LU VE S p A : Explanatory Report of the BoD on the items on the agenda of the Shareholders' meeting - extraordinary session

LU-VE S.p.A.

Via Vittorio Veneto 11 - 21100 Varese

Economic and Administrative Repertory No.: VA-191975

Tax Code: 01570130128

EXPLANATORY REPORT OF THE BOARD OF DIRECTORS ON THE PROPOSALS ON THE AGENDA OF THE EXTRAORDINARY SESSION OF THE SHAREHOLDERS' MEETING CONVENED IN ORDINARY AND EXTRAORDINARY SESSION ON 28 APRIL 2023 IN A SINGLE CALL

(drawn up pursuant to Article 125-ter of Legislative Decree No. 58 of 24 February 1998 as subsequently amended and supplemented - the "TUF" (Consolidated Law on Finance) - and articles 72 and 84-ter of the Regulations adopted by CONSOB Resolution No. 11971 of 14 May 1999, as subsequently amended and supplemented - the "Issuer Regulations"- in compliance with Table 3 of Annex 3A to the same Issuer Regulations).

Dear Shareholders,

this report (the "Explanatory Report") was drafted by the Board of Directors of LU-VE S.p.A. ("LU-VE", the "Company" or the "Issuer") in compliance with Article 125-ter of the Consolidated Law on Finance and Articles 72 and 84-ter of the Issuer Regulations, as well as in compliance with Table 3 of Annex 3A to the Regulations, with the aim of illustrating the proposals to amend and supplement the ByLaws of LU-VE (the "By-Laws"), as included in the agenda of the extraordinary session of the Shareholders' Meeting convened - by means of a notice published on 17 March 2023 on the Company's website at www.luvegroup.com, in the section "Investor Relations" - "Corporate governance & Shareholders" - "For shareholders" - "Shareholders' Meeting" - "Shareholders' Meeting of 28 April 2023"), and on the authorised storage mechanism eMarket Storagewww.emarketstorage.com, as well as by abstract, on 18 March 2023, in the daily newspaper "Il Sole 24 ORE"- at the administrative headquarters of the Company in Uboldo, via Caduti della Liberazione No. 53, on 28 April 2023 at 10:00 a.m., in a single call (the "Shareholders' Meeting").

The agenda for the extraordinary sessionof the above-mentioned Shareholders' Meeting is as follows:

1. Proposal to amend articles 6-bis, 15 and 18 of the By-Laws. Related and subsequent resolutions;
2. Introduction of the "Honorary Chairman" position. Related and subsequent resolutions.

For each of the two items on the agenda of the extraordinary session of the Shareholders' Meeting, the content of the amendments and additions to the By-Laws proposed by the Board of Directors and the reasons for their adoption are set out below, presenting, in comparative form, the text of the current By-Laws and, in red in the adjacent column, the proposed amendment to be made.

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FIRST ITEM ON THE AGENDA

1. PROPOSAL TO AMEND ARTICLES 6-BIS, 15 AND 18 OF THE BY-LAWS. RELATED AND SUBSEQUENT RESOLUTIONS.

Dear Shareholders,

the amendment proposals for articles 6-bis, 15 and 18 of the By-Laws, which are being presented for adoption essentially concern:

1. the adjustment of the statutory regulations on the increase in voting rights - dictated by Article 6- bis - to comply with the guidance expressed by CONSOB in Communication No. 0214548 of 18 April
   2019 and the repeal of paragraph 3 of Article 44 of the "Single Provision on Post-Tradingby CONSOB and the Bank of Italy of 13 August 2018" (containing the "Regulations governing central counterparties, central depositories and centralised management activities"), introduced with the provision of 10 October 2022 (the "Single Post-TradingMeasure"), with the subsequent elimination of the provision of a second communication by the intermediary, at the holder's request, as a condition for the assignment of the increased vote;
2. the adjustment of the statutory regulations of the composition of the Board of Directors dictated by Article 15, paragraph 1, b) of the By-Laws, with regard to the number of directors who fulfil the independence criteria required by the legal and regulatory provisions currently in force on the matter, in order to replace the indication of the minimum number of independent directors currently foreseen (with reference to the dictates of law in force) with future reference being made, for its identification, to the legislation in force at any given time, also explicitly including the referral to the regulatory provisions applicable to the Company following the recent admission of its shares to the STAR segment; as well as
3. the amendment of the clause dictated by Article 18, paragraph 3 of the By-Laws, which allows for the possibility that the meetings of the Board of Directors may also be held in several connected audio or video locations, envisaging, in the light of the guidelines of the Notary Council of Milan on the conduct of corporate meetings: (a ) that the validity of the board meetings convened at a physical location with the possibility of joining the meeting via audio or video conference, requires the presence, at the physical place of convocation, of the secretary taking the minutes and not necessarily that of the Chairman, as required by the statutory clause currently in force; (b) the possibility that board meetings be held exclusively by audio or video conference, thus omitting the indication of the physical location of the meeting in the notice of call.

