Information on Corporate Governance

Introduction

IREN S.p.A. (hereinafter “Iren”) is the result of the merger by incorporation of Enìa S.p.A. into IRIDE S.p.A. which took effect on 1 July 2010. The merger between IRIDE and Enìa was promoted by the controlling shareholders - respectively FSU S.r.l. (then controlled equally by the Municipalities of Turin, through FCT Holding S.p.A., and Genoa) and the Municipalities of Reggio Emilia, Parma, Piacenza and other Municipalities of the Emilia area that had signed ad hoc shareholders’ agreements – with the objective of creating a new entity capable of developing industrial synergies and to be a hub for further aggregations on the national market.

At the date of this report, three Shareholders’ Agreements are in force among the public shareholders of Iren S.p.A.:

• FSU - FCT Agreement- so-called Parti Emiliane – Soci Spezzini, effective as of 5 April 2019.
  This agreement (hereinafter also the “Shareholders' Agreement”) is attributable to a blocking and voting syndicate with the purpose of guaranteeing the development of the Company, of its investees and of its business, and of ensuring unity and stability of guidance, also through the use of the instrument of increased votes, and, specifically: (i) determining methods of consultation and joint decision‐making regarding certain resolutions of the Company’s Shareholders’ Meeting; and (ii) setting certain limits on the circulation of the shares contributed.
  The Agreement has a duration of 3 years and will be tacitly renewed, subject to the option to withdraw with the methods and in the terms pursuant to the Agreement, for a further 2 years; subsequently, any further renewal must be agreed in advance in writing.
   
• Emilian Parties Sub‐Agreement in effect as of 5 April 2019.
  This agreement is intended, among other things, to determine the respective rights and obligations, in order to (i) ensure uniformity of conduct and rules on decisions that must be taken by the Emilian parties in the context of what is provided for in the FSU‐FCT‐Emilian Parties‐La Spezia Shareholders Agreement;provide for further commitments in order to guarantee the development of the Company, of its investees and of its business, and of ensuring to the same unity and stability of guidance; (iii) attribute a right of pre‐emption in favour of the signatories in the event of sale of the Company’s shares other than shares covered by the Block Syndicate under the terms of the Agreement; and (iv) confer on the Municipality of Reggio Emilia an irrevocable mandate to exercise on behalf of the signatories the rights attributed to these latter under the terms of the Agreement.
  The Emilian Parties Sub‐Agreement has a duration of 3 years and will be tacitly renewed, subject to the option to withdraw with the methods and under the terms pursuant to the Sub Agreement, for 2 additional years; subsequently, any further renewal must be agreed in advance in writing.
• FSU – FCT Sub‐Agreement in effect as of 17 July 2018.
  This agreement is attributable to a blocking and voting syndicate with the purpose of ensuring that, following the Demerger, FCT and FSU will exercise jointly the powers of voting and indicating candidates for IREN’s company officers, in substantial compliance with what is provided for in the Articles of Association of FSU current up to the date of the Demerger; all this, in the context and with the necessary observance of the Shareholders' Agreement, so that the provisions regarding FSU in this Shareholders' Agreement are passed on jointly, without a break, to FSU and FCT, which will act as a single party in relation to the other signatories, in accordance with what is provided for in the Sub‐Agreement.
  The FSU‐FCT Sub‐Agreement has a duration of 3 years from the date of effectiveness of the Demerger and is renewed automatically on expiry for a period of a further 2 years, subject to withdrawal to be communicated at least 6 months before expiry.

During FY 2020, the structure of IREN's public ownership structure changed as follows:

• 2 Subscribers sold on the market a total of 119,000 shares contributed to the FSU - FCT - Emilian Parties - Spezzini Shareholders Agreement;
• the number of voting rights conferred to the FSU - FCT- Parti Emiliane - Spezzini Shareholders Agreement as a result of the allocation of the Increased Vote for 20,415,981 shares held by 24 Spezzini Shareholders as of 1 June 2020 and, subsequently on 1 September 2020, for 1 share held by FSU;
• an Emilian Shareholder joined the FSU - FCT- Parti Emiliane - Soci Spezzini Agreement by contributing 257,298 ordinary shares.

The Company adopts a traditional system of corporate governance. The Board of Directors is vested with the broadest powers for the ordinary and extraordinary administration of the Company and, specifically, with the power to carry out all the actions it deems appropriate for the implementation and achievement of the corporate purpose, including organising the Company and the Group into business areas, whether structured as companies or operating divisions, excluding only those actions that the law and the Articles of Association reserve for the Shareholders' Meeting.

Under the terms of the current Articles of Association, the Board of Directors delegates its powers to one or more of its members and may also assign powers to the Chairperson, Deputy Chairperson and CEO provided they do not conflict with each other.

