Medacta : 2023 Corporate Governance

CORPORATE GOVERNANCE REPORT

Medacta's Annual Report 2023

INDEX

1.	GROUP STRUCTURE AND SHAREHOLDERS	60
2.	CAPITAL STRUCTURE	62
3.	BOARD OF DIRECTORS	64
4.	GROUP EXECUTIVE MANAGEMENT	82
5.	COMPENSATION, SHAREHOLDINGS AND LOANS	84
6.	SHAREHOLDERS' PARTICIPATION RIGHTS	85
7.	CHANGE OF CONTROL AND DEFENCE MEASURES	86
8.	AUDITORS	87
9.	INFORMATION POLICY	88
10.	INDEPENDENT PROXY	88
11.	QUIET PERIODS	88

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PRECISE

EXECUTION

PATIENT ENGAGEMENT

EFFICIENT CASE MANAGEMENT

Improve accuracy and precision during surgery with the 3D printed patient-specific guides based on more than 10 years of clinical evidence, and with the unique NextAR Augmented Reality Surgical Platform. NextAR empowers the surgeon's vision with unique real-time surgical guidance superimposed onto the operative field to enhance precision and enable data-driven decision- making. NextAR allows the user to stay focused on what matters most: the patient. MyHip Verifier allows for intraoperative non- invasive assessment of patient- matched implant positioning.

Medacta is committed to build value and trust with all the stakeholders. Good corporate governance is an essential element of Medacta's values.

Medacta's corporate governance principles are set out in the Articles of Association1, the Organizational Regulations2, the Corporate Compliance System including Medacta's Code of Business Conduct and Ethics3 and the MedTech Europe Industry Code of Conduct4, the Charters of the Board Committees and internal policies on quality, IT, privacy as well as employee regulations. Further, we take into account the recommendations of the Swiss Code of Best Practice for Corporate Governance. The Group's corporate governance disclosures described in this report are in compliance with the Directive on Information relating to Corporate Governance5 published by SIX Exchange Regulation.

On April 27, 2023 the Annual General Meeting (hereinafter AGM) approved the proposal made by the Board of Directors, with regards to the amendment of Medacta Group's Articles of Association to reflect the new provisions of the Swiss Corporate Law and to further strengthen shareholder rights. The relevant amendments are reflected in this Corporate Governance Report.

1. GROUP STRUCTURE AND SHAREHOLDERS

1.1 GROUP STRUCTURE

ORGANIZATIONAL GROUP STRUCTURE

Medacta Group SA ("Company"), Strada Regina 34, 6874 Castel San Pietro, Switzerland, the ultimate parent company of the Group, is a stock corporation under the laws of Switzerland and is listed on the SIX Swiss Exchange (valor number: 46'852'522, ISIN: CH0468525222, SIX ticker symbol: MOVE, LEI: 506700P2PFU3A3DROC14). The market capitalization of the Company as per December 31, 2023 was CHF 2.5 billion.

Our headquarters and production facilities are located in Castel San Pietro and Rancate, Switzerland, where we have approximately 951 employees in the aggregate. The Group Executive Management is based at our headquarters in Castel San Pietro and Rancate, Switzerland and they are responsible for executing the decisions of the Board of Directors and implementing the strategy of the Group.

Medacta constitutes with only one segment which reflects the internal organizational and management structure used within the Group. The Chief Operating Decision Maker (CODM) for the segment is our Chief Executive Officer, Francesco Siccardi. Our CEO is supported by other members of our Group Executive Management, specifically the CFO and the Chief Supply Chain Officer.

The Extended Group Management, which comprises our Head of Research and Development, Global Marketing Director, Technical Director, Vice-President Joint and General Manager, Vice-President Spine and Vice-President Extremities and Sportsmed are also based at our headquarters and under the supervision of the CEO, save for the Technical Director who reports directly to the Chief Supply Chain Officer. The Vice-President Joint and General Manager is responsible for the regional Directors who oversee and manage our international branches in 12 countries. Our international branches are responsible for overseeing our salesforce, which consists of direct sales representatives and marketing employees, independent agents, and distributors in 44 countries. For an overview of our worldwide locations, see Note 6.2 "Consolidation principles, composition of the Group and significant accounting policies" of the Financial Report.

