Alligo : Corporate Governance Report 2022

ALLIGO AB

CORPORATE GOVERNANCE REPORT

2022

ANNUAL REPORT - ADMINISTRATION REPORT

CORPORATE GOVERNANCE REPORT

Alligo's corporate governance aims to ensure that the business creates long-term sustainable value for shareholders and other stakeholders.. High standards of openness, reliability and ethical values are guiding principles for Alligo's business..

Alligo applies the Swedish Corporate Governance Code (the "Code"). The Code is part of the self-regulation system

of Swedish trade and industry, and is based on the "comply or explain" principle. This means that a company that applies the Code may deviate from individual rules, but is required to provide an explanation for each deviation. This corporate governance report for the 2022 financial year was prepared in accordance with the recommendations of the Code. The corporate governance report constitutes a part of the formal annual accounts and has been reviewed by the company's auditors.

The purpose of the company's corporate governance structure is to establish a clear distribution of roles and responsibilities between the owners, Board of Directors, Board committees and executive management. Alligo AB primarily applies the Swedish Companies Act and the rules that apply as a result of the company's shares being listed on Nasdaq Stockholm ("Stockholm Stock Exchange") as well as best practice in the stock market. In the course of its operations, Alligo also complies with the regulations stipulated in the company's Articles of Association. The Articles of Association are available in full on the company's website. In addition to this, there are policies in a number of areas, including the Group's Code of Conduct, which must be familiar

to and complied with by all employees. All parts of the business also work in accordance with Alligo's management systems.

Corporate governance structure at Alligo

The General Meeting of Shareholders is the company's highest decision-making body. The Board of Directors and its Chair, as well as the auditors where applicable, are appointed by the Annual General Meeting. The Nomination Committee drafts proposals for the Annual General Meeting regarding the composition of the Board of Directors. By order of the Annual General Meeting, it is the duty of the appointed auditors to examine the financial statements and the administration of the Board of Directors and the CEO during the financial year. The Board of Directors is ultimately responsible for the company's organisation and administration. It is also the duty of the Board to ensure that all shareholders' interests in Alligo are provided for. The Board of Directors appoints the CEO and the Deputy CEOs. The Audit Committee examines the procedures for risk management, governance, control and financial reporting. The Remuneration Committee prepares proposals concerning remuneration levels for the CEO as well as general incentive programmes for the approval of the Board. It

is also the responsibility of the Remuneration

Committee to decide on remuneration levels for other senior executives. The CEO and other members of the management are responsible for the day-to-day administration of Alligo.

Share structure and holding of treasury shares

The share capital amounted to approximately MSEK 102 as at 31 December 2022. The distribution by class of share was as follows: Class A shares 564,073, Class B shares 50,342,116. The total number of shares before repurchasing was 50,906,189. The number of repurchased Class B shares was 425,300 and the total number of shares after repurchasing was 50,480,889.

All shares carry equal rights to Alligo AB's assets and earnings. The company's Class A shares entitle the holder to ten votes each and Class B shares to one vote each. The Articles of Association contain no limitations concerning how many votes each shareholder may cast at the General Meeting of Shareholders. For repurchased shares held in treasury, all rights are waived until such time as the shares are reis- sued. The Board is authorised, during the period until the next Annual General Meeting, to decide to increase the company's share capital through a new issue of shares up to a maximum of 10 per cent of the number of shares in the company as a means of payment for acquisitions.

