Governance Information • Mar 22, 2016
Governance Information
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Courtesy translation. In case of incongruity with the Italian version, the latter will prevail.
pursuant to art. 123 bis of the Consolidated Finance Law (TUF)
(traditional administration and control model)
Issuer: Aeffe S.p.A.
Website: www.aeffe.com
Year covered by the Report: 2015
Date of approval of the Report: 10th March 2016
a) share capital structure (para. 1.a) of art. 123-bis, TUF)
b) restrictions on the transfer of securities (para. 1.b) of art. 123-bis, TUF)
c) significant interests in share capital (para. 1.c) of art. 123-bis, TUF)
d) securities carrying special rights (para. 1.d) of art. 123-bis, TUF)
e) shares owned by employees: exercise of voting rights (para. 1.e) of art. 123-bis, TUF)
f) restrictions on voting rights (para. 1.f) of art. 123-bis, TUF)
g) shareholders' agreements (para. 1.g) of art. 123-bis, TUF)
h) change of control clauses (para. 1.h) of art. 123-bis, TUF) and articles of association governing public offers (para. 1-ter of art. 104 and para. 1 of art. 104-bis)
i) mandates to increase share capital and authorization to purchase treasury shares (para. 1.m) of art. 123-bis, TUF)
l) management and coordination activities (art. 2498 et seq. c.c.)
4.1 APPOINTMENT AND REPLACEMENT (para. 1.l) of art. 123-bis, TUF) 4.2 COMPOSITION (para. 2.d) of art. 123-bis, TUF) 4.3 ROLE OF THE BOARD OF DIRECTORS (para. 2.d) of art. 123-bis, TUF) 4.4 EMPOWERED BODIES 4.5 OTHER EXECUTIVE DIRECTORS 4.6 INDEPENDENT DIRECTORS 4.7 LEAD INDEPENDENT DIRECTOR
6. BOARD COMMITTEES (para. 2.d) of art. 123-bis, TUF)
Directors
11.1 DIRECTOR RESPONSIBLE FOR THE RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM
11.2 MANAGER OF THE INTERNAL AUDIT FUNCTION 11.3 ORGANIZATIONAL MODEL PURSUANT TO DECREE 231/2001 11.4 INDEPENDENT AUDITORS 11.5 EXECUTIVE RESPONSIBLE FOR PREPARING FINANCIAL AND CORPORATE DOCUMENTATION AND OTHER CORPORATE ROLES AND FUNCTIONS
11.6 COORDINATION BETWEEN PERSONS INVOLVED IN THE RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM
12. DIRECTORS' INTERESTS AND TRANSACTIONS WITH RELATED PARTIES
13. APPOINTMENT OF STATUTORY AUDITORS
14. COMPOSITION AND FUNCTIONING OF THE BOARD OF STATUTORY AUDITORS (para. 2.d) of art. 123-bis, TUF)
15. RELATIONS WITH SHAREHOLDERS
16. SHAREHOLDERS' MEETINGS (para. 2.c) of art. 123-bis, TUF)
17. FURTHER CORPORATE GOVERNANCE ACTIVITIES (para. 2.a) of art. 123 bis, TUF)
18. CHANGES SUBSEQUENT TO YEAR END
Table 1: Information on the ownership structure
Table 2: Share capital structure
Table 3: Structure of the Board of Directors and its committees
Table 4: Structure of the Board of Statutory Auditors
Code / Code of Self-Regulation: the Code of Self-Regulation approved in July 2014 by the Committee for the Corporate Governance of Listed Companies and promoted by Borsa Italiana S.p.A., ABI, Ania, Assogestioni, Assonime and Confindustria.
Civil Code / c.c.: the Italian civil code.
Board: the Issuer's board of directors.
Issuer: Aeffe S.p.A., with registered offices at via delle Querce 51, San Giovanni in Marignano (Rimini), share capital € 26,840,626.00, Rimini Companies Register and Tax Code no. 01928480407, Rimini Business Register (R.E.A.) no. 227228.
Year: the financial year covered by the Report.
Market Instructions: the Instructions to the Regulations for Markets Organized and Managed by Borsa Italiana S.p.A.
MTA: the Screen-traded Market organized and managed by Borsa Italiana S.p.A.
Market Regulations: the Regulations for Markets Organized and Managed by Borsa Italiana S.p.A.
Consob's Issuers' Regulation: the Regulation governing issuers approved by Consob Resolution no. 11971/1999 and subsequent additions and amendments.
Consob's Market Regulation: the Regulation governing market matters approved by Consob Resolution no. 16191/2007 and subsequent additions and amendments.
Consob's Related Parties Regulation: the Regulation approved by Consob Resolution no. 17221 on 12th March 2010 (as successively modified) concerning the related-party transactions.
Report: the report on corporate governance and the ownership structure that companies are required to prepare pursuant to art. 123 bis of the Consolidated Finance Law (TUF).
TUF: Decree no. 58 dated 24th February 1998 (Consolidated Finance Law) and subsequent additions and amendments.
The Aeffe Group operates at an international level in the fashion and luxury sector, producing and distributing a wide range of products that include prêt-à-porter, footwear and leather goods, lingerie and beachwear. With a constant focus on uniqueness and exclusivity, the Group designs, produces and distributes collections for both its house brands, including
remunerating the directors and executives with strategic responsibilities in compliance with the provisions of the Code; (iv) the careful management of potential conflicts of interest; and (v) clear procedural rules for the conduct of related-party transactions, in accordance with the regulations in force, and for the processing of corporate information.
The Mission of the Company is to create value for all shareholders, employees, customers and vendors.
The issued and fully-paid share capital of the Issuer amounts to Euro 26,840,626.00, represented by 107,362,504 ordinary shares, nominal value Euro 0.25 each, that are listed solely in the STAR segment of the MTA. The categories of shares outstanding are indicated in the following table..
| SHARE CAPITAL STRUCTURE | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| NO. OF SHARES |
% OF SHARE CAPITAL |
LISTED IN STAR SEGMENT |
RIGHTS AND OBLIGATIONS |
|||||||||
| ORDINARY SHARES | 107,362,504 | 100% | 107,362,504 | RIGHTS AND OBLIGATIONS ASSOCIATED WITH ORDINARY SHARES |
||||||||
| SHARES WITH MULTIPLE VOTING RIGHTS |
NOT APPLICABLE |
NOT APPLICABLE | NOT APPLICABLE | NOT APPLICABLE | ||||||||
| SHARES WITH RESTRICTED VOTING RIGHTS |
NOT APPLICABLE |
NOT APPLICABLE | NOT APPLICABLE | NOT APPLICABLE | ||||||||
| SHARE WITHOUT VOTING RIGHTS |
NOT APPLICABLE |
NOT APPLICABLE | NOT APPLICABLE | NOT APPLICABLE | ||||||||
| OTHER | NOT APPLICABLE |
NOT APPLICABLE | NOT APPLICABLE | NOT APPLICABLE |
The Issuer has not issued any financial instruments carrying the right to subscribe for new shares.
The Articles of Association do not envisage restrictions on the transfer of securities.
Based on the communications made to Consob pursuant to art. 120 TUF, the following
significant, direct or indirect interests in the share capital of the Issuer were held as of 10th March 2016.
| SIGNIFICANT INTERESTS IN SHARE CAPITAL | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Declarant | Direct ownership | % of ordinary capital | % of voting capital | |||||||
| HIGHCLERE INTERNATIONAL INVESTORS LLP |
HIGHCLERE INTERNATIONAL INVESTORS LLP |
2.060 | 2.060 | |||||||
| TULLIO BADIOLI | TULLIO BADIOLI | 5.000 | 5.000 | |||||||
| IM FASHION | 24.410 | 24.410 | ||||||||
| FRATELLI FERRETTI HOLDING S.R.L |
FRATELLI FERRETTI HOLDING |
|||||||||
| 37.387 | 37.387 | |||||||||
| TOTAL | 61.797 | 61.797 | ||||||||
| AEFFE S.P.A. | AEFFE SPA | 5.473* | 5.473 |
The Issuer has not issued any securities carrying special rights of control.
Employees who own shares in the Issuer exercise their voting rights directly, in accordance with the provisions of the Articles of Association.
At the date of this Report, there are no restrictions and/or limitations on voting rights in relation to the Issuer's shares.
Pursuant to art. 122 TUF, as subsequently amended, and to the best of the Issuer's knowledge, there are no shareholders' agreements in force at the date of this Report.
(H) Change of control clauses (para. 1.h) of art. 123-bis, TUF) and articles of association governing public offers (para. 1-ter of art. 104 and para. 1 of art. 104 bis, TUF)
At the date of this Report, the Issuer and its subsidiaries have not signed any significant agreements that would become effective or would be modified or terminated upon a change in control over the Issuer or its subsidiaries.
The Articles of Association of the Issuer do not contain exceptions to the passivity rule envisaged in paras. 1 and 2 of art. 104, TUF; furthermore, the Articles of Association do not envisage application of the neutralization rules contained in paras. 2 and 3 of art. 104-bis, TUF.
The Board has not been granted any mandates to increase share capital pursuant to art. 2443 c.c., or to issue equity instruments.
Pursuant to the shareholders' resolution adopted on 3rd March 2008, the Issuer has purchased and currently owns 5,876,878 treasury shares representing 5.473% of share capital. The authorization to purchase treasury shares expired on 4th September 2009.
