Ayen Energy

1. CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE STATEMENT

During the reporting period of 2022, the Ayen Enerji A.Ş. has continued to carry out the works as well necessary within scope of the Communiqué on the Determination and Implementation of Corporate Governance Principles issued by the Capital Market Board.

In 2022 reporting period Independent Members of the Board of Directors were appointed by the General Assembly; working principles of committees established within the Board of Directors were reviewed and brought in compliance with communiqués and regulations of the Board; Corporate Governance Committee, the Audit Committee, and the Early Detection and Assessment of Risk Committee were restructured, and working procedures and principles of these committees were determined and published.

Furthermore, the Investor Relations Department was established

in order to communicate with the Shareholders within the context of the Corporate Governance Principles Compliance. The principles, which were not applied from those our Company was not obliged to apply, are explained under the main headings of Shareholders, Public Disclosure and Transparency, Beneficiaries and the Board of Directors in our Report on Compliance with Corporate Governance Principles and the necessary works will be carried out in order to comply with these principles in the subsequent financial years to come as well as long as the sector in which our Company operates, the status of the Company, and the market conditions allow us.

SECTION I - SHAREHOLDERS

2. INVESTOR RELATIONS DEPARTMENT

Pursuant to the Corporate Governance Principles issued by the Capital Markets Board, the “Investor Relations Department” was positioned in a way to directly report to the Board of Directors in 2014.

The following persons were appointed to the Investor Relations Department as the responsible official:

Ahmet Alan               0 312 445 04 64 /1203 aalan@ayen.com.tr

Cenk Eren                 0312 445 04 64 /1202 cenke@ayen.com.tr Activities carried out by the Department are as follows:

• Ensuring that shareholders are able to exercise their shareholding rights; that the records concerning shareholders are kept in a sound, secure, and up to date manner,
• Meeting the written information requests of the shareholders regarding the Company excluding any undisclosed, confidential information or Trade secrets that were not disclosed to public,
• Ensuring that the General Assembly meetings are held in line with provisions of the applicable legislation and the Articles of Associations, preparing the documents that could be utilized by the shareholders, keeping the records of voting results and ensuring that the reports related to such results are sent to the shareholdersifrequested,
• Observing and monitoring all matters related to public disclosure,including the legislation and the Company Disclosure Policy,
• Performing all duties assigned by the Corporate Governance Committee,
• Ensuring that the Material Disclosures are made in line with provisions of the applicable legislation and the principles concerning Material Disclosures to Public and with the aim of enabling the public to access such information on a timely, equal, fair, true, and transparent basis,
• Preparing the List of Corporate Insiders; briefing corporate insiders on the protection of corporate information and compliance with confidentiality requirements until material information, financial statements, and other incidents are disclosed to public and taking the necessary measures,

Written and verbal requests of information received from shareholders and investors were replied within the framework of applicable legislation and Public Disclosure regulations in 2022 reporting period. There was no complaint that information requests were not replied and / or that they included information which are different from those disclosed and / or are not disclosed to the public.

The confidentiality of the information that is currently or potentially in the nature of commercial secret is protected by our Company and the company officials, who possess such information, in a way that such information cannot be known by third persons and be accessible under normal conditions until it is made available to the public. In pursuant to Article 16 of the Communique Serial: II-15.1 published by the CMB (Capital Markets Board), A “List of Corporate Insiders” is prepared and it is updated when any change takes place in the names of the persons with access to such information. Last update was made on February 17, 2023.

3.  EXERCISE OF RIGHTS TO OBTAIN INFORMATION BY SHAREHOLDERS

Shareholders generally request information related to the Company by phone or e-mail. Information requests, that are not in the nature of commercial secret and are not within the context of those needed to be kept for the interest of the company, are answered by authorized officials verbally and/or in writing. The situations, which will affect exercise of the rights of shareholding, are announced to public with Material Disclosures. Written and/or verbal answers are given with Material Disclosures within the framework of disclosures made to the public.

The questions asked by Shareholders in 2022 were generally about the operations of generation plants, annual generation and sales quantities, unitprices,stockperformance, financialstatements, dividenddistribution, Special Case Explanations made to Public Disclosure Platform (PDP), investments, and progress in investments. Such information is posted on the website of the Company under the heading Generation Units, Investments and Subsidiaries. The financial statements, annual reports, independent audit reports, and Material Disclosures of the company for ten (10) years from past to present are published on the Public Disclosure Platform (PDP) and website of the Company and made available to shareholders for information. In addition, minutes of the General Assembly meetings are also posted on the Company’s website.

Articles of Association of the Company does not contain any specific provision with respect to shareholders’ right to request appointment of an independent auditor for inspection of a certain material subject, because this matter is set out in the Turkish Commercial Code No 6102. No such request was received from shareholders in 2022.

