ABGOY Abengoa SA (CE)

ITEM 16G.    CORPORATE GOVERNANCE.

        We are a Spanish corporation and qualify as a foreign private issuer listed on the NASDAQ Global Select Market. Under NASDAQ's applicable corporate governance rules, foreign private issuers are permitted to follow home country corporate governance practices in certain circumstances in lieu of NASDAQ's corporate governance rules. We base our corporate governance procedures on the Conthe Code, published in May 2006. Publicly-listed Spanish companies are required by law to publish an Annual Report on Corporate Governance, which provides a detailed explanation of our corporate governance procedures and explains the role and duties of our Board of Directors and Board Committees. Our Annual Report on Corporate Governance and other corporate governance information is available on our website at www.abengoa.com. None of the information contained on our website is incorporated in this annual report. Set forth below is a summary of the significant differences between the corporate governance practices we follow under Spanish law and those followed by NASDAQ-listed U.S. domestic issuers.

        Under NASDAQ's corporate governance rules, the board of directors of a U.S. domestic issuer must have a majority of independent members. As a foreign private issuer, we are permitted to follow Spanish corporate governance requirements for the number of independent directors on our Board of Directors. As of the date of this annual report, we had 15 directors, out of which four have been deemed independent by our Board of Directors. We assess the independence of our directors by evaluating, among other things, (i) the contractual, employment and commercial relations between directors, our shareholders and us, (ii) other board of directors positions held by our directors, and (iii) the presence of material business dealings with us or any other company in our Group. The classification of our directors as independent is reviewed annually by our Board of Directors and is reported in our annual corporate governance report filed in accordance with Spanish corporate law.

        Under NASDAQ's corporate governance rules, only independent directors may be members of the compensation committees of the boards of directors of U.S. domestic issuers. We have an Appointments and Remuneration Committee, which is our equivalent to a compensation committee. Under Spanish corporate governance codes, all of the members of a compensation committee of a publicly-listed Spanish company must be external directors and a majority of those directors must be independent. Our Appointments and Remuneration Committee bases its corporate governance procedures and functions on these published codes and is currently in compliance with their requirements, including those related to committee membership, executive compensation, and director nominations.

        Under NASDAQ's corporate governance rules, U.S. domestic issuers are required to provide a quorum as specified in its bylaws for any meeting of the holders of common stock, provided, however, that such quorum is not permitted to be less than 33 ¹ / 3 % of the outstanding shares of common voting stock. Our articles of association provide that, on the first call of our general shareholders' meeting, a duly constituted meeting requires a quorum of at least 25% of our subscribed share capital, and, if a quorum was not obtained on the first call, a meeting is validly convened on the second call regardless of the share capital in attendance. However, certain major corporate actions (such as issuing additional ordinary shares, increasing or decreasing our share capital, issuing debt securities, amending our bylaws or approving merger transactions) require shareholder approval at a meeting at which at least 50% of our subscribed share capital is present or represented on the first call or at least 25% of the our share capital present or represented on the second call. However, when the number of shareholders attending a meeting represents less than 50% of our subscribed share capital, resolutions on any of these major corporate actions must be adopted by the affirmative vote of at least two-thirds of the share capital present or represented at such meeting.

        Under NASDAQ's corporate governance rules, U.S. domestic issuers are required to solicit proxies, provide proxy statements for all shareholder meetings and provide copies of such proxy materials to NASDAQ. As a foreign private issuer, we are generally exempt from the SEC's rules governing the solicitation of shareholder proxies. However, under Spanish law we are required to publish a "calling of the meeting" one

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month in advance of the meeting setting forth the matters to be voted upon with respect to a shareholder meeting in our corporate website, in the website of the CNMV (the Spanish securities markets regulator) and in either a Spanish widely-read newspaper or the BORME. We distribute a copy of the calling of the meeting and a form of proxy to our U.S. shareholders and also make these materials available through our website in advance of such meeting.

        Under NASDAQ's corporate governance rules, shareholders of U.S. domestic issuers must be given the opportunity to vote on equity compensation plans and material revisions thereto, with limited exceptions set forth in the NASDAQ Marketplace Rules, including an exception for foreign private issuers who follow the laws of their home country. Under Spanish law, equity compensation plans involving the issuance of our securities require prior shareholder approval. Additionally, equity compensation plans in which our officers and employees participate can be approved by our board of directors without shareholder approval. However, the establishment of equity compensation plans in which members of our board of directors participate must be authorized in our articles of association. Our articles of association currently do not include this type of provision and would have to be amended by our shareholders before any such plan could be adopted.

        Under NASDAQ's corporate governance rules, shareholders of U.S. domestic issuers must approve the issuance of our securities when such issuance would result in a change in control of such issuer. Under Spanish law, any issuance of our securities, regardless of whether such issuance would result in a change of control, requires prior shareholder approval.

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