6.3 Coordination between the parties involved in the ICRMS

The rules and procedures adopted by Snam in the context of its ICRMS and CRCS ensure adequate coordination of all parties involved.

In particular, information flows that ensure coordination between the parties involved in the ICRMS and the Board of Directors is composed of:

1. review by the Board of Directors of the opinions and reports prepared by persons involved in the ICRMS;
2. information provided to the Board of Directors and the Board of Statutory Auditors by the Chairperson of the Control, Risk and Related-Party Transactions Committee and the presence of the Board of Statutory Auditors at meetings of the Board of Directors; and
3. participation in meetings of the Board of Directors and the Control, Risk and Related-Party Transactions Committee, for matters within their respective remits, of the managers of the control functions and the Executive Responsible For Preparing Corporate Accounting Documents.

The Control, Risk and Related-Party Transactions Committee and the Board of Statutory Auditors of Snam:

• receive information flows from Internal Audit, from the Company’s other control functions (i.e., Enterprise Risk Management and Compliance), the Supervisory Body and the External Auditors. When the information is obtained, they meet to assess the results; and
• receive from the Executive Responsible For Preparing Corporate Accounting Documents a half-year report and an annual report on the assessment of the CRCS and compliance with the administrative and accounting procedures and an annual report on the Snam Group’s organisational, administrative and accounting structure.

Furthermore, the Board of Statutory Auditors of Snam, in its capacity as the Internal Control and Audit Committee, pursuant to Legislative Decree No. 39/2010, oversees the financial disclosure process, it receives a report from the External Auditors on the fundamental questions arising during the audit.

The Chief Executive Officer, as the Director in Charge:

• receives periodic information flows from the Executive Responsible For Preparing Corporate Accounting Documents on the more important aspects of the CRCS and the results of the monitoring activities, and shares with the latter the half-year and annual report on the CRCS and the annual report on the organisational, administrative and accounting structure of the Snam Group, to be submitted to Snam’s Board of Directors;
• receives from the Internal Auditor: (i) periodic reports and reports on particularly significant events prepared by the Internal Auditor, including with regard to the auditing activities carried out at the Subsidiaries; (ii) notifications relating to Snam and the Subsidiaries, compiled by the Internal Auditor in a quarterly report; (iii) requests for audits not included in the Audit Schedule; and (iv) information on audits relating to areas where investigations by the authorities are taking place;
• reports promptly to the Control, Risk and Related-Party Transactions Committee and/or the Board of Directors, at the next convenient meeting, on issues and problems relating to the ICRMS.

The Supervisory Body provides the following information flows to the top corporate level:

• ongoing, to the CEO, who reports to the Board of Directors during his activity of reporting on the exercise of the powers granted to him;
• half-yearly, to the Control, Risk and Related-Party Transactions Committee and the Board of Statutory Auditors; to this end, a half-yearly report is prepared regarding the activity performed, which includes the outcome of checks and any legislative developments relating to the administrative liability of entities. On this occasion, meetings are organised with the Control, Risk and Related-Party Transactions Committee and the Board of Statutory Auditors; the half-yearly report is also sent to the Chairperson and the CEO, and the Board of Directors is informed of it; and
• immediate, in the case of ascertained facts of special importance and significance, to the Control, Risk and Related-Party Transactions Committee and the Board of Statutory Auditors, after informing the Chairperson and the CEO.

Information flows are also sent from the management to the Supervisory Body.

The Executive Responsible For Preparing Corporate Accounting Documents, after consulting the External Auditors and the Board of Statutory Auditors, assesses, with the Control, Risk and Related-Party Transactions Committee, the correct application of the accounting policies and their homogeneity for the purposes of the consolidated financial statements, and is required to agree with the Internal Auditor on the proposed Audit Schedule to submit to Snam’s Board of Directors for approval. In view of the duties assigned to the Executive Responsible For Preparing Corporate Accounting Documents as part of the CRCS, the Executive Responsible For Preparing Corporate Accounting Documents receives information flows from other persons, bodies and functions within the Company and the Subsidiaries³⁷.

The Internal Audit function receives and provides information relating to the ICRMS, pursuant to the Guidelines. In particular, it:

• obtains information and assessments from the Boards of Directors, Boards of Statutory Auditors and Supervisory Bodies of Snam and the Subsidiaries, for the purposes of formulating the proposed Audit Schedule, for subsequent approval by the Board of Directors;
• sends the Internal Audit reports on each audit intervention made by the Chairperson of the Board of Directors to the Control, Risk and Related-Party Transactions Committee, the Board of Statutory Auditors, the Chief Executive Officer and to top management of the functions subject to audit, to the Executive Responsible and, for matters within its remit, to the Supervisory Body. For audits carried out on the Subsidiaries, reports are also sent to the Chairperson of the Board of Directors, the CEO and the control and supervisory bodies of the Subsidiaries themselves;
• provides a quarterly information flow to Snam’s Supervisory Body concerning summary assessments of the audits carried out and the state of implementation of the corrective actions;
• notifies the managers of the functions involved, with specific regard to the CRCS, of the results of the independent monitoring activities carried out; and
• fulfils the disclosure obligations stipulated in the Anonymous Notification Procedure and prepares a quarterly report on notifications, which the Internal Auditor sends to the Chairperson of the Board of Directors, the Executive Responsible For Preparing Corporate Accounting Documents, the Board of Statutory Auditors, the Control, Risk and Related-Party Transactions Committee, the External Auditors, the Anti-Corruption Unit and the Supervisory Body.

The Enterprise Risk Management Function receives information flows from the functions and structures of Snam and the Subsidiaries competent from time to time and prepares and sends to the various corporate levels summary reports on the identification, assessment and management of risk. Specifically, it reports: (i) to the Control, Risk and Related-Party Transactions Committee, the Board of Statutory Auditors and Snam’s Supervisory Body, as the case may be, at least every three or six months; (ii) to the Boards of Statutory Auditors of the Subsidiaries and the Supervisory Bodies of Snam and the Subsidiaries at least every six months; and (iii) to the Executive responsible for preparing corporate accounting documents (through the CRCS function) with regard to: (a) the results of the Enterprise Risk Management process, and (b) any findings relating to the CRCS.

Finally, the Legal and Compliance Function periodically reports to the Control, Risk and Related-Party Transactions Committee, the Board of Statutory Auditors and the Supervisory Body, specifically for the purpose of reviewing compliance matters, with regard to, among others, any potential issue and/or possible improvement recommendation, as well as the status of the Company’s legal proceedings; within this framework, a report is also sent on the activities of check, training, assessment and monitoring set out in anti-corruption procedures.