Corporate governance
2005 annual report
Corporate Governance Organization
The system of corporate governance (i.e., the set of standards and behavior guidelines) adopted by the Company to ensure the efficient and transparent functioning of its corporate governance and internal control systems complies with the recommendations and standards of the Code of Conduct published by Borsa Italiana and is consistent with international best practice.
The main rules of corporate governance, as defined following the change in controlling shareholders of
Edison that occurred as of September 16, 2005, with Transalpina di Energia Srl (TdE), a joint venture of Elettricité de France Sa (EDF) and AEM Spa (AEM) becoming the Company's majority shareholder, have been incorporated in Edison's Bylaws. Consistent with the Governance Agreements discussed later in this Report, this was done to provide the utmost transparency and facilitate the understanding by the financial markets of the Company's rules of corporate governance by incorporating the rules directly in a legal document that, because of the specific disclosure requirements that govern it, is best suited to achieve the desired objective. The most significant amendments to the Bylaws approved by the Shareholders' Meeting in December 13, 2005 concerned the following: quorums required for Shareholders' Meeting to be effectively convened and adopt resolutions, which, when allowed, are higher than the statutory minimums; number of members of the Board of Directors, set permanently at 12; procedure for electing the Chairman and the Chief Executive Officer; expansion of the issues reserved for the Board of Directors, as explained later in this Report; and method for calling meetings of the Board of Directors and quorum required for Board meetings to be effectively convened and adopt resolutions, which was set at 10 in both cases. These amendments became effective on January 10, 2006.
Moreover, as explained in previous Reports, Edison's Bylaws had already been amended in December
2002, when the Company's shares were accepted for public listing following the absorption of the Edison (formerly Montedison) subsidiary, to comply with the provisions of Legislative Decree No. 58/1998 (the Uniform Financial Code) with regard to the information that must be provided to the Board of Statutory Auditors and nonexecutive Directors and include provisions concerning the rights of minority shareholders to representation on the Board of Statutory Auditors. The Bylaws were amended again in April 2004 to make them consistent with new statutory provisions enacted with Legislative Decree No. 6/2003, particularly with regard to the provisions that govern the convening Shareholders' Meetings and attendance to those Meetings, and the rules by which the Board of Directors operates, giving the Board jurisdiction over certain issues previously reserved for the Shareholders' Meeting.
The Bylaws and this Report are available at the Company website (www.edison.it).
Consistent with its status as a company under Italian law with shares traded on a stock exchange that follows the guidelines of the abovementioned Code of Conduct, Edison has adopted a multi-tier system of corporate governance, based on a conventional organizational model, that comprises: the Board of Directors (supported by an Audit Committee, a Compensation Committee and a Strategy Committee), the Chairman of the Board of Directors, the Chief Executive Officer, the Board of Statutory Auditors and the Independent Auditors.
The Company's corporate governance structure also includes procedures for allocating and delegating authority, which are described below; a system of internal controls; and the Company's Code of Ethics, which was approved by the Board of Directors in September 2003. The Code of Ethics defines the fundamental principles and values that must guide the behavior of all members of the corporate organization, including Directors, Statutory Auditors, employees and business partners. The Code of Ethics is also available at the Company website (www.edison.it)
2002, when the Company's shares were accepted for public listing following the absorption of the Edison (formerly Montedison) subsidiary, to comply with the provisions of Legislative Decree No. 58/1998 (the Uniform Financial Code) with regard to the information that must be provided to the Board of Statutory Auditors and nonexecutive Directors and include provisions concerning the rights of minority shareholders to representation on the Board of Statutory Auditors. The Bylaws were amended again in April 2004 to make them consistent with new statutory provisions enacted with Legislative Decree No. 6/2003, particularly with regard to the provisions that govern the convening Shareholders' Meetings and attendance to those Meetings, and the rules by which the Board of Directors operates, giving the Board jurisdiction over certain issues previously reserved for the Shareholders' Meeting.