. . .

— CORPORATE GOVERNANCE

7

The integration of the principles of sustainable development in all its facets: social, environmental and economic, means turning REN’s mission and values into guaranteed evolution and progress.

7.1.1 ›

7.1.1 ECONOMIC ENVIRONMENT

 

I. CAPITAL STRUCTURE

I.1. Capital structure (share capital, number of shares, distribution of capital among shareholders, etc.), including information on shares not admitted to trading, different classes of shares, inherent rights and duties and percentage of capital which each class represents (Art. 245-A)(1)(a))

The share capital of REN – Redes Energéticas Nacionais, SGPS, S.A. (REN or the company) in the amount of 534,000,000 Euros is represented by 534,000,000 ordinary shares with a face value of 1.00 Euros, in the form of nominative book-entry shares.

REN shares are ordinary shares that do not grant special rights to their holders, beyond the general rights inherent as a shareholder, under the law.

Currently, all REN shares are admitted to trading on Euronext Lisbon, a regulated market managed by Euronext Lisbon – Sociedade Gestora de Mercados Regulamentados, S.A., corresponding to the Code PTREL0AM0008.
This has been the case since 25 May 2016 when 213,600,000 shares held by State Grid Europe Limited and Mazoon B.V. were admitted to trading.

%
2016 SHAREHOLDER STRUCTURE
31 December 2016
  • 25,0% State Grid Of China
  • 15,0% OMAN OIL
  • 5,3% FIDELIDADE - COMPANHIA DE SEGUROS, S.A.
  • 5,0% THE CAPITAL GROUP COMPANIES, INC.
  • 5,0% EDP GROUP
  • 5,0% RED ELÉCTRICA INTERNACIONAL, S.A.U.
  • 2,1% GREAT-WEST LIFECO, INC.
  • 0,7% OWN SHARES
  • 36,9% OTHER

1 STATE GRID OF CHINA
— 25,00%

A Companhia Nacional da Rede Elétrica da China ou, em língua inglesa, State Grid Corporation of China, é uma empresa de energia na República Popular da China, que é responsável pela maior parte da operação da rede elétrica nacional. Wikipédia

Dono: State-owned Assets Supervision
Sedes: Pequim, China
Fundada em: 2002
Aeronave projetada: SGCC UAV

Dono: State-owned Assets Supervision
Sedes: Pequim, China
Fundada em: 2002
Aeronave projetada: SGCC UAV

Dono: State-owned Assets Supervision
Sedes: Pequim, China
Fundada em: 2002
Aeronave projetada: SGCC UAV

2 STATE GRID OF CHINA
— 25,00%

A Companhia Nacional da Rede Elétrica da China ou, em língua inglesa, State Grid Corporation of China, é uma empresa de energia na República Popular da China, que é responsável pela maior parte da operação da rede elétrica nacional. Wikipédia

Dono: State-owned Assets Supervision
Sedes: Pequim, China
Fundada em: 2002
Aeronave projetada: SGCC UAV

3 STATE GRID OF CHINA
— 25,00%

A Companhia Nacional da Rede Elétrica da China ou, em língua inglesa, State Grid Corporation of China, é uma empresa de energia na República Popular da China, que é responsável pela maior parte da operação da rede elétrica nacional. Wikipédia

Dono: State-owned Assets Supervision
Sedes: Pequim, China
Fundada em: 2002
Aeronave projetada: SGCC UAV

4 STATE GRID OF CHINA
— 25,00%

A Companhia Nacional da Rede Elétrica da China ou, em língua inglesa, State Grid Corporation of China, é uma empresa de energia na República Popular da China, que é responsável pela maior parte da operação da rede elétrica nacional. Wikipédia

Dono: State-owned Assets Supervision
Sedes: Pequim, China
Fundada em: 2002
Aeronave projetada: SGCC UAV

5 STATE GRID OF CHINA
— 25,00%

A Companhia Nacional da Rede Elétrica da China ou, em língua inglesa, State Grid Corporation of China, é uma empresa de energia na República Popular da China, que é responsável pela maior parte da operação da rede elétrica nacional. Wikipédia

