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Corporate Governance
Report
2017
Corporate Governance
At Grupo Energía Bogotá (GEB) the corporate governance system establishes
the mechanisms through which key aspects for the company's and the group's
growth, competitiveness and sustainability are managed. GEB understands that
its acts are defined as of the decisions of the shareholders, the Board of
Directors, Senior Management and, in general, all of the company's
collaborators; that is why GEB is comitted with the implementation of the
highest standards in this regards.
Corporate governance allows for the management process to understand
the economic, environmental and social dimensions and implications in
territories where the Group has operations, and that the management is guided
by corporate policies. This has allowed the company to take actions to establish and maintain
cooperation and support relationships with public and private organizations,
regional governments in Colombia and Latin America and with the communities
in the areas of influence in favor of sustainable development. This aspect has an impact in the company's economic and social growth
and ensures its sustainable development increasing its value through a proper
management, avoiding or reducing financial crisis risks through better
relationships with all of its stakeholders and generating social investment and
environmental protection possibilities.
The Corporate Governance System is a tool that GEB has to ensure its
autonomy within the political scope; this is why during 2016 and 2017 it made
an effort to structure a solid corporate governance that will continue in the
strengthening process during 2018; this effort has been internally called as
"Corporate Governance Reinstitutionalization".
2
Likewise, GEB, acting as issuer of local and international securities, complies
with the highest standards of transparency and disclosure of financial and non-
financial information, according to the applicable regulations. GEB has also
been recognized within the program of the Colombian Stock Exchange for
companies that have high standards of disclosure of information to its investors
(Investor Relations Recognition, IR).
The Business Group Agreement and the Corporate Governance Code
establish the mechanisms through which key aspects of growth,
competitiveness and sustainability for the company and the Group are
managed; in this sense, it is committed with the implementation of high
standards in this matter. Regarding the above, GEB understands that its acts
are defined as of the decisions from the shareholders, the Board of Directors,
Senior Management and, in general, from all of the company's employees.
The company directs and executes its legal and corporate governance
management through the Business Group Agreement, the Governance Code
and the Corporate Governance Policy. The Business Group Agreement
establishes the guidelines for the development of the management, direction
and control process of GEB S.A. E.S.P. and its companies; this agreement is
based on the recommendations of the Best Corporate Practices Code, the
Country Code, provided in Circular 028/2014 of the Superintendence of Finance
of Colombia, in the Guidelines for a Corporate Governance Latin American
Code of CAF (Latin American Development Bank) and in the recommendations
of the Organization for Economic Cooperation and Development (OECD) with
respect to good corporate governance practices.
The Corporate Governance Code describes the main elements of
governance of GEB and defines the guidelines for actions of the governance
bodies of the company, including some aspects related to the Group; in
addition, it acts as an instrument that describes in general, several practices
adopted and regulated in detail in other corporate instruments, such as the
Corporate Governance Policy, the Information Disclosure Policy, the Share
Trading Policy, the Appointment of Statutory Auditor Policy, among others.
Likewise, the company, through the Corporate Governance Code and taking
into account its capacity as issuer of shares listed in the Colombian Stock
Exchange, whose majority shareholder is the Capital District of Bogota and,
among whose minority shareholders are individuals and institutions, such as
pension funds, formulated the following general commitments:
i. Regarding minority shareholders of GEB. Grant equal and respectful
treatment to all its shareholders, regardless of the
value of their investments or the number of shares they represent,
in line with the legal and regulatory provisions and with what is
established in the different corporate instruments.
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ii. Respect by the Capital District as majority shareholder. GEB is respectful of its
relationship with its majority shareholder and guides its actions by the
Guidelines on Corporate Governance of State-Owned Enterprises of the OECD;
in return, it expects to have a relationship that is supported in business and
technical criteria, which is respectful of corporate channels, such as the General
Shareholders Meeting and the Board of Directors, both instances in which
representatives of the majority shareholder participate; GEB is conscious of the
importance of observing these channels with respect to the protection of the
company's interests and the creation of value for all shareholders.
Respect to other shareholders in GEB companies. In all of its investments, GEB
guides its action criteria in respectful, transparent and abiding criteria with the
provisions contained in the Corporate Governance Code, such that agreements
that are formalized for the management of those investments are honored.
CAPITAL AND STRUCTURE OWNERSHIP OF THE COMPANY
.........
Grupo Energía Bogotá S. A. E. S. P. is a share issuer listed in the Colombian Stock
Exchange, whose majority shareholder is the Capital District of Bogota; the
company also has minority shareholders, among which are individual investors and
institutions such as pension funds.
Shareholder TIN Shareholder %
Bogotá Capital District 8999999061-9 7.003.161.430 76,28%
Fondo de Pensiones Obligatorias Porvenir Moderado 800224808-8 671.477.238 7,31%
Fondo Moderado de Pensiones Obligatorias Protección 800229739-0 482.641.626 5,26%
Corporación Financiera Colombiana S. A. 890300653-6 192.884.105 3,56%
Fondo de Pensiones Obligatorias Colfondos 800227940-6 192.884.105 2,10%
Other share ownerhip 503.862.118 5,49%
9.181.177.017 100% *Share ownership as of December 30, 2017 based on information provided by the Central Securities Deposit
The members of the Board of Directors of GEB do not owe shares in the
company and only two senior managers have participation (non-material of
0,002% of the property). By having a mainly institutional property structure, GEB
does not have family relationships among the holders of significant shares. It
should be noted that the second (Porvenir) and fourth significant shareholders
(Corficolombiana) are part of Grupo Aval, one of the most important financial
conglomerates in Colombia.
Up to this date, GEB has not been informed of any current shareholder
agreement.
4
STRUCTURE OF THE CONGLOMERATE
.........
Companies that are part of the Group:
Urban
Strategic Solutions
(SEU)
aff
ilia
tes
1 2 3 4 5 9
Subo
rdin
at
es C
omp
anie
s
EEB Perú
Holding Ltd 1 2
Co
mp
an
ies
Co
mpa
nies
subs
idia
ries
GrupoEnergíaBogotá
1 2 3 4 5 9
Interconexión para el Generación de baja
desarrollo de mercados (IDM) emisión (GBE)
Gebbras GrupoEnergíaBogotá
1 2 3 4 1 9 5 6 8 9
Trecsa GrupoEnergíaBogotá
1 2 3 4 5 9 1 2 3 4 8 9
1 2 3 4 5 6 9 1 2 3 5 9
EEB Gas SAS
1 2 9
TGI Internacional
1 2
Logo Foundation
1 2 9
1 General Shareholders Meeting /
Shareholders Board / Partner
Board/Founding Council.
2 Board of Directors / Directories /
Management Board/ Governing Board
3 Audit and Risk Committee
4 Finance and Investment Committee
5 Corporate Governance Committee
6 Compensations Committee
7 Energy Rights of Way Easments,
Collaterals and PVBC Committee
8 Operations Committee
9 Presidency / Directors / CEO
*For purposes of the Business
Group Agreement, the
Fundación Grupo Energía
Bogotá is understood as a
company that is part of GEB.
Nevertheless, with respect to this
foundation, no situation of the
Business Group has been
registered before the Chamber of
Commerce of Bogota.
5
Company shares The authorized, issued and paid capital is determined by articles 6, 7 and 8 of
the Bylaws.
STRUCTURE OF THE MANAGEMENT OF THE COMPANY OR CONGLOMERATE
.........
