INTERNAL CONTROL SYSTEM

The fundamental principles that have inspired Arpinge’s governance since its foundation are the company’s management autonomy; the transparency and traceability of decision-making processes and the professionalism and collegiality of the decisions taken by management.

These principles have been laid down in specific organizational procedures for verification and control adopted by the company. In this respect, the definition of the Control System has been founded on the principles and rules of supervision applicable to asset management, taking into account the Company’s special features, on a proportional basis.

The current Manual of Procedures oversees the main business risks through a comprehensive set of procedures, which includes, inter alia:

• Investment Procedure – aimed at regulating the phases of the company’s decision-making process concerning proposals for investment or divestment and, at the same time, governing the transactions and monitoring activities. Process autonomy and effectiveness are ensured, among other things, by the creation of multiple layers of management approval, organized hierarchically and by functional competence, as well as by the establishment of the Investment Committee as a technical committee with advisory and support functions.

• Conflict of Interest and Related Party Procedure – it governs how to identify and manage material conflicts of interest (even potential) that may involve the company and all those who work for the company in various capacities. This procedure governs the organizational and procedural arrangements to minimize the risk of such conflicts, or otherwise manage them in an appropriate and traceable manner, in the interest of shareholders and all other stakeholders. In this respect, due to the importance of a potential conflict to the management and ownership structure, as well as to the economic dimension of the decisions to be taken, the decision-making processes applied are enhanced or the matters are escalated to higher layers of management approval. In any case, the decision-making process traceability is ensured. Special attention shall be paid to the conflict of interest of those involved in group governance as they hold confidential information and ability to influence. To this end, the position within the corporate governance of the Group is not in line with the existence or start of business relations with companies belonging to Arpinge.

• Internal Control Organizational System – it introduces and defines the main and general criteria concerning the identification, assessment, measurement, management and reporting of the main risks for business operations identified to date, including those relating to non-compliance with laws and regulations.

ORGANISATION, MANAGEMENT AND CONTROL MODEL PURSUANT TO LEGISLATIVE DECREE NO. 231/2001

Among its control procedures, the Arpinge Group has adopted an Organization, Management and Control Model (“231 Model”) pursuant to Legislative Decree No 231/01 and has set up the Oversight Body.

Legislative Decree No 231/2001 has introduced the principle of liability for private limited companies and other legal entities (the “Entities”) for a certain type of offence (the “predicate offence”) committed, in their interest or for their benefit, by its employees and/or its top management (e.g. directors, statutory auditors, managers, representatives of the Entity, as well as by persons under their direction or supervision), unless, among other conditions, the Entity has adopted and effectively implemented an appropriate organization, management and control model.

The 231 Model is a strong reference point for Arpinge and its direct and indirect subsidiaries, to ensure the operational fairness and transparency that characterizes the company’s shareholding and management. In other words, it has been deemed appropriate, also in this case, to align the company’s governance with market best practices, based on effectiveness, efficiency and proportionality criteria, in order to ensure the fairness and transparency of the decision-making processes.

As an integral part of the 231 Model adopted by Arpinge, a comprehensive Code of Ethics has been developed which identifies the principles, behaviors and implementing mechanisms recognized as adding positive ethical value by the company, which all recipients of the Code – namely directors, statutory auditors, workers of the company’s audit firm, employees, including managers, as well as anyone outside the company that directly or indirectly acts for Arpinge (e.g., representatives, agents, contractors in their various capacities, consultants, suppliers, business partners) – shall comply with. Furthermore, the companies belonging to the Arpinge group require the contractual parties involved from time to time to read the 231 Model of the company concerned and to accept its principles and provisions, as well as to act in accordance with Legislative Decree 231/2001. Any breach constitutes grounds to terminate the contract.

The organizational system of internal controls is part of a broader ethical and integrity system that includes, among others, important procedures such as the Code of Ethics and the Organization, Management and Control model (“231 Model”) and Oversight Body.

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