Directors must keep the Board informed of the directorships they hold in other companies, including any involvement in Board Committees of such French or foreign companies. They are required to notify the Board of any situation that may constitute a conflict of interest, even if such conflict is only potential, and must refrain from participating in the corresponding deliberations.
In addition, each year all Directors must issue a declaration relating to potential conflicts of interest between their duties to L’Oréal and their private or professional interests, specifically with regard to other directorships and roles. Any relevant information disclosed in this way is made public. Based on these declarations, the Board of Directors has not identified any conflict of interests on the date these declarations were issued pursuant to Delegated European Regulation No. 2019/980 supplementing Regulation No. 2017/1129, known as “Prospectus 3”.
The Nominations and Governance Committee conducts an annual review of the summary table prepared by the Company of the financial flows that occurred during the financial year between L’Oréal and interested parties as defined by regulations in order to report to the Board of Directors as part of the regular procedure to evaluate current agreements signed under normal terms pursuant to Article L. 22-10-12 of the French Commercial Code. In case of doubts about the classification of an agreement, the Committee must verify that the transactions have been concluded in ordinary course of business and under normal conditions, so that the Board of Directors can implement the procedure for related-party agreements when necessary. In this case, the persons directly or indirectly interested in this agreement do not participate in the assessment. In accordance with the AFEP-MEDEF Code and there commendations of the French Financial Markets Authority -AMF, the Board of Directors, based on the work carried out by the Nominations and Governance Committee, also analyses each year any possible business relationships between L’Oréal and companies in which independent Directors hold directorships or perform functions, to ensure these relationships are not significant (see section 2.2.1.4.).
Ms Françoise Bettencourt Meyers is the mother of Mr Jean‑Victor Meyers and Mr Nicolas Meyers.
To the Company’s knowledge, over the last five years, the directors and corporate officers have not been convicted for fraud, associated with a bankruptcy, receivership or liquidation, or the subject of any official public incrimination or sanction imposed by statutory or regulatory authorities (including designated professional bodies) or a decision by a court disqualifying them from acting as a member of an administrative, management or supervisory body or from acting in the management or conduct of the business of any issuer.
The method of organisation and modus operandi adopted by the Board would allow it, where applicable, to prevent any abusive exercise of their rights by one or more shareholders that come to control the Company, notably due to the presence of seven independent Directors on the Board o f Directors.
Regarding any arrangement or agreement entered into with the major shareholders, customers, suppliers, or others, under which a Director was selected as a member of the Board of Directors, an agreement between the Bettencourt Meyers family and Nestlé S.A., which expired on 21 March 2018,concerned the reciprocal voting commitment in favour of the appointment as Directors of three members proposed by the Bettencourt Meyers family and two members proposed by Nestlé.
The Company was informed of the participation, amounting to100 shares, of its Chairman, Mr Jean-Paul Agon, in the collective lock-up agreements signed on 16 December 2016 by Téthys SAS and members of the Bettencourt Meyers family group under the Dutreil law. The Nominations and Governance Committee Meeting of 6 December 2016examined this arrangement prior to signature of the agreement and considered that it could not be contested on the basis of the Company’s interests, nor could it lead to consequences for the Company’s governance, and informed the Board of Directors accordingly.
No directors or corporate officers have a service contract with L’Oréal or any of its subsidiaries providing for the granting of benefits upon termination of such contract.
The Board noted the rules to be applied to prevent insider trading, in particular those resulting from European Regulation (EU) No. 596/2014 on Market Abuse which became applicable on 3 July 2016, and the recommendations of the French Financial Markets Authority - AMF, in particular regarding the periods during which it is prohibited from trading in shares. It decided to amend its Internal Rules accordingly.
On the basis of the legal provisions, regulations and market recommendations, L’Oréal’s Stock Market Ethics Code points out that inside information must only be passed on and used for professional purposes.
Inside information is information of a precise nature, which has not been made public and which, if it were made public, would likely to have a significant effect on the share price. The Stock Market Code of Ethics restates the ban on any person in possession of insider information from executing or ordering the execution of financial transactions on L’Oréal shares, and emphasises that any misconduct in this area may result in criminal proceedings. The Internal Rules of the Board specifically ask Directors to refrain from trading in L’Oréal shares precisely in certain periods and when they have access to inside information.
Lastly, Directors are required to notify the AMF of each transaction carried out by them or by persons closely associated with them related to L’Oréal shares. This obligation is periodically restated by the Company (see summary of these operations in section 2.6.).
