7.4 Related-party transactions
The Board of Directors approved the procedure entitled “Transactions in which directors and statutory auditors have an interest and Related-party Transactions” pursuant to the Regulations on Related-Party Transactions (the “Related-Parties Procedure”)59. In accordance with the Regulations on Related-Party Transactions, the Related-Parties Procedure takes into account the peculiarities of the regulatory framework in which Snam and its Subsidiaries operate and the relevant assessments concerning the adoption of certain powers provided for by the Regulations on Related-Party Transactions and the identification of the “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 Subsidiaries, which are subject to oversight by the AEEGSI.
On 18 December 2015, the Board of Directors performed the annual check pursuant to Article 14 of the Related-Parties Procedure60, and did not make any modifications to the Procedure.
The Related-Parties Procedure identifies the Control and Risk Committee, composed entirely of independent directors, as the Committee provided for by the Regulations on Related-Party Transactions. This Committee expressed a unanimous favourable advance opinion on the Related-Parties Procedure and its successive 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 between 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 that approves the transaction.
The Procedure – which involves procedures for approving “Small Transactions” and “Large Transactions” – identifies the following Committees:
- the Control and Risk Committee, composed entirely of independent directors, as the entity responsible for issuing:
- for “Small Transactions61 ”, a non-binding reasoned opinion that must address the Company’s interest in carrying out the transaction, as well as the expediency 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 that led it to carry out the transactions despite that opinion;
- for “Large Transactions62 ”, 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 expediency and substantial accuracy of its conditions. Provision is also made for the Control and Risk Committee, or one or more of its members (as designated by the Committee), to 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 Compensation Committee (composed of non-executive directors, most of whom are independent), as the entity responsible for issuing an opinion on Transactions 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 parameter for identifying large related-party transactions than that provided for by the Regulations on Related-Party Transactions, providing for a single significance threshold of € 140 million63 for all related-party transactions; this threshold was confirmed by the Board of Directors on 18 December 2015, during the annual check on 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 Subsidiaries and its related parties, providing for adequate and timely information flows between the management of the Subsidiaries and of Snam, thereby voluntarily extending the scope of the framework provided for by the Regulations on Related-Party Transactions.
59 The “Transactions in which directors and statutory auditors have an interest and Related-party Transactions” Procedure defines a “Transaction” (or “Transactions”) as the active or passive transfer of resources, services or assumption of obligations, regardless of whether a fee has been agreed, carried out by Snam or its Subsidiaries (including non-company parties whose management bodies are composed mainly of employees of Snam or its Subsidiaries) with Related Parties of Snam. These include: (i) mergers or demergers by incorporation or non-proportional demergers; (ii) any decision relating to the awarding of remuneration and financial benefits, in any form, to members of the administration and control bodies and to executives with strategic responsibilities.
60 Article 14 stipulates that “Snam’s Board of Directors shall perform an annual check on whether to revise this Procedure by reflecting, inter alia, any changes to the ownership structure, as well as on the effectiveness of the procedure in its application, including with regard to the adequacy of the thresholds of significance for individual Transactions”.
61 Under the terms of the Procedure, “Small Transactions” are all transactions other than Large Transactions and Negligible Transactions (defined in Annex 2 of the Procedure).
62 “Large Transactions” are indicated in Annex 1 to the Procedure.
63 The Regulations on Related-Party Transactions have identified, as the relevant parameter for the identification of large tran sactions between related parties, the threshold of 5% of at least one or more parameters identified by the Regulations on Related-Party Transactions. The threshold is lowered to 2.5% for transactions entered into with a listed parent or with parties related to it which are in turn related to the Company.