REPORT ON CORPORATE GOVERNANCE 2012

Transcription

1 REPORT ON CORPORATE GOVERNANCE

2 CORPORATE GOVERNANCE REPORT The purpose of this report is to describe the Corporate Governance practices adopted by SAG GEST Soluções Automóvel Globais, SGPS, SA. This report has been prepared in accordance with the form appended to the Securities Commission (CMVM) Regulation no. 1/ /2010. Also, the purpose of this Report is to fulfill the obligation to annually divulge in detail the corporate governance structure and practices, in accordance with Article 245-A of the Securities Code, which applies to issuers of shares listed for trading in a regulated market. CHAPTER 0. STATEMENT OF COMPLIANCE SAG GEST is an issuing Company of shares admitted for trade on a regulated market, namely in the official share price market of NYSE Euronext Lisbon, and the Recommendations of CMVM s 2012 Corporate Governance Code which was approved by Comissão do Mercado de Valores Mobiliários (CMVM Securities Commission) shall apply during FY The full text of the said Code can be consulted on CMVM s website The table below identifies the Recommendations of CMVM that are part of the Corporate Governance Code, and full adoption or non-adoption of the same by SAG GEST is identified on a comply or explain basis, as well as the relevant part of the Report where a more detailed description regarding the adoption can be consulted. Recommendation I.1.1. The Chairman of the General Meeting shall have at his disposal human resources and logistics support that are adequate to his needs, bearing in mind the economic situation. COMPLIANCE STATEMENT Status on adoption of the Recommendation Remarks I. GENERAL MEETING I.1. General Meeting Board Adopted The Chairman of the General Meeting has at his disposal adequate human resources and logistics support as required, also to ensure proper functioning of the meeting, namely through legal consultancy and the investor relations office. Description in the Report I.1.2. The remuneration of the Chairman of Adopted I.3. the General Meeting shall be disclosed in the Annual Report on Corporate Governance. I.2. Participation at the Meeting I.2.1. The requirement for the Board to Not applicable With the entry in force of Decree- I.4. receive statements for share deposit or Law 49/2010, dated 19 th May, the blocking for participation at the General mechanism became that as Meeting shall not exceed 5 working days. described on Clause 23 C of the Securities Code as amended by this diploma. I.2.2 Should the General Meeting be Not applicable With the entry in force of Decree- I.5. suspended, the Company shall not require Law 49/2010, dated 19 th May, the share blocking during the interim period until mechanism became that as the meeting is resumed and shall then described on Clause 23 C of prepare itself in advance as required for the the Securities Code as amended first session. by this diploma. I.3. Voting and Exercising Voting Rights I.3.1 Companies shall not impose any Adopted Article 15, para. 1 of the I.9. 2

3 statutory restriction on postal voting and, whenever adopted or admissible, on electronic voting. Company By-Laws. Voting by mail is authorized. Article 15, para. 5 of the Company By-Laws. Telematic voting is not allowed. I.12. I.3.2 The statutory deadline for receiving early voting ballots by mail may not exceed three working days. I.3.3 Companies shall ensure the level of voting rights and the shareholder's participation is proportional, ideally through a statutory provision requiring the one share / one vote principle Companies that: i) hold shares that do not confer voting right; ii) establish non-casting of voting rights above a certain number, when issued solely by a shareholder or by shareholders related to former, do not comply with the proportionality principle. I.4. Companies shall not set a resolutionfixing quorum higher than the one provided for by law. Bearing in mind the fact that the Company has not established any statutory restriction to voting by mail, this recommendation is to be considered as adopted. The non-provision for statutory restrictions on electronic voting shall only be relevant when such means is adopted and admissible. Adoption of this recommendation shall therefore not be prejudiced in view of the lack of electronic means. Adopted I.11. Adopted I.4. Resolution fixing Quorum Not Adopted Clause 14, para. 3 of the Company By-Laws. Each share corresponds to one vote. Article 16 of the By-laws provides for a larger quorum than provided by law. The Company considers that adoption of this recommendation would not be adjusted in view of the reduced dispersion of the Company s capital among a small number of Shareholders. In fact, considering that the Shareholders of reference control 79.33% of the Registered Share Capital, it would not make sense to hold a general meeting without their presence. Article 17 further requires a resolution-fixing quorum higher than the one provided for by law, thus establishing the need for a quorum of two thirds corresponding to the share capital required for the approval of resolutions by the general meeting on capital increases, changes to the by-laws and dissolution. Considering once again the shareholder structure of the Company and bearing in mind the matter under review which is subject to deliberation, one understands the option made by the Shareholders as to the need to obtain significant support from I.6. I.8. 3