GROUP COMPANIES

No other company controlled by Medacta Group SA is listed on a stock exchange.

On December 31, 2023, Medacta Group SA directly or indirectly held 100% of the capital and voting rights in all unlisted consolidated Group companies disclosed in the Financial Report section of this Annual Report under Note 6.2 "Consolidation principles, composition of the Group and significant accounting policies" to the Financial Report.

1. Medacta's Articles of Association are available on Medacta's website at: https://aws-media.medacta.com/media/medacta-group-sa-aoa-statuti-new-2023-final-2023-04-27.pdf
2. Medacta's Organizational Regulations (including the charters of the Board Committees) are available on Medacta's website at: https://media.medacta.com/media/medacta-organizational-regulations-19-july-2021.pdf
3. Medacta's Group Code of Business Conduct and Ethics has been approved by the Board of Directors on 15th December 2021 and it is available at: https://www.medacta.com/EN/code-of-business-conduct
4. MedTech Europe Industry Code of Conduct is available at: https://www.medtecheurope.org/wp-content/uploads/2017/06/medtech-europe-code-of-ethical-business-practice-2022.pdf
5. Directive on Information relating to Corporate Governance of SIX Exchange Regulation is available at: https://www.ser-ag.com/en/topics/corporate-reporting.html

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SIGNIFICANT SHAREHOLDERS

To the best of our knowledge, the table below shows shareholders and shareholder groups owning or representing more than 3% of the voting rights of Medacta as of December 31, 2023. The number of shares shown below and the holding percentages are based on the last disclosure of shareholding communicated by the shareholder to the Company and the Disclosure Office of SIX Swiss Exchange. The number of shares held by the relevant shareholder may have changed since the date of such shareholder's notification.

The individual reports that were published during the year ending December 31, 2023 as well as any reportable changes since the date thereof can also be found on the website of the Disclosure Office of the SIX Swiss Exchange, which also includes the individual reports of the significant shareholders: SIX Exchange Regulation.

Beneficial owner / persons that
can exercise			Direct
the voting rights at their own	Domicile/		Number of	Percentage of shares
discretion 1	Registered Office	Country	Shareholders 2	shares	and voting rights
• Alberto Siccardi 3	Sonvico - Lugano	Switzerland	-
• Maria Luisa Siccardi Tonolli 3	Villa Luganese	Switzerland	-	13'889'928	69.45%
• Francesco Siccardi 3	Morcote	Switzerland	-
• Alessandro Siccardi 3	Collina D'Oro	Switzerland	-
• Artisan Partners Limited	Milwaukee, WI	USA	-	645'316	3.23%
Partnership 4

1. Regarding collective investment schemes, the beneficial owner corresponds to the licensee.
2. Regarding collective investment schemes, the direct shareholder corresponds to the collective investment scheme.
3. The Family shareholders (as defined in the "Shareholders' agreement" section here below) comprise a group acting in concert within the meaning of art. 120 et seq. FMIA and its implementing ordinances. See SIX shareholder notification after December 31, 2020, dated January 6, 2021, processed by SIX on January 8, 2021 in relation to the Shareholders' agreement. See also "Shareholders' agreement" (below). As a single person, Alberto Siccardi owns 10.2% of shares and voting rights, Francesco Siccardi owns 19.8% of shares and voting rights, Maria Luisa Siccardi Tonolli and Alessandro Siccardi own 19.7% of shares and voting rights each. Also, section 6 "Ownership of shares and options" of the Remuneration Report, reports the exact number of shares owned by members of the Board of Directors or GEM.
4. The persons that can exercise the voting rights at their own discretion is Artisan Partners Limited Partnership as derived from the latest shareholder notification dated July 24, 2023, processed by SIX on August 01, 2023.

