System and rules of corporate governance

Compliance with the Code of Corporate Governance of Borsa Italiana S.p.A.

In line with the values enshrined in the Code of Ethics, integrity and transparency are the principles that Snam pursues in formulating an administration and control structure that is suited to its size, complexity and operating structure, in adopting an effective internal control system, and in communicating with shareholders and other stakeholders, particularly by reviewing and updating the information available on its website.

Snam has complied with Borsa Italiana’s Code of Corporate Governance for Listed Companies since it became listed in 2001. As a consequence of the decision of the Board of Directors of 19 December 2011, Snam has implemented the recommendations on directors’ remuneration set forth in the Code of Corporate Governance, as most recently amended in the latest edition of December 2011 (Article 6).

In relation to compliance with the Code (as amended in December 2011), the Board of Directors’ meeting of 12 March 2012 examined the proposals made by the competent offices on the results of the analyses conducted. The Board decided to conclude their evaluation of the necessary adjustments in the meeting preceding the Shareholders’ Meeting called to approve the financial statements for 2011, for the purposes of confirming compliance.

The Code of Corporate Governance is available to the public on the website of Borsa Italiana S.p.A., (

The aim of the corporate governance system is to create value for shareholders, bearing in mind the company’s social importance, particularly with regard to protecting the environment, people’s health and safety, workers’ rights, equal opportunities, working with the local and national communities in which the company is present, and the interests of all stakeholders.

Corporate Governance Structure

The corporate governance structure of Snam follows the traditional model, which – notwithstanding the tasks to be carried out by the Shareholders’ Meeting33 – assigns corporate management to the Board of Directors, supervisory functions to the Board of Statutory Auditors, and auditing to the independent auditors appointed by the shareholders.The chosen model therefore establishes a clear distinction between the functions of the Chairman and those of the Chief Executive Officer; pursuant to Article 19 of the Articles of Association, both of them retain representative powers for the company.

Please find below a graphic summary of the governance structure of the company34:


Corporate Governance Structure (diagram)

Articles of Association

On 5 December 2011, the Snam Extraordinary Shareholders’ Meeting amended the company’s name to “Snam S.p.A.”. This followed the decision taken to give the wholly-owned subsidiary that carries out the gas transportation, dispatch, remote control and metering business the name “Snam Rete Gas S.p.A.” (or in abbreviated form, “Snam RG S.p.A.”) as of 1 January 2012, when the business unit was transferred by Snam. The current name “Snam S.p.A.” is designed to ensure that the FTSE MIB-listed company is easily identifiable and does not break continuity with the past. Furthermore, on 12 March 2012 the Board of Directors resolved to submit the changes to the company’s Articles of Association to the next Extraordinary Shareholders’ Meeting of 26 and 27 April 2012, to ensure compliance with the provisions of the TUF and those issued by Consob on gender representation in the corporate bodies. These provisions will apply from the next replacement of the corporate bodies, which is currently scheduled to take place at the same time as the approval of the financial statements up to 31 December 2012.

Board of Directors

Pursuant to Article 13 of the Articles of Association, the Board of Directors has a variable number of members ranging from five to nine, elected by list vote. Only those shareholders who35, severally or jointly, represent at least 1% of the share capital, as decided by Consob, shall have the right to submit lists. In their meeting of 27 April 2010, the shareholders decided that there would be nine directors, and appointed the Board of Directors36 and the Chairman for three years, until the date of the Shareholders’ Meeting called to approve the financial statements for financial year 2012.

The Board of Directors is made up of nine members: Salvatore Sardo (Chairman), Carlo Malacarne (CEO), Alessandro Bernini, Davide Croff, Roberto Lonzar, Massimo Mantovani, Elisabetta Oliveri, Renato Santini and Mario Stella Richter (directors).

Directors Salvatore Sardo, Carlo Malacarne, Alessandro Bernini, Davide Croff, Massimo Mantovani and Renato Santini were elected from the lists submitted by Eni S.p.A, while Roberto Lonzar, Elisabetta Oliveri and Mario Stella Richter were elected from the list presented by certain minority shareholders.

The Board of Directors is at the centre of the company’s corporate governance system. It has the broadest possible powers for the ordinary and extraordinary management of the company and is specifically entitled to carry out all actions it deems useful to realise and reach the company objective, with the sole exclusion of actions reserved by law or by company Articles of Association, for the Shareholders’ Meeting.