4 the shareholders in the General Meeting. I.5. Minutes and Information on Resolutions Passed Extracts from the minutes of the general Adopted I.14. meetings or documents with corresponding content must be made available to shareholders on the company's website within a five day period after the General Meeting has been held, irrespective of the fact that such information may not be classified as material information. The information disclosed shall cover the resolutions passed, the represented capital and the voting results. Said information shall be kept on file on the company's website for no less than a 3 year period. I.6.1. Measures adopted with the aim of preventing successful takeover bids shall respect the Company s and its Shareholders interests. The By-laws of companies that, in compliance with the said principle, provide for the restriction of the number of votes that may be held or exercised by a sole shareholder, either individually or in concert with other shareholders, shall also provide for a resolution by the General Assembly (5 year intervals), on whether that statutory provision is to be amended or prevails - without super quorum requirements as to the one legally in force - and that in said resolution, all votes issued be counted, without applying said restriction. I.6.2. In cases such as change of control or changes to the composition of the Board of Directors, defensive measures shall not be adopted that instigate immediate and serious asset erosion in the company and further disturb the free transmission of shares and free assessment by shareholders of the performance of the Members of the Board. I.6. Measures on Corporate Control Adopted I.19 Adopted I.20 4

5 II. BOARD OF DIRECTORS AND SUPERVISORY BOARDS II.1. General Points II.1.1. Structure and Duties II The Board of Directors shall assess the adopted model in its Annual Report on Adopted Chapter II Corporate Governance and point out possible constraints to its functioning, and it shall propose measures that it deems fit to overcome such obstacles. II Companies shall set up internal control and risk management systems in order to safeguard the company's worth and which will identify and manage the risk. Said systems shall include at least the following components: i) setting of the company's strategic objectives as regards risk assumption; ii) identifying the main risks associated to the company's activity and any events that might generate risks; iii) analyse and determine the extent of the impact and the likelihood that each of said potential risks will occur; iv) risk management aimed at aligning risks actually incurred with the company's strategic options for risk assumption; v) mechanisms to control the execution and effectiveness of measures adopted for risk management; vi) adoption of internal mechanisms for information and communication on several components of the system and of risk-warning ; vii) regular assessment of the implemented system and adoption of any changes that are deemed necessary. II The Board of Directors shall ensure the establishment and functioning of the internal control and risk management systems. The Supervisory Board shall be responsible for assessing the functioning of said systems and proposing the relevant adjustment to the company s needs. Not Adopted (CMVM considered this adopted in the 2011 compliance assessment.) The Company has implemented internal control and effective risk management systems that it considers adequate to the relevant risks to which Grupo SAG s business is exposed. However, the Company is not in a position to state that such systems entirely fulfill all the formal items listed in this Recommendation, and therefore it should (strictly) (in reality) not consider the said Recommendation as Adopted. II.5. Adopted II.6. II In the Annual Corporate Adopted II.9. Governance Report, companies shall: i) identify the main economic, financial and legal risk that the company is exposed to during the exercise of its activity; ii) describe the performance and efficiency of the risk management system. II The Board of Directors and the Adopted II.7. Supervisory Board shall establish internal regulations which shall be disclosed on the company's website. II.1.2. Governance Incompatibility and Independence II The Board of Directors shall include a number of non-executive members to ensure the efficient supervision, auditing and assessment of the executive members activity. Adopted II.3. II Non-executive members shall include an adequate number of independent members. The size of the company and its shareholder structure must be taken into account when devising this number and may never be less than a fourth of the total number of Board Directors. Not Adopted (CMVM considered this adopted in the 2011 compliance assessment.) Of the four non-executive members of the board of directors, none is considered independent as per the terms of clause 414, 5 do Código das Sociedades Comerciais, pelo que a presente recomendação II.14. 5

6 II The independence assessment of its non-executive members carried out by the Board of Directors shall take into account the legal and regulatory rules in force concerning the independency requirements and the incompatibility framework applicable to members of the other corporate bodies, ensuring orderly and sequential coherence in applying independency criteria to the entire company. Any director who could not hold a similar position in another corporate body due to the applicable rules cannot be considered to be independent. não é cumprida. paragraph 5 of the Commercial Company Act, reason why this recommendation is not fulfilled. The Company considers that the current structure of its Board of Directors is adequate bearing in mind the current shareholder structure and that the existing corporate organization mechanisms and strict compliance of the Company s various obligations as a listed company to which it is subject fulfill the underlying objectives of this recommentation. Furthermore, the added value provided by the previous experience of all the current Non- Executive Directors ensures constant monitoring and supervision of the company s business, ensuring a useful contribution to the discussion and interaction with Executive Directors. On the other hand, the Supervisory Board also ensures constant monitoring and the External Auditor registered at the Securities Commission conducts regular audit operations throughout the financial year, and compulsory information to the market is also made available by the Board of Directors in a timely manner, hence implementation of a new supervisory model in the company is considered to be inadequate. Adopted II.15 II Depending on the applicable model, the Chair of the Supervisory Board or of the Auditing and Financial Matters Committees, shall be independent and have the required competencies to carry out his/her duties. II The selection process of candidates for non-executive members shall be devised so as prevent interference by executive members. II.1.3 Eligibility Criteria and Appointment Criteria Adopted Not Adopted (CMVM considered this adopted in the 2011 compliance assessment.) The Chair of the Supervisory Board is independent and has the required competencies to carry out the relevant duties. The selection process of candidates to the position of Non-executive Directors is a procedure developed within the Shareholders Meeting. Should there exist a controlling position that gives a shareholder (who is simultaneously a Director II.21. II.22. II.16. 6

