CMVM Regulation No. 1/2007 Corporate Governance

Transcription

1 The official Portuguese text published in the Official Gazette should be consulted herewith CMVM CMVM Regulation No. 1/2007 Corporate Governance (Amendment to CMVM Regulation No. 7/2001) Corporate Governance has recently undergone a considerable amount of regulatory evolution. CMVM Regulation No. 7/2001 promoted part of the CMVM Recommendations on Corporate Governance to disclosure duties and now obliges issuers of shares admitted to trading on a regulated market, domiciled or operating in Portugal and subject to Portuguese personal law, to disclose their level of acceptance based on a comply and explain model. The biennial text revision of the CMVM Recommendations on Corporate Governance brought on consecutive amendments to CMVM Regulations Nos. 11/2003, 10/2005 and 3/2006 so that the national recommendatory and regulatory framework could adequately accommodate the regulatory standards of relevant approved texts such as the EC Recommendation on Auditor Independence, the EC Action Plan on Corporate Law, the EC Recommendation on the Role of Non-Executive Directors, the EC Recommendation on Director Remuneration and the Revision of the OECD Principles on Corporate Governance. Other interim developments imposed further review of the regulatory framework on corporate governance, with particular emphasis placed on the amendments introduced to the Commercial Companies Code by Decree-Law 76-A/2006 of 29 March regarding issues on the governance structure of public limited companies and the enshrinement of its Article 245-A in the Securities Code within the ambit of transposing the Takeover Bid Directive. In view of the above, the adoption of the current regulation is ongoing. Transparency duties incumbent on the company and the information duties by the relevant board members remain unchanged except for the contents of the corporate governance report. As to the current alterations that have been introduced, attention is drawn to the amendments made to the report s arrangement which concerns the corporate structure and practice to be disclosed by issuers of shares admitted to trading on a regulated market and subject to Portuguese personal law, so that the report s contents are aligned with the new recommendations that are currently covered in the Corporate Governance Code. Again, emphasis is given to the key instruction regarding the way in which the report is to be drawn up: the report is not to be prepared as a casual exercise, but rather as an input of opinions and standpoints on sound corporate governance practices.

2 In all, the regulatory independency concept has been done away with. One of the legislator s concerns when revising the Commercial Companies Code (CCC), was the increased independence of corporate bodies that supervise the company s day-to-day activities. In consideration of the latter, the list of incompatibilities provided for in article 414/A of the CCC was inserted and an independency concept was encompassed in article 414/5 of the CCC. Depending on the selected governance model, these rules apply to the Supervisory Board members, non-executive Directors of the Audit Board, the General and Supervisory Board members and the Financial Matters Committee members in face of this, the regulatory independency concept no longer stands to reason. Reference to the independency of non-executive directors that are not directly covered by the provisions of the CCC, are now mentioned in articles 414/A and 414/5 of the CCC, which affords system consistency, as is required in this Regulation s Attachment under number II.9 of Chapter II. The current Regulation obliges individual disclosure of the amounts payable should the duties cease during the respective mandate, regardless of its nature, whenever they surpass the monthly salary by twofold. One aims to encourage the control on the more relevant remuneration transfers which is consistent with thorough transparency requirements. The draft regulation was made available for public consultation. Under the provided for in article 319 of the Securities Code, the opinion of the CMVM s Advisory Board was sought and the Executive Board of the CMVM approved the following regulation: Article 1 Report on Corporate Governance Structure and Practices 1. The detailed report on the corporate governance strucuture and practices disclosed by issuers of shares that are admitted to trading on a regulated market and subject to Portuguese personal law shall include the data and comply with the model attached to this regulation of which it is an integral part thereof. 2. Issuers of shares admitted to trading on a regulated market and subject to Portuguese personal law shall refer to the CMVM Corporate Governance Code when disclosing the report mentioned in the previous paragraph. Article 2 Share-allocation and/or Stock Option Plans 1. Issuers of shares admitted to trading on a regulated market, shall inform the CMVM on information regarding share-allocation and/or stock option plans for employees and/or for the Board of Directors, during the seven working days following its approval.

