Convenience Translation
Report of the Management Board to the Annual General Meeting on agenda item 7 regarding the reasons for the authorization to exclude subscription and tender rights in the acquisition and disposal of treasury shares pursuant to Article 9 of the SE Regulation in conjunction with Section 71 (1) No. 8 sentence 5 and Section 186 (4) sentence 2 AktGThe Management Board of SAF-HOLLAND SE ("company") submits, pursuant to Article 9 of Council Regulation (EC) No. 2157/2001 of October 8, 2001 on the Statute for the European company (SE Regulation) in conjunction with Section 71 (1) No. 8, second half-sentence, of the German Stock Corporation Act ("AktG") and Section 186 (4) sentence 2 AktG, the following report to agenda item 7 of the Annual General Meeting regarding the reasons for the authorization to exclude the subscription and tender rights of the shareholders in connection with the acquisition and disposal of the treasury shares acquired by the company.
Under agenda item 7, the Management Board of the company ("Management Board") and the Supervisory Board of the company propose to authorize the company to acquire treasury shares, including other shares in the company which the company has already acquired and holds or which are attributable to the company pursuant to Sections 71d or 71e AktG, up to a maximum of 10% of the company's share capital at the time of the resolution of the General Meeting or - if lower - at the time the authorization is exercised, until May 20, 2028.
The Annual General Meeting of the company held on June 10, 2021, authorized the Management Board to acquire treasury shares up to a total of 10% of the share capital until June 9, 2026. The company has made partial use of this authorization within the framework of its 2025 share buyback program. In view of the fact that the existing authorization to acquire treasury shares will expire on June 9, 2026, this authorization is to be revoked and replaced by a new authorization for the acquisition and use of treasury shares in order to continue enabling the company to acquire an appropriate volume of its own shares at short notice without requiring a further resolution by the Annual General Meeting.
The treasury shares may be acquired both by the company itself and by subsidiaries or companies in which the company holds a majority interest (group companies), or by third parties acting on behalf of the company or on behalf of group companies.
The acquisition of treasury shares may be carried out either on the stock exchange ("Stock Exchange") or by means of a public purchase offer. A "public purchase offer" is an offer to purchase or a public invitation to submit offers to sell addressed to all shareholders of the company. In the process of the acquisition, the principle of equal treatment of shareholders in accordance with Section 53a AktG must be observed. The proposed acquisition via the Stock Exchange or via a public purchase offer complies with this principle.
In the case of a public purchase offer, the company will make an offer to all shareholders corresponding to their shareholding ratio. The volume of the public purchase offer may be limited. If the total subscription of the offer exceeds this volume, acceptance declarations -to the extent that they exclude any tender rights of the shareholders - will generally be considered in proportion to the number of shares tendered by each shareholder (tender quotas). Equally, to avoid fractional amounts, commercial rounding and a preferential consideration of small quantities of up to 100 shares offered for acquisition by the company per shareholder may be provided, to the extent partially excluding any right of shareholders to tender their shares. These measures are intended to avoid fractional amounts when determining the shares to be acquired and to handle small residual amounts, thereby facilitating technical execution. This also helps prevent a de facto exclusion of small shareholders. In this context, the Management Board considers the associated exclusion of a further tender right of the shareholders to be factually justified and appropriate with respect to the shareholders. Furthermore, the Management Board may, within the framework of a public purchase offer, set a price range within which shareholders may submit offers. In such a case, it may be provided that the final price is determined based on the amount and number of bids, depending on the specified total amount for which the repurchase of most shares is possible or the lowest price at which a specific number of shares can be repurchased. In such a purchase offer based on a price range, offers from shareholders requesting an overly high purchase price may be disregarded. In this respect as well, any shareholder right to tender their shares is excluded.
The Management Board shall be authorized to use the company's treasury shares for all legally permissible purposes. In particular, the Management Board may sell them on the Stock Exchange or by way of an offer to all shareholders. Furthermore, it may use them in particular as follows, whereby the subscription rights of shareholders to the shares shall be excluded in each case:
The treasury shares purchased by the company may, under the terms of the law, be resold to all shareholders via a stock exchange or a public offer made to all shareholders. Because of this possibility to sell shares, the right of shareholders to equal treatment is preserved when the shares are reissued.
