A revised version of the Code of Good Governance for Listed Companies of the Spanish Securities Market Commission (CNMV) was published in 2020. The Code of Good Corporate Governance contains a series of recommendations aimed at ensuring the proper functioning of the governing and administrative bodies of Spanish companies in order to lead them to the highest levels of competitiveness; to generate confidence and transparency for shareholders and domestic and foreign investors; to improve internal control and corporate responsibility of Spanish companies; and to ensure the proper segregation of functions, duties and responsibilities in companies, from a perspective of maximum professionalism and rigour.
Thus, based on the recommendations set out in the amended version of the Code of Good Governance, during 2020 Cellnex reviewed the organisation's corporate documents to incorporate these recommendations. In addition, the corporate governance regulations were revised to bring them into line with the Draft Law transposing Directive (EU) 2017/828 of the European Parliament and of the Council with regard to the promotion of long-term shareholder engagement, which subsequently resulted in Law 5/2021 and came into force on 3 May 2021.
Law 5/2021, of 12 April 2021, abolishes Article 120 of the Consolidated Text of the Stock Market Law and therefore eliminates the obligation for companies whose shares are listed on regulated markets to publish quarterly financial information. In this regard, Cellnex plans to continue submitting the quarterly financial reports for Q1 and Q3 on a voluntary basis, with an in-house analysis in each case as to whether these reports may contain inside information, in which case they will be reported as "Inside information"; and otherwise, they will come under "Other relevant information".
The list of Policies updated in 2021 is as follows:
Following the revision of all internal regulations, the Articles of Association and the Regulations of the General Meeting of Shareholders were approved by the Ordinary General Meeting of Shareholders of the Company on 29 March 2021 and the Regulations of the Board of Directors and the Internal Code of Conduct on matters relating to the Securities Market were approved by the Board of Directors on 19 February 2021.
Additionally, on 19 February 2021, the Board of Directors approved the new Policy on financial, non-financial and corporate information and contacts with shareholders, institutional investors and proxy advisors, which includes the General Policy on the communication of economic-financial, non-financial and corporate information, and was published on the Company's website.
In addition, on 19 February, 2021, the Company included sustainability in the functions of the Appointments and Remuneration Committee, which was renamed the Nominations, Remuneration and Sustainability Committee, and also incorporated risk management into the Audit and Control Committee, renamed the Audit and Risk Management Committee. Likewise, on the same date the Company approved an Environmental, Social and Governance (ESG) Policy. Consequently, Cellnex fully complied with recommendations 53, 54 and 55 of the Code of Good Governance.
In this regard, from the Board's point of view, the expanded responsibilities of the Appointments and Remuneration Committee in relation to Sustainability was intended to ensure best practices of the management team in governance oversight. In addition, the specific training and awareness of the Board and the Group's management team has been prioritised with an ad hoc updating programme in the field of ESG in collaboration with IESE.
The new Directors' Remuneration Policy approved by the Ordinary General Shareholders' Meeting of 2021 maintains the fundamental lines applied in previous years, but introduces some adjustments to strengthen alignment with the Company's strategic priorities, with corporate governance recommendations and with the practices of comparable sectors and companies. Likewise, the new requirements established in the then Draft Legislation for the transposition of Directive (EU) 2017/828 of the European Parliament and of the Council have been taken into account with regard to promoting the long-term involvement of shareholders, transposition made in Law 5/2021 that entered into force on May 3, 2021.
As a new feature, the 2021 Annual Directors' Remuneration Report (see Annex 10. Annual Report on the Remuneration of Directors) has been prepared in open format to reinforce the Company's good governance practices in line with the best standards in Europe. Therefore, in addition to the information provided in the CNMV format, further information will be provided to increase the transparency of the information contained in this report, and will also be provided in a more visual manner.
During 2021 there have been no significant changes in the shareholding structure of the Company since the previous year's General Shareholders' Meeting. Therefore, the main shareholders of Cellnex are presented below.
On 19 February 2021, the Board of Directors of Cellnex, a proposal of the Nominations, Remuneration and Sustainability Committee, approved the new Policy on the composition of the Board of Directors. This Policy aims, among other things, to achieve an appropriate composition for the Board in line with the recommendations of the Code of Good Governance for listed companies of the Spanish Securities Market Commission (CNMV).