3 2. The information referred to in the previous paragraph shall include an explanation as to why the plan was adopted, the category and number of persons included in the plan, conditions for the share assignment, share-pricing criteria and the option-exercising price, the period during which the options may be exercised, the number and characteristics of the shares to be distributed, the existence of incentives to purchase shares and/or for exercising options, and the responsbilities of the Board of Directors for executing and/or changing the plan. Article 3 Transaction Reporting 1. The notification provided for in article 248/B of the Securities Code is merely due when the transaction value has reached five thousand Euros. This calculation in based on the transactions carried out during a twelve-month period. 2. The price of the security concerned in a regulated market at the time of transaction is used for determining the value of transactions carried out free-of-charge or the relevant fair value when the security is not admitted to trading on a regulated market. 3. The five-working day deadline mentioned in article 248/B/1 of the Securities Code, is applicable as from the time the transaction (either detached or complemented with other transactions carried out during the previous 12 months), reaches or surpasses the amount mentioned in paragraph Members of the Board of Directors of an issuer or the controlling company thereof, issuing shares admitted to trading in a regulated market, are required to notify the invested company within 5 working days of their appointment or the admission to trading of the shares in question on a regulated market, on the number of shares owned and the percentage of voting rights they are responsible for, according to the terms of article 20 of the Securities Code. 5. The invested company shall immediately inform the CMVM on information received as per the previous paragraph. Article 4 Company Website Issuers of shares that are admitted to trading on a regulated market domiciled or operating in Portugal shall make the following information available on their website, which shall be clearly identified and updated: a) The company, its public company status, head-office and remaining data provided for in article 171 of the Commercial Companies Code; b) Articles of Association;

4 c) Credentials of the Members of the Board of Directors and the Market Liaison Officer; d) The Investors Assistance Unit and its functions and access tools; e) Financial Reports for the previous five years; f) Half-yearly calendar of corporate events disclosed at the beginning of each half-year, including inter alia, general meetings, disclosure of annual, half-yearly and, when applicable, quarterly financial information; g) Proposals submitted for discussion and vote at the general meeting during the 15 days prior to the general meeting date; h) Convening notices for general meetings, 30 days prior to the general meeting date. Article 5 Final Provisions This regulation repeals CMVM Regulation No. 7/2001. Article 6 Entry into force This regulation shall come into force on 1 January September 2007 Chairman of the Executive Board, Carlos Tavares, Vice-Chairman of the Executive Board, Amadeu Ferreira.

5 Attachment Corporate Governance Report Layout Chapter 0 Statement of Compliance 0.1. Location where the public may find the Corporate Governance Codes to which the issuer is subject to or those which the issuer voluntarily abides by; 0.2. Detailed description of the recommendations contained in the CMVM Corporate Governance Code that have or have not been adopted. Recommendations that are not fully met are understood to be non-implemented When the structure or the corporate governance practices deviate from the CMVM s Recommendations or from other Corporate Governance Codes that the company is subject to or had voluntarily applied to, the company shall explain which parts of each code have not been complied with and the reasons therefore The corporate body or the committee shall at all times, assess the independency of each of its members and shall inform the shareholders, via a statement included in the corporate governance report, on its assessment both at the time of the appointment and following the loss of independency. Chapter I General Meeting I.1. Identification of the members of the General Meeting Board. I.2. Indication of the commencement and end of the mandates. I.3. Indication of the remuneration of the Chairman of the General Meeting Board. I.4. Indication of the prior notice for deposit of shares or share-blocking for participation at the General Meeting. I.5. Indication of the applicable rules for share-blocking should the General Meeting be suspended. I.6. Number of shares that correspond to one vote. I.7. The existence of statutory rules on the exercise of voting rights, including constitutive or deliberating quorums or systems for equity rights. I.8. Existence of statutory rules on the exercise of voting rights via postal voting.

