«Grupo Argos is continuously committed to good Corporate Governance; consequently all actions are subject to the Grupo Empresarial Argos inspiring ...»
ANNUAL COMPLIANCE REPORT
CORPORATE GOVERNANCE PRACTICES - 2013
Grupo Argos is continuously committed to good Corporate Governance; consequently all actions are
subject to the Grupo Empresarial Argos inspiring principle: integrity. All of the Company’s practices
shape a responsible, truthful, straight, prudent and transparent behavior, consistent with the
requirements of each stakeholder.
Furthermore, Grupo Argos complies not only with the corporate governance requirements set out in the Colombian legislation, but also with international standards in this matter. It also ensures that its subsidiaries comply with the same parameters.
The Corporate Governance practices in Grupo Argos are guided by the following principles:
- Equal and fair treatment to shareholders and investors.
- Equal, timely and controlled disclosure of the relevant information required by shareholders and investors for decision-making.
- Transparency, fluidity and integrity of the information disclosed to the market.
- Setting clear, general rules to which administration bodies, directors and officers should abide.
- Abidance to and encouraging of compliance with domestic and international regulations.
- Environmental responsibility.
Board of Directors of the Grupo Argos provides guidelines related to sustainability and corporate governance matters through the Sustainability and Corporate Governance Committee. In regards to the subsidiaries, the CEO of Grupo Argos is the Chairman of the Board, but always seeking that the majority of the members of the Board meet the requirements to be considered as independent members. The Boards of Argos and Celsia, main businesses of the conglomerate, are composed mainly of independent members and also have sustainability and corporate governance committees, where relevant guidelines related to sustainability, corporate governance and ethics and transparency are defined, all within the framework defined by Grupo Argos. Additionally, guidelines are also communicated by the Synergy Tables, which are spaces where Grupo Argos officials interact with representatives of the subsidiaries to discuss and pursuit the implementation of best practices through ongoing analysis and debate.
1. ASSEMBLY OF SHAREHOLDERSThe General Assembly of shareholders is the highest corporate body made of Company shareholders. It shall gather in ordinary meeting once a year and in as many extraordinary meetings as required to properly fulfill its duties as assigned by Corporate Bylaws. The Law, Corporate Bylaws and the Good Governance Code rule the operation and convening of the Assembly.
The ordinary meeting of the General Assembly of Shareholders met on March 26, 2014.
- Quorum: 87.40%
- Total shares represented: 564.133.153
2. BOARD OF DIRECTORS Grupo Argos’ Board of Directors is made of 7 members, all principal members, of which 5 meet the independence criteria set forth in the Colombian law and in the Good Governance Code of the Company. None of the members of the Board is an employee of the Company.
The members of the Board are:
During 2013 the Board met 12 times in face-to-face meetings and twice in virtual meetings.
Attendance average of the Board: 91.83% Nomination and selection of the Board The Sustainability and Governance Committee is responsible for assessing proposals for new members of the Board of Directors. This Committee ensures that the candidates meet the independence criteria and have knowledge and expertise in economic, social, environmental issues, as appropriate. The independent members must have expertise in corporate finance and/or internal control, in accordance with the Good Governance Code of the Company. This code establishes that the proposals for the composition of the Board of Directors must be submitted within 5 working days prior to the meeting of the Assembly of Shareholders so that shareholders have enough time to analyze their resumes.
Compensation of the Board The Assembly of Shareholders sets the compensation for the members of the Board of Directors, taking into account the structure, duties and responsibilities of its members, as well as their personal and professional qualifications, time dedication and experience requirements. Members of the Board of Directors are paid monthly, regardless of their attendance to Board meetings, as their duties go beyond meeting attendance, as their performance and the fulfillment of their role outside the meetings are equally important to Grupo Argos. According to the Good Governance Code, members of the Board of Directors may be compensated with Company shares, but this alternative has not been yet implemented.
Board performance The Board of Directors, and its members individually, are assessed at the middle and end of their term by an independent firm. This assessment includes both quantitative and qualitative aspects and serves as the basis to implement corrective measures or modifications, as well as training programs for the Board members. In 2013, based on the results of the assessment, sustainability functions were added to the Corporate Governance Committee, a training plan was drawn up on issues of greatest interest to the Board and an induction process for Board members was included in the Good Governance Code.
3. BOARD OF DIRECTORS SUPPORT COMMITTEESThe Board is supported by three committees, appointed by the Board itself from within its members and from Company officers.
Audit and Finance Committee The main duty of this committee is to support the Board in its supervision of the effectiveness of internal controls, by giving instructions and monitoring that internal control procedures conform to the requirements, purpose, goals and strategies as defined by Grupo Argos, and that such procedures are framed within internal control purposes, namely efficiency and effectiveness of the operations, as well as adequacy and reliability of financial information.
This Committee is composed of:
- Members of the Board of Directors:
Sustainability and Corporate Governance Committee Due to an amendment approved by the Board of Directors to the Good Governance Code, in 2013 the Corporate Governance Committee became the Sustainability and Corporate Governance Committee, charged with managing the sustainability strategy. The Committee is responsible for the coordination and assessment of social, environmental, governance risks and for drawing up the Board’s annual action plan, which includes scheduling an exclusive meeting to discuss the Company’s strategy. Additionally, among its duties this committee is responsible for promoting the ongoing training and updating of the Directors on academic and business issues. Also, monitoring Board processes, including determining the schedule of meetings and agendas, and the flow of information to the Directors, and ensuring compliance with the Good Governance Code, with the support of the Internal Audit.
