The Board of Directors is responsible for PolyPeptide’s overall direction and oversight of management, and holds the ultimate decision-making authority, with the exception of matters reserved for shareholders.

We believe that the composition of our Board of Directors should reflect PolyPeptide’s objectives, strategic requirements, geographical reach and its culture. The Board of Directors should further be diverse in terms of age, gender, nationality, geographical / regional, background and business experience.

In furtherance of this, the Board of Directors has determined a wide range of skills to ensure that all members are well qualified, committed and willing to devote the necessary time and effort to effectively perform their responsibilities. Based on the defined set of competencies, the Board members were asked to identify their key skills highlighted by their educational and professional background and personal achievements, as illustrated in the chart below.

Board skills distribution

The Remuneration and Nomination Committee regularly assesses the set of competencies as well as each Director’s contributions to ensure that an appropriate mix of skills, expertise and diversity is represented on the Board of Directors and its Committees. In addition, the Remuneration and Nomination Committee, together with the Board of Directors, actively considers the key skills illustrated above, as well as gender diversity in succession planning of the Board of Directors as well as of the Executive Committee.

3.1Members of the Board of Directors

During the reporting period, the number of members of the Board of Directors increased from six (6) to seven (7). Each Director in office as of 1 January 2023 stood for re-election at the AGM 2023 and was approved by the shareholders. Furthermore, Dorothee A. Deuring was elected as a new member of the Board of Directors at the AGM 2023. Thus, as of 31 December 2023, the Board consisted of seven (7) non-executive Directors (including the Chair and the Lead Independent Director), four (4) of which are independent as outlined below:

PolyPeptide believes that the composition of its Board of Directors and Committees with regard to independence and competences fairly reflects and balances the interests of its shareholders and other stakeholders.

Set out below is a short description of the business experience, education and activities of each director.

Peter Wilden

Chair since 2021
(Non-) Executive⁹

Nationality: German

Year of birth: 1957

Professional background

Beginning in 1991, Dr. Wilden held various senior roles within the Ferring Group, ultimately serving as Executive Vice President and CFO of Ferring Pharmaceuticals between 2000 and 2017. During his tenure with the Ferring Group, Dr. Wilden also served as member of the board of directors for various subsidiaries of the Ferring Group. Following his resignation as Executive Vice President and CFO in 2017, Dr. Wilden has continued to hold various directorships and advisory roles within the Ferring Group. Due to the Group’s ongoing business relationship with the Ferring Group, which is also considered a related party, and his recent role as Executive Chair of PolyPeptide, Dr. Wilden is assessed as not independent.¹⁰

Prior positions at PolyPeptide

• Group Executive Chair (30 January 2023–30 September 2023)

Outside mandates at listed companies

• None

Outside mandates at non-listed companies

• None

Outside mandates at non-profit organizations

• Member of the board of directors of the Suisse Polar Foundation, Switzerland (since 2018)
• Chair of the board of directors of Project HOPE Suisse International Foundation, Switzerland (since 2015)
• Member / Vice-Chair of the board of directors of Project HOPE, USA (since 2012)

Former outside activities and functions

• Executive Chair of the board of directors of Ferring International Center SA, Switzerland (2002–August 2023)
• Vice-Chair of the board of directors of Schlumberger AG, Austria (2014–2022)
• Member of the board of directors of Ferring Ventures SA (previously named Trizell Holding SA), Switzerland (2014–June 2021)
• Member / Chair of the Audit Committee / Vice-Chair of the board of directors of Lonza Group AG, Switzerland (2004–2014)
• Executive Vice-President and CFO of Ferring Pharmaceuticals, Switzerland (2000– 2017)
• Member of the board of directors of Trace Biotech AG, Germany (1999–2002)

9 Dr. Peter Wilden assumed the role of Executive Chair on 30 January 2023 following the resignation of the then current CEO. Upon the appointment of Juan José González as CEO effective 12 April 2023 and the completion of his introduction to PolyPeptide, Dr. Wilden stepped down from his executive duties as of 30 September 2023 and continued his role as Chair of the Board of Directors.

10 Ferring Group is disclosed in note 22 “Related parties” of the consolidated financial statements in the Financial Report 2023 as a related party because it is related to the Company through the Esperante Investments Group ownership structure. For further information, see note 22 “Related parties” of the consolidated financial statements in the Financial Report 2023.

• Member of the board of directors of Group Finance of Ferring BV, The Netherlands (1995–2000)
• Vice-President Finance & Accounting and Technical Operations of Ferring Arzneimittel GmbH, Germany (1993–1996)
• Member of the board of directors of Finance at Ferring Arzneimittel GmbH, Germany (1991–1993)
• IT Consultant at MaK Data System GmbH (within the Krupp Steel Group), Germany (1988–1991)
• Management Assistant, Krupp MaK Maschinenbau GmbH, Germany (1986–1988)
• Scientific Assistant within the IT-Group at the Institute of World Economics, Germany (1983–1986)
• Tax Inspector at the Inland Revenue Service, Germany (1980–1981)

Education

• PhD in Economics, University of Kiel, Germany (1991)
• MBA in Industrial Economics, University of Kiel, Germany (1986)
• Education Tax Inspector at the German Inland Revenue Service, Germany (1977– 1980)

Key skills: Industry experience; Leadership / management; Finance / accounting / risk management; Data / digital; Environmental, social and governance (ESG); Strategy / development / execution

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Patrick Aebischer

Vice-Chair and Lead Independent Director since 2021¹¹
Non-executive

Nationality: Swiss

Year of birth: 1954

Professional background

Dr. Aebischer was the president of EPFL, the Swiss Federal Institute of Technology Lausanne from 2000 to 2016 and Professor of Neurosciences until his retirement in 2019. He has received numerous honors, including the Robert Bing Prize of the Swiss Academy of Medicine and the Pfizer Foundation Prize for Clinical Neurosciences. Dr. Aebischer holds various academic advisory positions as well as various positions in non-profit foundations and scientific advisory boards.

Prior positions at PolyPeptide

• None

Outside mandates at listed companies

• Member of the board of directors of Logitech SA, Switzerland (since 2016)
• Member of the board of directors of Nestlé SA, Switzerland (since 2015)

Outside mandates at non-listed companies

• Member of the board of directors of Swiss Vaccine SA, Switzerland (since 2022)
• Chair of the board of directors of Vandria SA, Switzerland (since 2021)

11 Dr. Patrick Aebischer has been a Senior Partner and member of the Investment Advisory Committee of NanoDimension Management Limited since 2017. In 2021, PolyPeptide committed to a limited investment in a partnership managed by NanoDimension Management Limited. Dr. Aebischer abstained from voting on this item. The indirect business relationship between PolyPeptide and Dr. Aebischer resulting from said commitment is considered comparatively minor. Thus, Dr. Aebischer is considered independent within the meaning of art. 15 Swiss Code of Best Practice for Corporate Governance and section 4(d) of the Organizational Regulations.

