System and Rules of Corporate Governance

Compliance with the Code of Corporate Governance of Borsa Italiana S.p.A.

In line with the values enshrined in the Code of Ethics, integrity and transparency are the principles that Snam pursues in formulating an administration and control structure that is suited to its size, complexity and operating structure, in adopting an effective internal control system, and in communicating with shareholders and other stakeholders, particularly by reviewing and updating the information available on its website.

Through the decision of the board of directors of 11 December 2006, Snam has confirmed and renewed its compliance with the Code of Corporate Governance for Listed Companies promoted by Borsa Italiana S.p.A, referring to the version published on 14 March 2006.

The aim of the corporate governance system is to create value for shareholders, bearing in mind the company’s social importance, particularly with regard to protecting the environment, people’s health and safety, workers’ rights, equal opportunities, working with the local and national communities in which the company is present, and the interests of all stakeholders.

Corporate Governance Structure

The corporate governance structure of Snam follows the traditional model, which – notwithstanding the tasks to be carried out by shareholders31 – assigns corporate management to the board of directors, supervisory functions to the board of statutory auditors, and auditing of the accounts to the audit firm appointed by the shareholders. The chosen model therefore establishes a clear distinction between the functions of the Chairman and those of the Chief Executive Officer; pursuant to Article 19 of the by-laws, both of them retain representative powers for the company.

Please find below a graphic summary of the governance structure of the company:


In their extraordinary meeting of 27 April 2010, the shareholders approved some amendments to the company by-laws for two reasons. Firstly, the amendments are dictated by the need to bring the structure of the by-laws in line with the changes to the legal and regulatory framework in which the company operates.

In this regard, it should be noted that during 2009 the company acquired total control of the companies Italgas S.p.A. and Stogit S.p.A, thereby entering the gas distribution and storage markets as well as gas transportation. As a result, Snam can today be seen as the most significant European organisation operating in the regulated business sector, with a presence (partly through its Subsidiaries) in the transportation, distribution, storage, regasification and gas measurement segments.

In the light of everything that has been mentioned above, it seemed worthwhile to set out the scope and contents of the company’s various activities in a more coherent way within the by-laws, as well as to clearly and rigorously affirm the company’s willingness to exercise correct supervision over the relationship between Snam and its Subsidiaries.

Secondly, and for separate reasons partly due to the company’s greater significance and visibility following the acquisitions of Italgas S.p.A. and Stogit S.p.A. (as well as to guarantee the utmost transparency in its activities), the company decided to implement some legal provisions introduced by Legislative Decree no. 27 of 27 January 2010, “Transposition of Directive 2007/36/EC of the European Parliament and of the Council of 11 July 2007 on the exercise of certain rights, in implementation of the authorisation referred to in Article 31 of Law no. 88 of 7 July 2009”, published in the Official Journal of the Italian Republic of 5 March 2010.

Board of directors

Under Article 13 of the by-laws, the board of directors has a variable number of members ranging from five to nine, elected by list vote. Only those shareholders32 who, severally or jointly, represent at least 2 percent of the share capital, or a different percentage established by Consob in its regulation, shall have the right to submit lists. On 26 January 2011, Consob issued Resolution no. 17633, which set this percentage as 1%. In their meeting of 27 April 2010, the shareholders decided that there would be nine directors, and appointed the board of directors33 and the chairman for three years, until the date of the shareholders’ meeting called to approve the financial statements for financial year 2012.

There are nine directors on the board: Salvatore Sardo (Chairman), Carlo Malacarne (Chief Executive Officer), Alessandro Bernini, Davide Croff, Roberto Lonzar, Massimo Mantovani, Elisabetta Oliveri, Renato Santini and Mario Stella Richter (Directors).

Directors Salvatore Sardo, Carlo Malacarne, Alessandro Bernini, Davide Croff, Massimo Mantovani and Renato Santini were elected from the lists submitted by Eni S.p.A, while Roberto Lonzar, Elisabetta Oliveri and Mario Stella Richter were elected from the list presented by certain minority shareholders.

The board of directors is at the centre of the company’s corporate governance system. It has the broadest possible powers for the ordinary and extraordinary management of the company is specifically entitled to carry out all actions it deems useful to realise and reach the company objective, with the sole exclusion of actions reserved by law or by company by-laws, for the shareholders’ meeting.