The Board of Directors in its decision on 30 April 2010, appointed Carlo Malacarne as Chief Executive Officer, thereby entrusting him with all the tasks and powers that are not reserved by law, company Articles of Association, or by decision of the Board of Directors37 itself, for the Board of Directors or the Chairman.

The Board also assigned the following tasks, powers and authorisations to the Chairman, Salvatore Sardo. In addition to the responsibilities attributed to him by law and by the Articles of Association, the Chairman shall have the following powers:

  • he is the Company’s legal representative and deals with institutional bodies and authorities, together and in conjunction with the CEO;
  • calls and presides over board meetings and sets their agendas together with the CEO. Guides, oversees and coordinates the work of the board, ensuring its proper functioning and adequate disclosure by directors. Verifies the implementation of board decisions;
  • in consultation with the Internal Control Committee, assesses and contributes to the CEO’s suggestions to the Board regarding the appointment, dismissal and remuneration of the head of internal control and the internal auditor;
  • assesses and contributes to the CEO’s suggestions to the Board regarding the appointment of general managers, the chief financial officer, and members of the supervisory body, pursuant to Legislative Decree no. 231 of 8 June 2001.

During the same meeting, Marco Reggiani, the company’s Director of Corporate, Legal and Compliance Affairs, was confirmed as the Secretary of the Board of Directors and on that same date the Board introduced a set of rules to regulate his work in this capacity.

All candidates must also meet the honesty requirements provided for by current provisions.

The Board shall periodically evaluate the independence and honesty of the directors, as well as the lack of grounds for ineligibility or conflict of interest.

Pursuant to the terms of the company Articles of Association - which are more favourable than those provided for by law - if there are no more than seven directors on the Board at least one must satisfy the independence criteria established for auditors of listed companies; however, with more than seven directors on the board, at least three must satisfy the independence criteria.

If one of the directors does not fulfil or no longer fulfils the established independence or integrity requirements imposed by law, or if there are grounds for ineligibility or incompatibility, the Board will dismiss the director and arrange for him or her to be replaced, or will ask that the grounds of incompatibility be removed within an established period of time, otherwise he or she must forfeit the post.

Directors’ independence and integrity as well as the inexistence of grounds for ineligibility and incompatibility is assessed following their appointment and at least once a year by the Board of Directors, based on information provided by the director himself or made available to the company by other means. In its meeting of 13 February 2012, the Board of Directors noted that no grounds for director incompatibility or ineligibility existed and that the directors met the integrity requirements for supervisory bodies established by Ministry of Justice Decree no. 162 of 30 March 2000.

In the same meeting of 13 February 2012, the Board of Directors noted that the non-executive directors Davide Croff, Roberto Lonzar, Renato Santini, Elisabetta Oliveri and Mario Stella Richter met the independence requirements imposed by current legislation and the Code of Corporate Governance. The Board of Statutory Auditors also verified that the criteria and the assessment procedures adopted by the Board of Directors were correctly applied.

In accordance with the provisions of the Code of Corporate Governance, on 12 March 2012 the Board of Directors evaluated the size, composition and workings of the Board and its committees, using for this purpose the services of Egon Zehnder International, an outside specialist.

In the light of the results of Egon Zehnder International’s evaluation of the Board of Directors and its committees, the Board expressed a very positive opinion on the size, composition and workings of the Board itself and its committees.

The independent directors met in 2011, in line with the Code of Corporate Governance, to approve the report and discuss the issues of major importance. At the meeting, the plan for coming into line with the provisions of Legislative Decree no. 93 of 2011 was outlined by the CEO and discussed. The statutory auditors of Snam and the subsidiary Snam Rete Gas (then “Snam Trasporto”) were also invited to attend the meeting. Meetings were also held with the managers of the company for directors and auditors in order to examine specific issues regarding the business and relevant legislation. Lastly, the directors and the auditors visited the storage plant in Sergnano (CR).

Board of Statutory Auditors

In compliance with the provisions of the law and the company Articles of Association, Snam’s Board of Statutory Auditors is composed of three statutory auditors and two alternate auditors, who are appointed by the Shareholders’ Meeting for three-year terms and may be re-elected at the end of their term in office. Like the Board of Directors and in line with applicable provisions, the Articles of Association provide for the auditors to be appointed by list vote, except when directors are replaced during their term in office.

