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Governance

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Italgas has adopted the so-called traditional administration and control system, which envisages the presence of the Board of Directors and Board of Statutory Auditors, in office for three financial years, as well as the Shareholders’ Meeting and the Independent auditing firm.

The planning, management and control rules and methodologies forming the corporate governance system are defined by the Board of Directors in compliance with the provisions of the civil code and the Unbundling Regulations, using national and international best practices as a reference, in compliance with: (i) the regulations to which the company is subjected as a listed issuer; (ii) the Corporate Governance Code of listed companies, in the latest version of July 2018, issued by the Corporate Governance Committee, which the company adopted on 4 August 2016 (the “Corporate Governance Code”); (iii) the Corporate Governance Code published by the Corporate Governance Committee on 31 January 2020 (“New Code” or “Corporate Governance Code”), which applies from 1 January 2021 and that the Company adopted, within the due date set by the New Code, on 18 December 20201 .

This system is founded on certain basic principles, such as fair and transparent management of business choices, also ensured by identifying the information flows between corporate bodies and the efficient definition of the internal control and risk management system.

The New Code, adapting to the evolution of international best practices, places growing attention on sustainability, inviting the Board to guide the company by pursuing “sustainable success”, creating long-term value for shareholders while considering the interests of stakeholders, rather than shareholders, who have a significant role in guaranteeing sustainability over time on the market the company operates in.

Therefore, the New Code gives the administrative body the responsibility of integrating sustainability objectives into the definition of the strategies and business plan, the internal control and risk management system and remuneration policies.

Shareholders’ Meeting

The Shareholders’ meeting represents all shareholders and is Italgas’ decision- making body responsible, among other things, for the task, in ordinary and extraordinary session, of appointing the members of the Board of Directors and Board of Statutory Auditors and establishing the related fees, appointing the Independent Auditors, approving the financial statements, including allocation of profits, and resolving on the purchase of treasury shares, amendments to the Bylaws and the issue of convertible bonds.

For more information on the functions of the Shareholders’ meeting, please refer to the Report on the Corporate Governance and Ownership Structure of Italgas for the 2020 financial year (“Corporate Governance and Ownership Structure Report”), drawn up pursuant to Article 123-bis of Italian Legislative Decree no. 58 of 24 February 1998 (“Consolidated Finance Act”).

Board of Directors

Italgas’ Board of Directors is tasked with the ordinary and extraordinary management of the Company and has the faculty to carry out all the acts deemed appropriate for the implementation and achievement of the corporate purpose, with the exclusion of the acts which, pursuant to applicable legislation and the Bylaws, are reserved for the Shareholders’ meeting.

In accordance with the provisions of its Bylaws, the Company is administered by a Board of Directors made up of 9 members. All the Italgas director possess the integrity requirements laid down by current legislation, and an executive director, seven non-executive directors and a chairman without management powers is appointed from among the same. The composition of the Board of Directors respects the company policies with regard to diversity in relation to aspects such as age, gender composition as well as training and professional background. Demonstrating the importance of this issue, in 2018, the Group prepared a “Diversity of corporate bodies policy”, a specific document summarising these policies (as well as their objectives and methods of implementation).

This was approved by the company’s Board of Directors on 24 January 2019 and has recently been updated at the proposal of the Appointments and Compensation Committee, with Board of Directors’ resolution of 25 January 2021, in order to bring it into line with the New Code.

In particular, with regard to the 2020 financial year, the Board of Directors is made up as follows:

  • three Directors of the less represented gender, equal to one third of the total composition, in compliance with gender balance requirements2;
  • five directors qualified as independent on the basis of both the requirements of independence of the

Consolidated Finance Act (Article 147-ter, subsection 4 and 148, subsection 3 of the Consolidated Finance Act), and of the Corporate Governance Code (Article 3) and a Chairman, independent pursuant to the Consolidated Finance Act.

The Board is characterised by the age structure diversity of its members, considering that the Board directors are aged between 41 and 66, and by diversity of geographical origin and experiences, including those abroad.

The educational and professional profiles of the Board directors currently in office (lawyers, engineers, economists, university professors) guarantee a balanced distribution of experience and expertise within the corporate body suitable to ensure that the functions are performed correctly.

Considering that the company adopted the New Code on 18 December 2020, effective from 1 January 2021, the Board of Directors established the existence of the requirements of independence on 10 March 2021, based on the statements issued by those concerned: (i) on 31 December 2020 on the basis of the Corporate Governance Code and (ii) on 10 March 2021, on the basis of the Corporate Governance Code. On 10 March 2021, the independence of the five non-executive directors mentioned above was confirmed both pursuant to the Consolidated Finance Act and to the Corporate Governance Code. The Chairman was also considered independent pursuant both to the Consolidated Finance Act and the Corporate Governance Code.