Dono: State-owned Assets Supervision
Sedes: Pequim, China
Fundada em: 2002
Aeronave projetada: SGCC UAV

6 STATE GRID OF CHINA
— 25,00%

A Companhia Nacional da Rede Elétrica da China ou, em língua inglesa, State Grid Corporation of China, é uma empresa de energia na República Popular da China, que é responsável pela maior parte da operação da rede elétrica nacional. Wikipédia

Dono: State-owned Assets Supervision
Sedes: Pequim, China
Fundada em: 2002
Aeronave projetada: SGCC UAV

 

 

I.2. Restrictions on the transferability of shares, such as consent for disposal clauses, or limitations on ownership of shares (Art. 245-A(1)(b)).

There are no restrictions and REN has not implemented any measures which hinder the transferability of shares. REN shares are freely tradable on the regulated market, without prejudice to that established in this section.

With respect to ownership limitations on shares, in accordance with applicable legislation, no entity, including entities which conduct business in the respective sector in Portugal or abroad, can have direct or indirect holdings greater than 25% of REN share capital.

These limitations on the ownership of REN shares were introduced following the transposition of European community directives applicable to the electricity and natural gas sectors to promote competition in the market and equal access by operators to transmission infrastructures. 

It should be further noted that on 9 September 2014, ERSE – The Energy Services Regulator ('ERSE') issued a decision on the certification of REN – Rede Eléctrica Nacional, S.A. and REN – Gasodutos, S.A. (both wholly owned by REN) as operators of the National Electricity Transmission System and the National Natural Gas Transmission System (the ERSE Decision), respectively, under full ownership unbundling. 

In accordance with the ERSE Decision, certification was dependent on compliance with a series of conditions intended to ensure the independence of those operators, including, inter alia,

(i) restrictions on the exercising of rights related to the REN General Meeting;

(ii) restrictions on the exercising of positions on the Board of Directors or Audit Committee of REN or the Transmission System Operators; and

(iii) the change to the REN’s Articles of Association in order to comply with the restrictions set out in (i) and (ii). 

The amendments to REN’s Articles of Association required to comply with the ERSE decision were approved by the REN General Meeting which was held on 17 April 2015. With regard to the exercising of rights at the REN General Meeting, the following changes were included: 

    • shareholders that, directly or indirectly, exercise control over a company which either produces or sells electricity or natural gas are not allowed to exercise voting rights at the general meeting over any Company shares, except when ERSE recognizes that no risk of conflict of interest exists;
    • The persons who exercise control or rights over companies which either produce or sell electricity or natural gas must not appoint members to the Board of Directors or the statutory auditor, or members of bodies which legally represent it, on their own or through others with whom they are connected via shareholders’ agreements, except (i) when ERSE recognizes that there is no risk of conflicts of interest due to the fact that the respective production or sale of electricity or natural gas of such a shareholder takes place in geographical locations which have no direct or indirect connection or interface with Portuguese networks and (ii) provided that there were no changes as to the grounds or objective circumstances which led ERSE to decide that there was no risk of conflict of interest with the Portuguese operators of the transport network.

 

Therefore, limitations on the transferability and ownership of shares (as well as the exercising of rights) are exclusively due to legal and regulatory requirements or compliance with administrative decisions which the Corporate Governance Code of the Portuguese Securities Market Commission (CMVM) must not overturn. As such, the non-implementation of recommendation I.4. of the CMVM Corporate Governance Code is fully justified.

With regard to limitations on voting rights, see also I.5 below on the limitations expressed in the Articles of Association arising from the legal system applicable to the electricity and gas sectors. 

1  Cf. article 25(2)(i) of Decree-Law Nº 29/2006 of 15 February (with its current wording), and article 20-A(3) (b) and article 21(3)(h) of Decree-Law Nº 30/2006, of 15 February (with its current wording).

2  ERSE – Energy Services Regulator notified REN on 4 August 2015 confirming that the certification conditions determined on 9 September 2014 had been complied with, thus making the certification decision final.

I.3. Number of own shares, percentage of the corresponding share capital and percentage of voting rights to which own shares would correspond (Art. 245-A(1)(a))

REN has 3,881,374 own shares with a face value of 10,728,000.00 Euros, representing 0.73% of its share capital. These shares would correspond to 0.73% of voting rights. 

