AutoWallis Nyilvánosan Muködo Reszvenytársaság : Corporate Governance Report

Corporate Governance Report

AutoWallis Nyrt.

2023

Introduction

AutoWallis Nyrt. (hereinafter: 'Company') is a public limited company registered in Hungary by the Metropolitan Court as the Court of Registration. The main market for the Company's shares and bonds is the Budapest Stock Exchange (hereinafter: 'BSE'); accordingly, the Company follows the corporate governance principles established in Hungary and the related mandatory legal regulations.

The Company has developed its Corporate Governance Processes, including this Corporate Governance Report, in accordance with Section 3:289 of the Civil Code and the Corporate Governance Recommendations of the Budapest Stock Exchange.

1.1 - A brief presentation of the operation of the Board of Directors / Governing Board, and the distribution of responsibilities and tasks between the Board of Directors / Governing Board and the management.

The Company's Board of Directors is the managing body of the Company, it acts as a body and exercises its powers at the meetings of the Board of Directors. The Board of Directors, or the Members of the Board of Directors authorised by it, represents the Company towards third parties, in courts and in front of other authorities. The responsibilities of the Board of Directors are divided between the Chairman of the Board of Directors and the Members of the Board of Directors.

In addition to the management of the Company, the Board of Directors plays a key role in relation to the companies belonging to the group of companies (hereinafter: 'Group') managed by the Company. The Board of Directors coordinates and manages the Group's operations, provides guidance and defines the Group's business and development concept.

The Board of Directors is entitled to include in its competence all decisions that do not fall within the competence of the General Meeting, and also decides on all matters referred to the competence of the Board of Directors by the Civil Code, other legal regulations or the Articles of Association of the Company. It may refer the performance of ad hoc tasks to the competence of the Board Member(s) delegated by the General Meeting or the Board of Directors.

The Chief Executive Officer is entitled and obliged to act in relation to an issue not expressly included in the exclusive competence of the Board of Directors, but otherwise falling within the competence of the Board of Directors, unless expressly provided otherwise in a resolution of the Board of Directors.

The Rules of Procedure of the AutoWallis Board of Directors is available on the following link: https://autowallis.com/szabalyzatok/.

1.2 - An introduction of the Board of Directors / Governing Board, Supervisory Board and management members (for board members, also indicating each member's status of independence), a presentation of the boards structures.

The Company currently has a Board of Directors consisting of 5 members. Chairman: Zsolt

Müllner, members: Gábor Ormosy (Chief Executive Officer, not independent, employee of the Company), Gábor Székely (Chief Investment Officer/IR&ESG Director, not independent, employee of the Company) Andrew John Prest (Wholesale Business Unit Director, not independent, employee of the Company), and Péter Antal (Retail and Services Business Unit Director, not independent, employee of the Company).

The Company currently has a Supervisory Board and an Audit Committee consisting of 4 members, chairman/president: Attila Chikán Jr, and members: Bence Buday, György Ecseri, Gábor Vitán.

1.3 - Specifying the number of meetings which the Board of Directors / Governing Board, Supervisory Board and committees held in the given period, completed with attendance rates.

During 2023, the Board of Directors of the Company held 18 meetings, 16 with 100% and 2 with 80% attendance rate.

The Supervisory Board held 4 meetings in 2023, all four with 100% attendance rate. The Audit Committee had six meetings in 2023, all six with 100% attendance rate.

1.4 - A presentation of the work done by the Board of Directors / Governing Board, the Supervisory Board and the management as well as the considerations for assessing their individual members. Specifying if the assessment carried out in the given period resulted in any changes.

The Board of Directors, the Supervisory Board and the Audit Committee of the Company performed the tasks required by law, their Rules of Procedure and the Articles of Association of the Company. The Company does not evaluate the work of individual members separately.