On 27 April 2010 the Shareholders’ Meeting appointed the following auditors38 for a period of three years or until the date of the Shareholders’ Meeting called to approve the 2012 financial statements: Massimo Gatto (Chairman), Roberto Mazzei and Francesco Schiavone Panni (statutory auditors), and Giulio Gamba and Luigi Rinaldi (alternate auditors). Roberto Mazzei, Francesco Schiavone Panni and Giulio Gamba were elected from the list presented by Eni S.p.A.; Massimo Gatto and Luigi Rinaldi were elected from the list presented by a number of minority shareholders.

Statutory auditors are chosen from among those who meet the professionalism and honesty requirements indicated in Ministry of Justice Decree no. 162 of 30 March 2000. For the purposes of this decree, areas of the company’s business are commercial law, business administration and corporate finance. Likewise, the sector pertaining to its business is the engineering and geological sector.

The Board of Statutory Auditors, based on its statements, has verified that all the members of the Board satisfy the independence requirements provided for by law, as well as those for directors contained in Article 3 of the Code of Corporate Governance.

Independent auditors

As required by law, the company’s financial statements are audited by independent auditors included in the relevant register and appointed by the Shareholder’s Meeting based on a proposal issued by the Board of Statutory Auditors.

On 27 April 2010, the Shareholders’ Meeting approved the proposal to revoke the appointment of PricewaterhouseCoopers S.p.A. as auditors based on an “objective” and sound reason, in an effort to guarantee effective auditing of the company and avoid any misalignment in this role with respect to the ultimate parent company Eni S.p.A.

On the same date, the Shareholders’ Meeting appointed Reconta Ernst & Young S.p.A. to audit the company for the 2010-2018 period.


As a consequence of the decision of the Board of Directors of 19 December 2011, Snam has implemented the recommendations on directors’ remuneration set forth in the Code of Corporate Governance, as most recently amended in the latest edition of December 2011, including the measure on the exemption of vested rights deriving from contracts entered into or regulations approved prior to 31 March 2010.

When adopting the new recommendations, Snam’s Board of Directors also:

  • amended the Regulation of the Compensation Committee, to bring the provisions on the composition and duties of said committee into line with the new recommendations;
  • resolved to defer the approval of the Remuneration Policy until 12 March 2012, which is the date set for the approval of the Remuneration Report as required by Article 123-ter of the TUF, considering that the first section of the Report describes the remuneration policy adopted and that, at the date of the aforesaid board resolution, Consob’s guidelines detailing the specific content of the Report, in implementation of the aforesaid Article 123-ter, had not yet been definitively published.

At its meeting of 12 March 2012 the Board of Directors approved the Remuneration Report required by Article 123- ter of the TUF, which will be submitted the Shareholders’ Meeting. The report contains, inter alia, the Remuneration Policy for the Chairman, CEO and other managers with strategic responsibilities. The Remuneration Report prepared in accordance with Article 123- ter of the TUF can be found in the “Governance” section of the Company’s website.


At its meeting of 13 February 2012 the Board of Directors verified, as had already been done during the course of the previous year, that Snam satisfies the requirements listed in Article 37, paragraph 1 of Consob Regulation 16191/07 and successive amendments and additions thereto for the admission, on an Italian regulated market, of the shares of subsidiaries subject to management and coordination by another company. The statement by the Board of Directors that the centralised treasury arrangement between Snam and its ultimate parent Eni S.p.A. is in the company’s interest was confirmed by the Board of Statutory Auditors.


For more efficient performance in its duties, in accordance with the Code of Corporate Governance the Board of Directors has established three committees: The Compensation Committee, the Appointments Committee and the Internal Control Committee The composition, duties and functioning of the committees are decided by the Board of Directors through specific regulations (available in the Governance section of the Company’s website), in line with the requirements of the Code.

Furthermore, pursuant to Article 16 of the Articles of Association, the Combined Independent Management Committee has been created.

1) The Compensation Committee consists of three non-executive directors, two of whom are independent, including the Chairman Davide Croff. The other members are Alessandro Bernini and Elisabetta Oliveri. The Committee has the following responsibilities in terms of making proposals and providing advice to the Board on directors’ remuneration:

  • to submit the Remuneration Report for the approval of the Board of Directors, with particular regard to the Remuneration Policy for directors and managers with strategic responsibilities, so that it may be presented to the Shareholders’ Meeting called to approve the financial statements within the time limits set by law;
  • The Board shall periodically evaluate the independence and honesty of the directors, as well as the lack of grounds for ineligibility or conflict of interest;
  • to make proposals relating to the remuneration of the Chairman and the Chief Executive Officer, concerning the various forms of compensation and remuneration;
  • to make proposals on the remuneration of the members of the directors’ committees established by the board;
  • to make proposals, having considered the recommendations of the CEO, regarding the general criteria for the remuneration of managers with strategic responsibilities, annual and long-term incentive plans including those based on equity; to define performance objectives and record the results of performance plans in order to determine the variable remuneration of directors with specific responsibilities and the implementation of incentive plans;
  • to monitor the implementation of the decisions taken by the Board of Directors;
  • to report to the Board on its activities every six months.