Declaration on observance of the laws on the subject of corporate governance

Iren's corporate governance system is in line with the provisions of the Consolidated Law on Finance (hereinafter "TUF") and the Corporate Governance Code approved by the Italian Corporate Governance Committee on 31 January 2020 (hereinafter "Code"), to which the Company subscribed by board resolution of 18 December 2020.

After adoption a disclosure was made to the public through a press release distributed to the market. On the same date the Board of Directors also approved the document which highlights the governance solutions adopted by the Company with reference to the provisions of the Code. This was published on the IREN Group's website (www.gruppoiren.it), in the Section "Investors – Corporate Governance – Corporate documents".

The current Articles of Association are in keeping with the rules of the TUF and the other provisions of laws or regulations applicable to listed companies.

In particular the Articles of Association state, among other things, that:

• the directors must be in possession of the requisites provided for by law and by the regulations on the subject (art. 147‐quinquies of the Consolidated Law on Finance);
• at least two members of the Board of Directors must possess the requisites of independence established by the applicable legislation (art. 147–ter, paragraph 4, and art. 148, paragraph 3, Consolidated Law on Finance);
• the members of the entire Board of Directors are appointed on the basis of lists (art. 147–ter, paragraph one, Consolidated Law on Finance);
• the non‐controlling shareholders have the right to appoint at least two Directors (art. 147–ter, paragraph 3, Consolidated Law on Finance);
• the balanced representation of genders in the composition of corporate bodies is respected (Article 147-ter, paragraph 1-ter and art. 148, paragraph 1-bis, Consolidated Law on Finance);
• one standing and one supplementary member of the Board of Statutory Auditors must be elected from the list presented by the minority (art. 148, paragraph 2 of the Consolidated Law on Finance;)
• the Chairperson of the Board of Statutory Auditors and one supplementary auditor must be appointed on the basis of the list presented by the minority (art. 148, paragraph 2‐bis of the Consolidated Law on Finance);
• a person responsible for corporate financial reporting must be appointed, setting the requisites of professionalism and the powers and tasks attributed to the same (art. 154–bis of the Consolidated Law on Finance).

On 22 May 2019 the Iren Shareholders’ Meeting, called inter alia to approve the financial statements at 31 December 2018, also proceeded to appoint the Company’s Board of Directors for the 2019‐2021 three year period, with expiry on the date of approval of the financial statements as at 31 December 2021.
By resolution of the Board of Directors meeting of 22 May 2019, the newly appointed Chairperson, Renato Boero, was conferred powers, delegated powers and responsibilities in relation to communication and external relations, institutional relations (including relations with Regulators, Regions and Local Authorities), and mergers & acquisitions.
The Deputy Chairperson, Moris Ferretti, conferred given powers, delegated powers and responsibilities in relation to corporate affairs, corporate compliance, corporate social responsibility (which also covers support for the activities of territorial Committees), risk management, internal auditing.
The Chief Executive Officer, Massimiliano Bianco, was given powers, delegated powers and responsibilities in relation to administration, finance and control (including investor relations); personnel, organisation and information systems; procurement, logistics and services; legal affairs; Energy, Market, Networks and Waste Management business units, as well as expansive entrustment of duties and powers of representation.
On 2 July 2019, at the same time as his appointment as General Manager, the Board of Directors of Iren gave Massimiliano Bianco powers and delegated powers of an operational kind, with a transversal impact on the Departments and Business Units.

In compliance with the provisions of the Code, with resolutions passed at the meetings on 22 and 30 May 2019, the Board of Directors also appointed:

• a Remuneration and Appointments Committee (hereinafter also “RAC”);
• a Control, Risk and Sustainability Committee (henceforth also “CRSC”).

In accordance with the provisions of the CONSOB Regulation and of current TRP Procedure, with a resolution passed at the meeting on 22 May 2019 (amended with a resolution passed on 30 May 2019), the Board of Directors also appointed the Independent Directors’ Committee for dealing with Transactions with Related Parties, named the Committee for Transactions with Related Parties (hereinafter also “CTRP”).

 

Board of Directors

As mentioned above, on 22 May 2019, the Shareholders’ Meeting appointed the current Board of Directors, made up of fifteen members, in office for the years 2019/2020/2021 (until approval of the separate financial statements at 31 December 2021).

The composition is as follows:

In accordance with art. 25 of the current Articles of Association, resolutions of the IREN Board of Directors are carried by a vote in favour of the absolute majority of Directors in office.
For the matters indicated in Art. 25.5 of the Articles of Association (“Significant Matters”), resolutions of the Board are instead carried by the vote in favour of at least 12 Directors.
Articles 18, 19 and 20 of the Articles of Association govern the appointment, methods and criteria for the presentation of lists for the appointment of Directors, which adopts the list voting system.
During FY 2020 the IREN Board of Directors held 19 meetings.

