Gefran

Governance Information • Mar 31, 2022

Report on Gefran S.p.A. Corporate Governance and Ownership Structure in the year 2021

Pursuant to article 123-bis of the TUF

Traditional administration and control model

www.gefran.com

Approved by the Board of Directors on 10 March 2022

CONTENTS

GLOSSARY

1. ISSUER PROFILE

2. INFORMATION ON PROPRIETARY ASSETS (pursuant to article 123-bis, paragraph 1, TUF) AS OF 31/12/2021

• a) Share capital structure (pursuant to article 123-bis, paragraph 1, letter a), TUF)
• b) Restrictions on the transfer of securities (pursuant to article 123-bis, paragraph 1, letter b), TUF)
• c) Significant shareholdings (pursuant to article 123-bis, paragraph 1, letter c), TUF)
• d) Securities conferring special rights (pursuant to article 123-bis, paragraph 1, letter d), TUF)
• e) mechanism for exercising voting rights (pursuant to article 123-bis, paragraph 1, letter e), TUF)
• f) Restrictions on voting rights (pursuant to article 123-bis, paragraph 1, letter f), TUF)
• g) Shareholder agreements (pursuant to article 123-bis, paragraph 1, letter g), TUF)
• h) Change of control clauses (pursuant to article 123-bis, paragraph 1, letter h), TUF) and statutory provisions regarding tender offers (pursuant to articles 104, paragraph 1-ter, and 104-bis, paragraph 1, TUF)
• i) Powers to increase share capital and authorise the purchase of own shares (pursuant to article 123-bis, paragraph 1, letter m), TUF)
• j) Management and coordination activity (pursuant to article 2497 et seq. of the Civil Code)

3. COMPLIANCE (pursuant to article 123-bis, paragraph 2, letter a), part one, TUF)

4. BOARD OF DIRECTORS

• 4.1 ROLE OF THE BOARD OF DIRECTORS
• 4.2 APPOINTMENT AND REPLACEMENT (pursuant to article 123-bis, paragraph 1, letter l), TUF)
• 4.3 COMPOSITION (pursuant to article 123-bis, paragraph 2, letters d) and d) bis of the TUF)
• 4.4 FUNCTIONING (pursuant to article 123-bis, paragraph 2, letter d), TUF)
• 4.5 ROLE OF THE CHAIRMAN
• 4.6 EXECUTIVE DIRECTORS
• 4.7 INDEPENDENT DIRECTORS AND LEAD INDEPENDENT DIRECTOR
• 5. HANDLING OF CORPORATE INFORMATION
• 6. INTERNAL BOARD COMMITTEES (pursuant to article 123-bis, paragraph 2, letter d), TUF)
• 7. SELF-ASSESSMENT AND SUCCESSION OF DIRECTORS - APPOINTMENTS COMMITTEE
  • 7.1 SELF-ASSESSMENT AND SUCCESSION OF DIRECTORS
  • 7.2 APPOINTMENTS COMMITTEE

8. REMUNERATION OF DIRECTORS - REMUNERATION COMMITTEE

• 8.1 REMUNERATION OF DIRECTORS 8.2 REMUNERATION COMMITTEE
• 9. INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM - CONTROL AND RISKS COMMITTEE
  • 9.1 CHIEF EXECUTIVE OFFICER
  • 9.2 CONTROL AND RISKS COMMITTEE
  • 9.3 HEAD OF INTERNAL AUDITING
  • 9.4 ORGANISATIONAL MODEL pursuant to Legislative Decree 231/2001
  • 9.5 EXTERNAL AUDITOR
  • 9.6 EXECUTIVE IN CHARGE OF FINANCIAL REPORTING AND OTHER CORPORATE ROLES AND FUNCTIONS
  • 9.7 COORDINATION BETWEEN PARTIES INVOLVED IN THE INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM

10. DIRECTORS' INTERESTS AND TRANSACTIONS WITH RELATED PARTIES

11. BOARD OF STATUTORY AUDITORS

• 11.1 APPOINTMENT
• 11.2 COMPOSITION AND FUNCTIONING (pursuant to article 123-bis, paragraph 2, letters d) and d) bis of the TUF)

12. RELATIONS WITH SHAREHOLDERS

• 13. SHAREHOLDERS' MEETINGS (pursuant to article 123-bis, paragraph 1, letter I) and paragraph 2, letter c) of the TUF)
• 14. ADDITIONAL CORPORATE GOVERNANCE PRACTICES (pursuant to article 123-bis, paragraph 2, letter a) of the TUF)
• 15. CHANGES OCCURRING SINCE THE END OF THE YEAR
• 16. CONSIDERATIONS REGARDING THE LETTER FROM THE CHAIRMAN OF THE CORPORATE GOVERNANCE COMMITTEE

TABLES

TABLE 1: INFORMATION ON OWNERSHIP STRUCTURE AS OF 31/12/2021

TABLE 2: COMPOSITION OF THE BOARD OF DIRECTORS

TABLE 3: STRUCTURE OF BOARD COMMITTEES

TABLE 4: STRUCTURE OF THE BOARD OF STATUTORY AUDITORS

ANNEXES

Annex 1: Instructions for completing the paragraph on the "Principal characteristics of the existing risk management and internal control systems in relation to the financial reporting process" pursuant to Article 123-bis, paragraph 2, letter b), TUF

GLOSSARY

Board/BoD: the Issuer's Board of Directors.

Civil code/c.c.: the Italian civil code.

Code/CG Code: the Corporate Governance Code of listed companies approved in January 2020 by the Corporate Governance Committee.

Committee/CG Committee/Corporate Governance Committee: the Italian Corporate Governance Committee promoted by Borsa Italiana S.p.A. and by ABI, Ania, Assogestioni, Assonime and Confindustria.

Consob Issuers' Regulation: the regulation issued by Consob with Resolution no. 11971 of 1999 (as amended and supplemented) regarding issuers.

Consob Regulation on Markets: the regulation issued by Consob with Resolution no. 20249 of 2017, on markets.

Consob Regulation on Related Parties: the regulation issued by Consob with Resolution no. 17221 of 12 March 2010 (as amended and supplemented), on transactions with related parties.

Consolidated Finance Act/TUF: Legislative Decree no. 58 of 24 February 1998 (as amended and supplemented).

Issuer/Gefran/Company: Gefran S.p.A. with registered office in Via Sebina, 74 – 25050 Provaglio d'Iseo (Bs) – Italy.

Remuneration Report: the Report on the remuneration policy and pay that companies are required to prepare and publish pursuant to art. 123-ter TUF and 84-quater of the Consob Issuers' Regulations.

Report: the Report on Corporate Governance and Ownership Structure prepared under art. 123-bis TUF.

Year: the financial year to which the Report refers.

Unless otherwise specified, reference must also be considered to be made to the definitions contained in the CG Code of the terms: directors, executive directors, independent directors, significant shareholders, Chief Executive Officer (CEO), administrative body, control body, industrial plan, company with concentrated ownership, large company, sustainable success, top management.

1. ISSUER PROFILE

Today, Gefran designs, produces and sells products in three main business units: industrial sensors, automation components and motion control devices for electronic control of electric motors. The entire product range, which is unique in its breadth, quality and specialisation, provides tailored turnkey solutions in multiple sectors of automation, serving customers through a number of channels.

The Gefran Group has 787 employees worldwide, a direct presence in 12 countries and 10 production facilities. The Group consists of three main business lines: industrial sensors and automation components, motion control for electronic control of electric motors, electrical panels and programmable automation.

The strategic value of sustainability for Gefran is implemented in a number of governance decisions that the Group has formally implemented, in line with this vision. In May 2020, the Board of Directors of Gefran Spa formally set up a Sustainability Committee among its board committees and approved its regulations. The Gefran Sustainability Committee is responsible for overseeing all the Group's sustainability activities and reporting on its progress to the Board of Directors, with the goal of creating long-term value for shareholders and taking into account the interests of its stakeholders.

The Gefran Group's Consolidated Non-Financial Statement was obligatorily drawn up pursuant to Legislative Decree 254/2016 and referring to the international reporting standards issued by the Global Reporting Initiative "Sustainability Reporting Standards" in the GRI Standard 2016 Referenced version. The Statement can be found on the Issuer's website www.gefran.com under investor relations > financial reports.

Gefran S.p.A. has been listed on the Milan stock exchange since 1998, and since 2002 it has been a part of the Euronext STAR Milan (Segmento Titoli con Alti Requisiti – ISIN: IT0003203947) segment dedicated to small and mid-cap companies that meet specific transparency, liquidity and corporate governance requirements.

Gefran is a qualified issuer of listed small enterprise shares under art. 1, paragraph 1, letter w-quater.1) TUF, included in the Consob list. In the year 2021, the company had an average capitalisation of 129,600,000 Euro and revenues of 158,382,616 Euro.

Gefran falls within the Corporate Governance Code's definition of "concentrated companies". The shareholder Fingefran S.r.l. holds the majority of the votes that can be cast at the ordinary shareholders' meeting. As of the date of the Report, the significant holdings in Gefran's capital, direct or indirect, according to the communications received by the Company pursuant to art. 120 TUF or other information available to the Company, are listed in Table 1 in the appendix.

The Management and Control Model adopted is the traditional one which, as required by Italian legislation under art. 2380 et seq. of the Civil Code, requires: management by a Board of Directors, auditing by a Board of Statutory Auditors, and legal auditing of the company's accounts and books by an External Auditor appointed by the Shareholders' Meeting. The Corporate Governance System is based on transparency in the decision‐making process, an effective system of internal controls, the rigorous regulation of potential conflicts of interest, and appropriate rules of conduct for transactions with related parties.

The table below summarises the Company's current governance structure.

In line with the principles drawn up by the Corporate Governance Committee of Borsa Italiana S.p.A. (the Italian Stock Exchange), the Group's corporate governance system is therefore characterised by adoption of codes, principles and procedures governing the activities of all the Group's organisational and operational components. These characteristics are always subject to checks and updates in order to respond effectively to the evolution of the regulatory environment and changes in operating practices.

The Board of Directors

The Board of Directors is vested with the broadest powers for the ordinary and extraordinary management of the Company, excluding only those strictly reserved for the Shareholders' Meeting by law and by the Company's Articles of Association.

The Board of Directors is also responsible for passing the following resolutions, subject to legal limitations:

• mergers pursuant to articles 2505, 2505-bis and 2506 ter, last paragraph, of the Civil Code;
• the establishment and closure of secondary offices;
• any reduction in share capital in the event of a withdrawal by shareholders;
• amendments to the Articles of Association and the Shareholders' Meeting Regulations to comply with regulatory provisions;
• transfer of the registered office within Italy.

The Board of Directors has established a Control and Risks Committee, an Appointments and Remuneration Committee, and a Sustainability Committee, which have the functions of making proposals and giving advice.

The procedure for transactions with related parties approved by the board of directors provides for use of the simplified rules permitted by the applicable legislation with reference to the acts of directors in urgent cases.

The Board of Directors, possibly through the executive officers, reports to the Board of Statutory Auditors on the activities carried out and on the transactions of greatest economic, financial and equity significance carried out by the company and its subsidiaries; in particular, it reports on transactions involving a potential conflict of interest. This report is provided at least quarterly, at Board meetings, or in the form of a written note to the Chairman of the Board of Statutory Auditors.

The Shareholders' Meeting is the body that represents all shareholders. It is responsible for passing ordinary resolutions regarding the approval of the annual financial statements, appointing the members of the Board of Directors and the Board of Statutory Auditors, determining directors' and auditors' fees and appointing the external auditor. It also passes extraordinary resolutions on operations of an extraordinary nature, such as amendments to the Articles of Association, capital increases, mergers, spin-offs, etc. that are not the responsibility of the Board of Directors pursuant to the Articles of Association.

The Board of Statutory Auditors is the body responsible for ensuring compliance with the law and the Articles of Association, respect for the principles of sound management, and in particular the adequacy of the internal control system, and the organisational, administrative and accounting structure and its effective operation.

In accordance with the laws in force, audits are entrusted to a specialised company that is included in a register kept by Consob and appointed by the Shareholders' Meeting.

The External Auditor is a body independent from the Company responsible for checking during the year that the accounts are properly maintained and accounting entries properly reflect operations. It is also responsible for checking that the separate and consolidated financial statements accurately reflect the accounting records and the assessments conducted, and that the accounting documents comply with the rules governing them.

2. INFORMATION ON PROPRIETARY ASSETS INFORMATION (pursuant to art. 123-bis, paragraph 1, TUF) AT 31/12/2021

a) Share capital structure (pursuant to article 123-bis, paragraph 1, letter a), TUF)

On 31 December 2021, the subscribed and paid-up share capital was 14,400,000.00 Euro, divided into 14,400,000 ordinary shares, with a nominal value of 1.00 Euro per share (refer to Table 1). Each ordinary share in the Company assigns the right to one vote in all ordinary and extraordinary meetings of the Company, as well as the other administrative rights specified in the applicable law and the Articles of Association. No further financial instruments have been issued.

There are no share-based incentive plans (stock options, stock grants, etc.) involving share capital increases, even free of charge.

Note that the Company has not introduced multiple voting rights.

b) Restrictions on the transfer of securities (pursuant to article 123-bis, paragraph 1, letter b), TUF)

The shares are considered free in that there are no:

• restrictions on the transfer of securities;
• securities conferring special rights of control;
• restrictions on voting rights;
• statutory provisions on public tender offers.

c) Significant shareholdings (pursuant to article 123-bis, paragraph 1, letter c), TUF)

For details on significant shareholdings (shareholders who own more than 5% of the share capital) in Gefran, see table 1 annexed to this Report. For the sake of completeness, note that Gefran is defined as an "SME" under art. 1 w-quater 1) of the TUF.

This information is based on the entries in the Shareholders' Register and the information available following shareholders' communications pursuant to article 120 of the TUF, as at 31 December 2021.

d) Securities conferring special rights (pursuant to article 123-bis, paragraph 1, letter d), TUF)

Gefran S.p.A. has not issued any securities conferring special rights of control, or any special powers assigned to shares. Gefran S.p.A.'s Articles of Association do not provide for shares with multiple or majority voting rights.

e) mechanism for exercising voting rights (pursuant to article 123-bis, paragraph 1, letter e), TUF)

There are no mechanisms for exercising voting rights in any employee shareholding situations, when employees do not exercise their voting rights directly.

f) Restrictions on voting rights (pursuant to article 123-bis, paragraph 1, letter f), TUF)

There are no restrictions on voting rights.

g) Shareholder agreements (pursuant to article 123-bis, paragraph 1, letter g), TUF)

Gefran has been informed by its majority shareholder Fingefran S.r.l. of the termination on 22 December 2021 of a shareholders' agreement under article 122 of Legislative Decree 58/98 covering the stake in the share capital held by the parent company Fingefran S.r.l., for which all formalities required by the laws and the regulatory provisions in force have been fulfilled.

This agreement, which was entered into on 16 October 2006, concerned shares worth 25,110.59 Euro, equivalent to 54.023% of the share capital of Fingefran S.r.l., and established limits on the sale of the shares as well as provisions regarding the exercising of voting rights at the Fingefran S.r.l. shareholders' meeting.

h) Change of control clauses (pursuant to article 123-bis, paragraph 1, letter h), TUF) and statutory provisions regarding tender offers (pursuant to articles 104, paragraph 1-ter, and 104-bis, paragraph 1)

As of 31 December 2021, there was no change of control clauses, since Gefran and its subsidiaries had not stipulated any agreements that would come into force, be changed or be terminated in the event of a change in corporate control, with the exception of a number of loan

agreements in which the lending bank is entitled to call in the loan and/or to withdraw in the event of a change in the control of the Company.

The Articles of Association do not contain provisions that:

• derogate from the passivity rule provisions pursuant to article 104, paragraphs 1 and 2, of the TUF;
• provide for the application of the neutralisation regulations set out in article 104-bis, paragraphs 2 and 3, of the TUF.

i) Powers to increase the share capital and authorise the purchase of own shares (pursuant to article 123-bis, paragraph 1, letter m), TUF)

The Board of Directors currently has no mandate to increase the share capital.

The Shareholders' Meeting of 27 April 2021 authorised the purchase and sale of own shares.

The Shareholders' Meeting authorised the purchase of a maximum of 1,440,000 ordinary Gefran S.p.A. shares with a nominal value of 1.00 Euro per share. Transactions, conducted pursuant to the laws in force, must be carried out within 18 months of the shareholders' authorisation.

The objectives of the mandate are:

• to intervene directly or through authorised intermediaries in order to limit any abnormal movements in share prices and regulate trading and price trends affected by excess volatility or poor liquidity;
• to offer shareholders an additional tool to monetise investments on the market.

The purchase price must be no less than the nominal value and no more than the average benchmark price of the three trading days prior to the date of purchase, plus 15%; the selling price must be no less than the benchmark price recorded by the share on the trading day prior to each sale, less 10%.

As of 31 December 2021, the Company directly held 27,220 own shares, equivalent to 0.19 % of the share capital.

Gefran S.p.A. informs the market on a weekly basis of the transactions carried out through press releases, and summarises them in a monthly report to Consob, in the form set out in Annex 3F of the Consob Issuers' Regulation, if they exceed the minimum threshold for transactions relating to own shares of 100,000.00 Euro, below which there is no reporting obligation.

l) Management and coordination activity (pursuant to article 2497 et seq. of the Civil Code)

Gefran S.p.A. is not subject to management and coordination pursuant to Article 2497 et seq. of the Civil Code, since the following indicators that the Company may be subject to the management and control of others are non-existent:

• i. the preparation of Group business, strategic and financial plans and budgets by the parent company;
• ii. the issuing of directives pertaining to finance and credit policy;
• iii. the centralisation of functions such as treasury, administration, finance and control;
• iv. the defining of Group growth strategies, the strategic and market positioning of the Group and individual companies, especially if the policy guidelines are likely to influence and determine their actual implementation by Company management.

In addition, the Company operates under conditions of corporate and entrepreneurial autonomy, having, in particular, an independent capacity to negotiate in relations with customers and suppliers and to define its strategic and development guidelines without any interference from parties outside the Company, and the Board of Directors operates in full management autonomy.

Gefran S.p.A. currently directly and indirectly exercises management and coordination activities pursuant to article 2497 of the Civil Code in the following companies:

Note that:

The information required by article 123-bis, paragraph one, letter i) ("agreements between the Company and directors... providing for compensation in the event of resignation or dismissal without just cause or if their employment ceases following a tender offer") is contained in the Report on Remuneration published pursuant to article 123-ter of the TUF. Please refer to the Issuer's website www.gefran.com under Governance > Shareholders' Meetings.

***

The information required by art. 123-bis, paragraph 1, letter l) ("rules governing the appointment and replacement of directors … and amendment of the Articles of Association, if different from

the laws and regulations applicable as supplementary measures") is provided in the section of this Report on the Board of Directors (Section 4.2).

The information required by article 123-bis, paragraph one, letter l) second part ("the rules applicable… to amendment of the Articles of Association, if different from the laws and regulations applicable as supplementary measures) are described in the section of this Report on the Shareholders' Meeting (Section 13).