The Committee also provides any procedurally required opinions on transactions with related parties within the time limits set forth in the relevant procedure.

In accordance with the decision of the Board of Directors on 30 April 2010, each year the Compensation Committee reviews the remuneration structure for the Head of Internal Control and the Internal Auditor, checking that it meets the general criteria approved by the Board for all managers and informing the Chairman of the Internal Control Committee of its findings so that he, in turn, may report on the matter to the Board.

2) The Appointments Committee, created by the Board on 26 October 2011, is made up exclusively of non-executive and independent directors. Its members are: Davide Croff, Roberto Lonzar and Renato Santini. Davide Croff chairs the Committee. The Appointments Committee makes proposals and provides advice to the Board of Directors.

The Committee has the following tasks:

  • to submit to the Board of Directors, upon proposal of the CEO, the candidates for the replacement of the corporate bodies. The Committee’s proposal is binding;
  • to develop and propose: a) annual self-assessment procedures for the Board of Directors and its committees; b) directives on the limits and rules against the accumulation of positions by the directors of Snam and its subsidiaries; c) criteria for assessing the professional and independence requirements that apply to directors of Snam and its subsidiaries, and their competitive activities;
  • to report to the Board on its activities every six months.

3) The Internal Control Committee, which is made up of three non-executive independent directors, as defined by the Code of Corporate Governance for Listed Companies, advises and assists the Board of Directors with regard to overseeing the general performance of the company. Specifically, the Committee’s tasks are, inter alia, as follows:

  • to evaluate, together with the Chief Financial Officer and the independent auditors, the proper use of accounting standards and their consistency for purposes of preparing the consolidated financial statements;
  • on request from the Chairman or CEO, to express its opinion on specific aspects involved in identifying the main business risks, as well as the planning, implementation and management of the internal control system;
  • to examine the work plan prepared by the Internal Auditor, as well as its periodic reports, at least every six months, on the activities carried out;
  • performs the other duties entrusted to it by the Board of Directors; in particular, it expresses an opinion on the transparency rules and substantial and procedural correctness of transactions with related parties and transactions in which a director has an interest either on his/her own behalf or that of third parties.

4) Resolution ARG/com 57/2010 of the Electricity and Gas Authority, amending Resolution 11/07 on the functional separation of regulated activities in the natural gas sector, established that, pursuant to and in accordance with Article 9 of Regulation 11/2007 (the “Consolidated Unbundling Act”), the activities of natural gas storage, regasification, transportation, dispatch, distribution and metering may be managed jointly, and are not subject to functional unbundling obligations.

Through the decision of 27 July 2010, the Board of Directors established the Combined Independent Management Committee (“the Management Committee”) pursuant to Article 9 of the Consolidated Unbundling Act. The Management Committee oversees the joint management of natural gas transportation and dispatch, distribution, storage and regasification activities, and is composed of the persons who, pro tempore, fill the following positions:

  • CEO of Snam;
  • CEO of Snam Rete Gas S.p.A.39 ;
  • CEO of GNL Italia;
  • CEO of Italgas;
  • CEO of Stogit.

The Board has conferred all powers on the Committee to perform its functions. The Combined Independent Management Committee has adopted its own operating regulations.

The Chief Executive Officer of Snam chairs the Management Committee and represents the organisational structure within the Management Committee responsible for expressing opinions binding on the Board of Directors in compliance with and for the purposes cited in Article 11.5, letter c) of the Consolidated Unbundling Act, for all decisions taken by the said body affecting the business’ managerial and organisational aspects; on any decisions that could have a direct or indirect effect on the independence of the transportation system; and to approve the development plan cited in paragraph 11.1, letter b), point i) of the Consolidated Unbundling Act.

The Management Committee appointed the Supervisor, in the person of Snam’s Head of Compliance and Assurance, who is responsible for the correct management of commercially sensitive information in the context of natural gas transportation, dispatch, distribution, storage and regasification activities, in line with his appointment as Head of Compliance at the subsidiary Snam Rete Gas, wherein he also ensures that the Supervisor’s task are carried out.