At the date of this Report, Fratelli Ferretti Holding S.r.l., a company owned jointly by Massimo Ferretti and Alberta Ferretti, directly holds 40,140,000 ordinary shares representing 37.387% of share capital, and indirectly holds via I.M. Fashion S.A. 26,207,690 ordinary shares representing 24.410% of share capital. In total, the above company holds 66,347,690 ordinary shares representing 61.797% of share capital. Art. 2497-sexies c.c. states that
The Issuer has adopted the Code, which is available to the public on the website of the Corporate Governance Committee of Borsa Italiana (www.borsaitaliana.it/comitato-corporategovernance/codice/2014clean.en.htm).
Neither the Issuer nor its subsidiaries of strategic significance are subject to non-Italian legislation that would influence the way their corporate governance is organized.
Pursuant to art. 14 of the Articles of Association, the Board of Directors comprises a variable number of members, between seven and nine, who need not be shareholders, of which the least represented gender comprises at least one third of the total, as rounded up to the nearest whole number in the case of a fraction. The Board includes both executive and non-executive directors. In all cases, at least one member of the Board of Directors, or two if the Board of Directors comprises more than seven members, must satisfy the independence requirements established in art. 148.3 of Decree No. 58 dated 24th February 1998.
The directors remain in office for three financial years and their appointments expire on the date of the Meeting called to approve the financial statements for the final year of their mandate; they may be re-elected.
As required by Code application criterion 6.C.1, it is confirmed that the mandate of the current Board terminates on approval of the financial statements as of 31st December 2016.
Pursuant to art. 15 of the Articles of Association, as modified on 18th April 2013 in accordance with the provisions of Law No. 120 dated 12th July 2011 (Law 120/2011), and pursuant to the provisions of Decree 27/2010, the ordinary shareholders' meeting is responsible for appointing the members of the Board from the lists of candidates presented by the shareholders, following the methodology described below and in compliance with the regulations currently in force on gender balance, rounding up to the nearest whole number the number of candidates belonging to the least represented gender, if application of the gender balance criterion does not result in a whole number. In view of the fact that Law 120/2011 contains specific transitional arrangements applicable on the first renewal of the corporate bodies subsequent to 12th August 2012, (principle envisaging that, for the first mandate, the least represented gender must comprise "at least one fifth of the directors and statutory auditors elected", instead of one third), it is clarified that on the first renewal of the Board of Directors subsequent to the Shareholders' Meeting held on 18th April 2013, which took place at the Shareholders' Meeting called for 16th April 2014, the portion reserved for the least represented gender was limited to one fifth of the total.
Shareholders have the right to present lists of candidates if, individually or collectively, they represent at least 2.5% (two point five percent) of the shares with voting rights at Ordinary Meetings, or such different percentage of the Company's share capital as is established by current and applicable laws and/or regulations. Each Shareholder (as well as (i) shareholders belonging to the same group, comprising the controlling party, not necessarily a company, as defined in art. 2359 of the Italian Civil Code, and all companies controlled by or under the joint control of that party, or (ii) the members of the same shareholders' syndicate pursuant to art. 122 of Decree No. 58 dated 24th February 1998, or (iii) the shareholders who are otherwise joined in relationships deemed relevant under current and applicable laws and/or regulations) may present or contribute together with other shareholders to the presentation, directly or via intermediaries or trust companies, of just one list of candidates; all lists presented by shareholders presenting multiple lists will be void.
The lists of candidates signed by the shareholders presenting them, or by the shareholder appointed to present them, and accompanied by the documentation required by the articles of association must be filed, via electronic documents bearing atures applied in accordance with the applicable regulations, or otherwise, at the registered offices of the Company no later than twenty-five (25) calendar days prior to the date fixed for the Shareholders' Meeting in first (or only) calling and published on the Company's website at least 21 (twenty-one) calendar days prior to the date fixed for the Meeting in first (or only) calling, or any different minimum time envisaged by current legislation or regulations. The filed lists of candidates will also be valid for subsequent callings of the same Meeting, if applicable. In order to demonstrate ownership of the number of shares necessary for the presentation of a list, each nominating shareholder must file the documents confirming such ownership at the registered offices, together with the list, not later than 21 (twenty-one) calendar days prior to the date fixed for the Meeting in first (or only) calling. Each candidate can appear on just one list, or will be ineligible for election. Each list must contain at least three candidates. The lists must also include candidates from both genders, so that the least represented gender has the portion of candidates envisaged by the legislation in force at the time (rounded up to the nearest whole number in the case of a fraction). The candidates must be listed in consecutive numerical order. Shareholders who present a list that aspires to obtain the largest number of votes are responsible for ensuring that such list contains a sufficient number of candidates. At least one candidate from each list, or two if the Board of Directors comprises more than seven members, must satisfy the independence requirements established in art. 148.3 of Decree No. 58 dated 24th February 1998 and subsequent amendments. In addition to each list, the following information must be filed at the registered offices by the above deadline:
a) the list of shareholders presenting the list, stating their personal or business names, addresses, company registration numbers or equivalent, and total percentage interest held in the Company's share capital.
b) the curriculum vitae of each candidate, containing full information on their personal and
professional characteristics and an indication, where applicable, that they satisfy the independence requirements established in para. 4 of art. 147-ter of Decree No. 58 of 24th February 1998 and subsequent amendments, as well as: (i) their appointments as non-executive directors or auditors of companies listed on regulated markets (including foreign markets) and of banks, insurance companies and other major companies, being those whose total assets or sales reported in their latest financial statements exceeded Euro 500,000,000.00 (five hundred million); (ii) their appointments as executive directors of any company, including those not covered by the categories mentioned in point (i) above, except for companies that
with the following instructions, no account will be taken of lists that do not receive at least half the percentage of votes required by art. 15.2 of the articles of association for the presentation of such lists. If no lists are presented, the Shareholders' Meeting resolves in accordance with the majorities established by current legislation.
If just one list is presented, all the members of the Board of Directors will be drawn from that list. The Shareholders' Meeting will appoint any directors remaining to be elected, applying the majorities envisaged by law. If, on the other hand, two or more lists are presented, the Board of Directors is appointed in the following manner:
a) all the candidates, up to the number decided each time at the Shareholders' Meeting, less one, will be drawn from the list that obtains the majority of the votes cast by the shareholders and appointed as directors in the numerical order in which they are presented on that list;
b) the remaining number of candidates to be elected will be drawn from the list that obtains the second-largest number of votes and appointed as directors in the numerical order in which they are presented on that list, on condition that such list is not linked in any way, directly or indirectly, with the shareholders who presented or voted for the list that obtained the largest number of votes;
c) the directors to be elected who satisfy the independence requirements established in the Articles of Association will be drawn from the list that obtains the largest number of votes cast by the shareholders or, to the extent that this is not possible, from that which obtains the second-largest number of votes;
d) in the event of a voting tie between two or more lists, the candidates on the list presented by shareholders with the greatest total equity interest or, failing this, by the largest number of shareholders, will be elected.
If the composition of the Board of Directors does not comply with the gender balance criterion then, having regard for the order of listing, the candidate from the most represented gender elected last from the list that obtained the largest number of votes (the "Majority List") shall be replaced, in consecutive numerical order, by the first candidate not elected from that list. Application of this replacement procedure will continue until the composition of the Board of Directors complies with the regulations in force at the time concerning gender balance.
If using the list voting mechanism the number of candidates is lower than the minimum number of Directors envisaged in the Articles of Association, or if using the list voting mechanism the required number of candidates from the least represented gender is not reached, the Board of Directors shall be elected and supplemented at the Shareholders' Meeting, applying the majorities envisaged by law.
If, during the year, one or more directors drawn from the list that obtained the largest number of votes (the
which they would be ineligible or incompatible, and that they satisfy the requirements established by the applicable regulations and the Articles of Association.
The Issuer is not subject to further rules governing the composition of the Board.
In view of the ownership structure of the Company and the fact that, pursuant to the law and the Articles of Association, the directors are appointed at the Shareholders' Meeting from lists presented by the Shareholders, the Issuer has not considered it necessary to adopt a specific succession plan for its executive directors.
At the date of this Report, the composition of the Board is set out in the table contained in attachment 1 to the Report.
The Shareholders' Meeting held on 16th April 2014 appointed the Board with reference to the list presented by Fratelli Ferretti Holding S.r.l. and IM Fashion S.r.l., since no minority lists were presented to the Issuer.
In particular, only one list of candidates for appointment as directors of Aeffe S.p.A. was presented at the registered offices of the Issuer, comprising:
List no. 1 (presented by Fratelli Ferretti Holding S.r.l. and I.M. Fashion S.r.l., holders in total of 61.797% of the share capital):
The above list, accompanied by the documentation specified in art. 15 of the Articles of Association, was filed at the registered offices and with Borsa Italiana within the time limits established by law and the articles of association.
This list obtained approval from 100% of the share capital present and voting at the meeting. There were no changes in the composition of the Board during 2015.
The personal and professional characteristics of each director are indicated in the nominations presented by Fratelli Ferretti Holding S.r.l. and I.M. Fashion S.r.l., published on the Company's website and accessible at the address:
http://www.aeffe.com/aeffeHome.php?pattern=11&lang=ita
The Board has not established general criteria for the maximum number of appointments held in companies listed in regulated markets, banks, finance companies, insurance companies or other large companies, that is deemed compatible with the work performed by its directors and statutory auditors. Nevertheless, the Board has identified such appointments based on the declarations made by the Issuer's directors and statutory auditors.
