7.4 Related-party transactions

On 30 November 2010, the Board of Directors approved the Procedure entitled “Transactions in which Directors or Statutory Auditors Have an Interest and Related-Party Transactions” pursuant to Consob Regulation No. 17221 of 12 March 2010 (the “Related-Parties Procedure”). In accordance with Consob Regulation No. 17221 of 12 March 2010, the Related-Parties Procedure takes into account the peculiarities of the regulatory framework in which Snam and its Controlled Companies operate and the relevant assessments concerning the adoption of certain powers provided for by said Consob Regulation and the identification of the so-called thresholds of significance for individual transactions. Specifically, the Related-Parties Procedure was adopted in compliance with the Unbundling Regulation, taking into account the specific nature of the activities engaged in by Snam and its Controlled Companies, which are subject to oversight by the Electricity and Gas Authority.

On 12 December 2013, the Board of Director performed the annual assessment, pursuant to article 14 of the Related-Parties Procedure²⁹, and made to it the amendments required in order to highlight the evolution of the corporate governance system and the change in the shareholding³⁰.

The Related-Parties Procedure identifies the Control and Risk Committee, in its composition of only independent directors, as the committee provided for by Consob Regulation No. 17221 of 12 March 2010. This Committee has voted unanimously in favour of the Related-Parties Procedure and its subsequent amendments.

The Related-Parties Procedure provides for a detailed examination process that (i) identifies the timeframe; and (ii) guarantees that information flows are formalised and tracked among the corporate department responsible for initially determining that the Procedure should be applied, the superior department, the body responsible for expressing an opinion on the transaction and, lastly, the party which approves the transaction.

The Procedure, which includes approval procedures for “Small Transactions” and “Large Transactions”, identifies the following Committees:

• the Control and Risk Committee - in its composition of only independent directors - as the entity responsible for issuing:
  1. for “Small Transactions³¹”, a non-binding reasoned opinion that must address the Company’s interest in carrying out the transaction, as well as the expedience and substantial accuracy of its conditions. In the event of a negative opinion, the Company is required to inform the market, at the end of the quarter in question, of the reasons which led it to carry out the transactions despite this opinion;
  2. for “Large Transactions³²”, which are the exclusive preserve of the Board of Directors, a favourable reasoned opinion on the Company’s interest in carrying out the transaction, as well as the expedience and substantial accuracy of its conditions. The Control and Risk Committee, or one or more of its members (as designated by the Committee), shall also be involved in the negotiation and examination stages, receiving comprehensive and timely information, with the power to request information and submit comments to the authorised bodies and persons tasked with carrying out the negotiations and examination;
  In both cases, the Committee may be assisted, at the Company’s expense, by one or more independent experts;
• the Remuneration Committee (comprising non-executive directors, most of whom are independent) as the entity responsible for issuing an opinion on transactions³³ concerning the remuneration of Snam’s directors, statutory auditors and executives with strategic responsibilities.

In order to ensure maximum market transparency, the Related-Parties Procedure has adopted a stricter criterion for large related-party transactions than required by Consob Regulation No. 17221 of 12 March 2010, imposing a single threshold of E140 million for all related-party transactions³⁴; such threshold of E140 has been confirmed by the Board of Directors on 12 December 2013 during the annual assessment of the Related-Parties Procedure.

Moreover, again with a view to ensuring maximum market transparency, Snam has decided to apply the Related-Parties Procedure to all transactions carried out between Snam’s Controlled Companies and the related parties of Snam, providing for adequate and timely flows of information between the management of the Controlled Companies and of Snam, thereby voluntarily extending the scope of the framework provided for by Consob Regulation No. 17221 of 12 March 2010. The Procedure is available on the Company’s website (http://www.snam.it/en/Governance/Procedures/Transactions_with_related_parties/).