7 with executive functions), the possibility of this person intervening in the choice of executive and non-executive directors does not provide the necessary conditions of exemption required by this Recommendation. Therefore, given the current legal framework for the election of Board Members combined with the current shareholder structure / type, identifying and implementing a practical solution accommodating this Recommendation seems to be a highly complex proposition. II.1.4. Policy on the Reporting of Irregularities II The company shall adopt a policy Adopted II.35. whereby irregularities occurring within the company are reported. Such reports shall contain the following information: i) the means by which such irregularities may be reported internally, including the persons entitled to receive the reports; ii) how the report is to be handled, including confidential treatment, should it be required by the reporting person. II The general guidelines on this policy shall be disclosed in the Annual Corporate Governance Report. Adopted II.35. II Remuneration of the Members of the Board of Directors shall be structured so that the formers' interests can be aligned with the long-term interests of the company. Furthermore, the remuneration shall be based on performance assessment and shall discourage extreme risks being taken. Thus, remunerations shall be structured as follows: i) Remuneration of the Board of Directors carrying out executive duties shall include a variable element which is determined by a performance assessment carried out by the company's competent bodies according to pre-established quantifiable criteria. Said criteria shall take into consideration the company's actual growth and the actual growth generated for the shareholders, its long-term sustainability and the risks taken on, as well as compliance with the rules applicable to the company's activity. ii) The variable component of the remuneration shall be reasonable overall as regards the fixed component of the remuneration, and maximum limits shall be set for all components. iii) A significant part of the variable remuneration shall be deferred for a period not less than three years and its payment shall depend of the company's continued positive performance during said period. iv) II.1.5. Remuneration Not Adopted (CMVM considered this adopted in the 2011 compliance assessment.) The Company considers that, given the current structure of its Registered Share Capital and recent results achieved by the Group, as well as the evolution of the economic sector in which it operates, the remuneration policy for Board Members is adequate as per the terms indicated on this Corporate Governance Report, and was indeed discussed and approved by the General Assembly on 30 April As far as the Company is aware, no agreement has been entered into by any Director with the aim of mitigating the risk associated with the variability of the remuneration determined by the Company. Members of the Board of Directors shall II.30. 7

8 not enter into contracts with the company or third parties the effect of which is to mitigate the risk inherent to the variability of the remuneration established for them by the company. v) The Executive Directors shall hold, up to twice the value of the total annual remuneration, the company shares that were allotted by virtue of the variable remuneration schemes, with the exception of those shares that are required to be sold for the payment of taxes on the gains of said shares. vi) When the variable remuneration includes stock options, the period for exercising same shall be deferred for a period of not less than three years. vii) The appropriate legal instruments shall be established so that in the event of a Director's dismissal without due cause, the envisaged compensation shall not be paid out if the dismissal or termination by agreement is due to the Director's inadequate performance. viii) The remuneration of Non-Executive Board Members shall not include any component the value of which is subject to the performance or the value of the company. II A statement on the remuneration policy of the Board of Directors and Supervisory Board referred to in Article 2 of Law No. 28/2009 of 19 June, shall contain, in addition to the content therein stated, adequate information on: i) on groups of companies whose remuneration policy and practices were taken as a baseline for setting the remuneration ii) on payments for the dismissal or termination by agreement of the Directors' duties. II The compensation policy statement referred to in Article 2 of Law No. 28/2009 shall also include the compensations of first level management positions within the meaning of Article 248-B/3 of the Securities Code whose compensation includes an important variable component. The statement shall be detailed and the policy presented shall particularly take into account the long-term performance of the company, compliance with the rules applicable to its business and restraint in taking risks. II A proposal shall be submitted at the General Meeting on the approval of plans for the allotment of shares and/or options for share purchase or based on variations in share prices, to members of the Board of Directors and Supervisory Board and other Not adopted (CMVM considered this adopted in the 2011 compliance assessment.) Not adopted (CMVM considered this adopted in the 2011 compliance assessment.) Not applicable The Company considered that it was appropriate to consider the general domestic market as the market of reference for the external competitiveness analysis. As concerns payments for the agreed dismissal or termination of Directors duties, the Company declared that it refers to the applicable legal provisions in force. The Company considers that, given the current structure of its Registered Share Capital and recent results achieved by the Group, as well as the evolution of the economic sector in which it operates, the remuneration policy for First Level Management Positions is adequate as per the terms indicated on this Corporate Governance Report, and was indeed discussed and approved by the General Assembly on 30 April The Company considers that, in the framework of the current functional structure of the Company, risk taking by First Level Management Positions is shared with the Management. There are no plans involving share distribution or stock options. III.10. 8

