Wawel S A : Statement on corporate governance_2021

Statement on applying the corporate governance principles in 2021

(this report is separated part of the report on the Company's activity report, being part of the Annual Report of Wawel S.A. for 2021)

1. The corporate governance principles governed Wawel S.A. in 2021.

The all corporate governance principles to which the Issuer is subordinated till June 30, 2021 are contained in the document "Code of Best Practices for WSE Listed Companies 2016", which is the appendix to the Resolution of of the Stock Exchange Board on 13th October 2015.

The all corporate governance principles to which the Issuer is subordinated from July 1, 2021 are contained in the document the Best Practice for GPW Listed Companies 2021 (Best Practice 2021). This document is available at the websites of Warsaw Stock Exchange S.A. under the address:https://www.gpw.pl/dobre-praktyki2021.

2. Complying with the corporate governance principles contained in the document "Code of Best Practices for WSE Listed Companies 2021".

According to the current status of compliance with the Best Practice, the Company does not apply 14 detailed principles: 1.6., 2.1., 2.2., 2.7., 2.11.6., 3.2., 3.3., 3.4., 3.5., 3.6., 3.7., 3.10., 4.1., 4.3.

1.6. Companies participating in the WIG20, mWIG40 or sWIG80 index hold on a quarterly basis and other companies hold at least on an annual basis a meeting with investors to which they invite in particular shareholders, analysts, industry experts and the media. At such meetings, the management board of the company presents and comments on the strategy and its implementation, the financial results of the company and its group, and the key events impacting the business of the company and its group, their results and outlook. At such meetings, the management board of the company publicly provides answers and explanations to questions raised.

Comments: The Company is in regular contact with investors and analysts.

2.1. Companies should have in place a diversity policy applicable to the management board and the supervisory board, approved by the supervisory board and the general meeting, respectively. The diversity policy defines diversity goals and criteria, among others including gender, education, expertise, age, professional experience, and specifies the target dates and the monitoring systems for such goals. With regard to gender diversity of corporate bodies, the participation of the minority group in each body should be at least 30%.

Comments: The Management Board's competences do not include interfering with the autonomous decisions of the General Meeting of Shareholders regarding the composition of the Supervisory Board and the Management Board.

2.2. Decisions to elect members of the management board or the supervisory board of companies should ensure that the composition of those bodies is diverse by appointing persons ensuring diversity, among others in order to achieve the target minimum participation of the minority group of at least 30% according to the goals of the established diversity policy referred to in principle 2.1.

Comments: The Management Board's competences do not include interfering with the autonomous decisions of the General Meeting of Shareholders regarding the composition of the Supervisory Board and the Management Board.

2.7. A company's management board members may sit on corporate bodies of companies other than members of its group subject to the approval of the supervisory board.

Comments: In accordance with the Company's Remuneration Policy in relation to the Management Board and Supervisory Board adopted by the resolution of the Ordinary General Meeting of Shareholders on May 27, 2020, the members of the governing bodies are obliged to notify the Company of their membership of other management and supervisory bodies. Members of the Management Board and the Supervisory Board are also obliged to notify other potential conflicts of interest resulting from their activities unrelated to the Company's business.

2.11. In addition to its responsibilities laid down in the legislation, the supervisory board prepares and presents an annual report to the annual general meeting once per year. Such report includes at least the following: 2.11.6. information regarding the degree of implementation of the diversity policy applicable to the management board and the supervisory board, including the achievement of goals referred to in principle 2.1. Comments: The company has not declared to have the diversity policy applicable to the management board and the supervisory board referred to in rule 2.1.

3.2. Companies' organisation includes units responsible for the tasks of individual systems and functions unless it is not reasonable due to the size of the company or the type of its activity.

Comments: The Company has no organizational units responsible solely for risk management, internal audit and compliance. However, it should be emphasized that the company has the system of broadly understood internal control applied at the Company which consists of a series of internal procedures and regulations (orders, internal rules and regulations, internal instructions, procedures describing the most important processes at the Company, scopes of duties of individual units and employees, etc.).

3.3. Companies participating in the WIG20, mWIG40 or sWIG80 index appoint an internal auditor to head the internal audit function in compliance with generally accepted international standards for the professional practice of internal auditing. In other companies which do not appoint an internal auditor who meets such requirements, the audit committee (or the supervisory board if it performs the functions of the audit committee) assesses on an annual basis whether such person should be appointed.

Comments: Due to tha fact that the company has the system of broadly understood internal control applied at the Company on which consists of a series of internal procedures and regulations (orders, internal rules and regulations, internal instructions, procedures describing the most important processes at the Company, scopes of duties of individual units and employees, etc.) the company has not separated and appointed an internal auditor.

3.4. The remuneration of persons responsible for risk and compliance management and of the head of internal audit should depend on the performance of delegated tasks rather than short-term results of the company. The principle is not applied.

Comments: The company does not apply the above rule due to the lack of this function in the company.