The appointments made in recent years have always complied with the criteria established in the former Policy for the Selection and Appointment of Directors, now by the Policy for the Composition of the Board of Directors. The Company also complies with the recommendations of the Code of Good Governance of Listed Companies regarding diversity on the Board. However, on the occasion of the upcoming reappointments, the Nominations, Remunerations and Sustainability Committee has formulated a matrix of competencies of the Board of Directors which has been approved by the Board, following the best practices set out in the Technical Guide on Nomination and Remuneration Committees, in order to analyse and, where appropriate, strengthen the composition of the Board of Directors.
Accordingly, an amendment to the new Board of Directors' composition policy and to the Board of Directors' Regulations is to include the objective that the least represented gender should represent at least 40% of the total number of Board members by the end of 2022. This objective has already been achieved as of the date of this report (the number of female directors currentl 45.45% of all the members of the Board). In addition, following its commitment to Diversity, the Council includes representatives of 7 different nationalities. Likewise, on the same date, February 19, 2021, an amendment to the Equity, Diversity and Inclusion Policy was also approved, in order to highlight the commitment to the presence of senior managers in the Company.
In 2021, 14 meetings of the Board of Directors were held, with 100% attendance at all meetings with the exception of the meeting held on 6 May, where one Director excused his absence. All meetings were held electronically, except for the last meeting in October and December, which were held in person.
The changes made to the composition of the Group's Board of Directors in 2021 include the following:
With the incorporation of Kate Holgate, the number of independent directors rises to eight, representing 72.72% of this governing body and thus exceeding the recommendation established in the Code of Good Governance listed companies of the Spanish National Securities Market Commission (CNMV) on this topic.
The current composition of the Board of Directors of the Cellnex Group is set out below.
The governing bodies of Cellnex are completed with:
The responsibilities and functioning of the ARMC and the NRSC are incorporated in the Internal Regulations of the Board of Directors.
As established in the CNMV's Code of Good Governance for Listed Companies, every three years an external consultant assesses the functioning of the Board and its committees, and Cellnex carries out an internal assessment on an annual basis. Based on the results of the assessments, an Action Plan is drawn up for the following year, which is approved by the Board of Directors.
The Board of Directors and the Management of Cellnex Telecom S, Aare firmly committed to promoting a solid culture of compliance, ethics and integrity in the performance of all activities of the Cellnex Group, including professional members of the Group, representatives, suppliers and other third-parties that provide services or in any way act in Cellnex’s name or have any relationship with the Group.
In this context, the Ethics and Regulatory Compliance Committee (“CEC”) is responsible for the proactive oversight in respect to ethics, business integrity and for the effective functioning of the Cellnex compliance system, for which it has ample powers and independence in the execution of its functions. The Committee is governed by Regulations of the Ethics and Regulatory Compliance Committee, the applicable law and other Cellnex Group corporate governance rules.
The Cellnex Ethics and Regulatory Compliance Committee is an internal and permanent collegiate committee, linked to the Audit Committee and Risk Management and reports to the Cellnex Telecom, S.A., Board of Directors.
In Accordance with the Regulations of the Ethics and Regulatory Compliance Committee, the Ethics and Regulatory Compliance Committee has the following responsibilities:
During the 2021 financial year, the Regulations of the Ethics and Regulatory Compliance Committee and a document on “Responsibilities of the Ethics and Regulatory Compliance Committee” were both approved by the Board of Directors its meeting of 28 July 2021.
Furthermore, during 2021 the composition of the Ethics and Regulatory Compliance Committee was reorganized with a view of promoting and developing new measures and policies that were implemented throughout the year.
The current composition of the Ethics and Regulatory Compliance Committee is as follows:
In 2020 Cellnex reviewed and updated its Crime Prevention Model to adapt it to the various legal provisions approved since the previous version of the Model, as well as to adapt to Cellnex’s organisational changes. Likewise, a report was issued based on the NIEA 3000 Standard “Assurance Engagements other than the audit or review of historical financial information”, which establishes that Cellnex has an adequate and reasonable control environment to mitigate the commission of criminal offences that entail criminal liability of legal persons.
The updated version of the Crime Prevention Model and the Independent Expert Report were approved by the Ethics and Compliance Committee, the Nominations, Remunerations and Sustainability Committee and the Board of Directors in 2021.
As an essential part of the Crime Prevention and Detection Model (“MPDD”), Cellnex also has a Corruption Prevention Procedure the content of which is in line with the requirements laid down by the ISO 37001 standard. The Corruption Prevention Procedure PPC is intended to establish mandatory principles for combating corruption, and to be configured as the guide to be followed by all directors, employees, and governing bodies at Cellnex, as well as by third parties, establishing appropriate standards of conduct in relation to the prevention, detection, investigation and remedy of any corrupt practice within Cellnex. The PPC therefore simbolises Cellnex’s commitment combat against corruption. In this connection, thanks to planned by Cellnex's to prevent corruption,prevention measures, no cases of corruption were identified in 2021.