The Issuer did not prepare a formal training plan for the current Board, appointed in 2014. Nevertheless, acting in a manner consistent with the current provisions of the Code of Self-Regulation and with a view to enabling the directors to perform their role in full awareness, the Chairman of the Board of Directors has consistently helped Board members to obtain and progressively refine their knowledge of the market and the sector concerned, the business of the Group, the risks faced and the system of internal controls, the organizational structure of the Company, its activities and the regulatory framework governing such activities, via specific meetings and other communications to provide them with such information.
During 2015, the Chairman of the Issuer's Board of Directors promoted informal meetings with the directors on the sidelines of Board meetings; during these meetings, the Chairman explained the corporate processes and dynamics to the directors, especially those newly appointed, indicating the related changes. Given the presence of Pierfrancesco Giustiniani and Sabrina Borocci, directors, at these meetings, the other directors were also able to benefit from an appropriate update on the regulations governing the Issuer's sector of activities.
The Board met five times during the Year.
The percentage attendance at Meetings by each directors is indicated below:
The current composition of the Board of Directors is in line with current regulations governing
gender balance.
The average duration of a Board meeting is an hour and a half.
At least four Board meetings are planned for 2016, one of which (10th March 2016) has already been held. Moreover, on 10th February 2016, a further Board meeting has already been held.
In order to ensure that Board members receive all the information and documents needed to make decisions, the Chairman's office sends out supporting documentation for the items placed on the agenda for discussion well in advance of the date set for each meeting and, usually, at least 3 days beforehand.
During Board meetings, the Chairman introduces each individual item on the agenda with, if necessary, assistance from the chief executive officer or the general manager. He then invites the directors to ask related questions and request any clarification needed. After hearing the opinions of the directors and providing any appropriate clarification requested, each item is put to the vote.
Where necessary for the technical and more detailed analysis of agenda items, the Board invites the Issuer's executives to attend meetings in order to provide directly the required clarification.
Pursuant to art. 19.1 of the Articles of Association, the Board exercises the widest powers for the administration of the Company, without any exceptions, and has the right to perform all deeds deemed appropriate for the pursuit and achievement of the Company's objects, with the sole exclusion of those reserved by law for the Shareholders' Meeting.
Pursuant to art. 19.6 of the Articles of Association, the following resolutions cannot be delegated and must be adopted by the Board pursuant to art. 2436 c.c.:
mergers or spin-off pursuant to arts. 2505, 2505-bis and 2506-ter c.c.;
opening or closure of secondary offices;
transfer of the registered offices elsewhere in Italy;
indication of which directors are the company's legal representatives;
reduction of capital following withdrawal by a shareholder;
alignment of the articles of association to reflect compulsory regulatory requirements,
without prejudice to the fact that such resolutions can, in any case, also be adopted at an extraordinary shareholders' meeting.
Pursuant to Criterion 1.C.1 of the Code, the Board has sole responsibility for:
examination and approval of the strategic, industrial and financial plans of the Issuer and the group which it leads, the Issuer's system of corporate governance and the structure of the group;
assessment of the adequacy of the organization, administrative and financial accounting
systems of the Issuer, and those of subsidiaries of strategic importance, put in place by the Executive Directors, with particular reference to the system of internal controls and the management of conflicts of interest;
granting and revoking the mandates of the Executive Directors, establishing limits on their powers and how they may be exercised;
determination, having examined the proposals made by the relevant committee and heard the opinion of the Board of Statutory Auditors, of the remuneration of the Executive Directors and the other directors with special duties, as well as the allocation of the total remuneration due to members of the Board, if not already decided at the shareholders' meeting;
assessment of the general results of operations, having regard in particular for the information received from bodies with delegated powers, and periodically comparing the results achieved against budget;
acquisition of firms and equity investments and merger and spin-off transactions and other special operations that may have strategic, economic or financial importance for the Issuer.
As envisaged in art. 19.2 of the Articles of Association and pursuant to art. 150 of Decree No. 58 dated 24th February 1998, the directors report to the Board of Statutory Auditors, at least every quarter, on the work performed and on the principal economic, financial and equity transactions carried out by the Company and its subsidiaries, as well as on the transactions in which they have an interest, whether personally or on behalf of third parties, or which were influenced by the party which directs and coordinates the activities of the Company. Such information is communicated verbally by the directors to the Board of Statutory Auditors, during special meetings with the directors or at the meetings of the Board of Directors or the Board of Statutory Auditors envisaged by art. 2404 of the Italian Civil Code, or by the submission of written reports which is noted in the minute book of the Board of Statutory Auditors envisaged by art. 2421.5 of the Italian Civil Code.
The Board is therefore responsible for the examination and prior approval of the transactions of the Issuer and its subsidiaries when they have strategic, economic or financial importance for the Issuer.
The Issuer complies via informal operating practices with the requirements of Principle 1.P.2 of the Code regarding the obligation placed on members of the Board to act and resolve in an informed and independent manner, pursuing the objective of creating value for the shareholders.
In application of Criterion 1.C.1.f), the Board has resolved to retain the following activities for itself: acquisition of firms and equity investments, merger and spin-off transactions and other special operations that may have strategic, economic or financial importance for the Issuer.
Each quarter at meetings held to approve financial information, the Board assesses the adequacy of the organization and accounting systems of the Issuer put in place by the executive directors, who report to the other directors on the functioning of the system of internal controls and the management of conflicts of interest. In view of the fact that such information is provided periodically and that, to date, no critical issues have emerged, the above reports from the executive directors are not documented in the Board minutes, although they would be if they highlighted problems to be addressed by the Board.
Similarly, the Board evaluates the organization, administrative and financial accounting systems of the subsidiaries of strategic importance put in place by their managing directors; the information needed for this assessment is gathered by employees reporting to the Issuer's general manager, who then discusses it directly with the managing directors of the subsidiaries of strategic importance. He then presents the information obtained to the Board on a quarterly basis. Here too, in view of the fact that such information is provided periodically and that, to date, no critical issues have emerged, the above reports are not documented in the Board minutes, although they would be if they highlighted problems to be addressed by the Board.
At its meetings, the Board assesses the general results of operations, having regard in particular for the information received from the directors and committees, and periodically compares the results achieved against budget.
For an understanding of the general principles for identifying transactions that have strategic, economic or financial importance for the Issuer, reference is made to the criteria identified by the Board in the procedure governing the following types of related-party transaction: Transactions involving Minor Amounts, Transactions of Greater Significance, Transactions of Lesser Significance, and Routine Transactions.
Each year the Board of Directors assesses the size, composition and functioning of the Board and Board committees. This assessment is made at the meeting held to approve the draft financial statements and was made at the meeting held on 11th March 2015.
At the meeting held 11th March 2015, the Board noted the absence of issues concerning the size, composition and functioning of the Board and its committees.
At the meeting held on 11th March 2015, , the Board checked that Marco Salomoni, Sabrina Borocci and Roberto Lugano met and continue to meet the independence requirements for directors.
In compliance with the Code of Self-Regulation, directors accept appointment when they believe themselves able to dedicate the time necessary to perform diligently the tasks required by the nature of their role. This assessment takes account of their membership of Board committees and the commitment associated with their own working and professional activities, as well as the number of and commitment associated with any other directorships and audit appointments held in other companies, considering the applicable regulations. Directors ensure that they continue to comply with the above conditions throughout the period of their mandate.
Furthermore, aware of the inherent responsibilities associated with their role, director are required to keep themselves constantly informed about the principal legislative and regulatory changes affecting the Company and the performance of their functions.
The directors align their behavior with the requirements of the Code of Ethics, the Code of Internal Dealing and all instructions by which the Company governs the actions of its directors; just as the members of the Board of Statutory Auditors, the directors keep strictly confidential the documents and information that come to their attention by virtue of their office.
The Board also took note of Application Criterion 1.C.1.h) and reserves the right, if necessary, to provide guidance to the shareholders about the professional profiles that would be appropriate to see represented on the Board.
The Shareholders' Meeting has not granted advance relief from the no-competition requirements laid down in art. 2390 c.c. to the Issuer's directors.
On 13th May 2014, the Board granted the Chairman, Massimo Ferretti, acting as sole signatory, all powers for the implementation and proper performance of accident-prevention activities and, therefore, granting him all the widest powers of ordinary and extraordinary administration to be exercised freely as sole signatory, without limitations on amount or expenditure, with the exclusion of transactions involving (i) the purchase, sale, exchange or contribution of property subject to registration; (ii) the purchase, sale, exchange or contribution of lines of business that include property subject to registration; (iii) the sale of trademarks used in pursuit of the company's objects; (iv) the purchase, sale, exchange or contribution of lines of business or investments in companies with a value in excess of € 2,000,000; as sole signatory, the power to (i) organize the company's processing activities, giving the instructions and directives needed in order to protect the health and safety of workers and, in the case of violations, taking the proper disciplinary action; (ii) adopt all measures deemed necessary to safeguard health and safety in the workplace, including the performance of all urgent and non-deferrable work needed to establish or restore safe conditions in the workplace; (iii) sign contracts for purchasing, working on or exchanging any goods, services or intellectual property in any form that may be required in order to implement, manage correctly, improve or modify the work performed to safeguard the health and safety of workers.
