Organizational Model under Legislative Decree no. 231/2001

Since December 2002, Terna's Board of Directors has resolved to adopt an Organizational and Management Model that met the requirements of Legislative Decree no. 231 of June 8, 2001, which introduced into the Italian Law a system of administrative (and criminal) liability for companies with respect to certain types of offences committed by their Directors, managers or employees in the Company's interest or to its benefit. The Model was updated in June 2004, after the Company's shares were listed.

During 2010, the Model was amended following changes in law provisions as per Article 24-ter regarding "organized crime offences" and Article 25-bis, 25-novies and 25-novies-(bis) regarding, respectively, "offences against industry and trade", "crimes related to the violation of copyright" and "crime of incitement to refrain from issuing statements or to issue false statements", introducing the new Special Section I, relative to organized crime offences and updating the "General Section" and the "Special Sections" "A", "B", "G" and "H" for the other types of offences.

In addition to identifying areas deemed to be mostly at-risk for committing offences (so called "At-risk Areas"), the activity also involved defining conduct principles which all company representatives must comply with in order to prevent such offences, in addition to the provisions already included in the existing procedures within the Company.

This project went hand-in-hand with the Code of Ethics, as the Company believes that the adoption of this Model - regardless of the regulations that made it optional rather than mandatory - is a valid tool in increasing the awareness of those operating in the name and on behalf of Terna and its Group, so that their conduct be correct and transparent in the performance of their activities, to prevent the risk of the offences provided for by the Decree from being committed.

In 2011, due to the extension of the predicate offences category to environmental crimes, pursuant to Article 25-undecies of Legislative Decree no. 231/2001, an assessment was carried out, as well as the mapping of company areas, the roles is and responsibilities, identifying the so-called "At-Risk Areas" and the definition of principles of conduct which company representatives must comply with in order to prevent the occurrence of new predicate offences. Therefore, following said activity, the Model 231 was further broadened through the introduction of the Special Section “L” in connection with “Environmental Offences”.

In 2012, by virtue of the business reorganisation of the Terna Group, the Model of the parent company Terna S.p.A. was completely reviewed and updated and specific Organisational Models were prepared for the subsidiaries to consider their specific business.

Under the scope of the new special part "D", the new Model also considers the extension of the list of crimes established under Article 25-duodecies of Italian Legislative Decree no. 109 of July 16, 2012, which establishes the extension of the administrative liability to include entities where the minimum rules relating to the employment of citizens of third party countries with invalid permits to stay are exceeded, as established in Italian Legislative Decree no. 286 of July 25, 1998 (the Consolidated Law on Immigration).

The Model is currently organized into eleven sections:

  • a “general section” which describes, inter alia, the content of Legislative Decree no. 231/2001, the objectives of the Model and its implementation, the duties of the supervisory board – structured as a collective body – required to monitor the implementation and compliance of the Model, information flows and the penalty system; In this regard, in the meeting of December 19, 2012 and considering the current legislative and regulatory structure concerning the appointments and competences of the Board of Statutory Auditors, the Board of Directors chose not to transfer the functions of supervisory body to this organisation (Comment to Article 7 of the Governance Code);
  • a "special section A" concerning the crimes committed in transactions with the public administration and crime of leading someone not to make a declaration or to make untruthful declarations to the legal authorities;
  • a “special section B”, which discusses Corporate offences;
  • a “special section C”, which deals with offences of terrorism or subversion of the democratic order;
  • a "special section D" in relation to crimes against the individual personality and the employment of citizens from third party countries with invalid residence permits;
  • a "special section E", concerning market abuse offences, with the addition of specific "Compliance regulations for the prevention of offences and administrative market abuse offences";
  • a “special section F” regarding dealing in stolen goods, money laundering and use of money or assets coming from illegal sources as introduced in Decree no. 231/01 consequent to Legislative Decree no. 231/07 becoming effective;
  • a “special section G”, regarding manslaughter and serious or very serious injuries committed in violation of the rules on occupational health and safety;
  • a “special section H”, regarding computer-related offences;
  • a “special section I” relative to organized crime offences;
  • a “special section L”, concerning environmental offences.

The content of this Model is consistent with the guidelines prepared for this purpose by trade associations. It is also in line with the best practices, and represents the final step towards complete accuracy, transparency and accountability in internal and external relations, while offering shareholders a guarantee of efficient and correct management.

As a supplement to the Model, already in 2008, Terna also approved a specific “Compliance Regulation for preventing offences and administrative illegalities of market abuse”, most recently updated in July 2012, aimed at providing the recipients of the Model an additional operational tool for evaluating their conduct for integrating offences and administrative illegalities of market abuse and consequently for preventing conduct potentially representing a source of administrative responsibility for the Company.

In order to guarantee wider diffusion of the knowledge of the adopted Model, the same is published in the Company's website (www.terna.it) under the Investor Relations section and, since 2010, a widespread training and customized campaign has been carried out involving all employees. In particular, in 2012 an awareness raising campaign based on "At-risk areas" for crimes where everyone operates, and other activities were undertaken aimed at ensuring an effective process-modulated awareness of regulations and conduct to be followed by all company representatives. Moreover, a manual was drafted and distributed throughout the territory on the “Model for Organization and Management of Procedures” - intended for Terna's personnel called on to implement Model 231 - in order to facilitate a simple reading of the Model but complete in its fundamental elements by clearly indicating proper conduct and conduct to be avoided so as not to incur liability.