• Senior Partner of NanoDimension Management Limited, Cayman Islands (since 2017)
• Chair of the board of directors of Amazentis SA, Switzerland (since 2007)

Outside mandates at non-profit organizations

• Member of the board of directors of Fondation “Geneva Science & Diplomacy Anticipator”, Switzerland (since 2019)
• Member of the board of directors of Fondation du domaine de Villette, Switzerland (since 2018)
• Chair of the board of directors of Fondation ArtTech, Switzerland (since 2017)
• Member of the board of directors of Fondation Defitech, Switzerland (since 2017)
• Chair of the board of directors of Swiss Polar Foundation, Switzerland (since 2016)
• Member of the board of directors of Fondation Claude Nobs, Switzerland (since 2015)
• Member of the board of directors of Fondation du Festival de Verbier, Switzerland (since 2015)

Former outside activities and functions

• Chair of the board of directors of the Novartis Venture Fund, Switzerland (2014–2023)
• Member of the board of directors of Lonza Group AG, Switzerland (2008–2020)
• Professor of Neurosciences, Swiss Federal Institute of Technology Lausanne (EPFL), Switzerland (2000–2019)
• President of EPFL, Switzerland (2000–2016)
• Founding scientist and Director of Modex Therapeutiques Inc., Switzerland (IPO 2000 on SIX) (1996–2004)
• Professor and Medical Director of the Surgical Research Division at Lausanne University Medical School Hospital (1992–2000)
• Founding scientist of CytoTherapeutics Inc., USA (IPO 1996 on NASDAQ) (1989–1999)
• Professor, Brown University, USA (1986–1992)

Education

• Dr. in Medicine, University of Geneva, Switzerland (1983)
• MD, University of Geneva, Switzerland (1980)

Key skills: Industry experience; Leadership / management; Data / digital; Environmental, social and governance (ESG); Strategy / development / execution; Independence

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Erik Schropp

Member since 2021
Non-executive

Nationality: Dutch

Year of birth: 1964

Professional background

Currently, Mr. Schropp is CEO of Esperante Investments Group and a director of Draupnir Holding B.V. (one of the Company’s significant shareholders, see section 1.2 “Significant shareholders” of this Corporate Governance Report).¹² As a result of these roles, Mr. Schropp is assessed as not independent.

Prior positions at PolyPeptide

• Member of the board of directors of PolyPeptide Laboratories Holding B.V., The Netherlands, and PolyPeptide Laboratories Holding (PPL) AB, Sweden (2017–2021)

Outside mandates at listed companies

• None

Outside mandates at non-listed companies

• CEO of Esperante Investments Group (since 2020) (including serving as a member of the board of directors of Draupnir Corporation B.V., The Netherlands (since 2022) and Draupnir Holding B.V., The Netherlands (since 2008) and of the following strategic business units: (i) SEVER Life Sciences B.V., The Netherlands (since 2019), including serving as a member of the board of directors of two subsidiary companies; (ii) Esperante Ventures B.V., The Netherlands (since 2008); (iii) Svar Life Science AB, Sweden (since 2008), including serving as a member of the board of directors of two subsidiary companies)
• Member of the board of directors of Haydn Holding AB, Sweden (since 2012) (including serving as a member of the board of directors at six subsidiary companies)
• Member of the board of directors of Ferring Foundation B.V., The Netherlands (since 2008) (including serving as a member of the board of directors of two subsidiary entities)

Outside mandates at non-profit organizations

• Member of the board of directors, Stichting Det Paulsen Legaat, The Netherlands (since 2023)
• Member of the board of directors, Stichting Vrienden van Megara, The Netherlands (since 2022)

Former outside activities and functions

• Member of the board of directors of FinVector Oy, Finland (2020–2021)
• Member of the board of directors of Altacor Ltd., United Kingdom (2014–2017)
• Group Financial Officer, C&P Investors Group (presently: Esperante Investments Group), The Netherlands (2008–2020)
• Group Tax & Finance Director, C&P Investors Group (presently: Esperante Investments Group), The Netherlands (2005–2008)
• International Tax & Finance Director, Ferring Pharmaceuticals, The Netherlands and Denmark (1999–2005)
• International Tax Manager, Unisource N.V., The Netherlands (1996–1999)
• Tax Manager, Arthur Andersen, The Netherlands (1988–1996)

12 Draupnir Holding B.V. is disclosed in note 22 “Related parties” of the consolidated financial statements in the Financial Report 2023 as a related party because it is related to the Company through the Esperante Investments Group ownership structure. For further information, see note 22 “Related parties” of the consolidated financial statements in the Financial Report 2023.

Education

• Master’s degree in Economics & Tax, Erasmus University, Rotterdam, The Netherlands (1988)

Key skills: Leadership / management; Finance / accounting / risk management; Data / digital

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Jane Salik

Member since 2021
Non-executive (since 17 August 2021)

Nationality: American

Year of birth: 1953

Professional background

Ms. Salik joined PolyPeptide in 1996 as President of PolyPeptide Laboratories Inc., where she was responsible for sales and marketing, and overall management, administration and strategic planning for the company. In 2006, she was appointed CEO during which time she guided PolyPeptide through a period of significant growth, expansion of sales and profits, expanding into new geographies and establishing a culture of innovation and execution of best practice. Ms. Salik resigned as CEO on 29 April 2021 and was a member of the Executive Committee of PolyPeptide until 17 August 2021. Due to her recent operational management roles at the Group, Ms. Salik is assessed as not independent.

Prior positions at PolyPeptide

• Group CEO (2006–April 2021) and Executive Committee member (2006–August 2021)
• President, PolyPeptide Laboratories Inc., USA (1996–2006)
• Member of the board of directors of PolyPeptide Laboratories Holding B.V., The Netherlands, as well as certain of its direct and indirect global subsidiaries (2003–2021)

Outside mandates at listed companies

• None

Outside mandates at non-listed companies

• None

Outside mandates at non-profit organizations

• None

Former outside activities and functions

• Vice President of Sales and Marketing, Bachem California, USA (1986–1996)
• Technical services biochemist, product manager and marketing manager, Boehringer Mannheim, USA (1980–1986)

Education

• PhD in Molecular and Cellular Biology, SUNY Stony Brook, USA (1980)
• B.A. in Biology, Lafayette College, USA (1975)

Key skills: Industry experience; Leadership / management; Environmental, social and governance (ESG); Strategy / development / execution

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Beat In-Albon

Member since 2021
Independent; Non-executive

Nationality: Swiss

Year of birth: 1952

Professional background

From 2016 to 2018, Mr. In-Albon was Head of Strategic Projects at Lonza AG, Switzerland, on a part-time basis ahead of his retirement. Previously, Mr. In-Albon served as Senior Vice President and Chief Operating Officer Specialty Ingredients and was a member of the Executive Management Committee of Lonza AG, Switzerland, from 2012 until 2015.

Prior positions at PolyPeptide

• None

Outside mandates at listed companies

• Member of the board of directors of Evolva Holding SA, Switzerland (since 2020, Chair 2020-2022)

Outside mandates at non-listed companies

• Chair of the board of directors of Hans Kalbermatten Thermalbad AG, Switzerland (since 2021)
• Member of the board of directors of Deccan Fine Chemicals Pvt. Ltd., India (since 2019)

Outside mandates at non-profit organizations

• Vice-Chair of the board of directors of Lonza Arena AG, Switzerland (since 2020)

Former outside activities and functions

• Member / Chair of the board of directors of Escientia Switzerland AG, Switzerland (2020–2021)
• Head of Strategic Projects at Lonza AG, Switzerland (2016–2018)
• Senior Vice President and COO Specialty Ingredients / Member of the Executive Management Committee, Lonza AG, Switzerland, (2012–2015)
• Member of the board of directors of Siegfried AG, Switzerland (2009–2012)
• Executive Vice President of Industrial Services, Member of the Operations Council, SGS SA, Switzerland (2009–2012)
• Executive Vice President of Life Science Services / Member of the Operations Council, SGS SA, Switzerland (2008–2009)
• Senior Vice President / Head of Organic Fine- & Performance Chemicals / Member of the Executive Management Committee at Lonza Group AG, Switzerland (2006–2007)
• Senior Vice President / Head of Organic Fine- & Performance Chemicals / Member of the Executive Management Committee of Lonza AG, Switzerland (2003–2006)
• Various positions at Lonza AG, Switzerland, in the fields of Agrochemicals and Organic Fine Chemicals (starting 1983)

Education

• Master of Business Administration in Political Economy, University of Fribourg, Switzerland (1987)
• PhD in Economic Science, University of Fribourg, Switzerland (1983)

Key skills: Industry experience; Leadership / management; Finance / accounting / risk management; Law / regulatory; Environmental, social and governance (ESG); Independence

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Philippe Weber

Independent¹³; Non-executive
Member since 2021

Nationality: Swiss

Year of birth: 1965

Professional background

Mr. Weber is a member of the board of directors of Niederer Kraft Frey AG, Zurich (since 2008) and has been a partner of Niederer Kraft Frey AG, Zurich since 2002. He is an attorney-at-law admitted to the Swiss bar.

