REPORT OF THE BOARD OF DIRECTORS

ON THE ITEM ON THE AGENDA

AGENDA

Amendment of Articles 14.3 and 26.2 of the Corporate Bylaws. Integration of the provisions concerning the appointment of the Board of Directors and of the Board of Statutory Auditors by slate voting.

(This is a translation of the original Italian text. For any difference in meaning between the original Italian text and its translation, the Italian text will prevail)

REPORT OF THE BOARD OF DIRECTORS ON THE SOLE ITEM ON THE AGENDA

Amendment of Articles 14.3 and 26.2 of the Corporate Bylaws. Integration of the provisions concerning the appointment of the Board of Directors and of the Board of Statutory Auditors by slate voting

Dear Shareholders,

You have been summoned to this extraordinary meeting in order to discuss and resolve on certain proposed amendments to the articles 14.3 and 26.2 of the corporate Bylaws, in relation to the election methods of the members of the Board of Directors and the Board of Statutory Auditors by a slate voting system.

With regard to the Board of Directors, you are reminded that the number of members is determined by the Shareholders' Meeting at between seven and thirteen members (Art. 14.1 of the Corporate Bylaws) with a proposal voted in by the majority.

Once the Shareholders' Meeting has decided on the number of Board members, the appointment of the Board of Directors is done based on the "slate voting" mechanism governed by Art. 14.3 of the Company Bylaws, aimed at guaranteeing the presence in the management body of members designed by the minority shareholders, to the extent of three tenths of the Directors to be elected, rounded up if the proportion results in a fraction of less than one.

In summary, the slate voting system in the Corporate Bylaws of TERNA S.p.A. stipulates that:

7/10 of the Board members are extracted from the list that obtained the highest number of votes;
the remaining 3/10 are drawn from the other lists according to the quotient mechanism, obtained by dividing the votes from each list, progressively by one, two, three and so on, according to the number of Directors that are to be elected. The quotients obtained in this way are progressively assigned to the candidates of each of these lists, according to the order they appear in. The quotients attributed in this way to the candidates on the different lists are included in a single list in descending order. Those that have obtained the highest quotients are elected.

There are specific provisions to safeguard the presence of independent members and gender quotas on the Board of Directors.

The above-mentioned clause in the Bylaws is strictly formulated in accordance with the minority protection principles contemplated by Italian Legislative Decree No. 58 of 24 February 1998, based on an ownership structure whereby at least to date, the main shareholder that has presented the

list containing the number of candidates corresponding to the majority of places to be assigned on the Board of Directors, has obtained the majority consensus from the Shareholders' Meeting with its list, and therefore, the candidates specified in the above list have occupied the majority of the places on the Board. Otherwise, the list presented by several minority shareholders, grouped together on this occasion, containing a limited number of candidates, has obtained a lower consensus than the first list, and consequently, occupied the remaining places assigned to the minority on the Board.

This proposal is formulated subsequent to an analysis undertaken of the trend in voting during recent Shareholders' Meetings of certain issuers.

On these occasions it happened, given also the increase in the equity interests held by institutional investors and their more active participation in the Shareholders' Meeting, that the main shareholder, whilst presenting a list of candidates with number corresponding to the majority of places to be covered on the Board of Directors, did not obtain the majority consensus at the time of voting in the Shareholders' Meeting. On the contrary, the list presented by a grouping of institutional investors, containing an insufficient number of candidates to cover the majority of the Board of Directors, obtained the majority of the votes. At the outcome of voting according to the slate voting procedure, the entire Board of Directors was then not elected. It consequently became necessary to proceed with additional voting in the Shareholders' Meeting, based on the majorities provided by law, so as to appoint the missing Directors on the basis of the proposals formulated by shareholders directly during the Shareholders' Meeting.

If this happens it could create objective difficulties when carrying out the work to be done by the Shareholders' Meeting; furthermore the shareholders that normally participate in the Shareholders' Meetings on the basis of a proxy could encounter difficulties in exercising their vote, because of the mechanisms whereby they provide voting instructions to their representatives, which generally require prior knowledge of the proposals to be submitted to the shareholders' vote, which is not the case when proposals are formulated by shareholders during the course of the Shareholders' Meeting itself.

A similar situation could arise, mutatis mutandis, in relation to the appointment of the Board of Statutory Auditors, as actually did occur last year during the Shareholders' Meeting of another issuer.

To obviate this, and ensure an easier and more ordered procedure for the appointment of the Board of Directors and the Board of Statutory Auditors, and further make it possible to conduct the voting more quickly, this proposal seeks to amend Articles 14.3 and 26.2 of the Corporate Bylaws. This proposal envisages keeping the existing Bylaw framework and adding some additional

provisions – duly set out in the text below – which would make it possible to quickly identify the candidates to be appointed and similarly announce the results.

More specifically, with reference to the appointment of the Board of Directors, it is proposed that in the event of the list obtaining the most votes - i.e. the "Majority List" - not having a sufficient number of candidates to cover the seven/ten places to be assigned to the former pursuant to letter a) of Art. 14.3, then (i) all the candidates listed therein will be drawn, (ii) all the Directors from the Minority List, pursuant to letter b) above, will be drawn for the number of positions, equalling three tenths of the total, provided for in these Minority Lists; (iii) the remaining Directors are drawn for the positions not covered by the Majority List, from the minority list that had obtained the greatest number of votes among the Minority Lists (the "First Minority List") in relation to the capacity of said list. In the event of insufficient capacity in this list, and (iv) where necessary, the remaining Directors are drawn using the same procedures, from the subsequent list ("Second Majority List") or from those following, in relation to the number of votes and the lists' capacity.

If, for example, the total number of candidates included in the lists presented, is less than the Directors to be elected, then a resolution needs to be taken in accordance with letter d) of Art. 14.3 of the Corporate Bylaws and consequently on the basis of voting in the Shareholders' Meeting, based on the majorities provided by law.

