	1.0 ISSUER PROFILE	5
CORPORATE	2.0 INFORMATION ON THE OWNERSHIP STRUCTURE	6
GOVERNANCE	a) Share Capital Structure
	b) Restrictions on the transfer of securities
REPORT	c) Significant equity interests
	d) Shares that confer special rights
	e) Restrictions on voting rights
	f) Agreements among shareholders
	g) Mandates to increase share capital and authorisations to purchase treasury shares
	3.0 COMPLIANCE	16
	4.0 BOARD OF DIRECTORS	17
	4.1 Role of the Board of Directors 4.2 Appointment and Substitution
	4.3 Composition
	4.4 Functioning of the Board of Directors
	4.5 Role of the Chairman of the Board of Directors
	4.6 Executive Directors
	4.7 Independent directors and Lead independent director
	5.0 MANAGEMENT OF CORPORATE INFORMATION	34
	6.0 INTERNAL BOARD COMMITTEES	35
	7.0 DIRECTORS' SELF-ASSESSMENT AND SUCCESSION – APPOINTMENTS COMMITTEE	36
	7.1 Directors' self-assessment and succession
	7.2 Appointments Committee
	8.0 DIRECTORS' REMUNERATION - REMUNERATION COMMITTEE	38
	8.1 Directors' remuneration
	8.2 Remuneration Committee
	9.0 INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM - CONTROLS AND RISKS COMMITTEE 9.1 Director in charge of the internal control and risk management system	39
	9.2 Controls and Risks Committee
	9.3 Internal auditing department manager
	9.4 Organisational model pursuant to Legislative Decree no. 231/2001
	9.5 Independent Auditors
	9.6 Appointed Manager in charge of drafting corporate financial reports and other corporate
	roles and functions
	9.7 Coordination among the subjects involved in the internal control and risk management system
	10.0 THE INTERESTS OF DIRECTORS AND TRANSACTIONS WITH RELATED PARTIES	48
	11.0 BOARD OF STATUTORY AUDITORS	49
	11.1 Appointment and Substitution
	11.2 Composition and functioning
	12.0 RELATIONS WITH SHAREHOLDERS	53

	13.0 MEETINGS	54
	14.0 COMMENTS ON THE LETTER FROM THE CHAIRMAN OF THE CORPORATE GOVERNANCE COMMITTEE	55
	TABLE 1: STRUCTURE OF THE BOARD OF DIRECTORS AT THE END OF THE FINANCIAL YEAR	56
	TABLE 2: STRUCTURE OF THE BOARD COMMITTEES AT THE END OF THE FINANCIAL YEAR	57
	TABLE 3: STRUCTURE OF THE BOARD OF STATUTORY AUDITORS AT THE END OF THE FINANCIAL YEAR	58
	TABLE 4: POSITIONS THE DIRECTORS HOLD IN OTHER COMPANIES	59

| Corporate Governance Report

4 |

CORPORATE GOVERNANCE REPORT

1.0 Issuer profile

The Hera Group was born in 2002 out of the integration of 11 Emilia-Romagna public service companies, and in the subsequent years continued its territorial growth in order to expand its core business, in particular through the subsequent merger of important companies (Agea Spa, Meta Spa, Sat Spa, Acegas Aps Spa and Amga Azienda Multiservizi Spa), and most recently through its partnership with Ascopiave Spa in the commercial energy sector.

Hera is one of the leading Italian multi-utilities in the environmental services, water, gas and electricity businesses, with more than 9,000 employees, counting both open-ended and fixed-term contracts. The Company, the majority of whose share capital is owned by the state, has been listed on the Mercato Telematico of Borsa Italiana S.p.A. since 26 June 2003 and operates mainly in the Emilia Romagna region in the territories of Bologna, Ravenna, Rimini, Forlì, Cesena, Ferrara, Modena, and Imola as well as the Veneto, Friuli-Venezia Giulia, Marche and Abruzzo Regions. Hera is an Issuer that uses the traditional governance system and its organizational structure is versatile and capable of adapting to an economic, business and regulatory, technological, environmental and human capital context that is increasingly volatile and affected by significant changes.

Hera is an Issuer that uses the traditional governance system and its organizational structure is versatile and capable of adapting to an economic, business and regulatory, technological, environmental and human capital context that is increasingly volatile and affected by significant changes. Since its inception, Hera has developed a trajectory of growth both organic and along external lines.

Its development strategy entails actions to support organic growth in the businesses already served, but also consolidation and acquisition operations to expand the current perimeter of operations, maintaining the Group's solid financial structure in the context of a shared industrial vision.

On the internal front, Hera addresses all possible opportunities for developing activities in its businesses, leveraging innovation, efficiency and excellence.

The strategy for external lines of growth is based on three cornerstones:

mergers and consolidation with other multi-utility companies, activities in which the Group has a long and successful track record;
the acquisition of companies in the individual supply chains it serves, with the aim of accelerating the growth of its customer base and supplementing its facilities-industrial structure;
participation in tenders for awarding concessions for the provision of regulated services.

Over the years, the Hera Group has, however, implemented a plan to rationalise its shareholdings, reducing their number significantly and more effectively merging the various companies by business area and geographical contiguity.

Hera is also committed to acting every day to enhance the experience and develop the skills of its employees, and to promote cooperation and the exchange of knowledge, so that work is a source of satisfaction and pride for everyone involved as well as an important factor for the success of the company.

Hera's goal is to become the best multi-utility in Italy for its customers, workforce and shareholders. It aims to achieve this through further development of an original corporate model capable of innovation and of forging strong links with the areas in which it operates, while respecting the local environment.

As early as 2003, Hera included Corporate Social Responsibility in its strategy, a concept which has since evolved into the broader perspective of shared value, understood as a tool for increasing competitiveness and a key factor for achieving sustainable success, in keeping with the guidelines identified by the United Nations.

During the shareholder's meeting of 28 April 2021, Hera modified article 3 of the Articles of Association, integrating it with the corporate purpose that the Company aims to achieve in carrying out its business activities.

Therefore, by making this aim explicit, the Company has confirmed and outlined its commitment to developing a business model geared towards creating value for its shareholders by creating shared value together with its stakeholders.

In this regard, as more fully detailed in the consolidated non-financial statement pursuant to Articles 3 and 4 of Legislative Decree 254/2016, available on the website www.gruppohera.it in the "Sustainability Section", Hera organizes and carries out its business activities with the aim of fostering social equity and contributing to the achievement of carbon neutrality, the regeneration of resources and the resilience of its system of services managed for the benefit of customers, the local ecosystem and future generations. In compliance with Principle I of the Corporate Governance Code referred to below, therefore, Hera means to reaffirm its commitment to corporate social responsibility and sustainability, principles that have constituted a distinctive factor of the Company's relationship with all its stakeholders since its establishment, with the awareness that the points of intersection between business activities and the local ecosystem represent opportunities for the creation of shared value and, therefore, of lasting prosperity for the Group. In this respect, Hera was the first Italian multi-utility to be included in the Down Jones Sustainability Index, a global stock market index for assessing social responsibility.

Hera has further strengthened its commitment to the energy transition and circular economy through innovation and digitalization, as well as its engagement in promoting social equity. Hera believes that creating shared value in these areas represents a guarantee for achieving its "Purpose" and for continuing to act as a company capable of "leaving a mark and not a footprint", prioritizing the three parameters of "Planet, People and Prosperity" at the top of its business model as the fundamental rationale behind its development.

The Mission and Values outline the guidelines for corporate behaviour contained in the Code of Ethics and shape every action taken by and relationship maintained by the Group. Mission, values and shared conduct represent the strategic and cultural framework within which the industrial plan is formulated, results are reported transparently through the consolidated non-financial statement, and economic planning is defined on an annual basis.

Hera grants special attention to dialoguing with its stakeholders and the local area in which it operates, consolidating positive results achieved in terms of creating value and demonstrating the Group's ability to grow despite the current complex economic conditions.

The Board of Directors bases its activities on the pursuit of sustainable success, supported in this direction by the Ethics and Sustainability Committee which has the task, among others, of supervising the sustainability aspects of the company's operations.

According to the classifications of the Corporate Governance Code, Hera Spa falls within the scope of large companies with non-concentrated ownership, having presented a capitalization of more than one billion euros on the last day of the open market for the years 2019, 2020 and 2021.

2.0 Information on the ownership structure (pursuant to Article 123-bis, paragraph 1, letter a) of the Consolidated Finance Act (hereafter TUF) at 23 March 2022

a) Share capital structure (pursuant to Article 123-bis, paragraph 1, letter a) of the TUF) The share capital is Euro.1,489,538,745, fully subscribed and paid-up, and consists of 1,489,538,745 ordinary shares with a par value of Euro1 each.

Share Capital Structure

Type	no. of shares	no. of voting rights	Listed	Rights and obligations
Ordinary shares	749,625,632	749,625,632		MTA Italian Bourse Ordinary shares grant their holders the property and administrative rights stipulated by law
Ordinary shares with increased voting rights	739,913,113	1,479,826,226	MTA Italian Bourse	Ordinary shares that have been registered for a continuous period of at least 24 months in the special list shall entitle holders to cast two votes for each share held, with regard to the resolutions of the Shareholders' Meetings concerning: i) amendments to articles 6.4 and/or 8 of the Articles of Association, ii) the appointment and/or revocation of the Board of Directors or its members, and iii) the appointment and/or revocation of the Board of Statutory Auditors or its
Total	1,489,538,745	2,229,451,858		members.

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

Article 7 of Hera's Articles of Association to stipulate that the majority of voting rights in the company be held by Municipalities, Provinces and Consortiums established in accordance with Article 31 of Legislative Decree no. 267/2000, or by other Public Authorities, or consortiums or joint-stock companies including Municipalities, Provinces or Consortiums established in accordance with Article 31 of Legislative Decree 267/2000, or other Public Authorities hold, even indirectly, the majority of the share capital. Article 8.1 of the Articles of Association prohibits the holding of more than 5% of the company's share capital by any shareholder other than those indicated above.

c) Significant equity interests (pursuant to Article 123-bis, paragraph 1, letter c) of the TUF)

The parties that directly or indirectly hold more than 3% of the share capital of the Company represented by shares with voting rights, are as follows, based on communications made pursuant to article 120 of the TUF, as well as any other data in the possession of the Company.

Declarer	Direct shareholder	% of the share capital	% of the voting share capital
Municipality of Bologna	Municipality of Bologna	8.402%	8.402%
Municipality of Imola	Con.Ami	7.293%	7.293%
Municipality of Modena	Municipality of Modena	6.519%	6.519%
Municipality of Ravenna	Ravenna Holding Spa	4.916%	4.916%
Lazard Asset Management LLC	Lazard Asset Management LLC	4.742%	4.742%
Municipality of Trieste	Municipality of Trieste	3.731%	3.731%
Municipality of Padua	Municipality of Padua	3.097%	3.097%

d) Shares that confer special rights (pursuant to Article 123-bis, paragraph 1, letter f) of the TUF)

The shareholder's meeting of 28 April 2015 authorized, pursuant to the limits established by Article 6 the institute's Articles of Association, an increased vote, whereby individuals who are registered for a continuous period of at least 24 months in the special list established beginning in 1 June 2015, will be entitled, for every share they hold, to two votes in shareholders deliberations regarding: i) the amendment of Articles 6.4 and/or 8 of the Articles of Association, ii) the appointment and / or revocation of the Board or its members, iii) the appointment and / or revocation of the Board of Statutory Auditors or its members. On 13 May 2015, Hera's Board of Directors in order to define the criteria and procedures for keeping the special list, approved the special list regulations for eligibility for increased voting rights, in implementation of the provisions of applicable law and Hera's Articles of Association.

e) Restrictions on voting rights (pursuant to Article 123-bis, paragraph 1, letter f) of the TUF)

Article 8.6 of the Articles of Association stipulates that the voting rights of parties other than public authorities who hold more than 5% of the share capital will be limited to an overall maximum of 5%.

f) Shareholders' agreements (pursuant to Article 123-bis, paragraph 1, letter g) of the TUF)

In accordance with Article 122 of the TUF, the following shareholders' agreements are in effect:

First-level Shareholders' Agreement, between 111 public shareholders, concerning the procedures for exercising voting rights and the transfer of the shareholdings held in Hera by members, signed on 28 April 2021, with a duration of three years, from 1 July 2021 to 30 June 2024, in continuation of the previous agreements, in particular the one entered into on 26 June 2018 effective from 1 July 2018 until 30 June 2021, of which the existing structures and balances expressed in that agreement are maintained unchanged;
Second-level shareholders' agreement between 34 public shareholders of Hera, belonging to the Bologna area, concerning the regulation of the exercise of voting rights, the transfer of shareholdings held in Hera by the adherents, as well as the designation of members of the Board of Directors, entered into on 10 February 2022 and with a duration until 30 June 2024, in continuation of the previous agreements, in particular the one entered into on 26 June 2018 with effect from 1 July 2018 until 30 June 2021, of which the existing structures and balances expressed in that agreement are maintained unchanged;
Second-level shareholders' agreement between 41 public shareholders of Hera, belonging to the Romagna region, concerning the regulation of the methods of consultation and joint assumption of certain decisions of the parties relating to their shareholding in Hera, as well as the methods of circulating the shares bound by this agreement, entered into on 27 May 2021, with a three-year duration, from 1 July 2021 to 30 June 2024;
Second-level shareholders' agreement between 20 public shareholders of Hera, belonging to the Modena area, concerning the regulation of the exercise of voting rights, the transfer of shareholdings held in Hera by the adherents, as well as the designation of members of the Board of Directors,

entered into on 21 June 2021 and with a duration of three years, from 1 July 2021 to 30 June 2024, as a continuation of the previous agreements, in particular the one entered into on 26 June 2018 effective from 1 July 2018 until 30 June 2021, of which the existing structures and balances expressed in that agreement are maintained unchanged

▪ Sub-agreement between the municipalities of Padua and Trieste, having as its object the constitution of a consultation and voting syndicate functional for the realization of some provisions regarding the corporate governance of Hera in implementation of the provisions of the first level Shareholders' Agreement, stipulated on 12 July 2021 and with a duration of three years starting from the signing date, in continuation of the previous agreements, in particular that entered into on 26 June 2018, of which the existing structures and balances expressed therein are maintained unchanged.

The main identifying elements of the aforementioned Agreements, which can be found in the "Governance Section/Shareholders' Agreements Disclosures" section of the company's website at www.gruppohera.it, are provided below.

1) First-level Shareholders' Agreement

The Agreement concerns 682,924,858 shares granted to the Voting Trust, corresponding to 45.84808% of Hera's share capital, 1,355,358,908 voting rights granted to the Voting Trust, corresponding to 60.78710% of the total voting rights making up the share capital and 571,257,152 blocked shares corresponding to 38.35128% of the share capital.

Content and bodies of the Agreement

Voting trust

In order to realize the decisions of the voting trust, the Parties have established a voting trust deliberative body (the Voting Trust Committee) composed as follows: a member designated by the Municipality of Bologna, to whom seven votes are assigned, a member designated by the minor shareholders of the Bologna area, to whom two votes are assigned, a member designated by Holding Ferrara Servizi Srl, to whom one vote is assigned, a member designated by Ravenna Holding Spa, to whom five votes are assigned, a member designated by CON.AMI, to whom six votes are assigned, one member designated by Rimini Holding Spa, to whom one vote is assigned, one member designated by the Municipality of Cesena, to whom one vote is assigned, one member designated by the shareholders of Modena, to whom six votes are assigned, one member designated by the Municipality of Padua, to whom three votes are assigned, one member designated by the Municipality of Trieste, to whom three votes are assigned, and one member designated by the Municipality of Udine, to whom two votes are assigned.

For the duration of the Agreement, the number of votes assigned to each principal shareholder through its committee member is allocated on the basis of one vote for each 1% of blocked shares held, rounded down if the surplus was less than 0.50%, or up if the surplus was equal to or greater than 0.50%, of the blocked shares. The percentage of blocked shares is calculated as follows:

Hera share capital % shares blocked = X 100 100100

The number of votes cast by each of the main members was verified at the opening of the first meeting of the Committee and definitively ascertained by the Chairman of the Committee.

The Voting Trust Committee remains in office until the end of the Agreement.

Decisions will be made through a yes-vote by at least 65% of the total votes assigned to the members of the Voting Trust Committee present at that meeting, except for decisions for which the Agreement requires a different majority.

The Voting Trust Committee will meet at least one day prior to:

(i) any meeting of the shareholders that includes any of the following items on its agenda:
a) liquidation of the Company;
b) merger or division of the Company;
c) changes in Articles 6 ("Shares and Increased voting rights"), 7 ("Public majority shareholding"), 8 ("Limits on shareholdings"), 14 ("Validity of Shareholders' Meetings and rights of veto") 17 ("Appointment of the Board of Directors"), 21 (Validity of resolutions), and 23.4 (Exercise of powers - matters falling within the exclusive competence of the Board of Directors) of the Articles of Association.

The Parties undertake to ensure that their vote at the Shareholders' Meeting conforms to the resolutions adopted by the Voting Trust Committee and indicated in this section (i). In the event that a vote in favour of the resolution to be adopted pursuant to this Paragraph (i) is not reached in the Voting Trust Committee, every Party to the Agreement shall express a vote in the Shareholders' Meeting against the adoption of that resolution.

(ii) any meeting of the Board of Directors that includes any of the following items on its agenda:
- 1) the establishment of the Hera Executive Committee, whose powers will be determined by the Board of Directors. The Executive Committee will be composed of the Chairman, the CEO, the Vice-Chairman and a Director appointed jointly by the Municipality of Padua and the Municipality of Trieste;
- 2) within the limits of the law and the Articles of Association, the appointment (i) of the Chairman of the Board of Directors, who will be appointed on recommendation by the Shareholders of the Romagna Territorial Area; (ii) of the Chief Executive Officer, who will be appointed on recommendation by the Shareholders of Bologna. The Shareholders of the Romagna Territorial Area and the Shareholders of Bologna will consult each other before proceeding to appoint the Chairman and the Chief Executive Officer; (iii) the Vice Chairman of the Board of Directors will be appointed - within the limits of the law and the Articles of Association - from among the members indicated by the Municipality of Modena;
(iii) the deadline for the submission of the List of Directors and the List of Statutory Auditors.

The Voting Trust Committee shall meet: (i) at least once a year, by the date of the Hera Shareholders' Meeting convoked to approve the financial statements, in order to verify any plans for the sale of Hera Shares not subject to the voting trust blocking provided for by each Party; (ii) whenever one or more members of the same make a written request to the Chairman of the Voting Trust Committee. In addition, the Voting Trust Committee will be responsible for:

a) the collation and formation of the List of Directors. The number of members to be included in the List of Directors indicated by each group of contracting parties is allocated on the basis of one member designated for each 3% of shares blocked by that group of contracting parties, and therefore, the list of Directors will be composed as follows: three members designated by the Shareholders of Bologna and Municipality of Ferrara, also in the interest of the Shareholders of Ferrara; four members designated by the Shareholders of the Romagna Territorial Area; two members designated by the Municipality of Modena, also in the interest of the Shareholders of Modena; one member designated by the Municipality of Padua; and one member designated by the Municipality of Trieste;
b) the collation and formation of the List of Statutory Auditors. The List of Statutory Auditors shall indicate as many candidates as there are members of the Board of Statutory Auditors, to be elected by the majority, and shall be determined according to the following procedures: a) the Shareholders of Bologna and the Municipality of Ferrara, also in the interest of the Shareholders of Ferrara, shall have the right to designate the candidates to be included in the second and third places on the list (one Statutory Auditor and one Alternate Auditor); b) the Shareholders of Romagna Territorial Area shall have the right to designate the candidate to be included in the first place on the list (one Statutory Auditor);
c) the resolution to request the penalty by paid by the defaulting Party; the main shareholder accused of such a default will not be allowed to participate in the discussion and will not have the right to vote on the respective resolution;
d) resolutions concerning the coordination and execution of plans to sell the shares as well as the related preparatory and consequent acts, with all the widest powers to implement them, also invested in the person of the Chairman individually or jointly with other members of the Voting Trust Committee, including, among other things, the power to carry out in the name and on behalf of the Selling Parties procedures for the selection of consultants, placement agents, trust companies and to identify , negotiate, sign and, if necessary, modify the relative contracts, commitments and mandates in the name and on behalf of the Selling Parties, as well as to implement them.

Stock Blocking Syndicate

The Parties undertake and agree, for the entire duration of the Agreement, to not transfer the shares allocated to the Blocking Syndicate (the blocked shares). Under the terms of the Agreement, Transfer or To transfer refers to any legal transaction, even free of charge (including sale, donation, exchange, contribution to a company, forced sale, block sale, merger, demerger) that has the direct or indirect result of transferring to third parties ownership or bare ownership of the shares or investing third parties with real rights (pledge and usufruct) on the Shares in the event that the voting right belongs to the pledgee or usufructuary.

The Parties undertake to maintain on the list established by Hera in accordance with Article 6.4 of the Hera Articles of Association (the Special List) the number of blocked shares determined in each instance pursuant to the Agreement. The Parties may also register in the Special List a greater number of shares than the number of blocked shares.

The Agreement identifies the number of shares blocked for the entire duration of the Agreement with respect to each Party.

The Parties have agreed that, in any event, the total number of blocked shares may not be less than 38% of the share capital of Hera until the expiration of the Agreement. If the total number of blocked shares does not comply with the above mentioned indefectible condition, the Parties, for this purpose, grant the Chairman of the Committee a mandate to adjust, without delay and on the basis of a principle of proportionality, the number of blocked shares. If the above condition is not satisfied due to the nonperformance of a Party, the provisions relating to non-performance and penalties shall apply.

The contracting Parties will be free to transfer blocked shares to public shareholders (Municipalities, Consortiums established in accordance with Article 31 of Legislative Decree 267/2000, or to other Public Authorities, or consortiums or joint-stock companies of which Municipalities or Consortiums established in accordance with Article 31 of Legislative Decree 267/2000 or other Public Bodies or Authorities hold, even indirectly, the majority of their share capital), including the other Parties, or to consortia formed between public bodies or to companies with share capital, also in consortium form, controlled by a Party to the Agreement, also jointly with other Parties to the Agreement, on the condition that the aforesaid company, at the time of the transfer made in its favour, has adhered to the Agreement. The Parties will be free to transfer, even to third parties, the option rights on the blocked shares. Transfers of blocked shares will be permitted only on the condition that the transferring entity, by the date of the Transfer made to it, has entered into the Agreement by accepting it in writing and allocating the transferred shares to the Blocking Syndicate.

Each Party undertakes to inform the Chairman of the Syndicate Committee in writing, in a timely manner and in any case no later than the fifth day following the transfer, of any change in the blocked shares held by that Party.

The non-transferability constraint applies only to blocked shares. In any case, the Parties undertake to sell, in an orderly manner, the shares other than the blocked shares which they intend to transfer in order to allow a smooth negotiation, in particular: a) each Party that intends to make sales on the stock market (without prejudice to the prohibition on selling blocked shares), for a total amount greater than three million shares in each calendar year, undertakes to coordinate in advance with the Committee, and its Chairman on its behalf, during the annual meeting and, where appropriate, also to request further meetings, and to implement a method of sale completed through a single transaction; b) if at the annual meeting: (i) the total number of shares to be offered for sale, even individually, is greater than ten million shares, the sale will proceed in a coordinated way; (ii) the total number of shares to be offered for sale does not exceed ten million shares, each Party may proceed with the sale independently, without prejudice to the provisions outlined under point a) above.

