IRCE S.p.A. TRANSACTIONS WITH RELATED PARTIES PROCEDURES

Transcription

1 IRCE S.p.A. TRANSACTIONS WITH RELATED PARTIES PROCEDURES pursuant to article 4 of Regulations on Related Party Transactions adopted by Consob with resolution No of 12 March 2010, as amended and supplemented Page 1 of 1

2 TABLE OF CONTENTS 1 DEFINITIONS AND INTERPRETATION DEFINITION OF RELATED PARTIES DEFINITION OF TRANSACTIONS WITH RELATED PARTIES DEFINITION OF INDEPENDENT DIRECTORS AND UNRELATED DIRECTORS ROLES AND RESPONSIBILITIES COMMITTEE FOR THE APPROVAL OF PROCEDURES COMMITTEE FOR THE APPROVAL OF TRANSACTIONS WITH RELATED PARTIES MANAGER RESPONSIBLE FOR PREPARING THE CORPORATE ACCOUNTING DOCUMENTS (FINANCIAL REPORTING MANAGER) CORPORATE OFFICERS IDENTIFICATION OF TRANSACTIONS OF GREATER IMPORTANCE WITH RELATED PARTIES IDENTIFICATION OF TRANSACTIONS OF LESSER IMPORTANCE WITH RELATED PARTIES IDENTIFICATION OF EXEMPTION CASES TRANSACTIONS OF NEGLIGIBLE AMOUNT COMPENSATION PLANS PURSUANT TO ARTICLE 114-BIS OF THE CONSOLIDATED FINANCIAL ACT RESOLUTIONS REGARDING REMUNERATION FOR DIRECTORS HOLDING SPECIAL OFFICES AND OTHER KEY MANAGEMENT PERSONNEL REGULAR TRANSACTIONS COMPLETED UNDER MARKET OR STANDARD EQUIVALENT TERMS AND CONDITIONS TRANSACTIONS WITH AND AMONG SUBSIDIARY AND/OR ASSOCIATED COMPANIES IDENTIFICATION AND RECOGNITION OF TRANSACTIONS WITH RELATED PARTIES. INFORMATION FLOWS PROCEDURES FOR SIGNIFICANT TRANSACTIONS TRANSACTIONS NOT UNDER THE AUTHORITY OF THE SHAREHOLDERS' MEETING METHODS FOR THE ASSESSMENT AND APPROVAL OF LESSER IMPORTANCE TRANSACTIONS ALTERNATIVE PROCEDURES TRANSACTIONS UNDER THE AUTHORITY OF THE SHAREHOLDERS' MEETING TRANSACTIONS CARRIED OUT THORUGH SUBSIDIARY COMPANIES PROCEDURES FOR FRAMEWORK RESOLUTIONS RELATED PARTY DISCLOSURES INTERNAL DISCLOSURE ON TRANSACTIONS OF LESSER IMPORTANCE WITH RELATED PARTIES DISCLOSURE TO THE PUBLIC ON TRANSACTIONS OF GREATER IMPORTANCE WITH RELATED PARTIES PERIODIC DISCLOSURE TRANSACTIONS WITH RELATED PARTIES AND COMMUNICATIONS TO THE PUBLIC UNDER ART. 114, PARAGRAPH 1 OF THE CONSOLIDATED FINANCIAL ACT DISSEMINATION OF THE PROCEDURES AMENDMENTS AND UPDATING OF THE PROCEDURES PUBLICATION OF THE PROCEDURES Page 2 of 2

3 RECITALS Consob has adopted, with resolution No of 12 March 2010, a regulation containing principles and provisions to which administrative bodies of companies that make use of the risk capital market must comply in order to ensure transparency and substantial and procedural fairness of related party transactions entered into directly or through subsidiaries (the Regulations ). On 24 September 2010, Consob has issued a Communication (No. DEM/ ) containing Instructions and guidelines for the implementation of the Regulations on Related Party Transactions, adopted with resolution No of 12 March 2010, as amended (the Interpretative Communication ). In compliance with the above-mentioned provisions, this document (the Procedures ) describes rules, roles, responsibilities and activities implemented by IRCE S.p.A. ( IRCE or the Company ) in order to ensure transparency and substantial and procedural fairness of related party transactions entered into by the Company directly or through its subsidiaries. 1 DEFINITIONS AND INTERPRETATION 1.1 Definition of related parties Pursuant to these Procedures, the concept of related parties as well as the concept of control, joint control, significant influence, close relatives, key management personnel, subsidiary company, associated company and joint venture shall have the meanings as described in Annex 1 to the Regulations. Based on the definitions contained in Annex 1 to the Regulations and on the instructions and guidelines provided by the Interpretative Communication, IRCE's related parties are the following: a) entities which control IRCE, either directly or indirectly, including through subsidiary companies, trustees or intermediaries; b) entities which, directly or indirectly, including through subsidiary companies, trustees or intermediaries, are under the control of IRCE; c) entities which, directly or indirectly, including through subsidiary companies, trustees or intermediaries, are under common control together with IRCE; d) entities which, directly or indirectly, including through subsidiary companies, trustees or intermediaries, hold a stake in IRCE so to exert significant influence over IRCE; e) entities which, directly or indirectly, including through subsidiary companies, trustees or intermediaries, exercise control over IRCE jointly with others; f) entities which exercise an individual or joint control or a significant influence over IRCE due to their participation in a shareholders' agreement; g) IRCE's associated companies, as defined in compliance with the international accounting standard IAS 28 Investments in associates ; h) joint venture in which IRCE has a stake; i) IRCE's key management personnel, i.e. those who have (either directly or indirectly) authority and responsibility in the planning, management and supervision of IRCE's activities (including the directors, even non-executive and independent members, as well as the statutory auditors); j) key management personnel of companies exercising control over IRCE, i.e. those who have (either directly or indirectly) authority and responsibility in the planning, management and Page 3 of 3

