SCH2017_DRF_EN_Livre.indb

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Corporate governance report Board committees (composition, operating procedures and activities)

E verifies the auditors’ independence, in particular by reviewing fees paid by the Group to their firm and network and by giving prior approval for assignments that are not strictly included in the scope of the statutory audit; E monitors the efficiency of internal control and risk management systems. For this purpose: E it shall examine the organization and resources used for internal audit, as well as its annual work program. It receives a quarterly summary report on the findings of the audits carried out, E reviews operational risks mapping and its year-on-year evolution. It ensures procedures are implemented to prevent and reduce them, E reviews risk mitigation and coverage optimization, E reviews the rollout of the Group’s internal control system and acknowledges the outcome of entities’ self-assessment regarding internal control. It ensures procedures are implemented to identify and handle anomalies; E it shall examine rules of good conduct notably concerning competition and ethics and the measures implemented to ensure that these rules are circulated and applied. The Audit and risks committee examines proposals for distribution as well as the amount of financial authorizations submitted for approval at Annual Shareholders’ Meetings. The Audit and risks committee reviews all financial and accounting issues and those related to risk-management submitted to it by the board of directors. The Audit and risks committee presents its findings and recommendations to the board. The Chairman of the Audit committee keeps the Chairman and the Vice-chairman independent lead director promptly informed of any difficulties encountered. Activities in 2017 In 2017, the Audit committee met 5 times. The average duration of the meetings was 3 hours 15 minutes and the average attendance rate was 100%. Each meeting was fully or partially attended by the Deputy CEO in charge of Finance, members of the Finance Department, the head of Internal Audit as well as the statutory auditors. Operational Management also reported to the committee. In line with the provisions of the AFEP/MEDEF Code, the Chairman and CEO does not in principle attend the Committee’s meetings. The topics discussed by the committee were as follows: 1) financial statements and financial disclosures: E review of the annual and interim financial statements and of the reports on the financial statements, E review of goodwill, the Group’s tax position, provisions and pension obligations or similar obligations,

E review of investor relations’ documents concerning the annual and interim financial statements, E review of the Group’s scope of consolidation, E review of pension commitments; 2) internal audit, internal control and risk management: E review of the risk mapping, E review of the 2018/Q1 2019 Internal Audit schedule drawn up after the risk mapping review, E monitoring the Internal Audit road map realization related to 2017/Q1 2018, and review of main audits’ outcome, E review of the activities of Internal Control, particularly the results of assessments/self-assessments, E review of risks covered by insurance, E deployment of the Tailored Supply Chain initiative and related risks, E update on Samara Electroshield integration, E intellectual property protection, E evolution of the “Compliance” function and review of the summary report on the fraud cases E implementation of the new commercial policy in France, E review of main environmental risks and update on mitigation measures and actions E update on policies and processes aiming at preventing risks relating to quality E General Data Protection Regulation/Data Privacy: anticipation of new regulations and description of associated risks, E update on Finance Simplification initiative progress and associated risk, E Energy Rebound initiative status report including a review on the progress of the “Solutions Execution” set up transformation; E review of the Chairman’s draft report on procedures for internal control and risk management; 3) statutory auditors: E review of the fees paid to the statutory auditors and to their networks, E review of the external audit plan; 4) corporate governance: E recommended dividend for 2017, E review of the financial authorizations, whose renewal was approved by the Annual Shareholders’ Meeting of April 25, 2017. The Audit committee reported on its work in 2017 to the board’s meetings of February 15, July 26, October 25, andDecember 14, 2017.

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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