Terna — Governance Information 2024

Apr 17, 2024

Report on Corporate Governance and Ownership Structures 2023

TERNA S.P.A.

TRADITIONAL MANAGEMENT AND CONTROL MODEL

Report on Corporate Governance and Ownership Structures Terna S.p.A.

Traditional management and control model Issuer: «Terna - Rete Elettrica Nazionale Società per Azioni» (in abbreviated form Terna S.p.A.)

Website: www.terna.it

Annual reporting period to which the Report refers: 2023

Date of approval of the Report: 19 March 2024

Terna is investing in Italy's development

We guarantee energy security and balance electricity supply and demand 24 hours a day, ensuring that the system is reliable, efficient and accessible to all.

We invest and innovate every day in the development of an electricity grid capable of integrating the energy produced from renewable sources, improving links between the different areas of the country and strengthening cross-border interconnections, applying a sustainable approach that takes into account the needs of the communities and people we work with.

We are behind the energy you use every day

We are responsible for guaranteeing the continuity of power supply, essential in making sure that electricity reaches Italian homes and businesses at all times.

We provide everyone with equal access to electricity and are working to provide clean energy for future generations.

MISSION

We care about the future of energy

We are committed to building a future powered by clean energy, enabling new forms of consumption and production increasingly based on renewable sources. This will allow us to achieve the goal of delivering an energy transition that is fair and inclusive, whilst also lowering costs.

Thanks to our overall vision of the electricity system and new digital technologies, we are leading the country's drive to get to net zero by 2050, in line with European climate goals. VISION

Executive Summary 4 Report on Corporate Governance and Ownership Structures 2023 24

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Executive Summary

Structure and composition of corporate bodies

BOARD OF DIRECTORS IN OFFICE

Chairman IGOR DE BIASIO

Non-executive Independent

GIUSEPPINA DI FOGGIA Chief Executive Officer

Executive Non-independent

Director FRANCESCO RENATO MELE

Non-executive Non-independent

REGINA CORRADINI D'ARIENZO Director

Non-executive Non-independent

Director ANGELICA KRYSTLE DONATI

Non-executive Independent

Director MARCO GIORGINO

Non-executive Independent

QINJING SHEN Director

Non-executive Non-independent

Director ENRICO TOMMASO CUCCHIANI

Non-executive Independent

GIAN LUCA GREGORI Director

Non-executive Independent

SIMONA SIGNORACCI Director

Non-executive Independent

Director KARINA AUDREY LITVACK

Non-executive Independent

SVELTO Director

JEAN-MICHEL

Non-executive Independent

AUDIT, RISK AND SUSTAINABILITY COMMITTEE

NAME	ROLE	INDEPENDENT
Marco Giorgino	Chair
Jean-Michel Aubertin	Member
Enrico Tommaso Cucchiani	Member
Karina Audrey Litvack	Member
Francesco Renato Mele	Member

REMUNERATION COMMITTEE

NAME	ROLE	INDEPENDENT
Enrico Tommaso Cucchiani	Chair
Angelica Krystle Donati	Member
Gian Luca Gregori	Member
Simona Signoracci	Member
Anna Chiara Svelto	Member

RELATED PARTY TRANSACTIONS COMMITTEE

NAME	ROLE	INDEPENDENT
Anna Chiara Svelto	Chair
Angelica Krystle Donati	Member
Marco Giorgino	Member
Gian Luca Gregori	Member

NOMINATIONS, GOVERNANCE AND SCENARIOS COMMITTEE

NAME	ROLE	INDEPENDENT
Igor De Biasio	Chair
Jean-Michel Aubertin	Member
Regina Corradini D'Arienzo	Member
Karina Audrey Litvack	Member
Simona Signoracci	Member

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BOARD OF STATUTORY AUDITORS IN OFFICE

Chairman MARIO MATTEO BUSSO

Standing Auditor Standing Auditor

ANTONELLA TOMEI

NAME	ROLE
Lucrezia Iuliano	Alternate Auditor
Antonello Lillo	Alternate Auditor
Barbara Zanardi	Alternate Auditor

Terna's shareholders

At the date of approval of this report, Terna's share capital amounts to €442,198,240 comprising 2,009,992,000 fully paid-up ordinary shares with a par value of €0.22 each.

Based on periodic surveys carried out by the Company, it is estimated that 48.1% of Terna's shares are held by Italian shareholders, with the remaining 51.9% held by overseas institutional investors, primarily from the USA and Europe (excluding the UK).

The largest shareholder is CDP Reti S.p.A. (CDP Reti), a joint-stock company controlled by Cassa Depositi e Prestiti S.p.A. (CDP).

On 27 November 2014, a shareholder agreement was entered into by Cassa Depositi e Prestiti S.p.A. (CDP), on the one hand, and State Grid Europe Limited (SGEL) and State Grid International Development Limited (SGID), on the other, in relation to CDP Reti, SNAM S.p.A. and Terna. This was amended and supplemented to extend the scope of the agreement to include Italgas S.p.A..

Following the transfer to CDP Reti of CDP's remaining interests in SNAM S.p.A. and Italgas S.p.A., essential information in the shareholder agreement was most recently updated on 23 May 2017 and is available on Terna's website.

Based on information from the shareholder register and other data collected as at February 2024, Terna's shareholder structure breaks down as follows.

Shareholders by category

Shareholders by geographic area and category

Performance of Terna's shares

Performance of Terna's shares (Price from 1 January to 29 December 2023)

Total Shareholder Return of Terna's shares and the FTSE MIB and DJ Stoxx Utilities (From the otation to 29 December 2023)

55.69

58.8 57.3 58.6

Report on Corporate Governance and Ownership Structures 2023

Terna Board of Directors Key indicators

Size of the Board

Terna1	13.0
Companies on the FTSE-MIB2	12.3
Listed non-financial companies2	9.4
Large non-concentrated companies2	12.2
Average age of Directors
Terna3
Companies on the FTSE-MIB4
Listed non-financial companies4

Representation of minority interests on the Board of Directors5

Terna3	30.77%
Companies on the FTSE- MIB4	22.5%
Listed non-financial companies4	17.2%
Large non-concentrated companies4	23.8%

Presence of independent Directors

Large non-concentrated companies4

Terna3		69.23%
Companies on the FTSE- MIB4		64.9%
Listed non-financial companies4	46.1%
Large non-concentrated companies4		67.4%

Composition of the Board of Directors (number and category)6

* Independent pursuant to both the CLF and the Corporate Governance Code

¹ The data refers to the existing situation at 31 December 2023 2

The data are taken from the "Fin-Gov Report on Corporate Governance in Italy" (Third Edition, October 2023) by Massimo Belcredi and Stefano Bozzi.

³ See note 1.

⁴ See note 2.

⁵ It should be noted that "minority" refers to Directors taken from the slate presented by a group of shareholders consisting of asset management companies and other institutional investors (holding a total of 30,264,515 shares and comprising 1.50570% of Terna's share capital). At the Annual General Meeting held on 9 May 2023, this slate received the largest number of votes, amounting to 53.641545% of the share capital.

⁶ See note 1.

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Report on Corporate Governance and Ownership Structures 2023

Board of Directors' competencies

Board of Directors' activities

BOARD OF DIRECTORS - NUMBER OF MEETINGS

⁷ The data in this section - with reference to the average number of meetings at Italian listed non-financial companies - relate to the 2023 financial year and have been taken from the "Fin-Gov Report on Corporate Governance in Italy" (Third Edition, October 2023) by Massimo Belcredi and Stefano Bozzi. The data in this section relating to the years 2022 and 2021 have been taken respectively from the "Fin-Gov Report on Corporate Governance in Italy" (Second Edition, November 2022) edited by Massimo Belcredi and Stefano Bozzi, and from Assonime's "Report on Corporate Governance in Italy: implementation of the Italian Corporate Governance Code (2021)".

Remuneration Committee and Nominations, Governance and Scenarios Committee

REMUNERATION COMMITTEE - NUMBER OF MEETINGS

Terna

Average number of meetings at Italian listed non-financial companies8

* In 2023, the Remuneration Committee met jointly with the Related Party Transactions Committee on one occasion, as described in greater detail in Sections VIII and XII of this Report.

NOMINATION, GOVERNANCE AND SCENARIOS COMMITTEE9 - NUMBER OF MEETINGS

Terna Average number of meetings at Italian listed non-financial companies10

⁸ The data relating to 2023 and 2022 refer to Italian listed non-financial companies, while the data relating to 2021 refer to Italian listed companies. The data relating to 2023 were taken from the "Fin-Gov Report on Corporate Governance in Italy" (Third Edition, October 2023) by Massimo Belcredi and Stefano Bozzi, while the data referring to 2022 and 2021 were taken respectively from the "Fin-Gov Report on Corporate Governance in Italy" (Second Edition, November 2022) by Massimo Belcredi and Stefano Bozzi, and Assonime's "Report on Corporate Governance in Italy: implementation of the Italian Corporate Governance Code (2021)".

⁹ On 9 May 2023 - following the re-election of the Board of Directors by the Annual General Meeting of the Company's shareholders held on the same date - the Board of Directors reassigned various tasks relating to the Board Committees, maintaining the topic of sustainability within the Audit, Risk and Sustainability Committee, in line with the term of office of the previous Board, and entrusting corporate governance matters to the Nominations Committee, which was also assigned tasks relating to strategic scenarios.

¹⁰ See note 8.

Report on Corporate Governance and Ownership Structures 2023

Sustainable success in the Corporate Governance Code

Sustainable success is the objective that guides the Board of Directors' actions and takes shape in the creation of long-term value for the benefit of shareholders, taking into account the interests of other stakeholders relevant to the company.

Other aspects of the Board of Directors' activities

Adaptation to the Corporate Governance Code

In January 2020, the Corporate Governance Committee made significant changes to the Corporate Governance Code, (hereinafter, for brevity, also the "Code"), applicable from annual reporting periods after 31 December 2020.

Terna formally adopted the new Code at the Board of Directors' meeting of 27 January 2021.

Engagement Policy

One of the most significant innovations in the Corporate Governance Code is the recommendation to the Board of Directors to promote, in the most appropriate forms, dialogue with the Company's shareholders and other key stakeholders with a view to raising the level of transparency and fostering the creation of long-term value.

In implementation of this recommendation, as of 14 October 2021, the Company's Board of Directors adopted the "Policy for engagement with the generality of shareholders and other stakeholders of Terna S.p.A.".

Independence criteria

Since 2007, the Company has had a specific internal procedure that defines the criteria for assessing the independence of its non-executive members and for ascertaining the requirements of the Articles of Association and the Corporate Governance Code then in force.

In implementation of the Corporate Governance Code, the Company has updated the "Application criteria and procedure for assessing the independence, pursuant to art. 2 of the Corporate Governance Code". The document identifies the prerequisites, objectives and conditions that may compromise independence; it devotes an article to the figure of the Chair of the Board of Directors, if qualified as independent, and an article to the Board of Statutory Auditors, due to the extension of the independence criteria also to the members of the oversight body. It also describes the methods for for assessing independence and the relevant procedure. An ad hoc article is devoted to the meetings of Directors who qualify as independent.

The heart of the procedure is the description of the criteria adopted by the Company to assess the parameter of "significance" (pursuant to Recommendation 7, lett. c) and d) of the Code), the recurrence of which, in the presence of commercial, financial or professional relationships, as well as additional remuneration, may compromise the independence of the directors or statutory auditors involved in such situations.

Report on Corporate Governance and Ownership Structures 2023

Board Committees and Terms of reference

Until 9 May 2023, Terna's Board of Directors included a "Remuneration Committee", an "Audit, Risk, Corporate Governance and Sustainability Committee", a "Nominations Committee", and a "Related Party Transactions Committee". On 9 May 2023 – after re-election of the Board of Directors by the General Meeting of the Company's Shareholders held on the same date – the Board of Directors reassigned certain tasks regarding the Board Committees, maintaining responsibility for sustainability matters within the scope of the Audit and Risk Committee, in line with the Board's previous term of office, and assigning corporate governance matters to the Nominations Committee, which was also assigned tasks relating to strategic scenarios. As of the date of approval of this Report, Terna's Board of Directors thus includes the following Board Committees, all of which conduct reviews, make recommendations and provide advice, in order to ensure the effective performance of the Board's functions: the "Remuneration Committee", the "Audit, Risk and Sustainability Committee", the "Nominations, Governance and Scenarios Committee" and the "Related Party Transactions Committee". Also on 9 May 2023, on re-election of the Board of Directors, it was also decided to increase the number of members of the Audit, Risk and Sustainability Committee, the Remuneration Committee and the Nominations, Governance and Scenarios Committee from four to five, while the Related Party Transactions Committee continued to have four members.

The good governance of Terna's Board Committees is outlined in specific "Terms of reference" that govern their operations, composition, tasks and responsibilities.

Adherence to the Corporate Governance Code was an opportunity to revise and update the Committees' terms of reference. In making the changes, two basic guidelines were followed: on the one hand, the responsibilities of each Committee were redesigned in light of the recommendations of the Corporate Governance Code as well as the best practices already adopted by the Company; on the other hand, organisational changes were made that affected all the Committees in an across-the-board manner, with a view to standardising their operating procedures. After this revision, the Terms of reference of all four Board committees were further amended by a Board resolution of 13 December 2023 – with the prior approval of the relevant Committee - with the following aims: (i) to adapt to the new allocation of competences affecting the Audit, Risk and Sustainability Committee (formerly the Audit, Risk, Corporate Governance and Sustainability Committee) and the Nominations, Governance and Scenarios Committee (formerly the Nominations Committee); (ii) to adjust requirements for minimum attendance at meetings – set out in the "Guidelines for shareholders from the Board of Directors of Terna S.p.A. on the size and composition of the new Board of Directors", as well as in the Company's rules on limitation of the number of positions in other companies - which was increased from 75% to 80% attendance at meetings; and (iii) to facilitate the conduct of meetings by providing that meetings are deemed to be held at the location at which the Chair of the Committee is present, whilst the Chair and the Secretary may be in separate locations. In any event, remote attendance continues to be permitted.

Related Party Transactions procedures

In December 2020, the Company had already updated its procedures for Related Party Transactions (the "Related-Party Transactions Procedure"), due to the changes in the organisational structure as well as the entry into force of Legislative Decree 49/2019, which introduced, among other things, specific administrative sanctions on the matter. The Company had also adopted a second-level procedure aimed at regulating the application profiles regarding transactions with related parties in order to: (i) allow for a more rapid detection and identification of transactions with related parties; (ii) raise the awareness of corporate departments, also in view of the tightening of the sanctions regime.

Although the Company already had a very strict procedural package outlining roles and responsibilities in the process of identifying transactions to be carried out with related parties, during the first half of 2021, the procedures were further revised to take into account the changes introduced to Consob Regulation 17221 on related party transactions, which came into force on 1 July 2021, and the new definition of a related party, which is in line with the applicable international accounting standards. Constant maintenance of the procedures is also envisaged, in order to simplify them and, at the same time, make their application more efficient.

Board Review

In keeping with the past and in compliance with the Corporate Governance Code, Terna's Board of Directors, with the support of the Nominations, Governance and Scenarios Committee, carries out an annual self-assessment of the size, composition and actual functioning of the Board and of Board Committees, with reference to the activities performed since their election, also called a Board Review.

During the 2020-2023 term of office, Terna used Mercer Italia S.r.l., an independent external firm, as a specialised consultant for three consecutive years.

After the inauguration of the new Board of Directors, the Nominations, Governance and Scenarios Committee organised a process to select a provider of services and consulting activities relating to the self-assessment of the Company's Board of Directors, Board Committees and Board of Statutory Auditors for the 2023 financial year. At a meeting held on 16 January 2024, the Board identified Russel Reynolds Associates as the best candidate. Subsequently, on 24 January 2024, subject to prior approval from of the Nominations, Governance and Scenarios Committee, the Board of Directors appointed the independent external firm, Russel Reynolds Associates, as a specialised external consultant.

Gender diversity

The Corporate Governance Code highlights the issue of gender balance, recommending in particular that companies adopt measures to promote equal treatment and opportunities within the entire company organisation, monitoring their concrete implementation (Art. 2, Recommendation 8).

In 2021, the Company adopted ad hoc guidelines called the "Diversity & Inclusion Policy" with the aim of formalising Terna's commitment to enhancing and protecting diversity, as well as to preventing and sanctioning any discrimination and harassment based on gender, age, sexual orientation, nationality, disability, political opinions, religious belief and any other personal characteristic. At a Board meeting held on 24 January 2024, with the prior approval of the Nominations, Governance and Scenarios Committee granted on 16 January 2024, the Company updated the document, which is now called the Diversity, Equity and Inclusion Policy, to further strengthen its commitment to the principles contained therein. By virtue of this Policy, on 1 March 2024, Terna S.p.A. also obtained UNI/PdR 125:2022 certification for the Company's Gender Equality Management System.

Report on Corporate Governance and Ownership Structures 2023

Sustainability Policy

With the Sustainability Policy, Terna is committed to adopting and incorporating sustainability objectives in its strategy, in line with the topics found to be relevant in the Materiality Analysis and selected from the Sustainability Goals, supporting the management and mitigation of ESG risks.

The objectives are: (i) identification of the methods used in defining the Group's sustainability strategies; (ii) increasing awareness of the key topics and the expected results; (iii) dissemination of the culture of sustainability inside and outside the Company.

By adopting the Policy, Terna has made a formal and public commitment to adopting sustainable conduct and actions in relation to the main reference frameworks (the SDGs and Italy's National Integrated Energy and Climate Plan) and to ESG topics considered important for the Group. Furthermore, the commitments outlined in the Policy support management and mitigation of the ESG risks to which the Terna Group is exposed.

Maximum number of positions in other companies

Bearing in mind the approach taken in the Corporate Governance Code then in force, in 2007 Terna's Board of Directors approved its own guidelines regarding the maximum number of positions that can be held as director or auditor in significantly large companies that still enable efficient performance of duties as a Director of Terna S.p.A.. These guidelines are presented in the in-house document "Guidance concerning the maximum number of offices that may be held by Directors of Terna S.p.A.", requiring the Directors of Terna to consider these before accepting office.

The Board thus identified general criteria for the commitments required for each role, covering Executive Directors and/or the Chief Executive Officer, non-executive independent Directors, and non-executive non-independent Directors. In assessing the required commitment for each type of position, a "weight" was assigned to each category, also establishing that holding the position of Chief Executive Officer and/or Executive Director of Terna would be incompatible with holding the position of Chief Executive Officer and/or executive Director in listed companies or other large companies.

The document has been reviewed over the years and, lastly, during the Board meeting held on 1 March 2023, it was decided to align it with the changes introduced by the Corporate Governance Code and take into account the experience acquired during the current term of office and the approaches taken by peers.

To evaluate the number and type of other positions held in the management and oversight bodies of other companies, as recommended in the Corporate Governance Code, the document distinguishes between "listed companies" and "large companies" and the definition of "Executive Director" has also been aligned with definition used in the Code.

In terms of the number of positions that may be held by each of Terna's Director in the management and oversight bodies of other listed companies or companies of significant size, the overall maximum "weight" for such positions used in the document has been amended, reducing the number from sixteen to ten. Moreover, the "weights" attributed to other management and oversight positions - held by the Chief Executive Officer, executive Directors or other Directors of Terna - in listed companies or companies of significant size have been increased.

The review of the Guidance offered an occasion to emphasise the principle that whoever assumes the role of Director must be able to dedicate sufficient time to diligently carry out the related duties. The Guidance specifies that the average level of attendance at Board meetings by members of Terna's Board of Directors must be in any event in line with the average attendance recorded at other companies listed on the FTSE-MIB and, in particular, at those comparable with Terna. Moreover, attendance must not be below 80% for Board of Directors' meetings held during any one year. The above percentage for attendance also applies to meetings of Board Committees. In addition, if a Director fails to register the above percentage for attendance at the meetings of individual Board Committees or of the Board of Directors, the latter must decide whether to relieve the Director from their duties as a member of any Board Committees to ensure full attendance and that the Committees can function properly.

Diversity Policy

Terna adopted its "Diversity Policy for Administrative and Auditing bodies of Terna S.p.A." in 2018. This provides non-binding recommendations regarding aspects such as the age, gender, geographical origin and professional and management training of the members of Terna's Board of Directors and Board of Statutory Auditors.

The aim of the Policy is, therefore, to ensure that the qualitative and quantitative composition of the Board of Directors is such as to enable Directors to effectively carry out the duties and responsibilities assigned to the management body.

The Policy is aimed at:

• (i) shareholders who, pursuant to the law and the Articles of Association, wish to submit slates of candidates for election of the Board of Directors;
• (ii) the Annual General Meeting called to elect the Board of Directors;
• (iii) the Company's outgoing Board of Directors for the purposes of drawing up guidance for shareholders and in the event that - when re-electing the Board of Directors - it should wish to submit its own slate of candidates;
• (iv) the Company's Board of Directors, as well as its shareholders, if during the Board's term of office it is necessary to replace a member of the Board of Directors pursuant to art. 2386 of the Italian Civil Code;
• (v) the Company's Board of Statutory Auditors.

To ensure formal alignment with the Corporate Governance Code, the CLF and the Regulations for Issuers, and to reflect the results of the Board Reviews conducted during the term of office of the Board, in early 2023 the Company revised and updated the Policy.

The changes made to the Policy include, with regard to the size of the Board of Directors, the recommendation that the number of members should be such as to provide an adequate balance of expertise and experience in relation to the complexity of the Company and the Group. This should also apply to Board Committees. However, it was decided not to indicate a specific number, bearing in mind that the Articles of Association state that the number of Board members must be between seven and thirteen.

The document also specifies that, under the Corporate Governance Code applied by the Company, in companies of significant size, independent Directors should represent at least half of the Board.

The sectors in which Directors must have professional and management expertise, based on the outcome of the Board Review conducted in 2022, have also been updated.

In terms of gender, the quota for the least represented gender has been raised to two-fifths of the Board of Directors, in line with the legislation in force and the Articles of Association.

The Policy was also updated with regard to the composition of the Board of Statutory Auditors, raising the quota for the least represented gender to two-fifths, without prejudice to the fact that, if the Board has three members, rounding must be to the lower whole number in application of the criterion in art. 148 of the CFL and art. 144-undecies 1 of the Regulations for Issuers. As regards the requirements for members of the oversight body, the document specifies that the Statutory Auditors must meet: (i) the integrity requirements provided for in the legislation in force and the Articles of Association, and (ii) the independence requirements provided for in the legislation in force, the Articles of Association, the Corporate Governance Code and the document adopted by the Company containing "Application criteria and procedure for assessing the independence (under the terms of art. 2 of the Corporate Governance Code)".

Terms of reference for the Board of Directors

As part of work on adapting and revising internal governance documents with the aim of fully and effectively applying the new recommendations in the Corporate Governance Code, on 28 July 2022, Terna's Board of Directors revised and updated the "Terms of reference for the Board of Directors" (i) to ensure formal alignment with the Corporate Governance Code; (ii) to provide greater consistency of the text with the reference documents that had already been aligned with the new recommendations of the Corporate Governance Code; (iii) to apply the practices developed during the current Board's term of office. Subsequently, during the current term of office, on 13 December 2023, the document was updated once again, subject to prior approval by the Nominations, Governance and Scenarios Committee. The amendments to the Terms of reference include: (i) formal changes deriving from the different allocation of competences among the Board Committees and the consequent changes in the Committees' names; (ii) raising the mandatory percentage of attendance for members of the Board of Directors at Board meetings as well as at meetings of Board Committees from 75% to 80%.

The proposed changes have improved the way the Board of Directors operates, enabling "informed" and "collective" decision-making with the priority aim of creating long-term value for shareholders and pursuing sustainable success, taking into account the interests of the Company's key stakeholders.

Review of market abuse procedures

In accordance with legislation designed to prevent and crack down on market abuse, since 2004, Terna has adopted specific procedures governing the internal management and processing of confidential information and the disclosure of documents and information concerning the Company and its subsidiaries.

These measures are designed to protect confidential information, whilst also ensuring that the market disclosure of information on the Company is fair, complete, appropriate, timely and not selective.

The procedures adopted by Ternal in relation to market abuse include:

• the "Procedure for Managing, Processing and Communicating Corporate Information relating to Terna S.p.A. and its Subsidiaries" (LG005);
• the "Procedure for Compiting and Updating the Insider List of and Relevant Information List" (LG008);
• the "Guidance on the Identification of the relevant and insider nature of corporate information and the grounds for the applying the procedure for delayed publication" (IO412CA);
• the "Internal Dealing Procedure" (LG010).

In implementation of the required three-yearly review of the above procedures, the Company undertook a revision of the procedures with the aim of bringing them into line with organisational changes and amendments to the legislation regarding sanctions for market abuse (in response to a toughening of sanctions in art. 184 of the CLF).

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Internal control and risk management system

BODY/FUNCTION		NOTES
Chief Executive Officer	Giuseppina Di Foggia
Chief Risk Officer (CRO)	Enrico Farci	Head of HSE – Quality and Risks
Internal Audit department		Internal to the Company
Head of the Internal Audit department	Nicoletta Buonomo
Manager responsible for financial reporting	Francesco Beccali11	Head of Administration, Finance and Control
Supervisory Board	Bruno Assumma (Chair) Massimo Dinoia Nicoletta Buonomo	external member external member internal member
Independent Auditors	Deloitte & Touche S.p.A.	Nine-year period 2020-2028

11 It should be noted that, until 31 August 2023, Agostino Scornajenchi held the position of Manager responsible for financial reporting (https://www.terna.it/en/media/press-releases/detail/consensual-termination-employment).

As of 1 September 2023, this position is held by Francesco Beccali (https://www.terna.it/en/media/press-releases/detail/francesco-beccaliappointed-administration-finance-control-director-executive-charge-preparing-company-accounting-documents;

Report on Corporate Governance and Ownership Structures 2023

Average

BOARD OF STATUTORY AUDITORS - NUMBER OF MEETINGS

Terna

Average number of meetings Italian listed non-financial companies12

AUDIT, RISK AND SUSTAINABILITY COMMITTEE13 - NUMBER OF MEETINGS

Terna

Average number of meetings at Italian listed non-financial companies14

* In 2023, the Audit, Risk and Sustainability Committee met jointly with the Related Party Transactions Committee on three occasions, as described in greater detail in Sections X and XII of this Report.

¹² The data in this section - with reference to the average number of meetings of Italian listed non-financial companies - relate to the 2023 financial year and have been taken from the "Fin-Gov Report on Corporate Governance in Italy" (Third Edition, October 2023) by Massimo Belcredi and Stefano Bozzi. The data in this section relating to the years 2022 and 2021 have been taken respectively from the "Fin-Gov Report on Corporate Governance in Italy" (Second Edition, November 2022) by Massimo Belcredi and Stefano Bozzi, and from Assonime's "Report on Corporate Governance in Italy: the implementation of the Italian Corporate Governance Code (2021)".

¹³ On 9 May 2023 – after re-election of the Board of Directors by the General Meeting of the Company's Shareholders held on the same date - the Board of Directors reassigned certain competences regarding the Board Committees, maintaining the topic of sustainability within the Audit, Risk and Sustainability Committee, in line with the term of office of the previous Board, and entrusting corporate governance matters to the Nominations Committee, which was also assigned tasks relating to strategic scenarios.

¹⁴ The data for 2023 and 2022 refer to Italian listed non-financial companies, whilst the data for 2021 refer to listed Italian companies. In particular, the data for 2023 have been taken from the "Fin-Gov Report on Corporate Governance in Italy" (Third Edition, October 2023) by Massimo Belcredi and Stefano Bozzi, whilst the data for 2022 and 2021 have been taken respectively from the "Fin-Gov Report on Corporate Governance in Italy" (Second Edition, November 2022) by Massimo Belcredi and Stefano Bozzi , and from the Assonime's "Report on Corporate Governance in Italy: the implementation of the Italian Corporate Governance Code (2021)".

Key elements of the internal control and risk management system

ELEMENTS

YES Existence of a document containing guidelines for the Internal Control and Risk Management System

YES Presence of specific organisational structures with responsibility for risk management

YES Adoption of an Enterprise Risk Management Framework for the analysis of all types of risks

Annual assessment of the compatibility of business risks with management of the Company consistent with the strategic objectives set

Preparation of specific compliance programmes (Model 231, Control Model 262, Integrated Management System, Information Security Governance Model, Privacy Model, Anti-Fraud Model, Open & Transparent Tenders, Subcontractor Portal, Whistleblowing Policy)

Report on Corporate Governance and Ownership Structures 2023

Relations with key institutional partners involved in risk management

Emergency management involving the prevention of natural and manmade risks that may be detrimental to the continuity of the electricity service nationwide

National Cyber Security Coordination and Cyber Incident Management

Prevention of the risk of infiltration by organised crime through contractors or suppliers.

Operational support by the SAGF (Soccorso Alpino GdF) and the airborne fleet for actions concerning strategic infrastructures

Training of Terna personnel to adequately support the fire service, including in emergency conditions.

Specific training for fire service personnel on working close to or in contact with infrastructure used to transport HV/VHV electricity

Security Information, aimed at protecting Italy from any dangers and threats coming from within or from outside the country

Physical protection of vulnerable sites to prevent and counter any attacks on or damage to Terna's critical infrastructure

Liaison with the State Police's Territorial Surveillance Service

Prevention and suppression of cybercrime

Promotion of study and research on energy security

Table of contents

Introduction	26
Section I: Profile of the Issuer – Corporate Structure Profile of the Issuer Mission Sustainability Corporate structure	28 28 28 28 29
Section II: Information on ownership structures	32
Structure of the share capital	32
Significant shareholdings in the Company and shareholder agreements	33
Authority to increase the share capital and to purchase own shares	35
Employee share ownership: procedure for exercising voting rights	36
Change of control clauses and Articles of Association provisions relating to takeovers	37
Restrictions on the transfer of shares and shares carrying special rights	37
Restrictions on voting rights	45
Election and replacement of Directors and amendments to the Articles of Association	45
Election of Directors, related requirements and term of office Succession plans	45 51
Amendments to the Articles of Association	52
Termination payments to Directors in the event of resignation, dismissal or termination of the relationship following a public tender offer for the Company	52
Management and coordination	52
Further information and corporate governance practices Additional corporate governance practices	53 54
Sezione III: Compliance	58
Section IV: Board of Directors	59
Role of the Board of Directors	59
Composition	62
Diversity policies	70
Maximum number of positions in other companies Induction Programme	72 74
Functioning of the Board of Directors	75
Role of the Chair of the Board of Directors	79
Role of the Secretary	80
Attendance policy Executive bodies	80 81
Other executive Directors	81
Independent Directors	81
Lead independent director	85
Section V: Management of corporate information	86
Section VI: Board Committees	89
Section VII: Nominations, Governance and Scenarios Committee Board Review and Board Committees review	92 92

Section VIII: Remuneration Committee Composition Duties the Remuneration Committee	98 98 99
Section IX: Directors' remuneration	103
Section X: Audit, Risk and Sustainability Committee Functions of the Audit, Risk and Sustainability Committee Composition Functions assigned to the Audit, Risk and Sustainability Committee Joint meetings of the Audit, Risk and Sustainability Committee and the Related Party Transactions Committee	105 105 106 107 111
Section XI: Internal Control and Risk Management System Chief Executive Officer Chief Risk Officer Head of Internal Audit Code of Ethics Organisational Model pursuant to Legislative Decree 231/2001 Independent Auditors Manager Responsible for Financial Reporting and other roles and functions Coordination of the persons involved in the Internal Control and Risk Management System	112 117 118 119 121 122 127 128 130
Section XII: Directors' interests and related party transactions	131
Section XIII: Election and replacement of Statutory Auditors	137
Section XIV: Composition and activities of the Board of Statutory Auditors Review of the Board of Auditors Diversity policies Independence Remuneration Investor relations	142 146 146 147 147 147
Section XV: Investor relations	148
Section XVI: General Meetings	151
Section XVII: Considerations on the letter dated 13 December 2023 from the Chair of the Corporate Governance Committee	155
TABLES Table 1 Table 2 Table 3 Table 4 ANNEXES	157 158 159 160

Annex 1 161

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Introduction

Since the listing of its shares on the screen-based trading system (Mercato Telematico Azionario) organised and managed by Borsa Italiana S.p.A. in June 2004 (now Euronext Milan), TERNA S.p.A. (hereinafter also "Terna" or the "Company") has adopted a corporate governance system in line with corporate governance recommendations.

Since the IPO, the Company has applied the Corporate Governance Code promoted by Borsa Italiana, progressively making changes to its governance system to keep pace with the changing requirements in later editions of the Code.

In January 2020, the Corporate Governance Committee published a new edition of the Code, which is effective for annual reporting periods beginning after 31 December 2020. At the Board of Directors' meeting of 27 January 2021, the Company formally signed up to the new edition of the Code.

Even before the new edition of the Code came into force, Terna had put in place some practices in line with the new recommendations so as to enable adherence to the new governance standards. In 2021, the Company revised its internal governance documentation in order to achieve full and effective adoption of the new provisions and recommendations.

In 2022 and 2023, the Company further refined and revised the internal procedures it uses, with a view to constantly improving its governance model.

This Report on Corporate Governance and Ownership Structures therefore sets out the corporate governance practices adopted in 2023. These practices take into account the following documents: (i) the Q&As to aid with application of the Corporate Governance Code – the 2020 edition, published by the Corporate Governance Committee; (ii) the recommendations made by the Chair of the Corporate Governance Committee in the customary Letter to Issuers and in the Report for 2023 (both published on 13 December 2023). In preparing this Report, the Company has also, as far as possible, based its approach on the Format for the Report on Corporate Governance and Ownership Structures - 9th edition, published by Borsa Italiana in January 2022.

CONSOB recommendations and, more generally, the main international best practices have also been applied.

Finally, the Report includes a specific section containing the information required by art. 123-bis of Legislative Decree 58/98 (the Consolidated Law on Finance, or "CLF"), as amended by Legislative Decree 254 of 30 December 2016 ("Implementation of Directive 2014/95/EU of the European Parliament and the Council of 22 October 2014, containing amendments to Directive 2013/34/EU relating to the disclosure of non-financial information and diversity information by certain undertakings and certain large groups"), and by art. 144-decies of the "Regulation implementing Legislative Decree 58 of 24 February 1998, concerning the regulations for issuers" adopted by CONSOB with Resolution no. 11971 of 14 May 1999 (the "Regulations for Issuers"). It also includes a specific annex explaining the main characteristics of the internal control and risk management systems used in relation to the financial reporting process.

As will be explained in more detail in the Report, the Board of Directors leads the Company in the pursuit of sustainable success.

The corporate governance system also pays particular attention to compliance with Italian and European rules regarding the functional and/or ownership unbundling that apply to all businesses operating in the electricity and natural gas sectors ("Unbundling Legislation"). The system also takes into account the specific nature of the activities carried out by Terna and its subsidiaries, which are subject to regulation by the Regulatory Authority for Electricity, Gas and Water (the AEEGSI, now known as the Regulatory Authority for Energy, Networks and the Environment, or ARERA, under the changes introduced by art. 1, paragraph 528 of Law 205 of 27 December 2017).

Decisions regarding the Company's corporate governance rules are reserved for Terna's Board of Directors. They are to be approved on the recommendation of the Chief Executive Officer and are summarised in this Report, which was examined and approved by the Board of Directors at its meeting on 19 March 2024.

As specified in the Introduction to the Code, failure to comply with one or more of the Code's recommendations must be explained as follows:

• (a) how the best practice recommended by the Code was not applied;
• (b) the reasons for this;
• (c) a description of how the decision not to comply was taken within the Company;
• (d) whether non-compliance is limited in time, with an indication of when future adoption is to take place;
• (e) any approach adopted as an alternative to the best practice not complied with and a description of how this decision contributes to good corporate governance.

Unless otherwise stated, all the information included in the Report has been updated on the basis of the information available at the date of approval of the Report.

< > REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2023

Section I Profile of the Issuer – Corporate Structure

Profile of the Issuer Mission

"Terna is a major operator of grids used to transport energy. It manages the high-voltage transmission of electricity in Italy, ensuring security, quality and cost-effectiveness over time and guaranteeing equal access to all grid users. Terna is developing non-regulated activities and exploiting new business opportunities building on the experience and technical expertise gained in managing complex systems. The Company creates value for shareholders, with a strong commitment to professional best practices and adopting a responsible approach to the community and the environment in which it operates".

Sustainability

Terna plans, manages and monitors all of its activities, paying attention not only to the potential economic impact but also the social and environmental impacts by fully embedding sustainability in its approach to doing business.

In line with the principles of the "Corporate Governance Code", which assigns the Board of Directors, among others, the task of promoting "dialogue with shareholders and other stakeholders which are relevant to the company, in the most appropriate way", Terna adopts all the best tools to create, maintain and consolidate a relationship of mutual trust with its stakeholders, which is instrumental in creating value for the Company, society and the environment.

The values underpinning Terna's approach to sustainability are set out in the Code of Ethics and are expressed in its mission, which in turn is aligned with the United Nations SDGs (Sustainable Development Goals), above all Goals 7 ("Affordable and clean energy"), 9 ("Industry, innovation and infrastructure"), 13 ("Climate action") and 17 ("Partnerships for the goals"), which define responsibilities and objectives in keeping with the Terna's role in driving and enabling the Italian energy system and a just and inclusive transition.

From the point of view of sustainability, the relationship with the environment and the resulting social consequences are particularly important. The physical presence of pylons, lines, and electricity substations interacts with the surrounding landscape and biodiversity, direct CO2 emissions (caused essentially by leaks of the SF6 gas used as an insulator in some electrical equipment) and waste management represent the most significant impact of Terna's activities.

The tools used by the Company to manage these aspects in the best possible way, minimising risks, including reputational ones, are, as far as its impact on the landscape and environment are concerned, governed by the adoption, since 2002, of a voluntary process of prior involvement of local institutions (regional and municipal authorities, park authorities, etc.) directly affected by implementation of the Development Plan. Since 2015, Terna has adopted a further tool for engaging with local communities, called "Terna Incontra". These are public events that institute a continuous communication channel with people from the communities directly affected by new electricity infrastructure, whether a power line or a substation, in order to enter into a participatory design process.

Since 2020, when the restrictions imposed as a result of the Covid-19 pandemic meant that people could not attend such events in person, Terna has held them in digital form. This continues to be used alongside meetings where people are physically present.

In terms of institutions, in 2023, Terna held a total of 480 meetings with local authorities, involving around 278 bodies.

Terna's cooperative approach has, since 2009, also involved potentially critical stakeholders, such as the main environmental associations (WWF Italia, Legambiente and Greenpeace), with which the Company has entered into and renewed partnership agreements with the aim of continuously improving the sustainability of the National Transmission Grid since the preparation of the Development Plan.

With regard to CO2 emissions, in line with national and international climate change objectives, Terna has formally set a Science Based Target ("SBT") to reduce its emissions. The target was made more ambitious at the beginning of 2023, setting the goal of cutting direct and indirect emissions by 46.2% by 2030 versus 2019 levels and indirect emissions produced by its value chain by 11.1% compared with 2021.

During 2023, following a preliminary analysis and the ensuing identification of the areas on which to focus attention to progressively introduce circularity criteria in its operational processes, Terna defined a preliminary Action Plan that, in keeping with its "Circularity Roadmap to 2030", outlined the first actual initiatives to be implemented to embed circularity within the business.

All of Terna's activities related to the increasingly sustainable development of its business are subject to monitoring and measures that, especially in recent years, have attracted growing attention from the financial markets which, in line with international trends and objectives, no longer view sustainability merely as a factor reducing investment risk but as a fully integrated element in the business capable of creating new opportunities for growth and development.

The Board of Directors is kept constantly updated on sustainability policies, activities and results and, in 2023, this was ensured through regular communications to the Audit, Risk and Sustainability Committee.

Finally, Terna has developed a Management System designed to control and mitigate the impact of its activities. This System has been ISO 14001 certified since 2007 and forms part of a wider Integrated Management System. This includes certified management systems covering quality and workplace safety and represents a key risk management tool.

In 2023, Terna published its NFS, which was included in the "Report on Operations", constituting the Group's "Integrated Report". The document is available on the Company's website at www.terna.it.

Pursuant to the "definitions" contained in the Corporate Governance Code, Terna qualifies as a "large" company, as it had a capitalisation of more than €1 billion on the last trading day of each of the three calendar years prior to 31 December 2020. By assuming the status of large company, Terna has adhered to the principles and recommendations addressed to this category of company.

Corporate structure

In compliance with the provisions of the Italian legislation concerning listed companies, the Company's corporate structure - based on the traditional management and control model - includes the following:

• The Board of Directors with responsibility for managing the Company (art. 21.1 of the Articles of Association). For this purpose, the Board is vested with the broadest possible powers to perform all acts deemed necessary for the performance and achievement of the Company's objects, excluding only those matters reserved by law or by the Articles of Association to the General Meeting of shareholders;
• the Board of Statutory Auditors with responsibility for overseeing: (i) compliance with the law and the Articles of Association, and the application of correct governance principles in the conduct of the Company's business, (ii) the adequacy of the organisational structure, the internal control system and the administrative and accounting systems adopted by the Company and its domestic and overseas subsidiaries, as well as performing all the tasks assigned to the Board of Statutory Auditors by the law and the Corporate Governance Code.

Pursuant to the provisions of art. 19 of Legislative Decree 39/2010, the Board of Statutory Auditors is responsible for: a) informing the management body of the audited entity of the results of the statutory audit conducted and

for sending this body the additional report pursuant to art. 11 of EU Regulation 537/2014, accompanied by any observations; b) monitoring the financial reporting process and presenting recommendations or proposals aimed at guaranteeing the integrity of such process; c) overseeing the efficacy of internal controls over quality and risk management and, where applicable, of internal audit procedures, as they relate to financial reporting of the audited entity, without compromising their independence; d) monitoring the statutory audit of the separate and consolidated financial statements, taking into account the eventual results or conclusions of quality controls carried out by the CONSOB, where available; e) verifying and monitoring the independence of the Independent Auditors, above all with regard to the adequacy of the non-audit services provided to the audited entity, in compliance with art. 5 of EU Regulation 537/2014; f) the procedure for selecting the audit firm or Independent Auditors and for recommending the audit firm or Independent Auditors to be engaged pursuant to art. 16 of the above EU Regulation. The Board of Statutory Auditors is also responsible for the oversight tasks assigned to it by Legislative Decree 254 of 30 December 2016, which implemented Directive 2014/95/EU on non-financial and diversity disclosures.

Pursuant to article 19 of Legislative Decree 39 of 2010, the functions of the "Internal Control and Audit Committee" are attributed to the Board of Statutory Auditors, the Supervisory Board (or a committee set up within it) or the Management Control Committee, depending on the management and control model adopted by the Public Interest Entity.

According to Terna's governance, therefore, the Board of Statutory Auditors acts as the "Internal Control and Audit Committee" and has oversight duties with respect to:

• a) the financial reporting process;
• b) the effectiveness of the internal control, internal audit, if applicable, and risk management systems;
• c) the independent audit of the annual and consolidated accounts;
• d) the independence of the audit firm, in particular as regards the provision of non-audit services to the audited entity.
• the General Meeting of shareholders, with responsibility for deliberating in ordinary or extraordinary session on:
  • i. the election and termination of members of the Board of Directors and Board of Statutory Auditors and the related remuneration and responsibilities;
  • ii. approval of the financial statements and the allocation of annual profit;
  • iii. the buyback and sale of own shares;
  • iv. amendments to the Articles of Association;
  • v. the issue of convertible bonds;
  • vi. the grant of authority necessary for Directors to authorise related party transactions for which the relevant independent body has not issued a favourable opinion, as required by the legislation in force and the procedures adopted by the Board of Directors, and for urgent transactions submitted by the Directors to the General Meeting for a consultative vote (art. 13.3 of the Articles of Association);
  • vii. pursuant to art. 123-ter, paragraph 3-ter of the CLF, the Company's policy governing the remuneration of the members of management bodies and the oversight body, general managers and key management personnel, as contained in Section I of the "Annual Remuneration Report", which is subject to a binding vote;
  • viii. pursuant to art. 123-ter, paragraph 6 of the CLF, Section II of the "Annual Remuneration Report" regarding the remuneration paid, which is subject to a non-binding vote; and
  • ix. share-based payment plans, pursuant to art. 114-bis of the CLF.
• the Manager Responsible for Financial Reporting, assigned the duties and responsibilities provided for in law and the applicable regulatory and internal requirements, and those provided for in the Corporate Governance Code.

The independent audit of the Company's accounts is entrusted to a specialist audit firm enrolled on the specific register of external auditors, appointed by the General Meeting of shareholders on the recommendation of the Board of Statutory Auditors.

Terna's Independent Auditor performs the same role within the Company's main subsidiaries.

In order to ensure the independence of the audit firm and of the senior in charge of the audit, the engagement of independent auditors to audit the financial statements of the Company and those of any other Group company, and of the consolidated financial statements, is not in any event given to audit firms falling within the definition of incompatibility pursuant to art. 17 of Legislative Decree 39/2010 and Part III, Title VI, paragraph I-bis of the Regulations for Issuers.

Terna S.p.A.'s Annual General Meeting of 27 May 2014 approved amendments to articles 4.1, 10, 14.3, 15.5 and 26.2 of the Articles of Association. This was in response to resolutions ARG/com 153/11 e 142/2013/R/EEL issued by the Regulatory Authority for Electricity, Gas and Water (the AEEGSI, now known as the Regulatory Authority for Energy, Networks and the Environment, or ARERA, under the changes introduced by art. 1, paragraph 528 of Law 205 of 27 December 2017). In these resolutions, the regulator laid down the procedures for certification of the electricity transmission operator and adopted the final decision to certify Terna as the "electricity transmission system operator in ownership unbundling model".

These changes were implemented for the first time at the Annual General Meeting held on 9 June 2015, with reference to the election of a Director who had previously been co-opted by the Board of Directors on 21 January 2015 and, subsequently, also at the General Meeting of 27 April 2017, which elected new corporate bodies.

On 23 March 2017, a General Meeting of Terna's shareholders approved the Board of Directors' proposal to expand on the rules governing slate voting during the election of the Board of Directors and the Board of Statutory Auditors, in cases where the slate obtaining a majority of the votes does not contain a sufficient number of candidates to ensure the election of the required number of Directors (art. 14.3 and art. 26.2 of the Articles of Association).

Finally, on 18 May 2020, a General Meeting of Terna's shareholders approved the Board of Directors' proposal to align the Articles of Association with the current legislation governing gender quotas. The General Meeting cancelled art. 31 of the Articles of Association, referred to as the "Transitional provision", in its entirety, maintaining – within the other articles governing the composition of the Company's Board of Directors and Board of Statutory Auditors – the reference to the legislation from time to time in force.

The Terna Group, including direct and indirect investments at 31 December 2023, consists of 30 subsidiaries (including 12 Italian), 3 joint arrangements (overseas) and 4 associates (including 1 Italian).

The following changes in the structure of the Group have taken place with respect to 31 December 2022:

• On 7 February 2023, Terna completed the acquisition of shares in SEleNe CC S.A. following the withdrawal of the Romanian TSO, National Power Grid Company Transelectrica S.A., from the company's shareholder base. The Company's stake has thus increased from 25% to 33.33%.
• On 5 October 2023, the merger of the company Omnia S.r.l. with and into the company LT S.r.l. was completed. On 29 March 2023, terna, through its subsidiary LT S.r.l., completed the acquisition of a 100% stake in Omnia S.r.l., a company providing O&M services for photovoltaic plants.
• On 21 December 2023, the merger of Rete Nord S.r.l. (formerly Edyna Transmission S.r.l.) with Rete S.r.l. was completed. On 22 June 2023, Terna completed the acquisition of a 100% stake in Edyna Transmission S.r.l., at the same time renamed Rete Nord S.r.l..

< > REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2023

Section II

Information on ownership structures (as per art. 123-bis, paragraph 1 of the CLF)

Structure of the share capital

(as per art. 123-bis, paragraph 1(a) of the CLF)

At 19 March 2024, the Company's share capital amounts to €442,198,240.00 and solely comprises a total of 2,009,992,000 fully paid-up nominative ordinary shares with a par value of €0.22 each.

Each share carries the right to one vote at both ordinary and extraordinary General Meetings, in accordance with the limits set by current legislation and by the Articles of Association. The ordinary shares grant the further voting and ownership rights provided for by the laws governing voting shares.

In implementation of the buyback programme linked to the Performance Share Plan 2023-2027 (see the paragraph on "Authority to increase the share capital and to purchase own shares"), in the period from 22 June 2023 to 6 July 2023, the Company purchased 917,611 own shares on the Euronext Milan market (equal to 0.046% of the share capital at a cost of €6,999,997.07)15. These shares are in addition to the 3,296,049 own shares purchased by the Company in 2020, 2021, and 2022. As of today, therefore, Terna holds a total of 4,213,660 treasury shares (equal to 0.210% of the share capital), acquired under four separate buyback Programmes to service: (i) the Performance Share Plan 2020-2023, in the period from 29 June 2020 to 6 August 2020; (ii) the Performance Share Plan 2021-2025, in the period from 31 May 2021 to 23 June 2021; (iii) the Performance Share Plan 2022-2026, in the period from 27 May 2022 to 13 June 2022; and (iv) the Performance Share Plan 2023-2027 from 22 June 2023 to 6 July 202316. With the exception of the above shares, the Company does not hold further treasury shares in its portfolio, including through subsidiaries; therefore, pursuant to art. 6.1 of the Articles of Association, 2,005,778,340 ordinary shares, excluding the above treasury shares, have voting rights.

Since 23 June 2004, Terna's shares have been listed in the Euronext Milan segment of the Italian Stock Exchange's screen-based trading system ("EXM", formerly the MTA or Mercato Telematico Azionario), organised and managed by Borsa Italiana S.p.A.. This index includes mid- and large-cap companies aligned with international best practices and belonging to the Financial Times Stock Exchange - Milano Indice di Borsa (FTSE MIB).

Pursuant to art. 5.2 of the Company's Articles of Association, the General Meeting of shareholders can approve capital increases through the issue of new shares, including those belonging to special categories, to be allotted free of charge pursuant to art. 2349 of the Italian Civil Code to employees, or for consideration, and with the exclusion of pre-emption rights pursuant to art. 2441 of the Civil Code, to persons to be identified by shareholder resolution.

The Company has not issued other financial instruments granting holders the right to subscribe for newly issued shares. Terna has not issued shares that are not traded on regulated markets in an EU state.

¹⁵ In this regard, see the press release published on 10 July 2023, available at the following link:

https://www.terna.it/en/media/press-releases/detail/closing-programme-share-buy-back-2023

¹⁶ In this regard, see the press releases published on 10 August 2020, 28 June 2021, 13 June 2022, and 10 July 2023 available at the following links:

https://www.terna.it/en/media/press-releases/detail/Terna\_notification\_of\_share\_buy\_back\_end\_of\_the\_program;

https://www.terna.it/en/media/press-releases/detail/notification-share-buy-back-end-program;

https://www.terna.it/en/media/press-releases/detail/closing-programme-share-buy-back;

https://www.terna.it/en/media/press-releases/detail/closing-programme-share-buy-back-2023

For the first, second and fourth buyback programmes, the final dates shown are those on which the last purchases were made. As regards the third buyback programme, the final date matches the date of the press release announcing the end of the programme (and not the last purchase made, as with the other programmes).

Significant shareholdings in the Company and shareholder agreements

(as per art. 123-bis, paragraph 1(c) and (g) of the CLF)

Based on information from the shareholder register, notifications received in accordance with the applicable legislation and other available information, at 19 March 2024, the following shareholders hold interests in the Company's share capital, amounting to €442,198,240.00 and comprising a total of 2,009,992,000 fully paid-up nominative ordinary shares with a par value of €0.22 each, in excess of the notification thresholds established by art. 120 of the CLF and the Regulations for Issuers:

• CDP Reti S.p.A. (a joint-stock company controlled by Cassa Depositi e Prestiti S.p.A., itself in turn 82.77% owned by Italy's Ministry of the Economy and Finance), which holds a 29.851% interest.

• Blackrock Inc. which holds a 5.082% interest.

There are no other interests in the Company above the notification threshold established by the CONSOB, based on the information in the Company's possession.

In terms of the situation of control, in a letter dated 30 October 2014, Cassa Depositi e Prestiti S.p.A. ("CDP") declared that it had transferred its entire 29.851% interest in Terna to CDP Reti S.p.A. ("CDP Reti"), a wholly owned subsidiary of CDP. The letter represented the fact that "the de facto relationship of control between CDP and Terna, as notified on 19 April 2007, is unchanged".

In a subsequent letter dated 2 December 2014, CDP announced that:

• on the one hand, on 27 November 2014, it had sold a total interest of 40.898% in CDP Reti to State Grid Europe Limited ("SGEL" or "the Investor") - a company wholly controlled by State Grid International Development Limited ("SGID"), a member of the State Grid Corporation of China Group - and to a group of Italian institutional investors and that, as a result of the sale, CDP's controlling interest in CDP Reti consisted of 95,458 class A shares, representing 100% of the category A shares in issue and 59.102% of the share capital;
• on the other hand, that "the other data previously communicated in relation to the aforementioned shareholdings remained unchanged".

In this regard, it should also be noted that, within the context of the shareholder agreements entered into by CDP, SGEL and SGID on 27 November 2014, and in relation to CDP Reti, Snam S.p.A. and Terna as below, CDP has confirmed that it has sole de jure control over CDP Reti.

As regards shareholder agreements, it should be noted that the only current shareholder agreement of which the Company is aware, and that can be classed as relevant for the purposes of art. 122 of the CLF, is the shareholder agreement between CDP, SGEL and SGID signed on 27 November 2014. This was registered with the Rome Companies Register on 1 December 2014 and announced in a notice published in the newspaper, "Il Sole 24 Ore", on 2 December 2014. An extract is published on the websites of the CONSOB and the Company (www.terna.it, in the Investors section, under "Main Shareholders").

In this regard, it should be noted that, on 5 August 2014, CDP - in view of the above sale of its interest in CDP Reti provided the Company with the essential information required under the terms of art. 122 of the CLF and of articles 127 and 130 of the Regulations for Issuers. This information was taken from the sale contract entered into for the above purpose on 31 July 2014 and published on the Company's website.