The board of directors in its 30 April 2010 decision appointed Carlo Malacarne as chief executive officer, thereby entrusting him with all the tasks and powers that are not reserved by law, company by-laws, or by decision of the board of directors itself, for the board of directors or the chairman.

The board also assigned the following tasks, powers and authorisations to the chairman, Salvatore Sardo. In addition to the powers assigned to him by law and the company by-laws, the chairman:

  • is the company’s legal representative; deals with institutional bodies and authorities, together with and in conjunction with the chief executive officer;
  • calls and presides over board meetings and sets their agendas together with the chief executive officer. Guides, oversees and coordinates the work of the board, ensuring its proper functioning and adequate disclosure by directors. Verifies the implementation of board decisions;
  • in consultation with the Internal Control Committee, assesses and contributes to the CEO’s suggestions to the board regarding the appointment, dismissal and remuneration of the of Officer in charge of internal control and the Internal Audit Manager;
  • assesses and contributes to the CEO’s suggestions to the board regarding the appointment of general managers, the Officer in charge of preparing financial reports, and members of the Watch Structure, pursuant to Legislative Decree no. 231 of 8 June 2001.

During the same meeting, Marco Reggiani, the company’s General Counsel Legal and Corporate Affairs, was confirmed as the Secretary of the board of directors and on that same date the board introduced a set of rules to regulate his work in this capacity.

In order to smooth their arrival at the business, newly-elected directors and auditors undergo a ‘board induction’ process. The main aspects of regulated businesses in the gas sector are explained to them in relation to Snam, focusing in particular on the legal and regulatory framework, and the company’s corporate governance structure.

All candidates must also meet the integrity requirements imposed by current laws.

The board periodically evaluates the independence and integrity of the directors as well as any grounds for ineligibility or incompatibility.

Pursuant to the terms of the company by-laws which are more favourable than those provided for by law if there are no more than seven directors on the board at least one must satisfy the independence criteria established for auditors of listed companies; however, with more than seven directors on the board, at least three must satisfy the independence criteria.

If one of the directors does not fulfil or no longer fulfils the established independence or integrity requirements imposed by law, or if there are grounds for ineligibility or incompatibility, the board will dismiss the director and arrange for him to be replaced, or will ask that the grounds of incompatibility be removed within an established period of time, otherwise he must forfeit the post.

Directors’ independence and integrity as well as the inexistence of grounds for ineligibility and incompatibility is assessed following their appointment and at least once a year by the board of directors, based on information provided by the director himself or made available to the company by other means. In its 9 February 2011 meeting, the board of directors noted that no grounds for director incompatibility or ineligibility existed and that the directors met the integrity requirements for supervisory bodies established by Ministry of Justice Decree no. 162 of 30 March 2000.

In the same meeting held on 9 February 2011, the board of directors noted that the non-executive directors Davide Croff, Roberto Lonzar, Renato Santini, Elisabetta Oliveri and Mario Stella Richter met the independence requirements imposed by current legislation and the Code of Corporate Governance. The board of statutory auditors also verified that the criteria and the assessment procedures adopted by the board of directors were correctly applied.

In accordance with the provisions of the Code of Corporate Governance, the board of directors evaluated the size, composition and workings of the board and its committees in 2010, using for this purpose the services of Egon Zehnder International, an outside specialist.

In the light of the results of Egon Zehnder International’s evaluation of the board of directors and its committees, the board expressed a very positive opinion on the size, composition and workings of the board itself and its committees.

Board of statutory auditors

In compliance with the provisions of the law and the company by-laws, Snam’s board of statutory auditors is composed of three standing members and two alternate members, who are appointed by the shareholders for three-year terms and may be re-elected at the end of their term in office. Like the board of directors and in line with applicable provisions, the by-laws provide for the auditors to be appointed by list vote, except when directors are replaced during their term in office.

On 27 April 2010 the shareholders’ assembly appointed the following auditors34 for a period of three years or until the date of the shareholders’ meeting called to approve the 2012 financial statements: Massimo Gatto

(Chairman), Roberto Mazzei and Francesco Schiavone Panni (standing members), and Giulio Gamba and Luigi Rinaldi (alternate members). Roberto Mazzei, Francesco Schiavone Panni and Giulio Gamba were elected from the list presented by Eni S.p.A; Massimo Gatto and Luigi Rinaldi were elected from the list presented by a number of minority shareholders.

