REGULATION FOR TRANSACTIONS WITH RELATED PARTIES

Transcription

1 REGULATION FOR TRANSACTIONS WITH RELATED PARTIES This Regulation, which was prepared in accordance with Consob Resolution no of 12 March 2010 as amended, sets out the rules for substantial and procedural fairness of relatedparty transactions, in order to ensure transparency in the management of Gefran S.p.A. and provide the Board of Directors and Board of Auditors with a suitable instrument for the evaluation, decision and control of transactions with related parties. PART I DEFINITIONS 1. Identification of related parties For the purposes of this procedure, related parties are the parties defined as such in the international accounting standard IAS 24, as amended on the date of approval of the aforementioned CONSOB resolution no /2010. A party is therefore defined "related party" if: a) it directly or indirectly, through subsidiaries, trustees or intermediaries:. controls the company, is controlled by the company, or is under common control;. holds a stake in the company such as to hold a significant influence over the entity;. controls the company jointly with other parties; the definition of "control", in particular, is included in art. 93 of the Consolidated Finance Act (TUF); while "related company and significant influence" are defined in art of the Civil Code; b) it is a related company; c) it is in a joint venture in which the company is a partner; d) it is key management personnel of the company or its parent company; such key management personnel are those persons who have the power and responsibility, directly or indirectly, for planning, directing and controlling activities of the company, including directors of the company and members of the board of auditors; e) it is a close relative of one of the parties referred to in subparagraphs a) or d); such relatives may include, without limitation: the spouse not legally separated and unmarried; the children and dependants of the subject, not legally separated spouse or partner; f) it is an entity in which one of the persons referred to in subparagraphs d) or e) exercises control, joint control or significant influence, or has, directly or indirectly, a significant portion of the voting rights, at least equal to 20%; g) it is a supplementary pension fund, whether collective or individual, Italian or foreign, established in favour of employees of the company, or of any other entity associated with it. 2. Transactions with related parties "Related-party transactions" are those involving a transfer of resources, services or obligations between related parties - regardless of whether a fee is charged - as well as mergers and spinoff transactions with related parties. For the purposes of this regulations, transactions that form part of the same strategy or executive programme must be considered as a single transaction, even in the calculation of the relevance threshold. 3. Transactions of greater importance Transactions of greater importance are transactions in which at least one of the following relevance indexes is greater than 5%: 1

2 - Equivalent-value relevance ratio : the ratio between the equivalent transaction and shareholders equity drawn from the latest published balance sheet; - Asset relevance ratio : the ratio between the total assets of the entity in the transaction and the total assets of the company; - Liabilities relevance ratio : the ratio between the total liabilities of the acquired entity and the total assets of the company. 4. Transactions of lesser importance Transactions of lesser importance are transactions where none of the relevance indexes mentioned in Article 3 above is greater than 5%. 5. Transactions for smaller amounts Transactions for smaller amounts are transactions for amounts not greater than 50, The aforesaid amount is intended for each transaction or a series of similar transactions. 6. Intercompany transactions Intercompany transactions are transactions with or between subsidiaries or with related companies, executed in the ordinary course of business. 7. Ordinary transactions Ordinary transactions are transactions referred to ordinary business operations or the related financial operations, as part of the typical business purpose. 8. Smaller companies Smaller companies are companies for which neither their assets under the balance sheet nor their revenue, resulting the latest approved consolidated financial statements, exceed 500 million. Smaller companies shall not qualify as such if any of these requirements is not met for two consecutive years. 9. Non-independent directors Directors are not independent if they: - directly or indirectly, including through subsidiaries, trustees or nominees, control the issuer or are able to exercise significant influence, or participate in a shareholders' agreement through which one or more persons may exercise control or significant influence; - are, or have been in the previous three years, important representatives of the issuer, of a subsidiary with strategic importance or of a company under common control with the issuer, or of a company or an entity which, together with others through a shareholders' agreement, controls the issuer or is able to exercise considerable influence on it; - directly or indirectly (e.g. through subsidiaries or companies in which they are key executives, or in their capacity as partner of a professional firm or a consulting company), have or had in the previous year, a significant commercial, financial or professional relationship:. with the issuer, one of its subsidiaries, or any of its significant representatives;. with a subject who, jointly with others through a shareholders agreement, controls the issuer, or in case of an entity- jointly with the relevant significant representatives; or that are, or have been for the previous three years, employees of one of the aforementioned parties; 2