On the same date, the Board withdrew the powers for the implementation and proper performance of accident-prevention activities previously granted to Alberta Ferretti and, consequently, granted her all the widest powers of ordinary and extraordinary administration to be exercised freely as sole signatory, without limitations on amount or expenditure, with the exclusion of transactions involving (i) the purchase, sale, exchange or contribution of property subject to registration; (ii) the purchase, sale, exchange or contribution of lines of business that include property subject to registration; (iii) the sale of trademarks used in pursuit of the company's objects; (iv) the purchase, sale, exchange or contribution of lines of business or investments in companies with a value in excess of € 2,000,000; (v) the organization of processing activities by giving instructions and directives that protect the health and safety of workers and taking disciplinary action in the case of violations of the accident-prevention rules; (vi) the adoption of all measures deemed necessary to safeguard health and safety in the workplace, including the urgent and non-deferrable work needed to establish or restore safe conditions in the workplace; and (vii) the signature of all contracts for purchasing, working on or exchanging any goods, services or intellectual property in any form required in order to implement, manage correctly, improve or modify the work performed to safeguard the health and safety of workers.
On 13th May 2014, the Board also withdrew the powers for the implementation and proper performance of accident-prevention activities previously granted to Simone Badioli and, consequently, granted him all the widest powers of ordinary and extraordinary administration to be exercised freely as sole signatory, without limitations on amount or expenditure, with the exclusion of transactions involving (i) the purchase, sale, exchange or contribution of property subject to registration; (ii) the purchase, sale, exchange or contribution of lines of business that include property subject to registration; (iii) the sale of trademarks used in pursuit of the company's objects; (iv) the purchase, sale, exchange or contribution of lines of business or investments in companies with a value in excess of € 2,000,000; (v) the organization of processing activities by giving instructions and directives that protect the health and safety of workers and taking disciplinary action in the case of violations of the accident-prevention rules; (vi) the adoption of all measures deemed necessary to safeguard health and safety in the workplace, including the urgent and non-deferrable work needed to establish or restore safe conditions in the workplace; and (vii) the signature of all contracts for purchasing, working on or exchanging any goods, services or intellectual property in any form required in order to implement, manage correctly, improve or modify the work performed to safeguard the health and safety of workers.
By a resolution adopted on 13th May 2014, the Board revoked all the powers previously granted to Marcello Tassinari, director and General Manager of the Aeffe Group, and granted him the following powers, after duly specified – in order to obtain the maximum workabilityduring the Board meeting held on 10th February 2016, to be exercised as sole signatory without any limitation on the amount or expenditure and with expressed power of sub-delegate:
Italy, Consob, the Competition Authority, the Stock Exchange, ministries and other public and private bodies and offices concerning requirements placed on the Company by laws, regulations or regulatory or administrative instructions, sign and present declarations and communications concerning value-added tax, registration taxes, Ires, Irap and all other direct and indirect taxes, ICI declarations, INVIM declarations, as well as any and all attachments or attestations relating to the above deeds;
drafts; overdraw the Company's current accounts to the extent of agreed lines of credit; cash drafts and checks of all kinds and in any currency, with the usual reservations; request and collect blank check books for current accounts opened in the Company's name, giving receipts; order the sale and purchase of currency for all import and export transactions;
revoke the same, appoint solicitors, lawyers and experts, revoke such appointments and elect domicile;
Simone Badioli, as the Chief Executive Officer of the Issuer, is identifiable as the person primarily responsible for the management of the business. In this role, Simone Badioli receives constant support from Marcello Tassinari, the General Manager.
With regard to the positions held by Simone Badioli, the interlocking directorate situation envisaged in Application Criterion 2.C.5 does not apply, since Simone Badioli (A) is not a director of any other issuer (B) is not a director of any companies not belonging to the same group, in which the chief executive officer is a director of the Issuer.
Operational powers have been granted to the Chairman in view of Massimo Ferretti's central role and position within the organization of the Company and the Aeffe Group. Massimo Ferretti has always promoted the family brand name and is principally responsible, together with Alberta Ferretti, for the growth strategy of Aeffe and the creation of the Aeffe Group.
The Chairman is not the party that controls the Issuer pursuant to art. 93 TUF. The Issuer is controlled by Fratelli Ferretti Holding S.r.l., a company owned jointly by Massimo Ferretti and Alberta Ferretti.
The Chairman does not perform the role of chief executive officer.
The Company has decided not to establish an Executive committee.
At the Board meetings held at least every quarter, the executive directors report to the Board on the work performed under the mandates granted to them.
There are no directors who perform executive activities, other than the persons indicated as executive directors in section 4.4 above.
When appointing the Board of Directors on 16th April 2014, the shareholders that presented lists also indicated which directors were independent; their assessment was adopted at the Shareholders' Meeting.
Roberto Lugano, Marco Salomoni, Sabrina Borocci and Pierfrancesco Giustiniani are nonexecutive directors since they do not hold operational mandates and/or perform executive functions within the business. Consistent with Principle 2.P.2 of the Code, the non-executive directors bring their specific skills to Board discussions, contributing to the making of balanced decisions and taking special care in the areas where conflicts of interest may arise.
At the Board meeting held on 11th March 2015, the Board verified the existence and maintenance of the independence of the non-executive directors, Marco Salomoni, Sabrina Borocci and Roberto Lugano, pursuant to para. 4 of art. 147-ter of Decree 58/1998, the Code of Self-Regulation for Listed Companies and the Stock Exchange Regulations.
In particular, the above directors do not have and have not recently had any direct or indirect relations with the Company, or parties related to it, that might currently influence the independence of their judgment, nor do they find themselves in any of the situations whereby a non-executive director may not be deemed independent.
On 11th March 2015, the Board of Statutory Auditors checked the correct application of the verification criteria and procedures adopted by the Board for evaluating the independence of its members, considering that such criteria and procedures were applied correctly, as set out in the following extract from the annual report of the Board of Statutory Auditors to the shareholders' meeting:
March 2015 state before considering the report to the presented by the Board of Statutory Auditors, it is
The Code envisages that directors and statutory auditors keep confidential the documents and information obtained in the performance of their duties, and comply with the procedures adopted by the Issuer for the internal management and external communication of such documents and information.
Consistent with this requirement and the provisions contained in paras. 1 and 12 of art. 114 and art. 115-bis, TUF, as well as in arts. 66 et seq. and 152-bis et seq. of the Issuers' Regulation, until March 2007, the Issuer also adopted a code of conduct in relation to privileged information ("Code on Privileged Information") and established (in July 2007) a register of persons with access to privileged information in view of their job, function or professional activities. Such registers have been properly established for both the Issuer and its subsidiaries. In addition, in compliance with para. 7 of art. 114, TUF, and arts. 152-sexies et seq. of the Issuers' Regulation, on 26th March 2007 the Board also approved a code of conduct for internal dealing (the "Code on Internal Dealing") which identifies the so-called
These Committees are internal to the Board, carrying out a consultative role and making recommendations, thereby improving the functioning of the Board and its ability to provide strategic guidance.
Consistent with Principles 7 and 8 of the Code and para. 3, letters m), n) and o), of art. 2.2.3 of the Market Regulation, on 13th May 2014 the Board appointed the members of these Committees.
The Company did not institute any kind of committee that carries out the functions of two or more Committees provided in the Code.
The composition and functioning of the committees is described in sections 8 and 10 of the Report.
At the date of this Report, the Board has not established an internal Nominations Committee, since this is not deemed necessary. This decision reflects the fact that the current and applicable regulatory requirements and the provisions of the Articles of Association - including, in particular, the mechanism of nominations via a list voting system - ensure a suitable level of transparency for the procedure of selecting and nominating candidates.
The Compensation Committee comprises non-executive directors, the majority of whom are independent. Its members are:
Roberto Lugano, between the three members above mentioned, has a very important experience, admitted by the Board, in accounting and financial subjects.
The role of the Compensation Committee is to make proposals to the Board, in the absence of the directors involved, concerning the remuneration of the executive directors and those with specific responsibilities, as well as - at the request of the executive directors - to establish criteria for the remuneration of the Company's senior managers, including any stock-option plans or allocations of shares, as well as any short and medium/long-term MBO bonuses.
In compliance with Application Criterion 7.C.3, the Compensation Committee periodically checks the criteria adopted for the remuneration of executives with strategic responsibilities, monitors their application based on information provided by the executive directors and makes general recommendations to the Board on this subject.
The Committee met four times during the Year. The average duration of a Committee meeting is one hour. All members attended both meetings, with the exception of the meeting on 20th July 2015, in which Pierfrancesco Giustiniani justified his absence. Committee meetings are coordinated by the Chairman and have been properly minuted; the minutes have been recorded in the minute book.
At least two meetings are planned for 2016, one of which (8th March 2016) has already been held.
Further information about the Compensation Committee is provided in the relevant parts of the compensation report published pursuant to art. 123-ter, TUF.
Information on this topic is provided in the relevant parts of the compensation report published pursuant to art. 123-ter, TUF.
This said, the shareholders' meeting held on 16 April 2014 authorized the total remuneration payable to the independent and non-executive directors; at the Board meeting held on 28th July 2014, acting on a proposal from the Compensation Committee supported by the Board of Statutory Auditors, the Board established the remuneration payable to each non-executive director, each executive director and each director with specific responsibilities.