In respect of the latter, clarification is proposed for letter d) of Art. 14.3 of the Corporate Bylaws, which aims to make explicit the principle that is already implicit within the current Bylaws, based on which for the appointment of Directors, who for whatever reason are not elected according to the slate voting procedure, the Shareholders' Meeting will resolve according to the majorities provided by law so as to ensure compliance with applicable legislation.

Again in respect of Art. 14.3 of the Bylaws, it is further proposed with reference to the provisions under letters c), c-bis) and e), that certain amendments are made of a formal nature, so that they are more effectively coordinated with the general structure of Art. 14.3, subsequent to the introduction of the new letter b-bis).

With regard to the appointment of the Board of Statutory Auditors, it is proposed to introduce under Art. 26.2, a clause making provision that, in the event that a similar situation arises – with the applicable differences – to the one contemplated under the foregoing letter b-bis) of Art. 14.3, the procedures set out under letter b-bis) are applied for both Standing Auditors and Alternate Auditors, in so far as compatible with applicable regulations and the Bylaws on the election of the Board of Statutory Auditors and Alternate Auditors.

Again with reference to the Board of Statutory Auditors, it is also proposed that it be specified that for the appointment of Statutory Auditors who for whatever reason are not elected according to the slate voting procedure, the Shareholders' Meeting will resolve according to the majorities provided

by law so as to ensure compliance with applicable legislation. The Board of Directors therefore deems it necessary to propose that the Shareholders' Meeting makes adjustments to Articles 14.3 and 26.2 of the Corporate bylaws, which will then read as follows:

"14.3 With a view to ensuring that the national electricity transmission grid is managed according to principles of neutrality and impartiality, without discrimination to users or categories of users, Directors will be appointed in accordance with the following terms.

The Directors are appointed by the Shareholders' Meeting on the basis of lists submitted by the entitled shareholders and the outgoing Board of Directors, in which the candidates must be listed according to a progressive number.

The lists must indicate which are the candidates in possession of the independence requirements provided for under the law and Article 15.4 of the Bylaws and any other information or representation requested by the applicable rules and regulations and by the Bylaws.

Lists submitted with three or more candidates must also include candidates of a different gender, according to the provisions in the shareholders meeting notice of call, in such a way as to allow the composition of the Board of Directors to be in compliance with legislation governing matters of gender balance.

The lists submitted must be filed at the Company's premises even by remote communication methods, based on the manner and in compliance with the requirements needed to identify the applicants, which will be indicated by the Company in the Shareholders' Meeting notice and published in compliance with the terms and in the manner prescribed by the applicable rules and regulations.

Each entitled shareholder may submit or take part in the submission of only one list and each candidate may appear in one list only or he will be ineligible.

The right to submit the lists is for the shareholders who, individually or as a group, in compliance with the terms and conditions provided by law, own at least 1% or a lower percentage as provided by the applicable rules and regulations of the shares entitled to vote in the Shareholders' Meeting. In order to prove ownership of the number of shares required to submit lists, the entitled shareholders must submit and/or deliver the relevant certification to the Company, in the manner and in compliance with the terms established by law, and in accordance with the details in the Shareholders' Meeting Notice of Call.

Together with each list a statement must be filed, whereby individual candidates accept their candidature and represent, under their responsibility, the inexistence of any of the causes for ineligibility and incompatibility, as well as the existence of the requirements provided for by the applicable law and by these Bylaws for their respective offices and any other information required by the applicable rules and regulations and these Bylaws.

The appointed Directors must notify the Board of Directors, without delay, of the loss of the requirements prescribed by the applicable provisions of law and these Bylaws, as well as of the arising of any ineligibility or incompatibility causes.

Each subject entitled to vote may vote one list only.

The procedure for the election of the Directors is the following:

a) from the list that has obtained the highest number of votes expressed by the shareholders (the "Majority List"), seven tenth of the Directors to be elected are extracted, according to the progressive number by which they are listed in the list, with rounding up to the lower unit, in the event of a fraction of number lower than the unit;

b) the remaining Directors are extracted from the other lists (the "Minority Lists"). To such

purpose, the votes obtained from the lists are then divided by one, two, three and so forth, according to the number of Directors to be elected. The quotients so obtained are progressively attributed to the candidates of each one of such lists, according to the order respectively provided therein. The quotients so attributed to the candidates of the several lists are then arranged in one decreasing classification list. Those candidates will be elected, who have obtained the highest quotients.

In the event that several candidates have obtained the same quotient, that candidate will be elected, who has not yet elected any director or has elected the lowest number of Directors.

In the event that none of the above-mentioned lists has elected any director yet or in the event that all the lists have elected the same number of Directors, in the framework of these lists the candidate shall be elected of the list, which has obtained the highest number of votes. In the event of equal number of votes in the list and again in the event of an equal quotient, a new voting shall take place by the entire Shareholders' Meeting and those candidates shall be elected, who will obtain the simple majority of votes;

b-bis) in the event that the Majority List does not have a sufficient number of candidates to reach the number of Directors to be elected pursuant to letter a) above, all the candidates listed therein will be drawn, according to the progressive order in which they appear in the list; after having then drawn all the Directors from the Minority List, pursuant to letter b) above, for the number of positions, equalling three tenths of the total, provided for in these lists, the remaining Directors are drawn for the positions not covered by the Majority List, from the list that had obtained the greatest number of votes among the Minority Lists (the "First Minority List") in relation to the capacity of said list. In the event of insufficient capacity, the remaining Directors are drawn using the same procedures, from the subsequent list ("Second Majority List") or from those following if need be, in relation to the number of votes and the lists' capacity. Finally, should the total number of candidates included in the lists presented, both in the Majority List and in the Minority Lists, be less than the Directors to be elected, the remaining Directors are elected by the Shareholders' Meeting with a resolution taken in accordance with letter d) below;