1.1.1.Justification and explanation of the proposed amendments to the By-Laws to Article 6-bis of the By-Laws, relating to the elimination of reference to the second communication by the intermediary, at the holder's request, as a condition for assigning the increased vote

Under a resolution of 30 October 2018, the Extraordinary Shareholders' Meeting of the Company approved the proposal to introduce increased voting rights, in compliance with the provisions of Article 127-quinquies of the Consolidated Law on Finance and the Single Post-Trading Provision, with the subsequent addition of Article 6-bis of the By-Laws, making the achievement of the increased vote subject to the following conditions: (i) that voting rights are retained by the same subject as a result of a legitimate real right( such as, by way of example, ownership, bare ownership with voting rights, usufruct with voting rights) for a continuous period of at least twenty-four months (the "Period") from the date of registration in the list specifically established by the Company (the "List");

1. the fulfilment of the condition under (i) is certified in a specific communication issued, pursuant to the regulations in force, by the intermediary at the shareholder's request.

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The provision referred to in the aforementioned letter (ii) was the result of the first guidelines on the subject, also shared by CONSOB which, in the document resulting from the consultation of 23 December 2014 regarding the amendments to the Issuer Regulations (concerning, inter alia, other, the implementation provisions to be fulfilled for increased voting rights, pursuant to Article 127- quinquies, paragraph 2, of the TUF) had specified that: (i) "Article 127-quinquiesof the TUF does not expressly clarify weather, once the term of continuous ownership of not less than 24 months from the date of registration in the list has elapsed, increased voting rights are configured as an automatic effect (without prejudice to the possibility of waiver, where foreseen), or still requires a concerted action by the shareholder concerned", (ii)"with no legal indication provided, it is believed that companies can independently regulate the mechanism for increasing voting rights in one way rather than the other", and (iii) "it is in any case considered more protective for the shareholders concerned to make the assignment of the increased voting right subject to a statement of intent by the shareholder to the issuer, with certification of any additional terms and conditions required by the By- Laws, together with confirmation of the information found in the communications".

CONSOB's approach subsequently underwent some changes: in its Communication No. 0214548 of 18 April 2019, in response to a question relating to the application of the mandatory takeover bid regulations for consolidation when the threshold is exceeded as a result of the increased vote, the Supervisory Authority ruled out that statutory provisions that bind the assignment of the increased voting rights not only to a minimum holding period but also on an express request to that effect by the shareholder to the share custodian, may have the effect of conditioning (and possibly delaying) the constitutive effectiveness of the benefit as a result of a choice made by the shareholder (whether to make or not to make the request), even if all the terms and conditions envisaged by Article 127- quinquies of the Consolidated Law on Finance (registration of shares in the special list and continuous minimum holding) have already been met.

More specifically, CONSOB considered that "once the case in point has been envisaged in the By-Laws, no discretion is allowed regarding the allocation of statutory autonomy in the definition of the legal requirements, including the assignment of increased voting rights, since said requirements have already been defined by the legislator and limited to the circumstances that the shares of the company: a) have been registered in a specific list and b) have belonged to the same party for a continuous period (not less than twenty-four months) from the date of registration in the list". CONSOB also specified that "in order to allow the legal mechanisms of the increase to be deactivated, statutory autonomy is only left with the possibility of providing that the shareholder may - ex post - waive the (automatic) assignment of the increased voting rights. However, this statutory margin of autonomy is also limited, as any waiver is, by express provision of the law, irrevocable once made. Therefore, the restriction of the irrevocability of any right of waiver introduced by the By-Laws represents a further indication that the position held by the beneficiary of increased voting rights pursuant to Article 127-quinquies of the Consolidated Law on Finance" is unviable.

