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INGENICO GROUP

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Registration Document 2016

Corporate governance

3

3.1 Report of the Chairman of the Board of Directors on corporate governance

and on internal control and risk management procedures

3.1

Report of the Chairman of the Board of Directors

on corporate governance and on internal control

and risk management procedures

To the Shareholders,

In line with the provisions of Article L.225-37 of the French

Commercial Code, the Chairman of the Board of Directors

presents his report for 2016 on the composition of the Board of

Directors, the application of the principle of equal representation

of men and women thereon, how it prepares and organizes its

work, and the internal control and risk management procedures

implemented within the Company.

The Chairman of the Board has written his report in close

cooperation with the Group’s main functional and operational

departments, namely the Audit and Internal Control, Finance,

and Human Resources Departments. The back-and-forth process

between the Chairman of the Board and these departments

enhances comprehension and provides an accurate picture of the

operations involved and the relevant procedures implemented

in the Group.

In accordance with Article L.225-235 of the French Commercial

Code, the Company’s statutory auditors have reported on the

information contained in this report on the internal control

procedures implemented by the Company in preparing and

processing accounting and financial information and confirmed

that this report contains the other disclosures required by

Articles L.225-37 and L.225-68 of the French Commercial Code.

This report was approved by the Board of Directors on

February 23, 2017.

3.1.1

Governance structure

3.1.1.1

Corporate Governance Code

As part of its corporate governance initiatives, the Company

has established a set of measures in accordance with the AFEP-

MEDEF Code which inspired the drafting and updating of the

Company’s Articles of Association and Rules of Procedure

of the Board of Directors. In the same manner, the Company

has opted to refer to the AFEP-MEDEF Corporate Governance

Code for listed companies (the “AFEP-MEDEF Code”), which

was last updated in November 2016. The Code is available

on the websites of both AFEP

(www.afep.com) a

nd MEDEF

(www.medef.com).

3.1.1.2

Implementation of the “apply or

explain” rule

In accordance with the “apply or explain” rule in Article L.225‑37

of the French Commercial Code and Article 27.1 of the

AFEP‑MEDEF Code, the Company believes that it is in compliance

with the recommendations of the AFEP-MEDEF Code.

3.1.1.3

Organization of powers

The Company is a public limited company with a Board of

Directors and a Management Board.

Combining the functions of Chairman

and Chief Executive Officer

On January 20, 2010, the Board of Directors combined the

positions of Chairman and Chief Executive Officer, which had

been separate since 2004. Since that decision was made,

Philippe Lazare has been the Chairman and Chief Executive

Officer.

This option, which is also that most often chosen by French

listed companies with a Board of Directors, was made in a

constantly changing and particularly competitive environment

to ensure greater consistency between strategic and operational

functions and to simplify the decision-making process in the

interests of greater efficiency, thereby ensuring compliance with

best governance practices.

The governance structure implemented within the Group is

in strict compliance with the authority delegated to each of

the Company’s various bodies, as provided by French law. It

includes:

a Board of Directors on which the majority of the members

are independent (87.5% as at the date of this report);

a Group strategy that involves every member of the Board;

attendance on special focus committees of the Board of

Directors that are largely made up of independent members

(100% as at the date of this report);

limits on the powers of the Chairman and Chief Executive

Officer (detailed below), including the requirement to notify

or request the prior approval of the Board of Directors for

the most significant transactions;

a formal annual performance evaluation of the Board of

Directors by all of the directors, except for the Chairman

and Chief Executive Officer (see section 3.1.4.4 of this

Registration Document).

The Chairman and Chief Executive Officer is not a member of

any of the Board of Directors’ special focus committees.