The direction, management and oversight of the company are exercised, within
their own competence, by the following main bodies: 1) General Shareholders
Meeting, 2) Board of Directors, 3) Presidency and 4) Statutory Auditor.
General Shareholders Meeting
Board of Directors President Beatriz Elena Arbeláez Martínez
33% independent members 67% non-independent members 33% women 67% men
Governance Committee Audit Committee Finance Committee Corporate and
Risks y Riesgos y de Inversiones Compensaciones
President of GEB Statutory Auditor Astrid Álvarez Hernández,
Group Vice Presidencies business strategic (GEN)
Interconexión para el Soluciones Generación Desarrollo de Mercados Energéticas Urbanas de Baja Emisión
Senior Management GEB
Trecsa Gebbras GrupoEnergíaBogotá GrupoEnergíaBogotá
General Shareholders Meeting The General Shareholders Meeting is the highest body of GEB; it is responsible
for setting guidelines and orienting and evaluating the performance of the
members of the Board of Directors and of the legal representatives of the
Company. It is formed by all the holders of shares and its constituted as the
main stage to provide information and interact with the shareholders. It has its
own Regulations, that contains its functions and regulated its operation.
The General Shareholders Meeting, as maximum governance body of the
company, can delegate in specific and special cases, the exercise of
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some of its functions to the Board of Directors or the President, except those
stated in paragraph one of article 58 of the Bylaws.
The General Shareholders Meeting that was held on December 6, 2017,
approved a statutory reform to extend the terms to call the general meetings as
follows: thirty (30) calendar days in advance to the ordinary meetings of the
General Shareholders meeting and not less than fifteen (15) calendar days in
advance of the special meetings.
The above, to ensure that the shareholders have more than the time legally
established to familiarize with the reports and proposals presented by the Board
of Directors and ensure their participation at the meetings. Likewise, the right of the shareholders to access additional information to
the documentation received or the public information facilitated by the company
about the agenta of the General Shareholders Meeting was also expressly
included in the Bylaws. Grupo Energía Bogotá S. A. E. S. P. is committed with the highest
standards of corporate governance and transparency, which are enshrined in
the Corporate Governance Code, in the Corporate Governance Policy and in
the Disclosure of Information Policy, which are tools with which it is guaranteed
that their actions are framed in equal treatment for all its shareholders and other
stakeholders.
The disclosure and publication of the information constitutes the main
mechanism through which GEB ensures transparency, ethics, accountability
and the respect of the rights of shareholders; in addition, it allows it to generate
trust relationships with all of its stakeholders. Being that GEB is a securities
issuer, GEB complies with all the standards and requirements of disclosure of
information provided in the laws, the guidelines established by the
Superintendence of Finance of Colombia, the provisions in the Comprehensive
System for Securities Market Information (SIMEV) and the highest local and
international standards regarding transparency.
The website is the main mechanism to establish permanent contact with the
stakeholders. According to the applicable Colombian laws, the provisions of the
Superintendence of Finance and international standards, GEB's website
discloses financial and non-financial information with a clear and simple
language, uses graphic tools to communicate effectively and its contents is
permanently updated, all of this responding to criteria of universality,
proportionality and promptness, and preserving, in all cases, the confidential or
reserved nature of the information. Likewise, the corporate information modules
are noted in which all corporate documents are found, as well as the ethical
behavior standards of the company.
Additionally, GEB has a Finance and Investor Relationship Department, that
answers specific questions from investors. Through this Department, telephone
requests may be made or through written communications submitted to GEB's
physical address or thorugh email to [email protected].
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B) ASSISTANCE DATA TO GENERAL SHAREHOLDERS MEETING Minute 75 (January 27, 2018) Total shares represented/recorded..... 8.718’364.226 | 94,96%
Total shares present:.................................... 8.718’364.226 | 94,96%
Total subscribed and paid shares:................. 9.181’177.017 | 100%
Minute 76 (March 30, 2017) Total shares represented/recorded..... 8.801’863.612 | 95,87%
Total shares present.................................... 8.801’863.612 | 95,87%
Total subscribed and paid shares................. 9.181’177.017 | 100%
Minute 77 (June 20, 2017) Total shares represented/recorded..... 8.744’833.606 | 95,24%
Total shares present.................................... 8.744’833.606 | 95,24%
Total subscribed and paid shares................. 9.181’177.017 | 100%
Minute 78 (October 6, 2017) Total shares represented/recorded..... 8.694’331.888 | 94,697%
Total shares present.................................... 8.694’331.888 | 94,697%
Total subscribed and paid shares................. 9.181’177.017 | 100%
Minute 79 (October 6, 2017) Total shares represented/recorded..... 8.659’380.585 | 94,317%
Total shares present.................................... 8.659’380.585 | 94,317%
Total subscribed and paid shares:................. 9.181’177.017 | 100%
C) DATA OF THE MAIN AGREEMENTS MADE
Minute 75 (January 27, 2018) 1. Amendment to Bylaws, corporate purpose (article 5). Minute 76 (March 30, 2017)
1. Corporate Governance Report. 2. Consideration of reports:
1. Sustainable management report 2016 2. Operations with economic affiliates report. 3. Individual financial statements for the period from January 1 to December 31, 2016
and consolidated for the same period, and a report on the financial situation of the company.
4. Auditor's opinion on the financial statements. 5. Consideration of the profit distribution project and payment of dividends. 6. Amendment to the Bylaws. 7. Election of the members of the Board of Directors of Empresa de Energía de Bogotá
S. A. E. S. P. Minute 77 (June 20, 2017)
1. Granting of a corporate guarantee to Contugás S. A. C.
2. Election of members of the Board of Directors of Empresa de Energía de Bogotá S. A.
E. S. P. Minute 78 (October 6, 2017) 1. Modification of the corporate name of Empresa de Energía de Bogotá
S.A.E.S.P. Bylaws amendment.
2. Election of the members of the Board of Directors of Empresa de Energía de
Bogotá S. A. E. S. P.
3. Corporate guarantee from EEB to TRECSA. Minute 79 (December 6, 2017) 1. Bylaws and Regulations of the General Shareholders' Meeting amendment.
Implementation of recommendations of Circular 028 of 2014 of the
Superintendence of Finance of Colombia.
2. Bylaws amendment - Creation of a Branch that will be in charge of the electric
power transmission business of GEB S.A. ESP.
8
Board of Directors The Board of Directors, as the highest strategic management body, determines
the general policies of the company and ensures the rights and fair treatment of
all shareholders, as well as the stability and development of the GEB in the
short, medium and long term. It is the responsibility of the Board to supervise
the performance of the Senior Management, ensure the quality of the
information disclosed, set guidelines for risk management and monitor
compliance with policies and corporate governance schemes required by the
regulation or those voluntarily adopted by the GEB. The Board is composed of
nine principal members, with personal alternates, elected by the General
Shareholders' Meeting through the electoral quotient system for periods of two
years.
The Board of Directors is responsible for ensuring compliance with the law, the
Bylaws, the Code of Good Governance and the commitments acquired by the
company in the development of its corporate purpose.
