Carlo Gavazzi : Excerpt from the Annual Report 2023/24

Carlo Gavazzi Group

Annual Report 2023/24

Corporate Governance

CARLO GAVAZZI GROUP	17

Corporate Governance

Carlo Gavazzi Group

Carlo Gavazzi is committed to the principles of good corporate governance. The Carlo Gavazzi Group shows responsibility in dealing with the interests of its various stakeholders, which include shareholders, employees, customers, suppliers and the public. Sound corporate governance principles help to consolidate and strengthen trust in the Group.

The following representations made by Carlo Gavazzi Holding AG (the "Company", together with its subsidiaries "Carlo Gavazzi Group" or the "Group"), are in accordance with the Directive on Information relating to Corporate Governance (DCG) of SIX Exchange Regulation AG dated January 1, 2023. To the extent not applicable or not material, information required by the directive is not mentioned. The representations also take

into account the Guideline on the Corporate Governance Directive (Guideline DCG) of SIX Exchange Regulation AG, dated January 1, 2023. The information is set out in the order required by the DCG, with subsections being summarized to the extent possible. Carlo Gavazzi Group's financial statements comply with IFRS reporting standards, and in certain sections readers are referred to the financial statements and notes in this annual report.

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Corporate Governance

1. Group structure and shareholders

The operational Group structure is as follows:

Carlo Gavazzi Holding AG

Board of Directors, Steinhausen CH

Automation Components

R&D, Sourcing Companies

and National Sales Companies

There are no listed companies apart from the Company being listed on SIX Swiss Exchange, Security No. 1100359, ISIN No. CH0011003594 (stock market capitalization CHF 230 980 750 as of March 31, 2024, respectively CHF 220 320 100 as of March 31, 2023). For details regarding non- listed companies, please refer to the Notes to the Consolidated Financial Statements of the Company, note 27 "Subsidiaries", where all consolidated subsidiaries of the Company are listed.

Major shareholders	% of voting rights
	March 31, 2024

Valeria Gavazzi, Zug (indirectly via
Barguzin Participation SA, Zug)	73.85 %
Uberta Gavazzi Estate*), with Stefano Premoli, Zug
as Executor of the estate, who can exercise
the voting rights at his discretion	4.95 %

*) Further information on the Uberta Gavazzi Estate can be found at https://www.ser-ag.com/en/resources/notifications-market-participants/significant-shareholders.html#/shareholder-details/TBN4H00011 and https://www.ser-ag.com/en/resources/notifications-market-participants/significant-shareholders.

html#/shareholder-details/TAN4H00020.

Reports concerning the disclosure of significant shareholdings made to the Company and to the Disclosure Office of the SIX Swiss Exchange can be viewed via the link to the search facility on

the Disclosure Office's publication platform at https://www.ser-ag.com/en/resources/notifications- market-participants/significant-shareholders.html.Two new disclosures were published during the financial year under review, both relating to the passing away of Uberta Gavazzi on April 6, 2023 and her estate. The two disclosures are available at https://www.ser-ag.com/de/resources/ notifications-market-participants/ significant-shareholders.html#/ shareholder-details/TBN4H00011and https://www.ser-ag.com/en/resources/ notifications-market-participants/ significant-shareholders.html#/ shareholder-details/TAN4H00020.

Apart from the shareholders mentioned above, there are no other major shareholders known to the Group holding more than 3 % of the Company's voting rights.

No cross-shareholdings exist.

In light of the entry into force of the revised corporate law as of January 1, 2023, the Company comprehensively revised its Articles of Association at the last ordinary general meeting. The current Articles of Association are available at https://www.carlogavazzi.com/files/media/files/ b5b31db42864e749ec5016524a3c8f46/Statuten- DE-Carlo-Gavazzi-230725.pdf(German only). Among other changes and mandatory amendments to the Articles of Association in order to reflect the revised corporate law, the following significant amendments to the Articles of Association were approved by the ordinary general meeting on July, 25, 2023:

• Conversion of bearer shares into registered shares. In recent years, numerous international financial centers have abolished bearer shares. Also in Switzerland, since 2021, the use of bearer shares has been restricted. Vis-à-vis banks and other financial service providers, listed companies with bearer shares may have

CARLO GAVAZZI GROUP

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Corporate Governance

to fulfill additional requirements for "Know Your Customer" and similar purposes. Furthermore, the conversion of bearer shares into registered shares enables direct communication with registered shareholders. Hence, the listed 390 710 fully paid-up bearer shares with a nominal value of CHF 15 each were converted into 390 710 fully paid-up registered ordinary shares with a nominal value of CHF 15 (see in particular article 3 paragraph 1 of the Articles of Association, available in German at https://www.carlogavazzi.com/files/media/files/ b5b31db42864e749ec5016524a3c8f46/Statuten- DE-Carlo-Gavazzi-230725.pdf).