 

I.4. Significant agreements REN is a party to and that come into force, are amended or terminated in the event of a change of control over the Company, as the result of a takeover bid, as well as the respective effects, except if, due to their nature, such disclosure is severely detrimental for the Company, unless the Company is specifically required to disclose such information due to other legal requirements (Art. 245-A(1)(j))

REN and its subsidiaries are party to a number of financing contracts and debt issues which include clauses on change of control which are typical of such transactions (including, although not expressly, changes of control arising from public takeover bids) and essential for carrying out such transactions in the market. 

In any case, the practical application of these clauses is limited, considering the legal restrictions on the ownership of REN shares as explained in I.2.

There are no other significant agreements to which REN is a party that come into force, are amended or terminated in the event of a change in control over the Company or as the result of a public takeover bid.

In summary, REN has not adopted any measures aimed at requiring payment or the assumption of burdens by the Company in the event of changes of control or changes in the composition of the Board of Directors and which would affect the free transferability of shares or the free evaluation of the performance of members of the Board of Directors by the shareholders. Recommendation CMVM I.5 has thus been complied with.

I.5. Framework to which the renewal or cancelation of defensive measures are subject , in particular those which limit the number of votes which can be held or exercised by a sole shareholder individually or jointly with other shareholders

The only provisions in REN’s Articles of Association which provide for limitations on votes which can be held or exercised by a sole shareholder or by certain shareholders (e.g. who exercise control over a company which works in the production or sale of electricity or natural gas), individually or together with other shareholders are set out in I.2 above.

Nevertheless, such provisions arise from legal requirements and from the ERSE decision and do not seek to limit voting rights, but rather to ensure the existence of a sanctioning system for breaching the legal limit on the ownership of shares and the legal restriction on voting rights, respectively.
As such, the non-implementation of CMVM Corporate Governance Code recommendation 1.3 is fully justified.

As such, there is no mechanism in the Articles of Association to renew or cancel these statutory rules, as its existence is due to compliance with legal and administrative requirements. Therefore, the non-implementation of the recommendation I.4. of the CMVM Corporate Governance Code is fully justified.

There are no other defensive measures.

 

I.6. Shareholder agreements the company is aware of and that may lead to restrictions with regard to the transfer of securities or voting rights (Art. 245-A(1)(g))

The Board of Directors is not aware of any shareholder agreements in relation to REN that may result in any restrictions to the transfer of securities or exercising of voting rights.

II. SHAREHOLDINGS AND BONDHOLDINGS

II.7. Identification of natural or legal persons which, directly or indirectly, own qualified shareholdings (Art. 245-A(1)(c) and (d) and Art. 16), with detailed information on the percentage of capital and attributable votes and the source and causes of such attribution

Taking into account the communications submitted to the Company in accordance with article 447 of the Portuguese Companies Code, article 16 of the Portuguese Securities Code and article 2 of CMVM Regulation No 5/2008, with reference to 31 December 2016, shareholders holding qualified shareholdings representing at least 2% of REN’s share capital, calculated in accordance with article 20 of the Portuguese Securities Code, were as follows:

STATE GRID CORPORATION OF CHINA
  Nº OF SHARES % CAPITAL WITH VOTING RIGHTS

Directly

0

0%

Through State Grid Europe Limited (SGEL), which is controlled by State Grid International Development Limited (SGID), which is controlled by the State Grid Corporation of China

133.500.000

25,0%

TOTAL ATTRIBUTABLE
133.500.000
25,0%

 

OMAN OIL COMPANY SAOC
  Nº OF SHARES % CAPITAL WITH VOTING RIGHTS

Directly

 
0 0%
 

Through Mazoon BV, which is controlled by the Oman Oil Company SAOC

80.100.000 

15,0%
TOTAL ATTRIBUTABLE
80.100.000
15,0%

 

FIDELIDADE COMPANHIA DE SEGUROS, S.A.3
  Nº OF SHARES % CAPITAL WITH VOTING RIGHTS

Directly

28.115.216

5,265%

Through Via Directa – Companhia de Seguros, S.A., which is controlled by Fidelidade