Main Members Alternate Members Beatriz Elena Arbeláez Martínez José Alejandro Herrera Lozano 33% independent
Roberto Holguín Fety Pedro Orlando Moreno Pérez Members
67% non-independent
Gisele Manrique Vaca Darío Montenegro Trujillo Members
Jaime Eduardo Ruiz Llano María Victoria Angulo González 33% women
Margarita María rehebbein Dávila Beatriz E. Cárdenas Casas 67% men
Carlos Alberto Sandoval Reyes Yaneth Rocío Mantilla Barón
*Luis Fernando Uribe Restrepo Diego Quintero Múnera
*Gustavo Antonio Ramírez Galindo Alejandro Sánchez Vaca
*Rafael Simón Herz Stenberg Ana María Calle López
*Independent Members
9
BEATRIZ ELENA ROBERTO Gisele ARBELÁEZ MARTÍNEZ HOLGUÍN FETY MANRIQUE VACA
Economist Master Economist Attorney
National Security and Defense
››Council VP.
››Private Secretary of Bogotá Mayor
››District Treasury Secretary U. Jorge Tadeo Lozano
››Non-independent ››Non-independent ››Non-independent
››Designated by Capital District ››Designated by Capital District ››Designated by Capital District
››Since 2016 ››Since 2017 ››Since 2016
››BD President ››Financial, Investment, ››Compensation Committee
››Fin. and Investment Committee Governance, and Risk committees ››100% attendance
››84% attendance ››92% attendance ›› No conflict of interest declared
››Refrained from participating in ››No conflict of interest declared In 2017.
discussions on statutory reforms in 2017. of the company, debt prepayment
to the Capital District, approval and
changes in credit conditions for
the acquisition of GEB shares to the extent that as District Treasury Secretary is
Representative of the Capital District
JAIME EDUARDO MARGARITA MARÍA CARLOS ALBERTO RUIZ LLANO REHBEIN DÁVILA SANDOVAL REYES
Civil Engineer Biomedical Engineer Adm. and economist
››Master in Civil Engineering ››Master in Industrial Engineering ›› Master in Fiscal Studies
››Manager Colombiana de Viviendas ››CFO of Sanford Management And Public Policies
››Non-independent Colombian Branch ››VP of Structuring and
››Designated by Capital District ››Non-independent and Project Management of the
››Since 2016 ››Designated by Capital District National Development Financer
››BD Vicepresident ››Since 2016 (FDN).
››Financial and Inv. Committee ››Corporate Gov. Committee ››Non-independent
››100% attendance ››84% attendance ››Designated by Capital District
››Declined to participate ››No conflict of interest declared ››Since 2016
in discussions about the asset In 2017. ››Corporate Gov. Committee
operation in Embalse ››89% attendance
de Tominé due to ownership rights ››No conflict of interest declared
in the area of influence. in 2017.
10
LUIS FERNANDO GUSTAVO ANTONIO RAFAEL SIMÓN URIBE RESTREPO RAMÍREZ GALINDO HERZ STENBERG
Attorney Electrical Engineer PhD Candidate in Development Economy
››Partner at Uribe Rodríguez
››Master in Economy
››Master in Economy Economic Law ››VP. Corficolombiana Investments
››Independent ››Independent ››Independent advisor
››Designated by Capital District ››Designated by Corficolombiana and Colombian Petroleum Association VP
››Since 2017 y Fondos Porvenir
››President of the governance and ››Since 2014 ››Independent
risk committees. ››President of the audit, risk and ››Designated by Fondos Protección
››Corporate Governance, audit, Compensation committees ››Since 2016
and risk committees ›› President of the audit, risk and ››Financial and investment ››100% attendance compensation committees Committee president
››No conflict of interest declared ››89% attendance ››Financial, investment,
in 2017. ››Refreined from disscusing the Audit, risk and compensation TGI strategy, asset transfer and Committees
invariant disinvestments, ››95% attendance
participation and selection of gas ››No conflict of interest declared
Partners for this purpose, taking into In 2017.
Account that he is part of
Promigas Board of Directors and
Legal Representative of Corficolombiana.
In 2017 the following changes in the Board of Directors were made:
• Alberto Gutiérrez B. by Roberto Holguín F., March 30, 2017. • Antonio José Núñez T. by Luis Fernando Uribe R., March 30, 2017. • María Carolina Castillo A. by Yaneth Mantilla B., March 30, 2017. • Germán González R. by María Victoria Angulo G., October 6, 2017. • José Alejandro Samper C. by Ana María Calle L., June 20, 2017.
Members of the Board of Directors of the parent company
who sit on or hold executive positions on the boards of
directors of subordinate companies (conglomerates): • Gustavo Ramírez Galindo is a
member of the Board of Directors of
Cálidda. None of the members of the Board of Directors have shares
in GEB.
For more information on Board members' resumes, scan this QR code
POLICIES APPROVED BY THE BOARD OF DIRECTORS
DURING THE REPORTING PERIOD:
Minute 1569 of January 26, 2017
Approval of Financial Policy Approval of the Communications Policy
Minute 1571 of February 23, 2017
Approval of the Corporate Governance Policy Minute 1575 of May 25, 2017
Approval of internal control policy and prevention of fraud and corruption Minute 1577 of June 22, 2017
Policies Approvals: Stock Trading, Appointment of the Statutory Auditor and External Auditor and Disclosure of Information.
Minute 1584 October 26, 2017
Approval of Compensation Policy
11
Board of Directors Committees To carry out this task, the Board is supported by the Corporate Governance,
Audit and Risk, Financial and Investment and Compensation Committees. Each
of these bodies has an independent operating regulation, which establishes its
functions, composition and responsibilities. The members of each committee
are appointed by the Board of Directors to perform their duties for the same
period that corresponds to each of them as members of the Board of Directors
of the company and may be removed at any time.
The regulations of the General Shareholders Meeting, of the Board of Directors
and each committee can be found on the website
https://www.grupoenergiabogota.com/informacion-corporativa/gobier-no-
corporativo.
Each committee receives periodic reports on issues that concern it, and each
proposes and supervises compliance with corporate governance measures
adopted in the company, including the protection of the rights of all shareholders
and investors.
.
Audit and Risk Committee. The Internal Audit Department, the fiscal auditor and the external auditor ensure compliance with governance policies. This committee supervises and evaluates compliance with the Annual Internal Audit Plan, which includes business risks and the company's processes; it also supervises and evaluates the company's Internal Control System in order to recommend and issue concepts to the Board of Directors and fulfills the other functions that correspond to it in accordance with the law, the Bylaws
and its Regulations.
Main Members Alternate Members
*1. Gustavo Antonio Ramírez Galindo *Alejandro Sánchez Vaca
President
*2. Luis Fernando Uribe Restrepo *Diego Quintero Múnera
*3. Rafael Simón Herz Stenberg *Ana María Calle López 1
*Independent Members
12
Compensation Committee. Its function is to analyze and discuss all issues
relating to compensation of employees, such as
fixed compensation, variable compensation,
incentives and benefits, worker-employer relations
and industrial relations, in order to make specialized
recommendations to the Board of Directors on such
matters; it also supports the Board of Directors in
the exercise of its decision-making or advisory
functions associated with the appointment. and
remuneration of members of the Board and Senior
Management
Main members Alternate Members
*1. Gustavo Antonio Ramírez Galindo *Alejandro Sánchez Vaca
President
2. Gisele Manrique Vaca Darío Montenegro Trujillo
*3. Rafael Simón Herz Stenberg *Ana María Calle López
*Independent Members 2
4
1
Financial and Investment Committee.
3
It monitors the financial management of the company and the GEB and analyses new business opportunities and the redefinition of existing investments in order to make specialized recommendations to the Board of Directors on such matters; as well as to support it in the exercise of its decision-making functions related to the competences of the Committee.