Prior positions at PolyPeptide

• None

Outside mandates at listed companies

• Vice-Chair of the board of directors of Leonteq AG, Switzerland, and Leonteq Securities AG, Switzerland (both since 2020)
• Member of the board of directors of Medacta Group AG, Switzerland (since 2019)
• Member of the board of directors of EDAG Engineering Group AG, Switzerland (since 2015)

Outside mandates at non-listed companies

• Member of the board of directors of NorthStar Holding AG, Switzerland (since 2018)
• Member of the board of directors of Banca del Ceresio SA, Switzerland (since 2017)
• Member of the board of directors of Newron Suisse SA, Switzerland (since 2007)
• Partner at Niederer Kraft Frey AG, Switzerland (since 2002)
• Company Secretary of CLS Group Holdings AG, Switzerland (since 2002)

Outside mandates at non-profit organizations

• None

Former outside activities and functions

• Chair of the board of directors and managing partner of Niederer Kraft Frey AG, Switzerland (2015–March 2021)
• Director of Robert Aebi AG, Switzerland (2004–2017)

Education

• PhD in law (summa cum laude), University of Zurich, Switzerland (1995)
• LL.M. (with distinction), European University Institute (EUI) in Fiesole, Italy (1994)

Key skills: Leadership / management; Law / regulatory; Environmental, social and governance (ESG); Strategy / development / execution; Independence

13 Philippe Weber is a Partner at Niederer Kraft Frey AG (NKF), see section 4.2 “Compensation of the Board of Directors” of the Remuneration Report 2023 for disclosure of the fees received by NKF in relation to these ordinary course legal matters. The business relationship between PolyPeptide and Mr. Weber is considered minor. Thus, Mr. Weber is considered independent within the meaning of art. 15 Swiss Code of Best Practice for Corporate Governance and section 4(d) of the Organizational Regulations.

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Dorothee A. Deuring

Independent; Non-executive
Member since 2023

Nationality: Austrian

Year of birth: 1968

Professional background

Ms. Deuring is an independent corporate finance expert with more than 25 years of experience in the fields of manufacturing, biotech, pharmaceuticals and banking.

Prior positions at PolyPeptide

• None

Outside mandates at listed companies

• Member of the board of directors and Member of the Audit and Remuneration Committees of Elementis PLC (since 2017)
• Member of the board of directors of Temenos AG (since 2023)

Outside mandates at non-listed companies

• None

Outside mandates at non-profit organizations

• None

Former outside activities and functions

• Member of the board of directors and Member of the Audit Committee of Axpo Holding AG (since 2017-2023)
• Member of the board of directors of Lonza Group AG, Chair of the Audit and Compliance Committee (2020–2022)
• Supervisory Board Member of Immofinanz AG, Chair of the Audit Committee (2020–2022)
• Supervisory Board Member of Bilfinger SE, Member of the Audit Committee (2016–2021)
• Member of the board of directors of PIQUR Therapeutics AG (2019–2021)
• Member of the board of directors of Selecta AG (2020)
• Supervisory Board Member (Beirat) of Röchling Group SE & Co. KG (2016–2019)
• Head of Corporate Advisory Group Europe, Managing Director Wealth Management Division for UBS AG (2011–2014)
• Managing Director Investment Banking, Head Healthcare and Chemicals M&A for Bankhaus Sal. Oppenheim Jr & Cie (2007–2009)
• Vice Director, Corporate Finance, Mergers & Acquisitions; Vice Director, Diagnostics Division, Business Development for F. Hoffman-La Roche AG (2003–2007)
• Founder, Owner, Manager and Board Member of CoCap AG (1998-2003)
• Consultant for McKinsey & Company (1997–1998)
• Managing Director of K. Deuring & Co (1993–1997)

Education

• Master of Science in Chemistry from Université Louis Pasteur, Strasbourg, France (1994)
• Master in Business Administration from INSEAD, Fontainebleau, France (1996)

Key skills: Industry experience; Leadership / management; Finance / accounting / risk management; Law / regulatory; Environmental, social and governance (ESG); Strategy / development / execution; Independence

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3.2Other activities and vested interests

Except as disclosed in the biographies of the members of the Board of Directors, no further activities or vested interests are carried out outside of PolyPeptide.

3.3Mandates and other permitted activities

In accordance with Swiss law, our Articles of Association limit the number of functions in superior management or administrative bodies of legal units other than with PolyPeptide that Directors are allowed to hold at one time.

Pursuant to art. 23 of the Articles of Association, the Directors may have the following comparable functions at other companies with an economic purpose (including their group):

• up to four (4) mandates as member of the board of directors or any other superior management or administrative body of listed companies; and, in addition,
• up to ten (10) mandates as member of the board of directors or any other superior management or administrative body of legal entities that do not meet the above mentioned criteria.

With respect to the additional activities of the Directors, mandates in companies that are under uniform control or the same beneficial ownership are deemed to be one mandate.

The following mandates shall not be subject to the limitations set forth in art. 23 of the Articles of Association:

• mandates in companies which are controlled by the Company or which control the Company;
• mandates held at the request of the Company or companies controlled by it; no member of the Board of Directors shall, however, hold more than ten (10) such mandates; and
• mandates in associations, charitable organizations, foundations, employee welfare foundations and other similar organizations; no member of the Board of Directors shall, however, hold more than fifteen (15) such mandates.

3.4Election and term of office

According to art. 15 of the Articles of Association, the Board of Directors consists of a minimum of three (3) members. As prescribed by Swiss Law, all members of the Board of Directors, including the Chair, have to be elected individually, and may only be removed by a shareholders’ resolution. The maximum term of office for a member of the Board of Directors is one year. In this context, one year means the time period between one general meeting and the next or, if a member is elected at an extraordinary shareholders’ meeting between such extraordinary shareholders’ meeting and the next general meeting. Re-election is possible. The Company’s Articles of Association do not contain a limitation on the number of terms served or the age of members of the Board of Directors, including the Chair. Furthermore, the Company’s Articles of Association do not contain any rules concerning the appointment of the Chair, the members of the Remuneration and Nomination Committee or the independent proxy (the “Independent Proxy”) that deviate from those prescribed by Swiss law.

The members of the Remuneration and Nomination Committee (individually) as well as the Independent Proxy are also elected by the general meeting for a one-year term.