***

3. COMPLIANCE (pursuant to article 123-bis, paragraph 2, letter a), part one, TUF)

The Corporate Governance structure adopted by the Company is based on the recommendations and rules set forth in the CG Code, which the Company has adopted.

In particular, it should be noted that under the 16 December 2020 resolution of the Board of Directors, the Company adopted the CG Code available on the website of the Corporate Governance Committee on the page:

https://www.borsaitaliana.it/comitato-corporate-governance/codice/2020.pdf.

Strategically important subsidiaries are not subject to non-Italian legal provisions that could influence the corporate governance structure of Parent Company Gefran S.p.A..

***

4. BOARD OF DIRECTORS

4.1 ROLE OF THE BOARD OF DIRECTORS

In line with the provisions of the traditional model of administration and control, the Board of Directors is responsible for the strategic guidance and supervision of the business as a whole and has powers to direct overall administration and intervene directly in all major decisions necessary or useful for achieving the corporate purpose.

The Board of Directors is responsible for making the most important decisions of economic and strategic importance, or ones that have a structural effect on management, or that are functional to the Company's control and guidance, on the basis of a sustainable process.

The Company has in fact adopted a Strategic Sustainability Plan, approved on 10 November 2020 by the Sustainability Committee, the result of an activity involving all stakeholders of significance to the Company. The Company's strategies take into account the results of the Strategic Sustainability Plan, which led to the approval of a number of projects identified in the above-mentioned Plan which have therefore been integrated into the Group's strategy.

The Strategic Sustainability Plan was updated in November 2021.

The administrative body defines the corporate governance system most appropriate for the performance of the Company's activities and the pursuit of its strategies, taking into account the areas of autonomy offered by the legal system, and, if necessary, evaluating and promoting the appropriate changes, submitting them to the Shareholders' Meeting when appropriate. Please refer to Section 4.4 of this Report.

The administrative body promotes dialogue with shareholders and other stakeholders of importance to the Company in the most appropriate manner. Please refer to Section 12 of the Report.

In carrying out its duties, the Board of Directors is supported by specific internal committees, with the functions of giving instruction, making proposals and giving advice.

The Gefran S.p.A. Board of Directors:

• examines and approves the strategic, industrial and financial plans of the Company and the Group, also on the basis of analysis of issues of relevance for long-term generation of value, and periodically monitors their implementation;
• evaluates overall operating performance, comparing results achieved with targets on a regular basis;
• defines the nature and level of risk compatible with the strategic objectives of the Issuer, including in its assessments all elements that may be of relevance for the sustainable success of the Issuer;
• defines the guidelines of the internal control system;
• supervises the risk management process, and sets the overall threshold of acceptable risk;

• define the Issuer's corporate governance system and the corporate structure of the Group the Company leads;
• assesses the appropriateness of the organisation, administration and general accounting structure of the Company and its subsidiaries of strategic importance, with particular reference to the internal control and risk management system. Please refer to Section 9 of the Report in this regard;
• resolves on transactions of the Issuer and its subsidiaries of particular strategic, economic, equity or financial significance for the Issuer, establishing the general criteria for identification of significant transactions;
• adopts, in response to a proposal by the Chairman, and in agreement with the Chief Executive Officer, a procedure for the internal management and external communication of documents and information regarding the Issuer, with particular reference to inside information. Please refer to section 5 in this regard;
• creates one or more internal advisory committees, appoints its members and establishes their duties, powers and remuneration;
• grants and revokes powers to the executive directors and the executive committee, if established, and determines their limits and how they are exercised; establishes the frequency, which must not exceed three months, for the executive bodies to report to the Board on the activities conducted in performing their duties;
• defines the general remuneration policy and, after examining the Remuneration Committee's proposals and consulting the Board of Statutory Auditors, approves the remuneration of executive directors and other directors with special duties, and, unless already done so by the Shareholders' Meeting, the division of the overall remuneration due to Board members;
• assesses general operating performance, taking particular account of information received from executive bodies and periodically comparing results forecast and results achieved;
• examines and approves in advance the operations of the Company and its subsidiaries, when these operations have strategic, economic, capital or financial importance, meaning all operations that have a significant financial effect;
• assesses, at least once a year, the size, composition and functioning of the Board and its various committees, possibly recommending the professions that should be represented on the Board;
• appoints the Supervisory Body pursuant to Legislative Decree 231 of 8 June 2001;
• appoints the manager responsible for preparing the corporate accounting documents, determines his/her responsibilities and powers, and identifies managers with strategic responsibility;
• appoints and revokes the Internal Audit Manager and determines this person's remuneration, having consulted the Control and Risks Committee;
• assesses and approves transactions with related parties in accordance with the Company's procedure on Transactions with Related Parties;
• assesses and approves the periodic reports required by the laws in force;
• formulates proposals to submit to the Shareholders' Meeting;
• exercises the other powers and fulfils the duties attributed to it by the law and the Articles of Association.

With the assistance of the Appointments and Remuneration Committee, the Board of Directors periodically assesses the effectiveness of its activities and the contribution made by its individual members by means of formalised procedures, supervising their implementation. Please refer to section 7.1.

4.2 APPOINTMENT AND REPLACEMENT (pursuant to article 123-bis, paragraph 1, letter l), TUF)

Gefran has maintained a traditional management system, with the Board of Directors responsible for all aspects of company management.

The Board of Directors is appointed by the Ordinary Shareholders' Meeting on the basis of lists, which may be presented by Shareholders who, at the time of presentation of the list, hold, on their own or in association with other submitting shareholders, a shareholding equal to the amount determined by Consob pursuant to Article 147 ter, paragraph 1, of Legislative Decree 58/1998 and in accordance with the provisions of the Issuers' Regulation approved by resolution no. 11971 on 14 May 1999 as amended.

Art. 13 of the Company's Articles of Association, describing the composition of the Board of Directors (which complies with the legal obligation of gender balance), the list vote and the voting and election procedures, is quoted below.

"The Company is managed by a Board of Directors consisting of a minimum of seven and a maximum of eleven directors.

Directors shall remain in office for a period not exceeding three years. Their mandate expires on the date of the Shareholders' Meeting called to approve the financial statements for the final financial year of their mandate, and they may be re-elected.

Before appointing directors, the Shareholders' Meeting shall determine the number of Board members and their term of office.

All Directors must meet the requirements of eligibility, professionalism and good standing established by law and other applicable provisions. Pursuant to article 147‐ter, paragraph 4, of Legislative Decree 58/1998, at least one Director, or at least two if the Board has more than seven members, must meet the requirement of independence set out therein (hereinafter the "Independent Director pursuant to article 147‐ter").

The Shareholders' Meeting appoints the Board of Directors based on the lists submitted by the shareholders, following the procedures set out below, without prejudice to any different and additional provisions provided by binding laws or regulations.

Shareholders may submit a list to appoint members of the Board of Directors if they hold, on their own or in association with other submitting shareholders, a shareholding equal to the amount determined by Consob pursuant to Article 147 ter, paragraph 1, of 58/1998 and in accordance

with art. 144-quater of the Issuers' Regulation approved by resolution no. 11971 on 14 May 1999 as amended.

Lists should be filed at the Company's registered office at least twenty-five days prior to the Shareholders' Meeting asked to appoint the directors. They should also be published in accordance with the legal provisions in force at least twenty-one days prior to the same date.

Lists may contain up to 11 candidates, numbered consecutively. Each list must contain and explicitly indicate at least one Independent Director pursuant to article 147‐ter, with a progressive number no higher than seven. If the list contains more than seven candidates, it must contain and explicitly indicate a second Independent Director pursuant to article 147‐ter. Each list may also, if necessary, indicate which directors meet the requirements of independence laid down by the Codes of Conduct drawn up by management companies of organised markets or professional associations.

If binding criteria relating to gender quotas are applicable, every list that presents at least three candidates must contain a number of candidates of the less represented gender at least equal to the minimum required by the provisions in force at the time. The lists must also contain, or have attached: (i) information on the shareholders who presented them, with the overall percentage of shareholding held; (ii) full details of the candidates' personal and professional characteristics; (iii) a statement by the candidates declaring that they accept their candidacy and meet the legal requirements, as well as the requirements of independence, where they are indicated as Independent Directors pursuant to article 147‐ter or as independent Directors under the above‐ mentioned codes of conduct; (iv) any other or different statement, information and/or document covered by the law and by the applicable regulatory standards.

Shareholders may not submit nor vote for more than one list, even through a third party or a trust company. A candidate may be present on only one list, or else be deemed ineligible.

At the end of the vote, candidates from the two lists obtaining the highest number of votes are elected, according to the following criteria: (i) from the list obtaining the highest number of votes (the "Majority List"), a number of directors is taken equal to the total number of Board members, as established by the Shareholders' Meeting, less one; the candidates are elected, in the established number, in the numerical order specified in the list; (ii) from the list that obtained the second highest number of votes and which is not directly or indirectly related to the shareholders who presented or voted for the Majority List pursuant to the applicable provisions (the "Minority List") one director is taken, namely the candidate at the top of the list. However, if no Independent Directors pursuant to article 147-ter are elected from the Majority List, when the Board has a maximum of seven members, or if only one Independent Director pursuant to article 147‐ter is elected, when the Board has more than seven members, the first Independent Director pursuant to article 147‐ter in the Minority List will be elected, rather than the person at the top of the Minority List.

Lists that have not gained at least half of the number of votes required for their presentation will not however be taken into account.

If the lists receive an equal number of votes, the winning list shall be the one submitted by the shareholders with the highest shareholding at the time the list is submitted or, subordinately, by the highest number of shareholders.

If the Board of Directors formed in this way does not include at least the minimum number of directors of the less represented gender required by the legislation in force at the time, the last candidate elected from the majority list shall be replaced by the first unelected candidate of the same list belonging to the less represented gender, and so on up the majority list. If the minimum number of members of the less represented gender is not reached, they will be appointed by the Shareholders' Meeting with the ordinary majorities established by law, replacing the candidates in the majority list belonging to the more represented gender, starting from the last elected candidate, and so on up the list.

If only one list has been presented, the Shareholders' Meeting shall vote on that list, and if the list obtains a relative majority of voters, not counting abstentions, candidates listed in progressive order are elected as directors up to the maximum number established by the Shareholders' Meeting, provided, however, that if the Board comprises more than seven members, the second Independent Director pursuant to article 147‐ter is also elected, in addition to the one in the first seven places, and that this complies with the gender equality provisions in force at the time. If the minimum number of members of the less represented gender is not reached, they will be appointed by the Shareholders' Meeting with the ordinary majorities established by law, replacing the candidates in the only list belonging to the more represented gender, starting from the last elected candidate, and so on up the list.

In the absence of lists, or of the number of directors elected based on the lists submitted is lower than the number established by the Shareholders' Meeting, the members of the Board of Directors shall be appointed by the Shareholders' Meeting with the majorities established by law, subject to the appointment by the Shareholders' Meeting of a number of Independent Directors pursuant to article 147‐ter equal to the minimum number established by law, and to the Shareholders' Meeting's obligation to appoint a number of directors belonging to the less represented gender that is not below the minimum number established by the provisions in force at the time.

Independent Directors pursuant to article 147‐ter identified as such at the time of their appointment must report if they no longer meet the requirement of independence, and will thereby leave office, as prescribed by law.

If one or more directors leave office, for any reason, they will be replaced in accordance with the provisions of article 2386 of the Civil Code, subject to the obligation to maintain the minimum number of Independent Directors pursuant to article 147‐ter established by law, and the obligation to maintain gender equality in accordance with the regulations in force at the time.

If due to resignations or other causes, half the number, in the event of an even number, or more than half, in the event of an odd number, of the directors holding office or designated directors leave office, the entire Board shall be considered as removed from office, effective at the time of the subsequent reconstitution of the Board. A meeting to make the new appointments shall be called urgently by the remaining directors and will take place pursuant to the provisions of this article.

The Articles of Association do not allow the outgoing Board of Directors to present a list.

Note that presentation of candidacies for the 2020–2022 three-year mandate took place on the basis of the orientation expressed by the outgoing Board regarding the size and composition of the Board and the professional and managerial figures described in the Directors' Report on the Appointment of the Board of Directors, available on the Company's internet site along with additional documents supplied prior to the meeting.

The Issuer is not subject to further rules - such as sector regulations - regarding the composition of the Board of Directors.

Please refer to section 7 for information on the role of the Board of Directors and Board committees in the processes of self-evaluation, appointment and succession of directors.

***

There are no special procedures for making changes to the Articles of Association.

4.3 COMPOSITION (pursuant to article 123-bis, paragraph 2, letters d) and d) bis of the TUF)

The Board of Directors is composed of executive and non-executive directors, all with the professionalism and skills required for the tasks entrusted to them.

The Board of Directors in office as of 31 December 2021 was appointed during the 28 April 2020 Shareholders' Meeting using the list system, specifically with the only Majority List, submitted by the shareholder Fingefran S.r.l. on 03 April 2020, which held a total of 8,164,080 Gefran S.p.A. ordinary shares, equal to 56.695% of the share capital.

The current Board shall remain in office until the date of the Shareholders' Meeting to approve the financial statements for the year ending 31 December 2022.

The list included the following candidates:

• 1. Ennio Franceschetti, born in Provaglio d'Iseo (BS) on 5 September 1942;
• 1. Maria Chiara Franceschetti, born in Iseo (BS) on 22 June 1969;
• 1. Giovanna Franceschetti, born in Iseo (BS) on 3 February 1976;
• 1. Andrea Franceschetti, born in Iseo (BS) on 28 May 1977;
• 1. Marcello Perini, born in Brescia on 26 March 1969;
• 1. Daniele Piccolo, born in Milan (MI) on 26 June 1962;
• 1. Monica Vecchiati, born in Palazzolo sull'Oglio on 28 May 1961;
• 1. Cristina Mollis, born in Bergamo on 4 September 1974;
• 1. Giorgio Metta, born in Cagliari on 14 January 1970.

This list received 8,837,248 votes, representing 100% of the voting capital.

The directors shall perform their duties with full knowledge of the facts and contribute their specific skills of a technical and strategic nature to Board discussions, in full autonomy and with independent judgement, with the aim of creating value for shareholders.

The number and powers of non-executive directors are such as to guarantee a significant weight in voting on Board resolutions and ensure effective monitoring of management. A significant number of non-executive directors is independent.

The four non‐executive directors, who do not have operational or management powers within the Company, can provide a broader perspective in discussions on agenda items, especially matters where the interests of the executive directors and those of the shareholders do not coincide.

A brief curriculum vitae for each director in office as of the date of this Report, showing their personal details, expertise and experience, is provided below.

For details on the Directors and their appointments, please refer to Table 2, attached.

Ennio Franceschetti

Honorary Chairman and Executive Director

Born in Provaglio d'Iseo on 5 September 1942, he holds an Industrial Technician diploma from Istituto Tecnico Castelli in Brescia, and is the founder of Gefran S.p.A., where he was Chief Executive Officer until 2004 and Chairman until 2018.

Maria Chiara Franceschetti

Chairwoman and Executive Director

Born in Iseo on 22 June 1969, she graduated in Mechanical Engineering from Brescia University and started her career as a director of 3S S.r.l. in Varese. She later joined the Gefran Group as Company Information Systems Manager, and subsequently became Group HR Director. She was Group CEO between 2014

and 2017.

Andrea Franceschetti

Vice Chairman and Executive Director

Born in Brescia on 28 May 1977. He obtained a Master's Degree in Economics and Management of Small and Medium Enterprises in 2006/2007 and a Master's Degree in Business Economics promoted by Il Sole 24 Ore in 2009.

In 2001-2002, he was responsible for updating the Go-Fluid site for Hydraulics/Pneumatics/Lubrication of the company Vortal srl.

He began working for Gefran S.p.A. in 2002, holding a number of positions in production and quality, becoming International Sales Manager in February 2013 and then Drives Business Unit Sales Manager until 2017; currently Chairman of the Board of Directors of the subsidiary Gefran Soluzioni Srl. Also holds the position of Director in the innovative start-up Matchplat S.r.l..

Giovanna Franceschetti

Vice Chairwoman and Executive Director

Born in Iseo on 3 February 1976, she holds a degree in Public Relations from the IULM University in Milan. After obtaining a Master's Degree in Business Administration from L. Bocconi Business School, she started working as a Product Manager for consumer goods multinational Unilever.

She was Head of Communications and Image for Gefran and the Group's Investor Relator from 2004 to 2018.

Member of the Board of Directors of Fingefran S.r.l., a Gefran S.p.A. subsidiary.

Marcello Perini

Chief Executive Officer

Born in Brescia on 26 March 1969, he has been Gefran Chief Executive Officer since April 2020. He holds a degree in Mechanical Engineering from Brescia University and an Executive Master of Business Administration from MIP Graduate School of Business at Politecnico di Milano. Marcello Perini has held positions of

growing responsibility and strategic importance in Gefran, from leadership of R&D in the Sensors Business Unit to the position of General Manager of the Sensors and Automation Components Business Unit. In 2014-2015 he was also at the helm of the Motion Control Business Unit.

Daniele Piccolo

Non-executive Director

Born in Milan on 26 June 1962, he completed his professional training on financial markets and marketing at the following institutes: SDA Bocconi, Milan; HEC, Paris; EFMA, Paris; Lafferty, London; Istud Business School, Milan. From 1982 to 2007, he held numerous positions of increasing seniority within the Credito

Emiliano Group. From 2001 to 2006, he was also Chief Executive Officer of Istifid S.p.A., Milan. From 2007 to 2015 he was Assistant General Manager of Banca Albertini Syz. From 2015 to 2017, he was General Manager of Banca Cesare Ponti S.p.A.; he is now Private Banking Manager in Northern Italy for Banca Finnat Euramerica.

On 16 December 2021, the Board of Directors resolved that Director Daniele Piccolo no longer met the independence requirements to be considered an independent director of the Company pursuant to Article 2, Recommendation 7, letter e) of the Corporate Governance Code.

Monica Vecchiati

Independent Director

Born in Palazzolo sull'Oglio (BS) in 1961. Graduated from Bergamo University in Business Administration in 1985 and specialised in the Corporate Governance programme at Milan University before taking a level II Master's Degree in Welfare at Tuscia University.

She is a Certified Accountant and Statutory Auditor. Director, Auditor, and Member of the Supervisory Body under Law 231/2001, Co.Vi.Soc. Inspector, Mediator and Consultant in civil and penal law for a number of companies and organisations.

The Board of Directors has verified that Monica Vecchiati meets the requirements pursuant to article 148, paragraph 3 of the TUF and Recommendation 6 mentioned in art. 2 of the Code for qualification as an independent director of the Company.

Cristina Mollis

Independent Director

Born in Bergamo on 4 September 1974, she is an entrepreneur and digital strategist. She graduated from LIUC University in Castellanza with a degree in Economics and then took a Master's Degree from SDA Bocconi.