c) if, following the application of the procedure described above, the minimum number of independent Directors provided by the law and Article 15.4 of these Bylaws, in relation to the overall number of Directors, is not elected, the candidates which would have been elected in the various lists pursuant to the above provisions are organised in a single decreasing progressive list, formed according to the quotient system indicated in letter b). The candidate or candidates without the aforementioned requirements in possession of the lowest quotient or quotients, will be replaced, by the candidate/candidates in possession of such requirements not elected and belonging to the same list as the replaced candidate/candidates according to the progressive order of such list. Failing such a number of candidates as is sufficient to enable the compliance with the required number of independent Directors, the Shareholders' Meeting shall resolve, with the majorities provided for under the law, upon the replacement of the candidates without the independence requirements, who have obtained the lowest quotient;

c-bis) following the voting and the operations set out hereinabove, if legislation governing gender balance has not been respected, candidates who have been elected on the various lists pursuant to the above provisions shall be placed on one decreasing classification list that is formed according to the quotient system indicated under letter b). The candidate of the most represented gender having the lowest quotient in said classification list is then replaced by the first candidate of

the least represented gender who has not been elected and who belongs to the same list of the replaced candidate from the most represented gender, while respecting the minimum number of independent directors under the foregoing letter c).

In the event of equal quotients, the replacement is made of the candidate drawn from the list which would have provided the highest number of selected candidates on the basis of the above letters a), b) and b-bis), while respecting the minimum number of independent directors under the foregoing letter c).

Should no other candidates be on the list, the aforesaid replacement will be made by the Shareholders' Meeting with the legal majorities and in respect of the principle of a proportional representation of minorities on the Board of Directors.

In the event the replacement of the candidate of the most represented gender with the lowest quotient on the classification list does not, however, allow for achievement of the minimum threshold established by governing legislation for gender balance, the replacement indicated above is carried out also with reference to the candidate of the most represented gender having the second-to-last quotient, and so forth, starting from the bottom of the classification list going up;

c-ter) upon completion of the above indicated operations, the chairman announces the names of the elected persons;

d) the slate vote procedure applies only in the event of renewal of the entire Board of Directors; for the appointment of Directors, who for any reason, are not elected in accordance with the above procedure, the Shareholders' Meeting will resolve according to the majorities provided by applicable law and without observing the procedure provided above so as to ensure, however, the presence of the necessary number of Directors in possession of the independence requirements provided by the law and Article 15.4 of these Bylaws, as well as compliance with governing legislation concerning gender balance;

e) for the purposes of electing Directors – both when the election takes place based on the slate voting system and when the same takes place according to the terms set forth in the letter d) above no operator of the electricity generation, importation, distribution, supply and transmission sectors – including by means of subsidiaries, parent companies, or subsidiaries controlled by the same Parent Company – may exercise voting rights for more than 5% of the share capital;

f) pursuant to Directive no. 2009/72/EC of 13 July 2009 and Italian Legislative Decree no. 93 of 1 June 2011, without prejudice to the assessments made by the Regulatory Authority for Electricity Gas and Water Services in the context of the Company's certification as a transmission system operator, it is deemed to be a conflict of interest, in accordance with that provided under article 2373 of the Italian Civil Code, for any individual taking part in the session to elect the directors, under any format provided for by the Corporate Bylaws, to operate in the sector for the generation or supply of electricity or gas, or directly or indirectly control a company operating in the sector for the generation or supply of electricity or gas, or hold a significant shareholding pursuant to article 120 of Italian Legislative Decree no. 58 of 24 February 1998. In this regard, each participant in the shareholders' meeting shall declare, under its own responsibility, any conflicts of interest that may exist."

"26.2 Statutory auditors and substitute auditors are appointed by the Shareholders' Meeting on the basis of lists submitted by entitled shareholders, in which the candidates must be listed according to a progressive number. For the presentation, deposit and publication of the lists, the procedures set forth in Article 14.3 above of these Bylaws shall apply being compatible with the applicable rules and regulations and with what expressly provided by this article.

The lists are divided into two sections, one for the candidates to the office of statutory auditor and the other for the candidates to the office of substitute auditors. The first one of the candidates of each section must be registered in the register of statutory auditors and must have exercised the activity of legal control of the accounts for a period being not less than three years.

In compliance with the provisions of legislation governing gender balance, the lists that, when considering both sections, submit three or more candidates must also include, for the first two places of the list section relative to statutory auditors and also for the first two places of the list section relative to substitute auditors, candidates of a different gender.

Two statutory auditors and two substitute auditors are extracted from the list (so-called Majority List) that has obtained the highest number of votes, according to the progressive order by which they were listed in each section of the list. The remaining statutory auditor and the remaining substitute auditor are appointed from the other lists (so-called Minority Lists) according to the modalities set out in Article 14.3, letter b) above, to be applied distinctly to each of the sections in which the lists are divided.

For the appointment of the auditors, which takes place in events other than the renewal of the entire Board of Statutory Auditors, the Shareholders' Meeting shall resolve according to the majorities provided by the applicable provisions of law and without observing the procedure provided above, but, however, in such a way as to ensure a composition of the Board of Statutory Auditors that complies with the provision of Article 1, first paragraph of the decree no. 162 of the Ministry of Justice dated 30th March 2000 or as amended or supplemented pursuant to Article 148, second paragraph, of legislative Decree no. 58 of 24th February 1998 and to legislation governing gender balance.

In the session to elect the statutory auditors, the provisions under art. 14.3 point. f) are applied.