1.5 - A report on the operation of each committee, elaborating on the professional background of committee members, the number of and the attendance rate at the meetings held as well as the major topics discussed at the meetings and a presentation of the general operation of each committee. When presenting the operation of the Audit Committee, any decision by the Board of Directors / Governing Board against the proposal of the committee should be mentioned (also including the explanations offered by the Board of Directors / Governing Board). The Company website, where all tasks delegated to the committees and the dates of the members' appointment must be published, should also be mentioned. (If this information is not available on the Company website, it must be included in the Corporate Governance Report.)

The Company's Audit Committee held six meetings in 2023, all of them with 100% attendance rate. The main topics of the meetings were:

• Review and comment on the 2022 annual IFRS reports and choosing a new auditor
• Review and comment on the 2023 Q1 IFRS reports

• Review and comment on the 2023 H1 IFRS reports
• Review on the auditor's contract
• Review and comment on the 2023 Q3 IFRS reports
• Procedure for engagements involving non-statutory audit services provided by the auditor

It was not necessary to convene an extraordinary meeting; the Audit Committee did not observe any event giving rise to an extraordinary investigation. The Board of Directors did not make a decision contrary to its proposal.

The professional presentation of the members of the Audit Committee can be viewed on the Company's website: https://autowallis.com/vezeto-testuletek.

The Rules of Procedure presenting the operation of the Audit Committee are also available on the website: https://autowallis.com/szabalyzatok/. The Audit Committee determines its own Rules of Procedure.

The Company's Supervisory Board held four meetings in 2023, all of them with 100% attendance rate. The main topics of the meetings were:

• Review and comment on the 2022 annual IFRS reports, appoint a new audit firm and comment on the contract and fee
• Review and comment on the 2023 Q1 IFRS reports
• Review and comment on the 2023 H1 IFRS reports
• Review and comment on the 2023 Q3 IFRS reports

The professional presentation of the members of the Supervisory Board can be viewed on the Company's website: https://autowallis.com/vezeto-testuletek.

The Rules of Procedure presenting the operation of the Supervisory Board are also available on the website: https://autowallis.com/szabalyzatok. The Supervisory Board determines its own Rules of Procedure, which are approved by the General Meeting.

1.6 - A description of the system of internal controls, an evaluation of the activities performed in the given period. A report on the efficiency and effectiveness of the risk management procedures. (Information about where shareholders can access the Board of Directors / Governing Board report on the operation of internal controls.)

The main goal of internal control is for the organisation to perform its defined task with an adequate quality:

• carry out its management activities regularly, economically, efficiently and effectively;
• comply with applicable laws and regulations;

The internal audit function is carried out by an internal auditor, whose duties include:

• - to verify the proper functioning of the Company in accordance with its internal rules
• - preparing an annual report for the Supervisory Board
• - monitoring the implementation of action plans

• - monitoring of IT operations
• - updating the internal control rules as necessary

The activities of the internal auditor are monitored by the Supervisory Board. It receives regular information on ongoing matters, contracts and events, and has continuous access to the Company's documents.

1.7- Information on whether the auditor performed any activities not related to auditing.

PricewaterhouseCoopers Könyvvizsgáló Kft.-t (responsible auditor: Biczó Péter, chamber

registration number: 004957) audited the 2022 annual IFRS reports.

The auditors also provided non-audit services during the current year, without violating their independence.

1.8 - An overview of the Company's publication policy and its insider trading policy.

The Company applies the disclosure rules prescribed in its disclosure policy, legislation, BSE Regulations and the Company's Articles of Association.

Places of publication: according to the Articles of Association, the official website of the BSE (www.bet.hu), the publication website of the MNB (https://kozzetetelek.mnb.hu/) and the website of the Company (www.autowallis.com).

The Company maintains a register of persons engaged in activities with the Company on a legal basis and having access to inside information. The regulation of the Company on Insider Persons, the MAD/MAR - European Regulation, and the Capital Market Act guidelines apply to the Company's insider persons.

1.9 - An overview of the method of exercising shareholder rights.

