This website uses third-party cookies to collect statistical information related to your navigation. If you continue to browse, we consider you accept this use. See more information on our cookies policy here.

Degree to which Corporate Governance recommendations are followed

F. Degree to which corporate governance recommendations are followed

Indicate the degree to which the company follows the recommendations of the Unified Good Governance Code. In the event of failure to comply with any of them, explain the alternative recommendations, regulations, practices or criteria that the company applies.

1. The bylaws of listed companies should not limit the votes that can be cast by a single shareholder, or impose other obstacles to impede the takeover of the company by means of share purchases on the market.

See section: A.9, B.1.22, B.1.23, E.1 and E.2

2. When a parent and a subsidiary company are listed, both should provide detailed disclosure on:

a) Their respective types of activities, and any business dealings between them, including between the listed subsidiary and other companies in the group;

b) The mechanisms in place to resolve possible conflicts of interest.

See sections: C.4 and C.7

3. That even when not specifically required under Commercial Law, all decisions involving fundamental corporate restructuring, especially the following, are submitted to the General Assembly of Shareholders for approval or ratification:

a) The transformation of listed companies into holdings through subsidiarisation, or the reallocation of previous core activities of such listed company to its subsidiaries, even if the latter retains full control of the former;

b) Any acquisition or transfer of key operating assets that would effectively alter the company’s corporate purpose;

c) Operations that effectively amount to the company’s liquidation.

Partially compliant.

The company has not voluntarily incorporated this regulation into its internal rules (Bylaws) but, in
practice, this fact is not an impediment to compliance with said Recommendation.

4. That the proposals outlined in the decisions to be taken at the General Assembly of Shareholders, including the  information stated in recommendation 28, be made available at the same time the meeting is convened.


5. That the General Assembly of Shareholders be allowed to vote separately on substantially independent issues such that said shareholders are able to exercise separate voting preferences. And that said rule particularly apply to the following:

a) The appointment or ratification of directors, with separate voting on each candidate;

b) The modification of Bylaws, with votes taken on all materially different articles or groups of articles.

See section: E.8

6. That companies allow split votes such that financial intermediaries acting as nominees on behalf of different clients can issue their votes following the instructions given by such clients.

See section: E.4

7. That the board of directors perform its duties with unity of purpose and criteria independence, giving the same treatment to all the shareholders, allowing itself to be guided only by the company’s interests, which means striving to maximise its economic value in a sustainable manner. And that it also ensures that the company abides by the laws and regulations in its dealings with stakeholders; performing its obligations and contracts in good faith; respecting the customs and good practices of the sectors and territories in which it operates; and upholding any additional social  responsibility principles to which it may have voluntarily subscribed.


8. That the core components of the board’s mission be to approve the company’s strategy and the required organization for its execution, ensuring that management meets the objectives set while pursuing the company’s interests and  corporate purpose. And that, for that purpose, the plenary board reserves the right to approve the following:

a) The company’s general policies and strategies and, in particular,

i) The strategic or business plan, management targets and annual budgets;

ii) Investment and financing policy;

iii) Design of the structure of the corporate group;

iv) Corporate governance policy;

v) Corporate social responsibility policy;

vi) Senior staff performance remuneration and evaluation policy;

vii) Risk control and management policy, and the regular monitoring of internal information and control systems.

viii) Dividend and treasury stock policies and especially their limits.

See sections: B.1.10. B.1.13. B.1.14 y D.3

b) The following decisions:

i) On the proposal of the company’s chief executive, the appointment and removal of senior officers, and their  compensation clauses.

See section: B.1.14

ii) Remuneration of board members, including, in the case of executive members, the additional considerations for their executive duties and other contract conditions.

See section: B.1.14

iii) The financial information that all listed companies must periodically disclose.

iv) All kinds of investments or operations deemed strategic due to their huge amount or special characteristics, except if they require the approval of the General Assembly of Shareholders;

v) The creation or acquisition of shares in special purpose vehicles or entities resident in countries or territories considered tax havens, and any other comparable transactions or operations with  complexities that might impair the transparency of the group.

c) Transactions which the company conducts with board members, significant shareholders, shareholders with  board representation or with other associated persons (“associate transactions”).

