Related Party Transaction Policy and Procedure

Transcription

1 Related Party Transaction Policy and Procedure in accordance with the provisions set forth in the CONSOB regulation introduced by resolution No of 12 March 2010 as further amended by resolution No of 23 June 2010

2 PG.W.AEC - 07 rev. 02 PG.W.AEC 07 rev. 02 RELATED PARTY TRANSACTION POLICY AND PROCEDURE Pursuant to the CONSOB regulation adopted by resolution No of 12/03/2010 as further amended by resolution No of 23/06/2010 Prepared by: N. Bettinelli Corporate & Compliance Resp. Date: Signature: A. Pazzi Accounting & Reporting Manager Date: Signature: M. Tiraboschi CFO Date: Signature: U. Simonelli General Counsel Date: Signature: Favourable Opinion by: Internal Audit Manager - A. Ramorino Date: Signature: Audit & Risks Committee Chairman (G. Cavallini) Date: Signature: Approved by (1) : Board of Directors Chairman (A. Bombassei) Date: Signature: Approval of Companies involved: X Brembo S.p.A. X Brembo North America Inc. X Ap Racing Ltd. X Brembo Poland Spolka Zo.o. X Belt & Buckle S.r.o. X Brembo Scandinavia A.B. X Brembo Brake India Pvt. Ltd. X Brembo Spolka Zo.o. X Brembo China Brake Systems Co. Ltd. X Brembo UK Ltd. X Brembo Czech S.r.o. X Corporacion Upwards 98 S.A. X Brembo Deutschland GmbH X Qingdao Brembo Trading Co. Ltd. X Brembo do Brasil Ltda. X Sabelt S.p.A. X Brembo Japan Co. Ltd. X X Brembo México S.A. de C.V. X X Brembo Nanjing Brake Systems Co. Ltd. X La.Cam s.r.l. Brembo SGL Carbon Ceramic Brakes GmbH Brembo SGL Carbon Ceramic Brakes S.p.A. X Brembo Nanjing Foundry Co. Ltd. X Brembo Argentina S.A. Revision index: REVISION DATE NOTE 00 12/11/2010 First edition /01/2012 The procedure has been completely revised /01/2013 Modification of Committees name and update of intercompany transactions definition (parts updated from the previous version are highlighted in gray). Next revision date: January (1) Details on the approval process of the RPT Procedure are given in Attachment 1.

3 CONTENTS 1. PURPOSE AND SCOPE OF APPLICATION ABBREVIATIONS AND DEFINITIONS MATRIX OF RESPONSIBILITIES IDENTIFICATION OF ROLES AND RESPONSIBILITIES PROCEDURAL FORMALITIES REFERENCE DOCUMENTS ENCLOSURES /27

4 1. PURPOSE AND SCOPE OF APPLICATION 1.1. Purpose The purpose of this procedure (hereinafter the RPT Procedure as defined in paragraph 2 Abbreviations and Definitions), as specified, inter alia, in the Code of Ethics, is to ensure the transparency and the substantive and procedural propriety of related-party transactions that are not concluded at arm s length, with a view to safeguarding the company s higher interests. As a general rule, the said transactions may be concluded only when strictly necessary in the company s interest, without prejudice to the foregoing provisions. More specifically, the RPT Procedure: a) lays down the procedural rules governing its adoption and subsequent amendments and/or revisions; b) categorises related parties and Related Party Transactions on the basis of the criteria established in Attachment 1 to the RPT Rules (hereinafter RPT Rules, as defined below); c) defines significant transactions in light of criteria respectful of the thresholds specified in Attachment 3 to the RPT Rules; d) provides for departures from the applicable procedural rules in accordance with the provisions of Articles 13 and 14 of the RPT Rules; e) lays down the requirements to be met to qualify as an independent director taking due account of the provisions of Article 3(h) of the RPT Rules; f) lays down the procedural rules to be followed in examining and approving highly or moderately significant Related Party Transactions that are not exempt (including those concluded between subsidiaries within the meaning of Article 2359 Subsidiaries and associates of the Italian Civil Code); g) establishes the procedural rules and deadlines to be respected in providing information on Related Party Transactions to the Audit & Risks Committee (as defined in paragraph 2 Abbreviations and Definitions Roles and Responsibilities ) which is to put forward binding opinions on the transactions in question to the Company s governing and control bodies Scope of Application This RPT procedure is adopted pursuant to and for the intents and purposes of Article 2391-bis (Related Party Transactions) of the Italian Civil Code, as well as in accordance with the provisions set forth in the CONSOB regulation introduced by resolution No of 12 March 2010 as further amended by resolution No of 23 June 2010 (the RPT Rules ), and by virtue of CONSOB Notice No. DEM/ of 24 September 2010 pertaining to Indications and Guidelines for the Application of the Rules Setting Forth Provisions on Related Party Transactions (the CONSOB Notice ), in smooth coordination with the corporate administrative and accounting procedures contemplated in Article 154-bis of the Consolidation Law currently in force. This RPT Procedure lays down the procedural rules to be followed for the approval of Related Party Transactions effected by: 3/27