In line with a clarification by CONSOB on the aforementioned Communication, among the amendments to the Single Post-Trading Measure adopted jointly by CONSOB and the Bank of Italy at the time of adjusting the measure itself to the regulatory provisions of Directive (EU) 2017/828 (so- called "SHRD 2" ), the repeal of paragraph 3 of Article 44 of the Single Post-Trading Provision on "Increased voting rights", which required the issuer to send the so-called "second communication" of the intermediary, at the shareholder's behest, once the minimum holding period on a continuous basis had expired as required by the By-Laws. The repeal of this provision was ordered by the joint provision of CONSOB and the Bank of Italy of 10 October 2022 and entered into force on 19 January 2023.

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Given the above, the proposed amendment is aimed at aligning the current provisions of the By-Laws regarding increased voting rights with the guidance provided by the Supervisory Authority and the repeal of paragraph 3 of Article 44 of the Single Post Trading Provision, thus establishing the automatic assignment of the increased vote only pending compliance with the legal requirements (the circumstances that the Company's shares have been registered in a specific list and have belonged to the same party for the Period, from the date of registration in the List).

1.1.2.Justification and explanation of the proposed amendments to the By-Laws to Article 15, paragraph 1, b) of the By-Laws, relating to the replacement of the minimum number of directors who meet the independence requirements with said number being subsequently identified by referring to the legislation and regulations in force at the time, also with regard to any share listing segment

In defining the composition of the Company's Board of Directors, Article 15 of the LU-VEBy-Laws currently in force states, in paragraph 1 b), that the Board of Directors must "include at least 1 (one) member of the Board of Directors, or 2 (two) members if it is made up of more than 7 (seven) members, that meet the requirements to be classified as independent director pursuant to applicable legislation and regulations in force at the time".

As is known, following Borsa Italiana's provision No. 8883 of 14 September 2022, the LU-VE shares have achieved STAR qualification and as of 21 September 2022 are traded on the Euronext STAR Milan segment of the Euronext Milan market, a segment dedicated to companies with excellence requirements in terms of transparency, communication, liquidity and corporate governance.

For the purposes of assessing the adequacy of the number of independent directors required to obtain and maintain STAR status, the "Provisions relating to STAR issuers" dictated by the Instructions to the Regulations of the Markets organised and managed by Borsa Italiana S.p.A. state, under Article 2.10.6, that the number of independent directors is considered adequate when there are: (i) at least 2 independent directors for administrative bodies with up to 8 members; (ii) at least 3 independent directors for administrative bodies consisting of between 9 and 14 members; (iii) at least 4 independent directors for administrative bodies composed of more than 14 members and that the independent directors cannot also be appointed as Chairman.

Given the above, the proposed amendment is intended to replace in the aforementioned statutory clause the indication of the minimum number of independent directors currently provided (which refers exclusively to the provisions of the law) with said number subsequently being identified with reference to the provisions of the legislation, even of a regulatory nature, in force at the time, also with regard to any share listing segment.

1.1.3. Justification and explanation of the proposed amendments to the By-Laws to Article 18, paragraph 3 of the By-Laws, relating to the elimination of the required co-presence of the Chairman and the Secretary, as a condition for the validity of the Board meetings carried out with the use of audio-video conferencing means and addition of the option that the Board meetings may be held exclusively in audio-video conferencing mode

Following the emergency procedures for the conduct of company meetings temporarily introduced by Article 106 of the so-called "Cura Italia Decree"1 to deal with the Covid-19 pandemic, the Milan Notary Council again addressed the age-old issue of the necessary presence, in the same venue, of the chairman and the person taking the minutes in the event of meetings held in audio-video

1 Decree Law 18/2020 converted into Law No. 27, as subsequently amended. In view of some extensions, the emergency procedures envisaged by the law for the conduct of company shareholders' meetings will be in force until the shareholders' meetings convened by 31 July 2023.

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