Digital Bros S p A : Corporate Governance Report as of June 30th, 2023

Corporate Governance Report

Pursuant to Art. 123-bis of the T.U.F.

(one tier governance model)

(Fiscal year 2022/2023)

Date of approval: September 27th, 2023

Digital Bros S.p.A.

Via Tortona, 37 - 20144 Milan, Italy VAT

Number and Tax Number 09554160151

Share Capital: Euro 6,024,334.80 of which subscribed Euro 5,706,014.80 Milan Companies House no. 290680-Vol. 7394 Chamber of Commerce No. 1302132

The report is available in the Governance/Corporate

Governance Report section at www.digitalbros.com

Please consider that this is an Italian to English translation and that the Italian version shall

always prevail in case of any discrepancy or inconsistency

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Index
GLOSSARY	5
1.	ISSUER PROFILE	6

2. INFORMATION ABOUT THE OWNERSHIP STRUCTURE AT JUNE 30TH, 2023 (pursuant to Art.123-bis, (1),

	T.U.F.)	8
a)	Capital structure (pursuant to Art. 123-bis (1) (a) of the T.U.F.)	8
b)	Restrictions on the transfer of shares (pursuant to Art. 123-bis (1) (b) of the T.U.F.)	9
c)	Significant equity holdings (in terms of Art. 123-bis(1)(c) of the T.U.F.)	9
d)	Shares with special rights (pursuant to Art. 123-bis (1) (d) of the T.U.F.)	9

1. Employee share ownership: mechanism for exercise of voting rights (pursuant to Art. 123-bis (1) (e) of the T.U.F. 9

f)	Restrictions on voting rights (pursuant to Art. 123-bis(1)(f) of the T.U.F.)	9
g)	Shareholder agreements (pursuant to Art. 123-bis (1) (g) of the T.U.F.)	9

1. Change of control clauses (pursuant to Art. 123-bis(1)(h) of the T.U.F.) and provisions contained in the Articles of

Association on takeover bids (pursuant to Arts. 104 (1-ter) and 104-bis (1) of the T.U.F.)

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1. Delegated powers regarding share capital increases and powers to authorize the purchase of treasury shares

(pursuant to Art. 123-bis (1) (m) of the T.U.F.)	10
j) Management and coordination activities (in terms of Art. 2497 of the Civil Code)	11
3.	COMPLIANCE (pursuant to Art.123-bis(2)(a), of the T.U.F.)	11
4.	BOARD OF DIRECTORS	12
4.1	Role of the Board of Directors	12
4.2	Appointment and replacement of Directors (pursuant to Art. 123-bis (1)(l) of T.U.F.)	15
4.3	Composition of the Board of Directors (pursuant to Art. 123-bis (2) (d) (d-bis) of the T.U.F.)	17
4.4	Functioning of the Board of Directors (pursuant to Art.123-bis (2) (d) of the T.U.F.)	22
4.5	Role of the Chairman of the Board of Directors	22
4.6	Executive Directors	24
4.7	Independent Directors and Lead Independent Director	25
5.	DISSEMINATION OF CORPORATE INFORMATION	27
6.	INTERNAL COMMITTEES OF THE BOARD (pursuant to Art. 123-bis (2)(d), of the T.U.F.)	28
7.	NOMINATION COMMITTEE	29
7.1	Directors assessment and succession	29
7.2	Nomination Committee	29
8.	DIRECTORS' REMUNERATION - REMUNERATION COMMITTEE	31
8.1	Directors' remuneration	31
8.2	Remuneration Committee	33
9.	INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM - CONTROL AND RISK COMMITTEE	35
9.1	Chief Executive Officer	38
9.2	Control and Risks Committee	38
9.3	Head of the Internal Audit Department	39
	3

9.3.1 Director in charge of the internal control and risk management system	41
9.4	Organisational Model pursuant to Legislative Decree 231/2001	41
9.5	External auditor	43
9.6	Financial Reporting Manager	43
9.7	Coordination of individuals involved in the internal control and risk management system	44
10.	DIRECTORS' INTERESTS AND RELATED PARTY TRANSACTIONS	44
11.	BOARD OF STATUTORY AUDITORS	46
11.1 Appointment and replacement of Statutory Auditors	46
11.2 Composition and functioning of the Board of Statutory Auditors (pursuant to Art.123-bis, (2) (d) (d-bis) of the
T.U.F.)	48
12.	SHAREHOLDERS RELATIONS	50
13.	SHAREHOLDERS' GENERAL MEETINGS (pursuant to Art.123-bis(2) (a) second part of the T.U.F.)	52