4 supervision of the activities carried out by IRCE's parent companies (including the directors, even non-executive and independent members, as well as the statutory auditors); k) close relatives of subjects under previous points a), d), e), f), i) or j), i.e. those relatives who are potentially capable of exercising influence over, or be influenced by, the abovementioned person in their dealings with IRCE, including common-law spouses, their children and dependants; l) an entity in which a person referred to in paragraphs i), j) or k) exercises control, joint control or significant influence or owns, directly or indirectly, a significant portion, but not less than 20% of voting rights; m) a supplementary pension fund, collective or individual, Italian or foreign, established for the employees of the company or of any other entity associated with it. Information regarding the entities and the situations described above, are included in a list of the Company's related parties ( the List of Related Parties ), held and updated by the manager responsible for preparing the corporate accounting documents (hereinafter also Financial Reporting Manager ), in compliance with the operating methods described in the following paragraph Definition of transactions with related parties A related party transaction is any transfer of resources, services or obligations between related parties, regardless of whether for valuable consideration. (Annex 1, paragraph 1, of the Regulations). For the purpose of these Procedures, transactions with related parties include: a) merger transactions involving IRCE and a related party, including, but not limited to, the merger by incorporation of IRCE into the parent company or into the company that exercises a significant influence on it, or the merger of IRCE and another company subject to joint control together with IRCE itself; b) spin-off by incorporation with a related party, i.e. transactions through which IRCE, for example, splits parts of its assets to the benefit of the parent company, or vice versa; c) strictly non-proportional spin-off where, for instance, IRCE's assets are split in favour of a number of beneficiaries, with non-proportional allotment of shares or unit trusts from the beneficiaries to IRCE's shareholders; d) IRCE's capital increases with exclusion of option rights in favour of a related party; e) any resolution on the allocation of remunerations and economic benefits, in whatever form, to directors, statutory auditors and key management personnel, including any offices held and/or assignments carried out in subsidiary companies (to be exempted only if all requirements described in art. 5 below are met). These Procedures also regulate transactions performed through Italian or foreign subsidiary companies, under article 2359 of the Italian Civil Code, or any company subject to IRCE management and coordination activity (the Subsidiaries ), more specifically those transactions which, although performed by one of IRCE's subsidiary companies, can be traced back to IRCE itself by means of a preventive analysis or approval by the latter, in compliance with the provisions of the Interpretative Communication, to be used as a reference. Page 4 of 4

5 1.3 Definition of independent directors and unrelated directors Under these Procedures: - independent directors of the Company, in compliance with the provisions of the Interpretative Communication, are those recognised as such by IRCE in application of the principles and criteria set forth in the Corporate Governance Code for Listed Companies issued by Borsa Italiana S.p.A., adopted by the Company; - unrelated directors are the directors other than the counterparty to a given transaction and its related parties. 2 ROLES AND RESPONSIBILITIES 2.1 Committee for the approval of Procedures The Committee for the approval of Procedures is appointed by the Board of Directors and is composed entirely of independent directors. The task of the Committee for the approval of Procedures is to issue a binding opinion on the resolutions passed by the Board of Directors approving the Procedures and any amendments thereto. If fewer than three independent directors are in office, the resolutions on the Procedures and any amendments thereto are approved subject to the favourable opinion of the independent directors who are present or, in their absence, subject to the non-binding opinion of an independent expert appointed by the Board of Directors. 2.2 Committee for the approval of transactions with related parties The Committee for the approval of transactions with related parties (hereinafter also the Committee ), regardless of the greater or lesser importance of such transactions, is appointed by the Board of Directors and is composed of at least three non-executive directors, the majority of whom must be independent; moreover, such directors must be unrelated to each transaction. The Committee for the approval of transactions with related parties carries out all activities as required by the Regulations and these Procedures and in particular, with respect to transactions of lesser or greater importance, it issues (before approving the transactions themselves) a reasoned and nonbinding opinion on the interest of the company in the completion of the transaction and the convenience and substantial correctness of the underlying terms and conditions. The Board of Directors, upon its establishment, appoints the Chairman of the Committee for the approval of transactions with related parties. The Committee defines, also through the adoption of specific regulations, its own operating rules. 2.3 Manager responsible for preparing the corporate accounting documents (Financial Reporting Manager) The Financial Reporting Manager prepares and updates the List of Related Parties, as identified in paragraph 1.1 of the Procedures. The List of Related Parties is prepared/updated: a) on the basis of the information and documents filed with the Company, with the support of the Group's Administration and Budget Office; Page 5 of 5

