A. Foreword

Corporate Governance is usually defined as the manner wherein companies are organised, managed and controlled. In this context, corporate governance is deemed to be good, where directors and officers responsible for governance proceed diligently, ethically and with transparency in the performance of their duties.

Section 5.4. of the Board of Directors´ Regulations reads as follows: “The Board of Directors shall perform its duties in accordance with the corporate interest, it being understood as the viability and the maximization of the Company’ s value in the long term for the common interest of all the shareholders, which shall not prevent taking into account also other lawful interests, whether public or private, concurring on the development of the business activity, especially those of the other “stakeholders” of the Company: employees, clients, suppliers and the civil society in general. The Board shall determine and review the business and financial strategies of the Company in the light of said criterion, seeking a reasonable balance between the proposals passed and the risks assumed.” Thus, the enhancement of the value of the company may only be understood as an ongoing process of building value for each and every stakeholder therein involved: employees, shareholders, clients, business partners, suppliers and society in general, i.e., a socially responsible business model that allows an ongoing dialogue and that serves the common interests all of groups associated with the company.

The concept of good corporate governance arises thus as a necessary instrument to help meet the goal of creating net worth in the long term, and it shall be necessarily embodied through a Management that shall act ethically and with transparency and subject to control and verification, both internal and external. This good corporate governance is an active part of the concept of corporate social responsibility, in its broad definition, that is a strategic tool to increase the effectiveness of the company, to achieve competitive advantages, together with the social responsibility strictu sensu, and environmental sustainability.

Annual Corporate Governance Report

In line with the foregoing, the Annual Corporate Governance Report for fiscal year 2013 (from 1 February 2013 through 31 January 2014) approved by the Board of Directors of Industria de Diseño Textil, S.A. (Inditex, S.A.) (hereinafter, Inditex, the Company or the Group) and available at the corporate website (www.inditex.com) and at the webpage of CNMV [Spanish SEC] (www.cnmv.es) furnishes full and reasoned information about the structure and governance practices of the company, so that the market and the stakeholders may obtain a true image and a full and grounded view of corporate governance of the Group, as well as of the degree of compliance with the recommendations of the Unified Good Governance Code of Listed Companies. During FY2013, such degree of compliance stands at 98% regarding the Recommendations which apply to Inditex.

Regulations on Corporate Governance

The rules governing the corporate governance of Inditex, available at www.inditex.com, are established in:

  • The Articles of Association: they were approved by the Annual General Meeting of Shareholders in July 2000 and have been subject to different amendments subsequently. The latest amendment to the Articles of Association was approved by the Annual General Meeting held on 17 July 2012.
  • The Regulations of the General Meeting of Shareholders: they were approved by the Annual General Meeting of Shareholders on 18 July 2003 and subject to different amendments afterwards. The latest partial amendment to such Regulations was approved by the Annual General Meeting held on 17 July 2012.
  • The Board of Directors’ Regulations were approved by the Board of Directors in July 2000 and subsequently amended. The Board of Directors’ Regulations were amended by said body in the meeting held on 12 June 2012.
  • The Internal Regulations of Conduct Regarding Transactions in Securities of Industria de Diseño Textil, S.A. and its Corporate Group (hereinafter, IRC): they were approved by the Board of Directors in July 2000 and amended in part by said body in the meetings held on 13 June 2006.
  • The Code of Conduct and Responsible Practices and the Code of Conduct for Manufacturers and Suppliers: the Board of Directors approved the Code of Conduct and Responsible Practices and amended the Code of Conduct for Manufacturers and Suppliers in the meeting held on 17 July 2012.

Additionally, the Group relies on a Manual on Criminal Risks Prevention, approved by the Board of Directors in the meeting held on 17 July 2012.

Transparency and Information

Good Governance requires that stakeholders may have regular and timely access to any relevant, appropriate and reliable information, both as regards corporate governance regulations and exercise, and the results achieved.

Therefore, in order to achieve maximum transparency, in addition to including all relevant information and communications on its corporate website, Inditex has kept the market regularly posted during fiscal year 2013 by means of the submission of the relevant “Results releases” and proceedings with institutional investors.

A summary of the most relevant issues of the Annual Corporate Governance Report is included in this Annual Report:

  1. Ownership structure/li>
  2. General Meeting of Shareholders
  3. Board of Directors
  4. Board of Directors’ Committees
  5. Remunerations
  6. Senior Management
  7. Related-party transactions and situations of conflict of interest
  8. Transparency and independence
  9. Code of Conduct and Responsible Practices and Committee of Ethics