Corporate Governance Code – NEW (Effective from 1 January 2025)

CORPORATE GOVERNANCE CODE December 2024

CONTENTS Introductory Provisions 7 • Purpose of the Code 7 • Method of Application of the Code 8 • Reporting on the Application of the Code 8 • Effective Date 9 Chapter 1: Leadership 10 Chapter 2: Duties of Management and Supervisory Board Members 12 Chapter 3: Appointment of Management and Supervisory Board Members 14 Chapter 4: Supervisory Board and its Committees 16 Chapter 5: Management 20 Chapter 6: Remuneration of Management and Supervisory Board Members 22 Chapter 7: Risks, Internal Control and Audit 26 Chapter 8: Disclosure and Transparency 30 Chapter 9: Shareholders and the General Meeting 34 Chapter 10: Shareholders, Sustainability and Resilience 36 Appendices: A. Definitions 38 B. Application of the Code to Companies with a Monistic Structure 40

Dear Readers, Before you is the revised and supplemented Corporate Governance Code, which we developed in 2019 with the support of the European Bank for Reconstruction and Development (EBRD). The new Corporate Governance Code reflects changes in the regulatory framework at the European and international levels, the implementation of best management practices, and the adaptation of business operations to ongoing challenges in global markets. Future corporate governance sets responsible management as a key imperative, ensuring the sustainability and resilience of companies. Therefore, the Corporate Governance Code defines standards that enable companies to achieve their business strategies and objectives substantively and effectively. Special attention is given to creating inclusive and equal relationships within the company, the ability to identify and manage risks, and improving the quality of the company’s relations with relevant stakeholders, which long-term contributes to increasing the company's value. Adopting new corporate governance standards is always a challenge for companies, but we are confident that their implementation will significantly improve business operations, shape more substantive relations with relevant stakeholders, and ultimately contribute to strengthening confidence in the Croatian capital market, which is in our common interest. The regulator’s role in this process is not only to set corporate governance standards but also to cooperate with companies that implement them, facilitating and accelerating this sometimes complex process through collaboration. We hope we will succeed in this and jointly contribute to establishing a new level of corporate governance in the Republic of Croatia. We thank everyone who contributed to the development of this Corporate Governance Code through their participation, helping define new goals and identify potential challenges, thereby setting expectations for the future conduct of companies. In an extremely rapidly changing environment in which commercial companies operate, corporate governance faces greater challenges, and the need for clearly defined principles becomes more pronounced. Good corporate governance creates stable foundations for sustainable business, improved competitiveness, protection of stakeholder interests, and preservation of ethical principles in operations. Its establishment and maintenance is a complex and continuous process that never ends, requiring strong commitment from shareholders, board members, managers, and other stakeholders to create an atmosphere that promotes the highest ethical standards in all aspects of business. The Code should not be viewed as a limitation, but rather the opposite: as guidelines for more precise and easier adherence to the highest corporate governance and transparency standards, so that commercial companies not only secure their place in the market but also contribute to creating a more stable, responsible, and sustainable business, economic, and social environment. Together with listed companies, the regulator, investors, and all other direct and indirect interested parties and stakeholders, we will continue to work on promoting the quality of corporate governance to increase company value, market value, and ultimately the entire national economy.

INTRODUCTORY PROVISIONS Purpose of the Code The purpose of the Code is to promote effective management and accountability in companies whose shares are listed on the regulated market of the Zagreb Stock Exchange (ZSE). Management includes the conduct of business affairs, but management and conducting business are not synonymous. Conducting business refers to day-to-day decision-making, while the purpose of management includes establishing vision and standards that influence those decisions. Management covers issues such as the company’s purpose, relations with other persons, and expected behavior of managers and employees. Companies with good management standards and transparency attract capital more easily due to greater investor confidence. The benefit arises not only for individual companies but also for the market and the state as a whole. Companies with good management have higher prospects for long-term sustainable success, from which investors, employees, and the national economy benefit. Companies that behave ethically and maintain constructive relations with stakeholders develop a good reputation, which contributes to their success. The revised Code reflects changes in Croatian and European Union law, as well as the revised G20 and Organisation for Economic Co-operation and Development (OECD) Principles on Corporate Governance, and significant progress achieved in understanding the factors and practices that contribute to good management. This revised Code replaces the previous edition of the Code published in 2019. The Code seeks to align standards expected from listed companies with those in other European and global states with similar capital markets, while reflecting the specific circumstances of the Republic of Croatia. If companies adopt the Code’s standards, it will signal to investors that they can confidently invest in the Croatian market. A company’s approach to management is an integral part of how decisions are made and risks and opportunities assessed, and therefore holds great importance for the company’s strategy and how it conducts its business. Corporate governance is not limited to the accountability companies owe to their shareholders, but also extends to accountability toward other stakeholders and society as a whole. The inability to maintain their support, whether due to improper company conduct or the perception that the company neglects stakeholder interests, can be just as damaging to the company’s reputation and long-term sustainable progress, and to shareholder interests, as failures in strategy or business model. Higher corporate governance standards can be achieved if companies embrace the spirit of the Code and its reporting framework. The Code serves as an incentive for all listed companies to recognize it as an opportunity to improve long-term results and show investors and other stakeholders their commitment to high standards and willingness to engage in meaningful dialogue.