9 First Level Management Positions within the meaning of Article 248/3/B of the Securities Code. The proposal shall mention all the necessary information for a correct assessment of the plan or, in its absence, of the general condtions to which the plan must obbey. The main characteristics of the retirement benefit plans established for members of the Board of Directors and Supervisory Board and other First Level Management Positions within the meaning of Article 248/3/B of the Securities Code, shall also be approved at the General Meeting. II At least one of the Remuneration Committee's representatives shall be present at the Annual General Meetings. Adopted I.15 II The amount of remuneration received, as a whole and individually, in other companies of the group and the pension rights acquired during the relevant financial year shall be disclosed in the Annual Report on Corporate Governance. Not applicable With the entry in foce of CMVM s Regulation no. 1/2010, the applicable regime is that of Article 3 c) and d). II.31 II.2.1 Within the limits established by Law for each Management and Supervisory structure, and unless the company is of a reduced size, the Board of Directors shall delegate the day-to-day running and the delegated duties should be identified in the Annual Report on Corporate Governance. II.2.2 The Board of Directors shall ensure that the company acts in accordance with its goals, and should not delegate its duties, namely in what concerns: ii) definition of the company's strategy and general policies; ii) definition of the corporate structure of the group; iii) decisions taken that are considered to be strategic due to the amounts, risk and particular characteristics involved. II.2.3. Should the Chair of the Board of Directors carry out executive duties, the Board of Directors shall set up efficient mechanisms to coordinate the non-executive members work to ensure that the latter may decide in an independent and informed manner, and furthermore shall explain these mechanisms to the shareholders in the corporate governance report. II.2.4 The annual management report shall include a description of the activity carried out by the non-executive Board Members and shall mention any restraints encountered. II.2.5. The company shall explain its policy of portfolio rotation on the Board of Directors, including the person responsible for the financial portfolio, and report on same in the Annual Corporate Governance Report. II.2. Board of Directors Adopted II.2. II.3. Adopted II.3. Adopted II.8 Adopted II.17 Not adopted (CMVM considered this adopted in the 2011 compliance assessment.) The Company has no defined portfolio rotation policy for the Board of Directors, namely for the person responsible for the financial portfolio. The Company considers that a generic and abstract policy does not serve its interests, and portfolios are decided and assigned according to the specific capacities and competencies, qualifications and 9

10 professional experience of each Member, and it cannot be considered that all Directors have capacities that enable them to perform in every capacity with an equal degree of ability and performance. The current Member in charge of the financial portfolio is in his second term, which is considered to be totally reasonable. II.3. Chief Executive Officer (CEO), Executive Committee and Executive Board of Directors II.3.1. When Directors that carry out executive duties are requested by other Board Members to supply information, the former shall do so in a timely manner and the information supplied must adequately suffice the request made. I.3.2. The Chair of the Executive Committee shall send the convening notices and minutes of the meetings to the Chair of the Board of the Directors and, when applicable, to the Chair of the Supervisory Board or the Auditing Committee. I.3.3. The Chair of the Executive Board of Directors shall send the convening notices and minutes of the meetings to the Chair of the General and Supervisory Board and to the Chair of the Financial Matters Committee. Adopted Information requested by other Members of the Corporate Bodies from Directors with executive functions is provided in a timely and adequate manner. Adopted The Chairman of the Board sends the calls to meetings and the minutes of all the Board meetings to the Chariman of the Supervisory Board. Not applicable This recommendation does not apply to the corporate governance model adopted by SAG GEST. II.4. General and Supervisory Board, Financial Matters Committee, Audit Committee and Supervisory Board II.4.1 Besides fulfilling its supervisory duties, Not applicable This recommendation does not the General and Supervisory Board shall apply to the corporate advise, follow-up and carry out on an ongoing basis, the assessment on the SAG GEST. governance model adopted by management of the company by the Executive Board of Directors. Besides other subject matters, the General and Supervisory Board shall decide on: i) the definition of the strategy and general policies of the company; ii) the corporate structure of the group; and iii) decisions taken that are considered to be strategic due to the amounts, risk and particular characteristics involved. II.4.2 The annual reports and financial Adopted II.4 information on the activity carried out by the General and Supervisory Committee, the Financial Matters Committee, the Audit Committee and the Audit Board shall be disclosed on the company s website together with the financial statements. II.4.3 The annual reports on the activity carried out by the General and Supervisory Board, the Financial Matters Committee, the Audit Committee and the Audit Board shall include a description on the supervisory activity and shall mention any restraints that Adopted II.4 they may have come up against. II.4.4. The General and Supervisory Board, the Auditing Committee and the Supervisory Board (depending on the applicable model) shall represent the company for all purposes at the external auditor, and it shall propose the provider of these services and relevant remuneration, ensure that adequate conditions for the supply of these services Adopted The Supervisory Board shall as per Article 25 of the Company s By-laws, propose to the General Meeting the appointment of the Statutory Auditor or of the Audit Company / External Auditor. The Supervisory Board shall also approve the relevant 10