The annual meeting will also be aimed at verifying whether the intentions of each Party to sell shares are lower than the number of shares held by that Party not subject to the Blocking Syndicate. In this case, extra shares not already subject to the Blocking Syndicate may be subjected to the Blocking Syndicate and the shares of other parties to the Agreement that need to be disposed of may be unblocked. Coordination will be carried out by the Committee on the basis of the principle of proportionality. Once shared, changes to the number of shares subjected to the Blocking Syndicate will be incorporated into the Agreement, it being understood that the total number of blocked shares may not be changed except as provided for in the preceding sections.

Each Party has the right to transfer, for any reason whatsoever, its shares to any joint-stock company, even in consortium form, controlled by itself or jointly with other Parties, provided that the aforesaid company, at the time of the transfer made in its favour, has adhered to the Agreement. In this case, all the rights and obligations of the Parties will be placed in the hands of the transferee company, without prejudice to the obligation of the Party to the Agreement that made the transfer to then repurchase a number of shares equal to those transferred, if the company (i) is no longer controlled by the transferor, or (ii) the controlled company is subject to bankruptcy proceedings of any kind, or (iii) in the event of a merger, demerger or any other form of transformation of the controlled company.

For the entire duration of the Contract, the Parties undertake not to set up, directly or indirectly, including through third parties or through subsidiaries and/or connected parties or with third parties acting in concert with them, as defined in article 109 of the TUF, acts and/or facts and/or transactions, including transfers, which involve or may involve the obligation to make a mandatory public offer for the purchase of Hera shares ("OPA"). The defaulting Party shall take all necessary and appropriate actions to remedy the occurrence of OPA and, where possible, benefit from the exemptions provided for by applicable legislation, for example it shall undertake to transfer the shares to unrelated parties, or reduce the excess voting rights within 12 months and not to exercise these rights pursuant to letter e) of Article 49, paragraph 1) of the Issuers' Regulations and/or it must waive the allocation of the increased voting rights pursuant to and within the terms of applicable legislation.

Bodies of the Agreement

In addition to the Voting Trust Committee, the bodies of the Agreement are the Chairman and Secretary.

Chairman

The Voting Trust Committee is presided over by the Committee Chairman or, in his/her absence, the oldest individual among its members. The Chairman is assisted by the Secretary. In its first meeting, the Voting Trust Committee will appoint the Chairman, to be the person who, among the members of the Committee, has obtained the highest number of overall votes assigned to the members of the Committee present at that meeting. The Chairman performs the following tasks: a) convenes and chairs the Committee, preparing the agenda; b) carries out all the activities entrusted to him by the Committee and by the Agreement; and c) adjusts the Agreement and its Annexes by removing from the text the names of persons who may not have signed the Pact, and making any further changes that follow from this.

Secretary

In its first meeting, the Voting Trust Committee will appoint a Secretary, whether or not he/she is a member of the Voting Trust Committee who, unless the position is revoked or resigned, will remain in office for the entire duration of the Agreement. The Secretary is responsible for the following tasks: a) preparing the minutes of the meetings of the Voting Trust Committee; b) keeping the minutes of the meetings of the Voting Trust Committee; c) performing all the operational and executive functions necessary for the proper functioning of the Agreement, in support of the activities of the Voting Trust Committee and the Chairman, entrusted to him/her by the Chairman.

Nature of the Agreement and persons exercising control over the Company through the Agreement

In view of the above, it is considered that the Agreement is material pursuant to article 122, paragraph 5, letters a) and b) of the TUF.

In view of the nature of the Agreement and by virtue of its provisions, no person is in a position to exercise control over Hera.

Penalties

The Party that is in breach of certain provisions of the Agreement shall be liable to pay a penalty of (a) 5 million euro or (b) the lesser value to be calculated as follows: number of shares held by the Party that is in breach at the time of the breach, multiplied by three times the value of the share resulting from the arithmetic mean of the official stock exchange prices of the security during the 15 trading days prior to the date of the breach. The amount referred to in this paragraph, point (b), may not be less than 3 million euro and, therefore, if application of the above calculation results in less than this amount, the penalty will be 3 million euro. This is without prejudice to the right of each of the non-defaulting parties to bring a lawsuit for damages. The penalty shall be requested and collected, upon a resolution by the Voting Trust Committee made without the vote of the defaulting party, by the Chairman of the Voting Trust Committee in the name and on behalf of the non-defaulting parties, and shall be paid to the non-defaulting parties in proportion to the shares held by each of them.

If, as a result of breaches of the provisions of the Agreement, one or more Parties, individually or jointly, become obliged to launch a takeover bid, the defaulting party(s) shall indemnify and hold harmless the other Parties from all costs, expenses, charges, liabilities and damages related to or otherwise arising from such conduct, including those relating to the mandatory public tender offer for the Company's shares and related payment obligations. In addition, in such a case, the amount of the applicable penalty referred to in points (a) to (b) shall be applied in duplicate, except in the case of greater damages. This penalty will be applied, for the entire duration of the Agreement, in the event of a breach of the prohibition on the transfer of blocked shares resulting in a reduction in the total number of blocked shares below 38% of the share capital of Hera.

Any Party that does not default may automatically terminate the Agreement in relation to the defaulting Party in accordance with Article 1456 of the Italian Civil Code and with retroactive effect, and, where necessary, request that the Arbitration Board, in accordance with the procedure established therein, pronounce the Agreement terminated by right against the defaulting Party, without prejudice to the application of the rules on penalties for non-performance.

Agreement duration and modifications

The Pact shall take effect on 1 July 2021 and shall remain in force until 30 June 2024. In view of the expiry of the Agreement, the parties undertake, in accordance with the principles of good faith, to do everything in their power, and in compliance with current legislation, to renegotiate new shareholders' agreements in accordance with the spirit of the Agreement. From the date of effectiveness of this Agreement, any previous shareholders' agreement between the same parties concerning the shares and signed by the same parties will cease to be effective.

The Agreement may be amended with the written agreement of the Parties which together hold at least 65% of the shares subject to the Blocking Syndicate. Changes to the Agreement shall be communicated to all Parties at least 30 days prior to the date such changes come into effect. In this case, the dissenting Parties shall have the right to withdraw immediately by means of a notice sent no later than the fifteenth day prior to the date on which the modifications to the Agreement come into effect.

2) Second-level Shareholders' Agreement, Bologna area

The Agreement concerns 165,026,856 Hera ordinary shares bound to the Agreement, with a par value of EUR 1.00, equal to 11.07906% of Hera's current share capital, held by a total of 34 public shareholders, and 320,809,560 voting rights, equal to 14.38813% of the total voting rights making up the share capital.

Content of the Agreement

Voting trust

In order to take on the decisions made by the Voting Syndicate, the Parties have established a deliberative body of the Voting Syndicate (the Agreement Assembly) composed of the pro-tempore legal representatives of each Party or their delegates.

The Agreement Assembly meets:

(i) at least three days before each meeting of the Voting Trust Committee, as per the Voting Trust Agreement;
(ii) at least five days before each meeting of the Hera S.p.A. shareholders that includes any items on its agenda different from that covered by the Voting Trust Committee as outlined in point i) above;
(iii) at least 30 days before each meeting of the Hera S.p.A. shareholders that includes on its agenda the nomination of components of the Board of Directors and/or Board of Statutory Auditors;
(iv) Any time the Municipality of Bologna, or 14 Parties other than the Municipality of Bologna, make a written request to the Chairman of the Agreement Assembly.

The decisions of the Agreement Assembly are validly made by a majority of those present, provided that a yes vote has been expressed by the Municipality of Bologna and at least eight other Parties.

The Parties to the Agreement undertake to ensure that their vote at the Shareholders' Meeting conforms to the resolutions adopted by the Agreement Assembly.

Identification of the members of the Hera Board of Directors

With reference to the process of drawing up the majority list for appointing the Board of Directors of Hera S.p.A., the Parties themselves undertake to define and approve, as follows, with due regard for the balance between genders, the list containing the names of directors:

a maximum of two components in accordance with the agreements that may be entered into with the Municipality of Ferrara, also in the interest of the shareholders of the Ferrara area - indicated by the Mayor of the Municipality of Bologna;
one component indicated by the Parties, excluding the Municipality of Bologna, in the Agreement Assembly.

Finally, the Parties undertake to ensure that the Directors appointed by them, at the first meeting of the Board of Directors of Hera S.p.A., proceed with appointing the office of Chief Executive Officer, it being understood that they will consult each other before the name of the candidate is formalized.

Before the name of the candidate for Chief Executive Officer of the Board of Directors of Hera S.p.A. is formalised, the Mayor of the Municipality of Bologna or a person appointed by him, in the interest of the Parties, will consult with the common representative of the shareholders of the Romagna Territorial area and will inform the Chairman of the Voting Trust Committee.

Rules for transfers of blocked shares

For the duration of the Agreement, the parties to the Agreement undertake not to transfer the Hera Spa shares subject to the Blocking Syndicate (blocked shares) referred to in the first-level Shareholders' Agreement.

Rules for non-blocked Hera shares

The Party that intends to sell Syndicated shares that are not blocked shares, and therefore not subject to the non-transferability restriction, for total amount of less than three million shares during each calendar year, must pre-emptively offer the Shares to be sold in advance to all the other Parties, under the same conditions, in proportion to the shareholding held by each Party in Hera, without prejudice to the right of growth of each Party.

In the event of non-compliance with the above provision, the acts of disposal of the shares shall be null and void and shall be unenforceable in relation to the Parties and Hera Spa

Penalties

The Party in breach of the provisions of the Agreement will be required to pay a penalty, for each individual, confirmed violation, of 500 thousand euro, without prejudice to compensation for any potential additional damage.

Agreement duration

The Pact shall take effect on 10 February 2022 and shall remain in force until 30 June 2024.

In view of the expiry of the Agreement and if the Voting Trust Agreement is in turn renewed, the parties undertake, in accordance with the principles of good faith, to do everything in their power, and in compliance with current legislation, to renegotiate new shareholders' agreements.

Nature of the Agreement and persons exercising control over the Company through the Agreement

In view of the above, it is considered that the Agreement is material pursuant to article 122, paragraph 5, letters a) and b) of the TUF.

In view of the nature of the Agreement and by virtue of its provisions, no person is in a position to exercise control over Hera.

3) Second-level Shareholders' Agreement, Romagna area

The Agreement concerns 226,324,983 Hera ordinary shares bound to the Agreement, with a par value of EUR 1.00, equal to 15.19430% of Hera's current share capital, held by a total of 41 public shareholders, and 452,433,403 voting rights, equal to 20.29139% of the total voting rights making up the share capital.

Content of the Agreement

Voting trust

The Agreement Assembly meets:

(i) at least eight days prior to the date set for meetings of the Audit Committee concerning the matters identified in article 4.3 of the Voting Trust contract;

(ii) at least eight days prior to any meeting of the Shareholders' Meeting that brings to the agenda any of the matters other than those identified in article 4.3 of the Voting Trust contract;
(iii) any time 10 Parties make a written request to the Chairman for consultation purposes.

The decisions of the Agreement Assembly are validly taken if at least 2/3 of the Syndicated Shares are present and at least 2/3 of the Syndicated Shares present at the Agreement Assembly vote in favour.

The Parties to the Agreement undertake to conform their vote in the Voting Trust Committee for the relevant matters referred to in letters ii and iii) of article 4.3 of the Voting Trust Agreement and at the Shareholders' Meeting with respect to matters other than those relevant to the resolutions adopted.

Identification of the members of the Hera Board of Directors

With reference to the process of drawing up the majority list for appointing the Board of Directors of Hera Spa, the Parties undertake to define and approve at the Agreement Assembly, with due regard for the balance between genders, the list containing the list of the Directors appointed by the Romagna Area Shareholders, which will be made up as follows:

no. 1 member to be included in the first place of the Majority List, who will hold the position of Chairman of the Board of Directors, indicated by the Chairman of the Agreement Assembly, in the interests of the Romagna Area Shareholders;
no. 1 member indicated by the Mayor of the Municipality of Imola, also in the interests of Con.Ami's Member Municipalities;
no. 1 member indicated by the Mayor of the Municipality of Ravenna, also in the interests of the shareholders of Ravenna Holding and of the other Municipalities of the Province of Ravenna belonging to the Agreement which do not fall within the Con.Ami perimeter;
no. 1 member indicated by the Mayors of the Municipalities of Cesena and Rimini, also in the interests of the Municipalities of the Provinces of Forlì-Cesena and Rimini adhering to the Pact.

Finally, the Parties undertake to ensure that the Directors appointed by them, at the first feasible meeting of the Board of Directors proceed with appointing the office of Executive Chairman of Hera, it being understood that that the Romagna Area Shareholders and Bologna Shareholders will consult each other before nominating the candidate for the position of Executive Chairman.

Rules for transfers of blocked shares

Penalties

The Party that fails to comply with the provisions of the Agreement will be required to pay a penalty equal to 2% of the nominal value of the Shares held at the time of the breach. In any case of default, the amount of the penalty may not be less than € 5,000 or more than € 200,000.

Agreement duration

The Agreement will take effect on 1 July 2021 and will remain in effect until 30 June 2024.

Nature of the Agreement and persons exercising control over the Company through the Agreement

In view of the above, it is considered that the Agreement is material pursuant to article 122, paragraph 5, letters a) and b) of the TUF.

In view of the nature of the Agreement and by virtue of its provisions, no person is in a position to exercise control over Hera.

4) Second-level Shareholders' Agreement, Modena area

The total number of voting rights conferred on the voting syndicate is 231,621,326 and the relative percentage of the total voting rights that make up the share capital of Hera is approximately 10.38809%.

Content of the Agreement

Voting trust

In order to take on the decisions made by the Voting Syndicate, the Parties have established a deliberative body of the Voting Syndicate (the Shareholders' meeting of the Voting Trust) composed of the pro-tempore legal representatives of each Party or their delegates.

The Shareholders' meeting of the Voting Trust meets:

(i) at least one day before each meeting of the Voting Trust Committee, in accordance with the Hera Pact, that includes on its agenda one of the resolutions and activities referred to in Article 4.3 of the Hera Pact;
(ii) at least one day before each meeting of the Hera S.p.A. shareholders that includes any items on its agenda different from that covered by the Committee as outlined in point i) above;

With reference to the process of drawing up the majority list for appointing the Board of Directors of Hera Spa, if under the Hera Pact:

(i) only one member of the majority list for the Board of Directors elections is reserved for the parties to the Modena pact, the Shareholders' meeting of the Voting Trust shall arrange for it;
(ii) the parties to the Modena agreement are assigned the right to designate two members of the majority list for the Board of Directors election, the Municipality of Modena will be in charge of designating who will be proposed as vice chairman of the Board of Directors, while the second member will be designated by the Shareholders' meeting of the Voting Trust;
(iii) more than two members of the majority list for the election of the Board of Directors are to be be appointed by the Parties to the Modena agreement; the Municipality of Modena will be responsible for appointing two thirds of the members, rounded up to the nearest whole number, including the one who will be proposed as vice president, while the other members will be appointed by the Shareholders' meeting of the Voting Trust.

The Shareholders' Meeting of the Voting Trust shall resolve on the basis of the number of Hera shares blocked under the Hera Pact held by each Party, with reference to the total number of Hera shares blocked under the Hera Pact held by the Parties as a whole: for resolutions to be valid, there must be present a number of Parties holding at least 7/8 of the blocked shares and a yes vote by a number of Parties holding at least 7/8 of the blocked shares in relation to those held by the Parties present.

Rules for blocked Hera shares

The Modena agreement does not provide for a specific Blocking Syndicate; rather, it refers to the Hera pact for the regulation of the blocked shares covered by it.

Rules for non-blocked Hera shares

The Modena agreement refers to the Hera pact for the regulation of the transfer of non-blocked shares. It also states that the Parties undertake to define, in advance and jointly, at the Shareholders' Meeting, the number of shares to be transferred.

Agreement duration

The Modena Agreement, in effect beginning 1 July 2021, shall remain in force until 30 June 2024. The parties have undertaken to renegotiate the Agreement in good faith, with due respect for the spirit of the Agreement and with a view to its expiry.

Nature of the Agreement and persons exercising control over the Company through the Agreement

In view of the above, it is considered that the Agreement is material pursuant to article 122, paragraph 5, letters a) and b) of the TUF.

In view of the nature of the Modena Agreement and by virtue of its provisions, no person is in a position to exercise control over Hera.

Penalties

The Party that is in breach of the provisions of the Agreement shall be liable to pay a penalty equal to five per cent of the value of the Hera shares held at the time of the breach, calculated as the arithmetic mean of the official stock market prices of the Hera share during the 15 trading days prior to the date of the breach.

5) Sub-agreement between the Municipalities of Padua and Trieste

The Agreement concerns 101,696,159 ordinary Hera shares, equal to 6.82736% of the current share capital of Hera, held in total by the two participating municipalities, and 203,392,318 voting rights, equal to 9.11663% of the total voting rights that make up the share capital.

Content of the Sub-agreement

The purpose of the Sub-agreement is to establish a consultation and voting syndicate that will be instrumental to ensuring the realization of certain provisions regarding Hera's corporate governance in implementation of the provisions of the Agreement.

Specifically, the Sub-agreement regulates the procedures for the joint appointment of a member of the Hera Executive Committee, providing that the Parties confirm their mutual commitment to consulting in good faith in order to identify and agree which of the two directors elected to the Company's Board of Directors, upon their appointment, should be the director to be appointed as member of the Hera Executive Committee.

The Parties also acknowledge that the Executive Committee of Hera, the duration of which is scheduled until the date of approval of the financial statements at 31 December 2022, currently includes, as a member, the director designated by the Municipality of Padua, who will remain in office until the natural termination of the body; the Parties also agree that, in the subsequent Executive Committee that will remain in office until the approval of the financial statements at 31 December 2025, it will be up to the Municipality of Trieste to designate the member.

Duration of the Sub-agreement

The Sub-agreement has a duration of three years from the date of its signing (12 July 2021).

In view of the expiry of the Sub-agreement, the parties undertake, in accordance with the principles of good faith, to do everything in their power, and in compliance with current legislation, to renegotiate new shareholders' agreements in accordance with the spirit of this Sub-agreement.

Nature of the Agreement and persons exercising control over Hera S.p.A. through the Subagreement

In view of the above, it is considered that the Agreement is material pursuant to article 122, paragraph 5, letter a) of the TUF.

In view of the nature of the Agreement and by virtue of its provisions, no person is in a position to exercise control over Hera.

g) Mandates to increase share capital and authorisations to purchase treasury shares (pursuant to Article 123-bis, paragraph 1, letter m) of the TUF)

The shareholder's meeting of 28 April 2021 authorized, pursuant to the limits established by Article 2357 of the Italian Civil Code, to purchase, within 18 months of the date of the resolution, on one or more occasions, up to a revolving maximum of 60 million ordinary Hera shares with a par value of 1 euro each, equal to approximately 4.03% of the ordinary shares making up the share capital, in accordance with the following conditions:

(i) purchase price not lower than the par value and not more than 10% higher than the reference price recorded on the stock-market trading day preceding each individual purchase;
(ii) the purchases and all the deeds concerning the treasury shares may occur at a price that does not involve negative economic consequences for the company, and must occur in compliance with the laws, regulations and provisions established by the supervisory body and/or Borsa Italiana Spa, involving a maximum increase in investment of 240 million euro.
(iii) use of treasury shares acquired as part of transactions, including those carried out by Group companies, in relation to which there is undertaken a consolidation of the shareholdings and/or there is an economic and/or financial advantage for Hera, including for the purpose of improving the operations and competitive positioning of the Hera Group, and investment opportunities or other transactions emerge that involve the allocation or distribution of treasury shares.

It should be noted that the buy-back authorisation only concerns the purchase of ordinary shares, thus excluding the possibility of purchasing derivative financial instruments, and that the number of treasury shares in portfolio at the end of the 2021 financial year was 29,217,962.

3.0 Compliance (pursuant to article 123-bis, paragraph 2, letter a), of the TUF)

Hera, with a resolution by the Board of Directors on 11 November 2020, adopted the provisions of the Corporate Governance Code (hereinafter referred to as the Code), which contains a detailed series of recommendations concerning principles and rules for the management and control of listed companies, in order to increase the clarity and concreteness of persons and roles, particularly with regard to the independent directors and the internal committees of the Board of Directors.

Although adoption of the recommendations contained in the Code is voluntary, the Company, in continuity with its previous adherence to the Self-Regulatory Code, has decided to adhere to the Code's recommendations in order to reassure investors that it has a clear and well-defined organisational model, with adequate allocation of responsibilities and powers and a proper balance between management and control; this model is an effective tool at the disposal of the administrative body for the pursuit of sustainable success.

The full text of the Code currently in force is available to the public on the Committee for Corporate Governance website, at: https://www.borsaitaliana.it/comitato-corporate-governance/codice/2020.pdf

4.0 Board of Directors

Hera has an ordinary/traditional system of governance. The following sections describe the role, composition and functioning of the Board of Directors.

4.1 Role of the Board of Directors

The Board of Directors is the central administrative body of the Company. In accordance with the recommendations of the Code, the Board of Directors is responsible for guiding the Company by pursuing its sustainable success (Principle I) and defining its strategies (Principle II), including for the Group in question, in a manner consistent with the pursuit of sustainable success, and for monitoring the implementation of these strategies.

The administrative body also defines the corporate governance system that is most effective for carrying out the company's business and pursuing its strategies (Principle III) and promotes, in the most appropriate manner, dialogue with the shareholders and other relevant stakeholders of the Company (Principle IV).

The Articles of Association require the Board to meet at least quarterly and whenever the Chairman deems it necessary, or when requested by at least 1/3 of its members or by the Board of Statutory Auditors. Furthermore, the Board of Directors shall be vested with the widest powers for the ordinary and extraordinary management of the Company without any limitations, with the power to carry out all the acts deemed necessary or appropriate to achieve the Company's aims, with the sole exception of those which, strictly speaking, are assigned to the competence of the Shareholders' Meeting by law or by the Articles of Association.

In particular, in accordance with the provisions of the Articles of Association, and in addition to the definition of the structure of the Group, deliberations on the following matters fall to the exclusive competence of the Board:

I. appointment and/or removal of the Chairman and Vice Chairman;
II. appointment and/or removal of the CEO and/or the General Manager;
III. formation and composition of the Executive Committee, appointment and/or removal of the members of the Executive Committee;
IV. determination of the powers delegated to the Chairman, the CEO and/or the General Manager and/or the Executive Committee, and modification of those powers;
V. approval and modification of any long-term plans or business plans;
VI. approval and modification of Group regulations, if adopted;
VII. recruitment and/or appointment, on the proposal of the Group CEO, of the managers responsible for each departmental area;
VIII. proposal to place on the agenda of the Shareholders' Meeting the modification of Article 6.4 (shares and shares with increased voting rights) Article 7 (Public majority shareholding), Article 8 (Limits on shareholdings), Article 14 (Validity of Shareholders' Meetings and rights of veto) and Article 17 (Appointment of the Board of Directors) of the Articles of Association;
IX. the acquisition and disposal of equity investments with a value exceeding 500,000 euro (five hundred thousand);
X. purchase and/or sale of properties with a value exceeding 500,000 euro;
XI. provision of sureties, liens and/or other real guarantees with a value exceeding 500 thousand euro;
XII. purchase and/or sale of companies and/or business units;
XIII. appointment of directors of subsidiaries and affiliates;
XIV.participation in calls for tender and/or public procedures involving the assumption of contractual obligations exceeding 25 million euro.

