Framework Agreement Ferguson Marine Group Companies and the Scottish Government, 2024

Annex C

Shareholder Relationship Framework Document Scottish Government and FMPG

FMPG Operational and Administrative Independence Undertaking

1. Unless otherwise defined below, capitalised terms used in this Annex shall have the meaning given to such terms in the Framework Document drawn up by FMPG and its Shareholder.

Undertakings

2. In its capacity as the sole shareholder of FMPGHL, the Shareholder is committed to giving FMPG Boards freedom to operate FMPG / Group in seeking to achieve its purposes as stated in the Framework Agreement and FMPG Objects. FMPG and its Group shall have operational and administrative independence to bid for work based on its own assessment of how to achieve the Business Plan and, secure the future of the yard.

The Shareholder:

A. shall not interfere in day-to-day operational or commercial matters or decision making by FMPG or its Group which are undertaken within Delegated Authority limits (where applicable) and respect the commercial and legal confidentiality of its operations;

B. subject to the terms of this Framework Document, shall not give any instruction to FMPG or its Group to implement, or prevent FMPG or its Group from bidding for work or running the yard as FMPG management and the Board see fit;

C. shall not exercise its rights as shareholder in a manner which is inconsistent with this paragraph; and

D. shall allow FMPG and its Group freedom to allocate resources and budgets within its control, (together, (A), (B), (C) and (D) being the "Company Operational and Administrative Independence Principles").

3. The Shareholder shall not give any instruction to the directors of FMPG or its Group, which would be contrary to any Subsidy Control Requirements applicable to FMPG or its Group.

Right to raise reservations

4. Subject to paragraph 3, if the Shareholder gives any instruction to FMPG to undertake an action or an instruction to procure that FMPG or any member of its Group undertakes an action that the CEO, the directors of FMPG or the directors of any member of its Group required to undertake any such action (an "Affected Company") reasonably believe (in the case of an Affected Company, by providing written notice to FMPG) would or may require FMPG or any relevant Affected Company (as applicable) to undertake an action that would:

A. infringe the requirements of propriety or regularity or obligations of legal and/or commercial confidentiality;

B. not represent good value for money for the Scottish Government as a whole.

C. be of questionable feasibility or is unethical;

D. be contrary to FMPG Objects or would result in the Affected Company being in breach of its objects;

E. be contrary to the agreed purposes of FMPG running the yard;

F. result in the directors of the Company or any relevant Affected Company being in breach of their legal duties to the relevant company or otherwise in their legal or regulatory obligations; and/or

G. not be in the best interests of FMPG or any relevant Affected Company for any other material and demonstrable reason, then FMPG Board, acting through the CEO, may make their reservations in respect of such matter clear to the Shareholder in writing (a "Reservation Notice").

5. If the Shareholder, after receiving a Reservation Notice, nevertheless instructs FMPG to proceed, or to procure that any Affected Company shall proceed, with the matter the subject of the Reservation Notice (an "Instructed Matter"), then the CEO shall:

A. seek a written instruction to undertake such Instructed Matter from the Shareholder, (a "Written Direction") with any oral instruction from the Shareholder (an "Oral Direction") being confirmed promptly in writing;

B. upon receipt of a Written Direction or an Oral Direction:

C. inform FMPG Board who shall undertake the Instructed Matter or procure that the Instructed Matter shall be undertaken by any relevant Affected Company;

D. copy the Written Direction or any Oral Direction confirmed in writing to the Auditor General for Scotland and the Scottish Parliament, under publication arrangements agreed by the Shareholder;

E. if asked, explain the Shareholder's course of action; and

F. arrange for the existence of the Written Direction or any Oral Direction confirmed in writing to be published (unless the Shareholder has directed in writing to FMPG that the matter must be kept confidential or unless FMPG considers that the matter is confidential).

Exceptions

6. FMPG's Operational and Administrative Independence Principles shall only apply if and to the extent that the activities of FMPG or any Affected Company are:

A. consistent with FMPG Articles;

B. compliant with Subsidy Control Requirements and the other specific requirements imposed upon the FMPG and its Group pursuant to the Framework Document; and

C. notwithstanding the Company Operational and Administrative Independence

Principles, in addition to any matters which are expressly stated to be subject to the prior approval of the Shareholder in the Framework Document or the FMPG Articles, any conduct which is inconsistent with the FMPG Articles (including with respect to the achievement of the FMPG's purposes as stated in the FMPG Objects), the Framework Agreement, or the Subsidy Control Requirements shall require the prior written approval of the Shareholder.