Shareholders’ meetings

  • In its 3 November meeting the Company’s Board of Directors, as already mentioned, introduced the changes to the Bylaws necessary to implement the obligatory provisions of the law.
  • Shareholders may ask questions on topics on the agenda even before the meeting date applying the rules stated in the call notice.
  • The following documents, among others, are available on the Company’s website for each meeting:
    (i) call to meet;
    (ii) copy of the minutes of the meeting;
    (iii) brief report on voting;
    (iv) documents and reports examined by the meeting;
    (v) press release distributed by the Company on the meeting.

The regulations governing the operation of Shareholders' Meetings have been profoundly changed in response to the provisions introduced into Italian legislation by Legislative Decree 27 of 2010 implementing in national law Directive 2007/36/CE for facilitating participation in Shareholders' Meetings by shareholders in listed companies.

In its 3 November meeting the Company's Board of Directors, as already mentioned, introduced the changes to the Bylaws necessary to implement the obligatory provisions of the law and on the occasion of the Shareholders' Meeting to approve the 2010 Financial Statements further changes will be proposed to implement some of the powers the legislator permits to promote the right to attend meetings and vote.

For more information on this topic, the reader is referred to the Board of Directors' Report to the Shareholders' Meeting, published on the Company's website; this section reports on a number of proposed changes to the Bylaws and on the changes made on 3 November 2010.

Shareholders' Meetings are called under the law and the Company Bylaws by publishing a call to meet on the Company's website. The call to meet is normally published at least thirty days prior to the first summons of the meeting, and in the case of Shareholders' Meetings called to elect members of the company's administration and control bodies, at least forty days prior to the date of the meeting. The call notice must identify the date, time and place of the meeting and the list of topics on the agenda.

The call notice must also contain a description of the procedures shareholders must comply with to attend meetings and exercise their voting rights and information on: (i) the right to ask questions prior to the meeting; (ii) the terms and methods applicable to the right to add topics to the agenda; (iii) the proxy voting procedure; (iv) the identity of the subject (which the Company may have designated for proxy voting and the methods and terms for delegating proxies).

The Shareholders' Meeting may not deliberate on topics which do not appear on the agenda.

Shareholders who, alone or together, represent at least one fortieth of the Company's share capital may ask, within five days of the publication of the call notice, that topics be added to the agenda, identifying the additional topics they propose in their request.

The Shareholders' Meeting deliberates – in ordinary or extraordinary sessions – on, among other topics: (i) appointment and revocation of members of the Board of Directors and the Board of Statutory Auditors and their fees and responsibilities, (ii) approval of the financial statements and allocation of profits, (iii) purchase and sale of the company's own shares, (iv) changes to the Bylaws, (v) issuing of convertible bonds;

An ordinary Shareholders' Meeting – which may be held anywhere in Italy, not necessarily in the Company's offices – must be convened within 120 days of the end of the Financial Year, though the Shareholders' Meeting to approve the financial statements may, under article 2364 of the civil code, be convened within 180 days of the end of the Company's Financial Year.

The Shareholders' Meeting may be held in response to the first or second summons (or third summons, in the case of extraordinary Shareholders' Meetings only).

The Shareholders' Meeting to approve the 2010 financial statements may also be held as a single summons, in which case the majorities required for the second summons of an ordinary meeting or the third summons of an extraordinary meeting shall apply.

In this regard, with the exception of specific topics for which the law requires a different majority, the Shareholders' Meeting shall be constituted and pass resolutions as follows:

  1. in an ordinary session:
    • at the first call, the Shareholders' Meeting shall be considered duly constituted provided enough shareholders are present to represent at least half the Company's share capital and pass resolutions by absolute majority of the share capital represented;
    • at the second (or only) call: the Shareholders' Meeting shall be considered duly constituted no matter what portion of the Company's share capital is represented by the shareholders attending and shall pass resolutions by absolute majority of the share capital represented
  2. in an extraordinary session:
    • at the first call, the Shareholders' Meeting shall be considered duly constituted provided enough shareholders are present to represent at least half the Company's share capital and pass resolutions by favourable vote of at least two thirds of the share capital represented;
    • at the second call, the Shareholders' Meeting shall be considered duly constituted provided enough shareholders are present to represent at least one third of the Company's share capital and pass resolutions by favourable vote of at least two thirds of the share capital represented;
    • at the third call, the Shareholders' Meeting shall be considered duly constituted provided enough shareholders are present to represent at least one fifth of the Company's share capital and pass resolutions by favourable vote of at least two thirds of the share capital represented.

Shareholders are entitled to view all the documents filed in the company's offices for Shareholders' Meetings already called and to obtain a copy thereof at their own expense.

The proceedings of Shareholders' Meetings are regulated by the law, the Bylaws, and the Regulations for Shareholders' Meetings approved by the 11 May 2004 Shareholders' Meeting and amended by the 23 April 2007 Shareholders' Meeting71.

Meetings are chaired, in order of priority, by the Chairman of the Board of Directors, a Deputy Chairman or a Managing Director (if there are two or more Deputy Chairmen or Managing Directors, the senior one will act as chair). In the absence of all the aforementioned individuals, the meeting shall be chaired by another person elected with the favourable vote of the majority of the share capital represented at the meeting.

The tasks of the Chairman of the Shareholders' Meeting include, among others: verifying that the meeting is duly constituted; verifying attendees' identity and right to attend, also by proxy; ascertaining the number legally required to pass resolutions; directing the session, establishing a different order for discussion of the topics on the agenda if necessary. The Chairman normally adopts all suitable measures to ensure the orderly progress of debate and voting, defining the methods and ascertaining the results.