11 are in place within the company, and shall act as liaison between the company and the first recipient of the reports. remuneration, ensure that adequate conditions are in place within the company to enable proper provision of the services and also that it is the first recipient of the relevant reports. The Issuer considers that this Recommendation does not definitively establish that the Audit Board is the only and exclusive counterpart of the External Auditor (EA), therefore excluding the possibility for the EA to interact, while conducting its work, with the executive body or with other relevant operational structures that monitor the Company s activity. Indeed, and considering the nature of the work involved in external auditing, requiring the Audit Board to know in detail about every operation and moves underlying the preparation and completion of the financial statements checked and verified under the accounts review is hardly compatible, as this involves an obvious interaction between the EA and its work teams with the Issuer s structures. Therefore, the practical conclusion is that the Audit Board is obviously not the Company s only and exclusive counterpart vis-à-vis the EA, remaining albeit as the privileged counterpart to represent the Company in the formal requirements or in the formal and confidential addressing of reports. Therefore, we consider that this Recommendation has been fulfilled. II.4.5. According to the applicable model, the General and Supervisory Board, Auditing Committee and Supervision Board shall assess the external auditor on an annual basis and recommend to the General Meeting that the external auditor be discharged whenever justifiable grounds are present. II.4.6. The internal audit services and those that ensure compliance with the rules applicable to the company (compliance services) shall functionally report to the Audit Committee, to the General and Supervisory Board or, in the case of companies adopting the Latin model, to an independent director or Supervisory Board, regardless of the hierarchical relationship that these services have with the executive management of the company. Adopted II.24 Adopted II.5 11

12 II.5.1 Unless the company is of a reduced size and depending on the adopted model, the Board of Directors and the General and Supervisory Committees, shall set up the necessary Committees in order to: i) ensure that a competent and independent assessment of the Executive Directors' performance is carried out, as well as its own overall performance as well as the performance of all existing committees; ii) study the adopted governance system and verify its efficiency and propose to the competent bodies, measures to be carried out with a view to its improvements; iii) in a timely manner, identify potential candidates with the high profile required for the performance of director's duties. II.5.2. Members of the Remuneration Committee or equivalent body shall be independent from the Members of the Board of Directors and include at least one member with knowledge and experience in matters of remuneration policy. II.5.3. Any natural or legal person that provides or has provided, over the past three years, services to any structure subject to the Board of Directors, to the Board of Directors proper or that has a current connection with any of the company s consultancy firms shall not be recruited to assist the Remuneration Committee. This recommendation also applies to any natural or legal person who has an employment contract or provides services to the same. II.5. Special Committees Adopted The Company has a functioning Corporate Governance and Structure Assessment Committee The Company has a specialized committee to ensure a competent and independent evaluation of the performance of the Executive Directors and to assess its own global performance. Although no formal structure exists with competence to identify potential candidates with the profile required for the position of Director, since the Company considers that this is the remit of the Shareholders Meeting because the presentation of candidate lists for the Board of Directors is a Shareholder competence, it is nevertheless considered that this Recommendation can be considered as having been complied with. Adopted II.38 II.39 Adopted II.39 II.5.4. All the Committees shall draw up minutes of the meetings they hold. Adopted All existing Committees in the Company have drawn up minutes of the meetings held. 12

13 III.1.1. Companies shall maintain permanent contact with the market thus upholding the principle of equality for shareholders and ensure that investors are able to access information in a uniform fashion. To this end, the company shall create an Investor Relations Office. III.1.2. The following information that is made available on the company s Internet website, shall be disclosed in the English language: a) The business name, public company status, head-offices and remaining data provided for in Article 171 of the Commercial Companies Code; b) By-laws c) Identity of the members of the Board of Directors and of the Investor Relations Officer; d) Investor Relations Office its functions and access means; e) Accounts Reporting documents; f) Half-Yearly Calendar on Company Events; g) Proposals sent through for discussion and voting during the General Meeting; h) Notices convening meetings. III.1.3. Companies shall advocate the rotation of auditors after two or three terms in accordance with four or three years respectively. Their continuance beyond this period must be based on a specific opinion from the Supervisory Board to formally consider the conditions of auditor independence and the benefits and costs of replacement. III. INFORMATION AND AUDITING III.1. General Disclosure Duties Adopted III.16. Adopted All the information on the Company s website is available in English. Adopted The maintenance of the External Auditor beyond the legal maximum number of terms is based on an Opinion of the Supervisory Board that considered the Auditor s conditions of independence and the benefits and costs of replacement. III.1.4. The external auditor must, within its powers, verify the implementation of remuneration policies and systems, the efficiency and functioning of internal control mechanisms and report any shortcomings to the company's Supervisory Board. III.1.5. The Company shall not recruit services other than auditing services to the external auditor or any entities with which they have a partnership or share a network. Where recruiting such services is called for, said services shall not exceed 30% of the total amount for services rendered to the company. The hiring of these services shall be approved by the Supervisory Board and shall be expounded in the Annual Corporate Governance Report. Not adopted (CMVM considered this adopted in the 2011 compliance assessment.) Adopted The Company considers that these functions generally fall within the framework of the audit function conducted vis-à-vis the Financial Statements as at 31 December. However, and although the External Auditor checks the effectiveness and functioning of internal control mechanisms and reports any flaws to the supervisory body, it does not actually check compliance of the remuneration policy regarding the corporate bodies and management that was discussed and approved in the Shareholders Meeting. The Company specifies in its report any services other than auditing services that it contracted to the External Auditor. The Audit Board specifically approved the possibility for the Company to contract services other than auditing from the External Auditor or from any III.17 13

