I. Articles of Association

I.48. Rules applicable to changes to the Company’s Articles of Association (Art.
245(A)(1)(h)

Changes to the Articles of Association are subject to the relevant rules as
stipulated by law65 and in the Articles of Association themselves66. See note in
point I.14.

II. Whistleblowing Policy

II.49. Whistleblowing Policy and Methods for irregularities occurring
in the Company

Shareholders, members of corporate bodies, employees, service providers,
clients, suppliers and other stakeholders in REN or Group companies may
communicate to the Audit Committee any irregular practices they have
knowledge of or which are duly founded, in order to prevent, stop or sanction
irregularities which could adversely affect the REN Group.

This system covers the communication of irregular practices by shareholders,
members of corporate bodies, employees or service providers of the REN Group.

Communications must be submitted in writing to the registered office or to
the email comissão.auditoria@ren.pt, which is only accessible by the Audit
Committee. Communications must contain all the information the author has and
considers necessary to the assessment of the irregularity.

Communications will be dealt with confidentially, except if the whistleblower
wishes to reveal his or her identification in the communication of the irregularity,
which will only be disclosed for the purposes of investigations should the
whistleblower give his or her consent.

The Audit Committee must assess the situation described and determine
or propose actions that, in each specific case, are deemed appropriate, in
accordance with the Internal Regulations approved by the Board of Directors,
under a proposal by the Audit Committee.

The investigation process by the Audit Committee includes a preliminary
stage with the aim of (i) conducting an in-depth investigation which may use
contracted external consultants, (ii) rejection of the communication, or (iii)
presentation of a proposal for corrective measures to the Board of Directors or
the Audit Committee.

III. Internal control and risk management

III.50. People, bodies or committees responsible for internal audit and/or for
the implementation of internal control systems

The management and supervisory bodies of the Company have attributed
growing importance to the development and improvement of the internal control
and risk management systems, with a significant impact on the activities of the
Group’s companies. This approach has been in line with national and international
recommendations, the Company’s size and business and the complexity of the
associated risks.

The Executive Committee and, ultimately, the Board of Directors, are responsible
for creating and managing the internal control and risk management systems,
including the setting of objectives.

The Audit Committee is responsible for assessing the Executive Committee in the
analysis of the integrity and efficiency REN’s internal control and governance and
risk management systems, including the introduction of resolutions to improve
operations and amendments in accordance with REN’s requirements67. Therefore,
in its action plan for to be carried out in 2013, the Audit Commission considered
carrying out of a range of investigations and assessments into the operation and
suitability of the internal control and governance and risk management systems,
having carried out various meetings with the statutory auditor and external
auditor and with the heads of various departments, namely: information systems;
procurement, management planning and control, accounts, research and
regulation, operation services, quality, environment and safety.

The external auditor verifies the efficiency and operation of the internal control
mechanisms, as part of its legal review of financial statements, and reports any
significant deficiencies to the Audit Committee.

On 13 May 2009, the Executive Committee passed a resolution to set up GSADAI
(Internal Audit), with the mission of supervising the creation, operation and
effectiveness of the Group’s risk management control model and internal control
and governance systems, through objective, independent and systematic
monitoring.

Of note, among GSAD-AI’s various tasks are the following:

  • Review of risk management and internal control policies in force;
  • Assess the degree of implementation of internal control (organizational structure and governance, delegation of powers, ethics and code of conduct, policies and procedures);
  • Implementation of financial, IT, operational and management audits in the various areas of the REN Group, confirming compliance with the policies, laws and regulations (compliance services);
  • Define, jointly with the various areas, corrective measures for any weaknesses and non-compliances identified during audits;
  • Monitoring the implementation of corrective measures, through follow-up reports;
  • Support high-level management in defining and/or implementing control and governance measures.

In addition, the mission of the Risk Management Committee, created in 2011, is to support the Board of Directors in monitoring the Group’s risks, as well as ensuring the enforcement of risk management policies common to the entire REN Group and the internal disclosure of best practices for Risk Management. To carry out this mission, the Risk Management Committee’s main functions are to:

  • Promote the identification and systematic assessment of business risks and their impact on REN’s strategic objectives;
  • Categorize and prioritize the risks to be addressed, as well as the corresponding preventive opportunities identified;
  • Identify and define the persons responsible for risk management;
  • Monitor significant risks and REN’s general risk profile;
  • Approve regular risk reporting mechanisms by different businesses areas.
  • Approve, or submit to the Executive Committee, recommendations for prevention, mitigation, sharing or transfer of material risks.