95.816

0,018%

Through Companhia Portuguesa de Resseguros, S.A., which is controlled by Fidelidade

30.000 0,006%

Through Fidelidade Assistência – Companhia de Seguros, S.A., which is controlled by the common shareholder Longrun4

78.907 0,015

Through Multicare – Seguros de Saúde, S.A., which is controlled by the common shareholder LongRun5Through Fidelidade Assistência – Companhia de Seguros, S.A., which is controlled by the common shareholder Longrun5

50.726 0,009%
TOTAL ATTRIBUTABLE
28.370.665 5,313%

 

3  84.9861% of the share capital and voting rights in Fidelidade – Companhia de Seguros, S.A. are held by LongRun Portugal, SGPS, SA (LongRun), which is in turn wholly owned by Millennium Gain Limited, which is 100% owned by Fosun Financial Holdings Limited, companies to which the abovementioned holdings are attributable. On 11 February 2015, Fidelidade notified REN that it had reached holdings of 5.008% in REN share capital and voting rights, in accordance with that better described at: http://web3.cmvm.pt/sdi2004/ emitentes/emit_part.cfm?num_ ent=%24%21%24%3FT%23%40%20 %20%0A 

4  LongRun also holds 80% of the capital of Fidelidade Assistência – Companhia de Seguros, SA. 

5  LongRun also holds 80% of the capital of Multicare – Seguros de Saúde, SA.

EDP – ENERGIAS DE PORTUGAL, S.A. (EDP)
 
Nº OF SHARES
% CAPITAL WITH VOTING SHARING

Directly

18.690.000

3,5%

Through the EDP Pension Fund, which is controlled by EDP

8.017.335

1,5%

TOTAL ATTRIBUTATE
26.707.335
5,0%

 

RED ELÉCTRICA CORPORACIÓN, S.A.
 
Nº OF SHARES
% CAPITAL WITH VOTING RIGHTS

Directly 

0 0,0%

Through Red Eléctrica Internacional, S.A.U.

26.700.000

5,0%

TOTAL ATTRIBUTABLE
26.700.000
5,0%

 

THE CAPITAL GROUP COMPANIES, INC.
  Nº OF SHARES % CAPITAL WITH VOTING RIGHTS

Directly

0

0%

Through Smallcap World Fund, Inc.

14.099.780

2,6404%

Through accounts under the discretionary management of fund management companies in a controlling or group relationship with The Capital Group Companies, Inc.

12.692.524

2,3769%

TOTAL ATTRIBUTABLE
26.792.304
5,0173%

 

GREAT-WEST LIFECO, INC.6
  Nº OF SHARES
% CAPITAL WITH VOTING RIGHTS

Directly

O 0%

Through PanAgora Asset Management, Inc. a company controlling Great-West Lifeco, Inc.

82 0,00002%

Through the collective investment undertakings managed by Setanta Asset Management Limited7, a company in a controlling relationship with Great-West Lifeco, Inc.

10,740,000 2.011% 

Through the collective investment undertakings managed by GLC Asset Management Group LTD8, a company in a controlling relationship with Great-West Lifeco, Inc.

218,682  0.041%

Through the sub-fund Indexed World Small Cap Equity, sub-fund of Beresfird Funds plc, managed by Irish Life Investment Managers Limited9 a company in a controlling relationship with Great-West Lifeco, Inc.

 22,223 0.004% 
TOTAL ATTRIBUTABLE
10,980,987  2.056% 

 

6 In accordance with the notification receveid by the company on 5 October 2016, the ultimate controlling shareholders of Great-West Lifeco, Inc. are The Desmarais Family Residuary Trust and its trustees Jacqueline Desmarais, Paul Desmarais, Jr., André Desmarais, Michel Plessis-Bélair and Guy Fortin to whom the 2.056% of REN’s voting rights are attributed, under article 20(1)(b) of the Portuguese Securities Code, . The same voting rights are also attributable to the following Companies controlled by the Desmarais Trust: Power Financial Corporation; 17,123 Canada Inc.; Power Corporation of Canada; and Pansolo Holdings Inc. 