After working as a consultant with Valdani Vicari & Associati, she was appointed Vice President of the Value Partners Group. In 2008 she founded NuvO', which she led until it became a part of H-Farm in 2015. Following the merger, Cristina Mollis became H-Farm Head of Industry. In 2019 she was CEO of Coin S.p.A.

She continues her career in enterprise.

The Board of Directors has verified that Cristina Mollis meets the requirements pursuant to article 148, paragraph 3 of the TUF and Recommendation 6 mentioned in art. 2 of the Code for qualification as an independent director of the Company.

Giorgio Metta

Independent Director

Born in Cagliari on 14 January 1970. Current Scientific Director of Istituto Italiano di Tecnologia (IIT). He graduated from Genoa University with a degree with honours in Electronic Engineering and went on to take a PhD from the same university. He conducted research at Leeds University (UK) and MIT (U.S.A.)

before beginning his academic career at Genoa University starting in 2005, with a special focus on robotics. He started working with ITT in 2007, finally leaving the university in 2011 to become department head at IIT, and then Deputy Director in 2015. He has authored numerous scientific publications and conducts assessments for the European Commission and various national and supranational bodies in robotics and artificial intelligence.

The Board of Directors has verified that Giorgio Metta meets the requirements pursuant to article 148, paragraph 3 of the TUF and Recommendation 6 mentioned in art. 2 of the Code for qualification as an independent director of the Company.

Diversity criteria and policies in Board composition and Company organisation

Gefran has always been aware of the importance of preserving all aspects of diversity, such as gender and age composition and different educational backgrounds and work experience.

The Company fully implements all the provisions of the law regarding gender composition: one third of the members of its Board of Directors and Board of Statutory Auditors belong to the least represented gender. Please refer to the statutory provisions of Section 4.2 of the Report in this regard.

The composition of both bodies is therefore sufficiently diversified in relation to this parameter. There is also diversity in terms of age and differences in educational background and work experience, as will be evident from the information provided above and from employees' CVs.

Gefran has taken measures to promote equal treatment and gender opportunities within the entire corporate organisation and monitors its implementation. The Company notes this in the "Policy for people in Gefran" of 28 January 2021, published on the company's intranet and in its Strategic Sustainability Plan, approved in November 2020 by the Sustainability Committee and most recently updated in November 2021, available on the Issuer's website www.gefran.com in the sustainability > sustainability governance section.

Finally, it should be noted that the qualitative and quantitative composition of the Board is checked, analysed and monitored by the Board each year during a self-evaluation process, which also involves aspects relating to age, nationality, gender composition, managerial and professional skills, training, the presence of different age groups and seniority of office. Board evaluation also takes place in a way that allows all the Directors to express their views on key aspects concerning the Board, Committees, interaction with management and risk governance, allowing them to express their comments and proposals.

Maximum number of positions held in other companies

The Gefran Board of Directors, drawing its inspiration from the Corporate Governance Code and, in particular, Recommendation 15¹ applicable to "large companies"² , has expressed its orientation in the adoption of the Board of Directors Regulations regarding the maximum number of positions on the administrative and control bodies of other listed companies of significant size³ that may be considered compatible with effective performance of the role of director in the Company, taking into account the commitment involved in the position held. In this regard, Gefran's Board of Directors has specified that no more than five positions may be held in listed companies or companies of significant size, including the position held in Gefran.

The positions of Director or Auditor held by current Gefran Directors in other listed companies and companies of significant size are listed below:

➢ Cristina Mollis: Triboo S.p.A.

The Board's current composition fully complies with the general criteria set out above.

***

Induction Programme

In compliance with Recommendation 12 letter d), referred to in article 3 of the Corporate Governance Code (so-called "induction programme"), the Chairwoman has ensured that all Directors and Auditors may participate in initiatives aimed at improving their knowledge of the sector in which the issuer does business, corporate dynamics and how they evolve, risk management principles, and the applicable legislative and self-regulatory framework.

These initiatives include visits to production plants and meetings with senior management.

¹ Recommendation 15: "In large companies, the administrative body shall express its orientation regarding the maximum number of positions in the administration or control bodies in other listed companies or companies of significant size that may be considered compatible with effective performance of the office of director of the company, taking into account the commitment involved in the position held".

² Company exceeding one billion Euro in capitalisation as of the last trading day in each of the previous three calendar years. Starting on 31 December 2020, companies considered "large companies" apply the principles and recommendations for this type of company beginning in the second year after the one in which the applicable size condition emerged.

³ As the Corporate Governance Code does not contain a definition of "company of significant size", the Board of Directors has decided to consider as such all those companies that prepare consolidated financial statements and are characterised by either: i) revenues from sales and services in excess of 500 million Euros; or ii) assets appearing in the balance sheet in the last approved financial statements exceeding 800 million Euros.

The induction programme in the year 2021 specifically regarded: (I) procurement; (ii) the Enterprise Risk Management activities of the Gefran Group; and (iii) development of new products.

An induction meeting was also held by the Control and Risks Committee regarding cybersecurity issues.

With reference to the principal risks which may theoretically be associated with the Issuer's line of business, the results of Enterprise Risk Management were presented in the 10 February 2021 Board of Directors' meeting.

4.4. FUNCTIONING (pursuant to article 123-bis, paragraph 2, letter d), TUF)

The Company's administrative body defines the rules and procedures for its operation in its Regulations, approved by resolution on 1 October 2020, with the aim of ensuring effective management of the Board's reporting functions.

The Board Regulations not only sum up the tasks of the Board under the provisions of the law, the Articles of Association and the Corporate Governance Code, but specify the deadline for providing information prior to Board meetings and for summoning meetings, the deadline for providing Directors and Auditors with the minutes of meetings, and provide criteria for objective determination of a number of aspects of Corporate Governance, including:

• accumulation of positions held in other listed companies or large corporations, specifying what is meant by "large corporations"
• defining the phrase "significant business, financial or professional relations".

The Board carries out the activities required by the Articles of Association, by law, by the principles established by the self-regulatory codes to which Gefran adheres, and acts not included in the powers of the Company's Executive Directors.

The Board of Directors' discussions and resolutions are recorded in minutes signed by the Chairwoman and the Secretary of the meeting (or by a Notary, where required by the applicable legislation).

As a rule, a preliminary draft of the minutes shall be distributed as soon as they are available, and in any case within 30 days from the date of the meeting, with an invitation to report any comments in time for the preparation of the final draft, which is then submitted to the Board at the first subsequent meeting and transcribed in the book of minutes of its meeting.

The supporting documentation distributed to the Directors and Auditors is kept in the Board's files.

The Chairwoman, assisted by the Legal and Corporate Affairs Office, ensures that for all topics to be discussed by the Board, directors receive in good time the necessary documentation and information to enable them to assess and make informed decisions on the issues discussed, except in cases of urgency. In this case, it is still ensured that items on the agenda are discussed exhaustively.

For the purposes of compliance with Recommendations 11 and 12 of the new Corporate Governance Code, the Board of Directors, through adoption of the Board Regulations, has

established the following timeframes within which documentation relating to the items on the agenda must be sent: five days prior to the Board meeting for sending interim financial statements; three days for documentation on other agenda items; one day for duly justified matters of particular urgency.

In order to ensure the utmost confidentiality and traceability of the circulation of documentation, the Company uses an electronic platform for the distribution and consultation of documents pertaining to the meetings of Company bodies.

The deadlines are met. When it is not possible to provide the necessary information with sufficient notice, the Chairwoman ensures that sufficient analysis is conducted during the Board sessions, and extends their duration for as long as necessary.

Under the Board of Directors' Regulations, Directors receive the minutes of each meeting no later than one month after it was held.

Board meetings are convened by the Chairwoman, one of the Vice‐Chairmen, or two directors, by letter, fax or e‐mail or via the electronic platform, sent at least three days in advance of the meeting to each Director and Statutory Auditor at the fax number or email address provided. In cases of urgency, the Board meeting may be convened by telegram, fax or e-mail sent at least two days in advance of the meeting.

Even when the directors hold other posts, they shall all devote the time required to perform their duties, while remaining aware of the responsibilities associated with their posts; they are kept constantly up to date on the principal new developments in legislation and regulations.

On the Chairwoman's or the Chief Executive Officer's invitation, Board meetings are attended by management representatives who can provide the directors and the Board as a whole with in‐ depth knowledge of the Company's and Group's activities. In 2021, for instance, managers and/or strategic executives attended a number of Board meetings.

Board of Directors	2021	2020	2019
no. meetings	8	13	10
average attendance %	98,6%	98,3%	91,1%

In 2021, the Board met 8 times, with an average attendance rate of 98.6% (72.2% in attendance in person in the Company's offices and 26.4% via videoconferencing) and an average meeting duration of 2.5 hours; this frequency and the constant presence of the Board of Statutory Auditors enable the Board to act in a timely and effective manner. Any absences are announced and justified in advance.

According to the 2022 Corporate Events Calendar, which is available on the Company's website, five Board meetings are scheduled for the current year. So far this year, the Board met to examine the preliminary consolidated figures for the year ending 31 December 2021 on 10 February 2022,

and met to approve the draft financial statements and the consolidated financial statements for 2021 on 10 March 2022.

Board meetings may be held in person in the Company's registered offices or using telecommunication tools that permit identification of participants, allow all participants to take part in the debate and receive equal information, and allow voting where required.

4.5 ROLE OF THE CHAIRWOMAN

The Chairwoman of the Board of Directors acts as a liaison between the executive directors and non-executive directors and takes care of the effective functioning of the Board's duties.

The Chairwoman of the administrative body, with the help of the Secretary of the same body, ensures that:

• preparatory information and any additional information to be provided during meetings is appropriate to enable directors to perform their duties in an informed manner;
• the work of Board committees with preliminary, proposal and advisory functions is coordinated with the activity of the administrative body;
• in agreement with the Chief Executive Officer, the Company and Group executives responsible for the corporate functions concerned attend Board meetings, even in response to the request of individual directors, to provide appropriate insights on the items on the agenda;
• all members of administrative and control bodies may participate, following their appointment and while in office, in initiatives aimed at providing them with adequate knowledge of the sectors of business in which the Company operates, the Company's dynamics and their evolution, also with a view to ensuring the sustainable success of the company, as well as the principles of proper risk management and the regulatory and self-regulatory framework of reference. Please refer to Section 4.3 Induction Programme;
• the adequacy and transparency of the self-assessment process of the administrative body, with the support of the Appointments Committee. Pursuant to Section 7 of the Report.

The Chairwoman of the Board ensures that the Board is always informed, at its first subsequent meeting, on developments and significant content of interaction with shareholders.

See section 4.6 below for further information on the role and responsibilities of the Chairwoman.

Secretary of the Board

The Board shall appoint and revoke the Secretary of the Board in response to the Chairwoman's proposal.

The Secretary need not be a member of the Board, and must possess adequate knowledge of the Company's corporate matters and system of governance.

The Secretary supports the work of the Chairwoman and impartially provides assistance and advice to the Board of Directors on all aspects pertaining to the proper functioning of the corporate governance system.

In the event of absence or impediment of the Secretary, the Chairwoman may appoint another person, even for a single meeting, provided this person meets the same professional requirements.

As of the date of this report, the Board has not formally appointed a Secretary, and is supported by the Legal and Corporate Affairs function in the fulfilment of these tasks.

4.6 EXECUTIVE DIRECTORS

Executive Officers

The Board has appointed from among its members:

• Honorary Chairman Ennio Franceschetti, who is granted the following powers:
  • 1) to perform a function of guidance in the definition of new strategies and the performance of extraordinary operations, particularly real estate purchases and transactions;
  • 2) to chair the Company's newly established scientific committee, contributing to the definition of guidelines for the development of new products and applications, in the context of the strategies and business plans resolved by the Board of Directors;
  • 3) to represent the Company in corporate meetings with public or private sector organisations of strategic relevance, reporting to the Board of Directors on the results;
  • 4) to sign the Company's ordinary correspondence within the framework of his powers, writing "Gefran S.p.A." and "Honorary Chairman" followed by his signature.
• Chairwoman Maria Chiara Franceschetti, who is entitled to legal representation of the Company pursuant to the law and the Articles of Association. She is not the principal person responsible for management of the Issuer (the Chief Executive Officer), but has been endowed with powers of management. The Chairwoman, in undivided ownership with Giovanna Franceschetti and Andrea Franceschetti, indirectly controls 53.018 % of the Company's share capital.

The powers listed below are bestowed on the Chairwoman, to be exercised with single and several powers of signature unless otherwise specified, and with powers of sub-delegation where specified:

• A) In the planning of the Group and the Company's activities
  • 1) to oversee relations with shareholders, and providing of information to shareholders;
  • 2) to identify strategic guidelines for the Company and the Group, to be submitted to the Board of Directors for approval, setting up, once the guidelines have been approved, the necessary relationships of coordination and control over the actions of subsidiaries, affiliates or associated companies with the aim of achieving the Group's targets;
  • 3) to perform actions of guidance, coordination and control of the activities of Group companies;

• 4) to acquire all data and information considered necessary for performing the above functions from the CEO and the group's management structure;
• 5) to propose to the Board of Directors, in agreement with the Chief Executive Officer, the Group's corporate structure, any changes that may be considered necessary or appropriate at various times, and corporate operations necessary or appropriate to achieve the Company's strategic plans;
• 6) to identify the organisation of the Company through areas and functions to be submitted to the approval of the Board of Directors;
• 7) to set forth the guidelines of the Company's and the Group's financial policies.
• B) Banking and financial transactions (the Chairman will have the option of sub-delegating the powers listed here)
  • 1) to open and close current bank and postal accounts and securities accounts;
  • 2) to issue bank cheques, banker's drafts and money orders, give orders for payment either electronically or otherwise, withdraw bills of exchange and cash orders, sign orders and receipts to withdraw money from banks, financial institutions and post office savings accounts, and in general manage the Company's bank and postal accounts, including signing currency trading contracts and interest rate and currency hedge contracts up to a limit of 4,000,000.00 Euro (four million Euro) per transaction or series of transactions related to the same party, using cash on hand or available credit lines, in compliance with the contractual provisions governing the relationships with these parties;
  • 3) to transfer funds between the Company's various current accounts and make collections in the name and on behalf of the Company;
  • 4) to issue bills of exchange, accept drafts and in general carry out any transactions involving bills of exchange related to the supply of goods and/or services to the Company, up to a limit of 1,250,000.00 Euro (one million two hundred fifty thousand Euro) per transaction or series of transactions related to the same party;
  • 5) to conduct all transactions necessary for immediate implementation of plans for the purchase or sale of own shares, within the limits and by the methods permitted by resolutions passed in meetings, and transactions in fixed-income securities up to and not beyond the limit of 2,500,000.00 Euro (two million five hundred thousand Euro) per transaction or per day;
  • 6) to take out and issue loans of any kind, to or from any party and in any form, and provide collateral and personal guarantees up to 4,000,000.00 Euro (four million Euro);
  • 7) within the limit of 4,000,000.00 Euro (four million Euro) per single transaction or set of transactions referring to the same subject matter, to execute agreements with factoring companies and financial companies in general, defining all contractual terms and conditions and signing all the related deeds, including granting of credits, collection mandates, advance payment and discount transactions, provision of guarantees, issuance of receipts, and carry out transactions for transfer and/or pledging, both with and without recourse, the credits of the Company accrued and accruing.

• C) In collection, pick-up, signature and shipping (the Chairman will have the power to sub-delegate these powers)
  • 1) to demand and receive any sums due to the Company in any form and for any reason, and to issue receipts for total or partial collection;
  • 2) to collect from post, railway and transport offices any type of registered letter, package or parcel, and in general anything addressed to the Company, and issue receipts and quittances;
  • 3) to sign the Company's ordinary correspondence within the framework of his or her powers, writing "Gefran S.p.A." and "Chairman" followed by his or her signature;
  • 4) to despatch and collect letters, packages and parcels, including registered and insured ones.
• D) In representation of the Company and conducting operations with public and private entities and associated companies (the Chairman will have the power to sub-delegate these powers)
  • 1) to represent the Company before any Court, Judge, or other judicial authority, whether single or collegial, entity, commission, or board, in any area (civil, penal, administrative, labour law, commercial, industrial, bankruptcy and business) of any order, jurisdiction and degree, with the power to sign mandates, powers of attorney and appeals, propose and accept settlements, initiate lawsuits, appear as defendant or respondent, appellant or appealed, represent the Company in meetings of creditors, make proposals or credit claims in bankruptcies or other insolvency proceedings, accept settlements with customers and demand payment, negotiate any amounts or disputes up to a limit of 500,000.00 Euro (five hundred thousand Euro), reach settlements in disputes by arbitration or seek friendly settlements, final or otherwise, ensure the implementation of judgements, make, refer and accept conclusive and other sworn statements, promote foreclosures and seizures or other preventive acts against debtors and third parties and revoke the same;
  • 2) to conduct any transactions and represent the Company in any fiscal or administrative practice or dispute with any public official - state, regional, provincial or municipal - or any private office, in Italy and abroad, or tax revenue offices, and before administrative commissions of the first and second degree; to sign and file, electronically or otherwise, returns for direct and indirect taxes, Intrastat forms, tax and statistical forms and questionnaires, accept and reject assessments, reach agreements and settlements, challenge registrations, present petitions, complaints and documents, appoint defence counsel for appeals and statements of defence before any tax office or commission, or at tax revenue offices or administrative commissions of the first and second degree, accept tax refunds, including interest, issue receipts, make payments with no limit on the amount and take any steps required to pay direct and indirect taxes, duties and fees, including social security contributions;
  • 3) to represent the Company before any central or peripheral administrative authorities to obtain concessions, licences and authorisations;

• 4) to represent the Company before Consob, the Italian Stock Exchange, and Monte Titoli (settlement system), with the power to sign any kind of document, communication or notice, including press releases with price‐sensitive contents, in accordance with the regulations and codes adopted by the Company;
• 5) to represent the Company in subsidiaries' ordinary and extraordinary shareholders' meetings, with all the required powers of representation and authorisation, and appoint delegates for this purpose under the law;
• 6) to take the necessary steps in patenting procedures, including but not limited to requests for corrections, amendments, secrecy extensions and divisions, to propose or challenge administrative opposition, interference and administrative appeals, and to take any other steps required in applying for, obtaining and maintaining patents, to sign all the deeds required to execute the above powers, to appoint patent agents in Italy and abroad and grant them related mandates;
• E) In current administration of buildings (the Chairman will have the power to sub-delegate these powers)
  • 1) to sign documents concerning the day-to-day administration of the Company's property and third‐party property leased to the Company, and all connected and consequent operations;
  • 2) to enter into, amend and terminate lease agreements covering third‐party property and the Company's own property, with a maximum duration of nine years.
• F) In insurance, supply and transportation contracts (the Chairman will have the power to sub-delegate these powers)
  • 1) to enter into private insurance agreements or mandates, as the insured party, covering risks to the Company's assets (including credit insurance) and employees and third‐party liability, and sign the insurance policies;
  • 2) to make changes to these insurance agreements, in the event of damage suffered negotiate the amount of compensation due by the insurance company, and issue receipts for sums collected;
  • 3) to enter into, amend and terminate contracts covering the supply of any kind of utilities required for ordinary company management, and to represent the Company in dealings with companies supplying energy, telecommunications services and other services to businesses;
  • 4) to enter into, amend and terminate contracts with transport companies, shipping agents and other public or private bodies or entities, in Italy or abroad, that provide transport services for goods or people;
• G) In the purchase of moveables not destined for sale and not destined for industrial activity (the Chairman will have the power to sub-delegate these powers)
  • 1) to purchase, lease, financially or otherwise, hire, loan or sell registered and unregistered movable assets, furniture and equipment up to a limit of 500,000.00 Euro (five hundred thousand Euro) per transaction.