As at 31 December 2020, in the Board of Directors, consisting of 15 directors, 9 of possess the requirements of independence both under the terms of the combined provisions of arts 147‐ter, paragraph 4, and 148, paragraph 3, of the Consolidated Law on Finance, and under the terms of art. 7 of the Code.

The Board of Directors assesses the independence of its members with regard to the principle of substance over form. The independence of directors is assessed by the Board of Directors on appointment, and thereafter on an at least annual basis, or when significant circumstances occur for the purposes of independence during their mandate. The outcome of the Board’s assessments is disclosed to the market, with the methods identified in the Code.
As at 31 December 2020, the Independent Directors met twice, under the terms of Recommendation no. 5 of the Code. During the FY 2020, an additional meeting was held which was attended by the Executive Directors in addition to the Independent Directors.

The Company has set up a short-term bonus system (MBO) for the Chief Executive Officer and General Manager of the Parent Company and the Group's Executives with Strategic Responsibilities: the targets are set respectively by the Company’s Board of Directors and Chief Executive Officer and General Manager – after an opinion of the Company’s Remuneration and Appointments Committee – on an annual basis and, if achieved, for the amount established at the end of an enquiry carried out by the Committee, give the right to receive the related bonus (after a resolution of the Board of Directors, as regards the figure of the Chief Executive Officer and General Manager).
During the meeting on 27 November 2018, the Company’s Board of Directors, on the basis of the inquiry carried out by the Remuneration and Appointments Committee, approved the 2019‐2021 Long‐Term Monetary Incentive Plan for the Group’s Key Management Personnel and other resources (the so‐called “Key Resources”) who can contribute in a significant way to achieving the targets in the 2018‐2023 Business Plan (as approved by the Board of Directors on 26 September 2018). On 2 July 2019, considering the enquiry carried out by the Company’s Remuneration and Appointments Committee, also in performing the duties pursuant to the TRP Procedure, the Iren Board of Directors approved the acceptance by Mr Massimiliano Bianco (Chief Executive Officer and General Manager of the Company), of the 2019‐2021 Long‐Term Monetary Incentive Plan.
For more information on the remuneration policy, please see the Report on the policy on the subject of 2021 remuneration and on fees paid for FY 2020 made available to the shareholders, in observance of the terms provided for in the current legislation, in view of the Shareholders’ Meeting called to approve the Financial Statements as at 31 December 2020.

As envisaged in the Italian Civil Code, directors with an interest in a given transaction must report such interest beforehand. On this point, with a resolution passed on 30 May 2019, the current text of IREN’s Procedure for Transactions with Related Parties was approved by the Board of Directors.

 

Remuneration and Appointments Committee

The Board of Directors set up within it a Remuneration and Appointments Committee (hereinafter also “RAC”), composed of non‐executive directors, most of whom independent, from among whom the Board of Directors appointed the Chairperson. The Committee has the preliminary, proposing and consultative functions towards the Board of Directors, as per the Code as well as the Policies and Procedures approved by the Board of Directors of IREN S.p.A. on 1 August 2018 (and of which the RAC in office took note in the first meeting following the appointment), as follows:

• to formulate proposals to the Company’s Board of Directors on the definition of the policy on remuneration of Directors and Key Management Personnel of the IREN Group (top management, as defined in the Code), in compliance with the current legislation and having regard to the criteria recommended by the Code, after interaction with the Company’s Control, Risk and Sustainability Committee, as regards the risk profiles;
• to submit for the approval of the Company’s Board of Directors the annual Report on the policy on the subject of remuneration and on fees paid prepared under the terms of art. 123‐ter of the Consolidated Law on Finance, for its presentation to the Shareholders' Meeting called for approval of the annual financial statements;
• to assess periodically the adequacy, overall consistency and actual application of the policy under a) above, availing itself, in this last regard, of the information provided by the competent delegated bodies and formulating proposals on the subject to the Board of Directors;
• to present proposals or express opinions to the Company’s Board of Directors on the remuneration of executive directors and other directors who hold special positions and establishing performance objectives relating to the short and medium/long‐term variable component connected with this remuneration;
• to monitor the application of the decisions adopted by the said Board by verifying, in particular, the actual achievement of the short‐ and medium/long‐term performance targets pursuant to point d) above;
• to formulate proposals to the Company’s Board of Directors on the remuneration of the members of the Committees set up within the Board itself;
• to establish the annual board evaluation procedure (“board evaluation”) on the operation of the Board itself and of its Committees and on their size and composition, also taking into account elements such as the professional characteristics, experience, including managerial, and gender of its members, and their seniority in office; specifically, after coordination with the Chairperson of the Board of Directors, the Committee identifies the subjects with which the assessment is concerned and, having regard to the best practices, also availing itself of the assistance of an expert consultant in the sector;
• taking into account the results of the board evaluation as in point g) above, to formulate opinions to the Board of Directors on the subject of the dimensions and composition of the same and of its Committees (including the requisites of professionalism, integrity and independence of the related members) and to express recommendations on the professional and managerial figures whose presence on the Board of Directors is considered opportune, so that the Board of Directors can express its guidance to the shareholders before the appointment of the new administrative body;
• to express recommendations to the Board of Directors as regards the maximum number of appointments as Director or Statutory Auditor in other listed companies in regulated markets (including abroad), in financial, banking and insurance companies or in large companies, compatible with an effective fulfilment of the appointment as Director of IREN S.p.A. taking into consideration the participation of the Directors in the Committees set up within the Board;
• to express recommendations to the Board of Directors on any problematic cases connected with application of the prohibition on competition provided for in relation to Directors in art. 2390 of the Italian Civil Code;
• in line with the current with statutory provisions, to propose candidates to the Board of Directors for the position of Director in the cases of co-option pursuant to Article 2386 paragraph 1 of the Italian Civil Code, if it is necessary to replace Independent Directors, ensuring observance of the prescriptions on the minimum number of independent directors and on the quotas reserved for the less represented gender;
• to carry out the enquiry on preparation of the plan for the succession of the Executive Directors, if the Board of Directors decides to adopt this plan;
• to report, through its Chairperson, on the most significant questions examined by the Committee on the occasion of the first useful meeting of the Board of Directors of IREN;
• to report on the methods of performing its duties to the Shareholders' Meeting called for approval of the annual financial statements, through its Chairperson or another member indicated by the same.

No Director shall take part in meetings of the Committee in which proposals are formulated to the Company’s Board of Directors on their remuneration, unless the proposals regard all the members of the Committees set up within the administrative body.
In performing its duties, the Committee has the right to accede to the information and corporate units necessary for it to carry out its tasks, and to avail itself of external consultants, under the terms laid down by the Board of Directors.
In the case of operations regarding the remuneration of the Directors of the Company and the Key Management Personnel of the IREN Group, the Committee also performs the duties of the Committee of independent directors responsible for the examination and enquiry pursuant to the current TRP Procedure, limited to cases in which its composition makes it possible to meet the minimum requisites of independence and non‐relatedness of its members required by the CONSOB T.R.P. Regulation.

With resolutions passed on 22 and 30 May 2019, IREN’s Board of Directors identified, as members of the Remuneration and Appointments Committee for the three years 2019‐2021, the following Directors:

• Pietro Paolo Giampellegrini, recognising that he possessed adequate knowledge and experience on the subject of remuneration policies;
• Maurizio Irrera, recognising that he possessed adequate knowledge and experience on the subject of remuneration policies;
• Francesca Grasselli, recognising that she possesses adequate knowledge and experience on financial matters and remuneration policies.

On 30 May 2019, Iren S.p.A.’s Board of Directors appointed as President of the Remuneration and Appointments Committee att. Pietro Paolo Giampellegrini, in possession of the requisites of independence under the terms of arts 147‐ter, paragraph 4, and 148, paragraph 3, Consolidated Law on Finance, and under the terms of Recommendation no. 7 of the Code.

In FY 2020 the Remuneration and Appointments Committee met 11 times (of which once jointly with the Control, Risk and Sustainability Committee), preparing proposals and opinions recorded in the minutes of the Committee meetings. The Committee meetings held during the year were attended by at least one Statutory Auditor of the Company, as per the Committee Regulations.

 

Control, Risk and Sustainability Committee

In accordance with what is established by the Code, the Board of Directors set up within it a Control, Risk and Sustainability Committee (hereinafter also “CRSC”), composed, as of today, of four non‐executive Directors, most of whom independent, from among whom the Board of Directors appointed the Chairperson.

The Control, Risk and Sustainability Committee performs the general task of supporting, through adequate preliminary activities, the assessments and decisions of the Board of Directors relating to the internal control and risk management system, as well as those concerning approval of the periodic reports of both a financial and a non‐accounting nature.