Legislative Decree No. 93 of 1 June 2011 on the “Implementation of Directives 2009/72/EC, 2009/73/EC and 2008/92/EC concerning common rules for the internal market in electricity and natural gas and a Community procedure to improve the transparency of gas and electricity prices charged to industrial end users, repealing Directives 2003/54/EC and 2003/55/EC” (the “Decree”) saw the transposition by Italian legislation of Directive 2009/73/EC, which introduced new provisions on the separation of operators of natural gas transportation systems from the other activities in the gas supply chain.

The Decree provides that the major transportation company shall comply with the rules governing an “Independent Transmission Operator” (ITO, hereinafter the “Operator”).

According to the rules governing the ITO model, in order to demonstrate the separation of the Operator from the vertically integrated corporation, the Operator’s compliance with the requirements of the Decree must be certified by the Electricity and Gas Authority.

Furthermore, the Decree: (i) confirmed the system of commercial and functional unbundling of distribution activities, as already provided by Directive 2003/55/EC; (ii) enforced the commercial unbundling of the transportation network from the ownership structure in the cases where the transportation network had adopted the ISO model (designed for minor transportation companies); and (iii) confirmed, with regard to regasification, the principle of unbundling the accounts of LNG activities from the other activities of the gas supply chain and identified the duties of the manager of the LNG system.

Having obtained this certification, the Operator is approved and appointed by the Ministry for Economic Development as the “Manager of the Transportation System”. The appointment is notified to the European Commission and published in the Official Journal of the European Union.

In order to comply with the Decree, Snam’s Board of Directors decided that the most efficient way to proceed was to transfer the transportation, dispatch, remote control and metering business unit to its wholly-owned subsidiary Snam Rete Gas S.p.A. (named “Snam Trasporto” until 31 December 2011), on behalf of which certification as an Independent Transmission Operator was then requested.

The deed of transfer was signed on 21 December 2011, which would take effect on 1 January 2012 subject to the approval of the Shareholders’ Meeting held on 5 December 2011 pursuant to the Articles of Association (Article 12.2).

As a result of the ensuing corporate reorganisation, an organisational structure was created which, in order to reinforce the functional unbundling from the vertically integrated company (Eni), is made up of four operating companies that are direct subsidiaries of Snam (GNL Italia, Italgas, Snam Rete Gas and Stogit, alongside the indirect subsidiary Napoletanagas), which are focused on the management and development of their respective businesses, plus a corporate company (Snam), which is responsible for:

(a) the strategy, management and control of the subsidiaries;

(b) providing support services to the subsidiaries (including by taking over the services previously provided by Eni and its subsidiaries) in accordance with the rules of the Decree, in order to retain the levels of operating efficiency obtained following the acquisitions of Italgas and Stogit during 2009.

In accordance with the provisions of the Decree, Snam Rete Gas has been given a system of governance40, responsibilities and organisational structures that are in line with the Decree’s specific requirements, including in terms of personnel and asset ownership.


Snam has adopted an internal control system conforming to the prescriptions of the Code of Corporate Governance for Listed Companies and in line with the current best practices. The purpose of the control system is: (i) to ensure the suitability of various company processes in terms of effectiveness, efficiency and affordability; (ii) to ensure the reliability and accuracy of accounting entries and the protection of the company’s assets; and (iii) to ensure that operating performance complies with internal and external regulations, directives and company guidelines aimed at guaranteeing sound and proper business management.

Responsibility for the internal control system lies with the Board of Directors which, with the assistance of the Internal Control Committee, prepares guidelines for the system and periodically verifies that it is adequate and functioning efficiently, thereby ensuring that the principal business risks are identified and managed appropriately.

The Chief Executive Officer is responsible for implementing the guidelines prepared by the Board of Directorsby designing, managing and monitoring the internal control system. In accordance with the proposal put forth in this regard by the Code of Corporate Governance, on 11 December 2008 the Board of Directors appointed the Chief Executive Officer as executive director responsible for overseeing the functionality of the internal control system.

On 30 April 2010 the Board, complying with the recommendations of the Code of Corporate Governance, also confirmed the appointment of the head of internal auditing for the company as Head of Internal Control, reporting to the Chief Executive Officer. In order to ensure the necessary independence, the appointment, dismissal and remuneration of the Head of Internal Control are approved by the Board of Directors, which also approves the programme and budget for internal auditing activities.

The Head of Internal Control reports regularly on his actions to the CEO, as well as every six months (unless circumstances require a more timely report) to the Internal Control Committee and the Board of Statutory Auditors.

