The APE creation was aimed at strengthening the governance of companies with Government holdings in reference to the working group recommendations led by Mr. Bouton, Mr. Barbier de la Serre and a parliamentary investigation panel led by Mr. Douste-Blazy, while respecting the best practices, Government constraints and general public interest assignments.

The rules of governance listed hereunder are relative to dealings between a company and the Government as a shareholder. They are made to differentiate the Government in its role as a regulator (responsible for technical and legal restrictions for practicing of a specific activity), investor or buyer. They do not replace legal and regulatory dispositions which apply to companies of the public sector, more specifically the July 26th, 1983 law No 83-675 explaining the democratization of the public sector and the August 9th, 1953 and May 26th, 1955 decrees concerning Government control over public companies.

These rules define quality standards applied to Government controlled entities and are strictly followed by Government representatives and other shareholders during Board meetings for private companies with a Government stake.

These global rules are to be applied on a case by case basis taking into account the status of the company and if necessary their capital structure as well as legal and specific regulatory dispositions. It is up to the company Chairman and management team to strictly follow these rules mainly the shareholder equality principle when applicable.

The operating guidance described below is applicable to company corporations or public companies with Boards of Directors. The Board of Directors' goal is to define company directives and ensure their proper implementation: based on the authority granted during general assemblies and limited by the company's mission statement the Board deals with all questions relative to company operations and deals with all matters concerning the company.

The implementation of the company strategy as well as its day to day management belongs to the management team.

As a shareholder representative the APE will pay specific attention to the following aspects.

• The Committee President reports on the Committees work during the following session. All subjects addressed by the Committees are submitted to the Board for debate.
• Committees meet at least three working days before a Board meeting.
• Committees are composed of professional administrators in the Committee's competency field. They are composed in majority of independant administrators.

• It is necessarily mandated for book and relative appendix audits as well as for management reports to inform the Board of Directors on the accuracy and the quality of the transmitted information. The Committee pays specific attention to the scope and consolidation methods. During book audits an exchange timeframe is planned with the Accounting Auditors outside company presence.
• The company presents its accounting methods, its end of year statement and its internal audit statement, its financial communication policy and its major financial communication elements.
• The Committee examines any significant non book commitment risks. It discusses with the Internal Audit Manager outside the presence of the management team and gives his/her opinion on the organization of his/her department. The Committee is informed of the internal audit's control process and receives internal audit reports or summary reports on a recurring basis.
• The Audit Committee organizes the designation process of the Account Auditors who are always competitively compared and gives recommendations to the Board for the final choice. The Committee monitors the separation principle of consulting activities and auditing activities: it regularly receives a list of all consulting activities taking place in the company and its subsidiaries.
• It meets at least three times a year (at least one separate meeting for annual and semestrial accounts examination).

• Board or Committee sessions are followed by minutes or reports which must be approved.
• An internal Board policy and specific internal policies are established for each Committee defining their competency fields and specifying member confidentiality commitments.
• These policies state that members receive preparatory meeting documents at least 5 working days before the scheduled date: unless an exceptional situation arises, if this timeframe is not respected and concerns an item submitted to the members for decision the Government representative members can ask that the decision be postponed.
• Members of Boards and Committees must formally commit themselves to respecting the internal policies of these groups.
• Specific conditions in the internal policies specify that Committees can ask for external expertise paid if necessary by the company.
• During the last Board meeting of the calendar year Board and Committee members receive a projected meeting schedule for the following calendar year.

Acting as an interface between companies and the Government as a shareholder, the APE looks after the following aspects:

On a regular basis and at least once a year company management teams meet the APE to present main transactions and strategic prospects. These meetings are also the preferred time to highlight the relationship between the APE and the companies and to measure compliance with governance rules detailed in this document.

• During work on annual budgets for Government companies milestone meetings are organized between the concerned public services and the company for a detailed discussion if an arbitration is needed.
• Exceptional investments and external growth operations are subject to detailed upfront presentations before any validation process.
• Meetings are organized to define accounting methods before the Board of Directors' review of the books.