Method of Application of the Code The Code applies to all companies whose shares are listed on the regulated market of the Zagreb Stock Exchange (ZSE). Each chapter of the Code consists of a purpose, principles, and provisions. • The Purpose explains why the issues in that chapter are important for effective management. They are stated solely for clarification and companies are not required to act in accordance with them or report on them. • Principles describe the general objectives that companies must achieve. Companies should ensure that their management mechanisms fulfill these objectives. • Provisions clarify best practices that enable companies to achieve the objectives established in the principles. Companies must comply with the Code’s provisions or explain the reasons for non-compliance. In this Code, gendered expressions are used in a sex-neutral manner and apply equally to the female and male sexes.

Relationship with Law and Zagreb Stock Exchange Rules Some parts of the Code overlap with mandatory statutory provisions and Zagreb Stock Exchange Rules. In most cases, the provisions in the Code are more detailed or set higher standards than such mandatory statutory provisions or ZSE requirements. Therefore, compliance with listing laws or rules, although necessary, may not in itself be sufficient to ensure compliance with the provisions of this Code. Furthermore, adherence to the Code’s provisions does not exempt companies from their obligation to comply with the law or ZSE Rules.

Application of the Code to Companies with a Monistic Structure The Code is written for application by companies with a dualistic structure, i.e., companies that have a supervisory board and management, given that this is the most common governance structure for listed companies in Croatia. Companies with a single-tier board are required to report on their conduct in accordance with the Code’s provisions. Appendix B contains a smaller number of provisions specifically directed at these companies, which replace the corresponding provisions applicable to dualistic companies. The Appendix also contains guidelines on how single-tier board companies must interpret the remaining provisions of the Code.

Reporting on the Application of the Code Companies must complete two questionnaires annually: one in which they declare whether the company has complied with each provision of the Code (compliance questionnaire) and another in which they provide more detailed data on their corporate governance practices (management practices questionnaire). The questionnaires, instructions for completing them, and information on when and how they should be submitted to HANFA and, regarding the compliance questionnaire, published, are available on the websites of HANFA and the Zagreb Stock Exchange in the corporate governance section.

Companies must explain in detail how they achieve the objectives set by the principles and apply the Code’s provisions to enable shareholders to understand the company’s specific circumstances, how the company’s strategy was established and its objectives achieved, and how decisions impacted results. Whenever possible, the company should link to relevant parts of the annual report and other relevant information so that shareholders can assess the overall quality of corporate governance policies and the conduct of the supervisory board and management, avoiding unnecessary repetitions. If a company does not comply with a provision of the Code, it must: • explain in what respect and for what reason it does not comply with the Code’s provisions, noting special circumstances relevant to that company; • describe in detail the measures it has taken instead of complying with the Code’s provision to fulfill the objective established in the corresponding principle; and • if the company intends to comply with the Code’s provision in the future, indicate when it will begin doing so. Management is responsible for overseeing the completion of annual questionnaires, which in the case of the compliance questionnaire includes explanations for all cases of non-compliance with the Code. Before being published and submitted to HANFA, the completed questionnaire must be approved by the company’s supervisory board.

Effective Date Companies apply this revised Code from 1 January 2025 and report on their compliance and corporate governance practices for the financial year beginning on 1 January 2025 using the new questionnaires. For the financial year beginning on 1 January 2024, companies must report using the existing questionnaires. This Code was adopted by HANFA and the Zagreb Stock Exchange.