Main members Alternate Members
*1. Rafael Simón Herz Stenberg *Ana María Calle López
President
2. Beatriz Elena Arbeláez Martínez José Alejandro Herrera Lozano
3. Jaime Eduardo Ruiz Llano María Victoria Angulo González
4. Roberto Holguín Fety Pedro Orlando Moreno Pérez
*Independent Members
13
Corporate Governance Committee. Proposes and supervises compliance with the
corporate governance measures adopted by the
company and makes recommendations related to
the Group's governance model.
Main members Alternate members 1
*1. Luis Fernando Uribe Restrepo
*Diego Quintero Múnera
President
2. Margarita María Rehbein Dávila Beatriz E. Cárdenas Casas 3
3. Carlos Alberto Sandoval Reyes Yaneth Rocío Mantilla Barón
4
4. Roberto Holguín Fety Pedro Orlando Moreno Pérez *Independent members
2
General Shareholders Meeting Regulation available with this QR.
Board of Directors Appointment Process In accordance with the provisions of its Regulations (article 3), it shall be
composed by individuals of the highest professional and personal qualities. For
the appointment, the General Shareholders' Meeting shall take into account
criteria such as (i) experience in the field of finance, law or related sciences, or
in activities related to the public services sector or the operations carried out by
the company; (ii) the candidate's profile, including background, recognition,
prestige, availability, leadership, good name and recognition of the candidate for
professional suitability and integrity.
The evaluation of the suitability of candidates and compliance with applicable
requirements is carried out prior to their election in the terms set forth in the
Regulations of the General Shareholders' Meeting. In accordance with articles
379 numeral 1 of the Code of Commerce and 18 of the Regulations of the
General Shareholders' Meeting, in order to facilitate their legal right of
nomination, shareholders propose candidates for the verification of
requirements, a task that corresponds to the Compensation Committee, in
which case it will submit a report to the General Shareholders' Meeting after the
corresponding verification. In the event that the procedure has not been carried
out by the Compensation Committee, it shall be the responsibility of the
proposing shareholder to carry out the analysis and present it at the Meeting
before the election by vote.
14
Without distinction of gender, race, nationality, religious, political or
philosophical opinion, the Board of Directors is composed of persons with the
highest professional and personal qualities (their resumes may be consulted on
the website). For its election, the General Shareholders Meeting takes into
account criteria such as experience in certain fields (law, finance and related
sciences) and in activities related to the public services sector and the
operations carried out by the company. In addition, it takes into account the
profile of the candidates, including their experience, leadership, recognition and
prestige.
Candidates, whether independent or remnants, must submit the documents that
allow the Compensation Committee to verify the qualities and requirements
applicable to each category. During the respective meeting of the General
Shareholders' Meeting, the report of said committee is submitted, which
provides compliance support of the candidates' conditions and requirements
(Regulations of the General Shareholders' Meeting, article 18).
In accordance with the terms of the Regulations of the Board of Directors, the
independent members of the collegiate body must comply with the
independence requirements defined in Law 964 of 2005. In addition, in
accordance with article 8 of the Regulations of the Board of Directors, for a
member to be independent, in addition to the requirements established in the
applicable law, it must comply with the following:
1. "Not to exercise nor to have exercised as an employee or manager of the company or
any of its affiliates or subsidiaries, including those persons who have had such capacity
during the last year prior to their appointment, except in the case of the re-election of an
independent individual.”
2. “Not to exercise, nor to have exercised during the last year prior to his appointment,
as an employee or executive of shareholders who directly or by virtue of an agreement
direct, guide or control the majority of the voting rights or who determine the majority
composition of the administrative, management or control bodies of the same, or of any
of the controlled entities, ascribed or linked to it.”
3. “Not to be a shareholder who directly, or by agreement, directs, guides or controls the
majority of the voting rights of the entity or who determines the majority composition of
its administrative, management or control bodies.”
4. “Not to be a member or employee of associations or companies that provide advisory
or consulting services to the company".
Likewise, the candidate who meets the requirements declares his or her
independent membership in the letter of acceptance of the position.
REMUNERATION POLICY OF THE BOARD OF DIRECTORS:
By disposition of the General Shareholders Meeting, fees are paid. "The
equivalent to five (5) current legal minimum monthly wages, for participating in each session
and up to two Board sessions within the same month. Members of the Board of Directors
committees shall receive fees for their participation in each meeting equal to seventy-five
percent (75%) of the current fees for Board of Directors meetings and up to two committee
sessions within the same month.”
The GEB does not have a variable remuneration model for the Board of
Directors, and therefore all amounts are associated with participation in
meetings. 15
The members of the Board of Directors are excluded from remuneration
systems that incorporate share options.
Board of Directors Remuneration (19 sessions) Per session:
three million six hundred and eighty-eight thousand five hundred
and eighty-five M. L..
COP 3’688.585
Compensation Committee Remuneration (Nine sessions) Per
session: Two million seven hundred and sixty-six thousand four hundred
and thirty-nine pesos M. L.
COP 2'766.439
Audit and Risk Committee Remuneration (11 sessions) Two million seven hundred and sixty-six thousand four hundred and thirty-nine pesos M. L.
COP 2'766.439
Corporate Governance Committee Remuneration (five sessions) Two million seven hundred and sixty-six thousand four hundred and thirty-nine pesos M. L.
COP 2'766.439
Financial and Investment Committee Remuneration (12 sessions) Two million seven hundred and sixty-six thousand four hundred and thirty-nine pesos M. L.
COP 2'766.439
Attendance at Board Committees
100% 100% 92% 100%
Corporate and Corporate and
Financial and Investment Committee
Corporate Governance Committee
Compensation Audit and Risk
No. of sessions: 9 No. of sessions: 11 No. of sessions: 12 No. of sessions: 5
Rafael S. Herz Stenberg Gustavo A. Ramírez G. Rafael S. Herz Stenberg Luis F. Uribe Restrepo:
100% 100% 100% 100%
Gustavo A. Ramírez G. Luis F. Uribe Restrepo Beatriz E. Arbeláez M. Margarita Ma. Rehbein D.
100% 100% 67% 100%
Gisele Manrique Vaca Rafael S. Herz Stenberg Jaime E. Ruiz Llano: Carlos A. Sandoval:
100% 100% 100% 100%
Roberto Holguín Fety: Roberto Holguín Fety:
100% 100%
16
› The Board of Directors 2017:
› Total: 19 Sessions
› Ordinary 12
› Extraordinary 7
› Total average attendance: 91%
› At all meetings required quorum to deliberate and decide was established.
› Average duration of the board meetings: 4 hours 11 minutes
› Notice and information: Five calendar days in advance. The functions of the President of the Board of Directors are detailed in article 63 of the By-laws, and in article 7 of the Regulations of the Board of Directors
› The functions of the Secretary of the Board of Directors are detailed in article 74 of the By-
Laws and Article 9 of the Regulations of the Board of Directors
Average duration of all meetings of the Board of Directors:
4 hours 11 minutes
Handling of information: 5 calendar days in advance.
INTERACTIONS OF THE BOARD OF DIRECTORS During 2017, in compliance with its responsibilities, the Board of Directors
interacted with the tax auditor, financial analysts and investment banks to
address the following issues:
Interactions with the auditor: Minute 1570 of February 16, 2017. The Board Meeting had the participation of the tax
auditor (Deloitte & Touche) for the review of the TRECSA Report. Minute 1571 of February 23, 2017. The Board Meeting had the participation of the tax
auditor (Deloitte & Touche) to know his opinion on the individual and consolidated financial statements presented at the 2017 Ordinary General Shareholders' Meeting.