In 2013, the Risk Management Committee continued to support the Board of
Directors in monitoring the Group’s risks, as well as ensuring the enforcement of
risk management policies common to the entire Group and the internal disclosure
of best practices for Risk Management.

III.51. Demonstration through inclusion of flowchart, of operational and/or
reporting hierarchy in relation to other Company bodies or committees

In operational terms, GSAD-AI reports to the Audit Committee, notwithstanding
its administrative relationship with the Company’s Executive Committee.

As part of its supervisory function and the competences expressly prescribed
in the internal regulations, the Audit Commission supervises the internal audit
procedure, namely through the introduction of resolutions to improve their
operation68. To this effect, the Audit Committee carries out an appraisal of the
work plans and resources put in place, I, supervises the activity and has access
to all reports prepared by the GSAD-AI including, amongst others, articles
relating to accounts, potential conflicts of interest and the detection of possible
irregular practices.

The Risk Management Committee is coordinated by Gonçalo Morais Soares, an
executive director, and is responsible for the first line of defence, reporting to the
Executive Committee.

68 Cf. Article 3(6)(a)(b) and (m) of the Audit Committee regulations.

III.52. Existence of other functional areas with competences for risk control

No other functional areas with competences for risk control exist beyond those
referred to in III.50.

III.53. Identification of the main types of risk (economic, financial and legal) to
which the Company is exposed when conducting business

When conducting business in all of its areas of operation or those of its
subsidiaries, REN is subject to multiple risks. These have been identified with the
aim of mitigating and controlling them.

The ‘appetite for risk’ reflects the amount of risk the company is willing to take on
or to retain in pursuing its goals. REN adopts a prudent position with regard to its
appetite for risk.

In 2013, the Risk Management Committee, with support from ‘risk owners’,
reviewed the various risks to which REN is exposed, thereby updating the Group’s
risk profile.

The most serious risks for the REN Group are shown in detail below, with their
category and subcategory:

# Category Subcategory nature risk
1

surronding
environment

External
con text

Regulatory Change to the regulatory model and
parameters
2

3
    Financial Markets Evolution of REN’s rating

Evolution of interest rates
4 Processes Operacional Business Interruption Occurrence of a general incident
5

6
   

Investment Projects

Non approva l of investment plans

No transfer of assets into operation on
schedule
7    

Health and Safety

Occurrence of serious work accidents
8    

Information Technology

Unavailability of information systems
9     Investment Projects Insolvency of suppliers
10     Assets Safety Critical nature of the installations

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Evolution of ren’s rating

Changes to REN’ rating could have an impact in terms of access to financing as
well as the cost of such financing.

REN manages this risk by building a position of sound liquidity and through
efficient management of its financing needs combined with effective initiatives
for communicating with both the market and the various financial agents.

It should be noted that the company’s rating may be affected by any
deterioration in Portugal’s rating.

Evolution of ren’s rating

Changes to REN’ rating could have an impact in terms of access to financing as
well as the cost of such financing.

REN manages this risk by building a position of sound liquidity and through
efficient management of its financing needs combined with effective initiatives
for communicating with both the market and the various financial agents.

It should be noted that the company’s rating may be affected by any
deterioration in Portugal’s rating.

Evolution of interest rates

The fluctuation of interest rates can have an impact on remuneration from
regulated assets and on servicing REN’s debt. A change to relevant benchmarks
of market interest rates could result in higher financing expenses for the
REN Group.

REN manages exposure to the risk of changes in interest rates by contracting
financial derivatives, in order to achieve a balanced ratio of fixed and variable
interest rate and to minimize financial burdens in the medium and long-term.

Occurrence of a generalized incident

The company’s performance could be influenced by the occurrence of events
causing an interruption in the electricity and/or gas supply service and by
any difficulty in restoring the service in a timely manner. The infrastructures
supporting REN’s operations are exposed to a series of conditions (pollution,
atmospheric conditions, fires, birds, among others), which could cause
interruptions to the service.