STANDARD 405-1 – DIVERSITY OF GOVERNANCE BODIES AND EMPLOYEES BREAKDOWN OF THE GOVERNANCE BODIES (ITALGAS S.P.A. BOARD OF DIRECTORS) BY GENDER AND AGE GROUP
Uomini Donne
30-50 >50 30-50 >50
2018 2 4 1 2
2019 3 3 1 2
2020 3 3 1 2

During the 2020 financial year, the Board of Directors met twelve times and the rate of Director participation in the meetings was close to 100%.

For more information on the Board of Directors, please refer to the Corporate Governance and Ownership Structure Report.

In compliance with the company Bylaws, the Board of Directors set up three internal committees: (i) the Control, Risk and Related Party Transactions Committee, set up on 4 August 2016, (ii) the Sustainability Committee, set up on 4 August 2016, and (iii) the Appointments and Compensation Committee, set up on 23 October 2017 following the merging of the Appointments Committee and Compensation Committee set up on 4 August 2016.

The composition and functions of the board committees

CONTROL, RISK AND RELATED PARTY TRANSACTIONS COMMITTEE

It consists of 3 independent, non-executive directors 3. It provides proposals and advice to the Board of Directors regarding the Internal Control System, risk management and the periodic financial and non-financial reports.

The tasks and functions of the Committee are detailed in the regulations of the Control, Risk and Related-Party Transactions Committee approved by the Board of Directors on 4 August 2016, effective until 31 December 2020. It should be noted that, on 18 December 2020, the Board of Directors approved the new regulations of
the Control, Risk and Related Party Transactions Committee, which will be effective from 1 January 2021. The regulations assign the Committee tasks and functions updated in line with the Recommendations of the New Code, including responsibilities for non-financial reporting 4.

APPOINTMENTS AND COMPENSATION COMMITTEE

The Committee is composed of 3 non-executive directors, 2 of whom are independent 5. It provides proposals and advice to the Board of Directors regarding the appointment of directors, their remuneration and that of general managers, statutory auditors and executives with strategic responsibilities.

The tasks and functions of the Committee are detailed in the Regulations of the Appointments and Compensation Committee approved by the Board of Directors on 23 October 2017, which were effective until 31 December 2020.

On 18 December 2020, the Board of Directors approved the new regulations of the Appointments and Compensation Committee, which will be effective from 1 January 2021, in which the tasks and functions of the Committee have been supplemented in line with the Recommendations of the New Code 6.

SUSTAINABILITY COMMITTEE

The Committee is composed of 3 non-executive directors, of which 2 are independent 7.

It provides proposals and advice to the Board of Directors regarding the processes and activities which contribute to the company’s sustainable development along the value chain, aimed at pursuing sustainable success and for periodic non-financial reports, coordinating with the Control, Risk and Related Party Transactions Committee for evaluation by this committee of the suitability of the periodic, financial and non-financial reporting.

The tasks and functions of the Committee are detailed in the regulations of the Sustainability Committee approved by the Board of Directors on 4 August 2016, effective until 31 December 2020.

On 18 December 2020, the Board of Directors approved the new regulations of the Sustainability Committee, which will be effective from 1 January 2021. The regulations assign the Committee tasks and functions updated in line with the Recommendations of the New Code and the sustainability activities carried out by the Company 8.

Italgas also has a Corporate Social Responsibility unit (CSR) within the External Relations and Communication Department. The CSR unit is responsible for sustainability processes and coordinates the contribution of each company department involved in the various issues.

For more information on the Control, Risk and Related Party Transactions Committee, the Appointments and Compensation Committee and the Sustainability Committee, please refer to the Corporate Governance and Ownership Structure Report.

The Board of Statutory Auditors

The Board of Statutory Auditors supervises compliance with the law and the Articles of Association, respect for the principles of correct administration in carrying out corporate activities, the adequacy of the organisational structure for aspects of responsibility, of the system of internal control and accounting system as well as the reliability of the latter in correctly representing transactions, and how to implement the corporate governance rules provided under the Corporate Governance Code.

The current Board of Statutory Auditors was appointed by the Shareholders’ Meeting of 4 April 2019 for a term of three financial years and in any event until the date of the Shareholders’ Meeting called in 2022 to approve the financial statements for 2021.

The Board of Statutory Auditors is made up of five members, three of whom standing auditors and two alternate.

For more information on the Board of Statutory Auditors, please refer to the Corporate Governance and Ownership Structure Report.

Independent Auditors

External auditing is entrusted in accordance with the law to an independent auditing firm entered in the relevant register and appointed by the Shareholders’ Meeting on the reasoned proposal of the Board of Statutory Auditors.

At the Shareholders’ Meeting of 12 May 2020, the independent auditing firm Deloitte & Touche S.p.A. was appointed for the period 2020-2028.

Shareholders’ agreements

As far as agreements between shareholders are concerned, pursuant to Article 122 of the Consolidated Finance Act, as far as Italgas is aware, the following is noted.