14. ADDITIONAL CORPORATE GOVERNANCE PRACTICES (pursuant to Art.123-bis (2) (a), second part of the

T.U.F.)	53
15. SUBSEQUENT CHANGES	53

16. COMMENTS ON THE LETTER FROM THE CHAIRMAN OF THE CORPORATE GOVERNANCE

COMMITTEE	54
17. SUMMARY TABLES	56
TABLE 2: BOARD OF DIRECTORS AS OF JUNE 30TH, 2023	57
TABLE 3: BOARD OF DIRECTORS' COMMITTEES AS OF JUNE 30TH, 2023	59
TABLE 4: BOARD OF STATUTORY AUDITORS AS OF JUNE 30TH, 2023	61

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GLOSSARY

Articles of Association: the Articles of Association of Digital Bros S.p.A..

Board: the Board of Directors of Digital Bros S.p.A..

Civil Code: the Italian Civil Code.

Corporate Governance Code/Code: the Corporate Governance Code approved in January 2020 by the Corporate

Governance Committee.

Corporate Governance Committee/Committee: the italian Committee for Corporate Governance for listed companies promoted by Borsa Italiana S.p.A., the Italian Banking Association, ANIA, Assogestioni, Assonime and Confindustria.

Fiscal Year/Reporting Period: the year ended June 30th, 2023 to which the Report relates.

Group or Digital Bros Group: collectively, the Parent company and its subsidiaries pursuant to Art. 93 of the T.U.F..

Issuers' Regulation: the Regulations issued by Consob by means of resolution 11971 of 1999 for issuers and its

amendments.

Market Regulation: the Regulations issued by Consob with the resolution 20249 of 2017 on the subject of markets and

its amendments.

Parent Company/Company/ Issuer: Digital Bros S.p.A..

Related party Regulation: the Regulations issued by Consob with the resolution no 17221 of March 12th, 2010 (as subsequently amended) on related party transactions.

Remuneration Report: the Report on Remuneration and fees paid required by Art. 123-ter of the T.U.F. and approved by the Board of Directors together with the Corporate Governance Report.

Report/Corporate Governance Report: the corporate governance report prepared pursuant to Art. 123-bis and 89-bis of the T.U.F..

T.U.F.: Legislative decree no. 58 of February 24th, 1998 (Testo Unico della Finanza) and its amendments.

Unless otherwise specified, the Code definitions are used with the meaning therein specified: Directors, Executive Directors, Independent Directors, Significant shareholder, Chief Executive Officer (CEO), Management Body, Control Body, Business Plan, Companies with concentrated ownership, Large company, Sustainable success and Top management.

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1. ISSUER PROFILE

The Company develops, produces, markets and distributes, directly and/or through its subsidiaries, entertainment products and services, including video games for personal computers and consoles, accessories and multimedia products in general, both in Italy and worldwide.

The mission has been pursued with the incorporation and/or the acquisition of companies to commercialize the Group's products on major international markets and to develop new video games.

The Issuer is a company incorporated under the Italian law and is listed on the Euronext STAR segment of Borsa Italiana. The Company adopted the Corporate Governance Code.

The Company has a one tier governance model and its governance bodies are:

• Shareholders' General Meetings;
• Board of Directors;
• Board of Statutory Auditors and internal control and audit committee;
• External auditors.

Shareholders' General Meetings express the decisions of the entirety of the shareholders through the resolutions adopted. Resolutions passed in accordance with the Law or the Articles of Association are binding for all shareholders,

including the absent or dissenting ones, without prejudice to the right of withdrawal for dissenting shareholders, where permitted. Shareholders' general meetings are convened in accordance with the Laws and regulations applicable to

companies with shares listed on regulated markets to take decisions about the items reserved for them by the Law.

The Board of Directors is vested with all powers of ordinary and extraordinary administration and has a permanent role in the Company governance process. It is based on the transparency and correctness of management decisions both for the Company and in respect to the stakeholders. The Board pursues the Group sustainable success through:

• solid economic, financial and social growth;
• the continuous improvement of the quality of the products and services offered to consumers, increasing their satisfaction through effective and fair competition, in full compliance with the Laws and regulations in force in the countries where the Group does business;
• the well-being and professional growth of employees and consultants, maintaining a healthy, motivating and compassionate work environment free of any form of discrimination;
• the promotion of the long-term personal growth of individuals;
• contribution to the financial and technological development of the videogame sector with a view to sustainable success.

The Section 4.1 - Role of the Board of Directors, 6 - Board of Directors' Committees, 8 - Directors' Remuneration, 9

• Internal Control and Risk Management System of the Report, together with the ESG Policy and the Code of Conduct, available on the Company's websitewww.digitalbros.com(Sustainability section), contain further details about the integration of sustainability objectives into the Issuer's strategies.