14 entity having a partnership relationship or being part of the same network, provided that such services do not exceed 30% of the total amount for the services provided to the Company. IV. CONFLICTS OF INTEREST IV.1. SHAREHOLDER RELATIONSHIP IV.1. Where deals are concluded between the company and shareholders with qualifying holdings, or entities with which same are linked in accordance with Article 20 of the Securities Code, such deals shall be carried out in normal market conditions. IV.1.2. Where deals of significant importance are undertaken with holders of qualifying holdings, or entities with which same are linked in accordance with Article 20 of the Securities Code, such deals shall be subject to a preliminary opinion from the Supervisory Board. The procedures and criteria required to define the relevant level of significance of these deals and other conditions shall be established by the Supervisory Board. Adopted III.12 Adopted III.13 14

15 Chapter I. General Shareholders Meeting I.1. Details of the members of the Presiding Board to the General Meeting The Board of the General Meeting comprises a Chairman and the Company Secretary, as established on Article 12 of the By-laws. The current composition of the Board of the General Meeting is the following: Chairman - Dr. Lopo Roque de Pinho Cancella de Abreu Company Secretary Dr.ª. Maria do Carmo Gomes Teixeira I.2. Indication of the start and end dates of mandates - Chairman - Dr. Lopo Roque de Pinho Cancella de Abreu o Date of first appointment 3 November o Date term ends 31 December Company Secretary: Dr.ª. Maria do Carmo Gomes Teixeira o Date of first appointment April o Date term ends - 31 December I.3. Details of the remuneration of the Chairman of the Presiding Board to the General Meeting The Chairman of the Board of the General Meeting receives a fixed retribution paid as an attendance ticket in the amount of Eur 1,750 for each General Meeting session he/she chairs. In 2012, only one General Meeting was held. I.4. Indication of the notice required for the blocking of shares for participation in the General Meeting Under the provisions of no. 2 of Article 23 C of the Securities Code as amended by Decree-Law 49/2010 dated 19 th May the exercising of the rights [to attend, discuss and vote in the general meeting] is not prejudiced by the transfer of shares occurring after the date of registration, nor does it depend on the blocking of the said shares between that date and the date of the general meeting. Under the provisions of no. 2 of Article 23 C of the Secutiries Code as amended by Decree-Law 49/2010 dated 19 th May anyone who, on the date of registration, corresponding to hours (GMT) of the 5 th day of trading prior to the date of the Meeting, holds shares that confer upon him/her the right to, according to the law and by-laws, at least one vote, is entitled to attend, discuss and vote at the meeting. I.5. Indication of the rules for blocking shares in the event of the General Meeting being suspendedunder the provisions of no. 2 of Article 23 C of the Securities Code as amended by Decree-Law 49/2010 dated 19 th May the exercising of the rights [to attend, discuss and vote in the general meeting] is not prejudiced by the transfer of shares occurring after the date of registration, nor does it depend on the blocking of the said shares between that date and the date of the general meeting. 15

16 I.6. Number of shares corresponding to one vote According to Article 14 of the Company s By-laws and according to Recommendation I.3.3. of CMVM s 2010 Corporate Governance Code, each share corresponds to a vote. I.7. Indication of the by-laws rules providing for actions that do not confer voting rights or which enable voting rights over a certain number not to be counted, when issued by a single shareholder or shareholders related thereto No statutory rules provide for the existence of shares that do not confer voting rights or establishing non-casting of voting rights above a certain number, when cast by a single Shareholder or by Shareholders related to former I.8. Existence of by-laws rules on the exercise of voting rights, including constitutive and decision-making quorums or systems for equity rights Apart from the rules mentioned in points I.4., I.6. e I.9., the By-laws of SAG GEST establish specific requirements as regards constitutive / deliberative quorums for the following situations: Article 16 of the By-Laws establishes a constitutive quorum which is larger than the one required by law, i.e., after the first call, the General Meeting shall only function when Shareholders holding shares representing fifty per cent of the Share Capital are present or represented, regardless of the matters included in the agenda. Article 17 of the By-laws determines the need of a quorum of two thirds of the votes corresponding to the share capital for the approval of deliberations by the General Meeting regarding Share Capital increases, changes in the By-laws and dissolution. I.9. Existence of by-laws rules rules on the exercising of voting rights via postal voting SAG GEST s By-laws provide for voting by mail. Votes cast by mail count for the purpose of the quorum required for the General Meeting and are also valid for the second call to the General Meeting for which they were issued, and it is the Chairman of the General Meeting's duty to check their authenticity and compliance under the terms announced in the General Meeting Call Notice. It is also the Chairman of the General Meeting s duty to ensure that votes by post remain confidential until voting time. Votes by post shall be counted at the same time as votes delivered at the General Meeting. Votes cast by mail count as negative votes on deliberation proposals made after their date of issue. The presence of the Shareholder, or of his representative at the General Meeting revokes the vote cast by mail. I.10. Provision of a form for exercising the right to vote by mail The Company has made voting forms available to the Shareholders for voting by mail. The forms can be obtained at the Head-office, or online on the Company s website 16

