Internal regulations

Role of the board of director

The board of directors manages the company as a board and acts under the supervision of the general assembly which appoints and dismisses directors. The board of directors serves the shareholder and must ensure the long-term success of the company.

The board of directors has the most extensive powers to achieve the object of the company. The board of directors’ tasks include setting and determining general policies and strategic goals for both the company and the group and outlining its investment policy.

Within the framework of these tasks and without this list being exhaustive, the board of directors fulfils the following tasks:

• It determines the valuations, the objectives, the strategy and the level of exposure the company deems acceptable;
• It discusses items and passes any and all important resolutions on behalf of the company;
• It organizes and guarantees supervision;
• It analyses and ratifies the financial documents of the company and ensures that they give a true image of the company and that these are published within the terms imposed by law ;
• It approves the tasks of the audit, good governance and risk management committee and guarantees its proper operation;
• It convenes the ordinary and extraordinary general assemblies and sets the agenda.

Composition

The articles of association stipulate that the board of directors is composed of at least three members but does not set a maximum number of members.

From the point of view of efficiency and attempting to strike a balance between executive and non-executive directors the board of directors has between five and seven members.

At present the board has three directors entrusted with an executive position within the group who are appointed at the suggestion of the controlling shareholder. Two are entrusted with the daily management of Brederode SA. The chairman of the board of directors is the third executive director, which the board of directors considers to be an asset for the company taking into account its history and specifics. The two remaining directors are independent

Each director has the skills and integrity from which the board can benefit. The present composition of the board of directors is justified given the low number of directors, the size and the activities of the company.

Appointment of directors

The directors are appointed by the general assembly at the suggestion of the board of directors.

Insofar as the choice of directors is concerned, the company takes into account competence criteria (in particular in the field of finance, accountancy and audits) and diversity criteria (in particular insofar as the compatibility of profiles and experiences is concerned).

The board of directors:

• Assesses the existing and required skills, knowledge and experience of each management position and on the basis of such an assessment gives a description of the roles and the required skills, knowledge and experience;
• Examines any and all suggestions relating to the appointment of directors made by both its members and the shareholders and compiles a list of candidates to be presented to the general assembly focusing on the candidates’ skills, experience and integrity
• Gives its advice on the level of independence of the candidate-directors.

In the event of a new candidate the chairman of the board of directors – prior to this request to approve the candidate – must ensure that the board of director has received sufficient information on the candidate: his cv, the assessment on the basis of the first interview, the list with other positions he has and possibly the required information pertaining to the assessment of his independence. The information pertaining to recommendation 4.11 of the X principles will be communicated to the general assembly.

Duration/age limit

The articles of association stipulate a maximum term for directors of six years which is renewable.

In order to ensure more stability the company will appoint directors for a period of three to six years, with the understanding that directors can always resign and be dismissed taking into account the provisions imposed by law.

The board of directors has set the age limit at sixty-five.

In individual cases the general assembly can deviate from the rules imposed by the two previous paragraphs

Criteria pertaining to independence

The assessment of independence is more content- than form-oriented.

Each independent director must meet the following criteria :

1. He is not an executive director of the company or a company associated with the group and has not held such a position in the past five years ;
2. He is not remunerated by the company or a company associated with the group and has not been remunerated in this manner in the past three years;
3. He does not receive any substantial and additional remuneration from the company or a company associated with the group on top on his fixed remuneration as non-executive director and has not received such a remuneration;
4. He is not or does not represent a strategic shareholder owning a participation of 10% or more;
5. In the last fiscal year he did not maintain any substantial business relation with the company or a company associated with the group and this both directly and indirectly as a partner, a shareholder, a director or executive of a body maintaining such a relationship and did not maintain such relations in the past. Under business relation is understood being an important supplier of goods or services (financial, legal, advisory or as a consultant) or an important customer of the company or companies to which he contributes substantially;
6. He is not a partner of or employed (wage-earning) by the present or previous auditor, the company or a company associated with the group;
7. He is not an executive director (or a member of the executive committee) of another company in which an executive director is a non-executive director or a member of the audit committee and does not maintain any close relations with the executive directors of the company based on positions in other companies or bodies;
8. He has not been a member of the board of directors as a non-executive director for more than twelve years ;
9. He is not a close relative of an executive director or of the persons being in the situations mentioned in sections 1 to 8.