• H) In the appointment of professionals and attorneys (the Chairman will have the power to sub-delegate these powers)
  • 1) to assign professional mandates of a non‐continuous nature, within his/her powers;
  • 2) to appoint special proxies for single acts or categories of acts within his/her powers.
• I) In management of the Company's industrial activities (the Chairman will have the power to sub-delegate these powers)
  • 1) to negotiate, finalise and enter into lease agreements up to a duration of nine years, and custody, storage and transport agreements connected with the Company's industrial activity;
  • 2) to contract in and out work of any kind and enter into work contracts connected with the Company's industrial activity;
  • 3) to negotiate, finalise and enter into agreements for the supply of goods and services connected with the Company's industrial activity;
  • 4) to purchase, lease, sell and swap movable goods, machinery, plant and equipment connected with the Company's industrial activity, with the power to negotiate terms, conditions and fees, all up to a limit of 500,000.00 Euro (five hundred thousand Euro) per transaction.
• J) In management of the Company's commercial activities (the Chairman will have the option of sub-delegating the powers listed here)
  • 1) to finalise and execute contracts with customers of any type, and to grant payment extensions, discounts and bonuses;
  • 2) to handle practices connected with the import and export of finished and unfinished products, and fulfil all the associated obligations;
  • 3) to purchase printed, advertising and propaganda materials, and enter into related supply contracts;
  • 4) to enter into and terminate mandate, commission, agency, distribution, brokerage and business procurement agreements;
  • 5) to collect and issue receipts for amounts, cheques, promissory notes, security deposits, money orders and anything else due to the Company;
  • 6) to reach compromises on disputed receivables, and grant discounts and allowances up to a limit of 300,000.00 Euro (three hundred thousand Euro) per operation;
  • 7) to lodge protests, apply for injunctions, promote cautionary or executive measures, file bankruptcy petitions, and intervene in bankruptcy or insolvency proceedings in general to recover amounts due to the Company;
  • 8) to stipulate, modify, and cancel contracts for the sale of goods and services sold by the Company, and to sign proposals, order confirmations, and applications to participate in calls for tender.
• K) In human resources management
  • 1) to hire, promote and dismiss the Company's employees (including executives) in Italy and abroad; to determine their tasks, remuneration and conditions; to arrange

revocations, suspensions, job changes, transfers, and disciplinary and other provisions, including precautionary suspension; to determine and pay termination indemnities in the event of cessation of the employment relationship for any reason;

2) in response to the Chief Executive Officer's proposal, to hire and dismiss persons reporting directly to the Chief Executive Officer and, if he or she has the power to do so, subsidiaries' General Directors.

This allocation of proxies responds to the organisational requirements of the Company: in fact, in view of the structure organised in different business units and the size of the group, the presence of an executive chairman seems appropriate to guarantee unified strategic direction and to allow efficient and correct management, always operating within the framework of the direction and control of the Board of Directors. In addition, the granting of these powers is mitigated by the fact that the Issuer has allocated additional powers among its Directors.

• Vice Chairman Andrea Franceschetti, with functions determined under art. 21 of the Company's Articles of Association, and specifically: "Vice Chairmen shall have the power to sign for the company and act as its legal representative before third parties and in court in the event that the Chairman is absent or unable to perform these functions"; he is also awarded the following powers:
  • 1) responsible for relations with trade associations, representing the Company and participating in meetings, observatories and committees concerned with the sectors in which the company works, for the purpose of monitoring economic scenarios, technical and regulatory updates and technological innovations, reporting to the Chief Executive Officer on the work performed and possible opportunities for the Company;
  • 2) participating in the principal national and international trade fairs in the areas in which the Company operates, and in seminars and conventions of interest, interfacing with the Chief Executive Officer in order to monitor market trends and the orientation of customers and competitors and to send the corresponding information to the Chief Executive Officer;
  • 3) to sign the Company's ordinary correspondence within the framework of his/her powers, writing "Gefran S.p.A." and "Vice Chairman" followed by his or her signature.
• Vice Chairwoman Giovanna Franceschetti, with functions determined under art. 21 of the Company's Articles of Association, and specifically: "Vice Chairmen shall have the power to sign for the company and act as its legal representative before third parties and in court in the event that the Chairman is absent or unable to perform these functions"; she is also awarded the following powers:
  • 1) responsible for internal and external corporate communications, determining the guidelines for corporate branding aspects and supervising the protection of the company's trademarks, in coordination with the Chief Executive Officer, in order to determine the compatibility of the initiatives with the strategies defined;

• 2) coordination of the Company's sustainability initiatives (Environmental Social Governance), overseeing internal and external communications and guaranteeing the commitment and sponsorship of the Board of Directors, including adoption of the Sustainability Balance;
• 3) within the limits of the powers granted, she may stipulate contracts and award appointments committing the company to a maximum expenditure of 50 thousand Euro per transaction, within the limits of Company's annual budget.
• 4) she signs the Company's ordinary correspondence within the framework of her powers, writing "Gefran S.p.A." and "Vice Chairman" followed by her signature
• The Chief Executive Officer, entrusted with legal representation of the Company, on whom the powers listed below are bestowed, to be exercised with single and several powers of signature unless otherwise specified, and with powers of sub-delegation where specified:
  • A) In the planning of the Group and the Company's activities
    • 1) to prepare the budget and the three-year plan, with the goal of implementing the strategic guidelines;
    • 2) to propose to the Board of Directors, jointly with the Chairman, the Group's corporate structure, any modifications that may be considered necessary and/or appropriate over the years, and corporate operations necessary or advisable for the pursuit of the Company's strategic plans;
    • 3) to verify the consistency of investments with the Group's strategic plans in advance, particularly investments regarding extraordinary operations and the establishment of new companies, with the budge and three-year plan approved by the Board of Directors;
  • B) In banking and financial transactions (the Chief Executive Officer will have the option of sub-delegating the powers listed here)
    • 1) to open and close current bank and postal accounts and securities accounts;
    • 2) to issue bank cheques, banker's drafts and money orders, give orders for payment either electronically or otherwise, withdraw bills of exchange and cash orders, sign orders and receipts to withdraw money from banks, financial institutions and post office savings accounts, and in general manage the Company's bank and postal accounts, up to a limit of 2,000,000.00 Euro (two million Euro) per transaction or series of transactions related to the same party, using cash on hand or available credit lines, in compliance with the contractual provisions governing the relationships with these parties; to transfer funds between the Company's bank accounts and collect sums in the Company's name and on its behalf;
    • 3) to transfer funds between the Company's various current accounts and make collections in the name and on behalf of the Company;
    • 4) with the joint signature of the Chairman, to conduct all transactions necessary for immediate implementation of plans for the purchase or sale of own shares, within the limits and by the methods permitted by resolutions passed in meetings, and transactions in fixed-income securities up to and not beyond the limit of 1,250,000.00 Euro (one million two hundred fifty thousand Euro) per transaction or per day;

• 5) with the joint signature of the Chairman, to take out and issue loans of any kind, to or from any party and in any form, and provide collateral and personal guarantees up to 2,000,000.00 Euro (two million Euro);
• 6) with the joint signature of the Chairman, within the limit of 2,000,000.00 Euro (two million Euro) per single transaction or set of transactions referring to the same subject matter, to execute agreements with factoring companies and financial companies in general, defining all contractual terms and conditions and signing all the related deeds, including granting of credits, collection mandates, advance payment and discount transactions, provision of guarantees, issuance of receipts and carrying out transactions for transfer and/or pledging, both with and without recourse, the credits of the Company accrued and accruing.
• C) In collection, pick-up, signature and shipping (the Chief Executive Officer will have the option of sub-delegating the powers listed here)
  • 1) to sign the Company's ordinary correspondence within the framework of the powers of the Chief Executive Officer, writing "Gefran S.p.A." and "Chief Executive Officer" followed by his or her signature.
• D) In representation of the Company and conducting operations with public and private entities and associated companies (the Chief Executive Officer will have the option of sub-delegating the powers listed here)
  • 1) to represent the Company in subsidiaries' ordinary and extraordinary shareholders' meetings, with all the required powers of representation and authorisation, and appoint delegates for this purpose under the law.
• E) In human resources management
  • 1) to propose to the Chairman hiring and dismissal of personnel at the highest levels in the organisation, that is, reporting directly to the Chief Executive Officer and to the General Directors of subsidiaries.

The Chief Executive Officer also holds the office of General Manager of Gefran S.p.A., and as such bears additional powers.

There are no other directors considered to be executive directors who hold (i) management positions in the Issuer; ii) the position of Chairman of a subsidiary of the Issuer of strategic importance, giving this person powers in the management or preparation of corporate strategies; iii) the role of managing director, that is, a management position, in a subsidiary of the Issuer of strategic importance, or in the parent company of the Issuer, in which the assignment also regards the Issuer.

The Company has not set up an Executive Committee.

Disclosure to the Board by Directors / delegated bodies

In accordance with the recommendations of art. 2381, paragraph five of the civil code, the delegated bodies will provide the Board of Directors with a report, provided with the frequency

identified in the Articles of Association and at least once every six months, on the work performed in the exercise of their powers, as well as on the general performance and the foreseeable evolution and the transactions of particular significance in relation to the size and characteristics of the Company and its subsidiaries

4.7. INDEPENDENT DIRECTORS AND LEAD INDEPENDENT DIRECTOR

Independent Directors

Four of Gefran's non-executive Directors in office as of the date of this Report are independent, meaning that they do not have and have not recently had, either directly or indirectly, significant relations with the Company or with parties related thereto, of a nature likely to affect their independent judgement.

The following Directors qualify as independent pursuant to the Consolidated Financial Act:

• ➢ Daniele Piccolo
• ➢ Monica Vecchiati
• ➢ Cristina Mollis
• ➢ Giorgio Metta

In accordance with the Corporate Governance Code, there are three independent Directors. This is following Director Daniele Piccolo's loss of the requirements necessary to qualify as an independent Director of the Company. On 16 December 2021, the Board of Directors resolved that this Director no longer met the independence requirements pursuant to art. 2, Recommendation 7, letter e) of the Corporate Governance Code.

In accordance with the procedure adopted by the Board to verify independence, this requirement must be declared by the Director when his/her candidacy for the post is submitted. Independent Directors also undertake to inform the Board promptly should any situation occur that impairs this independence, and consequently resign from their post. The Board repeats the assessment of independence when it becomes aware of important circumstances, such as the taking up of new positions.

The Chairwoman of the Board of Directors is an Executive Director of the Company.

The Board has specified in its Regulations, pursuant to Recommendation 7 of the Corporate Governance Code, the circumstances that compromise the independence of a Director.

The Board considers that the number and responsibilities of independent Directors are appropriate for the Company's needs and the functioning of its administrative body, as well as the formation of the relevant Committees.

The Board of Directors appointed on 28 April 2020 assessed the existence of the requirements of independence in the meeting held on the same date, and the result of the assessment was announced to the market on the same day, 28 April 2020, in a notice published as required by

law. The Board of Directors verified compliance with the above criteria, also in its 11 March 2021 meeting.

In making the above assessments, the Board has considered all the information available, assessing all the circumstances that appear to compromise independence identified in the TUF and the Code and applying (among others) all the criteria provided for in the Code with reference to the independence of the Directors.

Each non-executive Director has provided all the necessary and useful information for the Board's assessments.

The Board of Statutory Auditors has verified the correct application of the assessment criteria and procedures adopted by the Board to ensure the independence of its members, and has included the results in its report to the Shareholders' Meeting.

The independent Directors were convened by the Lead Independent Director and met once during the year, assisted by the Head of Legal and Corporate Affairs, and without the presence of the other directors, in order to analyse the Letter of the Chairman of the Corporate Governance Committee and provide feedback.

Lead Independent Director

On 28 April 2020 Independent Director Daniele Piccolo was appointed Lead Independent Director.

As Director Daniele Piccolo no longer met the requirements necessary to qualify as an independent Director of the Company, on 16 December 2021 the Board of Directors appointed non-executive and independent Director Monica Vecchiati as Lead Independent Director.

The Lead Independent Director acts as a point of reference and coordination for petitions and contributions made by non‐executive and independent directors, thereby ensuring independence of judgement from management.

The Lead Independent Director has the power to summon a meeting of the independent directors, autonomously or in response to the request of the other directors, to discuss issues relevant to the operation of the Board or the management of the company.

Independent directors' meetings are duly recorded in minutes; one meeting was held in 2021.

5. HANDLING OF CORPORATE INFORMATION

The Company considers it essential to maintain dialogue with investors, safeguard confidential documents and information, and ensure transparency. By Board resolution dated 25 June 2020, the Company adopted the new edition of the "Internal regulations for management and handling of inside information" (the "Regulations"), which lay down rules and procedures on inside information within the organisation, in compliance with the Market Abuse Regulation, Legislative Decree 58/98 (TUF), and Consob regulation no. 1 of 2017.

The regulation also establishes the rules and procedures on company disclosure of information to the public, to ensure that it is disseminated to all investors in a global, timely, complete and appropriate manner. The Regulations are available on the Company's website www.gefran.com, in the Governance > Documents and Procedures section. In this regard, the information is issued via press releases, meetings with the financial community and the press, as well as extensive and constantly updated documentation made available on the website www.gefran.com, in the investor relations section.

In its internal Regulations, the Company regulates procedures for keeping and updating a "Registry of people with access to significant and inside information". In accordance with these Regulations, the Chief Executive Officer has appointed representatives of Legal and Corporate Affairs to be in charge of keeping this Registry.

The Chief Executive Officer oversees application of the procedures regarding company information and coordinates the internal departments involved.

On 25 June 2020 the Company also approved the new edition of its "Internal Regulations Disclosure of transactions in shares and financial instruments conducted by Significant Persons (Internal Dealing)" ("Internal Dealing Regulation"), containing provisions relating to disclosure obligations and limits on transactions on financial instruments issued by Gefran S.p.A. conducted by significant persons, expressly defined in the Internal Dealing Regulation, based on the parties' access to price‐and‐business sensitive information through the positions they hold.

6. INTERNAL BOARD COMMITTEES (pursuant to article 123-bis, paragraph 2, letter d), TUF)

The Company's Board of Directors has established the following committees from among its members:

• i. Control and Risks Committee;
• ii. Appointments and Remuneration Committee;
• iii. Sustainability Committee.

Board Regulations govern the establishment of the Board's internal committees.

The powers and duties of each Committee are determined by specific Regulations adopted by resolution of the Board of Directors.

The Regulations govern the operating rules, including procedures for the minutes of meetings and procedures for the management of information for the directors who make up the Committees, specifying the time limits for submitting information in advance and how to protect the confidentiality of the data and information provided in such a way as not to jeopardise the timeliness and completeness of information flows.

The Committees perform their functions of preparation, proposal and consultation through meetings, the minutes of which are filed among the Company's documents. Each committee has access to the corporate information and departments necessary to perform its duties.

The Appointments and Remuneration Committee incorporates internal functions which, in the Corporate Governance Code, are attributed to the appointments committee and the remuneration committee, in compliance with the conditions laid down in the Code for the composition of the committee.

The management body defines the tasks of the committees and determines their composition, giving priority to the competence and experience of their members and avoiding excessive concentration of positions.

The Committees Chairmen report to the Board about their activities and assessments at the next meeting.

Additional committees (other than those provided for by legislation or recommended by the Code)

SUSTAINABILITY COMMITTEE

On 14 May 2020 the Gefran Board of Directors set up this committee among its members, composed of directors with skills in the areas of sustainability and ESG (environmental, social and governance). This committee assists the Board of Directors with preliminary functions, proposals and consultations, in assessment and decision-making in the area of sustainability: that

is, initiatives and activities supervising the Group's commitment to sustainable development throughout the value chain, in connection with the operation of the Company's business and the dynamics of its interaction with all its stakeholders, corporate social responsibility, examination of scenarios for preparation of the industrial plan and Corporate Governance.

All committee members will remain in office until the end of the Board's mandate, that is until the approval of the financial statements for the year ending 31 December 2022.

The Directors currently sitting on the Committee are:

OFFICE	MEMBERS
Vice Chairwoman and Chairwoman of the Committee	Giovanna Franceschetti
Chief Executive Officer	Marcello Perini
Independent Director	Cristina Mollis

The Committee, in addition to assisting the Board in the operations listed in the pertinent section, is responsible for overseeing aspects of sustainability related to the Company's line of business and the dynamics of interaction with all its stakeholders. Specifically:

• examining the policies and strategic guidelines in the area of sustainability prepared by the company's work team, expressing an opinion on them to the Board of Directors and assessing their orientation and goals, also in view of the preparation and updating of the industrial plan;
• discussing guidelines based on the principles of sustainable business with the Board of Directors and other Board Committees, taking into account the evolution of the reference scenarios and identifying opportunities that generate value for stakeholders;
• examining the overall set-up of the Sustainability Report, the structure of its content, and the completeness and transparency of the disclosure to stakeholders supplied in the Sustainability Report, prior to its formal approval by the Board of Directors;
• performing its tasks in relation to the "non-financial statement" required under Legislative Decree no. 254 of 30 December 2016, according to the explicit requirements of the Group's "Non-Financial Reporting Procedure";
• monitoring application of the Group's existing vision of sustainability and the actions necessary to determine the value generated by the company for its stakeholders, contributing to the definition and adoption of a model for the measurement thereof;
• monitoring the Group's positioning on financial markets in the area of sustainability;
• expressing opinions on the initiatives and programmes promoted by the Parent Company, including subsidiaries, and any proposals regarding specific sustainability issues.

In the month of November 2021, promotion of the culture of sustainability among suppliers led to the first Supplier Day, an event reserved for small and medium-sized companies operating in the vicinity of the Group's production facilities. Gefran aims to accompany its suppliers on the journey towards a broader concept of sustainability, making Gefran's skills and experiences available to

them and identifying initiatives aimed at reducing the environmental and social impact of its products and components.

The work of the Committee is coordinated by its Chairwoman. Committee meetings are duly recorded in minutes, and the Chairwoman reports on them to the next Board of Directors' meeting.

Sustainability Committee	2021	2020
Number of meetings	2	3
Average attendance %	100%	100%

In the year 2021, the Committee held two meetings lasting an average of one hour, which were attended by all members.

Two Committee meetings are scheduled for the current year. The Committee has met once so far in the year 2022.