7 Breakdown of the collective investment undertakings and respective holdings: Balanced Fund, sub-fund of Summit Investment Funds plc (52,347 shares corresponding to 0.01% of the share capital); Balanced Fund, sub-fund of Summit Mutual Funds plc (16,733 shares corresponding to 0.003% of the share capital); Canada Life Assurance Europe Limited (2,715,969 shares corresponding to 0.509% of the share capital); CF Canlife Global Equity Income Fund (209,682 shares corresponding to 0.039% of the share capital); Growth Fund, sub-fund of Summit Investment Funds plc (109,317 shares corresponding to 0.020% of the share capital); Growth Fund, sub-fund of Summit Mutual Funds plc (73,262 shares corresponding to 0.014% of the share capital); Irish Life Assurance Plc (4,696,070 shares corresponding to 0.879% of the share capital); Little Company of Mary Limited (30,861 shares corresponding to 0.006% of the share capital); London Life Insurance Company (639,014 shares corresponding to 0.120% of the share capital); Quadrus Global Dividend Class (946,989 shares corresponding to 0.177% of the share capital); Quadrus Global Dividend Fund (21,094 shares corresponding to 0.004% of the share capital); Quadrus Global Equity Class (28,636 shares corresponding to 0.005% of the share capital); Setanta Global Equity Fund, sub-fund of Beresford Funds plc (125,943 shares corresponding to 0.024% of the share capital); Setanta Income Opportunities Fund, sub-fund of Beresford Funds plc (130,804 shares corresponding to 0.024% of the share capital); Setanta Reditus Global Balanced Fund, sub-fund of Beresford Funds plc (18,587 shares corresponding to 0.003% of the share capital); Setanta Reditus Global Equity Fund, sub-fund of Beresford Funds plc (82,979 shares corresponding to 0.016% of the share capital); The Great-West Life Assurance Company (268,316 shares corresponding to 0.050% of the share capital); The Canada Life Assurance Company (207,807 shares corresponding to 0.039% of the share capital); Setanta Reditus Income Fund, sub-fund of Beresford Funds plc (365,590 shares corresponding to 0.068% of the share capital). The voting rights inherent to the abovementioned shares are also attributable, under article 20(1)(b) of the Securities Code, to the following companies controlled by Great-West Lifeco, Inc.: The Great-West Life Assurance Company; Canada Life Financial Corporation; The Canada Life Assurance Company; Canada Life Capital Corporation Inc; Canada Life International Holdings Limited; and The Canada Life Group (U.K.) Limited.


8 Breakdown of the funds and companies and respective holdings: London Life Insurance Company (177,122 shares corresponding to 0.033% of the share capital); Quadrus U.S. and International Specialty Class (2,125 shares corresponding to 0.0003% of the share capital); The Great-West Life Assurance Company (14,247 shares corresponding to 0.0027% of the share capital); The Canada Life Assurance Company (17,511 shares corresponding to 0.0033% of the share capital); CF Canlife Global Infrastructure Fund (7,677 shares corresponding to 0.001% of capital).

The voting rights inherent to the abovementioned shares are also attributable, under article 20(1)(b) of the Securities Code, to the following companies controlled by Great-West Lifeco, Inc.: The Great-West Life Assurance Company; Canada Life Financial Corporation; The Canada Life Assurance Company; Canada Life Capital Corporation Inc; Canada Life International Holdings Limited; and The Canada Life Group (U.K.) Limited.

II.8. Information on the number of shares and bonds held by members of management and supervisory bodies

In accordance with and for the purposes of article 447 of the Portuguese Companies Code, in particular paragraph 5 thereof, the number of shares held by the members of the REN management and supervisory bodies and by the persons related to them pursuant to paragraph 2 of the abovementioned article10, as well as all their acquisitions, encumbrances or disposals with reference to the financial year 2016, based on communications with the company, were as follows:

AUDIT COMMITTEE
 
ACQUISITIONS
(IN 2016)

ENCUMBRANCES

(IN 2016)

DISPOSALS
(IN 2016)
Nº OF SHARES
AT 31.12.2016
Manuel Ramos de Sousa Sebastião 9.000  -

7.000

7.000

Gonçalo Gil Mata

- -

-

0 (zero)