It is assigned the functions set out in the Code as well as in the Regulation approved by the Board of Directors of IREN S.p.A. on 5 April 2019 (and which the CRSC in office acknowledged in the first meeting following its appointment), as follows:

• to assess, together with the Financial Reporting Manager, and after consulting the independent auditors and the Board of Statutory Auditors, the proper use of accounting standards, and in the case of Groups, their uniformity for the purpose of drafting the Consolidated Financial Statements;
• to express opinions on specific aspects related to identifying the main business risks (in particular, on specific aspects related to the Risk Policies, identifying the main business risks and the Audit Plan, and on Guidelines for the internal control and risk management system);
• to examine the periodic reports, concerning the evaluation of the internal control and risk management system, and those of particular significance drafted by the Internal Audit Unit;
• to monitor the independence, adequacy, effectiveness and efficiency of the Internal Audit function;
• to request that the Internal Audit function carry out checks on specific operational areas, communicating simultaneously with the Chairperson of the Board of Statutory Auditors;
• to report to the Board, at least every six months, on the occasion of approval of the annual and interim Financial Report, on its activity and on the adequacy of the internal control and risk management system;
• to support, with adequate enquiries, the assessments and decisions of the Board of Directors in relation to the management of risks deriving from detrimental events of which the Board of Directors has become aware;
• to examine the risk analysis carried out (a) with reference to the multi‐annual Business Plan of the IREN Group, prior to its approval by the Board of Directors; (b) with reference to the strategic initiatives, including the merger & acquisition operations, carried out by the Company and/or by the subsidiaries, if they fall within the scope of Iren’s Board of Directors;
• to express to the Board of Directors of the Company its prior opinion on the proposal related (a) to the appointment and dismissal of the Manager of the Internal Audit unit; (b) to the adequacy of the resources assigned to the same for performing his or her duties; (c) to the definition of the related remuneration in keeping with the corporate policies;
• in agreement with the Remuneration and Appointments Committee, prior to its approval by the Board of Directors, to examine the Company’s policy for the remuneration of the Directors and Key Management Personnel of the Group, with a particular focus on the risk profiles.

The Committee also provides the Board of Directors with its prior opinion on proposals related: (a) to the appointment and dismissal of the Manager of the Internal Audit unit; (b) to the adequacy of the resources assigned to the same for performing his or her duties; (c) to the definition of the related remuneration in keeping with the corporate policies;

The Board of Directors of Iren S.p.A. also attributed to the Control, Risk and Sustainability Committee the functions of consultation and proposal in relation to the administrative body on the subject of sustainability listed below:

• to express opinions to the Board of Directors of the Company on (a) the definition of “sustainability” policies and principles of conduct, in order to ensure the creation of value over time for the shareholders and for all the other stakeholders; (b) the definition of a sustainability plan (strategic priorities, commitments and objectives) for the development of the economic, environmental and social responsibility of the Group;
• to supervise the “sustainability” policies and observance of any principles of conduct adopted on the subject by the Company and its subsidiaries;
• examine the issues under enquiry in terms of long‐term sustainability of the basic principles and guidelines of strategic planning, of the Business Plan and of short‐term planning, supervising the methods for implementing the same;
• to assess, together with the competent Group Unit and after consulting the Independent Auditors, the proper use of the standards adopted for the purposes of preparing the non‐accounting disclosures provided for in the current legislation;
• supervise the system for assessing and improving the environmental, economic and social impacts deriving from the business activities in the local areas;
• to examine the periodic reports on the implementation of the structured methods of discussion with stakeholders in the local areas in which the Group operates, also through instruments such as Local Committees, and those on the consistency with the corporate social responsibility questions of the Group’s cultural and image promotion activities.

In performing its duties, the Committee has the right to accede to the information and corporate units necessary for it to carry out its tasks, and to avail itself of external consultants, under the terms laid down by the Board of Directors.

With resolutions passed on 22 and 30 May 2019, Iren’s Board of Directors identified as members of the Control, Risk and Sustainability Committee for the three years 2019‐2021, the following Directors:

• Giacomo Malmesi, recognising that he possessed adequate experience on strategic planning processes and aspects of corporate social responsibility;
• Sonia Maria Margherita Cantoni, recognising that she possessed adequate experience on assessment of functioning processes of complex organisations, on strategic planning processes, on strategic risk management, on aspects of corporate social responsibility and on guidance and assessment of environmental aspects;
• Enrica Maria Ghia, recognising that she possessed adequate experience regarding assessment of functioning processes of complex organisations, of strategic planning processes, of strategic risk management, of aspects of corporate social responsibility and of guidance and assessment of environmental aspects;
• Cristiano Lavaggi, recognising that he possessed adequate experience regarding the analysis of accounting and financial disclosures and aspects of corporate social responsibility.

On 30 May 2019, Iren S.p.A.’s Board of Directors appointed as President of the Remuneration and Appointments Committee att. Giacomo Malmesi, in possession of the requirements of independence under the terms of arts 147‐ter, paragraph 4, and 148, paragraph 3, Consolidated Law on Finance, and under the terms of Recommendation no. 7 of the Code.