The plan for restoring service following a generalized incident implemented by
REN and the organization of drills to test the ability to restore the service in the
event of an incident, are some of the initiatives adopted for managing this risk.

Non-approval of investment plans

The existence of delays in the approval of investment plans by the Regulator
or by other authorities can cause significant delays in implementing new
infrastructures and/or loss of the investment made, with an impact on the quality
of the service provided.

REN has adopted procedures for managing this risk that involve monitoring
actions by the regulatory authority with approval responsibilities and other
competent entities in the process of authorizing the investment to be made.

Non-entry into operation of assets within planned deadlines

Economic and financial conditions together with the difficulty in obtaining
financing to allow providers of services and suppliers to do business, and also
other factors of an operational nature including processes for environmental
licensing/authorization, may compromise the entry into operation of assets within
planned deadlines.

REN carries out a series of actions which allow the ongoing monitoring and
mitigation of all factors which could increase this risk.

Occurrence of serious work accidents

Non-compliance with safety and operational procedures for equipment could
result in the occurrence of serious work accidents with damage to people and
property during work organized by REN.

REN manages this risk through the safety management system, with specific
training for operations involving risks and training for employees of REN’s service
providers on safety awareness.

Unavailability of information systems

REN’s activities rely heavily on the information systems and technologies used
within the Group. Therefore, the availability of information systems and their
capacity to meet Company needs are crucial to REN’s good performance.

To manage this risk, REN maintains its communication systems and the
respective support services up to date by performing periodic inspections of the
configurations of network and security equipment. At the same time, security
measures are in place for systems deemed to be critical, such as the existence of
redundant communications and the shielding of such systems from potentially
dangerous traffic.

Insolvency of suppliers

The unavailability or untimely or inefficient availability of resources/services
provided by third parties may influence REN’s ability to achieve its objectives.

Therefore, it has become necessary to improve the model for supplier assessment
and qualification and to put mechanisms in place to continually follow and
monitor the performance of the contractors and service providers throughout
the execution of projects, so that REN can ensure its clients’ needs are met and
achieve the key performance indicators of quality, cost and time.

The key tools to manage this risk are the supplier qualification and assessment
system implemented at REN, the financial assessment of suppliers and contract
workers during the market consultation process and the monitoring of corporate
information on suppliers and service providers.

Critical nature of the installations

Protection and efficient asset management has always been REN’s priority, and
has become an ever more crucial factor in the pursuit of its activities in order to
ensure service quality and value creation.

To manage this risk, REN has developed new methodologies that pave the way
for increased efficiency in asset management as well as guaranteeing their
physical protection, through the implementation of integrated security systems
for installations, in order to avoid unforeseen circumstances or incidents that may
put the integrity of infrastructures or equipment at risk.

III.54. Description of the risk identification, assessment, monitoring, control
and management process

It is considered that a risk management and internal control system – as
implemented by REN - should meet the following objectives:

  • Guarantee and supervise compliance with the objectives previously set bythe Board of Directors;
  • Identify the risk factors, the consequences of the occurrence of risk and the mechanisms for dealing with and minimizing risk;
  • Align admissible risk with REN Group strategy;
  • Ensure that information is reliable and complete;
  • Ensure the complete, reliable and timely preparation and reporting of financial and accounting information and apply an appropriate management information system;
  • Guarantee the safeguarding of assets;
  • Ensure prudent, appropriate valuation of assets and liabilities;
  • Improve the quality of decisions;
  • Promote the rational and efficient use of resources.

As such, in pursuing the objectives stated above, REN’s Risk Committee is
responsible for the identification and evaluation of the inherent risks involved
in REN’s activities stated in III.53., whilst also supporting the monitoring of
significant risks and the general risk profile of REN.

That is to say that, at the first stage, the Risk Committee, with the collaboration of
its members who are the heads of various departments and with the assistance
of all other department heads within the Company, analysed any aspects related
to REN’s business that could constitute a risk to its activity.

The Risk Committee then assesses existing risks (severity and probability of
occurrence for each potential risk) and classifies them by order of importance
and by categories and subcategories. The assessment of risks inherent to REN’s
activities, as well as the Internal Control System, are carried out according to the
following principles:

 

  • To strengthen and improve effectiveness and efficiency in the use of resources;
  • Safeguarding assets;
  • To analyse the information processing system;
  • Checking of the reliability and accuracy of financial, accounting and other kinds of information;
  • To prevent and detect fraud and errors;
  • To check for compliance of the Group’s operations and business with applicable legal and regulatory provisions, as well as with general policies and Company regulations;
  • To promote operational effectiveness and efficiency.