CORPORATE GOVERNANCE STRUCTURE

	➊	SHAREHOLDERS
			Nomination
Auditors		THROUGH
		Committee
➐	GENERAL			MEETING
							Remuneration
	➌						Committee
	BOARD		OF		Audit
			Committee
		DIRECTORS
		Goals,	Reports,	Internal monitoring
	strategies, control	and control plus risk
	controls
	instruments
	management
	➏
	GROUP
		MANAGEMENT

➋

➍

➎

Internal control instruments

Important internal binding control documents are:

•  Articles of Association

•  Rules of procedure for the Board of Directors

•  Instructions for the CEO, Audit Committee, Remuneration Committee and financial reporting

• Policies

External control instruments

Important external control instruments that provide the framework for corporate governance are:

•  Swedish Companies Act

• Swedish Annual Accounts Act
• Nasdaq Stockholm's Rulebook

•  Swedish Code of Corporate Governance

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According to Chapter 6, Section 2a of the Swedish Annual Accounts Act, listed companies are required to disclose information concerning certain circumstances that may affect opportunities to take over the company through a public takeover bid for the shares in the company. The company's lenders are entitled to cancel approved committed credit facilities if the company's shares are delisted from Nasdaq Stockholm or in connection with public takeover bids if the bidder secures a shareholding of more than 50 per cent of the number of shares in the company or controls at least 50 per cent of the votes in the company. Otherwise the company has not entered into any significant agreements with suppliers or employees that would be affected, change, expire or stipulate the payment of financial remuneration should control of the company change as a result of a public takeover bid for the shares in the company.

3 November 2025 to 17 November 2025 inclusive. The redemption price has been calculated as SEK 129.30, based on 120 per cent of the volume-­ weighted average price during the period 12 May to 25 May 2022. If the share price at the time the call option is exercised exceeds SEK 194.00, the redemption price shall be increased krona for krona by the amount in excess of SEK 194.00. The option premium has been calculated as SEK 7.82 by an independent third party according to the accepted Black-Scholes model.

185,000 call options have been allotted

and acquired by employees on market terms. Of these, 80,000 have been acquired by the Group CEO and CFO and 105,000 by other key per- sonnel. The option premium paid totals MSEK 1.4.

In June 2022, a cash redemption of the remaining 8,000 outstanding options in the "Call option programme 2018/2022" took place for a cash sum of SEK 362,647.

Directors. It was recorded that Gunilla Spongh declined re-election. Cecilia Marlow was elected as a new member of the Board. Göran Näsholm was elected Chair of the Board of Directors.

Annual General Meeting on 11 May 2022

The Annual General Meeting of Alligo AB was held on 11 May 2022 in Stockholm. The notice for the Annual General Meeting and the supporting documentation for the Meeting were published in accordance with the company's Articles of Association. A total of approximately 50 shareholders participated in the Meeting, representing a combined total of 81.5 per cent of the votes in the company. The Meeting was attended by all Board members and the company's auditors.

Among other decisions, the Meeting resolved on authorisations for repurchases of own shares and new share issues in conjunction with acqui- sitions, a decision on the issue of call options, a decision on changing the guidelines for determin-

Treasury shares and incentive programmes

As at 31 December, the number of Class B shares held in treasury amounted to 425,300, corresponding to 0.8 per cent of the total number of shares and 0.8 per cent of the total number of votes. There were no changes to the holding of treasury shares during the financial year.

The 2022 Annual General Meeting approved a call option programme ("Call option programme 2022/2025") containing a maximum of 185,000 options, corresponding to approximately 0.36 per cent of the total number of shares and approximately 0.33 per cent of the total number of votes in the company. The programme is designed for key personnel in senior positions and provides the opportunity to acquire call options at market price for Class B shares repurchased by Alligo. After two years, a subsidy will be paid equivalent to the premium paid for each call option (before tax) provided that the option holder's employment at the Group has not been terminated and that the call options have not been divested prior to this point. The subsidy is recognised

as an accrued expense until the time when the employment condition is met. The subsidy is also charged with social security contributions.

Each call option entitles the holder to acquire one (1) repurchased Class B share in the company on three occasions: 1) during the period from

2 June 2025 to 16 June 2025 inclusive, 2) during the period from 18 August 2025 to 1 September 2025 inclusive, and 3) during the period from

• Shareholders

As at 31 December 2022, Nordstjernan AB held

54.6 per cent of the share capital and 49.6 per cent of the total number of votes in the company. No other shareholders had direct or indirect shareholdings in the company representing more than one-tenth of the total number of votes. As at 31 December 2022, Alligo AB had approximately 5,000 shareholders. Further information regard- ing Alligo's shares and ownership structure as at 31 December 2022 is provided in the section on the Alligo share on page 24.