The statutory auditors are chosen from among those that satisfy the requirements of professionalism and integrity set forth by Ministry of Justice Decree no. 162 of 30 March 2000. For the purposes of this decree, areas of the company’s business are strictly defined as commercial law, business management and corporate finance. Likewise, the sector pertaining to its business is the engineering and geological sector.

Based on the statements provided, the board of statutory auditors has checked that all the members meet the necessary independence requirements set forth by law as well as those pertaining to directors contained in Article 3 of the Code of Corporate Governance.

Independent auditors

As required by law, the company’s financial statements are audited by independent auditors included in the relevant register and appointed by the shareholders based on a documented proposal issued by the board of statutory auditors.

On 27 April 2010, the shareholders’ assembly approved the proposal to revoke the appointment of PricewaterhouseCoopers S.p.A. as auditors based on an “objective” and sound reason, in an effort to guarantee effective auditing of the company and avoid any misalignment in this role with respect to the ultimate parent company Eni S.p.A.

On the same date, the shareholders’ assembly appointed Reconta Ernst & Young S.p.A. to audit the company accounts for the 2010 - 2018 period.

Relationships between Snam and Subsidiaries

On 1 April 2010 corporate restructuring was completed following the acquisitions of Italgas and Stogit, thereby leading to the adoption of a new corporate governance structure at Snam. The aim of this was in part to allow Snam to exercise legitimate management and coordination powers typically enjoyed by parent companies.

In line with changes to Snam’s operational model, and following the acquisition of business units from GNL Italia S.p.A. (procurement and tenders; personnel and services) and Stogit S.p.A. (legal affairs; administration and financial reporting; sales and business development; growth project management; Health Safety and Environment and quality; internal audit; human resources; IT and procurement), and the temporary allocation of staff from Italgas S.p.A., Snam provides these companies with a series of centralised services on the basis of service agreements entered into with each subsidiary.


Snam’s remuneration system is in line with the recommendations of the Code of Corporate Governance. The system places particular emphasis on variable incentive instruments based on the achievement of performance targets established in relation to Snam Rete Gas’s Strategic Plan for sustainable results and creation of shareholder value over the medium and long term. The remuneration system is supplemented by benefits that include goods and services primarily associated with supplementary social security and healthcare.

The remuneration of directors is determined by the shareholders. Remuneration of directors with particular powers (e.g., the chief executive officer), or fees for functions carried out within the board committees, is determined by the board of directors on the basis of proposals submitted by the Compensation Committee on consultation with the Board of Statutory Auditors. The basic compensation criteria for the general manager and managers with strategic responsibilities35 are approved by the board of directors based on suggestions from the Compensation Committee, upon examination of the guidelines provided by the chief executive officer.

The remuneration of directors is made up of a fixed annual component established for the entire duration of the appointment. Non-executive directors receive additional fees for sitting on board committees.

As of 1 June 2010 the chairman’s fees are made up of a gross, annual salary including amounts decided upon by the shareholders in their 27 April 2010 meeting, as established by the board of directors in relation to the powers conferred in the 29 April 2010 meeting.

The compensation structure for the chief executive officer for the powers assigned to him comprises a fixed component, a variable annual component linked to the achievement of specific company objectives set for the preceding financial year, and a long-term variable component divided into two separate plans, each based on different business performance conditions measured over three years according to both absolute and relative standards compared to a peer group of six of the largest listed European utilities.

The compensation structure for the general manager and managers with strategic responsibilities comprises a fixed component, a variable annual component linked to the achievement of specific company objectives set for the preceding financial year, and as a long-term variable component divided into two separate plans, under the same conditions provided for the chief executive officer.

In 2010, the compensation structure (“pay mix”) for the chairman, the chief executive officer, the general manager and other managers with strategic responsibilities was as follows:

Chairman CEO Chief Operating Officer Other executives with strategic responsibilities
Fixed compensation 100% 40% 48% 51%
Variable compensation (result-related) 24% 23% 21%
Long-term incentives (result-related) (*) 36% 29% 28%
Total 100% 100% 100% 100%

(*) Maximisation of long-term incentives (discounted) in predicting target results

For more detailed information on the compensation structure, please refer to the section entitled “Compensation structure” in the Report on Corporate Governance and Ownership Structure for 2010, available on the company’s website at:

In accordance with Consob provisions, the notes t financial statements for Snam Rete Gas S.p.A. include the following: (i) the amount of compensation paid to members of administration and control bodies, the chief operating officer and executives with strategic responsibilities; (ii) stock options allocated to members of administration and control bodies, the chief operating officer and executives with strategic responsibilities; (iii) long-term incentives allocated to members of the administration body, the chief operating officer and executives with strategic responsibilities; and (iv) and severance pay paid to directors, if any. The equity investments held in Snam Rete Gas by members of administration and control bodies, the chief operating officer and executives with strategic responsibilities are indicated in the section “Other information”.