5 - Brembo S.p.A., directly; - Brembo S.p.A., through subsidiaries within the meaning of Article 2359 (Subsidiaries and Associates) of the Italian Civil Code. These procedural rules are to be followed, without prejudice to the exemptions contemplated in paragraph 4.5 below. Brembo S.p.A. s CFO shall forward this Procedure to: - to all the companies and undertakings subject to management and coordination by Brembo S.p.A. within the meaning of Article 2497-bis (Dissemination) of the Italian Civil Code, for their information and action in respect of compliance (Art. 4.9), where applicable; - to all subsidiaries within the meaning of Article 2359 (Subsidiaries and Associates) of the Italian Civil Code, for adoption as part of their own corporate instruments, following approval of the same by their respective governing bodies, and for action in respect of compliance (Art. 4.9), where applicable Approval This Procedure has been approved in accordance with the RPT Rules pursuant to the adoption of formalities described in Attachment Dissemination The Procedure is available at Brembo s website in the section Investor Relations Corporate Governance Codes and Manuals, and is also incorporated, including by reference to the cited site, in the Director s Annual Report for Recipients The recipients of this Procedure, all of which shall be bound to strictly comply with the same, include: - Related Parties (as defined in paragraph 2.32); - Managers (as defined in paragraph 2.23); - Members of the Board of Directors; - Members of the Board of Auditors; - Members of Brembo s Audit & Risks Committee. The Legal & Corporate Department shall organise, in concert with the CFO, training events focusing on the contents of the RPT Procedure and any and all significant amendments brought to the same in the future Entry into Effect The operating regime introduced by the RPT Procedure shall enter into force on 1 January 2011, save for the transparency regime regarding the Public disclosure of information on Related Party Transactions set forth in the CONSOB Rules containing provisions on Related Party Transactions, that shall enter into effect already as of 1 December /27

6 2. ABBREVIATIONS AND DEFINITIONS 2.1 Independent Directors: as required under the RPT Rules and the CONSOB Notice, for the intents and purposes of this RPT Procedure, Independent Directors shall mean and include only those Directors who meet the independence requirements specified in the Corporate Governance Code of Borsa Italiana S.p.A. (Article 3) and adhered to by Brembo insofar as all the relevant principles and criteria set forth in the same have been duly incorporated into Brembo s own Corporate Governance Manual. In particular, all Independent Directors must, at the time of their appointment, satisfy the Board of Directors that they meet the aforesaid independence requirements, and thereafter submit to annual assessments of their continued compliance with the said requirements (with the Board of Auditors verifying the procedural propriety of all such assessments). The said annual assessments are undertaken at the Board of Directors' meeting called for the approval of the Annual Report on Corporate Governance and the Ownership Structure. 2.2 Unrelated Directors: directors other than the counterparty to any given transaction, nor a related-party of any such counterparty. 2.3 Non-executive Directors: directors that Brembo acknowledges serve in non-executive capacities within the meaning of Brembo s Corporate Governance Manual. 2.4 Brembo: Brembo S.p.A. or the Brembo Group. 2.5 c.c.: the Italian Civil Code. 2.6 CFO: Brembo S.p.A. s Chief Financial Officer. 2.7 Board of Auditors: Brembo S.p.A. s Board of Auditors. 2.8 Audit & Risks Committee: Brembo s Audit & Risks Committee, vested with consultative and recommendatory responsibilities in respect of the issues specified in Brembo s Audit & Risks Committee Rules. The Audit Committee is currently made up of the 3 (three) Independent Non-executive Directors and has accordingly been identified by the Board of Directors as the body tasked with: - expressing a preliminary opinion on the Procedure and any and all proposed amendments thereto or revisions thereof, within the meaning of Article 4 of the RPT Rules; - expressing a reasoned, non-binding preliminary opinion, supported by a statement of grounds on the advisability of effecting Moderately Significant RP Transactions, taking due account of the Company s interests, as well as assessing the fairness and substantive propriety of the related terms and conditions, pursuant to Article 7 of the RPT Rules, in accordance with the procedures set forth in point 4.6 below; - participating in negotiations and fact-finding investigations undertaken prior to effecting highly significant RP Transactions and expressing a reasoned, binding preliminary opinion, supported by a statement of grounds on the advisability of the said Transactions, taking due account of the Company s interests, as well as assessing the substantive and procedural propriety of the proposed Transactions, pursuant to Article 8 of the RPT Rules, in accordance with the procedures set forth in point 4.7 below Independent Expert: in discharging the tasks described above, the Audit & Risks Committee may, at Brembo s expense, avail of the assistance of one or more independent experts selected by the Committee itself from amongst professionals recommended by Committee members (hereinafter the Independent 5/27