4.  GENERAL ASSEMBLY MEETINGS

Ordinary General Assembly Meeting of our Company for the year 2021 was held on April 4, 2022. The call for the General Assembly meeting was duly published as required by the applicable laws and the Articles of Association of the Company and in a manner to contain the agenda of the meeting in the Turkish Trade Registry Gazette No 10289, dated March 11, 2022 as well as in 13.03.2022 issue of the national daily Akşam newspaper and the invitation was also sent to each of the registered shareholders to notify them about the date and time of the meeting and posted on the www.ayen.com.tr website of our Company 21 days before the date of the meeting by including all the necessary information. The quorum for meeting and resolution in General Assembly Meetings is specified in Article 13 of the Articles of Association. Accordingly, General Assembly Meetings and the quorum for resolution during these meetings are subject to the provisions of the Turkish Commercial Code.

The attendance of minimum 50% of Class (A) Shareholders is sought for resolution quorum during General Assembly meetings. It is determined that the TL 3.142.037,798 of the 277.500.000 shares with a nominal value of TL 277.500.000 were represented in person and 235.834.244,386 shares with a nominal value of TL 238.976.282.184 were represented by proxy in the Ordinary General Assembly Meeting of our Company for 2021 and the quorum was recoreded as 86,12%. Requests were made to the Ministry of Energy and Natural Resources and to the Capital Market Board for the attendance of their representatives at ordinary General Assembly meeting; however, the representatives of the Ministry of Energy and Natural Resources and the Capital Market Board did not attend the meeting in the capacity of Observers. No media representative attended the meeting either.

The General Assembly Meeting, in accordance with provisions of the “Regulation on General Assembly Meetings to be Held in Electronic Environments in Joint Stock Companies”, which was issued based on Article 1527 of the Turkish Commercial Code no 6102, was also held in electronic environment. Our shareholders, who were members of the Electronic General Assembly System (EGKS) attended the meeting and cast their votes electronically. No question was held or no information request was done by our partners who attended the meeting via EGKS System.

The announcement concerning the call for meeting and the documents and information related to the matters to be discussed at the meeting were posted on the website of our Company and the annual report for the accounting period was made available for the information of the shareholders at the central office of the Company three weeks before the meeting. Since the agenda contained an item concerning an Articles of Association amendment, the former and new versions of the Articles of Association amendment approved by the Capital Market Board and the Ministry of Customs and Trade as well as the information related to the Independent Members to be elected to the Board of Directors were posted on the website of the Company.

Our shareholders are allowed to ask questions during the General meetings of our company both within and outside the scope of the meeting agenda. Authorized persons and the auditor are present during these meetings to answer the questions to be asked related to both technical matters and financial statements. All members of the Board of Directors also attend the meetings to respond to the questions to be directed to the Company management. Any proposals submitted by the shareholders are included in the agenda and discussed. There were no questions that were requested to be answered in writing by the Shareholder Relations Unit because they were not answered at the General Assembly Meeting. No agenda items were proposed by the shareholders during the meeting.

The policy of our Company related to donations and aids and the cap for the donations to be made were determined and they were submitted to the General Assembly for approval together with the relevant Articles Association amendment and the cap for donations was determined to be TL 750.000 by the General Assembly. In 2022, 163,040 TL aid and donations were made to the association and sports clubs in order to support students and their activities in order to support their education.

Election was made for renewal of Memberships of the Board Directors as per Article 10 of Articles of Association and new Board of Directors was established for the period of three (3) years.

The shareholders were informed with regard to the guarantees, peldges and mortgages given to third parties for the purpose of carrying out the ordinary commercial activities of the Company, the required explanations are provided in the notes of the consolidated financial statements of 2022 fiscal year which were prepared in accordance with the CMB’s communiqué with no Serial:II-14.1 and audited by independent auditors; and that the company has no guarantees, peldges and mortgages in order to guaratee any of its’ liabilities against 3rd parties.

In accordance with Article 366 of the TCC, those who were elected as members of the board of directors at the general assembly meeting dated 04.04.2022 to serve for a period of 1 year as a result of the division of duties among themselves, decided to appoint Mehmet AYDINER as the Chairman of the Board of Directors and Turgut AYDINER as the Vice Chairman of the Board of Directors.

Other articles of the agenda were voted and unanimously accepted by General Assembly. Relevant officials have informed the General Assembly about the articles of agenda, which are not needed to vote. The minutes of the meeting, the list of attendees and other documents pertaining to the decisions taken at the end of the meeting were published on the Public Disclosure Platform (PDP), Central Registry Agency Electronic General Assembly System and the company’s website on the same day.

