LEGRAND / 2018 Registration document

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INTERNAL CONTROL AND RISK MANAGEMENT

ENVIRONMENT AND ORGANIZATION OF INTERNAL CONTROL AND RISK MANAGEMENT

3.1 – ENVIRONMENT AND ORGANIZATION OF INTERNAL CONTROL AND RISK MANAGEMENT

3.1.1 – Reference framework

The Group’s internal control and risk management system falls within the legal framework applicable to companies listed on the Paris stock exchange and relies on the “Reference framework for risk management and internal control systems” published by the AMF in 2010.

3.1.2 – Scope of application

The Group’s internal control and risk management system covers all controlled entities that fall within the scope of consolidation of which the Company is the parent company. No entity is excluded from the system. The Group defines the roles and responsibilities of the various participants, establishes procedures, and ensures that internal control and risk management are performed effectively within its subsidiaries. Newly acquired companies adopt the internal control

system during their integration with the Group. They are audited for the first time by the Group’s Internal Audit team within around a year of their acquisition. The scope of application of internal control concerns every area of the business. The internal control system is regularly updated, to keep it closely aligned with risk management approach and business developments.

3.1.3 – Internal control and risk management environment

The Group’s internal control and risk management environment is based on the following: W the Group’s values, formally enshrined in a set of charters that are widely circulated among its teams. They include the Group’s Charter of Fundamental Principles and its Application Guide setting out the Group’s values, its Prevention Charter and Environment Charter and its Guide to good business practice. Commercial practices are governed by the Fair Competition Charter and the Guide to Good Business Practice; W exemplary behavior, an essential means of disseminating values within the Company; W the clear objectives set out by the Company and communicated to its employees (see section 2.2.1); W an organizational and hierarchical structure that provides a clear definition of responsibilities and powers;

W management policies and procedures available on the Group’s intranet, applicable to all its subsidiaries; W IT tools and access to information systems determined according to each person’s role, in compliance with the rules regarding segregation of duties. The reporting structures that exist for all the Group’s major business processes relevant and reliable information to be gathered and circulated at various levels of the business, and ensure that the Group’s different organizational levels (regions, subsidiaries and head office departments) use the same terminology. Examples include the annual budget process, monthly and quarterly country performance reviews, and various reports (financial, HR, corporate social responsibility, environmental responsibility, etc.), as well as the internal control self-assessment questionnaire completed by each Group entity.

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LEGRAND

REGISTRATION DOCUMENT 2018