However, board authorisation need not be required for associate transactions that simultaneously meet the following three conditions:

1. They are governed by standardized agreements applied on an across-the-board basis to a large number of clients;

2. They go through at market rates, generally set by the person supplying the goods or services;

3. Their amount is no more than 1% of the company’s annual revenues.

It is advisable that the Board approves associate transactions only if the audit committee issues a favourable report or, if applicable, any other committee assigned to that function; and that the board members involved may neither exercise  nor delegate their voting rights, and should be excused from the meeting while the board deliberates and votes.

Ideally the above powers should not be delegated with the exception of those mentioned in b) and c), which may be  delegated to the executive committee in urgent cases and later ratified by the plenary session of the Board of Directors.

See sections: C.1 and C.6

9. In the interests of maximum effectiveness and participation, the board of directors should ideally comprise no fewer then five and no more than fifteen members.

See section: B.1.1

10. External dominion and independent board members should occupy an ample majority of board places, while the number of executive board members should be the minimum necessary bearing in mind the complexity of the corporate group and the percentage of ownership the executive board members hold in the equity.

See sections: A.2. A.3. B.1.3 y B.1.14

11. In the event that an external board member may not be considered dominion or independent, the company should disclose such circumstance and the links, be it with the company or with its executives, or its shareholders.

See section: B.1.3
Not applicable.

12. That among the external boards members, the relation between dominion and independents members should match the proportion between the capital represented on the board by dominion board members and the rest of the company’s capital.

This strict proportional criterion can be relaxed so the weight of dominion board members is greater than would  correspond to the total percentage of capital represented:

1st. In companies with huge capital where few or no equity stakes attain the legal threshold of significant shareholdings, but where there may be shareholders with considerable sums actually invested.

2nd. In companies with a plurality of shareholders represented on the board but not otherwise related.

See sections: B.1.3 A.2 and A.3
Partially compliant


Abengoa has increased the number of dominion board members by virtue of the agreement reached on October 4, 2011, with Inversión Corporativa, in the capacity as shareholders of Abengoa, within the framework of the investment  agreement signed between Abengoa and First Reserve Corporation, effective on November 4, 2011.

On the proposal of First Reserve Corporation, by virtue of the agreement reached with Inversión Corporativa, in their capacity as shareholders of Abengoa, on November 9, 2011, Claudio Santiago Ponsa was appointed board member of Abengoa, within the framework of the Investment Agreement signed between Abengoa and First Reserve Corporation, mentioned above, regarding the proposal, appointment, ratification, re-election or replacement of a board member  representing First Reserve Corporation, notifying this Committee.

13. That the number of independent members represent at least one third of all board members.

See section: B.1.3


Contrary to what the company has come realizing till now, expiring with the recommendations of good corporate government, the number of independent board members has been diminished below the third of the total of members due to Mr. Claudio Santiago Ponsa’s appointment as dominion board member by virtue of the agreement reached with Inversión Corporativa, I.C. S.A., as shareholders of Abengoa, of date November 9, 2011 and Mr. Carlos Sebastian Gascón’s resignation as independent board member.

14. That the condition of each board member be explained at the General Assembly of Shareholders, which shall appoint or ratify its appointment, with confirmation or, if applicable, review in the Annual Corporate Governance Report, before verification by the appointments committee. And that said report also gives the reasons for the appointment of the dominion members at the urging of shareholders with less than 5% of capital, explaining any rejections of formal  requests for a place on the Board of Directors issued by shareholders with capital equal to or greater than that of others whose requests for dominion members may have been accepted.

See sections: B.1.3 and B.1 4

15. That in the event that female board members are few or non existent, the Board gives the reasons for this situation and the correction measures implemented; in particular, the Appointments Committee takes the necessary steps to  ensure that:

a) The process of filling board vacancies has no implicit bias against female candidates;

b) The company makes a conscious effort to include females in the target profile among the candidates for board places.

See sections: B.1.2. B.1.27 and B.2.3

16. That the Chairman, as the person responsible for the proper operation of the board, ensures that members are supplied with sufficient information in advance of board meetings, and secures a good level of debate and active  involvement of all members, safeguarding their rights to freely express opinions and take stands, organising and coordinating regular evaluations of the board and, if appropriate, the company’s chief executive, along with the chairmen of the relevant board committees.


