30. SUPERVISORY BOARD MODEL ADOPTED
EDPR’s governance model, as long as it is compatible with its personal law, the Spanish law, corresponds to the so-called “Anglo-Saxon” model set forth in the Portuguese Commercial Companies Code, in which the management body is a Board of Directors, and the supervision and control duties are of the responsibility of an Audit and Control Committee.
31. COMPOSITION OF THE AUDIT AND CONTROL COMMITTEE
Composition of Audit and Control Committee is reflected in topic 29 above. The term of office and the dates of first appointment of the members of the Audit and Control Committee are available on the chart of topic 17.
32. INDEPENDENCE OF THE MEMBERS OF THE AUDIT AND CONTROL COMMITTEE
Details of the members of the Audit and Control Committee which are considered to be independent are available on the chart of topic 18 of the report. As mentioned on the first paragraph of topic 18, the independence of the members of the Board and of its Committees is evaluated according to the Company’s personal law, the Spanish law.
33. PROFESSIONAL QUALIFICATIONS AND BIOGRAPHIES OF THE MEMBERS OF THE AUDIT AND CONTROL COMMITTEE
Professional qualifications of each member of the Audit and Control Committee and other important curricular information, are available on Annex IV of this Report.
34. AUDIT AND CONTROL COMMITTEE REGULATIONS
The Audit and Control Committee regulations are available to the public at the Company’s website, www.edprenovaveis.com and at the Company’s headquarters at Plaza de la Gesta, 2, Oviedo, Spain.
35. NUMBER OF MEETINGS HELD BY THE AUDIT AND CONTROL COMMITTEE
In 2013, the Audit and Control Committee held twelve (12) meetings, six (6) of those meetings were plenary and the other six (6) were with the different departments whose activity development was discussed with the Committee. The following table shows the attendance percentage to the meetings of the Audit and Control Committee by its members:
36. AVAILABILITY OF THE MEMBERS OF THE AUDIT AND CONTROL COMMITTEE
The members of the Audit and Control Committee are fully available for the performance of their duties having no constraints for the execution of this function simultaneously with positions in other companies. The positions held simultaneously in other companies inside and outside the group, and other relevant activities undertaken by members of this Committee throughout the financial year is listed in Annexes II and III, respectively.
C. POWERS AND DUTIES
37. PROCEDURES FOR HIRING ADDITIONAL SERVICES TO THE EXTERNAL AUDITOR
In EDPR there is a policy of pre-approval by the Audit and Control Committee for the selection of the External Auditor and any related entity for non-audit services, according to Recommendation IV.2 of the Portuguese Corporate Governance Code. This policy was strictly followed during 2013.
The services, other than auditing services, provided to the Company by the External Auditor and entities in a holding relationship with or incorporated in the same network as the External Auditor were previously approved by the Audit and Control Committee according to Article 8, no 2, b) of its Regulations and upon review of each specific service, which considered the following aspects: (i) such services having no effect on the independence
of the External Auditor and any safeguards used; and (ii) the position of the External Auditor in the provision of such services, notably the External Auditor’s experience and knowledge of the Company.
Furthermore, although hiring services other than auditing services to the External Auditor is admissible, it is envisaged as an exception. In 2013 such services reached only around 5% of the total amount of services provided to the Company.
38. OTHER DUTIES OF THE AUDIT AND CONTROL COMMITTEE
Apart from the competences expressly delegated on the Audit and Control Committee according to Article 8 of its Regulations and in order to safeguard the independence of the External Auditor, the following powers of the Audit Committee were exercised during the 2013 financial year and should be highlighted:
- Nominate and hire the External Auditors and responsibility for establishing their remuneration as well as pre-approval of any services to be hired from the External Auditors;
- Direct and exclusive supervision by the Audit Committee;
- Assessment of the qualifications, independence, and performance of the External Auditors, and obtaining, yearly and directly from the External Auditors, written information on all relations existing between the Company and the Auditors or associated persons, including all services rendered and all services in progress; in fact, the Audit Committee, in order to evaluate independence, obtained from the External Auditors information on their independence in light of article 62B of Decree-Law no. 224/2008 of 20 November 2008, which amends the articles of association of the Chartered Accountant Professional Association;
- Review of the transparency report, signed by the Auditor and disclosed at its website. This report covers the matters provided for under article 62A of Decree-Law no. 224/2008, including those regarding the quality control internal system of the audit firm and the quality control procedures carried out by the competent authorities;
- Definition of the Company’s hiring policy concerning persons who have worked or currently work with the External Auditors;
- Review, with the External Auditors, of the scope, planning, and resources to be used in their services;
- Responsibility for the settlement of any differences between the Executive Committee and the External Auditors concerning financial information;
- Contracts signed between EDPR and its Qualified Shareholders that were analysed by the Audit and Control Committee. This information is included on the annual report of the Audit and Control Committee regarding those cases that needed a previous opinion from the committee;
- The Audit and Control Committee participated on the Tender to select the External Auditor for EDP’s Group for a three year term (2014-2016). The Chairperson of the Audit and Control Committee was part of the Evaluation Commission that selected the final proposal. The Audit and Control Committee will present on the next Board of Directors meeting the proposal for the appointment of the External Auditor to be submitted to approval at the next General Shareholders’ Meeting according to Article 28o, no 6, b) of the Company’s Articles of Association.
Within this context, it should be particularly stressed that External Auditor independence was safeguarded by the implementation of the Company’s policy on pre-approval of the services to be hired to External Auditors (or any entity in a holding relationship with or incorporating the same network as the External Auditors), which results from the application of the rules issued by SEC on this matter. According to such policy, the Audit Committee makes an overall pre-approval of the services proposal made by the External Auditors and a specific pre-approval of other services that will eventually be provided by the External Auditors, particularly tax consultancy services and services other than “audit and audit related” services.