6 b) on the basis, in addition to results from surveys, of written statements provided by parent companies, directors, statutory auditors and other entities as specified in Annex 1 to the Consob Regulations, which are all Related Parties to the Company, and with the indication of any other Related Party to the Company through these entities ( Indirect Related Parties ); c) on the basis of the prompt communication to the Financial Reporting Manager, by the entities under previous letter b), about any change regarding the designation of such entities, or of their respective Indirect Related Parties, as related parties. The Financial Reporting Manager is responsible for the update of the List also on the basis of the information provided by the departments of the Company and its subsidiaries, by the entities listed under previous letter b) and by their Indirectly Related Parties and, in any case, the Financial Reporting Manager reviews the List at least on a quarterly basis. All the departments of the Company and its subsidiaries are required to communicate to the Financial Reporting Manager any new circumstances including, but not limited to, the acquisition of investments in other companies, the execution of agreements or the revision of existing agreements that may require changes in the List of Related Parties. The List of Related Parties is electronically accessible to the Company's Offices/Departments. The List is also made available, upon request, to the Committee, to the corporate bodies and the subsidiaries of the Company, as well to all other offices/departments of the Company and its subsidiaries, by the Financial Reporting Manager. The Financial Reporting Manager verifies, based on reports (as regulated under paragraph 6) provided by the Corporate Officer, the nature of the reported transactions and, if appropriate, starts the procedural steps in compliance with the provisions under paragraph 7. The Financial Reporting Manager is responsible for coordinating these Procedures with the administrative and accounting procedures adopted for the preparation of the Separate Financial Statement, the Consolidated Financial Statements and the half-year Financial Statements for the purpose of their certification as per article 154-bis of the Consolidated Financial Act, as well as for coordinating the financial reporting on Transactions with Related Parties in accordance with the information contained in the List. 2.4 Corporate Officers Corporate Officers are the Managers operating within the Company and the legal representatives of the subsidiary companies, who, according to internal corporate regulations, have signing authority and/or delegation of powers for transactions of amounts exceeding the negligible amounts stated in the Procedures. Corporate Officers are responsible for preliminary reviews in order to identify any Transaction with Related Parties, according to the methods described in the following paragraph 6. 3 IDENTIFICATION OF TRANSACTIONS OF GREATER IMPORTANCE WITH RELATED PARTIES For the purposes of these Procedures, the transactions with related parties carried out by IRCE, either directly or through its Subsidiaries, should be considered as transactions of greater importance when, at least one of the applicable relevance indexes, as described in Annex 3 to the Regulations and here below, exceeds the 5% threshold ( Relevance Threshold ). Also of importance is the exceeding of at least one of the set out relevance thresholds by multiple transactions completed within the same year, with the same related party, or with entities related to the latter or to IRCE which are homogeneous or made under a unified design, without prejudice to the exemptions set forth in these Procedures. Page 6 of 6

7 The relevance indexes adopted by the company are: a) Equivalent-value relevance ratio, i.e. the ratio between the value of the transaction and the net equity taken from the most recent consolidated balance sheet published by the Company or, if greater, the capitalization of the Company recognised at the end of the last trading day included in the period covered by the most recent periodic accounting document (annual or semi-annual financial report, or interim report) published by the Company. b) Asset relevance ratio, i.e. the ratio between the total assets of the entity involved in the transaction and the total assets of the Company. The data to be used must be taken from the most recent consolidated balance sheet published by the Company; whenever possible, similar data should be used for determining the total assets of the entity involved in the transaction. c) Liabilities relevant ratio, i.e. the ratio of the total liabilities of the acquired entity and the Company's total assets. The data to be used must be taken from the most recent consolidated balance sheet published by the Company; whenever possible, similar data should be used for determining the total liabilities of the acquired company or business unit. The Relevance Threshold, in reference to the above indexes, is decreased to 2.5% for transactions involving: - Disposals of intangible assets, including but not limited to, trademarks, patents, industrial inventions; - Acquisitions / transfer of companies and business units; - Acquisitions / transfer of investments and/or financial instruments in general; - Acquisition / transfer of properties. 4 IDENTIFICATION OF TRANSACTIONS OF LESSER IMPORTANCE WITH RELATED PARTIES Transactions of Lesser Importance are transactions carried out with related parties, by IRCE directly or through its subsidiaries, that are: a) below the thresholds set out for the greater importance transactions; and b) exceeding the thresholds set out for transactions of negligible amount (see the following paragraph 5.1); with the exclusion of additional transactions identified as exempt, pursuant to the following paragraph 5. 5 IDENTIFICATION OF EXEMPTION CASES The provisions of these Procedures do not apply: a) to transactions of negligible amount, pursuant to paragraph 5.1 below; b) to compensation plans based on financial instruments approved by the Shareholders' Meeting pursuant to article 114-bis of the Consolidated Financial Act and its implementing transactions (see the following paragraph 5.2); Page 7 of 7

