Consolidated Financial Statements and Consolidated Management ...

The Board of Directors, if it so decides, may release the outgoing director from this obligation or reduce its applicable period.
Proposals to re-elect directors put before the General Shareholders’ Meeting by the Board of Directors must be subject to a formal procedure, which
must include a report issued by the Appointments and Remuneration Committee that evaluates the quality and dedication of the proposed directors
to the position during their mandate.
The Appointments and Remuneration Committee is the competent body for reviewing the criteria that must be followed regarding the composition of
the Board of Directors and the selection of candidates.
The Board shall annually evaluate the quality and effectiveness of the functioning of the Board, based on a prior report from the Appointments and
Remuneration Committee, as well as the performance of the Chairman and/or Chief Executive Director of the Company.
6. Removal of Directors
Directors shall step down when the period for which they were appointed comes to an end or when agreed by the General Shareholders’ Meeting
based on the powers legally attributed to it.
Directors shall place their office at the disposal of the Board of Directors and tender their resignation in any of the following circumstances:
a) When they reach the age of seventy. Directors performing executive functions shall stand down from such office when they reach the age of sixty-five,
though they may continue holding the office of director, should the Board so resolve.
b) Where they are removed from the executive offices to which their appointment as a director was associated or where the reasons for which they were
appointed no longer exist. It shall be construed that such a circumstance comes about for a proprietary director where the company or business
group such director represents ceases to hold a significant shareholding in the company’s share capital or where, in the case of an independent
director, he/she becomes an executive of the company or of any of its subsidiaries.
c) Where they fulfil any of the situations for incapacity, incompatibility or prohibition set forth in legal provisions, along with any of the other
circumstances laid down in the Board Regulations.
d) Where they are seriously reprimanded by the Appointments and Remuneration Committee for having breached any of their obligations as directors.
e) Where their permanence on the Board may affect the company’s good standing or reputation in the market or jeopardise its interests in any other
way whatsoever.
To be a member of the Board, directors shall not be involved in any of the situations for incapacity, incompatibility or prohibition set forth in prevailing
legislation.
B.1.20. State the cases in which directors are obliged to resign.
Directors shall step down when the period for which they were appointed comes to an end or when agreed by the General Shareholders’ Meeting
based on the powers legally attributed to it.
In addition, Directors shall place their office at the disposal of the Board of Directors and tender their resignation in any of the following circumstances:
a) When they reach the age of seventy. Directors performing executive functions shall stand down from such office when they reach the age of sixty-five,
though they may continue holding the office of director, should the Board so resolve.
b) Where they are removed from the executive offices to which their appointment as a director was associated or where the reasons for which they have
been appointed disappear. It shall be construed that such a circumstance comes about for a proprietary director when the company or business
group such director represents ceases to hold a significant shareholding in the company’s share capital or where, in the case of an independent
director, he/she becomes an executive of the company or of any of its subsidiaries.
c) Where they fulfil any of the situations for incapacity, incompatibility or prohibition set forth in legal provisions, along with any of the other
circumstances laid down in the Board Regulations. For such a purpose, any person with direct or indirect interests of any kind or who has any kind of
employment, professional or commercial relationship of any kind whatsoever with competing companies shall be deemed unfit to hold the office of
Director, except where the Board of Directors resolves to waive this rule with a favourable vote of at least 70% of its members
d) Where they are seriously reprimanded by the Appointments and Remuneration Committee for having breached any of their obligations as directors.
e) Where their permanence on the Board may affect the company’s good standing or reputation in the market or jeopardise its interests in any other
way whatsoever.
B.1.21. Explain whether the post of chief executive director of the company is also held by the chairman of the Board. If so, state the
measures that have been taken to limit the risks of concentrating powers in a single person:
YES
Measures to limit risks
Article 17 of the Regulations of the Board of Directors state that the Executive Chairman shall hold the position of Chief Executive Director of the
Company [.], who shall be responsible for the effective management of the businesses of the Company, always in accordance with the decisions
and criteria set by the General Shareholder’s Meeting and the Board of Directors. As a result, the decisions of the Chairman shall be subject to and
controlled by the General Shareholders’ Meeting and the Board of Directors in all cases. Similarly, all resolutions and decisions of special relevance to
the Company must be previously approved by the Board of Directors or the corresponding control committee. Furthermore, certain resolutions can
only be adopted upon receipt of the reports and proposals drawn up by different Board committees.
In addition, the Regulations of the Board (Article 21.2) empower directors to ask the Chairman to include items on the agenda, and the Chairman is
obliged to include these when the request has been made at least ten days prior to the date set for the meeting and is accompanied by the relevant
documentation needed for said items to be communicated to the other members of the Board.
Lastly, it should be expressly noted that when the Chairman of the Board is also the Chief Executive Director of the company, the Board shall appoint
one of the independent directors to coordinate and represent the concerns of the external directors and to oversee the evaluation of the Chairman by
the Board (Article 21.5 of the Regulations of the Board).
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ANNUAL CORPORATE GOVERNANCE REPORT