During 2020, the Audit, Risk and Sustainability Committee held 15 meetings (of which one jointly with the Remuneration and Appointments Committee and one jointly with the Board of Statutory Auditors). As per the recommendations of the Code, all the meetings of the Committee were attended by the President of the Board of Statutory Auditors and/or another/other statutory auditor(s) designated.

 

Transaction with Related Parties Committee

In accordance with what is established by the current TRP Procedure, the Board of Directors set up a specific Transactions with Related Parties Committee (“TRPC”).

The TRPC consists of four Directors in possession of the requirements of independence provided for in Arts147‐ter, paragraph 4 and 148, paragraph 3 of the Consolidated Law on Finance and the additional requirements set forth in Recommendation no. 7 of the Code. In order to guarantee the double requisite of independence and non‐relatedness in each transaction to be examined, in the context of the current TRP Procedure mechanisms were put in place to identify any subjects responsible, as an alternative, for the enquiry.

Specifically, without prejudice to the competence of the RAC in the case of transactions related to the remuneration of the Company’s Directors and the Group’s Key Management Personnel, it is envisaged that:

• if possible, the TRPC is expanded to include other independent Directors, “unrelated to the transaction under review” who are members of the Company’s Board of Directors, attributing to same administrative body the task of identifying a Sub‐Committee composed of three Independent Directors unrelated to the individual transaction with Related Party under review;
• if there is not even one member of the TRPC or of the Board of Directors in possession of the aforementioned requisites of independence and non‐relatedness, the task of the enquiry will be given, as Alternative Overseers to (a) the Company’s Board of Statutory Auditors or (b) an Independent Expert appointed by the Company’s Board of Directors.

With resolutions passed on 22 and 30 May 2019, the Board of Directors identified, as members of the Committee for Transactions with Related Parties for the three years 2019‐2021, the following Directors:

• Licia Soncini;
• Alessandro Giglio;
• Giacomo Malmesi;
• Ginevra Virginia Lombardi;

all in possession of the requirements of independence under the terms of the provisions of the Consolidated Law on Finance, and pursuant to Recommendation no.7 of the Code.

On 29 May 2019, the TRPC appointed Licia Soncini as its President.

In 2020, the TRPC met 11 times preparing, among other things, opinions that are recorded in the minutes of the Committee’s meetings. The meetings of the Committee were attended by the Chairperson of the Board of Statutory Auditors and/or another/other statutory auditor(s) designated by him.

 

Board of Statutory Auditors

As of today, the Board of Statutory Auditors is composed of three statutory auditors and two supplementary auditors1 with a three‐year term of office expiring on the date of the shareholders’ meeting called to approve the financial statements in their last year of office; they can be re‐elected.

On 19 April 2018, the Shareholders’ Meeting appointed the members of the Supervisory Board; their term expires upon approval of these 2020 financial statements.

The composition is as follows:

Arts 27 et seq. of the Articles of Association, to which reference should be made, establish list voting as the method for appointing the Board of Statutory Auditors.
The members of the Board of Statutory Auditors attend the shareholders’ meetings and meetings of the Board of Directors. The presence of at least one member of the Board of Statutory Auditors at Board of Directors’ meetings ensures that the Board of Statutory Auditors remains informed of activities conducted by the company and on the transactions of greatest economic, financial and equity significance performed by the company and its subsidiaries, particularly transactions in which the directors have an interest.
As indicated above, in accordance with the indications of the Code, the meetings of the Committees set up within the Board of Directors held during the FY 2020, were attended by the President of the Board of Statutory Auditors and/or another/other statutory auditor(s) designated.
In carrying out its supervisory activities on the adequacy of the internal control and risk management system, the Board of Statutory Auditors has established an information flow with the Internal Audit Function and the Risk Management Department of the Company.
Furthermore, in its capacity as the "Internal Control and Risk Management Committee" and in coordination with the Company's Administration, Finance and Control Department, the Board of Statutory Auditors monitored, inter alia, (i) the financial reporting process, (ii) the legal audit of the Company's Financial Statements and of the Consolidated Financial Statements, and (iii) the verification of the independence of the Audit Company.

In 2020, the Board of Statutory Auditors held 11 meetings. The outcome of the supervisory activities of the Board of Statutory Auditors is shown in the report to the Shareholders' Meeting prepared pursuant to Article 153 of the Consolidated Law on Finance and annexed to the these financial statements.