17. That when the board chairperson is also the company’s chief executive, an independent board member is empowered to convene board meetings or to include new items on the agenda; to coordinate and voice concerns of  external board members; and to lead the board’s evaluation of its chairperson.

See section: B.1.21


The Board of Directors currently comprises of fifteen members. The Board of Directors Regulations govern the composition, functions and internal organization of the governing body. The company also has an Internal Code of Conduct that bounds the Board of Directors, the senior management and all other employees deemed affected, by virtue of the positions or powers that may be held in matters relating to the Stock Market. The General Assembly of Shareholders Regulations of Procedures and Operations govern the formal aspects and the internal system for conducting shareholders’ meetings. Lastly, the Board of Directors is assisted by its Audits Committee and the Appointments and Remunerations Committee, both of which have their own respective Internal Regulations. All these rules and regulations are brought together in a consolidated text of the company’s Internal Good Governance Rules, available on the company’s website, and Since its inception, the Appointments and Remunerations Committee has worked towards analysing the structure of the company’s governing bodies and adapting it to corporate governance recommendations, with particular attention to the historic and special configuration of said bodies within Abengoa. In February 2007, based on this analysis, the Committee recommended the creation of the post of coordinating director, and the elimination of the Advisory Committee to the Board of Directors. The first measure was in order to incorporate the most recent corporate governance recommendations made in Spain in 2006; the second, because it was deemed that said Advisory Committee had already performed the duty for which it was originally created and that its coexistence with the corporate bodies could lead to conflicts of power. Both proposals were approved at a meeting of the Board of Directors held in February 2007 and at the General Assembly of Shareholders on April 15 of the same year, appointing Mr. José B. Terceiro in representation of Aplicaciones Digitales S.L., as coordinating board member, in its capacity then as independent.

On a final note, in October 2007 the Committee proposed that the Board accepts the resignation of Mr. Javier Benjumea Llorente from his position as Executive Vice-Chairman, subsequently revoking the powers entailed therein, and accepts the appointment of a new natural person to represent Abengoa and the Focus-Abengoa Foundation in entities or companies in which they have an appointed position.

The Committee then decided to revisit the study of the number and characteristics of the Executive Vice-Chairman of the Board of Directors within the current structure of governing bodies.

As a result, the Committee thought it necessary that the powers of the Executive Vice-Chairman of Abengoa should be restricted to those conferred under the Spanish Corporations Act as regard the material representation of the company, on the one hand, and the balance to the Chairman’s functions on the Board of Directors, on the other. Thus, it was considered that the coordinating board member – with the functions assigned thereto by the decisions taken by the Board of Directors (February 2007) and the General Assembly of Shareholder (April 2007) – was the ideal figure, given the corporate governance recommendations and the company structure, as well as the composition and diversity of its directors. The coordinating board member has already been entrusted with the task of coordinating the concerns and motivations of the other Board members, and empowered to convene Board meetings and to include new items on the agenda. In its role as the visible protector of the interests of the Board members, it holds more of a de facto than of a de jure position on the Board, such that it seemed appropriate to confirm and expand this representation by making the post both institutional and organic.

In view of the above, the Committee proposed Aplicaciones Digitales, S.L. (Aplidig, represented by Mr José B. Terceiro Lomba), the current coordinating director, as the new Executive Vice-Chairman to the Board of Directors. In addition, and within the functions of material representation, the executive vice-chairman, jointly with the Chairman of the Board of Directors, has been put forward as the physical representative of Abengoa, in its capacity as the Chair of the Board of the Focus-Abengoa Foundation, as well as in any other foundations and institutions in which the company is or must be represented.

In view of the above, on December 10, 2007, the Board of Directors agreed to appoint Aplicaciones Digitales, S.L. (represented by Mr José B. Terceiro Lomba), the current coordinating director, as executive vice-chairman of the Board of Directors, with the unanimous consent of independent board members in relation to continuing in his position as coordinator in spite of the change in his capacity as executive board member.

In addition, and within the functions of material representation (conferred thereof by virtue power of attorney granted by the Board of Directors on July 23, 2007), the Executive Vice-Chairman, together with the Chairman of the Board of Directors, was proposed as joint physical representative of Abengoa, in its capacity as the Chair of the Board of Focus-Abengoa Foundation, as well as in any other foundations and institutions in which the company is or must be represented.