7 Expert ). The Independent Experts assisting the Audit Committee may be the same as those appointed by Brembo for concluding the transaction, provided that the said Independent Experts are retained expressly and specifically to assist the Audit & Risks Committee. When considering the appointment of an Independent Expert, the Audit & Risks Committee must be satisfied that the candidate is in fact independent, taking due account of: - any and all financial, economic or asset-related relationships between the candidate and: (i) Brembo; (ii) any and all persons or parties that exert corporate control over Brembo and the Subsidiaries or that are subject to common corporate control with Brembo; (iii) any and all directors of the corporate undertakings falling within the scope of points (i) and (ii) above; - reasons for which the aforesaid relationships must be deemed irrelevant for the intents and purposes of assessing the candidate s independence. The cost to the Company for the services of Independent Experts assisting the Audit & Risks Committee in the assessment of Moderately Significant RP Transactions, may not exceed 2, per each transaction Alternate Committee Members: each member of the Audit & Risks Committee must give the Legal & Corporate Department timely notice of any and all potential or actual conflicts of interest the said member may bear in respect of any transaction in which he or she is called upon to play a role pursuant to paragraph 2.8, so that the Legal & Corporate Department may, in concert with the Secretary of the Board of Directors, take timely action to ensure that the relevant corporate bodies (the Board of Directors) proceeds with the replacement of the committee member in question by one of the alternate committee members (hereinafter the Alternate Committee Members ), after hearing the opinion of the Chairman of the Board of Auditors. Any individual member of the Audit & Risks Committee may be replaced by one of the following Alternate Committee Members, in the descending order of preference specified below: - another unrelated Independent Director serving in office; - an unrelated member of the Board of Auditors (other than the Chairman), serving in office. The Alternate Committee Member shall temporarily replace an Audit Committee member in assessing an RPT in which the counterparty is represented by one or more related members of the Audit & Risks Committee. The regime of Alternate Committee Members shall also apply in the following events: - an individual member of the Audit & Risks Committee ceases to serve in such capacity for any reason or cause whatsoever; - an individual member of the Audit & Risks Committee ceases to meet one or more of the independence requirements specified in paragraph /27

8 In such cases, the Alternate Committee Member shall replace the outgoing committee member through to the Board meeting called at the earliest opportunity thereafter to make the new appointment or appointments necessary to reconstitute the Audit & Risks Committee. 2.9 Remuneration & Appointments Committee: Brembo s Remuneration & Appointments Committee, vested with consultative and recommendatory responsibilities in respect of the issues specified in Brembo s Remuneration & Appointments Committee Rules. The Remuneration & Appointments Committee is currently made up of 3 (three) Non-executive Directors, two of whom are also Independent Directors CONSOB Notice: CONSOB Notice No. DEM/ of 24 September 2010 pertaining to Indications and guidelines for the application of the Rules setting forth provisions on Related Party Transactions Board of Directors: Brembo S.p.A. s Board of Directors Control: the power to govern the financial and operating policies of a company so as to obtain benefits from its activities. Control is presumed to exist when the subject owns, directly or indirectly through subsidiaries, more than half of the voting power of a company unless, in exceptional circumstances, it can be clearly demonstrated that such ownership does not constitute control. Control also exists when the subject owns half or less of the voting rights of a company when there is: a) control over more than half of the voting rights by virtue of an agreement with other investors; b) power to govern the financial and operating policies of the company under a By-law or an agreement; or c) power to appoint or remove the majority of the members of the board of directors or equivalent governing body, and control of the company is by that board or body; or d) power to cast the majority of votes at meetings of the board of directors or equivalent governing body and control of the company is by that board or body Common control: shared control of a business operation, pursuant to specific contractual provisions Legal & Corporate Manager or Legal & Corporate Department: Brembo S.p.A. s Legal & Corporate Manager Key Management Personnel: within the meaning of the RPT Rules and the CONSOB Notice, any and all persons vested with the power and responsibility to directly or indirectly plan, manage and control a company s business, including (executive or other) directors of the company and the serving members of its Board of Auditors. In particular, under the current System of Delegation of Powers, in addition to the (executive or other) directors of the company and the serving members of its Board of Auditors, Key Management Personnel include the Chairman of Brembo s Board of Directors, the Executive Deputy Chairman and Executive Officer in charge for the preparation of the Company s Financial Reports as well as its Managing Director and General Manager List of Related Parties: the list of all Brembo s Related Parties, prepared and maintained by the Legal & Corporate Department. 7/27