Financial Reporting Manager

Massimo Levrino (Manager of the Administration, Finance and Control Department)

Indepndent Auditors

PricewaterhouseCoopers S.p.A. was appointed by the Shareholders' Meeting of 14 May 2012 to audit the Company's accounts for the 2012-2020 nine-year period. With the approval of the financial statements for the year ended December 31, 2020, this audit engagement ends.
As is known, on the recommendation of the Board of Statutory Auditors, in its capacity as the "Internal Control and Audit Committee", the Shareholders' Meeting, held on 22 May 2019, has already appointed KPMG S.p.A. to audit the financial statements of IREN S.p.A. for the nine-year period 2021-2029. This resolution was taken at the end of an articulated selection procedure which was carried out in accordance with the provisions of Article 16 of Regulation (EU) 537/2014 (the "Tender Process").
Subsequently, on 25 November 2019, the Parent Company and KPMG signed a Framework Agreement containing terms and conditions (technical and financial) for the performance, for the 2021-2029 nine-year period by KPMG S.p.A. of (i) the activity of legal audit of Iren's financial statements, and (iii) the activity of legal audit of the financial statements of the consolidated companies included in the scope of the Tender Process (the "Framework Agreement"). Moreover, the same Framework Agreement contains (technical and economic) terms and conditions for carrying out the limited review activity of the DNF of the Iren Group for the three-year period 2021-2023, with an option to renew for two further three-year periods.

The Shareholders' Meetings of each consolidated company included in the Tender Process, on the basis of a reasoned proposal from their respective Boards of Statutory Auditors, have therefore appointed KPMG S.p.A. to audit their accounts for the 2021-2023 three-year period (with an option to renew for two additional three-year periods), in accordance with the terms and conditions of the Framework Agreement.
After the signing of the Framework Agreement, the dynamism that has characterised the Group in the last period, both in terms of growth through external lines and in terms of internal reorganisation, has given rise to situations such as to entail changes to the original audit scope entrusted by Iren to KPMG S.p.A. for the nine-year period 2021-2029. More precisely it is: (i) the expansion of the scope of Iren’s subsidiaries (direct and indirect) which, at the end of this year, includes entities not envisaged in the Tender Process concluded in 2019; (ii) changes in the size or legal status of some consolidated companies, already included in the audit scope, which could affect the terms and conditions of the audit appointments already conferred on KPMG S.p.A. by these companies.
Given the changes that have occurred in the meantime, it has become necessary to amend the Framework Agreement. This intervention is permitted by Article 5 of the Framework Agreement, which expressly regulates the procedures and terms for amending the Agreement itself in connection with changes both with reference to the characteristics of the companies subject to legal audit and with reference to the list of companies directly and indirectly controlled by Iren. The Company, also in the name and on behalf of the companies directly and indirectly controlled by Iren, and KPMG S.p.A. will therefore finalise, by the approval of the 2020 financial statements, an Addendum to the Framework Agreement, aimed at: (i) extending the statutory audit that KPMG S.p.A. is required to perform, starting from 2021, to the financial statements of companies consolidated in the medium term following the single group auditor approach that was the basis for the Tender Process ; (ii) adjusting the terms and conditions of certain statutory audit engagements already assigned to KPMG S.p.A.

More specifically, in relation to the above-mentioned growth in size of the Group and the changes in size or legal status undergone by the companies referred to above, the increase in audit services provided for in the Addendum to the Framework Agreement concerns the following activities: (i) Statutory audit of the financial statements of subsidiaries, (ii) Statutory audit of the consolidated financial statements of Iren Group, (iii) Limited audit of the consolidated half-yearly report of Iren Group, (iv) Limited audit of the half-yearly report of subsidiaries and (v) Limited audit of the DNF of Iren Group.
The increase in consideration recognised for the entire Iren Group, in compliance with the indications of art. 5 of the Framework Agreement, amounts respectively, in yearly terms, to: € 348,958.15, plus VAT, with respect to the activities indicated at points (i) through (iv); and € 12,213.42, plus VAT, with respect to the activity indicated at point (v).

Maximum number of positions held in other companies

According to the Code, the directors ensure adequate time availability for the diligent fulfilment of the tasks assigned to them. Furthermore, the Board of Directors, on the basis of the commitment required of the directors for the execution of their office in Iren, can express their orientation regarding the maximum number of offices in the management or control bodies in other listed companies or companies of significant size which can be considered compatible with the effective execution of the office of director of the company, taking into account the commitment deriving from the role held, as well as the participation of the Directors in the Committees established within the Board. To this end it may propose to the Shareholders to introduce into the Articles of Association particular rules aimed at regulating consistently the appointment of directors.
In the current context, the Remuneration and Appointments Committee and the Board of Directors of the Company did not consider it necessary to make this provision, considering that the number of positions currently held by members of the board in other companies is compatible with the fulfilment of the commitment as Director of IREN S.p.A.

Directors responsible for the Internal Control and Risk Management System

By resolution of 4 June 2019, having regard to the allocation of powers, the Board of Directors of Iren identified, as Directors in charge of the internal control and risk management system (hereinafter "ICRMS Directors"), Eng. Renato Boero (Chairperson), Massimiliano Bianco (Chief Executive Officer and General Manager) ,and Moris Ferretti (Deputy Chairperson), each with regard to their respective functions and powers2.

