PARTICIPANT MEMBERS:
Dres. Alberto Y. Messano
Julio P. Naveyra
Raul A. Miranda.
SECRETARY: Mr. Hector Caram
DATE OF MEETING: March 17, 2005
RELEVANT PART:
OPINION OF THE PROPOSALS THAT THE BOARD OF
DIRECTORS HAS THE INTENTION TO PRESENT TO THE GENERAL ORDINARY ANNUAL
SHAREHOLDERS MEETING
Mr Naveyra states that the Board of Directors of
the Company, in accordance with articles 13 and 15, sections a) and e) of the
Decree 677/01, has requested the Audit Committee to issue an opinion of the
proposals that the Board of Directors has the intention to present to the
General Ordinary Annual Shareholders Meeting, with respect to:
a) Appointment of Price Waterhouse & Co.
S.R.L. as External Auditors of the Financial Statements of the Company,
corresponding to the fiscal year to be ended in December 31, 2005.
b) The compensation of P$1,670,000 to the Board
of Directors in office during fiscal year 2004, to be distributed among the
independent directors or those that performed special tasks, in the manner to
be decided by the Board of Directors. Furthermore, the Board of Directors would
propose to be authorized by the Shareholders Meeting to make advance payments
up to a global amount of P$1,800,000 to the directors that will perform as
“independent directors” or those that perform technical-administrative or
special tasks, allowing to increase such amount in the case of inflation.
c) The proposal to pay the sum of Six Hundred
and Fifty Thousand Pesos ($650,000, without VAT, to Price Waterhouse & Co.
S.R.L. for their services as External Auditors of the Financial Statements of
Telecom corresponding to fiscal year 2004.
Mr. Naveyra adds that the Board of Directors has
also requested an estimate of the amount of money that must be proposed for
approval of the Shareholders Meeting, as a budget for the operation of the
Audit Committee during fiscal year 2005.
1) Opinion of the proposal of designation of
External Auditors for Fiscal Year 2005.
The Board of Directors will propose the
designation of Price Waterhouse & Co. S.R.L. (“Price”) as Auditors to the
Financial Statements of the fiscal year that started on January 1, 2005 and
that will end on December 31, 2005, where Mr. Juan Carlos Grassi will act as
Acting Certified Public Accountant while Mr. Juan Pedro Jackson and Mrs. Silvia
Patricia Giordano will act as alternates.
The Audit Committee discusses the firm’s
background and the performance of recent fiscal years considering:
- Price
is one of the most renowned and prestigious accounting firms, both locally and
internationally, that has performed and continues to perform external audit
functions in some companies and corporations, has vast experience in the
matter.
- Except
for fiscal years 2001 and 2002, Price has performed as External Auditors of the
Financial Statements of Telecom since its constitution (in some fiscal years as
joint-auditor), without receiving any objection from regulators or
shareholders. In fiscal year 2004, Price was the exclusive External Auditor,
having performed its activities in satisfactory form and with due independence,
as expressed in the annual report that this Committee was presented to the
Board of Directors of the Company.
- The
professional solvency of the partners and working group of Price that has being
performing the external audit in Telecom and the knowledge acquired of the
Company, its accounts and internal controls, make advisable their continuity in
the position, due to the accumulated experience, added to the proven
independence and efficiency with which it has performed its functions, that
constitute an important support for their performance in the new fiscal
year.
It is unanimously resolved to submit to the
Board of Directors an opinion fully favorable of the proposal to appoint Price
Waterhouse & Co. S.R.L. as External Auditors for Fiscal Year 2005.
2) Opinion of the proposal of compensation of
the Board of Directors of Fiscal Year 2004 and advance payments for those to
perform during Fiscal Year 2005.
The Board of Directors has the intention to
propose to the Shareholders Meeting to allocate a total remuneration of
P$1,670,000 to be distributed among independent directors or those that have
performed special tasks, in the manner to be decided by the Board of Directors.
Furthermore, it would propose to the Shareholders Meeting to authorize the
Board of Directors to make advance payments up to an amount of P$1,800,000 to
the directors that during the fiscal year that ends in December 31, 2005
perform as “independent directors” or that perform technical-administrative or
special tasks, authorizing to increase such amount in the case of inflation.
In order to submit the proposal, it is
considered that Mr. Oscar Cristianci, Alberto Y. Messano and Gerardo Werthein,
have resigned to receive remuneration for their performance as Directors of the
Company during fiscal year 2004.