8 c) to resolutions issued by the Shareholders' Meeting, pursuant to article 2389, paragraph 1, of the Italian Civil Code, concerning the remunerations for the members of the Board of Directors and the Executive Committee; d) to resolutions concerning the remunerations for directors holding special offices, included in the total amount approved in advance by the Shareholders' Meeting pursuant to art. 2389, paragraph 3, of the Italian Civil Code; e) to resolutions issued by the Shareholders' Meeting, pursuant to article 2402 of the Italian Civil Code, concerning the remunerations for the members of the Board of Statutory Auditors; f) to transactions to be carried out based on instructions received from the Supervisory Authority for financial stability purposes, or based on provisions issued by the parent company for the execution of instructions received from the Supervisory Authority for ensuring the group's financial stability; g) to regular transactions that are carried out under terms and conditions that are standard or market-equivalent (see following paragraph 5.4); h) to transactions carried out with or among subsidiary companies and transactions with associated companies, if there are no interest in these companies that can be qualified as significant (see following paragraph 5.5). 5.1 Transactions of negligible amount For the purposes of these Procedures, transactions of negligible amount are transactions that do not exceed the negligible threshold (see Table 1), identified by the type of transaction and counterparty, and of an amount that allows for the exclusion, in consideration of the Company's size, of transactions that do not involve any significant risk in terms of the protection of the investors. Types of transactions Individuals Counterparty Entities Remunerations 250, N/A Professional Consulting Services 250, , Purchase/sale of goods/services 250, , Other transactions (acquisitions/transfers of investments, business units, other fixed assets, etc.) 350, , If the transactions do not fall within the categories shown in the table, the threshold is set at 250, Compensation plans pursuant to article 114-bis of the Consolidated Financial Act Compensation plans based on financial instruments approved by the Shareholders' Meeting pursuant to article 114-bis of the Consolidated Financial Act, and related implementing transactions, are excluded from the application of the provisions set out in these Procedures. 5.3 Resolutions regarding remuneration for directors holding special offices and other key management personnel Page 8 of 8

9 Resolutions regarding remuneration for directors, board members and key management personnel, other than those under previous paragraph 5, letter c) and d), are excluded from the application of these Procedures. For the exclusions to be implemented, it is necessary that: - IRCE has adopted a remuneration policy; - the definition of the remuneration policy has involved a committee, consisting solely of nonexecutive directors or board members, the majority of whom must be independent; - a report describing the remuneration policy has been subject to the approval or an advisory vote from the IRCE Shareholders' Meeting; - the remuneration awarded is consistent with such policy. 5.4 Regular Transactions completed under market or standard equivalent terms and conditions Identification of regular transactions completed under market or standard equivalent terms and conditions Regular transactions are the transactions carried out by IRCE in the course of its regular business and related financial activities. Transactions completed under market or standard-equivalent terms and conditions are the transactions completed under terms and conditions equivalent to those normally applied to non-related parties carrying out transactions of a similar nature, extent and risk, or based on regulated rates or on imposed prices, or equivalent to those applied to subjects with whom the company is required, by law, to contract at a certain price. The identification of regular transactions is carried out while keeping into account the guidelines under paragraph 3 of the Interpretative Communication. The definition of regular transaction is based on the concept of regular business and related financial activities, and more specifically: - the concept of regular business includes: (i) the main activities that contribute to the generation of revenue for the company and (ii) all other operating activities that are not classifiable as investment or financial activities; - the concept of financial activities (also called financing activities ) related to regular business, includes transactions that, in theory, can be qualified as financial to the extent in which they are incidental to the performance of the regular business, including, but not limited to, short-term liabilities that are functional to the purchase of raw materials. Loans obtained for carrying out transactions that cannot be qualified as regular business (being related to investment activities) cannot be considered regular transactions Applicable regulations Regular transactions that are completed under market or standard-equivalent terms and conditions, are exempt from the application of these Procedures, without prejudice to the provisions under paragraph 10 of these Procedures. If the transactions that benefit from exemption are transactions of greater importance, without prejudice to the provisions of article 114, paragraph 1 of the Consolidated Financial Act, the Company: - shall communicate to Consob, within seven days from the approval of the transaction, the counterparty, the subject matter and the amount thereof; Page 9 of 9