If the office of the Chair of the Board of Directors is vacant, the Remuneration and Nomination Committee is not complete or the Company does not have an Independent Proxy, the Board of Directors shall appoint a substitute for the time period until the conclusion of the next general meeting who must be (with the exception of the Independent Proxy) a member of the Board of Directors.

Please refer to section 3.1 “Members of the Board of Directors” of this Corporate Governance Report for information relating to the time of first election to office of the Company’s current Directors.

3.5Internal organizational structure

3.5.1Allocation of tasks within the Board of Directors

3.5.1.1General

Our Board of Directors is responsible for the ultimate direction of PolyPeptide, supervision of our management and holds the ultimate decision-making authority, with the exception of matters reserved for shareholders.

The Board of Directors determines PolyPeptide’s strategy, the allocation of resources and the management framework. It is also responsible for setting the organizational structure, accounting, financial control and financial planning. In addition, the Board of Directors takes responsibility for all sustainability and environmental, social and governance (“ESG”) issues. For further information, see the Corporate Responsibility Report 2023.

The internal structure of our Board of Directors is set out in the Organizational Regulations, which determines the corporate bodies of PolyPeptide, defines their responsibilities and competences regarding management and regulates the functioning and cooperation of the various bodies involved in PolyPeptide’s management. Subject to applicable law and the Articles of Association, the allocation of tasks within the Board of Directors is determined annually by the Board at its first meeting following the general meeting in accordance with section 2.1.1 of the Organizational Regulations.

To operate effectively and allow in-depth focus in specific areas, the Board of Directors has four standing committees (each, a “Committee”):

Except for the election of the Chair of the Board of Directors and the members of the Remuneration and Nomination Committee (which are to be elected by the general meeting), the Board of Directors determines its own organization. It elects the Lead Independent Director and the chair of the Remuneration and Nomination Committee from among those Directors elected to the Remuneration and Nomination Committee at the general meeting, the chair and members of the other Committees, and appoints a secretary who does not need to be a member of the Board of Directors.

Each Committee generally comprises two or more members of the Board of Directors with its own charter governing its duties and responsibilities. The Committees have no decision-making authority of their own (unless provided with such authority by a special resolution of the Board of Directors) and generally act in advisory and preparatory capacities. The Board of Directors remains ultimately responsible for the tasks delegated to the Committees by Swiss law, the Articles of Association or the Organizational Regulations.

The Board of Directors may form additional ad-hoc working groups and standing committees for particular areas within the scope of its duties to deal with specific issues. In 2023, no such additional ad-hoc or standing committees were formed.

At least annually, the Board reviews its own performance, as well as the performance of each of the Committees. Such anonymous assessments seek to evaluate the Board’s contribution to the Group and determine whether each of the Board and the Committees function effectively and efficiently. In addition, these assessments aim to improve governance, identify gaps in skill sets and diversity, as well as define future priorities for the Group. The assessments are reviewed and adjusted as appropriate on an annual basis by the Remuneration and Nomination Committee. For 2023, the self-assessments were prepared by the Company based on customary industry evaluations and questionnaires. Following the completion of the assessments, the Board of Directors reviews the results and discusses areas or opportunities for improvement.

3.5.1.2Chair of the Board of Directors

The Chair calls and chairs the meetings of the Board of Directors and presides over the general meetings. Together with the person keeping the minutes (i.e., the secretary), he or she signs the minutes of the deliberations and resolutions of the Board of Directors. The Chair, together with the CEO, is responsible for ensuring effective communication with shareholders and stakeholders, including government officials, regulators and public organizations. The Chair establishes and maintains a close working relationship with the CEO, providing advice and support to him or her. Furthermore, the Chair seeks to facilitate a constructive relationship between the Board of Directors, the CEO, and the other Board Committee members.

The Chair has the right to call upon third parties as advisors in meetings of the Board. The Committees shall keep the Chair informed on a current basis about all important strategic issues, transactions, the business situation and development, and important organizational changes within their scope of responsibilities and duties. The Chair shall monitor such informational duty of the Committees. The Chair reports to the Board of Directors on information received from each of the Committees. In addition, the Chair shall immediately inform the other Directors of any extraordinary situation regarding the Company or the Group of which the Chair may become aware. Peter Wilden is currently serving as the Chair of the Board of Directors. For more information, see section 3 of the Organizational Regulations.

3.5.1.3Lead Independent Director

The Lead Independent Director is an independent member of the Board of Directors and is elected by the Board of Directors until the conclusion of the next general meeting. If the Chair is indisposed, the Lead Independent Director will take the chair at the meetings of the Board of Directors and the shareholders’ meeting. In particular, the Lead Independent Director will chair the meeting of the Board of Directors or the shareholders’ meeting if the Chair is required to abstain from the deliberation and decision-taking in case the following items are on the agenda: (i) assessment of the work of the Chair; (ii) decision of the Board of Directors on the request to the shareholders’ meeting for the re-election or not of the Chair; (iii) decision about the compensation of the Chair; and (iv) any other matters in which the Chair has a conflict of interest. The Lead Independent Director is entitled to call a meeting of the Board of Directors whenever he or she deems fit. Patrick Aebischer is currently serving as the Lead Independent Director and Vice-Chair. For more information, see section 4 of the Organizational Regulations.

3.5.2Working methods of the Board of Directors

3.5.2.1Overview

Meetings of the Board are held as often as the business requires, but as a general rule at least four (4) times per year, including (i) in the first quarter, inter alia, to approve the annual report and the agenda and invitation to the upcoming general meeting; (ii) immediately after the general meeting, inter alia, to constitute the Board; (iii) in the third quarter, inter alia, to approve the half year financials; and (iv) in the fourth quarter, inter alia, to approve the budget for the next financial year. For each of these meetings, the Chair also generally selects key business or strategic topics for more in-depth focus and discussion, such as operations, customer developments, quality and risk management. Meetings of the Board are convened by the Chair if and when the need arises or whenever a Director or the CEO, indicating the reasons, so requests in writing. If the Chair does not comply with any such request within 14 days, the Lead Independent Director is entitled to call the meeting.

Notice of meetings is given at least five (5) business days prior to the meeting. The notice must set forth the time, place and agenda of the meeting so that Directors may have a reasonable understanding of the business intended to be conducted at the meeting. Directors are provided with all necessary supporting materials at least five (5) business days prior to the meeting. In urgent cases (as determined by the Chair at his or her discretion), a meeting may be held at appropriate shorter notice. If the Chair deems it necessary, supporting materials may also be provided later to allow the Board to receive the latest available information. This applies, in particular, to updates on financial and other relevant data. Board meetings may be held in person, by telephone or by video conference.

The Chair, or in his absence the Lead Independent Director, or in the absence of both, a Director designated by the attending Directors, shall chair the meeting.

If all Directors are present and agree, deviations from the formal requirements set forth in the Organizational Regulations (including those described above) are permitted; in particular, decisions can be taken in respect of items that are not listed on the agenda for the meeting.

In order to pass resolutions, not less than a majority of the Directors must be participating in the meeting (whether in person, by phone or video conference). The Board may pass resolutions with the majority of the votes cast (simple majority). Abstentions count as votes uncast. In case of a tie of votes, the Chair has the casting vote. Board resolutions may also be passed by means of circular resolutions, by letter, facsimile or electronic means (e.g., e-mail or via board management portals/platforms); provided that no Director requests by phone, facsimile or e-mail within five (5) days of receipt of the proposed resolution that the resolution be deliberated in a meeting. Board resolutions by means of circular resolutions require the affirmative vote of the majority of the Directors.