Maria Estela Barbot  -  -

0 (zero)

BOARD OF DIRECTORS
 
ACQUISITIONS (EM 2016)
ENCUMBRANCES (EM 2016)
DISPOSALS (EM 2016)
Nº OF SHARES AT 31.12.2016

Rodrigo Costa

- - -

0 (zero)

João Faria Conceição

- - - 500

Gonçalo Morais Soares

- - -

0 (zero)

Guangchao Zhu (representing State Grid International Development Limited)

- - -

0 (zero)

Mengrong Cheng

- - -

0 (zero)

Longhua Jiang

- - -

0 (zero)

Omar Al-Wahaibi

- - -

0 (zero)

Manuel Champalimaud11

 - 19.499.71512

12.540.28513

Jorge Manuel Magalhães Correia

 -  -

28,370,66514

José Luís Arnaut15

7,587

10 This comprises the shares held by members of the REN management and supervisory bodies and also, if applicable, (i) by the spouse not judicially separated, regardless of the matrimonial property regime; (ii) by underage descendants; (iii) by persons under whose name shares are registered, in the event that they have been acquired on behalf of a member of the management or supervisory bodies and of persons referred to in (i) and (ii); and (iv) by companies of which a member of the management or supervisory bodies and the persons referred to in (i) and (ii) are shareholders with unlimited liability, exercise any management or supervisory duties or hold, individually or jointly with the persons referred to in (i) to (iii), at least half of the share capital or corresponding voting rights.

11 Resigned on 13 April 2016, but remained in functions until 31 May 2016. For that reason, the information regarding the number of shares on 31 December 2016 refers, in this case, to that last date. According to the information made public by Gestmin, after such date, as a shareholder with a qualified shareholding, the disposal of 656,713 REN ordinary shares, corresponding to 0.12% of the share capital, was announced to the market, on 28 July 2016. On that date, the REN shareholding attributable to Gestmin was 10,230,922 shares corresponding to 1.92% of the voting rights and sharecapital (losing the qualified shareholding).

12 Shares disposed by the shareholder and by the shareholder Gestmin, which, due to the exercise of the function of president of the board of directors of that company and as a holder of the majority of the corresponding share capital, are also attributable to him. This refers to 280,000 shares directly held by Manuel Champalimaud and 17,219,715 shares and 2,000,000 shares held by the shareholder Gestmin (as, respectively, announced on 7 April and 9 May 2016).

13 Shares held by tshe shareholder Gestmin as specified in the previous footnotes.

14 Corresponding to the shares attributable to Fidelidade Companhia de Seguros, S.A., which are attributable for the purposes of art. 447 of the Portuguese Companies Code, due to the exercise of the functions of member of the board of directors of that company.

15 Comprises 480 bonds held directly and the remaing held by the Company Platinumdetails – Consultoria e Investimentos, Lda, in which it holds 68% of the share capital.

 

 

BOARD OF DIRECTORS

In accordance with and for the purposes of article 447 of the Portuguese Companies Code, in particular paragraph 5 thereof, the number of bonds held by the members of the REN management and supervisory bodies and by the persons related to them pursuant to paragraph 2 of the abovementioned article16, as well as all their acquisitions, encumbrances or disposals with reference to the financial year 2016, based on communications with the company, were as follows:

 

ACQUISITIONS (EM 2016)
ENCUMBRANCES (EM 2016)
DISPOSALS (EM 2016)
Nº OF BONDS AT 31.12.2016
Rodrigo Costa - - -

 0 (zero)

João Faria Conceição - - -

0 (zero)

Gonçalo Morais Soares - - -

0 (zero)

Guangchao Zhu - (representing State Grid International Development Limited) - - -

0 (zero)

Mengrong Cheng - - -

0 (zero)

Longhua Jiang - - -

0 (zero)

Omar Al-Wahaibi - - -

0 (zero)

Manuel Champalimaud17  - -

12.540.28513

Jorge Manuel Magalhães Correia

200,00018

 - 54,109,00019 28.370.66514
José Luís Arnaut15  -  -

7.587

16 This comprises the shares held by members of the REN management and supervisory bodies and, as well as, if applicable, the ones held (i) by the spouse not judicially separated, regardless of the matrimonial property regime; (ii) by underage descendants; (iii) by persons in whose name shares are registered, in the event that they have been acquired on behalf of a member of the management or supervisory bodies and of persons referred to in (i) and (ii); and (iv) by companies of which a member of the management or supervisory bodies and the persons referred to in (i) and (ii) are shareholders with unlimited liability, exercise any management or supervisory duties or hold, individually or jointly with the persons referred to in (i) to (iii), at least half of the share capital or corresponding voting rights.