Each ICRMS Director, with reference to the areas falling under their responsibility, and in compliance with the delegated powers, is vested with the functions indicated below:

• to identify the main business risks, taking into account the characteristics of the activities performed by Iren S.p.A. and by its subsidiaries and check that the same are submitted periodically to examination by the Board of Directors; in more detail, in the current governance system, the ICRMS Director with delegated powers on the subject of Risk Management, in agreement with the other ICRMS Directors, as far as each is responsible, also submits to examination by the Board of Directors the Risk Policies and the Audit Plan;
• to put into practice the guidelines defined by the Board of Directors, dealing with the planning, creation and management of the internal control and risk management system and checking constantly its adequacy and effectiveness;
• to adapt this system to changes in the operating conditions and the legislative and regulatory framework;
• to request that the Internal Audit Unit perform audits on specific operating areas and on compliance with the internal rules and procedures in the execution of business operations, communicating this at the same time to the Chairperson of the Board of Directors, to the President of the Control, Risk and Sustainability Committee and to the President of the Board of Statutory Auditors;
• to report promptly to the Control, Risk and Sustainability Committee (or to the Board of Directors) on the problems and critical issues that have emerged in performance of his or her work or which he or she has in any case been informed, so that the Committee (or the Board) may take the opportune initiatives.

Supplementing the above, the ICRMS Director with delegated powers on the subject of Risk Management (in the current system, this is the Deputy Chairperson), in agreement with the Chairperson (who, equally, holds the position of ICRMS Director), proposes to the Control, Risk and Sustainability Committee, for the relevant opinion, and to the Board of Directors, for the related decision, the appointment, dismissal and remuneration of the Manager of the Internal Audit unit.

Requisites of directors

All members of the Company's Board of Directors in office possess the requirements of integrity, pursuant to Article 147‐quinquies of the Consolidated Law on Finance. As at 31 December 2020, the Directors Sonia Maria Margherita Cantoni, Pietro Paolo Giampellegrini, Enrica Maria Ghia, Alessandro Giglio, Francesca Grasselli, Ginevra Virginia Lombardi, Giacomo Malmesi, Gianluca Micconi, and Licia Soncini are also in possession of the requirements of independence provided for in the provisions of the Consolidated Law on Finance (acc. to Arts 147‐ter, paragraph 4, and 148, paragraph 3, Consolidated Law on Finance), and in Art. 7 of the Code according to the Corporate Governance solutions adopted by IREN S.p.A.

Organisational model under the terms of Italian Legislative Decree 231/2001

Iren and the main Group companies have adopted Organisation, Management and Control Models under the terms of Italian Legislative Decree No. 231/2001 with the objective of creating a structured and organic system of procedures and control activities aimed at preventing, as far as possible, conduct that can entail committing the crimes contemplated by Italian Legislative Decree 231/2001. Alongside the Organisation, Management and Control Model, Iren S.p.A. has adopted, with a resolution of the Board of Directors of 10 December 2010, also the Code of Ethics. This document has been updated several times over the years and was approved in its current version by the Board of Directors on 18 December 2020.
During 2020, the Holding and the main Group Companies continued the Project for substantial revision and updating of the Organisation, Management and Control Models in order to guarantee their constant consistency with the organisational changes that had occurred and with the introduction by the legislator of new offences, so that they maintain over time their effective ability to prevent 231 offences from being committed. The updated 231ies Models were subsequently submitted to the Supervisory Bod, presented to the Boards of Directors of the individual companies for approval, and published in their entirety on the companies' intranet sites. Iren and the main companies in the Group have established, by a resolution of the Board of Directors, a Supervisory Body pursuant to art. 6 of Legislative Decree. 231/2001, with the task of supervising the functioning of and compliance with the model and ensuring that it is updated. In 2019, the Board of Directors of Iren S.p.A. confirmed the sitting as a united bench of its Supervisory Body appointing three external professionals with legal, corporate governance, organisational, economic and financial skills, with the objective of meeting the requirements of autonomy, independence and professionalism required by law. The Board of Directors also appointed a Contact Person within the OC in order to ensure the coordination and continuity of action of the Committee itself and the constant identification of a reference in the Company. IREN S.p.A.'s Supervisory Body, availing itself of the competent corporate units, performs checks on areas of activity considered at risk under the terms of Italian Legislative Decree 231/2001, and half-yearly reports to the Board of Directors on its activities and findings. If it is considered necessary, the Supervisory Body expresses suggestions aimed at improving the system for controlling the activities and monitors its implementation.
Both the general part of the Model and the Code of Ethics are available on the Company's website.