Information to be included in annual report by directors of public companies

Filings of financial statements of public companies as from fiscal years beginning on January 1, 2007 must include in their annual reports completed questionnaires by the Board of Directors, as specified by the Regulations of the CNV under Numeral XXIII.15 - Annex V: "Annual Report by Directors of public companies”.

The contents of such Annex are based on the principles established by Decree No 677/2001 concerning the measures required of directors to ensure prudent management and the prevention of breach of duties imposed by the CNV and self regulating organizations. The Board of Directors of every company will have to complete the questionnaire, or specify the reasons for not answering it – whether fully or partially.

The questionnaire begins with questions about the by-laws and continues with the general and specific responsibilities of the Board of Directors (including the allocation of personal duties and functions) as well as certain aspects of the shareholders’ meetings.

It requires information on the composition, independence and functions of the Board of Directors; clarification as to whether it has an annual agenda, and whether it determines the general strategy, risk policies, and performance objectives for management. Also to be included is information on whether the Board of Directors verifies compliance with regulations in force, by-laws and the annual budget, as well as whether the general manager or chief executive officer, succession plans of key officers, and the board’s performance are evaluated.

In connection with the management of the issuer company, the questionnaire asks about independence of the directors, the coordination between members of the Board and the general manager, and the existence, composition, independence, regulation and performance of diverse committees (e.g. executive committee, remuneration, nominations, finance and audit committees).

The questionnaire also includes questions about the existence of regulations for the functioning of shareholders’ meetings, and the requirements for advance provision of accounting information which is to be considered at such meetings.

Finally, the regulation requires information about the existence of a code of conduct and the handling and disclosure of conflicts of interest among shareholders, key executives, interest groups and members of the Board.

Regulation No 493 does not amend the contents of the annual report, which continue to be governed by Article 66 of the Argentine Companies Law No 19,550 (text as reinstated by Decree No 841/1984, as amended) and relevant Regulations of the CNV and self regulated organizations; rather, it adds the above-mentioned questionnaire as an additional requirement in the case of public companies.