6 I.9. Availability of a model format for exercising the right to vote via postal means. I.10. A deadline requirement for the receipt of the postal ballots and the date on which the General Meeting is held. I.11. The exercise of voting rights via electronic means. I.12. Information of the intervention by the General Meeting on matters concerning the remuneration policy of the company and the performance assessment of the members of the Board of Directors. I.13. Indication of the defensive measures that are intended to immediately instigate asset erosion in cases such as changes in the control or to the composition of the Board of Directors. I.14. Main agreements to which the company is a part of and that come into force, are changed or end in cases such as change in company control, as well as related outcome, unless the disclosure of same, due to its nature, is highly damaging to the company and save when the company is specifically obliged to disclose such information by force of legal imperatives. I.15. Agreements between the company and the Board of Directors, within the meaning of article 248/B/3 of the Securities Code, that provide for compensation if they resign or are made redundant without a valid reason or if their employment ceases following a change in company control. Chapter II Management and Supervisory Boards II.1. Identification and composition of the corporate bodies; II.2. Identification and composition of other committees created with responsibilities for the management or the supervision of the company. II.3. Organisational structure or functional chart concerning the delegation of responsibilities among the various corporate bodies, committees and/or departments within the company, including information on the scope of delegating responsibilities or distributing duties among the members of the Management or Supervisory bodies, as well as a list of non-delegable subject matters. II.4. Description of the internal control and risk management systems within the company, namely as regards the financial information disclosure system. II.5. Powers of the Management Body, particularly as regards resolutions on capital increase.

7 II.6. Indication on the existence of regulations on the functioning of the corporate bodies or any internally defined rules on incompatibility and the maximum number of positions that a member is entitled to hold and the place where these rules may be consulted at. II.7. Rules applicable to the appointment and replacement of members of the Management and Supervisory Body. II.8. Number of meetings held by the Management and Supervisory Body and other created Committees that are responsible for managing and supervising during that time. II.9. Identification of the members of the Board of Directors and other Committees created within the company and their distinction between executive and non-executive Members and from among the latter, which members comply with the incompatibility rules provided for in article 414/A/1, except for item b/ and the independence criterion mentioned in article 414/5, both from the Commercial Company Code. II.10. Professional qualifications of the members of the Board of Directors, the professional activities carried out by them at least during the last five years, the number of company shares they hold and the date of the commencement and end of the first mandate; II.11. Duties that the members of the Board of Directors carry out in other companies as well as those carried out in companies of the same holding. Whenever applicable; II.12. The identification of the members of the Supervisory Board by listing those members that comply with the incompatibility rules provided for in article 414/A/1 and the independency criterion provided for in article 414/5, both from the Commercial Company Code; II.13. The professional qualifications of the members of the Supervisory Board, the professional activities carried out by them at least during the last five years, the number of company shares they hold and the date of the commencement and end of the first mandate; II.14. The duties that the members of the Superviosry Board carry out in other companies as well as those carried out in companies of the same holding. Or, II.15. The identification of the members of the General and Supervisory Board and other Committees created within the company, by listing those members that comply with the incompatibility rules provided for in article 414-A/1 including item f/ and the independency criterion provided for in article 414/5, both from the Commercial Company Code.

8 II.16. The professional qualifications of the members of the General and Supervisory Board, the professional activities carried out by them at least during the last five years, the number of company shares they hold and the date of the commencement and end of the first mandate. II.17. The duties that the members of the General and Supervisory Board, as well as other Committees established within the company, carry out in other companies, as well as those carried out in companies of the same holding. II.18. A description of the remuneration policy and the alignment of the Directors interests with those of the company and the performance assessment, distinguishing executive from non-executive Directors, a summary and reasoning behind the company s policy on compensations negotiated on contracts or via transactions for cases of impeachment or severance pay. II.19. Indication of the composition of the Remuneration Committee or similar body, whenever applicable, identifying the relevant members that are likewise members of the Board of Directors, as well as their spouses, next of kin up to and including third-degree lineage. II.20. Indication of the individual and collective remuneration that amply includes performance pay bonuses earned by the members of the Board of Directors. The following information shall also be made available: a) Explanation on the amount concerning the variable and fixed components of the directors remuneration, as well as the possible installment payment of the variable component; b) The distinction between the amounts owing to the executive directors and to the non-executive directors; c) Sufficient information on the criteria on which any right to shares, share options or the variable component of the remuneration are based; d) Sufficient information on the relation between remuneration and performance; e) The main factors and reasons for any such annual bonus scheme or any other non-financial benefits; f) The allotment of shares and/or rights to acquire share options and/or any other incentive system involving shares; g) Remuneration paid in the form of a share in the profits and/or the payment of bonuses and the rationale behind the act of awarding such bonuses and/or share in profits; h) Compensation paid or owed to former executive directors in relation to early contract termination; i) Amounts paid on any basis by other companies in a group relationship or exercising control over the company;