• Supplement of the nominee provision. With the amendment of article 5 of the Articles of Association, available in German athttps://www.carlogavazzi.com/files/media/ files/b5b31db42864e749ec5016524a3c8f46/ Statuten-DE-Carlo-Gavazzi-230725.pdf, the Articles of Association were aligned with the revised corporate law wording. In addition, a specific regulation for so-called nominees was introduced. A nominee (i.e. acquirers who do not expressly declare in the application for registration that they hold the shares for their own account) will be entered in the share register as a shareholder with voting rights up to a maximum of 3 % of the share capital. Above this registration limit, nominees will be entered in the share register as shareholders if the relevant nominee discloses the names, addresses, nationalities and shareholdings of those beneficial owners for whose account it holds 0.5 % or more of the share capital and if the reporting requirement pursuant to the Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (FinMIA) (as amended) is met.
• Introduction of the Possibility of Holding a Virtual General Meeting. As part of the corporate law reform, the possibility of holding virtual general meetings was introduced in order to strengthen

shareholders' rights. Subject to a corresponding provision in the Company's Articles of Association, this makes it possible to hold a general meeting by electronic means and entirely without a physical venue. In light of this development, a provision has been introduced in the Articles of Association allowing for virtual general meetings to be held (article 10 paragraphs 3 and 4 of the Articles of Association, available in German at https://www.carlogavazzi.com/files/media/files/ b5b31db42864e749ec5016524a3c8f46/Statuten- DE-Carlo-Gavazzi-230725.pdf). Physical and hybrid general meetings remain possible.

2. Capital structure

The fully paid-up share capital of the Company amounts to CHF 10 660 650, divided into 1 600 000 non-listed registered shares with a par value of CHF 3 each (voting shares) and 390 710 registered shares with a par value of CHF 15 each (ordinary shares), which are listed on the SIX Swiss Exchange. Prior to the conversion of the listed shares into registered shares at the last ordinary general meeting in July 2023, the listed shares were issued in the form of bearer shares. All shares, irrespective of their par value, carry one vote and each share is entitled to dividend payments, the amount of which is determined based on the par value of each such share. Further information on the shares issued by the Company is available at www.carlogavazzi.com/en/investors/shares.html. For further details regarding the share capital of the Company, refer to the Notes to the Financial Statements of the Company, note 3 "Share Capital" as well as to article 6 of the Articles of Association, governing the exclusion of shareholders' subscription rights (the Articles of Association are available in German at https://www.carlogavazzi.com/files/ media/files/b5b31db42864e749ec5016524a3c8f46/ Statuten-DE-Carlo-Gavazzi-230725.pdf. As of March 31, 2024 the Company had no authorized capital and no conditional capital. There were no

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Corporate Governance

changes in the share capital, the authorized capital and the conditional capital during the yearly reporting period that ended on March 31, 2024 and the preceding two financial years. The Company has not issued any profit-sharing certificates (Genussscheine) or participation certificates (Partizipationsscheine).

At the last ordinary general meeting the Company has amended its registration restriction provision as further set out in article 5 of the Articles of Association, available in German at https://www.carlogavazzi.com/files/media/files/ b5b31db42864e749ec5016524a3c8f46/Statuten-DE- Carlo-Gavazzi-230725.pdf, in order to align it with the revised corporate law. In light of the conversion of the listed shares from bearer shares into registered shares, this new amended registration restriction applies to both the listed registered shares (ordinary shares) and the voting shares, whereas previously only the voting shares were subject to a registration restriction. Accordingly, the acquirer has to provide the Company its name, nationality and address

and declare that it has acquired the shares in its own name and for its own account, that there is no agreement to take back or return the shares concerned and that it bears the economic risk associated with the shares (article 5 paragraph 1 of the Articles of Association, available in German at https://www.carlogavazzi.com/files/media/files/ b5b31db42864e749ec5016524a3c8f46/Statuten-DE- Carlo-Gavazzi-230725.pdf). Furthermore, a specific regulation for nominees was introduced, which

foresees that acquirers who do not expressly declare that they hold the shares for their own account will be entered without restriction in the share register as shareholders with voting rights up to a maximum of 3 % of the share capital. Above this registration limit, nominees will be entered in the share register as shareholders if the relevant nominee discloses the names, addresses, nationalities and shareholdings of those beneficial owners for whose account it holds 0.5 % or more of the share capital and if the reporting requirement pursuant to the Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (FinMIA) (as amended) is met (article 5 paragraph

