Regulations of the Audit Committee of SegurCaixa Adeslas, S.A. de seguros y reaseguros
These regulations are approved by the Board of Directors of SegurCaixa Adeslas, S.A. de Seguros y Reaseguros (hereinafter also SegurCaixa Adeslas), to regulate the composition, rules of use, responsibilities and regulations that must govern the relationships of its Audit Committee with its shareholders, with the company’s Internal and External Auditor and with the company’s Board of Directors itself, and to include the remaining aspects envisaged in the Consolidated Spanish Limited Liability Companies Law, approved by Legislative Royal Decree 1/2010, of 2 July (hereinafter the Spanish Limited Liability Companies Law or the “SLLCL”), and in the Technical Guide 3/2017, on Audit Committees for Public-interest Entities (hereinafter, CNMV Technical Guide).
TITLE I. LEGAL NATURE AND BASIC PROCEDURAL PRINCIPLES
Article 1. Legal nature.
1.1. The Audit Committee is formed, in conformity with article 529 quaterdecies of the SLLCL, the Technical Guide of the Spanish National Securities Market Commission (CNMV) and the remaining applicable regulations, and a specialised committee of the Board of Directors of SegurCaixa Adeslas, to organise and facilitate its work, thereby being an internal governing body of the company with consultative, reporting, supervision, advisory and proposal powers.
1.2. The Audit Committee will be governed by that envisaged in these regulations complying with, in any case, that provided for in the regulations of the Board of Directors, the company’s Articles of Association and all other applicable legal regulations.
1.3. The Board of Directors, with the majority votes required in this regard in the Articles of Association, is responsible for approving, amending or repealing that envisaged in these regulations for the Audit Committee.
Article 2. Basic principles.
In its procedures, SegurCaixa Adeslas’s Audit Committee will comply with the principles of responsibility, scepticism, constructive dialogue and free expression between its members, ongoing dialogue with its usual representatives and analysis ability, as set forth in the CNMV’s Technical Guide.
Article 3. Publication.
These regulations and their possible amendments will be published on the company’s corporate web page to facilitate their publication between shareholders, investors, regulators and other interested parties.
TITLE II. COMPOSITION OF THE COMMITTEE AND REQUIREMENTS FOR THE APPOINTMENT OF ITS MEMBERS.
Article 4. Composition.
4.1. The Audit Committee will have the composition set forth in the Board of Directors’ regulations, under article 529 quaterdecies of the Spanish Limited Liability Companies Law.
Article 5.
Requirements for their appointment. Welcoming Programme.
5.1. The Committee members, in their capacity as company directors, must be of acknowledged commercial and professional honour. Likewise, they must possess, as a whole, adequate knowledge and experience in the areas of management, economy, financial, accounting, audit, business, internal control and risk management of the insurance business itself, so that they contribute to a healthy prudent management of the company.
In areas related to information technologies, when deemed necessary due to their complexity or degree of specialisation of certain matters whose knowledge is the responsibility of the Committee, their knowledge may be completed by recurring to the advisory services of both company employees and external professionals.
5.2. In any case, the Committee members are subject, in terms of their honour and training, to the requirements of the company’s Aptitude and Honourability Policy.
5.3. The company has established a welcoming programme for new Committee members, to ensure that they all have a minimum uniform knowledge of the company and to facilitate their active participation from the outset.
TITLE III. RULES OF FUNCTIONING
Article 6. Committee Chairman and Secretary.
The Audit Committee will appoint a Chairman and a Secretary:
· The Audit Committee Chairman must be one of the Independent Directors and must be substituted every four (4) years, and can be re-elected once the period of one (1) year has elapsed since their resignation.
The Audit Committee Chair will act as its spokesperson at the Board of Directors’ meetings and, where appropriate, at those of its Shareholders’ Meeting.