In accordance to article 15 section e) of Decree
Nº677/01, the Audit Committee has to issue an opinion with respect to the
reasonability of the proposal. Notwithstanding, Mr. Naveyra and Mr. Miranda
state that, as independent directors, are affected by a conflict of interest as
both are beneficiaries of part of the remuneration that the Shareholders
Meeting sets for the Board of Directors. Therefore, only Mr Messano is in
condition to issue an opinion on this matter.
Mr Messano states that the evaluation of the
proposal of the Board of Directors regarding the remuneration to directors
included:
- A
comparison with previous fiscal years.
- Verification
of the compliance of legal, regulatory and statutory regulation.
Having ended such evaluation and considering:
- That the remuneration that is being proposed
to be allocated to the Board of Directors are only to pay exclusively the
services of independent directors, as the three “non-independent directors”
have resigned to receive remuneration:
- That the three independent directors are
persons with vast experience and excellent professional reputation;
- That the independent directors assume a great
responsibility and dedicate a considerable amount of time in the performance of
their tasks, as some of them also form part of the Audit Committee, and others
take part of the negotiations related to the debt restructuring process of the
Company, and represent the Company in governmental and business entities;
- The amount of fees that it is being proposed
for fiscal year 2004 is in line with the remuneration approved by the
Shareholders Meeting for the previous fiscal year;
- It is of general practice that the
Shareholders Meeting authorizes the Board of Directors to make advance payments
to directors that during the new fiscal year perform as independent directors
or to those that perform technical-administrative or special tasks, as it would
not deem reasonable to defer to the next fiscal year the payment of all the
remuneration for functions that require so much time and dedication. With
respect to the amount of these advanced payments, it seems reasonable as well
as the possibility of increasing the amount in case of inflation.
- In the case that the proposal is approved by
the Shareholders Meeting as a specific point of the Agenda of the Meeting, in
accordance to Chapter III of the CNV Regulation, the payment of the remuneration
does not violate any legal, regulatory or statutory regulation, applicable to
the Company.
Due to the above mentioned, Mr Messano concludes
that the remuneration proposed by the Board that performed during fiscal year
2004, is deemed “adequate” in the terms of article 2º, section d) of the
Chapter III of the CNV Regulation, taking into account the responsibilities,
representations, technical tasks, dedication to the functions, competence,
professional reputation of the independent directors that perceive such fees
and the value of their services in the market. Moreover, the possibility of
authorizing the Board of Directors to make advance payments to those directors
acting during fiscal year 2005 is considered reasonable and in accordance to
market practice.
3) Fees to be payable to External Auditors of
Fiscal Year 2004.
The Board of Directors has the intention to
propose to the Shareholders Meeting to approve a payment to Price Waterhouse
& Co. S.R.L. for their services as External Auditors of the Financial
Statements of Telecom Argentina S.A. corresponding to fiscal year 2004 of Six
Hundred and Fifty Thousand Pesos (P$650,000), without VAT, and has requested
the opinion of the Audit Committee regarding the reasonability of such
proposal.
The Audit Committee considers that:
- The
fees are appropriate taking into account the importance, magnitude and quality
of the tasks performed by the External Auditors;
- The
proposed fees are within the range of fees approved by other public companies,
with similar characteristics of Telecom;
- The
amount is lower that the fees authorized by the Shareholders Meeting for two
firms that rendered auditing services in the previous fiscal year;
The Committee concludes that the sum of $650,000
that the Board of Directors would propose to the Shareholders Meeting to
approve as fees to the External Auditors for the fiscal year ended December 31,
2004 is deemed reasonable.
4) Budget for the operation of the Audit
Committee during Fiscal Year 2005.
The Board of Directors has requested the Audit
Committee to estimate an amount of money that must be proposed for approval of
the Shareholders Meeting, in concept of budget for the operation of the Audit
Committee during Fiscal Year 2005.
After discussing the matter, considering the
experience gained during the last fiscal year, the training and advisory needs estimated
for the current year, and the hiring of services related to evaluations and
testing of internal controls and the implementation of the channels that will
receive allegations, the Audit Committee resolves to request to the
Shareholders Meeting to approve an operative budget of P$600,000 for fiscal
year 2005.
Julio P. Naveyra
Alberto Y. Messano
Raul A. Miranda