In the event of replacement of one of the auditors, without prejudice to possessing the legal requirements, the first substitute auditor is drawn from the same list. In the event the substitution, if carried out pursuant to the foregoing line, does not allow for a reconstitution of the Board of Auditors in compliance with legislation governing gender balance, the office is taken up by the second substitute auditor drawn from the same list. In the event that it subsequently becomes necessary to replace another auditor drawn from the same list, the additional substitute auditor drawn from the same list shall, in any case, take up the office.

In the event that a similar situation arises mutatis mutandis, to the one contemplated under the foregoing Art. 14.3, letter b-bis), the procedures set out under letter b-bis) are applied for both Standing Auditors and Alternate Auditors, in so far as compatible with applicable regulations and this Article.

The chairmanship of the Board of Statutory Auditors pertains to the statutory auditor appointed by the minority according to the procedure set forth by Article 14.3, letter b). In the event of replacement of the Chairman, such an office is taken up by the substitute auditor drawn from the same list.

The slate voting procedure is only applied in the event of renewal of the entire Board of Statutory Auditors; for the appointment of Statutory Auditors, who for whatever reason are not elected according to the procedure contemplated above, the Shareholders' Meeting will resolve according to the majorities provided by law and without observing the procedure provided above so as to ensure that the composition of the Board of Statutory Auditors complies with governing legislation concerning gender balance."

Herein below is the proposal being put forth before the Shareholders' Meeting with a side-by-side comparison of the current complete text of the Bylaws under exam and the version containing the proposed amendments (in bold print) to be made.

Current Text	Proposed Text
TITLE V	TITLE V
BOARD OF DIRECTORS	BOARD OF DIRECTORS
Article 14	Article 14
14.1 The Company is managed by a Board of	14.1 The Company is managed by a Board of
Directors made up of a number of members that	Directors made up of a number of members that
must not be lower than seven and must not exceed	must not be lower than seven and must not exceed
thirteen	thirteen
members.	members.
The	The
Shareholders'	Shareholders'
Meeting	Meeting
determines the number of members of the Board of	determines the number of members of the Board of
Directors, within the above-mentioned limits.	Directors, within the above-mentioned limits.
14.2 The Board of Directors is appointed for a period	14.2 The Board of Directors is appointed for a period
lasting up to three fiscal years and may be re	lasting up to three fiscal years and may be re
elected.	elected.
14.3 With a view to ensuring that the national	14.3 With a view to ensuring that the national
electricity transmission grid is managed according to	electricity transmission grid is managed according to
principles	principles
of	of
neutrality	neutrality
and	and
impartiality,	impartiality,
without	without
discrimination to users or categories of users,	discrimination to users or categories of users,
Directors will be appointed in accordance with the	Directors will be appointed in accordance with the
following terms.	following terms.
The Directors are appointed by the Shareholders'	The Directors are appointed by the Shareholders'
Meeting on the basis of lists submitted by the entitled	Meeting on the basis of lists submitted by the entitled
shareholders and the outgoing Board of Directors, in	shareholders and the outgoing Board of Directors, in
which the candidates must be listed according to a	which the candidates must be listed according to a
progressive number.	progressive number.
The lists must indicate which are the candidates in	The lists must indicate which are the candidates in
possession	possession
of	of
the	the
independence	independence
requirements	requirements
provided for under the law and Article 15.4 of the	provided for under the law and Article 15.4 of the
Bylaws and any other information or representation	Bylaws and any other information or representation
requested by the applicable rules and regulations	requested by the applicable rules and regulations
and by the Bylaws.	and by the Bylaws.
Lists submitted with three or more candidates must	Lists submitted with three or more candidates must
also	also
include	include
candidates	candidates
of	of
a	a
different	different
gender,	gender,
according to the provisions in the shareholders	according to the provisions in the shareholders
meeting notice of call, in such a way as to allow the	meeting notice of call, in such a way as to allow the
composition of the Board of Directors to be in	composition of the Board of Directors to be in
compliance with legislation governing matters of	compliance with legislation governing matters of
gender balance.	gender balance.
The lists submitted must be filed at the Company's	The lists submitted must be filed at the Company's
premises even by remote communication methods,	premises even by remote communication methods,
based on the manner and in compliance with the	based on the manner and in compliance with the
requirements needed to identify the applicants,	requirements needed to identify the applicants,
which will be indicated by the Company in the	which will be indicated by the Company in the
Shareholders'	Shareholders'
Meeting	Meeting
notice	notice
and	and
published	published
in	in
compliance with the terms and in the manner	compliance with the terms and in the manner
prescribed by the applicable rules and regulations.	prescribed by the applicable rules and regulations.
Each entitled shareholder may submit or take part in	Each entitled shareholder may submit or take part in
the submission of only one list and each candidate	the submission of only one list and each candidate
may appear in one list only or he will be ineligible.	may appear in one list only or he will be ineligible.

Each subject entitled to vote may vote one list only.

The procedure for the election of the Directors is the following:

a) from the list that has obtained the highest number of votes expressed by the shareholders, seven tenth of the Directors to be elected are extracted, according to the progressive number by which they are listed in the list, with rounding up to the lower unit, in the event of a fraction of number lower than the unit;

b) the remaining Directors are extracted from the other lists. To such purpose, the votes obtained from the lists are then divided by one, two, three and so forth, according to the number of Directors to be elected. The quotients so obtained are progressively attributed to the candidates of each one of such lists, according to the order respectively provided therein. The quotients so attributed to the candidates of the several lists are then arranged in one decreasing classification list. Those candidates will be elected, who have obtained the highest quotients.

In the event that several candidates have obtained the same quotient, that candidate will be elected, who has not yet elected any director or has elected the lowest number of Directors.

Each subject entitled to vote may vote one list only. The procedure for the election of the Directors is the following:

b) the remaining Directors are extracted from the other lists (the "Minority Lists"). To such purpose, the votes obtained from the lists are then divided by one, two, three and so forth, according to the number of Directors to be elected. The quotients so obtained are progressively attributed to the candidates of each one of such lists, according to the order respectively provided therein. The quotients so attributed to the candidates of the several lists are then arranged in one decreasing classification list. Those candidates will be elected, who have obtained the highest quotients.