In particular, the Board is tasked with:

examining and approving the industrial plan of the Issuer and its Group, based also on an analysis of the issues that are relevant for generating value in the long term (Recommendation 1, a);
periodic monitoring of the implementation of the business plan, as well as assessment of general operating performance by periodically comparing achieved results with planned results (Recommendation 1, b);
defining the nature and level of risk compatible with the Issuer's strategic objectives, including in its assessments all the elements that may be relevant for the Issuer's sustainable success (Recommendation 1, c) (for further details, see "Section 9");
defining the Issuer's corporate governance system and the structure of the group to which it belongs (Recommendation 1, d, first part);
assessing the suitability of the Issuer's organisational, administrative and accounting structure and that of its subsidiaries with strategic importance, in particular with regard to the internal audit and risk management system (Recommendation 1, d, second part) (for further details, see "Section 9");
deciding on the transactions of the Issuer and its subsidiaries that have significant strategic, economic, capital or financial importance for the Issuer, and establishing the general criteria for identifying significant transactions (Recommendation 1, e);
adopting, upon request of the Chairman and in agreement with the Managing Director, a procedure for the internal handling of documents and information concerning the Issuer and their disclosure to third parties, in particular with regard to privileged information (Recommendation 1, f) (for further details, see "Section 5").

Specifically, the Board of Directors:

during the year 2021 resolved to adopt, following the proposal of the Executive Chairman in agreement with the Managing Director, the "Policy for managing dialogue with shareholders and bondholders in general" (for further details see "Section 12") in order to ensure that the dialogue that the Company and Hera Group maintain with shareholders and bondholders is inspired by the principles detailed in this document and takes place in compliance with EU and national regulations concerning market abuse, as well as in line with international best practices;
on 27 January 2022, approved the business plan;
approved the transactions concerning Hera and Group companies carried out in implementation of the strategies outlined in the business plan.

With regard to the Board's further powers concerning its composition, functioning, appointment, selfassessment, the remuneration policy, and internal control system and risk management, please refer to the following sections of this Report.

4.2 Appointment and replacement (pursuant to Article 123-bis, paragraph 1, letter l) of the TUF)

List voting

The appointment of the Board of Directors is subject to the list voting mechanism, in order to guarantee that the Board of Directors includes Directors designated by minority shareholders, in compliance with current legislation on gender balance.

Specifically, Articles 16 and 17 of the Articles of Association govern the terms and conditions for filing and publishing lists, as well as the related documentation, in compliance with current regulations.

It should be noted, in this regard, that Law 160 of 27 December 2019, effective 1 January 2020, to supersede former Law 120/11, introduced new provisions concerning the gender balance in the management and control bodies of listed companies, increasing the percentage of seats to be allocated to the less represented gender from at least one third to at least two fifths for both management and control bodies, and also increasing the period of validity of the new distribution criterion to six consecutive mandates instead of three.

In order to align its by-laws with the above-mentioned regulatory provisions, Hera amended articles 16 and 17 of the by-laws during the Shareholders' Meeting held on 29 April 2020.

The current Articles of Association specify that the lists presented by shareholders must include at least two candidates satisfying the independence requirements established for the statutory auditors by Article 148, paragraph 3 of Legislative Decree 58/1998 and by the Corporate Governance Code drawn up by the Corporate Governance Committee of Borsa Italiana S.p.A., together with the candidates' CVs, a declaration of the individual candidates stating that they accept the office and certifying the non-existence of any ineligibility and/or incompatibility provided by law and any applicable declaration of satisfaction of the independence requirements established for statutory auditors by Article 148, paragraph 3 of the TUF and those established by the Civil Code. In this regard, it is noted that the Board of Directors currently in office is made up of 13 independent directors out of 15 members.

In this regard, it is specified that the Shareholders' Meeting of 28 April 2022 will bring the current provisions of the Articles of Association concerning the number of independent directors into line with the indications introduced by the Code.

The lists must be filed, pursuant to article 17.5 of the Articles of Association, at the registered office at least 25 days before the Shareholders' Meeting, and made available to the public at the registered office and on the website www.gruppohera.it at least 21 days before the meeting.

The terms and conditions for the filing of lists are indicated by the Company in the Shareholders' Meeting notice of call. Each shareholder may submit or participate in the submission and voting of only one list. Subscriptions and votes cast in violation of this prohibition shall not be attributed to any list.

Eligibility to submit lists and their composition

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

Lists for the appointment of members of the Board of Directors may be submitted by shareholders representing at least 1% of the share capital with voting rights at the Ordinary Shareholders' Meeting, unless otherwise provided for by current legislation, to be indicated in the notice of call.

In this regard, it should be noted that, on the occasion of the last renewal of the administrative body which took place at the Shareholders' Meeting of 29 April 2020, the shareholding required for presenting lists of candidates for the election of the sitting administrative body was identified by Consob (through Resolution 28 of 30 January 2020) in the amount of 1%, equal to the percentage provided for in article 17.4 of the current Articles of Association.

In order to demonstrate ownership of the number of shares necessary for presenting lists, shareholders must file the appropriate certification proving ownership of the number of shares represented at the registered office within the deadline set by the Company for posting the lists.

The rules established by Article 17 of the Articles of Association, as modified by the Extraordinary Shareholders' Meeting of 29 April 2020, in implementation of Law 160 of 27 December 2019, also guarantee compliance with current legislation regarding the balance between genders in the administrative and control bodies of listed companies.

If the list voting system does not ensure the minimum gender quota required by law, the candidate of the most represented gender positioned last on the list of candidates elected from the list with the highest number of votes shall be replaced by the candidate of the less-represented gender who was positioned first among the non-elected candidates on the same list and so on, up to the minimum number of directors belonging to the less-represented gender. If the minimum number of directors belonging to the less represented gender still has not been reached even after applying this criterion, the replacement criterion indicated will be applied to the minority lists, starting from the list that received the highest number of votes.

Appointment mechanism

The members of the Board of Directors are appointed in accordance with current law and on the basis of the provisions of Articles 16 and 17 of the Articles of Association, as modified by the Extraordinary Shareholders' Meeting of 29 April 2020, and therefore:

the company is managed by a Board of Directors composed of 15 members;
The members of the Board of Directors are appointed on the basis of lists in which the candidates are marked with a progressive number and, in any case, number no more than the number of members to be elected:
11 members taken from the list that obtained the highest number of votes according to the rank order in which they were listed, of which at least four must be of the less-represented gender;
for the appointment of the remaining four members, the votes obtained by each of the lists other than the majority list, and which have not been presented or voted for by shareholders connected to the shareholders who presented or voted for the same majority list in accordance with the regulations in force at the time, are subsequently divided by one, two, three and four; The quotients deriving from this division are progressively assigned to the candidates on each list, in the order provided for by the list. Candidates are then arranged in a single descending ranking, according to the quotients assigned to each candidate. The candidates elected shall be those who the highest quotients, in relation to the remaining members to be elected, of which at least one must be of the lessrepresented gender.

Replacement of directors

In accordance with Article 17.10 of the Articles of Association, if one or more directors appointed on the basis of the list voting system should leave office during the course of the financial year, their places will be filled by means of the co-opting, pursuant to Article 2386 of the Italian Civil Code, of the first unelected candidates from the list to which the departing directors belonged who have not yet been members of the Board of Directors, respecting the principles of gender balance set forth by the law. If, for any reason, no candidates are available, the Board, in compliance with the principles of gender balance set forth by the law, and again pursuant to Article 2386 of the Italian Civil Code, will carry out the co-opting. 2386 of the Civil Code. The directors thus appointed will remain in office until the next Shareholders' Meeting, which will deliberate in accordance with the procedures established for the appointment.

Refer to "Section 7" for information on the role played by the Board of Directors and Board committees in the processes of self-evaluation, nomination and succession of directors.

4.3 Composition (pursuant to Article 123-bis, paragraph 2, letter d) and d-bis, of the TUF)

In line with the requirements set out in Principle V of the Code, the Board is made up of executive and non-executive directors, all of whom have the professionalism and skills required for the tasks assigned to them.

Principle VI of the Code is also complied with in that all thirteen non-executive Directors are independent and their number and skills are such as to ensure that they have a significant influence on the Board's resolutions and guarantee effective monitoring of management.

The shareholder's meeting held 29 April 2020 has appointed for three financial years a Board of Directors, whose mandate lasts from now until the approval of the financial statement for the 2022 financial year, composed of 15 members, including:

11 members taken from the list that obtained the highest number of votes according to the rank order in which they were listed, of which four of the less-represented gender;
four members taken from the lists that were not the one that obtained the highest number of votes and which were neither presented nor voted on by shareholders associated with the shareholders who presented or voted for the majority list, of which two of the less-represented gender;

This appointment was thus made on the basis of the list voting system, in order to ensures that at least 1/5 of the directors are appointed from the minority list in compliance with the provisions of Article 4 of Decree-Law 332 of 31 May 1994, converted from Law no. 474 of 30 July 1994.

At the Shareholders' Meeting of 29 April 2020 mentioned above, three lists of candidates were presented, listed below along with an indication of their proposing Shareholders:

List no. 1, presented on 30 March 2020 by the shareholders Municipality of Bologna, Municipality of Casalecchio di Reno, Municipality of Cesena, Municipality of Modena, Municipality of Padova, Municipality of Trieste, Municipality of Udine, Con.Ami, Holding Ferrara Servizi Srl, Ravenna Holding Spa and Rimini Holding Spa, who, together with 107 other public shareholders, were at the time parties to the "Shareholders' Agreement on Voting and Share Transfer Rules" of 26 June 2018, and who together hold 619,396,602 Hera shares, corresponding to 41.58% of the voting shares of Hera S.p.A., a list that obtained 1,310,803,294 voting shares, equal to 69.632048% of the total voting shares present, containing the names, in ranked order, of the following candidates:

1. Tomaso Tommasi di Vignano
1. Stefano Venier
1. Gabriele Giacobazzi
1. Monica Mondardini
1. Fabio Bacchilega
1. Danilo Manfredi
1. Lorenzo Minganti
1. Manuela Cecilia Rescazzi
1. Marina Vignola
1. Alessandro Melcarne
1. Federica Seganti

List no. 2, submitted on 2 April 2020 by the shareholder Gruppo Società Gas Rimini Spa, holder of 30,771,269 Hera shares, corresponding to 2.065825% of the shares with voting rights of Hera Spa, a list that obtained 167,846,764 voting rights, corresponding to 8.916299% of the total voting shares present, containing the names, in ranked order, of the following candidates:

1. Bruno Tani
1. Anna Maria Galassi
1. Rodolfo Ortolani
1. Beatrice Righi

List no. 3, submitted on 3 April 2020 by Studio Trevisan & Associati on behalf of the shareholders Amundi Luxembourg SA - Amundi European Equity Small Cap; Amundi Asset Management SGR Spa manager of the funds: Amundi Dividendo Italia, Amundi Risparmio Italia, Amundi Sviluppo Italia; APG Asset Management N.V, manager of the funds: Stichting Depositary APG Developed Markets Equity Pool, Stichting Depositary APG Developed Markets Equity Minimum Volatility Pool; ARCA Fondi SGR Spa manager of the fund: Arca Azioni Italia; Etica SGR Spa manager of the funds: Etica Rendita Bilanciato, Etica Obbligazionario Misto, Etica Bilanciato, Etica Azionario; Eurizon Capital SGR Spa manager of the funds: Eurizon Progetto Italia 70, Eurizon Azioni Italia, Eurizon PIR Italia Azioni, Eurizon Progetto Italia 40; Eurizon Capital S. A. manager of the fund Eurizon Fund, section Italian Equity Opportunities; Fideuram Asset Management Ireland manager of the fund Fonditalia Equity Italy; Fideuram Investimenti SGR Spa manager of the funds: Fideuram Italia, Piano Azioni Italia, Piano Bilanciato Italia 50; Interfund Sicav - Interfund Equity Italy; Kairos Partners SGR Spa management company of Kairos International Sicav comparti: Italy, Target Italy Alpha; Legal & General Assurance (Pensions Management) Limited; Mediolanum Gestione Fondi SGR Spa manager of the funds: Mediolanum Flessibile Futuro Italia, Mediolanum Flessibile Sviluppo Italia; Mediolanum International Funds Limited - Challenge Funds - Challenge Italian Equity; Pramerica SGR Spa - Pramerica Sicav comparti Italian Equity and Clean Water, together the holders of 26. 928,425 Hera shares, corresponding to 1.80784% of the Hera Spa shares with voting rights, a list that obtained 394,583,000 voting rights, corresponding to 20.960904% of the total number of voting rights present, containing the names, in ranked order, of the following candidates:

1. Erwin Paul Walter Rauhe
1. Gianmarco Montanari
1. Paola Gina Maria Schwizer
1. Alice Vatta
1. Manlio Costantini

Following the shareholders' meeting vote, as well as the subsequent meeting of the Board of Directors held on the same date for the appointment of Executive Chairman, Chief Executive Officer and Vice Chairman, the administrative body was made up as follows:

1. Tomaso Tommasi di Vignano (Chairman of the Executive Committee)
1. Stefano Venier (Chief Executive Officer)
1. Giovanni Basile (Vice Chairman)
1. Monica Mondardini
1. Fabio Bacchilega
1. Danilo Manfredi
1. Lorenzo Minganti
1. Manuela Cecilia Rescazzi
1. Marina Vignola
1. Alessandro Melcarne
1. Federica Seganti
1. Erwin Paul Walter Rauhe
1. Bruno Tani
1. Paola Gina Maria Schwizer
1. Alice Vatta

The current composition of the Board of Directors is indicated below, please see Table 2 - Structure of the Board of Directors at the end of the financial year - attached to this report for more detailed information on the composition and functioning of the Board of Directors, as well as the specific section on the Company's website where the personal and professional details of each director are outlined.

First and Last name	Office	title
Tomaso Tommasi di Vignano	Executive Chairman	Executive Director
Stefano Venier	Chief Executive Officer	Executive Director
Gabriele Giacobazzi	Vice Chairman	Non-executive Independent Director
Fabio Bacchilega	Director	Non-executive Independent Director
Danilo Manfredi	Director	Non-executive Independent Director
Alessandro Melcarne	Director	Non-executive Independent Director
Lorenzo Minganti	Director	Non-executive Independent Director
Monica Mondardini	Director	Non-executive Independent Director
Erwin P.W. Rauhe	Director	Non-executive Independent Director
Manuela Cecilia Rescazzi	Director	Non-executive Independent Director
Paola Gina Maria Schwizer	Director	Non-executive Independent Director
Federica Seganti	Director	Non-executive Independent Director
Bruno Tani	Director	Non-executive Independent Director
Alice Vatta	Director	Non-executive Independent Director
Marina Vignola	Director	Non-executive Independent Director

Diversity criteria and policies in Board composition and corporate organization

Hera has applied diversity criteria, including gender-based criteria, in forming the administrative body, the members of which possess the required skills and professionalism.

The appointment of the Board of Directors took place during the Shareholders' Meeting of 29 April 2020, following the presentation of three lists, one majority and two minority, which guaranteed, in accordance with regulatory provisions currently in force on the balance between genders, that at least 2/5 of the members of the Board of Directors consisted of the least-represented gender (six members of the leastrepresented gender out of a total of 15 directors).

Of the current 15 directors, three are between 30 and 50 years old, six are between 51 and 60 years old and six are over 60 years old, for an average age of 58.

The directors possess proven professional competence in financial, economic, and legal matters and in the fields of sustainability, social and environmental issues.

Furthermore, Hera maintains as a priority the objective of ensuring equal treatment and opportunities between genders, including within the company organization as a whole, on the assumption that:

differences in gender, culture and origin are now universally recognized as a value and must therefore be managed in the best possible way;
feeling equal and included leads to the generation of cooperative behaviours at work and fosters an organisational coexistence which promotes greater sharing of the company culture.

Already in 2011, in order to further promote the development and dissemination of a company policy on equal opportunities and equality at work, the figure of the Diversity Manager was established with the aim of fostering the implementation of this company policy on equal opportunities and diversity enhancement.

The mission of Diversity Management can be described in the following macro-points:

spreading the culture of inclusion among public, private and civil society, and sharing best practices with local institutions and companies to strengthen the social network;
supporting the management and valorisation of plurality in the company;
strengthening the Hera Group's role in developing the culture of appreciating differences and fostering work-life balance.

Spreading a culture of diversity, introducing time-saving projects aimed at achieving an effective balance between everyday life and work, health and wellbeing and fostering empowerment have been central themes in the company's work to date.

In particular, in 2021 Hera continued to focus on activities to raise awareness and promote a culture of diversity, both internally and externally, strengthening networking with stakeholders.

In continuity with the Hera Group's priorities, particular attention is paid to STEM (Science, Technology, Engineering, Mathematics) fields and the gender gap that is often associated with them.

Maximum accumulation of positions in other companies

It should be noted that, with a resolution dated 10 October 2006, the Board of Directors placed a limit of one on the maximum number of posts of director or statutory auditor in listed companies that can be regarded as compatible with the role of executive director, and a limit of two on the maximum number of posts of director or statutory auditor in listed companies that can be regarded as compatible with the role of non-executive director.

In this regard, the Board of Directors, in its 23 March 2022 meeting, deemed the position of director held by Ms. Mondardini in Hera to be compatible, notwithstanding the fact that she has declared that she holds positions in three listed companies, in consideration of the fact that two of these belong to the same corporate group.

4.4 Functioning of the Board of Directors (pursuant to Article 123-bis, paragraph 2, letter d) of the TUF)

In conformity with the provisions of Article 3 - Recommendation 11 - of the Code, the Company has adopted regulations for the functioning of the administrative body, approved by the Board of Directors on 11 November 2020, as well as regulations concerning the functioning of its internal committees.

The Regulations of the Board of Directors govern, in particular, the functioning of the body, the duties of the Executive Chairman and Secretary, pre-meeting information, and the duties of the Directors with specific reference to the diligence required to carry out their duties, as well as the safeguarding of the confidentiality of the data and information they acquire.

As far as pre-meeting information is concerned, in order to guarantee the timeliness and completeness of this information, the Regulations specify that the resolution proposals and/or the supporting documentation for Board meetings be brought to the attention of each Director and Statutory Auditor via a dedicated information system - accessible by means of confidential user IDs for each member - at least three working days before the date of the Board meeting, except in urgent circumstances in which case the documentation is made available as soon as it is available and in any case, if possible, before the start of the Board meeting.

The Executive Chairman and CEO ensure that the Board of Directors is also informed on the most important changes in legislation and regulations relating to the Company and the corporate bodies.

Following each Board meeting, a draft of the minutes shall be forwarded to all Directors and Auditors for possible comments. The final text of the minutes is then drafted by the Secretary of the Board of Directors and, following the approval by the Chairman, is submitted to the Board of Directors for approval at its next meeting and, subsequently, transcribed into the proper Company register. In cases of urgency - in particular for adopted resolutions requiring the immediate production of documents and/or execution the minutes, or part thereof, may be approved on the spot.

The Board of Directors, in conformity with the provisions of Article 23 of the Articles of Association and Article 150 of Legislative Decree no. 58/98, reports regularly to the Board of Statutory Auditors, at least every three months, normally during the meetings of the Board of Directors or even directly through a written memorandum sent to the Chairman of the Board of Statutory Auditors, on the activities carried out and on the most important economic, financial and asset-related operations carried out by the Company or its subsidiaries, as well as on the operations in which the directors have an interest, on their own behalf or that of third parties, or which are influenced by the party that exercises the activity of direction and coordination. Each director, pursuant to Article 2391 of the Italian Civil Code, informs the other directors and the Board of Statutory Auditors of any interest which, on his own account or that of third parties, he has in a given operation of the Company, indicating the nature, terms, origin and extent of that interest; if the director concerned is the Group CEO, he must refrain from carrying out the operation and entrust it to the Board.

The Board of Directors met on 10 occasions in 2021: all the directors took part in six of these meetings, while almost all of them took part in the other four; all the statutory auditors took part in nine of the meetings, while almost all of them took part in one. The average length of the meetings of the Board of Directors was approximately two hours and 30 minutes.

In FY 2021, as in financial years 2020 and 2019, the directors again displayed a high level of attendance at the meetings of the Board of Directors (equal to more than 97%), a figure higher than the average level of attendance recorded for FTSE MIB Index companies.

In accordance with Principle XII of the Code, each director has consequently ensured that he or she has adequate time available to diligently perform the duties assigned to him or her.

The Head of Legal and Corporate Affairs, in his capacity as Secretary of the Board of Directors, attended all of the meetings.

When so required, the managers responsible for the various departmental areas participated in the meetings of the Board of Directors to refer on matters falling under their competence that are part of the agenda.

Regarding the current financial year, as of 23 March 2022, a total of three Board of Directors meetings have been held: all of the directors took part in one of these meetings, while almost all of the members took part in the other two. As of that date, eight meetings of the Board of Directors had been planned for the remainder of the year.

4.5 Role of the Chairman of the Board of Directors

In line with the provisions of Principle X of the Code, the Chairman receives the requests and contributions of the Company's independent non-executive Directors through the Lead independent director, this latter representing a reference point and hub of coordination.

Furthermore, the Chairman, pursuant to Article 2381 of the Italian Civil Code, convenes the Board of Directors, sets the agenda, coordinates its work and ensures that all Directors are provided with adequate information regarding the items on the agenda, according to the procedures described in art. 7 below.

In particular, the Chairman, as provided for in the Regulations on the functioning of the Board of Directors and in compliance with Recommendation 12 of the Code, with the assistance of the Secretary, is responsible for ensuring that:

a) the pre-meeting briefing and additional information provided during meetings are adequate to enable Directors to act in an informed manner in carrying out their role;
b) The activities of board committees with investigative, propositional and consultative duties are coordinated with those of the governing body;
c) the Company and Group company managers in charge of the relevant corporate departments may attend Board meetings to discuss the items for which they are responsible; they are, however, obliged to observe the confidentiality requirements laid down for Board meetings;
d) all members of the management and control bodies may attend induction sessions after their appointment and during their term of office;
e) the self-assessment process conducted by the governing body is effective and transparent.

In terms of induction activities, the Chairman ensures that the members of the governing body participate in initiatives aimed at increasing their own knowledge of Hera's sector of activities, its company dynamics and their developments, as well as the regulatory reference frame.

As in the past, during the last financial year in-depth analysis was carried out in order to ensure that Directors had adequate knowledge of the main issues concerning the Company.

