Integrated Annual Report 2021
Italgas has adopted the so-called traditional administration and control system, which envisages the presence of the Board of Directors (BoD) 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 the legislation to which the Company is subject as listed Issuer as well as with the Corporate Governance Code published by the Corporate Governance Committee on 31 January 2020 (the “Corporate Governance Code”), which applies from 1 January 2021 and to which the Company adhered, under the terms set forth in the Corporate Governance Code, last 18 December 202016.
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 Corporate Governance 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 Corporate Governance 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. The same Rules for the functioning and organisation of the Board of Directors, moreover, specify that the Board shall guide the Company, pursuing the objective of creating value in the long-term, to the benefit of shareholders, taking into account the interests of the other relevant Company stakeholders. From this standpoint, the Board defines the strategies of the Company and of the Group in line with the pursuit of Sustainable Success and monitors its implementation.
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 2021 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 Law on Finance”).
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 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 Corporate Governance Code.
In particular, with regard to the 2021 financial year, the Board of Directors is made up as follows17:
The Board is characterised by the age structure diversity of its members, considering that the Board directors are aged between 42 and 67, and by diversity of geographical origin and experiences, including those abroad.
The educational and professional profiles of the Board directors 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 had already adapted to the New Corporate Governance Code recommendations on the matter, based on the statements issued by those concerned, on 10 March 2021 it was ascertained that: (i) the existence of the independence requirements pursuant to the CLF and the Corporate Governance Code as at 31 December 2020 and (ii) the existence of the independence requirements pursuant to the CLF and the New Corporate Governance Code as at 10 March 2021, also taking into account the quantitative and qualitative criteria applied to assess independence, as approved by the Board of Directors on 24 February 2021. In this regard, it is noted that at 10 March 2021, the Chairman was also independent, both in accordance with the CLF and in accordance with the Corporate Governance Code, as none of the circumstances described under Recommendation 7 of the Corporate Governance Code applied.
Lastly, the verification on the existence of independence requirements pursuant to the CLF and Corporate Governance Code was carried out on 09 March 2022, after which the six non-executive directors specified above were found to be independent.
| u.o.m. | Men | Women | |||
| 30-50 | >50 | 30-50 | >50 | ||
| 2019 | n. | 3 | 3 | 1 | 2 |
| 2020 | n. | 3 | 3 | 1 | 2 |
| 2021 | n. | 3 | 3 | 1 | 2 |
During the 2021 financial year, the Board of Directors met fifteen 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: the Control, Risk and Related Party Transactions Committee, set up on 4 August 2016, the Sustainability Committee, set up on 4 August 2016, and 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.
It consists of three independent, non-executive directors.
It provides proposals and advice to the Board of Directors regarding the Internal Control Sys- tem, risk management and the periodic financial and non-financial reports.
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 Corporate Governance Code, including responsibilities for non-financial reporting20. Please therefore refer to these Regulations for details of the tasks and duties assigned to the committee.
The Committee is composed of three non-executive directors, two of whom are independent.
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.
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 Corporate Governance Code21. Please therefore refer to these Regulations for details of the tasks and duties assigned to the Committee.
The Committee is composed of three non-executive directors, of which two are independent 21.
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.
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 Corporate Governance Code and the sustainability activities carried out by the Company 22. Please therefore refer to these Regulations for details of the tasks and duties assigned to the Committee.
Italgas also has a Sustainability unit within the External Relations and Sustainability Department. The Sustainability 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 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, in connection with whom, it is specified that: (i) one Standing Auditor and one Alternate Auditor belong to the least represented gender 23; (ii) without prejudice to the professional requirements provided for by law, the training and professional background of the members of the Board of Statutory Auditors currently in office guarantees the appropriate skills to ensure the proper performance of their duties.
For more information on the Board of Statutory Auditors, please refer to the Corporate Governance and Ownership Structure Report.
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.
As far as agreements between shareholders are concerned, pursuant to Article 122 of the TUF, 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 Gas”) 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 CLF.
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/.
16 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”.
17 Following the resignation tendered by Mr Yunpeng He on 11 January 2022, with effect from the date on which his replacement was to be appointed, on 27 January 2022, the Board of Directors appointed through cooptation, Mr Qinjing Shen as non-executive, non-independent director of the Company who, therefore, is in office at the date this Report is approved.
18 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.
19 The 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).
20 The 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).
21 Following the resignation tendered by Mr Yunpeng He, on 27 January 2022 the Board of Directors also appointed Mr Qinjing Shen member of the Sustainability Committee, who was thus a member of said Committee on the date on which this Report was approved.
22 The 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).
23 The same considerations set forth for the Board of Directors also apply to the gender balance of the Board of Statutory Auditors.