· The Committee will appoint a Secretary and, where appropriate, a Vice Secretary, which may not be Committee members. The Secretary will aid the Chair and must consolidate the sound functioning of the Committee, taking care to duly reflect meeting events and the contents of the deliberations in the minutes. At each session, the Secretary, or whoever exercises their functions in their absence, shall draft the minutes, which will be signed by them with the approval of the Chairman.
Article 7.- Annual Work Plan and announcement of meetings.
7.1. The Committee Chairman must establish an Annual Work Plan with all those aspects that enable it to comply with Committee targets, including;
7.1.1. Specification of the particular objectives in relation to each of the functions attributed to the Committee, especially those deemed to be significant for the company.
7.1.2. An Annual Meeting Schedule, which must take into account the Board of Directors’ and Shareholders’ Meetings. This Schedule will at least envisage a meeting every quarter of the calendar year and, where appropriate, those required upon the publication of the annual or interim financial information, having, in these cases, the presence of the Internal Auditor and, if a review report is issued, of the Auditor. Without prejudice to the foregoing, the Committee may meet when announced by its Chairman or at the request of any of the Committee members if circumstances arise that advise the holding of an extraordinary meeting.
7.1.3. Systemic organisation of the meetings and of the information to be supplied thereat, distinguishing those matters that must be dealt with frequently from those that only have to be dealt with at certain meetings.
7.1.4. If deemed necessary, work meetings should be planned prior to certain Committee sessions in order to complement them.
7.1.5. Planning of meetings or of those communication channels deemed to be appropriate with company management, the Internal Auditor and the Auditor.
7.1.6. If deemed necessary and as far as possible, foresee the need to have external experts to determine the scope and object of their advisory services.
7.1.7. Plan and specify the training deemed appropriate to correctly perform their duties.
7.2. Meetings will be announced in line with the agenda established by the Chairman and will comply with the meeting announcement provisions of the Board of Directors in the Articles of Association and in its regulations.
TITLE IV. RESPONSIBILITIES AND FUNCTIONS ASSIGNED
Article 8. Functions assigned.
The competences of SegurCaixa Adeslas’s Audit Committee include all those set forth in article 529 quaterdecies of the Spanish Limited Liability Companies Law and also those attributed in the CNMV Technical Guide, grouped together as follows:
a) Supervision of financial and non-financial information.
b) Supervision of management and risk control.
c) Supervision of internal audit.
d) Relationship with the auditor.
e) Other responsibilities.
The Committee will have access to the information required to exercise the foregoing functions in an adequate, timely and sufficient manner and, in this regard, it may invite those company members deemed necessary (executives, officials or employees) to its meetings. Information requests will be channelled through the Committee Chair.
Article 9. Supervision of financial and non-financial information.
The Audit Committee is responsible for supervising the preparation and presentation of the related mandatory financial and non-financial information made public by the company, and for making the recommendations or proposals to the Board of Directors that it deems appropriate to safeguard its integrity.
The Committee’s powers in this regard are as follows:
9.1 Supervising the effectiveness of the Internal Control over Financial Reporting System (ICFRS).
9.2 Assessing, taking into account the different information sources available, whether the Entity has correctly applied the accounting policies, and applying its own judgement to reach its own conclusion.
9.3 Reviewing all the related financial and non-financial information disclosed by the company with clarity and integrity.
9.4 Checking that the related financial and non-financial information disclosed by the company published on its web page is permanently updated and coincides with that prepared by the Board of Directors.
9.5 Likewise, it is also responsible for supervising the general functioning of the company’s Whistleblower Channel.
Article 10. Supervision of management and risk control.
10.1 The Committee is responsible for supervising the effectiveness of the internal risk control and management systems as a whole, including financial and non-financial risks, thereby collecting frequent information from the corresponding managers.
10.2 These functions will be performed by following, as far as possible, the practices advised in this regard by the CNMV Technical Guide.
Article 11b Appointment of the Internal Audit Director: supervision of Internal Audit.
11.2 The Internal Audit Director will be functionally answerable and will report to the Audit Committee Chairman with the frequency determined by the latter.