Furthermore, the treasury shares may be sold for cash consideration in accordance with Sections 71 (1) No. 8 sentence 5 and 186 (3) sentence 4 AktG at a price that does not significantly fall below the stock exchange price of shares of the company of the same class at the time of disposal. The pro rata amount of the share capital attributable to the shares for which subscription rights are excluded must not exceed a total of 10% of the share capital, even in the case of multiple disposals, neither at the time the authorization becomes effective nor at the time it is exercised. Shares issued during the term of this authorization from authorized capital pursuant to Sections 203 (2) and 186 (3) sentence 4 AktG with the exclusion of subscription rights shall be counted toward this limit. Furthermore, shares issued or that may be issued to service convertible bonds, warrant bonds and/or profit participation bonds (or combinations of these instruments) shall also be counted toward this limit, provided that the underlying instruments were issued during the term of this
authorization on the basis of an authorization to issue such instruments in analogous application of Section 186 (3) sentence 4 AktG with the exclusion of subscription rights. These offsetting requirements ensure that treasury shares are not disposed of with the exclusion of subscription rights in accordance with Section 186 (3) sentence 4 AktG if this would result in subscription rights being excluded, whether directly or by analogous application of Section 186 (3) sentence 4 AktG, for more than 10% of the share capital during the term of the authorization without a specific objective justification. This additional restriction serves the interests of shareholders who wish to maintain their proportional shareholding. Shareholders generally remain able to maintain their proportional shareholding by purchasing shares of the company on the stock exchange. The authorization is in the best interest of the company, as it provides it with greater flexibility.
This authorization is intended to make use of the simplified exclusion of subscription rights pursuant to Sections 71 (1) No. 8 sentence 5 and 186 (3) sentence 4 AktG. It enables the Management Board to take advantage of opportunities arising from the respective stock exchange situation quickly, flexibly and cost-effectively. The proceeds from disposal that can be achieved through pricing close to market levels generally result in a significantly higher inflow of funds per treasury share sold than in the case of a share placement with subscription rights. By dispensing with the time-consuming and costly processing of subscription rights, the company's equity requirements can be met from short-term market opportunities. Although Section 186 (2) sentence 2 AktG permits the subscription price to be published no later than three days before the end of the subscription period, the volatility of the stock markets still entails market risk over several days, which may lead to safety discounts when determining the disposal price and thus to conditions that are not aligned with the market and are not optimal for the company. The financial interests of the shareholders are safeguarded when this authorization is exercised by the fact that the company may dispose of treasury shares only at a price that is not significantly lower than the respective stock exchange price. The final determination of the disposal price for the treasury shares is made shortly before the disposal. In doing so, the Management Board will endeavor-taking into account the prevailing market conditions-to keep any discount on the stock exchange price as low as possible.
Furthermore, the Management Board is to be authorized to use treasury shares purchased on the basis of the proposed authorization as consideration for contributions in kind from third parties, in particular for the acquisition of companies, operations, parts of companies or equity investments in companies, or other assets eligible for contribution, or rights to acquire assets, including claims against the company or its group companies. International competition and the globalization of the economy increasingly demand this form of acquisition financing. The authorization proposed here affords the company the necessary leeway to respond rapidly and flexibly to exploit any acquisition opportunities that arise, both on the domestic market and on the international market. The proposed exclusion of subscription rights addresses this issue. When setting the relative values, the Management Board will take care to ensure that the interests of the shareholders are given due consideration. The Management Board will align its measurement of the value of the shares offered in consideration on the exchange price of the shares of the company without,
however, applying a specific formula to an exchange price, in order not to call firmly negotiated terms into question because of fluctuations in the stock exchange price. When deciding on the nature of share purchases to finance such transactions, the Management Board will align its actions solely on the interests of the company and its shareholders.
Moreover, the Management Board shall be authorized to use the treasury shares to satisfy obligations or rights to acquire shares of the company arising from or in connection with convertible bonds, warrant bonds and/or profit participation bonds (or a combination of these instruments) issued by the company or its group companies. If and to the extent that the company avails of this possibility, there is no need to conduct a contingent capital increase. The interests of the shareholders are therefore not affected by this additional possibility. Since the use of existing treasury shares instead of a capital increase or a cash settlement can make economic sense, the authorization is intended to increase flexibility in this regard.
Finally, the Management Board shall be authorized to redeem the treasury shares acquired, in whole or in part, without a further resolution of the Annual General Meeting. The redemption of treasury shares generally results in a reduction of the company's share capital. However, the Management Board shall also be authorized to redeem treasury shares under the simplified procedure without a reduction of the share capital pursuant to Section 237 (3) No. 3 AktG. By redeeming treasury shares without an associated reduction of share capital, the imputed share of the remaining no-par value shares in the share capital of the company automatically rises. The Management Board should therefore be authorized to make the necessary adjustments to the Articles of Association regarding the change in the number of no-par value shares caused by the redemption.
These authorizations may be exercised with respect to those treasury shares of the company that have been acquired on the basis of this or previous authorizations to acquire treasury shares or pursuant to Section 71d sentence 5 AktG.
The Supervisory Board of the company can, at its own discretion, determine that measures of the Management Board authorized by the Annual General Meeting pursuant to Section 71 (1) No. 8 AktG may only be carried out with its approval.
The Management Board will report at the next general meetings, in each case in accordance with Section 71 (3) sentence 1 AktG, on any utilization of these authorizations.
Bessenbach, Germany, April 2026
Alexander GeisChairman of the Management Board and Chief Executive Officer
Frank Lorenz-DietzMember of the Management Board and Chief Financial Officer
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