TECHTEX CORPORATE GOVERNANCE GUIDELINES
TECHTEX (or the “Company”) is a Limited Liability Company. Nevertheless, even if not specifically required by law, the shareholders of TECHTEX decided to adopt the highest corporate governance standards, with a dual leadership structure: a Supervisory Board (the “Board”) comprised of non-executive members and a Directorate comprised of a CEO and other Senior Executives. The Board of TECHTEX has adopted these guidelines which, in conjunction with the Certificate of Incorporation, the Bylaws and the Code of Conduct, form the framework for governance of the Company. The Board will review these guidelines annually or any time it deems necessary.
A.THE ROLES OF THE BOARD OF DIRECTORS AND MANAGEMENT
1. The Supervisory Board – The business of the Company is conducted under the oversight of the Supervisory Board. The Board selects the Chief Executive Officer (CEO) and delegates to the CEO the authority and responsibility to manage the Company’s operations. The Supervisory Board serves as elected representatives of the shareholders, acts as an advisor and counselor to the CEO and senior management, and oversees management performance on behalf of shareholders. In addition to its general oversight of management, the Board also performs a number of specific functions, including:
- Selecting, evaluating and compensating the CEO and the other members of the Directorate and developing a succession plan for them;
- Reviewing, monitoring and approving the Company’s long-term business strategy and annual operating plans;
- Reviewing and approving significant corporate actions and major transactions including, among other things, dividends, borrowing authorization, annual capital expenditure budget, and major capital expenditures, acquisitions and divestitures;
- Overseeing risk management and assessing the major risks and issues facing the Company; and
- Ensuring the establishment of, and monitoring compliance with, processes designed to ensure the integrity of the Company’s actions, including its financial statements and financial reporting, its relationships with customers, suppliers and other constituencies, and its compliance with law and its Code of Conduct.
2. The Directorate – The CEO and senior management (executive officers) are responsible for running the day-to-day Company’s business operations.
B. BOARD COMPOSITION AND LEADERSHIP
1. Chairman of the Board – The Board selects a Chairman from among its members. The Chairman should be independent.
2. Size of the Board – The number of directors should not exceed a number that can function efficiently. The Board, together with the shareholders, periodically reviews its size according to the development and the needs of the Company. Presently the Board has three members, out of which two are independent and one is non-independent.
3. Board Independence – The Board believes in having majority of independent directors on the TECHTEX Board. A director is “independent” if the Board affirmatively determines that the director has no material relationship with the Company directly or as a partner, shareholder or officer of an organization that has a relationship with the Company and otherwise meets the requirements for independence of the listing standards of the major stock exchanges. The independent directors will make the Board decisions on corporate governance matters.
4. Board Membership Criteria – The Board periodically reviews the appropriate skills and characteristics required of Board members given the current Board composition. It is the intent of the Board that the Board, itself, will be a high performance organization creating competitive advantage for the Company. To perform as such, the Board will be comprised of individuals who have distinguished records of leadership and success in their arena of activity and who will make substantial contributions to Board operations and effectively represent the interests of all stockholders. The Board’s assessment of Board candidates includes, but is not limited to, consideration of: (i) roles and contributions valuable to the business community; (ii) personal qualities of leadership, character, judgment and whether the candidate possesses and maintains throughout service on the Board a reputation in the community at large of integrity, trust, respect, competence and adherence to the highest ethical standards; (iii) relevant knowledge and diversity of background and experience in such things as business, manufacturing, technology, finance and accounting, marketing, international business, government and the like; or (iv) whether the candidate is free of conflicts and has the time required for preparation, participation and attendance at all meetings.
5. Board Compensation -The Company concludes Mandate Contracts with each of the Board members which stipulate their obligations and rights, including compensation. The shareholders will periodically review the Board members compensation and will decide on appropriate changes according to market practices and the Company performance.
C. BOARD OPERATIONS
1. Selection of Agenda Items for Board Meetings – At the first Board meeting of each year, the Chairman will propose for the Board’s approval agenda items to be discussed during the course of the year. Before each meeting, the Chairman will review proposed agenda items and distribute the agenda in advance to the Board. Any Board member may ask to include items on the agenda.
2. Board Materials Distributed in Advance – Board members receive materials related to agenda items sufficiently in advance of Board meetings so that they may prepare to discuss the items at the meeting. Sensitive subjects may be discussed at the meeting without distributing written materials in advance or at the meeting.
3. Board Members Responsibilities – Directors must exercise their business judgment to act in the best interests of the shareholders and the Company. In discharging this obligation, directors reasonably may rely on the Company’s senior executives and its advisors and auditors. Directors are expected to attend and participate in all meetings of the Board and to spend the time needed and prepare for and meet as frequently as necessary to discharge their responsibilities. The Board will meet at least four times a year in person with the rest being virtual (telephone or video).
4. Board Presentations and Access to Employees – Members of senior management may be invited to attend part or all of a Board meeting in order to participate in discussions. Generally, the executive responsible for an area of the Company’s operations, the Board is to consider, makes the presentation. Board members have complete access to all other members of management and Company employees.
D. BOARD COMMITTEES
- Committees – Considering the present size of the Board, for the time being there will be no sub-committees, as the three Board members will take all relevant decisions. Nevertheless, as soon as the size of the Board will warant the creation of such committes, it is the intention of the Board to establish gradually Audit, Compensation & Nomination, and Technology & Sustainability Committees. Each committee will operate under a written charter setting forth its purpose, duties and responsibilities.
E. COMPANY’S CODE OF CONDUCT
1. The Board has adopted a Code of Business Conduct and Ethics that is applicable to all employees, the members of the Directorate and of the Board of the Company. The Board is responsible for the stewardship of the Company’s Code of Conduct and periodically evaluates the Code of Conduct to assess whether it conforms to applicable laws and best practices.
F. BOARD AND MANAGEMENT EVALUATION
1. Formal Evaluation of the CEO – The Board sets annual and long-term performance goals for the CEO.
2. Board Self-Assessment – The Board will conduct an annual self-evaluation to determine whether it is functioning effectively. Based on the comments and further discussion, the Board will make an assessment specifically reviewing areas in which the Board and/or the management believe improvements could be made to increase the effectiveness of the Board.
3. Succession Planning – The Board plans the succession to the position of CEO and certain other senior management positions. To assist the Board, the CEO annually assesses senior managers and their succession potential. The CEO also provides the Board with an assessment of persons considered potential successors to certain senior management positions.
4. Management Development – The CEO annually should report to the Board on the Company’s program for management development.