Following the sale of the interest, CDP notified the Company that, on the same date as the sale, it had entered into a shareholder agreement with SGEL and SGID. This agreement was a replacement for the previous agreements of 31 July 2014 with the same parties and regarded the signatories' investments in CDP Reti, Snam S.p.A. and Terna, giving SGEL governance rights. At the same time, CDP provided the necessary essential information on this agreement.

In a letter dated 11 November 2016, CDP informed the Company of further changes to the agreement made on 7 November 2016. The changes extended the scope of the agreement to include Italgas S.p.A. and coordinated its content with that of the shareholder agreement dated 20 October 2016, which came into force on 7 November 2016, regarding all the interests held by CDP Reti, CDP GAS and SNAM in Italgas. The amended agreement was filed with the Rome Companies Register on 11 November 2016 (registration date: 17 November 2016), as per the notice published on the same date in the newspaper, "Il Sole 24 Ore". The essential information on this agreement, to which the reader should make reference, has been published on the websites of the CONSOB and the Company (www.terna.it, in the Investors section, under "Main Shareholders"). Lastly, following the transfer to CDP Reti of the remaining investments held by CDP in SNAM S.p.A. and Italgas S.p.A., the essential information in the shareholder agreement was last updated on 23 May 2017. This last update only concerned the voting rights attaching to the above investments and not the shares in Terna held by CDP Reti. Based on the provisions of art. 131, paragraphs 2 and 5 of the Regulations for Issuers, at CDP's request, Terna proceeded to publish and store this update, which is also available in the appropriate section of the Company's website.

The Shareholder Agreement contains (i) provisions regarding the exercise of voting rights in Terna and in CDP Reti pursuant to art. 122, paragraph 1 of the CLF; and (ii) provisions placing limits on the transfer of the shares pursuant to art. 122, paragraph 5(b) of the CLF.

The duration of these agreements is three years from the date of signature and they are automatically renewable for further periods of three years, subject to withdrawal. Should CDP inform the Investor of its intention not to renew the agreement at least six months before the next expiry, the Investor will have the right to withdraw from CDP Reti.

For the present purposes, the aforementioned agreement grants the Investor the following:

• with regard to CDP Reti:
  • the right to nominate two of the five members of the Board of Directors of CDP Reti provided that the Investor continues to hold an interest equal to at least 20% of the share capital of CDP Reti, while CDP retains the right to designate the other Directors (including the Chair of the Board of Directors and the Chief Executive Officer);
  • the right to nominate one standing auditor and one alternate auditor provided that the Investor continues to hold an interest equal to at least 20% of the share capital of CDP Reti, whilst the Chair of the Board of Statutory Auditors will in any event continue to be chosen from among the standing auditors nominated by CDP;
  • certain matters reserved to the Board of Directors, relating, among other things, to (i) the budget and business plan, (ii) proposals/recommendations for amendments to CDP Reti's article of association, (iii) decisions concerning the slate of candidates to be presented for the purpose of electing Terna's Board of Directors, (iv) decisions on exercising CDP Reti's voting rights at Terna's extraordinary General Meetings, and, for the present purposes, (viii) the transfer, wholly or in part of the 29.851% interest held by CDP Reti in Terna and the purchase of any further Terna shares, if and to the extent to which this purchase gives rise to the obligation for CDP Reti to launch a mandatory takeover bid for Terna, (ix) the assumption of debt (in addition to existing debt at the time the agreement was signed) above certain thresholds and amendments to key terms and conditions in the loan agreements entered into by CDP Reti before the agreement was signed, (x) proposals to distribute dividends and/or reserves and/or other distributions on the part of CDP Reti, (xi) transactions with CDP Reti's related parties that are not conducted on an arm's length basis, and (xii) decisions on the acceptance of possible assignees of any investment in CDP Reti;
  • the Investor's right to veto resolutions regarding the matters regarding (viii), (ix), (xi) and (x) in the above point, in the latter case when not compliant with the profit distribution policy provided for in the agreement, and which may not be adopted without the favourable vote of at least one of the directors nominated by the Investor;
  • specific quorums for Board of Directors' resolutions that provide for the necessary participation of at least 1 member of CDP Reti's Board of Directors nominated by the Investor, unless a new meeting of the Board is convened with the same agenda;
  • specific quorums for resolutions to be passed by CDP Reti's extraordinary general meetings, provided that the Investor continues to hold an interest equal to at least 20% of the share capital of CDP Reti, in relation to specific matters, such as: capital increases that exclude or limit the exercise of shareholders' pre-emption rights, non-proportional demergers, mergers that do not regard companies wholly owned or 90%-owned, changes to provisions in the articles of association that provide for rights protecting non-controlling shareholders, including through the issue of new categories of share;

• - the right to withdraw from CDP Reti if, among other things specified in the essential information in the shareholders' agreement, for any reason CDP's sole de jure control over CDP Reti should cease (a Change of Control provisions);
• with regard to Terna and provided that the Investor continues to hold an interest equal to at least 20% of the share capital of CDP Reti:
  • the right to nominate a candidate to be included in the slate of candidates for election Terna's Board of Directors, assigning the candidate a position in the slate such as to guarantee their election should the slate receive a majority of the votes at Terna's General Meeting.

Under the legislation governing mandatory tender offers, within the context of the agreement described, it is forbidden for either the Investor or CDP, by reason of their direct or indirect investment in CDP Reti, to directly or indirectly purchase shares in Terna.

With regard to certain agreements relating to intragroup transfers and those relating to the lock-up of investments in CDP Reti held by the parties to such agreements (the "Lock-up Period"), it should be noted that the specific provision relating to the non-transferability of such investments to "a direct competitor of Snam and/or Italgas and/or Terna meaning by this any industrial entity whose core business consists of the management of natural gas and/or electricity transmission systems within the territory of the European Union, and any person who exercises control, directly or indirectly, including jointly, over such industrial entity" (the "Lock-up Period for Transfers to a Direct Competitor").

In the event of a transfer of an interest to third parties, if one of the parties, following the transfer, holds an interest of less than 20% in CDP Reti, the parties have given a mutual undertaking to ensure that the Directors of CDP RETI and/or Terna nominated by such party will resign. The same commitment to ensure the resignation of the Directors nominated by the Investor in Terna applies when the Investor is no longer wholly owned, directly and/or indirectly, by SGID.

Within the context of the above agreements, specific provisions have also been introduced to take account of the provisions in the Unbundling Legislation and of the rules included in Terna's corporate governance system, as a company operating in the electricity sector. Such provisions are designed to ensure the observance of unbundling requirements.

In particular, the Investor has undertaken to ensure that the Director it has nominated to be a member of Terna's Board of Directors (if, and to the extent to which, this Director is not independent under the terms of art. 148 of the CLF) shall abstain, to the extent permitted by law, from the receipt of information and/or documentation from Terna relating to certain matters. This relates to matters where the Director has a conflict of interest on behalf of the Investor and/or of any subject affiliated thereto, and relating to commercial opportunities in which both Terna and the Investor, and/or a subject affiliated thereto, have an interest and where there may be competition ("Matters Involving Conflict"). In addition, the Director may not take part in discussions of Matters Involving Conflict by Terna's Board of Directors.

Moreover, in order to resolve any breaches of the legislation on ownership unbundling, wherein the Investor does not intend to comply with any of the requirements or measures imposed by the competent authorities, a specific exception to the rules in the agreement relating to the Lock-up Period has been provided for.

Authority to increase the share capital and to purchase own shares (as per art. 123-bis, paragraph 1(m) of the CLF)

At the date of this Report, the Board of Directors has no authority pursuant to art. 2443 of the Italian Civil Code to increase the share capital, nor does it possess the authority to issue equity instruments.

Based on the Board of Directors' proposal of 22 March 2023, the Annual General Meeting of 9 May 2023 – subject to prior revocation of the authority to purchase and dispose of own shares adopted by the Annual General Meeting of 29 April 2022 - authorised the Board of Directors: (i) to buy back, on one or more occasions, over a period of 18 months from the date of the above resolution (and until 9 November 2024, subject to revocation of said resolution) Terna's ordinary shares to service the Performance Share Plan 2023-2027 for the management of Terna and/or its

subsidiaries pursuant to art. 2359 of the Italian Civil Code, approved by the same Annual General Meeting of 9 May 2023, and/or other share-based incentive plans for Terna's Directors and/or employees and/or those of subsidiaries and/or associates (the "Programme"), and (ii) to dispose of the treasury shares held, establishing the related conditions.

In implementation of the authority granted by the Annual General Meeting, on 14 June 2023, the Board of Directors approved the launch of the Programme and authorized the Chief Executive Officer to take all the necessary steps in order to exercise such authority.

In execution of the above resolutions, on 22 June 2023, the Company launched a share buyback programme, involving a total cost of up to €7 million and up to a maximum of 1.4 million of the Company's ordinary shares, representing approximately 0.07% of Terna's share capital.

In order to carry out the Programme, Terna also specifically appointed BNP Paribas Exane (Exane S.A.), an authorised intermediary that will take all the decisions regarding the purchases to be made on the Euronext Milan exchange, organized and managed by da Borsa Italiana S.p.A.. The intermediary is to act on a fully independent basis, including with regard to the timing of transactions, and in conformity with the daily price and volume limits in keeping with both the authority granted by the above Annual General Meeting of shareholders and the provisions of art. 5 of Regulation (EU) 596/2014 on market abuse and art. 3 of Delegated Regulation (EU) 2016/1052.

Under the Programme, which came to an end on 6 July 2023, Terna purchased 917,611 own shares (equal to 0.046% of the share capital at a cost of €6,999,997.07). These shares are in addition to the 3,296,049 own shares purchased by the Company in 2020, 2021, and 2022. As of today, therefore, Terna holds a total of 4,213,660 treasury shares (equal to 0.210% of the share capital), acquired under four separate buyback Programmes to service: (i) the Performance Share Plan 2020-2023, in the period from 29 June 2020 to 6 August 2020; (ii) the Performance Share Plan 2021-2025, in the period from 31 May 2021 to 23 June 2021; (iii) the Performance Share Plan 2022-2026, in the period from 27 May 2022 to 13 June 2022; and (iv) the Performance Share Plan 2023-2027 in the period between 22 June 2023 and 6 July 202317. With the exception of the above shares, the Company does not hold further treasury shares in its portfolio, including through subsidiaries. The Parent Company does not directly or indirectly hold any shares in CDP Reti S.p.A. or Cassa Depositi e Prestiti S.p.A., nor did it purchase or sell any such shares during 2023.

In addition, it should be noted that the Board of Directors' meeting that approved this Report decided to ask the Annual General Meeting to approve a further motion granting it the authority to purchase and dispose of the Company's own shares, in compliance with the legislation in force. Such shares will be used to service the new Long-term Incentive Plan based on Performance Shares for the period 2024-2028 for the management of Terna and/or its subsidiaries pursuant to art. 2359 of the Italian Civil Code. The new Plan is also to be submitted for approval by shareholders, which will at the same time be asked to revoke the previous authority.

Employee share ownership: procedure for exercising voting rights (as per art. 123-bis, paragraph 1(e) of the CLF)

The procedure for exercising the right to vote at General Meetings through shareholder associations, including groups of employee shareholders, is governed by the specific legislation in force.

Under special legislation for listed companies, Terna's Articles of Association contain a special provision designed to facilitate the collection of proxy votes from groups representing employee shareholders at both the Company and subsidiaries, thereby encouraging their involvement in shareholder decision-making (art. 11.1 of the Articles of Association).

At 19 March 2024, the Company had not received any notification of the establishment of employee shareholder groups.

¹⁷ For the first, second, and fourth buyback programmes, the final dates shown are those on which the last purchases were made. As regards the third buyback programme, the final date matches the date of the press release announcing the end of the programme (and not the last purchase made, as with the other programmes).

Change of control clauses (as per art. 123-bis, paragraph 1(h) of the CLF) and Articles of Association provisions relating to takeovers (as per art. 104, paragraph 1-ter and art. 104-bis, paragraph 1 of the CLF)

With regard to significant agreements that Terna or any of its subsidiaries are parties to at 31 December 2023, and that are subject to conditions precedent, amendments or termination in the event of a change of control of Terna, the following should be noted.

Within the context of such matters, it should be noted that outstanding loan agreements with the European Investment Bank (EIB) at 31 December 2023 include mandatory early repayment provisions, the triggers for which include a change of control of the Company. Should a change of control occur, the EIB will have the right to consult the Company. Should the EIB decide, based on a reasonable and justified assessment of the situation, that the related transactions may have a negative impact on the Company's ability to meet its financial obligations to the bank, following prior notification to the Company containing the reasons for its decision, the EIB will have the right to cancel the credit facilities and request early repayment of any outstanding amounts, together with any interest accrued on the amounts in question and any other sum payable under the related agreements.

With regard to takeover bids and public tender offers to exchange, the Articles of Association do not provide for any exemptions from the provisions of the CFL on the passivity rule provided for in art. 104, paragraphs 1 and 1-bis, of the CLF, nor are the neutralisation rules contained in art. 104-bis of the CLF. This is without prejudice - under the terms of art.104-bis, paragraph 7 of the CLF – to the rules in the Articles of Association and legislation putting limits on share ownership and voting rights, as per art. 3 of Law Decree 332 of 31 May 1994, converted with amendments into Law 474 of 30 July 1994, as amended (the "Privatisation Law").

Restrictions on the transfer of shares and shares carrying special rights (as per art. 123-bis, paragraph 1(b) and (d) of the CLF)

The Articles of Association do not place limits on the free disposal of shares, except as already described in the previous section under "Significant shareholdings in the Company and shareholder agreements" in relation to the existing shareholder agreement between CDP, SGEL and SGID and to the provisions in the Articles of Association regarding the rules on privatisations in Law Decree 332 of 31 May 1994 converted with amendments into Law 474 of 30 July 1994, as amended (the "Privatisation Law").

In particular, pursuant to Italian legislation concerning privatisations, Terna's Articles of Association put a "cap on shareholdings", with no shareholder permitted to hold a direct and/or indirect interest in Terna's shares of more than 5%, unless they are the Italian government, a public body and entities under the control of such entities. Application of these provisions, under certain circumstances required by the Articles of Association, also affects voting rights.

The "cap on shareholdings" (provided for in art. 6.3 of the Articles of Association and in accordance with art. 3 of the "Privatisation Law") is also calculated taking into account the total interests held by the parent, a natural or a legal person or a company; all direct and indirect subsidiaries, as well as subsidiaries under the control of the same controlling entity; associates and natural persons connected by family relationships up to second degree and by marriage, providing the spouse is not legally separated. Control occurs, including with reference to persons other than companies, in the circumstances provided for in art. 2359, paragraphs 1 and 2 of the Italian Civil Code. Association occurs in the circumstances provided for in art. 2359, paragraph 3 of the Civil Code, as well as between persons who, directly or indirectly, through subsidiaries other than those managing mutual investment funds, enter into, including those with third parties, agreements related to the exercise of voting rights or to the transfer of shares or quotas in third-party companies or, in any event, agreements as per art. 122 of the CLF, with reference to third-party companies, if such agreements regard at least 10% of the voting shares, in the case of listed companies, or 20% in the case of unlisted companies. With reference to calculation of the above-mentioned cap on shareholdings (5%), shares owned through trustees and/or proxies and, generally, through an intermediary, are also taken into account.

This cap on shareholdings - in accordance with the provisions of art. 3, paragraph 3 of the "Privatisation Law" – no longer applies where it has been exceeded as the result of a public tender offer, provided that, following the offer, the bidder holds an interest equal to at least 75% of the voting shares granting the right to elect or terminate directors.

Voting rights attaching to shareholdings in excess of the above-mentioned cap may not be exercised and the voting rights attributable to each of the persons to which the cap applies are proportionally reduced, except in the event of joint prior notice given by the relevant shareholders. In the event of non-compliance, the shareholder resolution may be challenged under art. 2377 of the Italian Civil Code if the required majority would not have been achieved without the votes attaching to the shareholdings in excess of the above cap. Shares for which the right to vote cannot be exercised are nevertheless included in computation of the quorum for General Meetings.

As a result of the repeal of the provisions contained in art. 2, paragraph 1 of the Privatisation Law relating to "special powers" granted to the Italian State (represented for this purpose by the Ministry of the Economy and Finance, irrespective of the quantity of any Terna shares held by the Ministry), which took place following the entry into force, from 7 June 2014, of both Presidential Decree 85 of 25 March 2014 (published in the Official Gazette of 6 June 2014 and containing "Regulations governing the identification of strategic assets in the energy, transport and communications sectors, pursuant to art. 2, paragraph 1 of Law Decree 21 of 15 March 2012") and the provisions of Law Decree 21 of 15 March 2012, converted into law by art. 1, paragraph 1 of Law 56 of 11 May 2012 (the so-called "Golden Power Decree"), the provisions regarding "special powers" in Terna's Articles of Association ceased to have effect. Such powers were then eliminated by resolution of the Company's Board of Directors on 18 December 2014.

Under the Golden Power Decree, lawmakers introduced new legislation regarding the government's "special powers" relating to "corporate structures in the defence and national security sectors, as well as for activities of strategic importance in the energy, transport and communications sector", in order to bring Italian legislation into line with EU legislation. The Decree assigns the government the power to intervene to protect the Country's lawful, essential and strategic interests. The "Golden Power Decree" was later amended by Legislative Decree 148 of 16 October 2017, the so-called "Fiscal Decree", converted with amendments into Law 172 of 4 December 2017, by Law Decree 105 of 21 September 2019, converted with amendments into Law 133 of 18 November 2019, by law Decree 23 of 8 April 2020, the so-called "Liquidity Decree", converted with amendments into Law 40 of 5 June 2020, by Law Decree no. 82 of 14 June 2021, converted and amended by Law no. 109 of 4 August 2021, and, lastly, by Law Decree no. 21 of 21 March 2022, converted and amended by Law no. 51 of 20 May 2022 and by Law Decree no. 50 of 17 May 2022, converted and amended by Law no. 91 of 15 July 2022.

The provisions of art. 2 of the Golden Power Decree essentially provide for the following:

1. The issue of specific decrees by the Cabinet Office (to be updated at least every three years), on the recommendation of the Minister for the Economy and Finance, the Minister for Economic Development and the Minister for Infrastructure and Transport, in agreement with the Minister for Internal Affairs, the Minister for Foreign Affairs and International Cooperation and the ministries with responsibility for the various sectors, to be adopted following prior receipt of an opinion from the competent Parliamentary Committees, with the aim of identifying "networks and infrastructure, including those necessary in order to ensure minimum levels of supply and the provision of essential public services, goods and relationships of strategic national interest, even if subject to concessions, however entrusted, [...] in the energy, transport and communications sectors, and the same types of action and transaction within the same group to which this article does not apply" (art. 2, paragraph 1).

As required by article 2, paragraph 1 of the Golden Power Decree, the Cabinet Office Decree 180 of 23 December 2020 approved the regulation for identifying strategic assets in the energy, transport and communications sectors. In art. 1, with specific reference to the energy sector, the Decree identifies the following energy networks of national interest and the related contractual relations as being strategic assets: a) the national natural gas network and the related compression stations and dispatching centres, as identified pursuant to article 9 of Legislative Decree 164 of 23 May 2000, and gas storage units; b) the infrastructure used to import electricity and gas from other countries,

Report on Corporate Governance and Ownership Structures 2023

including onshore and offshore LNG regasification plants; c) the national electricity transmission grid and the related control and dispatching infrastructure; d) the activities involved in managing the grids and the infrastructure referred to under letters a), b) and c) and key property assets relating to their use.

1. Based on the amendments introduced by the above Fiscal Decree, as amended by Law Decree 105 of 21 September 2019, converted into law with amendments by Law 133 of 18 November 2019, with the issue of one or more decrees by the Cabinet Office (to be updated at least every three years), on the recommendation of the Minister for the Economy and Finance, the Minister for Economic Development and the Minister for Infrastructure and Transport, in agreement with the Minister for Internal Affairs, the Minister for Defence, the Minister for Foreign Affairs and International Cooperation and with the ministries with responsibility for the various sectors, to be adopted following prior receipt of an opinion from the competent Parliamentary Committees, the identification, for the purposes of assessing the presence of threats to the country's security and to public order, including the potential to compromise the security and operation of networks and infrastructure and the continuity of supplies, goods and relationships of strategic national interest, of further critical assets and activities with respect to those indicated in the Cabinet Office decrees referred to in point 1 above. The scope of the legislation now covers all the areas identified in article 4, paragraph 1, of EU Regulation 2019/452 (critical infrastructure, whether physical or virtual, including energy, transport, water, health, communications, media, data processing and storage, aerospace, defence, electoral or financial infrastructure, sensitive assets, and investments in land and buildings that are key to the use of such infrastructure; critical technologies and products with dual uses, such as artificial intelligence, robotics, semi-conductors, cybersecurity, aerospace, defence, quantum and nuclear energy storage, and nanotechnologies and biotechnologies; the security of supply of critical factors of production, including energy and raw materials, as well as food security; access to confidential information, including personal data, or the ability to control such information; media freedom and pluralism), in addition to the type of action and transaction within the same group to which the provisions of art. 2 of the Golden Power Decree do not apply. In any case, if the acts, transactions and resolutions concern assets covered by intellectual property rights in the fields of artificial intelligence, semiconductor production machinery, cybersecurity, aerospace, energy storage, quantum and nuclear technologies and food production technologies and involve one or more entities outside the European Union, the provisions of article 2 of the Golden Power Decree shall also apply within the same group, without prejudice to the examination to determine the existence of the conditions for the exercise of special powers. (art. 2, paragraph 1-ter).

As required by article 2, paragraph 1-ter of the Golden Power Decree, the Cabinet Office Decree 180 of 23 December 2020 approved the regulation for identifying goods and relationships of strategic national interest, in addition to those identified in the decrees referred to in article 1, paragraph 1, and article 2, paragraph 1 of the Golden Power Decree, in the sectors referred to in article 4, paragraph 1 of Regulation (EU) 2019/452 of the European Parliament and Council of 19 March 2019, and the types of action and transaction within the same group to which article 2, paragraph 1-ter of the Golden Power Decree does not apply. Art. 3 of the above Cabinet Office Decree thus identifies the following goods and relationships in the energy sector: a) critical infrastructure storing or to be used to store nuclear fuel and materials or radioactive waste, and the technologies and infrastructure used in the treatment, management and transport of such fuel, materials and waste; b) property assets that play a key role in use of the critical infrastructure referred to in this article; c) coastal deposits of oil and oil products with a capacity equal to or in excess of 100,000 cubic metres used for the national market, LNG storage infrastructure with a capacity equal to or in excess of 10,000 cubic metres, oil pipelines used in the importation of oil from overseas, including for transfer to other countries, and oil pipelines supply intercontinental airports; d) critical technologies, including the platforms used in managing the wholesale markets for natural gas and electricity; e) the strategic economic activities carried out by the sector referred to in this article, carried out by companies that report annual net turnover of no less than €300 million and having an annual average number of employees of no less than 250.

• 1. The obligation for companies to notify the Cabinet Office within 10 days and in any event prior to implementation of any resolution, action and transaction decided on by a company that owns one or more of the assets identified in accordance with art. 1, paragraph 1 of the Golden Power Decree, resulting in changes to the ownership, control or disposability of the assets or a change in their use, including shareholder or board of directors' resolutions relating to a merger or demerger of the company, the transfer of the registered office overseas, changes in the object, the winding up of the company, amendments to articles of association decided on pursuant to art. 2351, paragraph three of the Italian Civil Code, or introduced in accordance with art. 3, paragraph 1 of Law Decree 332 of 31 May 1994, converted into law with amendments by the "Privatisation Law", as latterly amended by art. 3 of the Golden Power Decree, the transfer of the company or of business units thereof that include the above assets or their assignment in the form of guarantees. The notification must be filed, unless the transaction is being assessed or has already been assessed pursuant to paragraph 5 of art. 2 of the Golden Power Decree. Shareholder and Board of Directors' resolutions concerning the transfer of subsidiaries owning the above assets must also be notified within the same deadlines (art. 2, paragraph 2).
• 1. In addition, the obligation for companies to notify the Cabinet Office within 10 days and in any event prior to implementation – of any resolution, action and transaction decided on by a company that owns one or more of the assets identified in accordance with paragraph 1-ter of art. 2 of the Golden Power Decree, resulting in changes to the ownership, control or disposability of such assets for the benefit of a non-EU entity, as per paragraph 5-bis of art. 2 of the Golden Power Decree, or in the sectors specified in the second sentence of paragraph 5 of article 2 of the Golden Power Decree, also in favour of persons belonging to the European Union, comprising those established or resident in Italy, including shareholder or board of directors' resolutions relating to a merger or demerger of the company, the transfer of the company or business units thereof that include the above assets or their assignment in the form of guarantees, the transfer of subsidiaries that own the above assets or that have as a result transferred their registered office to a country that does not belong to the European Union. The notification must be filed, unless the transaction is being assessed or has already been assessed pursuant to paragraph 5 of art. 2 of the Golden Power Decree. On the same terms, any resolution, action or transaction decided on by a company that owns one or more of the assets identified in accordance with paragraph 1-ter of art. 2, resulting in a change in their use, and any resolution regarding a change of object, the winding up of the company, amendments to articles of association decided on pursuant to art. 2351, paragraph three of the Italian Civil Code, or introduced in accordance with art. 3, paragraph 1 of Law Decree 332 of 31 May 1994, converted into law with amendments by the "Privatisation Law", as recently amended by art. 3 of the Golden Power Decree, are also notifiable (art. 2, paragraph 2-bis).
• 1. The obligation to notify the Cabinet Office within 10 days of any purchase, for whatever reason, by a non-EU entity of investments in companies that own the assets identified as strategic in paragraph 1 and 1-ter of art. 2 of the Golden Power Decree, where such companies are of such significance to result in the acquirer having a permanent establishment following the assumption of control of the investee, pursuant to article 2359 of the Italian Civil Code and Legislative Decree 58 of 24 February 1998 (hereinafter "CLF") providing, where possible with the target company, any additional information that might help to describe in general terms the acquisition plan, the acquirer and the acquirer's business. In the communications, energy, transport, health, agribusiness and financial sectors, including the credit and insurance sectors, the notification obligation set forth in the first sentence also applies to the acquisition, for any reason whatsoever, of equity investments by persons belonging to the European Union, including those resident in Italy, of such relevance as to determine the permanent establishment of the acquirer by reason of the acquisition of control of the investee, pursuant to article 2359 of the Italian Civil Code and the CLF. In computing the size of the relevant investment, the acquirer must take into account the investment held by non-controlling shareholders with whom the acquirer has entered into one of the agreements provided for in art. 122 of the CLF, as amended, and art. 2341-bis of the Italian Civil Code.

Unless the act constitutes an offence and without prejudice to the invalidity provided for by law, whoever fails to observe the notification requirements provided for in paragraph 5, art. 2 of the Golden Power Decree, is liable to an administrative monetary fine of up to double the value of the transaction and, in any event, of not less than 1% of the company's total turnover in the last financial year for which financial statements have been approved.

Report on Corporate Governance and Ownership Structures 2023

In cases where the notification is not made jointly by all the parties to the transaction referred to in the first and second sentences, the notifying company shall, at the same time as the notification, send a notice, containing the essential elements of the transaction and of the notification itself, to the investee in order to enable its participation in the process, providing proof of receipt. The obligation to notify provided for in article 2 of the Golden Power Decree also applies to the purchase, by a non-EU entity, of investments in companies that own the assets identified as strategic in paragraphs 1 and 1-ter of the same article, where the purchase grants a share of the voting rights or of the share capital amounting to at least 10%, taking into account the shares or quotas already directly or indirectly held, when the total value of the investment is equal to or greater than €1,000,000. The notification obligation also applies to transactions which result in exceeding the thresholds of 15%, 20%, 25% and 50% of the share capital (art. 2, paragraph 5).

• 1. For the purposes of articles 1 and 2 of the Golden Power Decree, a non-EU entity is defined as: a) any natural person who is not a citizen of an EU member state; b) any natural person who is not a citizen of an EU member state and who does not have their residence, habitual place of domicile or main place of business in an EU member state or in the European Economic Area or that is not otherwise established therein; c) any legal person that has not its registered office or administrative headquarters or main place of business in an EU member state or in the European Economic Area or that is not otherwise established therein; d) any legal person that has established its registered office or administrative headquarters or main place of business in an EU member state or in the European Economic Area or that is otherwise established therein, and is directly or indirectly controlled by a natural or legal person referred to in points a), b) and c) above; e) any natural or legal person that is a citizen of an EU member state or the European Economic Area and that has established their residence, habitual place of domicile, registered office or administrative headquarters or main place of business in an EU member state, or that is otherwise established therein, when there is evidence of conduct intended to circumvent the rules in the Golden Power Decree (art. 2, paragraph 5-bis).
• 1. The power of veto may be expressed by means of a decree of the Prime Minister adopted on the basis of resolution of the Cabinet Office to be transmitted, in a timely manner and in extracts, to the competent Parliamentary Committees - covering the resolutions, actions and transactions referred to in paragraphs 2 and 2-bis of article 2 of the Golden Power Decree that result in an exceptional situation, not governed by Italian or European law in relation to the sector, involving the threat of serious damage to public interests concerning the security and operation of networks and infrastructure and continuity of supply (art. 2, paragraph 3).
• 1. With the notifications referred to in paragraphs 2 and 2-bis of Article 2 of the Golden Power Decree, the Government is provided with full information on the resolution, act or transaction, and is thus able to exercise in the veto power in a timely manner. The notification does not give rise to any disclosure obligation for the Prime Minister's Office or for the company pursuant to Article 114 of the CLF as subsequently amended and supplemented. Any veto must be announced by the Prime Minister within 45 days of notification. When it is necessary to request information from the company, this deadline is suspended once only, until receipt of such information, which must be provided within 10 days of the request. When it is necessary to request an investigation by third parties, the above deadline of 45 days is suspended, once only, until receipt of the requested information, which must be provided within 20 days. Requests for information and for investigations by third parties subsequent to the former do not lead to a suspension of the deadline. Should the notification be incomplete, the 45-day deadline starts from receipt of the missing information or elements. Until notification and, in any event, until the above deadline has passed, effectiveness of the relevant resolution, action or transaction is put on hold. Once the deadline has passed, the transaction may be carried out. The power of veto referred to in article 2, paragraph 3 of the Golden Power Decree is expressed in the form of specific requirements or conditions, where such is sufficient to ensure protection of the public interest in relation to the security and operation of networks and infrastructure and continuity of supply.

Resolutions, actions or transactions decided on and implemented in breach of the notification requirements or in breach of the article 2, paragraph 4 of the Golden Power Decree are null and void.

The Government may also order the company and any counterparty to restore the previous situation at their own expense.

Unless the act constitutes an offence, anyone who fails to comply with the notification provisions set forth in paragraphs 2, 2-bis and 4 of article 2 of the Golden Power Decree is liable to an administrative monetary fine of up to double the value of the transaction and, in any event, of not less than 1% of the company's total turnover in the last financial year for which financial statements have been approved (art. 2, paragraph 4).

In the event of breach of the notification obligations under Article 2 of the Golden Power Decree, even in the absence of the notification referred to in paragraphs 2, 2-bis and 5 thereof, the Cabinet Office may in any event act ex officio in order to proceed with the exercise of the special powers, with the period for the exercise of such powers being 45 days from the end of the proceedings establishing the non-compliance with the obligation to notify (art. 2, paragraph 8-bis).

If the acquisition referred to in paragraph 5 of article 2 of the Golden Power Decree entails a threat of serious prejudice to the essential interests of the State or a danger to security or public order, the Prime Minister shall, within 45 days from the notification, issue a decree, based on a resolution of the Cabinet Office, to be promptly transmitted to the competent Parliamentary Committees in full and in extract form, making the acquisition effective only if the acquirer and the acquiree undertake to protect the foregoing interests.

Within 15 days of notification, the acquired company may submit representations and documents to the Cabinet Office. Where it is necessary to request information from the acquirer and the company whose investments are being acquired, the above deadline is suspended, once only, until receipt of the requested information, which must be provided within 10 days. When it is necessary to request an investigation by third parties, the above deadline of 45 days is suspended, once only, until receipt of the requested information, which must be provided within 20 days. Requests for information and for investigations by third parties subsequent to the former do not lead to a suspension of the deadline, after which it shall be construed that the special powers have not been exercised. Should the notification be incomplete, the 45-day deadline provided for in this paragraph starts from receipt of the missing information or elements.

In exceptional cases that put the above interests at risk, and where such risk cannot be eliminated by the above commitments, the government may oppose the acquisition based on the same procedure.

Until the notification and, subsequently, until the deadline for the government to exercise its right of opposition or impose commitments, the voting rights and other non-financial rights attaching to the shares or quotas representing the significant investment are suspended. Once the deadline has passed, the transaction may be carried out.

If the power is exercised by imposing a commitment, in the event of a breach, throughout the period in which the breach was committed, the voting rights and other non-financial rights attaching to the shares or quotas representing the significant investment are suspended. Any resolutions adopted with the deciding vote of the holders of such shares or quotas, or resolutions or actions decided on in violation or breach of the conditions imposed, are null and void.

Should the acquirer and the investee fail to respect the commitments imposed, they are also liable, unless such failure constitutes a criminal offence, to an administrative monetary fine of up to double the value of the transaction and, in any event, of not less than 1% of the company's total turnover in the last financial year for which financial statements have been approved.

In the event that the right of opposition is exercised, the acquirer may not exercise the voting rights, or any other non-financial rights, attaching to the shares or quotas representing the relevant investment and the acquirer must dispose of the same shares or quotas within one year. In the event of non-compliance, the court, at the request of the Government, will order the sale of such shares or quotas in accordance with the procedures laid down in Article 2359-ter of the Civil Code. Any shareholder resolutions adopted with the deciding vote of the holders of such shares or quotas are null and void.

In determining whether or not a foreign investment may constitute a threat to security or public order, the following elements must be taken into account:

• a) if the acquirer is directly or indirectly controlled by the public administration, including state entities or armed forces, of country that is not an EU member state, including through the ownership structure or significant loans;
• b) if the acquirer is already engaged in activities that constitute a threat to security or public order in an EU member state;
• c) if there is a serious risk that the acquirer may engage in illegal or criminal activity (art. 2, paragraph 6).
• 1. Notwithstanding the provisions of article 1, paragraph 1, letter c) and article 2, paragraph 6 of the Golden Power Decree, the acquisition, for any reason, by a person from outside the European Union, as defined in article 2, paragraph 5-bis of the Golden Power Decree, of equity interests in companies holding one or more of the assets identified as strategic pursuant to article 1, paragraph 1 of the Golden Power Decree is permitted subject to reciprocity, in compliance with international agreements entered into by Italy or the European Union (art. 3, paragraph 1).
• 1. The special powers of veto and opposition referred to above may be exercised on the basis of objective and non-discriminatory criteria, such as, with regard to the nature of the transaction:
• a) the existence, also taking into account the official positions of the European Union, of objective evidence raising concerns about the potential presence of links between the acquirer and third countries who do not recognise democratic principles or the rule of law, who do not respect international law or who have engaged in conduct that has put the international community at risk, as borne out by the nature of their alliances, or criminal or terrorist organisations or persons linked thereto;
• b) the ability of the structure resulting from the legal deed or transaction, taking into account the method of financing the purchase and the economic, financial, technical and organizational capabilities of the purchaser, to guarantee: (1) security and continuity of supply; (2) maintenance, security or operation of the networks and infrastructure;
• b-bis) for the transactions referred to in paragraph 5, in addition to the threat of serious harm to the interests referred to in paragraph 3 of article 2 of the Golden Power Decree, the threat to security or public order is also considered (art. 2, paragraph 7).
• 1. For the purposes of exercising the special powers referred to in art. 2 of the Golden Power Decree, the establishment of an enterprise that carries out activities or that owns one or more of the assets identified in accordance with paragraph 1 or paragraph 1-ter of article 2 of the Golden Power Decree must be notified to the Cabinet Office within the deadline and according to the procedures set out in article 2, if one or more shareholders, classified as non-EU pursuant to paragraph 5-bis of article 2 of the Golden Power Decree, holds at least 10% of the voting rights or share capital (art. 2, paragraph 7-bis).
• 1. In the event that the activities of strategic importance (identified by the decrees referred to by paragraph 1 of article 2 of the Golden Power Decree) relate to companies in which the Ministry of the Economy and Finance holds a direct or indirect stake, the Cabinet Office decides on the exercise of the special powers referred to in paragraphs 3 and 6 of article 2 of the Golden Power Decree, on the proposal of the Minister of the Economy and Finance, having consulted the Minister for Economic Development and the Minister for Infrastructure and Transport, for their respective remits. The notifications referred to in paragraphs 2 and 5 of article 2 of the Golden Power Decree are immediately forwarded by the Presidency of the Cabinet to the Ministry of the Economy and Finances (art. 2, paragraph 8).

The procedures involved in activating the "special powers" are governed by Presidential Decree 86 of 25 March 2014, published in the Official Gazette on 6 June 2014 (the "Procedure") and by the Cabinet Office Decree 133 of 1 August 2022, concerning "the regulation of the coordination activities of the Cabinet Office in preparation for exercise of the special powers referred to in Law Decree 21 of 15 March 2012, as subsequently amended and supplemented, the pre-notification and measure to simplify the procedures" (the "Implementing Cabinet Office Decree").

• 1. Under art. 2-ter , paragraph 1 of the Golden Power Decree (bringing Italian legislation into line with the provisions of Regulation (EU) 2019/452 and the deadline for the exercise of special powers), if a member state or the Commission should notify, pursuant to article 6, paragraph 6 of Regulation (EU) 2019/452 of the European Parliament and Council of 19 March 2019, its intention to provide observations or issue opinions on a foreign direct investment involved in an ongoing procedure, the deadline for the exercise of the special powers indicated in articles 1 and 2 of the Golden Power Decree is suspended until receipt of the observations of the member state or of the opinion from the European Commission. If the opinion of the European Commission is received after the observations of the member state, the deadline for the exercise of the special powers shall be established with reference to the date of receipt of the Commission's opinion. The deadline for exercising the special powers is also suspended if the Government, pursuant to article 6, paragraph 4 of the above Regulation (EU) 2019/452, requests the Commission to issue an opinion or other member states to provide observations on the procedure in progress pursuant to article 2-ter of the Golden Power Decree. This is without prejudice to the option of exercising the special powers prior to receipt of the Commission's opinion or of member states' observations, where the need to protect national security or public order requires an immediate decision pursuant to article 6, paragraph 8 of the same Regulation (EU) 2019/452.
• 1. Art. 7 of the Implementing Cabinet Office Decree (issued in implementation of art. 2-quater of the Golden Power Decree) has introduced the so-called pre-notification procedure. This procedure gives an interested company (without affecting the need to comply with the notification deadlines provided for in articles 1 and 2 of the Golden Power Decree) the option of submitting information to the Department for Administrative Coordination within the Cabinet Office about a planned incorporation, acquisition, resolution, deed or transaction, providing all the documents and information, to the extent available, required for formal notification.

Within 30 days of the notification, based on the decisions taken by the Coordinating Group, the Department for Administrative Coordination within the Cabinet Office must inform the company that:

• a) the pre-notified transaction does not fall within the scope of application of the Golden Power Decree and, therefore, no formal notification will be required;
• b) the pre-notified transaction is liable to fall within the scope of application of the Golden Power Decree and the company is, therefore, required to file the notification provided for in articles 1 and 2 of the Golden Power Decree;
• c) the pre-notified transaction falls within the scope of application of the Golden Power Decree, but there are no grounds for exercising the special powers.

In the instances described in b) and c), the Coordinating Group, at the proposal of the Ministry responsible for conducting the investigation and recommending exercise of the special powers, following a preliminary assessment of whether or not the pre-notified transaction can be authorised, may make recommendations to the company.

In the instances described in a) and c), at the meeting of the Coordinating Group, one or more Ministries that participate in the Group may request the company to file a formal notification in accordance with articles 1 and 2 of the Golden Power Decree.

In any event, within 3 days of the meeting of the Coordinating Group for the Ministries that participate in the Coordinating Group, or of the above communication from the Department for Administrative Coordination within the Cabinet Office to the parties, the above Ministries or the parties may request that the company file a formal notification in accordance with articles 1 and 2 of the Golden Power Decree. In this case, the Department for Administrative Coordination within the Cabinet Office informs the company of the need to file a formal notification.

If, within 30 days of the interested company's submission of information, the Coordinating Group has not reached any decision, the company is required to file a notification in accordance with articles 1 and 2 of the Golden Power Decree.

15.The Articles of Association do not provide for multiple-vote shares (pursuant to art. 127-sexies of the CLF) or shares with enhanced voting rights (pursuant to art. 127-quinquies of the CLF).

Report on Corporate Governance and Ownership Structures 2023

Restrictions on voting rights (as per art. 123-bis, paragraph 1(f) of the CLF)

In implementation of the legislation regarding privatisations, a number of restrictions on voting rights linked to the cap on shareholdings referred to above are provided for (in art. 6.3 of the Articles of Association). Further restrictions are provided for under the provisions of the Golden Power Decree, as indicated above, in connection with the process in preparation for exercise of the special powers relating to the purchase, for whatever reason, by a natural or legal person from outside the European Union, or, among other things, "who is not resident in or whose usual place of domicile, registered or administrative office or main place of business is not in a European Union member state or a state forming part of the European Economic Area, or which is not in any case established therein", of controlling interests in Terna and, also, in the event that the right of opposition is exercised.

Finally, further restrictions apply to operators in the electricity sector (as provided for in art. 3 of the Cabinet Office Decree of 11 May 2004 concerning "criteria, methods and conditions for the unification of ownership and management of the National Transmission Grid"). This has capped the exercise of voting rights when electing Directors at 5% of the share capital (art. 14.3(e) of the Articles of Association).

With regard to the expression of voting rights at General Meetings, reference should be made to "Section XVI: General Meetings", regarding the related provisions in the Articles of Association (specifically art. 10.2, art. 14.3(f) and art. 26.2) introduced by the General Meeting held on 27 May 2014 (as described in the previous section "Corporate Structure"). These articles regard potential conflicts of interest for the purposes of art. 2373 of the Italian Civil Code, in compliance with the provisions of Directive 2009/72/EC, subsequently superseded by Directive (EU) 2019/944 and Legislative Decree 93/2011, as amended by Legislative Decree 210/2021, and resolutions of the Authority for Electricity, Gas and Water, or ARERA, no. ARG/com 153/11 and 142/2013/R/EEL, whereby the Authority laid down the procedures for certification of the electricity transmission operator and adopted the final decision to certify Terna as the electricity "transmission operator" according to the ownership unbundling model.

Election and replacement of Directors and amendments to the Articles of Association (as per art. 123-bis, paragraph 1(l) of the CLF) Election of Directors, related requirements and term of office

The procedure for electing members of the Board of Directors is governed by art. 14 of the Articles of Association.

The number of members of the Board of Directors is determined by the General Meeting and is between seven and thirteen (art. 14.1 of the Articles of Association), elected for a period of no more than three financial years and eligible for re-election at the end of their term of office (art. 14.2 of the Articles of Association).

The Chair is elected by the General Meeting from among Board members (art. 16.1 of the Articles of Association and art. 2380-bis, paragraph 5 of the Italian Civil Code) or, failing this, by the Board itself. The Board of Directors also has the authority to elect a Deputy Chair.

Election of the entire Board of Directors takes place - in implementation of the legislation concerning privatisations and in compliance with Italian laws relating to listed companies – on the basis of slates, as governed by art. 14.3 of the Articles of Association. This aims to ensure that non-controlling shareholders are represented on the Board, with their representatives accounting for three-tenths of the Directors to be elected after rounding up to the nearest whole number in the event of a fractional number.

Slates of candidates may be submitted by the outgoing Board of Directors or by shareholders who, either on their own or together with other shareholders, hold an interest of at least 1% of the voting shares in accordance with the terms and conditions provided for by law, or of the lower percentage provided for by the CONSOB in implementation of art. 147-ter of the CLF and art. 144-septies of the Regulations for Issuers. In Executive Determination 92 of 31 January 2024, the CONSOB set the threshold at 1%.

The submission, filing and publication of slates is governed, in accordance with the Articles of Association, by the applicable legislation and regulations and, where required by the Articles of Association, by the rules established by the Company in the notice of call to the General Meeting.

In particular, the submission and filing of slates must take place – in accordance with art. 147-ter, paragraph 1-bis of the CLF – at least 25 days before the scheduled date of the General Meeting called to deliberate on the election of members of the Board of Directors.

Ownership of the minimum percentage interest required in order to submit slates is determined – in accordance with the provisions of art. 147-ter, paragraph 1-bis of the CLF – on the basis of the shares registered as belonging to the shareholder or shareholders on the date on which the slates are filed with the Company. In order prove title to the number of shares required in order to submit slates, shareholders with voting rights must present and/or deliver the relevant documentation, issued in accordance with art. 43 of the Single Measure on post-trading issued by the CONSOB and the Bank of Italy on 13 August 2018. This may occur after the slate has been filed, provided that it takes place within the deadline for publication of the slates (being at least 21 days prior to the scheduled date of the General Meeting called to deliberate on the election of the Board of Directors).

Each shareholder may submit or participate in the submission of one slate only and each candidate may be on one slate only or will be considered ineligible.

The slates must list candidates by assigning them a progressive number (art. 14.3 of the Articles of Association).

Slates containing three or more candidates must include candidates from both genders, in accordance with the notice of call to the General Meeting. This is to ensure that the composition of the Board of Directors complies with existing legislation concerning the gender balance among the members of the management and oversight bodies of listed companies, as per art. 147-ter, paragraph 1-ter of the CLF, which requires that two-fifths of the total seats on the Board must be reserved for the least represented gender (after rounding up in the event of fractional numbers).

The slates indicate which of the candidates meet the independence requirements established by law and in the Articles of Association (art. 148, paragraph 3 of the CLF, recalled by art. 147-ter paragraph 4 of the CLF and art. 15.4 of the Articles of Association) and any other information or representation required by the applicable legislation and regulations and the Articles of Association for the respective positions.

As concerns the personal characteristics of candidates, when drawing up the slates, shareholders are invited to assess candidates' details, including their professional backgrounds, experience, including management experience, and gender, with regard to the size of the Company and the specific nature of the sector in which it operates. Shareholders should also bear in mind the guidance published by the outgoing Board of Directors and the diversity policies adopted by the Company regarding aspects such as age, seniority, gender, geographical origin, qualifications and professional and managerial experience of members of the Board of Directors (see below Section IV: "Board of Directors - Composition – Diversity policies"). The aim of the above policies is to ensure the qualitative and quantitative composition of the Board of Directors is such as to enable Directors to effectively carry out the duties and responsibilities assigned to the management body, including by ensuring the presence of people with sufficiently divergent points of view and with the expertise necessary in order to understand the current state of the business, the long-term risks and opportunities to which the Company is exposed and the medium- to long-term sustainability of the Company's activities.

Slates of candidates must be accompanied by an indication of their suitability to qualify as independent pursuant to the law and/or the Corporate Governance Code. In this regard, together with the slates and as specifically requested in a section of the notice of call to the General Meeting, each candidate must file a declaration, under their own responsibility, certifying their suitability to qualify as independent pursuant to the above Code.

The slates must also be accompanied by declarations in which each candidate accepts their candidacy and declares, under their own responsibility, the absence of any reason for their ineligibility or incompatibility (including those provided for in art. 15.5 of the Articles of Association introduced by the General Meeting of 27 May 2014 for all the Company's Directors, in implementation of the provisions of Directive 2009/72/EC, subsequently superseded by Directive (EU) 2019/944, and Legislative Decree 93/2011, as amended by Legislative Decree 210/2021, and resolutions of the

ARERA, no. ARG/com 153/11 and 142/2013/R/EEL, whereby the Authority laid down the procedures for certification of the electricity transmission operator and adopted the final decision to certify Terna "electricity transmission system operator in ownership unbundling"), and provide the information required by art. 144-octies, paragraph 1(b) of the Regulations for Issuers and any further information required by the applicable legislation and regulations and the Articles of Association.

Shareholders submitting a "minority slate" must comply with CONSOB Communication DEM/9017893 of 26 February 2009 (regarding the "Election of members of management and oversight bodies"), which recommends that, together with the slate, they file a declaration attesting to the absence of any of the connections referred to in art. 147-ter, paragraph 3 of the CLF, containing the information listed in the communication with regard to the election of the management body.

The slates, accompanied by information on the characteristics of each candidate and the additional declarations and information required by CONSOB Communication DEM/9017893 of 26 February 2009, which also applies the requirements for election of the oversight body in art. 144-octies, paragraph 1 of the Regulations for Issuers to the election of the management body, are made available for consultation by the public - in accordance with art. 147-ter, paragraph 1-bis of the CLF – at the registered office, on the Company's website and in accordance with the procedures established by the CONSOB, at least 21 days prior to the General Meeting called to deliberate on the election of members of the Board of Directors.

Assumption of the position of Director is subject to meeting the integrity, professionalism and independence requirements provided for in the Articles of Association and the applicable legislation.

In particular, the Company's Directors must meet integrity requirements similar to those that apply to the statutory auditors of listed companies (art. 15.2 of the Articles of Association and art. 147-quinquies of the CLF). The elected Directors must immediately inform the Board of Directors if they subsequently fail to meet the requirements established by law and the Articles of Association, and the occurrence of any reason for their ineligibility or incompatibility (art. 14.3 of the Articles of Association).

With regard to professionalism requirements, the Articles of Association (art. 15.3) state that no person may be elected as Director of the Company and, if elected, their position must be terminated, if they have not acquired at least three-year experience in the following:

• management, oversight or executive roles at a company with share capital of no less than €2 million; or
• professional roles or permanent university teaching positions relating to legal, economic, financial and technicalscientific matters closely related to the Company's activities, as defined by art. 26.1 of the Articles of Association; or
• managerial roles at public entities or bodies operating in the credit, financial or insurance sectors or, in any event, in sectors closely related to the Company's activities, as defined by art. 26.1 of the Articles of Association (matters considered to be closely related to the Company's activities include those regarding commercial and tax law, business economics and corporate finance, and matters and sectors related to the energy sector in general, communications and network infrastructure).

With stricter application of the rules with respect to the provisions of art. 147-ter, paragraph 4 of the CLF, at least a third of the Directors in office must also meet the specific independence requirements provided for in art.15.4 of the Articles of Association, which makes reference to the requirements for statutory auditors indicated in art. 148, paragraph 3 of the CLF. In addition, Directors, given the specific activities conducted by the Company, are subject to the independence requirements referred to in art. 15.5 of the Articles of Association.

The presence of Directors qualifying as "independent", in accordance with the recommendations in the Corporate Governance Code, is important in relation to the composition of the Board Committees provided for in the Code itself and of the Related Party Transactions Committee established by Terna in compliance with the CONSOB Regulation regarding measures relating to related party transactions and contained in Resolution 17221 of 12 March 2010, as subsequently amended and supplemented.

The Board of Directors must confirm that each member of the Board meets the integrity, professionalism and independence requirements, and periodically assess whether or not its non-executive members continue to meet the independence requirements, taking into account the information provided by each of the interested parties.

In 2007, the Company adopted a specific internal procedure, setting out the criteria for assessing the independence of its non-executive Directors and confirming the requirements referred to in the Articles of Association and the Corporate Governance Code in force at the time ("Application criteria and procedure for assessing the independence of Directors pursuant to art. 3 of the Corporate Governance Code"). This procedure was revised by the resolution dated 19 December 2012 to ensure alignment with the recommendations in the Corporate Governance Code, which called for confirmation that each Director met the requirements following their election, or every time an event took place that might compromise a Director's independence, and in any case at least once a year. For this purpose, Directors were requested to provide the information necessary to enable the Board to conduct its assessment.

In implementation of the new Corporate Governance Code, the Company updated the procedure entitled "Application criteria and procedure for assessing independence (pursuant to art. 2 of the Corporate Governance Code)". The document consists of nine articles and identifies: the assumptions and objectives and the conditions that may compromise independence; the text dedicates an article to the figure of the Chairperson of the Board of Directors, if qualified as independent, and an article dedicated to the Board of Statutory Auditors, due to the extension of the independence criteria also to the members of the oversight body. The methods for assessing independence and the relevant assessment procedure are also described. An ad hoc article is dedicated to the meetings of directors who qualify as independent.

With regard to the procedure for electing Directors using a slate vote procedure, governed by art. 14.3 of the Articles of Association, the extraordinary session of the General Meeting of Terna's shareholders held on 23 March 2017 approved a number of amendments to the Articles of Association. These concerned articles 14.3 and 26.2 and were designed to supplement the rules for electing the Board of Directors and Board of Statutory Auditors by slate vote. The new provisions were applied for the first time when re-electing the Directors on 27 April 2017. In this regard, the procedure for electing Directors using a slate vote procedure, as governed by art. 14.3 of the Articles of Association, is described below.

The procedure for electing Directors using a slate vote procedure, as governed by art. 14.3 of the Articles of Association, establishes that each holder of voting rights may vote for one slate alone at the General Meeting. Seven-tenths of the Directors to be elected (after rounding down any fractional numbers) must be elected from the slate that obtains the greatest number of shareholder votes (the majority slate). The remaining Directors (equal to three-tenths of the remaining total) are elected from the other slates (the minority slates), applying the specific rules indicated in letters b) and c) of art. 14.3.

In addition to the above provisions, in the event that, following the vote, the majority slate does not contain a sufficient number of candidates to ensure that the required number of Directors has been elected, the General Meeting shall proceed, without holding a further vote, to elect all the candidates listed on the slate, in the progressive order with which they are listed and – having filled all the positions reserved for minority slates, as indicated under letter b) of the above art. 14.3 – to elect the remaining Directors from the slate that obtained a majority of the votes among the minority slates (the "First Minority Slate") based on the number of candidates on such slate. If there are not sufficient candidates on the slate, the remaining Directors are elected, according to the same procedure, from the following slate (the "Second Minority Slate") or from subsequent slates, based on the number of votes and the number of candidates on the slates. Finally, if the total number of candidates included in the slates submitted, including both majority and minority slates, is below the number of Directors to be elected, the remaining Directors are elected by the General Meeting based on the majority required by law and without following the procedure for slate voting, so as to ensure the presence of the necessary number of Directors in possession of the independence requirements established by law and by art. 15.4 of the Articles of Association, and in compliance with the gender balance legislation in force.

