Directors’ Committee Annual Report
In accordance with Article 50 bis of the Chilean Corporations Act, amended by Law No 20,382 published in the Official Gazette on October 20, 2009, the following Report discloses the activities carried out by the Directors’ Committee of Enel Generación Chile S.A. and their expenses for the year 2017.
The composition of the Committee.
At the Ordinary Board of Directors’ meeting of Enel Generación Chile S.A held on April 28, 2016, Enrique Cibié Bluth, Jorge Atton Palma and Julio Pellegrini Vial were appointed as members of the Directors’ Committee of Empresa Nacional de Electricidad S.A., currently Enel Generación Chile S.A . Enrique Cibié was elected Chairman of the Committee and financial expert under the Sarbanes-Oxley Act of the United States of America.
The members of the Directors’ Committee are all independent Board members, as defined by the Chilean Corporations Act.
The Directors’ Committee met on 18 occasions during 2017, 13 occasions were ordinary sessions and the rest were extraordinary sessions, proceeding to review the company’s operations and contracts with related companies and in general pronouncing on those matters referred to in Article 50 bis of the Chilean Corporations Act, reporting its decisions to the company’s Board of Directors. The Committee also pronounced, when required, on the services provided by external auditors other than the regular audit services and regarding the accusations originated from the company’s Ethics Channel.
The Directors’ Committee, in its session held on September 1, 2017, agreed to appoint the company Asset Chile as independent appraiser, additional to the appraiser appointed by the Board of Directors, to assist the members of the Directors´ Committee in their analysis and review of the terms and conditions of the Elqui Project.
On November 9 and 14, 2017, the Directors´ Committee pronounced on the corporate reorganization operation of Enel Chile, the Elqui Project, concluding that the operation, as described in its terms and conditions, contributes to the best interest of the company.
The Directors’ Committee analyzed the Company’s quarterly and annual financial statements and the reports of the external auditors and account inspectors. Also, KPMG Auditores Consultores Limitada presented the Annual Audit Plan and the report regarding the company’s internal controls to the Directors’ Committee, as stipulated in Section 404 of the Sarbanes-Oxley Act.
During the ordinary session held on April 26, 2017, the Committee pronounced on the 20-F document and authorized its submission to the United States Securities and Exchange Commission. In 2017, specifically until December 20, 2017, the Directors’ Committee analyzed and informed the Board that the following related party transactions had been performed at arm’s length:
1. Trade account contracts between Enel Generación Chile and Enel Chile S.A. and between Enel Generación Chile and its subsidiaries Pehuenche, and GasAtacama Chile and a structured loan facility between Enel Generación Chile and Canela.
2. Legal services contract with Enel Chile S.A.
3. New SAP information system.
4. Engineering services contract with related companies.
5. Commodity hedging instruments Management 37
6. Services contract with Enel Green Power.
7. Electricity supply contract with Enel Distribución Chile.
8. OPR with EGP energy commercialization.
9. Spot price LNG shipment purchase.
10. Supply and technical assistance of LMS system with CESI firm.
11. LNG shipment purchase.
12. Monetary contribution to San Ignacio de Huinay Foundation.
13. LNG shipment sales contract with Enel Trade or Endesa Energía.
14. Representation and energy trade contract between Enel Generación Chile and GasAtacama Chile S.A..
15. Energy commercialization contract with EGP.
16. Intercompany hydroelectric and thermoelectric engineering services contracts between Enel Group companies.
17. Solar lighting contract for San Isidro´s parking lot.
18. Procurement and services contract CESI.
19. Authorization to transfer the concession of the Duqueco-Pangue line.
20. Engineering services contract for the “CT Termozipa-expected life extension and emissions reduction” project.
21. Review of the corporate reorganization, Elqui Project.
22. Agreement to waive the condition subsequent of the Renaico Project.
23. Commodity hedging.
Regarding all contracts and operations mentioned, the market conditions were verified through bids, requests for comparable offers or otherwise by observing the relevant market conditions.