18. The secretary should take care to ensure that the board’s actions:

a) Adhere to the spirit and letter of laws and their implementing regulations, including those issued by regulatory agencies;

b) Are in conformity with the company Bylaws and the Regulations of the Assembly, the Board of Directors and all others to which the company may have subscribed

c) Complies with the recommendations on good governance set forth in the Unified Code that the company may have accepted. And that in order to safeguard the independence, impartiality and professionalism of the Secretary, its  appointment and termination should be proposed by the Appointments Committee and approved by the plenary session of the Board of Directors; and that said appointment and termination procedure be included in the Regulations of the Board of Directors.

See section: B.1.34

19. The board should meet as frequently as may deemed necessary to properly perform its functions, following a calendar and a program scheduled at the beginning of the year, to which each director may propose the addition of other items.

See section: B.1.29

20. The absences of board members should be reduced to the bare minimum and quantified in the Annual Corporate  Governance Report. If board members have no choice but to confer their voting powers, such conferment should be with instructions.

See sections: B.1.28 and B.1.30

21. If a board members or the secretary expresses concerns about a proposal or, in the case of a board member, about the company’s performance, and such concerns are not resolved at the Board meeting, the person expressing the  concerns may request that such concerns be recorded in the minute book.


22. The plenary session of the board should evaluate the following on yearly basis:

The quality and efficiency of the board’s operation;

a) The level of performance of the chairman and chief executive of the company based on the report the Appointments Committee may submit;

b) The performance of its committees on the basis of the reports they provide.

See section: B.1.19

23. All board members should be able to exercise their rights to obtain any additional information they may require on matters within the board’s competence. Unless the Bylaws or Board Regulations indicate otherwise, such requests should be addressed to the chairman or secretary.

See section: B.1.42

24. All board members should be entitled to call on the company for the required advice and guidance necessary for the performance of their duties. The company should provide the suitable channels for the exercise of this right, extending in special circumstances to external assistance at the company’s expense.

See section: B.1.41

25. Companies should set up orientation programmes that may provide new board members with quick and sufficient knowledge of the company and its corporate governance rules and regulations. Companies should make knowledge updating programs available to board members whenever the circumstances deem it advisable.


26. Companies should insist that their board members devote sufficient time and effort to perform their duties effectively, and, as such:

a) Board members should apprise the Appointments Committee of any other professional obligations that could possible interfere with the necessary dedication;

b) Companies should establish rules about the number of boards on which their board members can sit.

See sections: B.1.8, B.1.9 and B.1.17
Partially compliant.

Section (a) of this recommendation is complied with, in that the Appointments and Remunerations Committee is kept duly informed of the professional duties of Board members, as well as their potential needs with regard to any information they may need for successful performance. In relation to section (b), there are no limits on participation on other Boards, and this aspect is left to the responsible judgement of each board member.

27. The proposal for the appointment or renewal of board members submitted to the general assembly of shareholders, as well as provisional appointments by co-optation should be approved by the board:

a) On the proposal of the Appointments Committee, in the case of independent board members.

b) Subject to report from the Appointments Committee in all other cases.

See section: B.1.2

28. Companies should post the following information on the board members on their websites, and keep them permanently updated:

a) Professional experience and background;

b) Other Board of Directors on which the board member sits, whether listed company or not;

c) Indicate the category of the board member, pointing out, in the case of dominion members, which shareholder they represent or to whom they are linked.

d) The date of their first and subsequent appointments as a members of company’s board of directors, and;

e) Shares held in the company and any options on the same.


29. Independent board members should not stay on as such for a continuous period of more than 12 years.

See section: B.1.2

30. Proprietary board members should resign when the shareholders they represent dispose of their ownership interest in its entirety. If such shareholders reduce their stakes, thereby losing some of their entitlement to dominion board  membership, the latter’s number should be reduced accordingly.

See sections: A.2. A.3 and B.1.2

31. The board of directors should not propose the removal of independent board members before the expiry of their tenure as mandated by the bylaws, except where just cause is found by the board, based on a proposal from the Appointments Committee. In particular, a just cause shall be understood to exist if a board member is in breach of his or her fiduciary duties or comes under one of the disqualifying grounds enumerated in section III.5 (Definitions) of this  Code.