3.5. Persons responsible for risk and compliance management report directly to the president or other member of the management board.

Comments: The company does not apply the above rule due to the lack of this function in the company.

3.6. The head of internal audit reports organisationally to the president of the management board and functionally to the chair of the audit committee or the chair of the supervisory board if the supervisory board performs the functions of the audit committee.

Comments: The company does not apply the above rule due to the lack of this function in the company.

3.7. Principles 3.4 to 3.6 apply also to members of the company's group which are material to its activity if they appoint persons to perform such tasks.

Comments: The company does not apply the above rule due to the lack of this function in the company.

3.10. Companies participating in the WIG20, mWIG40 or sWIG80 index have the internal audit function reviewed at least once every five years by an independent auditor appointed with the participation of the audit committee.

Comments: The tasks described in this principle are performed in cooperation with the auditor in the course of the audit and review of the company's financial statements.

4.1. Companies should enable their shareholders to participate in a general meeting by means of electronic communication (e-meeting) if justified by the expectations of shareholders notified to the company, provided that the company is in a position to provide the technical infrastructure necessary for such general meeting to proceed.

Comments: The Company has not decided to implement this rule due to the legal risks involved in this matter.

4.3. Companies provide a public real-life broadcast of the general meeting.

The principle is not applied.

Comments: The Company has not decided to implement this rule due to the legal risks involved in this matter and due to the lack of implementation of rule No. 4.1.

3. Description of the main features of the internal control and risk management in relation to the process of preparing the financial statements and consolidated financial statements applied in the company.

The financial statements of the Issuer are prepared by the financial and accounting departments, but the complete statements is made with the strict cooperation with the other departments of the company, which are substantively responsible for data which follows directly the accounting books of the Issuer. The persons responsible for preparing the financial statement have the proper knowledge in this field and the necessary experience.

After preparing and checking the financial statement is provided to the statutory auditor together with the report of the Issuer's business activity report in order to examine or revise it. The statutory auditor during his

work on the Issuer's financial statement meets various people responsible for preparing it and managing the company, discussing the particular issues from this statement. After making the possible adjustments reported by the statutory auditor the financial statements is signed by the authorized persons i.e. by the Proxy (the Chief

Accountant) and Member(s) of the Management Board.

During preparing the financial statements the effectiveness of the internal control and risk management is ensured by the following actions:

1) Implementation of the internal documents, in particular regulations, orders, instructions and scope of the activities and procedures specifying:

- duties, right and responsibilities of the particular organizational units and employees,

- principles of financial and accounting documents circulation and the control system in the substantive, formal and accountancy scope.

- principles of the accounting policy prepared pursuant to the applicable regulations.

2) Qualified team of employees from the financial and accounting sector, which is essentially responsible for correct and timely preparing of the financial statements.

• 3) Conducting the accounting books using the professional IT system.

• 4) the Company monitors the important tax and legal risk factors up-to-date.

• 5) The checking the financial statements by the independent statutory auditor, who is selected in a manner so that to ensure the independency during the performing the entrusted tasks. The selection of the statutory auditor is performed by the Supervisory Board, among the known auditing companies, warranting the high standards and independency.

Additionally the Management Board personally engages at the individual levels of the internal regulations to the proper functioning the all control system and on a current basis controls its functioning.

4. The Shareholders holding directly or by subsidiaries at least 5% of the total number of votes at GM, with indication the number of held shares and the percentage share in the share capital, number of votes resulting from these and the percentage share in the total number of votes at the general meeting.

Hosta International AG seated in w Münchenstein

781.761

781.761

52,13% 52,13%

(Switzerland)

MetLife OFE *

Aviva OFE Aviva Santander **

Nationale-Nederlanden OFE **

147.029 84.201 76.322

147.029 84.201 76.322

9,80% 9,80% 5,61% 5,61% 5,09% 5,09%

*) information on the number of shares given in accordance with the notification received by the Issuer pursuant to art. 69 in conjunction from art. 87 par. 1 point 3 lit. b of the Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organised Trading, and Public Companies dated July 29th 2005.

**) information on the number of shares given in accordance with the notification received by the Issuer pursuant to art. 69 of the Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organised Trading, and Public Companies dated July 29th 2005.

5. As of the date of annual report delivery the Issuer's all shares are non-preference shares and each share entitled to one vote. Due to this there are any holders of the Issuer's securities with the special control

rights.

6. There are any limitations concerning transferring the property right of securities and any limitations in the field of executing the voting rights belonged to the company's shares.

7. The description of the principles concerning appointing and recalling the members of the board and rights of such persons.

The principles of appointing and recalling the members of the board are ruled by the Articles of Association.

1. The number of the members of the Management Board is set by the Supervisory Board, but the number of the Management Board shall be between 1-15 persons.

• 2. The tenure of the Management Board runs for 3 years.

• 3. The President of the Management Board is appointed and recalled by the General Meeting of Shareholders.