General Meeting

The General Meeting of Shareholders is the company's highest decision-making body where shareholders exercise their voting rights. At the Annual General Meeting, decisions are made concerning the annual report, dividends, the election of the directors and auditors, directors' and auditors' fees, and other matters in accordance with the Swedish Companies Act and the Articles of Association.

Extraordinary General Meeting on 23 March 2022

An Extraordinary General Meeting of Alligo AB was held on 23 March 2022. The Meeting resolved to distribute all of the shares in the wholly owned subsidiary Momentum Group AB to the shareholders of Alligo AB. Göran Näsholm, Stefan Hedelius, Johan Sjö, Johan Eklund and Christina Åqvist were re-elected to the Board of

ing remuneration and other terms of employment for senior executives and also approved the Board of Directors' remuneration report and discharged the Board of Directors and CEO from liability

for their administration of the company during the 2021 financial year. Göran Näsholm, Stefan Hedelius, Johan Sjö, Christina Åqvist and Cecilia Marlow were re-elected to the Board of Directors. It was recorded that Johan Eklund declined re-election. Pontus Boman was elected as a new member of the Board. Göran Näsholm was re-elected Chair of the Board of Directors.

• Nomination Committee

The Annual General Meeting in August 2020 resolved on the instructions for the appointment of a Nomination Committee at Alligo as well as its duties, which apply until further notice.

In accordance with these instructions, the Nomination Committee is tasked ahead of the upcoming Annual General Meeting with submitting proposals for the number of Board members, the election of Board members including the Chair of the Board, the election of auditors, Board fees and auditors' fees, the Chair of the Meeting, proposed principles for the appointment of next year's Nomination Committee and instructions for its work. As part of the process to prepare a proposal for Board members, the Chair of the Board presents the evaluation of the Board's work carried out during the past year. The company's business and future direction are also presented by the CEO, while the Chair of the Audit Committee reports

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on the cooperation with the auditors. This then provides the basis for the work of the Nomination Committee, together with the requirements of the Swedish Code of Corporate Governance and the company-specific requirements at Alligo.

Composition of the Board of Directors

In its nomination work, the Nomination Committee ensures that the proposed Board of Directors has a well-balanced composition in relation to the company's operations, stage of development and circumstances that ensures its ability to manage the company's affairs effectively and with integrity. The Board of Directors must contain the skills and qualities that are considered important for Alligo's continued development. In addition to good knowledge of Alligo's business and industry, the Board of Directors must also possess general expertise in areas such as corporate management, accounting, sustainability, law and finance. The composition of the Board must be characterised by diversity and breadth in terms of experience, qualifications and background, while giving consideration to

an even gender distribution and continuity.

Nomination Committee 2023

A Nomination Committee was appointed ahead of the 2023 Annual General Meeting comprising Peter Hofvenstam (nominated by Nordstjernan) as Chair, Stefan Hedelius (nominated by Tom Hedelius), Joakim Spetz (nominated by Swedbank Robur Funds) and Lilian Fossum Biner (nominated by Handelsbanken Funds).

The Nomination Committee's complete motions regarding the Board of Directors and auditors will be presented in the notice for the 2023 Annual General Meeting and on the Company's website. The Nomination Committee will present

and motivate its motions regarding the Board of Directors and auditors on the company's website in conjunction with the publication of the notice for the Meeting and at the Annual General Meeting itself. No separate remuneration was paid for work on the Nomination Committee during the year.

• Board of Directors

In accordance with Alligo's Articles of Associ- ation, the Board of Directors is to comprise not fewer than five and not more than eight ordinary Board members.