The current version of the Corruption Prevention Procedure was approved by the Ethics and Regulatory Compliance Committee, the Nominations, Remunerations and Sustainability Committee and finally by the Board of Directors in December 2020.
Moreover, in line with the desire for continuous improvement indicated, during 2021, with the help of an independent third-party expert, a Gap-Analysis Report was drafted on the content of the MPDD and the PPC and the proposals in relation to recommendations laid down by UNE.ISO 37001, with the view to making the improvements identified during the 2022 financial year.
To reinforce the culture of compliance, ethics, and integrity, and to align with the requirements of UNE 19602, the Tax and Complaince Committee a specific body for the Tax Compliance Officer was set up in 2021 within Cellnex Group. Furthermore, since 2020 Cellnex has adhered to the Code of Good Tax Practices.
Finally, during 2021, work was carried out on the implementation of a tool that can automatically assess any compliance risk that Cellnex bares when contracting with third parties, such as customers or suppliers, with the aim of avoiding kind of damage arising from relationships with such parties. This tool helps monitor data such as the presence on an international sanctions list of entities related to Cellnex,to treat of its administrators as politically exposed persons or if a company appearing in the media or social networks for reasons related to corruption, money laundering or tax evasion.
In 2015 the Board of Directors of Cellnex Telecom, S.A approved the Cellnex Code of Ethics, which has been updated in 2019.
The Cellnex Code of Ethics is a fundamental regulation of the Cellnex Group and its objectives are as follows:
In accordance with the Cellnex Group Code of Ethics, the guiding principles of the Cellnex Group are as follows:
Since 2019, the General Conditions of Procurement of the Cellnex Group have included a clause on the Group’s Code of Ethics to require suppliers to declare knowledge of and full compliance with the contents of the Code of Ethics. In addition, suppliers have to inform their employees and any subcontractors of the existence and content of the Code of Ethics and to ensure full compliance. The same clause has been incorporated into the employment contracts in the new Cellnex Group hires.
Furthermore, all Group employees always have access to training related to and associated with the Code of Ethics.
The Cellnex Group Code of Ethics has a whistleblowing channel (known as the Ethical Channel for reporting, anonymously and confidentially, any potentially significant irregularities observed within the companies of the Cellnex Group. The Ethical Channel is managed by the Group’s Ethics and Compliance Committee.
In 2021 the Ethics and Regulatory Compliance Committee made fuerther progfress on disseminating and communicating of the Group’s Code of Ethics through number of actions in each geographical area.
The Cellnex Group, in its mission to promote a robust culture of compliance, has implemented a whistleblowing channel, known as the Ethical Channel.
The Ethical Channel is a communication tool accessible to all employees and stakeholders of the Group for reporting, confidentially and anonymously, any irregularities of potential significance detected within the companies of the Group.
Through the Ethical Channel, all concerned individuals and groups can:
Both people working in the Cellnex Group and third parties with whom the Group has relationships must cooaperate on the early detection and reporting through the Ethical Channel, of anu conduct that might be in breach of the applicable regulations, especially when such conduct might give rise to criminal liability for Cellnex.
The Ethical Channel is easily accessible as follows:
Complaints received through the Ethical Channel will be handled by the Group’s Ethics and Regulatory Compliance Committee, the body responsible for regulatory compliance. Such reports will be confidential and anonymous.
Given the importance of the Ethics Channel as a powerful communication tool for reporting irregularities of potential significance by employees and stakeholders of the Cellnex Group, the company works continuously to improve this channel, ensuring that it works correctly. Accordingly, in 2021, technical and organisational aspects of the Channel were modified to guarantee not only the inherent confidentially from the beginning, but also the possibility of submitting complaints and reports in general in an anonymous manner.
These updates to the Ethical Channel herald an even more in-depth reform that will lead to its enhancement during 2022, thereby taking another step towards fulfilling the firm commitment to promote a robust culture of compliance, ethics and integrity in the performance of all Cellnex Group activities.
Finally, the number of complaints received in the Ethical Channel, has risen from two in 2020 to seven in 2021. Four of those complaints were related to issues that were not the responsibility of the Ethics and Regulatory Compliance Committee. None of the complaints received was related to a violation of human rights or corruption.
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