Directors interests and transactions with Related Parties
In order to implement art. 2391-bis of the Italian Civil Code, Consob approved a Regulation on March 12, 2010 which obliged listed companies to adopt procedures not later than December 1, 2010 aimed at guaranteeing full transparency as well as procedural and effective fairness for transactions with related parties.
Also in light of the recommendations of the Corporate Governance Code, on November 24, 2010, Saipem’s Board of Directors unanimously approved the procedure “Interests held by Board Directors and Statutory Auditors and transactions with related parties”, effective from January 1, 2011. This procedure supersedes the procedure “Code of Practice Regulating Operations with Related Parties” approved by the Board of Directors on July 7, 2003.
The Audit and Risk Committee, comprised wholly of independent Directors pursuant to the Corporate Governance Code and the aforementioned Regulation, have expressed a preliminary opinion in favour of the adoption of this procedure.
This largely reflects the definitions and provisions of Consob Regulation: transactions with related parties have been divided into transactions of greater importance, transactions of lesser importance, and exempted transactions, with different procedures to be followed based on the type and relevance of transactions.
Specifically, the Board of Directors reserves the right to approve transactions of greater importance, subject to the Audit and Risk Committee being in favour, having been involved in negotiations and having received complete and timely information. The Audit and Risk Committee expresses a reasoned, albeit not binding opinion on the interest the Company may have in a transaction and the expedience and substantial fairness of its terms.
The Board of Directors, having consulted the Audit and Risk Committee, has also identified Transactions of smaller amounts, which are excluded from the procedure, as well as other types of transactions, which, due to the nature of the revenue and/or cost, are deemed to be Regular Transactions as they were completed in market-equivalent or standard terms and therefore are excluded from the procedure even if they are not of lesser amounts.
This procedure attributes a major role to independent Directors, as members of the Audit and Risk Committee and the Compensation and Nomination Committee, in matters of remuneration.
Also in terms of the duty of information to the public, Saipem’s procedure reflects the provisions of Consob Regulation in full.
On March 13, 2012, the Board of Directors updated the procedure following the first year of application, taking into account the ensuing operational requirements.
The new procedure defines timeframes, responsibilities and verification tools by the interested resources, in addition to the flows of information required for the correct application of the procedure.
A specific discipline was added for those transactions in which a Director of Statutory Auditor hold a vested interest, on their own or third party’s behalf.
Specifically, it details the checks and evaluations required in the preparatory and approval stages, as well as the reasons for the transactions involving a vested interest by a Director or a Statutory Auditor, notwithstanding the requirement of a reasoned opinion issued by the Audit and Risk Committee, when a transaction requires approval by the Board of Directors.
Board Directors, Statutory Auditors, General Managers and senior managers with strategic responsibilities declare every six months all transactions they may have entered into involving Saipem S.p.A. and/or its subsidiaries, either directly or through a third party, in compliance with IAS 24. They also declare potential significant relations for the purposes of the identification of related parties (for instance, close relatives).
Amounts of transactions of a commercial, financial or other nature with related parties, a description of the most relevant types of transaction, their incidence on the balance sheet, income statement and financial flows are detailed in the consolidated and statutory financial statements of Saipem S.p.A.
Board Directors and Statutory Auditors declare, every six months or sooner in the event of changes, any potential interests they may hold towards the Company and the Group.
In 2011, the Chairman has provided periodical updates to the Board of Directors and the Board of Statutory Auditors of transactions entered into with related parties.