Report on corporate governance and ownership
Evolution of approach
The current governance structure of ERG S.p.A. (hereafter, also the "Company") has been developed over time by gradually introducing, into the ERG corporate approach, rules of conduct reflecting the most advanced, recognised principles of corporate governance.
Even before the company was listed in October 1997, one of its key features was a focus on a proper relationship between management and shareholders and on ensuring that business operations be directed towards value creation.
This corporate policy was implemented via:
- coordinated delegation of powers within the Board of Directors in such a way as to assure (a) clarity and completeness of executive accountabilities and (b) monitoring of activities
and assessment of results achieved;
- regular and adequate reporting to the Board of Directors on actions taken in the exercise of powers and of managerial responsibilities;
- adoption of specific procedures to determine remuneration for directors and management.
Its presence on the stock market has clearly accentuated the company's propensity to base its conduct on the criteria of transparency and correctness. It has also accelerated the process of adapting both internal regulations and organisation to meet these criteria.
This corporate policy was therefore put into effect by means of:
- amendments to the Articles of Incorporation to bring them into line with the regulatory changes introduced by the Italian Company Law Reform, by law provisions on the matter of Shareholders' Rights on transactions with related parties and, lastly, on gender balance in the composition of corporate bodies;
- adoption of a Code of Ethics as a tool for defining and communicating the duties and responsibilities of ERG S.p.A. towards its stakeholders, and as an imperative element of an organisation and management model, updated on 26 February 2013, consistent with the requirements of Italian Legislative Decree No. 231/2001;
- acceptance of the Italian Corporate Governance Code for Listed Companies, promoted by Borsa Italiana S.p.A. ("Corporate Governance Code" )1 since its first edition in 1999;
- adoption of a Code of Conduct for the Directors of ERG Group companies;
- appointment of independent directors and non executive directors to the Board;
- adoption of a Policy for the compensation of members of the Board of Directors, and of the key managers as prescribed by the Corporate Governance Code, updated on 18 December 2012, to align the interests of management with those of shareholders and strengthen the relationship between managers and the Company, both in terms of awareness of the importance of the stock value and its continuity over time;
- definition of guidelines for the identification and execution of significant transactions, updated on 10 May 2012, and of other governance documents designed to assure transparent and timely management of the ERG Group's relationship with the market;
- adoption of a Procedure for handling and processing privileged information and for the public dissemination of statements and information, updated on 10 May 2012;
- adoption of an integrated risk management model, with the objective of identifying, as exhaustively as possible, the risks inherent in the ERG Group's full range of business activities;
- adoption of a specific Procedure to assure the transparency and the substantial and procedural correctness of transactions with related parties carried out by ERG S.p.A. directly or through its subsidiaries, updated on 6 August 2012.
- adoption, on 12 November 2013, of the Anti-corruption Guidelines and the updating of the Compliance Guidelines as per Italian Legislative Decree No. 231/01 and the anti-corruption laws in the Group companies.
1 On 30 July 2012, the Board of Directors resolved to adhere to the new edition of the Corporate Governance Code published in December 2011 with the exception of the different choices already made by the Board, to be adequately pointed out in the pertinent section of this report; consequently, all references to the provisions of the Corporate Governance Code shall be deemed to refer to the aforesaid edition of the Code.
Information about the ownership structure as of 31 december 2013 (pursuant to article 123-bis of legislative decree no. 58 dated 24 february 1998 (italian consolidated finance act or t.u.f.)
Share capital structure as at 31 December 2013
| ||Number of shares ||Amount of share capital subscribed and paid up ||% of share capital ||Listed (market) / not listed ||Rights and obligations |
|Ordinary shares ||150.320.000 ||150.032.000.00 ||100 ||MTA/FTSE Italy Mid Cap Index ||- |
|Shares with limited voting rights || - ||- || - ||- ||- |
|Shares without voting rights ||- ||- || - ||- ||- |
Significant equity investments as at 31 December 2013
| Declarant ||Direct shareholder ||% share of ordinary capital ||% share of voting capital |
|San Quirico S.p.A. ||San Quirico S.p.A. ||55.942 ||55.942 |
|San Quirico S.p.A. ||Polcevera S.A. || 6.905 ||6.905 |
|ERG S.p.A ||ERG S.p.A || 5.000 || 5.000 |
|Norges Bank ||Norges Bank || 2.033 ||2.033 |
Other information as at 31 December 2013
| ||Yes ||No ||No available information |
|Restrictions on transfer of securities || ||X || |
|Restrictions on voting right || ||X || |
|Shareholder agreements || || ||X |
|Arrangements pursuant to article 123-bis, paragraph 1, letter i) tuf 1 ||X || || |
1 Said information is contained in the report on remuneration, published in accordance with Article 123-ter of the Italian Consolidated Finance Act.
- there are no securities conferring special control rights;
- there are no employee stock option plans;
- with regard to the provisions of Article 123-bis, paragraph 1, point h) of the Italian Consolidated Finance Act, it should be noted that there are in existence financing agreements containing the usual provisions regarding the change of control of the debtor, which, at least in one case, could involve the reimbursement of the loan in question if there is a change in control at ERG S.p.A. and in particular: the loan granted by Intesa San Paolo for a total of EUR 50 million maturing on 31 December 2014. It should also be noted that there are in existence partnership agreements with third parties relating to certain investee companies, which allow for the possibility, but not the obligation, as is frequently the case in such agreements, for third parties that are shareholders of the above-mentioned investee companies, to acquire, usually at market conditions, the shares or stakes of the shareholder belonging to the ERG Group if there is a change in control at ERG S.p.A. In this regard, of particular note is the case of TotalErg S.p.A., in relation to which the shareholders' agreements provide the possibility, for the other shareholder, when the circumstances occur and in accordance with the procedures prescribed by said agreements, to purchase an equity investment, owned by the ERG Group, representing 2% of TotalErg S.p.A. if control of ERG S.p.A. changes;
- for rules applicable to the appointment and replacement of the members of the Board of Directors and of the Board of Statutory Auditors, and to amendments to the Articles of Incorporation, please refer to the relevant sections of this report (hereafter also the "Report");
- no powers have been granted to Directors in relation to capital contributions pursuant to Article 2443 of the Italian Civil Code;
- the Directors have no powers to issue equity instruments;
- the Shareholders' Meeting held on 23 April 2013 authorised the Board of Directors, as per Article 2357 of the Italian Civil Code, to purchase treasury shares for a period of 12 months from the date of the related resolution, up to a revolving maximum (i.e. the maximum amount of treasury shares held from time to time) of 30,064,000 (thirty million, sixty-four thousand) shares of ERG common stock with a par value of EUR 0.10 each, at a unit price, including ancillary purchase charges, not lower than 30% below and not higher than 10% above the closing price of the stock on the day immediately preceding each individual transaction.