Indra will be able to approve Escribano's integration without the approval of the supervisory committee

BarcelonaIndra's board of directors will be able to decide on the integration of the defense company Escribano without the approval of the supervisory committee ad hoc who must ensure there is no conflict of interest, since the president of the technology company is Ángel Escribano, who is also a shareholder of Escribano Mechanical & Engineering (EM&E). Furthermore, EM&E is a shareholder of Indra. If this transaction were to occur, it should be led by Indra's CEO, José Vicente de los Mozos, and the Escribano family should be excluded from the decision-making. Such an integration would, in any case, require approval from Indra's shareholders.

Indra published this Friday, at the request of the Spanish National Securities Market Commission (CNMV), the protocol to regulate the potential transaction with Escribano Mechanical & Engineering (EM&E), the "proper management of conflicts of interest," and to guarantee that the process is carried out "in accordance with the highest governance standards." This protocol, published now at the CNMV's request, was approved by Indra's board of directors on July 30 of last year.

The document states that the CEO, José Vicente de los Mozos, will be responsible, as Indra's chief executive, for assuming the ordinary functions of analysis, structuring, and execution of the potential merger. De los Mozos "will collaborate and maintain constant contact with the committee ad hoc and will attend its meetings, with voice but without vote."

The conflict of interest could arise from the fact that Ángel Escribano, president of Indra, is a co-owner of EM&E with his brother and EM&E president, Javier Escribano. Furthermore, EM&E is 14.3% owned by the Spanish government, which holds 28% of the capital through the State Industrial Holdings Company (SEPI). In addition, Javier Escribano sits on Indra's board of directors representing EM&E.

The protocol stipulates that the two Escribano brothers must be absent from any board meeting where the potential merger is discussed and must abstain from participating and voting on any matter related to it. Furthermore, they will not have access to documentation pertaining to the transaction or to the advisors appointed by Indra. The protocol also establishes a committee. ad hoc to carry out the potential transaction, coordinating and supervising the entire process and issuing reports or recommendations prior to any board decision on the transaction.

The protocol details that, in approving the transaction, the CEO must endeavor, "to the extent possible," to obtain a favorable report from the committee ad hocHowever, it is emphasized that this text will be necessary but "non-binding," so the board may ultimately approve the merger even without the advisory committee's approval. If the board approves the transaction, a general shareholders' meeting will be convened, chaired by the company's vice-chair, Virginia Arce, to obtain shareholder approval. EM&E, which has voting rights, will participate in the meeting. The quorum will depend on the nature of the transaction. If it involves the issuance of shares, 50% of the share capital will be required at the first meeting and 25% at the second, with an absolute majority if the quorum exceeds 50%, and two-thirds of the share capital present or represented otherwise.