Interactions with financial analysts and investment banks: Minute 1568 of January 19, 2017. The Board Meeting had the participation of the
investment bank Cerrito Capital, which presented a report on the operations of the transmission business of Grupo Energía Bogotá. In the same session, the Board of Directors reviewed the report on the impact of the tax reform presented by the administration with the support of the consulting firm Tributar Capital Asesores S.A.S.
Minute 1569 of January 23, 2017. On this occasion the accounting advisors of PricewaterhouseCoopers (PwC) attended as guests to render their report regarding the subsidiary TRECSA.
Minute 1576 of June 5, 2017. Within the framework of this session, the investment banks Davivienda Corredores, Credit Suisse and Itaú BBA presented the valuations of the invariant assets of the GEB. Likewise, the consulting firm Economica Consultores presented its report regarding the regulatory and financial analysis of some of these assets.
Minute 1579 of July 27, 2017. The investment bank Credit Suisse attended this meeting to present the progress in the process of divestment of non-strategic assets.
Minute 1581 of August 31, 2017. The investment bank Cerrito Capital presented the updated report of the operations of the transmission business in Colombia and the structure of the transmission business of GEB.
Minute 1584 of 26 October 2017. The investment bank Credit Suisse attended this meeting to present the progress in the process of disinvestment of non-strategic assets.
Minute 1586 of December 14, 2017. On this occasion the investment bank Valor y Estrategia presented its report regarding the advice given to the GEB in the preparation of the offer of one of the transmission projects.
17
External Advisers to the Board of Directors
Legal Advisers:
Investment Banks, accounting and financial advisers Strategy Advisers
Human Talent Advisers
• White & Case
• Zuleta Abogados • Davivienda Corredores • Upside Consulting • Mercer
Asociados • Credit Suisse • J. Walter Thompson • Korn Ferry
• Philippi Prieto Carrizosa • Itaú BBA (JWT) International
Ferrero DU & Uría • Cerrito Capital • Boston Consulting
• Posse Herrera Ruiz • Credicorp Capital Group
• Rafael Acosta Chacón • Valor y Estrategia • CompassBranding
• López Abogados • Ernst & Young
& Asociados • Pricewaterhouse Coopers
INFORMATION ON THE PERFORMANCE OF THE EVALUATION
PROCESSES OF THE BOARD OF DIRECTORS AND SENIOR
MANAGEMENT, AS WELL AS ANALYSIS OF RESULTS: Every year, the Board of Directors, with the support of an external advisor
and after review by the Corporate Governance Committee, carries out a
process of self-evaluation as a collegiate body of the operation, of the issues it
deals with, of the fulfillment of duties and expectations, and of the work of its
committees. A results report is presented to the General Shareholders' Meeting
each year.
In December 2017, the Board of Directors carried out a self-evaluation and
a partial evaluation with the collaboration of a specialized external firm
(Governance Consultants S. A.). The evaluation was completed by the
members and included six fronts.
18
1. Interaction between the Board of Directors and Senior Management
2. Structure and operation
3. Fulfillment of Board of Directors duties
4. Issues and agenda
5. Other corporate governance practices
6. Board Committees: 4
Among the main strengths of the evaluation are the commitment and
contribution of the members to the development of the GEB; the protection of
the interests of the company and all shareholders; independent decision-
making; the rigor, discipline and effectiveness of the Board of Directors; the
proper management of privileged and confidential information; and the
management of conflicts of interest. The efficiency of the meetings was
identified as an opportunity for improvement.
Good corporate governance in the GEB is one of the key elements for the
creation of sustainable value for its shareholders. For this reason, a process
called "re-institutionalization of corporate governance" has been led by the
Steering Committee and the Presidency to strengthen the management and
control processes of the companies. This process has led to important
adjustments in various corporate instruments, the definition of new policies and
the implementation of various practices to effectively articulate the Group's
decision-making bodies (shareholders' meetings, boards of directors and senior
management teams).
As a result of this commitment, for 2017 all the Group's boards of directors
(parent company, subsidiaries and foundation) were evaluated with the support
of a specialized external firm (Governance Consultants S.A.). The methodology
included the analysis of the effectiveness of each collegiate body, its dynamics
and operation, the work of its committees, the topics and the depth with which
the agendas are approached, as well as the interaction with the Senior
Management teams of each company.
The results have allowed important discussions in the Group's boards of
directors and the structuring of action plans to continue advancing in a robust
management process, in accordance with the best corporate practices at the
local and international level.
This process, which is conducted for the third consecutive year for the parent
company and for the second consecutive year for the subsidiaries, considered
for the first time the peer review methodology for the GEB Board of Directors
(parent company). This methodology is one of the best corporate governance
practices in the world because it represents the most demanding test of a board
of directors to evaluate its members individually. The purpose is to establish a
culture of accountability from the head of the Group that inspires a culture of
performance and focuses on results in all instances of the GEB.
Senior Management The Senior Management is led by the president, who is the first executive of the
company. He is elected by the Board of Directors for periods of two years,
according to criteria of suitability, knowledge, experience and leadership; he can
be reelected indefinitely or removed at any time. On the other hand, the
members of the Senior Management are appointed by the president in
accordance with the corporate structure defined by the Board of Directors.
19
The Senior Management is accountable to the Board of Directors for the
economic, social and environmental management of the company. As GEB
S.A.E.S.P. is the parent company of the GEB, the Senior Management, in
accordance with the corporate strategy, fulfills its functions at the corporate
level, defines guidelines and makes coordination and synergy decisions for the
Group's companies and strategic business groups.
General Managers of the subsidiaries, 2017
Jaime Alfonso Jorge Olazábal Jorge Ramos Felices Orjuela Vélez (E) Gómez de la Torre
Trecsa Gebbras GrupoEnergíaBogotá
GrupoEnergíaBogotá
Mauricio Milena Díaz Hidalgo Marcos Díez
Acevedo Arredondo Risk and Insurance
GEB Manager
FOLLOW-UP Compliance with the Corporate Governance Code and all internal rules is
monitored by the Legal, Regulatory and Compliance Vice-Presidency of the
GEB. Shareholders may submit complaints to the Board of Directors or the
Corporate Governance Committee to ensure effective compliance.
During 2017, the Board of Directors supervised compliance with corporate
governance regulations and the verifications carried out by the control bodies
(internal and external), and no material findings were presented that would
compromise compliance. In addition, no claims were made by shareholders or
investors regarding non-compliance with the Code.
CONFLICT OF INTEREST Article 18 of the Regulations of the Board of Directors establishes the duties of
the members of the body and includes the duty of loyalty: To fully inform the
Board of Directors of the existence of a real or presumed conflict of interest.
They must refrain from acting, directly or through related persons, in situations
of conflict of interest, except with the express authorization of the Shareholders'
Meeting, obtained in the cases and in accordance with the provisions of the law
and the Corporate Governance Code; the duty of non-competition: Abstain from
carrying out, directly or through related persons, activities that compete with
those of the company in the terms indicated in the applicable laws; and the duty
of secrecy: Refrain from disclosing any information that is not or should not be
of public knowledge and that he has known by reason of the performance of his
functions as a member of the Board of Directors.
20
The provisions on the administration and resolution of conflicts of interest,
directly or through related parties, are contained in the title "Conflict of interests"
of the Code of Ethics and in title VII of the Corporate Governance Code.
.