Starting from previous years, specific induction sessions were carried out to provide directors with adequate knowledge of the main sectors of activity (networks, energy and environment) and several indepth sessions were prepared, within the meetings of the Board of Administration, focusing on business issues, investments, organization, the market scenario, the evolution of regulations, tenders and risk management, but also risk issues (particularly environmental risks) and investments.

During 2021, emphasis was placed on in-depth discussions at Board meetings aimed at providing Board members with adequate knowledge of the main characteristics of the company (governance, sustainability, relations with the main stakeholders), the results the Groups has achieved in recent years, the elements of the business plan and CSV strategy as well as human resources, financial management and risk management, with specific in-depth analyses of the individual sectors and a focus on the other services and activities carried out by the Group in terms of innovation.

In-depth information was provided regarding the positioning of EU's position on climate and sustainability, the recommendations of the TCFD (Task Force on Climate-Related Financial Disclosures) and the SBTi (Science Based Target) initiatives, and EU Taxonomy; these topics were also reflected in the amendment to the Articles of Association introduced in 2021, which combined the concept of duration with that of Corporate Purpose, a topic discussed in greater detail in Section 1 regarding the Issuer Profile.

The National Recovery and Resilience Plan and its impact on the Group's businesses were also examined.

In addition, in-depth analysis was carried out regarding risk assessment, the progress of the cyber security management plan, the actions taken following the medical emergency, the development of digital transformation and data analytics, and financial risk reports and investments; the organizational model was also reviewed in accordance with Legislative Decree no. 231/2001, new protocols were revised and adopted with reference to the organizational model pursuant to Legislative Decree no. 231/2001, and the periodic reports of the Risks Committee and the Internal Controls and Risks Committee were presented.

In-depth analysis was carried out on the contents of the new Corporate Governance Code, which came into force on 1 January 2021, and on the recommendations of the Chairman of that committee and, during the year, the Lead independent director's Regulations were approved as was the Policy for Dialogue with Shareholders and Bondholders.

Updates were conducted for tenders for the concession of services relating to the integrated water cycle and waste management, as well as tenders for energy services.

In 2021, further in-depth analysis was also carried out during strategy day, as a moment of collective reflection on the future of the Company, with the support of Management.

In addition, a visit was organised to tour the Servola purification plant in Trieste, the largest one in the Friuli-Venezia Giulia region.

Induction activities will continue over the course of 2022 as well.

The Chairman, with the support of the Secretary of the Board of Directors, reports to the Board of Directors on a six-monthly basis or by the first available meeting, whenever significant events occur, on the development and relevant aspects of the dialogue with shareholders and bondholders, as well as on any contacts with other stakeholders.

During the 23 February 2022 meeting, the Chairman informed the Board of Directors about the meetings held with investors and financial analysts following the approval of the Business Plan and development strategies, as well as about the road show planned for March 2022 in the main European marketplaces of Milan, Geneva, Paris, London and Zurich.

Secretary of the Board

In compliance with the provisions contained in Recommendation 18 of the Code, the Board resolves upon proposal of the Chairman - regarding the appointment and removal of the Secretary of the administrative body, this latter required to meet the professionalism requirement and provide assistance and advice to the management body in relation to any issue that has to do with the proper functioning of the corporate governance system.

In the event he or she is absent or unable, the duties of Secretary shall be temporarily assigned by the Chairman to a person designated by him or her.

Also pursuant to the provisions of Recommendation 12, the Secretary is responsible for the following duties:

a) coordinating and collecting the documentation to be submitted to the Board of Directors;

b) assisting the Chairman in conducting the meeting;

c) drafting the minutes of the meeting;

d) maintaining the stamped minute books of the meetings and the records of the Board of Directors' meetings;

e) communicating to the relevant departments the resolutions adopted by the Board of Directors relating to their sphere of competence.

4.6 Executive Directors

There are two executive directors on the Hera Board of Directors, the Chairman and the Chief Executive Officer.

Neither of the two executive directors can be described as the principal supervisor for the management of the company (chief executive officer), given that both receive the reports of different company sectors and are assigned specific management powers pertaining to these sectors.

Executive Chairman of the Board of Directors

The Board of Directors, at its meeting of 29 April 2020, passed a resolution to grant the following powers to the Executive Chairman:

1. to chair and direct the Shareholders' Meetings;
1. to establish the agenda of the meetings of the Board of Directors, taking into account the proposals of the CEO;
1. to oversee the deliberations of the Company's administrative bodies, without neglecting the periodic reports presented by the Internal Auditing Department;
1. to represent the Company before third parties and in legal proceedings, with the power to appoint attorneys and lawyers;
1. in cases of urgency, in association with the CEO, to make any decision falling within the competence of the Board of Directors, informing the Board of Directors accordingly at its next meeting;
1. in association with the Group CEO, to propose to the Board of Directors the appointment of Company representatives on the administrative and control bodies of affiliate companies;
1. to represent the company in relations with the shareholding Public Authorities;
1. to propose to the Board the candidates for membership of the Committees that the Board may decide to establish in compliance with the Stock Exchange regulations which the Company is obliged to observe, or that it intends to establish;
1. to execute the decisions of the Shareholders' Meeting and of the Board of Directors as far as his authority permits;
1. to supervise the Company's performance for the purposes of achieving the corporate goals and to draw up proposals relating to the management of the Company to be submitted to the Board of Directors;
1. to be responsible for organizing the services and offices under his authority, as well as the employees working under him;
1. to sign company correspondence and deeds associated with the exercise of the powers attributed to him and the functions he holds;
1. to supervise the management of the Company and, as far as his authority permits, of its subsidiaries, reporting each month to the Board of Directors;
1. to draw up the long-term plans to be submitted to the Board of Directors; to implement corporate and Group strategies, within the context of the directives established by the Board, and to exercise the delegated powers, particularly those listed here, in accordance with the said strategies and directives;
1. to propose to the Board any initiatives that he may deem useful to the interests of the Company and the Group, and to draw up proposals on matters reserved to the competence of the Board;
1. to represent the Company in the shareholders' meetings of companies, associations, entities and bodies that do not constitute joint-stock companies, of which the Company is a member, with the power to issue special proxies;
1. to make payments into bank and post office accounts of the Company, and to endorse cheques and drafts for crediting to the said accounts;
1. to actively or passively represent the Company before public and private entities and offices, Chambers of Commerce, Stock Exchanges, the National Commission for Listed Companies and the Stock Exchange, the Ministry for Foreign Trade, and the Italian Exchange Office, and any other Public Administration or Authority; by way of example:
2. a) to sign notices, including notices to the General Register of Shares and to Consob, and to fulfil the corporate obligations provided by law and regulations;
3. b) to submit reports, motions and appeals, to apply for licences and authorisations;
1. to represent the Company in all active and passive lawsuits, in all degrees of jurisdiction, before arbitration boards, with the widest powers to:
2. a) promote actions to determine jurisdiction, conservative, restraining and executive actions, request summary judgements and seizures of property and oppose the same, enter civil proceedings, present motions and appeals, file lawsuits and complaints;
3. b) request and oppose any evidence, undergo free or formal examination, elect domicile, appoint lawyers, attorneys and arbitrators, and perform whatever else may be necessary for the positive outcome of the lawsuits at issue;
1. to stipulate and sign contracts and deeds to take on or dispose of shares, to constitute companies, associations and consortiums with a value not exceeding € 500,000.00 (five hundred thousand euro) for each transaction;
1. to establish, in the Company's interests, consultancy relationships with external experts and professional consultants, specifying the terms and conditions of payment, all within the limits of € 300,000.00 (three hundred thousand euro) for each operation;
1. as far as his authority permits, to stipulate, amend and terminate commercial agreements with companies and entities;
1. as far as his authority permits, to stipulate, with all the appropriate clauses, assign and terminate contracts and agreements pertaining in any manner to the corporate purpose - including those relating to know-how, trademarks and patents - also in association with other companies, up to a limit of € 2,000,000.00 (two million euro) for each transaction;
1. to provide for the expenses incurred by the Company for investments, call for tenders, stipulate, amend and terminate the relative contracts, in particular for:
2. a) works and supplies necessary for the transformation and maintenance of properties and plants up to an amount of € 20,000,000.00 (twenty million euro) for each individual operation;
3. b) purchases and disposals of furniture, fittings, machinery and moveable assets in general, including those enrolled in public registers, up to an amount of Euro10,000,000.00 (ten million) for each individual operation, as well as finance leases and rentals of such assets, with the cost limit referring to the annual rental;
4. c) purchases, including those under usage licence with the cost limit referring to the annual premium, and job orders relating to EDP programmes;
5. d) commercial information;
1. to participate, as far as his authority permits, in the capacity of representative of the Company, as Parent Company or as principal company, in the formation of joint ventures, TACs (Temporary Associations of Companies), EGEIs (European Groups of Economic Interest), consortiums and other entities, issuing and receiving the relative mandates, for the purpose of participating in tenders for the awarding of works, services and supplies;
1. to take part, as far as his authority permits, in the Company's name, including in TACs (Temporary Associations of Companies), EGEIs (European Group of Economic Interest), consortiums and other entities, in tenders for contracts or concessions, auctions, private invitations to tender, private negotiations, calls for bids and other public auctions at national, EU and international level, including those eligible for State grants or aid, for the awarding of works, supplies of plant, including turn-key, and/or of goods and/or studies and/or research and/or services in general for any national, EU or international public or private entity; submit applications for participation as from the pre-qualification stage; submit bids up to an amount of Euro25,000,000.00 (twenty-five million) for each individual transaction - in cases of urgency, the decision concerning amounts exceeding Euro25,000,000.00 (twenty-five million) will be taken in association with the Group CEO, informing the Board of Directors accordingly at its next meeting; in the case of awarding, sign the relevant documents, contracts and commitments, including the issue of guarantees and/or the establishment of guarantee deposits, with the widest powers to negotiate, settle and/or complete all the clauses that he may deem necessary and/or appropriate and/or useful;
1. to take out, modify and cancel insurance policies, with the cost limit referring to the annual premium, including for surety policies, up to the value of € 500,000.00 (five hundred thousand euro) for each operation (this limit will not apply to transactions connected with participation in tenders);
1. to draw up, sign and implement deeds of sale, purchase, and expropriation of properties and to grant, modify or cancel the in rem rights associated with these properties, with the option of carrying out all the operations associated with and consequent to this, including paying and/or receiving, also in instalments, the payment, and to pay out possible damages and waive statutory mortgages, up to a total of € 500.000,00 (five hundred thousand euro) for each operation;
1. to draw up, sign and implement deeds of association, modification or extinguishment for positive and negative easements, voluntary or of necessity, and to initiate expropriation proceedings for properties, installations, equipment and plants serving these networks, as well as any other deed that might become necessary for fine-tuning the easements in question, with the authority to execute all the associated and consequent deeds, including paying and/or receiving, also in instalments, the payment and to pay out possible damages and waive statutory mortgages, up to a total of € 500.000,00 (five hundred thousand euro) for each operation;
1. to rent or let out properties under leases or subleases and stipulate, amend and terminate the relative contracts;
1. to deliberate the cancellation, reduction or restriction of mortgages or liens registered in favour of the Company, as well as subrogations in favour of third parties, where the aforesaid cancellations and waivers are requested further or subordinate to the full discharge of the credit;
1. to establish, register and renew mortgages and liens on the account of third parties and to the benefit of the Company; permit mortgage cancellations and limitations on the account of third parties and to the benefit of the Company for return and reduction of obligations; waive mortgages and mortgage subrogations, including those of a legal nature, and effect any other mortgage transaction, always on

the account of third parties and to the benefit of the Company, and therefore receivable, exonerating the competent property registrars from each and every responsibility;

1. to appoint lawyers and attorneys for dispute proceedings of any judicial degree; conclude transactions up to a maximum of Euro5,000,000.00 (five million) for each individual transaction, sign arbitral settlements and compromise agreements, and nominate and appoint arbitrators;
1. to define the functional structures of the Company and its subsidiaries, within the framework of the general organisation guidelines established by the Board, specify the criteria for personnel hiring and management in compliance with the annual budget; propose the engagement of directors for each department to the Board of Directors, in consultation with the Executive Committee; engage, appoint and dismiss personnel in accordance with the provisions contained in the annual budgets; promote disciplinary sanctions, dismissals and any other measure in relation to personnel;
1. to represent the Company in all lawsuits pertaining to labour law, including the power to:
2. a) settle individual labour disputes concerning all categories of employees;
3. b) request and oppose any evidence, undergo free or formal examination, elect domicile, appoint lawyers, attorneys and arbitrators, and perform whatever else may be necessary for the positive outcome of the lawsuits at issue;
1. to represent the Company before Social Security and Welfare offices and entities in relation to issues concerning employees of the Company, and also before Trade Unions in negotiations for contracts, agreements and labour disputes, with the power to sign the related documents;
1. to grant and revoke powers of attorney within the sphere of the aforesaid powers, for individual acts or categories of acts, to both employees of the Company and to third parties including legal entities;
1. as far as his authority permits, to decide the Company's subscription to bodies, associations and entities of a scientific or technical nature or pertaining to studies and research within the Company's field of interest, where the related subscription fees do not represent an interest in the equity of the entity concerned and where participation in the same does not involve an outlay of more than € 300,000.00 (three hundred thousand euro) for each operation;
1. the Chairman is assigned the powers and responsibilities set forth in EU Regulation 2016/679 (General Data Protection Regulation - GDPR) and Legislative Decree 196 of 30 June 2003 concerning the processing of personal data and privacy, with the power of delegation;
1. the Chairman, within the scope and limits of the respective delegations and reporting lines of the various corporate structures, is charged, as far as his authority permit, with the establishment and maintenance of the Internal Control and Risk Management Systems. To this end, as far as his authority permits, he:
2. a) ensures that the Risk Committee identifies the main business risks, taking into account the activities carried out by the Company and its subsidiaries, and periodically presents those risks for examination by the Board of Directors,
3. b) implements the guidelines defined by the Board of Directors, ensuring that the responsible business structures design, create and manage the Internal Control and Risk Management Systems, constantly checking their overall appropriateness, effectiveness and efficiency;
4. c) ensures that the system is suited to the dynamics of the operating conditions and of the legislative and regulatory context;
5. d) may ask the Internal Auditing Structure to perform checks on specific operational areas, and on compliance with internal rules and procedures in carrying out corporate operations,
6. e) promptly informs the Control and Risks Committee (or the Board of Directors) regarding problem areas or issues that emerge in carrying out his activities or of which he has been informed, in order that the Committee (or Board) may take appropriate actions.

In relation to the powers outlined above and in conformity with the provisions of Article 2 - Recommendation 4 of the Code, it is noted that the Board of Directors has granted management authority to the Chairman due to the organisational complexity of the Hera Group and for the purposes of a more efficient achievement of the company's business and strategies. In this regard, according to the organizational structure the President is responsible for Legal and Corporate Central Management, Human Resources and Organization Central Management, External Relations Central Management, Strategy, Regulatory Affairs and Local Authorities Central Management, Corporate Services Central Management and the Investor Relations Department, as well as the businesses related to the activities of the companies Herambiente Spa, Marche Multiservizi Spa and AcegasApsAmga Spa.

Chief Executive Officer

The Board of Directors, at its meeting of 28 July 2021 and effective 1 August 2021, unanimously passed a resolution to grant the following powers to the Group CEO:

1. to execute the decisions of the Shareholders' Meeting and of the Board of Directors as far as his authority permits;
1. in cases of urgency, in association with the Chairman, to make any decision falling within the competence of the Board of Directors, informing the Board of Directors accordingly at its next meeting;
1. to implement corporate and Group strategies, within the context of the directives established by the Board of Directors, and to exercise the delegated powers, particularly those listed here, in accordance with the said strategies and directives;
1. to propose to the Board any initiatives that he may deem useful to the interests of the Company and the Group, and to draw up proposals on matters reserved to the competence of the Board;
1. to draw up the annual budget to be submitted to the Board of Directors;
1. to be responsible for organizing the services and offices under his authority, as well as the employees working under him;
1. to make monthly reports to the Board of Directors, as far as his authority permits, as regards the specified subsidiary companies;
1. to sign company correspondence and deeds associated with the exercise of the powers attributed to him and the functions he holds;
1. to stipulate, amend and terminate agreements concerning lines of credit or loans of any type and duration involving a cost commitment of up to € 1,000,000.00 (one million euro) for each individual transaction;
1. to open and close current accounts with banks and credit institutions, withdraw sums from the accounts held in the Company's name, issuing for this purpose the relative cheques or equivalent credit documents, and order transfers utilising available funds or lines of current account credit;
1. to make payments into bank and post office accounts of the Company, and to endorse cheques and drafts for crediting to the said accounts; arrange for the management of activities relating to the collection of sums due and payments by the Company, including the issuing of discharged receipts;
1. to draw bills on customers, endorse also for discount promissory notes, bills and drafts, as well as cheques of any kind, and effect any consequential transaction;
1. to assign receivables and accept the assignment of receivables claimed by Company suppliers (contracts for reverse factoring and/or indirect factoring) without recourse and/or with recourse up to a maximum amount of € 250,000,000.00 (250 million euro) per transaction and to operate with companies and factoring institutions by signing all related deeds;
1. to actively and passively represent the Company before the Tax Authorities and Commissions of any nature and rank, as well as before the Cassa Depositi Prestiti, the Bank of Italy, Customs Offices, Post and Telegraphic Offices; by way of example:
2. a) to sign tax and VAT returns and to fulfil any other tax-related obligations;
3. b) to submit reports, motions and appeals, to apply for licences and authorisations;
4. c) to issue receipts, in particular for payment orders in relation to credits subject to factoring operations;
5. d) to perform any transaction at the Cassa Depositi Prestiti, the Bank of Italy, Customs Offices, Post and Telegraphic Offices for the shipment, deposit, clearance and collection of goods, credit instruments, parcels and packages, registered and insured letters, issuing receipts for the same;
1. to issue guarantees and grant loans, and sign bank surety agreements up to the value of € 500,000.00 (five hundred thousand) for each operation (this limit shall not apply to operations relating to participation in tenders); to issue, accept and endorse credit instruments;
1. to participate, as far as his authority permits, in the capacity of representative of the Company, as Parent Company or as principal company, in the formation of joint ventures, TACs (Temporary Associations of Companies), EGEIs (European Groups of Economic Interest), consortiums and other entities, issuing and receiving the relative mandates, for the purpose of participating in tenders for the awarding of works, services and supplies;
1. to take part, as far as his authority permits, in the Company's name, including in TACs (Temporary Associations of Companies), EGEIs (European Group of Economic Interest), consortiums and other entities, in tenders for contracts or concessions, auctions, private invitations to tender, private negotiations, calls for bids and other public auctions at national, EU and international level, including those eligible for State grants or aid, for the awarding of works, supplies of plant, including turn-key, and/or of goods and/or studies and/or research and/or services in general for any national, EU or

international public or private entity; submit applications for participation as from the pre-qualification stage; submit bids up to an amount of € 25,000,000.00 (twenty-five million euro) for each individual transaction - in cases of urgency, the decision concerning amounts exceeding € 25,000,000.00 (twenty-five million euro) will be taken in association with the Chairman, informing the Board of Directors accordingly at its next meeting; in the case of awarding, sign the relevant documents, contracts and commitments, including the issue of guarantees and/or the establishment of guarantee deposits, with the widest powers to negotiate, settle and/or complete all the clauses that he may deem necessary and/or appropriate and/or useful;

1. as far as his authority permits, to stipulate, amend and terminate commercial agreements with companies and entities;
1. as far as his authority permits, to stipulate, with all the appropriate clauses, assign and terminate contracts and agreements pertaining in any manner to the corporate purpose - including those relating to know-how, trademarks and patents - also in association with other companies, up to a limit of € 2,000,000.00 (two million euro) for each transaction;
1. to establish, in the Company's interests, consultancy relationships with external experts and professional consultants, specifying the terms and conditions of payment, all within the limits of € 300,000.00 (three hundred thousand euro) for each operation;
1. to conclude transactions up to an amount of € 5,000,000.00 (five million euro) for each individual transaction, sign arbitral settlements and compromise agreements, and nominate and appoint arbitrators;
1. to draw up, sign and implement deeds of association, modification or extinguishment for positive and negative easements, voluntary or of necessity, and to initiate expropriation proceedings for properties, installations, equipment and plants serving these networks, as well as any other deed that might become necessary for fine-tuning the easements in question, with the authority to execute all the associated and consequent deeds, including paying and/or receiving, also in instalments, the payment and to pay out possible damages and waive statutory mortgages, up to a total of € 500.000,00 (five hundred thousand euro) for each operation;
1. to grant and revoke powers of attorney within the sphere of the aforesaid powers, for individual acts or categories of acts, to both employees of the Company and to third parties including legal entities;
1. as far as his authority permits, to decide the Company's subscription to bodies, associations and entities of a scientific or technical nature or pertaining to studies and research within the Company's field of interest, where the related subscription fees do not represent an interest in the equity of the entity concerned and where participation in the same does not involve an outlay of more than € 300,000.00 (three hundred thousand euro) for each operation;
1. the CEO is assigned the role of "Employer" pursuant to and for the purposes of Article 2 of Legislative Decree 81 of 9 April 2008 and subsequent amendments and integrations, with the duties provided for therein and with the power to delegate, as far as is permitted by said decree, the performance of any activity useful and/or necessary for ensuring compliance with the provisions of the law, with the exception of the following Sectors/Structures, for which the role of Employer is attributed as indicated below:
2. a) Corporate Systems Central Department (excluding the Purchasing and Procurement Department) Marcello Guerrini
3. b) Water Department Susanna Zucchelli
4. c) Environmental Services and Fleets Central Department Franco Fogacci;
5. d) Innovation Central Department Salvatore Molè;
6. e) Central Market Department (especially for activities regarding district heating, the Imola cogenerator productive unit and all the plants and activities falling under this authority) Cristian Fabbri;
7. f) Purchases and Contracts Department Giancarlo Randi Marco Del Giaccio;
1. The CEO is responsible for overseeing activities relating to the Register of Freight Carriers, with the power of delegation;
1. The CEO, within the scope and limits of the respective delegations and reporting lines of the various corporate structures, is charged, as far as his authority permits, with the establishment and maintenance of the Internal Control and Risk Management Systems. To this end, as far as his authority permits, he:
2. a) ensures that the Risk Committee identifies the main business risks, taking into account the activities carried out by the Company and its subsidiaries, and periodically presents those risks for examination by the Board of Directors,
b) implements the guidelines defined by the Board of Directors, ensuring that the responsible business structures design, create and manage the Internal Control and Risk Management Systems, constantly checking their overall appropriateness, effectiveness and efficiency;
c) ensures that the system is suited to the dynamics of the operating conditions and of the legislative and regulatory context;
d) may ask the Internal Auditing Structure to perform checks on specific operational areas, and on compliance with internal rules and procedures in carrying out corporate operations,
e) promptly informs the Control and Risks Committee (or the Board of Directors) regarding problem areas or issues that emerge in carrying out his activities or of which he has been informed, in order that the Committee (or Board) may take appropriate actions.