On 20 October 2016 Snam S.p.A. (“Snam”), CDP Reti S.p.A. (“CDP Reti”) and CDP Gas S.p.A. (“CDP”) signed a shareholders’ agreement (the “Italgas Shareholders’

Agreement”) covering all the shares that the respective parties held in Italgas of consequence and with effect starting on the effective date of the partial and proportional demerger from Snam in favour of Italgas and the simultaneous listing of the Italgas shares, namely 7 November 2016. Amongst other things, the Italgas Shareholders’ Agreement governs: (i) the exercise of voting rights attached to the syndicated shares; (ii) the establishment of a consultation committee; (iii) the obligations and procedures for submitting a joint list for the appointment of members of the company’s Board of Directors; and (iv) certain restrictions on the sale and purchase of Italgas shares. The Italgas Shareholders’ Agreement was filed in copy at the Milan Business Registry on 11 November 2016 and can be retrieved in extract from the company’s website at:

http://www.italgas.it/investitori/azionariato/patti-parasociali/.

On 1 May 2017, CDP Gas was merged into CDP, to which the Italgas shares held by CDP Gas were transferred. On 19 May 2017 these same shares were transferred to CDP Reti, already party to the Italgas Shareholders’ Agreement. On 1 August 2019, the Italgas Shareholders’ Agreement was further updated to take into account the reclassification of the equity investment of CDP in Italgas as a de facto controlling interest, pursuant to Article 2359, subsections 1) and 2) of the Italian Civil Code and Article 93 of the Consolidated Finance Act.

On 27 November 2014, CDP S.p.A. (“CDP”), on the one hand, and State Grid Europe Limited (“SGEL”) and State Grid International Development Limited (“SGID”), on the other, entered into a shareholders’ agreement (the “SGEL Shareholders’ Agreement’”) in the context of the sales contract concluded between the same parties on 31 July 2014 in accordance with which on 27 November 2014 SGEL acquired from CDP a stake equal to 35% of the share capital of CDP Reti. In conjunction with the effectiveness of the partial and proportional demerger from Snam in favour of Italgas and the simultaneous listing of the Italgas shares on 7 November 2016, SGEL, SGID and CDP have amended and supplemented the SGEL Shareholders’ Agreement, effective on the same date, extending its application to the stake held by CDP Reti in Italgas. The SGEL Shareholders’ Agreement was filed in copy at the Milan Business Registry on 11 November 2016 and can be retrieved in extract from the company’s website at:

http://www.italgas.it/investitori/azionariato/patti-parasociali/.

1 As indicated in the New Code (see “Introduction”), “the companies adopting the New Code will apply it from the first financial year starting after 31 December 2020, advising the market of the fact in the corporate governance reports to be published in 2022”.
2 The Board includes three Directors of the less represented gender, equal to one third of the total composition. The composition of the Board of Directors therefore complies with the legislation on gender balance, which was already being applied in advance on a voluntary basis at the time the company was listed and to a greater extent than legally required for the first renewal following listing (1/3 instead of 1/5 as required for the first renewal). Budget law no. 160/2019, in force since 1 January 2020, established that the least represented gender must constitute at least two-fifths of the elected members, instead of the previous quota of one-third. The new distribution criterion of at least two-fifths applies from the first renewal of the administrative body following the date of entry into force of the law and, therefore, on the occasion of the next renewal of the Board of Directors (and the Board of Statutory Auditors), scheduled for the Shareholders’ Meeting to approve the financial statements at 31 December 2021
3 It should be noted that the directors proved independent: (i) pursuant both to the TUF and to the Corporate Governance Code as at 31
December 2020; (ii) pursuant both to the TUF and to the New Code, as at 10 March 2021.
4 The new Regulation of the Control, Risk and Related Party Transactions Committee can be consulted on the Company’s website (https://www.italgas.it/export/sites/italgas/italgas-gallery/Documenti_it/Regolamento-Comitato-Controllo-e-Rischi-e-Operazioni-con-Parti-Correlate.pdf).
5 It should be noted that the directors proved independent: (i) pursuant both to the TUF and to the Corporate Governance Code as at 31 December 2020; (ii) pursuant both to the TUF and to the New Code, as at 10 March 2021.
6 The new Appointments and Compensation Committee Regulations can be consulted on the Company’s website  (https://www.italgas.it/export/sites/italgas/italgas-gallery/Documenti_it/Regolamento-Comitato-Nomine-e-Remunerazione.pdf).
7 It should be noted that the directors proved independent: (i) pursuant both to the TUF and to the Corporate Governance Code as at 31 December 2020; (ii) pursuant both to the TUF and to the New Code, as at 10 March 2021.
8 The new Sustainability Committee Regulations can be consulted on the Company’s website (https://www.italgas.it/export/sites/italgas/italgas-gallery/Documenti_it/Regolamento-Comitato-Sostenibilita.pdf).