3.3 Control, Risk and Related-Party Transactions Committee
Following the renewal of the corporate bodies, the Board of Directors, at its meeting of 11 May 2016, changed both the composition of the Committee and its name (to the Control, Risk and Related-Party Transactions Committee) and approved new Committee Regulations.
Since 11 May, the Committee has been composed of three independent non-executive directors, as defined by the Code of Corporate Governance for listed companies, when it had previously comprised four members, of which three were independent and one was non-independent. With regard to “Transactions in which directors and statutory auditors have an interest and related-party transactions”, the Committee carried out the duties assigned to it under the related Snam Procedure with its composition of only independent directors.
The composition of the Control, Risk and Related-Party Transactions Committee is as follows:
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Independent non-executive director(1) – Chairwoman
Independent non-executive director(1)
Independent non-executive director(1)
Snam’s Board of Directors identified the Chairperson (Elisabetta Oliveri) among the members with adequate accounting, financial and risk management experience.
The Chairperson and the Board of Statutory Auditors were invited to Committee meetings; at the invitation of the Committee, the Director in Charge and other non-Committee members may attend Committee meetings to provide information and express opinions, within their respective remits, on agenda items.
Committee meetings are valid when attended by the majority of the members in office. The Committee resolves by an absolute majority of the attendees. In the event of a tie, the Chairperson has the casting vote.
The Committee provides recommendations and advice to the Board of Directors by making suitable enquiries to support Board decisions and assessments concerning the internal control and risk management system, as well as those relating to the approval of financial reports.
For a more detailed description of the duties of the Control, Risk and Related-Party Transactions Committee, please see to this Report.
In 2016, the Committee met 12 times, with an average attendance of 96.6% of members and an average duration of 170 minutes.
The table below briefly describes the main issues discussed and the main activities performed in the 2016 financial year.
Activity: Activities of a non-recurring nature
Area: Internal control and risk management system
- examination, in relation to the organisational restructuring implemented after the Italgas demerger, of:
- the organisational restructuring of Snam and the Subsidiaries implemented in early November 2016 with the creation of three Business Units and the launch of an overhaul of staff responsibilities with a view to simplifying processes and continuous improvement
- acknowledgement, in relation to the ruling of the Court of Palermo, Preventive Measures Section, issued to Italgas on 11 July 2014, pursuant to Article 34, paragraph 2 of Legislative Decree No. 159/2011, of:
- the Decree of revocation of the “Judicial Control” measure imposed on Italgas (now Italgas Reti), declaring that the implementation of the consequent limitations has therefore ceased
- change in the composition of the Supervisory Body
- expression of a favourable opinion on the identification of the new Executive Responsible For Preparing Corporate Accounting Documents and the new internal auditor
Activity: Activities of a recurring nature
Area: ERM system and management of the main risks faced by the Company
- review of quarterly reports on the detection and updating of the key corporate risks in the ERM system, with a particular study of the risks associated with the demerger
- periodic analysis, with the management of the Finance function, of the management of financial risks
Area: Oversight of the Internal Audit function
- examination of the periodic reports on the activities carried out in implementation of the Audit Schedule for 2016, the relevant follow-up activities and the audit’s results
- analysis of the quarterly reports on the notifications received by Snam and the Subsidiaries
- review of the results of the Quality Assurance Review of the Internal Audit function carried out by Protiviti on the instruction of the Committee, which showed that the practices adopted by Snam’s Internal Audit function fully comply with international standards
- analysis of the proposed 2017 audit schedule
Area: Corporate reporting and control system
- examination of the report on the adequacy of the CRCS and on the compliance of the administrative and accounting procedures and the annual report on the organisational, administrative and accounting structure of Snam and of its Subsidiaries
- analysis of the activities carried out in 2016 to update and continuously improve the CRCS of the Snam Group
Area: Independent audit of financial statements
- analysis of issues relating to the half-year and annual financial report, with regard to both the auditing and the checks performed in relation to the effectiveness of the CRCS
Area: Legislative Decree No. 231 of 2001 Code of Ethics and the Anti-Corruption Procedure
- meetings with the Supervisory Body and examination of its activities
- report received from the General Counsel concerning the updating of the special part of the 231 Model to reflect legislative changes
Area: Corporate Governance and regulatory compliance
- review, with the General Counsel, of the 2015 Report on Corporate Governance and Ownership Structure and the 2015 Compliance Report and analysis of matters relating to changes in EU legislation on market abuse
- analysis, with the General Counsel, of the proposal, subsequently approved by the Board of Directors, to introduce a new way of managing notifications, including anonymous ones, received by Snam and the Subsidiaries, by a legal firm of high standing and professionalism (Ombudsman) mandated by the Supervisory Body to ensure its independence
Area: Health and safety at work
- examination of the Snam Group’s Workplace Health and Safety Management System, with the assistance of the Head of HSEQ, the EVP Human Resources & Organisation and the General Counsel
Area: Transactions in which directors and statutory auditors have an interest and related-party transactions
- monitoring of the Company’s activities in relation to the demerger, as a significant transaction pursuant to the relevant regulations on the subject, expressing a favourable opinion, including on the basis of an authoritative opinion provided by an independent professional mandated by the Committee
- annual review of the procedure “Transactions in which directors and statutory auditors have an interest and related-party transactions” (approved most recently on 14 December 2016), annual assessment of the choices made by the Company for the definition of the threshold for the purposes of distinguishing between transactions of lesser and greater significance and expression of a favourable opinion on the amendment of the threshold in order, among other things, to take account of amendments made to governance
- analysis of the report drawn up by the Administration department on the related-party transactions carried out in the first half of 2016
The Regulations governing the Control, Risk and Related-Party Transactions Committee were most recently approved by the Board of Directors on 11 May 2016.
The Committee reported to the Board of Directors, at the Board meetings of 26 July 2016 and 6 March 2017, on its work in the first and second halves of 2016, respectively. At the subsequent Board meeting, it also reported on each meeting held since 11 May 2016, when amendments were made to the Regulations pursuant to Criterion 4.C.1, letter d) of the Code of Corporate Governance.
Seven Committee meetings are scheduled for 2017; as at the Report approval date, two have been held.
In 2016, several non-Committee members attended meetings of the Control, Risk and Related-Party Transactions Committee, at the invitation of the Committee, to provide information and explanations.
The Committee Regulations stipulate that the Committee is authorised to access the information and corporate functions necessary to perform its duties.
The Board of Directors provides the Committee with the necessary resources to perform its duties; particularly, within the terms established from time to time by the Board of Directors, the Committee may turn to external consultants, provided that their position is not likely to compromise their independent judgement.