Our generation license dated 19.03.2020 and numbered EU/9249- 14/04467 for the Çaypınar WPP project established by Ayen Ostim Enerji Üretim A.Ş., one of our subsidiaries, within boundaries of Balıkesir Province Kesput District, was transformed into a multi-source generation plant. In this scope, a 5,5009 MWm SPP (Solar Power Plant) was established as an auxiliary resource and total installed capacity of plan has been increased from 25.2 MWm/24MWe to 30,7009 MWm/24 MWe. In this context, the construction works for the SPP Investment have been completed, its provisional acceptance was made by the Ministry of Energy and Natural Resources on 22.09.2022, and the plant has been put into commercial operation.

Our application to the Energy Market Regulatory Authority (EMRA) to increase installed power of Çaypınar WPP Project by 3.6 MWe was approved by EMRA. Thus, total installed power of our power plant has increased to 34,3009 MWm/27.6 MWe. Our new generation license was delivered to our company by EMRA on 13.02.2023. Following the completion of the necessary legal processes, it is planned to start additional turbine investment studies.

Our application to the Energy Market Regulatory Authority (EMRA) for addition of 6 MWe of power to the wind power plant with a capacity of

31.5 MWe in Akbük, Didim, Aydın, was approved by EMRA. Thus, total installed power of our plant increased to 37.5 MWe. Our new generation license was delivered to our company by EMRA on 27.01.2023. Following the completion of the necessary legal processes, it is planned to start additional turbine investment studies.

Our application to the Energy Market Regulatory Authority (EMRA) for addition of 6 MWe of power to Akbuk II Wind Power Plant with a capacity of 20 MWe operated by our Company in Muğla Province Milas District, was approved by EMRA. Thus, total installed power of our plant increased to 26 MWe. Our new generation license was delivered to our company by EMRA on 07.02.2023. Following the completion of the necessary legal processes, it is planned to start additional turbine investment studies.

5. VOTING RIGHTS AND MINORITY RIGHTS

Class A shares owned by the founders of the Company contain voting right privileges. Class (A) shareholders have 15 (fifteen) voting rights per share at General Assembly meetings while the remaining shareholders have only one voting right per share.

None of the majority shareholders of our Company is in mutual participation. The Articles of Association of the Company do not contain any provisions stipulating the representation of minority interests in the management or cumulative voting rights granted to minority shareholders. This is an arbitrary practice pursuant to the Capital Market legislation. Therefore, no cumulative voting rights are exercised at the general assembly meetings of our Company.

Due to the need for some resolutions to be taken rapidly and because of some difficulties in practice, minority shares are not represented in management.

6.  DIVIDEND RIGHTS

The dividend payout policy of our Company is determined within framework of Turkish Commercial Code, Capital markets legislation, and provisions of the Articles of Association, by taking into consideration the liquidity position of our Company, the financing requirements of the investments being realized, and the capital subscriptions in affiliates. Whether or not the portion remaining after taxes and legal obligations as well as legal reserves are deducted from the Company profit will be distributed or the amount of such distribution is decided by the General Assembly based on the above mentioned criteria. In case dividend is decided to be distributed, this distribution is realized within 30 days after General Assembly meeting. There are no privileges among shareholders with respect to participation in dividend.

At the Year 2021 Ordinary General Assembly Meeting dated 04.04.2022, the net period profit of the Parent Company is TL 111.655.194,00 according to our Consolidated Financial Statements prepared in accordance with the Communiqué Serial: II 14.1 of the Capital Markets Board and Turkish Accounting Standards/Turkish Financial Reporting Standards. The Net Period Profit calculated according to the financial statements prepared according to the legal records kept within scope of the tax laws is TL 36,963,856.59. Accordingly, profit for the period has occurred in the 2021 financial statements prepared in pursuant to TAS/TFRS regulations.

Therefore, a total of TL 5,544,578,49 was set aside as general legal reserve, of which TL 1.848.192,83 is the first order and TL 3.696.385.66 is the second order, from the profit generated according to the legal records of the 2021 accounting period. It was unanimously decided by the attendees of the meeting to distribute the remaining TL 31,419,278,10 to the shareholders as dividends and to allocate TL 72,897.294,58 as extraordinary reserve, which remains after distribution according to the Consolidated Financial Statements. Dividend distribution was made on April 25, 2022 

7. TRANSFER OF SHARES

Even though there are no provisions restricting the transfer of shares in the Articles of Association of our Company, a resolution of the Board of Directors is sought for the transfer of registered shares. Since the Turkish Commercial Code No 6102 stipulates that the transfer of registered shares could not be made difficult except for “Important Reasons”, this provision in the Articles of Association of the Company was accepted with the Articles of Association Amendment Text at the 2012 General Assembly Meeting held on May 08, 2013.