7. SELF-ASSESSMENT AND SUCCESSION OF DIRECTORS - APPOINTMENTS COMMITTEE

7.1 SELF-ASSESSMENT AND SUCCESSION OF DIRECTORS

In accordance with and for the purposes of principle XIV, as well as Recommendations 19, 21 and 22 of the GC Code, the Board of Directors annually assesses the effectiveness of its own activities and its Committees.

On 10 March 2022 the Board issued a positive assessment of the size, composition and functioning of the Board and its Committees for the financial year 2021, on the basis of the results of the self-assessment questionnaires completed by the Directors.

The Company collaborated with Professor Enrico Diecidue of INSEAD Business School in preparation of the self-assessment questionnaire.

The questionnaires are completed anonymously and aim to obtain an objective and free assessment of the following operational aspects:

• The role and responsibilities of the Board;
• Composition and competences of the Board;
• Information flow, meetings and decision-making processes of the Board;
• Relations with Executive Directors and Senior Managers;
• Committees within the Board;
• Definition of strategy, monitoring of management trends and of the internal control and risk management system;
• Self-assessment of individual performance.

These sections contain a series of questions, to which the Directors must attribute an assessment ranging from strongly agree to strongly disagree.

Finally, there is a section for suggestions and ideas for improvement.

The Appointments and Remuneration Committee met to examine the positions and observations emerging from these questionnaires, in order to identify the most important elements to report to the Board.

The Board ensures, as far as it is within its competence, that the process of appointment and succession of directors is transparent and functional to achieve the optimal composition of the administrative body.

In relation to the provisions of Principle XIII and Recommendation 19, letter b) of the Code, the following is noted.

The Board of Directors was most recently renewed on 28 April 2020, prior to the entry into force of the CG Code.

The Board of Directors of the Company, also taking into account the results of the self-assessment questionnaires, in view of the renewal of the Board of Directors, provided the shareholders with its own guidelines regarding the size of the new Board of Directors and the characteristics of its members, as required by art. 1.C.1 letter H) of the Code of Conduct in effect at that time.

The outgoing Board therefore expressed its guidance in the "Explanatory Report of the Board of Directors of Gefran S.p.A. on the items on the agenda" of 12 March 2020, published on the Company's website in the section Governance > Shareholders' Meetings.

Pursuant to the CG Code, the Company is defined as a "concentrated company," and therefore Recommendation 23 does not apply to the Board's guidance on renewal.

In accordance with Article 4, Principle XIII of the Corporate Governance Code, the Board, in its resolution of 7 October 2021, having received the favourable opinion of the Appointments and Remuneration Committee, approved the "Plan for succession of the Chief Executive Officer of Gefran S.p.A. and of the Gefran Group".

The plan set forth specific cases which determined its implementation in circumstances in which it should be necessary to replace the Chief Executive Officer prior to the ordinary expiry of office. The plan specifies mechanisms guaranteeing business continuity in the interim period, in addition to the mechanisms for identifying a possible successor.

The succession plan also contains appropriate procedures for the succession of senior top management, identified in the Executive Recovery Plan prepared by the People & Organisation function and presented to the Appointments and Remuneration Committee and to the Board of Directors. This plan analyses the main business functions and roles and identifies a contingency plan in the event of a need for succession.

7.2 APPOINTMENTS AND REMUNERATION COMMITTEE

The Company's Board of Directors appointed an Appointments and Remuneration Committee on 28 April 2020, awarding it the powers identified in the Committee's Regulations.

Composition and Operation of the Appointments and Remuneration Committee (pursuant to article 123-bis, paragraph 2, letter d), TUF)

The Company has set up an Appointments and Remuneration Committee composed of three non-executive directors, the majority of whom are independent, who will remain in office until the approval of the 31 December 2022 financial statements. At the time of its appointment, the Board believed that the Committee's members included persons with sufficient know-how and experience in the areas of finance and remuneration policy.

Following the resolution referred to in Section 4.7 of the Report, the Board of Directors appointed Director Cristina Mollis as Chairwoman of the Appointments and Remuneration Committee when Director Daniele Piccolo no longer met the requirements necessary to be Chairman of the Committee.

As of the end of the year, the Committee is composed of the following Directors:

OFFICE	MEMBERS
Independent Director and Chairwoman of the Committee	Cristina Mollis
Independent Director	Monica Vecchiati
Non-executive Director	Daniele Piccolo

The Committee's work is coordinated by the Chairwoman. The meetings are duly recorded in the minutes. The Chairwoman shall report to the first subsequent meeting of the Board.

In the year 2021, the Committee held 3 meetings lasting an average of one hour, which were attended by all members.

Appointments and Remuneration Committee	2021	2020	2019
Number of meetings	3	5	4
Average attendance %	100%	100%	100%

Three meetings of the Committee are scheduled for the current year. The Committee has met twice so far in the year 2022.

Directors shall refrain from attending the meetings of the Committee in which proposals for their remuneration are prepared for presentation to the Board.

The Chief People & Organisation Officer, Patrizia Belotti, and the Heads of Legal and Corporate Affairs attended Committee meetings on invitation of the Chairwoman, having first notified the Chief Executive Officer.

The members of the control body attended all the meetings of the Committee.

Functions of the Appointments Committee

The Committee expresses its opinion to the Board of Directors regarding the size and composition of the Board, and makes recommendations for the professional figures required on the Board.

The Committee assists the Board of Directors in the self-assessment of the board of directors and its committees, supporting the Chairwoman of the Board in ensuring the adequacy and transparency of the self-evaluation process.

The Committee proposes candidates for the office of director to the Board of Directors when a director must be co-opted and an independent director must be replaced.

The Committee performs preliminary proceedings regarding the preparation of Executive Recovery Plans for executive directors, keeping them up-to-date at all times and suggesting to

the Board any changes that may be necessary. If the Executive Recovery Plan is implemented, the Committee, acting in agreement with the executive directors, determines the characteristics and competences of potential candidates for succession and identifies profiles of suitable candidates to be suggested to the Board of Directors for co-opting.

The Committee checks:

• a) that the company has an Executive Recovery Plan in place for its key executives;
• b) identification of potential in-house candidates for natural successions to the post of CEO and their managerial background, with constant observation of the external market;
• c) the process of talent identification and development, a summary of which is presented by the CEO assisted by the Chief People & Organisation Officer once a year.

Functions of the Remuneration Committee

The Committee assists the Board of Directors in drawing up remuneration policy.

The Committee submits proposals or expresses opinions on the remuneration of executive directors and other directors with special duties, as well as the setting of performance targets determining the variable component of this remuneration.

The Committee also formulates proposals regarding the division among the members of the Board of the overall remuneration package approved by the Shareholders' Meeting.

The Committee monitors concrete application of the remuneration policy and, in particular, checks the actual achievement of performance targets on the basis of the information provided by the Chief People & Organisation Officer.

The Committee periodically assesses the adequacy, overall consistency and practical application of the policy for remuneration of directors and senior management.

The Committee examined the following matters, among other things, during their meetings:

• MBO implementation activities for 2021;
• work on the Report on Remuneration Policy and Pay;
• self-assessment by the Board of Directors;
• updating the CEO's Executive Recovery Plan.

***

The Committee is able to access the corporate information and functions necessary for the performance of its duties. As far as is relevant, please also refer to the specific section of the Report on Remuneration Policy.

8. REMUNERATION OF DIRECTORS - REMUNERATION COMMITTEE

8.1 REMUNERATION OF DIRECTORS

Information on directors' remuneration is provided in the Remuneration Report published pursuant to article 123‐ter of the TUF.

8.2 REMUNERATION COMMITTEE

Information on the role and functioning of the Remuneration Committee is provided in the previous section 7.2., to which reference should be made. Reference should also be made to the Remuneration Report published pursuant to article 123-ter of the TUF.

9. INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM - CONTROL AND RISKS COMMITTEE

In drawing up strategic, business and financial plans, Gefran's Board of Directors assessed the nature and level of risks compatible with its strategic objectives. The Board also drew up guidelines for the internal control and risk management system, in order to ensure that the risks monitored and the strategic objectives identified were compatible.

The internal control and risk management system involves, each in relation to its own responsibilities:

• The Board of Directors, in its role of guidance and assessment of the adequacy of the system;
• The Chief Executive Officer, who is in charge of maintaining the system;
• The Control and Risk Committee, with the role of supporting the evaluations and decisions of the administrative body pertaining to the internal control and risk management system and the approval of periodic financial and non-financial reports;
• the Executive in charge of financial reporting, who is directly in charge of the control model pursuant to Law 262/2005 and the related administration and accounting procedures, and is responsible for updating it regularly in relation to financial reporting risk assessment and regulatory issues, and for verifying the effectiveness of the underlying procedures;
• The Head of the Internal Audit Department, who is in charge of checking the functioning and adequacy of the system and its consistency with the guidelines defined by the Board of Directors, as well as following up on implementation of improvement actions;
• The Board of Statutory Auditors, which monitors the effectiveness of the System;
• the Process Managers, General Managers and Financial Controllers of foreign subsidiaries, who play a direct role in executing controls, applying the administrative and accounting procedures, implementing measures in the improvement plan and issuing the necessary statements, and an indirect role in updating the system of procedures, in concert with the Executive in charge of financial reporting.

The internal control system adopted by the Company and its subsidiaries consists of a series of rules, administrative and accounting procedures and organisational structures, aimed at achieving ‐ via an adequate process of identifying, measuring, managing and monitoring the main risks – the objectives relating to the financial information process, such as completeness, reliability, accuracy, truthfulness and timeliness of reporting.

Pursuant to article 154‐bis of Legislative Decree 58/1998 (the "TUF"), which was introduced by Law 262/2005 and provides for the position of Executive in charge of financial reporting (hereinafter also referred to as the "Executive in charge"), on 27 September 2013 Gefran's Board of Directors, upon obtaining the favourable opinion of the Board of Statutory Auditors, appointed Fausta Coffano, the Group's Chief Financial Officer, as the Executive in charge of financial reporting.

In 2007, the Board of Directors also implemented general procedural provisions, agreed upon beforehand with the Executive in charge of financial reporting, covering the activities which this

officer is required to carry out by law, with particular regard to the means and powers granted thereto, in relation to both the Company and its subsidiaries (including the possibility of using the Internal Audit department to carry out major checks, inspections and other audits within the limits of its independence in terms of functions and activities).

Gefran has adopted a series of administrative and accounting procedures to ensure that the financial reporting generated by the internal control system is reliable.

The Company uses policies, procedures and operating instructions to guarantee an effective flow of information from the subsidiaries. These include Group Accounting Policies (rules for using and applying international accounting standards), the Group Reporting Manual, the Group Accounting Manual, procedures for creating and disclosing financial information, and other procedures for drawing up the consolidated financial statements and the interim financial reports (including the chart of accounts, the consolidation procedure and the procedure covering transactions between related parties). Subsidiaries may access all policies, procedures and accounting regulations through the Group's Intranet site.

IT processes are managed through a segregation of duties access control policy.

The reference models adopted in the design and executive phases were: the COSO Report (Committee of Sponsoring Organization of the Treadway Commission Report) and the COBIT (Control Objectives for IT and related technology), both acknowledged in international best practice.

In particular, the Company referred to the "COSO framework" to identify the main risks and, consequently, the main controls to be implemented to mitigate the risks identified and ensure that the internal control system operates effectively.

Companies of strategic importance were identified through a risk assessment based on quantitative criteria, which also required the use of various parameters relating to the Group's results and equity, and on qualitative criteria that considered internal and external, operating and business risks, which can have a significant effect on financial reporting in the absence of controls.

As with the Parent Company, for each of the Group's subsidiaries, Internal Audit conducts an independent assessment of the effectiveness of previously identified key controls, supported by the Executive in charge of financial reporting in relation to her specific duties.

The areas of improvement identified by the controls are illustrated by the department responsible (Internal Audit) to the Chief Executive Officer, the Control and Risks Committee and the Board of Statutory Auditors at Control and Risks Committee meetings, by sharing Audit Reports and Action Plans.

The Control and Risks Committee reports every quarter to the Board of Directors on the status of its activities, through presentations prepared by Internal Audit.

An action plan was jointly drawn up and agreed on with each Group company to strengthen the current control system and correct any specific deficiencies identified. The implementation of the

measures agreed is monitored constantly by Internal Audit, which reports to the Chief Executive Officer, the Control and Risks Committee and the Board of Statutory Auditors.

To comply with the provisions of Law 262/05, the Company has adopted a centrally coordinated assessment and certification system to monitor the appropriateness and effectiveness of the internal control system, including in the definition thereof controls relating to the financial reporting area.

The General Manager and the Financial Controller of each Group subsidiary, as well as the heads of the main central departments and functions, are responsible for maintaining an appropriate internal control system by conducting regular assessments of key controls, based on criteria of efficiency and effectiveness.

The management of each subsidiary is required to sign a quarterly statement confirming that the internal control system is operating correctly. Once signed, the statement is sent to the Chief Financial Officer (the executive in charge of financial reporting) and the Chief Executive Officer.

The Executive in charge of financial reporting ensures that senior management receives, at least every six months when the half-yearly and annual financial statements are prepared, information on the implementation and monitoring of the control model pursuant to Law 262/2005, with reference to the results of inspections and other related activities, in addition to regular information relating to the results of any independent checks conducted by Internal Audit.

In line with its policy of continuous improvement and adjustment, in the year 2021 the Group reviewed its control model pursuant to Law 262/2005 in order to re‐examine the hierarchy of controls regarding financial reporting risks and to further redefine and cyclically modulate testing activities, aiming to guarantee its overall effectiveness through this approach.

In 2021, the Board also assessed the appropriateness of its internal control and risk management system based on the Company's characteristics, specific risks that are perceived as significant in relation to its field of business, and the system's efficacy.

***

Risk Management is on the whole adequate.

Gefran's Risk Assessment was conducted as follows:

• Definition and discussion of the risk-based risk assessment method.
• Development of the Group's Risk Model (external risk, financial risk, strategic risk, governance and integrity risk, operative and reporting risk, legal risk and compliance risk, IT risk, human resources risk).
• Enterprise Risk Management work, conducted through meetings with senior management aimed at identifying and assessing the risks to which the Group is exposed, classifying them on the basis of their impact, probability and the existing risk management system.

This was followed by:

• Construction of the Audit Universe through the identification of significant processes / areas for Gefran S.p.A. and its subsidiaries to be submitted for audit.
• Development of a 2021-2023 Audit Plan to be submitted to the Board of Directors for approval, taking the following elements into account:
  • the results of the Enterprise Risk Management activities conducted in the previous year, which identified 15 strategic and operative top risks;
  • the audit measures adopted in previous years, in order to ensure complete coverage of processes in Gefran S.p.A. and its subsidiaries over a period of about 3 years;
  • specific compliance and assurance requirements expressed by the relevant functions and various reports (e.g.: 231, 262);
  • any other requests from senior management or control bodies (e.g.: Supervisory Body, the Executive in charge of financial reporting pursuant to Law 262, CRC, etc.).

This activity allows continuous monitoring of risk mitigation actions and has allowed the assessments conducted to be updated.

9.1 CHIEF EXECUTIVE OFFICER

The Board of Directors has appointed Marcello Perini, Chief Executive Officer, as the executive director responsible for setting up and maintaining the internal control and risk management system. This decision appears to be in line with the provisions of the Code of Corporate Governance, best practice and the Company's organisational structure, within which Internal Audit reports directly and hierarchically to the Board of Directors.

In carrying out his duties, the Chief Executive Officer:

a) identified the main corporate risks, taking into account the characteristics of the activities carried out by the Company and its subsidiaries, and regularly submitted them to the Board of Directors for review;

b) implemented the guidelines defined by the Board of Directors, taking care of the planning, implementation and management of the internal control and risk management system, and constantly verified its appropriateness and effectiveness;

c) adapted the system to changes in operating conditions and the legislative and regulatory framework;

d) entrusted the Internal Audit Department with the task of assessing specific operating areas and compliance with the internal rules and procedures in the running of Company operations, in accordance with the Audit Plan approved by the Board of Directors and examined by the Control and Risks Committee and the Chairman of the Board of Statutory Auditors;

e) reported promptly to the Control and Risks Committee any problems or critical issues arising in the performance of his duties, or made known to him, to allow the Committee to take the necessary steps;

9.2 CONTROL AND RISKS COMMITTEE

The Control and Risks Committee comprises three independent directors, all experts in accounting and finance and/or risk management; this composition was considered appropriate by the Board of Directors, which appointed the members.

All committee members will remain in office until the end of the Board's mandate, that is until the approval of the financial statements for the year ending 31 December 2022.

Composition and Operation of the Control and Risks Committee (pursuant to article 123-bis, paragraph 2, letter d), TUF)

The Directors on the Committee are:

OFFICE	MEMBERS
Independent Director and Chairwoman of the Committee Monica Vecchiati
Independent Director	Giorgio Metta
Non-executive Director	Daniele Piccolo

The composition of the Committee did not change during the year. Please note the change reported in Section 4.7 involving the Director Daniele Piccolo.

The Committee's work is coordinated by the Chairwoman. The meetings are duly recorded in the minutes. The Chairwoman informs the first subsequent Board of Directors meeting of the Committee's meetings and activities.

In the year 2021, the Committee held five meetings lasting an average of two hours, which were attended by all members.

Control and Risks Committee	2021	2020	2019
Number of meetings	5	6	5
Average attendance %	100%	100%	100%

The same number of meetings is scheduled for this year, and as of the date of this Report, the Board of Statutory Auditors has already met twice.

The meetings were attended by members of the departments involved in the Internal Audit System, invited by the Committee Chairwoman, as well as the independent auditor, to discuss

specific items on the agenda. In compliance with the CG Code, the Committee's meetings were also attended by the Chief Executive Officer, the Executive in charge of financial reporting, the Chairman of the Board of Statutory Auditors at all meetings, and the entire Board of Statutory Auditors at the majority of meetings.

The Committee has so far met on two occasions in the year 2022, and is scheduled to meet three more times before the end of the year, at least once every quarter.

Functions assigned to the Control and Risks Committee

In addition to assisting the Board in the operations listed in the relevant section, the Committee is responsible for:

a) assessing, after consulting the Executive in charge of financial reporting, the independent auditor and the Board of Statutory Auditors, the correct use of accounting standards and their uniform application in drawing up the consolidated financial statements;

b) assessing the suitability of periodic, financial and non-financial information to correctly represent the business model, the Company's strategies, the impact of its activities and the performance achieved;

c) examine the content of periodic non-financial information relevant to the internal control and risk management system;

d) expressing opinions on specific aspects relating to the definition of the guidelines of the internal control and risk management system and identification of the main corporate risks in order to ensure that they are consistent with the Company's strategies, supporting the corresponding annual assessment and ensuring the adequacy of the system with respect to the Company's characteristics and risk profile, as well as its effectiveness;

e) expressing opinions in relation to Internal Audit's plans of action;

f) reviewing the periodic reports assessing the internal control and risk management system, as well as particularly significant reports provided by the Internal Audit department;

g) monitoring the independence, adequacy, effectiveness and efficiency of the Internal Audit department;

h) appointing the Internal Audit department to conduct audits of specific operating areas, where necessary, duly informing the Chairman of the Board of Statutory Auditors;

i) reporting to the Board of Directors at least every six months, when the annual and half-yearly financial statements are approved, on the activities performed and on the adequacy of the internal control and risk management system;

j) supporting, with adequate preliminary investigation, the evaluations and decisions of the Board of Directors concerning the management of risks arising from harmful incidents of which the Board of Directors has become aware;

k) expressing opinions concerning coordination and information flows between the different parties involved in the internal control and risk management system, in order to maximise the efficiency of the system, minimise duplication of activities and ensure effective performance of the tasks of the control body.