10 - shall include, in the interim and annual report on operations, within the information required under article 5, paragraph 8 of the Regulations, which reportable transactions have been completed through the exemption described in this paragraph. For each regular transaction to be exempted under this paragraph, the Financial Reporting Manager provides, in a specific document, the following information: regular nature of the transaction in relation to its purpose, the recurrence and scope of the transaction, the nature of the relation, the terms and conditions defined in the framework agreement, as well as the nature of the counterparty. 5.5 Transactions with and among subsidiary and/or associated companies Without prejudice to the provisions under the following paragraph 10 of these Procedures, transactions with or among subsidiary companies, also conducted jointly, as well as transactions with associated companies, if there are no significant interests from other parties related to IRCE in the subsidiary or associated companies 1 as counterparties of the transactions, are exempt from the application of these Procedures. Interests deriving from the mere sharing of one or more directors or, if any of any other key management personnel between the Company and its subsidiary or associated companies, are not considered to be significant interests. Conversely, significant interests exist if, in addition to the sharing of one or more directors or other key management personnel, these subjects benefit from incentive plans based on financial instruments (or in any case with variable remunerations) based on the results achieved by the subsidiary or associated companies with which the transaction was carried out. The assessment of significant interests is based on the weight assigned to a remuneration based on the performance of the subsidiary versus the overall remuneration for a director or key management personnel involved in the transaction. In particular, a significant interest exists if the variable component of the remuneration to be received by the interested party, according to the performance of the subsidiary, prevails over the fixed component of the remuneration itself. An investment, even if indirect, in the subsidiary participating in the transaction, from an entity exercising control over IRCE, is also considered ad a possible significant interest. In this case, the investment in the related party held by the entity that exercises a significant control or influence over the company, becomes a significant interest if the actual weight of this investment exceeds the actual weight of the investment held by the same entity in the issuer. 6 IDENTIFICATION AND RECOGNITION OF TRANSACTIONS WITH RELATED PARTIES. INFORMATION FLOWS Before undertaking a negotiation or defining a transaction, on behalf of the Company or Subsidiary Companies through which the Company intends to carry out the transaction, the Corporate Officer involved: a) verifies, with the support of the Financial Reporting Manager and by referring to the information data contained in the List of Related Parties, if the counterparty is to be considered a related party; b) verifies if the transaction is carried out with and among the subsidiary and/or associated companies in which no other related parties hold any significant interest for the purpose of the application of the exemptions under paragraph 5.5 of these Procedures; c) if, through the verification under points a) and b) above, the Corporate Officer determines that the counterparty is a Related Party and that no exemptions apply under paragraph 5.5 of the Procedures, communicates promptly to the Financial Reporting Manager the information concerning the transaction. 1 According to the Interpretative Communication, in terms of exemptions, the definition of subsidiary and associated companies are those contained in Annex No. 1 to the Regulations. Page 10 of 10

11 This communication must contain at least the following: - identification data of the counterparty; - reasons for the transaction; - type and purpose of the transaction; - estimated amount of the transaction, or if it is an acquisition or transfer of an investment, company or business unit, total assets and liabilities of the entity that is the subject matter of the transaction; - estimated time schedule; - any other transactions completed with the same related party or with entities related to it; - if the transaction terms and conditions are deemed as market or standard-equivalent, the documentation must include objective evidence thereof. The Financial Reporting Manager, after receiving the above communication, promptly assesses: a) whether a relationship with the counterparty exists and, if necessary, requests additional information, through the most appropriate means; b) whether one or more of the exemptions under previous paragraph 5 apply; c) whether it is a transaction of greater or lesser importance. In addition, for verification purposes about the relevance of the transaction under point c) above, the Financial Reporting Manager complies with the following criteria: - the amount of long-term employment agreements shall be considered equal to the presumed remuneration applied to the entire duration, in the case of fixed-time agreements, or in the case of permanent employment agreements, the amount must be equal to the presumed remuneration applied to a financial year, or if the termination notice period is above one year, to the entire notice period; - the transactions of lesser importance that are homogeneous or made under a unified design and completed within the same financial year, with the same related party or with entities related to this party or to the Company, shall be added together: in particular and first of all, the importance of each transaction is determined on the basis of the ratio and ratios to be applied to it and subsequently, in order to verify any exceeding of the relevance thresholds, the results of each ratio must be added together; - if not otherwise specified (in particular, under article 5, paragraph 2 of the Regulations), the transactions with related parties are measured, for the purpose of calculating their greater or lesser importance, on an individual basis. Consequently, with specific reference to the assignment of remunerations and economic benefits, under any form, to the members of the Board of Directors and Board of Statutory Auditors and to key management personnel, the remuneration assigned to each member and to each manager shall constitute an independent transaction with a related party that must be individually treated when applying the correct procedural regulations. For transparency purposes, the regulations regarding the accumulation as regards a single key manager of homogeneous transactions or transactions under a unified design (see Interpretative Communication), shall apply. The Financial Reporting Manager details all control activities, tracking them through the appropriate means. If the Financial Reporting Manager, at the completion of these control activities: Page 11 of 11