The removal of independents may also be proposed when a takeover bid, merger or similar corporate operation produces changes in the company’s capital structure, in order to meet the proportionality criterion set out in recommendation 12.

See sections: B.1.2. B.1.5 and B.1.26

32. Companies should establish rules obliging board members to report of and, as the case may be, to resign in any circumstance that might damage the company’s name or reputation and, in particular, obliging them to inform the Board of Directors of all criminal cases in which they may be named as accused and the progress of any subsequent trials.

The moment a director is indicted or tried for any of the crimes stated in Article 124 of the Spanish Companies Act, the board should examine the matter and, in view of the particular circumstances and potential harm to the company’s name and reputation, decide whether or not he or she should be called on to resign. The board should also disclose all such determinations in the annual corporate governance report.

See sections: B.1.43 and B.1.44

33. All board members should express clear opposition when they feel a proposal submitted for the board’s approval might damage the corporate interest. In particular, independent and other board members unaffected by the possible conflict of interest should challenge any decision that could go against the interests of shareholders lacking board representation.

In the event that the board takes significant or reiterated decisions about which a board member may have expressed serious reservations, said board member may draw the pertinent conclusions and, should it decide to resign, it should explain the reasons in the letter referred to in the next recommendation. The terms of this recommendation also applies to the Board Secretary although not officially a board member.


34. Board members who give up their position before their tenure expires, through resignation or otherwise, should state their reasons in a letter to be sent to all members of the board. Irrespective of whether such resignation is filed as a significant event, the reason must be explained in the annual corporate governance report.

See section: B.1.5

35. The company’s remuneration policy approved by its board of directors should at least specify the following:

a) The amount of the fixed components, itemised where necessary, of board and board committee attendance allowance, with an estimate of the fixed annual payment resulting thereof;

b) Variable components, in particular:

i) The types of board members they apply to, with an explanation of the relative weight of variable to fixed remuneration items.

ii) Performance evaluation criteria used to calculate entitlement to the award of shares or share options or any performance-related remuneration;

iii) The main parameters and grounds for any system of annual bonuses or other non cash benefits; and

iv) An estimate of the sum total of variable payments arising from the remuneration policy proposed, based on the degree of compliance with pre-set targets or benchmarks.

c) The main characteristics of pension systems (for example, supplementary pensions, life insurance and similar arrangements), with an estimate of their amount of equivalent annual cost.

d) The conditions to apply to the contracts of executive board members exercising senior management functions, among them:

i) Duration;

ii) Notice periods; and

iii) Any other clauses covering hiring bonuses, as well as compensations or ‘golden parachutes’ in the event of early termination of the contractual relation between company and executive board member.

See section: B.1.15

36. That executive board members are granted remunerations comprising of the delivery of shares of the company or of other companies in the group, share options or other share-based instruments, payments linked to the company’s  performance or membership of pension schemes.

The delivery of shares is excluded from this limitation when board members are obliged to retain them until the end of their tenure.

See sections: A.3 and B.1.3

37. The remuneration of external board members should sufficiently compensate for the dedication, abilities and  responsibilities that the post entails, but should not be so high as to compromise their independence.


38. In the case of remuneration linked to company earnings, deductions should be computed for any qualifications  stated in the external auditor’s report.


39. In the case of variable awards, remuneration policies should include technical safeguards to ensure they reflect the professional performance of the beneficiaries and not simply the general progress of the markets or the company’s  sector, atypical or exceptional transactions or circumstances of this kind.


40. As a separate item on the agenda, the Board should submit a report on the board member’s remuneration policy to the General Assembly of Shareholders for voting. Said report can be made available to shareholders either separately or in any other manner that each company deems fit.

Said report shall focus on the remuneration policy the board has approved for the current year with reference, as the case may be, to the policy planned for subsequent years. It shall address all the points referred to in recommendation 35, except those potentially entailing the disclosure of commercially sensitive information. Special attention shall be paid to the most significant changes of such policies on what is applied during the past financial year that the General Assembly may refer to. It shall also include an overall summary of the application of the remunerations policy in the last financial year.

The Board of Directors should also report on the role of the Remunerations Committee in preparing the policy and, if external consultancy was employed, the identity of said external consultants.

