Corporate Governance Updates 3-2013

1. INTRODUCTION

On October 14, 2013, the Spanish National Securities Market Commission published a study on proposed legislative amendments produced by the Committee of Experts on Corporate Governance set up under a decision by the Spanish Cabinet on May 10, 2013.

The study is the result of the initial phase of the work entrusted to the Committee of Experts under the above-mentioned decision, which required the Committee, within four months of being set up, to submit a study to the Ministries of Economy and Competitiveness and of Justice, for referral to the Cabinet, so that based on the report, the Government could approve the necessary legislative reforms or proposals within the following two months.

To conduct the study, the Committee of Experts analyzed the degree of compliance with and the relevance of the recommendations contained in the Unified Code, the international standards on good governance and, in particular, the European Commission‟s recommendations, as well as various documents and proposals from international organizations and associations, contributions by corporate governance experts, and the laws of comparable countries. In the case of Spain, apart from an analysis of corporate legislation and of the recommendations contained in the Unified Code, the Committee of Experts particularly took into consideration the recently published Proposal for the Commercial Code.

2. PROPOSED LEGISLATIVE AMENDMENTS RELATING TO THE SHAREHOLDERS’ MEETING AND SHAREHOLDER RIGHTS

2.1 Powers of the shareholders’ meeting

2.2 Minority shareholder rights. Powers relating to the shareholders’ meeting

2.3 Calling shareholders’ meetings

2.4 Right to attend shareholders’ meetings

2.5 Voting at shareholders’ meetings

2.6 Adoption of resolutions at shareholders’ meetings

2.7 Shareholders’ right to information

2.8 Challenging corporate resolutions

2.9 Shareholder associations and forums

2.10 Knowledge of the identity of shareholders

3. PROPOSED LEGISLATIVE AMENDMENTS IN RELATION TO THE LEGAL STATUS OF DIRECTORS, THE COMPOSITION AND FUNCTIONING OF THE BOARD OF DIRECTORS, THE RULES ON DIRECTORS’ COMPENSATION AND BOARD COMMITTEES

3.1 Status of directors: duties and rules on liability (applying to all types of corporate enterprises)

3.2 Board of directors: composition, powers and functioning

3.3 Board chairman

3.4 Board secretary

3.5 Appraisal of the board of directors and of board committees

3.6 Appointment of directors

3.7 Definition of the different classes of director

3.8 Directors’ compensation. Special consideration for board members’ compensation

3.9 Board committees

4. OTHER LEGISLATIVE AMENDMENTS

5. NEXT PHASE IN THE WORK TO BE DONE BY THE COMMITTEE OF EXPERTS