In the event that several candidates have obtained the same quotient, that candidate will be elected, who has not yet elected any director or has elected the lowest number of Directors.

number of votes. In the event of equal number of votes in the list and again in the event of an equal quotient, a new voting shall take place by the entire Shareholders' Meeting and those candidates shall be elected, who will obtain the simple majority of votes;	number of votes. In the event of equal number of votes in the list and again in the event of an equal quotient, a new voting shall take place by the entire Shareholders' Meeting and those candidates shall be elected, who will obtain the simple majority of votes; b-bis) in the event that the Majority List does not have a sufficient number of candidates to reach the number of Directors to be elected pursuant to letter a) above, all the candidates listed therein will be drawn, according to the progressive order in which they appear in the list; after having then drawn all the Directors from the Minority List, pursuant to letter b) above, for the number of positions, equalling three tenths of the total, provided for in these lists, the remaining Directors are drawn for the positions not covered by the Majority List, from the list that had obtained the greatest number of votes among the Minority Lists (the "First Minority List") in relation to the capacity of said list. In the event of insufficient capacity, the remaining Directors are drawn using the same procedures, from the subsequent list ("Second Majority List") or from those following if need be, in relation to the number of votes and the lists' capacity. Finally, should the total number of candidates included in the lists presented, both in the Majority List and in the Minority Lists, be less than the Directors to be elected, the remaining Directors are elected by the Shareholders' Meeting with a resolution taken in accordance with letter d)
c) if, following the application of the procedure described above, the minimum number of independent Directors provided by the law and Article 15.4 of these Bylaws, in relation to the overall number of Directors, is not elected, then the candidate or candidates without such requirements in possession of the lowest quotient or quotients, will be replaced, according to the respective progressive order, by the candidate/candidates in possession of such requirements not elected and belonging to the same list as the replaced candidate/candidates. Failing such a number of candidates as is sufficient to enable the compliance with the required number of independent Directors, the Shareholders' Meeting shall resolve, with the majorities provided for under the law, upon the replacement of the candidates without the independence requirements, who have obtained the lowest quotient;	below; c) if, following the application of the procedure described above, the minimum number of independent Directors provided by the law and Article 15.4 of these Bylaws, in relation to the overall number of Directors, is not elected, then the candidates which would have been elected in the various lists pursuant to the above provisions are organised in a single decreasing progressive list, formed according to the quotient system indicated in letter b). The candidate or candidates without such the aforementioned requirements in possession of the lowest quotient or quotients, will be replaced, according to the respective progressive order, by the candidate/candidates in possession of such requirements not elected and belonging to the same list as the replaced candidate/candidates according to the progressive order of such list. Failing such a number of candidates as is sufficient to enable the compliance with the required number
c-bis) following the voting and the operations set out	of independent Directors, the Shareholders' Meeting shall resolve, with the majorities provided for under the law, upon the replacement of the candidates without the independence requirements, who have obtained the lowest quotient; c-bis) following the voting and the operations set out

number of votes. In the event of equal number of
votes in the list and again in the event of an equal
quotient, a new voting shall take place by the entire
Shareholders' Meeting and those candidates shall be
elected, who will obtain the simple majority of votes;
b-bis) in the event that the Majority List does not
have a sufficient number of candidates to reach
the number of Directors to be elected pursuant to
letter a) above, all the candidates listed therein
will be drawn, according to the progressive order
in which they appear in the list; after having then
drawn all the Directors from the Minority List,
pursuant to letter b) above, for the number of
positions, equalling three tenths of the total,
provided
for
in
these
lists,
the
remaining
Directors are drawn for the positions not covered
by the Majority List, from the list that had
obtained the greatest number of votes among the
Minority
Lists
(the
"First
Minority
List")
in
relation to the capacity of said list. In the event of
insufficient capacity, the remaining Directors are
drawn using the same procedures, from the
subsequent list ("Second Majority List") or from
those following if need be, in relation to the
number of votes and the lists' capacity. Finally,
should the total number of candidates included
in the lists presented, both in the Majority List
and in the Minority Lists, be less than the
Directors to be elected, the remaining Directors
are elected by the Shareholders' Meeting with a
resolution taken in accordance with letter d)

c) if, following the application of the procedure
described
above,
the
minimum
number
of
independent Directors provided by the law and
Article 15.4 of these Bylaws, in relation to the overall
number
of
Directors,
is
not
elected,
then
the
candidate or candidates without such requirements
in possession of the lowest quotient or quotients, will
be replaced, according to the respective progressive
order, by the candidate/candidates in possession of
such requirements not elected and belonging to the
same list as the replaced candidate/candidates.
Failing such a number of candidates as is sufficient
to enable the compliance with the required number
of independent Directors, the Shareholders' Meeting
shall resolve, with the majorities provided for under
the law, upon the replacement of the candidates
without the independence requirements, who have
obtained the lowest quotient;

below;
c) if, following the application of the procedure
described
above,
the
minimum
number
of
independent Directors provided by the law and
Article 15.4 of these Bylaws, in relation to the overall
number
of
Directors,
is
not
elected,
then
the
candidates which would have been elected in the
various lists pursuant to the above provisions
are organised in a single decreasing progressive
list, formed according to the quotient system
indicated in letter b). The candidate or candidates
without such the aforementioned requirements in
possession of the lowest quotient or quotients, will
be replaced, according to the respective progressive
order, by the candidate/candidates in possession of
such requirements not elected and belonging to the
same list as the replaced candidate/candidates
according to the progressive order of such list.
Failing such a number of candidates as is sufficient
to enable the compliance with the required number

c-bis) following the voting and the operations set out

of independent Directors, the Shareholders' Meeting
shall resolve, with the majorities provided for under
the law, upon the replacement of the candidates
without the independence requirements, who have
obtained the lowest quotient;
c-bis) following the voting and the operations set out

hereinabove, if legislation governing gender balance has not been respected, candidates who have been elected on the various lists, including the list that obtained the highest number of votes, shall be placed on one decreasing classification list that is formed according to the quotient system indicated under letter b). The candidate of the most represented gender having the lowest quotient in said classification list is then replaced by the first candidate of the least represented gender who has not been elected and who belongs to the same list of the replaced candidate from the most represented gender, while respecting the minimum number of independent directors under the foregoing letter c).

