Chrysler 2011 Annual Report Download - page 344

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Auditors’ Reports
Motions for AGM
we have reviewed and obtained information on the organizational and procedural measures implemented pursuant to and for the
effects of Legislative Decree 231/2001, as amended, and on the liability of legal persons for the offenses addressed therein. No
significant issues requiring mention arose from the report of the Compliance Program Supervisory Body on activities carried out
during 2011 or meetings conducted between that Body and the Board of Statutory Auditors;
no significant issues arose during meetings held with the Independent Auditors pursuant to Article 150 of Legislative Decree 58/1998;
the report of the Independent Auditors, issued on 27 February 2012, contains no qualifications or emphasis paragraphs;
in compliance with Article 149 (1)(c-bis) of Legislative Decree 58/98, we acknowledge the affirmation of the Directors in the Annual
Report on Corporate Governance, as confirmed by the Board resolution of 22 February 2012, that:
“Fiat Group adheres to the new Corporate Governance Code for Italian Listed Companies issued in December 2011, with the
modifications related to the specific characteristics of the Group.” The above is discussed in detail in the Annual Report on Corporate
Governance prepared by the Board of Directors, which is available for your review.
The Board of Statutory Auditors, with the support of the Company’s management, continued to monitor Fiat S.p.A.’s liquidity.
On 4 April 2011, a formal request was received from Consob for information on the additional reviews conducted by the Statutory
Auditors, with the support of the Independent Auditors, on the quarterly results and the situation at 31 December 2010, in relation to
which the findings were positive. The Statutory Auditors submitted the report to Consob on 11 April 2011.
The Board of Statutory Auditors has focused in particular on the most significant aspects of the Fiat–Chrysler agreement, reviewing,
with the support of Fiat’s legal department, the Master Transaction Agreement, which governs three types of agreement, all signed in
2009: i) agreements aimed at restoring Chrysler’s long-term viability; ii) agreements on industrial cooperation between Chrysler and
Fiat and iii) agreements on Chrysler’s ownership structure and governance.
In particular, an analysis was undertaken of the procedures, terms and conditions for exercise of the various call options included in the
agreements, with particular focus on the conditions of exercise for the Incremental Equity Call Option, which resulted in Fiat acquiring
control of Chrysler.
In discussion with management and the Independent Auditors, the Statutory Auditors also examined the appropriate accounting
treatment in the consolidated financial statements for the controlling interest in Chrysler based on the requirements of IFRS 3.
The Statutory Auditors were provided summary financial statements for Chrysler Group LLC for 2009 and 2010.
The Statutory Auditors were also informed of the new organization of Fiat Group, following the demerger and acquisition of control
of Chrysler, in which Fiat has adopted a more operational role and become a focused car company. On 1 September 2011, a new
Group Executive Council (GEC) was established that reflects the organizational changes, including the addition of Chrysler executives
to ensure a more rapid and efficient integration between the two groups.
Lastly, the Board of Statutory Auditors was given general information on the activities undertaken by Chrysler to obtain SOX §404
certification starting in 2012.
On 27 October 2011, the Board of Directors announced its intention to submit a proposal for the conversion of Fiat S.p.A. preference
and savings shares into ordinary shares for your approval at the extraordinary session of the General Meeting. The objective of the
conversion is to simplify the Company’s capital and governance structure. We confirm that we were duly informed of the technical
aspects of the transaction that you will be asked to approve. The proposal will also be submitted to holders of savings and preference
shares for approval at their respective special meetings.
Lastly, the Board of Statutory Auditors is submitting a proposal for additional fees for the independent auditors, Reconta Ernst & Young,
for the 2012 financial year – in relation to review of the Chrysler consolidated financial statements necessary for attestation of the Fiat
Group consolidated financial statements – and for the period 2013-2020, following acquisition of a controlling interest in Chrysler and
consequent consolidation of Chrysler by Fiat. Details of the proposal are provided in a separate document.