The remainder of the slate vote procedure is governed by further articles (art.14.3(c) and (c-bis)) designed to guarantee gender balance and minimum number of independent Directors required by law and the Articles of Association. These articles provide that, should the outcome of the vote not be in compliance with gender balance legislation, it is necessary to form a new list, in descending order, of the candidates elected from the various slates (including the slate receiving

the highest number of votes) and replace the candidate from the most represented gender with the lowest quotient in the ranking with the first of the candidates from the least represented gender to not be elected and belonging to the same slate as the candidate replaced. This must be done whilst ensuring the minimum number of independent Directors required by the Articles of Association. The same procedure is to be adopted if it is necessary to replace an elected Director in accordance with art. 14.3(c) of the Articles of Association, when the outcome of the vote does not result in the election of the minimum number of independent Directors required by law and the Articles of Association.

Where quotients are equal, whilst ensuring the minimum number of independent Directors required by the Articles of Association, the replacement must be taken from the slate that received the greatest number of votes (being the slate from which the largest number of candidates has been taken under the above procedure). If the number of candidates on that slate is not sufficient, in accordance with art. 14.3 c-bis) of the Articles of Association, the procedure is based on the majority required by law, respecting the proportionate representation of non-controlling shareholders on the Board of Directors. Where it is necessary to elect more than one candidate of a gender different from that of the other elected candidates, the replacement process described is conducted by moving up the rankings until the related legislation has been complied with.

Provisions in the Articles of Association designed to ensure compliance with gender balance legislation were first introduced into the Articles of Association by the Extraordinary General Meeting of 16 May 2012, in implementation of the provisions of Law 120 of 12 July 2011 (the "Golfo-Mosca Law"). These provisions, which require that at least a third of the total seats on the Board of Directors must be reserved for the least represented gender (after rounding up in the event of fractional numbers)18, were already applied, in line with the provisions of the Golfo-Mosca Law itself, when (i) re-electing the Board of Directors at the Annual General Meeting of 27 May 2014, and (ii) at the time of the subsequent election of the Board by the Annual General Meeting of 27 April 2017.

The Budget Law amending art. 147-ter, paragraph 1-ter of the CLF came into effect on 1 January 2020. As a result, at least two-fifths of the seats on a board of directors must be reserved for the least represented gender (after rounding up in the event of fractional numbers, with the exception of corporate bodies with 3 members).

In accordance with the provisions of the Budget Law, the new two-fifths requirement is applicable for six consecutive terms of office "from the first re-election of the management and oversight bodies of companies listed on regulated markets following the date of entry into force" of the Budget Law (i.e., the first re-elections to take place after 1 January 2020). This new criterion was thus applied for the first time on the occasion of the re-election of the Board of Directors by the Annual General Meeting of 18 May 2020.

In implementation of the above provisions, the extraordinary session of the Annual General Meeting of 18 May 2020 also approved an amendment to the Articles of Association, cancelling art. 31 of the Articles of Association, referred to as the "Transitional provision", in its entirety, maintaining – within the other articles governing the composition of the Company's Board of Directors and Board of Statutory Auditors – the reference to the legislation regarding gender quotas on corporate bodies from time to time in force.

In addition to the above, under the provisions of art. 147-ter, paragraph 3 of the CLF, at least one member of the Board of Directors must be elected from the minority slate that has obtained the highest number of votes and is not connected in any way, including indirectly, with shareholders who have submitted or voted for the slate winning a majority of the votes.

For the election of Directors who, for any reason, are not elected at the same time as the re-election of the entire Board, as well as in all other cases in which, for any reason, it is not possible to follow the slate vote procedure, the General Meeting must adopt resolutions with the majority required by law and in such a way as to, in any event, ensure:

• the presence of the necessary number of directors in possession of the independence requirements established by law and the Articles of Association;
• compliance with the gender balance legislation in force.

¹⁸ Reduced to a fifth for the first term of office in which the Golfo-Mosca Law is applied.

Finally, with regard to operators in the electricity sector, the Articles of Association have capped the exercise of voting rights when electing Directors at 5% of the share capital, as mentioned above. These restrictions are in line with the others more generally applicable to the exercise of voting rights at general meetings in implementation of the privatisation laws from time to time in force and linked to the cap on shareholders governed by art. 6.3 in the Articles of Association. Further details are provided above in the sub-section, "Restrictions on the transfer of shares and shares carrying special rights".

If required, the replacement of Directors must take place in accordance with art. 2386 of the Italian Civil Code.

In any event, any Directors standing down are replaced by the Board of Directors, ensuring the presence of the necessary number of Directors in possession of the independence requirements established by law and by art. 15.4 of the Articles of Association, and compliance with gender balance legislation in force.

If a majority of the Directors elected by General Meeting should stand down, the entire Board is deemed to have resigned and a new General Meeting must be called without delay by the remaining Directors in order to re-elect the Board.

When Directors are elected, according to any of the procedures provided for in the Article of Association, the specific provisions of the Articles of Association (specifically art. 14.3(f)) regarding conflicts of interest also apply for the purposes of art. 2373 of the Italian Civil Code, introduced under the terms of Directive 2009/72/EC of 13 July 2009, and Italian Legislative Decree 93 of 1 June 2011, as described in greater detail below in Section XVI: "General Meetings".

The Annual General Meeting of shareholders was held on 9 May 2023, among other things, to re-elect the management and oversight bodies. The Meeting elected the new Board of Directors on the basis of the nominations submitted on 14 April 2023. The first slate, presented by the shareholder CDP RETI S.p.A. (holder of 599,999,999 shares, representing a total of 29.851% of Terna's share capital) and referred to as slate "number 1", included the following candidates, listed in progressive order: 1. Igor De Biasio; 2. Giuseppina Di Foggia; 3. Francesco Renato Mele; 4. Qinjing Shen; 5. Regina Corradini D'Arienzo; 6. Angelica Krystle Donati; 7. Enrico Tommaso Cucchiani; 8. Gian Luca Gregori; 9. Simona Signoracci. All the candidates on this slate have attested that they meet the requirements of integrity and professionalism set forth in paragraphs 2 and 3, respectively, of art. 15 of the Articles of Association, and that they are free from the incompatibilities set forth in paragraph 5 of said art. 15, as well as the requirements of integrity set forth in art. 147-quinquies of the CLF. In addition, the candidates Igor De Biasio, Giuseppina Di Foggia, Angelica Krystle Donati, Enrico Tommaso Cucchiani, Gian Luca Gregori and Simona Signoracci declared the existence of the independence requirements set forth in article 147-ter, paragraph 4, of the CLF and in article 148, paragraph 3, of the CLF, as well as the independence requirements for directors of companies with listed shares set forth in article 2 of the Corporate Governance Code. The second slate submitted by a group of shareholders consisting of asset management companies and other institutional investors (holding a total of 30,264,515 shares and representing 1.50570% of Terna's share capital, as indicated in the slates submitted and disclosed to the market) – slate "number 2" – included the following candidates 1. Marco Giorgino; 2. Karina Audrey Litvack; 3. Jean-Michel Aubertin; 4. Anna Chiara Svelto. The candidates on this slate have also attested, inter alia, that they meet the requirements of integrity and professionalism set out in paragraphs 2 and 3 of article 15 of the Articles of Association and the absence of incompatibilities set out in paragraph 5 of the same article 15, as well as the requirements of integrity set out in article 147-quinquies of the CLF. Furthermore, all the candidates have declared that they meet the independence requirements set forth in article 147-ter, paragraph 4, and article 148, paragraph 3, of the CLF, as well as the independence requirements for directors of companies with listed shares set forth in article 2 of the Corporate Governance Code. In accordance with Consob communication no. DEM/9017893 of 26 February 2009, the group of shareholders consisting of asset management companies and other institutional investors that submitted slate "number 2" expressly declared both the absence of significant relationships within the meaning of article 147-ter, paragraph 3 of the CLF and article 144-quinquies of the Regulation on Issuers, and the absence of significant relationships within the meaning of the Consob Communication n. DEM/9017893 of 26 February 2009. 2,087 shareholders participated in the vote, representing 1,430,121,956 shares eligible to vote, or 71.150629% of the share capital. 660,144,477 shares, representing 46.160013% of the share capital represented at the meeting, voted in favour of the "number 1" slate. On the other hand, 767,139,516 shares, representing 53.641545% of the share capital represented at the Meeting, voted in favour of slate "number 2". It should be noted that slate "number 2", submitted by a group of shareholders consisting

of asset management companies and other institutional investors, and which obtained the highest number of votes, did not contain a sufficient number of candidates to ensure that the seven tenths to be elected would be allocated to it; therefore, in accordance with the Company's Articles of Association, the candidates necessary to complete the composition of the Board of Directors were drawn from slate "number 1" submitted by the shareholder CDP RETI S.p.A.. As a result of the voting procedure and in accordance with the Company's Articles of Association, the Board of Directors is composed as follows: Igor De Biasio (Chairman), Giuseppina Di Foggia (CEO), Enrico Tommaso Cucchiani, Angelica Krystle Donati, Simona Signoracci, Francesco Renato Mele, Regina Corradini D'Arienzo, Gian Luca Gregori and Qinjing Shen (Directors elected from the slate "number 1" and second in terms of number of votes, submitted by CDP Reti S.p.A.), Marco Giorgino, Anna Chiara Svelto, Jean-Michel Aubertin and Karina Audrey Litvack (directors elected from the "number 2" slate submitted by a group of shareholders consisting of asset management companies and other institutional investors and ranked first in terms of the number of votes). On 9 May 2023, the Board of Directors, having taken note of the appointment of Director Giuseppina Di Foggia as CEO and her executive role in the Company, assessed and determined that the CEO, Giuseppina Di Foggia, is not an independent director pursuant to (i) article 148, paragraph 3, CLF, as required by article 147-ter, paragraph 4, CLF; (ii) of article 15.4 of the Articles of Association, (iii) of article 2, Recommendation 7 of the Corporate Governance Code as well as articles 2, 5 and 6 of the document "Application criteria and procedure for assessing the independence".

Succession Plans

In view of the ownership structure and the concentration of ownership, Terna's Board of Directors has in the past opted not to proceed with an assessment of succession Plans for executive Directors.

The definition of specific procedures for the early replacement of executive Directors has assumed growing importance in recent years from the viewpoint of corporate governance. In this sense, at a meeting on 23 June 2015, the then Board of Directors extended the scope of the recommendations to be made by the Nominations Committee, assigning it responsibility for ensuring business continuity in the event of the need to replace Terna's Chair or Chief Executive Officer.

Subsequently, with the aim of improving the Company's governance practices, in line with the recommendations of Borsa Italiana S.p,A.'s Corporate Governance Committee in its "Fifth Report on application of the Corporate Governance Code", dated November 2017, and in view of the findings of the first board review, following the reelection of the Board in April 2017, in 2018, the Nominations Committee began looking into the potential for devising a succession process and the related procedures, thus responding to the recommendation from the Corporate Governance Committee.

At the end of the assessment and following a positive opinion from the Nominations Committee, on 8 May 2019, the Board of Directors approved an initial plan consisting of two levels: on the one hand, a Contingency Plan for the replacement of the Chief Executive Officer, the Chair and other Board members in an emergency; on the other, a Succession Plan for senior management positions. The Company was advised by external consultants in drawing up the plans.

During the 2020-2023 term of office, the then Nominations Committee began succession planning activities with the aim of developing long-term replacement strategies, partly in implementation of the recommendations in the Corporate Governance Code in art. 4, Recommendation 24. As will be described in greater detail below, at the meeting of 16 March 2022, the Nominations Committee provided a positive opinion on the proposed changes to the Succession Plan for senior management. During its term of office, revision of the Contingency Plan was not, on the other hand, addressed as the document approved in 2019 remained in force. This was because the Nominations Committee found that the Company had already adopted a complete policy capable of managing emergency situations. As the Committee had not revised the Contingency Plan at the end of its term of office, it recommended that the incoming Board would give due attention to these issues at its next meeting. The Nominations, Governance and Scenarios Committee in charge will take into account these recommendations.

Amendments to the Articles of Association

In terms of the rules governing amendments to the Articles of Association, any changes must be approved by an extraordinary General Meeting with the majority required by law.

As permitted by law, the Articles of Association (art. 21.2) assign the Board of Directors the authority to adopt certain resolutions reserved for shareholders that may involve amendments to the Articles, such as:

a) mergers and demergers, in the instances permitted by law;

• b)the establishment or closure of secondary offices;
• c) decisions on which of the Directors may act as representatives of the Company;
• d)reductions in the share capital following the withdrawal of one or more shareholders;
• e) amendment of the Articles of Association to comply with legislation;
• f) the transfer of the registered office within Italy.

The provisions of the "Golden Power Decree" and the related restrictions are covered in the previous sub-section, "Restrictions on the transfer of shares and shares carrying special rights".

In addition, in accordance with the provisions of art. 3, paragraph 3 of the "Privatisation Law", Terna's Articles of Association state that the provisions of art. 6.3 of the Articles of Association, regarding the "cap on shareholdings" described above in the sub-section "Restrictions on the transfer of shares and shares carrying special rights", may not be amended.

Termination payments to Directors in the event of resignation, dismissal or termination of the relationship following a public tender offer for the Company (as per art. 123-bis, paragraph 1(i) of the CLF)

The disclosures required by art. 123-bis, paragraph 1(i) of the CLF regarding agreements between the Company and Directors, involving payments in the event of resignation or dismissal/termination without just cause, or if the relationship is terminated following a public tender offer, are provided in the "Report on the Remuneration Policy and Remuneration Paid", published by Terna in compliance with the provisions of art. 123-ter of the CLF.

Management and coordination

Terna is subject to the de facto control of Cassa Depositi e Prestiti S.p.A., currently exercised through CDP Reti S.p.A. (a joint-stock company controlled by Cassa Depositi e Prestiti S.p.A.), which holds a 29.851% interest in the Company. The checks, providing confirmation of the above situation of control, were conducted by Cassa Depositi e Prestiti and notified to the Company and the CONSOB with effect from 19 April 2007 and, subsequently, as described in greater detail above in the sub-section of Section II, "Significant shareholdings in the Company and shareholder agreements", by letter dated 30 October 2014 and 2 December 2014.

At this time, there are no formal arrangements for the management and coordination of the Company. Terna conducts its business either directly or through its subsidiaries in conditions of operational and contractual independence.

Further information and corporate governance practices

(as per art. 123-bis, paragraph 2 of the CLF)

The further information on the Company's corporate governance required by art. 123-bis, paragraph 2 of the CLF and art. 144-decies of the Regulations for Issuers, with regard to:

• compliance (as per at. 123-bis, paragraph 2(a) of the CLF) is provided in a specific section of the Report (section III);
• the main characteristics of existing risk management systems and internal controls over financial reporting, including the consolidated accounts (as per art. 123-bis, paragraph 2(b) of the CLF), and further material information on corporate governance practices (as per art. 123-bis, paragraph 2(a) of the CLF) are described in the section of the Report dealing with the Internal Control and Risk Management System (section XI) and in Annex 1;
• General Meeting procedures (as per art. 123-bis, paragraph 2(c) of the CLF) is provided in the section of the Report dealing with General Meetings (section XVI);
• the composition of the Board of Directors and the role of its members, as well as information on the election and composition of the Board of Statutory Auditors and the application of diversity policies to the composition of the Board of Directors and Board of Statutory Auditors (as per art. 123-bis, paragraph 2, d) and d-bis) of the CLF and 144-decies of the Regulations for Issuers), is provided in the section of the Report dealing with the Board of Directors (section IV) and in subsequent sections dealing with Board Committees (sections VI, VII, VIII and X) and in the sections on the election and composition of the Board of Statutory Auditors (sections XIII and XIV).

With regard to further corporate governance practices, it should also be noted that - following Legislative Decree 25 of 15 February 2016, which repealed the requirement for listed companies to publish interim management reports - Terna, since 2016 and in line with best practices, subject to a resolution of the Board of Directors and in continuity with the past, has published consolidated results for the three and nine months ended 31 March and 30 September.

As announced to the market on 29 January 2024 and in continuity with previous years, Terna S.p.A. will again, in 2024, publish its consolidated results for the three and nine months ended 31 March and 30 September, following their approval by the Board of Directors.

The figures contained in the interim reports will be approved and published on a voluntary basis, according to the financial calendar published in the market announcement dated 29 January 2024. This practice is in implementation of the provisions of art. 82-ter of the CONSOB's Regulations for Issuers, as amended by CONSOB Resolution 19770 of 26 October 2016. The publication of quarterly results guarantees the consistency and fairness of additional interim financial reporting and the comparability of the related disclosures with the matching disclosures in previously published interim reports.

It should be noted that on 1 August and 3 August 2023, the Company signed two termination agreements with Mr Giuseppe Del Villano - Director of Corporate Affairs - and Mr Agostino Scornajenchi - Head of Administration, Finance and Control (Chief Financial Officer) of the Company, respectively. The information on the aforementioned early termination of employment was disclosed to the market after the Board of Directors' meeting of 3 August 2023. On 9 August 2023, the Company also announced that, on the same day, the Board of Directors had appointed Mr Francesco Beccali - as he fulfilled the requirements of article 21.4 of the Articles of Association and subject to the favourable opinion of the Board of Statutory Auditors - as Manager in charge of the Company's financial reporting pursuant to article 154-bis of Legislative Decree 58 of 1998, with effect from 1 September 2023. At the same time, the Company announced that, also with effect from 1 September 2023, Mr Francesco Beccali, until then Group Finance Manager, would assume the role of Head of Administration, Finance and Control (Chief Financial Officer).

Additional corporate governance practices

In 2022, the Terna Group adopted the Tax Control Framework (TCF), an organisational model aimed at managing tax risk that is part of the broader system of corporate governance and internal control.

The Tax Control Framework ("TCF") is a set of rules, procedures, organisational structures and safeguards designed to enable the detection, measurement, management, control and monitoring of tax risk, understood as the risk of committing a violation of tax regulations or breaching the related legislation (abuse of law).

At its meeting on 14 December 2022, Terna's Board of Directors approved the Group's Tax Strategy, setting out the objectives, tone at the top and risk appetite in relation to taxation. The principles forming the basis for managing relations with tax authorities, and the commitment to promoting a culture of tax compliance among employees, from both an operational viewpoint and in terms of the structure of the tax control framework, are an integral part of the Tax Strategy.

Adoption of the Tax Control Framework and the Tax Strategy represent the necessary requirements for access to the "Cooperative Compliance" regime governed by Legislative Decree no. 128 of 5 August 2015 as subsequently amended, to which Terna was admitted on 14 December 2023 with Revenue Agency Order prot. 425598.

The aim of the Cooperative Compliance regime is to increase the degree of certainty surrounding tax-related issues through continuous, preventive dialogue with the tax authority on factual elements, with the aim of arriving at an agreed interpretation of situations liable to give rise to tax risks.

Terna's admission to the Cooperative Compliance system, which was granted following a positive assessment by the Revenue Agency of the system for the identification, management, control and mitigation of tax risks, is a significant testimony to the reliability of Terna's procedures and control systems and qualifies the Company as a "privileged" interlocutor of the Tax Authorities.

Also, with a view to strengthening corporate governance, the process of evaluating the management structure of the Terna Group's subsidiaries was completed in 2023, with the inclusion of companies with independent management, in addition to those to which the Parent Company, Terna, provides administrative services, already included in 2022. Pursuant to art. 2381, paragraph 3 of the Italian Civil Code, the Board of Directors, "based on the information received, assesses the company's organisational, administrative and accounting structure". To enable the assessment of each subsidiary to which services are provided, a report is prepared and approved, containing a description of the company's administrative and accounting systems, the procedures and tools adopted to ensure that it operates correctly, including with reference to the timely detection of a business emergency or of the loss of business continuity, pursuant to Legislative Decree 14 of 12 January 2019. The report drawn up for each subsidiary is submitted to the relevant boards of statutory auditors and approved in subsequent Board of Directors' meetings.

Companies with independent management to which administrative services are provided at 31 December 2023

SUBSIDIARY (*)	ADMINISTRATIVE SERVICES PROVIDED BY TERNA S.P.A.	INDEPENDENT ADMINISTRATIVE SERVICES
Terna Rete Italia S.p.A.	✘
Rete S.r.l.	✘
Terna Gora d.o.o. (Montenegro)		✘
Terna Energy Solutions S.r.l.	✘
Terna interconnector S.r.l.	✘
Avvenia The Energy Innovator S.r.l.	✘
Brugg Cables Group (Switzerland)		✘
Tamini Group		✘
LT Group		✘
ESPERIA-CC S.r.l.	✘
Terna Forward S.r.l.	✘
Terna Plus S.r.l.	✘
Terna Chile S.p.A. (Chile)		✘
Terna 4 Chacas S.A.C. (Peru)		✘

(*) The companies involved in the sale of the South American assets, classified as held for sale in the consolidated financial statements, have not been included.

During the first quarter of 2023, an assessment of the organisational, administrative and accounting structures of subsidiaries to which services are provided was conducted. The assessment was divided into specific areas, each of which is the subject of a separate section of the report:

• Operating environment;
• Organisational structure;
• Administrative procedures;
• Administrative and accounting information systems;
• Risk management and internal control system;
• Workforce framework.

With regard to the operating environment, the main key indicators used in defining all the subsidiaries' administrative and accounting structure were identified, distinguishing between indicators common to all subsidiaries and those specific to the company's specific area of business. In 2023, additional specific crisis indicators were added in accordance with article 13 of the Business Crisis and Insolvency Code.

In terms of the organisational structure, the report clarifies that the serviced subsidiary's organisational structure for Administration, Finance and Control is provided by the "Financial Reporting, Administration and Tax", "Planning and Control" and "Finance" departments of the Parent Company, Terna, under a specific service agreement. For subsidiaries with independent management, the report, in addition to describing the subsidiary's organisational structure, highlights which services are provided by the Parent Company, Terna, detailing the related intercompany agreements.

With regard to administrative procedures, subsidiaries to which services are provided have adopted the Group's administrative procedures, consisting of the same procedures used by Terna. Briefly, these regard the recognition and measurement criteria to be used and the disclosures to provide in preparing financial statements and interim reports, in accordance with the relevant accounting standards. Companies with independent management comply with the Group's administrative regulatory system, as described in particular in the instructions for the Reporting Package.

All the Group's regulations and procedures are included in the Documentation available on Terna's intranet (the Documentation portal can be accessed online). This contains all the rules, guidelines and codes applicable throughout the Group, ensuring the prompt and widespread communication of procedures within the Group.

With regard to the risk management and internal control system, the report clarifies that, in the case of serviced subsidiaries, the system is the sole responsibility of Terna and has been designed in accordance with the requirements of art. 154-bis of Legislative Decree 58/98 (the Consolidated Law on Finance or CLF), applicable to Terna as a jointstock company listed on the Italian Stock Exchange.

Subsidiaries with independent management adopt a Risk management and internal control system consistent with that of the Parent Company and show in the report the set of rules and procedures underlying it, describing the organisation of monitoring activities.

The control system, which includes the "accounting and administrative procedures" referred to in paragraph 3 of art. 154-bis of the CLF, consists of:

• internal controls over financial reporting, focusing on preparation of the financial statements in accordance with the requirements of the applicable accounting standards, and over safeguards of the Company's assets;
• the controls and procedures ensuring compliance with disclosure requirements, with the aim of ensuring a generally high standard of reporting and the timely identification by senior management of any significant aspect to enable prompt decision-making regarding the information to be disclosed in periodic reports.

Of particular importance within Terna's Internal Control and Risk Management System are the controls represented by the set of policies, procedures and organisational structures aimed at identifying, measuring, managing and monitoring the main risks to which the Group is exposed in terms of financial reporting, which complement and reinforce the Group's "Management and control model pursuant to Legislative Decree 262" ("Model 262").

The Management and Accounting Policy of the Terna Group, implemented in 2023, has strengthened the governance over the proper management and accounting structure of the Terna Group companies, consolidating those instructions, rules and principles that have always been followed by the Company, such as segregation of roles, transparency, compliance with tax regulations, compliance with accounting principles, traceability, confidentiality, treatment of inside information, as well as those expressed in the Code of Ethics.

In this context, and also with a view to adopting the cooperative compliance model, the Company began in 2022 a process of defining, updating and maintaining its operating procedures in the areas of Administration, Accounting and Tax area, which will be extended in 2023 to the processes of finance, planning and control and M&A.

Risk Based Approach

In accordance with best practice, the new operational procedures that have an impact on financial reporting (administrative, accounting and operating procedures) are prepared in keeping with the guidelines of Terna's Risk Management System, using a specific methodology (risk-based approach). They describe the characteristics, operational procedures, roles and responsibilities of the various departments in charge of operational activities relating to financial, operating and cash flow reporting, which precede the preparation of the financial statements and, in general, the documents intended for the Board of Directors, shareholders and all stakeholders.

The risk-based approach therefore involves the clear identification and description of the risks underlying the activities that have an impact on financial, operating and cash flow reporting, as well as the controls put in place to mitigate these risks (first level controls).

The fine-tuning of the processes, and therefore their implementation in the operational procedures, supports the issuance of the attestation that the managers of the Administration, Finance and Control departments, as process owners, must give to their direct supervisor, thus forming part of the chain of attestations intended for the Manager in charge, leading to the final attestation issued by the latter and the CEO.

UNI PDR 104 Certification

Terna is the first Italian company to obtain the "UNI Pdr 104 2021" certification for the management and internal control system of the administrative and accounting processes of the Parent Company, Terna, and its subsidiaries.

"UNI Pdr 104 2021" certification, valid for five years and issued by Intertek Italia, attests to the Terna Group's strong management of all administrative and tax aspects and their control processes. The certification also reflects the work carried out by the Company to refine its financial reporting procedures, as well as the high level of professionalism and reliability of Terna's staff involved in administrative, financial and control tasks.

Section III Compliance

At the Board of Directors' meeting of 27 January 2021, the Company adopted the new Corporate Governance Code, which is available to the public on the website https://www.borsaitaliana.it/comitato-corporate-governance/ codice/2020-eng.en.pdf

In 2021, although it has a set of rules and procedures in line with the best governance standards, the Company aligned its model with the new recommendations of the Code, carrying out an in-depth review of internal governance documentation in order to fully and effectively implement the new recommendations.

In particular, the Company has updated the procedure concerning the "Criteria for assessing independence", extending its application also to the members of the Board of Statutory Auditors.

The Company has had Terms of Reference for the Board of Directors since 2019. The document was updated on 28 July 2022 and, during the current Board's term of office, on 13 December 2023, with the favourable vote of a majority of the Directors, subject to the favourable majority opinion of the Nominations, Governance and Scenarios Committee. In 2021, on the other hand, the Terms of Reference for Board Committees and the Related Party Transactions Committee were updated, also in view of the alignment with the new CONSOB regulations in force as of 1 July 2021. The Terms of Reference of Board Committees have also been revised during the current term of the Board, in accordance with the Board resolution of 13 December 2023, with the favourable opinion of the relevant Committee.

As of 14 October 2021, the Company has also adopted an engagement policy aimed at identifying the methods, timing and role of dialogue with shareholders and other relevant stakeholders.

The Company is not subject to non-Italian legislation influencing its corporate governance structure.

Report on Corporate Governance and Ownership Structures 2023

Section IV Board of Directors

Role of the Board of Directors

The Board of Directors leads the Company, pursuing its sustainable success; it defines its strategies and identifies the most suitable corporate governance system for carrying out the Company's activities and implementing its strategies.

It is responsible for execution of the strategic and organisational policies of the Company and the Group, as well as for ensuring that the necessary controls are in place to monitor the performance of the Company and its subsidiaries.

The Terna Group considers it consistent with its mission, with the values of its Code of Ethics and with its commitment to sustainable development, to adopt and embed sustainability objectives in its strategy. On 15 December 2021, the Board of Directors therefore adopted the "Sustainability Policy", i.e., the tool through which Terna identifies, manages and communicates the "pillars" of its sustainability culture. The objectives are (i) identification of the methods for defining the Group's sustainability strategies; (ii) increasing awareness of key topics and expected results; (iii) dissemination of a culture of sustainability inside and outside the Company.

The document sets out Terna's formal and public commitment to adopting sustainable conduct and actions in relation to the main sustainability frameworks (the SDGs and the National Integrated Energy and Climate Plan, or PNIEC) and to the ESG topics considered material for the Group. Furthermore, the commitments defined in the Policy support the management and mitigation of ESG risks to which the Terna Group is exposed.

In particular, with the Sustainability Policy, Terna is committed to adopting and embedding sustainability objectives in its strategy, in line with the topics found to be material in the Materiality Analysis and selected from the Sustainability Goals, supporting the management and mitigation of ESG risks. The Policy outlines Terna's main sustainability-related commitments, as follows:

• enabling the ecological transition;
• integrity, responsibility and transparency;
• the promotion of dialogue with stakeholders;
• the empowerment of people;
• inclusion, diversity and protection of human rights;
• protection of the environment and ecosystem.

The Sustainability Policy applies to all Terna Group companies, including those operating overseas, and Terna is committed to promoting awareness of the Policy among its employees and to providing public evidence of it to all interested stakeholders through dedicated tools, including the NFS included in the Integrated Reports for 2021, 2022 and 2023.

The Board of Directors also promotes, in the most appropriate forms, dialogue with shareholders and the Company's other significant stakeholders. As will be better described in section XV, "Investor relations", in line with the recommendations of the Corporate Governance Code, the Board of Directors, at its meeting of 14 October 2021, adopted, on the proposal of the Chair, a "Policy for engagement with the generality of shareholders and other stakeholders of Terna S.p.A." (hereinafter also the "Engagement Policy").

In particular, the Engagement Policy intends to pursue the following objectives:

• to identify and describe the ordinary channels of direct and continuous communication and information between the Company, shareholders and other stakeholders, managed by the competent corporate departments or carried out during General Meetings;
• to promote, among the current ordinary forms of engagement, a report to the Board of Directors on the main communication and information activities with major shareholders and institutional investors;
• to introduce and regulate Shareholder-Director Engagement, consisting of direct dialogue between Directors and stakeholders interested in such engagement, following the introduction of procedures on how to carry it out, its scope, the criteria for assessing requests, as well as the related internal governance processes and procedures for participation and internal reporting.

Any future revision of the Engagement Policy will take into account any contextual developments, monitoring the related guidance.

In addition to exercising the powers granted to it by law, the Company's Articles of Association (art. 21.2), as permitted by law, grant the Board the authority to adopt resolutions otherwise reserved for the General Meetings of shareholders. These include resolutions amending the Articles of Association, as previously described in the sub-section, "Amendments to the Articles of Association".

Within the limits of art. 2381 of the Italian Civil Code, the Board of Directors may delegate its duties to an executive committee and/or to one or more of its members (art. 22.1 of the Articles of Association).

In this context, in compliance with the law and the provisions of specific resolutions and taking into account the provisions of art. 1 of the Corporate Governance Code (art.1, Recommendation 1), the Board of Directors has assumed responsibility for a series of decisions that are necessary or useful to pursue the corporate purpose.

In particular, it examines and approves the Industrial Plan of the Company and of the Group it heads, also based on an analysis of the matters relevant to the creation of long-term value. The current structure of powers within the Company provides, in particular, that the Board of Directors is responsible for approving the Company's annual budget and longterm plans (which also include, in aggregate form, the annual budgets and long-term plans of subsidiaries). In this regard, on 22 March 2023, the Board of Directors reviewed and approved the 2023 Budget in line with the strategies outlined in the 2021-2025 Industrial Plan (Update 2021-2025 Industrial Plan). Monitoring activities were carried out through the periodic (quarterly) assessment of management performance and through specific Company Performance Management tools. Furthermore, on 19 March 2024, the Board of Directors approved the new Industrial Plan 2024- 2028, the starting point for the monitoring activities that will be carried out during 2024.

With respect to the planned activities, the Board provides specific guidelines, a description of the objectives, characteristics and application methods of the monitoring of corporate processes and risk analysis, and defines the nature and level of risk compatible with the Company's strategic objectives, including assessments of any risks that may be significant in terms of the long-term sustainability of the Company's activities. In this regard, reference should be made to Section XI.

The Board of Directors also defines the Company's corporate governance system and the structure of the Group that it manages, and assesses the adequacy of the organisational, administrative and accounting system of the Company and its strategically important subsidiaries. This is done during its review of the related internal procedures submitted to the Board and when adopting resolutions on the various matters brought to its attention, with particular reference to the internal control and risk management system. At the date of approval of this Report, the Board of Directors has assessed the adequacy of the organisational structures.

The Board is also responsible for drawing up, on the basis of the proposals made by the Remuneration Committee, the Company's policy on the remuneration of the members of management and oversight bodies, general managers and key management personnel, which is then put to a binding vote by the Annual General Meeting of shareholders,

Report on Corporate Governance and Ownership Structures 2023

and determines, on the basis of recommendations from the Remuneration Committee and/or in consultation with the Board of Statutory Auditors, where provided for, the remuneration of the Chief Executive Officer and other Directors with delegated powers. These matters are reported on annually in the first section of the "Report on remuneration policy and remuneration paid", pursuant to art. 123-ter, paragraph 3-ter of the CLF. In this regard, reference should be made to Section IX. The Board of Directors is also responsible for setting, on the basis of the proposals made by the Remuneration Committee, the general criteria for the remuneration of senior management and the incentive plans for which shareholder approval is required. With the support of the Remuneration Committee, it prepares the second section of the "Report on remuneration policy and compensation paid" pursuant to art. 123-ter, paragraph 4 of the CLF which it submits to the non-binding vote of the General Meeting of shareholders pursuant to art.123-ter, paragraph 6 of the CLF. In order to ensure the proper management of corporate information, it adopts, on the proposal of the Chair in agreement with the Chief Executive Officer, a procedure for the internal management and external communication of documents and information concerning the Company, with particular reference to inside information. In this regard, reference should be made to Section V.

With particular reference to the Internal Control and Risk Management System (as described in Section XI below), the Board defines the guidelines on the proposal of the Chief Executive Officer and subject to the opinion of the Audit, Risk and Sustainability Committee. An assessment of the adequacy of the Terna Group's Internal Control and Risk Management System, in terms of the Company's nature and risk profile, as well as its effectiveness, is carried out at least once a year, having previously consulted the Audit, Risk and Sustainability Committee. In this regard, reference should be made to Section XI.

The Board of Directors examines and approves transactions that have a significant impact on the Company's financial position and results, especially if they are related party transactions or could otherwise give rise to a potential conflict of interest. This is without prejudice to the powers assigned to the Chief Executive Officer for particularly urgent matters. In particular, in addition to the specific provisions of the special procedure regarding related party transactions and the steps taken to identify and manage situations in which Directors have their own interests or third-party interests regarding a transaction submitted to them (reference should be made to Section XII relating to Directors' interests and related party transactions), "significant transactions", including those concluded through subsidiaries identified via an appropriate internal Board procedure - ("Approval of significant transactions and management of conflict of interest situations", updated on 31 March 2011 and, specifically with regard to the management of conflict of interest situations, latterly on 23 June 2015) following approval by the former Audit, Risk and Corporate Governance Committee – now called the Audit, Risk, and Sustainability Committee – are subject to prior approval or prior examination (in the case of transactions pertaining to companies directly and/or indireclty controlled by Terna) by the Board of Directors. Such transactions include: (i) transactions which, due to their purpose, amount and terms and conditions may have an impact on the Company's ability to safeguard the value of its assets or the completeness and accuracy of Terna's disclosures, including accounting information, and as such oblige Terna to publish information in compliance with the requirements of financial market regulators and/or (ii) transactions with a value of more than €50 million, except for those provided for in previously approved budgets or financial plans, as well as those regarding dispatching and all the related services. In this regard, there is a specific requirement for the Board of Directors to be duly informed about the procedures for implementing significant transactions, the related financial terms and conditions and assessment procedures, the underlying interests and rationale and any risks to which Terna and its subsidiaries may be exposed as a result of the transactions. The Board may also seek advice from one or more independent experts regarding the financial conditions and/or the related implementing and technical procedures. Board resolutions regarding intragroup transactions should be based on an assessment of the appropriate grounds for and benefits of a transaction. In accordance with the current corporate governance structure, the Board of Directors is also entitled to pass resolutions regarding the following matters: the agreement of any form of medium- to long-term loan or borrowing with a value of more than €100 million, when not already approved as part of a budget or financial plan, and not to be used to finance initiatives already approved by the Board in relation to the National Transmission Grid Development Plan and/or the Strategic Plan; and the provision by the Company of sureties and real security amounting to more than €30 million per transaction, when not already approved as part of a budget or financial plan. The Board of Directors is constantly and fully informed, together with the Board of Statutory Auditors, by the Chief Executive Officer, in accordance with art.

21.3 of the Articles of Association, regarding the activities carried out in exercising the authority granted to her, and with regard to the Company's operating performance, outlook and significant transactions. In particular, with regard to all significant transactions carried out by the Company and its subsidiaries, the Chief Executive Officer reports to the Board of Directors on (i) the nature of the transaction and (ii) the parties involved and any relations they may have with the Company or its subsidiaries.

The Board of Directors assesses, after consulting the Board of Statutory Auditors and after hearing the opinion of the Audit, Risk, and Sustainability Committee, the findings set out by the independent auditors in their letter of recommendations, if any, and in their report on key matters arising from the independent audit.

Lastly, the Board of Directors reports to the General Meeting of shareholders, as required by current legislation. In this regard, reference should be made to Section XVI.

Composition

Up to 9 May 2023, the Board of Directors consisting of the following members: Valentina Bosetti (Chairwoman), Stefano Antonio Donnarumma (CEO), Alessandra Faella, Antonella Baldino, Ernesto Carbone, Valentina Canalini, Fabio Corsico, Giuseppe Ferri (Directors elected from the majority slate submitted by CDP Reti S.p.A.), Quinjing Shen (appointed by co-optation at the Board meeting of 26 January 2022 following the resignation of Director Yunpeng He - also elected from the aforementioned majority slate submitted by the shareholder CDP Reti S.p.A. which were tendered on 11 January 2022; the General Meeting of Shareholders held on 29 April 2022 resolved on his appointment), Marco Giorgino, Gabriella Porcelli, Jean-Michel Aubertin and Paola Giannotti (Directors elected from the minority slate submitted by a group of shareholders consisting of asset management companies and other institutional investors as listed in the Company's press release on the publication of the slates on 23 April 2020).

On 23 January 2023, the Director, Ernesto Carbone, tendered his resignation, with immediate effect, following his appointment, by Parliament in joint session, as a member of the Consiglio Superiore della Magistratura. This news was promptly notified to the Board of Directors and the Board of Statutory Auditors and disclosed to the market in a press release of the same date.

The Annual General Meeting of shareholders was convened on 9 May 2023 to, among other things, re-elect the management and oversight bodies. The Meeting appointed the new Board of Directors on the basis of the proposals submitted on 14 April 2023.

Following the vote and in accordance with the Articles of Association, the Board of Directors consists of the following: Igor De Biasio (Chairman), Giuseppina Di Foggia (CEO), Enrico Tommaso Cucchiani, Angelica Krystle Donati, Simona Signoracci, Francesco Renato Mele, Regina Corradini D'Arienzo, Gian Luca Gregori and Qinjing Shen (Directors elected from the "number 1" slate, second in terms of votes, submitted by CDP Reti S.p.A.), Marco Giorgino, Anna Chiara Svelto, Jean-Michel Aubertin and Karina Audrey Litvack (Directors elected from the "number 2" slate, submitted by a group of shareholders consisting of asset management companies and other institutional investors, which ranked first in terms of number of votes).

Six members of the Board are women and seven are men.

As to the independence requirements, nine out of the current thirteen Directors qualify as such pursuant to the CLF and the Corporate Governance Code, as specified in the section on "Independent Directors".

The Board of Directors provides for the presence of a Chair, elected by shareholder resolution adopted at the Annual General Meeting of 9 May 2023 pursuant to art. 16 of the Articles of Association. The Board also consists of a sole executive Director, the Chief Executive Officer, appointed by the Board of Directors on 9 May 2023 pursuant to art. 22 of the Articles of Association, as more thoroughly specified below in the section "Executive Bodies".

Terna's Directors are suitably competent and professional (art. 2, principle 5 in the Corporate Governance Code). Specifically, alongside professionals operating in the legal and financial field, there are Directors experienced in the sectors of engineering, energy, sustainability and risk management. The international scope is ensured, as is the presence of non-Italian nationals, as well as members who have garnered solid experience in international contexts. In addition to the CEO, IT skills are possessed by a number of directors working in the sector.

A brief description of the professional profiles of Terna's Board members is provided below.

Chairman Born in Milan on 18 November 1977 IGOR DE BIASIO

Married with three daughters.

He has been Chairman of Terna since 9 May 2023.

He graduated in Political Science from the University of Cattolica in Milan at the age of 23 (110/110). He then obtained four post-graduate specialisations: in Marketing and Digital Economics (Cattolica of Milan), in Marketing (Bocconi), in Design Thinking (Polytechnic of Milan) and in Business Finance (IMD Business School, Lausanne).

After several years of management experience in multinational consulting companies, he became an executive at Philips S.p.A. at the age of 35, where he took on international responsibilities in the Mediterranean region, and at the age of 39 became Sales Director for Europe, Africa and the Middle East for Moleskine.

He was appointed to the Board of Directors of RAI by the Italian Parliament in July 2018, and confirmed in 2021.

In 2019, he was appointed CEO of Arexpo S.p.A. In 2020, the company recorded a pre-tax profit for the first time in its history and continued to be profitable in all subsequent years. In 2022, at the end of his tenure, he was reappointed CEO of Arexpo S.p.A.

In 2022 he was co-director, with Prof. Giovanni Orsina, of the LUISS Executive Course 'Government and Territorial Development: Public and Private Partnerships'.

In December 2022, he was appointed Officer of the Order of Merit of the Italian Republic by the President of the Republic.

< > REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2023

GIUSEPPINA DI FOGGIA

Chief Executive Officer and General Manager Born in Rome on 16 July 1969

Giuseppina Di Foggia has been CEO and General Manager of Terna since 9 May 2023.

From April 2020 to May 2023, she was CEO and Vice President of Nokia Italia, a company with over 100 years of experience in the manufacture and service of telecommunications equipment and in research and development in the fields of optical networks, microwaves and artificial intelligence.

She was named Cavaliere del Lavoro of the Italian Republic in 2021 for her work in the field of information and communication technology and, in the same year, was selected by Forbes Italia magazine as one of the 100 leading and creative women who have distinguished themselves by their commitment, tenacity and competence. She was also honoured by Forbes as the best CEO of the year in the Teelcommunications category at the CEO Italian Awards 2021. In 2022, she was awarded the Margutta Prize, a symbol of creativity and intellectual acumen in the field of entrepreneurship.

After graduating in Electronic Engineering from the La Sapienza University in Rome and passing the State Examination in Engineering, she obtained a Master's degree in Professional Program Management from the Stevens Institute of Technology in New Jersey (USA) and attended specialisation and general management courses at SDA Bocconi in Milan and Luiss Business School in Rome.

With thirty years of experience in R&D, project management, operational and strategic management in different countries, she started working in R&D projects funded by the European Union for the planning and implementation of the third generation (3G) mobile network. In 1998, she joined Lucent Technologies Bell Labs Innovations, which became Alcatel-Lucent in 2006 and finally Nokia in 2016, where she has held various management and strategic positions in all areas of the company.

Chairwoman of the Board of Directors of GPI SpA and member of the Board of Directors of Assolombarda, Giuseppina Di Foggia is a member of the Board of Directors of Luiss Business School and, since October 2023, of the Advisory Board of Sole24Ore Formazione. She is also a member of the Advisory Board of B7 Italy 2024 and of the Board of Directors of Cefriel, the Research, Innovation and Training Centre of the Politecnico di Milano. Previously, she was a member of the Board of Directors of LUMSA Executive MBA, a member of the Foreign Investors Advisory Board of Confindustria, a member of the Board of Directors of Anitec-Assinform (between 2021 and 2023) and a member of the Advisory Board of B20 Italy (between 2020 and 2022). From June to December 2023, she was Vice-President of GO15, the global association of very large electricity transmission system operators.

Always very attentive to the issues of youth and work, in recent years she has promoted and supported several programmes focusing on digital literacy and helping students gain familiarity with STEM subjects, as well as work experience schemes.

She is married and has two children.

Director Born in Milan on 10 February 1969 FRANCESCO RENATO MELE

Francesco Renato Mele has been a member of Terna's Board of Directors since 9 May 2023.

He graduated with honours in Business Economics from Luigi Bocconi University in Milan.

In September 2022 he was appointed CEO and General Manager of CDP Equity Spa and Investment Director of CDP Spa.

He was CFO of Ilimity Bank (2018-2022) and Bank Montepaschi di Siena (2016-2018). From 2010, he worked at Nomura for 6 years until becoming Head of Italian Investment Banking.

Prior to this, he worked for 14 years at Goldman Sachs (1996-2010) with increasing responsibilities in the London and Milan offices, up to the position of Managing Director in charge of the Italian market, after an initial professional experience at Bank Commerciale Italiana (1994-1996).

REGINA CORRADINI D'ARIENZO

Director Born in Turin on 30 May 1969

Regina Corradini D'Arienzo has been a member of Terna's Board of Directors since 9 May 2023.

She holds a Master's degree in Strategic Psychology, a degree in Business Economics from the University of Turin and a Master's degree in Banking Management from Bocconi University in Milan.

In July 2002, she was appointed CEO and General Manager of Simest Spa, a CDP Group company that supports the growth of Italian companies abroad through the internationalisation of their business.

She previously worked at BNL since 2013, where she held various positions, including Territorial Director Corporate Northwest and later Director of the entire Corporate Banking Division. A member of the BNP Paribas G100 and a member of the Cash Management Governance Board and the Trade Finance Strategic Board of the BNP Paribas Group, she has also held positions in a number of BNP Paribas Group companies, including as a Director of Arval Spa, Vice Chair of Ifitalia Spa and Chair of BNP Paribas Leasing Solutions Spa.

Between 2012 and 2013, she was Head of the Corporate Division at Banco Popolare, after having been Head of Corporate Banking at Banca Popolare di Novara (2008-2011).

From 1990 to 2008, she worked at Bank San Paolo IMI (Intesa Sanpaolo), until her appointment as Head of Marketing and Commercial Services in the Corporate Division of Banca dei Territori.

Director ANGELICA KRYSTLE DONATI

Born in Los Angeles (USA) on 16 September 1985

Angelica Krystle Donati has been a member of Terna's Board of Directors since 9 May 2023.

She holds a degree in Management from the London School of Economics and Political Science and a Master of Business Administration from Oxford University.

President of ANCE Giovani since 2021, she is an entrepreneur and manager in the construction sector. She was a member of the B20 Finance and Infrastructure Task Force in 2021 and 2022.

Head of Business Development at Donati S.p.A and CEO of Donati Immobiliare Group, an international property development company, she is a columnist for Forbes, AGI and Property Week.

She started working at Goldman Sachs in 2006 and then held the position of Retail Marketing Manager at Ralph Lauren in 2012.

< > REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2023

MARCO GIORGINO Director Born in Bari on 11 December 1969

Marco Giorgino has been a member of Terna's Board of Directors since May 2019 and is also Chairman of the Audit, Risk and Sustainability Committee and a member of the Related Party Transactions Committee.

An economist by training, he has been a full professor at the Politecnico di Milano since 2004, where he holds the Chair of Financial Markets and Institutions and Financial Risk Management.

After graduating from Bocconi University, he gained more than thirty years of experience in research and teaching, coordinating numerous projects that have resulted in more than one hundred and fifty publications, both national and international, on banking and financial topics and, more recently, on the topics of "governance and sustainability" and "risk management", both for industrial and financial companies, and on the topics of "digital innovation" and "sustainability" in banking and financial services.

In 2015 he founded the Fintech & Insurtech Observatory of the Politecnico di Milano and has been its Scientific Director since then.

He is Director of the International Master in Financial Risk Management at the Polimi Graduate School of Management.

He has held and still holds positions on Boards of Directors, including as Chairman of Board Committees, and Boards of Statutory Auditors of leading industrial, financial and banking companies, including entities subject to European banking supervision, as well as on supervisory bodies.

In the past, he was a member of the Boards of Banca MPS, also as Chairman of the Risk Committee and Lead Independent Director, of Luxottica and Mediolanum, among others.

He is currently Independent Director and Chairman of the Risk Committee of Mediobanca and Independent Director of RealStep SICAF.

He has spoken at over two hundred conferences and seminars on corporate finance, market finance, corporate governance, risk management, digital innovation in banking and financial services and sustainability.

He is a board member of the NED Community and Chairman of NED Value. He is one of Il Sole 24 Ore's "Le Nostre Firme" and a regular commentator on television.

QINJING SHEN Director Born in Haining, Zhejiang (China) on 22 July 1978

Qinjung Shen S.p.A. has been a member of Terna's Board of Directors since 26 January 2022.

He is currently a Director of CDP Reti S.p.A., SNAM S.p.A., Italgas S.p.A. and Head of State Grid's representative office in Italy.

From 2016 to 2021 he was Director of the Business Development & Strategy Department of State Grid International Development Co., LTD, of which he was previously Deputy Director from 2013 to 2016 and Project Manager from 2008 to 2013.

From 2003 to 2008, he worked as an engineer at the Dispatching Communications Centre of Zhejiang Electric Power Company (a subsidiary of State Grid Corporation of China). He graduated in engineering and electrical systems from Zhejiang University, China.

Director ENRICO TOMMASO CUCCHIANI

Enrico Tommaso Cucchiaini graduated with honours in Economics from Bocconi University in Milan and holds a Master of Business Administration from Stanford University.

Appointed Cavaliere del Lavoro of the Italian Republic, he has headed major banks and insurance companies and has also gained significant experience in the industrial, healthcare and high technology sectors.

During his career he was CEO of Intesa Sanpaolo. He was a member of the Executive Board of the Allianz Insurance Group in Munich, responsible for operations in the EU (excluding Germany), Switzerland, Turkey, Latin America and Africa, and worked as a management consultant with McKinsey in the Milan, London and New York offices.

He is a member of the Board of Directors of Bocconi University and a member of the Executive Committee, the International Advisory Board and Vice-President of the Javotte Bocconi Foundation. He is also a member of the International Executive Committee of the Trilateral Commission and Chairman of the Italian delegation. He is also an advisor to the Weizmann Institute of Science in Israel, an advisor to ISPI and Vice-President of the Amici della Scuola Normale di Pisa.

He has been President of the San Raffaele Hospital in Milan and an advisor to, among others, Unicredit, Pirelli, Acegas and Royal Sun Alliance; President and CEO of RAS; Co-Chairman of the German-Italian Forum; a member of the Advisory Council of Stanford University (California)..

Director GIAN LUCA GREGORI

Gian Luca Gregori has been a member of Terna's Board of Directors since 9 May 2023.

He graduated with honours from the "Giorgio Fuà" Faculty of Economics at the Polytechnic University of the Marche Region, where he was Full Professor of Economics and Business Management, Director of the Department of Management, Director of the Doctoral School and Chairman of the Faculty of Economics; he was previously Vice-Rector and in 2019 was elected Rector of the Polytechnic University of the Marche Region.

Author of more than 210 publications on management topics, he has held numerous university teaching positions, including International Marketing and Business Marketing. He is a member of various scientific societies.

He has participated, also as coordinator, in numerous national and international research projects on economic and management aspects with reference to different types of company. He has collaborated and still collaborates with companies in various sectors and also with business associations.

He is currently a member of the Board of Directors of the CRUI Foundation, Adjunct Professor of Business Administration at Henan University, Honorary Member of the Italian Marketing Society and Senior Fellow of the Luiss Business School.

Director Born in Mondolfo (Apulia) SIMONA SIGNORACCI

Simona Signoracci has been a member of Terna's Board of Directors since 9 May 2023.

She graduated with honours in Political Science, specialising in Administration, from the Faculty of Law of the University of Urbino and holds an MBA from the Business School of the University of Turin, Faculty of Engineering. During these years she attended numerous seminars abroad (Boston University and Toronto University).

She is currently President of Vises ETS, the Foundation of Federmanager, and a member of the Board of Directors of Q Academy. She also collaborates with numerous companies.

From 2009 to 2020, she worked at Telecom Italia in the field of institutional relations, stakeholder relations and regulatory affairs: CONSOB, Isvap, Agcom, Privacy Authority. From 2015 and for about three years, she also held the position of Executive Chair of a consortium company then formed by Telecom Italia, Vodafone and Wind. The company was wound up in 2018.

From 2008 to 2012, she was President of the Gigi Ghirotti National Foundation for Home Psychological Assistance, collaborating with Ania, the International Red Cross and the Vicariate of Rome. In 2008, she founded the Telecom Foundation, where she was Executive Vice President and President.

From 1997 to 2008, she worked at the Mediolanum Group, where she created a different model of integrated communication between the financial world and the media during the listing of the Mediolanum Group and the transformation of Sim Programma Italia into a bank. She was responsible for external, institutional and regulatory affairs in Italy and abroad. She was in charge of foreign acquisitions in Spain, Germany and Ireland and of the joint venture with Mediobanca that led to the creation of Banca Esperia. She created and chaired the Mediolanum Foundation. During these years she was also a member of numerous national and international committees and held seminars on strategic and financial communication at the Luiss University in Rome.

From 1990 to 1996, she managed European projects for the Milan Chamber of Commerce on the transfer of technological skills to help Italian small and medium-sized enterprises.

From 1987 to 1990, she worked at Fininvest Comunicazioni, analysing and studying new digital technologies in the television sector. After benchmarking the business plan in France and the United States, she contributed to the birth of Tele Più, Italy's first pay-TV channel.

In recent years she has taught a Master's degree course at Link University and is currently a guest lecturer at the Master's degree course in Strategic Planning at the La Sapienza Business School in Rome.