CHAPTER 1: LEADERSHIP Purpose The supervisory board and management have different roles but share responsibility for the company’s long-term sustainable success and responsible business conduct, creating value for shareholders and contributing to society and the community, while ensuring that policies, people, and processes are aligned with this goal. This shared responsibility can only be fulfilled through direct cooperation. The role of the supervisory board consists not only in appointing and overseeing management, but it should also be closely involved in determining the company’s strategic direction and serve as a source of guidance and constructive questioning for management. Supervisory board members often possess the knowledge and experience that complement management’s expertise and can ensure an objective insight into how management can promote the company’s best interests. Management must view the supervisory board as an important ally, not as a body whose influence it wishes to limit or from which it must hide information. On the other hand, the supervisory board must be ready to provide management with all necessary support while refraining from interfering in the day-to-day conduct of the company. Furthermore, it must ensure that close cooperation with management does not diminish the objectivity with which the supervisory board performs its guiding and oversight functions. Members of management and the supervisory board bear special responsibility for establishing the company’s culture and values; therefore, they must set clear expectations for themselves and employees regarding behavior toward colleagues and external stakeholders.

Principles A. The supervisory board and management must ensure that the established company strategy, set values, resources, risk management and internal control systems, and relations with shareholders and other stakeholders support responsible business conduct and the company’s long-term sustainable success. B. The supervisory board and management must ensure adequate systems that enable effective cooperation in the company’s best interests. C. Members of the supervisory board and management must act with integrity and in accordance with the law and the company’s code of conduct, setting an example for all employees through their behavior.

Provisions Cooperation

1. The company’s statute and other internal acts must clearly define the competences of the supervisory board and management, in accordance with applicable laws and mechanisms through which management and the supervisory board cooperate. The company’s statute must be available free of charge on the company’s website.
2. Management and the supervisory board must agree on categories of decisions and legal transactions for which prior consent of the supervisory board is required, and those on which management must consult with the supervisory board before making a decision. The supervisory board must adopt a decision listing these categories of decisions, and their summary must be available free of charge on the company’s website. For important decisions affecting the company’s strategy, expenses, risk exposure, and reputation, prior consent of the supervisory board must be sought.
3. Management must ensure that the supervisory board and its committees have timely access to the company’s facilities and premises, as well as senior management and employees when necessary for performing their duties, and to all documents required for this purpose. These procedures must be established in the company’s internal acts with the supervisory board’s consent.
4. In addition to legally mandated reports, management must regularly report to the supervisory board on the company’s operational results, financial situation, significant financial and other risks, resilience, and results of interactions with shareholders and other stakeholders. Management and the supervisory board must agree on the content, format, and frequency of these reports.
5. The CEO must immediately notify the supervisory board if an event occurs or is likely to occur that could significantly affect the company’s results, financial position, resilience, or reputation.

Code of Conduct 6. The supervisory board and management must agree on codes of conduct that members of management and the supervisory board, employees, and others acting on behalf of the company must follow. The codes of conduct must ensure an inclusive work environment, equal opportunities for different sexes, and prohibition of all forms of discrimination. The codes of conduct and measures to be taken in case of breach must be established in the code of conduct or another internal act and must be available free of charge on the company’s website. The supervisory board approves the code or other internal act, oversees its implementation, and monitors its effectiveness. 7. When agreeing on codes of conduct, the supervisory board and management must be guided, among other things, by recommendations for responsible business conduct as prescribed by the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct and applicable OECD Implementation Guidelines for due diligence in responsible business conduct.

CHAPTER 2: DUTIES OF MANAGEMENT AND SUPERVISORY BOARD MEMBERS Purpose For a company to achieve long-term sustainable success, its leadership must be dedicated to achieving that goal. Success could be jeopardized if members of management and the supervisory board instead choose to follow their own objectives, which sometimes may conflict with the company’s best long-term interests. Therefore, it is necessary for all members of management and the supervisory board to have a shared duty to always place the company’s interests first and resolve all conflicts of interest. This applies to both supervisory board members and management members, regardless of whether they were appointed by the general meeting, majority shareholders, or employees.

Principles D. Members of the supervisory board and management must act in the company’s best long-term interest, not in their own interest or the interest of individual shareholders or other parties. When assessing the company’s interests, members of management and the supervisory board must take into account the interests of employees, shareholders (including minority shareholders), and other stakeholders.