Analogously to that stated for the Chairman, in compliance with the provisions of article 2 - Recommendation 4 of the Code, it is noted that the Board of Directors has granted management authority to the CEO due to the organisational complexity of the Hera Group and for the purposes of a more efficient achievement of the company's business and strategies. To this end, the organisational structure establishes that the Chief Executive Officer oversees the Administration Central Management, Finance and Control Department, Market Central Department, Innovation Central Department, Networks Central Department, Waste Management and Fleets Central Department, Shared Value and Sustainability Department, Business Development and Subsidiary Central Management and the Coordination of Regulated Services and Tariffs division, as well as the businesses linked to the activities of the companies Uniflotte Srl, Inrete Distribuzione Energia Spa, Heratech Srl, Hera Comm Spa, Hera Trading Srl and Acantho Spa.

Executive Committee (pursuant to Article 123-bis, paragraph 2, letter d) of the TUF)

The Board of Directors, appointed during the Shareholders' Meeting of 29 April 2020 and in office until the natural expiration of the administrative body's term, and therefore until the approval of the financial statements as of 31 December 2022, as provided for by Articles 21.3 (iii) and (iv) and 23.3 of the Articles of Association, at its meeting of 13 May 2020, appointed the Executive Committee consisting of the following members: Tomaso Tommasi di Vignano, Chairman of the Executive Committee; Gabriele Giacobazzi, Vice Chairman of the Executive Committee; and Stefano Venier and Alessandro Melcarne, members.

In view of the above, the Executive Committee, its activities coordinated by the Chairman, is made up of the following:

Tomaso Tommasi di Vignano Chairman of the Executive Committee
Gabriele Giacobazzi Vice Chairman of the Executive Committee;
Stefano Venier member of the Executive Committee.
Alessandro Melcarne member of the Executive Committee.

With regard to the annual definition of the Group business plan and the budget and to the proposals for the appointment of first level senior executives for each departmental area, the Committee has the task of expressing an opinion prior to presentation to the Board of Directors, and also of deciding:

1. as to contracts and agreements pertaining to the corporate purpose with a value exceeding 2 million euro for each individual contract;
1. in the interests of the Company, consultancy relationships with external experts and professional consultants, specifying the terms and conditions of payment, with a value exceeding 300 thousand euro and up to 1 million euro for each operation;
1. as to the Company's subscription to bodies, associations and entities of a scientific and technical nature or pertaining to studies and research within the Company's field of interest, where the related subscription fees do not represent an interest in the equity of the said entity and where participation in the same involves an outlay of more than 300 thousand euro and up to 1 million euro for each operation;
1. to settle disputes and/or waive credits of an amount exceeding 5 million euro;
1. as to the activation, amendment and termination of contracts for the opening of lines of credit or loans of any type and duration involving a cost commitment of more than 1 million euro and up to 5 million euro for each operation;
1. as to issuing calls for tender and/or the stipulation, amendment and termination of contracts for investments relating to:
2. – works and supplies necessary for the transformation and maintenance of properties and plants for an amount exceeding 20 million euro for each operation;

– purchases and disposals of furniture, fittings, machinery and moveable assets in general, including those enrolled in public registers, with a value exceeding 10 million euro for each operation;

The Committee is also responsible for:

1. examining Audit Reports on a three-monthly basis
1. supervising, in conformity with the system of delegations defined within the Company, the implementation of the action plans arising from the audit reports.
1. examining the reports for the mapping and monitoring of financial risks on a three-monthly basis;

The Executive Committee met on seven occasions in 2021, and all of the meetings were attended by all members. The average duration of the meetings of the Executive Committee, duly recorded in the minutes, was approximately one hour.

The President shall report half-yearly to the Board of Directors regarding the activities of the Executive Committee during the reporting period.

Regarding the current financial year, as of 23 March 2022, a total of two Executive Committee meetings have been held: all of the members took part in all of these meetings. As of that date, another five meetings of the Executive Committee had been planned for the remainder of the year.

Information to the Board from the Directors/delegated bodies

In conformity with the recommendations of the Code, the delegated bodies report to the Board of Directors and to the Board of Statutory Auditors, at least every three months, on the activities carried out in exercising the powers delegated to them.

Other Executive Directors

With the exception of the Executive Chairman and Chief Executive Officer, there are no additional directors on Hera's Board of Directors who are to be considered executive.

As regards the Directors in addition to the Executive Chairman and CEO who are also members of the company's Executive Committee, it is believed that they should not be considered executive directors since they carry out their duties collectively within the committee.

4.7 Independent directors and Lead independent director

Independent directors

There are currently 13 independent non-executive members of the Board, Gabriele Giacobazzi, Fabio Bacchilega, Danilo Manfredi, Alessandro Melcarne, Lorenzo Minganti, Monica Mondardini, Erwin P.W. Rauhe, Manuela Cecilia Rescazzi, Paola Gina Maria Schwizer, Federica Seganti, Bruno Tani, Alice Vatta and Marina Vignola, in the sense that they meet the independence requirements set out in the Corporate Governance Code and article 148, paragraph 3 of the TUF.

Specifically, in compliance with recommendation 7 of the Code, the directors indicated above have stated that:

they are not significant shareholders of the Company;
they are not currently, and have not been in the previous three fiscal years, an executive director or employee:
- – of the Company, of a subsidiary with strategic importance or of a company under common control;
- – of a significant shareholder of the Company;
they do not currently have, nor have they had in the previous three financial years, either directly or indirectly, any significant commercial, financial or professional relationship:
- – with the Company or its subsidiaries, or with its executive officers or top management;
- – with a party who, also together with others through a shareholders' agreement, controls the Company; or, if the controlling party is a company or entity, with its executive directors or top management;
they do not receive and have not received in the previous three financial years, from the Company, one of its subsidiaries or the parent company, any significant remuneration in addition to the fixed remuneration for the office and that established for participation in internal committees;
they have not been a director of the Company for more than nine financial years, including nonconsecutive ones, in the last 12 financial years;
they have not held the office of executive director in another company in which an executive director of the Company holds the office of director;
they are not shareholders or directors of a company or entity belonging to the network of the firm appointed to audit the Company's accounts;
they are not close relatives of a party in one of the positions described in the previous points;

In compliance with Recommendation 5, it is believed that the number and expertise of independent directors is appropriate to the needs of the company and the operation of the Board, as well as the establishment of related committees.

At its 23 February 2022 meeting, the Board of Directors defined the quantitative and qualitative criteria for assessing the significance of the relevant circumstances pursuant to the Code for the purposes of evaluating directors' independence.

Specifically, the Board of Directors established that:

business, financial, and professional relationships, pursuant to Recommendation no. 7, first paragraph, letter c) of the Code, are to be considered "significant" and therefore capable of compromising the Director's independence if for any reason the Director has derived from the commercial, financial or professional relationship a sum the total annual value of which is equal to or greater than:
- (i) 5% of the annual turnover of the legal entity, organization or professional firm over which the Director has control or in which he/she holds shares or of which he/she is an executive director;

(ii) 10% of the total annual costs incurred by the Hera Group for services attributable to the same type of contractual relationship as the commercial, financial or professional relationship in question.
Additional compensation, pursuant to Recommendation no. 7, first paragraph, letter d) of the Code is that which the Director receives or has received, from Hera Spa and/or one of its subsidiaries, with respect to the fixed remuneration for the office held and is to be considered "significant" if:
- (i) If it relates to professional appointments or consultancies

and

(ii) it is equal to the fixed remuneration received from Hera Spa in the year in question for holding the office of Director.

In line with the provisions of Recommendations 6 and 10 of the Code, the independence of the aforementioned directors had already been assessed, at the time of their appointment, by the Board of Directors, which announced the result of this assessment by means of a press release circulated to the market.

The following circumstances do not invalidate the requirements of independence of a director: the appointment of the director by the shareholders or group of shareholders which expresses one or more directors on the Hera Board of Directors; the holding of the office of director of a subsidiary of the Company and receiving the related remuneration; the holding of the office of member of one of the advisory Committees cited below.

During the 23 March 2022 session, in light of the declarations made by each of the non-executive directors, the Board of Directors confirmed the assessment of its members' independence. In this regard, it is specified that:

with regard to the Director Gabriele Giacobazzi, Vice-Chairman and member of the Executive Committee, and the Director Alessandro Melcarne, member of the Executive Committee, it is deemed that they meet the independence requirements since they are not involved in the operational management of the Company, also taking into account the functions assigned to said body;
with regard to Director Fabio Bacchilega, although he is a significant representative of the shareholder Con.Ami (Chairman of Con.Ami), it is deemed that he meets the requirements of independence as the shareholder Con.Ami cannot be considered the parent company of Hera Spa, nor is it able to exercise significant influence over it;
with regard to Director Lorenzo Minganti, although he has been a public employee (part-time manager) of the shareholder Municipality of Padua, with assignment in the mobility sector, since 7 September 2021, it is deemed that he meets the independence requirements since the shareholder Municipality of Padua cannot be considered the parent company of Hera Spa, nor is it able to exercise significant influence over it;

▪ with regard to Director Monica Mondardini, who stated that she has a fourth-degree familial relationship with a Hera Spa employee, it is deemed that she cannot influence, or be influenced by this person in her relations with Hera and its Group, and therefore continues to meet the independence requirements.

As part of the tasks assigned to it by law, the Board of Statutory Auditors has verified the correct application of the assessment criteria and procedures adopted by the Board of Directors to evaluate the independence of its non-executive members.

During financial year 2021, the independent directors, in compliance with the last paragraph of recommendation 5 of the Corporate Governance Code, met separately and independently on 28 July 2021 and 15 December 2021. The meetings were chaired and coordinated by the Lead independent director and focused on evaluating the activities of the independent directors, the Lead independent director's regulations, the induction process, external meetings, an evaluation of the responses by management to the topics covered by the independent directors' meetings, the result of the Board of Directors' self-assessment, succession plans (guidelines, processes, etc.), and the Company's appointment and organizational procedures.

Lead independent director

Recommendation 13 of Article 3 of the Code provides that, if certain conditions are met, at the request of the majority of the independent directors, the board of directors shall appoint an independent director as lead independent director, so that he or she can be the focal point and coordinator of the requests and contributions coming from the non-executive directors and, in particular, the independent directors, coordinating their meetings.

At a meeting held 16 December 2020, the Board of Directors, on the recommendation of the Vice Chairman on behalf of all the independent directors, appointed as lead independent director of the Company the independent director Erwin Paul Walter Rauhe, and he will hold this position until the natural expiry of the administrative body, i.e. until the date the Shareholders' Meeting of Hera approves the financial statements at 31 December 2022.

5.0 Management of corporate information

For the purposes of governing the communication to the sector Authorities and the public of notices, data and price-sensitive information pertaining to the management and activities carried out, the dissemination of which might have an impact on the processes used for valuing the Company's shares, and consequently, on the levels of demand and supply of those shares, the Board of Directors updated the specific Group procedure by incorporating the legislative innovations effective as of 3 July 2016 introduced by the European legislation on Market abuse regulation (MAR) (EU Regulation 596/2014, Directive 2014/57/EU, EU Implementation Regulations 2016/347 and 2016/1055), as well as the Consob guidelines on the subject issued in October 2017.

This procedure has the aim of:

I. identifying and ascertaining specific confidential and material information, i.e. information relating to data, events, projects or circumstances that may take on a privileged nature and, consequently, influence the price of Hera shares;
II. defining procedures for authorization and management within the Group;
III. governing the procedures for external communication in terms of documentation, notices issued, interviews given, statements made and meetings conducted.

The aforementioned procedure is aimed at identifying the corporate functions that support top management in identifying and consequently mapping the relevant information, as well as the subjects who have access to it and the moment in which such information can take on the character of inside information, based on the assessments made by top management itself.

In compliance with the provisions of the Consob Guidelines, a so-called Relevant Information List (RIL) is drawn up that includes the names of the subjects who have access to the relevant information. The RIL stands alongside the already-existing list of people with access to privileged information, the management and storage methods of which were already updated at the time in compliance with the provisions introduced by the MAR (EU Regulation 596/2014, Directive 2014/57 / EU, EU Implementing Regulation 2016/347), which, in particular, expanded the concept of privileged information, establishing that it is information of a precise nature which has not been made public and which directly or indirectly concerns one or more issuers or one or more financial instruments and which, if made public, could have a significant effect on the prices of such financial instruments or on the prices of related financial derivative instruments, and introducing the concept of inside information that is part of a protracted process.

Furthermore, in applying the internal dealing procedure updated by Hera Spa following the entry into force of the MAR (EU Regulation 596/2014, Directive 2014/57 / EU, EU Implementing Regulations 2016/523 and 2016/522 ) relevant subjects, obliged to communicate to Consob the transactions they carry out on the financial instruments of Hera Spa, are considered to include the members of the Board of Directors, the standing auditors, the general managers, and the holders of an equity investment calculated pursuant to article 118 of the Consob Issuers Regulation as equal to at least 10% of the total voting rights that make up the Company's share capital, as well as persons closely associated with them. This procedure governs the timing and methods of communicating the operations carried out by the relevant subjects. Hera Spa has identified the Legal and Corporate Affairs Department as the entity responsible for receiving, managing and disseminating this type of information to the market.

The responsible entity will utilize the External Relations Central Department to disseminate the information to the market.

6.0 Internal Committees of the Board of Directors (pursuant to Article 123-bis, paragraph 2, letter d) of the TUF)

The internal committees, set up in compliance with Principle XI and Recommendation 16 of the Code, represent an internal Board of Directors structure with investigative, propositional and advisory functions. Their composition, which is available on the website www.gruppohera.it, evaluated at the time of appointment by the Board, has been formed in line with the provisions of Recommendation 17 to grant priority to the competence and experience of the members, while avoiding an excessive concentration of positions.

The Hera Board of Directors, following its renewal on 29 April 2020, proceeded to redefine the composition of the afore-mentioned committees at its meeting of 13 May 2020.

Concerning the committees envisaged by the regulations, see the specific paragraph of "Section 4.6" that relates to the Executive Committee, and "Section 10" below with reference to the Related Parties Committee.

Moreover, in order to provide the individual committees with specific internal regulations aimed at defining their operating rules, recording and management of the information provided to the Board of Directors, the latter has approved their contents.

It was decided to maintain the Appointments Committee's functions within the Board of Directors, under the coordination of the Chairman.

Additional committees (other than those required by regulations or recommended by the Code)

Ethics and Sustainability Committee

During its meeting of 12 September 2007, the Board of Directors of Hera Spa established the text of the mission and values and working principles of the Group, and consequently approved the updated version of the Code of Ethics that constitutes a social responsibility tool for the Company in implementing ethical principles inspired by good practices and aimed at the pursuit of the Company's mission.

Therefore, in implementing the aforementioned code, the Board of Directors, in its 8 October 2007 meeting, set up a special Committee made up of three members, at least one of whom is a director of the Company, and two experts on matters of social responsibility and the issues addressed by Legislative Decree 231/01, also highlighting that at least one member must be external.

Subsequently, in its 8 November 2018 meeting, the Hera Board of Directors, in compliance with the provisions of article 4 (Establishment and functioning of the internal committees of the Board of Directors) of the current Corporate Governance Code for listed companies of Borsa Italiana Spa, has deemed it appropriate to assign the Ethics Committee the functions of supervising the sustainability issues connected with exercising company activities and the dynamics of interaction with all stakeholders. It further decided to change the committee's name to the Ethics and Sustainability Committee and to expand its composition, raising the number of members from three to four, including two Directors of Hera Spa.

The Committee, last renewed on 13 May 2020, is therefore composed of two directors of Hera Spa in the persons of Federica Seganti, Chairman, and Alice Vatta, as well as Cristiana Rogate and an executive with expertise in social responsibility.

The Board of Directors of Hera Spa, in its 18 December 2019 meeting, resolved to once again update the code, adopting a fifth edition following a participatory process that involved the top management of Hera and Group employees involved through various corporate communication systems, as well as the Group's social partners. Benchmarking analyses were also carried out on other companies and meetings were held involving Group managers, middle managers and executives as spokespersons to report on previous seminars.

At its 29 July 2020 meeting, the Board of Directors approved a revision to the Ethics and Sustainability Committee Bylaws.

The Ethics and Sustainability Committee is responsible for monitoring the dissemination and implementation of the code of ethics, for supervising the sustainability aspects of the company's operations and, in accordance with Recommendation 1 of the Code, for supporting the Board in analysing issues that are relevant to the generation of long-term value. In particular, it receives reports of violations of the code and assesses whether or not to initiate proceedings, monitors the implementation of sustainability policies, formulates, at the request of the Board of Directors, opinions about specific sustainability issues, examines corporate procedures on social and environmental issues and, on a preventive basis, reviews the sustainability report to be submitted to the Board of Directors.

Since 2008, when the code of ethics went into effect, a special confidential, direct channel has been activated between the Committee and any stakeholders interested in reporting any conduct in violation of the code and values promoted by the Group.

The Ethics and Sustainability Committee met 6 times in 2021 and all meetings were attended by all members. The average duration of the meetings of the Committee was approximately one hour and 40 minutes

In the meetings held during the financial year, the Committee examined the reports it received and the consequent preliminary investigations carried out, assessed the contents of the 2020 Sustainability Report with a focus on the process of achieving conformity with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), formulated the code of ethics training plan, met with the Supervisory Body, defined the supplier assessment and control system, and managed sustainability activities such as the sustainability reports "Energia per il clima" ("In buona acque" and "Costruire insieme il futuro"), the independent auditors' report on SR 2020, the topic-specific reports "Sulle tracce dei rifiuti" and the 2021 Sustainability Report Project that outlines the reporting proposals developed as part of the Science Based Target initiative.

Regarding the current financial year, two meetings of the Ethics and Sustainability Committee were held as of 23 March 2022: all meetings were attended by all members. As of that date an additional Committee meeting had been scheduled for the remainder of the year, and subsequent meetings will be scheduled from time to time in accordance with the Committee's bylaws and the 2022 work plan.

7.0 Directors' self-assessment and succession - Appointments committee

7.1 Directors' self-assessment and succession

In application of the provisions of Principle XIV of the Code, the Board of Directors periodically assesses the effectiveness of its activities and the contribution made by its individual members through formalised procedures the implementation of which it supervises.

More specifically, in line with Recommendation 22 of the Code, the Board of Directors carries out an annual self-assessment of the size, composition and functioning of the Board itself and its committees, with the support of an independent external advisor who is an expert in governance issues and advising management bodies, also taking into account the role the Board has played in defining strategies and monitoring management performance and the effectiveness of the internal audit and risk management system, as set out in Recommendation 21 of the Code.

This assessment was carried out in 2022 with the support of Corsi & Partners and Mercer Italia, in a Temporary Regrouping of Companies (RTI); lastly, in March 2022, the assessment was presented and discussed during the meeting of the Board of Directors on 23 March 2022.

In the framework of the self-assessment process, the Directors expressed appreciation of the size, composition and functioning of Hera's Board of Directors and, especially, a positive opinion of its Committees.

This consulting company's methodology focuses on the roles and composition of the Board of Directors, decision-making processes, training and operational processes, time management, dynamics and communication. The focus is on the effectiveness of the Board and the Committees in performing their corporate policy and control functions.

This proposed methodology aims to grant continuity over time to the activities carried out in past years and is based on the following tools:

interviews with the members and chairman of the Board of Statutory Auditors focused on the main areas of interest (size, composition, functioning) of the Board;

As indicated, the project takes place through individual interviews with the Directors and the Chairman of the Board of Statutory Auditors.

The interviews are based on a questionnaire which is sent to the Directors before the meetings with the Corsi & Partners and Mercer Italia consultants and filled out, online, by the Directors. This questionnaire covers corporate governance, the functioning of the board, the composition of the Board, and the exercise of direction and control powers, and policies adopted to foster dialogue with shareholders.

Each question requires both a quantitative assessment and a qualitative comment on the topic under examination. The directors express the degree to which they agree with the statements contained in the questionnaire, using an internationally recognized scale.

All the analyses and comments are processed in an absolutely anonymous and confidential manner.

examination of the corporate documentation (minutes of the Board meetings, the Executive Committee meetings, and the internal Board committee meetings) and verification of the effectiveness of the actions taken during the last year, to follow up on the comments the Directors expressed during the previous self-assessment;

Hera's corporate documentation is analysed in order to understand the ways in which directors interact, the actions they take, the issues discussed and their frequency on the agenda.

Interviews with the Directors revealed a very high level of overall appreciation: the percentage of positive responses to the topics suggested in the questionnaire amounted to 90%.

In particular, the areas the Directors displayed the most agreement in assessing positively include:

The board's roles and composition
Decision-making processes.

The evaluation of these areas, based on the consultants' experience, was very positive.

In particular, the Directors appreciated:

the Chairman's leadership and experience and the figure of the Chief Executive Officer, considered a valuable asset;
the role, size and composition of the Committees;
the activity carried out by the Lead independent director in coordinating and organizing the work of the independent directors;
the work of strategic guidance performed by the Board of Directors, and the planning process adopted by the Company;
the integration of sustainability objectives into the Company's strategic planning and key policies, including those relating to management remuneration;
the fact that the Board of Directors and top management have very effectively implemented,, on the operational level, the principle of "sustainable success", one of the key elements of the new Corporate Governance Code;
the management of risks (including those relating to cyber-security), the internal control system and the effectiveness of the Company's organisational, administrative and accounting structure;
the pre-meeting briefs, which are deemed to be well-structured, clear and comprehensible and made available to directors in good time;
the quality of the minute-taking for meetings
the quality of induction sessions;
the Company's management, which appears cohesive and displays a deep understanding of the business;
the Company's robust business processes and the fact that it seems to be well managed overall.

In view of the way in which the Directors were appointed, representing the main shareholders and the assessments they have expressed, the Board of Directors deemed its size to be essentially suitable.

The suggestions that arose from the directors' assessments include:

▪ organizing additional induction sessions to hone knowledge about the businesses, including through further visits to the Group's operating centres.

7.2 Appointments Committee

As mentioned in "Section 6", it should be underlined that, since the members of the Board of Directors are appointed by the shareholders by means of list voting, it was decided to maintain the Appointments Committee's functions within the Board of Directors, under the coordination of the Chairman.

devoting adequate time during the meetings to carry out the tasks typical of this committee and on the condition that a number of independent directors equal to at least half of the members of the administrative body are present.

It should also be noted that, in case of early termination of the executive directors' mandate, the procedure will be carried out in compliance with the provisions of the Articles of Association and the Shareholders' Agreement: the Chairman's functions, as legal representative, will be immediately taken over by the Vice Chairman; the Board of Directors will have the power to co-opt new directors to replace those who have ceased to hold office and will deliberate the allocation of proxies. The first Meeting will act to supplement the Board of Directors.

8.0 Directors' remuneration - Remuneration Committee

8.1 Directors' remuneration

For all information concerning the remuneration policy, the remuneration of executive directors and top management, the remuneration of non-executive directors, the accrual and payment of remuneration and the indemnity of directors in the event of resignation, dismissal or termination following a takeover bid, please refer to the Report on the remuneration policy and compensation paid.

8.2 Remuneration Committee

Composition and functioning of the Remuneration Committee (pursuant to Article 123-bis, paragraph 2, letter d) of the TUF)

The Remuneration Committee, which was set up for the first time at the Board of Directors meeting held on 4 November 2002 and whose composition was last renewed on 13 May 2020, is chaired by the Vice-Chairman of the Board of Directors, Gabriele Giacobazzi, and by three further members: Monica Mondardini, Fabio Bacchilega and Alice Vatta.