This Committee is composed of:
- Members of the Board of Directors:
Appointments and Compensation Committee Among its duties this committee is responsible for determining the policies and standards for hiring, compensation and the development of the management staff of the Company. It continuously monitors the goals of the various compensation plans against the officers’ performance, and also defines and suggests the adoption of compensation programs for such officers and assesses the effectiveness of these programs.
This Committee is composed of:
- Members of the Board of Directors:
Any and all of the Board Support Committees may call any Company officer or independent expert to attend the meetings wherever it so deems necessary in accordance with the nature of the topic to be discussed.
4. INTERNAL COMMITTEES Grupo Argos has created operating committees in order to ensure transparency in the development of its operations and ensure that its subsidiaries are well aware of the policies it implements as parent company.
Steering Committee The Steering Committee is in charge of discussing and making decisions on the Organization’s strategic issues. This Committee is made of the Company CEO and the three Vice Presidents. The CEO’s Assistant is secretary thereof.
Vice Presidency’s Committees The 3 vice presidencies of the Company periodically perform their committees, which are composed of the relevant Vice President and his primary group.
The Synergy Tables are analysis and debate spaces where specific matters are discussed, and are composed of Grupo Argos officials and representatives of the subsidiaries. This cross-cutting synergy tables were consolidated during the year 2013 and continue to be implemented.
Central Conduct Committee In 2013, at the request of the Sustainability and Corporate Governance Committee, the Company implemented the Central Conduct Committee, to ensure, among other things, the implementation of the Code of Conduct in its subsidiaries. The Central Conduct Committee is composed of Grupo Argos officers and representatives of all subsidiaries, having as scope of action all the companies of the Grupo Empresarial Argos. This Committee defines research standards, promotes the unification of criteria, the strengthening of training programs, the creation of a culture of ethics, and monitors and assesses the most relevant cases of the companies associated to business conduct.
5. INTERNAL AND EXTERNAL CONTROLLING BODIES
Grupo Argos’ Statutory Audit is independent and self-governing in performing its duties and during 2013 it presented no incompatibilities or disabilities under the law.
- Financial Superintendence of Colombia - Superintendencia Financiera de Colombia Pursuant to applicable regulations, the Company is under the exclusive control of the Financial Superintendence of Colombia. All applicable rules were consistently applied during 2013 and the Best Practices in Corporate Governance Survey, Código País, was timely submitted, among other activities.
The Company has an Internal Control and Audit Department in charge of ensuring that all of Grupo Argos’ processes and procedures conform to applicable regulations and to previously set management guidelines.
6. BUSINESS CONDUCT – ETHICS AND TRANSPARENCYIn 2012, Grupo Argos absorbed the non-cement assets of Cementos Argos, whereby it was consolidated as a holding company. Before the spin-off, the Code of Conduct of Cementos Argos was the code by which the members of the Board of Directors of Grupo Argos conducted their business, because at that time there was a single executive team performing corporate functions both for the investment company and the cement subsidiary. After the spin-off, Grupo Argos has been implementing its own codes and policies, adapting them to its needs as a holding company and providing guidelines for all its businesses. In 2013, the Board of Directors approved a new Code of Conduct, of which an internal communication strategy has already been implemented as well as a training program for employees.
The Code of Conduct sets out the bodies for the management of ethical issues, and the code itself, which are: the Business Conduct Committee, the Business Conduct Officer -who must be an employee with executive level-, and the Investigative Officers. During the first months of 2014 the Company has been working on the implementation and selection of these bodies, and of the Transparency Hotline, which is the mechanism through which the wrongdoing are reported.
The Grupo Argos currently applies the anti-fraud policy of Cementos Argos, its largest business, and is working out a specific policy of its own, as a holding company. Once completed, the policy will serve as a frame of reference for all subsidiaries. The Fraud Prevention Program of Cementos Argos was created to strengthen the culture of ethical conduct, improve internal controls for the prevention and detection of fraud and give transparency and accuracy to financial reporting and other information of the organization. This anti-fraud policy applies to any fraudulent act committed by any employee, customer, supplier or third party having business or contractual relationships with the Company.
Reports The incident reporting in Grupo Argos has been done up to 2013 through the Transparency Hotline of Cementos Argos, until the exclusive line of the holding company is implemented as a mechanism governed by the new Code of Conduct. The Transparency Hotline has an email address and a toll free number, where the information received is treated confidentially and forwarded to the appropriate official, according to its nature. From the time when the spin-off process was completed in 2012 to date, no improper or fraudulent acts have been reported to Grupo Argos.
7. FUTURE CHALLENGES AND PROSPECTS
As of 2014, changes in the functioning of the Board of Directors will be implemented. Instead of the three-hour monthly meetings, the Board will hold all-day quarterly meetings, organized in thematic blocks. Additionally, the Board will hold monthly 90-minute virtual meetings, and an annual face-toface meeting will be scheduled to discuss budget, strategy and planning.