Throughout her career, she has acquired expertise and in-depth knowledge of ESG criteria for transformative, inclusive and digital sustainability in the banking and insurance sectors, generalist TV and VOD platforms. She has also worked on the study of technological innovation applied to oversight: artificial intelligence to support the investigative activities of authorities and related cybersecurity risks, the digital divide, artificial intelligence and privacy challenges in healthcare. She worked on Expo 2015 and the organisation of the opening week of the 2006 Winter Olympics in Turin. Finally, she has contributed to and sponsored numerous initiatives of national and international importance.

KARINA AUDREY LITVACK

Director Born in Montréal (Canada) on 7 December 1962

Karina Audrey Litvack has been a member of Terna's Board of Directors since 9 May 2023.

A graduate in Political Economy from the University of Toronto and in Finance and International Business from Columbia University Graduate School of Business, she is an Ambassador and Founding Chair of the Climate Governance Initiative and a member of the Advisory Board of Hawkamah, The Institute of Governance and the International Advisory Council of Transparency International.

A director of Eni from May 2014 to May 2023, her long career has included membership of the PaineWebber Incorporated corporate finance team (1986-1988), the Extractive Industries Transparency Initiative Board (2003-2009), the London Stock Exchange Primary Markets Group (2006-2012) and the CFA Institute Board of Governors (2019-2022).

She was also a member of the CEO Sustainability Advisory Panel of Lafarge (2003-2014), Groupe Danone (2011-2013), Veolia (2008-2010), ExxonMobil and IPIECA (2010) and SAP AG (2010-2017).

She was a project manager at the New York City Economic Development Corporation (1991- 1993). She joined F&C Asset Management in 1998 and held the positions of Ethical Research Analyst, Director of Ethical Research and Director of Governance and Sustainable Investment (2001-2013). She was Non-Executive Chairman of the Sustainability Committee of the Board of Viridor Waste Management (2020-2022).

Director ANNA CHIARA SVELTO

Born in Milan on 29 October 1968 Anna Chiara Svelto graduated with honours in law from the University of Milan in 1992 and is a practising lawyer. She is an expert in corporate law, M&A and corporate governance.

Between 2016 and 2018 she was Chief General Counsel of UBI Bank Spa. From 2000 to 2016 she worked in the Pirelli Group, where, as Director of Corporate Affairs and Compliance and Secretary to the Board of Directors, she played an active role in the most important transactions of the Pirelli Group and also contributed to the growth of an advanced corporate governance model of the company. Previously, she worked in the Legal Department of Edison Spa and was Head of Legal and Corporate Affairs of Shell Italia Spa.

Since 2014 she has held directorships in leading listed companies, including Enel (2014-2023), Astm and Brunello Cucinelli.

She is currently a Director of Credito Emiliano, Technoprobe, Interpump and Avvale (formerly Techedge).

She is on the list of Global Board Ready women promoted by the Professional Women Association, is included in the list of the Thousand Excellent Curricula of the Bellisario Foundation and was included in the first 150 'Unstoppablewomen' by StartupItalia. She is married and has two children.

JEAN-MICHEL AUBERTIN Director Born in Nice on 16 February 1958

Jean-Michel Aubertin has been a member of the Board of Directors since 18 May 2020 and has been a member of Terna's Audit, Risk and Sustainability Committee and Nominations, Governance and Scenarios Committee since 9 May 2023.

He holds an engineering degree from the Ecole Nationale Supérieure de l'Aéronautique et de l'Espace and an Executive MBA from the Centre de Perfectionnement aux Affaires, and has extensive experience in corporate transformations, international business development and the management of global operations (Europe, Asia, United States).

Since July 2018, he has held the position of Operating Advisor at Clayton, Dubilier & Rice, one of the leading private equity firms in the United States.

From 1994 to the present, his experience includes the roles of CEO of CG Power Systems in Belgium and Doosan Power Systems Ltd in the UK; General Manager of Alstom Energy & Environment Systems Group in Switzerland and President of the Telecommunications Satellite Division, EADS Astrium in the UK.

On its election, the Board of Directors confirmed that each of its members met the necessary integrity and professionalism requirements and those provided for under art. 15.5 of the Articles of Association in relation to the provisions of unbundling legislation.

The evaluation regarding independence requirements for each of the non-executive members was carried out taking into account the information provided by each individual, at the time of their election and, later, during the meeting held on 6 March 2024, in compliance with the terms illustrated below in the sub-section, "Independent Directors" (art. 2, Recommendation 6 of the Corporate Governance Code).

The annexed Table 2 provides information on the composition of the Board of Directors at the end of the financial year (art. 2 of the Corporate Governance Code and art. 123-bis, paragraph 2(d) of the CLF).

Diversity policies

Terna manages all its activities with a sustainable approach, having its cornerstones in the Company's mission and Code of Ethics. In concrete application of the guidelines set out in the Code of Ethics, Terna adopts recruitment, development and remuneration systems for personnel that recognise and reward merit and performance. Any and all forms of discrimination starting from the Company's recruitment process, are expressly prohibited.

These values also act as a reference point for the members of Terna's Board of Directors and Board of Statutory Auditors.

With this in mind – as set out in the above sub-section of Section II "Election of Directors, related requirements and terms of office" – Terna's Board of Directors, at its meeting on 20 February 2018, on the recommendation of the Nominations Committee and the Audit, Risk, Corporate Governance and Sustainability Committee, and in agreement with the Board of Statutory Auditors, resolved to adopt diversity policies with reference to the composition of the Board of Directors, considering aspects such as age, seniority, gender, geographical origin and professional and management training (the so-called " Diversity Policy for Terna's management and control bodies", hereinafter also the "Policy" or the "Diversity Policy").

In drawing up these policies, Terna had taken into account: (i) the nature and complexity of the Company's activities, the social and environmental context in which the Company operates, the experience gained by the Board with regard to the way the Board and its Committees operate; (ii) the results of the self-assessments carried out in recent years; (iii) the provisions of art.123-bis CLF"; and (iv) the "Guidelines on non-financial reporting (Methodology for reporting non-financial information)" published by the European Commission on 5 July 2017 (Communication 2017/C 215/01).

On 1 March 2023, Terna's Board of Directors, with the positive opinion of the Nominations Committee and the Audit, Risk, Corporate Governance and Sustainability Committee, updated the Policy, in order to:

• achieve formal alignment with the 2020 version of the Corporate Governance Code formally adopted by the Company on 27 January 2021;
• achieve formal alignment with the Consolidated Law on Finance and the Regulations for Issuers issued by the CONSOB;
• incorporate the results of the Board Review process carried out by the current Board during the last term of office;
• incorporate the results of the benchmark analyses conducted on the Diversity Policies of TERNA's peers.

The "Diversity policy" is intended for:

• shareholders, who, pursuant to the law and the Articles of Association, wish to submit slates of candidates for election to the Board of Directors;
• the Annual General Meeting called to elect the Board of Directors;
• the Company's outgoing Board of Directors, for it to provide guidance to shareholders on the size and composition of the new Board of Directors, and in the event that – when re-electing the Board of Directors - it should wish to submit its own slate of candidates, as permitted by art. 14.3 of the Articles of Association;

• the Company's Board of Directors, as well as its shareholders, in the event that – during their term of office – a member of the Board of Directors has to be replaced pursuant to art. 2386 of the Italian Civil Code.

The objective of the approved policies (described in the document "Policy on diversity in the management and oversight bodies of Terna", hereinafter also referred to as the "Policy" or "Diversity Policy") is to ensure that the qualitative and quantitative composition of the Board of Directors and the Board of Statutory Auditors is such as to enable the effective performance of duties and responsibilities. This is to be done by ensuring the presence of people with sufficiently divergent points of view and with the expertise necessary to understand the current state of the business, and the long-term risks and opportunities to which the Company is exposed.

The main provisions of the Policy relating to the diversity aspects considered by the Board of Directors are set out below:

• Professionalism/management skills, independence, competence and experience

The Policy invokes application of provisions concerning the requisites of professionalism and management skills already adopted in the Articles of Association (specifically in art. 15.3), as well as provisions in the Articles of Association regarding the independence of Directors and the principles of management neutrality and impartiality (articles 15.4 and 15.5). The Policy also expressly refers to recommendations set forth in the Corporate Governance Code relating to both independence requirements and the skills and experience required of members of boards of directors and board committees. In addition to the foregoing, it is hoped that the Board of Directors will ensure a combination of diversified skills and experience in the following sectors: business, generally in the electricity and energy sector; corporate governance, legal and corporate affairs; contracts, litigation, and tenders; digital, cybersecurity, artificial intelligence, innovation; finance, debt, investment; internal control system, risk assessment and management, and sustainability.

It is likewise hoped that all Directors will have adequate knowledge of at least the English language, sufficient to correctly understand written texts and, at any rate, to ensure the possibility of deliberating resolutions on the basis of documents written in English.

• Age and seniority in office

The presence of people of different ages and seniority on the Board of Directors is deemed useful in helping to ensure the right balance of experience, continuity, innovation and risk appetite.

• Gender

Within the Board of Directors, adequate representation of both genders must be ensured, also pursuant to the Articles of Association and the Corporate Governance Code. In particular, the Board of Directors must be consisting of at least two-fifths of persons belonging to the "least represented" gender.

• Geographical origin and international experience

The presence of Directors with training and professional experience in international contexts is recommended in order to further enhance the quality of board discussions, also considering the Group's international presence.

The new document, whose content was considered positive also by the review of the departing Board of Directors, was referred to in the guidelines issued to shareholders for the General Meeting, published on the company's website on 13 March 2023, in view of the Annual General Meeting of 9 May 2023, called to re-elect the Board of Directors.

Again with respect to diversity, the Corporate Governance Code has emphasised the need to address issues around gender balance, recommending that companies adopt measures to promote equal treatment and opportunities within the entire organisation and monitor their concrete implementation (art. 2, Recommendation 8).

In 2021, the Company adopted specific guidelines in the new "Diversity & Inclusion Policy", with the aim of formalising Terna's commitment to promoting and protecting diversity, and to preventing and punishing any form of discrimination and harassment based on gender, age, sexual orientation, nationality, disability, political opinions, religious beliefs and any other personal characteristic. At the meeting of January 24, 2024, after receiving the favourable opinion of

the Nominations, Governance and Scenarios Committee of 16 January 2024, the Board of Directors updated the document, approving the "Diversity, Equity and Inclusion" Policy, which incorporates the contents of the aforementioned Guideline of last May 2021 and further strengthens Terna's commitment to promoting conditions that allow for the removal of cultural, organisational and material obstacles that limit the full potential of people and their full development within the organisation.

Maximum number of positions in other companies

All Directors accept their appointment when they deem that they can devote enough time to discharge their duties diligently, also in view of the number and type of positions held outside the Company in other companies listed on regulated markets (also foreign), in financial, banking, insurance or other large companies. The Directors also take account of the commitment required of them by other work, professional activities and corporate positions held and undertake to devote the time needed to diligently perform their duties, being well-aware of the inherent responsibility attaching to the position held.

To this end, in February 2007, pursuant to the Corporate Governance Code then in force, Terna's Board of Directors approved its own guidelines regarding the maximum number of positions that can be held as director or auditor in significantly large companies that still enable the efficient performance of duties as a Director of Terna S.p.A.. These guidelines are presented in the in-house document "Guidelines on the maximum number of positions that can be held by Directors of Terna", requiring the Directors of Terna to consider these before accepting office.

More than 4 years after adoption, following ongoing monitoring of the governance choices made by the Company and in line with the practices of Terna's counterparts, at the meeting held on 7 October 2011, the Board of Directors reviewed these guidelines. Consequently, taking account of the clarifications provided by the December 2011 edition of the Corporate Governance Code, the guidelines were further revised with the resolution of 19 December 2012, as referred to in the "Attendance policy" approved by the Board of Directors on 20 February 2018. The same guidelines were further amended on 1 March 2019, as described below, within the scope of this section, in the paragraph "Attendance Policy".

The document " Guidelines on the maximum number of positions that can be held by Directors of Terna S.p.A." was last revised at the Board meeting of 1 March 2023, after consulting with the Nominations Committee and the Audit, Risk, Corporate Governance and Sustainability Committee, in order to adapt it to the changes introduced by the Corporate Governance Code and to take into account the experience gained during the previous Board's terms of office, as well as the guidelines adopted by peers.

For the purposes of assessing the number and quality of other positions held on the boards of directors and of statutory auditors of other companies, in line with the recommendation of the Corporate Governance Code, the document distinguishes between "listed companies" and "large companies".

• To this end, "large companies" were defined as:
• a) Italian or foreign companies with shares not listed on regulated markets operating in the insurance, banking, brokerage, asset management or financial sectors; and
• b) other Italian or foreign companies with shares not listed on regulated markets which, though operating in sectors other than those listed above in point a), have net assets exceeding €1 billion.

Due to the importance of assuming the office of director, which requires an adequate amount of time to diligently perform the duties assigned, the revision of the document enabled the reinforcement of a principle, already in use in the Company, relating to the minimum attendance required of an individual Director. The issue was the subject of an extensive debate among Directors, first in the Nominations Committee and then in the Audit, Risk, Corporate Governance and Sustainability Committee.

As a result, it was established that the average level of attendance at Board meetings by Terna's Board of Directors' members must not be less than 80% of the Board meetings held during the year. The aforementioned percentage of attendance also applies to the meetings of Board Committees. Furthermore, in the event that the above percentages are not reached in the individual Committees and in the Board of Directors, the Board of Directors will decide whether to relieve the Director of their role in Committees in order to ensure their full attendance and proper functioning.

The document also aligned the definition of "Executive Director" with the definition provided for in the Corporate Governance Code establishing that Executive Director means:

• the Chair of the company or of a strategic subsidiary, when he or she is vested with management or strategy-making powers;
• directors who are vested with management powers and/or hold managerial positions in the company or in a strategic subsidiary, or in the parent company when the position also concerns the company;
• directors who are members of the company's executive committee and, in companies adopting the two-tier model, directors who are members of the management body (for Italian companies adopting the two-tier model, members of the management board).

It was also specified that the attribution of deputy or emergency powers to a director does not, in itself, qualify him or her as an executive Director, unless such powers are, in fact, used with considerable frequency and/or for a prolonged period.

The Board has identified different general criteria for the commitments required for each role as executive Director and/ or Chief Executive Officer, non–executive and independent Directors, non-executive non-independent Director. In order to determine the commitment required, a "weighting "has been assigned to each position, and it was established that the role of Chief Executive Officer and/or executive Director at Terna S.p.A. is incompatible with the same role in listed companies or in other large companies.

With regard to the maximum number of positions that each Terna Director may hold in the management and control bodies of other listed or large companies, in addition to their position within the Board of Directors of Terna S.p.A. or in the boards of directors of companies directly and/or indirectly controlled or owned by Terna S.p.A., the revised document has:

• decreased the maximum overall "weightings" for such positions;
• increased the "weightings" attributed to management and oversight roles held by the CEO, the executive Director and other Terna S.p.A. Directors - in listed companies and companies of significant size.

All Directors in office hold a number of positions compatible with the guidelines established by the Board.

The short biographies for each Director indicate all the positions they hold. The number of positions held as a director or statutory auditor in other large companies is provided in the annexed Table 2.

There have been no exemptions granted by Terna's shareholders to the non-competition obligations undertaken by Terna's Directors, as provided for in art. 2390 of the Italian Civil Code.

MAXIMUM NUMBER OF POSITIONS AS DIRECTOR OR STATUTORY AUDITOR THAT DIRECTORS MAY HOLD IN OTHER COMPANIES, BASED ON THE POSITION HELD AT TERNA

The additional positions held by each Director of Terna S.p.A. - whether executive or non-executive - in the boards of directors and boards of statutory auditors of other listed companies or large companies must have a "weighting" of no more than 10, determined by multiplying the number of positions by the relative coefficient in the following table. In the calculation of the offices, those held by Terna directors in the Board of Directors of Terna S.p.A. itself or in those of companies directly or indirectly controlled or owned by Terna S.p.A. are not taken into account.

	WEIGHTINGS OF POSITIONS HELD IN LISTED COMPANIES OR LARGE COMPANIES REFERRED TO IN (A) AND (B
POSITION HELD IN TERNA	CEO IN LISTED COMPANIES	CEO IN LARGE COMPANIES	EXECUTIVE DIRECTOR IN LISTED COMPANIES	EXECUTIVE DIRECTOR IN LARGE COMPANIES	NON-EXECUTIVE AND INDEPENDENT DIRECTOR AND/ OR STATUTORY AUDITOR IN LISTED COMPANIES	NON-EXECUTIVE AND INDEPENDENT DIRECTOR AND/ OR STATUTORY AUDITOR IN LARGE COMPANIES	NON-EXECUTIVE AND NON INDEPENDENT DIRECTOR IN LISTED COMPANIES	NON-EXECUTIVE AND NON INDEPENDENT DIRECTOR IN LARGE COMPANIES
EXECUTIVE DIRECTOR AND/OR CEO	n/a	n/a	n/a	n/a	10	8	5	3
NON-EXECUTIVE AND INDEPENDENT DIRECTOR	10	5	5	5	2,5	2,2	2	1,8
NON-EXECUTIVE AND NON-INDEPENDENT DIRECTOR	10	5	5	5	2	1,8	2	1,8

Induction Programme

The Corporate Governance Code recommends that the Chair ensure that all members of management and oversight bodies participate, after their appointment and during their term of office, in initiatives aimed at providing them with adequate knowledge of the sectors in which the company operates, of corporate dynamics and their developments. This is also done with a view to assuring the sustainable success of the company, as well as of the principles of proper risk management and of the regulatory and self-regulatory framework of reference (art. 3, Recommendation 12(d) of the Corporate Governance Code).

In view of the renewal of the Board of Directors and the Board of Statutory Auditors, the following induction sessions were held in 2023:

• 14 June 2023: with the start of the term of office of the Board of Directors, an initial induction session was held to illustrate the guidelines in the 2021-2025 Industrial Plan. In the same session, there was a presentation aimed at representing the main governance solutions adopted by the Company in implementing the Corporate Governance Code and introducing the content of the Terms of Reference for the Board of Directors and the Guidelines on Conflicts of Interest.

• • 27-28 June 2023: in view of the start of the new Board of Directors' term, an induction session was organised, which was attended not only by the Chairman and the CEO, but also by all key management personnel, in order to provide an in-depth insight into the regulated, unregulated, international businesses and in financial topics.
• 20 November 2023: the Chairman organised an ad hoc meeting to discuss the rules governing related party transactions. At the same meeting, the Internal Audit Plan for 2023 was presented.

In 2024, up to the date of approval of this Report, one induction session was held on 5 March to examine how application of the WACC takes place.

Functioning of the Board of Directors

The Corporate Governance Code recommends that boards of directors draw up rules and procedures governing how they function so as to ensure effective management of pre-meeting information (art. 3, Principle IX). Subsequent recommendations also call for the adoption of rules governing the board's operating procedures and its committees, as well as for adequate disclosure in the Corporate Governance Report of the main contents and compliance with procedures relating to the timeliness and adequacy of information provided to Directors (art. 3, Recommendations 11 and 12). On 18 December 2019, Terna's Board of Directors adopted the "Procedure of Terna S.p.A.'s Board of Directors" (the "Procedure"), designed to govern the Board itself.

By adopting the Procedure, the Company was a step ahead of the recommendations of the new Corporate Governance Code. In particular, the Procedure defines in a comprehensive manner the role, activities and organisation of the meetings of the Board of Directors. It also provides indications to ensure the correct management of corporate information and the related documentation as well as the adequacy of information flows to the Board.

In fact, the Company intends to enhance the information provided to the Board of Directors, not only in quantitative but also in qualitative terms, in order to facilitate "informed" and "collective" participation in Board meetings.

The Procedure regulate the organisation of Board meetings, the provision of information and related documentation to Directors and the management of information flows to the Board of Directors.

In particular, in keeping with this principle, the above Procedure set out specific deadlines for the proposal and receipt of agenda items to be discussed by the Board in order to ensure that all the necessary information is collected in a timely and clear manner, also taking into account the Company's need for confidentiality. The supporting documentation for the items on the agenda is exclusively made available to the Directors in a dedicated data room with confidential access, at least five days before the date scheduled for the meeting. Departments ensure that this timeline is adhered to by making documentation available to board members. Such access is not permitted for Directors who have declared the existence of a conflict of interest, to the extent that the issue at hand relates to the conflict.

Should the documentation contain information deemed relevant or insider pursuant to legislation in force, then the head of Legal and Corporate Affairs, that is the individual in charge of the register, enters the names of the Directors in the specific section of the register (Insider List or Relevant Information List), noting the related requirements and restrictions. This way, information is provided in a timely manner, whilst safeguarding the Company's interest in preventing potential instances of market abuse.

During meetings, each Director is provided with a tablet computer containing all necessary and appropriate documentation relating to discussions.

Moreover, in order to facilitate comprehension of the documentation and optimise the participation of all Directors, including those who are not Italian nationals, Terna provides interpreters to offer real-time translations during Board meetings, above all for the Director of Chinese nationality.

At the indication of the Chair, in agreement with the CEO, meetings are normally attended by the Head of Corporate Affairs and the Chief Financial Officer. In addition, at the request of the Chair or the Chief Executive Officer, senior managers from Group companies are invited to participate in meetings, so that they may comment on agenda items and provide any in-depth analysis or clarification requested. In line with current regulations and best practices, Terna ensures that specific information flows are provided to the Board of Directors and its Committees by the heads of the relevant Company departments.

In detail, in addition to the information flows provided for by regulation and Company procedures, the Board of Directors receives periodic reports relating to the possible evolution of the energy system; on strategic transactions, projects and initiatives and on the related progress; on meetings held with stakeholders and, on a half-yearly basis or following a particularly important meeting, on the outcome of the dialogue conducted, ordinarily, with major shareholders and institutional investors, also in implementation of the Engagement Policy. In any event, the Board of Directors may decide to request information from Company departments also in relation to other matters deemed to be particularly important.

In order to take into account the practical experience gained during the Board's term of office, the Board of Directors, in its meeting of 27 July 2022, resolved to revise and update the document, now called "Terms of Reference of the Board of Directors" of Terna, in keeping with the recommendations of the new Corporate Governance Code.

The proposed revisions have three objectives:

• (i) to ensure formal alignment with the Corporate Governance Code in order to give full disclosure within this Report on Corporate Governance and Ownership Structures;
• (ii) to allow better consistency of the content of the text with the aforementioned documents, which have already been aligned with the new recommendations in the Corporate Governance Code;
• (iii) to incorporate the practices developed during the Board of Directors' term of office.

Generally speaking, the proposed changes are designed to improve the way the Board of Directors operates, enabling "informed" and "collective" decision-making with the priority aim of creating long-term shareholder value and pursuing sustainable success, taking into account the interests of the Company's key stakeholders.

In essence, the main changes made to the text of the Terms of Reference concerned:

i. with respect to the composition of the Board of Directors (art. 3.1 of the Terms of Reference), the explicit reference to:

• the qualitative and quantitative criteria for assessing the significance of relationships that could compromise the independence of Directors (see "Application criteria and procedure for assessing independence", pursuant to art. 2 of the Corporate Governance Code)";
• the Diversity Policy, approved by the Board of Directors at its meeting of 20 February 2018 and updated on 1 March 2023, in compliance with art. 2, Recommendation 8 of the Corporate Governance Code;
• the possibility for the outgoing Board of Directors to issue guidance to shareholders on the optimal qualitative and quantitative composition (art. 4, Recommendation 23 of the Corporate Governance Code) as well as on the maximum number of positions on the boards of directors or statutory auditors of listed companies or large companies that may be considered compatible with the effective performance of the duties of a Director of the Company (art. 3, Recommendation 15 of the Corporate Governance Code);

• ii. adaptation of the Board of Directors' responsibilities to the recommendations of the Corporate Governance Code and market best practices (art. 3.1. of the Terms of Reference). Such responsibilities include but are not limited to:
  • definition of the Company's strategies and the monitoring of their implementation through the approval of the Industrial Plan and identification of the nature and level of risk consistent with the strategic objectives in pursuit of sustainable success (art. 1, Recommendation 1, sub-paragraphs a, b and c of the Corporate Governance Code);
  • adoption, at the proposal of the Chair, in agreement with the Chief Executive Officer, of an "Engagement Policy" (art. 1, Recommendation 3 of the Corporate Governance Code);
  • the adequate internal division of its functions and the establishment of Board Committees tasked with factfinding, making recommendations and providing advice (art. 3, Principle XI and art. 3, Recommendation 16 of the Corporate Governance Code) and the allocation of specific budgets (art. 3, Recommendation 17 of the Corporate Governance Code);
• iii. adaptation of the responsibilities of the Chair of the Board of Directors to the recommendations of the Corporate Governance Code - in particular art. 1, Recommendation 3 and art. 3, Recommendation 12 - and to best market practices, emphasising their role in liaison between the CEO and any other Directors (art. 3.2 of the Terms of Reference). To this end, it was clarified that the Chair ensures that the pre-meeting information and additional information provided during meetings are suitable to enable the Directors to act in an informed manner and guarantee collective decisionmaking. The Terms of Reference also emphasise the key role of the Chair in ensuring, in agreement with the CEO, that Company and Group executives, heads of department responsible for the matters under discussion, or other persons whose presence is deemed useful, attend Board meetings, also at the request of individual Directors, to provide the appropriate in-depth analysis of items on the agenda. Furthermore, it should be noted that the Chair, with the assistance of the Secretary, must ensure the adequacy and transparency of the Board Review process with the support of the Nominations Committee;
• iv.the definition of professionalism requirements for the Secretary to the Board (art. 3.3. of the Terms of Reference), who is selected from among executives of the Company with adequate expertise and experience in corporate law and corporate governance, in line with art. 3, Recommendation 18 of the Corporate Governance Code;
• v. with regard to the manner in which Board of Directors' meetings are held (art. 3.6 of the Terms of Reference), the provision that:
  • in emergency situations, where the Board meeting is expected to be held remotely, indication of the location of the meeting in the notice calling the meeting or in the relevant minutes is not necessary;
  • in such extraordinary cases it is not necessary for the Chair and the Secretary to the meeting to be in the same place, notwithstanding the provisions of the Articles of Association;
• vi. the inclusion of certain clarifications regarding the Board Review (art. 3.8 of the Terms of Reference), and in particular the provision that such review:
  • should be concerned with the size, composition and effective functioning of the Board of Directors and its Committees, also considering the role played by the Board in defining strategies and monitoring operations and the adequacy of the Internal Control and Risk Management System, in compliance with art. 4, Recommendation 21 of the Corporate Governance Code;
  • might take place through different methods (use of questionnaires, meetings and/or individual interviews) or through a peer-to-peer review mechanisms, in line with art. 4, Recommendation 22 of the Corporate Governance Code.

The Terms of Reference also incorporated certain practices adopted by the Company during the current Board's term of office, in particular:

• allocation, in line with the approach adopted in the Terms of Reference for Board Committees, of a budget for individual Board Committees, with the clarification that for the Related Party Transactions Committee there is no cap on expenditure (art. 3.1 of the Terms of Reference);
• the provision that individual Board meetings, at the suggestion of the Chair, in agreement with the Chief Executive Officer, of inviting the Head of Corporate Affairs and the Chief Financial Officer to participate in individual Board meetings, and to invite the heads of Group' companies, or other persons external to the Company and the Group, whose presence is deemed useful in providing expertise regarding items on the agenda, to participate (art. 3.4 of the Terms of Reference);

• reference to annual calendars for Committee meetings (art. 3.4 of the Terms of Reference);
• reference to the practice that allows other members of the Board of Directors to participate in Committee meetings and all Board members to have access to the documentation prepared for the meetings of individual Committees (art. 3.4 of the Terms of Reference);
• advance notice, ten to fifteen days before the meeting, of the date of the meeting to the CEO, his staff, the Head of Corporate Affairs and the Secretary to the Board of Directors, as well as any other Heads of corporate departments indicated by the CEO, in order to review possible proposals to be submitted to the Board of Directors, and advance notice, seven to ten days before the meeting, of the date of the meeting to the CEO, the Chair, the Head of Corporate Affairs and the Secretary in view of circulation of notice of the meeting (art. 3.5 of the Terms of Reference);
• introduction of a special notice through the Secretary to the Board of Directors providing a list of the documentation accompanying individual items on the agenda as well as disclosures supported by appropriate documentation (art. 3.5 of the Terms of Reference);
• provision, when the Board is re-elected, of support activities on governance matters to the Chair as well as dedicated induction sections (art. 3.9 of the Terms of Reference).

At its meeting of 13 December 2023, the Board approved, with the favourable vote of a majority of Directors, subject to the favourable majority opinion of the Nominations, Governance and Scenarios Committee, certain amendments to the Terms of Reference. The amendments to the Terms of Reference included: (i) changes of a formal nature resulting from the different allocation of responsibilities among the Board Committees and the consequent changes in their names; (ii) an increase in the percentage of attendance of Board members at Board and Board Committee meetings from 75% to 80%.

The Secretary to the Board of Directors is responsible for taking the minutes of the meetings, which are drafted in such a way as to reflect the discussions of the Board of Directors.

The documents attached to the minutes, once entered in the meeting book, remain available for inspection at the request of each of the Directors and members of the Board of Statutory Auditors. The documents accompanying the minutes remain available to Directors and Auditors in the data room.

In 2023, the Board of Directors held 14 meetings that lasted an average of approximately 250 minutes each, which were duly attended by the Directors (94.22% overall) and the Board of Statutory Auditors (98.00%). The meetings were also attended by Company senior managers, whose presence was considered to be of assistance in providing better information on the items on the agenda. The attendance of each Director at the meetings held during the year is shown in the annexed Table 2.

For the current financial year, all Board meetings relating to the examination of the financial and operational data by the Board of Directors have been planned and scheduled as communicated to the market on 29 January 2024.

In the current financial year, up to the date of approval of this Report, the Board of Directors has held 5 meetings.

Role of the Chair of the Board of Directors

In order to avoid a concentration of responsibilities and to allow the Chair of the Board of Directors to perform their role of organising, managing and coordinating the Board in the best way possible, the Chair of the Board of Directors (hereinafter also the "Chair") is not usually granted executive powers.

The Chair liaises between executive and non-executive Directors and ensures that the Board Committees function smoothly.

On 9 May 2023, a resolution of the Board of Directors assigned specific corporate duties to the Chairman, Igor De Blasio, in line with the approach adopted by the previous Board. To that end, the Chairman is entrusted with representing the Company, leading and directing the work of the Board, performing a promotional and advisory role with regard to Corporate Social Responsibility, and overseeing activities relating to the investment in the company "CESI - Centro Elettrotecnico Sperimentale Italiano Giacinto Motta S.p.A.", in coordination with the Chief Executive Officer. Terna's Audit department also reports to the Chairman.

Pursuant to art. 25 of the Articles of Association, the Chair is the legal representative of the Company, chairs General Meetings, convenes and chairs the Board of Directors, sets the agenda, coordinates its work and ensures that adequate information regarding agenda items is provided to all Directors. The Chair also oversees the implementation of Board resolutions.

At each Board meeting, the duties of the Chair include an update on governance and sustainability matters.

In particular, in agreement and in coordination with the Chief Executive Officer and with support from the Secretary, the Chair ensures that sufficient time is allocated to items on the agenda to allow for constructive discussion, and also encourages contributions from Directors during the course of meetings.

The Chair, always in agreement with the Chief Executive Officer, encourages senior managers of Terna and Group companies and the heads of the relevant company departments to take part in Board meetings, so that they can provide expertise and clarifications regarding items on the agenda.

In order to facilitate the flow of information within the Board and to guarantee the "collective" nature of decisions, the Chair also ensures - including through the Secretary - that documentation relating to the Board's activities is made available to the Directors in a timely manner. If, in specific cases it is impossible to provide the necessary information well in advance, then the Chair must in any event ensure that adequate and detailed information is provided during Board meetings.

In implementation of the Policy for engagement with the generality of shareholders and other stakeholders of Terna in 2021, the Chair, with the support of the Company Secretary:

• (i) is responsible for corporate governance matters in the Shareholder-Director Engagement area;
• (ii) ensures that the Board of Directors is informed, at the earliest possible meeting, on developments in and the significant content of dialogue with all the stakeholders, inviting the CEO to report on the outcome of engagement activities for matters falling under his responsibility. The Chair must also inform the Board of Directors of developments in and the significant content of engagement activities carried out, as well as of any new requests received.

The content and method of implementation of the above Policy are described in Section XV of this Corporate Governance Report.

Role of the Secretary

On 9 May 2023, the Board of Directors appointed Emilia Pucci, Head of the Corporate Affairs and Corporate Governance department, as Secretary to Terna's Board of Directors. Ms. Pucci held the same role for the previous Board.

As the party responsible for the correct management of information flows and with the support of the relevant Company department, the Secretary seeks to ensure that the relevant Company departments transmit information promptly, in order to facilitate discussion.

Likewise - in agreement with the Chair - the Secretary ensures that the Directors are informed of any legislative or regulatory changes relevant to the Company, such as, for example, those directly or indirectly regarding Terna and its activities as Transmission System Operator (TSO), and those regarding listed companies.

During Board meetings, the Secretary assists the Chair with the organisation and management of the meetings, providing legal and corporate governance support if necessary.

In order to enhance the reporting function of the Board of Directors, the Secretary draws up the minutes in such a way as to describe the illustrated documentation and represent the Board's discussions.

In line with the recommendations of the new Corporate Governance Code, the Secretary provides impartial assistance and consultancy to the Board regarding any aspect that is relevant to the correct functioning of the corporate governance system (art. 3, Recommendation 18).

Attendance policy

With regard to the task of organising the work of the Board assigned to the Chair, taking into account international best practices, as disseminated among companies listed on the Dow Jones Sustainability Index (including Terna), at a meeting on 20 February 2018, on the recommendation by the Audit, Risk, Corporate Governance and Sustainability Committee, the Board of Directors approved a "Policy regarding participation at meetings of the Board of Directors" ("Attendance policy") aimed at facilitating the broadest possible participation of Directors at Board meetings. The policy specifies that, in addition to the procedures for participation, including teleconferencing, as provided for in the Articles of Association, the scheduling of meetings should as far as possible be notified in advance, with the Board of Statutory Auditors also to be informed. The Policy was then updated on 1 March 2019.

Since 18 December 2019, in the interests of rationalisation, the attendance policy has been included in the "Procedure of Terna S.p.A.'s Board of Directors", lastly updated on 28 july 2022 e now called "Terms of Reference of the Board of Directors".

As illustrated in greater detail in the previous paragraph, "Maximum number of positions in other companies", the Board of Directors - at its meeting of 1 March 2023, also pursuant to the opinion of the Audit, Risk, Corporate Governance and Sustainability Committee - further strengthened the attendance principle, by requiring an average rate of attendance at Board meetings by members of TERNA's Board of Directors of no less than 80% of the Board meetings held in the year, up from the previous 75%.

The heightened requirement now also applies to Board Committees.

Lastly, with a view to making individual Directors more responsible, failure to comply with the required attendance, whether at Board or Board Committee meetings, entitles the Board of Directors to relieve the Director of their role in any Committee of which he or she is a member.

The increase in the attendance percentage was included in the Board of Directors' Terms of Reference when the resolution of 13 December 2023 was approved to update the Terms.

Executive bodies

In carrying out its functions, Terna's Board of Directors provides for one Chief Executive Officer ("CEO") to whom the Board assigned authority with a resolution dated 9 May 2023 defining the content, limits and procedures for exercising such authority.

No Executive Committee has been established.

The CEO has the authority to act as the Company's legal representative and is vested with the broadest possible powers for management of the Company, pursuant to the above Board resolution, excluding only those matters reserved by law or by the Articles of Association to the Board of Directors, as described in this section under "Role of the Board of Directors".

The CEO reports to the Board of Directors and the Board of Statutory Auditors, on at least a quarterly basis and on the occasion of Board of Directors' meetings, on the Company's activities and performance, as well as on the decisions taken in exercising his authority pursuant to art. 21.3 of the Articles of Association.

As of the date of this Report, there are no instances of cross directorship: Terna's CEO does not hold any directorships in companies outside the Terna Group, of which another Director of Terna is Chief Executive Officer.

Other executive Directors

With the exception of the Chief Executive Officer, Giuseppina Di Foggia, the other members of the Board of Directors are non-executive (art. 2 Principles V and VI of the Corporate Governance Code).

The Chairman, Igor De Blasio, likewise does not hold an executive position, as he has not been assigned individual authority for executive decisions, nor does he have a specific role in determining corporate strategy (Art 3, Principle X of the Corporate Governance Code).

In this context, the separation of roles between Terna's Chair and the Chief Executive Officer strengthens the impartiality and fairness required of the Chair of the Board of Directors.

Non-executive Directors (as they do not have executive powers and/or management functions within the Company) make significant contributions to the adoption of Board resolutions and ensure effective monitoring of operations.

Independent Directors

A requisite number of non-executive Directors, with the appropriate expertise, also quality as independent (9 Directors out of 12). Whilst independence characterises the activity of all the Directors, whether executive or non-executive, the presence of Directors qualifying as "independent" in compliance with the independence requirements set out by the law, the Articles of Association and the Corporate Governance Code, and whose role is significant both within the Board itself and Board Committees, suitably ensures adequate consideration of all shareholders' interests.

In February 2007, the Company therefore adopted a specific internal procedure, setting out the criteria for assessing the independence of its non-executive Directors and confirming the requirements referred to in the Articles of Association and the Corporate Governance Code ("Application criteria and procedure for assessing the independence of Directors pursuant to art. 3 of the Corporate Governance Code"), in keeping with the provisions of the Corporate Governance Code then applicable. This is described in the above Section II under "Election of Directors, related requirements and term of office".

Following adoption of the Corporate Governance Code, the Board of Directors of the Company modified the independence requirements, providing full disclosure in the 2022 corporate governance report.

With specific reference to independence, the new Corporate Governance Code defines as "independent" nonexecutive directors who do not have, or have not recently had, directly or indirectly, such relations with Terna or persons connected with Terna as would affect their current independence of judgement.

Art. 2, entitled "The composition of corporate bodies" - Recommendation 7 - lists the circumstances that compromise, or appear to compromise, the independence of a director. In reviewing the conditions capable of jeopardising independence, the new text recalls the conditions contained in art. 3 of the previous Corporate Governance Code. In line with the past, the new Code also includes significant commercial, financial or professional relationships (letter c) and any significant additional remuneration other than the fixed remuneration for the office and the remuneration for participation in committees recommended by the Code or provided for by current legislation (letter d). The new Code also invites the Board of Directors to predefine, at least at the beginning of the term of office, the quantitative and qualitative criteria for assessing the significance of "commercial, financial and professional relations" and "additional remuneration" (art. 2, Recommendation 7).

Recommendation 9 specifies that "All members of the oversight body must meet the independence requirements set out in Recommendation 7 for directors".

Moreover, the independence of a director (and therefore of a statutory auditor) is jeopardised if the director is a close family member of a person who is in one of the situations referred to in Recommendation 7(a) to 7(g) of the Corporate Governance Code, including therefore the cases referred to in 7(c) and 7(d).

As described in the Corporate Governance Report for 2020, the Company decided to postpone application of art. 2, Recommendation 7 in the new Corporate Governance Code until such time as the Company's governance documentation – including the criteria for assessing independence – had been updated to fully comply with the new Code.

In 2021, following an analysis performed in order to identify the actions to be taken to ensure the correct implementation of the new Code, including with regard to independence, new document was then prepared, entitled "Application criteria and procedure for assessing independence, pursuant to art. 2 of the Corporate Governance Code".

The document was approved by the Board of Directors on 26 January 2022, with the favourable opinion of the Audit, Risk, Corporate Governance and Sustainability Committee dated 25 January 2022 and was adopted also by the Board of Statutory Auditors at its meeting of 15 February 2022.

The document is more detailed and comprehensive than its previous version and consists of nine articles. In addition to identifying assumptions and objectives, it lists the conditions that may jeopardise independence; the text devotes an article to the figure of the Chair of the Board of Directors, where he or she is qualified as independent, and an article to the Board of Statutory Auditors because of the desired extension of the criteria.

The text also describes the procedures for assessing independence and the related checks. A specific article is devoted to the meetings of independent directors.

The heart of the procedure relates to a description of the criteria adopted by the Company to assess "materiality" and the mechanism for defining and measuring the parameters adopted. This is a key point that reflects what emerged from the letter from the Chair of Italy's Corporate Governance Committee dated 6 December 2021. Based on an analysis of the reports published during 2021, the letter highlighted, among other things, that only a quarter of listed companies report such criteria. Similarly, in the letter of 25 January 2002, the Chair of the Committee reiterated the

importance of defining ex ante the quantitative parameters and qualitative criteria for assessing the significance of any commercial, financial or professional relationship and any additional remuneration for the independence of a Director and of disclosing them in the Corporate Governance Report.

In line with this approach, in incorporating the conditions that may compromise a director's independence, the Document defined the materiality of Commercial, Financial or Professional Relationships (art. 5) as well as the significance of Additional Remuneration (art. 6).

With reference to the materiality of Commercial, Financial or Professional relationships, the Document provides (a) with regard to past relations, that commercial, financial or professional relationships with Terna or the companies controlled by it, or with the relevant executive directors or top management, as well as with a party who, also together with others through a shareholders' agreement, controls Terna or, if the controlling shareholder is a company or entity, with the relevant executive directors or top management that, in at least one of the three financial years prior to taking office, are, individually or cumulatively, for each financial year above 100% of the "Benchmark"19, and (b) that during their term of office, Directors must not ne party to any of the aforementioned relationships in order to qualify as independent 20.

With reference to the materiality of additional remuneration, the Document establishes (a) that additional remuneration - meaning remuneration deriving from employment, administration or control - received by a Director, during one of the three financial years prior to that of taking office, from TERNA or its parent company or one of its subsidiaries is normally qualified as material if, individually or cumulatively, for each financial year, it is higher than the aforesaid Benchmark, and (b) that, during their term of office, Directors will not receive, from Terna, its parent company or one of its subsidiaries, additional remuneration that, individually or cumulatively, is higher than 40% of the aforesaid Benchmark21.

On the one hand, the diversified thresholds adopted by the Company makes it easier for candidates to stand for election as a Director or Statutory Auditors, even though it sets an objective, strict standard; on the other hand, it precludes any relationship of a financial nature during the term of office, so as to prevent any occurrence likely to jeopardise the independence of Directors and Statutory Auditors.

¹⁹ Pursuant to art. 5.1. of the Document "Application Criteria and procedure for assessing independence, pursuant to art. 2 of the Corporate Governance Code", "Benchmark" means the average remuneration received by non-executive directors for their office and for any participation in the committees recommended by the Corporate Governance Code or envisaged by the regulations in force during the last year of their previous term of office, calculated by the Corporate Affairs and Corporate Governance Department. For the purposes of calculating the "Benchmark", the Chair of the Board of Directors is not taken into account both with reference to the calculation of the number of directors and the amount received by him or her. Pursuant to art. 5.3 of the aforesaid Document, it should also be noted that, for the purposes of the aforesaid assessment of the materiality of commercial, financial or professional relations, in the case of a director who is also a partner in a professional firm or consulting company, the competent body considers the materiality of the professional relations that may have an effect on his position and role within the firm or consulting company, or that in any case pertain to important transactions of Terna and its Group, also independently of the Benchmark. With reference to the 2017-2019 three-year period, the Benchmark was equal to €104,562.85. With reference to the three-year period 2020-2022, the Benchmark was equal to €97,727. This amount was reported in the document "Guidelines of Terna's Board of Directors to shareholders on the size and composition of the new Board of Directors" in order to facilitate the presentation of "independent" candidates.

²⁰ Pursuant to art. 5.5 of the same Document, it is clarified that, with reference to any commercial, financial or professional relations entertained by close family members of directors, the Benchmark is applied both with respect to commercial, financial or professional relations entertained by them during one of the three financial years preceding the relevant director's term of office, and in each of the financial years during which such director is in office.

²¹ Pursuant to art. 6.3 of the Document, it should be noted that, with reference to the close family members of directors or statutory auditors, the Benchmark is applied both with respect to remuneration received during one of the three financial years preceding the year in which the term of office begins, and in each of the financial years during which the office is held. For the sake of completeness, it should be noted that the Document points out that the Board of Directors considers the independence of its members by placing substance over form. Based on this principle, it should be noted (a) that in any event, the Board of Directors retains the authority to consider the situation of the individual director in question on an individual basis and to qualify him or her as independent, where appropriate. In this case, the Board of Directors provides adequate and transparent information on the reasons for the disapplication of one or more criteria for each individual director concerned, ensuring that they are reported in the minutes of the meeting; the reasons for such assessment are also reported in the annual report on the Corporate Governance system (art. 7. 2), and (b) that, with specific reference to the examination of material business, financial or professional relations or material additional remuneration, the Board of Directors may consider a director to be non-independent where, albeit in compliance with the criteria set out in the Document, the overall assessment of the circumstances represented and the additional elements available, also in consideration of the principle of substance over form, leads it to consider that the independence requirement is not met (art. 7.3).

Mindful of the difference between the two cases and above all recognising the usefulness of having a Group statutory auditor, the Company has accordingly decided to cap additional remuneration during the term of office at 40%.

Lastly, the document reiterates the power of the Board of Directors to assess in a concrete manner the situation of an individual Director or Statutory Auditor concerned and, if necessary, to classify him/her as independent. With specific reference to the examination of significant commercial, financial or professional relations or significant additional remuneration, the Board may assess a Director or a Statutory Auditor as non-independent if, while respecting the adopted benchmark, the overall assessment of the circumstances depicted and of the additional elements available, also in consideration of the principle of substance over form, leads to the conclusion that the independence requirement has not been met.

The new criteria were applied for the first time in 2022 and 2023.

At a meeting on 6 March 2024, based on the information provided by the individuals concerned, the Board of Directors assessed the independence of its non-executive Directors, applying the aforementioned Application Criteria and art. 2, Recommendation 7 of the Corporate Governance Code, in addition to the document "Application criteria and procedure for assessing independence".

The assessments also concerned commercial, financial and professional relations as well as additional remuneration, as defined by the aforementioned document.

In particular, the Board of Directors proceeded to assess the independence requirements of its members in light of the Articles of Association, article 147-ter, paragraph 4, and article 148, paragraph 3, of the CLF, required by article 15.4 of the Articles of Association, as well as the independence requirements of the Corporate Governance Code (article 2, Recommendation 7) incorporated in the document "Application criteria and procedure for assessing independence". In light of the governance recommendations, the Chairman Igor De Biasio was assessed as independent pursuant to both articles 147-ter, paragraph 4 and 148, paragraph 3 of the CLF and article 2, recommendation 7 of the Corporate Governance Code.

Non-executive Directors Angelica Krystle Donati, Enrico Tommaso Cucchiani, Gian Luca Gregori, Simona Signoracci, Marco Giorgino, Karina Audrey Litvack, Jean-Michel Aubertin and Anna Chiara Svelto were found to be independent pursuant to both articles 147-ter, paragraph 4, and 148, paragraph 3, of the CLF and article 2, Recommendation 7 of the Corporate Governance Code.

The Director Regina Corradini D'Arienzo and the Directors Francesco Renato Mele and Qinjing Shen were found to be non-independent pursuant to articles 147-ter, paragraph 4 and 148, paragraph 3, of the CLF and article 2, Recommendation 7 of the Corporate Governance Code.

Correct application of the criteria and procedures adopted by the Board of Directors was, at the same time, verified by the Board of Statutory Auditors in application of the new procedure, which placed again such competence under the responsibility of the oversight body in line with the Q&As of the Corporate Governance Committee.

The Board of Statutory Auditors also reported during the same meeting of 6 March 2024 on the existence of the independence requirement for all Statutory Auditors, pursuant to article 2, Recommendation 9, of the Corporate Governance Code, which was verified during the meeting of 7 February 2024 in application of the Terms of Reference of the Board of Statutory Auditors.

Accordingly, the composition of the Board is also in line with the requirements of the new Corporate Governance Code, which recommends that, in large companies other than those with a concentrated ownership, at least half of the Board of Directors should be independent Directors (art. 2, Recommendation 4).

The number and expertise of independent Directors are also such as to ensure the appropriate composition of the Board Committees established by Terna in accordance with the Corporate Governance Code.

Given the composition of the Board of Directors, marked by a high number of independent Directors, and its working methods (described in the above sub-section, "Functioning of the Board of Directors"), and the significant participation of independent Directors in Board Committees, the Company has set up a system providing for a constant exchange of information among the independent Directors, both on the occasion of Board Committee meetings and full Board meetings. The new Guidelines on independence requirements devotes a specific article to "Meetings of the Independent Directors", stating that they shall meet, without the other Directors, on a periodic basis and in any event at least once a year to assess issues deemed of interest with respect to the functioning of the Board of Directors and the Company's management, with particular regard to the adequacy of dialogue and information flows between executive and non-executive Directors. The Guidelines also specify that the meetings of independent Directors do not provide for participation of the independent Chair, if appointed; however, the independent Directors may, if they deem it useful for coordination purposes, invite the Chair to participate in the meeting and/or provide him/her with details of any main considerations that are relevant. The independent Directors held a meeting on 20 November 2023.

With reference to the specific provisions of Terna's Articles of Association, introduced in order to implement the unbundling legislation, the Board review held on 6 March 2024 determined that all the Company's elected Directors meet the independence requirements provided for in art. 15.5 of the Articles of Association. This article states that "the Company's Directors may not hold, on penalty of disqualification, positions as a director, member of the supervisory board or of other bodies that legally represent a company whose business is the production or supply of electricity or gas". In this regard, at the end of 2023 and the beginning of 2024, a specific investigation was also conducted with reference to the Director, Karina Audrey Litvack, which is described in detail in Section VII with reference to the activities of the Nominations, Governance and Scenarios Committee.

Lead Independent Director

The working methods and composition of the Board of Directors has assured the suitable coordination of the contributions and requirements of non-executive Directors and, in particular, of the independent Directors. It has also guaranteed the prior exchange of information, thus allowing the Board to work in an effective and productive manner and to focus on the real needs of the Company. On this basis, as none of the conditions specified in the recommendations of the Corporate Governance Code (art. 2, Recommendations 13 and 14) apply, Terna has so far not appointed a Lead Independent Director.

Section V

Management of corporate information

In accordance with the provisions of the Corporate Governance Code in force at that time, in April 2004, the Company's Board of Directors adopted specific regulations for the internal management and processing of confidential information. The regulations also set out procedures for the disclosure of documents and information concerning the Company and its subsidiaries, aimed at protecting confidential information, whilst also assuring that the market disclosure of information on the Company is fair, complete, appropriate, timely and not selective.

The regulations were then supplemented and amended on various occasions to take account of changes in the applicable regulatory framework occurring from time to time and changes in the Group's organisational and governance structure.

In particular, specific procedures have been established in relation to the disclosure of corporate documents and information to the public - especially regarding the disclosure of insider information - and to the methods used by people representing the Company in order to contact the press and other forms of mass media (or financial analysts and institutional investors).

Subsequently, on the entry into force of new European market abuse regulations (EU Regulation 596/2014, Delegated Regulation (EU) 2016/522, Implementing Regulation (EU) 2016/1055 and further implementing provisions), the Board of Directors of Terna S.p.A. replaced the aforementioned regulations, adopting a new "Procedure for the management, processing and disclosure of corporate information relating to Terna S.p.A. and its subsidiaries" (also referred to in this section as the "Procedure for Managing Corporate Information"). The Procedure updated the notion of insider information and strengthened the rules governing cases in which the disclosure of inside information is delayed, as required by art. 17, paragraph 4.3 of Regulation (EU) 596/2014 and the above Implementing Regulation. The Procedure for Managing Corporate Information, which, like the previous regulations, also establishes official guidelines for subsidiaries so as to ensure the coordinated management of information flows within the Group, regulates the related responsibilities and obligations for reporting to the CONSOB. It also connects such activities with those involved in the establishment and update of the list of individuals with access to inside information (the Insider List), as governed by a specific, separate procedure (see below). The Procedure was revised on 18 December 2019 following the entry into force of Legislative Decree 107 of 2018 and changes to Terna S.p.A.'s organisational structure and, most recently, on 1 March 2023, the Board of Directors confirmed the current approach with minor changes.

The Directors and Statutory Auditors of Terna S.p.A. and its subsidiaries are required to comply with the rules set out in the Corporate Information Procedure and to ensure that all documents and information acquired in the performance of their duties remains confidential. This requirement also extends to the content of any discussions during Board of Directors' meetings.

This Procedure - available on the Company's website at, www.terna.it, in the Governance section - assigns, on a general basis, the Company's Chief Executive Officer and the respective heads (sole director, executive chair, chief executive officer and/or general manager, as applicable) of subsidiaries responsibility for managing the relevant confidential information. The Procedure also requires that the disclosure of information on individual subsidiaries must, in any event, receive prior authorisation from Terna's Chief Executive Officer.

Lastly, the Procedure also includes specific "Measures applicable to persons responsible for breaches of the Procedure".

Report on Corporate Governance and Ownership Structures 2023

Again, with regard to the management of corporate information, and in particular inside information, in compliance with the aforementioned European legislation on market abuse (in particular EU Regulation 596/2014 and Implementing Regulation (EU) 2016/347) and existing best practices, on 8 May 2018, Terna's Board of Directors adopted a specific Procedure for drawing up and updating the Insider List of persons with access to inside or potentially inside information, a document available on the Company's website at www.terna.it in the Governance section. The procedure was revised on 18 December 2019 following the entry into force of Legislative Decree 107 of 2018 and changes to Terna S.p.A.'s organisational structure and, most recently, on 1 March 2023, the Board of Directors confirmed the current approach with minor changes.

The Company – in implementation of the operational instructions contained in the CONSOB guidelines on "Managing Inside Information" (the "CONSOB Guidelines") - has drawn up and updated the lists of persons with access to inside or relevant information in carrying out certain responsibilities or by virtue of the professional relationship with Terna and/or a subsidiary.

Finally, in order to guarantee market transparency relating to significant transactions involving the purchase, sale, subscription for or exchange of Terna's shares, or of financial instruments connected with the Company, carried out directly or indirectly - by individuals with significant decision-making powers within the Company, and with access to price sensitive information ("relevant persons"), in April 2004, the Company's Board of Directors approved a code of conduct for internal dealing, in compliance with the regulations issued by Borsa Italiana S.p.A..