3 - receive, or have received for the last three years, from the issuer or a subsidiary or parent company, significant additional remuneration compared to the "fixed" remuneration of a nonexecutive director of the issuer, including participation MBO plans and stock options; - were members of the board of directors of the issuer for more than nine years over the last twelve years; - hold the position of executive director in another company in which an executive director of the issuer is a director; - are shareholders or directors of a company or entity belonging to the company in charge of auditing the accounts of the issuer; - are close relatives of a person who is in any of the situations described above. For the purposes of the above, "important representatives" of a company or entity are: the legal representative, the chairman of the board of directors, executive directors and executives with strategic responsibilities in the company or the relevant entity. PART II PROCEDURES 10. Procedure for transactions of greater importance Resolutions relating to transactions of greater importance with related parties are the sole responsibility of the Board of Directors. The approval of such transactions requires that: a) a binding opinion is issued prior to the approval of the transaction by a Committee composed of at least three unrelated independent directors. If there are less than three independent directors, the reasoned opinion is issued by the Board of Auditors. In order to be able to express their views in full awareness, the above mentioned bodies are involved since the early stages of the operation. Such bodies may require the assistance of external independent experts. b) information on the contents and purpose of the transaction is provided to the Board of Directors and the Committee at least fifteen days before the transaction is approved. In case the terms of the transaction are defined as market equivalent or standard, the reference documentation must contain objective elements. c) the company's interest in completing the transaction is suitably substantiated in the minutes of the resolution; d) full disclosure on the execution of the transactions is provided to directors and auditors at least quarterly; e) a document containing details of the transactions approved in the relevant quarter despite the contrary opinion the Committee, as well as the underlying reasons, is made available at the company s registered offices and published on the website within fifteen days of the end of each quarter. 11. Procedure for transactions of lesser importance Resolutions relating to transactions of lesser importance with related parties are the sole responsibility the Board of Directors. The approval of such transactions requires that: a) a non binding opinion is issued prior to the approval of the transaction by a Committee composed of at least two unrelated independent directors; 3

4 If there are less than two independent directors, the reasoned opinion is issued by the Board of Auditors. Such bodies may require the assistance of external independent experts. The maximum expenditure amount for the services rendered by independent experts and for each transaction shall not exceed 3,000.00; b) information on the contents and purpose of the transaction is provided to the Board of Directors and the Committee, at least fifteen days prior to approval of the transaction. In case the terms of the transaction are defined as market equivalent or standard, the reference documentation must contain objective elements; c) the company's interest in completing the transaction is suitably substantiated in the minutes of the resolution; d) full disclosure on the execution of the transactions is provided to directors and auditors at least quarterly; e) a document containing details of the transactions approved in the relevant quarter despite the contrary opinion the Committee, as well as the underlying reasons, is made available at the company s registered offices and published on the website within fifteen days of the end of each quarter. 12. Procedure for transactions in case of urgency In case of urgency, transactions with related parties pursuant to this Regulation may be exempted from the approval procedures referred to in points 10 and 11 above. In order for such transactions to benefit from the exemption it is required that: a) for transactions falling under the responsibility of an Executive Director, the Chairman of the Board of Directors and the Lead Indipendent Director are informed of the reasons of urgency prior to closing the transaction; b) these transactions are subsequently, without prejudice to their effectiveness, subject to non-binding resolution of the first valid ordinary meeting of the relevant body; c) in case the resolution pertains to the Shareholders Meeting, the Board of Directors, prepares a report containing an adequate justification of the reasons for urgency. The Board of Auditors reports its assessment on the existence of the reasons for urgency to the Shareholders' Meeting; d) the report and the assessments referred to in paragraph c) are made available to the public at least twenty days before the date fixed for the meeting at the registered office and as per the formalities set out in Title II, Chapter I of the Issuers' Regulation. These documents are also attached to the disclosure document referred to under point 15; e) by the day immediately after the Shareholders' Meeting, the company makes available to the public the information on voting results, according to the formalities specified in Title II, Chapter I of the Issuers' Regulation, particularly with regard to the number of total votes cast by unrelated shareholders. 13. Application of the procedure On the date of approval of the Regulation, Gefran S.p.A. is deemed to be a smaller company, in accordance with art. 3 f) of Consob Resolution no /2010. Therefore, as long as the conditions identified in that article persist and in compliance with art. 10 of the Resolution, the approval of related-party transactions of greater or lesser importance shall be subject to the procedure provided for under point 11. In any case, the disclosure requirements of Article 5 of the Resolution shall be complied with. If Gefran S.p.A. is no longer qualified as smaller company, the approval of related-party transactions of greater importance shall be subject to the procedure referred to under point 10. 4