Provisions Conflict of Interest 8. Members of management and the supervisory board must not be allowed to make decisions based on personal interests or the interests of related persons, and they must not participate in decisions regarding which they are in conflict of interest. The supervisory board must give prior consent to the policy for managing conflicts of interest, which must be available free of charge on the company’s website. 9. If a member of management or the supervisory board considers that they are in an existing or potential conflict of interest regarding a specific decision, they must notify other members of management if they are a management member, or other members of the supervisory board if they are a supervisory board member. Management members must additionally notify the chairman of the supervisory board. The supervisory board must maintain a register of all notifications regarding existing or potential conflicts of interest, describing the conduct and outcome for each existing or potential conflict. 10. If a member of management and/or the supervisory board has reason to believe that another member of management and/or the supervisory board has not reported an existing or potential conflict of interest, they must notify the chairman of the supervisory board. If any of them considers that the chairman of the supervisory board is in an existing or potential conflict of interest, they must notify the deputy chairman of the supervisory board.

Non-Compete 11. Members of the supervisory board and management must not engage in activities that compete with the company’s business, whether for their own account or on behalf of others. They must not be members of management or supervisory boards of companies that conduct such activities, nor hold significant shares in those companies. Members of management and the supervisory board must notify the company secretary of all shares in such companies. Details of these shares must be available free of charge on the company’s website.

Transactions with Related Parties 12. No transaction between members of management or the supervisory board and the company (or persons related to either party) may be concluded without prior consent of the supervisory board. The fair value of each significant transaction, as defined by law, must be confirmed by an independent expert prior to the transaction, and their report must be available free of charge on the company’s website. 13. The supervisory board may appoint a special committee in accordance with the law or authorize the audit committee to decide on prior consent for concluding transactions with related parties. If members of the special committee do not meet the independence conditions prescribed for supervisory board members, transactions with related parties may not be concluded without prior consent of the audit committee. 14. Members of the special committee or, if applicable, the audit committee deciding on prior consent for concluding transactions with related parties must be independent regarding the persons and matters subject to prior consent. 15. The supervisory board must ensure that procedures for approving and disclosing such transactions are adopted in accordance with statutory provisions and financial reporting standards. The audit committee must evaluate the effectiveness of these procedures at least once a year.

CHAPTER 3: APPOINTMENT OF MANAGEMENT AND SUPERVISORY BOARD MEMBERS Purpose It is crucial to select the right people for specific roles, and to ensure that the overall composition and balance of management and the supervisory board correspond to the company’s circumstances. It is necessary to very carefully specify the characteristics required for each appointment and the purpose it serves, and finally select the right person. When selecting members of management and the supervisory board, balanced representation of both sexes and the elimination of all forms of discrimination must be considered. The company’s needs inevitably change over time, as does the environment in which companies operate. It is important to look to the future with the goal of timely recognizing significant changes so that management and the supervisory board can be restructured as needed to be ready for upcoming challenges. Management and supervisory boards composed to handle yesterday’s problems may not know how to deal with tomorrow’s challenges.

Principles E. The supervisory board must ensure the establishment of formal and transparent procedures for appointing members of management and the supervisory board, as well as selecting senior management, and the existence of a quality succession plan for management, the supervisory board, and senior management. Appointment procedures and succession plans must be based on objective criteria and promote diversity, inclusion, and equal opportunities, taking into account balanced representation of both sexes and the prohibition of all forms of discrimination.

Provisions Role of the Supervisory Board 16. The supervisory board is responsible for appointing and dismissing members of management, and for recommending candidates for the supervisory board to the general meeting. It must also ensure the existence of formal and transparent procedures for appointment to management and the supervisory board, as well as selection of senior management, which allow the selection of candidates based on objective criteria, giving priority under equal conditions to a candidate of the underrepresented sex. Procedures for appointment to management and the supervisory board, as well as selection of senior management, along with the succession plan, must be published free of charge on the company’s website together with a prior assessment of the impact of these procedures and the succession plan on gender equality. 17. The supervisory board must ensure representation of at least 40% members of the underrepresented sex in the supervisory board, or representation of at least 40% members of the underrepresented sex in the supervisory board and management combined. All measures the company takes to achieve at least 40% representation of members of the underrepresented sex in the supervisory board, or in the supervisory board and management combined, or to achieve representation determined by the company, must be published on the company’s website.