C. Related-party transactions
Below is a list of the transactions with related parties during FY2012 pursuant to the definitions, criteria and groupings provided in Order EHA/3050/2004 of 15 September, to which refer the Instructions to complete this Annual Report included in Annex I of the Circular 1/2004, of 1 April, in the wording provided by Circular 4/2007 of 27 December, of CNMV, whereby the form of the annual corporate governance report of listed companies is amended.
C.1. Relevant transactions carried out by the Company with directors, significant shareholders or shareholders represented on the Board or with persons related thereto
The Board in plenary sessions has reserved for itself the power to approve, after a favourable report of the Audit and Control Committee or any other committee entrusted with such duty, transactions carried out by the Company with directors, with significant shareholders or shareholders represented on the Board or with persons related thereto.
C.2. Relevant transactions carried out which entail a transfer of resources or obligations between the Company, or entities of its Group, and the significant shareholders of the Company
During FY2012, the INDITEX Group has carried out with the majority shareholder Gartler, S.L, or with the individuals and companies related thereto, or with Partler, S.L., and other individuals related thereto, the following transactions:
| Nature of transaction | Type of transaction | Amount (€ thousands) |
|---|---|---|
| Contractual | Assets lease | (25,344) |
| Contractual | Assets lease | 161 |
| Contractual | Other expenses | (20) |
| Contractual | Sale of products | 177 |
| Contractual | Rendering of services (construction works) | 87 |
C.3. Relevant transactions carried out which entail a transfer of resources or obligations between the Company or entities of its group, and the directors or officers of the Company
With regard to remunerations received by directors and officers of the Company, reference is made to the provisions of sections B.1.11 and B.1.12, respectively.
Likewise, INDITEX approved in FY2010 a Deferred Incentive Payment Plan (hereinafter, “the Plan”) addressed to members of the Management team and other key employees of the Inditex Group, a description of which is provided in the Annual Report. For the purposes of transactions with related parties, an estimate of the amount accrued during the fiscal year, in respect of the incentive assigned to directors and officers which would be paid provided that, however the requirements covered in the Plan are met, is broken down below:
|
|
Directors | Officers |
|---|---|---|
| ASSIGNED INCENTIVE (in € thousands) |
1,333 | 2,293 |
No other relevant transaction has taken place between the Company or any company belonging to its corporate Group and the directors or officers of the Company and their related-parties pursuant to Second Rule of Order EHA/3050/2004 of 15 September, to which refer the Instructions to complete this Annual Report included in Annex I of Circular 1/2004 of 1 April, in the wording provided by Circular 4/2007, of 27 December of CNMV, whereby the form of the annual corporate governance report of listed companies is amended.
C.4. Relevant transactions carried out with other companies belonging to the same Group, provided that these are not eliminated in the process of preparing the consolidated financial statements and do not form part of the ordinary business of the Company as regards its object and conditions
| Entity | Brief description of the transaction | Amount (€ thousands) |
|---|---|---|
| Joint ventures | Purchase of goods | (352,258) |
| Transactions with Group companies | Transactions in securities | (518,240) |
C.5. Situations of conflicts of interest that the members of the Board of Directors have been subject to, according to the provisions of Article 127 third part, of the SCA
Subject to the information provided in section B.1.40 above, the company has no evidence that any of its directors is in a situation of conflict of interests, whether directly or indirectly, with the interests of the company.
C.6. Mechanisms established to detect, determine and resolve any possible conflicts of interest between the Company and/or its Group and its directors, officers or significant shareholders
Section 32 (“Conflicts of Interest”) of the Board of Directors’ Regulations reads as follows:
“1.- It shall be understood that a conflict of interest exist where there is a direct or indirect conflict between the interest of the Company and the personal interest of the Director. It is considered that directors have a personal interest when the matter affects them or a Person Related to them.
For the purposes of these Regulations, Related Persons are understood as being the following:
a)The spouse of the director or any other person with similar relation of affectivity.
b)The ascendants, descendants and siblings of the director or of the spouse (or any other person with similar relation of affectivity) of the director.
c)The spouse (or any other person with similar relation of affectivity) of the ascendants, descendants and siblings of the director.
d)Those companies where they hold the office of director or senior manager or in which they hold a significant participation, understanding as such, for the case of companies listed on any official Spanish or foreign secondary market, those referred to in section 53 of the Spanish 24/1998 Act, passed on 28 July – “The Stock Exchange Act”, and its regulations, and for the case of unlisted national or foreign companies, any direct or indirect participation over twenty (20) percent of its issued share capital.
With regard to directors who are legal entities, Related Persons are understood as being the following:
a)Those partners who are included with regard to the Director legal entity, in any the situations provided in section 4 of the 24/1988 Act, of 28 July, governing the Stock Exchange.
b)Those companies that are part of the same corporate group, as defined in section 4 of the 24/1988 Act, of 28 July, governing the Stock Exchange, and their partners.
c)The representative, who is a natural person, the administrators de iure or de facto, the liquidators and the attorneys-in fact of the director, who is a legal entity.
d) Those persons who are understood, with regard to the director who is a legal entity, as being related persons in accordance with the above-referred provisions regarding directors who are natural persons.
2.-The following rules shall apply to the situations of conflict of interest:
a)Information: directors must inform the Board of Directors, through the Chairman or the Secretary thereof, of any situation of conflict in which they are.
b)Abstention: directors must abstain from attending and taking part in the discussions and voting of those matters regarding which they are in conflict of interest. With regard to proprietary directors, they shall abstain from taking part in the voting of those matters that might entail a conflict of interest between those shareholders that had proposed their appointment and the Company.
c)Transparency: in the Corporate Governance Report, the Company must inform of any situation of conflict of interest in which a director is, that the Company is aware of by virtue of the information of same by the affected person, or by any other means”.