At its meeting of 9 February 2011 the board of directors verified, as had already been done during the course of the previous year, that Snam satisfies the requirements listed in Article 37 paragraph 1 of Consob Regulation no. 16191/07 and successive amendments and additions thereto for the admission, on an Italian regulated market, of the shares of subsidiaries subject to management and coordination by another company. This declaration was confirmed by the board of statutory auditors.


For more efficient performance in its duties, the board of directors has established three committees: the Compensation Committee, the Internal Control Committee and the Combined Independent Committee.

1) The Internal Control Committee, consisting of three independent non-executive directors, as defined by the Corporate Governance Code for Listed Companies, makes proposals and consults the Board on the oversight of the Company’s general management conduct. In particular, the Committee performs the following functions:

  • evaluates in collaboration with the Officer in charge of preparing financial reports and the independent auditors, the proper application and consistency of the accounting principles for the purposes of preparing the consolidated financial statements;
  • at the request of the Chairman or the Chief Executive Officer of the company, expresses opinions on specific aspects of identifying the principal business risks and the designing, implementing and managing of the internal control system;
  • examines the work plan prepared by the head of Internal auditing, as well as its periodic reports, at least every six months, on the activities carried out;
  • performs the other duties entrusted to its by the board of directors; in particular, it expresses an opinion on the transparency rules and substantial and procedural correctness of transactions with related parties and transactions in which a director has an interest either on his/her own behalf or that of third parties.

At its meeting of 10 June 2010, the board of directors approved the new “Regulations of the Internal Control Committee of Snam Rete Gas” proposed by the Internal Control Committee.

2) The Compensation Committee, consisting of three non-executive directors, two of whom are independent makes proposals to the board as follows:

  • proposals relating to the fixed and variable remuneration of the Chairman and the Chief Executive Officer, including any participation in incentive stock option plans;
  • examining information reported by the Chief Executive Officer, and proposing:
    • incentive stock option plans;
    • criteria for the remuneration of top management;
    • objectives and evaluation of the results of performance plans, in connection with determining the variable remuneration of executive directors and implementing incentive stock option plans.

3) Resolution ARG/com 57/2010 of the Electricity and Gas Authority, modifying and supplementing Resolution no. 11/07 on the functional separation of regulated activities in the natural gas sector, established that, pursuant to Article 9 of said Resolution 11/2007 (“Consolidated Unbundling Regulation” or “T.I.U.”), natural gas storage, regasification, transportation, dispatch, distribution and metering activities, inter alia, may be under joint control without being subject to the requirements governing functionally separate businesses.

By a resolution dated 27 July 2010, the board of directors established the Combined Independent Committee (the “Combined Independent Committee”), pursuant to Article 9 of the Consolidated Unbundling Regulation, as the collegial body responsible for the joint management of natural gas transportation, dispatch, distribution, storage and regasification activities. The Combined Independent Committee consists of the persons who, pro tempore, hold the following posts:

  • Chief Executive Officer of Snam;
  • Chief Executive Officer of GNL Italia;
  • Chief Executive Officer of Italgas;
  • Chief Executive Officer of Stogit;
  • General Manager of Snam Operations

and conferred all powers on the Combined Independent Committee to perform its functions. The Combined Independent Committee adopted its own operating regulations.

The Chief Executive Officer of Snam chairs Combined Independent Committee and represents the organisational structure within the Combined Independent Committee responsible for expressing opinions binding on the board of directors in compliance with and for the purposes cited in Article 11.5 letter c) of the Consolidated Unbundling Regulation for all decisions taken by the said body affecting the business’ managerial and organisational aspects, and to approve the development plan cited in Paragraph 11.1 letter b) point i) of the Consolidated Unbundling Regulation.

