6.6 Model 231, Supervisory Body and Code of Ethics Supervisor

Model 231

The Board of Directors has adopted its own organisation, management and control model pursuant to Legislative Decree No. 231 of 8 June 2001 (“Model 231”) to prevent crimes mentioned in the legislation on corporate administrative responsibility for crimes committed in the interest or to the advantage of the company (Legislative Decree 231/2001), and it has set up a Supervisory Body equipped with autonomous powers of initiative and control, in compliance with the law.

Most recently on 30 July 2013, the Board of Directors approved the new Model 231, which was updated with regard to the new crimes of “private corruption”, “undue inducement to give or promise benefits” and “employment of third-country citizens whose stay is illegal”, and to the changes to Snam’s organisational and ownership structure²⁵.

Model 231 is an organic set of principles, rules and provisions concerning, among other things, the management and control of each corporate process. Its aim is to protect the Company from any conduct that may incur its administrative responsibility, pursuant to Legislative Decree 231/2001, in relation to crimes or attempted crimes committed in the interest or to the advantage of the Company by persons holding a “senior” position within the entity or by those who are subject to the oversight or control of such persons.

The analysis’ activity of the corporate process and the comparative analysis between the existing control environment and the control tools are performed on the base of COSO Framework, that is the reference model on an international basis for the institution, the updating and the analysis and the evaluation of the internal control system (the “COSO Framework”, as recently published on May 2013²⁶).

The multifunctional “Team 231” was created within the Company with the purpose of identifying and carrying out the activities required to update Model 231, used by the Company and its Controlled Companies, by incorporating new legislative developments introduced under the scope of application of Legislative Decree No. 231 of 8 June 2001.

Also the Controlled Companies have adopted a Model 231 commensurate with their own specific nature, appointing their own Supervisory Body to monitor the implementation and effective application of the model.

Training and encouraging participation

With a view to the continual improvement of the control system, and in light of the importance of making those inside and outside the Company aware of the content of Model 231, Snam has developed a specific training programme for all its employees in order to ensure that Model 231 is applied effectively. As well as being an important tool for making management and other employees aware of how to prevent the crimes mentioned in Legislative Decree 231/2001, this training activity encouraged all staff members to play an active role in Snam’s system of ethics and values.

Model 231 can be consulted on the Company’s website (http://www.snam.it/en/Governance/Administrative_responsability/).

Supervisory Body and Code of Ethic Supervisor

Firstly, the Code of Corporate Governance allows issuers to allocate the supervisory-body functions mentioned in Legislative Decree 231/2001 to the board of statutory auditors²⁷. On 30 July 2013, the Board of Directors strengthened the Supervisory Body by increasing the percentage of external members, partly to ensure sufficient separation of duties and partly to ensure the presence of members with specific areas of expertise, thereby enabling the body to perform its duties effectively.

The Supervisory Body comprises the Internal Auditor, Head of Coordination of Legal and Corporate and Compliance Affairs and three external members, one of which chairs the body, who are experts in legal and corporate affairs as well as in business organisation and economics. The table below shows the members of the body:

Among other things, the Supervisory Body oversees the effectiveness of Model 231 and the monitoring of how it is implemented and updated. It examines Model 231’s suitability in terms of preventing unlawful conduct and manages the relevant flows of information with the various corporate departments and the supervisory bodies of the Controlled Companies. Lastly, the Supervisory Body also acts as the Code of Ethics Supervisor.

In performing its tasks, the Supervisory Body has unlimited access to corporate information for investigation, analysis and control activities. Any Company department, employee and/or member of corporate bodies is subject to a disclosure obligation upon any request by the Supervisory Body, or upon the manifestation of significant events or circumstances, for the purposes of the Supervisory Body’s remit.

If any problems emerge, the Supervisory Body publishes the results of its activities.

The Supervisory Body provides the following information flows:

• continuous reporting line to the Chief Executive Officer, who reports to the Board of Directors when reporting on the performance of the duties conferred;
• half-yearly reporting line to the Control and Risk Committee and the Board of Statutory Auditors; to this end, a half-yearly report is prepared regarding the activity performed, noting the outcome of controls and any legislative developments on corporate administrative responsibility. On this occasion, dedicated meetings are organised with the Control and Risk Committee and the Board of Statutory Auditors; the half-yearly report is also sent to the Chairman and to the Chief Executive Officer, and the Board of Directors is informed about it;
• immediate reporting line, in the event of ascertained facts of special importance and significance, to the Control and Risk Committee and the Board of Statutory Auditors, after informing the Chairman and the Chief Executive Officer.

“Dedicated information channels” are established in order to facilitate the communication and information flow.

In 2013, the Supervisory Body met 11 times, with the attendance of 94.5% of its members.