In this context, Terna introduced an obligation for these individuals to abstain from executing – directly or indirectly transactions subject to internal dealing rules during two blocking periods. These periods specifically concern the thirty day period before the approval of the separate (and consolidated) financial statements and the interim half-year report by Terna's Board of Directors. These obligations were also retained in the "Procedure for the management, processing and disclosure to the market of information on transactions in financial instruments undertaken by relevant persons", adopted by the Company's Board of Directors following the entry into force of the provisions on internal dealing introduced in the CLF (Law 62 of 18 April 2005) and the related implementing regulations issued by the CONSOB (articles 152-sexies to 152-octies and Annex 6 in the Regulations for Issuers).

Disclosure and transparency obligations concerning internal dealing were then further revised to comply with the aforementioned European market abuse regulations, in effect from 3 July 2016 (and, in particular, EU Regulation 596/2014 or "MAR", Delegated Regulation (EU) 2016/522 and Implementing Regulation (EU) 2016/523). This was done within the context of the Internal Dealing Procedure (referred in this section as the "Internal Dealing Procedure"), adopted by Terna's Board of Directors and updated on 27 July 2017, in compliance with the provisions of CONSOB Resolution 19925 of 22 March 2017, containing "Amendments to the regulations implementing Legislative Decree 58 of 24 February 1998, concerning the regulation of issuers and markets, as well as related party transactions, in implementation of EU Regulation no. 596/2014 on market abuse" and also taking into account the guidelines received from ESMA within the context of the "Questions and Answers on the Market Abuse Regulation".

The Internal Dealing Procedure was last revised on 18 December 2019 following the entry into force of Legislative Decree 107 of 2018 and changes to Terna S.p.A.'s organisational structure, and, most recently, on 1 March 2023, the Board of Directors confirmed the current approach with minor changes.

The Internal Dealing Procedure applies to transactions conducted on behalf of the persons described in art. 19 of the MAR ("relevant persons") and persons closely associated with them, as identified pursuant to art. 3, paragraph 1(26) of the MAR and taking into consideration the clarifications provided by ESMA in this respect. In accordance with art. 19, paragraphs 8 and 9 of the MAR and art. 152-quinquies.1 of the Regulations for Issuers, all subsequent transactions, as identified in the regulations, are to be disclosed once they have reached or exceeded €20,000 in a calendar year. The threshold of €20,000 is calculated by adding together all transactions completed during a calendar year, without any offset. It is understood that, after exceeding this threshold, all transactions (including those involving smaller amounts) must be disclosed.

< > REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2023

The disclosure obligations relating to significant transactions provided for in art. 114, paragraph 7 of the CLF, and articles 152-sexies et seq. of the Regulations for Issuers therefore remain in force. These obligations regard (i) shareholders who hold an equity investment equal to at least 10% of the share capital and to persons who in in any case control the issuer, and (ii) persons closely associated with them, as defined within the scope of art. 152-sexies, paragraph 1(d) of the Regulations for Issuers.

The current Internal Dealing Procedure is available on the Company's website (www.terna.it – Governance section). This serves to identify "relevant persons" at Terna and "persons closely associated" with them, and governs the management, processing and disclosure to the market of information on transactions in financial instruments undertaken by these individuals, the drawing up and updating of the list of relevant persons, as established pursuant to the regulations in effect, and the authorisation of relevant persons, where necessary, to carry out transactions during blocking periods.

Report on Corporate Governance and Ownership Structures 2023

Section VI Board Committees

The Corporate Governance Code recommends that the Board of Directors set up committees with the role of conducting reviews and providing recommendations and advice in the areas of nominations, remuneration, control and risk management (art. 3, Recommendations 16), in line with the previous edition.

When it took office and in implementation of the Code's recommendations, the newly elected Board of Directors adopted a resolution on 9 May 2023 establishing the following committees: the "Remuneration Committee", the "Audit, Risk and Sustainability Committee" and the "Nominations, Governance and Scenarios Committee", tasked with making recommendations and providing advice so as to ensure the effective performance of Board functions. The number of members of these Committees was also increased to five. A further Board Committee, the "Related Party Transactions Committee", has also been set up. This carries out the role required by the "Regulation containing measures concerning related party transactions" issued by the CONSOB with Resolution 17221 of 12 March 2010, most recently amended by CONSOB Resolution 21624 of 10 December 2020, and the "Procedure for Related Party Transactions" adopted by the Company and described in Section XII of this Report.

Compared to the tenure of the previous Board, and in line with the findings of the Board Review conducted by the outgoing Board, it was considered appropriate to assign governance responsibilities to the Nominations Committee, which at the same time expanded its remit to include scenario analysis. At the same time, the remit of the newly formed Audit, Risk and Sustainability Committee was redefined, also with a view to having an overall view of both financial and non-financial risks.

The criteria regarding the composition, duties and responsibilities, as well as the activities of these Committees were identified in line with the provisions of the Corporate Governance Code and outlined in specific terms of reference adopted by the Board of Directors.

It should be noted that the Terms of Reference were adopted for the first time at the meeting held on 24 January 2007. After that date, they were periodically revised, also due to the evolution of corporate governance principles and, as a result, of the Company's governance.

To this end, the responsibilities of each Committee were redesigned in the light of the new recommendations in the Corporate Governance Code, the most recent market guidelines and the best practices already adopted by the Company; in addition, organisational changes were made that affect all the Committees, with a view to standardising their operating procedures.

The main changes made to the texts of the Terms of Reference concern:

• i. the possibility of appointing the Chair of the Board of Directors as a member of a Committee;
• ii. adaptation of the expertise of the Committees based on the recommendations in the Corporate Governance Code;
• iii. the availability of financial resources to the Committees, with the exception of the Related Party Transactions Committee;
• iv. reports to the Board of Directors;
• v. annual approval of a calendar of Committee meetings, with the sole exception of the Related Party Transactions Committee, whose meetings are held when any such transaction is to be considered;
• vi. explicit arrangements for making supporting documentation for Committee meetings available in the data room;
• vii. the possibility for the Chair, the Chief Executive Officer, other Directors and, after informing the CEO, other members of departments to attend Committee meetings;
• viii. in the event of a tie, the introduction del casting vote of a casting vote for the chair of each Committee;
• ix. the definition of the professional requirements for the Secretary to each Committee.

Following these changes, the Terms of Reference were again amended at the Board meeting of 13 December 2023. The new division of responsibilities between the Audit, Risk and Sustainability Committee (formerly the Audit, Risk, Corporate Governance and Sustainability Committee) and the Nominations, Governance and Scenarios Committee (formerly the Nominations Committee) provided an opportunity to update the relevant Terms of Reference. At the same time, the following changes were made:

• i. Increase in the minimum attendance at meetings from 75% to 80%. The said minimum attendance percentage is the result of the conclusion of the deliberations that accompanied the last Board of Directors' meeting, which emerged from the Board Review and which found a precise definition in the document "Guidance to shareholders on the size and composition of the new Board of Directors", as well as in the Company's rules on concurrent offices. In particular, these documents state that "the average attendance of the members of Terna's Board of Directors at the meetings of the Board of Directors shall in any case be in line with the average attendance of the other companies included in the FTSE-Mib index and in particular those comparable to Terna, and in any case not less than 80% of the meetings of the Board of Directors held during the year. This percentage shall also apply to meetings of the Board Committees". Failure to comply with this provision will cause the Board to assess the Director's participation in the Committees. However, the aforementioned percentage may be reviewed in cases of proven necessity or urgency.
• ii. meetings will be deemed to be held at the place where the Chair of the Committee is located; in addition, the Chair and the Secretary may be located at different places, without affecting the option of connecting from a remote location.

The above-mentioned revisions also affected all the Committees.

On the other hand, certain clarifications in line with the recommendations of the Corporate Governance Code remained unchanged.

In this respect, at least one member of the "Remuneration Committee" must possess adequate knowledge and experience in financial and remuneration policy matters, and at least one member of the "Audit, Risk and Sustainability Committee" must possess adequate expertise in matters relating to accounting and finance or risk management.

Additionally, the "Remuneration Committee" reports to the Board of Directors, at least annually, on its activities, whilst the "Audit, Risk and Sustainability Committee" reports at least every six months at the time of approval of the annual report and the half-year report, including on matters concerning the Internal Control and Risk Management System.

During the year, the chair of each Committee reports to the earliest possible Board of Directors' meeting on the meetings carried out by their Committee, in accordance with the recommendations of the Corporate Governance Code.

All the Committees reported to the Board of Directors on 19 March 2024.

The information provided in this Report on the activities carried out during the year, on the number and average duration of the meetings held, and the related percentage attendance of each member of the Committees, takes into account the minutes drawn up by the Committees and the support provided by the respective chairs or other members, as far as their respective duties are concerned, as set forth in the related terms of reference. Committee meetings are recorded in minutes. Each Committee is also allowed to hold their meetings using video or telephone services, as is the case for the Board of Directors. Each Committee has the right to access the necessary information and corporate departments to carry out its tasks and may avail itself of external advisors within the limits provided for by the Board of Directors. All members of the Board of Statutory Auditors may take part in any Committee meeting.

< > REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2023

Section VII

Nominations, Governance and Scenarios Committee

The Board of Directors established the Nominations Committee at its meeting held on 27 May 2014, at the time of its first re-election following the entry into force of the provisions contained in art. 5.P.1 of the Corporate Governance Code.

Board Review and Board Committees review

In compliance with the Corporate Governance Code, Terna's Board of Directors, with the support of the Nominations Governance and Scenarios Committee carries out an annual self-assessment regarding the size, composition and actual functioning of the Board itself and of its Committees, with reference to the activity performed since the election. This is also called a Board Review.

To proceed with the self-assessment, Terna appointed a specialist external consultant, Russell Reynolds Associates Srl, an independent third party, selected following a beauty contest, taking into account the recommendations of the Nominations, Governance and Scenarios Committee. The review was conducted in the form of a specific questionnaire, prepared by the consulting firm, to be completed by the Directors. The responses provided were then expanded on in the course of interviews with individual members in order to further examine the various issues and obtain comments and opinions.

On completion of the consultant's activity, the Board of Directors' self-assessment highlighted its strengths in terms of the Board's diversity, quality and composition and the inclusive approach of the Chairman.

The other strengths noted by the Directors are:

• communication from management;
• induction processes;
• external financial reporting;
• involvement of Directors in drawing up the Company's strategy and examining the new industrial plan;
• suitable composition and functionality of Board Committees, the Board of Statutory Auditors and the Supervisory Board;
• suitable governance processes to handle compliance and ethical issues.

In order to further increase the quality of Terna's governance processes, the Directors, with the support of the appointed consultant, reviewed the suggestions made as part of the Board Review, regarding, among other things:

• the planning of further induction activities, in addition to those already planned, including off-site meetings and one-toone sessions (between the Chairman and Directors and between the Directors).
• strengthening the way in which the Board operates: full and timely information flows, clear agendas with welldefined priorities, adherence to established timetables, more efficient planning, an improved balance of the time used by each Directors.

The results of the Board Review process were analysed by the Nominations, Governance and Scenarios Committee on 4 March 2024. The process was concluded at the Board meeting of 19 March 2024, which approved the following Report.

		INDEPENDENCE
NAME	ROLE	CLS	CGC
Igor De Biasio	Chairman
Jean-Michel Aubertin	Member
Regina Corradini D'Arienzo	Member
Karina Audrey Litvack	Member
Simona Signoracci	Member

NOMINATIONS, GOVERNANCE AND SCENARIOS COMMITTEE

Composition

At the end of the last Board of Directors' term of office on 9 May 2023, the Nominations Committee consisted of the following three non-executive and independent Directors Gabriella Porcelli (acting as Chair), Jean-Michel Aubertin and Fabio Corsico.

With the appointment of the new Board, significant changes were made to the Board Committees. With regard to the Nominations Committee, and also in light of the results of the Board Review conducted by the outgoing Board, the Committee has been given responsible for governance and scenarios.

With effect from 9 May 2023, the Committee has therefore been renamed the Nominations, Governance and Scenarios Committee and consists of the following Directors: Igor De Biasio, Jean-Michel Aubertin, Karina Audrey Litvack, Simona Signoracci and Regina Corradini D'Arienzo. The Committee currently consists of nonexecutive Directors, the majority of whom are independent. It is chaired by the Chairman of the Board, who is also independent. Two members (Jean-Michel Aubertin and Karina Audrey Litvack) are Directors elected from the slate submitted by a group of shareholders made up of asset management companies and other institutional investors (holding a total of 30,264,515 shares and representing 1.50570% of Terna's share capital), which obtained the highest number of votes, with 53.641545% of the share capital.

Duties of the Nominations, Governance and Scenarios Committee

The Committee's duties have been determined in line with the Corporate Governance Code and the procedures for holding meetings are governed by specific terms of reference adopted by the Board of Directors on 27 May 2014 ("Terms of Reference for Terna's Nominations Committee"), updated by the Board of Directors on 23 June 2015, on 15 December 2021, with the adjustments necessary to align with the provisions in the new Corporate Governance Code, and lastly on 13 December 2023.

The Chair of the Committee may invite the Chair of the Board of Directors, the Chief Executive Officer, other Directors and, informing the Chief Executive Officer, representatives from the relevant departments to individual meetings (art. 3, Recommendation 17, paragraph 3 of the Corporate Governance Code).

Under the Committee's Terms of Reference, no Director may take part in meetings of the Nominations Committee at which proposals regarding his or her own candidature as a Director or position as a member of the Board or its Committees is discussed.

In performing its duties, the Nominations Committee has access to the information and departments it deems necessary in order to perform its duties. It may also make use of external consultants, within the limits approved by the Board of Directors and in accordance with the provisions of the Corporate Governance Code (art. 3, Recommendation 17, last paragraph).

The Committee has access to adequate financial resources.

The Nominations Committee supports the Board of Directors by conducting reviews, making recommendations and providing advice in relation to assessments and decisions regarding the size and composition of the Board.

In particular, the Committee's duties include, among other things, assisting the Board of Directors in the following activities: (a) self-assessment of the Board of Directors and Board Committees; (b) definition of the optimal composition of the Board of Directors and the Committees; (c) identification of candidates for the office of Director in the event of co-option; (d) possible submission of a slate by the outgoing Board of Directors, to be implemented in a manner that

ensures its transparent formation and presentation; (e) preparation, update and implementation of succession plans for the Chief Executive Officer and the other executive Directors; (f) assessment of any problem cases related to the application of the non-competition clause provided for directors in article 2390 of the Italian Civil Code, in the event that shareholders, for organisational reasons, should authorise exceptions to this prohibition in general and in advance.

In line with the extension of its remit and the revised Terms of Reference, the Committee has been given governance responsibilities, relating to:

• i. monitoring the development of legislation and national and international best practice in the field of Corporate Governance and inform the Board of any significant changes;
• ii. reviewing the compliance of the corporate governance system adopted by the Company and the Group with current legislation, the recommendations of the Corporate Governance Code and national and international best practices, and provide the Board of Directors with any opinions or proposals to adapt the said corporate governance system, should the need or opportunity arise;
• iii. giving its opinion on the modification and/or supplementation of the policy for managing relations with shareholders in general, prepared in accordance with the recommendations of the Corporate Governance Code, also taking into account the engagement policies adopted by institutional investors and asset managers;
• iv. advance examination of any reasoned proposal of the Board of Directors to shareholders on matters relating to the corporate governance system, in accordance with the recommendations of the Corporate Governance Code.

With regard to scenario-related activities, the Committee is entrusted with the task of gathering information, analyses and in-depth studies on reference scenarios useful for a better understanding of global trends that may affect the Company's strategies.

During the year, the Nominations, Governance and Scenarios Committee held 12 meetings, with almost full attendance (84.42%), and an average duration of approximately 95 minutes. Minutes were kept of all Committee meetings (article 3, recommendation 17, last paragraph of the Corporate Governance Code).

For the current financial year, the number of meetings of the Committee is sufficient to fulfil the tasks assigned to it. During the current financial year and up to the date of approval of this report, the Committee held 6 meetings.

The meetings of the Nominations Committee were attended by the Board of Statutory Auditors.

The following is a more analytical description of the Committee's activities in 2023 and at the beginning of 2024.

With regard to the activities carried out during the previous Board of Directors' term of office, the Committee met once, on 21 February 2023, to examine the document "Guidance from Terna's Board of Directors", which was drafted on the basis of the results of the Board Review process, with particular reference to the issues related to the qualitative and quantitative composition of the Board of Directors.

During the same meeting, the Committee examined the Diversity Policy and the "Guidance concerning the maximum number of offices that may be held by Terna's Directors". With regard to this document, which among the revisions proposed was the inclusion of a minimum percentage of attendance at Committee meetings in line with the percentage required for attendance at Board meetings (i.e., 75%), the Committee proposed a further increase to 80%. The Committee also recommended that the Guidance include an invitation to consider this attendance commitment when proposing candidates.

Finally, as the Committee did not review the contingency plan at the end of its term of office, it hoped that the new Board would give due attention to this matter.

On 27 July 2023, there was the inaugural meeting of the Committee, at which the objectives to be pursued during the term of office were defined. In addition to revising the contingency plan for the roles of Chair and CEO, the Committee included among its priority activities the updating of its terms of reference in light of the expansion of the scope of activities, postponing the definition of a first draft immediately after the summer break.

On 3 August, the Board of Directors decided that the Nominations, Governance and Scenarios Committee should be informed in advance, with appropriate documentation, about the process of appointing and possibly terminating relationships with key management personnel.

In implementation of this resolution, the Committee met on 9 August to receive a report on the appointment of the new Chief Financial Officer, Francesco Beccali, on 5 October to receive a report on the appointment of the new Director of Corporate Affairs, Danilo Del Gaizo, and on 20 October to receive a report on the appointment of Daniele Amati as the new Director of People, Organisation & Change.

Following the Board resolution of 3 August 2023, the Committee was also tasked with conducting a organisational benchmark regarding top management positions, with the aim of drawing up a proposal that, in light of the specific nature of Terna, would detail improvements to the termination procedure for such executives and a selection process for top management positions.

Based on the benchmark analysis conducted, a draft proposal was presented at the meeting of 11 December.

During that meeting, a minority Director put forward an alternative proposal, designed to strengthen the process used by the Committee to gather and analyse the available information. This would ensure an adequate flow of information between the Chief Executive Officer and the Committee so that the latter can make recommendations to the Chief Executive Officer regarding candidates and the selection process for key management personnel reporting directly to her. Although the alternative proposal did not receive a majority of the votes, it was still presented during the Board of Directors' meeting held on 13 December, where it again failed to receive a majority of the votes.

Following the assessment carried out, the Committee's Terms of Reference were amended, adopting the following proposed revisions:

i. description of duties and responsibilities in relation to governance and scenarios;

ii. an increase in minimum attendance at meetings from 75% to 80%;

iii. clarification that the meeting is deemed to be held at the location where the Committee Chair is present; in addition, the Chair and the Secretary may be in different locations. Remote connection is still possible in all cases;

iv. definition of the scope of activities in relation to scenarios.

The meeting of 11 December also examined the draft of the Board's new Terms of Reference and gave a favourable opinion on the proposal, which was then put to the vote at the Board meeting of 13 December.

On 8 January 2024, the Committee examined the results of the beauty contest organised by the Company to award the contract for the provision of consulting services for the purpose of carrying out the self-assessment of the Board of Directors, the Board Committees and the Board of Statutory Auditors of Terna for the 2023 financial year. On the basis of the reports submitted by the Board of Directors, a number of consultants were identified and admitted to the beauty contest after verifying the absence of any conflicts of interest.

At its meeting of 8 January, the Committee considered it appropriate to carry out further review in order to identify the most suitable adviser. As a result of the in-depth review, the Nominations, Governance and Scenarios Committee identified Russel Reynolds Associates as the best candidate at its meeting on 16 January 2024. The results of the Board Review were presented to the Committee at its meeting on 4 March 2024.

At the meetings of 15 and 30 January and 2 February 2024, the Nominations, Governance and Scenarios Committee considered the issue of the Director, Karina Litvack, with regard to the possible incompatibility of the position due to the unbundling provisions (article 15.5 of the Articles of Association). In the meeting of 2 February 2024, following the preliminary investigation carried out, the Committee expressed its opinion on the fact that Karina Litvack's appointment had not lapsed and proposed to Terna's Board of Directors to consider that Karina Litvack's appointment had not lapsed and that she remained in office without interruption.

At its meeting of 6 March 2002, in carrying out its annual assessment of the independence requirements for Directors in accordance with the CLF and the Corporate Governance Code, as well as in accordance with Article 15.5 of the Articles of Association, the Board of Directors determined that the Director, Karina Litvack, also met these requirements.

Activities regarding scenarios

At the Committee meeting of 11 December 2023, a presentation was made by the consulting company, Key to Energy, explaining the following topics:

• 1. Policy targets and key issues relating to the transition;
• 1. Integration of renewable resources;
• 1. Developments in storage systems;
• 1. Adequacy and imports;
• 1. Gas scenario.

At its meeting of 19 March 2024, the Board of Directors reviewed the Committee's tasks and functioning. The overall positive assessment on the size, composition and functioning of the Committee itself was confirmed by the Board of Directors in the context of the annual Board and Committee review.

< > REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2023

Section VIII Remuneration Committee

REMUNERATION COMMITTEE

		INDEPENDENCE
NAME	ROLE	CLS	CGC
Enrico Tommaso Cucchiani	Chairman
Angelica Krystle Donati	Member
Gian Luca Gregori	Member
Simona Signoracci	Member
Anna Chiara Svelto	Member

Composition

The Board of Directors set up the Remuneration Committee in 2004. The Committee's duties were established in line with the provisions of the Corporate Governance Code and the procedures for holding meetings are governed by specific terms of reference adopted by the Board of Directors on 24 January 2007 ("Terms of reference for Terna S.p.A.'s Remuneration Committee), which were updated on 9 November 2011, then on 19 December 2012, on 15 December 2021, in order to comply with the new provisions of the Corporate Governance Code and most recently on 13 December 2023.

As of 9 May 2023, when the previous Board's term of office ended, the Remuneration Committee consisted of four non-executive and independent Directors: Fabio Corsico (acting as Chair), Gabriella Porcelli, Alessandra Faella and Jean-Michel Aubertin.

With the start of the new Board's tenure, the newly-established Committee increased the number of its members to five, i.e., Enrico Tommaso Cucchiani (Chair), Gian Luca Gregori, Anna Chiara Svelto, Angelica Krystle Donati and Simona Signoracci. One member (Anna Chiara Svelto) is a Director elected from the slate submitted by a group of shareholders made up of asset management companies and other institutional investors (altogether owning 30,264,515 shares and representing 1.50570% of Terna's share capital), which obtained the highest number of votes with 53.641545% of the share capital.

The Committee currently consists of non-executive and independent Directors. At least one member has adequate knowledge and experience in financial matters or remuneration policies as required by the Corporate Governance Code (article 5, recommendation 26). In addition to the Chair, who possesses substantial professional expertise, the composition of the Committee is such as to fully meet this recommendation.

Duties of the Remuneration Committee

The Committee's duties include, among other things: (i) assisting the Board of Directors in the drafting of the remuneration policy; (ii) submitting proposals or expressing opinions on the remuneration of executive directors and other directors who hold special offices, as well as on the setting of performance objectives related to the variable component of such remuneration, which include ESG indicators; (iii) monitoring the concrete application of the remuneration policy and verifying, in particular, the effective achievement of performance objectives; (iv) periodically assessing the adequacy and overall consistency of the directors' and top management's remuneration policy, (art. 5, Recommendation 25, first paragraph of the Corporate Governance Code).

The Chair of the Committee may, from time to time, invite the Chairman of the Board of Directors, the Chief Executive Officer, other Directors, members of the Audit, Risk and Sustainability Committee and, informing the Chief Executive Officer, the representatives of the competent corporate departments to the meetings of the Committee, with reference to the individual items on the agenda (art. 3, Recommendation 17 of the Corporate Governance Code).

In performing its duties, the Remuneration Committee has the right to access the information and company departments necessary to carry out its tasks and may make use of external consultants, within the limits approved by the Board of Directors and as provided for by the Corporate Governance Code (art. 3, Recommendation 17, last paragraph).

The Remuneration Committee held 11 meetings in 2023. All of the meetings were attended regularly by all members of the Committee (91.48%) and the average duration was approximately 84 minutes. In keeping with art. 5, Recommendation 26, second paragraph of the Corporate Governance Code, no Director attended Committee meetings at which proposals regarding their remuneration were discussed, except in the case of the discussion of guidelines for the remuneration payable generally to the members of Board Committees, in line with the Remuneration Policy, submitted to the Board of Directors and which also received the prior opinion of the Board of Statutory Auditors.

The above-mentioned meetings, which also saw the participation of the Board of Statutory Auditors, were also attended by senior managers of the Company and by persons whose presence was deemed helpful in providing greater information on agenda items and in ensuring the best possible fulfilment of the duties of the Committee.

Minutes were duly taken of all Committee meetings and the Committee had the chance to access any information and company departments it deemed necessary in order to perform its duties, and to use external consultants in accordance with the terms of reference established by the Board (art. 3, Recommendation 17, last paragraph of the Corporate Governance Code).

For the current year, a number of Committee meetings have been scheduled that should be sufficient for the performance of the tasks entrusted to it. During the current year, up to the date of approval of this Report, the Committee has held 6 meetings.

The participation of each member of the current Committee at meetings held during 2023 is shown in the attached Table 3 (art. 123-bis, paragraph 2(d) of the CLF). The Committee has access to adequate financial resources.

As part of its duties, in 2023 the Remuneration Committee obtained additional information about the remuneration criteria used and the salary structure for management, and carried out all the activities associated with the role attributed to it by the Board of Directors in order to formulate recommendations regarding the remuneration of senior management.

In particular, the Committee dealt with the following matters, among other things:

• preparation of a proposal for the Remuneration Policy for 2023, described in the Report on the remuneration policy and remuneration paid, as approved by the Board of Directors, which will be submitted for approval by the Annual General Meeting called to approve the financial statements for the year ended 31 December 2022 in accordance with art. 123-ter, sub-paragraphs 3-bis and 3-ter of the CLF;
• support to the Board of Directors in preparing the second section of the "Report on the remuneration policy and remuneration paid", approved by the Board of Directors and submitted, pursuant to art. 123-ter, paragraph 6 of the CLF, to a consultative vote at the Annual General Meeting held to approve the financial statements for the year ended 31 December 2021;
• examination of the objectives for 2023 to which the variable remuneration of the Chief Executive Officer, in her role as both a Director and as a manager employed by the Company, and key management personnel is linked;
• assessment of achievement of the results for 2022 in respect of payment of the annual variable remuneration of the Chief Executive Officer, in her role as both a Director and as a manager employed by the Company, and key management personnel;
• assessment of achievement of the objectives linked to payments under the LTI Cycle for 2020-2023;
• approval of details of the structure of the Performance Share Plan 2023-2027 and the related Information Circular, examination of the implementation process and approval of the terms and conditions and the financial instruments to be allotted;
• sharing of planning activities for 2024.

The following is a more analytical description of the Committee's activities in 2023.

In 2023, the Committee examined a proposal for a special bonus in favour of certain of the Company's key management personnel, as already mentioned in the Report on Corporate Governance and Ownership Structures for 2022, in implementation of the provisions of the Remuneration Policy for 2022. The matter was also discussed at the meetings of 12 January 2023, 14 February 2023 and 16 and 22 March 2023. At the latter meeting, the Committee issued a positive opinion on assignment of the bonus. In order to analyse the proposal and verify its full consistency with the idea of a special bonus indicated in the Remuneration Policy for 2022, the Committee availed itself of the support of an independent external consultant, other than the consulting company Willis Towers Watson, which the Company uses for remuneration-related issues. Given the relationship between the key management personnel who are recipients of the bonus and the Company, the issue was also submitted to the Committee for Related Party Transactions, which met on 6 and 24 February and 17 March 2023, and jointly with the Remuneration Committee on 22 March 2023 to issue a positive opinion on the initiative. The Remuneration Committee's preliminary activity of the special bonus proposal was reported to the Board on an ongoing basis as part of the Committees' reporting activities. After hearing the opinions of the Remuneration Committee and the Committee for Related Party Transactions, the Board of Directors approved the bonus proposal on 22 March 2023.

At the meetings of 12 January, 14 February and 16 and 21 March 2023, the Committee also dealt with the design and review of the architecture of the long-term incentive scheme (called the Performance Share Plan 2023-2027), which aims to ensure the alignment of management's interests with the creation of long-term shareholder value, to reward long-term performance, to strengthen the loyalty of beneficiaries and to highlight Terna's commitment to sustainability and social and environmental responsibility.

At the meeting of 14 February 2023, the Committee also examined the results of the assessment carried out by the consultant Willis Towers Watson on the Report on the Remuneration Policy and Remuneration Paid, as well as on the benchmarking of executive and non-executive Directors' remuneration.

At the subsequent meetings on 16 and 21 March 2023, the Committee considered (a) the award of the 2023 MBO for the CEO/GM and key management personnel, (b) the Report on the Remuneration Policy for 2023 and Remuneration Paid in 2022, and (c) assessment of results of the Performance Share Plan 2020-2023 and (d) assessment of the results of the 2022 MBO for the CEO/GM and key management personnel. This was in view of the subsequent Board meeting convened to discuss these items - as well as the Performance Share Plan 2023-2027 - upon the proposal of the Committee.

With the start of the new Board of Directors' tenure, the newly established Remuneration Committee met on 9 May 2023 to discuss the proposals for the remuneration of the members of the Board Committees to be submitted to the Board of Directors for approval on the same date.

In particular, this remuneration, which is determined in the Remuneration Report, also taking into account the criterion of continuity, has been set at the following levels, distinguishing between the position of chair and that of committee member:

• Chair of a committee: €50,000 gross per year, with the exception of the Chair of the Audit, Risk and Sustainability Committee, for whom it is proposed to confirm the amount of €60,000 gross per year;
• Committee members: €40,000 gross per year.

At the same meeting, the Committee also approved the remuneration proposal to be submitted to the Board of Directors regarding the remuneration of the Chairman and of the CEO and General Manager, with particular reference to the remuneration components for the CEO/GM, in accordance with the provisions of the Report on the Remuneration Policy and Remuneration Paid, approved by the Board of Directors on 22 March 2023 and by the Annual General Meeting of shareholders on 9 May 2023.

Continuing its work, on 30 May 2023, the Committee reviewed the main elements of Terna's remuneration policy and the remuneration benchmarks for the Chairman and CEO/GM. At the same meeting, it gave a favourable opinion on implementation of the Performance Share Plan, as well as on the Terms and Conditions and the number of shares to be allotted, in view of the Board of Directors' meeting of 14 June 2023 convened to decide on the matter.

At subsequent meetings on 3, 16, 25 October and 16 November 2023, the Remuneration Committee began to review the early retirement rules to verify, inter alia, their scope and consistency with the Company's remuneration policy, with a view to making possible proposals for improvements to these rules. The Committee also initiated a benchmarking analysis of the remuneration of the Board of Directors, the Board of Statutory Auditors, the CEO and the Chairman.

These analyses will be continued during 2024, together with the additional activities undertaken by the Committee in early 2024, as reported below:

• examination of the results of the remuneration benchmarking in relation to the CEO and General Manager and other members of the Board of Directors;
• preparation of a proposal for the Remuneration Policy for 2024, described in the Report on the Remuneration Policy and Remuneration Paid, approved by the Board of Directors, and which will be submitted to a binding vote at the Annual General Meeting called to approve the financial statements for the year ended 31 December 2023, pursuant to art. 123-ter, paragraphs 3-bis and 3-ter, of the CLF;

• support to the Board of Directors in preparing the second section of the Report on the Remuneration Policy and Remuneration Paid, approved by the Board of Directors, and which will be submitted, pursuant to art. 123-ter, paragraph 6 of the CLF, to a non-binding vote at the Annual General Meeting held to approve the financial statements for the year ended 31 December 2023;
• examination of the objectives for 2024 to which the variable remuneration of the Chief Executive Officer, in her role as both a Director and as a manager employed by the Company, and key management personnel is linked;
• assessment of achievement of the results for 2023 in respect of payment of the annual variable remuneration of the Chief Executive Officer, in her role as both a Director and as a manager employed by the Company, and key management personnel;
• assessment of achievement of the objectives linked to payments under the LTI Cycle for 2021-2025;
• approval of details of the structure of the Performance Share Plan 2024-2028 and the related Information Circular.

The Committee Chair informed the Board at the earliest possible time of the Committee's meetings (art. 3, Recommendation 17, second paragraph of the Corporate Governance Code).

At its meeting of 19 March 2024, the Board of Directors assessed the Committee's duties and performance. The generally positive evaluation of the composition, size and performance of the Committee was confirmed by the Board of Directors as part of the annual review of the Board itself and its Committees.

Report on Corporate Governance and Ownership Structures 2023

Section IX Directors' remuneration

As of December 2011, Terna's Board of Directors adopted the "Remuneration Policy" in implementation of the recommendations in the Corporate Governance Code from time to time in force, as recommended by the "Remuneration Committee".

Following the entry into force of CONSOB regulations implementing art. 123-ter of the CLF (CONSOB Resolution 18049 of 23 December 2011, published in Official Gazette no. 303 of 30 December 2011), which, among other things, introduced art. 84-quater into the Regulations for Issuers, Terna's Board of Directors, on the recommendation of the "Remuneration Committee", has each year approved updates to the Policy adopted, as described in the "Annual Remuneration Report", This report, published annually, is made available for consultation by the public at the Company's registered office and on its website (www.terna.it), and on the authorised storage devise. The report is also put to a consultative, non-binding vote (until the regulatory changes referred to below) at the Annual General Meeting of shareholders, in accordance with art. 123-ter, paragraph 6 of the CLF. The Annual General Meeting has always voted in favour of the report.

Legislative Decree 49 of 10 May 2019, transposing Directive 2017/828 of the European Parliament and of the Council of 17 May 2017 ("Shareholders' rights directive II" or "SRD II") and amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement, has introduced a number of amendments to art. 123-ter of the CLF. Specifically, it has introduced a binding vote by the General Meeting of shareholders for the first section of the Report and a consultative vote by the same General Meeting regarding the second section of the Report. These modifications were applied for the first time during the General Meeting of shareholders held on 18 May 2020, which approved the first section of the Report on the remuneration policy and remuneration paid and expressed a favourable opinion as regards the second section. The report was made available to the public as described above. Thus the process of bringing the regulatory framework governing the transparency of remuneration into line with the SRD II has come to a close, at the level of secondary legislation, with the amendment of art. 84-quater of the of Regulations for Issuers and the relative Table 7-bis in Annex 3A of said Regulations from Consob Resolution 21623 of 10 December 2020. The Annual General Meeting of May 2023 approved the first section of the Report on the remuneration policy and the remuneration paid and voted in favour of the second section.

The Report on the Remuneration Policy and Remuneration Paid, which will be submitted to the next Annual General Meeting of shareholders called to approve the financial statements, has been prepared by the Company in compliance with the new first and second level regulatory provisions and takes account of the latest recommendations set forth in the new Corporate Governance Code.

The Report, to which reference is made, was approved by the Board of Directors – at the proposal of the Remuneration Committee – on 19 March 2024, and will be published by Terna in accordance with that set forth in art. 123-ter, of the recently amended CLF.

It should be noted that the remuneration payable to each Director is determined by the Annual General Meeting (art. 24.1 of the Articles of Association).

Additional fees payable to the members of Board Committees set up in compliance with the Corporate Governance Code are determined by the Board of Directors itself, in consultation with the Board of Statutory Auditors, as required by art. 2389, paragraph 3 of the Italian Civil Code and art. 24.2 of the Articles of Association. The overall remuneration for the Chairman and the Chief Executive Officer is also determined by the Board of Directors, based on the recommendation provided by the Remuneration Committee and in consultation with the Board of Statutory Auditors.

For a full description of the remuneration paid by the Company and its subsidiaries or associates during the reporting period, for any reason and in any form, to the members of Terna's management body and key management personnel for 2023, including descriptions of each element of remuneration, severance pay arrangements, clawback provisions and an opinion on the consistency of the Company's remuneration policy approved the previous year, reference should be made to the "Report on the Remuneration Policy and Remuneration Paid", to be published by Terna and submitted for approval at the forthcoming Annual General Meeting called to approve the financial statements for the year ended 31 December 2023, in compliance with the provisions of art. 123-ter of the CLF, as amended.

The "Report on the Remuneration Policy and Remuneration Paid" also includes the information required by art. 84-quater, paragraph 4 of the Regulations for Issuers, concerning the remuneration plans provided for in art. 114-bis of the CLF and shareholdings in Terna and its subsidiaries held by members of management and oversight bodies, general managers and other key management personnel, and by spouses who are not legally separated and minor children, either directly or through subsidiaries, trust companies or third party.

Section X Audit, Risk and Sustainability Committee

AUDIT, RISK AND SUSTAINABILITY COMMITTEE

			INDEPENDENCE
	NAME	ROLE	CLS	CGC
	Marco Giorgino	Chairman
	Jean-Michel Aubertin	Member
	Enrico Tommaso Cucchiani	Member
	Karina Audrey Litvack	Member
	Francesco Renato Mele	Member

Functions of the Audit, Risk and Sustainability Committee

In 2004, the Board of Directors set up a specific Board Committee named the Internal Audit Committee. This Committee had the task of performing research and analyses to advise the Board in its assessments and decisions relating to the "Internal Control System" and the regular monitoring of the adequacy of such system. The Internal Audit Committee was also responsible for studying specific aspects relating to the identification of the main business risks (for example, operational risk, financial risk, market risk, and compliance risk, in addition to accounting compliance risks), reporting periodically to the Board on the suitability of the system and the activities performed.

The duties of the Committee were identified in keeping with the applicable Corporate Governance Code (whose provisions are included in the new Corporate Governance Code) and the methods of conducting the meetings are governed by specific terms of reference adopted by the Board of Directors on 24 January 2007.

In the meeting held on 19 December 2012, the Board of Directors approved the necessary adjustments to the composition and duties of the existing Committee, in order to ensure that it would be fully aligned with the provisions of the Corporate Governance Code relating to internal control and risk management systems (articles 7.P.3(a-ii), 7.C.1 and 7.C.2 of the Corporate Governance Code). Following re-election of the entire Board of Directors, at the meeting of 27 May 2014, with a view to continuous improvement of the corporate governance system, the Board of Directors expanded the duties of the Audit and Risk Committee, adding to the latter's duties those related to the corporate governance system, making the consequent changes to the terms of reference. Consequently, the "Audit and Risk Committee" was renamed the "Audit, Risk and Corporate Governance Committee". The responsibilities indicated were subsequently expanded and the Committee was also assigned tasks relating to Sustainability. The resolution of 15 December 2016 thus made the consequent amendments to the Committee's terms of reference (known as "Terms of reference for Terna S.p.A.'s Audit, Risk, Corporate Governance and Sustainability Committee"). Responsibility for sustainability has been assigned to the internal board committee in response to the recommendation contained in the notes to art. 4 of the Corporate Governance Code, which invites the Board to assess the appropriateness of setting up a special committee to oversee sustainability matters, as well as the provisions of the new Corporate Governance Code (art. 1, Recommendation 1(a)).

The Committee's terms of reference were subsequently updated on 15 December to reflect the changes required by the Corporate Governance Code.

Following the appointment of the new Board and the consequent reconstitution of the Board Committees, it was agreed that, in line with the approach of the previous Board, the issue of sustainability should be retained within the Audit and Risk Committee in order to provide an integrated view of both financial and non-financial risks at the time of their identification in the conduct of monitoring and management activities. This approach is summarised in the Integrated Report, now in its third edition at the time of approval of today's Report. With a view to rebalancing responsibilities and in line with the results of the Board Review conducted at the end of the last term of office, the Committee was relieved of corporate governance matters, which were entrusted to the Nominations Committee, now called the Nominations, Governance and Scenarios Committee. The Terms of Reference were therefore further updated on 13 December 2023.

Composition

During the previous Board's term of office and until 9 May 2023, the Committee consisted of four non-executive and independent Directors: Paola Giannotti (Chair), Marco Giorgino, Alessandra Faella and Giuseppe Ferri. Two Directors were taken from the minority slate and one of them was assigned the role of Committee Chair.

With the start of the new Board's term of office, the newly-formed Committee increased the number of its members to five, being Marco Giorgino (Chair), Enrico Tommaso Cucchiani, Francesco Renato Mele, Karina Audrey Litvack and Jean Michel Aubertin.

Three of the members of the Committee were taken from the slate submitted by a group of asset management companies and other institutional investors (altogether owning n30,264,515 shares and representing 1.50570% of Terna's share capital), which obtained the highest number of votes with 53.641545% of the share capital.

Four of the five members meet the independence requirements pursuant to the Corporate Governance Code and article 148, paragraph 3, CLS, as recalled by article 147-ter, paragraph 4, CLS. The composition is in line with the Corporate Governance Code, which recommends the presence of non-executive directors only, the majority of whom should be independent, and entrusts the chair to an independent director (article 6, recommendation 35).

The Corporate Governance Code recommends that "At least one member has appropriate knowledge and experience of accounting, financial or risk management matters" (art. 6, Recommendation 35, second paragraph). In addition to the Chair, who possesses substantial professional expertise in the financial sector, the composition of the Committee is such as to fully comply with this recommendation.

The Committee may instruct the Internal Audit Department to review specific operational areas, notifying the chair of the Board of Statutory Auditors (art. 6, Recommendation 35(g) of the Corporate Governance Code).

The Chair of the Board of Statutory Auditors (or another Statutory Auditor designated by them) attends the Committee's meetings in accordance with the provisions of art. 6, Recommendation 37, second paragraph of the Corporate Governance Code, and the other Statutory Auditors may also attend.

The Chair of the Committee may from time to time invite to meetings, with reference to individual items on the agenda, the Chairman of the Board of Directors, the Chief Executive Officer (in her capacity as the Director in charge of setting up and maintaining the Internal Control and Risk Management System, members of the Remuneration Committee, other members of the Board of Directors, the Head of the Internal Audit Department and, after informing the Chief Executive Officer, representatives of the competent corporate departments (art. 3, Recommendation 17 of the Corporate Governance Code).

Duties of the Audit, Risk and Sustainability Committee

The "Audit, Risk and Sustainability Committee" has the task, among other things, of supporting the Board of Directors, with suitable research and analysis activities, in the assessments and decisions relating to the "Internal Control and Risk Management System" (the "System", as detailed in Section XI below), to Corporate Governance, to approval of periodic financial and non-financial reports (art. 6, recommendation 32c of the Corporate Governance Code). In this context, in assisting the Board of Directors, the Committee:

• reviews, after consulting the Manager Responsible for Financial Reporting, the independent auditors and the Board of Statutory Auditors, the correct use of accounting standards and their consistent application in preparation of the consolidated financial statements;
• assesses the suitability of periodic financial and non-financial information to correctly represent the company's business model, strategies, the impact of its activities and the performance achieved, in coordination with any committee provided for by Recommendation 1(a) of the Corporate Governance Code;
• examines the content of periodic non-financial information relevant to the internal control and risk management system;
• expresses opinions on specific aspects relating to the identification of the main corporate risks and supports the assessments and decisions of the Board of Directors relating to the management of risks arising from prejudicial events of which the latter has become aware;
• reviews periodic reports and reports of particular relevance prepared by the Audit Department;
• monitors the autonomy, adequacy, effectiveness and efficiency of the Audit Department. In this respect, reference is made to " Head of the Audit Department " in section XI below;

• reports to the Board of Directors, at least when the annual and half-year financial reports are approved, on the activities carried out and on the adequacy of the internal control and risk management system;
• supports the Board of Directors in performing the tasks entrusted to it by the Corporate Governance Code in the field of internal control and risk management with regard to:
  • (i) the setting of guidelines for the internal control and risk management system in line with the company's strategies and the assessment, at least once a year, of the adequacy of the system in relation to the characteristics of the company and the risk profile assumed, as well as its effectiveness;
  • (ii) appointment and termination of the head of the Audit Department, defining remuneration in line with company policies, and ensuring that such manager has adequate resources to perform his/her duties;
  • (iii) approval, at least once a year, of the work plan prepared by the head of the Audit Department, in consultation with the control body and the chief executive officer;
  • (iv) the possible adoption of measures to ensure the effectiveness and impartiality of judgement of other corporate departments involved in the internal control and risk management system, verifying that they have adequate expertise and resources;
  • (v) attribution to the Board of Statutory Auditors or to a specially constituted body of the supervisory functions under art. 6(1)(b) of Legislative Decree 231/2001;
  • (vi) assessment, in consultation with the Board of Statutory Auditors, of the findings set out by the independent auditors in their letter of recommendations, if any, and in the additional report to the Board of Statutory Auditors;
  • (vii) description, in the corporate governance report, of the main features of the internal control and risk management system and of the methods of coordination among the parties involved in it, indicating the national and international reference models and best practices, expressing its overall opinion on the adequacy of the system and explaining the choices made with regard to the composition of the supervisory board.
• carries out any additional duties as may be assigned by the Board of Directors.

Until 9 May 2023, the Committee supported the Board of Directors in performing its tasks relating to the general policies included in the corporate governance system adopted by the Company and the Group.

The Committee may have access to any information and company departments it deems necessary in order to perform its duties. It may also make use of external consultants, within the limits approved by the Board of Directors and in accordance with the Corporate Governance Code (art. 3, Recommendation 17, last paragraph).

The Committee reported to the Board of Directors in view of the approval of the annual and half-year financial reports on the activities performed and the adequacy of the Internal Control and Risk Management System (article 6, recommendation 35, letter h of the Corporate Governance Code).

Specifically, during the 2023 financial year, the Committee held a total of 13 meetings. To these were added 3 meetings held jointly with the Related Party Transactions Committee.

In 2023, the Committee's meetings were regularly attended by all its members (100%), the Chairman of the Board of Statutory Auditors and the other Statutory Auditors (97%), in view of the specific responsibilities for oversight of the System assigned to the Board of Statutory Auditors by current legislation governing listed companies, by the Corporate Governance Code and (art. 6, Recommendation 32(f) and art. 6, Recommendation 37, second paragraph) and the Rules of Conduct of the Board of Statutory Auditors of listed companies. The attendance of each member of the Committee in office at the meetings held during 2023 is shown in Table 3 attached hereto (article 123 bis, paragraph 2(d), of the CLS).

All the Committee's meetings were duly minuted and the Committee had access to the information and corporate functions necessary to perform its tasks.

The following is a more analytical description of the Committee's activities in 2023.

On 3 May 2023, the Committee examined the interim report as of March 31, 2023 and received an update on financial transactions from the Administration, Finance and Control Department. Also at the same meeting, the Committee received a preliminary illustration of the " Inclusion Manifesto", taking cognizance of the growth path, launched by Terna in the second half of 2022, to enhance inclusion, one of the three values in its Leadership model.

On 6 June, the Committee met for the first time in its new capacity as the Audit, Risk and Sustainability Committee.

At the beginning of the six-month period and due to the start of a new Board term, the Committee held a meeting in the presence of some of the Company's managers to analyse the main risks faced by the Company, which were identified in four macro areas: 1) operational and financial planning and key risks; 2) dispatching and robustness of the grid; 3) cyber risk; and 4) the supply chain.

At its meeting of 25 July 2023, the Audit, Risk and Sustainability Committee analysed the half-year financial report as at 30 June 2023, meeting with the Company's Manager in charge of financial reporting and CFO, as well as with the independent auditors. At the same meeting, the Committee also received a report on the update and annual renewal of the Euro Medium Term Notes Programme of up to €9 billion (the "EMTN Programme"). During the meeting, the report drawn up by the Supervisory Board in accordance with Legislative Decree 231/01 on the activities carried out in the first half of 2023 was examined and explained by the Chair of the Company's Supervisory Board.

With regard to progress in implementing the 2023 Audit Plan, the Committee received an update on the activities carried out by the Audit Department in the first half of the year (January - June 2023).

At the same meeting, the Committee reviewed the content of the half-year report of the Audit Committee in accordance with Article 6, Rec. 35 (h) of the Corporate Governance Code, which had been provided by the Corporate Affairs and Corporate Governance Department. In particular, the Committee stated that, in the light of the documents examined and the evidence obtained in the course of its activities, as well as the conclusions formulated by the Head of Internal Audit in the periodic integrated financial reports referred to in Article 6.36 b. of the Corporate Governance Code, it had concluded that the internal control and risk management system can be considered adequate.

On 6 December, the Committee received a briefing on ESG matters with a focus on sustainability. With regard to the Company's main activities in the area of sustainability, the Committee agreed that it would be advisable: (i) to receive detailed and material information on the main sustainability KPIs, broken down by thematic areas, as well as a proposed action plan and an exhaustive list of initiatives to enable the Committee to monitor sustainability in the Company; (ii) to be involved in the forthcoming activities related to the finalisation of the sustainability matrix and the definition of targets prior to such finalisation. The Committee also considered it appropriate to have a concrete picture of the elements that would allow sustainability itself to be considered as embedded in the Company's strategy and operating and financial data.

With regard to the question concerning the framework of Regulation 231/2001, the Committee considered the appropriateness of an external consultant, identified by the Board, to assess the adequacy of this framework.

The Committee then received an update on the most significant litigation, whether the Company is the plaintiff or the defendant, and the potential exposure of the Company. In particular, the pending litigation and the allocation to the provisions for risks and charges were explained, with particular emphasis on the provisions for litigation.

At the same meeting, the Committee received a report from the Administration, Finance and Control Department on the administrative and accounting procedures for the certification of processes. As a result of the work carried out, the Company was the first Italian company to obtain UNI PDR 104:2021 certification for its administrative and accounting procedures.The Committee was also informed of the signing of new loan agreements with the European Investment Bank and of new bank borrowings, on which it gave a positive assessment, in view of the meeting of the Board of Directors on 13 December 2023 to discuss the matter.

After the end of the financial year, during 2024 and up to the date of approval of this report, the Committee held 3 meetings. In addition, 2 meetings were held jointly with the Related Party Transactions committee.

*****

The Audit, Risk and Sustainability Committee discussed the following topics at its meetings in 2024:

• At its meeting on 22 January 2024, the Audit, Risk and Sustainability Committee discussed the conclusion of the 2023 Audit Plan with the presentation of the final results and the Integrated Report on the activities carried out in the second half of 2023.

The results of the Quality Assurance Review presented at the meeting confirmed the compliance of Internal Audit with the standards of the Institute of Internal Auditors and the effectiveness and efficiency of assurance and advisory activities.

During the meeting, the Committee also noted the conclusions of the Supervisory Board's report for the second half of 2023 and approved the corporate calendar of Committee meetings scheduled for 2024.

With regard to the guidelines and risks of the 2024-2028 Industrial Plan, the CEO and some company managers provided clarifications on the energy scenario in Italy and the Eurozone, financial risks, execution risks and ESG issues. Management also discussed the SACOI 3 project.

The CFO reported on the issue of 10 January 2024 under the Euro Medium Term Notes (EMTN) programme.

Finally, the Committee met with TERNA's Head of Investor Relations, who reviewed the schedule of meetings with institutional investors, presented the target price assigned by investors and developments in buy, sell and hold recommendations for the shares.

• - On 28 February 2024, the Committee received an update on the report on the Industrial Plan, on sustainability activities - in particular, (i) on the materiality analysis, (ii) on the overview of the Sustainability Plan and (iii) on the outline of the non-financial statement for 2023 - and on the topic of cybersecurity. The Committee also expressed a positive opinion in view of the subsequent Board deliberations on: 1. the impairment test procedure prepared in line with the provisions of Bank of Italy/CONSOB/Isvap Document No. 4 of 3 March 2010 and 2. the Audit Plan 2024 - 2026.
• On 15 March 2024, the preparatory Committee meeting was held for the Board of Directors meeting on 19 March for the approval, inter alia, of the 2023 Annual Financial Report.

At its meeting of 19 March 2024, the Board of Directors assessed the Committee's duties and performance. The generally positive evaluation of the composition, size and performance of the Committee was confirmed by the Board of Directors as part of the annual review of the Board itself and its Committees.

The Committee has access to adequate financial resources.

Joint Meetings of the Audit, Risk and Sustainability Committee and the Related Party Transactions committee

Following the signing, on 1 August and 3 August 2023, of the termination agreements between the Company and two senior managers, Giuseppe Del Villano (Director of Corporate Affairs) and Agostino Scornajenchi (CFO and Manager in charge of financial reporting), the Audit, Risk and Sustainability Committee and the Related Party Transactions Committee held a series of joint meetings, with the participation of the Board of Statutory Auditors. During these meetings they, inter alia, obtained a legal opinion on the legal assessment of the events occurred, also in order to ascertain whether the Company acted correctly.

The analysis of the activities, which saw the parallel involvement of the Company's Audit Department, engaged the Committee in a series of meetings, which were held jointly with the Related Party Transactions Committee and in the presence of the Board of Statutory Auditors. At the joint meetings of 9 January 2024 and 15 March 2024, the Committees also discussed the Report presented by the Director of Corporate Affairs at the Board of Directors' meeting of 13 December 2023, concerning, among other things, the positions taken by the Committees on the legal assessment of the aforementioned events and subsequently updated in view of the meeting of the Board of Directors on 19 March 2024.

< > REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2023

Section XI

Internal Control and Risk Management System

With regard to internal control, back in December 2006, following prior research by the Internal Audit Committee (now the Audit, Risk and Sustainability Committee), the Board of Directors:

• drew up the "Terna Group Internal Control System" (now the "Terna Group Internal Control and Risk Management System" or the "ICRMS"), taking its inspiration from national and international best practices. The System provides a set of rules, procedures and organisational structures that - through a suitable process of identifying, measuring, managing and monitoring the main risks - enables sound management of the business in keeping with the objectives established by the Company (art. 6, principles XVIII and XIX of the Corporate Governance Code);
• established the guidelines in the "Terna Group Internal Control and Risk Management System" (ICRMS) envisaged by the Corporate Governance Code (adopted by resolution on 19 December 2012). These guidelines set out the rules, procedures and organisational structures necessary to ensure that the main risks faced by Terna and its subsidiaries are correctly identified and suitably measured, managed and monitored, in accordance with criteria compatible with sound and proper management and in line with the strategic objectives set (art. 16, Recommendation 33(a) of the Corporate Governance Code). On the same occasion and based on the above guidelines, the Board of Directors, after prior consultation with the then Audit and Risk Committee, defined the nature and level of risk compatible with Terna's and its subsidiaries' strategic objectives. The Board of Directors verifies this definition each year when assessing the adequacy of the Internal Control and Risk Management System with respect to the nature of the company and its risk appetite. The above-mentioned guidelines in the "Terna Group Internal Control and Risk Management System" were subsequently updated by the Board of Directors in the resolution of 15 December 2016, after prior consultation with the former Audit, Risk, Corporate Governance and Sustainability Committee. The Company will issue a review of the guidelines for the "Terna Group's Internal Control and Risk Management System" in order to align the provisions contained therein with the recommendations of the Corporate Governance Code.

Lastly, Terna has adopted a specific procedure for the management and communication of critical events to top management. In fact, when events classified as "critical" occur, this procedure requires, among other things, the convocation of a Crisis Committee, consisting of managers from the Group and the Chief Executive Officer, in his role as the Executive Director responsible for the Internal Control and Risk Management System, to define guidelines for managing and resolving critical issues. Furthermore, in order to monitor critical environmental, social, political, authorisation, implementation and legal issues connected with the Group's planned and ongoing capital expenditure and infrastructure in service, Terna has set up a Territorial and Consents Committee. This consists of Group managers, who meet periodically to analyse the critical issues identified and to decide on how to respond.

The "Terna Group's Internal Control and Risk Management System" contributes, with reasonable certainty, to safeguarding the Company's assets, the efficiency and effectiveness of business processes, the reliability of financial transactions, compliance with the law, regulations, the Articles of Association and internal procedures, the pursuit of sustainable success, and the reliability of the Company's reporting and the information released to corporate bodies and the market. Moreover, the Internal Control and Risk Management System is constructed considering the specific nature and type of activities carried out by Terna and the connected risks and corporate interests, with special attention paid to the part of the ICRMS that aims to safeguard the continuity of the electricity service and guarantee impartial conduct in carrying out activities under concession.

The ICRMS is based on the following elements: a control environment; a risk management system; control activities; information and communication; and monitoring. The coordinated functioning of these elements determines the overall effectiveness of the ICRMS in achieving its objectives:

• the "control environment", the basis for all other components, consists of the set of ethical and cultural values, the governance and organisational model, the leadership style exercised by the company's senior and middle management and staff management policies. With that in mind, the Code of Ethics has been adopted. This document stresses, also from a moral point of view, Terna's unique position. It refers to the need to comply with generally accepted ethical standards that are immediately recognisable to everyone, and to adapt them to the nature of the Group.
• the "risk management system" implemented by the company's Board of Directors and senior management starts from the definition of business objectives (strategic plans, budgets, key performance measures, the risk appetite) and enables the various levels of the organisation to identify the main risks to which individual processes are exposed and the related action plans. These action plans are to prevent and manage risk in order to keep it within acceptable limits, monitoring the results over time. The risk management models and methods adopted (inspired by leading national and international best practices), and the roles and responsibilities within the organisation, are defined in specific corporate procedures and policies. In particular, in 2023, the "Risk Management in Terna" procedure was updated. This defines Terna's risk management model and its functioning in line with the corporate objectives defined by the Board of Directors. Risk management is applied throughout the Company in accordance with a cyclical process involving systematic and repeated identification, assessment, processing and monitoring of risks. It is also broken down into three levels, each with different objectives and associated responsibilities, which are coordinated in order to ensure the consistency, effectiveness and efficiency of the controls for monitoring and assessing the adequacy of the functioning of the ICMRS as a whole, and also ensuring unambiguous and consistent reporting to senior management and the corporate bodies of the risks to which the Company and its subsidiaries are exposed. Moreover, in accordance with the provisions of the guidelines in the "Terna Group's Internal Control and Risk Management System", the role of the Chief Risk Officer (CRO) has been introduced;
• "control activities" carried out by the management and staff of the Terna Group, based on basic principles such as self-control, hierarchical control, accountability, traceability and the simple reconstruction of the actions performed, the establishment of checkpoints, with the potential for blocks halting subsequent steps in the process, checks and balances and the segregation of duties. This is to ensure with reasonable certainty that the Company's objectives are achieved and responses to identified risks are implemented properly and on time;
• the "information and communication" processes ensure that the Company's objectives, culture, values, roles, responsibilities and expected conduct are clearly communicated internally, while guaranteeing that disclosures to stakeholders outside the Company are correct and transparent. More specifically, internal communication is implemented clearly and directly by management. In managing information, a suitable level of security must be guaranteed in relation to the nature of the data. An intranet site exists to make internal communication easier, allowing for prompt and widespread notification of company events and procedures. External communication is then regulated by procedures and organisational systems that are able to guarantee the transparency and correctness of corporate communications and prevent corporate crime. To that end, the "Procedure for Managing, Processing and Communicating Corporate Information Relating to Terna S.p.A. and its Subsidiaries" has been adopted (for which reference is made to Section V, "Management of corporate information"). Specific reporting channels are set up in line with the reference legislation (i.e., whistleblowing), governed by a specific Whistleblowing Guideline (LG054). Such channels are a tool to ensure the safeguard of the internal control system as well as a means to implement the Code of Ethics and, for companies certified according to the UNI ISO 37301:2001 standard such as Terna, also a support for such certification;

• "monitoring", which guarantees the effectiveness of the "Terna Group Internal Control and Risk Management System", through recurring activities carried out by personnel in the performance of their duties, and through nonrecurring (or "offline") assessments, often via sample tests, which are typical of, but not exclusive to, the Internal Audit department.

In addition, with a view to continuously monitoring governance and compliance risks, Terna has developed:

• an Internal Control System for Information Security Management based on an Information Security Framework that provides for Information Security policies and specific implementation rules governing the main Cyber Security processes (e.g. Access Management, Security Assessment, Security Incident Management) and a Cyber Security Governance model consisting of a rule system based on national and international sector standards (including: NIST, National Framework for Cyber Security and Data Protection, ISO 27001). Such a system makes it possible to identify and keep the Cyber Top Risks under control, paying constant attention to new cyber threats with Threat Modelling activities, and makes it possible to meet the obligations deriving from sector regulations (e.g. Network & Information Security - NIS, National Cyber Security Scope - PSNC), working together with the institutional parties concerned (e.g. National Cybersecurity Agency - ACN);
• a nerve centre for cyber event management with the Computer Emergency Readiness Team ("Terna-CERT"), which operates within Terna's Cyber Defence Centre. This structure ensures the management of Cyber Security platforms, the centralised real-time monitoring of the Group's security and the preventive and reactive monitoring of potential cyber threats. It is also focused on Cyber Security Info Sharing & Threat Intelligence processes, specifically in collaboration with the Computer Security Incident Response Team (CSIRT) Italy and the National Anti-Cyber Crime Centre for the Protection of Critical Infrastructure (CNAIPIC);
• an integrated security plan implemented through continuous and effective cooperation with institutional partners (e.g. Carabinieri, State Police, Guardia di Finanza, Civil Protection, Fire Brigade, Prefectures, Ministry of the Interior, Legambiente, ANIE) in order to prevent and counter attacks on or damage to Terna's critical infrastructures and the risk of criminal infiltration through companies fulfilling contracts or supplies;
• a specific department dedicated to the prevention and management of corporate fraud. In order to identify potential vulnerabilities in its control system, Terna has over time developed a process inspired by industry models and best practices defined by the Association of Certified Fraud Examiners ('ACFE'), the Institute of Internal Auditors ('IIA') and the American Institute of Certified Public Accountants ('AICPA') based on the systematic analysis of conditions that may generate fraud events, identifying "critical areas", potentially critical organisational and operational situations that may give rise to such phenomena, and adopting measures to prevent their occurrence. This is done by evaluating and monitoring the degree of exposure of processes to fraud risk, by identifying and analysing alerts/red flags of potential or actual breach of controls, the review and management of reports of potential offences, the adoption of adequate and increasingly rigorous governance and control measures for the prevention of fraud, the dissemination of a fraud prevention culture within the Company through awareness-raising and information actions. To achieve this objective, Terna has equipped itself with specialist software and databases capable of processing the related checks, both in terms of aggregate and statistical data and with a specific focus on suppliers, contracts, projects and departments;
• a further element of control developed relates to the risk-based analysis of the third parties with which Terna interfaces, with a view to curbing reputational risks arising from purchasing and selling transactions with them, by monitoring their reliability from an operating and financial point of view, international restrictive measures and morality, and paying special attention to anti-money laundering and anti-corruption indicators. With regard to the risk of international sanctions, Terna, in particular, performs systematic due diligence and has further strengthened its internal control system by formalising internal procedures to support its commitments to stakeholders. Moreover, as confirmation of the continuous commitment to the fight against corruption, in 2016 Terna adhered on a voluntary basis to the international standard ISO 37001:2016 - "Anti-bribery management systems" certifying its Anti-Corruption Management System in January 2017 and becoming the first Group in Italy to have received this certification. In this regard, since 2017, with the consent of the Audit, Risk, Corporate Governance and Sustainability Committee, the Terna Group has adopted specific "Global Anti-Bribery Guidelines" as a complete program to prevent corruption in the public and private sectors, in activities carried out by the companies of the Terna Group or by parties who operate in the name and/or on behalf of such Group companies in Italy and abroad,

thus laying down rules and guidelines in compliance with the Terna Group's anti-corruption program that support the respect and dissemination of the programme;

• specific measures to manage situations of actual or potential conflict of interest in order to guarantee the highest standards of transparency, loyalty and integrity in the application and implementation of Terna's Code of Ethics. These measures were laid down in a specific guideline, entitled "Conflict of Interest", published on 10 March 2022 and addressed to all Terna Group personnel. From a compliance perspective, it was considered that situations of conflict of interest may well facilitate or encourage the commission of crimes that are relevant also for the purposes of the entity's administrative liability for crimes pursuant to Legislative Decree 231/2001, first and foremost corruption. The document regulates, by means of guiding principles and practical examples, all those typical situations in which the actions or the judgement of employees may be improperly influenced, thus compromising the objective fulfilment of their duties and professional responsibilities towards the Company;
• a specific procedure for foreign subsidiaries, to harmonise their efforts in promoting compliance with the principles of ethics, integrity and legality and to prevent corporate criminal liability and provide a shared, consistent and uniform approach against possible unlawful conduct and strengthen the internal control system. In fact, since November 2017 Terna has adopted a Global Compliance Programme (or "GCP"). The GCP constitutes a policy of Terna to be implemented by its foreign subsidiaries and has been published on the company's website also in English. This document sets the general standards of control and principles of conduct applicable to employees, directors and other members of the management and control bodies of the foreign subsidiaries as well as, when applicable, to any third party acting in the name of and/or on behalf of a foreign subsidiary, such as providers, agents, consultants, business partners or any other counterparty in order to prevent the commission of unlawful conduct. The GCP was updated on 2 September 2022, to bring it in line with the main and latest best practices and regulations applicable to the compliance programme, and, lastly, on 14 December 2023 for adjustments to the whistleblowing system envisaged for foreign subsidiaries by the new Group Guideline on the subject, as well as to grant greater autonomy to foreign subsidiaries in their organisational choices regarding the department to support the Compliance Officer. The GCP makes explicit the senior management's commitment, to be replicated in the foreign subsidiaries, in the promotion and definition of a culture of ethics and compliance through a clear message of absolute adherence to the Group's principles of ethics, integrity and legality, which materialises in the definition and dissemination of guidelines, procedures and policies aimed at regulating said commitment in order to prevent the commission of unlawful activities (Top level commitment). The Global Compliance Programme, consistent with the Model pursuant to Legislative Decree no. 231/2001 adopted by Terna, is structured according to a "processbased" logic. In order to meet the specific needs of each foreign subsidiary in the Group, the GCP provides for the adoption of an ad hoc "Country Annex" for each of them, as an integral part of the GCP, describing the specific corporate regulatory instruments adopted by the foreign subsidiary in line with the GCP guidelines, and in implementation of local corporate liability regulations, and establishing the specific governance measure identified by the Compliance Officer (possibly supported by a specific Compliance Officer Bureau), for adequate monitoring and adequate training and information processes in relation to the overall body of documents;
• a Trade Compliance Policy (adopted as of 13 May 2020) aimed at establishing effective oversight of Trade Control issues. A special training course on international sanctions and trade compliance has been implemented in 2023 against the risk of non-compliance with sanctions regulations;
• a specific Antitrust Compliance Programme (ACP), lastly updated on 5 February 2024, in which Terna expressed its commitment to promoting and disseminating knowledge and respect for competition law and defined particularly effective organisational and procedural safeguards to prevent and manage the risks of non-compliance with antitrust regulations, also in line with the provisions of the Guidelines of the Italian Antitrust Authority ("AGCM") and with European and international best practices. The ACP consists of the Antitrust Compliance Guideline as well as the Antitrust Handbook and the Code of Conduct attached to the Guideline.
  • The Guideline formalises Terna's commitment to promoting and disseminating knowledge of and compliance with competition law and defines particularly effective organisational and procedural safeguards to prevent and manage the risks of non-compliance with antitrust regulations.

• The Antitrust Manual constitutes an effective overview of the principles and rules of competition law as well as the risks and sanctions that a breach thereof may entail and also illustrates the characteristic features of the prohibitions imposed by competition law.
• The Code of Conduct illustrates, in a practical manner and for the benefit of all, recommendations and clear rules to be followed in order to manage situations that could potentially lead to a breach of Antitrust regulations, especially for those areas of activity that are more sensitive due to Terna's actual activities in the market.

The oversight of the ACP is entrusted to the appointed Chief Compliance Officer (CAO), who, with the support of a dedicated Antitrust Team, verifies the adequacy of the ACP and ensures that it is updated and/or amended, in order to ensure that it remains constantly abreast of the potential risk of antitrust offences to which the Company may be subject.

• A Whistleblowing Guideline to govern the system for receiving and managing reports of breaches of internal or external regulations, to ensure fairness and transparency in the conduct of business and activities, and to protect the position and image of the Company, which may cause damage or harm to the Company, such as fraud, a general risk or a potentially dangerous situation. This Guideline, adopted as early as 2016, has subsequently been promptly updated (most recently on 14 December 2023) to ensure that the system also complies with the legal provisions that entered into force, firstly in 2017, with "Provisions for the protection of whistle-blowers who report offences or irregularities of which they become aware in the context of a public or private employment relationship" and then, in 2023, with Legislative Decree. No. 24/2023 on whistleblowing, concerning "Implementation of Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law and on the protection of persons who report breaches of national laws" and the latest guidelines issued by ANAC pursuant to Article 10 of the Decree. This Guideline also defines the roles and responsibilities at the various stages of the process, guaranteeing all aspects of information security, first and foremost the protection and confidentiality of the identity of the reporter, but also that of the person reported, the person involved and any other person mentioned in the report, as well as the content of the report and the relevant documentation, also in full compliance with the legislation on the protection of personal data.
• A Compliance Management System, certified according to the recent UNI ISO 37301:2021 standard, reinforcing governance controls alongside the existing management systems and other compliance controls, providing a further guarantee regarding the management of compliance in a highly complex organisation such as the Terna Group. In this context, Terna was the first in Italy to obtain certification extended to all relevant "compliance obligations" following a certification process that began in March 2022 and ended on 4 February 2023. The process was confirmed following the maintenance audit on September 29, 2023. The organisation of the Compliance Management System provides for the following structure:
• the Top Management, identified as Terna's CEO, which has the task of allocating appropriate and adequate resources to develop and maintain/improve the Compliance Management System, ensure performance reporting systems, establish and maintain accountability mechanisms, as well as the integration of compliance-related performance in staff performance reviews;
• the Governing Body, identified as Terna's Board of Directors, whose task is to ensure that Top Management is measured against the achievement of compliance objectives and to supervise the activities of Top Management with respect to the Compliance Management System's operational activities;
• the Compliance Function, filled by the Chief Compliance Officer (CCO), identified with Internal Note NI171GC (last updated on September 13, 2023) as the Director of the Industrial Program Management Office (IPMO), operationally supported, as of March 1, 2023, by the Compliance Organisational Structure (CMP).
• A Privacy Model, adopted to monitor personal data protection legislation: EU Regulation 2016/679 of the European Parliament and of the Council of April 27, 2016 on the protection of individuals with regard to the processing of personal data and on the free movement of such data, Legislative Decree no. 196/2003, Legislative Decree no. 101 of 2018 as well as any other applicable data protection legislation, including the provisions of the Authority for the Protection of Personal Data ("Garante"). This model contemplates in Terna the figure of the Privacy Officer and the appointment of a Data Protection Officer (DPO).

• • A Compliance department, reporting directly to the Director of the Industrial Management Program Office as from 2 August 2023, which
  • assists and advises Group departments in addressing Group compliance issues and coordinates the activities necessary to comply with the provisions on the administrative liability of entities pursuant to Legislative Decree 231/2001;
  • assists and advises Corporate departments in the correct interpretation of regulations on Compliance (ISO 37301:2021), Antitrust, Anti-Corruption, Anti-Money Laundering, Whistleblowing and Trade Compliance;
  • provides operational support to the Chief Compliance Officer, also in accordance with the UNI ISO 37301:2021 standard, by ensuring the mapping of compliance obligations and related risks as well as the coordination and supervision of the required functions;
  • oversees processes relating to compliance with data protection regulations. Compliance with the law is also assured through a Compliance Programme that, in addition to the above concerns, also deals with matters relating to conflicts of interest and corporate liability in the countries in which the Group is present and takes part in initiatives promoted by BIF – Business Integrity Forum (a Transparency International Italy initiative bringing together major Italian companies to discuss issues around integrity and transparency and to share anticorruption tools and practices and a culture of legality) and the BIAC Anticorruption Committee. BIAC is an international business organisation representing enterprises, the unions and NGOs at the OECD and that connects businesses with the OECD and its member governments.
• An eGRC (Enterprise Governance, Risk and Compliance) system, an information tool that enables structured management of the operational risk management process, via a workflow system that manages the transmission of requests, their compilation, approval and review. It also provides an access point for the collection and extraction of information, data and reports relating to risk management in various areas.

On 6 March 2024, the Board of Directors, in accordance with the opinion provided by the Audit, Risk and Sustainability Committee on the basis of the analyses carried out during 2023 and the Board of Statutory Auditors, confirmed the positive assessment given and judged the Internal Control and Risk Management System of the Terna Group adequate for the purposes of achieving an acceptable risk profile, in consideration of the industry in which Terna operates, its size and organisational and corporate structure (art. 6, Recommendation 33(a) of the Corporate Governance Code).

In its report, the Audit, Risk and Sustainability Committee also referred to the report of the Supervisory Board, appointed pursuant to Legislative Decree 231/01, on implementation of the resulting Organisational Model at Terna and at other Group companies, as well as referring to the report produced by the Chief Risk Officer (CRO) on the risk management methods employed by Terna. Annex 1 to this Report includes the principal characteristics of existing risk management and Internal Control systems with respect to the financial reporting process, including at consolidated level (pursuant to art. 123-bis, paragraph 2(b) of the CLF).

Chief Executive Officer

Terna's CEO, qualified as " Director in charge of the Internal Control and Risk Management System" by the Board of Directors on May 18, 2020, pursuant to the Corporate Governance Code in force at the time, is responsible for establishing and maintaining the "Terna Group's Internal Control and Risk Management System". In particular, as provided for by the Corporate Governance Code, the Chief Executive Officer:

• a) identifies the main corporate risks, taking into account the characteristics of the activities carried out by the company and its subsidiaries, and periodically submits them to the Board of Directors for its review (art. 6, Recommendation 34(a) of the Corporate Governance Code);
• b) carries out the guidelines set out by the Board of Directors, overseeing the design, implementation and management of the internal control and risk management system and constantly checking its adequacy and effectiveness, as well as adapting it to the dynamics of the operating conditions and the legislative and regulatory framework (art. 6, Recommendation 34(b) of the Corporate Governance Code);

• c) may instruct the Audit Department to audit specific areas of operation and review compliance with internal rules and procedures applicable to the conduct of business. In such cases, he simultaneously informs the Chairwoman of the Board of Directors, the Chairman of the Audit, Risk, Corporate Governance and Sustainability Committee and the Chairman of the Board of Statutory Auditors (art. 6, Recommendation 34(c) of the Corporate Governance Code);
• d) reports promptly to the Audit, Risk and Sustainability Committee on any problems or critical issues that have emerged, or of which he has become aware in discharging his duties, enabling the committee to take any necessary action (art. 6, Recommendation 34(d) of the Corporate Governance Code).

The CEO is also responsible for appointing and removing the Chief Risk Officer (CRO), after consultation with the Audit, Risk, Corporate Governance and Sustainability Committee, ensuring that this Officer has the resources necessary to fulfil his duties.

More specifically, in performing these activities during 2021, the Chief Executive Officer implemented the guidelines for the "Terna Group's Internal Control and Risk Management System" drawn up by the Board of Directors - as explained in the sub-section of Section XI, "Internal Control and Risk Management System" – and monitored changes in the Company's operating environment.

Chief Risk Officer

Since May 2013 (and subsequently, on 20 February 2018, 30 January 2019 and, lastly, on 23 February 2022), the Chief Risk Officer (CRO) - whose appointment is approved by the Board of Directors upon the proposal of the CEO, with the agreement of the Audit, Risk, Corporate Governance and Sustainability Committee - is responsible for supporting senior management in the effective implementation and management of the risk management process at Group level for all types of corporate risk.

Terna's CRO:

• supports the Chief Executive Officer in applying the guidelines and risk management policy defined by the Board of Directors;
• supports the Chief Executive Officer in defining the risk profile that can be assumed by Terna in relation to the Company's objectives;
• reviews the strategic objectives and the relevant processes for achieving them;
• in relation to Terna's general risk management model, fosters the development of methodologies and tools functional to the risk management process and review of the specific management and control models for the various corporate risks, and their implementation;
• examines, through periodic meetings with the heads of departments responsible for risk management, the results of their assessment and risk response activities, the improvements needed to strengthen internal controls, and the progress of ongoing projects;
• evaluates developments in both the internal context (organisation, activities performed, tools used) and the external context (exogenous factors and applicable best practices);
• disseminates a risk culture within the company;
• ensures coordination of the departments in charge of control activities;
• ensures integrated risk management, guaranteeing adequate reporting;
• provides assurances on the adequacy of the risk management process.

For the above activities, the CRO is supported operationally by the Enterprise Risk Management department, which reports directly to him. The scope of the CRO's activities is extended to all of Terna and its subsidiaries.

The activities are carried out in cooperation with the various heads of department, who are responsible for management of the risks related to the objectives assigned to their departments and extend to all business processes, with particular attention to the most important processes, due to their impact on the value of the Company/companies, the degree of risk they entail for business objectives or the influence they have on aspects of interest across the Company.

The CRO reports annually to the Chief Executive Officer and to the Audit, Risk and Sustainability Committee on the operational activities carried out, highlighting any critical issues addressed and how they were resolved.

Head of Internal Audit

According to the "Terna Group Internal Control and Risk Management System" guidelines adopted on 19 December 2012, and most recently revised on 15 December 2016, and previously referred to in this section, the "Terna Group Internal Control and Risk Management System" provides for an Internal Audit department, with the Head of Internal Audit appointed by the Board of Directors with the prior approval of the Audit, Risk and Sustainability Committee (art. 7, Recommendation 33 of the Corporate Governance Code).

The Head of Internal Audit is assigned the tasks indicated in the Corporate Governance Code (art., 6 Recommendation 36 of the Corporate Governance Code) and is not assigned any operational areas; she reports hierarchically to the Board of Directors (art. 6, recommendation 36 of the Corporate Governance Code), as represented by the Chairman of the Board of Directors, and functionally to the Chief Executive Officer, who is responsible for establishing and maintaining the internal control and risk management system.

To this end, Terna's organisation has long had a specific Internal Audit department, appointing as its head a Company manager meeting the appropriate professionalism requirements and not having any operational role or responsibilities. The appointed person, who reports to the Board of Directors, is assigned sufficient resources and means to enable them to oversee the adequacy, performance and functionality of the ICRMS, as well as being awarded remuneration in keeping with the Company's policies (art. 6, Recommendation 33(b) of the Corporate Governance Code). This arrangement has guaranteed the effectiveness of the Internal Audit department in pursuing its mission and in ensuring the compliance of its activities with the Standard for the practice of Internal Auditing issued by the IIA.

With a resolution on 17 February 2021, and with effect from 1 April 2021, Terna's Board of Directors appointed Nicoletta Buonomo, an executive at Terna S.p.A., as Head of Internal Audit for the Terna Group.

In implementation of the Corporate Governance Code (art. 6, Recommendation 33), the Board has also tasked the Chairman and the Chief Executive Officer with ensuring that the Head of Internal Audit is provided with adequate resources to carry out her duties.

The Head of Audit has direct access to all information relevant to the performance of her duties (art. 6, Recommendation 36 of the Corporate Governance Code).

Terna's Head of Internal Audit:

• oversees, both continuously and in relation to specific needs and in compliance with international standards, the performance and adequacy of the Internal Control and Risk Management System through the audit plan based on a structured process of analysis and prioritisation of the main risks (art. 6, Recommendation 36(a) of the Corporate Governance Code);
• prepares regular reports containing suitable information on their work, on the way in which risks are managed and on compliance with the plans designed to mitigate the related exposures. These regular reports contain an assessment of the adequacy of the Internal Control and Risk Management System (art. 6, Recommendation 36(b) of the Corporate Governance Code);
• promptly reports on particularly important events (art. 6, Recommendation 36(d) of the Corporate Governance Code);

< > REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2023

• sends the reports referred to above to the chairs of the Board of Statutory Auditors and the Audit, Risk and Sustainability Committee, and to the Chairman of the Board of Directors, as well as to the "Executive Director responsible for the Internal Control and Risk Management System" (art. 6, Recommendation 36(d) of the Corporate Governance Code);
• oversees, as part of the audit plan, the reliability of information systems, including accounting systems (art. 6, recommendation 36(e) of the Corporate Governance Code).

The work plan prepared by the Head of Internal Audit is approved by the Board of Directors at least once a year, based on the opinion of the Audit, Risk and Sustainability Committee, and after consultation with the Board of Statutory Auditors and the Chief Executive Officer (art. 6, Recommendation 33(c) of the Corporate Governance Code).

On 1 March 2023, Terna's Board of Directors, after consultation with the Audit, Risk, Corporate Governance and Sustainability Committee, approved the Group's Audit Plan for 2023-2025, which outlines the audit activities that will be carried out by the Audit Department over the three-year period 2023-2025.

The document, drafted by the Audit Department, was developed on the basis of a three-year methodological assessment and prioritisation approach (Audit Universe 2023/2025), starting from a systematic analysis of the results of the Risk Assessment, associated with the related operational processes and taking into account external sources (e.g., ARERA's regulatory framework) and internal sources (e.g., the results of previous audits). The Plan also takes into account the results of the Survey on the Internal Control System, requests from senior management and the results of the induction sessions carried out by the Board of Directors.

The activities of the Head of Internal Audit take the form of audits whose scope extends to Terna and its subsidiaries. The Chief Executive Officer may request the Internal Audit department to audit specific areas of operation and verify compliance with the internal rules and procedures applicable to the conduct of business, reporting its findings to the Chair of the Board of Directors, the Chair of the Audit, Risk and Sustainability Committee and the Chair of the Board of Statutory Auditors (art. 6, recommendation 34(c) of the Corporate Governance Code).

The Audit, Risk and Sustainability Committee may request the Internal Audit department to audit specific areas of operation, and to report its findings to the Chairman of the Board of Statutory Auditors and the Chief Executive Officer. The performance of Terna's Internal Audit department is subjected to a "Full External Quality Assessment" by qualified external experts every five years. On 22 December 2023, the results of the analysis of the External Quality Review of Terna's Audit Department, conducted by the consulting firm KPMG Advisory S.p.A, were transmitted. The review assigned the highest possible rating with respect to the "International Standards for the Professional Practice of Internal Audit". In particular: "Based on the work performed and the information obtained, we consider that Terna's Audit Department operates in a manner that is "Generally Compliant" with the International Standards for the Professional Practice of Internal Auditing and the Code of Ethics issued by the Institute of Internal Auditors (IIA). In the lexicon of the International Standards for the Professional Practice of Internal Auditing, "generally compliant" means that Internal Audit operates according to a Mandate (Audit Charter), procedures and processes that are assessed to be in line with the IIA Standards".

During the 2023 financial year, the Audit Department followed up on the activities set out in the Plan and also carried out off-plan activities by auditing a number of significant business areas relating to, inter alia: Operational activities of districts/departments, Audits of RTN sites, Tyrrhenian Link and Tyrrhenian Lab Project, Supply Chain, Sustainability Indicators, Material inventories, Impacts of WACC, Cyber Security in stations, Global Warming, Renewal and Maintenance Plan, Foreign, ANR: new business model, ICT Development Controls, MSD Incentive Model also through a technical consultancy of the Polytechnic University of Milan, Assessment Reorganisation Compliance.

Continuous auditing activities covered, inter alia: Procurement system, Assignment to predetermined operator, Advertising expenses, Quality of service, Live works, Investor communication, National Cyber Security, Tender Purchasing Management, Impartiality model audits.

Audits were carried out on the protocols and the internal control system relating to the 231 Organisational Model at the request of the Terna Group's Supervisory Board, regarding such areas as: Corporate giving, Personnel selection and recruitment, Awarding of contracts, consultancies, services and supplies, Connections, Accidents, ARERA quality review.

In 2020, the Audit department implemented a system (Power BI) to more accurately monitor improvement actions that emerge during audit activities, monitoring their progress through meetings with departmental focal points, the periodic sending of reminders and specific meetings with issue owners, and active management of changes in ownership following organisational modifications.

Analysis of reports on the Code of Ethics received through the Whistleblowing portal and by e-mail or post has been carried out to support the Ethics Committee in compliance with Legislative Decree 24/2023 concerning "The protection of persons who report breaches of Union law and laying down provisions concerning the protection of persons who report breaches of national laws"22.

The Audit department regularly attended the coordination meetings of the second-level control departments in order to boost information sharing during the planning and execution of activities. The department also attended the meetings of the Investment Committee, the Enterprise Development Committee, the Ethics Committee, and meetings of the Steering Top Program.

Code of Ethics

Since May 2002, mindful of the moral aspects involved in its core activities, Terna's Board of Directors resolved to adopt a Code of Ethics (later revised in March 2004), allowing employees and everyone entering into relations with Terna to act in such a way as to engender trust, strengthen the Company's positive reputation and create value.

In 2006, following the transformation of Terna into an independent operator in the electricity transmission market, the Code of Ethics underwent a review with the aim of providing Terna with a set of rules and principles in keeping with its new operating environment.

The Code of Ethics, which was approved by the Board of Directors on 21 December 2006, is Terna's constitutional charter, which stresses Terna's unique nature, including from a moral viewpoint. It underlines the need to respect universal ethical principles, which can be immediately recognised by everybody, as adopted by the Group. In this sense, the Code of Ethics explicitly recalls the 10 principles on human rights, labour, the environment and the fight against corruption of the Global Compact, the United Nations multi-stakeholder network, which represents the most prestigious expression of this vision, which Terna has embraced since 2009.

Terna's Code of Ethics consists of five sections, which reflect, in this order:

• Terna's fundamental ethical principles, organised into general ethical principles (legality, honesty and accountability), considered universal and therefore recognisable and acceptable to all, and into four principles that Terna believes are particularly important in view its activities and nature (sound management, respect, fairness and transparency);
• the conduct required, especially from employees, based on three important elements: loyalty to the Company, conflicts of interest and the integrity of the Company's assets;
• guidance on conduct in relations with stakeholders, made up of eight groups to which Terna wishes to maintain a consistent approach;
• Terna's commitment to comply with the Code and the conduct required in relation to certain stakeholders.

The ethical commitments undertaken by Terna with the Code of Ethics towards its stakeholders are translated into concrete and measurable objectives that Terna reports annually in the Annual Financial Report.

²² In particular, doing so as from 15 July 2023 with reference to Terna Group companies that have employed, in the last year, an average of more than two hundred and forty-nine employees on permanent or fixed-term employment contracts, and as from 17 December 2023, pursuant to article 24, paragraph 2, for the others.

The Code of Ethics is aimed at Directors, employees and all those who collaborate and work in the name and on behalf of Terna or who in any way contribute to creating value for the Group, and its contents are promoted throughout the company, including through specific training activities.

The Code of Ethics applies to all of the Terna Group's subsidiaries, in accordance with the provisions of LG050 concerning the "Adoption of the Code of Ethics in Terna Group Companies", adopted in February 2015, in order to ensure consistency within the Terna Group's governance system. This also with reference to the Confindustria Guidelines issued in relation to Legislative Decree 231/01, concerning the need to provide both the holding company and the subsidiaries with codes of ethics that are consistent in terms of principles while respecting the autonomous peculiarities of each entity that might result from such subsidiaries' obligation to adhere to different legal systems. This guideline was last updated on 20 April 2023; among other things, the purpose of the update was to make it resilient with respect to changes in the Terna Group's structure over time.

Since 2009, Terna has set up an Ethics Committee to provide internal and external stakeholders with a specific channel for discussion on the issues of the Code of Ethics. In implementing the provisions of Legislative Decree no. 24/2023 concerning whistleblowing, the Ethics Committee was given the responsibility to handle reports received and analysed by the Head of Audit, in order to follow up on them. The activities of the Ethics Committee, in this regard, are governed by the specific Guideline on whistleblowing (LG054) and by the Committee's Terms of Reference (LG014), updated with reference to the aforementioned legislation.

The seven members of the Ethics Committee are appointed by the CEO. They are selected so as to represent a diverse point of view and to strike a balance among the various Terna Group companies, corporate departments, and roles. In 2023, the Ethics Committee met 3 times to examine the reports received and investigated during the reporting period and to monitor feedback on the activities promoted and training on the Code of Ethics and the Whistleblowing system.

Terna's Code of Ethics can be consulted on the Terna website page: https://www.terna.it/it/Governance/etica-impresa/ codice-etico.

Organisational Model pursuant to Legislative Decree 231/2001

On 10 December 2002, Terna adopted an Organisational and Management Model that met the requirements of Legislative Decree 231 of 8 June 2001 (the "231 Model"). This legislation introduced into Italian Law a system of administrative (and criminal) liability for companies with respect to certain types of offences committed by their Directors, statutory Auditors, managers or employees in the companies' interests or for their benefit.

This 231 Model was revised in June 2004, in the light of the Company's listing, and subsequently adapted following organisational changes and the development of the business, as well as in response to the continuous addition of further categories of predicate offence.

With a resolution passed on 21 December 2006, Terna's Board of Directors adopted a new version of its 231 Model, taking into account, among other things, the integration of the "National Transmission Grid" operational activities. This initiative, like that of the Code of Ethics, has constituted a valid instrument for raising the awareness of all those who work in the name of and on behalf of Terna and the Group, so that in fulfilling their duties they may follow correct and transparent conduct, so as to prevent the risk of committing the crimes contemplated in the Decree. In particular, in 2010, the 231 Model was amended following changes to art. 24-ter regarding "organised crime offences" and art. 25-bis, 25-novies and 25-novies (bis) regarding "industrial and trade fraud", "breaches of copyright" and "inducement of others to withhold evidence or commit perjury in legal proceedings", respectively, introducing the new Special Part I, related to organised crime offences and revising the General Part and the Special Parts "A", "B", "G" and "H" for other types of offence.

In addition to identifying areas deemed to be most at-risk for the commission of offences (so called "At-risk Areas"), the process also involved defining a code of conduct that all representatives of the Company must comply with in order to prevent such offences, supplementing the provisions already included in existing internal procedures.

In 2011, following the addition of further categories of predicate offence relating to environmental crimes, pursuant to art. 25-undecies of Legislative Decree 231/2001, an assessment was carried out and the relevant areas of the Company, roles and responsibilities were mapped to as to identify "At-Risk Areas". This process also defined the code of conduct that all representatives of the Company must comply with in order to prevent such offences. Therefore, following this activity, the 231 Model was further expanded through the introduction of Special Part "L" regarding "Environmental offences".

In 2012, following a reorganisation of the Terna Group, the 231 Model was completely revised and updated and specific Organisational Models were prepared for the subsidiaries that took into account their specific activities.

Eventually, within the scope of the new Special Part "D", 2012 edition, the new 231 Model also considers the extension of the list of predicate offences to include the crimes referred to in art. 25-duodecies of Legislative Decree 109 of 16 July 2012. This extended the definition of administrative liability to include entities that breach the minimum rules relating to the employment of third-country nationals who are illegally resident, as established in Legislative Decree 286 of 25 July 1998 (the Consolidated Law on Immigration).

With the subsequent expansion of the list of offences, also in 2013, following the enactment of Law 190/2012 on anti-corruption, the Company proceeded to carry out the relevant assessment and to map the relevant areas of the Company, roles and responsibilities so as to identify "At-Risk Areas". It proceeded to define the standards of conduct that corporate officers must comply with in order to prevent commission of the new predicate offences. Therefore, following this activity, the 231 Model was further amended, updating the Special Parts "A" and "B" then applicable to take into account the changes made to the crimes of "unlawful inducement to give or promise benefits", "extortion", "corruption in performing a duty" and the introduction of the crime of "private-to-private corruption". In relation to organised crime, the new category of "influence peddling" was added to "Special Part I" of the Model. This crime, although not included among the new predicate offences in relation to the application of Legislative Decree 231/01, does contemplate conduct fostering corruption, and as such it was included in the map and referred to in the Model under racketeering.

Similarly, during 2015 - following the entry into force of Law 186 of 15 December 2014, which introduced the crime of self-laundering into the Italian legal system, by providing that such offence could determine the administrative liability of the entity in whose interest or to whose advantage it was committed - there was an additional update of the 231 Model. In this regard, following the usual risk assessment and gap analysis, tax crimes were included in the map of at-risk areas emerged. The 231 Organisational Model was thus amended by making some changes of a formal nature to Special Part "F", dealing with money laundering and the handling of stolen goods, to add the offence of self-laundering. The 231 Model was also updated to align it with recent theory and case-law regarding the crime of "Illegal burning of waste".

During 2016, the 231 Model was then revised on the basis of the changes introduced by Laws 68/2015 and 69/2015, relating to environmental offences, offences against the public administration, mafia-related criminal conspiracy and false accounting. The most significant amendments involved the then-Special Part "L" of the 231 Model, which was updated to take into account the new types of environmental offence. These specifically regard: environmental pollution, environmental disaster, environmental negligence and the trafficking and dumping of highly radioactive material. Additional amendments affected Special Part "B", updated to include the new types of offence regarding false accounting (articles 2621, 2621-bis and 2622 of the Italian Civil Code), Special Part "C", updated to include the new types of offence relating to terrorism, and Special Part "D", which was amended to include the crimes of child grooming and virtual pornography, introduced by articles 609-undecies and 600-quater1 of the Italian Criminal Code.

In 2017, the 231 Model was then subjected to an overall revision:

• following adoption of the regulatory amendments related to the cases already described and the related organisational controls concerning market abuse (Special Part "E"), anti-money laundering (Special Part "F") and crimes against the individual (Special Part "D"), and
• the introduction of the controls regarding new offences, such as human trafficking and labour exploitation, i.e. modern slavery (described in the new Special Part "D") and inducement to private-to-private corruption (described in the new Special Part "B"), and
• to set up so-called whistleblowing systems (the "General Part") as provided for in Law 179/2017, which amended art. 6 of Legislative Decree 231/2001.

In 2018, partly in view of minimal regulatory changes, no formal changes were made to the model. However, a general review of the Model was conducted in light of the Group's organisational changes and, updating the General Section and Special Sections of the Model in January 2019. The most important innovation was amendment of the Whistleblowing Policy to redefine the roles and responsibilities involved in handling disclosures.

In 2020, following the introduction of Law 157 of 19 December 2019 relating to the "Conversion into law, with amendments, of Law Decree 124 of 26 October 2019, containing urgent provisions relating to tax matters and requirements that cannot be deferred", which provided, among other things, for the inclusion in the Decree of art. 25-quinquesdecies, regarding tax offences, the update of the Model was approved by introducing a new Special Section on tax offences (Special Section M). Moreover, during the update process, in view of the new business activities in the area of innovation, an additional Special Section on industrial and trade offences (Special Section I) was introduced. Finally, organised crime offences, provided for in art 24-ter of Legislative Decree 231/2001, have been included in the General Section as well as in the individual Special Sections. This is in line with best practices of reference for the preparation of 231 Models, which rather than providing for a specific section devoted to criminal conspiracy, recommend covering this type of offence in all parts of the Model.

The constant maintenance of the 231 Model saw, during 2021, a further overall revision from a logic based on families of offences to a logic based on processes. This change is designed to ensure greater efficiency for the second and third level checks carried out on behalf of the Supervisory Board by the Group's departments. Moreover, this approach was intended to enable a greater understanding of the 231 Model by the employees, consistent with an organisation naturally structured according to processes and not by families of offences.

In addition, the 231 Model, approved on 30 November 2021, has been adapted to the regulatory changes of Legislative Decree 75/2020 enacted to implement Directive (EU) 2017/1371 Protection of Financial Interests (i. e., the PIF Directive), as well as Law Decree 21 September 2019, no. 105 on the subject of the national cyber security perimeter converted with amendments by Law No. 133 of 18 November 2019, and the related implementing the Decree of the President of the Council of Ministers dated 15 June 2021 which identified the categories of ICT goods, systems and services to be used in the national cyber security perimeter. In particular, after the usual risk assessment and gap analysis activities, the update concerned the predicate offences introduced into the 231 Decree:

• by Legislative Decree 75/2020, which came into force on 30 July 2020, such as: false declaration (art. 4 of Legislative Decree 74/2000) as part of cross-border VAT fraud exceeding 10 million; omitted declaration (art. 5 of Legislative Decree 74/2000) as part of cross-border VAT fraud exceeding 10 million; undue set-off (art. 10-quater of Legislative Decree 74/2000) as part of cross-border VAT fraud exceeding 10 million; fraud in public supply contracts (art. 356 of the Criminal Code); fraud to the detriment of the European Agricultural Guarantee Fund and the European Agricultural Fund for Rural Development (art. 2 of Law 898/1986); smuggling (Presidential Decree 43/1986); embezzlement (art. 314, paragraph 1, of the Criminal Code); embezzlement determined by the error of others (art. 316 of the Criminal Code) and abuse of office (art. 323 of the Criminal Code), if committed to the detriment of the financial interests of the European Union;
• by Law Decree 105 of 21 September 2019 (converted by Law 133/2019) in particular in the context of art. 24-bis, para. 3 of Decree 231 (Computer crimes and unlawful processing of data) concerning the violation of the new rules and procedures introduced. In this regard, an ad hoc risk area has been set up in the ICT process.

On 22 December 2022, the 231 Model was updated, with the CEO's approval, due to certain regulatory changes that took place on:

• "Crimes relating to payment instruments other than cash", which punish conduct relating to, among other things, the misuse, counterfeiting and alteration of credit cards or any other instrument enabling the withdrawal of money or the purchase of goods and services (a new 231 offence);
• "Crimes against cultural heritage", which punish conduct relating, among other things, to the theft of heritage assets, including archaeological artefacts, as well as damage to conservation areas (a new 231 offence);

and changes to certain types of offence already referred to in Legislative Decree 231/2001 and considered by Terna's 231 Model, with particular reference to:

• the extension of the scope of the offences of "Receiving stolen goods, money laundering and use of money, goods or benefits of unlawful origin, as well as self-laundering";
• the extension of certain offences included among "Computer crimes and unlawful data processing";
• the criminal relevance of the conduct of "Insider trading" also with regard to the so-called "secondary insiders";
• the extension of the scope of the offences of "Undue receipt of public funds", "Misappropriation of public funds" and "Aggravated fraud to obtain public funds" to include subsidised loans or any other facility granted by the State or other public bodies.

The changes were carried out following a specific risk assessment in line with the related best practices (e.g., the guidance provided by Confindustria in its guidelines)

The current Model

Terna's 231 Model was last updated on 11 July 2023.

The main changes concerned the update of the General Section to comply with the new provisions on Whistleblowing set forth in Legislative Decree 24/2023 concerning "the protection of persons who report breaches of Union law", in force as of July 15, 2023 ("Whistleblowing Decree") implementing Directive (EU) 2019/1937 of the European Parliament and of the Council of October 23, 2019.

The Whistleblowing Decree also explicitly provided in Article 4, para. 1 that the Models must define appropriate internal reporting channels established pursuant to the same Decree.

Therefore, it was necessary to update the current version of 231 Model. In particular, regarding

• the internal reporting channels (in line with the Directive referred to in the Whistleblowing Decree and Article 4(1) of the same Decree);
• the prohibition of retaliation (for whistleblowing reports);
• the disciplinary system suitable for punishing non-compliance with the measures set out in the 231 Model.

In addition, the opportunity was taken to update the 231 Model also to include the most recent predicate offences of Legislative Decree 231/01 introduced by Legislative Decree no. 19 - in implementation of Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019, amending Directive (EU) 2017/1132 with regard to cross-border transformations, mergers, and demergers - which included, in article 25-ter of Legislative Decree 231/2001, the new offence of false or omitted declarations for the issue of the preliminary certificate. In this regard, there was no particular impact on Terna's 231 Model.

The Model is currently organised into:

• a "General Section", which, among other things, describes the content of the 231 Decree, the objectives and functioning of the 231 Model, the tasks of the Supervisory Board (the body appointed by the Board of Directors pursuant to art. 6 of Decree 231 and called upon to supervise the functioning of and compliance with the Model, its actual effectiveness and the need for updating it), information flows, and the system of sanctions;
• a special section in which the following sensitive processes have been identified:
  • 1. Human Resources;
  • 1. Legal and Corporate Affairs;
  • 1. Administration, Financial Statements and Tax;
  • 1. Finance and M&A;
  • 1. ICT;
  • 1. Purchasing and Procurement;
  • 1. Dispatching and Conduction;
  • 1. Commercial;
  • 1. Network Planning, Design and Development;
  • 1. Plant Construction and Asset Management;
  • 1. Regulatory Affairs;
  • 1. Communication and Institutional Relations;
  • 1. HSE;
  • 1. Security and General Services.

The content of the Model adopted is consistent with the guidelines prepared for this purpose by trade associations. It is also in line with best practices, and represents a key element within the integrated security system adopted by Terna, testifying to the rigour, transparency and sense of responsibility that mark internal and external relations, and offering shareholders a guarantee of efficient and correct management.

Moreover, compliance with risk assessment best practices underlying the drafting of 231 Model, both of Terna and of each Italian subsidiary of the Terna Group, was confirmed in 2023 by an independent external audit.

Reports of breaches to 231 Model, in compliance with Legislative Decree 24/2023, may be sent in accordance with the specific provisions of 231 Model, as reported on the website https://www.terna.it/it/Governance/etica-impresa/ whistleblowing.

To disseminate the Model adopted, since 2010, the Company has been running a widespread, customised training and information campaign involving all employees. This involves classroom sessions, as well as e-learning modules, with content that differentiated according to the target group and based on real-life situations. In particular, during 2022, the following were provided: online courses in the area of 231 for all Italian companies of the Group; specific courses in the area of 231 for certain Group companies in relation to their activities and specific areas of risk; specific courses for "231 Contacts", as persons appointed to promote the effective implementation of the 231 Model; courses for obtaining the certification "Supervisory Board Member; Legislative Decree 231/2001 Expert"; periodic updates on new developments in the area of Legislative Decree 231/01 for the staff of the department acting as Technical Secretariat of the Supervisory Board"; courses for the Group's foreign subsidiaries. In addition, other initiatives were promoted to ensure effective knowledge of the regulations and conduct to be observed by all company representatives.

Specifically, significant efforts were put into informing personnel through circulation of memoranda on the main developments regarding Legislative Decree 231 and the related legislation. Moreover, an Intranet portal has been set up, with a specific section dedicated to matters relating to Legislative Decree 231/01, in which all the Models used by the Group can be accessed.

In addition, a survey was carried out to support the monitoring of the 231 Model, by periodically measuring the degree to which staff are familiar with it and their awareness of and confidence in the reporting management system, in accordance with international best practice. The result of the survey - also due to the size of the recipients - showed a good level of knowledge of the subject and the documentation, which allows for the proper management of Models 231 in the Terna Group.

Terna adopted and updated specific Guidelines ("Implementation and management of Organisational Models pursuant to Legislative Decree 231/2001 within the Terna Group"), which was last updated on 15 March 2022, to provide general guidance and implementation methods, which are non-binding and derived from best practices and applicable provisions of law. These can be used by subsidiaries in preparing, implementing and updating their Models, as well as in carrying out the related activities (e.g. training and information).

The Supervisory Board

In compliance with the provisions of art. 6 of Legislative Decree 231/01, the Parent Company and its Italian subsidiaries have entrusted the task of supervising the functionality and compliance with the respective Models, and any subsequent revisions, to a Supervisory Board with autonomous powers of initiative and control. The Supervisory Board is a collective body whose members, appointed by the Board of Directors of the Parent Company, must meet the related requirements relating to autonomy, independence, professionalism, continuity of action, integrity and absence of conflicts of interest.

The current Supervisory Board of the Parent Company, appointed by resolution of the Board of Directors of Terna S.p.A. on 29 July 2021, has a collegial form and is composed of the following three members, two of whom are external: Bruno Assumma, who acts as Chairman, Massimo Dinoia, and an internal member who is the Head of Audit, Nicoletta Buonomo, in order to ensure coordination between the various parties involved in the internal control and risk management system (art. 6, recommendation 33(e) of the Corporate Governance Code).

For more information, reference should be made to the website www.terna.it – "Business ethics and compliance" section. Terna's 231 Model can be viewed on Terna's website at https://www.terna.it/it/Governance/etica-impresa/ responsabilita-amministrativa and, in its English version, https://www.terna.it/en/Governance/business-ethics/ administrative-responsibility.

Independent Auditors

Following the outcome of the single European tender process launched by the shareholder, Cassa Depositi e Prestiti S.p.A., with a view to selecting a single audit firm for all its subsidiaries, and based on a reasoned proposal from the Board of Statutory Auditors, the Annual General Meeting of 8 May 2019 voted to engage Deloitte & Touche S.p.A. to audit the Company's accounts for the period 2020-2028, thereby replacing the outgoing audit firm, PricewaterhouseCoopers S.p.A.

In drafting its recommendation regarding the engagement, which was submitted to the Annual General Meeting of 8 May 2019, the Board of Statutory Auditors conducted a preliminarily assessment of the independence of this firm with reference to Terna and the Group.

Deloitte & Touche S.p.A. is responsible for auditing Terna S.p.A.'s separate financial statements and the Group's consolidated financial statements as of 31 December 2023, as well as for reviewing the consolidated non-financial statement pursuant to Legislative Decree 254/2016 relating to 2023.

In 2023, after consulting the Board of Statutory Auditors, the Board of Directors examined the results shown by the independent auditor in the additional report addressed to the Board of Statutory Auditors, as provided for by art. 6, Recommendation 33 of the Corporate Governance Code.

In 2023, in accordance with the provisions of art. 5, paragraph 4 of Regulation (EU) 537/2014, all other contracts, other than the independent audit engagement, awarded to Deloitte & Touche S.p.A. and its associates were subjected to pre-approval by the Board of Statutory Auditors in its capacity as the Internal Control and Audit Committee.

Manager Responsible for Financial Reporting and other roles and functions

In implementation of art. 154-bis of the CLF - introduced by Law 262 of 28 December 2005 and subsequently amended by Legislative Decree 303 of 29 December 2006 -, the Annual General Meeting of Terna's shareholders held on 24 May 2007 amended the Articles of Association (art. 21.4) to create the position of Manager Responsible for Financial Reporting. The article delegates authority for appointing the Manager to the Board of Directors, based on a prior opinion from the Board of Statutory Auditors and meeting specific professionalism requirements.

The decision to assign the Board of Directors responsibility for appointing and removing the Manager Responsible for Financial Reporting was taken in line with the legislation that directly gives the Board of Directors the specific task of oversight (art. 154-bis, paragraph 4 of the CLF). In this regard, within the scope of the "Terna Group Internal Control and Risk Management System" guidelines, as most recently revised on 15 December 2016 and previous described in this section, the Board has specifically assigned the "Executive Director responsible for the Internal Control and Risk Management System", governed by the Corporate Governance Code then applicable, the task of nominating the manager concerned, after consultation with the Board of Statutory Auditors.

The Manager Responsible for Financial Reporting must also meet the integrity requirements provided for by law and the professional requirements indicated in the Articles of Association (art. 21.4).

• In particular, the Manager Responsible for Financial Reporting must have at least three years' experience in:
• a) a management role related to administration, finance and control activities and/or the preparation and/or analysis and/or audit and/or review of company accounts where the degree of complexity is comparable to that of the Company's accounts; or
• b) auditing the accounts of companies listed in Italian regulated markets or in markets of other countries of the European Union; or
• c) practicing as an accountant or as a university teacher of financial or accounting subjects.

The figure of the Manager Responsible for Financial Reporting is subject to specific "Terms of reference for the Manager Responsible for Financial Reporting", a document that defines the tasks and associated responsibilities, and the related powers and resources attributed. The document was prepared by Terna back in 2007 and subsequently revised in agreement with the "Executive Director responsible for the Internal Control and Risk Management System".

In accordance with the relevant legislation, the Board of Directors promptly appointed a Manager Responsible for Financial Reporting. This position is currently held by Francesco Beccali, who was appointed, after verifying the requirements of integrity and professionalism and after receiving the opinion of the Board of Statutory Auditors, by the Board of Directors on 9 August 2023, effective as of 1 September 2023. Mr. Beccali was appointed to replace Mr. Agostino Scornajenchi, previously CFO and Manager Responsible for Financial Reporting of the Company, who, on 3

August 2023, signed a consensual termination of employment agreement with the Company, whereby he remained in the role until 31 August 2023.