In principle (and as set forth in the Organizational Regulations), the CEO and the other members of the Executive Committee attend designated and selected sections of the meetings of the Board without the right to vote as guests, except where not appropriate (e.g., if particular matters relating to their performance or remuneration are discussed). For example, as a general matter all members of the Executive Committee attend Board sessions dedicated to reports from management, whereas no members of the Executive Committee are present at the non-executive sessions of the Board meetings. Other members of the Group’s senior management are expected to participate at meetings of the Board if specific issues falling within their responsibility are on the agenda. The Chair decides if and which persons outside the Board are entitled to attend meetings of the Board as guests.

The minutes set forth all resolutions passed and reflect in a general manner the considerations that led to the decisions taken, including, where applicable, any statements of attendees expressly made “for the record”. The minutes must be signed by the Chair (or the Director who chaired the meeting) and the secretary. The minutes are available for review prior to the next meeting of the Board of Directors, when it is approved. Directors are entitled to examine the minutes of any Board meeting (as well as any Committee meeting) at any time.

As a general principle, Directors shall arrange their personal and business affairs so as to avoid, as much as possible, a conflict of interest. As set forth in the Organizational Regulations, each Director shall disclose to the Chair regarding any conflict of interest arising from or relating to any matter to be discussed at the meeting of the Board as soon as the Director becomes aware of its potential existence. Directors should neither conclude any investment nor other transactions or accept any benefits that may jeopardize their independent safeguarding of the Company’s interests.

The Chair (or, if applicable, the Lead Independent Director or the Remuneration and Nomination Committee) will decide upon appropriate and commensurate measures to avoid any interference of such conflict of interests with the decision-making of the Company. In the event of doubt, the Chair (or, if applicable, the Lead Independent Director or the Remuneration and Nomination Committee) shall request the respective corporate body (under exclusion of the Directors who are subject to the potential conflict of interest) to determine whether a conflict of interest exists and to decide upon appropriate measures.

As a rule, subject to exceptional circumstances in which the best interests of the Company dictate otherwise, in case of a disclosed conflict of interest a two-stage vote regarding the matter at stake is to be held, first among all Directors and then without the Director subject to the conflict of interest. The Director with a conflict shall have the right to, or may be required by the Chair to provide a statement of their view of the matter. In case of a continuing conflict of interest, the Board of Directors shall decide whether the Director subject to the conflict of interest should be asked to resign or should not be nominated for re-election.

3.5.2.22023 Board of Director meetings and key topics

Since 1 January 2023, the Board of Directors met ten (10) times, in a combination of in-person sessions and video conferences, for an average duration of approximately three and a half (3.5) hours (with individual sessions lasting between one (1) to over six (6) hours).

The following table outlines the dates and the attendees of each meeting of the Board of Directors.

The key topics of the Board of Directors during this period included, among other things:

• Review and approval of the Group’s 2023 budget and mid-term business plan
• Review and approval of the 2022 annual report and audited consolidated financial statements
• Review and approval of the 2022 variable short-term incentive for the members of the Executive Committee
• Review and approval of the AGM 2023 agenda and invitation
• Review and approval of the individual targets and weighting of 2023 variable short-term incentive for the members of the Executive Committee as well as performance targets for the 2023 variable long-term incentive award for the CEO
• Approval of the appointments to and removals from the Executive Committee
• Approval of financing agreements
• Approval of the 2023 half-year report and consolidated financial statements
• Regular review and discussion regarding the Group’s year-to-date sales, financials and full-year outlook as well as monitoring cash flow and net working capital
• Review and consideration of PolyPeptide’s key strategic plans and initiatives
• Monitoring of developments with key customers and operational and profitability improvement initiatives
• Review and monitoring of the Group’s Environmental, Social and Governance (ESG) Roadmap and accompanying non-financial reporting legal obligations
• Review and approval of the Group’s Enterprise Risk Management Report 2023
• Planning and content of the Group’s 2023 annual report and topics related to the 2024 general meeting
• Review of the Group’s budget for 2024 financial year

3.5.3Working methods of the Committees

The Committees act in advisory and preparatory capacities and have no decision-making authority of their own (unless provided with such authority by a special resolution of the Board of Directors). The Board remains ultimately responsible for the tasks delegated to the Committees by Swiss law, the Articles of Association or the Organizational Regulations.

The Committees keep the Chair of the Board of Directors informed on a current basis about all important strategic issues, transactions as well as any business situations and / or developments within their scope of responsibilities and duties. The Chair monitors such informational duties of the Committees. The chair of each Committee provides the full Board of Directors at their meeting with an overview of key topics discussed at the most recent Committee meeting.

Each Committee meets at such frequency as it deems necessary to fulfill its duties, normally ahead of ordinary Board meetings, which are expected to take place at least four times per year. Additional meetings may be held and may be convened at the request of either the Board of Directors or any Committee member. The Audit and Risk Committee further meets upon request of the governance, risk and compliance officer (the “GRC Officer”).

The secretary prepares the agenda for each meeting, keeps the minutes, and assists the Committee and the chair to coordinate and fulfill their duties and assignments. Once signed by the Committee chair and secretary, the minutes (together with all presentation and background materials) of each Committee meeting are made available to the full Board of Directors for their review.

3.5.3.1Remuneration and Nomination Committee

The Remuneration and Nomination Committee is entrusted with preparing and periodically reviewing PolyPeptide’s compensation policy, compensation strategy and principles as well as the performance criteria related to compensation and the accompanying review of their implementation. The Remuneration and Nomination Committee is also responsible for submitting proposals and recommendations to the Board of Directors regarding compensation matters. The Remuneration and Nomination Committee further supports the Board of Directors in preparing the compensation proposals for the general meeting. In addition, the Remuneration and Nomination Committee assists the Board of Directors in relation to the succession planning for and nomination of the members of the Board of Directors and the Executive Committee as well as the corporate governance of the Company and the Group. In furtherance of this, the Remuneration and Nomination Committee, for example, regularly assesses the set of competencies as well as each Director’s contributions to ensure that an appropriate mix of skills, expertise and diversity is represented on the Board of Directors and its Committees. The specific responsibilities and competencies of the Remuneration and Nomination Committee are set forth in art. 19 of the Articles of Association, section 5.3 of the Organizational Regulations as well as the Remuneration and Nomination Committee Charter.

The members of the Remuneration and Nomination Committee are individually elected by the general meeting. The term of office of the members of the Remuneration and Nomination Committee ends at the conclusion of the next ordinary general meeting. Re-election is possible. The chair of the Remuneration and Nomination Committee shall be independent and is appointed by the Board of Directors. As of 31 December 2023, the Remuneration and Nomination Committee consisted of two members: Philippe Weber (chair) and Peter Wilden.

2023 Remuneration and Nomination Committee meetings and key topics

Since 1 January 2023, the Remuneration and Nomination Committee met six (6) times, in a combination of in-person sessions and video conferences, for an average duration of approximately one and a half (1.5) hours.

