EGEL-CNI Examen General para el Egreso de la

The Act to amend the Act respecting the Caisse de dépôt et

placement du Québec provides for the creation of a

Governance and Ethics Committee. This Committee, formed on May 18, 2005, partially replaces the Human Resources, Ethics and Corporate Governance Committee.

Composition of the Committee

The Governance and Ethics Committee consists of four independent members:

Chairman: Yvan Allaire

Members: Bernard Bonin, Pierre Brunet and John T. Wall

Number of meetings and attendance

The Governance and Ethics Committee met six times in 2005 between the months of May and December. The members’ rate of attendance at the Committee meetings was 96%.

Director Meetings attended /total meetings

Yvan Allaire 6 / 6

Bernard Bonin 6 / 6 Pierre Brunet 6 / 6

134

Committee mandate

The Governance and Ethics Committee has a mandate to assure the Board of Directors that the Caisse maintains the highest standards of governance and ethics.

According to its mandate, the Committee drafts and sub- mits to the Board, for adoption, governance rules as well as structures and procedures to ensure that the Board of Directors acts independently from management. It devel- ops the process for orienting new members as well as the continuing training program for Board members.

It proposes to the Board of Directors the composition and mandates of its committees, as well as the constitution and mandate of other committees that may be formed to study specific matters or to facilitate the proper functioning of the Caisse. The Committee also proposes the procedure for dis- missal of a Board member as well as the number of missed meetings that constitutes a vacancy.

The Committee reviews and submits to the Board of Directors, for approval, the status of independent member in respect of the criteria established by the Act and govern- ment regulations, as well as the expertise and experience profile for the selection of independent members. It also develops a procedure for evaluating the performance of the Board members and of the Board as a whole, and recom- mends that the Board approve it.

The Committee drafts and submits to the Board of Directors, for adoption, rules of ethics and professional conduct appli- cable to the directors, officers and employees of the Caisse. In this respect it shall review any contravention and any sanction imposed as a result of such contravention. The Committee reviews and submits to the Board of Directors for adoption regulations and policies concerning the following matters:

• Socially responsible investment;

• The governance principles that the Caisse intends to pro- mote to the companies regarding which it exercises vot- ing rights;

• Control measures regarding the personal use of informa- tion received respecting the operations of the Caisse; • Instances in which officers of the Caisse are obliged to

Activity report of the Governance and Ethics Committee

The Governance and Ethics Committee carried out the fol- lowing main activities during the year:

• The Committee drafted the mandate statements for the Board’s four committees pursuant to the new provisions of the Act respecting the Caisse. It submitted them for comments to the committees concerned and then rec- ommended that the Board of Directors approve them. • The Committee designed a procedure for yearly perform-

ance evaluations of the Board and its committees. It rec- ommended that the Board adopt it. This process will be carried out for the first time in 2006 under the Commit- tee’s supervision.

• The Committee prepared the expertise and experience profile for the selection of independent Board members, in co-operation with the Human Resources Committee. This profile specifies the areas of expertise and experi- ence that will enable a director to contribute fully to the work of the Caisse’s Board of Directors. The Committee submitted the profile to the Board for approval. • The Committee proposed a procedure for evaluation of

the directors. The procedure is designed to evaluate the contribution made by each and to enable the Board to derive maximum benefit from each director’s experience and skills. The evaluation procedure was submitted to the Board for approval and implemented for the first time in 2006. The Chairman of the Board is responsible for its application.

• The Committee reviewed the Code of Ethics and Profes- sional Conduct for Directors to ensure it complies with the new provisions of the Act respecting the Caisse and to bring it into line with the best corporate governance practices. The Committee recommended that the Board adopt this code. The Committee also reviewed the code applicable to officers and employees. This code was sub- mitted to the Board for adoption in February 2006. These codes, which maintain and strengthen public confidence in the integrity of the Caisse’s administration, promote transparency within the Caisse and ensure its directors, officers and employees are accountable. Both codes can be consulted on the Caisse’s Web site.

Committee

• The Committee reviewed all the legal obligations of the Caisse’s directors with respect to their personal transac- tions. It recommended that the Board of Directors imple- ment a preauthorization system aligned with the system in effect for Caisse employees.

• On behalf of the Board of Directors, the Committee received and reviewed the directors’ declarations of interest. It also forwarded the declarations to the com- petent authorities.

• The Committee received a legal opinion regarding the interpretation of the concept of interests referred to in section 42 of the Act respecting the Caisse. Using this opinion, it prepared a form for the declaration of interests by directors. It also proposed a procedure to formalize forwarding of directors’ declarations of interest to the competent authorities. The Committee submitted the form and the disclosure procedure to the Board for approval.

• The Committee proposed to the Board, for adoption, a resolution regarding the circumstances in which a direc- tor’s repeated absence from meetings constitutes a vacancy.

• After each of its meetings, the Committee reported on its work to the Board of Directors.

The Committee continually evaluated the structures and procedures designed to ensure the Board’s independence. In this respect:

• It recommended that each Board meeting include a dis- cussion period without the members of senior manage- ment being present.

• The Committee reviewed the presentation of the docu- ments sent to the Board of Directors for investment authorization. It proposed that an executive summary be prepared for each file submitted. To allow the Board to make the right decisions regarding proposed projects, the Committee also ensured that the information provided is of high quality, is submitted in a timely fashion, is adapted to the directors’ needs and, lastly, is not excessively detailed. The Committee also ensured that the minutes of Board and committee meetings comply with good gov- ernance practices.

• The Committee organized a seminar for Board members on depositor relations and risk management at the Caisse. The Committee ensured that key members of senior management were available to address the various sub- jects on the agenda and that the time allocated to this training was sufficient to enable a full and complete dis- cussion.

• During the strategic planning exercise, the Committee ensured that the Board had all the relevant information and time necessary to analyze the issues facing the Caisse. The Board of Directors and its committees may, in order to exercise their functions, use the services of external experts. The Governance and Ethics Committee did not use such services in 2005.