Applying the control system is the primary responsibility of the functional management insofar as control activities are an integral part of management procedures. Management must therefore foster an environment which encourages controls and must specifically manage “line controls,” consisting of all the control activities that individual operating units or companies perform over their own procedures. The Internal Audit is responsible for verifying the adequacy of the internal control system and ensuring that it provides reasonable guarantees that the organisation is able to pursue its objectives economically and efficiently; to this end, it monitors the effectiveness of the controls applied by proposing suggestions and corrective actions to management to resolve any deficiencies identified.

The Articles of Association also provide for the Board of Directors to appoint the Chief Financial Officer, on the proposal of the Chief Executive Officer, by agreement with the Chairman and based on a favourable opinion from the Board of Statutory Auditors.

On 29 October 2007 the Board of Directors, in compliance with the professionalism requirements established by the Articles of Association, on the proposal of the Chief Executive Officer, by agreement with the Chairman and based on a favourable opinion from the Board of Statutory Auditors, appointed Dr Antonio Paccioretti, Planning, Administration, Finance and Control Manager of Snam, as Chief Financial Officer. At a meeting on 12 March 2012, the Board of Directors also verified the adequacy of the powers and resources at the disposal of the CFO to perform the duties assigned, as well as to observe the existing administrative and accounting procedures.

The internal control system is subject over time to verification and updating, in order to continually ensure its suitability and protect the main areas of risk among the company’s activities, with respect to the characteristics of its operating sectors and its organisational configuration, and in keeping with any new legislative or regulatory developments.


The financial information internal control system is the process aimed at providing a reasonable certainty of the reliability41 of said financial information and of the capability of the financial statement preparation process to produce financial information in keeping with generally accepted accounting principles.

Snam has adopted a body of rules that define the standards, methodologies, roles and responsibilities for designing, implementing and maintaining the system of internal controls over time on the corporate reporting of Snam and its subsidiaries, and on the evaluation of its efficacy.

The body of procedures for the corporate reporting control system was defined in accordance with the provisions of Article 154-bis of the TUF and takes into account the prescriptions of the U.S. Sarbanes-Oxley Act of 2002 (SOA), which apply to the ultimate parent Eni S.p.A. in its capacity as an issuer listed on the New York Stock Exchange (NYSE) and which have repercussions for Snam as a significant subsidiary.

The internal control model for corporate information adopted by Snam is based on the COSO Report (“Internal Control – Integrated Framework” published by the Committee of Sponsoring Organisations of the Treadway Commission).

In addition to Snam, the control model is applied to its subsidiaries pursuant to international accounting standards and based on their relevance in the preparation of financial information. Snam subsidiaries adopt the control model defined as a reference to design and institute their own control system and tailor it to their size and the complexity of the activities they undertake.

The design, institution and maintenance of the control system are ensured by risk assessment, identification and evaluation of controls, and reporting.

Controls are subject to evaluation in order to verify the quality of their design over time and their operational effectiveness; to this end, line monitoring has been entrusted to the management responsible for significant processes/activities, and independent monitoring has been entrusted to the internal audit department.

The results of the monitoring activities form the subject of periodic reporting on the status of the control system, which involves all levels of Snam’s organisational structure and its significant subsidiaries, from business operation heads and function heads to administrative directors and Chief Executive Officers.

Evaluations of all the controls implemented within Snam and its subsidiaries are brought to the attention of the Chief Financial Officer, who, on the basis of this information, prepares a half-yearly report on the adequacy and effective application of the control system, which is shared with the Chief Executive Officer.


On 12 June 2011, the Board of Directors updated the Code of Ethics, which incorporates the most modern guidelines on business ethics and sustainability in a manner that is fully consistent with the objective of including all the values that the Company recognises, accepts and shares, as well as the responsibilities that it assumes inside and outside the company.

The Snam Code of Ethics includes a special Addendum which considers the specifics of the activities engaged in by Snam and its Subsidiaries, which are subject to regulation by the Electricity and Gas Authority. Special emphasis is given to relationships with the Electricity and Gas Authority and to unbundling regulations.

The functions of Supervisor of the Code of Ethics were assigned to the Supervisory Body, to which the following may be submitted:

  • requests for clarification or interpretation of the principles and contents of the Code;
  • suggestions relating to the application of the Code;
  • reports of violations of the Code that have been determined directly or indirectly.

Snam employees, without distinction or exception, have the duty to comply and ensure compliance with these principles within the scope of their functions and responsibilities. Under no circumstances can any conduct contrary to these principles be justified by the belief that one is acting in the company’s interests.