Following the enactment of Legislative Decree 39/2010, which identifies the Board of Statutory Auditors as the "internal control and auditing committee", some of the supervisory functions attributed to the Control and Risks Committee are shared with the Board of Statutory Auditors, and are carried out in a coordinated manner.

The Board of Directors has also allocated to the Control and Risks Committee the duties and functions that the new regulation on transactions with related parties assigns to independent Directors, in particular the task of conducting an examination in advance of the procedure adopted by the Company (and any changes to it) and executing it.

The Committee examined the following matters, among other things, during the year:

• the draft financial statements and the consolidated financial statements for 2020, the 2021 half‐yearly financial statements, the results of audits of the half‐yearly financial statements and report;
• the 2021 Audit Plan, and the status and results of auditing activities, as well as the structure of the Company's internal control system;
• the results of Risk Assessment.
• the controls carried out in accordance with the current audit procedures and the verification of their implementation;
• the results of the statutory audit;
• the activities undertaken by the Company to address the COVID-19 pandemic;

***

The Committee has access to the company information and divisions necessary to perform its tasks, has access to financial resources, and may make use of external consultants, as established by the Board of Directors.

9.3 INTERNAL AUDIT MANAGER

The Board of Directors has appointed the Internal Audit Manager as the party responsible for verifying that the internal control and risk management system is functioning, adequate and consistent with the guidelines defined by the Board.

By resolution issued on 10 February 2021, with the favourable opinion of the Control and Risks Committee, the Board of Directors appointed Piermario Barzaghi, Partner of KPMG Advisory S.p.A., an external party to the Company who meets the requirements of autonomy, independence, professionalism and organisation, as Internal Audit Manager for the year 2021.

The Board of Directors considered it appropriate to entrust external parties with substantial expertise and experience with the mandate in question, since the size of the Gefran Group is not such that it can effectively support an Internal Audit organisational structure within the Company.

The Board, following the favourable opinion of the Control and Risks Committee, by means of a resolution passed on 10 February 2021, defined the remuneration of Mr. Barzaghi, in line with company policies, for the position of Internal Audit Manager, ensuring that he has adequate resources to carry out his duties.

Mr. Barzaghi is not responsible for any operational areas, and is hierarchically independent from the Board of Directors in the performance of his duties. The Internal Audit Manager has direct access to all the information necessary for carrying out the task. KPMG Advisory S.p.A. was tasked with conducting internal audit activities for the year 2021.

During the year, the Board of Directors approved the Audit Plan prepared by the Internal Audit Manager, with the favourable opinion of the Control and Risks Committee, having consulted the Board of Statutory Auditors and the Chief Executive Officer.

***

The Audit Plan prepared for 2021 was intended to supplement the existing internal control and risk management system with adequate internal auditing activities, concentrating the work in areas which, due to the number and critical nature of the risks identified, could have a significant impact on achievement of the company's targets.

***

The Internal Audit Manager, either in person or through the designated consulting firm:

• checks the operation and appropriateness of the internal control and risk management system, both continuously and in relation to specific requirements, in compliance with international standards, using the audit plan approved by the Board of Directors which is based on a structured analysis of the main risks;
• prepares regular reports providing appropriate information on his activities, the risk management methods used and compliance with the plans drawn up to reduce risks, as well as an assessment of the suitability of the internal control and risk management system. These are submitted to the Chairman of the Board of Statutory Auditors, the Chairman of the Control and Risks Committee and the Chief Executive Officer, unless the subject matter of these reports specifically concerns the activities of such persons;
• promptly prepares reports on events of particular importance, also in response to the request of the Board of Statutory Auditors, and submits them to the Chairman of the Board of Statutory

Auditors, of the Control and Risks Committee and of the Board of Directors, as well as the Chief Executive Officer, unless the subject matter of these reports specifically concerns the activities of such persons;

• assesses the reliability of IT systems, including accounting systems, as part of the Audit Plan.

The activities conducted in 2021 were intended:

• to carry out the work envisaged in the Gefran Group's 2021 Audit Plan;
• to propose solutions to any observations made;
• to check the measures adopted to fulfil the requirements identified during previous audits or risk assessments;
• to assess any other risk factors and related measures to be introduced as the result of changes in the organisation or in the law.

During the Control and Risks Committee's 1 February 2022 meeting, the Internal Audit Manager presented the function's annual report on its work and on the functioning of the company's internal control and risk management system.

It should also be noted that by means of a resolution passed by the Board of Directors on 10 February 2022, management of the Internal Audit Department was once again entrusted to Mr. Piermario Barzaghi; he was appointed by the Board of Directors, subject to the approval of the Control and Risks Committee. KPMG Advisory S.p.A.. was tasked with conducting internal audit activities.

On 10 February 2022, the Board of Directors approved the 2022 – 2024 Audit Plan, after which the Control and Risks Committee expressed its approval of the Plan.

9.4 ORGANISATIONAL MODEL pursuant to Legislative Decree 231/2001

At its meeting held on 13 February 2008, the Board of Directors adopted its own Organisational Model in accordance with Legislative Decree 231/2001 (referred to as the "Model").

Following a series of updates and reviews, the latest version of this model was approved by the Board on 11 November 2021.

The subsidiaries Gefran Soluzioni S.r.l., Gefran Drives and Motion S.r.l. and Elettropiemme S.r.l. have likewise adopted an Organisation and Management Model under Legislative Decree 231/2001 and have their own Supervisory Body.

The review of the Model took into account the extension of companies' administrative liability to include new offences, and changes in the Company's organisational structure following adoption of the new model.

The Company has therefore drawn up a model that complies with the guidelines resulting from the analysis and mapping of company processes at risk of an offence, is consistent with the Company's particular characteristics, and therefore fulfils the effectiveness requirements set out by law.

The Model adopted by the Company aims to prevent commission of the offences envisaged in Legislative Decree no. 231/01 and to ensure fair and transparent conduct of business activities, and consists of the following documents:

a) Code of Ethics: Represents general principles of conduct, including those of significance for the purposes of Legislative Decree 231/2001 (transparency, fairness and loyalty) which inspire the performance and conduct of the Company's business, also identifying the objectives and informative values of the Company's business. The document is published in the Investor Relations/Corporate Governance section of the Internet site www.gefran.com in the governance > model 231 and Code of Ethics section, and on the Company's intranet. Compliance with the Code of Ethics is of fundamental importance for the Group's proper functioning, reliability and reputation, which are essential assets for its success. The Code of Ethics aims to direct the Group's conduct and operations in both internal relations and relations with external parties, focusing on full compliance with the regulations in force in all the countries in which it operates, in addition to compliance with internal procedures.

b) Organisational Model: comprises a General Section describing the content of the Decree and the aims of the Model, and a Special Section, which contains general rules to be followed by the Model's recipients, a list of areas of activity at risk, and various sections dedicated to the relevant categories of offences. The document is published in the Investor Relations/Corporate Governance section of the Internet site www.gefran.com in the governance > model 231 and Code of Ethics section, and on the Company's intranet.

c) Procedures Manual: for all the main risk areas mapped, this governs:

• roles and responsibilities of the parties involved;
• procedures for making decisions/granting authorisations;
• methods of managing and controlling activities at risk.

The document is published on the Company's Intranet.

d) Group Whistleblowing Procedure: this procedure was approved by the Board of Directors on 13 November 2018 with the aim of regulating reporting of unlawful conduct of significance for the purposes of Legislative Decree no. 231 of 8 June 2001 and founded on specific, concordant facts or on violations of the Management and Organisation Model of Gefran S.p.A. and its subsidiaries in Italy and abroad.

The document is published on the intranet and on the Company's Internet site www.gefran.com in the governance > Model 231 and Code of Ethics section.

As required by Legislative Decree 231/2001, the Board of Directors has also appointed a Supervisory Board consisting of one external member (attorney Nicla Picchi, Chairwoman) and one internal member (Monica Vecchiati, a non-executive Director of the Company), and provided it with regulations and suitable means to enable it to operate. Through these appointments, the Board of Directors has applied Recommendation 33, letter e of the Corporate Governance Code.

The Supervisory Board may use external consultants to perform the necessary risk assessments and audits.

The Supervisory Board is responsible for supervising:

a) the functioning and observance of the Model, in relation to the various types of offence contemplated by Legislative Decree no. 231/01 and subsequent laws that have extended its scope;

b) the effectiveness of the Model in relation to the Company's structure and its effective ability to prevent the commission of offences;

c) the advisability of updating the Model, where adaptation of the Model is required in relation to changed business conditions and/or regulations

The Supervisory Board has the discretionary power to conduct specific controls, also in response to reports received, and periodically carries out checks of samples of sensitive activities, in order to verify their proper implementation in relation to the general rules and specific procedures laid down by the Model.

It is also responsible for advising the Board of Directors to make the necessary changes to the Model in the event of changes to the legal framework, the methods of implementation and the type of business activities. The Supervisory Board reports its control activities and their results to the Board of Directors, the Control and Risks Committee and the Board of Statutory Auditors.

The Gefran Board of Directors decided not to assign the functions of the Supervisory Board to the Board of Statutory Auditors.

9.5 EXTERNAL AUDITOR

The independent audit is conducted by a company appointed by the Shareholders' Meeting from among those included in the register kept by Consob.

The external auditor is currently PRICEWATERHOUSECOOPERS SPA, appointed at the Shareholders' Meeting of 21 April 2016 to conduct, for the years 2016 through 2024, the independent audit of the consolidated and separate financial statements, pursuant to articles 14 and 16 of Legislative Decree no. 39 of 27 January 2010, and the limited external audit of the condensed half-yearly financial statements.

As required by law, the mandate was granted based on a reasoned proposal put forward by the Board of Statutory Auditors, following an in‐depth technical and economic evaluation.

During the year, after consulting the Board of Statutory Auditors, the Board of Directors assessed the results expressed by the External Auditor.

9.6 EXECUTIVE IN CHARGE OF FINANCIAL REPORTING AND OTHER CORPORATE ROLES AND FUNCTIONS

After consulting the Board of Statutory Auditors, the Board of Directors appoints the Executive in charge of financial reporting, and determines his/her fees and term of office. It also ensures that he/she has appropriate powers and means to perform the duties attributed thereto pursuant to article 154‐bis of Legislative Decree 58/98, and that administrative and accounting procedures are complied with.

The director must meet the professional requirements of having at least three/five years' qualified experience in administration and control or in management or advisory roles, at listed companies and/or related groups of businesses, or companies, organisations or businesses of a significant size and importance, in the preparation and control of accounting and corporate documents. The Board ascertains that he/she meets the requirements established by law and the Articles of Association at the time of his/her appointment.

On 27 September 2013, with the favourable opinion of the Board of Statutory Auditors, the Board of Directors appointed Fausta Coffano, the Group's Chief Financial Officer, as Executive in charge of financial reporting, pursuant to art. 154-bis of Legislative Decree 58/98.

The Executive in charge of financial reporting and the Chief Executive Officer issue a specific report attached to the separate annual financial statements, the consolidated financial statements and the condensed half-yearly financial statements attesting to the adequacy and actual application of the administrative and accounting procedures, and to the fact that these documents correspond to the figures contained in the corporate accounting records, and provide a true and fair representation of the equity, economic and financial position of the Company and the companies included in the scope of consolidation.

The Executive in charge of financial reporting also issues a statement certifying that the interim accounting information (e.g. interim reports on operations and/or press releases to the market) corresponds to the documents, books and accounting records of the Company and the companies included in the scope of consolidation.

The Director has the following resources and powers:

• to directly access all information for the production of accounting data;
• to establish direct contact with the external auditors, the Control and Risks Committee and the Board of Statutory Auditors;
• to acquire, control and check information and news at equivalent or higher hierarchical levels, and also at lower hierarchical levels which do not report directly to the director; these powers may also be exercised in respect of subsidiaries and the corporate hierarchies of the companies included in the scope of consolidation;
• to use internal communication channels to ensure the correct flow of intercompany information;
• to use all the offices, facilities and specialised personnel under the Accounting, Finance and Control department;

• to propose/assess all the procedures implemented within the Company;
• to draw up administrative and accounting procedures;
• to make use of management control tools, including IT equipment (hardware and software), up to a spending limit of 25,000.00 Euro;
• to assign duties, responsibilities and time frames for collecting and checking information;
• to make use of independent specialist consultants to address specific issues, and assign professional duties up to a spending limit of 50,000.00 Euro;
• to attend conferences, training seminars and refresher courses;
• to summon staff, at her own discretion, to update and train them, and raise awareness of their obligations.

***

After examining the results of risk management during the year, the Board of Directors does not consider it appropriate to take further measures to ensure the effectiveness and impartiality of judgement of the other corporate functions involved in the controls, and has checked that they have adequate professionalism and resources.

9.7 COORDINATION BETWEEN PARTIES INVOLVED IN THE INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM

Through regular meetings and information flows, the Company co‐ordinates all the parties involved in the internal control and risk management system (Board of Directors, Chief Executive Officer, Control and Risks Committee, Internal Audit Manager, Executive in charge of financial reporting, Board of Statutory Auditors, External Auditor and other corporate functions with specific duties in relation to internal control and risk management), in order to maximise the efficiency of the internal control and risk management system, prevent duplication of tasks, and ensure effective performance of the tasks of the Board of Statutory Auditors.

The Board of Statutory Auditors and the Control and Risks Committee promptly exchange information relevant to the performance of their respective duties. The Chairman of the Board of Statutory Auditors assists the Control and Risks Committee and can assist Statutory Auditors.

10. DIRECTOR'S INTERESTS AND TRANSACTIONS WITH RELATED PARTIES

During its 24 June 2021 meeting, the Gefran Board of Directors approved the "Regulation for transactions with related parties" in application of Consob resolution No. 17221 dated 12 March 2010, as amended. This regulation is published in the Governance > Documents and Procedures section of the Company's website, www.gefran.com.

The regulation is based on the following general principles:

• ensuring the essential and procedural transparency and probity of transactions with related parties;
• providing Directors and Statutory Auditors with an appropriate assessment, decision-making and control tool regarding transactions with related parties.

The regulation is structured as follows:

• Part one: definitions (related parties, significant and insignificant transactions, intercompany, ordinary, of negligible amount, etc.);
• Part two: procedures for approval of significant and insignificant transactions, urgencies and exemptions;
• Third section: disclosure obligations.

For comments on transactions with related parties, see the section entitled "Transactions with related parties" in the notes to the annual financial statements, in which they are listed and commented on.

No Related Party Committee has been established. The current composition of the Control and Risks Committee of Gefran meets the requirements set out in Article 3, paragraph 1, letter i) of the Regulations on Related-Party Transactions adopted by Consob Resolution no. 17221 of 12.03.2010 and subsequent amendments, and therefore the function of Related Party Committee is attributed to the latter.

In the exercise of its functions, the Committee examines, expresses opinions and approves transactions with Related Parties, in the cases specifically identified in its Regulations.

Information on the functioning and work of the Committee is contained in the previous section 9.2, to which reference should be made.

During the year, the Committee took part in the review and updating of the "Procedure for Transactions with Related Parties" adopted by the Company in order to adapt it to the most recent regulatory provisions.

In its "Procedure for Transactions with Related Parties" (hereinafter referred to simply as the Procedure), Gefran has regulated and adopted operating solutions suitable for identifying and adequately managing situations in which a Director has an interest, on his or her own behalf or on behalf of a third party. The Procedure is available on the Company's Internet site www.gefran.com, in the Governance > Documents and procedures section.

11. BOARD OF STATUTORY AUDITORS

11.1 APPOINTMENT AND REPLACEMENT

Article 23 of the Gefran Articles of Association, amended by Board resolution on 1 October 2012 to guarantee gender balance within the management bodies pursuant to Law 120/2011, states that:

"The Board of Statutory Auditors is composed of three standing auditors and two deputy auditors.

Auditors shall remain in office for three years, until the date of the Shareholders' Meeting called to approve the financial statements for the final financial year of their mandate, and may be re-elected. Their remuneration for the whole duration of their mandate is determined by the Shareholders' Meeting when they are appointed.

Statutory Auditors must possess the pre-requisites established by law and other applicable regulatory provisions. Concerning professional requirements, the Company strictly operates in the following areas and business sectors: electronic automation for the Sensors industry and industrial Components.

The members of the Board of Statutory Auditors are subject to the limit on the number of appointments held on boards of directors and statutory auditors established by Consob regulations.

The Shareholders' Meeting appoints the Board of Statutory Auditors based on lists submitted by the shareholders, following the procedures set out below, without prejudice to any different and additional provisions provided by binding laws or regulations.

Minority shareholders – who are not part of any associative relationship, even indirectly, pursuant to Article 148, paragraph 2 of Legislative Decree 58/1998 and related regulations – have the right to elect one standing auditor, who will be Chairman of the Board of Statutory Auditors, and one deputy auditor. Minority statutory auditors are elected at the same time as the other members of the board, with the exception of replacements, as provided for below.

Lists for appointment of Statutory Auditors may be presented by shareholders who, at the time of presentation of the list, have a shareholding, alone or with other presenting shareholders, at least equal to that determined by Consob. in Article 147-ter, paragraph 1, of Legislative Decree 58/1998 and in accordance with the provisions of the Issuers' Regulation approved by resolution no. 11971 on 14 May 1999 as amended.

Lists should be filed at the company's registered office at least twenty-five days prior to the Shareholders' Meeting called to appoint the Board of Statutory Auditors. They should also be published in accordance with the legal provisions in force at least twenty-one days prior to the same date.

The lists should contain the names of one or more candidates for the office of standing auditor and one or more candidates for the office of deputy auditor. The names of candidates shall be marked by a progressive number, and the number shall not exceed the members of the board to be elected.

If binding criteria relating to gender quotas are applicable, every list that presents at least three candidates must contain a number of candidates of the less represented gender at least equal to the minimum required by the provisions in force at the time.

Additionally, the lists should contain, also annexed, the information, statements and other documents required by law and by applicable regulatory provisions.

If by the deadline for the submission of lists, only one list has been submitted, or only lists have been submitted by shareholders associated with one another under applicable provisions, lists may be submitted within the terms established by law. In this case, the threshold mentioned above for submitting lists is reduced by half.

Shareholders may not submit nor vote for more than one list, even through a third party or a trust company. Shareholders belonging to the same group and shareholders who enter into a shareholders' agreement regarding the issuer's shares may not submit or vote for more than one list, even through a third party or a trust company. A candidate may be present on only one list, or else be deemed ineligible.

