• Independent directors may not remain as such for more than 12 years, although there will be a transitional regime.
  • The remuneration report will be individualized and will be voted by the Board of Shareholders on an advisory basis.

The Minister of Economy and Competitiveness, Luis de Guindos, has signed the ministerial order regulating the structure of the Annual Corporate Governance Report, the Annual Remuneration Report and other information instruments required of listed public limited companies, savings banks and others entities that issue securities admitted to trading in the official securities markets. The objective is to reinforce and expand the information that the Annual Corporate Governance Report of these companies must contain and add the obligation to present an Annual Remuneration Report.

The ministerial order adapts the corporate governance regulations to the obligations derived from Law 2/2011 of March 4 of Sustainable Economy and of Royal Decree Law 11/2010 of July 9 of governing bodies and other aspects of the legal regime of the savings.

Regarding the information that the Annual Corporate Governance Report must contain, the most outstanding developments regarding the current situation are the following:

  • Ownership structure: The securities of the company that are not traded in a regulated community market, restrictions on the transferability of securities and the exercise of the right to vote must be reported. In particular, the restrictions that may make it difficult to take control of a company must be reported.
  • Operation of the General Meeting: The report will contain information on the restrictions to attend the Meeting, a reinforced quorum for certain types of decisions and regulations on the modification of statutes.
  • Administration structure: Detailed information will be given on the significant agreements that come into force or are modified in the case of OPA (Public Offering of Acquisition of Shares), compensation agreements of the administrators, management or employees, the number of female directors and the reasons that justify, where appropriate, your absence or low number.
  • Risk control system: It is obliged to include information on the risks that have materialized in the exercise and the response and supervision plans for said risks.

The rule also addresses the definition of the types of directors (executive, proprietary or independent) that in general terms were already contained in the Unified Code of Good Governance. The difference is that these definitions are now included in a general provision, which would imply submitting to the provisions of the Securities Market Law regarding the regime of infringements in case of breach by the company.

The definition of executive and proprietary director is maintained as set forth in the Code, but the limitation that independent directors may not be for more than 12 years is introduced. There is a transitional regime in this regard, so that independent directors as of June 30, 2013 who have held their position for a term exceeding 12 years, will not lose their status until the end of the current term of office.

As for the annual remuneration report, it must contain the policy in this regard approved by the Board of Directors of the company, as well as the individual detail of the remuneration accrued by each of the directors. The companies must put the report to the Shareholders' Meeting on a consultative basis. More specifically, this must contain, among others, the following data: Attendance allowances or other fixed remuneration as directors, fundamental parameters and rationale for any system of annual premiums or other benefits not paid in cash, any compensation agreed or paid in case of termination of duties and result of the advisory vote in the General Meeting, indicating the negative votes.

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