluated positively the aforementioned motion of the PGE Management Board.

IV. concerning the General Meeting's granting the consent for the manner of voting, as determined by the Management Board of PGE Polska Grupa Energetyczna S.A., at the General Meeting of the company PGE Systemy S.A., on the matter of changes in the Statutes of PGE Systemy S.A.

On 19 May 2020 the PGE Management Board adopted resolution no. 311/49/2020 concerning the determination of the manner of exercising the voting right at the Extraordinary General Meeting of the company PGE Systemy S.A., the granting of the power of attorney to represent PGE Polska Grupa Energetyczna S.A. at that General Meeting, and the motions to be submitted to the General Meeting and the Supervisory Board of PGE Polska Grupa Energetyczna S.A.

The presented justification indicates that, in connection with the corporate governance rules applicable in the PGE Capital Group ("PGE CG"), the Supervisory Boards in the PGE CG companies are authorized to grant the consent for the performance of an action by a company depending on the value of a liability or the type of an asset constituting the subject of an action. Such actions performed by the PGE CG companies concern, among other things, the purchase and sale of assets, including shares or interests, the execution of donation agreements and debt release arrangements, agreements for the provision of legal, marketing, public relations, social communication, and management consultancy agreements, the encumberment of assets with limited property rights, the incurring of financial and contingent liabilities, the granting of loans, the purchase of bonds, etc. The competences of the Supervisory Boards in the aforementioned scope are specified in the respective Statutes/Articles of Association of the PGE CG companies.

One of the prerogatives of the Supervisory Boards of the PGE CG companies is the granting of the consent for entering into agreements or incurring liabilities other than those specified in the respective Statutes/Articles of Association with an individual value exceeding the threshold indicated in the Statute/Articles of Association. The Statutes of PGE Systemy S.A. regulate this matter in § 18 clause 2 item 18): "§ 18 clause 2 - Furthermore, the competence of the Supervisory Board shall include giving the Management Board the consent for the following: 18) the Company's entering into agreements other than those specified in clause 2 or incurring liabilities other than those specified in clause 2, with an individual value exceeding5,000,000.00 (say: five million) zlotys, however, the consent of the Supervisory Board shall not be required for the presentation of offers and the execution of agreements relating to the provision of ICT services and supply of ICT goods to the PGE CG companies".

In connection with the present and expected future economic positions of the PGE CG companies resulting from the spreading of the SRS-CoV-2 coronavirus pandemic in Poland and around the world, in view of the fact that the revenues of the company PGE Systemy S.A. result in principle from the provision of ICT services to the PGE CG companies under service-level agreements, for the purpose of strengthening shareholder supervision over the Company, it is recommended that

• 18 clause 2 item 18 be changed accordingly. The aforementioned change aims to increase the range of the competence of the Supervisory Board of the company PGE Systemy S.A. by lowering

the threshold from 5 million zlotys to 500,000 zlotys and by broadening the scope of agreements and liabilities requiring the previous consent of the Supervisory Board for their execution or incurring, i.e. it takes into account also agreements with, and liabilities to, the PGE CG companies. Hence, § 18 clause 2 item 18) of the Statutes of the company PGE Systemy S.A. is to have the following new wording: "§ 18 clause 2 Furthermore, the competence of the Supervisory Board shall include giving the Management Board the consent for the following: 18) the Company's entering into agreements other than those specified in clause 2 or incurring liabilities other than those specified in clause 2, with an individual value exceeding500,000.00 (say: five hundred thousand) zlotys.".

Furthermore, on 29 February 2020 Article 19 of the State Property Management Act of 16 December 2016 ("State Property Management Act") was amended. This Article determines the requirements to be fulfilled by a person put forward as candidate for member of a supervisory body in a company in which the State Treasury holds shares. The aforementioned requirements are also being implemented in the PGE CG companies, pursuant to the obligations of the PGE Management Board specified in § 42 item 8 of the Statutes of PGE. The amendment to Article 19 of the State Property Management Act consists in the addition of letter k) to clause 1 item 1), which reads as follows:

"k) has passed an examination for candidates for members in supervisory bodies before an examination board appointed by a minister competent for matters relating to state assets;"

Pursuant to § 37 clause 3 item 2 of the PGE Statutes, the consent of the General Meeting is required for the purpose of determining the manner of voting at the General Meeting of the company PGE Systemy S.A. on the matter of changes in the Statutes of the company.

On 26 May 2020 the Supervisory Board evaluated positively the aforementioned motion of the PGE Management Board.

1. concerning the adoption of "The remuneration policy for the members of the Management Board and the Supervisory Board of PGE Polska Grupa Energetyczna S.A."

On 20 May 2020 the PGE Management Board adopted resolution no. 322/50/2020 concerning the acceptance of a draft of "The remuneration policy for the members of the Management Board and the Supervisory Board of PGE Polska Grupa Energetyczna S.A." and the submission of the motions to the General Meeting and the Supervisory Board of PGE Polska Grupa Energetyczna S.A.

An obligation of a general meeting to approve a remuneration policy for members of a management board and supervisory board was introduced by the Act of 16 October 2019 amending the Act on public offering, conditions governing the introduction of financial instruments to an organized trading system and public companies, as well as some other acts. Pursuant to Article 36 of the aforementioned Act, a general meeting of a company should adopt a resolution on a remuneration policy for members of a management board and supervisory board, referred to in Article 90d clause 1 [of the Act on public offering, conditions governing the introduction of financial instruments to an organized trading system and public companies], by 30 June 2020.

On 26 May 2020 the Supervisory Board evaluated positively the aforementioned motion of the PGE Management Board.