APC 2007 Annual Report Download - page 180

Auditors' report on the proposal to reduce
the capital by canceling shares
To the Shareholders,
In our capacity as Statutory Auditors of Schneider Electric
SA and as required by article L.225-209, paragraph 7, of
the Commercial Code in the case of a capital reduction
carried out by canceling shares bought back by the issuer,
we present below our report on our assessment of the rea-
sons for the proposed capital reduction and the terms and
conditions of the operation.
We performed the procedures we deemed necessary to
conduct this mission in accordance with the professional
guidelines of the French Institute of Statutory Auditors
(CNCC). Those procedures are designed to allow us to ob-
tain assurance concerning the reasonableness of the de-
cision to reduce the capital and of the terms and conditions
of the proposed operation.
The proposed capital reduction will concern shares repre-
senting up to 10% of the Company's capital bought back
pursuant to article L.225-209 of the Commercial Code. At
the Annual Meeting, you will be asked to give an 18-month
authorization to the Company to implement the buyback
program.
The Management Board is asking you to grant it full dis-
cretionary authority over a period of 24 months to cancel
shares purchased under the shareholder approved buy-
back program within a limit of 10% of the Company’s cap-
ital.
We have no matters to report concerning the reasons for
and the terms and conditions of the proposed capital re-
duction, the implementation of which is conditional upon
shareholders authorizing the buyback program as re-
quested in the seventeenth resolution.
Courbevoie and Neuilly-sur-Seine, February 19, 2008
The Statutory Auditors
Ernst & Young et Autres Mazars & Guérard
Pierre Jouanne Pierre Sardet
Auditors' report on the proposed employee share issue with
cancellation of shareholders’ pre-emptive subscription right
To the Shareholders,
In our capacity as Statutory Auditors of Schneider Electric
SA and pursuant to Article L.225-135 et seq. of the Com-
mercial Code, we present below our report on the proposal
to authorize the Management Board to issue shares, share
equivalents or debt securities, on one or several occasions,
to employees who are members of an Employee Stock
Purchase Plan set up by French or foreign related compa-
nies, with cancellation of shareholders’ pre-emptive sub-
scription right. The maximum nominal amount by which the
capital may be increased may not exceed 5% of the issued
capital as of the date on which this authorization is used.
The maximum discount at which shares may be offered is
set at 20% of the share price.
These authorizations are submitted for your approval in ac-
cordance with Article L.225-129-6 of the Commercial Code
and Article L.443-5 of the Labor Code.
You are asked to authorize the Management Board, on the
basis described in its report, to increase the Company’s is-
sued share capital directly or through a representative on
one or several occasions by issuing common shares or
share equivalents without pre-emptive subscription rights,
for a period of five years as from the date of this Meeting.
If the resolution is adopted, the Management Board will set
the terms and conditions of these transactions.
The Management Board is responsible for reporting to
shareholders on the proposed share issue in accordance
with Articles R.225-113 and R.225-114 of the Commer-
cial Code. Our responsibility is to express an opinion on
the fairness of figures taken from the financial statements,
on the proposal to cancel shareholders’ pre-emptive sub-
scription right and on certain other information included in
this report.
We performed our work in accordance with French pro-
fessional standards. Those standards require that we per-
form procedures to check the content of the report drawn
up by the competent management body concerning this
operation and the method used to determine the share
issue price.
We have no matters to report concerning the method for
determining the issue price as described in the Manage-
ment Board Report, contingent upon our final review of the
terms of the proposed capital increase.
Since the issue price has not yet been set, we cannot for-
mulate an opinion on the final conditions under which the
share issue will be carried out, and consequently have no
opinion on the proposal to cancel shareholders' pre-emp-
tive subscription right,
Should this resolution be approved and as required by Ar-
ticle R.225-116 of the Commercial Code, we will prepare
an additional report at the time the capital increase(s) is
(are) carried out by the Management Board.
Courbevoie and Neuilly-sur-Seine, February 19, 2008
The Statutory Auditors
Ernst & Young et Autres Mazars & Guérard
Pierre Jouanne Pierre Sardet
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