Annex 6 – Board of Statutory Auditors: Appointment and functions
1. Appointment of the Board of Statutory Auditors
Pursuant to Article 20 of the Bylaws, Snam’s Board of Statutory Auditors is made up of three standing auditors and two alternates appointed by the Shareholders’ Meeting for three financial years. They may be re-elected at the end of their term of office.
Statutory auditors are chosen from among persons who meet the professionalism and integrity requirements indicated in Decree of the Ministry of Justice No. 162 of 30 March 2000. For the purposes of this decree, the issues strictly related to the Company’s activity are: commercial law, business economics and business finance. Likewise, the sector pertaining strictly to the Company’s business is the engineering and geology sector.
Statutory auditors may not hold more than the maximum number of positions permitted by the applicable legislation. In any event, pursuant to Article 2, paragraph 2, letter c) of the Decree of the President of the Council of Ministers of 25 May 2012, the statutory auditors may not be members of the administrative or control bodies, or hold senior management positions, at Eni S.p.A. and its subsidiaries, nor may they have any direct or indirect professional or financial relationship with said companies.
As per the provisions laid down for the Board of Directors and pursuant to the applicable provisions, the Bylaws stipulate that the statutory auditors must be appointed by list voting, unless they are replaced during their term of office, and in compliance with the applicable law on gender representation.
In the lists submitted by shareholders, the candidates must be listed by consecutive number and their number must not be greater than the number of members of the body to be elected. The rules for filing, submitting and publishing the lists are the same as for the election of directors (see ). Each shareholder may submit or be involved in submitting only one list and may vote on only one list, according to the terms laid down in the applicable legislative and regulatory provisions.
Only shareholders that, alone or together with other shareholders, represent at least 1% of the share capital (the percentage set by Consob Resolution No. 19856 of 25 January 2017) are entitled to submit lists. Each candidate may appear on only one list; otherwise their candidacy is declared void.
Lists are divided into two sections: the first for candidates for the office of standing auditor, and the second for candidates for the office of alternate auditor. At least the first candidate in each section must be included in the Register of Auditors and must have a minimum of three years’ experience as an external auditor.
To comply with the applicable law on gender representation, lists with candidates for both sections which contain three or more candidates submitted for the appointment of the majority of the Board of Statutory Auditors’ members must contain candidates of each gender in the section for the appointment of standing auditors, pursuant to the notice of meeting of the Shareholders’ Meeting. Where the list contains only two candidates, one must be male and the other female.
Lists for appointing statutory auditors, together with information about the candidates and information on the identity of the shareholders submitting said lists and the percentage equity interest owned, must be made available to the public at the Company’s registered office and at Borsa Italiana and posted on the Company’s Website in a timely manner, or within the time periods provided for by current regulations. Additional binding legal provisions, including regulatory rules, shall remain applicable in any case.
List voting mechanism
The procedure for appointing the Board of Statutory Auditors by list voting mechanism, as provided for by Article 20 of the Bylaws, is described below.
Two standing auditors and one alternate auditor are taken from the list that obtains the majority of the votes. The other standing auditor, who will assume the role of Chairperson, and the other alternate auditor are appointed according to the methods laid down in Article 13.5, letter b) of the Bylaws for the election of directors, which are to be applied separately to each of the sections into which the other lists are divided.
Where following the above procedure fails to ensure compliance with the law on gender representation for the standing auditors, the quotient of votes to be attributed to each candidate taken from the standing auditor sections of the different lists shall be calculated by dividing the number of votes for each list by the order number of each of these candidates; the candidate of the most represented gender with the lowest quotient among the candidates taken from all the lists shall be replaced by the candidate of the least represented gender (with the highest consecutive number) from the same standing auditor section of the list of the replaced candidate, or, failing this, from the alternate auditor section of the same list as the replaced candidate (who, in this case, takes the place of the alternate auditor that he/she has just been replaced by). If this fails to ensure compliance with the law on gender representation, the candidate is replaced by the person appointed by statutory majority by the Shareholders’ Meeting, in such a way as to ensure that the composition of the Board of Statutory Auditors complies with the law and the Bylaws.
Where candidates from different lists have obtained the same quotient, the candidate from the list from which the greater number of statutory auditors has been taken shall be replaced, or, the candidate taken from the list with the fewest votes shall be replaced, or, if the number of votes is the same, the candidate who receives the fewest votes in a dedicated resolution by the Shareholders’ Meeting shall be replaced.
In the event of the replacement of a statutory auditor from the list obtaining the majority of the votes, he/she is replaced by the alternate auditor from the same list; in the event of replacement of a statutory auditor from other lists, he/she is replaced by the alternate auditor from these lists.
Pursuant to Article 149, paragraph 1, of the TUF, the Board of Statutory Auditors oversees:
- compliance with the law and with the deed of incorporation;
- respect for the principles of proper administration;
- the adequacy of the Company’s organisational structure in relation to its remit, the internal control system and the administrative and accounting systems, as well as the reliability of the latter in properly representing operational events;
- procedures for the implementation of the rules established by the Code of Corporate Governance; and
- the adequacy of the Company’s instructions to its Subsidiaries pursuant to Article 114, paragraph 2, of the TUF.
Pursuant to Article 19 of Legislative Decree No. 39 of 27 January 2010, as amended by Legislative Decree No. 135 of 17 July 2016, the Board of Statutory Auditors also performs supervisory functions in its capacity as the Internal Control and Audit Committee, overseeing in particular:
- the financial reporting process;
- the effectiveness of the internal control, internal audit and, if applicable, risk management systems;
- the independent audit of the annual financial statements and consolidated financial statements; and
- the independence of the External Auditors, particularly with regard to the provision of non-audit services to the entity being audited.
With prior notice to the Chairperson of the Board of Directors, the Board of Statutory Auditors may call Shareholders’ Meetings and Board of Directors’ meetings. The power to call Board of Directors’ meetings may be exercised individually by each member of the Board of Statutory Auditors; the power to call Shareholders’ Meetings must be exercised by at least two members of the Board.
The Board of Statutory Auditors is invited to attend meetings of the Control, Risk and Related-Party Transactions Committee.