The Combined Independent Committee appointed the Guarantor, in the person of Snam’s General Counsel Legal and Corporate Affairs, responsible for properly managing commercially sensitive information in the context of natural gas transportation, dispatch, distribution, storage and regasification activities.


At its meeting of 9 February 2011, the board of directors noted that the member states of the European Union are required to adopt the provisions of Directive 2009/73/EC by 3 March 2011 - the so-called “Third Energy Package” - which repeals Directive 2003/55/EC and introduces new provisions for the separation of natural gas transportation network operators from other gas sector activities. The Directive contains provisions that could affect Snam’s corporate governance system. It stipulates that member states which have not already implemented ownership separation must adopt one of the following separation models for natural gas transportation activities by 3 March 2012: i) Ownership Unbundling (“OU”), or ownership separation of the transmission system operator from the vertically integrated business, which may hold only a minority share without voting rights in the gas transportation network and while enjoying only property rights; ii) creation of an Independent System Operator (“ISO”) for the operational management of the network, i.e. a third party not owned by the same company that owns the transportation network, which may remain integrated with the production and sale company, or iii) creation of an Independent Transmission Operator (“ITO”), which, while ownership remains in the hands of the vertically integrated company, ensures network independence through a Regulatory Authority system which binds and controls legal and functional separation far more stringently than the system currently in effect.

On 3 March 2011 the Council of Ministers approved the draft legislative decree which implements Directive 2009/73/EC36. To summarise, a larger transportation company is required to comply with the ITO model. On the other hand, as an alternative to the ITO model, smaller transportation companies are to adopt the ISO model with the option to appoint Snam as manager of their transportation system (based on guidelines of the Electricity and Gas Authority). Five years after the decree goes into effect, the Competition Authority (“AGCM”) will verify the effectiveness of the model adopted37. Once this is done, the Ministry of Economic Development (“MISE”) will assess the adoption of different models taking into account the experience of European countries of the same size and with the same market structure. A Vertically Integrated Company may opt for ownership unbundling at any time.


Snam has adopted an internal control system conforming to the prescriptions of the Corporate Governance Code for Listed Companies and in line with the current best practices. The purpose of the control system is to (i) ensure the adequacy of the various business processes in terms of effectiveness, efficiency and economy, (ii) ensure reliability and correctness of accounting records and safeguard corporate assets, and (iii) ensure that operations comply with internal and external rules, directives and corporate guidelines aimed at guaranteeing sound and proper management of the business.

Responsibility for the internal control system lies with the board of directors, which, with the assistance of the Internal Control Committee, prepares guidelines for the system and periodically verifies that it is adequate and functioning efficiently, thereby ensuring that the principal business risks are identified and managed appropriately.

The Chief Executive Officer is responsible for implementing the guidelines prepared by the board of directors by designing, managing and monitoring the internal control system; in accordance with the proposal put forth in this regard by the Corporate Governance Code, on 11 December 2008 the board of directors appointed the Chief Executive Officer as executive director responsible for overseeing the functionality of the internal control system.

On 30 April 2010 the Board, complying with the recommendations of the Code of Corporate Governance, also confirmed the appointment of the head of internal auditing for the company as Officer in charge of Internal Control, reporting to the Chief Executive Officer. In order to ensure the necessary independence, the appointment, dismissal and remuneration of the Officer in charge of Internal Control are approved by the board of directors, which also approves the programme and budget for internal auditing activities.

The Officer in charge of internal control regularly reports on his/her activities to the Chief Executive Officer and, every six months (unless circumstances require more frequent reports), to the Internal Control Committee and the Board of Statutory Auditors.

Applying the control system is the primary responsibility of the management, as control activities form an integral part of the management processes. Management must therefore foster an environment that encourages controls, and must specifically manage “line controls”, consisting of all the control activities that individual operating units or individual companies perform over their own processes. The Internal Audit Manager is responsible for verifying the adequacy of the internal control system and ensuring that it provides reasonable guarantees that the organisation is able to pursue its objectives economically and efficiently; to this end, it monitors the effectiveness of the controls applied by proposing suggestions and corrective actions to management to resolve any deficiencies identified.

The by-laws also provide for the board of directors to appoint the Officer in charge of preparing financial reports, on the proposal of the Chief Executive Officer, by agreement with the Chairman and based on a favourable opinion from the Board of Statutory Auditors.