9 j) A description of the main characteristics of the supplementary pension or retirement schemes set up for directors; l) An estimate of the non-financial benefits considered as remuneration which do not fall under the categories listed above. II.21. Individual information on the amounts payable, regardless of its nature, should the duties cease during the respective mandate, whenever they surpass the monthly salary by twofold. II.22. Information on the irregularities disclosure policy adopted by the company. Chapter III Information III.1. The equity structure including those shares that are not admitted to trading, the different category of shares, rights and duties of these shares and the equity percentage that each category represents. III.2. Qualifying holdings in the issuer s equity calculated as per article 20 of the Securities Code. III.3. Identification of the shareholders that detain special rights and a description of those rights. III.4. Possible restrictions on share-transfer, i.e. consent clauses for their disposal or restrictions on share-ownership. III.5. Shareholder agreements which the company may be aware of and that may restrict the transfer of securities or voting rights. III.6. Rules applicable to the amendment of the articles of association; III.7. Control mechanisms for a possible employee-shareholder system inasmuch as the voting rights are not directly exercised by them. III.8. Description concerning the evolution of the issuer s share price and taking the following into account: a) The issuance of shares or other securities that entitle the subscription or acquisition of shares; b) The outcome announcement; c) The dividend payment for each share category including the net value per share.

10 III.9. Description of the dividend distribution policy adopted by the company, including the dividend value per share distributed during the last three periods. III.10. A description of the main characteristics of the share and stock option plans adopted or valid for the financial year in question, the reason for adopting said scheme and details of the category and number of persons included in the scheme, share-assignment conditions, non-transfer of share clauses, criteria on share-pricing and the exercising option price, the period during which the options may be exercised, the characteristics of the shares to be distributed, the existence of incentives to purchase and/or exercise options, and the responsabilities of the Board of Directors for executing and/or changing the plan. Details shall also include the following: a) The number of shares required for the share allotment and the number of shares required for the exercise of the exercisable options at the start and end of the year in question; b) The number of alloted, exercisable and extinct shares during the year; c) The general meetings appraisal of the plans adopted or in force during the period in question. III.11. A description of the main business data and transactions carried out between the company and the members of the Management and Supervisory Board, the owners of qualified holdings or parent companies, affiliates or group companies in an amount that is economically significant for any of the parties involved, except for those businesses or transactions that are cumulatively considered within the bounds of normal market conditions for similar transactions and are part of the company s current business. III.12. Reference to an Investor Assistance Unit or a similar service, describing: a) The role of said office; b) Type of information made available; c) Access means to said Office; d) The company s webiste; e) The market liaison officer s credentials. III.13. Indication of the annual compensation paid to the auditor and to other individuals or groups that belong to the same network supported by the company and/or by any group

11 that bears with it a control or group relationship and the percentage of the total amount paid for the following services: a) Statutory account review services; b) Other audit reliability services; c) Tax consulting services; d) Other non-statutory auditing services. A description of the auditor s independency safeguarding measures is required, should the auditor provide any of the services described in sub-paragraphs c/ and d/. For the purposes of this text, the network concept derives from the EC Recommendation No. C (2002) 1873 of 16 May.