11.3 The Audit Committee will supervise the Internal Audit Department’s activities, for which it has the required competences and powers, including:
11.3.1 Approving the Annual Internal Audit Plan, verifying that it envisages the main financial and non-financial risk areas of the business and delimiting its objectives for the purposes of adequately coordinating the remaining control functions existing at the company (risk management, regulatory compliance, management control and external auditing itself).
11.3.2 In relation to the Annual Internal Audit Plan, approving the human, technical, financial and technological resources required for its execution.
11.3.3 Informing the Board of Directors of the Annual Audit Plan, of its conclusions, recommendations and action plans that have arisen during its execution.
11.3.4 Monitor all those most significant risks identified in the Annual Internal Audit Plan. For such purpose, the Committee must verify and be continually informed of its implementation, its possible amendments and conclusions in relation to the weaknesses or irregularities detected and action plans to rectify it.
11.3.5 Acknowledge the Activities Report presented by the Internal Audit Department. This Report must contain at least:
- A summary of the activities performed and the reports prepared in the year, explaining those works which, being envisaged, have not been carried out, or those performed without being envisaged.
- An inventory of the weaknesses, recommendations and action plans contained in the different reports.
11.3.6 Assess the functioning of the Internal Audit Department and the performance of its head.
Article 12. Relationship with the Auditor.
In relation with the company’s Auditor, the Audit Committee has the following functions:
12.1 Submit the corresponding proposal to the Board of Directors to select, appoint, reelect and substitute the Auditor, taking charge of the selection process and of the hiring conditions. The proposal will be made subject to compliance with the procedures established legally, in line with the selection procedure approved in this regard.
12.2 Oversee the auditors’ independence. For such purpose:
12.2.1 It will request the confirmation or declaration of independence of the Auditor.
12.2.2 It will issue, as a result of this declaration, a report on the Auditor’s independence, prior to the issue by it of its Auditor’s Report.
For such purpose, the Committee must be informed in a detailed and individual manner of the additional services of any type provided and of the corresponding fees received from them by the External Auditor or by people or entities related thereto which, prior to their arrangement, must have been approved in conformity with the set forth in the CNMV Technical Guide.
12.2.3 It will approve a procedure that includes the criteria to guarantee the continuation of the Auditor’s independence and which defines its involvement faced with any circumstances that represent a threat thereto.
12.3 It will establish, in conjunction with the Auditor, fluid communication systems that do not undermine its independence to collect information from the Audit Plan, its execution and any circumstance related with the audit process. For such purpose, the Committee must:
12.3.1 Establish an activity schedule and an annual meeting agenda.
12.3.2 Review the following with the Auditor:
a) Where appropriate, the significant findings of its work.
b) The Audit Report.
c) The additional report for the Audit Committee envisaged for Public-interest Entities in article 36 of the Audit Law.
12.3.3 Discuss the significant internal control system weaknesses detected in the performance of the Audit.
12.3.4 From the date on which it learns of or it has been informed that the Auditor considers that any of the cases envisaged in article 12.11 of the (EU) Regulation 537/2014 have arisen, it is necessary to propose to the Board of Directors the adoption of all appropriate measures to eliminate the causes leading to such cases, to the extent possible or, at least, to reduce their impact on the financial statements, providing all the information that may be requested, if any, in this regard by the Directorate-General of Insurance and Pension Funds or any other corresponding supervisory authority.
12.3.5 Provide a final assessment regarding the Auditor’s involvement and how it has contributed to the audit quality and to the integrity of its financial reporting.
12.3.6 If from the foregoing assessment, the Audit Committee considers that worrying or unresolved aspects exist regarding the quality of the audit, it will inform the Board of Directors in this regard so that it can adopt the appropriate decisions.
Article 13. Other responsibilities.
The Audit Committee also has the following responsibilities:
13.1 The review of the written corporate governance policies implemented under article 65 of Law 20/2015, of 14 July, on the organisation, supervision and solvency of insurance and reinsurance companies, prior to their approval by the Board of Directors.