Statutory auditors are elected as follows: (i) from the list that obtained the highest number of votes ("Majority List"), two standing auditors and one deputy auditor are taken, based on their progressive number on the list; (ii) from the list that received the second highest number of votes ("Minority List"), which is not linked, even indirectly, to the shareholders who submitted or voted for the Majority List pursuant to applicable provisions, one standing auditor, who shall be the chairman of the Board of Statutory Auditors ("Minority Auditor"), and one deputy auditor ("Minority Deputy Auditor") are taken, based on their progressive number on the list. If the lists receive an equal number of votes, the winning list shall be the one submitted by the shareholders with the highest shareholding at the time the list is submitted or, subordinately, by the highest number of shareholders.

If the Board of Statutory Auditors formed in this way does not include a standing auditor of the less represented gender, if required by the legislation in force at the time, the last candidate elected from the majority list shall be replaced by the first unelected candidate of the same list belonging to the less represented gender. Where this is not possible, the standing auditor of the less represented gender shall be appointed by the Shareholders' Meeting by the majority required by law, replacing the last candidate of the majority list.

If only one list is submitted, the Shareholders' Meeting shall vote on it and if it obtains a relative majority of votes, without taking into account abstentions, all candidates on the list shall be elected to their positions as standing and deputy auditors. The Chairman of the Board of Statutory Auditors shall be the first candidate for the position of standing auditor.

If the Board of Statutory Auditors formed in this way does not include a standing auditor of the less represented gender, if required by the legislation in force at the time, the standing auditor of the less represented gender shall be appointed by the Shareholders' Meeting by the majority required by law, replacing the last candidate of the single list.

In the absence of lists, the Board of Statutory Auditors and the Chairman shall be appointed by

the Shareholders' Meeting by the ordinary majority required by law, without prejudice to the obligation to appoint at least one standing auditor of the less represented gender, if required by the legislation in force at the time.

If for any reason the Majority Auditor is not available, he/she shall be replaced by the deputy auditor taken from the Majority List.

If for any reason the Minority Auditor is not available, he/she shall be replaced by the Minority Deputy Auditor

When the Shareholders' Meeting is asked to appoint members to the Board of Statutory Auditors to replace auditors elected from the Minority List, where allowed by applicable provisions, appointments shall be by relative majority. The votes of shareholders who hold - according to the communications made pursuant to the laws in force, and also indirectly or jointly with other shareholders that have entered into significant shareholders' agreements pursuant to Article 122 of Legislative Decree 58/1998 - the relative majority of the votes that can be exercised at the Shareholder's Meeting, as well as shareholders who control, are controlled or are subject to joint control by the aforementioned, are not taken into account.

In any event, the new Minority Auditor shall also take on the role of Chairman.

In the event that any standing auditor is replaced, gender balance obligations, to the extent that these are provided for by the legislation in force at the time, shall remain binding."

11.2 COMPOSITION AND FUNCTIONING (pursuant to art. 123-bis, paragraph 2, letters d) and d-bis) of the TUF)

The Board of Statutory Auditors in office as of 31 December 2021 was appointed at the Shareholders' Meeting of 27 April 2021 using the list system, and specifically, solely with the Majority List submitted on 31 March 2021 by the shareholder Fingefran S.r.l., which held a total of 8,164,080 Gefran S.p.A. ordinary shares, equal to 56.695% of the share capital.

The current Board shall remain in office until the date of the Shareholders' Meeting to approve the financial statements for the year ending 31 December 2023.

The list included the following candidates:

	Roberta Dell'Apa - Chairwoman of the Board of Statutory Auditors
Standing Auditors	Primo Ceppellini
	Luisa Anselmi
Deputy Auditors	Stefano Guerreschi
	Simona Bonomelli

This list received 8,217,506 votes, representing 57.06% of the share capital.

Personal and professional characteristics of each statutory auditor

A brief curriculum vitae of each statutory auditor is provided below, showing their personal details, expertise and experience in business management.

Roberta Dell'Apa: graduated from Università Cattolica del Sacro Cuore in Milan with a degree in Economics and Commerce, and then passed the national examination for authorisation to practice the profession of chartered accountant and auditor. Practices the profession of chartered accountant with a special focus on business, corporate and fiscal consulting services, specifically in relation to innovative start-ups, including those with a social vocation, and innovative SMEs, as well as a number of aspects of company organisation. She often serves as technical consultant for parties in civil and criminal court cases, and as court-appointed consultant in civil cases, particularly in the banking and finance sector. Auditor of a number of industrial and sales companies. Founding partner in "Studio Dell'Apa Zonca e Associati – Dottori Commercialisti", a corporate and fiscal consultancy established in 2006. Participates actively in institution study commissions set up by her professional order. National chair of the Italian Association of Chartered Accountants - AIDC from March 2013 to February 2017, after serving as chair of the Milanese department. Member of the "Commission for Standards of Conduct and Common Interpretation in Tax Law" of AIDC Milan and Chairman of the "Social Security Commission" of AIDC nation-wide.

Primo Ceppellini: graduated from the Faculty of Economics and Commerce of Pavia University. A member of the Order of Certified Auditors and Accounting Professionals of Pavia since 1990, founder and partner of the professional partnership Ceppellini Lugano & Associati (CLA Consulting srl) with offices in Milan, Vicenza and Voghera (www.claconsulting.it). Registered in the list of Auditors. Auditor of a number of mid-sized to large joint-stock companies. Contributor to the financial newspaper "Il Sole 24 Ore". Member of the scientific committee of the magazines "Il corriere tributario", Ipsoa Editore, and "Norme & Tributi Mese", Il Sole 24 Ore Editore. In November 2021, CLA joined the Deloitte Tax and Legal network and Primo Ceppellini became a partner of Deloitte Tax and Corporate Law Firm. Author of books and other publications on fiscal topics and financial statements, including: Capire la contabilità e il bilancio – publisher Il Sole 24 Ore S.p.A., Guida all'Irap – publisher Il Sole 24 Ore S.p.A., Il testo unico delle imposte sui redditi - publisher Il Sole 24 Ore S.p.A., Operazioni straordinarie – publisher Ipsoa – Wolters Kluwer Group. Has significant professional experience in fiscal and corporate consulting, in the statement of opinions, informative notes, studies and research. Has significant experience as a teacher in the professional development and training of administrative staff in corporations. Participated as a speaker in numerous national conventions organised by consulting services, professional orders and trade associations. Acts as technical defence consultant for large taxpayers in fiscal cases and provides assistance in administrative proceedings with Italy's internal revenue service. Has served as court-appointed consultant stating an opinion on tax issues of particular complexity. With CLA Consulting srl, he provides consulting services in taxes, corporate affairs and corporate and financial restructuring for mid-sized to large companies and groups.

Luisa Anselmi: graduated with honours in Business and Economics from the University of Verona. She has been a chartered accountant since 1990 and an auditor since 1995. After

working at Coopers & Lybrand S.a.s. (now PriceWaterhouseCoopers Spa) and Studio Pirola Pennuto Zei e Associati, in 1994 she founded her own tax and corporate consulting firm, gaining significant experience in professional issues typical of multinational groups. In the course of her career, she has served more than once as court-appointed expert witness of the Court of Brescia. She sits on the Board of Statutory Auditors of a number of prominent Italian companies, some of which are members of multinational groups, such as Nespresso Italiana S.p.A. – Nestlè Group - and Zoogamma S.p.A. - Van Drie Group - . Since 2020 she has been Chairman of the Board of Auditors of Fondazione Brescia Musei (of which she had been a Standing Auditor since 2016), the organisation appointed by the City of Brescia to operate the city's museums.

Board of Statutory Auditors	2021	2020	2019
Number of meetings	10	10	9
Average attendance %	100%	100%	92.6%

In 2021, the Board of Statutory Auditors held 10 meetings lasting an average of 2 hours, which were attended by all members. The Chairman of the Board of Auditors played an active role in all the meetings held by the Control and Risks Committee, enabling a timely exchange of information relating to their duties.

Six meetings have been scheduled for the current year, and as of the date of this Report, the Board of Statutory Auditors has already met twice.

There has been no change in the composition of the Board of Statutory Auditors since the end of the year.

Pursuant to the law, the statutory audit is assigned to an external auditing firm, which is subject to the audit regulations governing listed companies and supervision by Consob.

The Board of Statutory Auditors is therefore responsible for supervising compliance with the law and the memorandum of association, as well as observance of the principles of good management in carrying out corporate activities and monitoring the appropriateness of the Company's organisational structure, internal control system and administrative and accounting system.

The Managing Bodies have duly and promptly reported to the Board of Statutory Auditors on the activities carried out, general management trends and their evolution. During Board meetings, the Board of Statutory Auditors was updated with regard to company dynamics and corporate affairs as well as the main developments in the legislative framework.

With the entry into force of Legislative Decree 39/2010, the Board of Statutory Auditors has been identified as the "internal control and auditing committee", to which this decree attributes supervisory functions regarding the financial reporting process, the effectiveness of the internal control, internal audit and risk management systems, the independent audits of annual and consolidated accounts, and the independence of the external auditor.

In performing its duties, the Board of Statutory Auditors works in concert with the Internal Audit Department and the Control and Risks Committee, through information flows and, more importantly, the Chairman of the Board of Statutory Auditors' constant attendance at committee meetings.

The induction initiatives mentioned above for the Board of Directors were also attended by members of the Board of Statutory Auditors.

Diversity criteria and policies

The Issuer has not adopted diversity policies in relation to the composition of the control bodies in view of aspects such as age, gender, and educational and career paths. However, for Gefran, diversity is a value that generates dialogue and a strategic resource for innovation and change, and as such, it must be protected. In view of the forthcoming renewal of corporate bodies, the introduction of a policy in this respect may be considered.

Statutory Auditors must possess the pre-requisites established by law and other applicable regulatory provisions. Concerning professional requirements, the Company strictly operates in the following areas and business sectors: electronic automation for the Sensors industry and industrial Components.

Information on diversity criteria and policies adopted by the Company can be found in the section 4.3 of the Report on Diversity Criteria and Policies in Board composition of the Board and Company Organisation, to which reference should be made.

At least one third of the members of the Board of Statutory Auditors are statutory auditors of the least represented gender.

Independence

The Articles of Association define the quantitative and qualitative criteria for assessing the significance of circumstances of relevance for assessing the independence of statutory auditors pursuant to the Code. Statutory Auditors must possess the pre-requisites established by law and other applicable regulatory provisions.

The newly elected Board of Statutory Auditors verified compliance with the criteria for independence in the meeting held at the end of the Shareholders' Meeting of 27 April 2021, notifying the Board of Directors of the positive outcome and disclosing the outcome of these assessments in a press release to the market on the same date.

In carrying out the above assessments, the Board applies the criteria set out in the CG Code with regard to the independence of Directors, as well as the further independence requirements specified in art. 148, paragraph three, of Legislative Decree 58/98.

The members of the Board of Statutory Auditors continued to meet the independence requirements throughout the year. In making these assessments, all the information provided by each member of the Board of Statutory Auditors was considered, evaluating all the circumstances

that might appear to compromise their independence, as identified in the TUF and the CG Code. In addition, all the criteria set forth in the GC Code with regard to the independence of directors were applied (among other criteria).

Remuneration

The Board of Directors of the Company, also in the light of the considerations expressed by the control body in the "Report on the self-assessment of the Board of Statutory Auditors" of 4 February 2021, in the section entitled "art. q.1.6 of the rules of conduct of the Board of Statutory Auditors of listed companies", considers the current remuneration, equal to a total of 70,000.00 (seventy thousand) Euro per year of their mandate, including 30,000.00 (thirty thousand) Euro for the Chairman of the Board of Statutory Auditors and 20,000.00 Euro for each Standing Auditor.

In light of the assessments contained therein on 27 April 2021 the Shareholders' Meeting voting to approve an annual fee of 30,000.00 Euro for the Chairman and 20,000.00 for each Standing Auditor, in addition to reimbursement of expenses incurred in carrying out the appointment.

The remuneration of the Statutory Auditors is commensurate with the Auditors' skills, professional qualifications, and the work required by the importance of the position held, as well as the Company's size and sector.

As in the case of the Directors, there is also a D&O (Directors & Officers) Liability insurance policy covering Statutory Auditors.

Management of interests

In addition, pursuant to Recommendation 37 of the Corporate Governance Code, any Auditor who has an interest in a specific Company transaction, on his/her own account or on behalf of third parties, must promptly and comprehensively inform the other Auditors and the Chairman of the Board of Statutory Auditors of the nature, terms, origin and extent of his/her interest.

12. RELATIONS WITH SHAREHOLDERS

Access to information

The Company communicates with investors via its Internet site (www.gefran.com), which includes an easily identifiable and accessible Investor Relations area featuring press releases, a calendar of company events, financial information and periodic and annual financial reports. To complete this information, the "Governance" section contains information on the Group's structure, corporate governance and all documents of use for in-depth knowledge of the Company and to allow shareholders to cast informed votes.

The figure of Investor Relator, obligatory for Gefran as a company listed in the Euronext STAR Milan segment of Borsa Italiana, the Italian Stock Exchange, is now held by Dr. Fausta Coffano, appointed to supervise relations with shareholders and stakeholders, an aspect to which the Company attributes great importance.

The Investor Relator regularly sends mailing list subscribers updates on this area of the website and information sent to Borsa Italiana and Consob.

The Investor Relations department maintains regular contact with investors and organises collective and one‐to‐one meetings in the main financial centres in Italy and abroad. The Investor Relations section on the Company's website also contains documents presented to the financial community.

Investor requests for information may be addressed to the Investor Relations office:

Fausta Coffano Via Sebina 74, 25050 Provaglio d'Iseo Tel: 030/9888.1 Fax: 030/9888300 fausta.coffano@gefran.com

Relations with Shareholders

On 10 March 2022, the Gefran Board of Directors, following a proposal by its Chairwoman in agreement with the Chief Executive Officer, adopted the "Policy for the Management of Dialogue with Shareholders and Investors", also taking into account the engagement policies adopted by institutional investors and asset managers. This policy is the document through which the Issuer implements Principle IV of Article 1 and Recommendation 3 of the Corporate Governance Code.

The adoption of the Policy falls under the principle that has always characterised the Company of valuing correct dialogue with its shareholders and investors with a view to creating value in the medium to long term. The Company has an interest in ensuring that this dialogue provides Recipients with information that is clear, complete, correct, truthful and not misleading.

The Policy can be found on the Company's Internet site at www.gefran.com, in the Investor Relations section.

13. SHAREHOLDERS' MEETINGS (pursuant to article 123-bis, paragraph 1, letter I) and paragraph 2, letter c) of the TUF)

Shareholders' Meetings are called in accordance with the law and the Articles of Association by notice generally published at least thirty days prior to the date set for the meeting (first call), or at least forty days prior to the date set for meetings called to elect the members of the Board of Directors and Board of Statutory Auditors, and in other cases prescribed by law according to the items on the agenda.

The notice of call contains the date, time and place of the meeting, and the list of items to be discussed.

The notice of call shall also contain a description of the procedures the shareholders must comply with in order to attend and exercise their right to vote at the meeting, as well as information regarding (i) the right to ask questions before the meeting, (ii) the terms and procedures for exercising the right to add items to the agenda, (iii) the procedure for exercising proxy voting.

The Shareholders' Meeting may not pass resolutions on items not included on the agenda.

Within five days of the publication of the notice of call of the Shareholders' Meeting, shareholders who, individually or jointly, represent at least one fortieth of the share capital may ask to add to the list of items on the agenda, providing details of the proposed items to be discussed in their request. The Shareholders' Meeting is responsible for passing resolutions – in both ordinary and extraordinary sessions – on matters reserved to it by law or the Articles of Association, as well as matters that the Board considers appropriate to submit to the shareholders' examination.

Gefran's Articles of Association grants the Board of Directors powers to decide on the following matters, subject to legal limitations:

• mergers pursuant to articles 2505 and 2505-bis of the Civil Code;
• the establishment and closure of secondary offices;
• any reduction in share capital in the event of a withdrawal by shareholders;
• amendments to the Articles of Association and the Shareholders' Meeting Regulations to comply with regulatory provisions;
• transfer of the registered office within Italy.

The Shareholders' Meeting is convened by the Board of Directors in a summons published as required by law. Where obligatory under the law, the summons must also be published in a national newspaper.

The Company may issue a third call for extraordinary meetings. When a Shareholders' Meeting is called to appoint directors and auditors, when required by law and/or the regulations in force at the time, the notice of meeting must specify the quorum required to submit lists of candidates and the calculation criteria used, subject to compliance with all other legal requirements.

Meetings may be held outside the Company's registered office, as long as they are held in Italy.

Ordinary and extraordinary meetings are held and resolutions are passed in accordance with the law.

The Company has drawn up regulations to ensure that meetings are conducted in a smooth and orderly manner, available on the Company's Internet site www.gefran.com, in the Governance > Shareholders' Meetings section.

Under the Articles of Association, each share gives the right to one vote.

Shareholders are entitled to attend Shareholders' Meeting provided they meet the conditions provided for by art. 2370 final paragraph of the Italian Civil Code, and art. 83-sexies of the TUF, that is, those who own shares in the Company as of the close of the seventh day of trading prior to the date set for the Shareholders' Meeting.

The provisions of the law apply to representation at Shareholders' Meetings.

The Company shall be notified of the mandate in electronic form, in accordance with the procedures established by the applicable ministerial regulations.

The Board shall provide shareholders with sufficient information to enable them to make the decisions pertaining to the Shareholders' Meeting with full knowledge of the facts. Pursuant to article 127‐ter of Legislative Decree 58/98, shareholders are entitled to ask questions relating to the agenda up to two days prior to the meeting by sending a registered letter to the Company's registered office or to the email address gefran@legalmail.it, together with a statement certifying that they are eligible to attend and vote at meetings, or a certificate issued by the brokers holding the shares owned by such shareholders. The Company may answer these questions at the Shareholders' Meeting at the latest.

The chairman of the Shareholders' Meeting moderates the debate, giving the floor to the directors, auditors and anyone entitled to speak. Each shareholder may speak only once on any item on the agenda. In order to encourage the broadest possible participation, the time allowed for each intervention must be limited as a rule to ten minutes. Replies may not exceed five minutes. After replies, the chairman of the Shareholders' Meeting declares the debate closed. Only brief voting is allowed following the end of the debate.

The Shareholders' Meeting held on 27 April 2021 was attended by all Company Directors and Auditors. The Shareholders' Meeting held on 30 September 2021 was attended by all Company Directors and Auditors.

During the Shareholders' Meeting, the Board of Directors reported on its completed and planned activities, endeavouring to ensure that shareholders had sufficient information to make informed decisions on the matters before the Shareholders' Meeting.

The Board did not consider it necessary to submit proposals to the Shareholders' Meeting in relation to the provisions of Recommendation 2 of the CG Code, considering the current system of corporate governance to be functional.