Following the identification and assessment of inherent risks, the Risk Committee
identifies the relevant measures to eliminate, mitigate or control the risks and
reports the result of the analysis to the Board of Directors. The Risk Committee
further seeks to apply preventive and protective measures, through the
formulation of a priority matrix, and communicates risk management best
practices internally.

Risk assessment is reviewed regularly in order to ensure that it is always up to
date. As such, the following activities were carried out in 2013 as part the REN
Group risk management system:

  • Review and updating of risk models and the respective processing files;
  • Review and updating of the list of greatest risks;
  • Definition of the action plan to mitigate the greatest risks;
  • Definition of the Key Risk Indicators (KRI);
  • Development and entry into operation of the do Risk Management Portal.

As part of risk monitoring, control and management, it should be noted that, on 8
November 2012, REN’s Board of Directors approved the review of the regulations
‘Appreciation and Control of Transactions with Related Parties and Prevention
of Conflicts of Interests’ and ‘Procedures Applicable to the Processing of
Whistleblowing Communications and the Inspection of Irregularities’.

Moreover, it should also be pointed out that REN has implemented a series
of changes to its internal control and risk management systems, involving
the components provided for in CMVM Recommendations, and in terms of
risk management, it has also been guided by the norms of the International
Organization for Standardization (ISO).

2013 saw a continuation of the application of a standardised and integrated
corporate risk management strategy, transversal throughout the organisation,
aligned and structured based on the priorities and specific characteristics of each
area of the business.

III.55. Main elements in the internal control and risk management systems
implemented at the Company with regard to the financial information
disclosure process (Art. 245(A)(1) (m)

REN regularly provides management information, to strictly monitor its
operations. In this regard, all management information provided both for
internal use and for disclosure to other organizations, is prepared on the basis
of sophisticated IT systems. REN carries out initiatives that seek to continually
improve the support information processes and systems that produce financial
and management information.

It is the Audit Committee’s responsibility to supervise the process for the
preparation and disclosure of financial information; As such, the Audit Committee
held meetings to monitor these processes with the members of the Executive
Committee, the Statutory Auditor and external auditor and with those responsible
for accounts and management planning and control.

IV. Investor support

IV.56. Service responsible for investor support, composition, functions,
information provided by this service and contact information
The service responsible for investor support is the Investor Relations Office (DRI),
founded in July 2007, and devoted exclusively to the preparation, management
and coordination of all activities necessary to achieve REN’s objectives in its
relations with shareholders, investors and analysts, and ensure a communication
that offers a full, coherent and comprehensive vision of REN, thereby facilitating
investment decisions and creating sustained value for shareholders, providing
information and clarification on information published by REN.

IRO contacts:

 E-mail: ir@ren.pt
Ana Fernandes - Diretora: ana.fernandes@ren.pt
Alexandra Martins: alexandra.martins@ren.pt
Telma Mendes: telma.mendes@ren.pt

Address: REN - Redes Energéticas Nacionais, SGPS , S.A.
C/O: Gabinete de Relações com o Investidor

Avenida dos Estados Unidos da América, 55
1749-061 Lisboa - Portugal

Telephone: 21 001 35 46 I Fax: 21 001 31 50

The IRO has the following main duties:

a) To act on REN’s behalf with shareholders, investors and financial analysts,
ensuring equality of service for shareholders and preventing incorrect
information;
b) Ensure that feedback from institutional investors is communicated to the
Executive Committee;
c) Guarantee timely compliance with CMVM obligations and other financial
authorities;
d) Coordinate, prepare and disclose all information made available by the
REN Group with regard to disclosure of privileged information and other
communications to the market, and in relation to the publication of periodic
financial statements;
e) Systematically monitor the content of analyst research work with the aim of
contributing to a correct evaluation of the Company’s strategy and results;
f) To prepare and continuously monitor the financial and operational
benchmark of competitors and peer group;
g) Attract the interest of potential institutional investors, as well as a greater
number of financial analysts;
h) D raw up an annual activities plan for the IRO, including road-shows, visits
to investors and the organization of Investor Day;
i) D evelop and maintain the Investor Relations page on the Company’s
website69.