SHAREHOLDERS' AGREEMENT

Alberto Siccardi, Maria Luisa Siccardi Tonolli, Francesco Siccardi and Alessandro Siccardi (collectively, the "Family shareholders") have entered into a shareholders' agreement regarding, inter alia, (i) the uniform exercise of voting rights in the shareholders' meeting of the Company, (ii) the right of representation on the Board of Directors of the Company,

1. principles regarding dividends distributed by the Company, (iv) transfer restrictions applicable to Family shares (as defined in the Shareholders' Agreement) and (v) purchase options regarding the Family shares.
   1.2 CROSS-SHAREHOLDINGS

The Group does not have, and has not entered into, any cross-shareholdings with other companies relating to equity or voting rights.

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2. CAPITAL STRUCTURE

2.1 CAPITAL

The share capital of the Company as of December 31, 2023, as registered with the Commercial Register of the Canton Ticino, amounted to CHF 2'000'000 and is divided into 20'000'000 registered shares with a nominal value of CHF 0.10 each. The share capital is fully paid-up.

2.2 CONDITIONAL CAPITAL

Medacta Group SA has no category of shares other than registered shares.

Article 3A of the Articles of Association includes conditional share capital for equity-linked rights (employee benefit plans) and provides for the increase in the nominal share capital of the Company in the amount of CHF 50'000 through the issuance of up to 500'000 fully paid-up registered shares with a nominal value of CHF 0.10 each, which in total equates to 2.5 % of the existing share capital.

The conditional share capital can be issued with no limitation of time.

The terms and conditions for the allocation and exercise of the equity-linked rights to eligible officers and employees of the Group are to be determined by the Board of Directors. Pre-emptive rights and advance subscription rights of shareholders are excluded or restricted, respectively, if and to the extent the option rights are not allocated to existing shareholders. The shares may be issued at a price below the market price. The acquisition of registered shares based on article 3A and every subsequent transfer of these registered shares is subject to the transfer restrictions pursuant to article 5 of the Articles of Association.

The 2023 Annual General Meeting amended articles 3a and 5 regarding conditional share capital and share register of the Articles of Association. Following the new Swiss stock corporation law, the Articles of Association now provide for electronic means for the exercise conversion or option rights and for waiving these rights. We also amended article 5 to introduce the basis for restricting transferability of shares now provided for in the law under art. 685d para. 2 CO.

2.3 CHANGES IN CAPITAL

There have been no changes in the share capital in the past three years. On December 31, 2021, 2022 and 2023 the share capital was composed of 20'000'000 registered shares with a nominal value of CHF 0.10 each.

2.4 SHARES AND PARTICIPATION CERTIFICATES

Medacta Group SA has no other categories of shares other than one category of registered shares entitled to one vote each. The share capital of the Company as of December 31, 2023 amounted to CHF 2'000'000 and is divided into 20'000'000 registered shares with a nominal value of CHF 0.10 each. The share capital is fully paid-up. The shares rank pari passu in all respects with each other, including, in respect of entitlements to dividends (if any), to a share in the liquidation proceeds in the case of a liquidation of the Company and to pre-emptive rights.

The Company issues its shares only as uncertificated securities, within the meaning of article 973c of the Swiss Code of Obligations and enters them into the main register of SIS and, consequently, constitutes them as intermediated securities within the meaning of the Swiss Federal Intermediated Securities Act (FISA). In accordance with article 973c CO, the Company maintains a register of uncertificated securities.

2.5 DIVIDEND-RIGHT CERTIFICATES

In 2023, Medacta Group SA did not issue any dividend-right certificates.

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2.6 LIMITATIONS ON TRANSFERABILITY AND NOMINEE REGISTRATIONS

The Company keeps a Share Register of the registered shares in which the owners/usufructuaries are entered with their name (for legal entities the company name), domicile, address and citizenship (for legal entities the legal domicile). Any person registered in the Share Register changing their address must inform the Company accordingly.