5 Transactions for smaller amounts, ordinary transactions, as well as resolutions in relation to remuneration and benefits to be paid to directors and members of the control bodies and managers with strategic responsibilities, are exempted from the approval procedures specified above. Intercompany transactions are exempted from the approval procedures, provided that in the subsidiaries or related companies there are no significant interests of other related parties of Gefran S.p.A. Interests deriving from the mere sharing of one or more directors or executives with strategic responsibilities between the company and its subsidiaries are not considered significant. The mere possession of a stake in the subsidiary or related company by other companies controlled by Gefran S.p.A. or related to it is not in itself a significant interest. A related party of Gefran S.p.A. is deemed to have a significant interest in a subsidiary or related company if it holds more than 20% of the share capital, or holds the office of director in such company, except as provided in the preceding paragraphs. PART III - DISCLOSURE AND MONITORING 14. Disclosure requirements on related-party transactions a) Information on the identification of related parties The entities referred to in point 1 a) and d) shall annually send to Gefran S.p.A. all information concerning their position as related party. These entities shall also timely report any changes to information already disclosed. Based on the information received, Gefran S.p.A. s Legal Dept. prepares and constantly updates the list of related parties, which will be shared with the central and local units. b) Information on related-party transactions In its annual business report envisaged by art of the Civil Code, the Board of Directors shall disclose all the transactions carried out with related parties during the year. c) Disclosure to the Board of Auditors The Board of Directors shall inform the Board of Auditors at least quarterly about related-party transactions concluded during the quarter and the state of progress as at the end of quarter of those transactions the execution of which is deferred or takes place periodically. In particular, the Board of Directors reports on the underlying interest in related-party transactions, their execution and the nature of the relationship. 15. Public disclosure In the event of related-party transactions of greater importance, including those carried out by subsidiaries, Gefran S.p.A. shall prepare a disclosure document in accordance with Annex 1, which is made available to the public within seven days of approval of the transaction or execution of the contract. In the event that the Company finalizes a series of transactions that are homogeneous and executed in pursuit of a common purpose with a related party, and they cumulatively exceed 5

6 the thresholds referred to in point 3 above, the disclosure document is made available to the public within fifteen days of the approval or execution of the contract. The disclosure document highlights the risks related to potential conflicts of interest arising from the operation, describes the terms, the reasons and the relevant economic and financial effects, indicates how the fees were determined and identifies the individuals who participated in the negotiations and approved the transaction. 16. Monitoring compliance with the Regulation The Board of Auditors monitors compliance with this Regulation and provides a report as envisaged by art of the Civil Code. Members of the Board of Directors and key management personnel shall promptly inform the Board of Auditors of any alleged breach of this Regulation, of which they become aware in carrying out their tasks. 17. Final provisions The CEO is responsible for the implementation of the Regulation. The key management personnel of the company or of its parent company will receive a copy of this Regulation, as well as any subsequent amendments or additions. GEFRAN S.p.A. 12 November