IV.57. Representative for market relations

Since 28 March 2012, the Representative for Market Relations has been the
Director Gonçalo Morais Soares who is also the Chief Financial Officer (CFO) of
the REN Group.

IV.58. Information about the proportion of, and response time to, requests for
information received this year and in previous years

Investor requests were responded to in a timely manner, usually on the same day
or, in such case as the request required the receipt of information from third parties,
soon after they were received. In 2013, almost 210 requests were attended to by
telephone, 420 by email and precisely 190 in person at conferences and roadshows,
with both debt and equity investors.

Another form of contact with the capital markets was through conference calls
commenting on the results of each quarter of the year, on which both analysts and
institutional investors participated.

Also in relation to information duties, REN published, in line with the stipulated terms,
press releases on the Portuguese Securities Market Commission and London Stock
Exchange websites, amongst other entities.

REN maintains an updated record of requests for information lodged, as well as the
treatment they received.

V. Internet site

V.59. Adress (es)

The Company website70: available in Portuguese and English, in accordance with
CMVM recommendation VI.1.

V.60. Place where information on the firm can be found, the quality of open
company, its registered office and all other information mentioned in article 171
of the Portuguese Companies Code;

On the REN website, under the tab marked ‘Investors’, we find a tab marked
‘Corporate Information’, where published information on the firm, the quality of
open company, the headquarters and other information mentioned in article 171
of the Portuguese Companies Code may be found.

www.ren.pt/investidores/informacao_da_sociedade/

V.61. Place where the Articles of Association and operating regulations for the
bodies and committees can be found

On the REN website, under the tab marked ‘Investors’, we find a tab marked
‘Corporate Governance’ under which we find, in turn, a tab marked ‘Statutes,
Regulations and Reports’, where we find the Articles of Association, as well as the
following regulations:

  • Board of Directors Regulations
  • Audit Committee Regulations
  • Executive Committee Regulations
  • Regulations on transactions with related parties
  • Regulations on transactions of securities by REN directors

www.ren.pt/investidores/governo_da_sociedade/estatutos_regulamentos_e_
relatorios/

V.62. Place where information is made available on the identity of members of the
corporate bodies, the Representative for Market Relations, the Investor Support
department or similar structure, their respective functions and means of access

On the REN website, under the tab marked ‘Investors’, we find a tab marked
‘Corporate Governance’ under which we find, in turn, a tab marked ‘Corporate
Governance’, under which we find the composition of the corporate bodies.

www.ren.pt/investidores/governo_da_sociedade/

On the other hand, on the REN website71, under the tab marked ‘Investors’, we
find a tab marked ‘Investor Relations’ where we find published information on
the identity of the Representative for Market Relations and the Office for Investor
Relations, as well as the contact details and powers of the aforementioned.

www.ren.pt/investidores/relacoes_com_investidores/

V.63. Place where accounting records are made available, which must be
accessible for at least five years, as well as a half-yearly calendar of company
events, announced at the start of each semester, including, amongst others,
General Meetings, publishing of annual, half yearly and, where applicable,
quarterly reports

On the REN website, under the tab marked ‘Investors’, we find a tab marked ‘Results’,
where documents are published on accounting records, which will be accessible for a
period of five years.

www.ren.pt/investidores/resultados/

On the same website, a calendar of company events is also available.

V.64. Place where the notice to convene a General Meeting is published as well
as all the preparatory documents and documents resulting from said meeting

On the REN website, under the tab marked ‘Investors’, we find a tab marked
‘Corporate Governance’, under which, in turn, we find a tab marked ‘General
Meetings, where we find the Notice to Convene, the proposed resolutions and the
minutes of the General Meeting.

www.ren.pt/investidores/governo_da_sociedade/assembleias_gerais/

V.65. Place where a historic record is made available with all the resolutions
adopted at the company’s General Meetings, the represented share capital and
voting results for the previous three years

On the website , REN provides extracts from the minutes of General Meetings.

On the website, REN maintains a historic record of notices to convene, points
of order and resolutions adopted at General Meetings, as well as information on
the represented share capital and voting results for the previous 5 years.

See V.64. with regard to where this information is provided.