17 I.11. Deadline requirement for the time between receipt of the postal ballots and the date on which the General Meeting is held Votes sent by mail must be received until three business days before the date of the General Meeting. I.12. Exercising of voting rights by electronic means As per the Company s by-laws, electronic voting is not allowed. I.13. Possibility of shareholders having access to excerpts from the Minutes of the General Meetings in the company's website within five days after the general meeting was held On the day of the General Meeting, a summary of the deliberations is published on the Company s website and on the Securities Commission information system, and within five days, an excerpt of the relevant minutes will be published on the Company s website. SAG Gest complies in this manner with recommendation I.5.of CMVM s 2010 Corporate Governance Code in the part that concerns the publishing of the excerpt of the minutes or of a document with equivalent contents. I.14. Existence of a historical record on the Company's website containing the resolutions passed at the company's General Meetings, Share Capital and voting results referring to the previous three years SAG GEST has on its website an historical record containing the minutes, information on the number of attendees, number of Shareholders represented and number of Corporate Shareholders present, agendas and resolutions made concerning the meetings held in the last three years, as per the requirements of Recommendation I.5 of CMVM s 2010 Corporate Governance Report. I.15. Indication of the representative(s) from the Remuneration Committee present at General Meetings Dr. Lopo Roque de Pinho Cancella de Abreu, who is Chairman of the General Meeting and Chairman of the Salaries Committee, was present at the 2012 General Meeting. I.16. Information of the intervention by the General Meeting on matters concerning the company's remuneration policy and the assessment of the performance of members of the Board of Directors and other First Level Management Positions Under the terms of Clause 22-1, of the Company s By-laws, it is the Salaries Committee s duty to determine the remunerations of Members of the Corporate Bodies. Since its introduction in November 2005 as a recommendation from the Securities Commission on Listed Companies Corporate Governance Report, the General Meeting has assessed, either as a separate item on the agenda or as an integral part of the appendix to the Management Report, the document prepared by the Salaries Committee containing guidelines to be observed by this Committee for the period deemed adequate. As concerns the assessment of performance of Members of the Já relativamente à avaliação do desempenho dos Membros of Management, a specific evaluation committee was established that issues a written annual evaluation report concerning the Directors performance up to date of approval by the Board of Directors, of the Management Report and Financial Statements concerning each financial period. 17

18 I.17. Information of the intervention by the General Meeting on matters concerning the proposal on the share allocation plan, and/or stock option plans, or based on share price fluctuations, the members of the Board of Directors, Supervisory Board and other Directors, within the meaning of Article 248-B/3 of the Securities Code together with the details provided to the General Meeting for the purposes of correctly assessing said plans. The Company has not approved any plan involving the distribution and/or acquisition of shares for such Members of Corporate Bodies or other First Level Management Positions. I.18. Information of the intervention by the General Meeting on matters concerning the approval of the main features of the retirement benefit system as enjoyed by the members of the Board of Directors, Supervisory Board and other Directors, within the meaning of Article 248-B/3 of the Securities Code The Company does not adopt any retirement benefit scheme on behalf of such Members of Corporate Bodies or other First Level Management Positions. I.19. Existence of a statutory provision envisaging the duty to submit, at least every five years, the maintenance or withdrawal of the statutory provision providing for the limitation of the number of votes that can be held or exercised by a single Shareholder individually or jointly with other Shareholders to a resolution by the General Meeting SAG Gest s By-laws do not contain any statutory rule providing for the limitation of the number of votes that can be held by a single Shareholder individually or in conjunction with other Shareholders, and therefore no provision is made for submitting the maintenance or elimination of such measures to a resolution by the General Meeting every five years. I.20. Indication of the defensive measures that have the effect of automatically causing serious erosion to Company assets in case of transfer of control or changes to the composition of the Board of Directors No defensive measures were taken the effect of which is the automatic causing of a serious erosion of the Company s assets in the case of changes in the control or to the composition of the Board of Directors. I.21. Important agreements to which the Company is a party and that come into force, are changed or terminated in cases such as a change in company control, as well as the related outcome, unless the disclosure of same, due to its nature, is highly damaging to the company and except when the Company is specifically obliged to disclose said information by virtue of other legal requirements N/A. 18

19 I.22. Agreements between the company and the Board of Directors, within the meaning of Article 248-B/3 of the Securities Code, that provide for compensation in cases of dismissal, unfair dismissal or termination of employment following a change in company control. N/A. 19