According with the Corporate Governance Code: “VII. On conflicts of interest and transactions with related parties.
a) General Provisions: The rules for the management of conflicts of interest are
included in the Company's Code of Ethics, and include, among other aspects, the
definition of conflicts of interest, and those responsible for verifying their proper
management.
In accordance with the provisions of the GEB Code of Ethics, in the event of a
conflict of interest, or when there is doubt about its existence, the person responsible
for the conflict of interest must refrain from intervening directly or indirectly in the
activities and decisions related to the situation that generates the conflict of interest
and must inform the hierarchical superior in detail and in writing of the situation.
In the particular case of the members of the Board of Directors, they have the duty
to inform about direct or indirect relations with the Company, suppliers, clients or any
other Interest Group that could generate situations of conflict of interests.
The members of the Board of Directors will inform the Board of Directors of any
situation that may give rise to a conflict of interest, an event in which the provisions of
the GEB for its administration will be applied. The doubt regarding the configuration of
acts that imply conflicts of interest does not exempt the member of the Board of
Directors from the obligation to abstain from participating in the respective activities
and decisions".
For the fulfillment of the foregoing, the company semiannually makes an in-survey
of conflict of interest and independence to the members of the Board of Directors.
Likewise, and in a complementary manner, the GEB has established the following
provisions in its corporate documents:
›› The Code of Ethics, title "Conflict of Interest", states: "Directors have the duty to inform
the Board of Directors of any direct or indirect relations between them, with the company,
economic related parties, suppliers, customers or any other interest group from which
situations of conflict of interest could arise or influence the direction of their opinion or
vote".
›› Similarly, the Corporate Governance Code, title VII "On conflicts of interest and
transactions with related parties", establishes as a duty of the company's executives,
administrators and employees to inform the hierarchical superior in detail and in writing of
the situation, in the event of a conflict of interest or when there is doubt as to its
existence.
›› Finally, the Corporate Group Agreement provides that all members of the boards of
directors of subsidiaries and parent companies must comply with the provisions of the
Corporate Governance Code and the Code of Ethics on the matter.
The GEB adopts the definition of "related party" established in International
Accounting Standard No. 24 (IAS 24), in accordance with the Code of Corporate
Governance, numeral c of title VII "On conflicts of interest and transactions with
related parties".
21
c) Provisions on transactions with related parties: The Board of Directors establishes the
means of approval of operations, agreements or material contracts involving related
parties, understood as being based on the standard of International Accounting Standard
No. 24 (IAS 24) and other applicable local standards. In general, acquisitions or
transactions must be made under the terms and conditions that the GEB usually uses with
unrelated third parties, i.e., at market conditions and prices. The GEB discloses such
transactions in its notes to the financial statements and in the Annual Corporate
Governance Report.
INFORMATION TO AND COMMUNICATION WITH SHAREHOLDERS.
Grupo Energía Bogotá S.A. E.S.P. is committed to high standards of corporate
governance and transparency, which are included in the Corporate Governance
Code, the Corporate Governance Policy and the Information Disclosure Policy,
instruments with which it is guaranteed that its actions are framed in an
equitable treatment for all its shareholders and other stakeholders.
The disclosure and publication of information is the main means by which the
GEB guarantees transparency, ethics, corporate accountability and respect for
shareholders' rights and generates relationships of trust with all its stakeholders.
As an issuer of securities, GEB S.A. ESP. complies with the standards and
information disclosure requirements established by legal provisions, the
guidelines established by the Superintendence of Finance of Colombia, the
provisions of the Comprehensive Securities Market Information System
(SIMEV) and high local and international transparency standards.
The website is the main mechanism for establishing permanent contact with
stakeholders. In accordance with the applicable Colombian regulation, the
provisions of the Superintendence of Finance and international standards, the
website of GEB S.A. ESP. reveals financial and non-financial information in
clear and simple language, uses graphic tools to communicate effectively and
its content is permanently updated, all responding to criteria of universality,
proportionality and promptness, preserving in any case, confidential or reserved
information. Also noteworthy are the corporate information modules in which all
corporate documents are found, as well as the Company's standards of ethical
behavior.
In addition, GEB S.A ESP has a Finance Management and Investor Relations
Department that attends to specific queries from investors of GEB S.A. ESP.
Telephone requests may be made to this management, or through written
communications sent to the physical address of GEB S.A. ESP. or by e-mail.
.
22
No. Category Quantity
1 Decisions of the Board of Directors 11
2 News media of securities issuers 5
3 Notices published by the company 37
4 Extraordinary General Shareholders Meetings 9
5 Representation of shareholders (res. 116 of febr. 27/2002) 6
6 Acquisition or disposal of securities 6
7 Securities Rating 3
8 Issuer Rating 2
9 Resignation or removal of the legal representative of bondholders 1
10 Conclusion, amendment or termination of contracts 1
11 Codes of good governance 5
12 Offers Notices 1
13 Bylaws amendments 3
14 Modification of risk ratings of securities 1
15 Shareholder Communications 1
16 Publication of emission prospects 2
17 Issuance of securities 2
18 Information shareholders of the company 5
19 Profit Project 2
20 General Assembly Call 1
21 End of Year Reports 4
22 Change of Board of Directors 1
Total 109
DETAILS OF THE CONFLICTS OF INTEREST PRESENTED AND THE ACTIONS OF THE MEMBERS OF THE BOARD OF DIRECTORS.
› Beatriz' E. Arbeláez Martínez:
At the session of the Board of Directors on January 19, 2017, as stated in minute 1568, Beatriz Arbeláez declared herself unable to participate in the discussions and decisions related to the item "bylaws amendment to present to the Extraordinary General Shareholders' Meeting", since as secretary of the District Treasury she is a representative of the Capital District, who might be interested in the steps involved in the modification to the corporate purpose. This impediment was accepted by the members of the Board of Directors. At the session of the Board of Directors of August 31, 2017, according to minute 1581, Beatriz Arbeláez manifested to be in a conflict of interests to participate in the discussions and decisions of the Board in relation to the pre-payment of the debt to the Capital District foreseen in literal e of point 4 of the agenda, bearing in mind that the beneficiary of the same is the District Treasury Secretariat in charge of it. In this same session, she also stated that she was in an eventual conflict of interest to participate in the discussion of the item associated with the "credit approval for the acquisition of EBB shares" because she is responsible for the process of democratization of the District's shareholding, in her capacity as District Treasury Secretary.
23
At session of December 14, 2017, as stated in minute 1586, Beatriz Arbeláez declared herself unable to participate in the discussions and decisions related to the item "approval of the change in the credit conditions for the acquisition of GEB shares" because she is responsible for the process of democratization of the District's shareholding, in her capacity as District Treasury Secretary.