A shareholder whose name appears - on the day of the closing of the Register of Shareholders

• in the Register of Shareholders compiled on the basis of the identification procedure initiated by the Company is entitled to participate and vote at the General Meeting of the Company. Each share entitles its holder to one vote. The shareholder can exercise their rights in person or through a proxy. The method of voting shall be determined by the Board of Directors in such a way that the voting right can be determined on the basis of the number and nominal value of the shares.

1.10 - A brief presentation of the rules for the conduct of the General Meeting.

The General Meeting is the highest organ of the Company.

The General Meeting shall be convened as necessary, but at least once per calendar year. A General Meeting may be convened at a place other than the registered office of the Company. The Annual Ordinary General Meeting approving the annual report of the Company shall be convened in such a way that the IFRS reports can be approved within the statutory deadline.

An Extraordinary General Meeting may be convened by the Board of Directors if it deems it necessary for the operation of the Company. The convening of an Extraordinary General Meeting may be requested by the Supervisory Board, the auditor or the Court of Registration in the cases specified in the Companies Act, and by the shareholders representing at least 5 percent of the Company's share capital, by stating, in writing, the reason and purpose therefor.

The General Meeting has a quorum if the shareholder representing more than half of the voting shares is present in person or through their authorised representative (including proxy).

If the General Meeting does not have a quorum, the repeated General Meeting to be held with the same agenda shall be convened within 21 days from the date of the original General Meeting.

An attendance sheet shall be prepared and minutes shall be kept of the General Meeting in accordance with the provisions of the Companies Act.

The members of the vote counting committee and the authenticators of the minutes shall be elected by the shareholders from amongst themselves, or from the members of the Board of Directors or the Supervisory Board, by a simple majority, with the proviso that the authenticator of the minutes of the General Meeting may only be a shareholder or their proxy.

1.11 Presentation of the issuer's compliance with Section IV. of Act 67 of 2019 on the incentivisation of long-term shareholder participation and harmonization of particular other acts.

Company's Remuneration Policy was adopted by the Extraordinary General Meeting was held on 1st of July 2022. A Remuneration Report for 2023 has been prepared and will be presented to the General Meeting to be held on 26th of April 2024. In the case of a transaction with a related party, the Company regularly reviews whether obligation of announcement arises based on the value of the transaction.

Annex 2 - Recommendations

1.1.1- Does the Company have an organisational unit dealing with investor relationship management, or a designated person to perform these tasks?

yesno

1.1.2 - Are the Company's Articles of Association available on the Company's website?

yesno

1.1.4 - If the Company's Articles of Association allow shareholders to exercise their rights in their absence, did the Company publish the methods and conditions of doing so, including all necessary documents?

yesno

1.2.1 - Did the Company publish on its website a summary document containing the rules applicable to the conduct of its General Meetings and to the exercise of voting rights by shareholders?

yesno

1.2.2 - Did the Company publish the exact date when the range of those eligible to participate in a given company event is set (record date), and also the last day when the shares granting eligibility for participating in a given company event are traded?

yesno

1.2.3 - Did the Company hold its General Meetings in a manner providing for maximum shareholder participation?

yesno

1.2.6 - The Company did not restrict the shareholders' right to designate a different representative for each of their securities accounts to represent them at any General Meeting. (Answer Yes, if not)

yesno

1.2.7 - For proposals for the agenda items, were the Board of Directors' draft resolution and also the Supervisory Board's opinion disclosed to the shareholders?

yesno

1.3.3 - The Company did not restrict the right of its shareholders attending a General Meeting to request information, add comments and submit proposals, or set any preconditions for these with the exception of some measures taken to conduct the General Meeting in a correct manner and as intended. (Answer Yes, if not)

yesno

1.3.4 - By answering the questions raised at the General Meeting, did the Company ensure compliance with the information provision and disclosure principles set out in legal and stock exchange requirements?

yesno

1.3.5 - Did the Company publish on its website the answers to the questions that the representatives of the Company's boards or its auditor present at the General Meeting could not satisfactorily answer at the meeting within 3 working days following the General Meeting, or an official statement explaining why it refrained from giving answers?

yesnoDescription

There has been no such case, but announcements are made in such cases within 3 days.