20 Chapter II. Board of Directors and Supervisory Board SAG Gest adopt s a model of corporate governance called Latin model which entrusts the management of the Company to the Board of Directors and the supervision of the Company s business to a Supervisory Board in conjunction with the Statutory Auditor. The model of governance adopted by SAG GEST allows a separation of the powers of the various Corporate Bodies and allows efficient management and administration, by means of delegation by the Board of Directors of day-to-day management to the Executive Directors responsible for business units and corporate services. For more information on the functioning of SAG GEST in terms of corporate governance, the Bylaws and regulations on the functioning of the Board of Directors and Supervisory Board are available to Shareholders on the Company s website, The Board of Directors considers that, taking into account the specific situation of SAG GEST, the model of governance adopted is adequate and follows principles that have been fully apprehended by its Members, and it has shown to be effective in terms of creating value for the Shareholders and safeguarding the interests and rights of the stakeholders. Section I General Issues II.1. Identification and composition of Corporate Bodies SAG GEST s Management and Supervisory Bodies are its Board of Directors, the Supervisory Board and the Statutory Auditor. The Board of Directors elected for the four-year period has the following members: Chairman João Manuel de Quevedo Pereira Coutinho Voting Members Carlos Alexandre Antão Valente Coutinho Esmeralda da Silva Santos Dourado Fernando Jorge Cardoso Monteiro José Maria Cabral Vozone Luís Miguel Dias da Silva Santos Pedro Roque de Pinho de Almeida Rui Eduardo Ferreira Rodrigues Pena 20

21 The Supervisory Board elected for the four-year period has the following members: Chairman João José Martins da Fonseca George Voting Members Duarte Manuel da Palma Leal Garcia Martinho Lobo de Almeida Melo de Castro Alternate Member António Marques Ernst & Young Audit & Associated (CPAC no. 178), represented by Paulo Jorge Luís da Silva (CPA no. 1334) has been appointed as Statutory Audit Company during FY II.2. Identification and composition of Committees established with responsibilities for the management or the supervision of the Company The Company does not have any formal Commission established with specific competence in administration or auditing. II.3. Organisational structure and functional chart 21

22 Functioning of the Board of Directors The current Board of Directors comprises the Chairman of the Board and seven Members, among which four Non-Executive Directors whose funtion is to monitor, supervise and assess the activity of its Executive Directors. The Board of Directors is focused on the definition and revision of the strategy and policy regarding management, monitoring and control of the Group s performance, ensuring that the interests of Shareholders, Clients and Employees are protected, including among others, the following tasks, (i) approval of the Group's Strategic Plan, which includes the main guidelines for the development of the business in the various areas and quantification of growth and global profitability targets by business areas, as well as the main activities to be conducted in order to achieve the said targets; (ii) approval of operation and corporate investment plans for the Company and its Affiliates, as well as of the financial plan duly validated by the Executive Committee, (iii) monthly monitoring of the Group s financial performance, (iv) follow-up of ongoing projects and (v) approval of the acquisition or divestment from actual or financial non-operational assets. The Board of Directors is required to have an ordinary meeting at least once every two months and whenever it must deliberate on a specific matter. Bearing in mind the current positioning of the Group s activities which, in Portugal, are focused on the Automotive Distribution, Retail and Logistics areas and, in Brazil, on the Automotive Services area, a corporate governance model was adopted to be in force during the term of the Board of Directors for the year period, under which Managing Directors were appointed who have day-to-day managerial powers, and who will be responsible for the areas as described in the organizational chart. II.4. Reference to the fact that annual reports on the activities undertaken by the General and Supervisory Board, the Financial Board, the Audit Committee and the Supervisory Board include the description of the supervisory activity and indicate any constraints encountered, and are subject to disclosure on the website of the company, together with the financial statements The Annual Report on the activity carried out by the Supervisory Board includes a description about the supervisory activity conducted, mentioning possible constraints detected (if applicable), and it is published on the Company s website together with the accounts reporting documents. II.5. Description of the Company's internal control and risk management systems, particularly with regard to financial reporting and the functioning and effectiveness thereof SAG GEST has implemented internal control and risk management systems enabling the prevention and detection of relevant risks to which Grupo SAG s business is exposed and which are based on structural units that are responsible for the monitoring and control of those same risks. Therefore, the ALCO Committee (Assets and Liabilities Committee), whose attributions include monitoring and controlling liquidity risks, exchange risks, interest rates variation exposure risks and credit risk, is responsible for the definition and control of policies on the management of financial risk factors which could cause a decrease in the Company s equity. The management and control of Unidas, SA s automobile risk position, namely the definition and control of policies on vehicle assessment and establishment of vehicle devaluation factors and indicators, are ensured by the Automobile Risk Committee, whose responsibilities include monitoring and control of the extraordinary depreciation risk of its automotive assets. Furthermore, there is an Internal Audit Committee that reports to the Supervisory Board and ensures the assessment and evaluation of Group activities, as well as the adequacy and 22