The Control and Risks Committee, which is the same as the Audit Committee, comprises three non-executive directors, the majority of whom are independent. Its members are:
The Audit Committee has a consultative function and makes recommendations to the Board concerning:
The Audit Committee also:
(d) assesses the proposals presented by auditing firms with a view to obtaining the related appointment, and assesses the plan of the audit and the results set out in the auditors' report and any letter of recommendations;
(e) monitors the effectiveness of the auditing process;
The Audit Committee coordinates its work with the Board of Statutory Auditors and the internal control managers, reporting at least every six months to the Board at the time of approving the annual financial statements and the six-monthly report. The meetings of the Audit Committee are attended by the Chairman of the Board of Statutory Auditors or by another serving auditor designated by him.
The Board has also appointed an internal control manager, Stefano Di Biase, who reports periodically to the Audit Committee (and to the Board) about the work performed and helps the Committee to carry out its functions and duties.
The Committee met seven times during the Year. The average duration of the meetings is an hour and a half.
At least four meetings are planned for 2016, one of which (8th March 2016) has already been held.
Furthermore, on an invitation from the Chairman, the manager responsible for preparing the consolidated financial statements and the external audit managers attended certain meetings in order to provide information about matters on the agenda.
On 16th April 2015, following the invitation of the President, attended the meeting also the independent director Marco Salomoni.
The above mentioned meeting was organized with the presence of the executive directors of the company, and was finalized to give general information about the processes and the business dynamics with the relative evolution, as well as providing general overview on the year 2015. It was also dedicated to share with the members of the Committee the expectations and projects aimed to improve the company management, the cost reduction policy, the project to support the brands and the collections.
The committee meetings were properly minuted and recorded in the minute book.
The Chairman of the Issuer's Board of Statutory Auditors, or, for his proxy, one member of the Board of Statutory Auditors, attended all the meetings.
The Audit Committee has right of access to the information and corporate functions necessary for the performance of its tasks, and may make use of external consultants, to the extent established by the Board (Application Criterion 5.C.1.e). If deemed necessary, the Committee may ask the Board to make available to it the financial resources deemed appropriate in order to perform its tasks.
The Committee has reported to the Board every six months on the work performed, as well as on the adequacy of the risk management and internal control system.
The Issuer's Board is aware that the system of risk management must be considered together with the system of internal controls over the financial reporting process. The system of internal controls comprises all the operating procedures designed to ensure the credibility, accuracy, reliability and timeliness of financial information, via an appropriate process for the identification, measurement, management and monitoring of the principal risks. The methodology followed when developing the control model was based on the Co.So Report's model, accepted at an international level, and the guidelines issued by relevant associations (e.g. Andaf). .
In order to identify the relevant business areas, the executive responsible made use of the risk assessment prepared by the internal control manager together with the Audit Committee.
The model envisages the identification of risks that might compromise the effectiveness and efficiency of processes, the reliability of reported information and compliance with the applicable rules and regulations, as well as the identification of controls that mitigate these risks.
The risks identified in relation to financial reporting concern the following accounting assertions:
The key processes and related controls, devised with reference to the risks associated with the above accounting assertions, are documented using a risks/controls matrix prepared for the Issuer and other group companies of strategic significance, in order to identify and evaluate such controls. These matrices are used to identify any control weaknesses, in order to assess the need for additional checks designed to mitigate any risks that might prevent achievement of the reporting objectives.
The model envisages the performance of specific tests throughout the year to check that the parties concerned have actually applied the control procedures mentioned above.
The model envisages a flow of information between the various parties involved in the system of internal controls. This includes preparation of a document summarizing the results of the monitoring activities carried out during the year, and the action proposed to eliminate any weaknesses found.
The system used for the management and control of financial information is managed by the Executive responsible for the preparation of accounting and corporate documentation. This person coordinates the various phases involved, such as planning, implementation, monitoring and updating.
In particular, the role and responsibilities of the Responsible Executive include internal verification of the proper functioning of the processes/accounting flows that are part of this person's operational responsibilities, the completeness and reliability of the information flows, and the adequacy and effective application of the related controls. The Responsible Executive checks all documents and information containing final accounting data relating to the economic and financial position.
The Responsible Executive is required to report periodically to the Audit Committee, the Board of Statutory Auditors and the Supervisory Board about the work performed to check the system of internal controls, and about the results of the assessment work carried out in support of the attestations and declarations made.
In particular, the Responsible Executive exchanges information, both formally and informally, with the Issuer's Audit Committee and Supervisory Board.
In this regard, the Issuer has appointed the Chief Financial Officer and General Manager of the group as the Responsible Executive. Given the position and role of this person, all appropriate operational and managerial powers have been granted to him, together with significant financial autonomy (see para. 11.6).
During the year, taking account of information received from the Audit Committee, the Board assessed the adequacy, effectiveness and proper functioning of the system of internal controls. This assessment was carried out by analyzing the results of the various checks performed to verify the credibility, accuracy, reliability and timeliness of financial information. No critical issues were identified.
The Board has appointed an executive director responsible for supervising the functioning of the system of internal controls (Application Criterion 8.C.1. b) The name of this director is Simone Badioli.
The executive director responsible for the system of internal controls: (i) considering the nature of the activities of the Issuer and its subsidiaries, has identified the principal business risks and periodically drawn them to the attention of Board members after the close of Board meetings; (ii) has implemented the guidelines established by the Board, via the design, development and management of the system of internal controls and by checking its overall adequacy, efficiency and effectiveness; (iii) has adapted the system to changes in the legislative and regulatory background; (iv) has recommended to the Board the appointment of an internal control manager. He has full powers to request this manager to perform checks in specific operating areas and on compliance with internal rules and procedures for the conduct of business transactions, informing at the same time the Chairman of the Board, the Chairman of the Audit Committee and the Chairman of the Board of Statutory Auditors.
In addition, if he deems it necessary and/or appropriate, the above director may report on a timely basis to the Audit Committee (or the Board) on any problems and issues arising in the performance of his activities, or otherwise coming to his attention, so that the Audit Committee (or the Board) can take appropriate action.
Since no problems or issues arose in the performance of his activities during 2014, the above director did not send any communications of this type to the Board or the Audit Committee.
The Board has appointed Stefano Di Biase as the internal control manager, acting on a recommendation from the executive director appointed to supervise the functioning of the system of internal controls.
Consistent with corporate policy, the Board has not allocated any specific remuneration to the internal control manager.
The internal control manager has direct access to all the information needed for the performance of his duties (Application Criterion 8.C.6.c); he has reported on his work to the Audit Committee and the Board of Statutory Auditors (Application Criterion 8.C.6.e); he has also reported on his work to the executive director appointed to supervise the functioning of the system of internal controls (Application Criterion 8.C.6.e).
The internal control manager is on the staff of the Director of Administration, Finance and Control and is also the manager of the Management Control Office. The Issuer has not established a specific internal audit function because the group structure and the scale of foreign subsidiaries have not yet reached a size where such a function would be operationally effective and economically justifiable; accordingly, the organizational structure has not been burdened by the recruitment of an individual dedicated solely to this work.
Among the requirements for obtaining and maintaining the STAR status, the Market Regulation envisage adoption of the organization, management and control model referred to in art. 6 of Decree 231/2001 (the "Organizational Model"). One of the effects of adopting the Organizational Model is to exclude sanctions against the entity if its senior management carry out certain types of illegal act, specified in the related Decree, in the interests of or for the benefit of the entity; such acts currently include corporate crimes and crimes involving market abuses (in addition to bribery and corruption, certain types of falsification, crimes related to terrorism and insurrection, and crimes against the individual).
The Organizational Model was presented to and approved by the Board on 28th March 2008 and is available on the Issuer's website: www.aeffe.com/governance. On 14th November 2013, the Board of Directors approved amendments and additions to this Model, involving inclusion of the new offenses that have been identified. These relate to crimes against the public administration (bribery, corruption in the exercise of duties, corruption by deed in breach of duties, corruption in judicial deeds, improper inducement to give or promise benefits, corruption of a public servant, incitement to corruption, embezzlement, bribery, improperly give or promise benefits, corruption and incitement to corruption of members of EU bodies and officials of the European Union and foreign states), corporate crimes (corruption between individuals), environmental crimes (unauthorized waste management activities, violation of obligations to communicate, to keep registers and to keep formula sheets), and the employment of citizens of other countries without proper residence status. The work to amend the Model included the performance of a risk assessment (mapping sensitive activities and establishing a risk profile for each offense identified) and analysis of the related results. In addition, checking procedures have been implemented to further mitigate the inherent initiation risk. Lastly, information is now provided to the Supervisory Body should function managers consider it necessary and/or appropriate to report anomalous situations.
The Board meeting held on 13th May 2014 confirmed the appointments of Robert Lugano, Fernando Ciotti and Stefano Di Biase as members of the Supervisory Board.
During the year 2014, Pollini S.p.A., a subsidiary, adopted its own organization, management and control model.
The Issuer is considering if Moschino S.p.A. should also adopt its own organizational, management and control model; in this regard, the necessary checks are still in progress to determine whether or not this subsidiary comes within the scope of application of the above regulation.