9 2.17 IAS 24: the international accounting standard IAS 24 Related Party Disclosures in force as at the date on which the RPT Rules took effect Significant Influence: the power to participate in the financial and operating policy decisions of a company, without control over such company. Significant Influence may be gained by share ownership, statute or agreement. If a subject holds, directly or indirectly (e.g. through subsidiaries), 20% or more of the voting power of the investee, it is presumed that the subject has Significant Influence, unless it can be clearly demonstrated that this is not the case. Conversely, if the subject holds, directly or indirectly (e.g. through subsidiaries), less than 20% of the voting power of the subsidiary s investee, it is presumed that the subject does not have Significant Influence, unless such influence can be clearly demonstrated. The fact that a given person or party holds an absolute or relative majority of the voting rights does not necessarily mean that no one else may wield Significant Influence. A significant Influence is generally deemed to arise in one or more of the following circumstances: a) representation on the board of directors or equivalent governing body of the investee; b) participation in policy-making processes, including participation in decisions about dividends or other distributions; c) material transactions between the investor and the investee; d) interchange of managerial personnel; or e) access to Essential Technical Information. Finally it should be noted that, according to the most common practice at the moment, serving as an Independent Director in a company (also on Governance Committees but without executive powers) is not in itself sufficient to indicate the existence of a significant influence of the person involved over said company. For this reason, Significant Influence should be considered to exist only if the director, as well as holding office, also owns an interest of more than 20% and this share allows the appointment of one or more directors Essential Technical Information: the RPT- specific data specified in Annex 2 to the RPT Procedure Significance Thresholds: the relevance thresholds defining Highly Significant RP transactions refer to: Value-based significance index: ratio between the value of the transaction and the equity as per the Brembo s most recently published consolidated financial statements; in the case of cash components, the value of the transaction is equivalent to the contractual consideration of the transaction; in the case of components made up of financial instruments, the value of the transaction is deemed to be the fair value of the transaction as determined pursuant to international accounting standards; in the event of loan transactions and guarantees, value is equivalent to the maximum amount of the loan or guarantee; if the economic terms of the transaction depend in whole or in part on variable components that cannot be currently quantified, the value of the transaction is deemed equivalent to the maximum value receivable or payable pursuant to the underlying agreement. 8/27

10 Asset-based significance index: ratio between the total assets of the entity covered by the transaction and the total assets of the Group. In the case of acquisitions and disposals of participating interests in corporations that have an impact on the dimensions of the reporting entity, the value of the numerator is equivalent to the total assets of the investee company, regardless of the stake held, whilst if the corporations involved do not impact the dimensions of the reporting entity, in the event of acquisitions, the numerator is to be deemed equivalent to the value of the transaction increased by any liabilities transferred together with the acquired corporation, and in the event of disposals, the consideration received for the branch of business sold. In the case of acquisitions and disposal of assets other than participating interests, the value of the numerator is equivalent, in the case of acquisitions, to the greater of the consideration due under the transaction and the value at which the operation is to be booked, and in the case of disposals, the book value of the operation. Liability-based significance index: ratio between the total liabilities of the acquired entity and the total liabilities of the Group. In the case were several transactions exert a cumulative effect within the meaning of Article 5, paragraph 2, the companies shall determine, first and foremost, the significance of each transaction on the basis of the applicable index or indices. To determine whether or not the relevant thresholds have been exceeded, account must be taken of the sum total of the results for each index Significant Interest: a directly or indirectly held shareholding of over 20% of the share capital of a given company, or the situation arising from the fact that a corporate entity shares with its Subsidiary or Associate company that is the counterparty in the transaction, one or more Key Management Personnel benefiting from incentive plans based on financial instruments (or other forms of variable remuneration), the value of which directly depends, to a significant extent, on the performance of the Subsidiary or Associate companies in question Joint Venture: a joint venture is a contractual arrangement whereby two or more parties undertake a business operation that is subject to Common Control Manager: - each and every head of Brembo s Central Staff or a Brembo Business Unit or Department; or - each and every Director with specific powers, Managing Director, Sole Director and General Director of any of Brembo s Subsidiaries; - each and every Brembo S.p.A. s executive, who, in compliance with the certificate of incorporation, has been conferred powers of corporate representation in order to carry out transactions, which bear an economic value equal to or higher than that of Low Value RP transactions Brembo s Corporate Governance Manual: the corporate governance manual adopted by Brembo S.p.A. in adherence to and in accordance with the recommended Corporate Governance Code of Borsa Italiana. 9/27

11 2.25 Subsidiary s or Subsidiaries Delegated Officer(s): the Managing Directors, the Sole Directors and/or General Managers of any of the Subsidiaries, who are called upon, under the RPT Procedure, to, inter alia, issue the approval of Moderately Significant Related Party Transactions RPT or Related Party Transaction: any transfer of resources, services or obligations between related parties, whether free of charge or for valuable consideration. Related Party Transactions include: - mergers, full or partial non-proportional de-mergers, effected with related parties (to the exclusion of proportional de-mergers and rights offerings to shareholders if they extend, indiscriminately to all shareholders at the same terms and conditions; but inclusive of funding pools in which a related-party bank participates in a qualified capacity, for instance, as an arranger or head of the pool); - any decision pertaining to the assignment of compensation and economic benefits, in any manner or form whatsoever, to members of the governing and control bodies and to key management personnel Highly Significant RP Transactions: any RP transaction as specified in paragraph below. The significance indices and thresholds indicated in absolute terms shall remain as specified in Attachment 4, through to the approval of the financial statements for Moderately Significant RP Transactions: the Related Party Transactions that are neither Highly Significant RP Transactions nor Low Value RP Transactions but are subject to the procedural rules set forth in paragraph Low Value RP Transactions: all Related Party Transactions featuring a value of no more than Euro 250, (euro two hundred fifty thousand/00), and excluded from the scope of this RPT Procedure Ordinary RP Transactions: all the Related Party Transactions described in point 4.4 below, and excluded from the scope of this RPT Procedure Intercompany Transactions: transactions with or between Brembo s Subsidiaries or Associate companies with activities foreseen in the company object related to those of Brembo S.p.A., at arm s length in accordance with the criteria set forth in the relevant instruction (2), and excluded from the scope of this RPT Procedure provided that no significant interest of any of Brembo s other related parties, is involved Related Party: within the meaning of the international accounting standard IAS 24, the provisions of the recommended Corporate Governance Code of Borsa Italiana, the RPT Rules and the CONSOB Notice, in respect of Brembo, a Related Party is any individual or entity that: a) directly or indirectly, including through subsidiaries, trust companies or third-party intermediaries: (i) controls Brembo, or is controlled by Brembo, or is subject to common control with Brembo; (ii) has an interest in Brembo that gives it significant influence over the entity; (iii) exercises corporate control over Brembo jointly with other individuals or entities; b) is one of Brembo s associate companies; c) is a joint-venture in which Brembo holds a participating interest; (2) Cf. I.AMMI.ET.20 Guidelines for Determining Transfer Prices for Intercompany Transactions 10/27