According to article 5 para. 3 of the Articles of Association, persons not expressly providing the confirmations listed in article 5 para. 2 (i.e. acquisition of the shares in their own name and for their own account; no agreement to take back or return the shares concerned; bearing of the economic risk associated with the shares; to comply with the disclosure requirements stipulated by the Federal Act on Financial Market Infrastructure (FMIA) of 19 June 2015) in their application for entry in the Share Register or upon request by the Company ("Nominees") are entered in the Share Register with voting rights without further inquiry up to a maximum of 3.0% of the share capital outstanding at that time. Above this limit, registered shares held by Nominees shall be entered in the Share Register with voting rights only if in its application for registration, or thereafter upon request by the Company, the Nominee discloses the names, addresses and shareholdings of the persons for whose account the Nominee is holding 0.5% or more of the share capital outstanding at that time and provided that the disclosure requirements stipulated by the Federal Act on Financial Market Infrastructure (FMIA) of June 19, 2015 are complied with. The Board of Directors has the right to conclude agreements with Nominees concerning their disclosure requirements.

According to article 5 para. 4 and para. 5 of the Articles of Association, and subject to article 652b para. 3 of the Swiss Code of Obligations, the described limit for registration also applies to the acquisition of registered shares, which are subscribed for or acquired by way of exercising any subscription, acquisition, option or convertible rights arising from shares or any other securities issued by the Company or third parties. For purposes of the aforementioned registration restrictions, legal entities or partnerships or other associations or joint ownership arrangements which are linked through capital ownership or voting rights, through common management or in a like manner, as well as individuals, legal entities or partnerships (especially syndicates) which act in concert with the intent to circumvent the entry restriction, are considered as one shareholder or Nominee.

The Company issues its registered shares only as uncertified securities (Wertrechte) and registers them as intermediated securities (in terms of FISA). Uncertified securities may only be transferred by way of assignment provided that they are not registered as intermediated securities. In order to be valid, the assignment must be reported to the Company, which may refuse the entry of the assignee in the Share Register in accordance with article 5 of the Articles of Association. The transfer restrictions according to article 5 are not affected by these regulations. For as long as the shares are in uncertificated form and registered as intermediated securities, any transfer and collateralization of shares has to be made in accordance with the FISA. The transfer of intermediated securities or the granting of security rights on intermediated securities by way of assignment is excluded.

The Company in special cases may on a discretionary basis decide to grant some exceptions to the above restrictions. In 2023, no such exemptions were granted.

The procedure and condition for the easement or abolition of the restrictions of the transferability of the registered shares in the Articles of Association require resolution of a shareholders' meeting passed by at least two thirds of the represented share votes and an absolute majority of the par value of represented shares is required to ease or abolish the restrictions on the transferability of registered shares (see article 13 of the Articles of Association).

The Company's Share Register is administered by SisWare AG, Militärstrasse 3, 6467 Schattdorf, Switzerland.

2.7 CONVERTIBLE BONDS AND OPTIONS

As of December 31, 2023, neither Medacta Group SA, nor any of its subsidiaries, had issued or outstanding any convertible bonds or options convertible into shares of the Company.

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3. BOARD OF DIRECTORS

The Board of Directors plays a central role in the strategic guidance of the Group as well as supervising the overall business activities and management.

Accordingly, Board candidates are carefully selected to ensure that they are qualified and committed members, characterized by diversity of backgrounds as well as experience and expertise relevant for the specific role they play on the Board of Directors. In addition, because the current Chairman formerly served as Chief Executive Officer of Medacta International SA until 2018, the Board of Directors also has a Lead Independent Director.

The description of the role of the Lead Independent Director is available into section 3.5 "Internal organizational structure" of this Corporate Governance Report.

Philippe Weber, Riccardo Braglia, Maria Luisa Siccardi Tonolli, Alberto Siccardi and Victor Balli (from left to right).

3.1 MEMBERS OF THE BOARD OF DIRECTORS

As of December 31, 2023, the Board of Directors consisted of five Members (including the Chairman and the Lead Independent Director), all of whom are Non-Executive Directors.