12 a) confirms that the counterparty to the transaction is a Related Party; b) concludes that no exemption rule, under previous paragraph 5, applies and, consequently, that the transaction can be qualified as a transaction of greater or lesser importance; c) obtains a favourable opinion from the CEO who makes recourse to the Company's appropriate departments for determining the type and characteristics of the transaction on the activities to be carried out for the definition of the transaction; the Financial Reporting Manager communicates, promptly and in writing, the importance of the transaction, pursuant to the set out Procedures, to the Chairman of the Committee and to the Corporate Officer, and approves the implementation of the procedures under the following paragraph 7. 7 PROCEDURES FOR SIGNIFICANT TRANSACTIONS Pursuant to article 10 (Regulation to determine certain types of companies) of the Regulations, the Company has the option to apply article 7 (Procedures for transactions of lesser importance in companies adopting traditional or single-tier management and control systems) of the Regulations themselves to all lesser and greater importance transactions, without prejudice to the communication obligations regarding the latter type of transactions in compliance with article 5 of the Regulations. 7.1 Transactions not under the authority of the Shareholders' Meeting Significant transactions that are not under the authority of the Shareholders' Meeting, are approved by the appropriate corporate body, following a non-binding reasoned opinion issued by the Committee. The corporate body authorised to approve the significant transactions is the CEO or the Board of Directors. 7.2 Methods for the assessment and approval of lesser importance transactions After determining whether the transaction is of lesser or greater importance, pursuant to these Procedures and based on the activities described in paragraph 6, the Financial Reporting Manager sends an explanatory memorandum regarding the transaction, together with any existing support documentation, to the Committee which may require additional information and may provide its remarks. The explanatory memorandum regarding the transaction, the support documentation and any expert opinion and/or fairness and/or legal opinion required under the following paragraph, are forwarded to the Committee with appropriate advance notice prior to its meeting for the issuing of a reasoned opinion about the transaction. The Committee meets, in a timely manner before the meeting of the Board of Directors called to issue a resolution on the transaction. When formulating its opinion, the Committee also takes into consideration the interest of IRCE in the transaction as well as the convenience and substantial fairness of its terms and conditions. The meeting, in which the Board of Auditors may participate, is attended, upon invitation, by the managers (or designated personnel) responsible for the corporate structures of IRCE and/or for the companies of the Group involved in the transactions, as well as any other manager and consultant suggested by the Committee itself. The documentation, provided to the Committee, any remarks issued by the Committee as well as the opinion of the Committee, are communicated to the Board of Directors - or to a different corporate body - within 5 (five) days prior to the meeting called to resolve on the transaction, except in cases of demonstrated urgency or other issues that must be specifically described. If the nature, extent and characteristics of the transaction so require, the Committee has the authority to be assisted, at the expense of the Company, by one or more independent experts of its choice, who will provide specific assessments and/or fairness and/or legal opinions. To this purpose, the Committee may recommend to the Board of Directors the expert(s) to be appointed for the performance of the transaction, and this assignment must expressly specify that the expert(s) is (are) Page 12 of 12