12 d) is a member of the Key Management Personnel of Brembo or one of the latter s subsidiaries; e) is a close family member of any individual falling within the scope of points (a) or (d); f) is a company over which an individual or entity falling within the scope of points (d) or (e), exercises sole or joint control or significant influence, or in which the said individual or entity directly or indirectly holds a significant stake bearing no less than 20% of the voting rights; g) is an Italian or foreign supplementary, collective or individual pension fund set up in favour of the employees of Brembo or any of the latter s related parties International Accounting Standards: the international accounting standards adopted by Regulation (EC) No. 1606/ RPT Procedure: this procedure, which is aimed at defining the operating procedures to be followed for the approval of Related Party Transactions in accordance with the principles set forth in the RPT Rules Administration & Reporting Manager: the Brembo S.p.A. s Administration & Reporting Manager Rules for Issuers: the Implementing Rules of Legislative Decree No. 58 of 24 February 1998 regarding the regulatory framework applicable to Issuers, adopted by CONSOB Resolution No /1999 as further amended and extended RPT Rules: rules setting forth provisions on Related Party Transactions, adopted by CONSOB by resolution No of 12 March 2010 as further amended by resolution No of 23 June Secretary of the Board of Directors: Brembo S.p.A. s Secretary to the Board of Directors System of Delegated Powers: Brembo s System of Delegated Powers that governs the management of the powers of attorney and delegated powers conferred within Brembo Unrelated Shareholders: persons and parties holding voting rights, but that are neither a counterparty to a given transaction nor related to any such counterparty s related parties, or to any of Brembo s related parties Subsidiary: any entity whatsoever, even if devoid of legal form or officially recognised status, as in the case of partnerships, subject to the control of another entity Associate Company: any entity whatsoever, even if devoid of legal form or officially recognised status, as in the case of partnerships, within which one shareholder or partner enjoys significant influence, without however exercising Control or Common Control Close Family Members family members of an individual, who may be expected to influence, or be influenced by, that individual in their dealings with Brembo. More specifically, in light of Brembo S.p.A. s ownership structure, in addition to the spouse who is not legally separated or, alternatively, the cohabiting partner and children and other dependents of the individual in question, Close Family Members may also be deemed to include the said individual s other relatives by blood or by marriage, up to the second degree (3). (3) Merely for illustration purposes: 1. first degree blood relatives: parents; 2. first degree relatives by marriage: parents-in-law, sons-inlaw and daughters-in-law; 3. second degree blood relatives: grandparents, grandchildren, brothers and sisters; 4. second degree relatives by marriage: brothers- and sisters-in-law. 11/27

13 These types of family relationships are merely examples of family members who could be related parties only if they influence or could influence the relevant party. In fact, the criterion for the above assessment is the possibility of a family member to influence or being influenced by the relevant party (in the case in question a director) in the latter s relations with Brembo TUF: Legislative Decree No. 58 of 24 February 1998 as further amended and extended the Consolidated Finance Law. 3. MATRIX OF RESPONSIBILITIES IDENTIFICATION OF ROLES AND RESPONSIBILITIES Under the RPT Procedure, the Roles and Responsibilities are given herebelow and summarised in the relevant Matrix of Responsibilities. 1. Board of Directors: the Board of Directors which, under the RPT Procedure, is tasked, inter alia, with: - issuing the approval of the RPT Procedure and any and all proposed amendments and/or changes thereto; - authorising highly significant Related Party Transactions. 2. Audit & Risks Committee: Brembo s Audit & Risks Commitee which, under the RPT Procedure, has been identified by the Board of Directors as the body tasked with: - expressing a preliminary opinion on the Procedure and any and all proposed amendments thereto or revisions thereof, within the meaning of Article 4 of the RPT Rules; - expressing a reasoned, non-binding preliminary opinion, supported by a statement of grounds on the advisability of effecting Moderately Significant RP Transactions, taking due account of the Company s interests, as well as assessing the fairness and substantive propriety of the related terms and conditions, pursuant to Article 7 of the RPT Rules, in accordance with the procedures set forth in point 4.6 below; - participating in negotiations and fact-finding investigations undertaken prior to effecting highly significant RP Transactions and expressing a reasoned, binding preliminary opinion, supported by a statement of grounds on the advisability of the said Transactions, taking due account of the Company s interests, as well as assessing the substantive and procedural propriety of the proposed Transactions, pursuant to Article 8 of the RPT Rules, in accordance with the procedures set forth in point 4.7 below. 3. Board of Auditors: as required under the RPT Rules, Brembo S.p.A. s Board of Auditors shall monitor the conformity of this RPT Procedure with the RPT Rules as well as compliance with the same by all the recipients hereof, reporting on its oversight activities and findings in such regard to the General Shareholders Meeting pursuant to Article 2429 of the Italian Civil Code and Article 153 of the Consolidated Finance Law (TUF). 4. CFO: Brembo S.p.A. s Chief Financial Officer who is tasked, as far as the economic-financial aspects are concerned, with: 12/27