7 Annex 1 Disclosure document concerning transactions of greater importance with related parties If the company conducts transactions of greater importance with related parties, the disclosure document envisaged under point 14 shall contain the following information: Contents 1. Warnings The risks related to potential conflicts of interest arising from the transaction with related parties described in the disclosure document are highlighted. 2. Information on transactions 2.1. A description of the characteristics, formalities, terms and conditions of the transaction An indication of the related parties involved in the transaction, the nature of the relationship and, when it has been disclosed to the Board of Directors, the nature and extent of the interests of such parties in the transaction An indication of the economic rationale and usefulness of the operation for the company Methods of determining the consideration for the transaction and assessments regarding its adequacy in relation to market values of similar transactions. If the economic terms and conditions of the transaction are defined as market-equivalent or standard, the statement is properly motivated and adequate evidence is provided. An indication of whether there are independent expert opinions in support of the adequacy of such consideration and the relevant conclusions, stating: - bodies or individuals who commissioned the opinions and designated experts; - the assessments conducted to select independent experts. In particular, information about any economic relations, property and financial relations between the independent experts, and (i) the Issuer, (ii) persons who control the issuer, the subsidiaries of the issuer, or under its common control (iii) the managers of the companies mentioned under (i) and (ii) taken into account for the purpose of qualifying the independent status of the expert and the reasons for which these relations were considered irrelevant to the assessment of independence. Information about possible relationships can be provided by attaching a declaration issued by the independent experts; - the terms and purpose of the mandate given to the experts; - the names of experts appointed to assess the adequacy of the consideration. An indication of whether the opinions of independent experts or the essential elements thereof, pursuant to Article 5 of the Issuers' Regulations, are attached to the disclosure document or published on the company website 7

8 The essential elements of the expressed opinion that shall be communicated are as follows: - evidence, where applicable, of the specific limits encountered in the performance of office (e.g. with regard to access to relevant information), the assumptions used and the conditions to which the opinion is subject; - evidence of possible criticisms reported by experts in relation to a specific transaction; - an indication of the valuation methods adopted by the experts to comment on the adequacy of the consideration; - an indication of the relative importance attributed to each of the valuation methods adopted for the purposes identified above; - an indication of the values resulting from each valuation method adopted; - an indication of the criteria used to determine the final value of the consideration, whenever the valuation methods used reveal a range of values; - an indication of the sources used to compile the relevant data being processed; - an indication of the main parameters (or variables) taken as reference for the application of each method. With regard to elements of the publicly available expert opinion, it is necessary to confirm that the information provided has been reproduced consistently with the content of opinions to which it refers, and that, to the best knowledge of the issuer, there are no omissions that would render the reproduced information inaccurate or misleading An illustration of the economic and financial effects of the transaction, providing at least the applicable relevance ratios. If the transaction exceeds the significant reporting threshold determined by Consob pursuant to Articles 70 and 71 of the Issuers' Regulation, it is necessary to highlight that pro-forma financial information will be published in the document envisaged, as appropriate, by subsection 4 of either Article 70 or 71 and according to the terms established by the provisions thereof. Notwithstanding the right to publish a single document pursuant to Article 5, subsection If the amount of the remuneration for the board members of the company and/or their subsidiaries is bound to change as a result of the transaction, full details of the change shall be provided. If no changes are expected, a declaration to that effect shall be provided In the case of transactions in which the related parties involved are members of the administrative and control bodies, top executives and directors of the issuer, information is provided of the issuer s financial instruments held by entities identified above and the interests of said entities in extraordinary transactions, as envisaged by subsections 14.2 and 17.2 of Annex I to Regulation 809/2004/EC Details of the entities or directors who have led or participated in the negotiations and/or instructed and/or approved the transaction must be provided, by specifying individual roles, especially with regard to independent directors, if any. Referring to the resolutions approving the transaction, the names of those who voted for or against the transaction or abstained, are provided giving the reasons for dissent or abstentions. 8

9 An indication, pursuant to Article 5 of the Issuers' Regulations, that any independent directors opinions are attached to the disclosure document or published on the company s website If the significance of the transaction results from the accumulation of several transactions carried out with the same related party or individuals related to both the latter and the company during the financial year, the information specified in the preceding subsections shall be provided with reference to all the above transactions. 9