The work of the Remuneration Committee is coordinated by the Vice-Chairman, who also informs the Board of Directors about the activities carried out. This committee met three times in 2021: two meetings were attended by all Committee members, while one meeting was attended by almost all members. The average length of the Committee meetings, duly recorded in the minutes, was approximately two hours. Regarding the current financial year, as of 23 March 2022, a total of one Remuneration Committee meeting had been held and almost all of the members took part in this meeting.

At the various meetings of the Committee held in 2021, the following topics were addressed: the 2021 BSC system for directors, executives and middle managers of the Group, the executive welfare plan, the Report on the remuneration policy and compensation paid, the final 2020 variable remuneration (corporate objectives component and 2020 welfare component), and the 2021 remuneration policies for directors and executives. In addition, as proposed by the Committee, with the renewal of the Board of Directors that took place in 2017, a claw-back clause was introduced that provides for ex post correction mechanisms in the remuneration system for executive directors, as well as a clause which, in the event of resignation, dismissal or termination of the latter, establishes an indemnity in the amount of 18 monthly salaries.

Moreover, in compliance with the provisions of Recommendation 26, the Remuneration Committee, entirely made up of non-executive directors and chaired by the Vice-Chairman of the Board of Directors, includes at least one member with adequate knowledge and experience in financial matters or remuneration policies, as determined by the Board of Directors upon appointment.

The Chairman of the Board of Directors, the Group CEO and representatives of company departments potentially involved may participate in the Committee's activities following an explicit invitation by the Chairman of the Committee.

For additional information, please refer to the Report on remuneration policies and compensation paid pursuant to Article 123-ter of the TUF.

Functions of the Remuneration Committee

In application of Recommendation 25 of the Code and also based on the provisions of the related Regulation, approved by the Board of Directors on 23 February 2022, the Remuneration Committee has the task of assisting the administrative body with investigative, advisory and propositional functions. In particular, the Committee is tasked with:

supporting the Board of Directors in drawing up the remuneration policy, defined taking into account the remuneration practices widespread in these sectors and for companies of a similar size, as well as the pursuit of the Company's sustainable success;
submitting proposals to the Board of Directors or expressing opinions regarding:
- – the remuneration of executive Directors and, having heard the opinion of the Board of Statutory Auditors pursuant to art. 2389 of the Italian Civil Code, that of other Directors who hold specific offices;
- – the setting of the performance targets associated with the variable component of the remuneration for Directors with executive powers;
monitoring the concrete application of the remuneration policy and the decisions adopted by the Board of Directors regarding remuneration and verifying, in particular, the effective achievement of performance objectives;
periodically assessing the adequacy and overall consistency of the policy for the remuneration of Directors and top management, in so doing making use of the information provided by the Chairman or the Director with executive powers, and reporting periodically to the Board of Directors.

In the performance of its functions, the Committee has access to the information and business functions necessary for carrying out its duties.

For additional information, please refer to the Report on the remuneration policy and compensation paid pursuant to Article 123-ter of the TUF.

9.0 Internal control and risk management system – Controls and Risks Committee

The Internal Control and Risk Management System is integrated into the broader organizational and corporate governance structures adopted by Hera and duly considers the recommendations of the Corporate Governance Code, reference models and best practices at national and international levels.

Risk Corporate Governance at Hera

In compliance with Principle XVIII of the Code, Hera has adopted an organizational structure designed for optimal management of any risk exposure arising from its business, delineating an integrated approach aimed at maintaining management effectiveness and profitability across the entire value chain.

In application of Principle XIX and Recommendation 33, the corporate governance system for risk management (Enterprise risk management), defines the rules, structures and organizational procedures designed to effectively and efficiently identify, measure, manage and monitor the main risks, in order to contribute to Hera's sustainable success, in keeping with its corporate strategies. For a more detailed description, please refer to the Management Report.

The Risk Committee

The Risk Committee, first established in 2011, is composed of the Executive Chairman, the Vice Chairman and the CEO of Hera Spa, the Central Director of Administration, Finance and Control, the Market Central Director and the Enterprise risk manager. Furthermore, in relation to specific pertaining issues, the Central Director of Legal and Corporate Affairs, the Central Director of Corporate Services, the Central Director of Innovation and the CEO of Hera Trading Srl are also expected to attend.

The significant risks dealt with by the Risk Committee comprise the following areas: strategic, economic, financial, regulatory, competitive, technological, environmental and related to human capital. In 2021 the Risk Committee met four times and provided information on risk management to the Board of Directors in the meetings of 24 February and 28 July 2021.

The Group's risk management structure

In the overall design of the risk management process, Hera has adopted a structured approach that mirrors industry best practices, through the introduction of Enterprise risk management (ERM). This stance is aimed at formulating a systematic and coherent approach to the control and management of risks and creating an effective model of direction, monitoring and representation so as to ensure management processes are appropriate and consistent with the objectives set by top management.

For a more detailed description of the fundamental elements of the risk management framework, please refer to the Management Report.

On 20 January 2016, the first ERM report was presented to the Board of Directors with a mapping of the Group's risks, accompanied by the appropriate assessment measures for each individual and consolidated risk (impact, probability, severity, control levels). At that time, the Board of Directors approved the Hera Group risk management policy Guidelines and risk limits for 2016.

On 15 February 2017, the second ERM report was presented to the Board of Directors that extended the perimeter of reference and the set and tyles of risks subject to control. On the same occasion, the limits for 2017 and updating of the Hera Group risk management policy Guidelines were approved.

On 27 September 2017, information was presented to the Board of Directors regarding risk management activities within the Group.

In particular, the following pertinent issues were addressed:

the lines of defence against risks and the structure of governance;
Compliance with Law 262/2005 and compliance with Legislative Decree 231/2001, clarifying the role of the Financial Reporting Manager and the Supervisory Body in their respective reports to the Board of Directors;
risk management governance, clarifying the role of the Risk Committee, in particular in conveying information flows to the Board of Directors, the Board of Statutory Auditors, and the Control and Risk Committee and Internal Auditing, and the governance system implemented through the adoption of the ERM with its assignment of the role of strategic direction to the Board of Directors, which is responsible for deciding on the Group's risk profile and approving the Hera Group risk management policy Guidelines.

The ERM report has been presented to the Board in subsequent years as well.

On 10 January 2020, the fifth ERM report was presented to the Board of Directors with an expansion of the reference perimeter and the set of risks subject to control and back-testing of the risks relating to the previous ERM analysis. The risk limits for the year 2020 were also approved, as was the update of the Hera Group risk management policy guidelines. On 25 March 2020, the group's crisis management model, the activities carried out and the planned development plan were presented to the Board of Directors.

On 13 January 2021 the sixth ERM report was presented to the Board of Directors; in addition to the previous edition, this report introduced a risk analysis of the Covid-19 pandemic and carried out a comparative analysis of the Group's risks with respect to the proposed reference model of the World Economic Forum's 2020 Global Risk Report, highlighting similarities and specific features.

On 26 January 2022 the seventh ERM report was presented to the Board of Directors, which, in addition to the previous edition, introduced additional time-based parameters for representing risks and mapping them onto the strategic areas of the Business Plan.

The risk management and internal control system in relation to the financial information process

Introduction

The internal control and risk management system specific to financial reporting is designed to ensure the reliability, accuracy and timeliness of company information on financial statements and the ability of the relevant business processes to produce such information in accordance with the Group's accounting principles.

The internal control and risk management system in relation to Hera's financial information process is inspired by the CoSO Framework (issued by the Committee of Sponsoring Organizations of the Treadway Commission), an internationally recognized model.

The definition of the internal control and risk management system was established in keeping with applicable norms and regulations:

Legislative Decree no. 58 of 24 February 1998 and subsequent amendments and additions article 154-bis of the TUF;
Law 262 of 28 December 2005 (and subsequent amendments and additions, including the Legislative Decree to assimilate Directive 2004/109/CE regarding the harmonisation of transparency requirements for information on listed companies, approved on 30 October 2007, in relation to the drafting of corporate financial documents;
Consob Issuers' Regulation of 4 May 2007 Statement of the Appointed Manager in charge of drafting corporate financial documents and of the designated administrative authorities in relation to financial

and consolidated financial statements as well as to the biannual report, in compliance with article 154-bis of the TUF;

Consob Issuers' Regulation of 6 April 2009 Assimilation of the Transparency Directive 2004/109/CE concerning the harmonization of transparency requirements in relation to information about the issuers whose movable value are permitted to enter negotiations in a regulated market, modifying directive 2001/34/EC;
The Civil Code, which extends responsibility in corporate management (Article 2434 c.c.), for disloyalty crime originating from conferred or promised utility (Article 2635 and 2635 Bis c.c.) and for the crime of obstructing the functions of public and surveillance authorities (Article 2638 c.c.) to the Appointed Managers in charge of drafting corporate financial documents;
Legislative Decree no. 231/2001 that references the above-mentioned regulations of the Civil Code and the administrative responsibility of legal subjects for crimes committed against the Public Administration and includes the Appointed Manager in charge of drafting corporate financial documents among the Apical Subjects.

Moreover, in the implementation of the system, the Group has taken under consideration the recommendations provided by some authorities in the sector (Andaf, AIIA and Confindustria).

Description of the primary features of the internal control and risk management system in relation to the financial information process

As part of the internal control and risk management system pertaining to the financial information process, the Appointed Manager has set up an administrative and financial control Model - Regulation of the Appointed Manager for drafting corporate financial documents (hereafter also "The Model") approved by the Hera spa Board of Directors in the meeting held 27 May 2018, outlining the adopted method and associated roles and responsibilities in relation to defining, implementing, monitoring and updating the financial-administrative procedural system over time and in assessing its adequacy and effectiveness.

Hera's administrative and financial control Model defines a methodological approach for the internal control and risk management system in relation to financial information processes that is structured through the following steps:

risk assessment for the identification, updating and evaluation of risks regarding company information;
identifying controls and updates for financial-administrative procedures in view of the identified risks;
evaluating the identified risks.

Step 1: Risk Assessment

Represents the process of identifying and/or updating the risks connected to the financial statement (risks of unintentional errors or fraud) that might have an effect on the financial statement, and is carried out under the supervision of the Appointed Manager, at least on an annual basis.

As part of this process, the aim is to identify the set of objectives that the system seeks to pursue in order to ensure a truthful and accurate representation. Risk Assessments, carried out according to a top-down approach, concentrate on those areas of the financial statement wherein potential effects on financial information have been located in relation to the failure to achieve these control objectives.

As part of the process of Risk Assessment, the following tasks are carried out:

identifying and/or updating the Group companies considered relevant in view of the proper functioning of the Group's control system for corporate reporting;
verifying and/or updating the list of corporate processes that have been identified as relevant in view of the proper functioning of the Group's financial and administrative control system;
reviewing the overall adequacy of the current financial and administrative control model.

The process for determining the scope of the Companies and relevant processes in terms of their potential impact on the financial statement is aimed at identifying the Subsidiary Companies, the accounts and processes associated with them, and any other financial information considered to be relevant. The evaluations are carried out using both quantitative standards and qualitative parameters.

Step 2: Identifying controls and updates for the financial-administrative procedures

An identification of the necessary checks for mitigating the risks that were identified in the previous step is carried out taking into consideration the control objectives associated with the financial statement.

Based on the above, Hera Spa has established an internal control system under which the directors of corporate functions verify the design and operating effectiveness of control activities at least annually, each for the areas under his or her jurisdiction.

The results of periodical updates applied to procedures and associated controls are communicated to the Appointed Manager by the directors of corporate departments. The directors of corporate departments provide for updating/modifying the financial-administrative procedures in relation to the areas under their managerial responsibility at least annually.

Step 3: Periodic evaluation of financial-administrative procedures and the controls they contain The identified controls are periodically assessed in terms of their adequacy and actual effectiveness through specific testing activities according to the best practices established for the area in question.

In the course of these activities, the Appointed Manager evaluates at each given time to what degree it is necessary to involve the directors of corporate departments and contact persons within the Subsidiary Companies.

On a six-monthly basis, the Hera Spa Appointed Manager and CEO receive specific internal statements from Hera Group subsidiary companies and relevant connected companies in reference to the completeness and reliability of information flows for the purposes of financial reporting.

On a six-monthly basis, the Appointed Manager defines a series of reports synthesizing the results of the assessments of controls in relation to the risks previously identified on the basis of the outcomes of the monitoring activities performed.

After having been shared with the CEO, the prepared Executive Summary is communicated to Hera Spa's Board of Statutory Auditors, the Controls and Risks Committee and the Board of Directors.

Roles and functions involved

The internal control and risk management system concerning financial reporting is governed by the Appointed Manager in charge of drafting corporate financial documents who, in agreement with the CEO, is responsible for planning, implementing, monitoring, and updating the financial and administrative control Model over time.

In performing his or her activities, the Appointed Manager:

is supported by a specific function called Compliance 262, part of the staff of the Administration, Finance and Control Group Director, established by SO no. 49 of 30 October 2013 and with effect from 1 November 2013;
is supported by the directors of corporate departments who, within their areas of responsibility, ensure the completeness and reliability of information flows directed toward the Appointed Manager for the purposes of preparing the financial reporting documents;
coordinates the activities of the Administrative Managers of the relevant subsidiaries who are tasked with implementing, within their companies, and together with the delegated bodies, an adequate financial control system to safeguard the administrative-financial processes;
initiates a reciprocal information exchange with the Controls and Risks Committee and the Board of Directors, communicating about the activities performed and the adequacy of the financial and administrative control system.

Lastly, the Board of Statutory Auditors and Supervisory Board are informed about the adequacy and reliability of the financial-administrative system.

9.1 Director in charge of the internal control and risk management system

Most recently with the resolution of 29 April 2020, the Hera Spa Board of Directors has established that, within the scope and limits of the respective delegations and reporting lines of the various corporate structures, the Chairman and CEO are charged, as far as their authority permits, with establishing and maintaining the Internal Control and Risk Management Systems.

Pursuant to Recommendation 34 of the Code, the Executive Chairman and Chief Executive Officer, in this case as well as far as their authority permits:

ensure that the Risk Committee identifies the main business risks, taking account of the characteristics of the activities carried out by the Company and its subsidiaries, and periodically present those risks for examination by the Board of Directors,
implement the guidelines defined by the Board of Directors, ensuring that the responsible business structures design, create and manage the Internal Control and Risk Management Systems, constantly checking their appropriateness, effectiveness and efficiency,

The corporate heads may request that the Internal Auditing Manager carry out operations concerning risk assessment on specific operational areas and compliance with internal rules and procedures in carrying out corporate operations.

9.2 Controls and Risks Committee

Composition and functioning of the Controls and Risks Committee (pursuant to Article 123-bis, paragraph 2, letter d) of the TUF)

As established by the Code, the Board of Directors, at its meeting of 4 November 2002, passed a resolution to establish the Internal Controls Committee: Subsequently, during the course of the Company's Board of Directors meeting that took place 17 December 2012, in application of updates to the Code of Self-Discipline, the Internal Control Committee took on the additional function of Risk Management Committee in order to manage the Company's risks and support the administrative body in associated assessments and decisions.

This Committee, whose composition was renewed on 13 May 2020, is made up of independent director Gabriele Giacobazzi as Chairman, Erwin Paul Walter Rauhe, Lorenzo Minganti and Paola Gina Maria Schwizer.

On the occasion of the latest renewal of the Committee, the Board of Directors confirmed that principle 7.P.4 of the Corporate Governance Code in force at the time had been complied with.

In compliance with Recommendation 35 of the Code, the Controls and Risks Committee is chaired by an independent director and composed exclusively of independent non-executive directors.

The Controls and Risks Committee met seven times in 2021; six sessions were attended by all the members, while one session was attended by almost all the members. The average length of the meetings of the Internal Controls Committee, duly recorded in the minutes, was approximately one hour and 15 minutes.

Regarding the current financial year, as of 23 March 2022, a total of two Controls and Risks Committee meetings have been held: all of the members took part in one of these meetings, while almost all of the members took part in the other meeting. As of that date, an additional five meetings of the Committee had been planned for the remainder of the year.

Functions assigned to the Controls and Risks Committee

In compliance with Recommendations 33 and 35 of the Code, the Control and Risk Committee has the task of supporting, through adequate preliminary activities, the decisions and assessments made by the Board of Directors concerning the internal audit and risk management system.

In carrying out its supportive role in relation to the Board of Directors, the Committee therefore expresses its judgment concerning:

a) the definition of the guidelines of the internal control and risk management system in such a way that the primary risks faced by HERA and its subsidiaries are identified correctly and properly measured, managed and monitored, determining moreover the compatibility criteria of such risks with healthy and proper corporate management;
b) at least on a six-monthly basis, the adequacy and effectiveness of the internal control and risk management system in relation to the characteristics of the enterprise and the risk profile it has assumed;
c) at least on an annual basis, the work plan drafted by the Supervisor of the Internal Auditing Structure in consultation with the Board of Statutory Auditors and the Directors in charge of the internal control and risk management system.

In addition, in order to aid the Board of Directors, the Committee specifically:

d) after consulting the Manager in charge of drawing up the corporate accounting documents, the Independent Auditors and the Board of Statutory Auditors, assesses the correct use of the accounting standards and their uniformity for the purpose of preparing the consolidated financial statements;
e) examines the content of periodical financial and non-financial information and assesses its effectiveness in providing a fair representation of Hera's business model, strategies, the impact of its activities and the performance it pursues;
f) expresses opinions regarding specific aspects involved in identifying the main corporate risks and supports the Board's assessment and decision-making processes in relation to the management of risks deriving from prejudicial circumstances of which it has become aware;
g) analyses periodic reports concerning the assessment of the internal control and risk management system as well as those drafted on at least a six-monthly basis by the Supervisor of the Internal Auditing Structure;
h) communicates to the Board of Directors its preventative judgment regarding the proposals developed by the Directors in charge of the internal control and risk management system in relation to measures regarding the appointment and dismissal of the Supervisor of the Internal Auditing Structure, allotting this figure adequate resources for the completion of his or her responsibilities as well as establishing appropriate remuneration in keeping with corporate policies;
i) monitors the autonomy, effectiveness and efficiency of the Internal Auditing Structure;
j) evaluates the findings of the Internal Auditing Structure supervisor's reports, of statements from the Board of Statutory Auditors and each of its individual members, of reports and any possible management letters from the Independent Auditor, and of surveys and investigations carried out by other committees of the company and third parties;
k) may ask the Internal Auditing Structure to perform checks on specific operational areas, contextually communicating the results to the president of the Board of Statutory Auditors;
l) communicates to the Board of Directors about the activities performed by and the adequacy of the internal control and risk management system at least on the occasion of the annual and bi-annual approval of the financial statement.

During the course of the meetings held during 2021 financial year, which were duly recorded, the following measures were carried out:

examining and approving periodic reports;
updating ongoing and completed audits;
analysing specific requests;
approving the risk assessment, 2022 audit plan and 2022 budget of the Internal Auditing Department;
exchanging information with ERM.

The Chairman of the Board of Statutory Auditors or another Statutory Auditor designated by the Chairman and, at the express invitation of the Chairman of the Committee, the Chairman of the Board of Directors and the Group CEO, participate in the work of the Committee.

In the performance of its functions, the Controls and Risks Committee had access to the information and business functions necessary for carrying out its duties.

In relation to FY 2021, and following the quarterly reports released by the Controls and Risks Committee, the Board of Directors has approved the adequacy and efficacy of the internal control and risk management system, including in terms of pursuing sustainable success, in relation to the features of the company and the type of risk profile it has undertaken, also considering its subsidiaries with strategic importance.

9.3 Internal auditing department manager

In compliance with Recommendation 33, on 20 December 2017 the Board of Directors appointed the Internal Auditing Director, effective 1 January 2018.

In compliance with Recommendation 36 of the Code, the head of the Internal Auditing Department is hierarchically independent of the heads of operational divisions, may have direct access to all information necessary for the performance of his or her duties, and reports to the Vice Chairman.

The Internal Auditing Department reports on its activities, whenever it deems it necessary, to the Chief Executive Officer, the Chairman of the Board of Directors, the Controls and Risks Committee and the Board of Statutory Auditors by preparing a suitable risk assessment and three-year audit plan:

provides a synthetic and comparative assessment of the primary risk areas and associated control systems, performing updates through the meetings that take place with management;
according to the varying level of risk of corporate processes, prioritizes the duties of the Internal Auditing department.

9.4 Organisational model pursuant to Legislative Decree no. 231/2001

Legislative Decree 231/2001 introduced into Italian legislation the administrative responsibility (rectius penale) of legal entities, companies and associations. In particular, the law introduced the criminal liability of entities for certain offences committed in the interest or to the advantage of those entities by persons fulfilling roles of representation, administration or management of the entity or of one of its organisational units with financial and operational independence, or by persons who exercise management and control thereof, including on a de facto basis, and lastly, by persons subject to the direction or supervision of one of the above-mentioned parties. Significant offences are those committed against Public Administration and corporate offences committed in the interest of the companies.

However, Articles 6 and 7 of Legislative Decree no. 231/2001 provide for a form of exoneration from liability where (i) the entity proves that it adopted and efficiently implemented, prior to the commission of the act, appropriate organisational, management and control models for preventing the perpetration of the offences considered by the said decree; and (ii) the duty of supervising the functioning of and compliance with the models, as well as providing for their updating, is entrusted to a body of the entity that is vested with autonomous powers of initiative and control.

To this end, on 16 February 2004, the Board of Directors of Hera Spa approved and subsequently updated the organizational model, also in the light of the provisions introduced by Legislative Decree no. 231/2001, with the aim of creating a structured and organic system of control procedures and activities to prevent commission of the offences referred to in the aforementioned decree, by identifying the activities exposed to a risk of offence and implementing suitable procedures for those activities.

The aspects being updated, in line with developments in legislation and jurisprudence, concerned in particular:

the list of 231 offences including the most recently introduced ones, brought into line with the list set out in Legislative Decree no. 231/2001;
the enhancement of references to the Hera Group's Code of Ethics, now in its fifth edition, which is a fundamental pillar of the Model for the purposes of preventing offences;
the insertion of references to the Model for preventing corruption and regulating the procedures for reporting offences (whistleblowing), already covered by specific protocols;

The updating of the General Section of the Organisational, Management and Control Model, aimed at incorporating regulatory updates in a continuation of the previous revision of the document, is therefore designed to consolidate and further strengthen the Model's effectiveness in preventing offences and exempting the Company from liability.

The Group is sensitive to the need to ensure conditions of fairness and transparency in conducting business and corporate activities, to guarantee that the needs of the community are met and to protect the Group' s position and image, the expectations of its shareholders and the work of its employees. Moreover, the Group is aware of the importance of an internal control system capable of preventing unlawful conduct by its Directors, employees, external collaborators and business partners in general.

The Model has been adopted in the conviction that - beyond the provisions of Decree 231, which identify it as an optional and not compulsory tool - it constitutes a valid instrument for raising the awareness of all those who work in the name of and on behalf of the Group companies, so that they behave in a correct and straightforward manner in performing their activities, thereby avoiding the risk of committing the crimes envisaged by the Decree.