17 Resigned on 13 April 2016, but remained in office until 31 May 2016. For that reason, the information regarding the number of shares refers to the latter.

18 The company Fidelidade – Companhia de Seguros, S.A., shareholder with a qualified shareholding and entity related with Jorge Manuel Baptista Magalhães Correira, member of the board of directors of REN, purchased 200,000 bonds “REN 1.75%, 01/06/2018, CORP” on 27 May 2016.

19 Comprises the sales transactions carried out by Fidelidade – Companhia de Seguros, S.A., shareholder with a qualified shareholding and entity related with Jorge Manuel Baptista Magalhães Correia, member of the board of directors of REN, and its subsidiary Multicare – Seguros de Saúde, S.A., through which they sold, respectively, 53,500,000 and 600.000 “REN 4.125%, 31/01/2018, CORP” bonds, on 31 May 2016, and the sale transaction carried out directly by Jorge Magalhães Correia of 9,000 “REN 6.25%, 09/2016” bonds, on 22 June 2016.

20 This Corresponds to 1,200,000 bonds held by Fidelidade – Companhia de Seguros, S.A.

II.9 Special powers of the management body, notably regarding resolutions on capital increase (Art. 245-A(1)(i)), indicating, as to such resolutions, the date on which the powers were attributed to the management body, time limit until such powers may be exercised, maximum quantitative limit on capital increase, amount already issued under the attribution of such powers and method of applying the attributed powers 

The Board of Directors has powers conferred by the Portuguese Companies Code and the 21 (see summary of these powers in II.21), and as such the management body does not have special powers.

Particularly, concerning resolutions on capital increase, it should be noted that REN’s Articles of Association do not authorize the Board of Directors to increase the Company’s share capital.

21 Cf. article 15 of the Articles of Association and article 3 of the Board of Directors’ Regulation.

II.10. Information on significant relationships of a commercial nature between the owners of qualified holdings and the Company

In accordance with the internal regulation on the assessment and control of transactions with related parties22 and prevention of conflict of interests23, significant transactions with related parties are those which:

a) are based on the purchase and/or sale of assets, provision of services or a contracted project with an economic value greater than one million euros;

b) are based on the acquisition or disposal of shareholdings;

c) require new loans, financing or subscription of financial investments resulting in an overall annual indebtedness exceeding 100 million euros, except when referring to a simple renewal of existing circumstances or operations undertaken within the framework of pre-existing contractual conditions;

d) should none of the materiality criteria set out in the subparagraphs above be met, (i) have a value exceeding one million euros or (ii) are considered relevant for this purpose by the management body, by virtue of their nature or their particular susceptibility to giving rise to a conflict of interests.

The Board of Directors’ is required to submit significant transactions with related parties to the Audit Committee for prior assessment24. Therefore, transactions considered significant are subject to prior opinion from the Audit Committee, while others are only subject to subsequent assessment.

Moreover, in accordance with the Board of Directors internal regulation, transactions with related parties with sums exceeding 500 million euros or, regardless of the sum, any transaction which may be considered as not being executed under market conditions are matters which may not be delegated to the Executive Committee. 

In light of the abovementioned criteria – set out in Board of Directors regulation and in internal regulations on the assessment and control of transactions with related parties and prevention of conflicts of interests – during 2016, there were three significant commercial transactions with related parties, which were subject to prior control by the Audit Committee, as detailed below in I.90.

22 The definition of related party in accordance with this regulation includes owners of qualified holdings calculated in accordance with article 20 of the Securities Code.

23 Cf. section II, paragraph I., p. 3.

24 Cf. section III, p. 3 and section VI, p.5.