In the event of equal quotients, the replacement is made of the candidate drawn from the list having the highest number of votes while respecting the minimum number of independent directors under the foregoing letter c).

c-ter) upon completion of the above indicated operations, the chairman announces the names of the elected persons;

d) the slate vote procedure applies only in the event of renewal of the entire Board of Directors, therefore for the appointment of Directors, other than in the circumstances of renewal of the entire Board of Directors, the Shareholders' Meeting will resolve according to the majorities provided by applicable law and without observing the procedure provided above so as to ensure, however, the presence of the necessary number of Directors in possession of the independence requirements provided by the law and Article 15.4 of these Bylaws, as well as compliance with governing legislation concerning gender balance;

e) for the purposes of electing Directors – both when the election takes place according to the terms set

hereinabove, if legislation governing gender balance has not been respected, candidates who have been elected on the various lists pursuant to the above provisions, including the list that obtained the highest number of votes, shall be placed on one decreasing classification list that is formed according to the quotient system indicated under letter b). The candidate of the most represented gender having the lowest quotient in said classification list is then replaced by the first candidate of the least represented gender who has not been elected and who belongs to the same list of the replaced candidate from the most represented gender, while respecting the minimum number of independent directors under the foregoing letter c).

In the event of equal quotients, the replacement is made of the candidate drawn from the list having which would have provided the highest number of votes selected candidates on the basis of the above letters a), b) and b-bis), while respecting the minimum number of independent directors under the foregoing letter c).

c-ter) upon completion of the above indicated operations, the chairman announces the names of the elected persons;

d) the slate vote procedure applies only in the event of renewal of the entire Board of Directors;, therefore for the appointment of Directors, other than who for any reason, are not elected in accordance with the circumstances of renewal of the entire Board of Directors, above procedure, the Shareholders' Meeting will resolve according to the majorities provided by applicable law and without observing the procedure provided above so as to ensure, however, the presence of the necessary number of Directors in possession of the independence requirements provided by the law and Article 15.4 of these Bylaws, as well as compliance with governing legislation concerning gender balance;

e) for the purposes of electing Directors – both when the election takes place based on the slate voting

forth in the letters a) and b) above and when the same takes place according to the terms set forth in the letter d) above no operator of the electricity generation, importation, distribution, supply and transmission sectors – including by means of subsidiaries, parent companies, or subsidiaries controlled by the same Parent Company – may exercise voting rights for more than 5% of the share capital;

14.4 The Shareholders' Meeting may change the number of members of the Board of Directors, also during their term of mandate, however, always within the limits set out in the first paragraph of this article, providing to the relevant appointments. The appointment of the Directors so elected expires simultaneously with the mandate of those in office.

14.5 If in the course of the fiscal year one or more Directors fail to hold their offices, the provisions of Article 2386 of the Italian Civil Code shall apply. In any event, the replacement of the directors who ceased their office is performed by the Board of Directors ensuring the presence of the necessary number of directors in possession of the independence requirements provided by the law and Article 15.4 of these Bylaws as well as guaranteeing compliance with governing legislation concerning gender balance. If the majority of the members of the Board of Directors elected by the Shareholders' Meeting fail to hold their offices, the entire Board of Directors is considered as having resigned and the Shareholders' Meeting must be convened without delay by the directors, who have remained in office, for constituting a new Board of Directors.

system according to the terms set forth in the letters a) and b) and when the same takes place according to the terms set forth in the letter d) above no operator of the electricity generation, importation, distribution, supply and transmission sectors – including by means of subsidiaries, parent companies, or subsidiaries controlled by the same Parent Company – may exercise voting rights for more than 5% of the share capital;