13 required to assist the Committee in the fulfilment of its duties. The selected expert must declare his/her independence upon appointment, and explain the reasons why any economic relationships existing with IRCE, the parent company of IRCE or the subsidiary companies of IRCE, are not relevant in order to meet the independence requirements. At the meeting of the Board of Directors called to approve the transaction, the chairman of the Committee explains the non-binding reasoned opinion issued by the Committee itself. If the transaction is approved, the Board of Directors and the Board of Statutory Auditors, at least on a quarterly basis, are provided with complete information regarding the performance of the approved transaction, pursuant to article 7 letter f) of the Regulations. The minutes of the approval resolution (issued by the Board of Directors or any other corporate body), if available, contain the reasons why it is in the interest of the Company to carry out the transaction, the convenience and substantial correctness of its terms and conditions, the evidence of the main elements of the opinion issued by the committee of independent directors, or, alternatively, by the Board of Statutory Auditors or the independent expert. Without prejudice to article 114, paragraph 1 of the Consolidated Financial Act, if one or more transactions are approved, regardless of a negative opinion being issued by the Committee, the Corporate Affairs Department and the Legal Office, with the support of the Group's Administration and Budget Office as well as other departments involved, based on the type of transaction, shall prepare and make available to the public, within fifteen [15] days from the end of each quarter of the financial year, at the corporate office and according to the methods specified in Title II, Paragraph I, of the Consob Regulations 11971/99 ( Issuer Regulations ), a document containing the name of the counterparty, the purposes and amounts of such transactions as well as the reasons for not sharing the issued opinion. Within the same term, the opinion is made available to the public as an attachment to the above document or on the Web site of the Company in the Investor Page/Corporate Governance sections. 7.3 Alternative procedures If one or more members of the Committee declare(s) to be related to a specific transaction, in order to ensure its substantial correctness, the non-binding reasoned opinion shall be issued by the unrelated independent director(s) who are present, or in their absence, by the Board of Statutory Auditors. This is subject to the right to designate an independent expert. If an opinion from the Board of Statutory Auditors is required, the members of the Board, if they hold an interest on their own account or on behalf of third parties in the transaction, must inform the other Statutory Auditors specifying the nature, terms and conditions, origin and scope of such interest. 7.4 Transactions under the authority of the Shareholders' Meeting When a significant transaction falls under the competence of the Shareholders' Meeting or must be authorised by it, during the negotiation, preliminary and approval phases of the proposal for a resolution to be submitted to the Shareholders' Meeting, the provisions set out in previous paragraphs 7.1, 7.2 and 7.3 shall apply. 8 TRANSACTIONS CARRIED OUT THORUGH SUBSIDIARY COMPANIES Without prejudice to the provisions under paragraph 6, if a Manager/Executive, in compliance with the powers and proxy granted, reviews, approves or intends to submit for review/approval by IRCE's Board of Directors, a transaction with Related parties to be carried out through a subsidiary 2, he/she is required to promptly inform the Financial Reporting Manager to allow for the necessary verifications to be performed, as described in paragraph 6. 2 To this end, please refer to the definition of control under article 2359 of the Italian Civil Code, rather than to the definition used for the identification of related parties. Page 13 of 13

14 If, once the activities described above are completed, the transaction can be qualified as of Greater or Lesser Importance, the procedures set out in paragraph 7 of these Procedures shall apply. 9 PROCEDURES FOR FRAMEWORK RESOLUTIONS For the purposes of these Procedures, the Board of Directors can adopt framework resolutions concerning homogeneous transactions to be carried out with specific categories of related parties, by applying the procedures described in previous paragraph 7. These procedures shall not apply to single transactions carried out following a framework resolution issued by the Board of Directors. The framework resolutions adopted in compliance with this paragraph, cannot be effective for more than one year, must refer to transactions that are sufficiently determined with indication, at least, of an estimated maximum amount of the transactions to be carried out within the reporting period, and must contain a specific reason for the conditions to be set forth. The Financial Reporting Manager of IRCE provides a complete report, at least on a quarterly basis, to the Board of Directors regarding the implementation of the framework resolutions, pursuant to article 12 of the Regulations. Upon approval of a framework resolution, the Company releases a disclosure report, pursuant to article 5 of the Regulations, if the estimated maximum amount of the transactions subject to the same resolution, exceeds one of the relevance thresholds identified in previous paragraph RELATED PARTY DISCLOSURES All corporate Offices/Departments in IRCE and in its Subsidiary Companies cooperate in order to enable the Company to fully and promptly fulfil the reporting obligations set out in the Regulations Internal disclosure on transactions of lesser importance with related parties The Financial Reporting Manager provides, at least on a quarterly basis, to the Board of Directors, the Committee and the Board of Statutory Auditors complete and detailed disclosures about the performance of significant transactions approved by the Board of Directors in the quarter of reference. The disclosures must also provide information on the transactions with related parties carried out through the Subsidiary Companies, that have been reviewed or approved by the Board of Directors and for which the Committee has issued a non-binding opinion. The IRCE Financial Reporting Manager, possibly with the support of the Corporate Officers, provides also to the Board of Directors, as specified in previous paragraph 9, a full disclosure, at least on a quarterly basis, regarding the implementation of any framework resolutions Disclosure to the public on transactions of greater importance with related parties Notwithstanding additional provisions under article 5 of the Regulations, in the event of greater importance transactions, the Financial Reporting Manager, with the support of the Group's Administration and Budget Office and of the other departments involved in this type of transaction, shall prepare, pursuant to article 114, paragraph 5 of the Consolidated Financial Act, a disclosure report drawn up in compliance with Annex 4 to the Regulations and made available to the public at the corporate offices and according to the methods set forth in Title II, paragraph I of the Issuer Regulations, within seven days from the approval of the transaction by the relevant body or if the relevant body resolves to require that a contractual proposal is submitted, from the moment when the contract, although preliminary, is executed based on the applicable provisions. In the cases that require examination or authorisation from the Shareholders' Meeting, the disclosure report must be made available within seven days from the approval of the proposal of submission to the Shareholders' Meeting. Page 14 of 14