The Independent Auditors appointed by the Issuer is the company "BDO Italia S.p.A." (formerly Mazars S.p.A.) with offices at Milan, Viale Abruzzi 94, tax code 07722780967; the appointment of 26 March 2007 terminates with the audit of the individual and consolidated financial statements of the Issuer closed on 31 December 2015.
The executive responsible for preparing the company's accounting documentation is Marcello Tassinari, Executive Director of Aeffe and General Manager of the Aeffe Group.
The articles of association envisage that the Board, having heard the required but not binding opinion of the Board of Statutory Auditors, appoints an executive responsible for preparing the company's accounting documentation and fixes the related remuneration.
Persons who do not satisfy the following professionalism requirements cannot be appointed as Responsible executive and, if already appointed, their mandates lapse:
(a) degree in economics, finance or business management and systems;
(b) at least three years' experience in total of:
administration and control activities or senior management responsibilities within a limited liability company, or
administrative or management functions or appointments as auditor or consultant, such as registered accountant, for entities operating in the banking, financial and insurance sectors, or in any case sectors that are closely connected with and related to the activities of the company, that involved the management of economic - financial resources.
In addition, persons who do not satisfy the honorability requirements established in art. 147 quinquies of Decree No. 58 dated 24th February 1998 cannot be appointed as Responsible executive and, if already appointed, their mandate lapses.
If the Responsible executive ceases to serve, the Board arranges without delay to replace him by appointing a new Responsible executive, having heard the required but not binding opinion of the Board of Statutory Auditors. Termination of the employment relationship between the Responsible executive and the company is a reason for ceasing to serve.
The Responsible executive exercises the powers and performs the tasks attributed to him in accordance with the provisions of art. 154-bis of Decree no. 58 dated 24th February 1998, and the related enabling regulations. For this purpose, the Board has granted the Responsible executive adequate powers and resources to accomplish the tasks attributed to him.
The Responsible executive attends those Board meetings that envisage the discussion of matters relevant to his activities.
The Issuer has not formalized methods of coordination between the various persons involved in the risk management and internal control system, since such persons have numerous opportunities to meet for information discussion both during and after (i) meetings of the audit committee (ii) meetings of the supervisory body (iii) meetings of the Board.
The Audit Committee keeps the Board of Statutory Auditors constantly informed and collaborates closely with it, not least by joint participation at the meetings of the Audit Committee.
In accordance with Principle 9 of the Code, the Board adopts measures designed to ensure that transactions with related parties are carried out in a transparent manner and comply with the criteria requiring substantial and procedural propriety. A similar requirement is contained in art. 2391-bis of the Civil Code, under which the administrative bodies of companies that make recourse to the market for risk capital must adopt specific internal regulations and procedures to govern transactions with related parties, including those conducted via their subsidiaries, thus ensuring their transparency and substantial and procedural propriety (
promoting transactions that benefit third parties; and (ii) directors to inform the Board about all interests promoted by them when carrying out a given transaction.
Principle 10.P.1 of the Code envisages that the appointment of statutory auditors follows a transparent procedure that guarantees, among other matters, the provision of timely and adequate information on the personal and professional characteristics of the candidates.
The Board of Statutory Auditors comprises three serving auditors and two alternate auditors. The statutory auditors remain in office for three financial years and their appointments expire on the date of the Meeting called to approve the financial statements for the final year of their mandate; they may be re-elected. With regard to the criteria and methodology for appointing statutory auditors, article 22 of the Articles of Association states that the Board of Statutory Auditors comprises 3 (three) serving auditors, of which at least one must be a member of the least represented gender; the Shareholders' Meeting shall also appoint two alternate auditors, one from each gender. The appointments are made on the basis of lists presented by the shareholders, following the process specified below.
Shareholders have the right to present lists if, alone or together with other shareholders, they represent at least 2.5% (two point five percent) of the shares with voting rights at ordinary meetings, or such different percentage of the company's share capital as is established by current and applicable laws and/or regulations. Each list must comprise two sections: one for the appointment of serving auditors and the other for the appointment of alternate auditors. Each section of the lists must ensure the presence of both genders.
The lists must indicate in consecutive numerical order at least one candidate for serving auditor but, in any case, not more candidates than the number of statutory auditors to be elected. Each candidate can appear on just one list, or will be ineligible for election. In accordance with the above-mentioned Principle 10.P.1 of the Code, the lists signed by the shareholders presenting them, or by the shareholder appointed to present them, and accompanied by the documentation required by the articles of association, must be filed at the registered offices at least 25 (twenty-five) days prior to the date fixed for the Meeting in first (or only) calling and published on the Issuer's website at least 21 (twenty-one) days prior to the date fixed for the Meeting in first (or only) calling. The following information must also be filed, together with each list, by the deadline indicated above: (i) declarations from each candidate accepting their nomination and confirming, under their personal responsibility, the absence of reasons for which they would be ineligible or for which their appointment would lapse by law, and that they satisfy the honorability and professionalism requirements established by law and applicable to such appointments; (ii) complete information on their personal and professional characteristics (curriculum vitae); (iii) the list of appointments as director or auditor held by candidate statutory auditors in other companies or bodies, if relevant under current regulations to the limit on the total number of appointments allowed by the articles of association or by the current and applicable laws and/or regulations; (iv) the list of shareholders presenting the list, specifying their personal or company name, address, company registration number or similar and the total percentage of share capital held by them.
Candidates must satisfy the requirements of eligibility, honorability and professionalism established by law, and must not hold a number of appointments as directors or auditors of other companies or entities that exceeds the maximum allowed by current and applicable laws and/or regulations.
If no lists are presented, the Shareholders' Meeting appoints the Board of Statutory Auditors and its Chairman in accordance with the majorities established by current legislation. If only one list is presented, the Board of Statutory Auditors is drawn entirely from that list and the first candidate on the list is appointed as Chairman.
If, on the other hand, two or more lists are presented, the Board of Statutory Auditors is appointed in the following manner:
a) the following candidates will be appointed, in the numerical order in which they appear, from the list that obtains the majority of the votes cast by the shareholders: (i) the first two candidates for the office of serving auditor and (ii) the first candidate for the office of alternate auditor;
b) the following candidates will be appointed, in the numerical order in which they appear, from the list that obtains the second-largest number of votes, on condition that such list is not linked, directly or indirectly, with the shareholders who presented or voted for the list that obtained the largest number of votes: (i) the first candidate for the office of serving auditor, who will also be appointed as Chairman of the Board of Statutory Auditors, and (ii) the first candidate for the office of alternate auditor, if available; otherwise, the alternate auditor will be the first candidate for this office on the first list obtaining the next-largest number of votes that is not linked, directly or indirectly, with the shareholders who presented or voted for the list that obtained the largest number of votes.
c) in the event of a voting tie between two or more lists, the candidates on the list presented by shareholders with the greatest total equity interest or, failing this, by the largest number of shareholders, will be elected.
If the composition of the Board of Statutory Auditors or the category of alternate auditors does not comply with the gender balance criterion then, having regard for the order of listing in the respective sections, the candidates from the most represented gender elected last from the Majority List shall be replaced by the first candidates not elected from the same list and the same section from the least represented gender. Application of this replacement procedure will continue until the composition of the Board of Statutory Auditors complies with the regulations in force at the time concerning gender balance.
The Board of Statutory Auditors monitors compliance with the law and the Articles of Association, and respect for the principles of proper administration including, in particular, the adequacy of the organization, administrative and accounting systems adopted by the Company and the way they function in practice, as well as how the corporate governance rules envisaged by the related regulations are applied in practical terms.
Lastly, the Articles of Association envisage that the Board of Statutory Auditors meets at least every ninety days at the request of any its members.
The mechanism of appointment using the list voting system ensures transparency and the provision of timely and adequate information on the personal and professional characteristics of the candidates.
The Shareholders' Meeting held on 16th April 2014 appointed the Board of Statutory Auditors, in compliance with the requirements for gender balance, on the basis of the only list presented by Fratelli Ferretti Holding S.r.l. and IM Fashion S.r.l., which obtained approval from 100% of the share capital present and voting at the meeting.
The mandate of the current Board of Statutory Auditors expires on approval of the financial statements as of 31st December 2016.
The current Board of Statutory Auditors comprises:
| PierFrancesco Sportoletti | Chairman of the Board of Statutory Auditors |
|---|---|
| Daniela Saitta | Serving Auditor |
| Fernando Ciotti | Serving Auditor |
| Barbara Ceppellini | Alternate Auditor |
| Luca Sapucci | Alternate Auditor |
The quorum required for the presentation of lists at the time of the most recent appointment of the Board of Statutory Auditors was 2.5% (two point five percent) of the shares with voting rights at ordinary meetings.
Since no minority lists were presented for the appointment of the Board of Statutory Auditors, on 23rd March 2014 the Issuer informed the market, pursuant to articles 144 sexies, para. 4, and 144 octies, para. 2, of Consob Regulation no. 11971 dated 24th May 1999, that the deadline for the presentation of lists for the appointment of members of the Board of Statutory Auditors was extended until 25th March 2014 inclusive, and that the minimum equity interest required by article 22.2 of the Articles of Association for the presentation of lists of candidate statutory auditors was halved (to 1.25%).
The list of appointments in other companies held by members of the Board of Statutory Auditors is attached to the report on their supervisory activities prepared by the Statutory Auditors pursuant to para. 1 of art. 153 TUF.