The board of directors may, however, assume that any director not meeting one or several of the aforementioned criteria can nevertheless be considered as independent. However, in this case the board of directors must specifically motivate its decision.

An independent director must:

1. Keep his independence in any circumstance insofar as analyses, decisions and actions are concerned;
2. Not request or accept inappropriate benefits which might compromise his independence, and
3. Clearly show his opposition when he believes that a resolution passed by the board of directors could harm the company. If the board of directors has passed a resolution about which the non-executive director has serious doubts, the non-executive director must bear the necessary consequences. If he desires to resign, he must motivate his decision in a letter addressed to the board of directors or the audit, good governance and risk management committee.

Operation

The operation of the board of directors is governed by section 12 of the articles of association.

The board of directors convenes at least three times a year and whenever this is in the interest of the company or whenever two directors request this. The meetings are convened by the chairman.

Minutes of the meetings of the board of directors must be drawn up and kept in a special register and must be signed by the chairman and the secretary.

The directors will abide by secrecy rules insofar as the information they have is concerned and are only permitted to use this information for the fulfilment of their tasks.

The board of directors will pay special attention to conflicts of interest which may occur with a shareholder or a company belonging to the group and will comply with the appropriate procedures, in particular the procedures imposed by section 57 of the Act. The transaction in question – after having been informed by the chairman of the board of directors – will be presented by the director in question to the audit, good governance and risk management committee and the auditor, and this, if possible, prior to its realization. The latter’s opinion will be communicated to the board of directors. If the board of directors passing resolutions with a valid majority one or several of the directors does not take part in the discussions as imposed by section 57 of the Act, the resolutions can be passed by a majority of the directors attending the meeting.

The executive directors will regularly report to the board of directors and if necessary to the audit, good governance and risk management committee on the state of affairs with Brederode, in particular the evolution of the share portfolio, the supervision of the subsidiaries and the financial management of the group

Representation

The company will be committed by:

• The joint signature of the two directors;
• The unilateral signature of each person to whom the board of directors has granted a power of attorney but only within the limits set by such a proxy;
• The unilateral signature of the executive director, but only within the limits of management and ongoing transactions.

Assessment

Under the leadership of its chairman the board of directors will at least twice a year assess its size, its composition, its role and the manner in which the board of directors complies with the rules concerning good governance.

The non-executive directors will regularly assess their interaction with executive directors and the performance by the latter. Therefore they will meet once a year without the presence of the executive directors.

Role of the chairman

The responsibilities of the chairman and the board of directors are as follows:

• Verifying whether the board of directors insofar as its composition, operation or decision-making process, acts according to this charter ;
• Setting the agenda and this following mutual consultation with the executive directors;
• Ensuring that all directors are convened for the meetings of the board of directors in good time and that they receive any and all relevant information ;
• Ensuring that during the meetings all directors can speak freely in an atmosphere of confidence and if possible that they are passed unanimously without one director dominating the decision-making process;
• Ensuring that the audit, good governance and risk management committee has been validly composed and a chairman has been appointed;
• Taking the initiative for the organization of various assessment procedures for the purpose of permanent improvement of the company’s rules concerning good governance;
• Ensuring that during the general meetings the shareholders, the directors and the authorized auditor can interview the directors and the shareholders receive the desired replies ;
• Providing precise information to new directors with regard to :
• The group’s value and strategy;
• The operation of the bodies of the company;
• Specific tasks and responsibilities which they must fulfil when assuming his role as a member of the board of directors or the audit, good governance and risk management committee.

Remuneration

The executive directors do receive fixed remuneration but no bonuses or other long-term benefits.

The non-executive directors do not receive any remuneration based on performance, no benefits in kind, no benefits in relation to pension plans. They are permitted to waive the fixed remuneration allocated by the company.

There are no plans to remunerate whomsoever by way of allocation of shares, share options and other rights to acquire shares.

Any and all directors, including the executive directors, can be dismissed ad nutum and without them being entitled to compensation except if provisions imposed by law apply.

The board of directors:

• Sets the remuneration policy of directors and ratifies suggestions made in this regard which must be presented to the general assembly;
• Sets the individual remuneration of directors, including any variable remuneration, long-term incentives and compensation following resignation/dismissal and ratifies the suggestions made in this regard which must be presented to the general assembly and the board of directors must ensure that no single person is permitted to vote on his/her own remuneration;
• Draws up the remuneration report which is to be included in the annual report.