The Board expressed specific proposals regarding all the items on the agenda submitted to the Shareholders' Meeting, and no proposals were received from members other than those formulated by the Board.

There were no significant changes in the Company's shareholding structure.

14. ADDITIONAL CORPORATE GOVERNANCE PRACTICES (pursuant to article 123-bis, paragraph 2, letter a), second part of the TUF)

The Issuer does not apply additional corporate governance practices beyond those already described above.

15. CHANGES OCCURRING SINCE THE END OF THE YEAR

No changes in the Company's corporate governance structure have occurred since the end of the year.

16. CONSIDERATIONS REGARDING THE LETTER FROM THE CHAIRMAN OF THE CORPORATE GOVERNANCE COMMITTEE

The letter sent by the Chairman of the Corporate Governance Committee of Borsa Italiana (the Italian Stock Exchange) to listed companies on 06 December 2021 (the "Letter") was discussed with the Chairman of the Board of Directors, the Chief Executive Officer and the Chairman of the Board of Statutory Auditors on 06 December 2021. The Letter was then made available to the entire Board of Directors and Board of Statutory Auditors.

The recommendations made in the letter were carefully examined by the Independent Directors in the 03 March 2022 meeting, after which they expressed their suggestions to the Board of Directors and the Board of Statutory Auditors in the 10 March 2022 meeting.

The recommendations were also taken into consideration in the self-assessment process in order to identify possible new developments in governance and address any gaps in the application or explanations provided.

In view of these recommendations, Gefran S.p.A. provides the following information:

Note 1:

Gefran has adopted a Strategic Sustainability Plan, the result of an activity involving all stakeholders of significance to the Company. The Company's strategies take into account the results of the Strategic Sustainability Plan, which led to the approval of a number of projects identified in the Plan which have therefore been integrated into the Group's strategy. Stakeholder engagement initiatives are carried out on a regular basis. The Strategic Plan is periodically updated.

The policy of dialogue with all shareholders is published in full on Gefran's Internet site. The Corporate Governance Report lists the measures adopted.

Note 2:

Under the Corporate Governance Code, Gefran is a "non-large" company with "concentrated ownership".

Gefran is classifiable as a non-large company, understood as a company whose capitalisation did not exceed 1 billion Euro on the last trading day of the previous three calendar years.

Gefran is classified as a company with "concentrated ownership", that is, a company in which one or more shareholders directly or indirectly (through subsidiaries, trust companies or intermediaries) exercise a majority of the votes that may be cast in the ordinary shareholders' meeting.

Note 3:

The Regulations of the Company's Board of Directors specify the criteria for assessing the significance of the relationships under examination.

The Chairman of the Board of Directors is a non-independent Executive Director.

Note 4:

On 1 October 2020, the Company adopted the Board of Directors' Regulations expressly regulating the deadline by which documents must be provided to members of the Board of Directors in preparation for Board meetings. No exemptions to these deadlines are allowed for confidentiality reasons.

The Report on corporate governance and ownership structure reports the deadlines specified in these Regulations. There have not been any exceptional cases which made it impossible to comply with this deadline.

Note 5:

In accordance with the Corporate Governance Code, Gefran is a company with "concentrated ownership" and does not fall within the scope of this recommendation. Nevertheless, the Board of Directors of the Company, also taking into account the results of the self-assessment questionnaires, in view of the renewal of the Board of Directors, provided shareholders with its own guidelines regarding the size of the new Board of Directors and the characteristics of its members, and reported this in the Board of Directors' Report on the points on the agenda of 6 April 2020.

Note 6:

Gefran has taken measures to promote equal treatment and gender opportunities within the entire corporate organisation, and monitors its implementation. The Company notes this in the "Policy for People in Gefran" of 28 January 2021, published on the company's intranet and in its Strategic Sustainability Plan, approved in November 2020 by the Sustainability Committee and most recently updated in November 2021, available on the Internet site www.gefran.com.

The Report on Corporate Governance and Ownership Structure for 2021 refers to the corporate documents in which Gefran acknowledges the measures identified to promote equal treatment and gender opportunities throughout its entire organisation and monitoring of concrete implementation of these activities.

Note 7:

Gefran defines clear, measurable rules for the disbursement of the variable component of pay; reference is made in this regard to the Report on Remuneration Policy and Pay. No termination indemnities are paid other than those payable under the law or collective bargaining agreements.

The parameters identified for variable remuneration are considered to be consistent with the strategic objectives of the business and the pursuit of sustainable success. It should also be noted that the pursuit of sustainable success is a variable part of the MbO for the CEO and other Senior Management.

Provaglio d'Iseo, 10 March 2022

For the Board of Directors The Chairwoman Maria Chiara Franceschetti

TABLE 1: INFORMATION ON OWNERSHIP STRUCTURE AS OF 31.12.2021

STRUCTURE OF SHARE CAPITAL
	No. of shares	no. voting rights	Listed (indicate the markets) / unlisted	Rights and obligations
Ordinary shares (the possibility of a majority of voting rights is not envisaged)	14,400,000	14,400,000	Listed - Euronext STAR Milan	ordinary
Preference shares
Multi-vote shares
Other categories of shares with voting rights
Savings shares
Convertible Savings Shares
Other non-voting categories of shares
Other

OTHER FINANCIAL INSTRUMENTS
	(entitling their owners to subscribe newly issued shares)
	Listed (indicate the markets) / unlisted	no. of instruments in circulation	Category of shares at the service of conversion/exercise	No. of shares at the service of conversion/ exercise
Convertible bonds Warrants

MAJOR SHAREHOLDINGS
Declarant	Direct shareholder	% of ordinary share capital	% share of voting capital
Giovanna Franceschetti (as representative of the undivided ownership of Franceschetti Maria Chiara and Franceschetti Andrea)	FINGEFRAN S.R.L.	7,634,522	53.018

TABLE 2: STRUCTURE OF THE BOARD OF DIRECTORS AT THE END OF THE FINANCIAL YEAR

Board of Directors
Office	Members	Year of birth	Date of first appointment*	In office from	In office to	List (present ers)**	List (M/m) **	Exec.	Non-E xec.	Indep. Code	Indep. TUF	of fic ot he es r	Share *
Honorary Chairman	Ennio Franceschetti	1942	07/05/1991	28.04.2020	meeting to approve financial statements at 31.12.2022	Not applicable	M	X				0	8/8
Chairwoman	Maria Chiara Franceschetti	1969	15/12/2003	28.04.2020	meeting to approve financial statements at 31.12.2022	Not applicable	M	X				0	8/8
Director	Andrea Franceschetti	1977	04/05/2011	28.04.2020	meeting to approve financial statements at 31.12.2022	Not applicable	M	X				0	7/8
Director	Giovanna Franceschetti	1976	23/04/2008	28.04.2020	meeting to approve financial statements at 31.12.2022	Not applicable	M	X				0	8/8
Director •	Marcello Perini	1969	16/12/2019	28.04.2020	meeting to approve financial statements at 31.12.2022	Not applicable	M	X				0	8/8
Director	Daniele Piccolo	1962	01/10/2012	28.04.2020	meeting to approve financial statements at 31.12.2022	Not applicable	M		X		X	0	8/8
Director○	Monica Vecchiati	1961	29/04/2014	28.04.2020	meeting to approve financial statements at 31.12.2022	Not applicable	M		X	X	X	0	8/8

Director	Cristina Mollis	1974	28/04/2020	28.04.2020	meeting to approve financial statements at 31.12.2022	Not applicable	M		X	X	X	1	8/8
Director	Giorgio Metta	1970	28/04/2020	28.04.2020	meeting to approve financial statements at 31.12.2022	Not applicable	M		X	X	X	0	8/8
------------------DIRECTORS WHO LEFT OFFICE DURING THE YEAR------------------
-	-	-	-	-	-	-	-	-	-	-	-	-	-

Indicate the number of meetings held during the year: 8 (eight)

Indicate the quorum required for the presentation of lists by minorities for the election of one or more members (pursuant to Art. 147-ter TUF): 2.5%

NOTES

The following symbols should be added to the "Position" column:

• This symbol identifies the director responsible for the internal control and risk management system.
• This symbol identifies the Lead Independent Director (LID).
• * The date of first appointment of each director is defined as the date on which the director was appointed to the Issuer's Board of Directors for the first time (absolutely).
• (**) This column indicates whether the list from which each director was drawn was presented by shareholders (indicating "Shareholders") or by the Board of Directors (indicating "BoD"). Not applicable to the Issuer as the Articles of Association do not permit presentation of a list by the Board of Directors.
• (***) This column indicates whether the list from which each director was drawn was presented by majority shareholders ("M") or by minority shareholders ("m").
• (****) This column indicates the number of appointments as director or statutory auditor held by the person in question in other listed companies or companies of significance size. Appointments are identified in full in the Corporate Governance Report.
• (*****)This column reports directors' attendance of meetings of the Board of Directors (specifying the number of meetings attended with respect to the total number of meetings that could have been attended; for example, 6/8; 8/8, etc.).

TABLE 3: STRUCTURE OF BOARD COMMITTEES AT THE END OF THE FINANCIAL YEAR

B.o.D.		Control and Risk Committee (also OPC Committee)		Appointments and Remuneration Committee	Sustainability Committee
Position/Qualification	Members	(*)	(**)	(*)	(**)	(*)	(**)
Vice Chairwoman and Executive Director - not independent	Giovanna Franceschetti					2/2	C
Chief Executive Officer	Marcello Perini					2/2	M
Non-executive Director - independent under TUF and the Code	Monica Vecchiati	5/5	C	3/3	M
Non-executive Director - Not independent under the Code - Independent under TUF	Daniele Piccolo	5/5	M	3/3	M
Non-executive Director - independent under TUF and the Code	Giorgio Metta	5/5	M
Non-executive Director - independent under Cristina Mollis TUF and the Code				3/3	C	2/2	M
No. of meetings held during the year:		5		3	2

NOTES

(*) This column reports directors' attendance of committee meetings (specifying the number of meetings attended with respect to the total number of meetings that could have been attended; for example, 6/8; 8/8, etc.).

(**) This column reports the director's position on the committee: "C" means Chairman; "M": member.

Director Daniele Piccolo held the position of Chairman of the Appointments and Remuneration Committee until 16 December 2021

TABLE 4: STRUCTURE OF THE BOARD OF STATUTORY AUDITORS AT THE END OF THE FINANCIAL YEAR

Board of Statutory Auditors
Office	Members	Year of birth	Date of first appointment*	In office from	In office to	List (M/m)**	Indep. Code	Attendance of meetings of the Board of Statutory Auditors***	no. of other offices held****
Chairwoman	Roberta Dell'Apa	1963	20.04.2017	27.04.2021	meeting to approve financial statements at 31.12.2023	M	X	10/10	7
Standing auditor	Primo Ceppellini	1963	29.04.2015	27.04.2021	meeting to approve financial statements at 31.12.2023	M	X	5/5	19
Standing auditor	Luisa Anselmi	1966	24.04.2018	27.04.2021	meeting to approve financial statements at 31.12.2023	M	X	10/10	3
Deputy auditor	Stefano Guerreschi	1959		27.04.2021	meeting to approve financial statements at 31.12.2023	M
Deputy auditor	Simona Bonomelli	1972		27.04.2021	meeting to approve financial statements at 31.12.2023	M
---------------------AUDITORS WHO LEFT OFFICE DURING THE YEAR----------------------------
Chairman	Marco Gregorini	1970	29.04.2015	24.04.2018	meeting to approve financial statements at 31.12.2020	M	X	5/5

Indicate the number of meetings held during the year: 10

Indicate the quorum required for the presentation of lists by minorities for the election of one or more members (pursuant to Art. 148 TUF): 2.5

NOTES

• (*) The date of first appointment of each auditor defined as the date on which the auditor was appointed to the issuer's Board of Directors for the first time (absolutely).
• (**) This column indicates whether the list from which each auditor was drawn was presented by majority shareholders ("M") or by minority shareholders ("m",
• (***) This column reports auditors' attendance of meetings of the Board of Statutory Auditors (specifying the number of meetings attended with respect to the total number of meetings that could have been attended; for example, 6/8; 8/8, etc.).
• (****) This column specifies the number of offices of director or statutory auditor held by the person in question under art. 148-bis TUF and the provisions for its implementation contained in the Consob Issuers' Code. Consob publishes a complete list of offices on its internet site under art. 144-quinquiesdecies of the Consob Issuers' Regulations.

GEFRAN S.P.A.

SELF-ASSESSMENT REPORT OF THE BOARD OF STATUTORY AUDITORS 1 FEBRUARY 2022

SELF-ASSESSMENT REPORT OF THE BOARD OF STATUTORY AUDITORS - 1 FEBRUARY 2022

This document briefly sums up the analyses conducted and the conclusions stated in the 1 February 2022 self-assessment meeting of the Board of Statutory Auditors.

1. Method and phases of the self-assessment process

The self-assessment process was conducted in the phases described below.

Preliminary phase

Figures and information of significance for the purposes of self-assessment, collected in person by filling in a questionnaire specifically intended for the auditing body, the results of which are summed up and processed in a separate spreadsheet (915f22_Autovalutazione CS 2022.xlsx), supported assessment of the body as a whole and of its individual members.

Processing of the figures and information collected

On 01 February 2022, the processing of the information collected in the three questionnaires was assessed, as summed up below:

(scale of values used for self-assessment: Unsatisfactory (NO): score 1; Partially unsatisfactory: score 2; Partially satisfactory: score 3; Satisfactory (YES): score 4; and therefore a score ranging from a minimum of 1 to a maximum of 4)

BODY (BOARD OF STATUTORY AUDITORS)

Composition

9 questions; average self-assessment score 4.0;

1. of the 9 points regarding the composition of the body, 1 is identified as not applicable, while the remaining 8 were considered satisfactory by all members;

Functioning

15 questions; average self-assessment score 4.0;

1. the maximum score (satisfactory) was awarded to the 15 aspects taken into consideration;

INDIVIDUAL MEMBER (BOARD OF AUDITORS)

Member's contribution

3 questions; average self-assessment score 4.0;

1. all members awarded the maximum score (satisfactory) for all 3 questions;

Others of other members

2 questions; average self-assessment score 4.0;

1. all members awarded these 2 questions the maximum self-assessment score (satisfactory).

The detailed information on the composition of the Board of Statutory Auditors was then assessed, along with information concerning the number and type of positions held by Auditors in other companies.

Preparation of the results of the process, examination by the Board and approval

The Chair and Auditors analysed the responses to different assessment profiles, also in view of their consistency, taking the aspects identified into consideration, stating any comments and suggesting possible actions for improvement of the body's efficiency.

The text of the Self-Assessment Report was then determined, taking into account the results that had emerged and focusing on possible actions to be taken.

2. Parties involved

Self-assessment activities took place with the involvement of all auditors, the chair and the standing auditors.

3. Results obtained: principal conclusions of the self-assessment process

Composition of the Board of Statutory Auditors

Quantitative profile

The numerical composition of the Board of Statutory Auditors does not pose any problems of consistency as it is determined by the Company's articles of association on the basis of the provisions of the civil code: the Board of Statutory Auditors is currently composed of 3 standing auditors and 2 substitute auditors.

Qualitative profile

The members of the body, in general:

• are aware of the powers and obligations inherent in their functions;
• are in possession of the professional skills required for their position, in view of the company's operations and size;
• are in possession of sufficient know-how, only partially diversified, to ensure effective governance of risk in all areas in the company;
• dedicate sufficient time and resources for the complexity of their tasks;
• comply with the limits on number of positions held;
• perform their tasks with independence of judgement, protecting the interests of the company as a whole.

The members of the Board of Statutory Auditors are self-employed professionals registered in the Register of Chartered Accountants and the Register of Legal Auditors.

The auditors' skills and experience are those associated with the profession of chartered accountant, with different backgrounds and fields of specialisation in bookkeeping, taxation, corporate law and insolvency proceedings.

Two of the standing auditors are female and one is male, while one substitute auditor is female and the other male.

The distribution of the standing auditors and deputy auditors in terms of age range is balanced and appropriate.

Functioning of the Body

As for the sufficiency of the amount of time the statutory auditors spend on their supervisory tasks, note that, in addition to their periodic meetings, the Board of Statutory Auditors attends Shareholders' Meetings and meetings of the Board of Directors, the Control and Risks Committee, the Appointments and Remuneration Committee and the Sustainability Committee as well as the induction meetings set up by the Board of Directors or by the committees set up by the board.

The frequency of these meetings and checks is considered appropriate and consistent with the features of the company's operations and the seniority of the auditors. The amount of time dedicated to performance of their functions is therefore considered appropriate, also in view of their systematic attendance of the meetings of other company bodies and the positions they hold in other companies, specified above.

The results obtained in planning of supervisory tasks, the methods for keeping and storing the minutes of the meetings and details of the resolutions of the Board of Statutory Auditors and supporting or working documents are considered adequate.

Ongoing discussion and dialogue allow the Board to achieve optimal, effective dialectic discussion. The Chair's efficacy is confirmed.

Individual members' contributions to the functioning of the body are effective and essential, and they always agree with the Board of Statutory Auditors' conclusions. The amount of time dedicated to discussion and individuals' contributions are considered sufficient, as is the space allocated to necessary internal debate. All Auditors participate effectively and sufficiently, with a homogeneous level of information. Dialectic discussion is encouraged, and is concise and effective.

4. Areas for improvement and any corrective actions planned

Taking account of what is set out in the preceding paragraphs, the Board of Statutory Auditors does not consider there are corrective actions to implement; however, it believes it is right to continue with the following actions:

• Improvement of knowledge of relations with subsidiaries and of information flows within the Group;
• Deepening of knowledge of internal policies and regulations;
• In the context of individual members' personal professional development, continuous deepening of knowledge of typical topics involving listed companies as well as deepening of knowledge of ESG and sustainability.

5. Independence

The Board of Statutory Auditors conducts an annual check of independence as required by the new Corporate Governance Code and the Regulations for boards of statutory auditors in listed companies issued by the National Council of Chartered Accountants and Accounting Experts (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili), and acknowledges that every member declares his or her independence as required by the law, the Company's articles of association, and the codes of conduct adopted by the Company.

Specifically, every auditor has presented his or her CV, which is filed among the working documents, and declared possession of the requirements of independence under recommendation 9 in the Corporate Governance Code, also declaring that he or she has not exceeded the maximum total number of positions that may be held and has no reason to forfeit the post.

The Board of Statutory Auditors, appointed on 27 April 2021, in compliance with the Rules of Conduct for boards of statutory auditors of listed companies issued by the National Council of Chartered Accountants and Accounting Experts (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili), specifies that it met 5 times in the past year, with an average meeting duration of 104 minutes. The Board attended all meetings of the Board of Directors, the Control and Risks Committee, the Appointments and Remuneration Committee and the Sustainability Committee, with each member spending 20 days a year on the work involved in the position, including personal professional development sessions.

Provaglio d'Iseo, 01 February 2022

For the Board of Statutory Auditors

Roberta Dell'Apa Chairwoman