The table below outlines the name, year of birth, position, committee memberships and year of appointment of the Members of the Board.

Name	Year of birth	Position	Committee Membership	Year of Appointment
Alberto Siccardi 1	1944	Chairman	None	2018
Maria Luisa Siccardi Tonolli 2	1975	Member	ARC	2018
Victor Balli	1957	Member; Lead	ARC (Chairman)	2019
Independent Director
Philippe Weber	1965	Independent Director	HR & RemCo (Chairman)	2019
Riccardo Braglia	1960	Independent Director	HR & RemCo	2020

HR & RemCo = Human resources & Remuneration Committee

ARC = Audit and Risk Committee

1. Founder and Chairman of the Board of Directors of Medacta International since 1999.
2. Member of the Board of Directors of Medacta International from 2003 until 2014.

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ALBERTO SICCARDI,

Swiss and Italian, Non-Executive, Chairman of the Board

Qualifications: Mr. Siccardi has a degree in Pharmacy from the University of Turin (1969) and a Master's degree in Business Administration (MBA) from SDA Bocconi School of Management in Milan (1979, with distinction).

Career Highlights: Mr. Siccardi served as CEO of Medacta International since founding Medacta in 1999 until November 2018 and as Chairman of the Company since March 2019. Prior to founding Medacta, the Siccardi's family owned Bieffe Medital SPA, an Italian company operating in the medical device industry. Mr. Siccardi successfully developed and expanded Bieffe Medital internationally, thanks to a new technology which improved the quality and the cost of sterile fluids and then subsequently sold the business developed by Bieffe in many countries to Baxter Group in 1997.

Other main activities: Mr. Siccardi further serves as Chairman of Surgical Practice Resource Group SA, Lugano since 2015 and as Chairman of the Medacta for Life Foundation, Castel San Pietro since 2011. He is Chairman of Verve SA, Castel San Pietro and a Board Member of Machi Holding SA, ALLES Holding SA and 2A Holding SA, Castel San Pietro since 2019.

Key attributes for the Board: Mr. Siccardi represents continuity, solidity and credibility among the various stakeholders. As founder and major shareholder of Medacta, Mr. Siccardi chairs the Board of Directors with his expertise and in-depth knowledge of the orthopedic products.

MARIA LUISA SICCARDI TONOLLI,

Swiss and Italian, Non-Executive, Member of the Board

Qualifications: Mrs. Siccardi Tonolli holds a Master of Science (MSc) in Business Administration from Bocconi University, Milan (2000) and has completed various professional training courses.

Career Highlights: Mrs. Siccardi Tonolli joined Medacta International SA in 2002 and served as a Member of its Board of Directors from 2003 until 2014. In early 2018, Mrs. Siccardi Tonolli was elected as Member of the Board of Directors of Medacta Group SA to the Board of the Company upon its incorporation. Mrs. Siccardi Tonolli has served in various finance, controlling and treasury roles at the Group maintaining a constant balance between her work commitments and private life. She served as Head of Strategic and Corporate Finance from 2003 until 2014 and then as Vice-President Finance / Treasury Supervisor from 2011 until April 1, 2019. In this role she led the IPO process until the listing in the SIX Swiss exchange. Since the IPO, Mrs. Siccardi Tonolli has exclusively served as a Member of the Board of Directors with a key focus and passion on Group Corporate Sustainability. Mrs. Siccardi is founder and Vice President of Medacta for Life Foundation, centred around the realization of philanthropic initiatives and socially driven projects for the protection and assistance of children and young people. The initiatives of the Foundation can be grouped into three specific areas: development of new generation through My School Ticino (started in 2019), funding for medical missions and participation in social projects. Mrs. Siccardi Tonolli has been responsible for the Siccardi's Family Office for over 20 years where she heads the wealth management and global real estate. She served as a Member of the Board of Verve SA since 2001, a real estate company domiciled in Switzerland.