Board members

Alligo AB's Board of Directors comprises six ordinary Board members appointed by the 2022 Annual General Meeting: Göran Näsholm (Chair), Pontus Boman, Johan Sjö, Cecilia Marlow, Stefan Hedelius and Christina Åqvist. A presentation of these Board members, including information on other assignments and work experience, can be found on page 59 and on the company's website. All Board members are independent in relation to the company and its senior executives. Two Board members are dependent in relation to the company's major shareholders. Accordingly, the Board of Directors meets the requirement that at least two of the Board members who are independent in relation to the company should also be independent in relation to major shareholders. There is also one employee representative on the Board, Johanna Främberg.

According to the resolution of the Annual General Meeting, each Board member elected by the Annual General Meeting receives a fee of SEK 300,000. The Chair of the Board receives a fee of SEK 650,000. A separate fee of SEK 150,000 is paid to the Chair of the Audit Committee and SEK 100,000 is paid to the Chair of the Remuneration

Committee. The total Board fee of SEK 2,400,000 is therefore SEK 400,000 lower than the previous year.

Refer to the table below for a summary of the members of the Board elected by the Annual General Meeting, their participation in commit- tees, attendance at Board meetings, dependency and fees.

Chair of the Board

The Chair of the Board is responsible for ensuring that the work of the Board is well organised and conducted efficiently and that the Board performs its duties. In particular, the Chair is responsible for organising and leading the work of the Board in a manner that creates the best possible conditions for the Board to conduct its work. It is the Chair's task to ensure that a new Board member receives the required introductory training and any other training deemed appropriate by the Chair and the Board member, to ensure that the Board continuously updates and deepens its knowledge about the company, to ensure that the Board holds meetings as required and receives sufficient information and supporting data for its work, to propose an agenda for Board meetings in consultation with the CEO, to ensure that the decisions of the Board are carried out and to ensure that the work of the Board is evaluated annually. The Chair is responsible for all contact with the owners regarding ownership matters and for conveying feedback from the owners to the Board.

Duties of the Board

The Board of Directors is ultimately responsible for the company's organisation and administration of the company's affairs in the interests of the company and of all shareholders in accordance with the laws, regulations, agreements and

BOARD COMPOSITION, ATTENDANCE, DEPENDENCY CONDITIONS AND FEES FOR 2022

				No. of meetings attended			Dependent in relation to
Ordinary Board members	Year of		Board of	Audit	Remuneration		Major
election	Position	Directors	Committee	Committee	Alligo	shareholders	Fee, SEK
No. of meetings			17	4	2
Göran Näsholm	2019	Chair of the Board,	17	1	2		No	No	750,000
Chair of Remuneration Committee
Johan Sjö	2019	Board member*	13	1	2		No	Yes	300,000
Pontus Boman	2022	Board member	8	2			No	Yes	300,000
Stefan Hedelius	2016	Board member	16	1	1		No	No	300,000
Cecilia Marlow	2022	Chair of Audit Committee,	12	4			No	No	450,000
Board member
Christina Åqvist	2020	Board member	14	1			No	No	300,000
Johan Eklund	2020	Board member	9	2			No	Yes	0
Gunilla Spongh	2016	Board member	5	1			No	No	0

*Chair of the Board up to the Annual General Meeting on 23 March 2022.

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THE WORK OF THE BOARD OF DIRECTORS IN 2022

DECEMBER

• Budget 2023

• Accounting issues		DEC	JAN
• Business intelligence
• Status Norway		NOV	FEB
• Employee survey
•  Evaluation of CEO
and senior executives
• Board evaluation
OCT	MAR
• Acquisition opportunities
OCTOBER
•  Interim Report Q3	SEP
•  Reporting of management audit	APR
and review for Q3