During the course of 2023, the key topics discussed by the Remuneration and Nomination Committee included, among other things:

• General review and assessment of the continued appropriateness of PolyPeptide’s remuneration principles, strategy and structure
• Review and preparation of compensation proposals for the Board of Directors and Executive Committee for AGM 2023
• Review and initiation of the redesign of PolyPeptide’s long-term incentive program (LTIP), with a focus on the performance targets
• Review of shareholders’ and proxy advisors’ feedback on the Remuneration Report 2022
• Review of the structure and approach to the Remuneration Report 2023, including analysis on remuneration disclosure
• Review of the results of the internal benchmark desk research for the Board of Directors
• Review and preparation of proposals to the Board regarding the achievement of the 2022 variable short-term incentive for the members of the Executive Committee, including individual performance appraisal
• Review and preparation of proposals to the Board regarding individual performance targets and weighting for the 2023 variable short-term incentive for the members of the Executive Committee
• Review and preparation of proposals to the Board regarding of the performance targets for the 2023 variable long-term incentive award for the CEO
• Oversight of the recruitment and the new appointments to the Executive Committee
• Review of succession planning at PolyPeptide
• Review of the results of the self-assessments of the Board of Directors and its Committees
• General update on corporate governance trends and best practices as well as relevant regulatory developments
• Review of shareholder analysis and outreach
• Update on human capital management, including the Group’s human resources mid- and long-term plan and an overview of key people analytics
• Review of material ESG topics assigned to the Remuneration and Nomination Committee
• Review of the Remuneration and Nomination Committee Charter

3.5.3.2Audit and Risk Committee

The Audit and Risk Committee assists the Board of Directors with respect to matters involving the financial and risk management aspects of governance, including the integrity of the Company’s and Group’s financial statements. The Audit and Risk Committee focuses on assessing the adequacy and effectiveness of the Group’s internal and prudential systems and controls in relation to both financial and non-financial risks. This includes compliance with legal and regulatory obligations, insurance and related matters. The Audit and Risk Committee will also obtain reasonable assurance with respect to the activity of the Internal Audit, evaluates the external auditors regarding the fulfillment of the necessary qualifications and independence according to the applicable legal provisions and makes proposals to the Board of Directors concerning the choice of the external auditors. The Audit and Risk Committee is further responsible for the appointment and dismissal as well as the compensation for the Head of Internal Audit. The specific responsibilities and competencies, organization, functioning and reporting of the Audit and Risk Committee are set forth in section 5.2 of the Organizational Regulations as well as the Audit and Risk Committee Charter.

The members of the Audit and Risk Committee are appointed by the Board of Directors. At least one member, including the chair, of the Audit and Risk Committee shall be independent. As of 31 December 2023, the Audit and Risk Committee consisted of three members: Beat In-Albon (chair), Erik Schropp and Dorothee A. Deuring.

2023 Audit and Risk Committee meetings and key topics

Since 1 January 2023, the Audit and Risk Committee met six (6) times, in a combination of in-person sessions and video conferences, for an average duration of approximately two (2) hours.

During the course of 2023, the key topics discussed by the Audit and Risk Committee included, among other things:

• Review of 2022 BDO audit and full-year consolidated and standalone financial statements
• Review of 2023 half-year consolidated financial statements
• Regular review and discussion regarding the Group’s year-to-date sales and financials as well as monitoring cash flow and net working capital
• Review of the Group’s capital expenditure management processes
• Oversight of the Group’s long-term financing strategy
• Oversight of the work of Internal Audit, including compensation proposal for the Head of Internal Audit
• Review of the Enterprise Risk Management Report 2023
• Review of the Group’s compliance programs, including the sanctions and trade compliance program and whistleblower programs, as well as monitoring of IT / (cyber)security matters
• Assessment of the Group’s internal control system
• Review of the Group’s insurance program and treasury policy
• Assessment of the Group’s accounting policies as well as of tax and transfer pricing aspects
• General assessment of yearly business expenses of the members of the Executive Committee
• Review of the status of material legal proceedings, including measures taken by management to protect the interests of the Company and the Group
• Evaluation of the Group’s external auditor
• Review of material ESG topics assigned to the Audit and Risk Committee and engagement of BDO for limited assurance on the Group’s report on non-financial matters for the financial year 2023
• Review of the Audit and Risk Committee Charter

3.5.3.3Innovation and Technology Committee

The Innovation and Technology Committee supports the Board of Directors and Executive Committee through the review of PolyPeptide’s technology plans and strategies, while monitoring existing and future trends in technology related or adjacent to PolyPeptide’s business. The specific responsibilities and competencies, organization, functioning and reporting of the Innovation and Technology Committee are set forth in section 5.4 of the Organizational Regulations as well as the Innovation and Technology Committee Charter.

The members of the Innovation and Technology Committee are appointed by the Board of Directors. The chair of the Innovation and Technology Committee shall be independent. As of 31 December 2023, the Innovation and Technology Committee consisted of two members: Patrick Aebischer (chair) and Jane Salik.

2023 Innovation and Technology Committee meetings and key topics

Since 1 January 2023, the Innovation and Technology Committee met four (4) times in person for an average duration of approximately two (2) hours.

During the course of 2023, the key topics discussed by the Innovation and Technology Committee included, among other things:

• Discussions on PolyPeptide’s green agenda, including the governance, priorities and objectives (i.e., green chemistry, green master plan and relevant KPIs)
• Considerations regarding Process excellence through clinical development
• Discussions on the industrial challenges related to the implementation of new technologies and innovation in peptide development and manufacturing
• Considerations and selected updates regarding strategic collaborations
• Review of material ESG topics assigned to the Innovation and Technology Committee
• Review of the Innovation and Technology Committee Charter

3.5.3.4Chair’s Committee

The Chair’s Committee is intended to serve as a flexible body that nurtures and facilitates a strong relationship, efficient coordination and continuous information exchange between the Chair of the Board, the chair of each Committee and the CEO through roundtable discussions, with particular focus on the Group’s strategy and other key business matters. The specific responsibilities and competencies, organization, functioning and reporting of the Chair’s Committee are set forth in section 5.5 of the Organizational Regulations as well as the Chair’s Committee Charter.

The members of the Chair’s Committee include the Chair of the Board and the chairs of each Committee (i.e., the chair of the Remuneration and Nomination Committee, the chair of the Audit and Risk Committee and the chair of the Innovation and Technology Committee). As of 31 December 2023, the Chair’s Committee consisted of four members: Peter Wilden (Chair), Beat In-Albon, Philippe Weber and Patrick Aebischer.

2023 Chair’s Committee meetings and key topics

Since 1 January 2023, the Chair’s Committee met ten (10) times, in a combination of in-person sessions and video conferences, for an average duration of approximately one (1) hour.

During the course of 2023, the Chair’s Committee discussed various topics of strategic importance and other key business matters, including developments among the Group’s leadership team, long-term financing plans, developments with key customers, operational and profitability improvement initiatives as well as considerations around the Group’s budget for 2023 and then later in the year for 2024.

3.6 Areas of responsibility between the Board of Directors and the Executive Committee

The Board of Directors’ responsibilities, duties and competencies and the procedural principles by which it is governed are specified by Swiss law, art. 17 of the Articles of Association and sections 2 through 5 of the Organizational Regulations. Importantly, the responsibilities of the Board of Directors include determining the strategy of PolyPeptide as well as the appointment, supervision and dismissal of the members of the Executive Committee.

Art. 17 of the Articles of Association sets out the non-transferable and irrevocable duties of the Board of Directors, and in addition to the non-transferable and irrevocable duties set out in art. 716a CO, the Board of Directors has the further non-transferable and irrevocable duties to (i) prepare the report on non-financial matters and other reports as required by law, (ii) adopt resolutions and amendments to the Articles of Association regarding the subsequent payment of capital with respect to non-fully paid-in shares, (iii) adopt resolutions on the change of the share capital to the extent such power is vested in the Board of Directors, confirming changes in the share capital and adopt the consequential amendments to the Articles of Association (including deletions), (iv) examine compliance with the legal requirements regarding the appointment / election of the external auditors, and (v) execute the agreements pursuant to art. 12, 36 and 70 of the Federal Act on Merger, Demerger, Transformation and Transfer of Assets (Merger Act).