› GUSTAVO' A. RAMÍREZ GALINDO
At session of March 16, 2017, as stated in minute 1572, Gustavo Ramírez stated that he was in an eventual conflict of interest to participate in the discussions related to the item "corporate strategy of TGI", bearing in mind that he is part of the Board of Promigas and is the Legal Representative of Corficolombiana. At session of March 23, 2017, as stated in minute 1573, Gustavo Ramírez stated that he was in an eventual conflict of interest to participate in the discussions related to the point "timeline of the process of sale of non-strategic assets and the Tominé project", on the occasion of the eventual sale of the shareholding of the company in Promigas, since he is part of the Board of Directors of the latter. At session of July 27, 2017, as stated in minute 1579, Gustavo Ramírez stated that he was in a possible conflict of interest to participate in the discussions related to the item "invariant divestments", on the occasion of the possible sale of GEB's shareholding in Promigas, given that he is part of the Board of Directors of the latter. At session of August 31, 2017, as stated in minute 1581, Gustavo Ramírez reiterated to be in a possible conflict of interest to participate in the discussions related to the eventual sale of the shareholding in Promigas, bearing in mind that he is part of the Board of Directors of Promigas and is its Legal Representative of Corficolombiana. At session of September 28, 2017, as stated in minute 1583, Gustavo Ramírez declared to be in a possible conflict of interest to participate in the discussions related to the eventual sale of the shareholding in Promigas and in the discussions of the participation of the GEB in the project of Regasificadora del Pacífico, bearing in mind that he is part of the Board of Directors of Promigas and is the legal representative of Corficolombiana. At session of October 26, 2017, as stated in minute 1584, Gustavo Ramírez stated that he was in an eventual conflict of interest to participate in the discussions related to the issues "approval of the project partner selection of Regasificadora del Pacifico" and "second stage of disposal of Promigas", taking into account that he is part of the Board of Directors of Promigas and is the legal representative of Corficolombiana. At session of November 23, 2017, as stated in minute 1585, Gustavo Ramírez recalled finding himself in an eventual conflict of interest to participate in discussions related to the process of disposition of shareholding in, bearing in mind that he is part of the Board of Directors of that company and is the Legal Representative of Corficolombiana.
› JAIME' E. RUIZ LLANO
In the session of March 23, 2017, as recorded in minute 1573, Jaime E. Ruiz Llano said he was in a possible conflict of interest to participate in discussions related to the issue "timeline of the process of disposal of non-strategic assets and Tominé project", given that he owns a property near the Tominé reservoir. Note: In all cases, the impediment was accepted by the Board of Directors and the members who declared that
they abstained from participating in the discussions and decisions related to the topic.
24
MECHANISMS FOR RESOLVING CONFLICTS OF INTEREST
BETWEEN COMPANIES OF THE SAME GROUP AND ITS
APPLICATION DURING THE FISCAL YEAR.
It is the duty of the Board of Directors to know and approve the operations that
the company carries out with controlling shareholders or with persons related to
them, as well as with companies of the conglomerate to which it belongs; The
foregoing, with the support of the Audit and Risks Committee and the Financial
and Investment Committee, inasmuch as the functions of each one are "to
evaluate and inform the Board of Directors of the Company on the possible
conflicts of interest that may arise between it and its subordinate companies or
between them, or with their administrators and related parties, and recommend
the measures to be carried out for its administration and management" and
"give its opinion regarding the possible operations that are planned to be carried
out with economic partners, for which it must verify that they are carried out
under market conditions and that they do not violate the equality of treatment
among shareholders", respectively.
On the other hand, the Corporate Group Agreement, issued by the GEB in
2017, recognizes that a good part of the advantages and efficiencies sought
through the Corporate Group derive from the relationships between its
companies, in order to take advantage of business opportunities of common
interest or exploit synergies associated with the competitive advantages of each
company. The agreement sets out the principles that should govern
transactions with related parties: (i) respect for commitments, (ii) authorization,
(iii) transparency, and (iv) conflicts of interest.
.
25
Risk Management Systems of the Company or
Conglomerate A) AN EXPLANATION OF THE INTERNAL CONTROL SYSTEM (SCI) OF THE
COMPANY OR CONGLOMERATE AND ITS MODIFICATIONS DURING THE
FINANCIAL YEAR
An adequate control environment is a commitment of the GEB with its
stakeholders. The GEB S.A.E.S.P. audit model is based on three lines of defence,
which have the following characteristics: (i) the first line of defense, exercised by
collaborators, makes it possible to identify and manage risks (control-self-control)
and implement corrective actions to deal with deficiencies in processes and
controls; (ii) the second line of defense consists of the function of supervision and
monitoring of the effectiveness of the controls of the first line, as well as in
counseling, accompaniment, prevention, institutionalization, detection
(investigation) and reaction, and the execution of the corporate defense program
that is exercised through the Compliance Department of GEB S. A. and each of
the GEB companies; and (iii) the third line of defense consists of independent
assurance through external and internal audit activities, as well as the design,
assurance and implementation of audit plans for key processes of the
organization (Group auditor + specialized auditors). Provisions for this matter are
set forth in the Corporate Group Agreement.
B) DESCRIPTION OF THE RISK POLICY AND ITS APPLICATION DURING THE
FINANCIAL YEAR.
The GEB Risk Policy establishes the commitments and the general framework of
action for the comprehensive risk management of the Group companies. The
statement of commitments includes:
1. “Contribute to the achievement of the strategy and to the continuous
operational improvement of the company and the subsidiaries that make up
the Group, through the identification of risks and the adequate
implementation of actions that mitigate their impact and probability of
occurrence". The GEB has designed and implemented the System for the
Integral Management of Enterprise Risks, through which the achievement of
the purposes is assured and the necessary activities for an adequate
administration of the risks are executed. This system takes as a reference the
international standards of ISO 31000,
ACHIEVEMENTS
The most important achievement of the Corporate Affairs and Subsidiaries
Department in 2017 was the signing of the GEB Corporate Group Agreement
with its subsidiaries; this instrument regulates the interaction model and the
general framework of action for the relationship between the parent company
and the subordinate companies in order to facilitate compliance with the
corporate strategy and the achievement of GEB's objectives within the
framework of unity of purpose and management, and the GEB companies are
made to work under certain common standards and principles that tend
towards respect for minority shareholders, ethics, transparency and
accountability, all of which are framed within good corporate governance
practices at the local and international levels.
The following were also prepared
and approved (i) the Corporate
Governance Policy, (ii) the
Information Disclosure Policy, (iii)
the Stock Trading Policy, (iv) the
Tax Reviewer Appointment Policy
and (v) the corporate governance
codes of TGI, Cálidda, TRECSA,
Contugás EEBIS and Fundación
Grupo Energía de Bogotá.
26
which sets out principles and strategies for risk management and provides an
approach for the improvement and effective management of risks in a
systematic manner.
2. "Promote and develop risk management culture at all organizational
levels". Through periodic training and coaching, we contribute to promoting and
strengthening the risk culture in GEB companies.
3. "Contribute to the guarantee of business continuity through risk
management". Through "business continuity" risk management, plans are
established to respond to possible catastrophic or force majeure events that
lead to interruptions in the activities of each business.
4. "Generate trust among shareholders and interested parties by
transparently informing them of the risks and actions implemented for their
control". The GEB, within the framework of corporate governance, establishes
the Audit and Risk Committee, to which the results of risk management are
reported quarterly.
5. "Ensure that in the decision making of investment projects, risks are
identified and evaluated, and actions are taken to mitigate them". All GEB
strategic, investment or growth projects identify their risk matrix, which is
presented to the Investment Committee.
6. "Protect the resources and reputation of the company, as well as the
subsidiaries that make up the Group". The GEB evaluates the reputational
impact of each of the strategic risks identified and, when necessary, defines
and implements internal and external strategies and protocols to mitigate it.
7. "Manage the necessary insurance and coverage for insurable risks in
order to mitigate the financial impact in the event of claims, seeking the best
technical and economic conditions".
C) MATERIALISATION OF RISKS DURING THE FINANCIAL YEAR
During 2017, the following strategic risks were recorded:
1. Vice Presidency of Transmission. Occurrence of the risk of business non-
continuity due to force majeure: Mocoa avalanche, 31 March-1 April 2017.