• Business intelligence
• Budget 2023

• Policy documents	AUG	MAY
• Sustainability
• Acquisition opportunities	JUL	JUN

SEPTEMBER

• Sustainability
• Business intelligence	JULY				JUNE
•  Follow-up on coordination
			• Strategy
of logistics and IT systems	•  Interim Report Q2
	• Situation analysis
• Status Sweden	•  Follow-up on coordination
	•  Follow-up on coordination
• IT structure		of logistics and IT systems
		of logistics IT systems,
• Policy documents	•	Business intelligence
	legal structure
• Acquisition opportunities	•	Acquisition opportunities
	• Audit plan

• Status Finland

• Sustainability

• Acquisition opportunities

JANUARY

•  Distribution of Momentum Group

• Financing

FEBRUARY

•  Year-End Report 2021

•  Proposal for appropriation of profits

•  Reporting of final audit report

• Risk assessment
• Internal control

•  Remuneration of senior executives

• Financing

•  Distribution of Momentum Group

•  Convening of extraordinary meeting

•  Russia's invasion of Ukraine

MARCH

•  Submission of Annual Report

• Remuneration report
  •  Share options scheme
  •  Convening of Annual General Meeting
  •  Distribution of Momentum Group
• Business intelligence

•  Central warehouses Norway

• Acquisition opportunities

APRIL

•  Interim Report Q1

• Acquisition opportunities
• Business intelligence

MAY

•  Statutory Board meeting

•  Board's rules of procedure and CEO instructions

• Business intelligence

•  Coordination of logistics IT systems, legal structure

• Acquisition opportunities

internal guidelines that the company is obligated to follow. This responsibility includes Alligo's sustainability work and the company's impact on the economy, environment and people.

The duties of the Board of Directors include establishing and monitoring the company's overall goals and strategies, ensuring that there are effective systems for the monitoring and control of the business and associated risks, identifying the impact of sustainability issues on the company's risks and business opportunities, adopting guidelines on the company's conduct in society in order to secure its ability to create long-term value, and ensuring that the compa- ny's provision of information is characterised by transparency and is accurate, relevant and reliable. The Board is also responsible for decisions regarding acquisitions and divestments of businesses, major investments, repurchases of own shares, and appointment and remuneration of the Group's corporate management.

Each year, the Board adopts written rules of procedure that regulate the work of the Board and its internal distribution of responsibility, including its committees and the distribution of responsibilities with internal business area boards, the procedure for resolutions within the Board, the

agendas of Board meetings and the duties of the Chair as well as instructions for financial report- ing. The Board has also issued instructions to the CEO, which grant the authority to make decisions regarding investments, corporate acquisitions and sales as well as financing issues. The Board has also adopted a number of policies for the Group's operations, including a financial policy, privacy policy and code of conduct.

The Board of Directors oversees the work of the CEO through ongoing monitoring of the business during the year and is responsible for ensuring that the organisation, management and guidelines for the administration of the company's affairs are appropriate. The Board is also responsible for the company having adequate internal control and effective systems for the monitoring and control of operations and for the company's compliance with legislation and regulations applicable to its operations. The Board and CEO present the annual accounts to the Annual General Meeting.

Evaluation of the Board's work

The work of the Board is evaluated annually under the supervision of the Chair of the Board. The purpose of this evaluation is to enhance the

working methods and efficiency of the Board of Directors by obtaining the opinions of the Board members on how Board work is carried out and which steps can be taken to improve the efficiency of Board work, on sustainable enterprise and on whether the Board is well balanced in terms of skills. The results of the evaluation performed in November have been reported to and discussed by both the Board of Directors and the Nomination Committee and they provide an important basis for the Nomination Committee ahead of the Annual General Meeting.

The Board evaluates the work of the CEO on an ongoing basis. This issue is also specifically addressed once a year without the presence of any member of the Group's corporate manage- ment. The Board also evaluates and comments on any significant assignments, if any, performed by the CEO outside the company. Each Board member is to independently assess the matters to be addressed by the Board and request the information deemed necessary to make well- founded decisions.

Each Board member is to continuously acquire any knowledge about the company's operations, organisation, markets and so forth required for the assignment.

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