14 - assisting Brembo s Manager in assessing, together with the Legal & Corporate Manager, whether the transactions to be effected fall within the scope of the RPT Procedure; - attending the Audit & Risks Committee and Board of Directors meetings called by each of those bodies respectively to focus on matters falling within the scope of the RPT Procedure, with a view to illustrating and describing the Related Party Transactions on which each of the bodies in question is required to express an opinion pursuant to the RPT Procedure; - reporting on Moderately Significant Related Party Transactions to the Board of Directors and the Board of Auditors, on a quarterly basis; - carrying out an itemised check aimed at determining all the Related Party Transactions booked were actually concluded, inserting all relevant findings in the financial statements; - drawing up the Information Document mentioned in Annex 2 to the RPT Rules, in the event of the approval of highly significant Related Party Transactions; - determining whether the proposed RP Transaction is price sensitive and therefore subject to the procedure for the management of inside information. 5. Legal & Corporate Manager or Legal & Corporate Department: the Legal & Corporate Manager, under the RPT Procedure, is tasked, inter alia and in relation to legal aspects, with: - preparing the RPT Procedure and any and all proposed amendments and/or changes thereto; - preparing and maintaining the List of Related Parties, updating the same on the basis of information received from the said parties, and transmitting the updated version to the CFO, the Administration & Reporting Manager and other Managers; - coordinating the collection of RPT-specific data to be forwarded to the Audit & Risks Committee and the Board of Directors; - assisting Brembo s Manager in assessing, together with the CFO, whether the transactions to be effected fall within the scope of the RPT Procedure; - calling preliminary meetings of the Audit Committee, within the limits of the sphere of competence of the Legal & Corporate Manager or Department, as the case may be, so as to enable the said committee to undertake the activities specified in paragraph 2.8 above; - taking timely action, whenever necessary, to ensure that one of the Alternate Committee Members immediately replaces any Audit & Risks Committee Member who reports bearing a conflict of interest in respect of any individual transaction in which he is called upon to play a role. 6. Secretary to the Board of Directors: the Secretary to the Board of Directors, who, under the RPT Procedure, is tasked with calling preliminary meetings of the Board of Directors, within the limits of his or her sphere of competence, should the need arise to effect related-party transactions subject to the procedural formalities set forth in paragraph 4.7 below. 13/27

15 7. Manager: The Manager tasked under the RPT Procedure with verifying, in light of input from the CFO (on economicfinancial matters) and the Legal & Corporate Manager (regarding legal matters), whether or not a proposed transaction falls within the scope of the RPT Procedure, and more specifically, whether or not: - the counterparty falls within the List of Related Parties maintained by the Legal & Corporate Department; - the Transaction is precluded from the scope of the RPT Procedure; - the proposed Transaction is a Highly Significant or Moderately Significant related party transaction (taking due account of possible cumulative effects generated through a series of transactions). 8. Administration & Reporting Manager: under the RPT Procedure, the Administration and Reporting Manager is tasked, as far as the economic-financial aspects are concerned, with: - submitting to the Audit & Risks Committee, on an annual basis, after the presentation of Brembo s consolidated financial statements to the General Shareholders Meeting, the relevance thresholds defining highly significant RP transactions and low-value RP transactions, so as to enable the said Committee to assess, on the basis of the results of the annual financial statements, whether or not there is reason to revise the thresholds defining the various types of transaction; - supporting the CFO in carrying out an itemised check aimed at determining that all the Related Party Transactions booked were actually concluded, inserting all relevant findings in the financial statements. Continued: Matrix of Responsibilities 14/27