2 of the Articles of Association, available in German at https://www.carlogavazzi.com/files/media/files/ b5b31db42864e749ec5016524a3c8f46/Statuten- DE-Carlo-Gavazzi-230725.pdf). In accordance with article 14 of the Articles of Association, available in German at https://www.carlogavazzi.com/files/ media/files/b5b31db42864e749ec5016524a3c8f46/ Statuten-DE-Carlo-Gavazzi-230725.pdf, the limitations on transferability of shares as well

as the cancellation of privileges can be canceled by the AGM by majority of the votes cast (the Articles of Association are available in German at https://www.carlogavazzi.com/files/media/files/ b5b31db42864e749ec5016524a3c8f46/Statuten-DE- Carlo-Gavazzi-230725.pdf). There are no convertible bonds or options issued by the Company or any of its subsidiaries with respect to the shares of the Company.

https://www.carlogavazzi.com/files/media/files/ b5b31db42864e749ec5016524a3c8f46/Statuten- DE-Carlo-Gavazzi-230725.pdf

CARLO GAVAZZI GROUP

21

Corporate Governance

Board of Directors

3. Board of Directors

The Board of Directors currently comprises five members.

CHAIRMAN / NON-EXECUTIVE	VICE-CHAIRMAN /NON-EXECUTIVE	DIRECTOR / NON-EXECUTIVE
(FROM JULY 27, 2022)	VITTORIO ROSSI	STEFANO PREMOLI TROVATI
DANIEL HIRSCHI	Born May 8, 1958	Born December 1, 1971
Born March 19, 1956	Italian national, Borgo Ticino, Italy	Italian national, Zug
Swiss national, Biel	First elected 2022,	First elected 2008,
First elected 2010,	elected until the next ordinary	elected until the next ordinary
elected until the next ordinary	general meeting in 2024	general meeting in 2024
general meeting in 2024
- Graduated as an engineer	- Graduated in electrical engineering,	- Graduated in economics and
in Biel, Switzerland	Politecnico of Milan, Italy	corporate law, Cattolica
- Attended AMP/SMP Advanced	- Held various management positions	University, Milan, Italy
Management Program at Harvard	with the Siemens Group in Germany,	- Postgraduate degree in tax law
Business School	Italy and USA from 1985 until 2002	- Managing Director of Barguzin
- Developed his professional career	- CEO of Siemens SpA, Milan, Italy,	Participation SA, Luxembourg,
during 23 years in Saia Burgess,	from 2002 until 2005	from 2009 until 2015
a Swiss industrial company	- CEO of Gewiss SpA, Bergamo, Italy,	- Managing Director of Barguzin
in the electro mechanical and	from 2005 until 2007	Participation AG, Zug, since 2022
electronics field	- CEO of Carlo Gavazzi Automation	- Member of the Board of Banca del
- CEO of Saia Burgess from 2001	Components from June 2009	Ceresio SA, Lugano, since 2023
until 2006	until July 2022	- Vice-Chairman of Carlo Gavazzi
- Bearer shareholders'		Holding AG from 2013 until 2023
representative of Carlo Gavazzi		- Held various other board
Holding AG from 2010 until 2022		memberships and positions as
		statutory auditor

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Corporate Governance

DIRECTOR / NON-EXECUTIVE

DIRECTOR / NON-EXECUTIVE

YOLANTA DE CACQUERAY Born July 18, 1966

Polish and French national, Zug First elected 2022,

elected until the next ordinary general meeting in 2024

FEDERICO FOGLIA

Born April 28, 1969 Swiss national, London First elected 2004,

elected until the next ordinary general meeting in 2024

• Graduated as Master of Sciences and Engineering at Polytechnical School, Wroclaw, Poland, and as MBA
  at HEC Paris, France
• Developed her professional career during 15 years in Nestlé
• Deputy Zone Director for Europe, Nestlé Waters from 2000 until 2002
• Director International Finance at France Telecom from 2002 until 2005
• Deputy CFO and CFO at Firmenich, Losinger Marazzi, Beldona and other companies from 2005 until 2016
• CFO of Landis & Gyr Switzerland AG from 2016 until 2022
• Director Accounting, Reporting and Treasury at Smartenergy Group since 2022
• Bearer shareholders' representative of Carlo Gavazzi Holding AG since 2022 until the last ordinary general meeting in July 2023