The personal and professional characteristics of each statutory auditor are indicated below, while further information about their personal and professional characteristics is provided in the nominations presented by Fratelli Ferretti Holding S.r.l. and I.M. Fashion S.r.l., published on the Company's website and accessible at the address: http://www.aeffe.com/aeffeHome.php?pattern=11&lang=ita
In Year 2015, the Board of Statutory Auditors was not modified.
Born in Bologna on 27th October 1956. Registered with the Bologna Chamber of the Italian Accounting Profession. Registered Auditor. Attendance at specialist courses abroad, including management accounting at the University of Nottingham and corporate finance at Ernst & Young in London.
Worked for more than twenty years for Ernst & Young, a leading international group of auditors and providers of integrated professional services, where he become a Manager in 1985 and a Partner in 1991, specializing in audit and special financing.
From 1991 he was authorized by CONSOB to sign auditors' reports relating to listed companies.
From 2001 to 2003 he was a member of the Audit Board for the Assurance and Advisory Business Services practice (management board at national level).
From 2000 to 2003 he was also responsible for all E&Y activities in North-East Italy (Emilia Romagna and Triveneto, as well as the provinces of Brescia, Mantua and Bergamo), with a mandate of representation in those markets.
As partner responsible for the North-East, from 2000 to 2003 he was a member of the E&Y Executive Committee responsible for the domestic market.
He managed audit, special financing and internationalization projects in Italy and abroad for firms belonging to leading domestic and international groups.
He participated in major professional engagements associated with IPOs and was actively involved in domestic and international M&A projects.
He has also served as expert, collaborator and lecturer on economic matters for universities and training institutions, including the school specialized in healthcare and administrative law - SPISA - within the Law faculty of Bologna University, the "specialization course for corporate internationalization experts", organized by ICE (Foreign Trade Institute), the Bologna chapter of Italian Public Accountants, the European Center for Business Studies, the Bologna Order of Journalists.
Principal of Studio Sportoletti, Milan, a consultancy specializing in special corporate transactions.
Born in Castelluccio dei Sauri (Foggia) on 13th June 1956. Degree in Law from Rome's "La Sapienza" University and Degree in Political Science from the same university. Member of the Rome chapter of Italian Public Accountants and Registered Auditor; formerly lecturer in Business Economics at L.U.I.S.S. "Guido Carli" International University in Rome. He was a lecturer in law at the San Pio V University in Rome and taught tax law, including for the postgraduate master in "Economics and Management of Organizations in an International Context" promoted by FORMIT (foundation for research into the migration and integration of technologies). Freelance journalist for "Il Fisco", a tax magazine edited by Pasquale Marino. Professionally active at his offices at Via Marche 54, Rome, under the name of Taxnet, a professional association.
Consultant for numerous leading public and private companies, both in Italy and abroad, as well as banks, public entities and charities.
Born in Messina on 9th August 1962, Degree in Economics and Commerce from LUISS Guido Carli University. Active as an Italian Public Accountant, providing tax, corporate and insurance advisory services to agencies, companies, banks, insurance companies, clinics and associations, with offices in Via Ugo De Carolis, Rome. Member of the Board of Directors of the Rome chapter of Italian Public Accountants from 1st January 2013. She has collaborated and continues to collaborate with the Bankruptcy Section of the Rome Court as administrator, court commissioner and accounting consultant. Shareholders' representative of Atlantia S.p.A. She has served and continues to serve as Technical Consultant for the Rome Magistrates and as expert for the Rome Criminal Court. She has served and continues to serve as Technical Consultant for the Perugia, Tivoli and Reggio Calabria Magistrates. From 1993 to 2000 she lectured on quantitative methods, insurance and tax matters at the LUISS Guido Carli School of Management.
Born in Cattolica (Rimini) on 13th November 1967. Degree in Economics and Commerce from Bologna University. Professional practice in Cattolica, consulting on tax and business matters for firms in Rimini and Pesaro.
Born in Broni (Pavia) on 20th February 1969. Degree in Economics and Commerce from Pavia University. Member of the Pavia and Voghera chapter of Italian Public Accountants from 2003. Registered Auditor. Collaborates since 2000 with
"Sacro Cuore" University. Registered Auditor. Professional practice in Milan, specializing in taxation.
The Board of Statutory Auditors met 6 times during the year. The minimum duration of meetings of the Board of Statutory Auditors was 2 hours and 45 minutes, while the average duration was 4 hours and 55 minutes.
The Board of Statutory Auditors has scheduled 6 meetings in 2016.
The Board of Statutory Auditors checked the continuing independence of its members during 2015 at the meeting held on 11th March 2015.
In accordance with the criteria established in para. 3 of art. 148 of Decree 58/98, the minutes of that meeting included the following text:
"Q.1.4. Independence, ineligibility and decadence causes: the Chairman of the Board of Statutory Auditors consigns to the auditors a self-assessment form focused to verify the subsistence of the eligibility and independence requisites of each member; furthermore, a has been issued a declaration concerning the self-assessment evaluation of the risk of monetary dependence. From the analysis of the forms it is possible to attest the independence of each member of the board of statutory auditors as well as that there are no incompatibility and/or decadence reasons. The result of the above mentioned close examination will be communicated, from the Chairman of the Board of Statutory Auditors, to the Chairman of the Board of Directors. ".
In reaching this determination, the Board of Statutory Auditors applied all the criteria set down in the Code.
During 2015, the Chairman of the Issuer's Board of Directors organized informal meetings with the statutory auditors on the days in which the Board meetings were held; during these meetings, the Chairman explained the corporate processes and dynamics to the statutory auditors, indicating the related changes. Given the collaboration received from Pierfrancesco Giustiniani, director, during these meetings, the statutory auditors were also able to benefit, to the extent applicable, from an appropriate update on the regulations governing the Issuer's sector of activities.
The members of the Board of Statutory Auditors are subject to application of the Issuer's Procedure for Transactions with Related Parties, the contents of which are described in paras. 4.3 and 12 of the Report. Furthermore, should a member of the Board of Statutory Auditors have an interest in a transaction carried out by the Issuer, whether directly or indirectly, such person must provide complete and timely information to the other statutory auditors and to the Board, specifying the nature, terms, origin and extent of this interest.
At the meeting held on 9th June 2015, the Board of Statutory Auditors verified the independence of the external auditors, checking both compliance with current regulations and the nature and extent of any non-audit services provided to the Issuer and its subsidiaries by the independent auditors and members of its network.
Lastly, in the performance of its duties, the Board of Statutory Auditors coordinated with the Audit Committee (whose meetings were attended by the Chairman of the Board of Statutory Auditors or by an appointed by him Statutory Auditor). The Chairman of the Board of Statutory Auditors attended all the meetings of the Audit Committee, verifying the effectiveness of the procedures adopted and contributing to the identification of the most sensitive areas within the company.
The Issuer believes that it is in its specific interests –
Shareholders' meetings are either ordinary or extraordinary, as defined by law.
Shareholders' Meetings are called at the registered offices or elsewhere in Italy by a notice published, within the timescales envisaged by current legislation, in a national daily newspaper.
The ordinary meeting is called whenever required by law and when deemed appropriate by the Board of Directors. The shareholders' meeting is also called by the Board of Directors at the request of shareholders representing at least 5% (five percent) of the share capital, to the extent allowed by the final paragraph of art. 2367 of the Italian Civil Code, or by the Board of Statutory Auditors, or by at least 2 (two) of its members.
The tasks and powers of the shareholders' meeting are those established by law.
During 2015, the shareholders who control the Issuer did not notify the public of any proposals that should have been presented to the shareholders' meeting regarding matters for which no specific proposals had been made by the directors.
In order to attend the shareholders' meeting, the Issuer must receive the communication from the authorized intermediary envisaged in art. 83-sexies, TUF. This communication must be received prior to the start of the session.
Ordinary and extraordinary meetings can be held in multiple locations, either adjoining or distant, that are linked by audio/video communications, on condition that the collegiate method and the principles of good faith and equal treatment for all shareholders are respected. In particular, it is necessary that:
(i) the Chairman of the Meeting, with support from the chairman's office or otherwise, is able to determine the identity and legitimacy of those attending, govern the conduct of the meeting, and determine and proclaim the results of voting;
(ii) the person responsible for taking the minutes is able to follow adequately the meeting events to be minuted;
(iii) those attending are able to take part in the discussions and in simultaneous voting on the matters on the agenda;
(iv) the notice of meeting specifies the locations equipped with audio/video communications provided by the company, where shareholders may gather; the meeting will be deemed to be held in the location where both the Chairman and the person responsible for taking the minutes are present.
The shares requiring the communication specified in para. 2 of art. 2370 c.c. remain unavailable until the meeting has been held.