Legislative Decree no. 231 of 8 June 2001 introduced the rules on the administrative liability of companies under which they can be held liable, and consequently punished, for offences committed or attempted in the interest or for the benefit of the company by persons who are entrusted with the representation, administration or management of the company or of a financially and functionally autonomous subsidiary thereof, as well as by persons who exert management and control on a de facto basis (“top management”) or by persons who are subject to the authority of or control by one of the aforesaid persons (“persons subject to the management of others”). The Company is not liable if it has adopted and effectively implemented, before the commission of the offences, appropriate organisation, management and control models to prevent such offences and has set up a body responsible for overseeing the functioning of the models and compliance with them.

In this regard, Snam and its subsidiaries have implemented the legal provisions by adopting its own organisation, management and control model commensurate with its particular nature, and by appointing for each of them a Supervisory Body responsible for monitoring the implementation and effective application of the Model.

A multi-functional “Team 231” was formed to identify and develop the activities necessary for updating the company and subsidiaries’ Model 231 by incorporating both new legislative developments in the field of application of Legislative Decree no. 231 of 8 June 2001, as well as organisational changes resulting from the acquisition of Italgas and Stogit.

Team 231, assisted by PriceWaterhouse Coopers as administrative liability and compliance expert and technical/methodological consultant, has updated the Model 231 of Snam S.p.A. and each of its subsidiaries.

The Supervisory Body of Snam consists of the Head of HR, Organisation and Security, the Internal Auditor, the Head of Compliance and Assurance and two external members, one of whom acts as Chairman.


Snam has long attributed primary importance to the issue of fighting corruption, most recently with the approval, by the Board of Directors, of the Anti-Corruption Guidelines aimed at enshrining the internal rules on fighting corruption – along with the procedures which govern in detail the “at-risk” activities (“Ancillary Anti-Corruption Procedures”) – within a systematic reference framework, ensuring maximum compliance by Snam and its personnel with the Code of Ethics, Model 231 and national and international anti-corruption laws. In compliance with international best practices, two measures have been taken: an anti-corruption unit has been set up within Snam’s Legal and Corporate Affairs and Compliance Division, whose task is to provide support on this issue to the business units of Snam and its subsidiaries, and a targeted e-learning training initiative has been launched together with lectures on the subject for newly-hired staff.

At a meeting on 10 February 2010, the Snam Board of Directors adopted the “Anti-Corruption Guidelines” (incorporating the equivalent policy introduced by ultimate parent Eni). In the meeting of 13 February 2012, the Board of Directors authorised the CEO to adopt and update the Management System Model on compliance, bearing in mind the incorporation of Eni’s equivalent policy (relating, inter alia, to matters connected to combating corruption).


Through Resolution 17221 of 12 March 2010, amended by Resolution 17389 of 23 June 2010, Consob approved the regulations on related-party transactions carried out, directly or through subsidiaries, by listed companies and by public share issuers with persons with potential conflicts of interest, such as major or controlling shareholders, directors, statutory auditors and other executives, and their close family members.

The reform of company law (Article 2391-bis of the Italian Civil Code) gave Consob, in its role as the supervisory and regulatory body for the financial markets, the task of establishing general regulatory principles in order to “ensure the transparency and substantial and procedural correctness of transactions with related parties”.

The measure aims to provide better protection to minority shareholders and other stakeholders by combating any abuses which might arise from related-party transactions with a potential conflict of interest. These include, by way of example, mergers, acquisitions, disposals and reserved capital increases.

In short, the regulation provides for:

a) a stronger role for independent directors in all the decision-making processes of related-party transactions;

b) a system of transparency.

On 30 November 2010, the Board of Directors approved the procedure on “Transactions in which Directors and Statutory Auditors have an interest, and Transactions with Related Parties”. The procedure applies from 1 January 2011 and is adopted pursuant to Article 2391-bis of the Italian Civil Code and the Consob Regulation 17221 “Regulation on transactions with related parties”, of 12 March 2010 (as amended).

At the meeting of 13 February 2012, the Board of Directors made its first annual check on the effectiveness of the procedure, as required in said procedure and ahead of the three-year deadline set by Consob. The Board approved a number of amendments to take account of specific operating requirements that emerged during the first year of its application, as well as the modified organisational structure of Snam and its subsidiaries.

The procedure has been provisionally and unanimously approved by Snam’s Internal Control Committee which, pursuant to Borsa Italiana’s Code of Corporate Governance and the aforesaid Regulation, is composed entirely of independent directors.