In addition, the following situations which can give rise to conflicts of interest are addressed in the Board’s Regulations:
- The rendering of professional services in competing companies (section 31).
- The use of corporate assets (section 33).
- The use of non-public company information for private ends (section 34).
- The taking advantage of business opportunities of the company (section 35).
Furthermore, section 37 of the Board of Directors’ Regulations, under the heading “Duties of information of the director”, provides that directors must inform the company:
a)of the shares in the same of which he is the direct or indirect holder, as well as of those other shares which are in the possession, directly or indirectly, of his closest relatives, all of which in accordance with the provisions of the Internal Regulations of Conduct Regarding Transactions in Securities;
b)of any stake they might hold in the capital of any companies with the same, similar or complementary business range as the one that makes up the corporate purpose, and of the offices and posts they hold in same. They shall also inform of those business conducted for themselves or for somebody else, with the same, similar or complementary business range as the one that makes up the corporate purpose. Said information shall be included on the Annual Report, and
c)of all the positions they hold and of the activities that they carry out in other companies or entities, and, in general, about any fact or situation that could be relevant for their acting as a director of the Company.
As it is expressly provided under section 1 of the Board of Directors’ Regulations, the rules of conduct established thereon for the directors shall apply, to the extent that they are compatible with their specific nature, to the senior management of the company who are not directors. More particularly and with the due nuances, the following sections shall apply to them: section 30 (duty of confidentiality); 32 (conflicts of interest), in connection with the duty of informing the Company; 33 (use of corporate assets); 34 (non-public information); 35 (business opportunities), and 36 (prohibition to make undue influence of the office).
Likewise, as regards significant shareholders, paragraphs 1 through 4 of section 38 of the above referred Regulations provides as follows, under the heading “Transactions with directors and significant shareholders”:
“1. The Board of Directors reserves the right to have knowledge of any transaction between the Company and a director or a significant shareholder.
2.In no event will it approve such a transaction if previously a report has not been issued by the Nomination and Remuneration Committee evaluating the transaction from the standpoint of market conditions. In the event of transactions with significant shareholders, the Committee shall examine it also from the standpoint of an equal treatment for all shareholders.
3. In the case of transactions within the ordinary course of company business and being of a habitual or recurrent nature, a general authorization of the line of transactions and their conditions of execution will be sufficient.
4. The Company shall inform of the transactions conducted with directors, significant shareholders and Related Persons in the half-yearly public periodic information and in the annual corporate governance report, within the scope of the Law. Likewise, the Company shall include on the notes to the annual accounts information on the transactions carried out by the company or any companies within the Inditex Group with directors and with those acting on their behalf, whenever they are alien to the ordinary course of trade of the Company or are not carried out in normal market conditions”.
In addition, section 5 of the Internal Regulations of Conduct regarding Transactions in Securities, after stating in the first paragraph that the general principles that must govern the actions of the persons subjected to conflicts of interest are those of independence, abstention and confidentiality lay down the following:
“5.2. Declaration of conflict
The Affected Persons shall undertake in writing to act independently in their activities and to make known to the CCO (Code Compliance Office) using the standard model that is established for this purpose, those conflicts of interest to which they are subject due to their activities outside the INDITEX group, their family relationships, their personal property, or for any other cause with:
a)Suppliers, external workshops not being part of the company and significant contractors for goods or services, or their Directors and general proxies.
b)Agents and franchisees of the Inditex group, or their Directors and general proxies.
c)People who are engaged in similar or analogous activities to those of the INDITEX group and that compete with the Inditex group in the same markets.
d)External advisors and suppliers of professional services to the INDITEX Group.”
Among the powers granted to the Nomination and Remuneration Committee is that of reporting on the transactions that involve or could involve conflicts of interest, transactions with related parties or that involve the use of company assets and, in general, on the matters contemplated in chapter IX of the Board of Directors’ Regulations (in which all the foregoing sections of the Board of Directors’ Regulations are included). In view of that report, it is incumbent on the Board of Directors to approve, where appropriate, the transaction.
Additionally, section 4.8 of the Code of Conduct and Responsible Practices of the INDITEX Group provides that:
“INDITEX’s employees shall avoid any situation which might entail any conflict between their personal interests and those of the company. They shall also refrain from representing the company and from taking part or having a say in any decision making wherein they may have, either directly or indirectly, either themselves or through any related party thereto, any personal interest. They may not avail themselves of their position in the company to obtain any economic or personal benefit, or any business opportunity for them.
No employee of INDITEX may render services as consultant, director, officer, employee or advisor to any of INDITEX’s competitors, except for such services which may be rendered at the request of INDITEX or with the authorization of the Committee of Ethics.
INDITEX respects the private life of its employees and therefore the private sphere of their decisions. In the framework of this policy of respect, employees are urged to report to the Committee of Ethics any personal conflicts of interest or any conflicts of interest involving their relatives, that might jeopardize the necessary objectivity or professionalism of their duties within Inditex, so that, in the respect of the confidentiality and privacy of individuals, the relevant measures might be taken for the mutual benefit of the company and of the affected individuals.
Namely, the cases below shall be considered as potential situations of conflict of interest and they shall be reported to the Committee of Ethics:
- The conduct by any employee or by any person related to him/her, either directly or indirectly, by themselves or through any company or institution, of any business which is the same, similar or supplementary to the business conducted by INDITEX.
- The conduct by any employee or by any person related to him/her, either directly or indirectly, by themselves or through any company or institution, of any business which involves an exchange of goods and/or services, regardless of the remuneration system agreed.”
C.7. Companies of the Group listed in Spain
Only one company of the Group is listed in Spain.