While the Board of Directors is responsible for PolyPeptide’s ultimate strategic direction and supervision of management, through the Organizational Regulations the Board has delegated the responsibility and authority necessary or appropriate for carrying out the day-to-day and operational activities of PolyPeptide to the Executive Committee under the leadership of the CEO. Nevertheless, the Board of Directors retains certain duties (in addition to the non-transferable and irrevocable duties described above), such as annually approving the budgets and business plans for the Group, monitoring risks as well as ensuring that fundamental policies and controls are in place for compliance with applicable law and regulations. In addition, the Organizational Regulations set out specific parameters, including financial thresholds, for certain strategic, operational and financial matters that remain within the competence of the Board of Directors. This information is also set out in an authority chart, which is an annex to the Organizational Regulations.

The Executive Committee is responsible for ensuring the execution of the decisions of the Board of Directors and implementing the strategy of PolyPeptide in accordance with Swiss law, the Articles of Association, the Organizational Regulations and the resolutions of the shareholders’ meeting. The Executive Committee is led by the CEO and in 2023 comprised the CEO, CFO, the Director Global Sales and Marketing, the Director Global Operations and the General Counsel, and such other officers as may be determined by the Board of Directors, in consultation with the CEO, from time to time. The Executive Committee has a dual function in the management of PolyPeptide. On the one hand, under the leadership of the CEO, the Executive Committee is responsible for the day-to-day business of the Company (to the extent not reserved to the Board); and, on the other hand, it is responsible for the operational business of the whole Group as well as of each individual site and subsidiary (to the extent that the respective competences are not reserved to the Board pursuant to the Organizational Regulations or are, by law, reserved to the boards of directors of the subsidiaries).

Pursuant to the Organizational Regulations, the CEO is appointed and removed by the Board of Directors upon recommendation of the Remuneration and Nomination Committee. The other members of the Executive Committee are appointed and removed by the Board of Directors upon recommendation of the Remuneration and Nomination Committee and in consultation with the CEO.

3.7 Information and control instruments vis-à-vis the Executive Committee

3.7.1Principles of Board information

The Board of Directors has different information instruments in place to oversee, monitor and control the implementation of PolyPeptide’s strategy as well as the execution of the responsibilities delegated to the Executive Committee.

Specifically, the Organizational Regulations require the CEO, together with the other members of the Executive Committee, to regularly inform the Board and its Committees at its ordinary meetings on the current course of business and all major business matters and important business developments, including anticipated opportunities and risks. Specifically, a report from the CEO is a standing agenda item at each ordinary board meeting where the CEO provides insight on the development of the Group’s business and key strategic initiatives.

In addition, the Chair and the CEO are in contact at regular intervals with respect to all major corporate policy issues. Extraordinary matters, including significant unanticipated developments, must immediately be reported to the Chair. In addition, the Directors shall be informed immediately of extraordinary events by way of circular letter and, if necessary, in advance by telephone, e-mail or facsimile.

Furthermore, each Director is entitled to request information concerning all of PolyPeptide’s affairs reasonably necessary to fulfill his or her fiduciary duties. For Directors requiring information or wishing to review documents outside of ordinary Board meetings, the Director must address their request in writing (including by e-mail) to the Chair. To the extent necessary to fulfill their duties, each Director may further request in writing (including by e-mail) that the Chair authorizes the inspection of the books and records of the Company. If the Chair rejects a request for information, hearing or inspection, the Lead Independent Director or the Board shall decide whether to grant such request.

3.7.2Regular reports to the Board

As noted above, the Executive Committee regularly reports to the Board of Directors and its Committees at their respective ordinary meetings. In addition to these meetings, on a monthly basis the Board of Directors receives sales and financial reports with (i) an executive summary, (ii) an assessment of the Group’s monthly and year-to-date revenue, (iii) the profit and loss statement, the balance sheet and the cash flow statement, (iv) a capital expenditure overview as well as (v) selected Group KPIs, updates on various initiatives and the Group’s outlook. These monthly reports illustrate the actual financial results to-date, along with comparisons to the previous period and the budgeted amounts, all with accompanying commentaries (where relevant). Directors often react to these reports with questions that are responded to by the CFO. In 2023, the Audit and Risk Committee additionally received weekly cash balance assessments and bi-weekly cash projections. Through the Audit and Risk Committee, the Board also receives the reports of PolyPeptide’s external auditor in connection with the audit of the full-year financial statements and the review and procedures performed on the half-year financial statements.

3.7.3Enterprise Risk Management Framework

Beginning in the second half of 2021 and during the course of 2022, the Audit and Risk Committee, together with the CFO, the General Counsel and members of the finance team, implemented an Enterprise Risk Management Framework. While the Board of Directors retains the ultimate responsibility for risk management and for determining the appropriate level of risk that PolyPeptide is willing to accept, the PolyPeptide Management Committee (together with the Audit and Risk Committee) is responsible for ensuring that the operation of the Enterprise Risk Management Framework is sound, including risk management of significant risks through the monitoring of specified actions.

The Enterprise Risk Management Framework is designed to provide a consistent, Group-wide perspective of key risks as well as any other risk areas as they are subsequently identified in connection with ongoing monitoring and updates by risk owners and other stakeholders. The objective of these risk assessments is to (i) make the principal risks to which PolyPeptide is exposed more transparent, (ii) determine treatment measures to control, eliminate and / or exploit the level of the risks / opportunities while monitoring their effectiveness and (iii) ultimately improve risk management. To the extent that the ongoing evaluation of the Enterprise Risk Management Framework discovers significant unanticipated developments, the PolyPeptide Management Committee will immediately report these to the Audit and Risk Committee and the Chair of the Board. The Directors must also be informed of extraordinary events (as described above).

The PolyPeptide Management Committee together with the General Counsel, the Head of Internal Audit and other internal stakeholders annually conduct a risk assessment to identify risks, map probability and impact, and evaluate strategies to address the risks and opportunities identified (e.g., mitigating / managing actions). These mitigating / managing actions are specific to each identified risk and opportunity, and the respective risk owners are responsible for monitoring their implementation and effectiveness. The PolyPeptide Management Committee oversees the Enterprise Risk Management Framework throughout the year.

Based on the annual risk assessment, an Enterprise Risk Management Report is prepared, specifying and assessing the main Group risks in terms of their probability and consequences as well as outlining the mitigating / managing actions, and submitted at least once per year to the Audit and Risk Committee. In addition, the Enterprise Risk Management Report is presented to the Board of Directors at one of their annually scheduled meetings for a deep-dive focus and discussion on risk assessment and management. In 2023, the deep-dive session and approval of the Enterprise Risk Management Report 2023 took place on 5 September 2023. In the Enterprise Risk Management Report 2023, PolyPeptide identified, inter alia, operational, supply chain, commercial, regulatory compliance and information technology / information security risks for which corresponding risk mitigation / managing measures were adopted.

See also chapter Business Review.