In compliance with the legislative provisions on Market Abuse, on 13 February 2012 the Board of Directors updated the “Procedure for communication to the market of privileged information and documents concerning Snam and the financial instruments issued by it”, the “Procedure concerning the identification of relevant persons and the communication of transactions carried out by them, including via nominees, in relation to shares issued by Snam or other financial instruments connected with such shares” (“Internal Dealing Procedure”) and the procedure “Keeping and updating of the register of persons who have access to privileged information within Snam”.42 In particular, the Internal Dealing Procedure identifies (i) the relevant persons, (ii) the transactions subject to a communication requirement, and (iii) the conduct requirements for such communication.


In order to involve shareholders in company life, Snam has taken various measures designed to ease the participation of shareholders in making decisions reserved to the Shareholders’ Meeting, making it easier for them to exercise their rights. Specifically, during 2010 Snam amended its Articles of Association in light of the transposition in Italy of Directive 2007/36/EC, relating to the exercise of certain rights of shareholders in listed companies (the “Shareholders’ Rights Directive”)43.

By taking measures which the legislation leaves to companies’ choice, Snam aimed to provide its shareholders with additional tools to encourage them to take part in shareholders’ meetings and exercise their voting rights (e.g. appointment of the Listed Company’s Proxy Holder).

In 2010 the website was enhanced and now features the “Shareholders’ Guide”44, including an interactive version, which aims to provide a summary of useful information which will give all shareholders a more active experience in their Snam investment.

32 The direct subsidiaries of Snam are: GNL Italia S.p.A.; Snam Rete Gas S.p.A.; Società Italiana per il Gas per azioni – Italgas; and Stoccaggi Gas Italia S.p.A. – Stogit; its indirect subsidiaries are: Compagnia Napoletana di Illuminazione e Scaldamento col Gas S.p.A. – Napoletanagas; and Servizi Territori Aree Penisole S.p.A. – Seteap.

33 For further information on the role of the Shareholders’ Meeting and the participation of shareholders, please refer to the “Governance” section of Snam’s website and the document “Report on Corporate Governance and Ownership Structure”.

34 The structure shown is updated to 12 March 2012. Please refer to Note 39 on the office of General Operations Manager.

35 Each shareholder may present or be involved in the presentation of only one list, and may vote for one list only.

36 For further information on the personal and professional characteristics of the directors elected, please refer to the “Governance” section of the website of Snam S.p.A.

37 These powers were later amended by the Board of Directors on 26 October 2011.

38 For further information on the personal and professional characteristics of the statutory auditors elected, please refer to the “Governance” section of the Snam S.p.A. website.

39 From 1 January 2012, Snam’s Chief Operating Officer was replaced by the CEO of Snam Rete Gas S.p.A. The position of Chief Operating Officer was abolished on the same date.

40 Snam Rete Gas (like the other subsidiaries of Snam) retains the traditional governance model with the three basic functions of supervision, management and compliance set out in its Articles of Association, which provide, inter alia, that:

(i) the Board of Directors also acts as the Supervisory Body required by Article 14 of the Decree, taking decisions which have a significant impact on the value of shareholders’ equity. The number of members of the Board of Directors is set at five, the majority of whom meet the independence requirements set out in the Decree (including the Chairman of the Board of Directors);

(ii) The Chief Executive Officer and the General Manager (a Company director appointed by the Board of Directors in its role as Supervisory Board, upon proposal of the CEO) perform the functions reserved by the Decree to the Heads of Operations.

Furthermore, the Head of Compliance (who is appointed by the Board of Directors in its capacity as Supervisory Body, subject to the approval of the Electricity and Gas Authority) is charged with monitoring the Compliance Programme and the ten-year infrastructure development plan and must report to the Electricity and Gas Authority.

The task of auditing the company has been assigned to different independent auditors to those used by Eni and Snam, given the ban on the Management Committee having the same independent auditors as the vertically integrated company (Eni), as set out in the Decree.

41 Reliability (of the information): information characterised by accuracy and compliance with generally accepted accounting principles which meets the legal and regulatory requirements applied.

42 These procedures, which replace those adopted by the Board of Directors on 17 March 2006 and amended on 27 October 2010, are published in the “Governance” section of the Company’s website at:

43 The Directive was transposed through Legislative Decree no. 27 of 27 January 2010.

44 The Shareholders’ Guide is published in the “Investor Relations” section of the Company’s website at:

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