The resolutions of the Shareholders' Meeting are recorded in minutes signed by the Chairman and the Secretary or by the notary public. The minutes of Extraordinary Shareholders' Meetings must be drawn up by a notary designated by the Chairman of the Meeting.

71 The Regulations for Shareholders' Meetings appear at the end of this Report and in the Governance section of the Company's website.

Following the changes introduced by Legislative Decree no. 27/2010 with introduction into Italian law of the socalled record date mechanism, the shareholders entitled to attend Shareholders' Meetings and vote are those who, on the basis of notification of the Company's broker, are authorised to attend the meeting and vote at the close of the seventh trading day prior to the date set for the first or only call of the meeting.

Records of credits and debits to accounts after this deadline will not affect the right to vote at the Shareholders' Meeting. Shareholders with voting rights may appoint a proxy to represent them by the methods specified by current laws and regulations. The Company will designate, for each Shareholders' Meeting, one or more subjects whom those entitled to vote in the Shareholders' Meeting may appoint as proxy with instructions for voting on some or all of the topics on the agenda. The proxy will not apply to proposals for which no voting instructions have been given. The designated subjects, methods and terms of granting proxies appear in the call to meet.

The Company may be notified of the proxy in electronic form by one of the following alternative methods:

  1. use of the appropriate section on the Company's website, indicated by the Company in its call to meet;
  2. sending a message to the certified email address indicated by the Company in the call to meet.

The call to meet may also identify one of the above methods as applicable on the occasion of the particular meeting to which it refers.

With reference to the right of each person attending the meeting to take the floor to speak on the topics appearing on the agenda, note that the Regulations for Shareholders' Meetings state that the Chairman may, in view of the importance of the individual points on the agenda, identify the amount of time, which must not be less than 15 minutes, available to each speaker. Anyone wishing to speak must ask the Chairman or the Secretary to give them the floor, identifying the topic on which they wish to speak. Requests may be presented until the Chairman declares discussion of the topic in question closed. Attendees may ask for the floor a second time in the course of the same discussion, for no more than five minutes, solely in order to reply or make a voting declaration.

The Regulations entitle the Chairman of the meeting to grant Shareholders who made a request under the Bylaws to add no more than 15 minutes of discussion time on topics on the agenda to illustrate their proposed resolutions and explain the reasons for them.

Following the changes introduced by Legislative Decree 27/2010, shareholders may ask questions on topics on the agenda even before the meeting date applying the rules stated in the call notice. Questions asked before the meeting will be answered no later than during the meeting, and may be answered along with other similar questions. If the information requested is already available in the "questions and answers" section of the Company's website, no reply need be provided.

2010 Shareholders' Meetings

Two Shareholders' Meetings were held in 2010:

  • on 21 April 2010, in response to the second call, with the participation of 57.92% of the Company's ordinary share capitalto discuss approval (i) in the ordinary session, of the financial statements at 31 December 2009 (approved by the favourable vote of 99.934% of the share capital represented at the meeting); (ii) in the extraordinary session, changes to article 5 (Share capital), 7 (Shareholders' Meetings) and 16 (Board of Statutory Auditors) of the Company Bylaws; numbering of the articles in the Company Bylaws in individual paragraphs (approved by the favourable vote of 99.996% of the share capital represented at the meeting);
  • on 15 July 2010, in response to the second call with the participation of 59.66% of the Company's ordinary share capital, to resolve on approval of (i) Elimination of the par value of ordinary shares and savings shares and consequent changes to articles 5, 6 and 18 of the Company Bylaws; (approved with the favourable vote of 99.994% of the share capital represented at the meeting); (ii) on the conversion of ordinary and savings shares into stock at a rate of 1 new ordinary share for every 11 ordinary shares and 1 new savings share for every 11 savings shares owned, after cancelling the minimum number of ordinary and savings shares necessary to permit overall balancing of the operation, resulting in reduction of share capital; (approved with the favourable vote of 99.995% of the share capital represented at the meeting); (iii) voluntary reduction of share capital by no more than Euro 329,620,911.48 pursuant to article 2445 of the civil code by proportionate assignment to owners of ordinary shares and savings shares of 487,231,561 ordinary Pirelli RE shares owned by the Company; preparatory and consequent changes to article 5 of the Company Bylaws; (approved with the favourable vote of 99.994% of the share capital represented at the meeting).

The following documents, among others, are available on the Company's website for each meeting: (i) call to meet; (ii) copy of the minutes of the meeting; (iii) brief report on voting; (iv) documents and reports examined by the meeting; (v) press release distributed by the Company on the meeting.

The shareholders' meeting of the savings shareholders

As far as the shareholders' meeting of the savings shareholders is concerned, it is called by the Common Representative of the Company savings shareholders or by the Board of Directors every time that they deem it opportune or when its call is requested under the terms of the law.

The special Shareholders' Meeting of the savings shareholders is chaired by the Common Representative of the savings shareholders or, in lack thereof, by the person elected with the favourable vote of the majority of the capital represented at the Shareholders' Meeting.

Pursuant to the Articles of Association72, the burdens regarding organisation of the special category Shareholders' Meeting and remuneration of the Common Representative lie with the Company.

The Shareholders' Meeting of the savings shareholders that took place on 28 January 2009 confirmed Giovanni Pecorella Common Representative of the savings shareholders for the years 2009-2011. It also defined his fee and approved the establishment of the fund for the costs necessary for protecting the common category interests. At the time the Common Representative was renewed, the savings Shareholders expressed themselves with separate voting on the appointment of the Common Representative and on defining the fee and common fund.

72 Article 6 of the Articles of Association.