On 29 October 2007 the board of directors, in compliance with the professionalism requirements established by the by-laws, on the proposal of the Chief Executive Officer, by agreement with the Chairman and based on a favourable opinion from the Board of Statutory Auditors, appointed as Manager of Financial Accounting to prepare the corporate accounting documents Dr Antonio Paccioretti, Director of Planning, Administration, Finance and Control of Snam. The board of directors also verified the adequacy of the powers and resources available to the Manager of Financial Accounting for the performance of his duties.

The internal control system is subject, over time, to verification and updating in order to ensure that it is always capable of controlling the principal areas of risk of the company’s activities, with respect to the characteristics of its operating sectors and its organisational configuration, and in accordance with any new legislative or regulatory provisions. The main innovations implemented in 2010 form part of an evolutionary process aimed at “ongoing improvement” of the system’s effectiveness and efficiency. The most significant innovations include:

  • a) following the acquisition of Italgas and Stogit and completion of the reorganisation process on 1 April 2010, the Company adopted the Organisation Manual on 30 June to describe the organisational model, business management system and functioning of Snam and its subsidiaries by identifying and describing their characteristic processes;
  • b) on 20 December 2010 the Board of Management approved the architectural integration of Snam’s Governance System, setting out (i) Policy and Management System Guidelines, documents containing elements of management and coordination by the parent company Eni S.p.A, in compliance with corporate autonomy and the rules in force, (ii) Procedures, and (iii) Operating instructions.


The financial reporting internal control system is the process aimed at providing reasonable certainty regarding the reliability38 of the financial reporting and the capacity of the process of preparing financial statements to produce financial reports in accordance with generally accepted accounting principles.

Snam has adopted a body of rules that define the standards, methodologies, roles and responsibilities for designing, implementing and maintaining the system of internal controls over time on the corporate reporting of Snam and its subsidiaries, and on the evaluation of its efficacy.

The body of procedures for the corporate reporting control system was defined in accordance with the provisions of Article 154-bis of the Testo Unico della Finanza (TUF) and takes into account the prescriptions of the U.S. Sarbanes-Oxley Act of 2002 (SOA), which apply to the ultimate parent Eni S.p.A. in its capacity as an issuer listed on the New York Stock Exchange (NYSE) and which have repercussions for Snam as a significant subsidiary.

The corporate reporting control model adopted by Snam is based on the COSO Report (“Internal Control – Integrated Framework” published by the Committee of Sponsoring Organisations of the Treadway Commission).

The defined control model applies not only to Snam, but to its subsidiaries, in accordance with international accounting principles, in view of their significance for the purposes of preparing financial reporting. Snam’s subsidiaries are adopting the defined control model as a reference for the design and implementation of their own control systems in order to adapt them to their size and the complexity of the activities carried out.

The design, implementation and maintenance of the control system are carried out by means of: risk assessment, identification of controls, evaluation of controls and reporting.

Controls are subject to evaluation in order to verify the quality of their design over time and their operational effectiveness; to this end, line monitoring has been entrusted to the management responsible for significant processes/activities, and independent monitoring has been entrusted to the Internal Audit Manager.

The results of the monitoring activities form the subject of periodic reporting on the status of the control system, which involves all levels of Snam’s organisational structure and its significant subsidiaries, from business operation heads and function heads to administrative directors and Chief Executive Officers.

Evaluations of all the controls implemented within Snam and its subsidiaries are brought to the attention of the Manager of Financial Accounting, who, on the basis of this information, prepares a half-yearly report on the adequacy and effective application of the control system, which is shared with the Chief Executive Officer.


On 27 June 2008 the board of directors approved the new Code of Ethics, which incorporates the most modern approaches to matters of ethics and sustainability.

The Code comprises the Eni Code of Ethics and a specific “addendum” which sets out the particular characteristics of Snam as a company listed on the stock market and subject to regulation by the Electricity and Gas Authority. The “addendum” therefore pays particular attention to relations with Snam’s shareholders and with the Market, the Electricity and Gas Authority, Clients, and Local and Regional Governments.

The functions of Guarantor of the Code of Ethics were assigned to the Watch Structure, to which the following may be submitted:

  • requests for clarification or interpretation of the principles and contents of the Code;
  • suggestions relating to the application of the Code;
  • reports of breaches of the Code, identified directly or indirectly.