15 If the Company performs, with one related party or with entities related to such related party or to the Company, transactions that are homogeneous or made under a unified design, which, although not individually classifiable as greater importance transactions, cumulatively exceed the identified relevance threshold, a disclosure report must be prepared in compliance with article 4 of the Regulations, which must contain information, also on an aggregate basis for homogeneous transactions, regarding all the transactions that are part of such aggregation. This document shall be made available to the public within fifteen days from the approval of the transaction or from the execution of the agreement that determines the exceeding of the relevance threshold. If the transactions that determine the exceeding of the above relevance threshold are carried out by IRCE subsidiary companies, the disclosure report is made available to the public within fifteen days from the time when the Company is notified of the approval of the transaction or of the execution of the agreement that determines its relevance. In compliance with the terms and conditions previously indicated, the Company makes available to the public, as an attachment to the disclosure report or on the Web site in the Investor Page/Corporate Governance section, any opinion issued by the Committee. Without prejudice to the provisions of article 5, paragraph 6 of the Regulations, if the Company is required to prepare a disclosure report pursuant to article 70, paragraphs 4 and 5, and 71 of the Issuer Regulations, it publishes only one document containing the information required in paragraph 1 of article 5 of the Regulations and in articles 70 and 71 of the Issuer Regulations. The Company, concurrently with the disclosure to the public, forwards to Consob the documents and the opinions described above, in compliance with article 65-septies, paragraph 3, of the Issuer Regulations Periodic disclosure The Group's Administration and Budget Office, with the support of the Financial Reporting Manager and of the other departments involved based on the type of transaction, provides the necessary information through the interim and annual report on operations concerning: - individual transactions identified as of greater importance pursuant to the Regulations, completed during the reference period, also if through Subsidiary Companies; - any other individual transactions with related parties, as defined in article 2427, paragraph 2, of the Italian Civil Code, completed in the reference period, which had a relevant impact on the Company's balance sheets and results; - any amendment or development of transactions with related parties, described in the most recent annual report, which had a relevant impact on the Company's balance sheets and results in the reference period Transactions with related parties and communications to the public under art. 114, paragraph 1 of the Consolidated Financial Act If a transaction with related parties, also if completed through Subsidiary Companies, is subject to communication obligations under art. 114, paragraph 1, of the Consolidated Financial Act, a memorandum to be released to the public, in addition to other information to be published under said provision, shall contain the following information: - the indication that the counterparty to the transaction is a related party and the description of the nature of such relationship; - the corporate or personal name of the counterparty to the transaction; - whether or not the transaction exceeds the relevance thresholds identified under paragraph 3 of these Procedures and the indication of any subsequent publication of a disclosure report, under art. 5 of the Regulations; Page 15 of 15

16 - the procedure that has been or is going to be adopted for the approval of the transaction and, in particular, whether the Company has availed itself of an exemption as set forth in these Procedures under art. 13 and 14 of the Regulations; - any approval of the transaction regardless of a negative opinion issued by the Committee. 11 DISSEMINATION OF THE PROCEDURES The Procedures are made available to the Company's Departments/Offices by the Financial Reporting Manager. The Procedures are also forwarded, by the Financial Reporting Manager, to the legal representatives and to the Offices of the Subsidiary Companies or of companies subject to IRCE management and coordination activity, to ensure that they review them and, within the area of their competence or responsibility, they implement the provisions contained therein, and they undertake to fulfil all obligations set forth in the same Procedures in order to ensure the effectiveness of the processes they regulate as well as disseminating knowledge of the same Procedures within the relevant corporate structures and to any company under the control of the Subsidiary Companies. The subsidiary companies are required to provide IRCE, assisted by the Financial Reporting Manager, with all information necessary for the implementation of the reporting obligations set forth in the Regulations and in these Procedures. 12 AMENDMENTS AND UPDATING OF THE PROCEDURES The Procedures are approved by IRCE's Board of Directors, upon favourable opinion issued by the Committee in charge of the approval of the Procedures. The Board of Directors evaluates, at least every three years, whether to revise the Procedures, taking into account, inter alia, any change that has occurred in the corporate structures, as well as the effectiveness of the Procedures themselves in their practical implementation. Any amendment to the Procedures shall be approved by IRCE's Board of Directors upon a favourable opinion from the Committee in charge of the approval of Procedures, as stated in paragraph 2.1 above. 13 PUBLICATION OF THE PROCEDURES The Procedures are published on the Web site of the Company, in the Investor Page/Corporate Governance section, on the company's intranet and, through reference to the Web site, also in the annual report on operations, pursuant to article 2391-bis of the Italian Civil Code, which also contains information on the transactions carried out with related parties. Page 16 of 16