At present, the organisational, management and control model pursuant to Legislative Decree no. 231/2001, available on the website www.gruppohera.it under the "Governance/Internal-Auditing section", includes 27 protocols, implemented over time and relating to individual sensitive areas, which aim to ensure transparency and a sense of responsibility in internal relations and with the outside world.

For each process at risk, the protocols identify principles, roles and responsibilities to be followed in managing the activities and define the periodic information flows used to control them.

Each protocol ensures that the Supervisory Body engages in constant monitoring of activities at risk.

The procedures adopted incorporate the principles of the code of ethics in order to guide Group management according to the values and operating principles defined in the Charter of Values.

Risk factors and critical issues were identified and weighed through risk assessments carried out on the Group's business areas and infrastructure processes. The specific risks inherent in these 231 areas are defined by the Supervisory Body in an annual auditing plan that takes into account risk assessments, the coverage of new processes, regulatory developments and the extension of the scope of activities of Group companies.

The model involves establishing an ongoing legal compliance check, drafting the Audit Report on the effective implementation of the protocols in Group companies falling within the 231 perimeter, providing assistance with drafting re-entry plans in adopting the recommendations outlined in the report, and carrying out specific follow-ups to verify that re-entry plans have been implemented and the critical points highlighted have actually been resolved.

The model entails an informative and training component that targets the subjects involved in sensitive processes in order to raise awareness about prohibited and mandatory behaviours, create awareness of the related ethical behaviours and promote a Group culture for managing corporate risks.

An integral part of the model is the Supervisory Body's bi-annual examination of the information flows concerning activities at risk.

The risk analysis document with its related audit plan is drawn up for the whole Group every three years, the last of which refers to the period 2022-2024.

The organisational, management and control model pursuant to Legislative Decree no. 231/2001 has also been adopted by subsidiaries with strategic importance.

The Board of Directors has also instituted the Supervisory Body, approving its regulations:

This body, renewed most recently on 13 May 2020 and currently, in line with the provisions of Recommendation 33 letter e), made up of an external member with the role of Chairman, the Legal and Corporate Central Director of Hera Spa, and the Internal Auditing Director of Hera Spa, has the specific task of periodically reporting to the corporate bodies of the Parent Company regarding implementation of the organizational model pursuant to Legislative Decree 231/2001 and will remain in office until the date of the Shareholders' Meeting approving the financial statements as of 31 December 2022.

The Supervisory Body met on seven occasions in 2021 and all these meetings were attended by all the members. The average length of the meetings of the Supervisory Body was approximately one hour.

The Supervisory Body approved and updated the 231 protocols that make up the organizational model, examined the system of information flows that allow it to supervise the functioning and observance of the models and examined reports made following audits, as well as consulting legislative developments pursuant to Legislative Decree 231/2001 and planning additional activities.

In order to carry out the checks and controls, the Supervisory Body drew up a schedule of measures for verifying compliance with the protocols adopted.

Regarding the current financial year, as of 23 March 2022, a total of two Supervisory Body meetings have been held, and all of the members took part in both of these meetings. As of that date, an additional five meetings of the Committee had been planned for the remainder of the year.

Corruption prevention model

In the course of 2019, Hera Spa obtained the ISO 37001 certification for corruption prevention, the validity of which was confirmed by the Certifying Body following the maintenance audit carried out in September 2021. The Hera Group has consequently adopted a management system for corruption prevention that is integrated into the organization, management and control model pursuant to Legislative Decree 231/01, the foundations of which are rooted in the principles and values expressed in the code of ethics and in the quality and sustainability policy.

Along these lines, the Group has set up a model for corruption prevention which involves establishing a Compliance Department for the prevention of corruption that coincides with the Supervisory Body, to oversee the management system for preventing corruption.

The main responsibilities/functions of the Corruption Prevention Compliance Department are:

a) overseeing the design and implementation of the management system for the prevention of corruption;
b) providing advice and guidance to staff (defined as employees at all levels and subjects entrusted with positions of collaboration, including internships and traineeships) about the management system for preventing corruption and corruption issues;
c) ensuring that the management system for corruption prevention complies with the requirements of UNI ISO 37001;
d) duly reporting on the functioning of the management system for corruption prevention to the Board of Directors and top management.

Hera Group top management and management staff are personally committed to respecting the model for corruption prevention, including by carrying out awareness-raising and dissemination activities for the principles of the rules aimed at preventing corrupt acts in their own departments.

The corruption prevention model concerns everyone who works for the Hera Group.

With the December 2021 approval of the revision of the Organizational, Management and Control Model in accordance with Legislative Decree 231/2001, the Hera Group renewed its commitment to combating corruption and all offences relating to 231 and to preventing situations where there is a risk of such offences being committed.

9.5 Independent Auditors

The Hera Spa Shareholder's meeting of 23 April 2014 appointed Deloitte & Touche Spa to the role of independent auditor for the 2015-2023 financial years.

In view of the end of Deloitte & Touche Spa's appointment, considering the size and complexity of the Hera Group, the Board of Statutory Auditors of Hera Spa deemed it appropriate to begin the procedure for selecting the new auditing firm for the 2024-2032 financial years one year in advance, in order to submit the proposal with its reasoning at the next Shareholders' Meeting.

Appointment one year in advance is a common practice among the main listed companies. On the one hand, it makes it possible to align the appointment of the new auditor with that of Group companies and, on the other hand, it allows the new auditors to organize their activities well in advance, thus acquiring greater knowledge of the Group.

Therefore, in the light of the above-mentioned reasons, a specific call for tenders was carried out for the above-mentioned appointment, under the supervision of the Board of Statutory Auditors - the responsible body under article 13, paragraph 1, of Legislative Decree 39/2010, and the body that will submit the proposal with associated reasoning for the appointment of the new auditors to the general Shareholders' Meeting of 28 April 2022.

9.6 Appointed Manager in charge of drafting corporate financial reports and other corporate roles and functions

In compliance with the provisions of the TUF and the Company's Articles of Association, in consultation with the Board of Statutory Auditors, the Board of Directors resolved on 1 October 2014 to appoint Luca Moroni to the role of Finance and Control Administration Central Director, in the post of Appointed Manager in charge of drafting corporate financial reports. He is in possession of the professional qualifications set forth in Article 29 of the Company's Articles of Association, in compliance with the TUF (Article 154-bis, paragraph 1).

The Appointed Manager is tasked with establishing adequate financial and administrative procedures for the creation of the financial statement and consolidated financial statement as well as any other financial communication. To this end, the Appointed Manager will have access to a dedicated budget approved by the Board of Directors and an adequate organizational structure (in terms of quantity and quality of resources) dedicated to the preparation/updating of financial-administrative procedures and periodical assessment activities concerning the suitability and actual application of financial-administrative rules and procedures. If the internal resources prove to be insufficient for the suitable management of these activities, the Appointed Manager is permitted to exercise the power of expenditure granted to him or her.

The Board of Directors verify that the Appointed Manager has access to adequate powers and means to carry out the tasks entrusted to him or her by Article 154-bis of the TUF, and also to monitor that financial and administrative procedures are being followed.

The Appointed Manager communicates and exchanges information with all the administrative and control bodies of the Company and of the Group's subsidiaries, including but not limited to:

the Board of Directors;
the Controls and Risks Committee;
the Directors in charge of the internal control and risk management system;
the Board of Statutory Auditors;
the Independent Auditor;
the Supervisory Body pursuant to Legislative Decree no. 231/01;
the Internal Auditing Manager;
the Investor Relations Manager.

9.7 Coordination among the subjects involved in the internal control and risk management system

The Issuer has established the following systematic coordination modes for the various subjects involved in the internal control and risk management system:

periodic coordination meetings focused in particular on the process of drafting financial information and the activities of assessing, monitoring and containing (economic-financial, operational and compliance) risks;
information flows among the subjects involved in the internal control and risk management system;
periodic reports to the Board of Directors;
establishment of a Risk Committee with the aim of outlining guidelines for monitoring and informing about risk management strategies.

In particular, the following types of coordination meeting are specified:

the Board of Statutory Auditors with the Controls and Risks Committee, the Independent Auditor, the Appointed Manager in charge of drafting corporate financial reports, and the Internal Auditing Manager;
the Board of Statutory Auditors with the Supervisory Board pursuant to Legislative Decree 231;
the Directors in charge of the internal control and risk management system with the Chairman of the Controls and Risks Committee.

10.0 The Interests of Directors and Transactions with Related Parties

At its meeting of 10 October 2006, the Board of Directors of Hera S.p.A. approved, in compliance with Articles 1 and 9 of the then-in force Corporate Governance Code, guidelines for significant transactions, transactions with related parties and transactions in which a director has an interest (Guidelines), in order to ensure that these transactions are conducted transparently and in conformity with the criteria of substantive and procedural correctness.

Subsequently, the Board of Directors of Hera S.p.A. approved the new procedure for transactions with Related Parties (Procedure) in compliance with the provisions of the Consob Regulation adopted by virtue of Resolution no. 17221 of 12 March 2010 and subsequent amendments and integrations thereto ("Consob Regulation"), later updated on 21 December 2015.

The Procedure cancelled and completely replaced the rules on transactions with Related Parties contained in the Guidelines, but there is no change to the existing rules set out in the Guidelines concerning significant transactions and transactions in which a director has an interest.

In the Procedure, the Board of Directors fully adopted the definitions of Related Parties and Transactions with Related Parties, as well as all the directly associated definitions, contained in the Consob Regulation and its annexes.

The Procedure was last updated on 30 June 2021, in order to adapt it to the amendments - introduced by Consob resolution 21624 of 10 December 2020 - to the Consob Regulation on related party transactions adopted by resolution 17221 of 12 March 2010 and effective beginning 1 July 2021.

In particular, the Procedure identifies:

1) the types of transactions with related parties outlined in the Procedure:

transactions of major importance, that is, transactions in which at least one of the indices of importance determined by the Consob Regulation exceeds the threshold of 5%;
transactions of minor importance, that is, transactions with related parties that are neither of major importance nor of negligible amount;
framework resolutions, that is, that series of transactions with related parties;
ordinary transactions, that is, transactions which (a) fall within the ordinary conduct of the company's operating activities or associated financial activities; and (b) are carried out under conditions: (i) similar to those normally applied to unrelated parties for transactions of a comparable nature, scale and risk, (ii) based on regularly applied tariffs or established prices, or (iii) comparable with those applied to parties with whom the company is legally obliged to deal for a determined amount;
transactions of negligible amount, that is, transactions for which the maximum foreseeable amount of the consideration or of the value of the service does not exceed, for each transaction:
- the sum of 1 million euros in the event of transactions whose related party is a legal person;
the sum of 300 million euros in the event of transactions whose related party is a natural person; ▪ transactions with related parties carried out by subsidiaries;

2) the approval process for transactions of major and minor importance, depending on whether they involve:

transactions of minor importance falling within the competence of the Board of Directors, which are approved by the Board of Directors after hearing the reasoned but non-binding opinion of the Committee for transactions with related parties (hereinafter referred to as the Committee) regarding the interest, appropriateness and substantive correctness of the transaction;
transactions of major importance falling with the competence of the Board of Directors, in which the Committee must be involved in the negotiation and investigation phases and in which the transaction may be approved following the receipt of a reasoned favourable opinion from the Committee regarding the interest, appropriateness and substantive correctness of the transaction, that is following a vote in favour by a majority of the independent directors;
transactions of minor and major importance falling with the competence of the Shareholders' Meeting, for which the proposals must follow the same procedure as that for transactions falling with the competence of the Board of Directors, as described in the previous two points, and which must in any event receive a favourable opinion from the Committee.

The Procedure provides that the Committee charged with guaranteeing, by issuing specific opinions, the substantive correctness of dealings with related parties, must be in agreement with the controls and risks committee.

The Procedure also identifies the cases to which the Procedure does not apply, as well as governing the procedures for communication with the public on the transactions carried out.

Beginning May 2014, a specific Operational Guideline was applied by Hera and its subsidiaries and subsequently updated on 21 May 2016, in order to detail the information reported in the Procedure and outline the rules, roles and responsibilities, as well as operational activities, implemented by the company.

11.0 Board of Statutory Auditors

11.1 Appointment and Substitution

List voting

The auditors are appointed by the shareholders' meeting on the basis of the voting list system set forth in Article 26 of the Articles of Association, as modified by the Extraordinary Shareholders' Meeting of 29 April 2020, in implementation of Law 160 of 27 December 2019 and the subsequent Consob Communication 1 of 30 January 2020, in order to ensure that the minority is able to appoint a standing auditor with the function of Chairman as well as an alternate auditor, in compliance with current legislation on gender balance. In accordance with Article 25 of the Articles of Association, the office of Statutory Auditor is incompatible with the offices of councillor or alderman in regional public authorities, as well as with that of Statutory Auditor in more than three listed companies other than subsidiaries of the Company pursuant to Article 2359 of the Italian Civil Code and Article 93 of Legislative Decree no. 58/98. In the latter case, a Statutory Auditor who subsequently exceeds this limit will automatically forfeit the office of Statutory Auditor of the Company.

Article 26 of the Articles of Association governs the terms and conditions for filing and publishing lists, as well as the related documentation, in compliance with current regulations.

The lists must be delivered to the registered office at least 25 days before the date set for the meeting, together with the curriculum vitae of the candidates and a declaration from each individual candidates stating that he or she accepts the office and certifying that there are no causes of ineligibility, incompatibility or revocation as established by law, and the existence of the requirements of integrity and professionalism required by law for members of the Board of Statutory Auditors.

Article 25 of the Articles of Association establishes that, for the purposes of the provisions of legislation in force concerning the requirements of professionalism for members of the Board of Statutory Auditors of listed companies, business matters and sectors strictly pertaining to the activities performed by the Company means the business matters and sectors associated with or pertaining to the activity performed by the Company and cited in Article 4 of the Articles of Association.

The lists must also be accompanied by a statement certifying that there are no agreements or connections of any kind with other shareholders who have presented other lists, and a list of the administrative and control positions held by the candidates in other companies. These lists must be made available to the public at the registered offices and on the website www.gruppohera.it, no less than 21 days prior to the date of the Shareholders' Meeting.

The terms and conditions for the filing of lists are indicated by the Company in the Shareholders' Meeting notice of call. Each shareholder may submit or participate in the submission of only one list. In the event this rule is violated, the shareholder's vote is not taken into account with respect to any of the lists presented. Each person entitled to vote may vote for only one list.

Eligibility to submit lists and their composition

Shareholders who alone or together with other shareholders represent at least 1% of the share capital with voting rights in the ordinary shareholders' meeting, or the alternative percentage required by current legislation and indicated in the notice of call, may submit lists.

In this regard, it should be noted that, on the occasion of the last renewal of the Board of Statutory Auditors which took place at the Shareholders' Meeting of 29 April 2020, the shareholding required for presenting lists of candidates for the election of the sitting control body was identified by Consob (through Resolution 28 of 30 January 2020) in the amount of 1%, equal to the percentage provided for in article 26.2 of the current Articles of Association.

In particular, (i) Municipalities, Provinces and Consortia constituted pursuant to Article 31 of Legislative Decree no. 267/2000 or other entities or public authorities, as well as consortia or joint-stock companies controlled, directly or indirectly, by these may present a single list and (ii) the shareholders not indicated in (i) may submit lists provided that they represent at least 1% of the shares with voting rights or the percentage established by current regulation and indicated in the notice concerning the meeting.

The lists contain a number of candidates not exceeding the number of members to be elected, listed by means of progressive numbering. Each candidate may appear on only one list under penalty of ineligibility. Each list must contain a number of candidates belonging to the less- represented gender that ensures compliance with the balance between genders, at least to the minimum extent required by current legislation, including regulations.

Appointment mechanism

The members of the Supervisory Body are appointed in accordance with the provisions of Article 26 of the Articles of Association:

The Board of Statutory Auditors comprises three standing members and two alternate members.
two standing auditors and one alternate auditor will be taken from the list that obtains the highest number of votes cast by the shareholders, in the progressive order in which they are listed, of which at least one standing auditor of the less-represented gender;
the third standing auditor and the other alternate auditor will be taken from the other lists, electing respectively the first and second candidates on the list that receive the second highest number of votes, of which at least one alternate auditor to be of the less-represented gender. In the event of a tie between two or more lists, the oldest candidate will be elected as statutory auditor, in compliance with the gender balance required by applicable legislation, including regulations;
If the list voting system does not ensure the minimum number of standing and alternate auditors of the less-represented gender required by law, the candidate of the most represented gender positioned last on the list of candidates elected from the list with the highest number of votes shall be replaced by the candidate of the less-represented gender who was positioned first among the non-elected candidates on the same list and so on, up to the minimum number of directors belonging to the less-represented gender. If the minimum number of directors belonging to the lessrepresented gender still has not been reached even after applying this criterion, the replacement criterion indicated will be applied to the minority lists, starting from the list that received the highest number of votes.
the Board of Statutory Auditors is chaired by the first candidate on the list obtaining the second highest percentage of votes. In the event of a tie between two or more lists, the oldest candidate will be elected as statutory auditor, in compliance with the gender balance required by current legislation, including regulations;
for the appointment of statutory auditors who for whatever reason are not appointed by the list voting procedure, the shareholders' meeting resolves with the majorities required by law, in compliance with the gender balance required by applicable legislation, including regulations.

Replacing members of the Board of Statutory Auditors

In the event of the replacement of a sitting Statutory Auditor, he or she will be succeeded by the alternate Auditor belonging to the same list as the Auditor to be replaced, respecting the principles of minority representation and gender balance.

The appointment of auditors to round out the Board of Statutory Auditors, pursuant to article 2401 of the Civil Code, will be carried out by the shareholders' meeting with the majorities provided for by the law, from among the names submitted by the same shareholders presenting the list to which the auditor who left the office belonged, in compliance with the principle of necessary representation of minorities and gender balance; where this is not possible, the shareholders' meeting will have to proceed with the replacement with the majorities required by law, in compliance with the gender balance rules set forth by current applicable legislation, including regulations.

11.2 Composition and functioning (pursuant to Article 123-bis, paragraph 2, letter d) and d-bis, of the TUF)

The Shareholders' Meeting of 29 April 2020 appointed a Board of Statutory Auditors made up of three standing members and two alternates, currently in office until the approval of the financial statements for the 2022 financial year, the composition of which complies with applicable regulations regarding gender balance.

This appointment was made through the list voting mechanism, in order to guarantee the minority lists the right to appoint a standing auditor, with the function of Chairman, and an alternate auditor.

At the Shareholders' Meeting of 29 April 2020 mentioned above, three lists of candidates were presented, listed below along with an indication of their proposing Shareholders:

List no. 1, presented on 30 March 2020 by the shareholders Municipality of Bologna, Municipality of Casalecchio di Reno, Municipality of Cesena, Municipality of Modena, Municipality of Padova, Municipality of Trieste, Municipality of Udine, Con.Ami, Holding Ferrara Servizi Srl, Ravenna Holding Spa and Rimini Holding Spa, who, together with 107 other public shareholders, were at the time parties to the "Shareholders' Agreement on Voting and Share Transfer Rules" of 26 June 2018, and who together hold 619,396,602 Hera shares, corresponding to 41.58% of the voting shares of Hera S.p.A., a list that obtained 1,261,463,415 voting rights, equal to 67.012602% of the total voting shares present, containing the names, in ranked order, of the following candidates:

Standing Auditors

1. Marianna Girolomini
1. Antonio Gaiani

Alternate Auditors

Valeria Bortolotti

List no. 2, submitted on 2 April 2020 by the shareholder Gruppo Società Gas Rimini Spa, holder of 30,771,269 Hera shares, corresponding to 2.065825% of the shares with voting rights of Hera Spa, a list that obtained 167,995,865 voting rights, corresponding to 8.924428% of the total voting shares present, containing the names, in ranked order, of the following candidates:

Standing Auditors

Elisabetta Baldazzi

Alternate Auditors

Alessandro Levoni

List no. 3, submitted on 3 April 2020 by Studio Trevisan & Associati on behalf of the shareholders Amundi Luxembourg SA - Amundi European Equity Small Cap; Amundi Asset Management SGR Spa manager of the funds: Amundi Dividendo Italia, Amundi Risparmio Italia, Amundi Sviluppo Italia; APG Asset Management N.V, manager of the funds: Stichting Depositary APG Developed Markets Equity Pool, Stichting Depositary APG Developed Markets Equity Minimum Volatility Pool; ARCA Fondi SGR Spa manager of the fund: Arca Azioni Italia; Etica SGR Spa manager of the funds: Etica Rendita Bilanciato, Etica Obbligazionario Misto, Etica Bilanciato, Etica Azionario; Eurizon Capital SGR Spa manager of the funds: Eurizon Progetto Italia 70, Eurizon Azioni Italia, Eurizon PIR Italia Azioni, Eurizon Progetto Italia 40; Eurizon Capital S. A. manager of the fund Eurizon Fund, section Italian Equity Opportunities; Fideuram Asset Management Ireland manager of the fund Fonditalia Equity Italy; Fideuram Investimenti SGR Spa manager of the funds: Fideuram Italia, Piano Azioni Italia, Piano Bilanciato Italia 50; Interfund Sicav - Interfund Equity Italy; Kairos Partners SGR Spa management company of Kairos International Sicav comparti: Italy, Target Italy Alpha; Legal & General Assurance (Pensions Management) Limited; Mediolanum Gestione Fondi SGR Spa manager of the funds: Mediolanum Flessibile Futuro Italia, Mediolanum Flessibile Sviluppo Italia; Mediolanum International Funds Limited - Challenge Funds - Challenge Italian Equity; Pramerica SGR Spa - Pramerica Sicav comparti Italian Equity and Clean Water, together the holders of 26,928,425 Hera shares, corresponding to 1.80784% of the Hera Spa shares with voting rights, a list that obtained 393,771,370 voting rights, corresponding to 20.918279% of the total number of voting rights present, containing the names, in ranked order, of the following candidates:

Standing Auditors

Myriam Amato

Alternate Auditors

Stefano Gnocchi

Following the shareholders' meeting vote, the Supervisory Body was made up as follows:

1. Myriam Amato -Chairman
1. Marianna Girolomini -standing auditor
1. Antonio Gaiani -standing auditor 4. Valeria Bortolotti -alternate auditor
1. Stefano Gnocchi -alternate auditor

From the date of appointment to that of this report, there have been no changes in the composition of the body.

For the composition of the Board of Statutory Auditors at the end of the 2021 financial year, please see the following Table 4, noting that the personal and professional details of each member are available on the website www.gruppohera.it

The Board of Statutory Auditors met 16 times in 2021; 12 of these meetings were attended by all statutory auditors, while four were attended by almost all of them. The average duration of the meetings of the Board of Statutory Auditors was approximately two hours.

With regard to the current financial year, seven meetings of the Board of Statutory Auditors have been held as of March 23, 2022, while a further ten meetings have already been scheduled for the remainder of the year.

Diversity Criteria and Policies

The appointment of the Board of Statutory Auditors took place during the Shareholders' Meeting of 29 April 2020, following the presentation of three lists, one majority and two minority, which also guaranteed the composition of the board meet regulatory provisions regarding gender balance (three members of the less-represented gender out of a total of five members).