This appointment is in line with changes in the Company's organisational structure and the functions assigned to Mr Beccali as the Chief Financial Officer, reporting directly to the Chief Executive Officer.

The Manager Responsible for Financial Reporting carries out all the activities necessary to allow the Board of Directors to carry out its oversight role as per art. 154-bis, paragraph 4 of the CLF.

Pursuant to art. 154-bis, paragraph 2 of the CLF, the Manager Responsible for Financial Reporting issues an attestation on the consistency of the Company's published documents and announcements, whether provided for by law or disclosed to the market, relating to its annual and interim accounts with its internal documents, accounting books and records. These statements have been made since the interim half-year report for 2007.

Pursuant to art. 154-bis, paragraph 3 of the CLF, the Manager Responsible for Financial Reporting designs suitable administrative and accounting procedures for use in preparation of the separate and consolidated financial statements and any other financial disclosures requiring his attestation. In this regard, the Manager Responsible for Financial Reporting, together with the Chief Executive Officer, issues a specific report on the separate financial statements, the condensed interim financial statements and the consolidated financial statements, attesting to the adequacy and effective application of these procedures, in accordance with paragraph 5 of the above article, in keeping with the format established in the Regulations for Issuers. These attestations have been provided since the financial statements for the year ended 31 December 2007.

During 2023, in continuity with the activities carried out in previous years, the Manager Responsible for Financial Reporting revised:

• the scope;
• the administrative and accounting procedures;
• the assessment of the entity-level Internal Control and Risk Management System.

Upon completion of these revisions and also for the purposes of art. 154-bis of the CLF, the Manager Responsible for Financial Reporting carried out a specific review aimed at verifying the correct application of the procedures and attested, with a specific report on the separate financial statements, the consolidated financial statements and the condensed half-year financial statements, the adequacy and effective application of administrative and accounting procedures, as well as the correspondence of the documents with the data in the books and accounting records and their suitability to provide a true and fair view of the financial condition, results of operations and cash flows of Terna and the group of companies included in the scope of consolidation.

In order to support the Manager Responsible for Financial Reporting and the administrative bodies delegated to issue the attestation, the internal "chain" attestation process was followed for the assessments of the control system in scope.

In accordance with the provisions of the Corporate Governance Code, the Manager Responsible for Financial Reporting has, together with the Audit, Risk and Sustainability Committee, evaluated the proper use of accounting standards and their consistency in view of their inclusion in the consolidated accounts (art. 6, Recommendation 35(a) of the Corporate Governance Code).

Coordination of the persons involved in the Internal Control and Risk Management System

The "Terna Group Internal Control and Risk Management System" involves, each within the scope of their responsibilities, the Board of Directors, the Chief Executive Officer, the Audit, Risk and Sustainability Committee, the Board of Statutory Auditors, the Internal Audit department and its Head, the Supervisory Board set up in accordance with Legislative Decree 231 of 8 June 2001, the Manager Responsible for Financial Reporting appointed in accordance with art. 154-bis of the CLF and the Chief Risk Officer (CRO). In line with the recommendations of the new Corporate Governance Code, the System sets out the ways in which these persons are to coordinate their activities, describing their roles and duties within the Internal Control and Risk Management System, in order to maximise the overall efficiency of the ICRMS. This is done in keeping with the respective roles and responsibilities and in order to reduce the duplication of activities (Principle XX). Pursuant to art. 6, Recommendation 37, of the Corporate Governance Code and as set forth in the Terms of Reference of the Board of Statutory Auditors (approved by the Board of Statutory Auditors at its meeting on 26 July 2021 and amended at the subsequent meeting of 15 February 2022), the Board of Statutory Auditors and the Audit, Risk and Sustainability Committee promptly exchange information relevant to the performance of their respective duties The Chairman of the Board of Statutory Auditors, or another member designated by him, takes part in the meetings of the Audit, Risk and Sustainability Committee.

The Chair of the Board of Statutory Auditors, or another member designated by him or her, also attends the meetings of Terna's Remuneration Committee, Nominations Committee and Related Party Transactions Committee. In any case, all members of the Board of Statutory Auditors may attend the meetings of the aforementioned Committees. In 2023, the Board of Statutory Auditors attended most meetings of the Board Committees.

In order to guarantee suitable coordination between the parties involved in the ICRMS, Terna arranges for:

• suitable, continuous flows of information between the parties involved in the ICRMS;
• ad hoc meetings in order to manage specific situations or events, needed to ensure the prompt control of any exposure to risks and the identification of operational issues;
• regular meetings to communicate the status of the risk management system and to plan tests:
• systematic reporting on the exposure to risks, with different information levels according to the person reported to.

Section XII Directors' interests and related party transactions

Even before listing its shares, Terna and its subsidiaries decided to lay the foundations for ensuring that related party transactions were carried out in compliance with the principles of procedural and substantive fairness, both in its own interests and as a duty to the market.

As of 22 February 2007, in keeping with the 2006 edition of the Corporate Governance Code, Terna defined these conditions as part of specific internal procedures submitted in advance to the then Internal Audit Committee and approved by the Board of Directors. Among other things, these procedures provided for specific reporting to the Board of Directors and Board of Statutory Auditors, which has been implemented periodically.

Following the publication of the "Regulations for Related Party Transactions" issued by CONSOB with Resolution 17221 dated 12 March 2010, subsequently amended by Resolution 17389 dated 23 June 2010 ("CONSOB Related Party Regulations"), Terna's Board of Directors - as announced to the market on 12 November 2010 – drew up these conditions within a new Procedure (the "Procedure for Related Party Transactions"), effective as of 1 January 2011. The Procedure takes into account the new regulations, as well as the requirements of the Italian Civil Code and those of the Corporate Governance Code then applicable. The resolution was passed unanimously following a positive opinion from the Committee established for this purpose and made up of independent Directors only (as established by art. 4, paragraph 3 of the CONSOB Related Party Regulations), whose members were chosen from among the members of the Remuneration Committee at that time. Since 2011, an annual survey of related parties has been carried out, as per art. 4 of the Procedure.

The amendments to the Articles of Association required by the Procedure for Related Party Transactions were approved in the resolution passed by the Annual General Meeting of 13 May 2011.

Therefore, the Procedure for Related Party Transactions has been progressively updated to take account of changes in the regulatory context and the relevant best practices.

According to the document prepared on first-time adoption, the Procedure for Related Party Transactions underwent a preliminary review by Terna's Board of Directors which, based on the favourable opinion of the specific Committee and considering the lack of critical issues, deemed the Procedure on the whole to be valid and effective, and did not find it necessary to make any changes to it.

On 15 December 2016, the Board of Directors, unanimously, based on the positive opinion of the Related Party Transactions Committee, resolved to extend the scope of the Procedure for Related Party Transactions to include the Terna Group's key management personnel, as identified by the Chief Executive Officer of the Company and included in the specific "Related Parties List".

Subsequently, on 26 January 2017, proceeding with the planned three-year audit of the document, the Board of Directors unanimously, and after obtaining the approval of the Related Party Transactions Committee, resolved to make a few, mainly formal, changes to the Procedure for Related Party Transactions. These consisted of reformulations and clarifications, designed to make it easier for all company departments and the various parties concerned to use the document.

On 31 October 2019, the CONSOB published a consultation document containing amendments to the Regulations for Related Party Transactions, the Markets Regulation and the Regulations for Issuers. These regarded the transparency of remuneration, asset management and proxy advisors, following the transposition of the abovementioned Shareholder Rights II Directive.

Therefore, instead of the three-year revision of the document, it was deemed appropriate to postpone the update of the Procedure for Related Party Transactions until the regulatory framework had been consolidated.

Subsequently, due to the evolution of the Company's organisational structure as well as the entry into force of stricter sanctioning provisions, at its meeting of 9 December 2019, the Committee decided to carry out limited revisions, proposing, in particular, to include a paragraph on administrative sanctions regarding related party transactions. In particular, these include art. 192-quinquies, introduced by Legislative Decree 49/2019 and amended by Legislative Decree 84 of 14 July 2020 (implementing art. 7 of Law no 117 of 4 October 2019, the "European delegation law" relating to encouragement of long-term shareholder engagement and regulation of the corporate governance system), which raised the sanctioning system's maximum penalties regarding remuneration and related party transactions. At its meeting of 16 December 2020, the Board of Directors therefore resolved on the amendments to the Procedure, undertaking also to implement a more systematic review of it, in view of the entry into force, on 1 July 2021, of the amendments made by CONSOB to Regulation no. 17221/2010 by the aforementioned Resolution no. 21624 of 10 December 2020.

At the same time, the Company decided to implement operating instructions that regulate the Guidelines' application profiles, in order to facilitate prompt identification of related party transactions from the earliest stages and ensure their correct classification. The operating instructions thus define roles and responsibilities in the process of identifying and managing transactions to be carried out with related parties and envisaged specific information flows. The operating instructions were also revised in the light of the above-mentioned regulatory changes.

On 10 December 2020, with Resolution no. 21624, CONSOB amended Regulation no. 17221 of 2010 regarding related party transactions.

The Italian regulations for related party transactions were already largely consistent with the Shareholders' Rights Directive 2 with regard to approval procedures, transparency requirements for transactions and certain identified cases of exemption.

The principal changes included:

• (i) a new definition of related party, which refers to the definition of related party contained in current international accounting standards;
• (ii) definition of the directors involved in a transaction with a related party who are required to abstain from voting, referring to those who have an interest, on their own behalf or on behalf of third parties, which conflicts with that of the listed company in relation to such transaction;
• (iii) the obligation to verify that the most significant exempted transactions are ordinary and carried out at arm's length.

In view of the entry into force of the new regulations (as of 1 July 2021), the Company had initiated a new process of revision of the procedural framework.

It should be noted that, within the Procedure for Related Party Transactions, pursuant to art. 4 of CONSOB's Regulations for Related Party Transactions, the Company had:

• identified Related Parties, defined Related Party Transactions and laid down the new methods for identifying, approving and executing the various categories of Related Party Transaction;
• defined low-value transactions and the cases in which the Procedure should not be applied (in line with the provisions of articles 13 and 14 of CONSOB's Regulations for Related Party Transactions), taking into account the size of the Company and the sector in which it operates, as well as its ownership structure;

• defined the procedures for appointing the Board Committee called upon to express its opinion individual transactions of lesser or greater significance, as well as the content of this opinion and the independence requirements for Committee members. Furthermore, specific measures have been identified should at least 3 independent, non-related Directors not be present;
• established the rules regarding cases where Terna has to examine or approve transactions carried out by Italian or foreign subsidiaries;
• established the procedures and time frames within which Directors and the Related Party Transaction Committee should be provided with information on Related Party Transactions and the related documentation;
• taken decisions in connection with the options granted by the CONSOB's Regulations for Related Party Transactions.

In order to facilitate review by the Related Party Transactions Committee, the Related Party Operating Instructions also regulated the phases of (i) ascertaining the nature of the related party relationship; (ii) determining that one of the hypotheses of exclusion from application of the procedure applies; and (iii) classifying a transaction as of either "material" or "less material".

The Instructions also provided for periodic reporting on the checks and assessments carried out during the reference period on Related Party Transactions and excluded transactions to the Chief Executive Officer, the Related Party Transactions Committee and the Company's Board of Statutory Auditors.

Following the new Consob procedure, the main changes introduced to the Guideline and to the Operating Instructions concerned:

• the introduction of a subdivision by thresholds, differentiated by the nature of the counterparty, relating to exempt transactions;
• the extension of the list of excluded transactions to include transactions resolved by the Company and addressed to all shareholders on equal terms (including rights issues, full or partial demergers with proportional share allocation, share capital reductions through shareholder redemption);
• the possibility to make use without any expense limit of independent experts, including those appointed by Terna, subject to verification of the relative independence and provided that the appointment expressly envisages that the expert also specifically assist the Related Party Transactions Committee in the performance of its duties pursuant to the Guidelines;
• as regards the directors involved, their obligation to inform the Chairwoman of the Board of Directors and the Chairman of the Board of Statutory Auditors, and through them the respective Boards, within two days of receipt of the notice of call and their involvement, as well as to refrain from voting on the transaction;
• with regard to information flows, the establishment, on a quarterly basis, of a report on: (i) the application of all cases of exclusion, with the sole exception of low value transactions; (ii) the correct application of the conditions for exemption with reference to material transactions classified as ordinary transactions carried out at arm's length; (iii) the checks and assessments regarding transactions carried out and excluded transactions (except for low value transactions) made to the CEO, the Related Party Transactions Committee and Terna's Board of Statutory Auditors;
• with regard to the mapping of related parties, the provision that such map should be made by using also the boundaries drawn by the Administration, Finance and Control Department, which already has it available for accounting purposes; a specific IT tool was implemented in collaboration with Computershare S.p.A. with a single shareholder.

With specific reference to the Operating Instructions, the necessary changes have been made to adapt them to the new version of the Guideline. The document is designed to ensure that transactions with related parties within the Company can be rapidly identified and then submitted to the Related Party Transactions Committee. In this sense, the role of the Advisory Board, already indicated in the previous version as a body supporting the Related Party Transactions Committee, has been specified. In the Operating Instructions, in paragraph 3 entitled "Preliminary and research role of the Advisory

Board", the activity of the Advisory Board was defined as "functional to ensuring the adequate and timely involvement of the Committee".

Both documents were submitted to the Related Party Transactions Committee for its prior review. The Committee held a meeting on 7 June 2021 and one on 14 June 2021, issuing on the latter date a positive opinion (on the procedure and on the operating instructions) in view of the Board of Directors' meeting of 16 June 2021, where the new Guideline "Procedure for Transactions with Related Parties" was approved and the Chief Executive Officer was instructed, with the express authority to sub-delegate, to update the related Operating Instructions. Subsequently, on 28 February 2022, certain formal adjustments were made to the Procedure and Operating Instructions.

In accordance with the provisions of the Procedure for Related Party Transactions and since its adoption, a specific Related Party Transactions Committee has been set up within Terna's Board of Directors, consisting of at least three independent Directors.

The Board assigned this Committee the role required by the CONSOB's Regulations for Related Party Transactions (Resolution 17221 of 12 March 2010), relating to approval of both material and less material transactions, as indicated in Terna's procedure for Related Party Transactions. The Committee has been assigned the role of conducting reviews, making recommendations and providing advice in relation to the assessment and approval of the above related party transactions, as well as in relation to any proposals to amend the Procedure adopted by Terna. Moreover, by virtue of the new application procedure adopted on the matter, the Committee receives periodic reports also on excluded or less material transactions.

Specific "Terms of reference for Terna S.p.A.'s Related Party Transactions Committee", approved in a resolution dated 12 December 2010 and effective from 1 January 2011, govern the Committee's composition, duties and operations. As is the case with other committee terms of reference, the Related Party Transactions Committee's terms of reference underwent a specific review in 2021, during the Company's process of adaptation to the new recommendations of the Corporate Governance Code.

On 15 December 2021, the Board of Directors therefore resolved on the revision of the Terms of Reference. The draft organisational regulation of the Related Party Transactions Committee was submitted for examination in advance to the Committee, which, at the meeting held on 9 December 2021, expressed a favourable opinion on the proposed amendments. Lastly, on 13 December, following the positive opinion of the Board Committee on 21 November 2023, the Company's Board of Directors approved a new revision of the Terms of Reference, introducing two revisions in each of the Board Committees' Terms of Reference for consistency purposes.

In particular, it was provided that: (i) the minimum attendance percentage at meetings be increased from 75% to 80% and (ii) that the meeting be considered to be held in the place where the Chair of the Committee is located, with the clarification that the Chair and Secretary may be in separate places and without prejudice to the possibility of remote connection.

The Company's budget provides adequate financial resources to fund the work of the Related Party Transactions Committee. The Chair of the Committee, with the assistance of the Secretary to the Committee and in coordination with the Secretariat of the Board of Directors, may from time to time invite to the meetings, with reference to the Transactions on the agenda, the Chairman of the Board of Directors, the CEO, other members of the Board of Directors as well as other members of Terna's organisation or other persons whose presence may be useful for the better performance of the Committee's functions. At the invitation of the Chair, other people whose presence could be helpful in improving the Committee's effectiveness may attend meetings of the Related Party Transactions Committee.

In the previous Board, the members of the Related Party Transactions Committee were Marco Giorgino (Chairman), Paola Giannotti and Ernesto Carbone. On 14 October 2021, the Board of Directors resolved to increase the number of members of each Board committee to four. As of the aforementioned date of 14 October 2021, Prof. Giuseppe Ferri became a member of the Related Party Transactions Committee. Following the resignation of the Director, Ernesto Carbone, on 23 January 2023, the Committee consists of three members.

With the commencement of the new Board of Directors' term of office and by resolution of 9 May 2023, the Committee is composed as follows: Annachiara Svelto (Chairwoman), Marco Giorgino (member), Angelica Donati (member) and Gianluca Gregori (member).

RELATED PARTY TRANSACTIONS COMMITTEE

During 2023, the Committee met 13 times, (4 times during the previous Board tenure, in the period between 1 January 2023 and 9 May 2023, and 9 times during the present Board term of office, in the period between 9 May 2023 and 31 December 2023). Of the total of 13 meetings held by the Related Party Transactions Committee in 2023, 3 meetings were held jointly with the Audit, Risk and Sustainability Committee.

Between 1 January 2023 and 9 May 2023, in line with the provisions of the Remuneration Policy contained in the relevant Report approved by the Annual General Meeting of shareholders of 29 April 2022, the Committee was involved in issuing a non-binding opinion on the proposal of extraordinary bonus in favour of certain key management personnel. Following the preliminary investigation conducted by the Remuneration Committee, the Related Party Transactions Committee met on 6 and 24 February and 17 March 2023, in order to frame the rationale of the transaction and the beneficiaries. The meeting of 24 February 2023 was attended by the CEO, who illustrated the extraordinary nature of the project underlying the possible payment of the bonus, and by Director Gabriella Porcelli, who represented the Remuneration Committee, which studied the issue. On the other hand, in order to ensure the flow of information between the two Committees, the Chair of the Related Party Transactions Committee attended the meeting of the Remuneration Committee on 16 March 2023. In any case, the progress of the activities regarding the bonus proposal was constantly reported to the Board of Directors. Lastly, the two Committees met jointly for the purpose of issuing their respective favourable opinions, on 22 March 2023, prior to the related Board resolution passed on the same date.

In the meeting of 24 February 2023, the Committee, due to the possible participation of Cassa Depositi e Prestiti S.p.A., was informed about the transaction to update the Revolving Credit Facility programme and made the issuance of any opinion conditional on the actual participation of Cassa Depositi e Prestiti S.p.A. in the initiative as well as the precise definition of the investment.

The transaction was approved by the Board of Directors on 1 March 2023, with the abstention of a related party Director, subject to the issuance of the positive opinion of the Related Party Transactions Committee if Cassa Depositi e Prestiti S.p.A. were to join the initiative.

It should also be pointed out that, on 17 March 2023, following the formal entry of Cassa Depositi e Prestiti S.p.A. into the syndicate of lending banks, the Committee issued a non-binding positive opinion, as it had verified the Company's interest in completing the transaction, as well as the appropriateness and fairness of the related terms.

With the new Board of Directors, certain senior managers were replaced. Pursuant to a resolution passed by the Board of Directors on 3 August 2023, the Nominations, Governance and Scenarios Committee was provided with prior information on the incoming senior management figures and, for any description, reference is made to Section VII, paragraph entitled " Duties of the Nominations, Governance and Scenarios Committee". For the remuneration profiles of top executives classified as key management personnel, the Related Party Transactions Committee has been systematically involved. This preliminary step within the Board Committee was appropriate for maximum meticulousness and regulatory compliance, due to the presence of a specific remuneration policy within the Terna Group, which has a flexible and discretional structure on certain aspects such as those related to the remuneration of " key management personnel". This prevents again based on an extremely strict approach - the application of the exemption provided for by the regulations on related party transactions, thus requiring the involvement of the Board Committee.

Following this approach, the Committee met on 1 September and 21 December, with reference to the remuneration increase of the new Director of Administration, Finance and Control, appointed on 9 August; on 6 October, with reference to the remuneration profiles of the new Director of Corporate Affairs and, on 21 November, with reference to the remuneration profilies of the new Director of People, Organization and Change.

During 2023, the Related Party Transactions Committee met 3 times jointly with the Audit, Risk and Sustainability Committee. On this point, reference is made to "Joint Meetings of the Audit, Risk and Sustainability Committee and the Related Party Transactions Committee", Section X.

During 2024, and up to the date of approval of this Report, the Committee has met two times, both were held jointly with the Audit, Risk and Sustainability Committee..

Section XIII Election and replacement of Statutory Auditors

The procedure for electing the members of the Board of Statutory Auditors is governed by art. 26 of the Articles of Association.

In accordance with the Company's Articles of Association, the Board of Statutory Auditors consists of three Standing Auditors and three Alternate Auditors, who are appointed by Annual General Meeting for a period of three years and may be re-elected at the end of their term of office.

All members of the Board of Statutory Auditors must meet the integrity and professionalism requirements as per art. 148, paragraph 4 of the CLF, as defined in Ministry of Justice Decree 162 of 30 March 2000, as supplemented by appropriate provisions in the Articles of Association (art. 26.1 of the Articles of Association).

Each Standing Auditor may not be a Statutory Auditor of five or more issuers and can hold other management and oversight positions in joint-stock companies according to Book V, Title V, Chapters V, VI and VII of the Italian Civil Code, within the limits established by art. 144-terdecies of the Regulations for Issuers, implementing the provisions of art. 148-bis of the CLF.

All members of the Board of Statutory Auditors must also meet the independence requirements provided for in art. 148, paragraph 3 of the CLF as well as the requirements set forth in art. 2, Recommendation 7 of the Corporate Governance Code and referred to in the Document "Application criteria and procedure for assessing independence (pursuant to art. 2 of the Corporate Governance Code)" adopted by the Company.

Election of the entire Board of Statutory Auditors takes place, in application of the legislation on privatisations and in compliance with the provisions in Italian legislation concerning listed companies, according to a slate vote procedure. This is governed by art. 26.2 of the Articles of Association and aims to guarantee the presence on the Board of Statutory Auditors of one Standing Auditor and one Alternate Auditor nominated by non-controlling shareholders. This procedure also aims to establish – in accordance with the provisions of art. 144-sexies, paragraph 9 of the Regulations for Issuers - the criteria for identifying the candidate to be elected if various slates receive the same number of votes, by referring to the procedure used in electing the Board of Directors. Pursuant to art. 26.2 of the Articles of Association, slates of candidates may be submitted by shareholders who, either on their own or together with other shareholders, hold an interest of at least 1% of the voting shares in accordance with the terms and conditions provided for by law, or a lower percentage, where provided for by law or regulations, in line with the rules governing the submission of slates of candidates for election to the Board of Directors.

The submission, filing and publication of slates is subject to the same provisions of the Articles of Association governing the election of the Board of Directors, since they are consistent with the relevant laws and regulations and with art. 26 of the Articles of Association relating to the election of the Board of Statutory Auditors.

In particular, the submission and filing of slates must take place – in accordance with art. 148, paragraph 2 and 147 ter, paragraph 1-bis of the CLF and 144-sexies, paragraph 4 of the Regulations for Issuers - at least 25 days before the scheduled date of the General Meeting called to deliberate on the election of members of the Board of Statutory Auditors.

The minimum holdings required to submit slates is determined - in accordance with the provisions of art. 147-ter, paragraph 1-bis of the CLF - by taking into account the shares that are registered in the name of the Shareholder(s) on the day on which the slates are filed with the Company. In order prove title to the number of shares required in order to submit slates, shareholders with voting rights must present and/or deliver the relevant documentation, issued in accordance with art. 144-sexies, paragraph 4-quarter of the Regulations for Issuers and art. 43 of the Single Measure on post-trading issued by the CONSOB and the Bank of Italy on 13 August 2018. This may occur after the slate has been filed, provided that it takes place within the deadline for publication of the slates (being at least 21 days prior to the scheduled date of the General Meeting called to deliberate on the election of the Board of Statutory Auditors).

Pursuant to art. 144-sexies, paragraph 5 of the Regulations for Issuers, in the event that on the date due for the submission of slates for the Board of Statutory Auditors only one slate has been filed, or only slates submitted by members who are connected to each other pursuant to the applicable legislation, slates may be submitted up to the third day following this date; in this case, the thresholds set forth above are reduced by half.

In accordance with the provisions in the Articles of Association and art. 144-sexies, paragraph 6 of the Regulations for Issuers, shareholders may not submit or vote for more than one slate, including through proxies and/or trust companies. Shareholders that belong to the same group and shareholders that are parties to a shareholder agreement may not submit or vote for more than one slate, including through proxies and/or trust companies. Candidates may be on one slate only or will be considered ineligible.

Slates must not include more candidates than the number to be elected. The slates must list candidates by assigning them a progressive number (art. 26.2 of the Articles of Association) and the lists must be divided into two sections, one for candidates for the position of Standing Auditor, and the other for candidates for the position of Alternate Auditor. The first of the candidates in each section of the slates must be entered in the register of auditors and must have practiced as a professional auditor for a period of at least three years.

Both the provisions of art. 26.2 on the gender balance among the Statutory Auditors to be elected, and the provisions of the Articles of Association on the integrity and professionalism requirements for Statutory Auditors, indicated under art. 26.1, apply.

In this regard, slates that, considering both sections, have three or more candidates must include, both in the first two places of the section of the slate relating to Standing Auditors and in the first two places on the slate relating to Alternate Auditors, candidates of different genders. This is to ensure that the composition of the Board of Statutory Auditors complies with existing legislation concerning the gender balance among the members of the oversight bodies of listed companies, as per art. 148, paragraph 1-bis of the CLF, as recently amended by the Budget Law, which requires that two-fifths of the total seats on the Board must be reserved for the least represented gender. To that end, CONSOB Communication 1/2020 of 30 January 2020 clarified that "with reference to the cases where corporate bodies are made up of three members and, in particular, cases where the Board of Statutory Auditors consists of three standing members" – where application of the two-fifths requirement, after rounding up, would be arithmetically impossible, rounding must be to the lower whole number.

As concerns the personal characteristics of candidates and on the basis of the independence criteria contained in the Corporate Governance Code, when drawing up the slates, shareholders are invited to assess candidates' details, including on the basis of art. 19 of Legislative Decree 39/2010, according to which the members of the Board of Statutory Auditors, overall, must be familiar with the sector in which Terna operates.

In order to ensure a transparent procedure for the election of the Board of Statutory Auditors, the slates must, in accordance with art. 144-sexies, paragraph 4 of the Regulations for Issuers, be accompanied by:

a) details of the identities of the shareholders who have submitted the slates, indicating the total equity interest held;

• b) a statement from shareholders other than those who hold, also as part of a group, a controlling or relative majority interest, indicating the absence of the connections referred to in art. 144-quinquies of the Regulations for Issuers with the latter. In this regard, CONSOB, in Communication DEM/9017893 of 26 February 2009 (concerning the "Election of the members of management and oversight bodies"), recommends that shareholders presenting a "minority slate" provide the information required with regard to the election of the Board of Statutory Auditors in this statement;
• c) exhaustive information on the personal and professional characteristics of the candidates, accompanied pursuant to art. 2400, last paragraph of the Italian Civil Code - by a list of directorships and positions as statutory auditor held within other companies, as well as a declaration from candidates certifying that they meet the requirements set by law (including the independence requirements pursuant to art. 148, paragraph 3 of the CLF) and their acceptance of the candidacy.

The slates - complete with all the information required by art. 144-octies, paragraph 1 of the Regulations for Issuers and CONSOB Communication DEM/9017893 of 16 February 2009 - are therefore made available to the public - in accordance with art. 148, paragraph 2 of the CLF and with art. 144-octies, paragraph 1 of the Regulations for Issuers - at the Company's registered office, on the Company's website and in the manner established by CONSOB, at least 21 days prior to the date of the specified General Meeting.

Pursuant to art. 148, paragraph 2 of the CLF, at least one standing auditor must be elected by non-controlling shareholders who are not connected, even indirectly, with the shareholders who have submitted or voted for the slate that obtains the highest number of votes.

In this regard, on the basis of the procedure for appointing Statutory Auditors under the slate vote procedure governed by art. 26.2 of the Articles of Association and art. 144-sexies of the Regulations for Issuers, each holder of voting rights may vote for one slate alone at the specified General Meeting.

With regard to the procedure for electing Statutory Auditors using a slate vote procedure, governed by art. 26.2 of the Articles of Association, the extraordinary session of the General Meeting of Terna's shareholders held on 23 March 2017 approved a number of amendments to the Articles of Association. These concerned articles 14.3 and 26.2 and were designed to supplement the rules for electing the Board of Directors and Board of Statutory Auditors by slate vote. The new provisions were applied for the first time when re-electing the members of corporate bodies on 27 April 2017. In this regard, the procedure for electing Statutory Auditors using a slate vote procedure, as governed by art. 26.2 of the Articles of Association, is described below.

The procedure for electing Statutory Auditors using a slate vote procedure, as governed by art. 26.2 of the Articles of Association establishes that, in the progressive order in which they appear in the slate, two Standing Auditors and two Alternate Auditors are to be taken from the slate that has obtained the greatest number of shareholder votes (the "majority slate"). The remaining Standing Auditor and the remaining Alternate Auditor are instead taken from the other slates (the "minority slates"), based on whichever obtained the most votes, according to the rules described in paragraph b) of art. 14.3 relating to the election of Directors. This is to be applied separately to each of the sections into which the slates are divided and that has been submitted and voted on by shareholders who are not directly or indirectly connected, in accordance with art. 144-quinquies of the Regulations for Issuers, with the shareholders who submitted or voted for the majority list.

In accordance with Italian legislation on listed companies, the Articles of Association (art. 26.2) attribute the role of Chair of the Board of Statutory Auditors to the Auditor elected from the minority slate (i.e., on the basis of the resolution passed by the General Meeting of 23 March 2017, as the candidate appointed using the methods provided for in art. 14.3, paragraph b) of the Articles of Association).

For the election of Statutory Auditors who, for any reason, are not elected at the same time as the re-election of the entire Board of Statutory Auditors, as well as in all other cases in which, for any reason, it is not possible to follow the slate vote procedure, the General Meeting must adopt resolutions with the majority required by law and in such a way as to, in any event, ensure that the composition of the Board of Statutory Auditors complies with the integrity and professionalism requirements provided for in the law and the Articles of Association, as well as with the gender balance legislation in force. The slate vote procedure is therefore only applied in the event of re-election of the entire Board of Statutory Auditors. This principle, already implicit in the legislation and in art. 26.2 of the Articles of Association, has been clarified by the amendments to the Articles of Association approved by the General Meeting of 23 March 2017, which expressly provided that - for the election of Statutory Auditors who, for whatever reason, are not elected according to the slate vote procedure described above - the General Meeting must resolve according to the majority required by law and without observing the above procedure so as to ensure that the composition of the Board of Statutory Auditors complies with current legislation, including that concerning gender balance.

In the event of the need to replace a Statutory Auditor, the terms of art. 26.2 of the Articles of Association must be applied. If one of the Statutory Auditors is replaced, without prejudice to meeting the legal requirements, the position must be filled by an Alternate Auditor from the same slate. If the replacement so effected does not restore the gender balance of the Board of Statutory Auditors required by the legislation in force, the second of the Alternate Auditors on the same slate must be appointed. If, subsequently, it is necessary to replace the other Statutory Auditor taken from the slate that obtained the greatest number of votes, the position must be filled by the additional Alternate Auditor taken from the same slate.

In addition to the provisions indicated and on the basis of the resolutions passed by the Extraordinary General Meeting of 23 March 2017, in cases in which, after voting, there is, mutatis mutandis, a situation similar to that foreseen by art. 14.3, paragraph b)-bis of the Articles of Association – i.e. the majority slate lacked a sufficient number of candidates to ensure that the number of candidates to be elected would be reached - the procedures pursuant to the same paragraph b)-bis apply, both for standing and alternate auditors, to the extent that they are compatible with the legislation in force.

If the Chair of the Board of Statutory Auditors is replaced, the position must be filled by the Alternate Auditor taken from the same slate.

When the Statutory Auditors are elected, in any of the ways provided for by the Articles of Association, the specific provisions of the Articles of Association (specifically art. 14.3 paragraph f), as referred to in art. 26.2 of the Articles of Association) on the subject of conflicts of interest also apply for the purposes of art. 2373 of the Italian Civil Code, introduced pursuant to EU Directive 2009/72/EC of 13 July 2009, and of Legislative Decree 93 of 1 June 2011, as described in more detail in Section XVI: "General Meetings" below.

Lastly, regarding the provisions of the Articles of Association designed to ensure that the Board of Statutory Auditors is compliant with the laws on gender balance, as indicated above in the sub-section, "Election and replacement of Directors and amendments to the Articles of Association", it should be noted that such provisions were first introduced into the Articles of Association by the Extraordinary General Meeting of 16 May 2012, in implementation of the provisions of the Golfo-Mosca Law. These provisions, which require that at least a third of the total seats on the Board of Statutory Auditors must be reserved for the least represented gender (after rounding up in the event of fractional numbers)23 were already applied, in line with the provisions of the Golfo-Mosca Law itself, when (i) re-electing the Board of Statutory Auditors at the Annual General Meeting of 27 May 2014, and (ii) at the time of the subsequent election of the Board by the Annual General Meeting of 27 April 2017.

²³ Reduced to a fifth for the first Golfo-Mosca Law enforcement mandate.

As described in the section on the election of the Board of Directors, the Budget Law amending art. 147-ter, paragraph 1-ter of the CLF came into effect on 1 January 2020. As a result, at least two-fifths of the seats on the oversight body must be reserved for the least represented gender. However, as already noted, CONSOB Communication 1/2020 of 30 January 2020, clarified that "in cases where corporate bodies consist of three members and, in particular, in cases where the Board of Statutory Auditors consists of three standing members" – where the two-fifths criterion, after rounding up, would be arithmetically impossible to apply – rounding must be to the lower whole number.

Such provisions on gender balance were applied at the Annual General Meeting of 18 May 2020 and by the Annual General Meeting of 9 May 2023, which were called to re-elect the Board of Statutory Auditors. The share provided for by these provisions, amounting to one-third of the total number of standing members, was reserved for the less represented gender.

< > REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2023

Section XIV

Composition and activities of the Board of Statutory Auditors

The term of office of the current Board of Statutory Auditors, elected by the Annual General Meeting of 9 May 2023, will expire on the date of the Annual General Meeting held to approve the financial statements for the year ended 31 December 2025.

In accordance with the resolutions passed by that Annual General Meeting, on the basis of the slates submitted, the members of the Board of Statutory Auditors are: Mario Matteo Busso (Chairman of the Board of Statutory Auditors elected from the minority slate submitted by a group of shareholders made up of asset management companies and other institutional investors, as listed in the Company's specific press release relating to publication of the Slates of 14 April 2023), Lorenzo Pozza and Antonella Tomei (Standing Auditors elected from the majority slate submitted by CDP Reti S.p.A.).

The following were elected as Alternate Auditors: Barbara Zanardi (elected from the minority slate submitted by a group of shareholders made up of asset management companies and other institutional investors, as listed in the Company's specific press release relating to publication of the Slates of 14 April 2023), Antonello Lillo and Lucrezia Iuliano (elected from the majority slate submitted by CDP Reti S.p.A.).

The Statutory Auditors elected represent both slates submitted for the aforesaid Annual General Meeting. Further information regarding the slates of candidates submitted and on the results of the vote is available on the Company's website at www.terna.it in the section Governance – General Meetings. Following the declarations made for the election, the vote count and after completion of the vote, a standing auditor was elected by non-controlling shareholders not connected, directly or indirectly, with the shareholders who submitted or voted for the slate that obtained the greatest number of votes.

Since the election, at the Annual General Meeting of 9 May 2023, the composition of the Board of Statutory Auditors has remained unchanged.

Summaries of the professional backgrounds of the Standing Auditors are provided below.

MARIO MATTEO BUSSO Chairman of the Board of Statutory Auditors

Mario M. Busso is a chartered accountant, a statutory auditor and an independent director. He graduated in Economics and Business and has a Master in Business Administration. He began his career at Industrial National Bank in the United States, was a partner at Arthur Andersen and a member of the Andersen Worldwide Advisory Council and the Italian Partner Affairs Group. Whilst working with the Deloitte network, he was the Partner responsible for the FSI Audit Division and a member of the Audit Management Team. He has significant experience in conducting audit engagements and the certification of financial statements for multinational companies listed on major stock exchanges in Italy, the USA, the UK and Spain.

He is a director and auditor at public interest at public interest entities, including listed and regulated companies. In this role, he has wide experience in corporate governance, having indepth knowledge of the CLF, Consolidated Banking Act and of the Corporate Governance Code adopted by Borsa Italiana.

The participation in the Board's work has been achieved through assuming a range of key governance roles: partner at and audit firm, chairman of boards of statutory auditors, independent director and the chair of board committees.

He holds the following positions in listed companies:

Chairman of the Board of Statutory Auditors of Mediobanca Spa, Chairman of the Board of Statutory Auditors of Terna Spa, Statutory Auditor of Avio Spa.

Independent Director of Cube Labs Spa

He is also Chairman of the Board of Statutory Auditors of the following Consortia: Cepav1

and Cepav2 (Consorzio Eni Alta Velocità); Florentia.

He has held the following positions:

Chairman of the Board of Statutory Auditors of Saipem, Ersel Sim and IOR;

Chairman of the Board of Statutory Auditors Compagnia Sanpaolo;

Statutory Auditor at Ersel Investimenti, Banco di Azzoaglio, Fondamenta Sgr, Permicro; Independent director of FCA Bank.

LORENZO POZZA Standing Auditor Born in Milan on 11 October 1966

He graduated with honours in Business Economics from the Bocconi University in Milan. He is a professor at this university, teaching Accounting, International Accounting Standards and Company Valuations. He is also Director of the Master's Degree Course in Business Economics and Law.

He is a Chartered Accountant, Auditor and consultant to numerous companies, both listed and unlisted, operating in the industrial, commercial, financial, insurance and banking sectors. During his career he has held the position of Director and Statutory Auditor in many companies, including Amplifon, Assicurazioni Generali, Edison, Gas Plus, Telecom Italia, Ariston Thermo, Bracco, H3G, Merloni Holding.

Co-founder of the advisory boutique Wepartner, a financial and professional advisory company, he deals with opinions on financial statements and finance, business valuations and litigation (both civil and criminal).

He is the author of numerous publications on financial statements and the value of company capital, and is a member of the International Accounting Standards Committee at the Italian Institute of Accountancy (OIC). He is also a member of the Editorial Board of Rivista dei Dottori Commercialisti.

In 2012, he was awarded the Prize for Excellence in Research by the Rector of Bocconi University.

< > REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2023

ANTONELLA TOMEI Standing Auditor Born in Barberino Val d'Elsa (Florence) on 1 January 1964

Registered with the Order of Chartered Accountants and Accounting Experts of Siena and accredited in the Region of Tuscany as a "Supplier of qualified services", she is included in the Thousand Excellent CVs of the Bellisario Foundation.

Enrolled in the list of Official Auditors with Ministerial Decree 07/10/93 and in the list of Local Authority Auditors in bands 2 and 3. Registered as Technical Expert at the Courts of Siena and Florence.

She holds the position of Statutory Auditor at the following companies: Terna Spa, Kato Imer Spa, Artema Firenze Srl. She acts as Auditor at Kuoyo Srl. She was appointed "Official Auditor" and was a member of the Study Commission on Independent Audit and Responsibility of statutory auditors in the corporate governance system at the National Board of Chartered Accountants and Accounting Experts.

She is a lecturer in Tax Law at the IED of Florence and at the Trainee Course at the Order of Chartered Accountants of Siena.

She has acted as auditor for the Tourism Agency of the Province of Siena, for the Municipality of Poggibonsi (Siena), for the Municipality of Figline, and for various private bodies and companies.

Promoter of the Informal Network of Female Entrepreneurs 'Talento D' for the promotion of women's participation in management roles and boards of private and state-owned companies.

As reported in the press release of 9 May 2023, based on the information provided by candidates and in accordance with the applicable laws, the Board of Directors confirmed that the members of the Board of Statutory Auditors elected by the Annual General Meeting held on 9 May 2023 met the related integrity, professionalism and independence requirements, and that the Board of Statutory Auditors as a whole met the competence requirements pursuant to art. 19, paragraph 3 of Legislative Decree 39/2010. All Standing Auditors in office comply with the provisions regarding limits on the accumulation of positions provided for in art. 148-bis of the CLF.

The total number of positions as director or statutory auditor in other companies according to Book V, Title V, Chapters V (S.p.A.), VI (S.A.p.A.) and VII (S.r.l.) of the Italian Civil Code, relevant for the purposes of art. 148-bis of the CLF, is indicated in the attached Table 2. The total number of positions relevant for the purposes of art. 144-quinquies decies of the above-mentioned Regulations for Issuers, as amended by CONSOB Resolution 17326 of 13 May 2010, is published by CONSOB and is available on its website (www.CONSOB.it). In this regard, it should be noted that, following the amendments to articles 144-terdecies and 144-quaterdecies of the Regulations for Issuers introduced by CONSOB Resolution 18079 of 20 January 2012 (published in the Official Gazette on 7 February 2012), the limits on the total number of positions and the consequent obligation to notify the CONSOB are not applicable to standing members of board of statutory auditors who hold the position of standing member of the board of statutory auditors "in one issuer alone".

In 2023, the Board of Statutory Auditors held a total of 26 meetings lasting an average of approximately 124 minutes each, which were duly attended by the Statutory Auditors. From January 2024 until the approval of this Report, the Board of Statutory Auditors met 4 times to carry out activities preparatory to the examination of the operating and financial data by the Board of Directors as well as the Non-Financial Statement.

The activities of the Board of Statutory Auditors are coordinated by an administrative office, which is managed by the Corporate Affairs and Corporate Governance department. On 9 May 2023, the Board appointed Emilia Pucci as Secretary to the Board of Statutory Auditors.

Following the appointment, on 9 May 2023, the Board of Statutory Auditors ascertained that the Statutory Auditors met the independence requirements set forth in the Corporate Governance Code pursuant to Article 2, Recommendations 7 and 9, transposed in the document "Application criteria and procedure for assessing independence (pursuant to Article 2 of the Corporate Governance Code)", and the requirements set forth in article 148, paragraph 3, of the CLS and article 19, paragraph 3, of Legislative Decree 39/2010.

This result was last confirmed at the meeting of the Board of Statutory Auditors on 7 February 2024. The findings of the independence assessment were reported by the Board of Statutory Auditors to the Board of Directors at the meeting of 6 March 2024. As for the Board of Directors, the continued existence of the conditions of independence of the Statutory Auditors was determined in light of the provisions of the Corporate Governance Code.

Report on Corporate Governance and Ownership Structures 2023

Overall, in 2023 the Board of Statutory Auditors carried out its typical oversight duties as established by Italian legislation for boards of statutory auditors. These regarded (i) observance of the law and of the Memorandum of Association, including observance of best administrative practices in managing the Company; (ii) the adequacy of the organisational structure; (iii) the adequacy and effectiveness of the Internal Control and Risk Management System; (iv) the adequacy of the Company's administrative and accounting systems; (v) the methods used in effectively implementing the corporate governance rules set out in the code of conduct that the Company has committed to applying; (vi) the financial reporting process and the independent audit of the annual separate and consolidated financial statements; and (vii), in this context, compliance with the provisions of Legislative Decree 254 of 30 December 2016, implementing Directive 2014/95/EU as regards non-financial and diversity disclosures (art. 7.P.3 and the Notes to art. 8 of the Corporate Governance Code). It also verified implementation of the provisions of art. 114, paragraph 2 of the CLF relating to disclosure requirements. The Board of Statutory Auditors also monitored the independence of the Independent Auditors, verifying both observance of the applicable provisions, and the nature and quantity of the non-audit services provided to Terna and its subsidiaries by Deloitte & Touche S.p.A. and its associates.

On 17 March 2023, the Board of Statutory Auditors approved the document "Guidance from the Board of Statutory Auditors of Terna S.p.A. on the composition and remuneration of the new Board of Statutory Auditors to be appointed by the Annual General Meeting of shareholders".

The Board of Statutory Auditors verified the proper application of the criteria and procedures adopted by the Board of Directors in assessing the independence of its members. It also analysed implementation of the regulations pursuant to Legislative Decree 231/01 and the tasks performed by the Manager Responsible for Financial Reporting pursuant to Law 262/05.

In 2023, the Board of Statutory Auditors, through its Chairman, received the results of the findings of the audits conducted by the Head of Internal Audit. The Board of Statutory Auditors regularly attended meetings of the Board of Directors and the Audit, Risk and Sustainability Committee, as well as the meetings of the Nominations, Governance and Scenarios Committee, the Remuneration Committee and the Related Party Transactions Committee. As mentioned above, the Board of Statutory Auditors and the Audit, Risk and Sustainability Committee also exchange information on a timely basis in order to fulfil their respective tasks.

In carrying out its activity, the Board of Statutory Auditors worked closely with Internal Audit department and with the Audit, Risk and Sustainability Committee in the manner illustrated in the previous "Section XI: Internal Control and Risk Management System" (art. 6, recommendation 36(d)) and 37 of the Corporate Governance Code), as well as with the Supervisory Board established pursuant to Legislative Decree 231/01, with the Manager Responsible for Financial Reporting pursuant to Law 262/05, as well as with the boards of statutory auditors of subsidiaries and with their independent auditors, exchanging relevant information enabling them to perform their respective duties.

In particular, the Board of Statutory Auditors, in carrying out its oversight activities, pursuant to art. 2403 bis of the Italian Civil Code and articles 149 and 151, paragraphs 1 and 2, of the CLF, and also in line with the provisions of the rules of conduct of the Board of Statutory Auditors drawn up by the National Council of Chartered Accountants, as amended from time to time, obtained information from the supervisory bodies of subsidiaries on the progress of company operations and specific matters, as well as on administration and control systems and the general performance of the Company's business.

In 2021, the Board of Statutory Auditors adopted Terms of Reference designed to govern the functioning and activities of the Board of Statutory Auditors. These Terms of Reference were subsequently updated at the meeting of 15 February 2022 to incorporate the qualitative and quantitative independence criteria pursuant to article 2, recommendation 7 of the Corporate Governance Code, adopted by Terna at the Board of Directors meeting of 26 January 2022.

As regards the participation of the Board of Statutory Auditors in initiatives aimed at providing the Directors and Statutory Auditors with adequate knowledge of the sector in which the Company operates, its performance and development, and the related legislative and self-regulatory framework, as provided for in art. 3, Recommendation 12(d) of the Corporate Governance Code, reference should be made to the description provided above in the sub-section of Section IV, "Composition", in the paragraph on the "Induction programme".

Review of the Board of Statutory Auditors

Also with the new Board of Directors in office, the Company continues to carry out the review, extending it to the Board of Statutory Auditors. By resolution of 24 January 2024, the Board of Directors of the Company, with the favourable opinion of the Nominations, Governance and Scenarios Committee, therefore resolved to avail itself of an external consultant who would perform the services and consultancy activities related to the review of the Company's Board of Statutory Auditors. The exercise mainly concerned the composition, exercise of powers and functioning.

The review was conducted in the form of a specific questionnaire, prepared by the consulting firm, to be completed by the Statutory Auditors. The responses provided were then expanded on in the course of interviews with individual members in order to further examine the various issues and obtain comments and opinions.

The process was documented in a report prepared by the consulting firm and presented to the Board of Statutory Auditors at the meeting held on 25 marzo 2024. The report contains a positive assessment of the Board of Statutory Auditors, without identifying any specific shortcomings, either individually or with regard to the Board as a whole, requiring attention in accordance with the above Rules of Conduct.

As required by the aforementioned Rules of Conduct, the Board of Statutory Auditors took ownership of the report and forwarded it to the Board of Directors, for its information. This activity was also reported to the Board of Directors on 19 March 2024.

Diversity policies

Terna's Board of Directors has adopted diversity policies relating to age and seniority, gender, geographical origin and professional and management training. The policies are partly designed to assist shareholders when choosing candidates in preparation for re-election of the entire Board of Directors or when electing replacements.

To this end, the "Policy on diversity in the management and oversight bodies of Terna S.p.A." (hereinafter also the "Policy" or "Diversity Policy") was approved by Terna's Board of Directors at its meeting of 20 February 2018, on the recommendation of the Nominations Committee and the Audit, Risk, Corporate Governance and Sustainability Committee, and after consulting the Board of Statutory Auditors. In line with the provisions of art. 123-bis of the CLF, as amended by Legislative Decree 254 of 30 December 2016, published in the Official Gazette of 10 January 2017 and the "Guidelines on nonfinancial reporting (Methodology for reporting non-financial information)" published by the European Commission on 5 July 2017 (Communication 2017/C 215/01), the Policy contains a number of provisions concerning the composition of the Board of Statutory Auditors, referring first of all to the laws and regulations in force regarding the professionalism, integrity and independence requirements for statutory auditors. In addition to the above, the Policy provides that:

• members of the Board of Statutory Auditors, taken as a whole, must be familiar with the sector in which the Company operates;
• the principles in the Policy, established with regard to the Board of Directors, also apply to the members of the Board of Statutory Auditors, insofar as they are compatible, in particular with regard to age, gender, seniority and professional experience.

On 1 March 2023, TERNA's Board of Directors updated the Policy in light of the thinking developed during the Board's term of office, illustrated in more detail in the paragraph "Diversity Policies" in section IV of this Report.

Among the changes made, we point out in particular the provision that the Board of Statutory Auditors be composed of two-fifths of persons belonging to the 'least represented' gender, without prejudice to the application of the criterion pursuant to article 144-undecies1, paragraph 3 of the Regulations for Issuers, whereby rounding down is made to the lower unit if the Board is made up of three members.

The new document was referred to in the guidelines issued to shareholders, published on the Company's website on 13 March 2023 in view of the Annual General Meeting of 9 May 2023, called to re-elect the Board of Directors.

The Board of Statutory Auditors also approved an autonomous document entitled "Guidance from the Board of Statutory Auditors of Terna S.p.A. on the composition and remuneration of the new Board of Statutory Auditors to be appointed by the Annual General Meeting of Shareholders". The document is available on the Company's website.

Independence

Article 2, recommendation 9 of the Corporate Governance Code provides that all members of the oversight body meet the requirements of independence envisaged for Directors pursuant to art. 2, Recommendation 7 of the same Code.

As noted above in Section IV, in 2021, the Company updated its "Application criteria and procedure for assessing independence", broadening its application to include members of the oversight body.

In the meeting on 15 February 2022, the Board of Statutory Auditors thus adopted the procedure and included it in the "Terms of Reference of the Board of Statutory Auditors of Terna S.p.A.".

During the meeting of 7 February 2024, the Board of Statutory Auditors assessed the existence of the independence requirements for each of its members, also in light of article 2, recommendation 9, of the Corporate Governance Code. In carrying out the assessment, the Board considered all the information provided by each member, examining all the circumstances that could appear to compromise the independence called for by the CLF and by the Code and applied all of the criteria provided for by the Code regarding the independence of Directors (art. 2, recommendation 9).

Remuneration

Remuneration paid to the Chairman and members of the Board of Statutory Auditors was determined by the Annual General Meeting of shareholders of 9 May 2024.

During the previous term of office of the Board of Directors, the consulting company commissioned for the board review had already carried out a benchmark study on the level of remuneration of the Board of Statutory Auditors. The results of the research were then included in the shareholder guidance.

With the start of the new Board of Directors' term of office, and in light of the extraordinary effort that was required of the Board of Statutory Auditors, the Remuneration Committee appointed a consulting firm to provide specialised support with reference to the analyses and assessments of the Company's remuneration policies, also with reference to the Board of Statutory Auditors.

Management of interests

The Corporate Governance Code recommends that any member of the oversight body who, either on his/her own behalf or on behalf of third parties, has an interest in a specific company transaction, promptly and fully inform the other members of the same body and the chair of the management body regarding the nature, terms, origin and extent of the interest.

In order to reinforce and consolidate this principle, the Board of Statutory Auditors has enshrined it in the above cited "Terms of Reference of the Board of Statutory Auditors of Terna S.p.A.", amended during the meeting held on 15 February 2022.

In 2023 and up to the date of approval of this Report, there have been no instances of interest on the part of any member of the Board of Statutory Auditors with respect to transactions carried out by Terna or its subsidiaries.

Section XV

Investor relations

Since its listing on the stock exchange, the Company has deemed that it is both in its best interest and a duty to the market to establish a constant dialogue, based on a mutual understanding of the respective roles, with all shareholders and institutional investors. This dialogue is to be carried out in compliance with both the procedure for the disclosure of documents and information outside the Company and the principles included in the "Guide for market disclosures" and in legislation and regulations on market disclosure.

In this regard, and also considering the Company's size, it was decided that this dialogue could be facilitated by creating a number of specific units.

Accordingly, the Company set up the (i) Investor Relations, Corporate Development and Sustainability unit, headed by Omar Al Bayaty, which is responsible for managing relations with institutional investors, within the Industrial Program Management Office (Viale Egidio Galbani, 70, 00156 Rome - tel. +39 06 8313 8282 -) e-mail: investor.relations@ terna.it) and (ii) a unit responsible for relations with all shareholders within the Corporate Affairs and Corporate Governance department, headed by Emilia Pucci (Viale Egidio Galbani, 70, 00156 Rome - tel. +39 06 8313 8573 e-mail: azionisti.retail@terna.it) - (art. 1, Principle IV of the Corporate Governance Code).

Moreover, the Company has further encouraged dialogue with investors by creating a specific section of its website (www.terna.it), where they can find both financial information (financial statements, half-year and quarterly reports and presentations for the financial community) and updated information and documents of interest to all shareholders (press releases, the Company's management, the Articles of Association, and the General Meetings Regulations, Corporate Governance information and documents, the Code of Ethics, and the 231 Organisational and Management Model established pursuant to Legislative Decree 231/2001, the dividend history, etc.).

In particular, in the new Corporate Governance Code there is the recommendation to the Board of Directors to promote, by taking appropriate measures, dialogue with the Company's shareholders and other significant stakeholders in order to help raise the level of transparency and encourage the creation of long-term value.