The other members are appointed and recalled by the Supervisory Board at the request of the President.

4. The President or the all Management Board from the important reasons may be suspended by the Supervisory Board before the tenure lasts. In case of exercising this right the Supervisory Board is obliged within 14 days to take necessary activities in order to convene the General Meeting of Shareholders, which will adopt the resolution on recalling the President or all Management Board.

In case such resolution is not adopted by the General Meeting of Shareholders or when the General Meeting of Shareholders is not convened by the Supervisory Board such suspension becomes invalid.

The authorizations of the members of the board follows from the Commercial Companies Code.

8. Description of the changes in the Articles of Association

The changes in the Articles of Association are adopted by the resolutions of the General Meeting of Shareholders.

9. The way of action of the General Meeting of Shareholders

The General Meeting of Shareholders is the highest entity in the Company. The General Meeting of Shareholders acts pursuant to the principles specified in the Articles of Association and the GMS Rules.

The General Meeting of Shareholders can be ordinary or extraordinary. It is held in the Company's seat office or in other place appointed by the Management Board. The Ordinary General Meeting of Shareholders is convened by the Management Board at least to 30th June of every year.

The Supervisory Board may call the Ordinary Shareholders Meeting, in case the Board of Directors does not call it in stipulated time.

The Extraordinary Shareholders Meeting shall be called by the Board of Directors or, in cases and pursuant to the regulations set out by law, by other entities or individuals.

The right to call the Extraordinary Shareholders Meeting is granted to: a) the Board of Directors,

• b) the Supervisory Board, in case it assumes it necessary to call the meeting, and the Board of Directors does not call the Shareholders Meeting within two weeks from submitting a relevant request by the

  Supervisory Board.

• c) shareholders representing at least a half of the share equity or at least a half of votes in the

  Company.

Shareholder or shareholders representing at least 1/20 of the share equity may demand calling the Extraordinary Shareholders Meeting and put specific matters on its agenda. The demand shall be submitted to the Company's Board of Directors in writing or in electronic form to the following e-mail address of the

Company:wza@wawel.com.pl

The resolutions of the General Meeting of Shareholders are adopted by the absolute majority of votes unless the Act or Articles of Association states otherwise.

The description of the way of action of the General Meeting of Shareholders

The right to participate in the Shareholders Meeting shall be granted to persons holding bearer shares as at the date of registration of the participation in the Shareholders Meeting, who, not earlier than after the announcement of convening the Shareholders Meeting and not later than on the first business day after the date of registration of their participation in the Shareholders Meeting, submit a request to the entity maintaining their securities account to issue a registered certificate of the right to participate in the Shareholders Meeting.

The date of registration of participation in the Ordinary Shareholders Meeting is the day falling 16 days before the date of the General Meeting. The right to participate in the Ordinary Shareholders Meeting is only granted to persons who are shareholders of the Company on the date of registration of participation in the Ordinary Shareholders Meeting.

The list of shareholders eligible to participate in the Shareholders Meeting shall be issued by the Company's

Board of Directors. The list shall include full names or company names of shareholders, the residence address (registered office), quantity, type and numbers of shares (refers to registered shares only) and number of attributed votes. The list shall be available in the Company's headquarters not later than three working days before the date of the Shareholders Meeting.

A shareholder is entitled to examine the list of shareholders in the Company's headquarters and request to

issue its certified copy, refunding the cost of its issue. A shareholder is entitled to demand certified copy of motions on matters put on agenda within one week before the date of the Shareholders Meeting. A shareholder is entitled to demand sending him a list of shareholders, free of charge by electronic mail, by sending a demand towza@wawel.com.pl

A shareholder may participate in the Shareholders Meeting and execute their right to vote in person or through a proxy, whereas:

a) a proxy may exercise all shareholder's rights at the Shareholders Meeting, unless the power of attorney states otherwise,

• b) power of attorney to participate in the Shareholders Meeting and exercise the right to vote may be granted in writing or in electronic form,

• c) power of attorney in electronic form shall be delivered not later than 4 days before the date of opening the Shareholders Meeting's session, to the following e-mail address of the Company:

  wza@wawel.com.pl, unless any other e-mail address is stipulated in the notification o calling the

  Shareholders Meeting,

• d) granting power of attorney in electronic form does not require safe electronic signature verified by means of valid qualified certificate,

• e) The Company has the right to undertake relevant actions for the identification of a shareholder and a proxy in order to verify the validity of the power of attorney to the Shareholders Meeting granted in an electronic form, both before and during the Shareholders Meeting, which does not apply to the case the power of attorney was signed with safe electronic signature verified by means of valid qualified certificate,

• f) In case the shareholder is an individual, the power of attorney granted in an electronic form and sent to a stipulated e-mail address of the Company shall be accompanied by a scanned copy of the shareholder's identity card, unless the notification on calling the Shareholders Meeting stipulates