See section: B.1.16

41. The Notes should list the individual yearly remunerations for board members, including:

a) A breakdown of remunerations for each company board member, including, where appropriate:

i) Participation and attendance allowance and other fixed board member payments;

ii) Additional compensation for acting as chairman or member of a board committee;

iii) Any payments made under profit-sharing or bonus schemes, and the reason for their accrual;

iv) Pension plan contributions paid on behalf of board member, or any increase in the vested rights of board member in the case of contributions to definedbenefit plans;

v) Any severance packages agreed upon or paid;

vi) Any compensation received as board members of other companies in the group;

vii) Remunerations of executive board members in respect of their senior management posts;

viii) Any kind of compensation other than those listed above, of whatever nature and provenance within the group, especially if it may be accounted as relatedparty transaction or if its omission would detract from a true and fair view of the total remuneration received by the board member.

b) An individual breakdown of possible deliveries of shares, share options or other share-based instruments to board members, itemised by:

i) Number of shares or options awarded in the year, and the terms set for their execution;

· Number of options exercised in the year, specifying the number of shares involved and the exercise price;

ii) Number of options outstanding at the annual close, specifying their price, date and other exercise conditions;

iii) Any change in the year in the exercise terms of previously awarded options.

iv) Information on the relation, in the year, between the remuneration obtained by executive board members and the company’s profits, or some other measure of enterprise results.


42. In the event that the company has an Executive Committee, the structure of participation of the different categories of members should be similar to that of the Board itself and its secretary should be the same as that of the Board of Directors.

See sections: B.2.1 and B.2.6
Not Applicable.

43. The board should always be granted first-hand knowledge of issues dealt with and decisions taken by the Executive Committee and each board member should receive a copy of the minutes of the executive committee.

Not Applicable.

44. In addition to the Audits Committee required by the Securities Market Act, the Board of Directors should also create a committee, or two separate committees, for appointments and remunerations.

The rules governing the composition and operation of the audit committee and the appointments and remunerations committee or committees should be set forth in the Board Regulations, and should include:

a) The Board of Directors should designate the members to these committees, considering the knowledge, talent and experience of board members and the tasks of each Committee;

b) Deliberate on their proposals and reports; and during the first plenary of the Board of Directors following their meetings, they should give account of their activities and answer for work done;

c) These committees should have a minimum of three members, exclusively of external board membership. The above notwithstanding, executive board members or senior officers may also attend meetings, for information purposes, at the committees’ invitation.

d) Committees should be chaired by an independent board member.

e) External consultants may be engaged if deemed necessary for the performance of their duties.

f) Minutes should be recorded of their meetings and copies of such sent to all board members.

See sections: B.2.1 and B.2.3
Partially compliant.

Except for section b) above, all requirements are duly met. we refer to Recommendation 54 with regards to the presence of an Executive Board member on the Appointments and Remunerations Committee. Regarding such presence on the Audits Committee, in addition to the explanation provided in point B.1.21 above (independent director appointed  coordinating director and subsequently appointed vice-chairman, who shall remain coordinating director following the unanimous consent of the remaining independent directors to such effect), we would add that their seat on the Audits Committee is due to (their knowledge and experience in accounting and auditing) the wishes of the independent  directors, given that the executive director acts as a nexus between such independent directors (irrespective of whether they sit on such committees and particularly insofar as they don’t) and the committee (and also the Appointments Committee).

45. The supervision of compliance with the internal codes of conduct and corporate governance regulations should be entrusted to the Audits Committee, Appointments Committee or, if separately existing, Compliance or Corporate 


46. All members of the audit committee, particularly its chairman, should be appointed bearing in mind their knowledge and background in Accounting, Auditing and Risk Management.


47. Listed companies should have an internal audit function, under the supervision of the audit committee, to ensure the proper operation of internal reporting and control systems.


48. The head of internal audit should present an annual work plan to the Audits Committee; report to it directly on any incidents arising during its implementation; and submit an activities report at the end of each year.


49. Control and risk management policy should specify at least:

a) The different types of risk (operational, technological, financial, legal, reputation…) to which the company may be exposed, including those of financial or economic, contingent liabilities and other off-balance-sheet risks;

b) The determination of the risk level deemed acceptable to the company;

c) Measures in place to mitigate the impact of risk events should they occur;

d) The internal reporting and control systems to be used to control and manage the aforementioned risks, including contingent liabilities and off-balance-sheet risks.