Current Text	Proposed Text
TITLE VI	TITLE VI
BOARD OF STATUTORY AUDITORS	BOARD OF STATUTORY AUDITORS
Article 26 26.1 The Shareholders' Meeting elects the Board of Statutory Auditors, made up of three statutory auditors and determined their remuneration. The Shareholders' Meeting also elects three substitute auditors.	Article 26 26.1 The Shareholders' Meeting elects the Board of Statutory Auditors, made up of three statutory auditors and determined their remuneration. The Shareholders' Meeting also elects three substitute auditors.
The members of the Board of Statutory Auditors are chosen among subjects in possession of the requirements of professional skill and respectability set out in the rules adopted pursuant to Article 148, fourth paragraph, of legislative decree no. 58 of 24th February 1998. Until the coming into force of the above-mentioned rules, the members of the Board of Auditors are chosen among those who are in possession of the professionalism and integrity requirements set forth in the decree of the Ministry of Justice no. 162 of March 30, 2000. For the purpose of the provisions of Article 1, second paragraph, letters (b) and (c) of the decree of the Ministry of Justice no. 162 of 30th March 2000, the matters relating to commercial law and tax law, corporate economy and corporate finance, as well as the matters and sectors of activity relating to energy in general, and communications and network structures, are considered as strictly pertinent to the scope of activity of the Company. The auditors may take up the office of members of Boards of Directors and Boards of Statutory Auditors in other companies within the limits set forth by rules adopted pursuant to Article 148 bis, first paragraph, of legislative Decree no. 58 of 24th February 1998. Until the coming into force of said rules and subject to the ineligibility situations provided for by the applicable provisions of law, those subjects who cover the office of statutory auditors in five or more companies issuer of securities listed on regulated markets, may not be appointed as auditors, and if they do, they are debarred from their office.	The members of the Board of Statutory Auditors are chosen among subjects in possession of the requirements of professional skill and respectability set out in the rules adopted pursuant to Article 148, fourth paragraph, of legislative decree no. 58 of 24th February 1998. Until the coming into force of the above-mentioned rules, the members of the Board of Auditors are chosen among those who are in possession of the professionalism and integrity requirements set forth in the decree of the Ministry of Justice no. 162 of March 30, 2000. For the purpose of the provisions of Article 1, second paragraph, letters (b) and (c) of the decree of the Ministry of Justice no. 162 of 30th March 2000, the matters relating to commercial law and tax law, corporate economy and corporate finance, as well as the matters and sectors of activity relating to energy in general, and communications and network structures, are considered as strictly pertinent to the scope of activity of the Company. The auditors may take up the office of members of Boards of Directors and Boards of Statutory Auditors in other companies within the limits set forth by rules adopted pursuant to Article 148 bis, first paragraph, of legislative Decree no. 58 of 24th February 1998. Until the coming into force of said rules and subject to the ineligibility situations provided for by the applicable provisions of law, those subjects who cover the office of statutory auditors in five or more companies issuer of securities listed on regulated markets, may not be appointed as auditors, and if they do, they are debarred from their office.
26.2 Statutory auditors and substitute auditors are appointed by the Shareholders' Meeting on the basis of lists submitted by entitled shareholders, in which the candidates must be listed according to a progressive number. For the presentation, deposit and publication of the lists, the procedures set forth in Article 14.3 above of these Bylaws shall apply being compatible with the applicable rules and regulations and with what expressly provided by this article. The lists are divided into two sections, one for the candidates to the office of statutory auditor and the other for the candidates to the office of substitute auditors. The first one of the candidates of each section must be registered in the register of statutory	26.2 Statutory auditors and substitute auditors are appointed by the Shareholders' Meeting on the basis of lists submitted by entitled shareholders, in which the candidates must be listed according to a progressive number. For the presentation, deposit and publication of the lists, the procedures set forth in Article 14.3 above of these Bylaws shall apply being compatible with the applicable rules and regulations and with what expressly provided by this article. The lists are divided into two sections, one for the candidates to the office of statutory auditor and the other for the candidates to the office of substitute auditors. The first one of the candidates of each section must be registered in the register of statutory

auditors and must have exercised the activity of legal control of the accounts for a period being not less than three years. In compliance with the provisions of legislation governing gender balance, the lists that, when considering both sections, submit three or more candidates must also include, for the first two places of the list section relative to statutory auditors and also for the first two places of the list section relative to substitute auditors, candidates of a different	auditors and must have exercised the activity of legal control of the accounts for a period being not less than three years. In compliance with the provisions of legislation governing gender balance, the lists that, when considering both sections, submit three or more candidates must also include, for the first two places of the list section relative to statutory auditors and also for the first two places of the list section relative to substitute auditors, candidates of a different
gender. Two statutory auditors and two substitute auditors are extracted from the list (so-called majority list) that has obtained the highest number of votes, according to the progressive order by which they were listed in each section of the list. The remaining statutory auditor and the remaining substitute auditor are appointed from the other lists (so-called minority lists) according to the modalities set out in Article 14.3, letter b) above, to be applied distinctly to each of the sections in which the lists are divided. For the appointment of the auditors, which takes place in events other than the renewal of the entire Board of Statutory Auditors, the Shareholders' Meeting shall resolve according to the majorities provided by the applicable provisions of law and without observing the procedure provided above, but, however, in such a way as to ensure a composition of the Board of Statutory Auditors that complies with the provision of Article 1, first paragraph of the decree no. 162 of the Ministry of Justice dated 30th March 2000 or as amended or supplemented pursuant to Article 148, second paragraph, of legislative Decree no. 58 of 24th February 1998 and to legislation governing gender balance. In the session to elect the statutory auditors, the provisions under art. 14.3 point. f) are applied. In the event of replacement of one of the auditors, without prejudice to possessing the legal	gender. Two statutory auditors and two substitute auditors are extracted from the list (so-called Mmajority Llist) that has obtained the highest number of votes, according to the progressive order by which they were listed in each section of the list. The remaining statutory auditor and the remaining substitute auditor are appointed from the other lists (so-called Mminority Llists) according to the modalities set out in Article 14.3, letter b) above, to be applied distinctly to each of the sections in which the lists are divided. For the appointment of the auditors, which takes place in events other than the renewal of the entire Board of Statutory Auditors, the Shareholders' Meeting shall resolve according to the majorities provided by the applicable provisions of law and without observing the procedure provided above, but, however, in such a way as to ensure a composition of the Board of Statutory Auditors that complies with the provision of Article 1, first paragraph of the decree no. 162 of the Ministry of Justice dated 30th March 2000 or as amended or supplemented pursuant to Article 148, second paragraph, of legislative Decree no. 58 of 24th February 1998 and to legislation governing gender balance. In the session to elect the statutory auditors, the provisions under art. 14.3 point. f) are applied. In the event of replacement of one of the auditors, without prejudice to possessing the legal
requirements, the first substitute auditor is drawn from the same list. In the event the substitution, if carried out pursuant to the foregoing line, does not allow for a reconstitution of the Board of Auditors in compliance with legislation governing gender balance, the office is taken up by the second substitute auditor drawn from the same list. In the event that it subsequently becomes necessary to replace another auditor drawn from the list that obtained the highest number of votes, the additional substitute auditor drawn from the same list shall, in any case, take up the office.	requirements, the first substitute auditor is drawn from the same list. In the event the substitution, if carried out pursuant to the foregoing line, does not allow for a reconstitution of the Board of Auditors in compliance with legislation governing gender balance, the office is taken up by the second substitute auditor drawn from the same list. In the event that it subsequently becomes necessary to replace another auditor drawn from the same list that obtained the highest number of votes, the additional substitute auditor drawn from the same list shall, in any case, take up the office. In the event that a similar situation arises mutatis mutandis, to the one contemplated under the foregoing Art. 14.3, letter b-bis), the procedures set out under letter b-bis) are applied for both Standing Auditors and Alternate Auditors, in so