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The Board of Statutory Auditors and the internal control and audit committee supervises about the compliance of

management decisions with the Law and the Articles of Association and perform a management control function, especially with regard to principles of prudency and permanently assessing the Group's organisational structure. Since

April 7th, 2010, pursuant to the Legislative Decree 39/2010 following the adoption of Directive 200/43/EC, the Board of Statutory Auditors performs the activities provided for by Art. 19 of the legislative decree. This includes the supervision of:

• the financial reporting process;
• the effectiveness of internal control and risk management systems;
• the audit of the Company and consolidated financial statements;
• the independence of the external auditors.

In accordance with the Law, the external auditors are appointed by the Shareholders' General Meeting from the register of the audit companies published by Consob. The external auditors verify that the accounting records have been properly kept, that operating events have been correctly recorded and that the Company and consolidated financial statements match with the accounting records.

The Control and Risk Committee, a Remuneration Committee and a Nomination Committee, as provided by the Code, have also been formed, together with the Supervisory Board ex the Legislative Decree 231/2001.

The Legislative Decree no. 254/2016, pursuant to article 2, does not provide the Company to prepare the non-financial statement. The Issuer is classified as a small and medium company in terms of Art. 2-ter of Consob Regulation 11971 and Art 1(1)(w-iv 1) of the T.U.F., as per list published by Consob on its website at www.consob.it/web/area-pubblica/emittenti-quotati-pmi.

The Issuer neither falls within the scope of the Code definitions of "Large company" i.e., with a capitalization greater than Euro 1 billion, nor within the definition of "Company with concentrated ownership".

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2. INFORMATION ABOUT THE OWNERSHIP STRUCTURE AT JUNE 30TH, 2023 (pursuant to Art.123-bis, (1), T.U.F.)

This section provides information regarding the Company's ownership structure, in accordance with Art. 123-bisof the

T.U.F., when applicable. The information is up to date as of June 30th, 2023.

a) Capital structure (pursuant to Art. 123-bis (1) (a) of the T.U.F.)

Share capital subscribed and paid at June 30th, 2023 amounted to Euro 5,706,014.80.

Subscribed share capital consists of 14,265,037 ordinary shares with a par value of Euro 0.4 each.

SHARE CAPITAL STRUCTURE

	No. shares	No. voting rights	Listed/not listed	Rights and
	obligations
				The shares are
				nominal, fully
				transferable and
				indivisible. Each
			Euronext STAR	share grants the
	14,265,037	14,265,037	right to one vote at
Ordinary shares	Milan
		the Company's
				Ordinary and
				Extraordinary
				Shareholders'
				Meetings

No shares with multiple voting rights, limited voting rights or without voting rights have been issued.

At the reporting date, Digital Bros S.p.A. had not issued any other classes of shares or financial instruments that enable the right to subscribe for newly issued shares.

On January 11th, 2017, the Shareholders' General Meeting approved the "2016-2026Stock Option Plan" for a restricted number of directors and managers of the Company and of the Group, identified by the Board of Directors. The Plan will expire on June 30th, 2026 and provides for the allocation of a maximum number of 800,000 options as follows:

1. 240,000 options on July 1st, 2019;
2. 240,000 options on July 1st, 2022;
3. 320,000 options on July 1st, 2025.

The exercise price of each option shall be equal to the average listed price of Digital Bros shares recorded on the market in the six months prior to the assignment date.

The options have been allocated as follows: 744,000 on January 29th, 2017 at Euro 10.61 per share and 56,000 on May 12th, 2017 at Euro 12.95 per share.

At the reporting date, only one beneficiary of the Plan requested the exercise of the first tranches of options, for a total of 4,200 options exercised at Euro 10.61 each.

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Further information about the "2016-2026Stock Option Plan" and the related capital increase is provided in the Notes to the Company's financial statements at June 30th, 2023 and in the information document which is available in the Governance/Remuneration section of the website at www.digitalbros.com, as well as in the Remuneration Report.

b) Restrictions on the transfer of shares (pursuant to Art. 123-bis (1) (b) of the T.U.F.)

There are no restrictions of any kind on the transfer of the shares.