See sections: D

50. The audit committee’s role should be:

1st With respect to internal control and reporting systems:

a) To supervise the preparation process and monitor the integrity of the financial information on the company and, if applicable, the group, and to verify compliance with regulatory requirements, the appropriate boundaries of the scope of consolidation and the correct application of Accounting principles.

b) Frequently review the systems for the internal monitoring and risks management, so that the main risks are identified, managed and properly disclosed.

c) Monitor the independence and efficacy of the internal audit function; propose the selection, appointment, re-election and removal of the head of internal audit; propose the department’s budget; receive regular feedbacks on its activities; and verify that senior management is acting on the findings and
recommendations of the reports.

d) Establish and supervise a mechanism whereby staff can confidentially and, if necessary, anonymously report any irregularities detected in the course of their duties, in particular financial or accounting  irregularities, with potentially serious implications for the company.

2nd With regards to the external auditor:

a) To submit proposals to the Board for the selection, appointment, re-election and removal of the external auditor, including the terms and conditions of its engagement.

b) To be regularly informed by the external auditor on the progress and findings of the audit plan and to ensure that senior management act on its recommendations.

c) To make sure the external auditor remains independent and, for that purpose:

i) The company should notify the CNMV of any change of auditor as a significant event, accompanied by a statement of any disagreements arising with the outgoing auditor and the reasons for the same.

ii) The Committee should ensure that the company and the auditor adhere to current regulations on the provision of non-audit services, the limits on the concentration of the auditor’s business and, in general, other requirements designed to safeguard auditors’ independence;

iii) The Committee should investigate the issues giving rise to the resignation of any external auditor.

d) In the case of groups, the Committee urges the group auditor to take on the auditing of all component companies.

See sections: B.1.35. B.2.2. B.2.3 and D.3

51. The audit committee should be empowered to meet with any company employee or manager, even ordering their appearance without the presence of another senior officer.


52. The audit committee should prepare information on the following points from recommendation 8 for input to board decision-making:

a) The financial information that all listed companies must periodically disclose. The committee should ensure that interim statements are drawn up under the same Accounting principles as the annual  statements and, to this end, may ask the external auditor to conduct a limited review.

b) The creation or acquisition of shares in special purpose vehicles or entities resident in countries or territories considered tax havens, and any other transactions or operations of comparable nature which,  due to their complexity, might impair the transparency of the group.

c) Associate transactions, except where their scrutiny has been entrusted to some other supervision and control committee.

See sections: B.2.2 and B.2.3

53. The board of directors should seek to present the annual accounts to the General Assembly of Shareholders without reservations or qualifications in the audit report. Should such reservations or qualifications exist, both the Chairman of the Audits Committee and the auditors should clearly inform the shareholders on the scope and content.

See section: B.1.38

54. The majority of the members of the Appointments –or Appointments and Remunerations Committee if only one exists– should be independent board members.

See section: B.2.1

55. In addition to the functions listed in the preceding recommendations, the Appointments Committee should be responsible for the following:

a) Evaluating the necessary abilities, knowledge and experience on the Board, consequently defining the roles and capabilities required of the candidates to fill each vacancy, and deciding on the time and dedication necessary for them to properly perform their duties.

b) Appropriately examining or organizing the succession of the chairman and chief executive and, where necessary, making recommendations to the Board for said succession to proceed in a planned and orderly manner.

c) Reporting on the appointments and removals of senior staff proposed by the chief executive to the board.

d) Reporting to the board on the gender diversity issues discussed in recommendation 14 of this code.

See section: B.2.3

56. The Appointments Committee should hold consultations with the company’s chairman and chief executive, especially on matters relating to executive board members.

Any board member may suggest candidates to the Appointments Committee for it to consider for filling out vacancies on the board of directors.


57. In addition to the functions listed in the preceding recommendations, the Remunerations Committee should be responsible for the following:

a) Making the following proposals to the Board of Directors:

i) The remuneration policy for board members and senior officers;

ii) The remuneration and other contractual conditions of individuals of the executive board members;

iii) The standard conditions for senior officer employment contracts.

b) Oversee compliance with the remuneration policy set by the company.

See sections: B.1.14 and B.2.3

58. The Remunerations Committee should hold consultations with the chairman and chief executive, especially on matters relating to executive board members and senior officers.