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7
Annual and Extraordinary Shareholders' Meeting of April 21, 2008
Auditors' report on the proposal to issue shares to
employees of Group companies outside of France 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 issue common shares or share equivalents to employ-
ees of Group companies outside of France. Shareholders
will be asked to waive their pre-emptive right to subscribe
the issue(s). This authorization would be granted to the
Management Board. The maximum nominal amount by
which the capital may be increased may not exceed 0.5%
of the issued capital as of the date of this Meeting. The
amount of any capital increase carried out under this au-
thorization would be deducted from the aggregate amount
by which the capital may be increased under the tenth res-
olution approved by shareholders at the Annual Meeting
of April 26, 2007 and from the aggregate amount by which
the capital may be increased under the twentieth resolution
tabled at this Meeting.
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 18 months. If the resolution is adopted, the
Management Board will set the terms and conditions of the
share issue.
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 Commercial
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
179