The shareholders who are entitled to attend the Meeting may be represented by another person, who need not be a shareholder, bearing a written proxy prepared in accordance with legal requirements. This proxy may be granted by electronic means, in the manner envisaged by the Ministry of Justice. The proxy may be notified to the company by certified e-mail at the address specified each time in the notice of meeting. The proxy form is available from the registered offices and from the Issuer's website www.aeffe.com in the Italian section entitled Documenti Societari.
form is available from the intermediaries authorized to issue the communication confirming the shareholder's right to attend the ordinary meeting, or from the company's website (www.aeffe.com); it may also be obtained from the Corporate Secretariat of Aeffe S.p.A. In addition, pursuant to the articles of association, each shareholder is entitled to notify proxies by e-mail sent to the Issuer's certified e-mail address. Proxyholders giving or sending the Issuer a copy of proxy form must confirm, taking full personal responsibility, that it is true copy of the original and also confirm the identity of the delegating shareholder. Without cost for the delegating shareholder, the proxy may be granted - with voting instructions for some or all
Pursuant to the law and art. 11 of the articles of association, shareholders are entitled to attend the Meeting and exercise their voting rights on presentation of a communication addressed to the Issuer by an authorized intermediary, as defined in the applicable regulations. This communication is released by the latter following reference to the accounting information recorded at the accounting close of the seventh trading day prior to the date fixed for the Meeting (so-called
Interested parties must provide the information needed to identify them. Questions are answered at the Meeting, at the latest, and the Issuer is entitled to give a combined reply to questions of a similar nature.
Pursuant to art. 126-bis, TUF, shareholders who, together or alone, hold at least one fortieth of the share capital may, within ten days of publication of the notice of meeting, request the addition of specific items to the agenda. This request must be presented in writing, sent by registered letter or certified e-mail to the addresses specified in the notice of meeting, on condition that it is received by the deadline stated above. By this deadline and in the same manner, the proposing shareholders must also present a report on the matters to be discussed at the meeting. Information about any additions to the agenda for the Meeting subsequent to receipt of the above requests will be provided, in the manner established for publishing notices of meetings, at least fifteen days prior to the date fixed for the meeting.
In addition to publishing the notice of amendment, the report prepared by the requesting shareholders must also be made available to the public at the same time, in the manner applicable to other meeting documentation, and accompanied by any related considerations made by the Board of Directors. Additions to the agenda are not allowed for matters that, by law, may only be voted on at the meeting following a recommendation from the directors, or based on a project or report prepared by them that is not included in those indicated in para. 1 of art. 125-ter, TUF.
The meeting and voting quorums specified in the articles of association of the Issuer are the same as those envisaged in current legislation.
By resolution of the Board meeting held on 26th March 2007, the Issuer adopted the text of the meeting regulations which are available for consultation in their entirety on the Issuer's website: www.aeffe.com/governance. The meeting regulations establish rules of conduct at meetings intended to guarantee the right of each shareholder to speak on the matters under discussion.
In particular, shareholders intending to speak must apply to the Chairman after the agenda item relevant to the question has been read out and the discussion period has been opened, but before the Chairman declares discussion of that item to be closed. Requests are made by the raising of hands, unless the Chairman has called for written requests. In the case of hand raising, the Chairman gives the floor to the first person to raise a hand. If this cannot be determined with precision, the Chairman gives the floor in the order determined at his sole discretion. In the case of written requests, the Chairman gives the floor in the order that the requests were recorded. The Chairman and/or, upon his invitation, the directors and the statutory auditors to the extent of their responsibilities or as deemed useful by the Chairman in relation to the matter discussed, reply immediately after each shareholder authorized to speak has spoken, or after all speakers on the matter discussed have spoken, as decided by the Chairman. Shareholders are entitled to speak just once in relation to each agenda item, except for any reply and declaration of voting intention, the duration of which may not exceed five minutes. Having regard for the nature and importance of each agenda item, the Chairman will specify the time available for each shareholder to speak. The duration will usually not be less than 5 (five) minutes or more than 10 (ten) minutes.
The Board reports to the shareholders' meeting on the work performed and that planned, and takes steps to ensure that shareholders obtain the information needed to adopt resolutions with full awareness of the matters concerned, via publication on the Issuer's website and filing at the registered offices and on the website of Borsa Italiana.
The shareholders' meeting held on 16th April 2014 was attended by 3 directors.
Each year, the Issuer makes available to the market and the shareholders a Compensation Report prepared pursuant to art. 123-ter TUF and in accordance with art. 84-quater of the Issuers' Regulation. This Report is approved by the Compensation Committee (whose functions are described in the Report on Corporate Governance) and, accordingly, the Chairman of the Compensation Committee has not considered it necessary to report to the shareholders on the way that the Committee functions.
There were no significant changes in the market capitalization of the Issuer's shares, or in the ownership of the Issuer, during the Year.
There are no other aspects of corporate governance beyond those described in the Issuer's Report and those required by current legislation and regulations.
There have not been any significant changes subsequent to year end.
San Giovanni in Marignano,10th March 2016
for the Board of Directors
The Chairman – Massimo Ferretti (signed)
Table 1: Information on the ownership structure Table 2: Share capital structure Table 3: Structure of the Board of Directors and its committees Table 4: Structure of the Board of Statutory Auditors
TABLE 1 - Information on the ownership structure
| SIGNIFICANT INTERESTS IN SHARE CAPITAL | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Declarant | Direct ownership | % of ordinary capital | % of voting capital | ||||||||
| HIGHCLERE INTERNATIONAL INVESTORS LLP |
HIGHCLERE INTERNATIONAL INVESTORS LLP |
2.060 | 2.060 | ||||||||
| TULLIO BADIOLI | TULLIO BADIOLI | 5.000 | 5.000 | ||||||||
| FRATELLI FERRETTI HOLDING S.R.L |
IM FASHION FRATELLI FERRETTI HOLDING TOTAL |
24.410 37.387 61.797 |
24.410 37.387 61.797 |
||||||||
| AEFFE S.P.A. | AEFFE SPA | 5.473* | 5.473 |
| SHARE CAPITAL STRUCTURE | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| NO. OF SHARES |
% OF SHARE CAPITAL |
LISTED IN STAR SEGMENT |
RIGHTS AND OBLIGATIONS |
|||||||||
| ORDINARY SHARES | 107,362,504 | 100% | 107,362,504 | RIGHTS AND OBLIGATIONS ASSOCIATED WITH ORDINARY SHARES |
||||||||
| SHARES WITH MULTIPLE VOTING RIGHTS |
NOT APPLICABLE |
NOT APPLICABLE | NOT APPLICABLE | NOT APPLICABLE | ||||||||
| SHARES WITH RESTRICTED VOTING RIGHTS |
NOT APPLICABLE |
NOT APPLICABLE | NOT APPLICABLE | NOT APPLICABLE | ||||||||
| SHARE WITHOUT VOTING RIGHTS |
NOT APPLICABLE |
NOT APPLICABLE | NOT APPLICABLE | NOT APPLICABLE | ||||||||
| OTHER | NOT APPLICABLE |
NOT APPLICABLE | NOT APPLICABLE | NOT APPLICABLE |
| BOARD OF DIRECTORS | CONTROL AND RISK COMMITEE |
COMPENSATION COMMITTEE |
||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Role | Members | Birth date |
First Appointmen t date * |
Appointed from |
Appointed until |
List M/m ** |
Esec. | Not Esec. |
Indip. From Code |
Indip. From TUF |
Number of other appointm ens *** |
(*) | (*) | (**) | (*) | (**) |
| President | Massimo Ferretti |
1956 | 16 July 1990 | 16 April 2014 Shareholders Meeting for approval of the balance sheet closed on 31/12/2016 |
M | X | - | 4/5 | - | - | - | - | ||||
| Vice President | Alberta Ferretti |
1950 | 16 July 1990 | 16 April 2014 Shareholders Meeting for approval of the balance sheet closed on 31/12/2016 |
M | X | - | 4/5 | - | - | - | - | ||||
| Chief Executive Officer◊● |
Simone Badioli |
1969 | 30 April1993 | 16 April 2014 Shareholders Meeting for approval of the balance sheet closed on 31/12/2016 |
M | X | - | 4/5 | - | - | - | - | ||||
| Director Managing Director |
Marcello Tassinari |
1963 | 20 May 2005 | 16 April 2014 Shareholders Meeting for approval of the balance sheet closed on 31/12/2016 |
M | X | - | 5/5 | - | - | - | - | ||||
| Director | Marco Salomoni |
1954 | 21 April 2011 16 April 2014 Shareholders | Meeting for approval of the balance sheet closed on 31/12/2016 |
M | X | X | X | - | 5/5 | - | - | - | - | ||
| Director | Roberto Lugano |
1959 | 23 May 2007 | 16 April 2014 Shareholders Meeting for approval of the balance sheet closed on 31/12/2016 |
M | X | X | X | - | 2/5 | 7/7 | P | 4/4 | M |
| Director | Pierfrancesco | 1966 | 29 April 2008 16 April 2014 Shareholders | M | X | - | 4/5 | 7/7 | M | 3/4 | M | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Giustiniani | Meeting for | |||||||||||||||
| approval of the balance |
||||||||||||||||
| sheet closed | ||||||||||||||||
| on 31/12/ | ||||||||||||||||
| Director ○ | Sabrina | 1973 | 16 April 2014 16 April 2014 Shareholders | M | X | X | X | - | 3/5 | 7/7 | M | 4/4 | P | |||
| Borocci | Meeting for | |||||||||||||||
| approval of the balance |
||||||||||||||||
| sheet closed | ||||||||||||||||
| on | ||||||||||||||||
| 31/12/2016 | ||||||||||||||||
| No of meeting occurred in the year: 5 | 7 | 4 | ||||||||||||||
| The quorum requested for the presentation of the lists by the minorities for the appointment of one or further members is equal to 2,5% | ||||||||||||||||
| NO DIRECTOR GIVES OVER FROM THE APPOINTMENT DURING THE YEAR | ||||||||||||||||
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