3.7.4Internal controls

The Board of Directors is also responsible for designing, implementing and maintaining the Group’s internal control system, which provides the ultimate oversight for PolyPeptide’s strategy, operations and finances. Importantly, the internal control system aims to ensure the integrity and completeness of accounting, to provide timely and reliable financial reporting, and to prevent, minimize and identify errors and irregularities in the financial statements. The Audit and Risk Committee supports the Board of Directors through the assessment of the adequacy and effectiveness of the Group’s internal and prudential systems and controls in respect of both financial and non-financial risks, including through discussions with and reviewing reports from the external auditor, internal officers and management. PolyPeptide’s internal control system is structured to ensure the correct disclosure and adequate coverage of control over all Group activities, with particular attention on areas considered potentially at risk. The external auditor confirms the existence of the internal control system in connection with the year-end audit.

According to the Organizational Regulations, the CFO, in cooperation with the CEO, ensures good financial governance, overseeing all financial planning, budgeting (short- and mid-term), reporting and risk management activities. Furthermore, the CFO leads the implementation of systems and procedures to seek compliance with regulatory requirements for financial information, reporting, disclosure requirements and internal control. The CFO and the Audit and Risk Committee regularly evaluate the risks of material misstatements in the consolidated financial statements and assess if the risks are reduced to an acceptable level by established and planned mitigating controls and processes. Significant risks are also continuously discussed in the meetings of the Executive Committee, the PolyPeptide Management Committee and the Audit and Risk Committee, which all take place on a regular basis. In 2023, the Audit and Risk Committee focused on six key areas of internal controls, specifically (i) revenue, (ii) inventories, (iii) payroll, (iv) property, plant and equipment, (v) financial reporting and closing processes and (vi) valuation of participations. During the course of 2023, the Audit and Risk Committee, together with the CFO and members of the finance team, evaluated key risks of financial misstatements in the identified key areas together with mitigating controls / processes currently in place, all of which were reviewed by the external auditor. In addition, improvement suggestions are submitted by the external auditor on a yearly basis, which are implemented by management in the following year.

3.7.5Internal Audit

In 2023, the Board of Directors, through the Audit and Risk Committee, was further supported by the Internal Audit function within PolyPeptide led by the Head of Internal Audit. Internal Audit’s mission is to ensure that PolyPeptide’s operations are conducted according to high standards by providing an independent, objective assurance function and by advising on best practices. Through a systematic and disciplined approach, Internal Audit helps PolyPeptide accomplish its objectives by evaluating and improving the effectiveness of the Group’s risk management, control and governance processes. As is customary across the industry, the evaluation and internal audit of PolyPeptide’s cGMP activities remain with the Quality department under the supervision of the Director Global Quality.

Internal Audit is responsible for, among other things, (i) developing and implementing annual audit plans using appropriate risk-based methodology, (ii) evaluating and assessing significant merging / consolidating of functions and new or changing services, processes, operations, technologies and control processes at the time of their development, implementation or expansion, (iii) establishing an Internal Audit quality assurance program to ensure high standards of operations, (iv) issuing periodic reports to the Audit and Risk Committee as well as the Executive Committee, (v) participating in any investigations at PolyPeptide and (vi) recommending appropriate actions to correct any deficiencies identified. The Audit and Risk Committee reviews and approves the annual internal audit plan. Further information on the responsibilities of Internal Audit can be found in the Internal Audit Charter, which is an annex to the Organizational Regulations. Functionally, the Internal Audit department reports to the Audit and Risk Committee. Administratively, the Internal Audit department reports to the CFO.

During the course of 2023, Internal Audit with the support of external consultants performed one site audit as well as process audits across four sites. The audit results as well as the results of other consultative projects conducted during 2023 were presented to the Audit and Risk Committee between the second and fourth quarters of 2023. As part of the Audit and Risk Committee’s regularly scheduled meetings, the Head of Internal Audit provides progress updates on the approved audit plan and proposes any modifications to the audit plan if risk priorities change and provides information on the status of management’s corrective actions.

See also chapter Business Review.

3.7.6Compliance controls

PolyPeptide is committed to the highest levels of ethics and integrity in the way that it does business and understands that this is crucial for its continued success and reputation. PolyPeptide’s core values and Code of Business Conduct and Ethics guide its everyday conduct. To monitor these efforts, the General Counsel shall be or shall designate another person as the Group’s governance, risk and compliance officer (“GRC Officer”). Currently, the General Counsel serves as the GRC Officer.

The GRC Officer is responsible for developing and maintaining compliance policies, promoting a culture of responsibility, maintaining risk management, identifying remediation needs, providing training and taking other steps to assist the Group in meeting its legal, regulatory and ethical obligations. The GRC Officer reports to the CEO. However, the GRC Officer also has direct access to the Audit and Risk Committee and reports to the Audit and Risk Committee whenever requested or if there exists a significant compliance or risk issue that involves or implicates a member of the Executive Committee that the GRC Officer believes cannot be or has not been appropriately addressed by, or directly implicates, the CEO.

PolyPeptide has implemented various compliance initiatives and is continuously expanding these to respond to PolyPeptide’s ever-changing dynamic business environment. For example, in August 2022, PolyPeptide constituted a cross-functional Corporate Compliance Committee (the “CCC”) to promote compliance across the organization with a focus on corporate compliance issues and matters, including compliance with securities laws and regulations, data privacy as well as sanctions and trade. In 2023, two new functions, including PolyPeptide’s new Corporate Compliance Manager, joined the CCC, strengthening its promotion of corporate compliance across the Group. The GRC Officer, or a delegate of the GRC Officer, is responsible for reporting on at least a quarterly basis (or more frequently, as needed) to the Executive Committee and the Audit and Risk Committee. Furthermore, in the second half of 2023 PolyPeptide updated its Supplier Code of Conduct and its Code of Business Conduct and Ethics with references to its new Global Supply Chain Policy on Child Labor, and it introduced an updated electronic learning tool aimed at reinforcing the principles set out in the Code of Business Conduct and Ethics.

In addition, PolyPeptide has established and promotes its whistleblower programs and hotlines, where anybody with knowledge or suspicion of illegal activities or irregularities at PolyPeptide can report these observations confidentially and even anonymously. To ensure independence, PolyPeptide has mandated the operation of its whistleblower hotlines to a third-party service provider. As of 31 December 2023, two reports of possible misconduct were received through the available whistleblowing reporting channels. However, each of the whistleblowers withdrew their respective complaints because they considered the reported matter resolved in light of subsequent developments. Nevertheless, internal investigations were carried out under the guidance of external experts and the allegations made in the reports could not be confirmed. The reports were subsequently closed and summarized to the Executive Committee and the Audit and Risk Committee.

The implementation of these and other compliance measures is supervised by and regularly reported to the Audit and Risk Committee at each of their ordinary meetings.

3.7.7Quality assurance

To oversee and monitor PolyPeptide’s quality assurance, the CEO has designated this responsibility to the Director Global Quality who reports to the CEO and is part of the PolyPeptide Management Committee. The Director Global Quality supervises the Group’s quality control and quality assurance functions and is responsible for setting, reviewing, monitoring, revising and implementing the Group’s quality management, quality control systems and quality assurance programs to comply with regulatory requirements and ensure high quality products, processes and related customer support. In addition, the Director Global Quality is responsible for providing results-oriented leadership to sustain and improve an effective and efficient international quality organization comprised of quality operations, quality systems, supplier quality and quality control / analytical development subject matter domains. As of 31 December 2023, Jon Holbech Rasmussen was serving as the Director Global Quality ad interim.

3.8Gender guidelines

As of 31 December 2023, two (2) out of seven (7) members of the Board of Directors were female (29%). The Remuneration and Nomination Committee, together with the Board of Directors, actively considers gender diversity in succession planning of the Board of Directors.