Other main activities: Mrs. Siccardi Tonolli has served as the Head of the Siccardi Family Office since 2002. Mrs. Siccardi Tonolli also serves as a Member of the Board of Directors of Surgical Practice Resource Group SA, Lugano since 2015, as President of Machi Holding SA, Castel San Pietro since 2019, as Vice-President and Member of the Board of Directors of Medacta for Life Foundation, Castel San Pietro since 2011 and as Member of the Board of Directors of Verve SA, Castel San Pietro since 2001.

Key attributes for the Board: As a major shareholder of Medacta Group, Mrs. Siccardi Tonolli contributes with her experience in the field of ESG, finance, controlling, treasury and Real Estate.

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VICTOR BALLI,

Swiss, Non-Executive, Member of the Board, Lead Independent Director

Qualifications: Mr. Balli holds a Master's degree in Economics from the University of St. Gallen (HSG) in St. Gallen (1984) and a Master of Science (MSc) in Chemical Engineering from the Swiss Federal Institute of Technology (ETH) in Zurich (1981). He has further completed various management courses at INSEAD, Fontainebleau France and INSEAD, Singapore.

Career Highlights: Mr. Balli was Chief Financial Officer of Barry Callebaut AG, Zurich, the largest global supplier of cocoa and chocolate products from 2007 to 2018. From 1996 to 2006, he was a director at Niantic Group, which represents the investment holding of Dr. Andreas Jacobs, and served in various executive and Board functions at subsidiaries of Niantic Group during that period. Mr. Balli served as Member of the Board of Directors and Chairman of the audit committee of Ceva Logistics AG, Baar from 2018 to 2019.

Other main activities: Member of the Board of Directors and Member of the compensation committee and Chairman of the audit committee of Givaudan SA, Vernier since 2016; Member of the Board of Directors and the Chairman of the audit committee of KWS Saat SE & Co. KGaA, Germany since 2017; since 2018 Member of the Board of Directors of the Swiss Federal Audit Oversight Authority in Bern (Revisionsaufsichtsbehörde, FAOA); since 2018, Member of the Board of Directors and Chairman of the audit committee of Louis Dreyfus Company International Holding B.V., Netherlands; since 2019, Member of the Board of Directors of Hemro AG, Bachenbülach; Member of the Board of Directors, of the audit and sustainability committees of SIKA AG, Baar since 2019.

Key attributes for the Board: In addition to his Board and executive experience in other companies, Mr. Balli has a strong track record in general management, finance and corporate finance.

PHILIPPE WEBER,

Swiss, Non-executive, Member of the Board, Independent Director

Qualifications: Mr. Weber holds a PhD in law (summa cum laude) from the University of Zurich (1995) and an LL.M. (with distinction) from the European University Institute (EUI) in Fiesole, Italy in 1995. He is an attorney-at-law admitted to the Swiss bar.

Career Highlights: Mr. Weber joined Niederer Kraft Frey AG (NKF) in 1994 and became a partner in 2002. In 2009 he became a member of the executive committee of NKF, which he chaired as managing partner from 2015 to March 2021. He continues to be a partner at NKF. From 1990 to 1992, he was a research assistant at the University of Zurich before joining the foreign affairs committees of the two chambers of the Swiss parliament as a legal clerk in 1992/1993.

Other main activities: Board of Directors member of Niederer Kraft Frey AG; Company Secretary of CLS Group Holdings AG, Lucerne (since 2002); Vice-chairman and Member of the Board of Directors of Leonteq AG and Leonteq Securities AG, Zurich (since 2020); Member of the Board of Directors of PolyPeptide Group AG, Zug (since 2021), NorthStar Holding AG, Roggwil (since 2018), Banca del Ceresio SA, Lugano (since 2017), EDAG Engineering Group AG, Arbon (since 2015), and Newron Suisse SA, Zurich (since 2007).

Key attributes for the Board: Mr. Weber has vast experience in corporate/ M&A, capital markets and banking law as well as corporate governance. He complements the Board with his extensive knowledge and experience with regards to legal and corporate matters as well as board member in various other listed and non-listed companies.

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