Snam employees, without distinction or exception, have the duty to comply and ensure compliance with these principles within the scope of their functions and responsibilities. Under no circumstances can any conduct contrary to these principles be justified by the belief that one is acting in the Company’s interests.


Legislative Decree no. 231 of 8 June 2001 introduced the rules on the administrative liability of companies under which they can be held liable, and consequently punished, for offences committed or attempted in the interest or for the benefit of the company by persons who are entrusted with the representation, administration or management of the company or of a financially and functionally autonomous subsidiary thereof, as well as by persons who exert management and control on a de facto basis (so-called “top management”) or by persons who are subject to the authority of or control by one of the aforesaid persons (so-called “persons subject to the management of others”). The Company is not liable if it has adopted and effectively implemented, before the commission of the offences, appropriate organisation, management and control models to prevent such offences and has set up a body responsible for overseeing the functioning of the models and compliance with them.

In this regard, Snam and its subsidiaries have implemented the legal provisions by adopting its own organisation, management and control model commensurate with its particular nature, and by appointing for each of them a Watch Structure responsible for monitoring the implementation and effective application of the Model.

During the course of 2010 a multifunctional team – “Team 231” – was set up to identify and develop the necessary activities for updating the 231 model of the company and its subsidiaries by adopting the new legislative provisions introduced to respond to offences of fraud involving money, credit cards, revenue stamps, instruments or distinctive signs, computer crime and unlawful processing of data, offences of organised crime, crimes against industry and commerce, copyright crimes and crimes against the administration of justice. Team 231 is supported by PriceWaterhouseCoopers as an expert consultant on matters of administrative liability and compliance.

The Watch Structure of Snam consists of the General Counsel Legal and Corporate Affairs, the Head of Internal auditing and an external member acting as Chairman. During the course of 2010, the Watch Structure met on 11 occasions, with the participation of all members.


Snam has long attributed primary importance to the issue of fighting corruption, most recently with the approval, by the board of directors, of the Anti-Corruption Guidelines aimed at enshrining the internal rules on fighting corruption – along with the procedures which govern in detail the so called at-risk activities(“Ancillary Anti-Corruption Procedures”) – within a systematic reference framework, ensuring maximum compliance by Snam and its personnel with the Code of Ethics, Model 231 and national and international anti-corruption laws. In compliance with international best practices, two measures have been taken: an anti-corruption unit has been set up within Snam’s Legal and Corporate Affairs Division, whose task is to provide support on this issue to the business units of Snam and its subsidiaries, and a targeted training initiative has been launched in the form of an e-learning programme.

At its 10 February 2010 meeting, Snam’s board of directors adopted the “Anti-Corruption Guidelines” (embracing the similar policy introduced by ultimate parent Eni). Within this context, it also modified the organisational setup with the constitution of Snam’s Anti-Corruption Legal Support Unit, with the aim of adapting the existing procedures where necessary, encouraging subsidiaries to adopt the new rules and personnel to take part in awareness programmes and training on understanding and complying with the Anti-Corruption rules. The purpose of the Guidelines is to protect and promote Snam’s reputation by introducing a specific system of rules designed to ensure that the company complies with the best international standards in the fight against corruption.

Within the scope of the Ancillary Anti-Corruption Procedures provided for by the Anti-Corruption Guidelines, during the course of 2010 Snam adopted the procedure “Brokerage contracts”, the procedure “Joint venture contracts - prevention of illegal activities”, the procedure “Management of Legal and Corporate Practices”, the procedure “Entertainment expenses”, the procedure “Reports, anonymous or otherwise, received by Snam Rete Gas and its subsidiaries”, the procedure “Investigation of possible illegal acts performed by Snam employees”, the operating instruction “Investigation of possible illegal acts performed by suppliers”, and AD circular no. 8 “Standard contractual clauses relating to the Company’s administrative liability due to administrative offences arising from crime”.


Through Resolution no. 17221 of 12 March 2010, amended by Resolution no. 17389 of 23 June 2010, Consob approved the regulations on related-party transactions carried out, directly or through subsidiaries, by listed companies and by public share issuers with persons with potential conflicts of interest, such as major or controlling shareholders, directors, statutory auditors and other executives, and their close family members.