Actions taken: Activation of an action plan that allowed collaboration for the
provisional restoration of service in the department of Putumayo and the
municipality of Mocoa,
ACHIEVEMENTS
The participation of Grupo Energía Bogotá S. A. E. S. P. in the Round Table of the
Latin American Network on Corporate Governance of State Owned Enterprises (SOE),
sponsored by the Development Bank of Latin America, the Organization for Economic
Cooperation and Development and the Ministry of Finance and Public Credit of
Colombia, in which the GEB had the opportunity to showcase its advances in corporate
governance, transmit to the market the good practices it has consolidated, share with
other public capital companies best corporate practices, and be recognized as a
benchmark and leader of public companies-listed in corporate governance issues in
Latin America.
Corporate governance
efforts were
consolidated in the
Group and in 2017
governance was
unified in all GEB
subsidiaries.
27
activity in which the national government, the Ministry of Mines and Energy and
different companies in the sector participated.
›› Management of loss recovery via insurance.
›› Management before the CREG for the flexibility of the quality scheme; the time window for the
start of compensation was extended (from six to 36 months). Remuneration was not affected thanks to the issuance of Resolution CREG 141 of 2017.
›› Creation of a sectoral roundtable with the participation of MME, UPME, EEP and GEB for the
definition of the new location of the transmission (GEB) and distribution (EEP) substation.
2. TRECSA. Impossibility of executing 100% of the TRECSA and Government
of Guatemala contract (PET 001/2009 expiring on 18/09/2017).
Actions taken:
›› It was included as the main risk of the subsidiary TRECSA and of
the Group.
›› The risks of the capitalization of TRECSA were analyzed.
›› The risks of the negotiation of the PET contract extension
001/2009 were identified.
›› Extension of the contract was achieved.
D) RESPONSE AND MONITORING PLANS FOR THE MAIN RISKS
The main strategic risks of the GEB with their respective mitigation controls are
mentioned below::
Risk 1. Legal, regulatory or tax changes that do not favor the interests of
the company.
›› Design and implementation of a procedure for regulatory management.
›› Legislative and regulatory follow-up and conformation of the Regulatory Analysis Group (VJR, VT
and TGI).
›› Management of the GEB with High Government
›› Periodic monitoring of normative, regulatory or tax changes with the support of external specialists.
›› Active participation in trade associations (Andesco Presidency, Naturgás).
Risk 2. Impossibility of executing 100% of the TRECSA contract with the
Government of Guatemala (PET 001/2009 expiring 17/11/2020).
ACHIEVEMENTS
At the General Shareholders' Meeting on December 6, 2017, an
amendment to the bylaws was approved to extend the periods for
calling general shareholders' meetings in the following terms: 30)
common days prior to the ordinary meetings of the General
Shareholders' Meeting and not less than fifteen (15) common days
prior to extraordinary meetings. The foregoing to ensure that
shareholders have more time to know the reports and proposals of the
Board of Directors and to guarantee their participation in the framework
of the sessions.
Inclusion in the Bylaws of
the shareholders right to
access additional
information to the public
documentation provided
by the company on the
agenda of the General
Shareholders' Meeting.
28
›› Implementation of the legal and operational strategy.
›› Implementation of relationship plan and communications.
›› Capitalization of the company.
›› Strengthening of the organizational structure and control of the subsidiary by the Group.
›› Establishment of the focus of the organization through project management by tranches (clearly
defined responsibilities/roles).
›› Establishment of follow-up mechanisms for reports with supervision of the performance of time-
bound activities. .
Risk 3. Workplace accidents in maintenance, operation or project
development activities.
›› Compliance with occupational safety and health (OSH) procedures. Continuous
inspection and verification of high-risk jobs and social security affiliations.
›› Periodic verification of competence and training of own staff and contractors. Periodic
induction and socialisation of the risks and dangers to which collaborators and
contractors are exposed.
›› Continuous and on-site assurance or supervision of the occupational health and safety
component (analysis of safe work, work permits, checklists).
›› Explicit inclusion in contracts of the consequences (sanctions or constraints) for non-
compliance with indicators and legal obligations in the field of occupational safety and
health.
›› Periodic review or updating of operational procedures for high-risk activities.
›› Definition of constructive or maintenance procedures in the designs or in the planning of
the performance of works or maintenance activities.
›› Requirement of personal accident insurance policies for high risk work in the field to the
contractor and its subcontractors.
Risk 4. Lack of continuity in GEB strategy and corporate governance ›› Implementation of good corporate governance practices aligned with OECD.
›› Reinstitutionalisation of corporate governance phase 1 and phase 2.
›› Definition and monitoring of the Long-Term Strategic Plan (PEC).
›› Definition and implementation and monitoring of the long-term strategy in Cálidda, Contugás and
TGI, aligned with the GEB strategy.
›› Adjustment of the organizational structure with the PEC implementation.
›› PEC communications plan, internal and external communications.
›› Compliance of the IR program (Investor Relations) with international standards.
Challenges
Appropriate new rules on
corporate governance that
will derive from the
democratization process
(adoption of the
Declaration of the Majority
Shareholder, among
others).
Maintain and continue to manage
good practices and standards in
corporate governance (Conflict of
Interest Management Policy, Board
of Directors Succession and
Nomination Policy, Related Party
Transactions Policy).
Disseminate and
communicate internally
and externally the
advances in corporate
governance and
position itself as a
leading company in this
area.
29
TO HIGHLIGHT
Among the mechanisms contained in the Corporate Governance System of the
GEB to ensure autonomy in its management are highlighted: (i) the appointment
of persons of high professional quality and recognized professional prestige in
the Board of Directors and the Senior Management; in addition, more than 25%
of the members of the Board of Directors are considered independent; (ii) the
Board of Directors and all its committees are chaired by an independent
member. These mechanisms contribute to the deliberations and decision-
making process being objective and guided by strictly business criteria, which
leads to decisions being based on the best interests of the company and its
stakeholders.
BUSINESS MATRIX
The GEB is made up by a matrix organized into strategic business groups
(GEN) and GEB companies.
The GEB S.A.E.S.P. as parent company exercises its role of strategic controller
and establishes guidelines and policies regarding significant issues that allow
the cohesive management of its companies and the unity of purpose and
management of the Group.
Companies are independent legal entities with separate administrative and
governance structures that are interrelated with the parent company and the
strategic business groups, in accordance with the model established in this
agreement.
The strategic business groups group together the GEB companies according to
their activity and corporate purpose, as follow: (i) strategic urban solutions
(SEU); (ii) interconnection for market development (IDM); and (iii) low emission
generation (GBE). They have a specialized interlocutor, who understands the
dynamics of the industry and business, is able to support the deployment of the
strategy of each of them and acts as a connector between the parent company
and the companies; this is called Vice President of GEN (VP GEN).
The corporate intervention model establishes the attribution levels for decision
making between the parent company, the GENs and the GEB companies, and
ensures that the operation decisions are made in the latter (distributed control),
where the best information is usually available. In such a way that only
decisions of high materiality or of a corporate nature are taken at Group level.
The corporate intervention model is the tool through which the decision-making
procedure regarding strategy and investments within the Group is instrumented;
its purpose is to guarantee that decisions are taken in the best interest of the
Group, with the greatest agility and assertiveness, and with the appropriate
controls. In the Business Group Agreement available at
https://www.grupoenergiabogota.com/informacion-corpora-tiva/gobierno-
corporativo you will find details of the interaction of the GEB's governing bodies,
which have the following communication and reporting flows.