1. Significant equity holdings (in terms of Art. 123-bis(1)(c) of the T.U.F.)

The Company may be classified as a SME, in terms of Art. 2-ter of Consob Regulation 11971 and Art. 1 (1) (w-iv) (1) of the T.U.F.. Accordingly, the threshold for the disclosure of significant holdings pursuant to Art. 120 of the T.U.F. is 5% of share capital with voting rights. According to the shareholder's register and considering the notices received pursuant to Art. 120 of the T.U.F., the following parties held, directly or indirectly, shares in the Company with voting rights representing more than or equal to 5% of the share capital as of the date of this report:

SUBSTANTIAL HOLDINGS

Declarant	Direct shareholder	% of share capital	% voting rights
Abramo Galante	YES	34.62%	34.62%
Raffaele Galante	YES	32.80%	32.80%

d) Shares with special rights (pursuant to Art. 123-bis (1) (d) of the T.U.F.)

The Company has not issued any shares holding special control rights. The Articles of Association does not provide the possibility of issuing shares with increased or multiple voting rights.

1. Employee share ownership: mechanism for exercise of voting rights (pursuant to Art. 123-bis (1) (e) of the T.U.F.

There are no specific mechanisms for the exercise of voting rights by employees.

1. Restrictions on voting rights (pursuant to Art. 123-bis(1)(f) of the T.U.F.)

There are no restrictions of any kind on voting rights.

g) Shareholder agreements (pursuant to Art. 123-bis (1) (g) of the T.U.F.)

The Company is not aware of any shareholder agreements pursuant to Art. 122 of the T.U.F..

1. Change of control clauses (pursuant to Art. 123-bis(1)(h) of the T.U.F.) and provisions contained in the Articles of Association on takeover bids (pursuant to Arts. 104 (1-ter) and 104-bis (1) of the T.U.F.)

Neither the Company nor its subsidiaries have entered into agreements that might come into force, be terminated and/or be amended as a result of a change of control of the Company.

The Articles of Association does not waive from the passivity rule provided for in Art. 104 (1) and (2) of the T.U.F. and, since there are no limitations on the transfer of shares or limitations on voting rights, the Articles of Association does not provide for the application of the neutralisation rules provided for in Art. 104-bis (2) and (3) of the T.U.F..

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1. Delegated powers regarding share capital increases and powers to authorize the purchase of treasury shares (pursuant to Art. 123-bis (1) (m) of the T.U.F.)

No powers to authorise share capital increases have been granted to the Board of Directors.

Pursuant to Art. 6 of the Articles of Association, share capital may be increased or reduced by resolution of an extraordinary shareholders' meeting in accordance with the Law. In the event of capital increases, contributions may be made in cash or in kind, in accordance with Art. 2342 of the Civil Code. In the event of a share capital increase or the issue of a convertible bonds, the shareholders have the pre-emption right in accordance with the Law and the Articles of Association.

The Extraordinary Shareholders' Meeting may grant the directors the power to increase share capital, on one or more steps, for a maximum of five years from the date of the resolution, up to the amount determined in the resolution. Such power may also extend to the adoption of the resolutions provided for in Articles. 2441 (4) and (5) of the Civil Code and in accordance with Art. 2441 (6). Without prejudice to all other provisions governing share capital increases, share capital may be increased without the right of pre-emption,in accordance with Art. 2441 (4) of the Civil Code, by the

shareholders' meeting or the Board of Directors, provided that such power has been delegated to the latter, within the

limits of 5% of the pre-existing share capital, including cash contribution, on the condition that the price of issue corresponds to the market value of the shares, as confirmed by a specific report by the external auditors.

Pursuant to Art. 2349 (1) of the Civil Code, the Extraordinary Shareholders' Meeting may authorise the allocation of earnings and/or earnings reserves to employees of the Company and its subsidiaries by issuing special classes of shares, for a maximum amount corresponding to the retained earnings reserves.

The Shareholders' Meeting of October 26th, 2022 authorized the purchase and disposal of Company treasury shares pursuant to art 2357 of the civil code. The authorization grants the Company the power to purchase treasury shares for a period of maximum eighteen months and dispose of ordinary treasury shares, without any temporal limits, in accordance with the procedures contained in the EU Regulations and the Italian Law in force and for the purposes provided by the Law, which include:

1. market liquidity and efficiency;
2. retention for future purposes including consideration in extraordinary transactions through the exchange of shares, contributions or other act of disposition with other subjects, share at the se4rvice of convertible bonds also including the convertible bonds with warrants;
3. use in compensation plans based on financial instruments in favour of the Group directors, employees or contractors pursuant to Art. 114-bis of the T.U.F., as well as the shares allocation to Shareholders.

The purchases will take place at a unitary consideration not lower than the official price recorded on the stock market in the trading session of the day before each single operation, decreased by 20%, and not higher than the official price recorded on the stock market in the trading session of the day before each single operation, increased by 10%, in compliance with the terms and conditions established by the Delegated Regulation (EU) 2016/1052 and market practices in force from time to time.

As at June 30th, 2023, the Company did not hold any treasury shares.

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