The reform of company law (Article 2391-bis of the Italian Civil Code) gave Consob, in its role as the supervisory and regulatory body for the financial markets, the task of establishing general regulatory principles in order to “ensure the transparency and substantial and procedural correctness of transactions with related parties”.

The measure aims to provide better protection to minority shareholders and other stakeholders by combating any abuses which might arise from related-party transactions with a potential conflict of interest. These include, by way of example, mergers, acquisitions, disposals and reserved capital increases. In short, the regulation provides for:

  • a) a stronger role for independent directors in all the decision-making processes of related-party transactions;
  • b) a system of transparency.

By a resolution of 30 November 2010 and following a unanimous favourable opinion from the Internal Control Committee, the board of directors approved the procedure “Transactions in which directors or auditors have an interest, and transactions with related parties”, which is applicable from 1 January 2011, adopted pursuant to Article 2391 bis of the Italian Civil Code and the Consob Regulation “Regulation on transactions with related parties”, no. 17221 of 12 March 2010 and successive amendments and additions thereto.


In compliance with the legislative provisions on Market Abuse, on 27 October 2010 the board of directors approved the “Procedure for communication to the market of privileged information and documents concerning Snam Rete Gas and the financial instruments issued by it”, the “Procedure concerning the identification of relevant persons and the communication of transactions carried out by them, including via nominees, in relation to shares issued by Snam or other financial instruments connected with such shares” (“Internal Dealing Procedure”) and the procedure “Keeping and updating of the register of persons who have access to privileged information within Snam”.39 In particular, the Internal Dealing Procedure identifies (i) the relevant persons, (ii) the transactions subject to a communication requirement, and (iii) the conduct requirements for such communication.


In order to actively involve shareholders in the life of the company, Snam has adopted various measures aimed at encouraging them to take part in the decisions falling to the responsibility of the shareholders’ meetings, facilitating the exercise of their rights. In particular, during the course of 2010 Snam made the necessary changes to the by-laws following the implementation in Italy of Directive 2007/36/EC concerning the exercise of certain rights of shareholders of listed companies (the so-called Shareholders’ Rights Directive)40.

By promptly updating its by-laws and taking measures which the legislation leaves to companies’ choice, Snam aimed to provide its shareholders with additional tools to encourage them to take part in shareholders’ meetings and exercise their voting rights (e.g. appointment of the Listed Company’s Proxy Holder).

During 2010, the website41 was enhanced and now features the “Shareholders’ Guide”, including an interactive version, which aims to provide a summary of useful information which will give all shareholders a more active experience in their Snam investment.

(31) For further information on the role of the shareholders’ meeting and the participation of shareholders, please refer to the Corporate Governance section of Snam’s website and the document “Report on Corporate Governance and Ownership Structure”.
(32) Each shareholder may present or be involved in the presentation of only one list, and may vote for one list only.
(33) For further information on the personal and professional characteristics of the directors elected, please refer to the Corporate Governance section of the website of Snam S.p.A.
(34) For further information on the personal and professional characteristics of the statutory auditors elected, please refer to the Corporate Governance section of the Snam S.p.A website.
(35) Managers with strategic responsibilities are those managers who have the power and the responsibility, both directly and indirectly, for the planning, direction and supervision of Snam. Managers with strategic responsibility at Snam, other than directors and statutory auditors, are the general manager and the managers bound to participate in the management committee on a constant basis. Currently, this applies to the Directors of: Corporate and Legal Affairs; Corporate Systems, Human Resources and Services; Business Development and Commercial; and Planning, Administration, Finance and Control.
(36) The draft decree will then be submitted to the appropriate parliamentary committees and the State-Region Conference to obtain the related opinions. Once a favourable opinion has been obtained, any amended text should be returned to the Council of Ministers for final deliberation, and finally, after being signed by the President of the Republic, it will be published in the Official Gazette. Following publication, it will become law.
(37) With respect to any discriminatory behaviour: access to third parties and investments.
(38) Reliability (of reporting): reporting which has the characteristics of correctness and conformity with generally accepted accounting principles and satisfies the requirements of applicable laws and regulations.
(39) These procedures, which replace those adopted by the board of directors on 17 March 2006, are published in the Corporate Governance section of the Company’s website at:
(40) The Directive was implemented by Legislative Decree no. 27 of 27 January 2010.
(41) The Shareholders’ Guide is published in the Investor Relations section of the Company’s website at:

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