1.3.7 - Did the Chairman of the General Meeting order a recess or suggest that the General Meeting be postponed when a proposal or proposal relating to a particular issue on the agenda was submitted which the shareholders hadn't had a chance to become familiar with before the General Meeting?

yesnoDescription

There has been no such case, but its proper management is ensured.

1.3.8.1 - The Chairman of the General Meeting did not use a combined voting procedure for a decision related to electing and recalling executive officers and Supervisory Board members. (Answer Yes, if not)

yesno

1.3.8.2 - For executive officers or Supervisory Board members, whose nominations were supported by shareholders, did the Company disclose the identity of the supporting shareholder(s)?

yesno

1.3.9 - Prior to discussing agenda items concerning the amendment of the Articles of Association, did the General Meeting pass a separate resolution to determine whether to decide on each amendment of the Articles of Association by individual votes, joint votes, or votes combined in a specific way?

yesno

1.3.10 - Did the Company publish the minutes of the General Meeting containing the resolutions, the description of the draft resolutions and any important questions and answers related to the draft resolutions within 30 days following the General Meeting?

yesno

The Company published the resolutions of the General Meeting.

1.6.1.1 - Do the Company's publication guidelines cover the procedures for electronic, online disclosure?

yesno

1.6.1.2 - Does the Company design its website by considering the aspects of disclosure and the information of investors?

yesno

1.6.2.1 - Does the Company have an internal publication policy in place which covers the processing the information listed in Section 1.6.2 of the Recommendations document?

yesno

1.6.2.2 - Do the internal regulations of the Company cover the methods for the assessment of events judged to be important for publication?

yesno

1.6.2.3 - Did the Board of Directors/Governing Board assess the efficiency of the publication processes?

yesno

1.6.2.4 - Did the Company publish the findings of the efficiency assessment of the publication process?

yesno

Description: This report on internal control and compliance has not been published, but we will aim to do so in 2024.

1.6.3 - Did the Company publish its annual company event calendar?

yesno

1.6.4 - Did the Company publish its strategy, business ethics and policies regarding other stakeholders?

yesno

1.6.5 - Did the Company publish the career information of Board of Directors / Governing Board, Supervisory Board and management members in its annual report or on the company website?

yesno

1.6.6 - Did the Company publish all relevant information about the internal organisation and the operation of the Board of Directors / Governing Board and the Supervisory

Board, about the work of the management, the assessments of these and the changes in the current year?

yesno

1.6.8 - Did the Company publish its risk management guidelines and information about its system of internal controls, the main risks and the principles for their management?

yesno

1.6.9.1 - Did the Company publish its guidelines relating to the trading of its shares by insiders?

yesno

1.6.9.2 - Did the Company disclose the share of the Board of Directors / Governing Board, Supervisory Board and management members in the securities issued by the Company, as well as the extent of their interest under the equity-based incentive system in the annual report or in some other way?

yesno

1.6.10 - Did the Company publish the relationship of Board of Directors / Governing Board, Supervisory Board and management members may have with third parties which could affect the operation of the Company?

yesno

2.1.1 - Does the Company's Articles of Association contain clear provisions regarding the responsibilities and competences of the General Meeting and the Board of Directors / Governing Board?

yesno

2.2.1 - Does the Board of Directors / Governing Board have a rules of procedure in place defining the organisational structure, the actions for arranging for and conducting the meetings, and the tasks regarding the adopted resolutions, as well as other issues related to the operation of the Board of Directors / Governing Board?

yesno

2.2.2 - Does the Company publish the procedure used for nominating Board of Directors / Governing Board members and the principles for determining their remuneration?

yesno

Description: We do not currently have a nomination procedure or policy, the principles for remuneration are set out in our remuneration policy.