• Graduated in economics and political sciences, Bocconi University, Milan, Italy
• Held positions with Merrill Lynch, London, England, from 1996 until 2000
• Managing Director of Banca del Ceresio, Lugano, Switzerland, from 2000 until 2014
• Executive Director, since 2014, and member of the Board of Belgrave Capital Management, London, England, since 2003
• Member of the Board of Ceresio SIM, Milan, Italy, since 2006
• Member of the Boards of Centro Stampa Ticino SA, Muzzano, Switzerland, since 2010, Società Editrice Corriere del Ticino SA, Muzzano, Switzerland, since 2011, and Corriere del Ticino Holding SA,
  Muzzano, Switzerland, since 2012
• Member of the Board of Global Selection SGR, Milan, Italy, since 2014
• Member of the Board of Simón I. Patiño Foundation, Geneva, Switzerland, since 2019

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Corporate Governance

SECRETARY TO THE BOARD

RAOUL BUSSMANN

Swiss national, Zug

• University of Zurich, Doctorate in jurisprudence
• Legal Counsel and member of the Corporate Legal Staff of Sulzer Brothers Limited, Winterthur, Switzerland, from 1981 until 1986
• General Counsel and head of the Corporate Legal Staff of Landis & Gyr AG, Zug, Switzerland, from 1986 until 1991
• Attorney at Law and Notary in Zug, Switzerland, since 1991 and partner at the law firm Stadlin Advokatur Notariat in Zug, Switzerland,
  from 1998 until 2016
• Partner at the law firm Kaiser Odermatt & Partner, Zug, Switzerland, since 2016
• Secretary to the Board of Directors of Carlo Gavazzi Holding AG since July 2009

24	CARLO GAVAZZI GROUP

FORMER MEMBER

VALERIA GAVAZZI

Born August 2, 1974

Swiss and Italian national, Zug First elected 2009,

elected until 2022

• Graduated in economics and business administration, IGS, Paris, France
• Managing Director of Barguzin Consultancy GmbH from 2004 until 2009
• Chairman of Carlo Gavazzi Holding AG from July 2009 until July 2022
• Managing Director of Barguzin Participation SA, Zug,
  from 2015 until 2022

Valeria Gavazzi is no longer a member of the Board of Directors as per July 26, 2022. Until July 26, 2022 Valeria Gavazzi also served on the Boards of Directors of direct or indirect subsidiaries of the Company.

Corporate Governance

Executive Management and independence of the Board of Directors

None of the members of the Board of Directors have served in the Executive Management of the Company or of any of its direct or indirect subsidiaries in the three financial years preceding the period under review, except for Vittorio Rossi who was CEO of Automation Components until July 26, 2022. Stefano Premoli Trovati has served on the Boards of Directors of direct or indirect subsidiaries of the Company.

For additional information on members of the Board of Directors and "Related Party Transactions" refer to note 25 "Related party transactions" to the Consolidated Financial Statements of Carlo Gavazzi Holding AG, note 4 "Significant shareholders and their shareholdings" to the Financial Statements of Carlo Gavazzi Holding AG, section 1 of this report concerning the disclosure of significant shareholdings as well as to section 2 "Remuneration expense" to the compensation report.

Restrictions on positions outside the Carlo Gavazzi Group

According to article 28 of the Articles of Association (the Articles of Association are available in German at https://www.carlogavazzi.com/files/media/files/ b5b31db42864e749ec5016524a3c8f46/Statuten- DE-Carlo-Gavazzi-230725.pdf), a member of the Board of Directors may hold up to twenty additional mandates as a member of the highest-level governing or administrative body of companies outside the Carlo Gavazzi Group, five thereof

in listed companies. Mandates with associated companies outside the Carlo Gavazzi Group are deemed to be a single mandate, as long as not more than ten mandates are held within such a group of associated companies.

