EDF_REGISTRATION_DOCUMENT_2017

CORPORATE GOVERNANCE Members and functioning of the Board of Directors

4.2.2

FUNCTIONING OF THE BOARD OF

EDF’s Chairman and Chief Executive Officer is appointed by decree of the President of the Republic of France, on recommendation from the Board of Directors. They can be dismissed by decree in accordance with Article 20 of the Order of 20 August 2014. In accordance with the provisions of Article 13 of the French Constitution, the Chair is appointed based on the opinion of the permanent Committees of the French National Assembly and Senate. Jean-Bernard Lévy was appointed following this process as Chairman and Chief Executive Officer of EDF by Decree of 27 November 2014. In case of vacation of the office of Chairman and Chief Executive Officer, Article 21 of the Order of 20 August 2014 states that the French State can appoint someone to the role temporarily until the appointment of the new Chairman and CEO (1) . Subject to the specific legal provisions governing public sector companies and the powers specifically reserved by law or by the articles of association to the Board of Directors or to Shareholders’ Meetings, and the limits to the powers of the Chairman and Chief Executive Officer provided for by the internal rules of procedure of the Board of Directors as internal rules (see section 4.2.2.3 “Powers and duties of the Board of Directors” below), the Chairman and Chief Executive Officer is vested with the most extensive powers to act on behalf of the Company under all circumstances, within the limits of the corporate purpose. The Chairman and Chief Executive Officer organises and supervises the work of the Board of Directors and reports to the Shareholders’ Meeting. They oversee the proper running of the Company’s bodies and, in particular, ensure that the directors are in a position to fulfil their duties. Powers and duties of the Board of 4.2.2.3 Directors The Board of Directors meets as often as the interest of the Company requires, in accordance with applicable legislative and regulatory provisions. In accordance with the Board’s internal rules of procedure, the directors meet once a year to discuss the strategy of the Company and of the Group as part of an ad hoc seminar. Moreover, under the internal rules of the Board of Directors, updated in January 2018, a meeting is to be held each year without the attendance of the Chairman and Chief Executive Officer, and shall be chaired by the Chair of the Governance and Corporate Social Responsibility Committee. In accordance with the law, the Board of Directors sets the strategies for the Company’s activities and oversees their implementation. It defines the major strategic, economic, financial and technological objectives for the Company and the Group. Subject to powers expressly attributed to the Shareholders’ Meetings and as limited by the Company’s corporate purpose, the Board may consider any question relating to the proper running of the Company and acts, through its deliberations, on any such issue. In particular, the Board deliberates, after study by the competent Committee or Committees, as the case may be, on the annual budget, the medium-term plan, any significant operation falling outside the Company’s announced strategy, the corporate strategic plan presenting the actions to be implemented by the Company or the Group in order to comply with the objectives of the multi-year energy plan (see section 1.5.2 “Public service in France”), the Group’s strategies relating to upstream and downstream operations of the nuclear fuel cycle, gas and renewable energies and the Public service contract. In accordance with its internal rules, the Board of Directors is also competent to authorise the following transactions prior to their implementation: external growth transactions (investments, mergers and acquisitions), ■ divestments, organic growth transactions, as well as stock exchange transactions, carried out by the Company or by one of its subsidiaries, which represent overall financial exposure for the Company or the Group exceeding €350 millions; this threshold falls to €150 million for transactions not in line with the Company’s or the Group’s strategic objectives; coherent and inseparable industrial programmes of investments or works on ■ existing assets, by the Company or one of its subsidiaries, exceeding €350 million per programme; real estate transactions, carried out by the Company or one of its subsidiaries, ■ exceeding €200 million; certain financial transactions (long-term borrowings, debt management, ■ securitisation or hedging transactions) whenever they exceed €5 billion (or the equivalent in any other currency);

DIRECTORS The internal rules of procedure of the Board of Directors set the principles of its functioning and the terms and conditions according to which the Board and its specialised Committees fulfil their duties. It also defines the role and powers of the Chairman and Chief Executive Officer. The Board’s internal rules of procedure are regularly updated, particularly to take account of legislative and regulatory changes and changes to the AFEP-MEDEF Code (see section 4.1 “Corporate Governance Code”). The most recent update to these rules was adopted by the Board of Directors at its meeting on 24 January 2018, after a joint review by the Governance and Corporate Social Responsibility Committee and the Appointments & Remuneration Committee held on 15 January 2018. Term of office of directors – Staggered 4.2.2.1 re-election of the Board In accordance with the option provided by the aforementioned order of 20 August 2014, the EDF Shareholders’ Meeting held on 21 November 2014 modified the Company’s articles of association and reduced the term of office of the directors to four years. As an exception, the articles of association state that the first term of office of the directors representing the employees that came into effect after the Shareholders’ Meeting held on 21 November 2014 shall be five years and that the term of office of the directors appointed by the Shareholders’ Meeting held on 21 November 2014 shall expire at the end of the Shareholders’ Meeting called to approve the financial statements for the fiscal year ending 31 December 2018. In accordance with the provisions of Article 2 of Decree no. 2014-949 of 20 August 2014 regarding the implementation of the order of 20 August 2014, the Representative of the French State is appointed for a term equal to the term of office of the members of the Board of Directors. At the Shareholders’ Meeting of 15 May 2018, a resolution will be put forward to modify Article 13 of EDF’s articles of association in order to provide that, starting from the 2019 Shareholders’ Meeting called to approve the financial statements for the 2018 fiscal year, the Board of Directors, excluding directors elected by the employees and the Representative of the French state appointed by decree, be renewed by rotation periodically in such a way that half (rounded to the nearest whole number) of the directors elected by the Shareholders’ Meeting be renewed every two years and that the Board be completely renewed, with respect to the members concerned, at the end of each four-year period. The directors appointed by the Shareholders’ Meeting can be dismissed at any time by the Shareholders’ Meeting. In accordance with Article 12 of the Law on the Democratisation of the Public Sector, the directors elected by the employees can be individually dismissed for gross negligence in the exercise of their duties by order of the Presiding Judge at the District Court delivered at summary proceedings upon request from the majority of the members of the Board. However, in the event that serious dissent disrupts the Company’s administration, dismissal pronounced by the Shareholders’ Meeting can be extended to representatives of the employees. The Representative of the French State ceases their duties by resigning or if they lose the capacity by virtue of which they were appointed; they can be replaced at any time for the remainder of the term of office. 4.2.2.2 Method of Executive Management − Appointment and powers of the Chairman and Chief Executive Officer In accordance with the option provided for in Article 18 of the Order of 20 August 2014, EDF’s articles of association state that the Chairman of the Board of Directors is the Executive Manager of the Company and holds the title of Chairman and Chief Executive Officer. The “non-separated” Executive Management structure is therefore set out in the Company’s articles of association. The Board’s internal rules of procedure, and in particular the limitations it applies to the powers of the Chief Executive Officer, ensure a satisfactory balance, in the Company’s interest, between the Chairman and Chief Executive Officer and the Board of Directors, whilst preserving the flexibility, effectiveness and responsiveness necessary in the administration and management of the Company.

4.

In accordance with this text, Jean-Bernard Lévy had been appointed, by ministerial decisions of 21 November 2014, temporary Chairman and Chief Executive Officer of the (1) Company from 23 November 2014.

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EDF I Reference Document 2017