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 on topic 29. 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
Information concerning the independence of the members of the Audit and Control Committee is 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 in the Annex 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 2015, the Audit and Control Committee held sixteen (16) meetings, six (6) of those meetings were formal and the other ten (10) were with the different departments whose activity development was discussed with the Committee.
On March 18th and 19th 2015 the Chairman of the Committee and the vocal João de Mello Franco, visited EDPR NA in Houston, where met the local teams to acknowledge the development of their activities.
The Audit and Control Committee also attended three meetings organized by EDP’s General Supervisory Board and participated in September on the Annual Meeting of the Audit and Control Committees’ of EDP’s Group.
The table below shows the attendance percentage to the meetings of the Audit and Control Committee by its members. During the year 2015 none of the members delegated their votes in other member.
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 are listed in the Annex of this report.
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 2015.
The services, other than auditing services, provided 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 8.2, 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 2015 such services reached only around 17% 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 and Control Committee were exercised during the 2015 financial year and should be highlighted:
- Nominate and hire the External Auditor and responsibility for establishing their remuneration as well as pre-approval of any services to be hired from the External Auditor and perform its direct and exclusive supervision;
- 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 ofNovember 20th 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.
Within this context, it should be particularly stressed that the External Auditor’ independence was safeguarded by the implementation of the Company’s policy for the 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 and Control 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.