Election, terms of office and internal organization

The Board of Directors of the Company comprises at least three members. They are elected by the AGM on an individual basis for a term of one year. Re-election is permitted. There is no limit to the terms of office. The age limit is 70 years. The Chairman is elected annually by the AGM. Reelection is permitted. The Articles of Association including the relevant article 16 are available in German at https://www.carlogavazzi.com/files/ media/files/b5b31db42864e749ec5016524a3c8f46/ Statuten-DE-Carlo-Gavazzi-230725.pdf.

Areas of responsibility - Board of Directors

The Board of Directors establishes the strategic, accounting, organizational and financing policies to be followed by the Group. It supervises, controls and advises the Group's management. The Board of Directors has put in place reporting and controlling processes to ensure it has sufficient information to make appropriate decisions. The Board of Directors regularly reviews the operational and financial results and approves budgets as well as consolidated financial statements. The Board of Directors appoints the Group's executive officers. Within the limits of the law and except for those competencies that are reserved to the Board

of Directors or delegated otherwise, the Board of Directors delegates to the CEO the overall management of the industrial and commercial activities of the Group and the conduct of the day-today business of the various companies belonging to the Group. On a regular basis, the CFO reports the financial results and forecasts to the Board

of Directors, whereas the CEO regularly reports to the Board of Directors regarding industrial and commercial business activity. The Board of Directors has established an Audit Committee (the "AC") and the Compensation Committee (the "CC", whose members are elected by the AGM) to carry out certain duties as set out below. Further, in order to exercise supervision over the Automation

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Corporate Governance

Components Business as well as the Group, the Board of Directors has established the Strategic Management Board (the "SMB").

The SMB regularly reports to the Board of Directors with respect to its supervision activities of the Automation Components Business and submits for approval to the Board of Directors the strategies of the Group. Other members of management report to the Board of Directors as necessary. The Board of Directors has a quorum when the majority of its members are present. Its decisions are taken by a simple majority of the attending members. In case of a tied vote, the Chairman has the casting vote.

The Board of Directors holds a minimum of four meetings per year including a strategy review meeting and a budget meeting in November and March, respectively. The meetings of the Board of Directors usually last for a whole day. The CEO attends these meetings as required in an advisory capacity related to business operations. The CFO regularly assists the Chairman in the presentation and discussion of the financial results. In the reporting period, the Board of Directors held four full-day meetings including one strategy review meeting and one budget meeting and held four conference calls. The CEO and CFO attended all Board meetings in an advisory capacity as required. One external consultant attended a Board meeting to advise the Board on ESG / Sustainability related matters.

Audit Committee (AC)

The prime function of the Audit Committee is to assist the Board of Directors in fulfilling its supervisory responsibilities. It evaluates the independence and effectiveness of external auditors, approves auditing services to be performed by the external auditors and their related fees, evaluates business risks, assesses the quality of financial accounting and reporting, evaluates scope and overall audit plans, reviews audit results and monitors compliance with specific laws and regulations governing the financial statements.

The Audit Committee may ask any questions at all times when deemed necessary and may have direct contact with the Group's auditors and other professional organizations. The Audit Committee is acting in an advisory capacity and its proposals are subject to the approval of the entire Board of Directors. During the financial year 2023/24, the Audit Committee consisted of Yolanta de Cacqueray (Chair of the AC), Stefano Premoli Trovati and Vittorio Rossi. The Audit Committee meets as often as business requires. In the reporting period, the Audit Committee held two meetings, each with the participation of the Group's auditors. The CFO in an advisory capacity attended both meetings in full. No external consultants or other members of the Executive Management attended the meetings. On average, the meetings lasted for approximately half a day.

Compensation Committee (CC)

The Compensation Committee comprises of at least two members, each elected by the AGM for a one-year term. Re-election is permitted. The prime function of the Compensation Committee is to assist the Board of Directors in preparing and proposing to the Board of Directors compensation guidelines in line with the overall strategy. It prepares and proposes to the Board of Directors the compensation levels for the Board of Directors and its Committees. In addition, it prepares and proposes to the Board of Directors the terms of employment of the Chairman, the Vice-Chairman of the Board of Directors and of the Executive Management. It also prepares and proposes to the Board of Directors a compensation policy for the Group (including the Automation Components Business) that fairly rewards performance and effectively attracts and retains the human resources necessary to successfully lead and manage the Business. The Compensation Committee prepares, monitors and proposes to the Board of Directors compensation plans including any modifications

to such plans for executives reporting to the Board of Directors or to the Chairman of the Board of Directors, including the Automation Components

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