16 Matrix of Responsibilities Type of responsibility Drafting of the RPT Procedure or revisions thereof where necessary Approval of the RPT Procedure or any and all changes Disseminating the RPT Procedure or any and all changes thereof Determining parameters and thresholds defining highly significant and moderately significant RPTs Drawing up, Updating and Maintaining the List of Related Parties Quarterly check with the Direct Related Parties of the summary of the relations between Brembo Group companies and the Related Parties declared by them prepared together with the Administration & Reporting Manager, for confirmation thereof Archive of documentation certifying the requirements provided for in the definition of Ordinary Transactions Preliminary assessment to determine whether or not the transaction is an RPT, and preparing of Essential Technical Data Assessment to determine whether or not the RPT is price sensitive Calling of the Audit & Risks Committee with the information required for undertaking the activities mentioned in paragraph 2.8 Issue of the Audit & Risks Committee s Preliminary Opinion on Highly/Moderately Significant RPTs Quarterly report to the Audit & Risks Committee for Ordinary Transactions carried out with companies other than Group companies Report to the Audit & Risks Committee seeking the required opinion Quarterly RPT Report to the Audit & Risks Committee and The Board of Directors, focusing on completed Moderately Significant RP Transactions Principal Board of Directors Audit & Risks Committee Board of Statutory Auditors Internal Auditor Contributory P V V P Principal Contributory Principal A CFO R General Counsel / Board Secretary R Contributory V V P Principal Contributory P V V P Principal R Manager Administration and Reporting Manager Contributory P V V P P Principal Contributory V/A P P Principal Contributory Principal Contributory V P P Principal Contributory Principal Contributory P P P P Principal R Contributory P P P Principal R R Contributory P P P P Principal R R Contributory P P P P Principal Contributory R R R R P R R R 15/27

17 Report to the Board of Directors seeking required Board approvals Authorising Highly Significant RPTs Preparing the Information Document for Highly Significant RPTs Information to be included in the financial statements Ensuring replacements by Alternate Audit Committee Members Principal R R Contributory V Principal A R Contributory P P P Principal R Contributory P P P Principal R Contributory P Principal R Contributory P P Legend: A: Approves P: Participates V: Verifies R: is the primary manager 4. PROCEDURAL FORMALITIES 4.1. Procedural Formalities to be Followed in Amending or Revising the RPT Procedure Any and all amendments to or revisions of the RPT Procedure shall be subject to the same adoption formalities described in Attachment 1 and applicable to the RPT Procedure itself In addition to the annual revision as illustrated in page 1, the RPT Procedure must be subjected to revision whenever necessary taking due account, inter alia, of any changes in ownership structures and the effectiveness of the RPT Procedure in practice. Should in considering revisions, the Audit & Risks Committee find that no amendment or change is necessary, the said committee shall forward its conclusions in such regard, without delay and duly supported by grounds, to the Board of Directors at the first Board meeting immediately following thereafter The Administrative & Reporting Manager shall submit to the Audit & Risks Committee, on an annual basis, after the presentation of Brembo s consolidated financial statements to the General Shareholders Meeting, the significance indices and thresholds defining Highly Significant RP Transactions and Low-value RP Transactions, so as to enable the said Committee to assess, on the basis of the results of the annual financial statements, whether or not there is reason to revise the thresholds defining the various types of transaction. Should the Audit & Risks Committee feel the said significance thresholds ought to be changed, it shall promptly submit the proposed changes to the Board of Directors for approval. Any and all changes shall entail a corresponding amendment to Attachment 2 to the RPT Procedure List of Related Parties Related Parties are identified on the basis of the definition set forth in paragraph Brembo s Related Parties are included in the List of Related Parties prepared and maintained by the Legal & Corporate Department which updates the same on the basis of information in its possession and the statements received from directly Related Parties themselves. Attachment 5 illustrates the flow of quarterly update. 16/27

18 4.2.3 All individuals and entities qualifying as directly Related Parties must forward and ensure that all indirectly Related Parties also forward to the Legal & Corporate Department all the information required to identify the Related Parties and to comply with the obligations imposed under the RPT Procedure. Immediately upon the emergence of a new Related Party, the directly Related Parties shall give notice thereof to the Legal & Corporate Manager The List of Related Parties shall be prepared and updated by the Legal & Corporate Department on a quarterly basis. More specifically, the Legal & Corporate Manager gathers the necessary information using the forms set forth in Attachment 3 to the RPT Procedure, and on a quarterly basis (by the end of the month following the close of the each quarter), updates the List of Related Parties accordingly, forwarding the updated list to the CFO and the Administration and Reporting Manager who shall then carry out the checks falling within their respective spheres of competence and further update the list, if necessary The Legal and Corporate Department sends, on a quarterly basis, the direct Related Parties a document (based on the format in Attachment 6 to the RPT Procedure), prepared together with the Administration and Reporting Manager which summarises the relations between the Brembo Group companies and the Related Parties indicated in the reference period for confirmation thereof The Legal and Corporate Department shall forward the updated List of Related Parties to all Managers on a quarterly basis (no later than the end of the month following the last day of each quarter) The Audit & Risks Committee monitors the proper updating of the List of Related Parties and any and all changes brought to the same Defining Features of Various Types of Related Party Transactions Related Party Transactions are categorised as indicated below, in descending order of significance: (i) for the intents and purposes of the RPT Procedure, Highly Significant RP Transactions may be defined at Related Party Transactions in which at least one of the significance thresholds applicable to each specific transaction exceeds 5%; the significance indices and thresholds indicated in absolute terms shall remain as specified in Attachment 4, through to the approval of the financial statements for 2010; (ii) the Moderately Significant RPT are transactions which are neither Highly Significant RP Transactions nor Low Value RP Transactions; (iii) the Low Value RP Transactions, which are all Related Party Transactions featuring a value of no more than Euro 250, (Euro two hundred fifty thousand/00); (iv) the Ordinary RP Transactions, which are Related Party Transactions that: (a) are effected in the course of Brembo s day-to-day business operations and related financial activities (hereinafter Core Business ); and (b) are concluded at terms and conditions that are: i. analogous to those generally applied to unrelated parties for transactions of a similar nature, value and risk profile; ii. based on public and/or controlled rates or imposed prices; or 17/27

