The Internal Regulations of the Audit Committee were approved by the Board of Directors on February 24, 2003, and contain the following information:

Composition and Appointments

The Audit Committee will comprise at least three members at all times, at least two of whom must be non-executive members, thereby meeting the requirement that it must comprise a majority of non-executive members pursuant to the aforesaid Act 44/2002.

Chairman and Secretary

The Audit Committee shall initially elect one of its non-executive directors to act as Chairman.

The Secretary to the Board of Directors shall also act as Secretary to the Audit Committee.

Powers and Duties

The powers and duties of the Audit Committee are as follows:

1. Report on the annual accounts and half-yearly and quarterly financial statements that must be submitted to regulatory bodies and market monitoring bodies, making reference to the internal control systems, the control mechanisms to monitor implementation and compliance through internal audit procedures and, where appropriate, the accounting principles applied.

2. Inform the Board of Directors of any changes in accounting principles, balance sheet risk and off-balance sheet risk.

3. To report to the General Shareholders’ Meeting on those matters requested by shareholders that fall within its remit.

4. To propose the appointment of the external financial auditors to the Board of Directors for subsequent referral on to the General Shareholders’ Meeting.

5. To oversee the internal audit services. The Committee will have full access to the internal audit and will report during the process of selecting, appointing, renewing and removing the director thereof. It will likewise control the remuneration of the latter, and must provide information on the budget of the internal audit department.

6. To be fully aware of the financial information reporting process and the company’s internal control systems.

7. To liaise with the external audit firm in order to receive information on any matters that could jeopardize the latter’s independence and any others related to the financial auditing process.

8. To summon those Board members it deems appropriate to its meetings, so that they may report to the extent that the Audit Committee deems fit.

9. To prepare an annual report on the activities of the Audit Committee, which must be included as part of the annual accounts for the year in question.

Meetings and Notice

The Audit Committee shall meet as often as required for the exercise and discharge of the powers and duties established in the preceding article and, in all cases, at least once every quarter. As a general rule, meetings shall take place at the Company’s registered office, although members may determine that a particular meeting be held elsewhere.

The Audit Committee shall also meet when a meeting is convened by the Chairman on his initiative or at the request of any of its members. Members may also ask the Chairman to include a certain item or items on the agenda of the next meeting. Notice of the meeting must be given in writing, including the agenda, no less than three days prior to the scheduled date. However, business can also be transacted at a meeting of the Audit Committee when all the members are present and agree to hold a meeting.


There will be a quorum present at meetings of the Audit Committee when the majority of the members are present. Members may only appoint a non-executive director as their proxy.

Resolutions shall be carried by a majority vote. In the event of an equality of votes, the Chairman shall have the casting vote.