The members of the Board of Statutory Auditors have an average age of about 50 years: one member is between 40 and 50 years old and two members are between 50 and 60 years old.

As part of its self-assessment activities, the Board of Statutory Auditors expressed its favourable opinion with regard to the functioning, composition and characteristics of its members in terms of their meeting the requirements of eligibility, independence, integrity and professionalism set out by current legislation, also considering the issues and business sectors related to or inherent in the Companies' activities, thus ensuring the independence and professionalism of the Board's functioning in compliance with Principle VIII of the Code.

Independence

In compliance with Recommendations 9 and 10 of the Code, following the renewal of the Board of Statutory Auditors, the market was informed about the independence of its members on 13 May 2020 by means of a specific press release. In the following financial years and, finally, on 1 March 2022, the Board of Statutory Auditors carried out its own self-assessment based on analysing each member's subjective suitability in relation to the requirements of professionalism, expertise, integrity and gender, as required by current legislation, as well as the proper functioning of the body.

For the purposes of the aforementioned self-assessment, the Board carried out information-gathering and evaluations by requesting its members to provide information and data relating to their qualitative, quantitative and operational profiles.

Specifically, it:

verified that its members meet the requirements of independence, integrity, professionalism, competence and experience;
assessed the adequate availability of time and resources to carry out the assignment, compliance with the limit on the number of offices held, as well as the adequacy of its composition with reference to the gender balance and age of its members.

With regard to overall operations, the Board of Statutory Auditors has assessed the following as satisfactory:

the running of meetings;
the activities carried out by the Chairman;
the exchange of relevant corporate information (with auditing firms, the Supervisory Board, the Internal Auditing function, internal committees and company management);
participation in the meetings of the Board of Directors and the Board's Committees;
participation in the Shareholders' Meeting.

The Board of Statutory Auditors has checked the correct application of the criteria and assessment procedures adopted for ascertaining the independence of its members, including for the purposes of Article 144-novies of the Issuer's Regulation, and went on to communicate this finding to the Board of Directors.

Remuneration

The remuneration paid to the members of the Board of Statutory Auditors is consistent with the skills, professionalism and commitment required by the importance of their role and the size and sector characteristics of Hera.

12.0 Relations with shareholders

Access to information

To enable shareholders to understand the Company more fully, the Company has established a suitable department dedicated to relations with investors, headed by and entrusted to Jens Klint Hansen. The investor relator can be contacted by telephone on 051 287737 or at the email address [email protected], and the "Investor Section" on the website www.gruppohera.it is dedicated to the activities of the investor relator along with the information provided to shareholders.

Dialogue with shareholders

On 1 December 2021, the Board of Directors resolved to adopt, following a proposal by the Executive Chairman in agreement with the Chief Executive Officer, a "Policy for Managing Dialogue with General Shareholders and Bondholders" ("Policy"), which is available on the website www.gruppohera.it under the "Governance/Governance System Section".

The aforementioned Policy is aimed at ensuring that the dialogue the Company and Hera Group maintain with Shareholders and Bondholders ("Dialogue") is inspired by the principles detailed in the Policy itself and takes place in compliance with EU and national regulations on market abuse, as well as in line with international best practices.

The Policy describes the purposes, scope of application, general principles to be complied with, topics covered by the Dialogue and the means used to facilitate the Dialogue itself; in particular, it identifies the Investor Relations Department and Central Legal and Corporate Affairs Department as the "Points of Contact" for Shareholders and Bondholders and the Chairman as the "Administrator in Charge" of managing the Dialogue, it being understood that the Board of Directors has the role of directing, supervising and monitoring the application of the Policy itself.

In particular, the Policy provides specific details about (i) the topics covered by the Dialogue, (ii) the means used to facilitate the Dialogue, and (iii) the way in which the Dialogue is conducted (evaluation criteria for accepting/rejecting a request for Dialogue, timing, guarantees of confidentiality).

The Company also promotes active and constructive communication with other stakeholders, including but not limited to: local communities, the public administration, customers, suppliers and employees.

In particular, the contact channels for this communication include:

"Hera LABs": these are local, multi-stakeholder councils (involving local communities, public administration, environmental groups and future generations, customers, suppliers and shareholders) that Hera organises in the areas in which it provides its services in order to establish a structured channel for listening to and dialoguing with local communities;
the annual residential customer satisfaction survey and biannual survey on the Company's internal climate, involving employees;
the annual meeting with employees;
the website in general and specifically the "Sustainability Section" that presents all the reports of interest to the various stakeholders;
a specific part of the company website reserved for consumer associations, where they can receive information and updates about Hera's services and communicate their comments or concerns;
conferences, events and initiatives organised or supported by Hera.

The Director in charge shall report to the Board of Directors on a six-monthly basis, or by the first available meeting in the event of significant events:

(i) regarding the development and relevant aspects of the dialogue with shareholders and bondholders;
(ii) regarding the most significant requests received from other stakeholders.

13.0 Meetings

Ordinary and extraordinary shareholders' meetings are called in the circumstances and manner provided for by law; they are held at the company's registered office or outside them, provided that the location is in Italy.

The full text of the proposed resolutions, together with the illustrative reports and documents submitted to the Shareholders' Meeting, are made available to the public at the company's registered offices and on the Company's website www.gruppohera.it, as well as on the authorized storage site within the legal deadline for each of the matters under discussion.

The shareholders entitled to participate in the Shareholders' Meeting are those entitled to vote, pursuant to the law, at the end of the accounting day coinciding with the record date and for which the Company has received the relative communication made by the authorized intermediary by the end of the third trading day preceding the date set for the Shareholders' Meeting. However, the legitimate right to participate and vote remains if these communications are received after this deadline, provided that they are received by the beginning of the meeting. Those who become owners of shares only subsequent to this deadline will not have the right to participate in and vote at the Shareholders' Meeting.

Any person entitled to attend may be represented at the Shareholders' Meeting in accordance with the law, exercising the right to use the proxy form available on the Company's website for this purpose, and the methods that interested parties can use to notify the Company of proxies are also available electronically on this site.

At each Shareholders' Meeting, the Company identifies a person to whom the holders of voting rights will be able to confer a proxy with voting instructions covering all or some of the agenda items. The proxy to the aforementioned representative must be conferred by the end of the second open market day prior to the date of the Shareholders' Meeting, in the manner specified on the Company's website and using the specific proxy form provided there.

The proxy to the designated representative has no effect with regard to proposals for which voting instructions have not been given.

Shareholders can ask questions about the items on the agenda even before the Shareholders' Meeting, in the manner indicated on the Company's website.

Shareholders who, even jointly, represent one fortieth of the share capital, can submit a request within ten days of the publication of the notice of convocation asking that items be added to the matters to be discussed, indicating in the request the additional topics proposed, or presenting proposed resolutions on the items already on the agenda. Requests must be submitted in writing in the manner indicated on the Company website.

In accordance with Article 13 of the Articles of Association, the Shareholders' Meeting is chaired by the Chairman of the Board of Directors or, in his/her absence, by a person elected by the Shareholders' Meeting itself through a majority vote by those present. The Chairman of the Shareholders' Meeting appoints a secretary, verifies that it has been constituted properly, ascertains the identity and legitimacy of those present and regulates the Shareholders' Meeting, in compliance with the meeting regulations, ascertaining the results of voting.

In accordance with Article 14 of the Articles of Association, both ordinary and extraordinary shareholders' meetings and their related resolutions are valid if made with the attendance requirements and majorities established by law.

Resolutions by the Extraordinary Shareholders' Meeting concerning amendments to articles 6.4 (shares and increased voting rights), 7 (public majority shareholding), 8 (limits on share ownership), 14 (validity of Shareholders' Meetings and right of veto) and 17 (appointment of the Board of Directors) of the Articles of Association will be valid if made with a yes-vote by at least 3/4 of shareholders with voting rights participating in the Shareholders' Meeting, rounded down if necessary.

The shareholders' meeting of 29 April 2003 approved the text of the meeting regulations, the updated version of which is published under the "Section Governance/Shareholders' Meeting" on the Company website at www.gruppohera.it, which indicate the procedures to be followed in order to permit the orderly and proper functioning of meetings, without prejudice to the right of each shareholder to express his or her opinion on the matters under discussion.

During the year 2021 only one Extraordinary and Ordinary Shareholders' Meeting was held on 28 April, which was attended by all members of the Board of Directors and the Board of Statutory Auditors.

14.0 Considerations regarding the letter from the Chairman of the Corporate Governance Committee

At its meeting of 23 February 2022, the Board of Directors considered the recommendations made in the letter sent on 3 December 2021 to the chairmen of the governing bodies of Italian listed companies by the Chairman of the Corporate Governance Committee. Specifically, the main issues involved in these recommendations include:

Sustainable success and promoting dialogue with relevant stakeholders;
the quality of independence assessments;
pre-consultation briefings;
the appointment and succession of directors;
gender parity;
remuneration policies.

At the aforementioned meeting, the Board of Directors noted these recommendations and reported on the status of their implementation/reception by the Company.

In particular, the Company is following the recommendations for promoting dialogue with stakeholders; in fact, through a Board of Directors resolution passed 1 December 2021, the Company adopted a "Policy for Managing Dialogue with General Shareholders and Bondholders" and this Report provides effective and concise information on the methods adopted to pursue sustainable success.

With respect to the latter issue, it should be noted that the Extraordinary Shareholders' Meeting of 28 April 2021 approved an amendment to article 3 of the Articles of Association by inserting, as part of this article, an additional paragraph aimed at describing the ways in which Hera intends to pursue its goal of being a model sustainable enterprise. The Company, therefore, confirms and highlights its commitment to developing a business model aimed at creating long-term value for its shareholders by creating shared value together with its stakeholders. To this end, one of the aims in the Company's activity of organising and carrying out business activities is to promote social equity and contribute to achieving carbon neutrality, regenerating resources and ensuring the resilience of the system of services it manages, for the benefit of customers, the local ecosystem and future generations.

With regard to the defining of the qualitative and quantitative criteria for determining directors' independence, at the same meeting held 23 February 2022, the Company's Board of Directors defined these criteria, pursuant to Recommendation 7 under article 2 of the Code, used in the subsequent independence review process for the Company's directors and statutory auditors that took place at the 23 March 2022 Board meeting.

The Company is in line with the recommendations of the Code concerning pre-consultation briefings as well, considering that, with a Board of Directors resolution dating to 26 July 2017, it adopted a procedure outlining the methods and timing for establishing the agenda for the meetings of the Board of Directors of both Hera and Group companies, as well as for sending the relevant documentation to the Directors. Subsequently, on 11 November 2020, the Board of Directors also resolved to adopt a "Regulation on the functioning of the Board of Directors of Hera Spa" aimed at establishing the operating rules for the administrative body and its committees. Finally, it should be pointed out that Hera is following the recommendations outlined in the letter from the Chairman of the Corporate Governance Committee in terms of preparing the committee regulations as well.

As for the recommendations regarding the appointment and succession of directors, it should be noted that the Board of Directors, at its meeting of 11 November 2020, decided not to set up an Appointments Committee, choosing to instead maintain these powers in the hands of the Board itself, also in consideration of the fact that the task of appointing the members of the Board of Directors lays in the hands of the shareholders, carried out through list voting at the Shareholders' Meeting. In case of premature termination of the mandate of executive directors, the procedure will be carried out in compliance with the provisions of the Articles of Association and Shareholders' Agreement, whereas as regards level-1 top management, the Chairman, in agreement with the CEO, will submit a duly documented proposal for appointment/replacement to the Board of Directors.

Finally, it can be confirmed that the Company is following the recommendations concerning both gender equality, a subject to which the Company has always paid particular attention, and remuneration policies, a subject that is highlighted in the Report on the remuneration policy and compensation paid.

Board of Directors

	Member	Birth year	Date first		In office until	List	List (M/m) (***)	Exec.	Non-exec.	Code of	TUF	no. of other	Participation
Position			appointed (*)	In office since		(presenters) (**)				indep.	indep.	positions (****)	(*)
Chairman	Tomaso Tommasi di Vignano	1947	04-nov -02	29-apr-20	Appr. Bil. 2022	Shareholders	M	X				-	10/10
CEO	Stefano Venier	1963	23-apr-14	29-apr-20	Appr. Bil. 2022	Shareholders	M	X				-	10/10
Vice Chair.	Gabriele Giacobazzi	1949	29-apr-20	29-apr-20	Appr. Bil. 2022	Shareholders	M		X	X	X	-	10/10
Director	Fabio Bacchilega	1963	29-apr-20	29-apr-20	Appr. Bil. 2022	Shareholders	M		X	X	X	-	9/10
Director	Danilo Manfredi	1969	23-apr-14	29-apr-20	Appr. Bil. 2022	Shareholders	M		X	X	X	-	10/10
Director	Alessandro Melcarne	1984	08-nov -17	29-apr-20	Appr. Bil. 2022	Shareholders	M		X	X	X	-	10/10
Director	Lorenzo Minganti	1973	29-apr-20	29-apr-20	Appr. Bil. 2022	Shareholders	M		X	X	X	-	10/10
Director	Monica Mondardini	1960	29-apr-20	29-apr-20	Appr. Bil. 2022	Shareholders	M		X	X	X	4	9/10
Director o	Erw in P.W Rauhe	1955	27-apr-17	29-apr-20	Appr. Bil. 2022	Shareholders	m		X	X	X	1	10/10
Director	Manuela Cecilia Rescazzi	1958	29-apr-20	29-apr-20	Appr. Bil. 2022	Shareholders	M		X	X	X	-	10/10
Director	Paola Gina Maria Schw izer	1965	29-apr-20	29-apr-20	Appr. Bil. 2022	Shareholders	m		X	X	X	1	10/10
Director	Federica Seganti	1966	27-apr-17	29-apr-20	Appr. Bil. 2022	Shareholders	M		X	X	X	2	9/10
Director	Bruno Tani	1949	27-apr-06	29-apr-20	Appr. Bil. 2022	Shareholders	m		X	X	X	-	10/10
Director	Alice Vatta	1975	29-apr-20	29-apr-20	Appr. Bil. 2022	Shareholders	m		X	X	X	-	9/10
Director	Marina Vignola	1970	27-apr-17	29-apr-20	Appr. Bil. 2022	Shareholders	M		X	X	X	-	10/10
	No. of meetings held during the financial year in question: 10
Association).	Quorum required for minority lists to be submitted for the election of one or more members (pursuant to art. 147-ter of theTUF): at least 1% of the shares with voting rights at the ordinary shareholders' meeting (art. 17.5 Articles of

Table 1: structure of the Board of Directors at year end

The following symbols must be entered in the "Position" column:

• this symbol indicates the adminstrator in charge of the internal control and risk management system.

○ this symbol indicates the Lead independent director (LID). * The dateof first appointment of each director refers to the date on which the director was appointed for the first time (ever) to theissuer's BoD.

** This column shows the list from which each director was taken, preented by the shareholders (indicating "Shareholders") or the BoD (indicating "BoD").

(***) This column indicates whether the list from which each director was drawn is "majority" (indicating "M"), or "minority" (indicating "m").

(****) This column indicates the number of offices as director or statutory auditor held by the person concerned in other companies listed on regulated markets or large enterprises. The positions are described in full in the report on corporate governance.

(*****) This column shows the Directors' participation in the meetings of the Board of Directors (indicate the number of meetings attended with respect to the total number of meetings which could have been attended; e.g. 6/8; 8/8 etc.).

Board of Directors		Executive Committee		Controls and risk committee / OPC		committee	Remuneration	Appointments committee		sustainability Ethics and committee
Position	Member	(*)	(**)	(*)	(**)	(*)	(**)	(*)	(**)	(*)	(**)
ex ecutiv e - non independent BoD Chairman	Tomaso Tommasi di Vignano	7/7	P
esecutiv o - non indipendente Chief Ex ectiv e Officer	Stefano Venier	7/7	M
non ex ecutiv e - Code and TUF independent Vice Presidente	Gabriele Giacobazzi	7/7	M	7/7	P	3/3	P
non ex ecutiv e - Code and TUF independente Director	Fabio Bacchilega					2/3	M
non ex ecutiv e - Code and TUF independente Director	Alessandro Melcarne	7/7	M
non ex ecutiv e - Code and TUF independente Director	Lorenzo Minganti			6/7	M			Not present
non ex ecutiv e - Code and TUF independent Director	Monica Mondardini					3/3	M
non ex ecutiv e - Code and TUF independent Director	Erw in P.W Rauhe			7/7	M
non ex ecutiv e - Code and TUF independent Director	Paola Gina Maria Schw izer			7/7	M
non ex ecutiv e - Code and TUF independent Director	Federica Seganti									6/6	P
non ex ecutiv e - Code and TUF independent Director	Alice Vatta					3/3	M			6/6	M
	------------- ANY MEMBERS WHO ARE NOT DIRECTORS -------------
Ex ternal professional	Cristiana Rogate									6/6	M
Hera Spa Shared Value and Sustainability Director	Filippo Maria Bocchi									6/6	M
Number of meetings held during the year		7 meetings		7 meetings		3 meetings				6 meetings

Table 2: structure of the Board Committees at year end

NOTES:

(*) This column indicates the degree of participation of the director in meetings of the committees. (**) This column indicates the role played by the director on the Board: "P": Chairman, "M": member.

57 |

Board of Statutory Auditors

			Date of first			List (m/M)	Code	Participation in College	No. other positions
Position	Member	Birth year	appointment (*)	In office since	In office until	(**)	indep.	meetings (***)	(****)
Chairman	My riam Amato	1974	27-apr-17	29-apr-20	Appr. 2022 f.s.	m	X	15/16	1
Standing auditor	Girolomini Marianna	1970	23-apr-14	29-apr-20	Appr. 2022 f.s.	M	X	16/16	-
Standing auditor	Gaiani Antonio	1965	23-apr-14	29-apr-20	Appr. 2022 f.s.	M	X	13/16	-
Alternate auditor	Gnocchi Stefano	1974	27-apr-17	29-apr-20	Appr. 2022 f.s.	m	X	-	2
Alternate auditor	Bortolotti Valeria	1950	23-apr-14	29-apr-20	Appr. 2022 f.s.	M	X	-	-
	No. of meetings held during the financial year:

Quorum required for minority lists to be submitted for the election of one or more members (pursuant to art. 148 of the TUF):

at least 1% of the shares w ith v oting rights at the Ordinary General Meeting (art. 26.2 Articles of Association).

Table 3: structure of the Board of Statutory Auditors at year end

First and last name	Position	Other positions (*)
Tomaso Tommasi di Vignano	Ex ecutiv e Chairman
Stefano Venier	Chief Ex ecutiv e Officer
Gabriele Giacobazzi	Vice Chairman
Fabio Bacchilega	Director
Danilo Manfredi	Director
Alessandro Melcarne	Director
Lorenzo Minganti	Director
Monica Mondardini	Director	Chief Ex ecutiv e Officer of CIR Spa Chairman of SOGEFI Spa (CIR Group) Director of Edenred SA (since May -21) Director of Crédit Agricole SA (until 12-May -21) Director of KOS Spa (CIR Group)
Erw in P.W. Rauhe	Director	Director of Isagro Spa (until 27-Apr-21) Durector of SOL Spa
Manuela Cecilia Rescazzi	Director
Paola Gina Maria Schw izer	Director	Director of Credito Emiliano Spa (until 29-Apr-21) Director of Cellularline Spa
Federica Seganti	Director	Director of Fincantieri Spa Director of Eurizon Capital SGR Spa
Bruno Tani	Director
Alice Vatta	Director
Marina Vignola	Director

Table 4: Positions the directors hold in other companies

(*) List of positions as Director or Statutory Auditor held by each Director in other companies listed on regulated markets, including foreign markets or large enterprises.

AI Terminal

Hera

4260_10-k_2022-04-06_89c9641a-2245-4421-a341-d4432b627d0a.pdf

TABLE OF CONTENTS

CORPORATE GOVERNANCE REPORT

1.0 Issuer profile

2.0 Information on the ownership structure (pursuant to Article 123-bis, paragraph 1, letter a) of the Consolidated Finance Act (hereafter TUF) at 23 March 2022

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

c) Significant equity interests (pursuant to Article 123-bis, paragraph 1, letter c) of the TUF)

d) Shares that confer special rights (pursuant to Article 123-bis, paragraph 1, letter f) of the TUF)

e) Restrictions on voting rights (pursuant to Article 123-bis, paragraph 1, letter f) of the TUF)

f) Shareholders' agreements (pursuant to Article 123-bis, paragraph 1, letter g) of the TUF)

1) First-level Shareholders' Agreement

Content and bodies of the Agreement

Voting trust

Stock Blocking Syndicate

Bodies of the Agreement

Chairman

Secretary

Nature of the Agreement and persons exercising control over the Company through the Agreement

Penalties

Agreement duration and modifications

2) Second-level Shareholders' Agreement, Bologna area

Content of the Agreement

Voting trust

Identification of the members of the Hera Board of Directors

Rules for transfers of blocked shares

Rules for non-blocked Hera shares

Penalties

Agreement duration

Nature of the Agreement and persons exercising control over the Company through the Agreement

3) Second-level Shareholders' Agreement, Romagna area

Content of the Agreement

Voting trust

Identification of the members of the Hera Board of Directors

Rules for transfers of blocked shares

Penalties

Agreement duration

Nature of the Agreement and persons exercising control over the Company through the Agreement

4) Second-level Shareholders' Agreement, Modena area

Content of the Agreement

Voting trust

Rules for blocked Hera shares

Rules for non-blocked Hera shares

Agreement duration

Nature of the Agreement and persons exercising control over the Company through the Agreement

Penalties

5) Sub-agreement between the Municipalities of Padua and Trieste

Content of the Sub-agreement

Duration of the Sub-agreement

Nature of the Agreement and persons exercising control over Hera S.p.A. through the Subagreement

g) Mandates to increase share capital and authorisations to purchase treasury shares (pursuant to Article 123-bis, paragraph 1, letter m) of the TUF)

3.0 Compliance (pursuant to article 123-bis, paragraph 2, letter a), of the TUF)

4.0 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) of the TUF)

List voting

Eligibility to submit lists and their composition

Appointment mechanism

Replacement of directors

4.3 Composition (pursuant to Article 123-bis, paragraph 2, letter d) and d-bis, of the TUF)

Diversity criteria and policies in Board composition and corporate organization

Maximum accumulation of positions in other companies

4.4 Functioning of the Board of Directors (pursuant to Article 123-bis, paragraph 2, letter d) of the TUF)

4.5 Role of the Chairman of the Board of Directors

Secretary of the Board

4.6 Executive Directors

Executive Chairman of the Board of Directors

Chief Executive Officer

Executive Committee (pursuant to Article 123-bis, paragraph 2, letter d) of the TUF)

Information to the Board from the Directors/delegated bodies

Other Executive Directors

4.7 Independent directors and Lead independent director

Independent directors

Lead independent director

5.0 Management of corporate information

6.0 Internal Committees of the Board of Directors (pursuant to Article 123-bis, paragraph 2, letter d) of the TUF)

Additional committees (other than those required by regulations or recommended by the Code)

Ethics and Sustainability Committee

7.0 Directors' self-assessment and succession - Appointments committee