19 iii. equivalent to those applied to parties which Brembo is bound under law to charge a specific price; provided that they are concluded in compliance with all relevant in-house corporate procedures and without any waiver of the ordinary managerial responsibilities binding on the Manager proposing each such transaction (the Manager is, in particular, required to preserve, as a precautionary measure, in the archives of Ordinary Transactions conducted with Related Parties, all appropriate and necessary documentation certifying the requirements provided for in the definition of Ordinary Transactions); (v) the intercompany transactions, which are transactions with or between Brembo s Subsidiaries or Associate companies with activities foreseen in the company object related to those of Brembo S.p.A., at arm s length in accordance with the criteria set forth in the relevant instruction (4) and excluded from the scope of this RPT Procedure provided that no significant interest of any of Brembo s other related parties, is involved Exemptions from the Application of the RPT Procedure The provisions of the RPT Procedure shall not apply to Low-value Related Party Transactions The provisions of the RPT Procedure shall not apply to: (i) (ii) Shareholders Resolutions pertaining to the remuneration due to Board members within the meaning of Article 2389 (Directors Emoluments), paragraph 1, of the Italian Civil Code; Shareholders Resolutions pertaining to the remuneration due to Brembo S.p.A. s directors entrusted with specific tasks, provided that the remuneration in question falls within the overall amount established by the General Shareholders Meeting pursuant to Article 2389 (Directors Emoluments), paragraph 3, of the Italian Civil Code; (iii) Shareholders Resolutions pertaining to the remuneration due to members of the Brembo S.p.A. s Board of Auditors Without prejudice to the periodic reporting obligations imposed under Article 5, paragraph 8 of the RPT Rules, and paragraphs and below, the provisions of the RPT rules and this RPT Procedure shall not apply to: (i) (ii) share-based remuneration plans approved by the General Shareholders Meeting within the meaning of Article 114-bis of the Consolidated Finance Law, and related implementing transactions; Board resolutions pertaining to the remuneration of directors and Board members entrusted with specific tasks other than resolutions passed pursuant to Article 2389 (Directors Emoluments), paragraph 3, of the Italian Civil Code as well as other Key Management Personnel, provided that: - Brembo has adopted a remuneration policy; (4) Cf. I.AMMI.ET.20 Guidelines for Determining Transfer Prices for Intercompany Transactions 18/27

20 - the remuneration policy was informed by input and contributions from the Remuneration & Appointments Committee made up exclusively of Non-executive Directors, the majority of whom are also Independent Directors; - a report illustrating the remuneration policy was subjected to consultative ballot of the Shareholders; - the remuneration assigned is in compliance with the said policy; (iii) Ordinary RP Transactions; (iv) Intercompany Transactions On a quarterly basis, the CFO informs the Audit & Risks Committee of any Ordinary Related Party Transactions (and hence those excluded from the application of the Related Party Transactions Procedure by virtue of the previous paragraph) carried out with companies other than Group companies Should any Highly Significant RP Transaction also qualify as an Ordinary RP Transaction within the meaning of the RPT Procedure, Brembo shall: - by the deadline specified in Article 5, paragraph 3 of the RPT Rules notify CONSOB of the counterparties, subject-matter and value of the transactions exempted from the RPT Rules as a result; - specify in the Interim Director s Report as well as the Annual Director s Report, within the framework of the disclosures required pursuant to Article 5, paragraph 8 of the RPT Rules, which of the transactions subject to the reporting and disclosure obligations set forth in the said article, were concluded in application of the exemption contemplated in this Article Preliminary Assessment to Verify Whether the Transaction Qualifies as a Related-Party Transaction Before effecting any transaction whatsoever, each Brembo Manager must determine, on the basis of the list prepared, together with the CFO (as far as economic-financial aspects are concerned) and the Legal & Corporate Manager (legal aspects), whether the transactions to be effected fall within the scope of the RPT Procedure, and in particular whether: - the counterparty falls within the List of Related Parties maintained by the Legal & Corporate Department; - as well as whether: (i) the proposed transaction is exempt from the scope of the RPT Procedure pursuant to paragraph 4.4 above; (ii) the proposed transaction is to be categorised as a Highly or Moderately Significant RP Transaction (including as a result of the cumulative effect of several transactions); At the same time, the CFO shall also determine if the proposed Transaction is price sensitive and therefore subject to the procedure for the management of inside information Should it be determined that the counterparty in the transaction is a Related Party and that the RP Transaction is excluded from the scope of the RPT Procedure pursuant to paragraph 4.4 above, the Manager shall refrain from proceeding and shall give timely notice of such fact to the CFO and the Legal & 19/27