LOREAL_Registration_Document_2017

2 Corporate governance *

FRAMEWORK FOR THE IMPLEMENTATION OF CORPORATE GOVERNANCE PRINCIPLES

Furthermore, although the General Management is vested with the broadest powers to act in all circumstances in the name of the Company, transactions for a significant amount or which are outside the Company’s normal course of business are submitted to the Board of Directors. Attentive management of conflicts of interest The Directors have to act in all circumstances in the interest of the Company and of all its shareholders. Every year, the Board of Directors evaluates the situation of Directors with the aim of preventing conflicts of interest. Each Director has the formal obligation to report potential conflicts of interest which could concern him/her and, in any event, must abstain from participating in the corresponding debates and deliberations. Active, effective specialised Board Committees The setting-up of Board Committees, their composition and the enlargement of their responsibilities contribute to the good balance of powers and are a point to which the Board of Directors pays particular attention. All of the committees include independent Directors: 60% for the Audit Committee and the Human Resources and Remuneration Committee and 50% for the Appointments and Governance Committee. The Chairman/Chairwoman of each of these committees is independent. Only the Strategy and Sustainable Development Committee is chaired by the Chairman and Chief Executive Officer. He does not serve on any other committees. Two of the four committees are chaired by women, the Audit Committee and the Appointments and Governance Committee. The employees Directors are active on the Board Committees. One is a member of the Human Resources and Remuneration Committee and the other a member of the Audit Committee. These committees are completely free to define their respective agendas. They report on their work to the Board of Directors, prepare for its meetings and make proposals to the Board.

Within the framework of the review of its activities at the end of 2017, the Board once again highlighted the quality of the work and recommendations of its committees which helped it to make well-informed decisions.

A regular evaluation of the organisation and modus operandi of the Board

Within the framework of the annual evaluation of its modus operandi , on the basis of the best corporate governance practices, the Directors set themselves new objectives every year for an improvement in the quality of their organisation. They strive to adopt an optimal method of functioning and ensure that they have all the necessary strengths to perform their remits successfully, with complete freedom. Thus in 2017, the Board of Directors confirmed that the current mode of governance was well-balanced and effective. The decision-making processes are clear and the balance of powers is properly ensured. As it prefers to have a direct relationship with the Chairman and Chief Executive Officer, it does not consider the appointment of a Lead Director to be necessary. Internal Rules that are regularly updated In order to structure and organise its action, L’Oréal’s Board of Directors has adopted Internal Rules reaffirming the guiding principles of its remit and the means at its disposal to perform its remit. The Internal Rules address both the formal aspects of the Board’s remits and the rights and obligations of the Directors (knowledge of and compliance with regulations, recommendations and obligations, respect of the Company’s interest, obligations of diligence and provision of information, reserve and confidentiality, responsibility with regard to stock market ethics, etc.). It is updated by the Board in order to take account of the changes in the laws and regulations, good corporate governance practices and its own modus operandi , particularly within the scope of the annual evaluation of its work. The latest updates to the Internal Rules were made on 9 February and 12 October 2017. They involved the rules regarding the holding of a minimum number of L’Oréal shares by the Directors and stock market ethics (Internal Advisor for Stock Market Ethics). The Internal Rules are published in full in this chapter.

REGISTRATION DOCUMENT / L'ORÉAL 2017

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