auditors and must have exercised the activity of legal
control of the accounts for a period being not less
than three years.
In compliance with the provisions of legislation
governing gender balance, the lists that, when
considering both sections, submit three or more
candidates must also include, for the first two places
of the list section relative to statutory auditors and
also for the first two places of the list section relative
to substitute auditors, candidates of a different

gender.
Two statutory auditors and two substitute auditors
are extracted from the list (so-called majority list) that
has obtained the highest number of votes, according
to the progressive order by which they were listed in
each section of the list. The remaining statutory
auditor and the remaining substitute auditor are
appointed from the other lists (so-called minority
lists) according to the modalities set out in Article
14.3, letter b) above, to be applied distinctly to each
of the sections in which the lists are divided.
For the appointment of the auditors, which takes
place in events other than the renewal of the entire
Board
of
Statutory
Auditors,
the
Shareholders'
Meeting shall resolve according to the majorities
provided by the applicable provisions of law and
without observing the procedure provided above,
but, however, in such a way as to ensure a
composition of the Board of Statutory Auditors that
complies
with
the
provision
of
Article
1,
first
paragraph of the decree no. 162 of the Ministry of
Justice dated 30th March 2000 or as amended or
supplemented
pursuant
to
Article
148,
second
paragraph, of legislative Decree no. 58 of 24th
February 1998 and to legislation governing gender
balance.
In the session to elect the statutory auditors, the
provisions under art. 14.3 point. f) are applied.
In the event of replacement of one of the auditors,
without
prejudice
to
possessing
the
legal

gender.
Two statutory auditors and two substitute auditors
are extracted from the list (so-called Mmajority Llist)
that has obtained the highest number of votes,
according to the progressive order by which they
were listed in each section of the list. The remaining
statutory auditor and the remaining substitute auditor
are
appointed
from
the
other
lists
(so-called
Mminority Llists) according to the modalities set out
in Article 14.3, letter b) above, to be applied distinctly
to each of the sections in which the lists are divided.
For the appointment of the auditors, which takes
place in events other than the renewal of the entire
Board
of
Statutory
Auditors,
the
Shareholders'
Meeting shall resolve according to the majorities
provided by the applicable provisions of law and
without observing the procedure provided above,
but, however, in such a way as to ensure a
composition of the Board of Statutory Auditors that
complies
with
the
provision
of
Article
1,
first
paragraph of the decree no. 162 of the Ministry of
Justice dated 30th March 2000 or as amended or
supplemented
pursuant
to
Article
148,
second
paragraph, of legislative Decree no. 58 of 24th
February 1998 and to legislation governing gender
balance.
In the session to elect the statutory auditors, the
provisions under art. 14.3 point. f) are applied.
In the event of replacement of one of the auditors,
without
prejudice
to
possessing
the
legal

requirements, the first substitute auditor is drawn
from the same list. In the event the substitution, if
carried out pursuant to the foregoing line, does not
allow for a reconstitution of the Board of Auditors in
compliance
with
legislation
governing
gender
balance, the office is taken up by the second
substitute auditor drawn from the same list. In the
event that it subsequently becomes necessary to
replace another auditor drawn from the list that
obtained the highest number of votes, the additional
substitute auditor drawn from the same list shall, in
any case, take up the office.

requirements, the first substitute auditor is drawn
from the same list. In the event the substitution, if
carried out pursuant to the foregoing line, does not
allow for a reconstitution of the Board of Auditors in
compliance
with
legislation
governing
gender
balance, the office is taken up by the second
substitute auditor drawn from the same list. In the
event that it subsequently becomes necessary to
replace another auditor drawn from the same list that
obtained the highest number of votes, the additional
substitute auditor drawn from the same list shall, in
any case, take up the office.
In the event that a similar situation arises mutatis
mutandis,
to the one contemplated under the
foregoing Art. 14.3, letter b-bis), the procedures
set out under letter b-bis) are applied for both
Standing Auditors and Alternate Auditors, in so

Under Art. 72, paragraph 1bis, of Consob Regulation No. 11971 of May 14, 1999, and as subsequently amended (Consob Issuers' Regulation), and pursuant to the provisions of scheme 3, Annex 3A to the above-mentioned Issuers' Regulation, please note that the changes to the Bylaws submitted to the Shareholders' Meeting do not produce any cases of right of withdrawal according to the current law.

* * * * *

The above having been stated, we submit for your approval the following

proposal

"TERNA S.p.A.'s Shareholders' Meeting, having examined the illustrative report by the Board of Directors,

resolves

to approve the proposal to amend Art. 14.3 and Art. 26.2 of the Corporate bylaws, based on the formulation contained in the Board of Directors' Report on the first and only point on the agenda of this Shareholders' Meeting, hereby granting the Chairperson of the Board of Directors and the Chief Executive Officer, with the right to subdelegate, the widest powers that are necessary and/or appropriate to execute this resolution in compliance with current regulations, and where appropriate or necessary, to make the additions, changes and deletions to the text of the resolution itself and the Corporate By-Laws, which are required by the competent Authorities for recording in the Companies Register."

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Terna AGM Information 2017

4300_rns_2017-03-02_65fac1c4-98f1-4313-bbc7-0a0c37c41c57.pdf