In implementation of this policy, at the meeting held on 14 October 2021, the Company's Board of Directors adopted the "Policy for engagement with the generality of shareholders and other stakeholders of Terna S.p.A.", available on the company's website www.terna.it in the Governance section.

The Policy has been drawn up taking into account the guidelines published both by Assonime, in the document "Principles for Listed Companies' Dialogue with Investors", and by Assogestioni, in the document "ITALIAN Shareholder Director Exchange – Italian Principles of S-D engagement", as well as assessments of the policies adopted by other issuers, institutional investors and asset managers.

The "Policy for engagement with the generality of shareholders and other stakeholders of Terna S.p.A." (hereinafter also the "Policy" or "Engagement Policy") pursues the following objectives:

• to identify and describe the ordinary channels of direct and continuous communication and information between the Company, shareholders and other stakeholders, managed by the competent corporate departments or carried out during General Meetings;

• to promote, among the current ordinary forms of engagement, a report to the Board of Directors on the main communication and information activities with major shareholders and institutional investors;
• to introduce and regulate Shareholder-Director Engagement, consisting of direct dialogue between Directors and stakeholders (these being the Company's shareholders, current and potential Institutional Investors, as well as other parties that have an interest in the shares issued by the Company interested in such engagement, following the introduction of procedures on how to carry it out, its scope, the criteria for assessing requests, as well as the related internal governance processes and procedures for participation and internal reporting.

The Policy is divided into two parts. The first is dedicated to ordinary forms of dialogue, generally carried out and managed by the competent corporate departments, which represent the first point of contact between the Company and the market; within this section, an activity involving reports to the Board of Directors on the results of the dialogue conducted with the main shareholders and institutional investors has been introduced. The second part of the Policy is dedicated to Shareholder-Director Engagement, which can be activated, through an escalation mechanism that places great emphasis on ordinary forms of dialogue (i.e., conference calls, road shows, other forms of contact with the financial community, the possibility of submitting questions during General Meetings or usual points of contact with the Company).

Persons entitled to activate the Policy include current and potential shareholders and institutional investors, as well as other stakeholders with interests in the shares issued by the Company.

As regards identification of the parties involved and their respective corporate roles, the Policy assigns the Board of Directors the role of guiding, overseeing and monitoring application of the Policy. The task of managing engagement is split between the Chief Executive Officer and the Chair, in accordance with their respective roles.

The Chief Executive Officer, with the support of the CFO and the IR Department, is responsible for matters falling within the scope of the executive powers entrusted to him or her, and, more generally, liaises with Stakeholders and implements the Company's business and sustainability Policy; the Chair, with the support of the Company Secretariat, is responsible for matters of corporate governance within the realm of the Shareholder – Director Engagement.

In order to ensure dialogue with stakeholders, the Policy envisages the potential involvement of one or more Directors who have the most appropriate knowledge and expertise to provide information on matters relating to Shareholder-Director Engagement. Moreover, it is possible to ask the Board of Directors to assess whether or not it is in the Company's interest to engage with one or more stakeholders.

The matters relating to Shareholder-Director Engagement correspond to those falling within the scope of responsibility entrusted to the Board of Directors and/or Board Committees. A request for Shareholder-Director Engagement on the part of a stakeholder must be submitted in writing to the IR Department at investor.relations@terna.it. The request must include the specific issues to be raised, the reasons for which activation of the Shareholder-Director Engagement is deemed necessary, the manner in which the engagement is to be conducted, the parties who, on behalf of the applicant, would take part and the relative timing. The IR department, together with the Company Secretariat and any other corporate departments involved, determine whether or not the request is relevant in terms of the application of the Policy. Should the request be deemed relevant, it is then submitted to the Chief Executive Officer. In accordance with the provisions of the Policy, the Chief Executive Officer, with the support of the CFO, the IR Department and possibly other competent departments, therein including the Company Secretariat, assesses whether to accept the request for Shareholder-Director Engagement.

If so, then the CEO decides on the related procedures (i.e., one-way, two-way, bilateral or collective) and the conditions for conducting the engagement, taking into account several factors, including, but not limited to:

• a. compliance with any relevant statutory, regulatory and/or self-regulatory limitations;
• b. the appropriateness and relevance of the issues to be dealt with;
• c. previous activation, regarding the same issues, of other forms of engagement;
• d. the potential interest in dealing with the issue for a large number of stakeholders;
• e. the nature of the stakeholders involved in the engagement;
• f. the size and nature of the investment in the Company;
• g. the outcome of previous voting at General Meetings;
• h. any activism undertaken by stakeholders involved in the engagement and/or the presence of any actual or potential conflicts of interest;
• i. the actual relevance of the engagement and its foreseeable usefulness, including within a long-term value creation perspective;
• j. the foreseeable approach of stakeholders to the matters relating to the engagement;
• k. the potential exposure of the Company to any forms of activism.

The Chief Executive Officer may decide to involve other departments with the knowledge and expertise best suited to providing information on the matter forming the focus of the Shareholder-Director Engagement.

The Policy provides that, when engagement meetings are held, the IR department or the Company Secretariat, with regard to the meetings in which they are respectively involved, and with support from the heads of the competent corporate departments present, are responsible for preparing brief reports on the participants, the issues raised, the answers given and any proposals and/or initiatives put forward.

The Chair ensures that the Board of Directors is informed, at the earliest possible meeting, as to the development and significant content of the engagement activities conducted with all stakeholders, inviting the Chief Executive Officer to report on the outcomes of any engagement activities falling within his or her purview. The CEO, with the support of the CFO and the IR department and, if necessary, of the other departments involved from time to time, may also propose to one or more stakeholders, engagement meetings, also electronically, on one or more topics of interest to the Company.

Section XVI General Meetings

Pursuant to art. 11.1 of the Articles of Association, every shareholder having the right to attend a General Meeting has a legal right to be represented by a proxy.

In order to facilitate the notification of proxies to the Company, on 18 October 2010, Terna's Board of Directors approved amendments to the Articles of Association taking into account the changes introduced by legislation regarding the rights of shareholders of listed companies, with the aim of encouraging shareholders to take an active interest in the life of the Company (Directive 2007/36/EC and the related implementing Legislative Decree 27 dated 27 January 2010). The changes included the possibility to notify the use of proxies by electronic means and, in accordance with art. 125-bis of the CLF, reference to such procedure in notices of call. On that occasion, the Board of Directors deemed it appropriate to allow shareholders to appoint a Representative designated by the Company to act as their proxy and to give the designated Representative specific voting instructions, in accordance with art. 135-undecies of the CLF, without exercising the "opt-out" provided for in the CLF. Additionally, the Annual General Meeting of 13 May 2011 responded to legislation in force designed to encourage the participation of shareholders in company life by granting the Company the option of holding General Meetings in single call. This was done by appropriately amending the Articles of Association, with a view to providing shareholders and the market with a firm date for General Meetings.

Pursuant to Article 11.1, last paragraph, of the Articles of Association of the Company, in order to facilitate the collection of proxy votes from shareholders who are employees of the Company and its subsidiaries and who are members of shareholders' associations meeting relative legislative requirements, space to be used for the purposes of communication and the collection of proxies has been made available to these associations, according to the terms and conditions from time to time agreed with their authorised representatives. The provision in the articles of association, along the lines of the special legislation on listed companies, is intended to facilitate the collection of proxies from the shareholders employed by the Company and its subsidiaries, thus fostering their involvement in the decision-making processes of shareholders' meetings.

With regard to the right to speak at General Meetings, the Articles of Association (art. 10.1) – as amended by the Board of Directors on 18 October 2010 in implementation of Legislative Decree 27 of 27 January 2010 - provide that only those having the right - pursuant to the legal and regulatory provisions in force – to attend and vote at General Meetings are entitled to exercise such rights.

On the basis of this provision, and in accordance with the current art. 83-sexies of the CLF, the right to vote and speak at General Meetings must be certified by a notice to be sent to the Company by the relevant financial intermediary. The intermediary, based on its records, must indicate the name of the person entitled to vote, as shown in the records referred to art. 83-quater, paragraph 3 of the CLF as of the close of business on the seventh trading day prior to the date set for the General Meeting to be held in first (or single) call (i.e. the record date).

These provisions do not entail any block on subsequent trading of the Company's shares. The credit and debit registrations recorded subsequent to the above term are not relevant for the purposes of certifying the exercise of the right to vote at General Meetings. Therefore, anyone registered as an owner of the Company's shares after such date will not be allowed to attend or vote at the General Meeting.

The Company must receive notices regarding participation from intermediaries by the end of the third trading day prior to the date set for the General Meeting to be held in first (or single) call. Shareholders will be entitled to attend and vote,

General Meeting begins in a single call (art. 83-sexies, paragraph 4 of the CLF). The Articles of Association do not permit participation at General Meetings using video or telephone services or via

even if the Company has received notification after the above term, provided that they are received by the time the

postal voting or voting by electronic means.

The right of shareholders to add agenda items and to submit new proposals for resolutions, as permitted by art. 30 of the Articles of Association, applies to shareholders who, also jointly, represent at least one fortieth of the share capital, as directly provided for by law (art. 126-bis of the CLF). On the basis of this provision, to add additional items to the agenda, shareholders may submit a written application, including by mail or electronically, in compliance with the requirements strictly necessary to identify the applicants and as indicated by the Company, within ten days of publication of the notice of call to the Meeting, Applicants must specify what additional agenda items or what additional resolutions relating to existing agenda items are being proposed, by the same deadline filing a report giving the reasons behind the proposed resolutions on the new agenda items for discussion or those behind the additional resolutions relating to existing agenda items. This must be accompanied by documentation certifying ownership of the shares in accordance with the "Single measure on post-trading issued by CONSOB and the Bank of Italy on 13 August 2018".

Shareholders with voting rights may individually submit proposed resolutions for General Meetings.

Additions to agenda items to be discussed are allowed only for topics on which the General Meeting is authorised by law to deliberate. These topics exclude those for which the law requires the related resolution to be based on a proposal from the Directors or on a plan put forward by them or on a report they have prepared, other than resolutions on agenda items.

In the event of additional agenda items or the submission of additional proposals, the modified agenda for the General Meeting and the new proposals must be published by the same deadline as that for the notice of call, being at least fifteen days prior to the scheduled date for the Meeting. At the same time, using the same procedure envisaged for the Directors' Report on agenda items, the report submitted by shareholders must be made available to the public, accompanied by any observations from the Board of Directors.

Pursuant to art. 127-ter of the CLF, shareholders with voting rights at General Meetings may ask questions on agenda items, including prior to the Meeting. The notice of call to the General Meeting must specify the procedure and the deadline for any questions to be submitted to the Company prior to the Meeting. Questions must be submitted by the fifth trading day prior to the General Meeting or the day indicated in art. 83-sexies, paragraph 2 of the CLF (i.e. the record date), if the notice of call requires the Company to reply to the questions received before the General Meeting.

Since 3 March 2004, under a special shareholder resolution, the Company has adopted a specific set of regulations for General Meetings. These ensure the orderly and smooth conduct of General Meetings, with detailed rules for the various phases, in keeping with each shareholder's fundamental right to request clarification on the various matters being discussed, to express an opinion and to submit proposals. With the shareholder resolution of 13 May 2011, the text of the adopted "Regulations for Terna S.p.A.'s General Meetings" was amended so as to be consistent with the provisions of Legislative Decree 27 of 27 January 2010 with regard to the exercise of certain rights by the shareholders of listed companies. On that occasion, additional amendments were introduced in order to better define the scope of certain provisions of the Regulations in the light of experience gained in applying them and to further ensure the smooth running of General Meetings. The main amendments, which were thoroughly illustrated to shareholders in a specific report to the General Meeting, regarded provisions concerning rules on the right to attend and vote in General Meetings and provisions concerning the right to pose questions regarding agenda items, including prior to the General Meeting.

Specifically, with respect to the right of each shareholder to speak regarding agenda items, art. 6 of the Regulations provides that those entitled to exercise the right to vote may ask for the floor only once for the matters being discussed, presenting observations, requesting information and formulating proposals. The request to speak may be submitted at the time the General Meeting is held and – unless otherwise stated by the Chair – until the Chair has declared the discussion on the matter closed. The procedures for such requests and for discussing matters – and the order in which

Report on Corporate Governance and Ownership Structures 2023

matters are discussed – are established by the Chair. Considering the matter under discussion and the importance of each item discussed, as well as the number of those requesting the floor and possible questions posed by shareholders before the General Meeting that were not answered by the Company, the Chair determines beforehand the duration of any interventions and the related replies – usually not to exceed ten minutes for interventions and five minutes for replies – in order to ensure that the General Meeting can be completed in a single session. The Chair and, by his or her invitation, all those who assist him or her, reply to speakers after they have finished speaking, or after each intervention, also taking into consideration potential questions posed by shareholders before the Meeting that were not answered by the Company. Those that have asked to speak may briefly reply.

Though not considered akin to the Articles of Association, the above Regulations are approved by the Ordinary General Meeting under the specific power given to shareholders by said Articles (art. 11.2). The contents of the Regulations are aligned with the latest templates drawn up by trade associations (Assonime and ABI) for listed companies. The "Regulations for Terna S.p.A.'s General Meetings" can be found on the Company's website in the section: "https://www.terna.it/it/Governance/assemblea-azionisti".

The Board of Directors reports to the Annual General Meeting on the activities carried out and those planned for the future on the occasion of approval of the annual financial statements and in the report on operations. Moreover, in specific reports, the Board provides shareholders with adequate information in a timely manner, so that they can vote on resolutions with full knowledge of the facts. Further clarification, where required, is also provided in response to queries raised by shareholders during the Meeting.

In the case of resolutions submitted to the General Meeting for which the Board of Directors has not formulated a proposal of its own, controlling shareholders provide their proposal for the General Meeting with sufficient advance notice.

General Meetings are chaired by the Chair of the Board of Directors or, in the event of his or her absence or inability to attend, by the Deputy Chair, if appointed, or, in the absence of both, by another person designated by the Board of Directors; failing all of the above, the General Meeting appoints its own Chair (art. 12.1 of the Articles of Association).

The Chair of the General Meeting is assisted by a secretary, who need not be a shareholder, designated by those in attendance at the Chair's behest and may appoint one or more tellers (art. 12.2 of the Articles of Association and art. 4 of the Regulations for Terna S.p.A.'s General Meetings). Under the law, assistance from the secretary is not necessary if the Chair waives this assistance and the minutes of the General Meeting are prepared by a notary public, even in cases when such it is not required by law (art. 4 of the Regulations for Terna S.p.A.'s General Meetings).

Unless otherwise required by art. 21.2 of the Articles of Association, which, in compliance with the law, assigns the Board of Directors the power to adopt certain resolutions falling within the purview of the General Meetings that may amend the Articles of Association, the General Meeting resolves on all the matters established by law or the Articles of Association (art. 13.1 of the Articles of Association), as indicated in the foregoing sub-section of Section I: "Corporate structure".

Shareholder resolutions subject to exercise of the "special powers" granted to the Italian state "in relation to strategic assets in the energy, transport and communications sectors" and indicated in the "Golden Power Decree" (as described in the sub-section of Section II "Restriction on the transfer of shares and shares carrying special rights") must be adopted and implemented in accordance with the provisions of this Decree. Where not otherwise established by the Articles of Association, resolutions adopted by both Ordinary and Extraordinary General Meetings must be passed with the majorities established by law and applicable in individual cases (art. 13.2 of the Articles of Association). Specifically, the Articles of Association provide that: (i) in the case of related party transactions that have not received a favourable opinion from the competent body, the General Meeting shall resolve, in addition to the majority required by law, in the presence of unrelated shareholders, as defined by applicable legislation and regulations, representing at least 10% of the share capital with voting rights and with a favourable vote by the majority of said unrelated shareholders; (ii) in the case of urgent related party transactions submitted by Directors for a consultative vote, the General Meeting shall adopt resolutions with the majority required by law (art. 13.3 of the Articles of Association).

As regards the exercise of voting rights at General Meetings (as described in the subsection of Section II "Restrictions on voting rights"), the Articles of Association identify (specifically in articles 10.2, 14.3(f) and 26.2) a number of instances of conflict of interest for the purposes of art. 2373 of the Italian Civil Code under the terms of Directive 2009/72/EC (subsequently amended by Directive (EU) 2019/944) and of Legislative Decree 93 of 1 June 2011, as subsequently amended by Legislative Decree 210/2021, and subject to assessment by ARERA as part of the process certifying the Company as an electricity transmission operator according to the ownership unbundling model. In particular, for the purposes of art. 2373 of the Italian Civil Code, the following are considered as having a conflict of interest:

• a) anyone who, directly or indirectly exercising control of the Company or holding a significant equity interest in it under the terms of art. 120 of Legislative Decree 58 of 24 February 1998, operates in the sector of electricity or gas production or distribution, or who, directly or indirectly, controls a business in the electricity or gas production or distribution sector (art. 10.2 of the Articles of Association);
• b) anyone who, at the time of election of the Directors, in any of the ways set forth in the Articles of Association, operates in the electricity or gas production or distribution sector or who, directly or indirectly, controls a business operating in the electricity or gas production or distribution sector or holds a significant equity interest in such a business under the terms of art. 120 of Legislative Decree 58 of 24 February 1998 (art. 14.3(f) of the Articles of Association). The same rule is applied during the election of the Statutory Auditors (art. 26.2 of the Articles of Association).

To this end, each participant in the General Meeting must declare, under his/her own responsibility, the existence of any conflict of interest.

There is no provision for electronic and/or postal voting.

In 2023, the Annual General Meeting was held on 9 May. The Company elected to take advantage of the option provided for in art. 106, paragraph 4 of Law Decree 18 of 17 March 2020. This meant that attendance of the Annual General Meeting by those with the right to do so could only take place through the representative designated by the Company pursuant to art. 135-undecies of the CLF, i.e., Computershare S.p.A. (the "Sole Representative").

Therefore, pursuant to art. 106, paragraph 4 of the above Law Decree 18 of 17 March 2020, having appropriately nominated the Sole Representative, Computershare S.p.A., to act as its proxy pursuant to art. 135-novies of the CLF, or art. 135-undecies of the CLF, attendance at the Annual General Meeting was only permitted via the representative.

The outcomes of the General Meeting were promptly communicated to the market (see, in this regard, the press release dated 9 May 2023).

Participants who were present in person at the General Meeting included the then Chairwoman, Valentina Bosetti, and the then Chief Executive Officer, Stefano Antonio Donnarumma. Other participants included the Directors, Qinjing Shen and Marco Giorgino and the Chairman of the Board of Statutory Auditors, Mario Matteo Busso. Attendees connected via electronic means, which ensured their identification, included the Director, Jean Michel Aubertin, and the then Standing Auditors, Raffaella Fantini and Vincenzo Simone.

With reference to regulations governing minority rights and in compliance with the above legislation and regulations applicable to the Company, in 2023, no significant changes took place in the Company's market capitalisation or in the composition of its shareholder base, for which the Board of Directors had to consider whether a proposal should be made to the General Meeting to amend the Articles of Association regarding the percentages established to exercise the rights and prerogatives designed to safeguard the interests of non-controlling shareholders.

Report on Corporate Governance and Ownership Structures 2023

Section XVII

Considerations on the letter dated 13 December 2023 from the Chair of the Corporate Governance Committee

On 13 December 2023, the Corporate Governance Committee approved the 2023 Annual Report containing the "Eleventh report on the application of the Corporate Governance Code". The Chairman of Terna received the aforementioned report together with the annual Letter from the Committee where specific recommendations are made to strengthen practices and facilitate a gradual transition to the new Corporate Governance Code.

The "Eleventh Report" provides an overview of the application of the Code's main recommendations and constitutes the second analysis of the application of the new Corporate Governance Code, which was approved on 31 January 2020 and entered into force in 2021.

As is customary, the Letter contains recommendations for reports to be published in 2024 and regarding 2023. In line with previous years, it invites the chairs of listed companies to submit them, together with the Report to the Board of Directors and the competent Board Committees for their review, also recommending that the results of the analyses and in-depth studies be the subject of a specific Board discussion in order to consider: (i) the Company's position with respect to the Committee's Recommendations and (ii) any governance development initiatives.

The Committee also recommended that the documents be adequately considered in the reviews conducted by the Board and Board Committees.

The Committee recommends that the considerations made be reported, with adequate evidence, in the next Corporate Governance Report, to allow (i) the market to assess changes in the quality of governance systems; (ii) the companies to confirm their commitment in this regard.

Lastly, it is requested that the Letter and the Report be sent to the Chair of the Board of Statutory Auditors for review, due to that body's responsibility to oversee actual implementation of the Code.

In implementation of the above, the Letter and the "Eleventh Report" were illustrated during the Nominations, Governance and Scenarios Committee meeting of 16 January 2024 and then forwarded by the Chairman to the CEO and the Chairman of the Board of Statutory Auditors on 22 January 2024.

On 22 January, the Secretary to the Board of Directors sent a summary of the main contents of the documents to the Board of Directors and the Board of Statutory Auditors.

Lastly, the documents were illustrated by the Chairman, also in consideration of his role as Chairman of the Nominations, Governance and Scenarios Committee, during the Board meeting of 24 January 2024. At the meeting, the Chairman referred to the 2024 Recommendations, calling for their implementation.

As to the recommendation to provide adequate disclosure on the Board of Directors' involvement in the review and approval of the Business Plan and in the analysis of issues relevant to the generation of long-term value, this indication was reported under 'Role of the Board of Directors', Section IV. It is also noted that the 2024-2028 Business Plan was approved at today's meeting, where also the Corporate Governance Report was approved.

< > REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2023

With regard to the Recommendation to provide adequate justification in the Report, in the event of a departure from the timeliness of reports made available before Board meetings for reasons of confidentiality, which may be provided for in the Board's terms of reference and/or adopted in practice, reference is made to Section IV, paragraph on the "Functioning of the Board of Directors".

With regard to the Recommendation on the Guidelines on the optimal composition, reference is made to what is indicated under "Functioning of the Board of Directors", Section IV, specifying that in view of the Annual General Meeting of shareholders of 9 May 2023, the Company published the guidelines well in advance of the date of submission of the slates.

In implementation of the Committee's recommendations, the Company carefully and thoroughly lists each of the issues, offering a complete presentation of them during the preparation of this Report on Corporate Governance.

Report on Corporate Governance and Ownership Structures 2023

Table rmation on ownership structures at 19 March 2024

Share capital structure

	NUMBER OF SHARES	NUMBER OF VOTING RIGHTS	LISTED (INDICATE MARKETS/ UNLISTED	RIGHTS AND OBLIGATIONS
Ordinary shares (specifying if It is possible to have enhanced Voting rights)	2,009,992,000	2,009,992,000	Screen-based Italian Stock Exchange organized and managed by Borsa Italiana S.p.A. ("MTA")	Ordinary shares with enhanced voting and dividend rights provided for by law for voting shares
Preference shares	-	-	-	-
Multiple voting shares	-	-	-	-
Other categories of shares with voting rights	-	-	-	-
Savings shares	-	-	-	-
Convertiible savings shares	-	-	-	-
Other categories of shares without voting rights	-	-	-	-
Other	-	-	-	-

Significant shareholders

REGISTERED SHAREHOLDER	DIRECT SHAREHOLDER	% OF ORDINARY CAPITAL	% OF VOTING CAPITAL
CDP Reti S.p.A.	CDP Reti S.p.A.	29.851%	29.851%
Blackrock INC	Blackrock INC	5.082%	5.082%

< > REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2023

Table 2

Composition of the Board of Directors at the close of the financial year

Board of directors

Position	Member	Date of birth	Date of first election (*)	In office since	In office until (approval of F.S. as of)	Slate (submitted by) (**)	Slate (M/m) (***)		Exec. Non Exec.	Indep. Code CLS	Indep. TUF	No. other positions (****)	Attendance (*)
CHAIRMAN	Igor De Biasio	18/11/1977		09/05/2023 09/05/2023	31/12/2025	Shareholders	m		√	√	√	1	10/10
CHIEF EXECUTIVE OFFICER	Giuseppina Di Foggia	16/07/1969		09/05/2023 09/05/2023	31/12/2025	Shareholders	m	√				1	10/10
DIRECTOR	Francesco Renato Mele	10/02/1969		09/05/2023 09/05/2023	31/12/2025	Shareholders	m		√			2	10/10
DIRECTOR	Regina Corradini D'Arienzo	30/05/1969		09/05/2023 09/05/2023	31/12/2025	Shareholders	m		√			0	10/10
DIRECTOR	Angelica Krystle Donati	16/09/1985		09/05/2023 09/05/2023	31/12/2025	Shareholders	m		√	√	√	0	9/10
DIRECTOR	Marco Giorgino	11/12/1969		08/05/2019 09/05/2023	31/12/2025	Shareholders	M		√	√	√	2	14/14
DIRECTOR	Qinjing Shen	22/07/1978		26/01/2022 09/05/2023	31/12/2025	Shareholders	m		√			3	13/14
DIRECTOR	Enrico Tommaso Cucchiani	20/02/1950		09/05/2023 09/05/2023	31/12/2025	Shareholders	m		√	√	√	1	10/10
DIRECTOR	Gian Luca Gregori	04/06/1961		09/05/2023 09/05/2023	31/12/2025	Shareholders	m		√	√	√	0	10/10
DIRECTOR	Simona Signoracci	30/06/1960		09/05/2023 09/05/2023	31/12/2025	Shareholders	m		√	√	√	0	10/10
DIRECTOR	Karina Audrey Litvack	07/12/1962		09/05/2023 09/05/2023	31/12/2025	Shareholders	M		√	√	√	0	9/10
DIRECTOR	Anna Chiara Svelto	29/10/1968		09/05/2023 09/05/2023	31/12/2025	Shareholders	M		√	√	√	3	10/10
DIRECTOR	Jean-Michel Aubertin	16/02/1958		18/05/2020 09/05/2023	31/12/2025	Shareholders	M		√	√	√	0	14/14
					DIRECTORS TERMINATED DURING THE YEAR
CHAIRWOMAN	Valentina Bosetti 25/04/1973 18/05/2020 18/05/2020 31/12/2022 Shareholders M √ √ √ 0								4/4
CHIEF EXECUTIVE OFFICER	Stefano Antonio Donnarumma	29/10/1967		18/05/2020 18/05/2020	31/12/2022	Shareholders	M	√				0	4/4
DIRECTOR	Giuseppe Ferri	03/03/1967		18/05/2020 18/05/2020	31/12/2022	Shareholders	M		√	√	√	0	4/4
DIRECTOR	Fabio Corsico	20/10/1973		27/05/2014 18/05/2020	31/12/2022	Shareholders	M		√	√	√	2	1/4
DIRECTOR	Paola Giannotti	13/07/1962		27/04/2017 18/05/2020	31/12/2022	Shareholders	m		√	√	√	1	4/4
DIRECTOR	Gabriella Porcelli	10/03/1965		27/05/2014 18/05/2020	31/12/2022	Shareholders	m		√	√	√	0	4/4
DIRECTOR	Alessandra Faella	06/06/1982		18/05/2020 18/05/2020	31/12/2022	Shareholders	M		√	√	√	0	4/4
DIRECTOR	Antonella Baldino	05/02/1963		18/05/2020 18/05/2020	31/12/2022	Shareholders	M		√			2	4/4
DIRECTOR	Ernesto Carbone24	25/06/1974		18/05/2020 18/05/2020	23/01/2023	Shareholders	M		√	√	√	0	0/0
DIRECTOR	Valentina Canalini	19/06/1983		18/05/2020 18/05/2020	31/12/2022	Shareholders	M		√		√	0	3/4

Number of meetings held during the financial year: 14

Quorum required for presentation of the minority slate to appoint one or more directors (pursuant to art. 147 ter CLF): 1%

Key:

BoD: Board of Directors of Terna

Position: Indicates the Chair of the BoD, Deputy Chair, Chief Executive Officer, etc.

In office since: this refers to the date on which the Director was elected to the Board of Directors of Terna for the first time for the related three-year term. In office until: this refers to the date on which the current term of office expires, that is the date on which the financial statements for the last year of the term of office are approved. Exec.: this is ticked "√" if the Director can be qualified as executive.

Non-exec.: this is ticked "√" if the Director can be qualified as non-executive.

Indep. - Code: this is ticked "√" if the Director can be qualified as independent according to the criteria in the Corporate Governance Code.

Indep. - CLF: this is ticked "√" if Director can be qualified as independent pursuant to art. 148, paragraph 3, of the CLF as set forth in art. 147 ter, paragraph 4 of the CLF. F.S.: Financial Statements

NOTES

The following symbols are used in the "Position" column:

• This symbol indicates the Director with responsibility for the internal control and risk management system.
• o This symbol indicates the Lead Independent Director (LID).
• (*) Date of first election of each Director refers to the date on which the Director was elected for the first time (ever) to Terna's BoD
• (**) This column indicates the slate from which each Director was presented by shareholders (indicating "SH"-Shareholders) or by the BoD (indicating "BoD". (***) This column indicates the slate from which each Director was elected - by the majority slates ("M"), or by the minority slate ("m")
• or appointed by co-optation. In this regard, it should be noted that the slate submitted by a group of Shareholders made up of asset management companies and other institutional investors (altogether owning 30,264,515 shares and representing a total of 1.50570% of Terna's share capital) - obtained the majority of the votes cast by the capital represented in the Ordinary Annual General Meeting of shareholders held on 9 May 2023 (53.641545% of the share capital).
• (****) This column indicates the number of positions as a director or statutory auditor held by the Director in other listed companies or in large companies.
• In the Report on Corporate Governance, the positions are indicated in full.
• (*****) This column indicates the Director's attendance at BoD meetings. (indicate the number of meetings attended out of the total number of meetings that could have been attended; e.g. 6/9; 9/9 etc.).

²⁴ On 23 January 2023, Director Ernesto Carbone tendered his resignation, effective immediately, following his appointment by the Parliament in Common Session as a member of the High Judicial Council.

Table 3 Composition of Board Committees at the close of the financial year

Board Committees

C.D.A.		RPT COMMITTEE		AUDIT, RISK, AND SUSTAINABILITY COMMITTEE25		REMUNERATION COMITTEE	NOMINATIONS, GOVERNANCE AND SCENARIOS COMMITTEE26
POSITION / QUALIFICATION	MEMBERS	(*)	(**)	(*)	(**)	(*)	(**)	(*)	(**)
CHAIRMAN OF THE B.O.D. INDEPENDENT	Igor De Biasio	-		-		-		11/11	P
CHIEF EXECUTIVE OFFICER	Giuseppina Di Foggia			-		-		-
NON-EXECUTIVE, NON-INDEPENDENT DIRECTOR	Francesco Renato Mele	-		10/10	M	-		-
NON-EXECUTIVE, NON-INDEPENDENT DIRECTOR	Regina Corradini D'Arienzo	-		-	-	-	-	10/11	M
NON-EXECUTIVE DIRECTOR - INDEPENDENT AS PER CLF AND CODE	Angelica Krystle Donati	9/9	M	-		5/6	M	-
PRESIDENTE DEL C.D.A. NON ESECUTIVO – INDIPENDENTE DA TUF E DA CODICE	Marco Giorgino	13/1327 P-M28		16/1629	M-P30	-		-
NON-EXECUTIVE, NON-INDEPENDENT DIRECTOR	Qinjing Shen	-		-		-		-
NON-EXECUTIVE DIRECTOR - INDEPENDENT AS PER CLF AND CODE	Enrico Tommaso Cucchiani	-		10/10	M	6/6	P	-
NON-EXECUTIVE DIRECTOR - INDEPENDENT AS PER CLF AND CODE	Gian Luca Gregori	7/9	M	-		6/6	M	-
NON-EXECUTIVE DIRECTOR - INDEPENDENT AS PER CLF AND CODE	Simona Signoracci	-		-		6/6	M	11/11	M
NON-EXECUTIVE DIRECTOR - INDEPENDENT AS PER CLF AND CODE	Karina Audrey Litvack	-		9/10	M	-		11/11	M
NON-EXECUTIVE DIRECTOR - INDEPENDENT AS PER CLF AND CODE	Anna Chiara Svelto	9/9	P	-		6/6	M	-
NON-EXECUTIVE DIRECTOR - INDEPENDENT AS PER CLF AND CODE	Jean-Michel Aubertin	-		10/10	M	5/531 (until 9 May 2023)	M-N/A33 (until 9 May 2023)	12/1233	M34
	DIRECTORS THAT HAVE CEASED TO HOLD OFFICE DURING THE YEAR
CHAIRWOMAN OF THE BOARD CHIEF EXECUTIVE OFFICER	Valentina Bosetti	-		-		-		-
CHIEF EXECUTIVE OFFICER	Stefano Antonio Donnarumma	-		-		-		-
NON-EXECUTIVE DIRECTOR - INDEPENDENT AS PER CLF AND CODE	Giuseppe Ferri	4/4	M	6/6	M	-		-
NON-EXECUTIVE DIRECTOR - INDEPENDENT AS PER CLF AND CODE	Fabio Corsico	-		-		2/5	P	0/1	M
NON-EXECUTIVE DIRECTOR - INDEPENDENT AS PER CLF AND CODE	Paola Giannotti	4/4	M	6/6	P	-		-
NON-EXECUTIVE DIRECTOR - INDEPENDENT AS PER CLF AND CODE	Gabriella Porcelli	-		-		5/5	M	1/1	P
NON-EXECUTIVE DIRECTOR - INDEPENDENT AS PER CLF AND CODE	Alessandra Faella	-		5/6	M	5/5	M	-
NON-EXECUTIVE, NON-INDEPENDENT DIRECTOR	Antonella Baldino	-		-		-		-
NON-EXECUTIVE DIRECTOR - INDEPENDENT AS PER CLF AND CODE	Ernesto Carbone35	0/0	M	-		-		0/0	M
NON-EXECUTIVE DIRECTOR - INDEPENDENT AS PER CLF AND CODE	Valentina Canalini	-		-		-		-
				MEMBERS WHO ARE NOT DIRECTORS
DIRECTORS OF THE ISSUER/OTHER
NUMBER OF MEETINGS HELD DURING THE YEAR:	13		16	11		12

Key:

ARSC: Terna's Audit, Risk and Sustainability Committee Terna

C.R.: Terna's Remuneration Committee N.C.: Terna's Nominations, Governance and Scenarios Committee

RPT Committee: Related Party Transactions Committee

Notes:

(*) This column indicates the Director's attendance at meetings (indicates the number of meetings attended with respect to the total number of meetings at which he or she could have attended, e.g. 6/8; 8/8 etc.). (**) This column indicates the Director's position in the committee: "C": Chair; "M": Member.

25 On 9 May 2023 - following the re-election of the Board of Directors resolved upon by the General Meeting of Shareholders of the Company held on the same date - the Board of Directors redistributed certain duties relative to the Board Committees, keeping the issue of sustainability within the purview of the Control and Risk Committee, in line with the previous Board, and entrusting Corporate Governance issues to the Nominations Committee, which was also assigned tasks concerning strategic scenarios.

26 On 9 May 2023 - following the re-election of the Board of Directors resolved upon by the Company's General Meeting of Shareholders held on the same date - the Board of Directors reallocated certain responsibilities relating to Board Committees, keeping the issue of sustainability within the purview of the Control and Risk Committee, in line with the previous Board, and entrusting Corporate Governance issues to the Nominations Committee, which was also assigned tasks on strategic scenarios.

27 During 2023, the RPT Committee held 13 meetings. From 1 January 2023 to 8 May 2023, 4 meetings were held - in which the Director, Marco Giorgino participated as Chairman - while from 9 May 2023 to 31 December 2023, 9 meetings were held, in which the Director, Marco Giorgino participated as a member of the Committee. In total, in 2023, the Director, Marco Giorgino attended all 13 meetings of the RPT Committee held in 2023. 28 During 2023, the RPT Committee held 13 meetings. From 1 January 2023 to 8 May 2023, 4 meetings were held - in which the Director, Marco Giorgino participated as Chairman - while from 9 May 2023 to 31 December 2023, 9

meetings were held, in which the Director, Marco Giorgino participated as a member of the Committee. In total, in 2023, the Director, Marco Giorgino attended all 13 meetings of the RPT Committee held in 2023. 29 During 2023, the Audit, Risk and Sustainability Committee (referred to as the Audit, Risk, Corporate Governance and Sustainability Committee until 9 May 2023) held 16 meetings. From 1 January 2023 to 8 May 2023, 6 meetings were held - in which the Director, Marco Giorgino participated as a member of the Committee - while from 9 May 2023 to 31 December 2023, 10 meetings were held, in which the Director, Marco Giorgino participated as Chairman. In total, Director Giorgino attended all 16 meetings of the Audit, Risk and Sustainability Committee held in 2023.

30 During 2023, the Audit, Risk and Sustainability Committee (referred to as the Audit, Risk, Corporate Governance and Sustainability Committee until 9 May 2023) held 16 meetings. From 1 January 2023 to 8 May 2023, 6 meetings were held - in which the Director, Marco Giorgino participated as a member of the Committee - while from 9 May 2023 to 31 December 2023, 10 meetings were held, in which the Director, Marco Giorgino participated as Chairman. In total, the Director, Marco Giorgino attended all 16 meetings of the Audit, Risk and Sustainability Committee held in 2023.

31 During 2023, the Remuneration Committee held 11 meetings. Five meetings were held from 1 January 2023 to 8 May 2023, and six meetings were held from 9 May 2023 to 31 December 2023. the Director, Jean-Michel Aubertin was a member of the Committee until 9 May 2023 and therefore attended all 5 meetings held until that date. 32 During 2023, the Remuneration Committee held 11 meetings. From 1 January 2023 to 8 May 2023, 5 meetings were held, and from 9 May 2023 to 31 December 2023, 6 meetings were held. the Director, Jean-Michel Aubertin was

a member of the Committee until 9 May 2023 and therefore attended all 5 meetings held until that date. 33 During 2023, the Nominations, Governance and Scenarios Committee (referred to as the Nominations Committee until 9 May 2023) held 12 meetings. One meeting was held between 1 January 2023 and 8 May 2023, and 11 meetings were held between 9 May 2023 and 31 December 2023. The Director, Jean-Michel Aubertin was a member of the Committee, both in the previous and current terms of office, and therefore attended all 12 Committee meetings held

in 2023. 34 During 2023, the Nominations, Governance and Scenarios Committee (referred to as the Nominations Committee until 9 May 2023) held 12 meetings. One meeting was held between 1 January 2023 and 8 May 2023, and 11 meetings were held between 9 May 2023 and 31 December 2023. The Director, Jean-Michel Aubertin was a member of the Committee, both in the previous and current terms of office, and therefore attended all 12 meetings of the Committee held in 2023.

35 On 23 January 2023, the Director, Ernesto Carbone, tendered his resignation, with immediate effect, following his appointment, by Parliament in joint session, as a member of the Consiglio Superiore della Magistratura.

< > REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2023

Table 4

Composition of the Board of Statutory Auditors at the close of the financial year

Board of Statutory Auditors

POSITION	MERMBERS	DATE OF BIRTH	DATE OF FIRST ELECTION (*)	IN OFFICE UNTIL	IN OFFICE SINCE (approval of financial statements for year ended)	SLATE (M/m) (**)	INDEP. CODE	PARTICIPATION IN MEETINGS (***)	NUMBER OF OTHER POSITIONSI (****)
CHAIRMAN	Busso Mario Matteo	01/03/1951	18/05/2020	9/05/2023	31.12.2025	m	√	26/2636	3
STANDING AUDITOR	Pozza Lorenzo	11/10/1966	9/05/2023	9/05/2023	31.12.2025	M	√	12/13	3
STANDING AUDITOR	Tomei Antonella	01/01/1964	9/05/2023	9/05/2023	31.12.2025	M	√	13/13	0
ALTERNATE AUDITOR	Zanardi Barbara	03/03/1977	18/05/2020	9/05/2023	31.12.2025	m	√	-	2
ALTERNATE AUDITOR	Lillo Antonello	25/09/1972	9/05/2023	9/05/2023	31.12.2025	M	√	-	1
ALTERNATE AUDITOR	Iuliano Lucrezia	16/01/1982	9/05/2023	9/05/2023	31.12.2025	M	√	-	1
STATUTORY AUDITORS WHO HAVE CEASED TO HOLD OFFICE DURING THE YEAR
STANDING AUDITOR	Simone Vincenzo	20/11/1960	27/05/2014 18/05/2020		31.12.2022	M	√	13/13	0
STANDING AUDITOR	Fantini Raffaella	20/2/1969	18/05/2020 18/05/2020		31.12.2022	M	√	13/13	1
ALTERNATE AUDITOR	Ghizzi Massimiliano	15/07/1966	18/05/2020 18/05/2020		31.12.2022	M	√	-	1
ALTERNATE AUDITOR	Damiano Maria Assunta	16/08/1966	18/05/2020 18/05/2020		31.12.2022	M	√	-	1

Number of meetings held during the financial year: 26

Quorum required for the submission of slates by non-controlling shareholders to elect one of more members (as per art. 148 CLF): 1%

Note:

• (*) Date of first election refers to the date on which the Auditor was elected for the first time (ever) to the Issuer's Board of Statutory Auditors.
• (**) This column indicates the slate from which each Auditor was elected ("M": majority slate, "m": minority slate).
• (***) This column indicates the Auditor's attendance at meetings of the Board of Statutory Auditors during the year under review (indicate the number of meetings attended out of the total number of meetings that could have been attended; e.g. 6/8; 8/8 etc.).
• (****) This column indicates the number of positions held by the person concerned as a director of statutory auditor pursuant to art. 148-bis of the CLF and the relevant implementing provisions contained in the CONSOB Regulations for Issuers. The full list of positions is issued by CONSOB on its website pursuant to art. 144-quinquiesdecies of the CONSOB Regulations for Issuers.

³⁶ During 2023, the Board of Statutory Auditors held 26 meetings. From 1 January 2023 to 8 May 2023, 13 meetings were held, and from 9 May 2023 to 31 December 2023, 13 meetings were held. The Chairman, Mr. Busso, was first appointed on 18 May 2020 and has therefore been in office for two terms; he therefore attended all 26 meetings of the Board of Statutory Auditors held in 2023.

Report on Corporate Governance and Ownership Structures 2023

Annex I

Main characteristics of existing risk management and internal control systems with regard to the financial reporting process (pursuant to art. 123 bis, paragraph 2 (b) of the CLF)

Introduction

The Terna Group has prepared the "262 Control Model" governing preparation of the financial statements in terms of the attestations required by paragraphs 2 and 5 of art. 154-bis of the CLF, with the aim of contributing towards the assessment of the "Internal Control and Risk Management System" (hereinafter also the "ICRMS"). Moreover, with reference to the provisions of Law 262/2005, it set up the detailed Internal Control over Financial Reporting system and outlined the activities that Group companies in scope need to perform to ensure its proper adoption and maintenance.

The "262 Control Model" must be considered together with the "Internal Control and Risk Management System" insofar as they are elements of the same "system" described in the "Terna Group Internal Control and Risk Management System" guidelines approved by the Board of Directors (last updated on 15 December 2016). In these guidelines, the ICRMS is defined as the "set of rules, procedures and organisational structures that, through a suitable process of identifying, measuring, managing and monitoring the main risks, enables sound management of the business in keeping with the objectives established by the Board of Directors, thereby facilitating informed decision-making".

The provisions of Law 262 (dated 28 December 2005, as amended by Legislative Decree 303 of 29 December 2006) relating to the ICRMS, which oversees preparation of the financial statements, have the main objective of ensuring that financial reports provide a true and fair view of the company's financial condition, operating results and cash flows in accordance with generally accepted accounting practices.

On the basis of the provisions set forth in art. 154-bis of the CLF, the ICRMS, which governs preparation of the financial statements, actively involving all of the corporate departments, focuses on the reliability of financial reporting. This is pursued by establishing adequate "accounting and administrative procedures" and by verifying their effective implementation.

Definition of the scope and of the processes to be analysed (scoping activity) is updated by the Manager Responsible for Financial Reporting at least once a year in order to assess, identify and consider the changes that have impacted the ICRMS and accordingly supplement/amend the administrative and accounting procedures.

This update is documented in order to guarantee the traceability of activities.

Description of the main characteristics of the existing risk management and internal control systems with respect to the financial reporting process

The analytical approach of the ICRMS overseeing preparation of the financial statements adopted by Terna is based on a twofold method of assessment:

Entity-level assessment

Overall assessment (brief) of individual Group companies with reference to the 5 elements that form the CoSO Report - i.e. Control Environment, the Risk Management System, Control Activity, Information, Communication and Monitoring - specifically focuses on the adequacy of financial reporting. This is essentially an analysis of the infrastructural components of the ICRMS (the oversight activities carried out by the Board of Directors, by the Audit, Risk, Corporate Governance and Sustainability Committee, by the Board of Statutory Auditors, as well as corporate policies and general Group policies, etc.) conducted in general terms but with a particular focus on outcomes in terms of the quality of financial reporting.

The establishment, management and assessment of the ICRMS at the individual entity level is carried out by those in charge of the various company departments (management) with regard to their respective duties, in line with the structure of the "individual entity" being assessed.

The objective of entity-level assessment is to identify any shortcomings in the entity's general controls that could potentially render even the best process control structures ineffective.

The assessment is carried out via a benchmarking activity with respect to procedures defined or referred to by official bodies or with the international best practices adopted by companies similar to the Terna Group.

This method is applied by filing in a checklist based on the five components of the control system, centred around specific audit objectives.

Controls are assessed on the basis of the following requirements, where applicable:

• existence of the control tool (organisational structure, rules, processes);
• adequate communication of the existence of the control tool identified to the relevant audience;
• understanding on the part of the company's employees of their role and responsibility in implementing the identified control tool;
• appropriate and effective monitoring of the control tool;
• management support in implementing the control tool;
• application, or action undertaken by the management aimed at ensuring compliance with the implemented control tool.

Process-level assessment

Assessment of the relevant processes by establishing guidelines that define, for each activity, the principal risks for financial reporting and the related controls aimed at mitigating them.

Process-level assessment makes it possible to assess the design and performance of controls on the corporate processes and sub-processes involved in financial reporting.

The grounds on which this assessment is based are the administrative and accounting procedures used in preparing the separate financial statements/consolidated financial statements/condensed interim financial statements. These include the execution of specific control activities aimed at preventing the occurrence of risks of significant accounting errors in carrying out the processes.

The process-level assessment, and subsequent establishment of administrative and accounting procedures, requires the selection of "significant processes". To this end, it is necessary to carry out specific "scoping" both to identify "individually significant" Group companies for the purposes of the ICRMS and the related significant accounting items, and to associate significant information with the processes.

The significance of financial reports is assessed with reference to the possible outcome that the omission or misrepresentation of information could determine in decisions by the users of financial statements. To that end, quantitative parameters are identified; these are normally identified as a percentage of the average pre-tax profit for the last five financial years, a method which successfully normalises the parameter. Qualitative parameters are also identified, including a risk-based approach, capable of rendering information significant, even if the amount is lower than the materiality threshold identified.

Significant information is thus identified through the combination of quantitative parameters, linked to the level of significance defined for the Terna Group, and quality parameters linked to the specific risk for sections of the financial statements or other disclosures.

Identifying quality parameters involves considering potential "factors" making certain companies, and therefore their accounts, significant, even if these do not on their own exceed the materiality threshold. Investors could demonstrate considerable interest in certain financial statement items that represent an important performance indicator for the related sector of operation.

The association of information identified as being significant, due to the related input processes, makes it possible to focus on processes that can determine significant errors in financial reporting.

Each selected significant item of information/accounting item must be associated with the processes that contribute to its formation, in order to determine the significant processes.

After defining the significant information and selecting the relevant processes on the basis of qualitative and quantitative parameters, the Manager Responsible for Financial Reporting updates and/or establishes the guidelines for "risk activities and controls" that represent administrative and accounting procedures, and assesses their adequacy and effective implementation (assessment of their design and performance).

To that end, the analysis of significant processes occurs through the following operational steps:

• definition and analysis of activities that make up the processes ("mapping");
• identification and assessment of risks for each activity and association of such risks with the control objectives;
• identification and assessment of existing controls;
• assessment of the performance of existing controls.

Assessment of the activities forming the processes ("mapping") is aimed at clearly identifying the process that gives rise to the data or note to be presented in the financial statements, from identifying the initial event that originates it up to its being included in the financial statements.

Mapping of the activities that make up the processes is conducive to the final objective of implementing checks at all stages of preparation of the data and notes in the financial statements, ensuring that information impacting on the accounts is collected, processed and transmitted in a correct and timely manner.

For every process, for the purposes of mapping and subsequently associating the risks and checks, "key" elements useful in identifying existing risks and checks must be identified.

The effectiveness and design of "key" controls is tested. This involves a dedicated unit in performing monitoring activities for the purposes of art. 154-bis of the CLF, using testing and sampling techniques based on international best practices.

Where deemed necessary, control assessment can involve identifying compensating controls, corrective actions and improvement plans. The results of these activities are submitted for assessment by the Manager Responsible for Financial Reporting, who in turn reports to senior management.

Roles and departments involved

Manager Responsible for Financial Reporting

The Manager Responsible for Financial Reporting is responsible for:

• each year revising the scope and the assessment of significant processes, considering the change/risk factors communicated by Terna S.p.A.'s senior managers and by the management of individually significant companies;
• preparing revisions of the "262 Control Model" and the "Terms of reference for the Manager Responsible for Financial Reporting", in agreement with the "Executive Director responsible for the Internal Control and Risk Management System";
• preparing and revising adequate administrative and accounting procedures for preparation of the separate financial statements, the consolidated financial statements and the condensed interim financial statements;
• reporting regularly to the Chief Executive Director, also in his or her capacity as "Executive Director responsible for the Internal Control and Risk Management System", on:
• a) the activities carried out in order to monitor effective application of administrative and accounting procedures and the critical issues that have emerged,
• b) the Corrective Action Plans drawn up in order to overcome critical issues that have emerged,
• c) the suitability of the means and resources made available to the Manager Responsible for Financial Reporting and the methods used;
• ensuring, in collaboration with all senior managers, the implementation of Corrective Action Plans and the dissemination of administrative and accounting procedures;
• supporting the Chief Executive Officer and the management of individually significant companies in executing the operational, control and reporting activities that are part of their specific duties.

The Manager Responsible for Financial Reporting may make use of the qualified external companies with specialist professional staff in assessing the design and performance of controls over administrative and accounting procedures.

Audit department and Chief Risk Officer

These departments are responsible for:

• providing the Manager Responsible for Financial Reporting with regular reports and reports prepared in light of specific needs, regarding the performance and adequacy of the ICRMS, and supporting the Manager Responsible for Financial Reporting in assessing the correct functioning of the internal control system and the related risk management procedures, including any IT systems;
• coordinating with the Manager Responsible for Financial Reporting in defining the annual audit plan, as regards the part relating to the administrative and accounting processes;
• providing the Manager Responsible for Financial Reporting with a suitable flow of information in relation to the results of activities connected with the respective controls relating to the responsibilities of the Manager Responsible for Financial Reporting, following agreed methods;
• in the event of involvement of specific testing activities, ensuring the necessary collaboration and changes to the audit plan and in defining priorities also, if necessary, with the assistance of the delegated corporate body.

Terna S.p.A.'s first-level managers

They are responsible for:

• coordinating the persons in charge of individual controls, including in subsidiaries, in the performance of their duties;
• coordinating the persons in charge of individual controls, including in subsidiaries, in establishing and implementing Action Plans;
• supporting activities carried out by the Manager Responsible for Financial Reporting and ensuring access to all documents/information useful for the relevant activities;
• preparing and forwarding, in the time frames established by the reporting calendar, the attestations regarding the design and performance of controls.

The management of individually significant companies

These individuals are responsible for:

• coordinating those in charge of individual controls in executing the controls entrusted to them;
• assessing, in collaboration with the Manager Responsible for Financial Reporting, the ICRMS over the financial reporting of individually significant companies;
• preparing and forwarding, in the time frame established by the reporting calendar, the attestations regarding the ICRMS of individually significant companies.

To enable the Manager Responsible for Financial Reporting and the delegated administrative bodies to issue the attestations required by art. 154-bis of the CLF, a system of internal "chain" attestations has been created, with the objective of making process owners and departmental heads accountable for the purposes of ensuring the adequacy and effective implementation of the administrative and accounting procedures drawn up as part of the 262 Control Model.

The attestation, issued to the market on the basis of the template provided by CONSOB, is the result of a complex assessment procedure that includes:

• collecting internal "chain" attestations issued both by senior managers within Terna and by the chief executive officers of individually significant companies. The existence of a periodic reporting flow makes it possible to certify:
  • the design of existing controls identified in the guidelines for "risk activities and controls";
  • the performance of existing controls and the effective implementation of administrative and accounting procedures;
  • the absence of material aspects and/or change/risk factors that could require the revision of administrative and accounting procedures;
• assessment of the performance of administrative and accounting procedures carried out by the Manager Responsible for Financial Reporting;
• the final overall assessment of the adequacy and effective application of administrative and accounting procedures by the Chief Executive Officer and the Manager Responsible for Financial Reporting. This activity is supported by an assessment of the design and performance of specific controls. As such, it is carried out overall with reference to the probability that, following one or more significant deficiencies, a misstatement in the financial statements could occur and with reference to the risk that this misstatement may have been material. To support the Chief Executive Officer and the Manager Responsible for Financial Reporting in their final assessments of the concrete possibility that there is a material misstatement in the financial statements, where one or more significant deficiencies are identified, compensating controls may be introduced. If such controls are successful in compensating for the one or more significant deficiencies identified, this will in any event enable the Chief Executive Officer and Manager Responsible for Financial Reporting to issue unqualified opinions. Any significant deficiencies must be promptly reported, together with the results of the compensating controls performed by the Chief Executive Officer and the Manager Responsible for Financial Reporting to Terna's Audit, Risk and Sustainability Committee, the Supervisory Board and the Board of Statutory Auditors.

Report on Corporate Governance and Ownership Structures 2023

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All pictures are the property of Terna.

www.terna.it

Mercurio GP Milan

Strategic advisory Creative concept Graphic design Layout Editing

www.mercuriogp.eu

Password Language Services S.r.l. Rome Translation