13.2 Report, for its submission in advance to the Board of Directors on the operations expected to be performed by the company or any of its subsidiaries with people or related entities in the terms established in the Spanish Limited Liability Companies Law.
13.3 Any others attributed by the prevailing regulations at all times.
TITLE V. RESOURCES TO PERFORM ITS DUTIES.
Article 14. Provision of resources to the Audit Committee.
The company will provide the Audit Committee with sufficient means to undertake its functions. For such purpose, the Audit Committee will make, through its Chairman, the requests that it deems necessary in this regard.
Article 15. External advisory services and technical resources.
In order to be aided in the exercise of its functions, the Audit Committee may request, with a charge to the company, the hiring of the legal, accounting and financial advisers or other experts.
TITLE VI. RULES ON THE COMMITTEE’S INTERACTION WITH THE BOARD OF DIRECTORS AND SHAREHOLDERS.
Article 16. Relationships with the Board of Directors.
The Committee Chairman will act as spokesperson of the Committee vis-à-vis the Board of Directors, informing it at the first Board meeting held following each of the Committee meetings, of the most significant aspects dealt with thereat and, in particular, of the preliminary mandatory reports so that the Board can adopt the corresponding resolutions.
Article 17. Shareholder relations.
Through its Chairman, the Committee will inform the General Shareholders’ Meeting of matters envisaged in relation to those issues that are the competency of the Committee and, in particular, of the findings of the Audit, explaining how it contributed to the integrity of the financial reporting and the Committee’s function in this process.
In any case, the content of the report on the functioning of the Audit Committee will be available to the shareholders with the activities performed by the Committee.
TITLE VII. RULES ON THE COMMUNICATION WITH THE AUDITOR AND THE INTERNAL AUDITOR.
Article 18. Rules on communication with the Auditor.
18.1 In conformity with section 12.3.1, the Auditors’ meetings are planned in an activity schedule and annual meeting agenda that must be approved by the Committee.
18.2 This annual agenda must include, at least in an approximate manner, the number of meetings to be held between the Committee and the Auditor, their dates, within the duration of the audit work, and the main matters that must be dealt with thereat.
18.3 Despite the foregoing, upon the initiative of the Committee or Auditor, it is possible to request, when so required by the circumstances, that meetings be held between the two parties that may be required for the sound performance of the audit work.
Article 19. Rules on communication with the Internal Auditor.
Through its Chairman, the Audit Committee will notify, as many times as deemed necessary or appropriate, the Internal Audit Director who, in turn, will have direct effective access to the Committee, and may request to appear at any of its meetings and inform it of all the aspects related with the Internal Audit Plan or with any other plan deemed appropriate.
TITLE VIII. ASSESSMENT OF THE COMMITTEE AND REPORTS.
Article 20. Committee assessment
20.1 The Committee will assess its performance in an autonomous manner, to strengthen its functioning and improve its planning for the following years requesting, in this regard, the opinion from the remaining Board members. To assess its functioning, the Committee must take into account the aspects envisaged in this regard in the CNMV Technical Guide.
20.2 The Committee can, if it deems it appropriate, have the help of an external consultant to comply with this self-assessment obligation.
20.3 The Committee’s Chairman will inform the Board of Directors of the assessment, the findings of which will also be published in the Annual Report on its activity, together with the remaining aspects established in the CNMV Technical Guide.
Article 21. Reports.
The Audit Committee must prepare and present the reports, assessments, recommendations or proposals for which, under the legal requirements of the CNMV Technical Guide or these very regulations, it is responsible (report on the independence of the External Auditors, proposed selection of the External Auditor, its Annual Activity Report, etc.).
a) A serious breach of the legal, regulatory or administrative provisions which establish, where appropriate, the authorisation conditions, or which specifically regulate the exercise of the activities of the Public-interest Entity;
b) A threat or doubt of relative importance in relation to the continuity of the activities of the Public-interest Entity;
c) The refusal to issue an audit opinion on the financial statements or to issue an unfavourable or reserved opinion.