Our main shareholder Aydıner İnşaat A.Ş. converted 5,400,000 of 13,875,000. -TL shares of Group B into type traded in the stock markets in November 2022 and sold them in the market. Necessary explanations regarding this situation were disclosed to PDP by our company in due time. After these sales, the company’s free float ratio increased to 16.96%.

SECTION II – PUBLIC DISCLOSURE AND TRANSPARENCY

8.  COMPANY DISCLOSURE POLICY

The disclosure policy of our company is based on the principle of materiality, excluding those determined with the legislation. Statements made to public are primarily disclosed on the Public Disclosure Platform (PDP) and through the press, when necessary. Meetings are held with press organizations if requested and when required, without being based on certain period intervals. Disclosure policies are determined by the Corporate Governance Committee. The “Shareholding and Shareholder Relations Unit” is responsible for carrying out the Disclosure policy.

Within the framework of the rules concerning Disclosure of Internal Information, the principles concerning which were determined within the context of the Communiqué Serial VII No 15.1 issued by the Capital Markets Board, our Company made an agreement with media tracking companies in order to enable our shareholders and investors to obtain more reliable information in a faster manner pursuant to Article 18 of the Communiqué in case of the emergence of any information or rumors, which are important enough to influence the decisions of account owners and affect the value of capital market instruments and the contents of which are different from the information covered by press and media and previously disclosed to the public by our Company in any manner whatsoever; and the media and important websites as well as news agencies are continuously followed.

The Company prefers not to disclose any information about the future, which might affect the investment decisions of investors and which is based on estimations, to protect the interests of investors.

9. COMPANY WEBSITE AND ITS CONTENTS

The website of our Company is www.ayen.com.tr. All information related to our Company may be accessed from this website. This website contains the trade registry information of our Company, its Articles of Association, Corporate policies, shareholding and management structure, annual reports, periodic financial statements and reports, financial statements that constitute the attachments of the Provisional Tax Return, independent audit and auditor’s reports, generation and investment operations of the Company, Material Disclosures, and the information related to its subsidiaries.

Answers to requests on information concerning privileged shares, final form of the Articles of Association of the Company along with the dates and numbers of trade registry gazettes in which the amendments were published, the agendas of General Assembly meetings, the lists of participants and the minutes of meetings, the sample form for voting by proxy, important resolutions of the Board of Directors that might affect the values of capital market instruments are published in our website. Also, the English version of our website was released in 2014.

10. ANNUAL REPORT

Interim reports prepared by the Board of Directors include Corporate Governance Principles in so far as they are related to the reporting period. Annual Reports contain Corporate Governance Principles in a separate section.

a)   There were no legislative changes that could significantly affect the Company’s operations.

b)  Important lawsuits brought against the company;

- Lawsuits filed by the customers against Ayen Elektrik Ticaret A.Ş for returning of 7 unfairly collected leakage loss fees and TRT Share fees. These are the lawsuits that do not directly affect the financial status, financial structure and continuity of our company, but in any case, we have the right of recourse against distribution companies regarding the results of these lawsuits.

c)   We do not have a mutual participation in which the direct participation rate in the capital exceeds 5%.

In this context, Agreement on Assignment of Receivables and Additional Agreement on Assignment of Receivables and Amendment Thereof were signed and entered into effect as of 18 January 2022.

Agreement on Assignment of Receivables was also approved and registered by the EPIAS on 26 January 2022.

SECTION III – STAKEHOLDERS

11. INFORMING STAKEHOLDERS

With respect to stakeholders, our Company makes the Material Disclosures and performs the necessary informing during both the company operations and the disclosure process within the framework of the Capital Markets Law, the Turkish Commercial Code, Tax Laws and other relevant legislation. Our company has adopted the principles of integrity, reliability and transparency in informing the stakeholders. Every opportunity has been provided in order to enable the stakeholders of our Company to obtain all kinds of information related to our operations. It is possible to obtain all kinds of information regarding the operations of our Company both from the website and by telephone or e-mail or by coming to our Company in person and talking to the relevant person.

Information may be obtained directly from the person in charge or the “Shareholding and Shareholder Relations Unit” and from the members of the Board of Directors when necessary, regarding the operations, the financial position, targets and all other matters concerning the Company, except for those the material condition of which was not stated or announced to the public. Besides, the annual report of our Company, which is issued every year, is sent to all the persons, who make a request and posted on our Company website.

All recommendations and requests of the interest holders of our Company are evaluated by our Company management and the relevant persons are informed about the results of such evaluations. Although specific statistical data are not compiled on the matter, a large number of written and oral information requests, which were received especially through the website of our company in 2022, were satisfied and answered after being evaluated in compliance with the Capital Market legislation and within the framework of the statements previously announced to public through Material Disclosures, except for those in the nature of trade secrets.

In relation with this matter, our Shareholder Relations Unit is continuing to work in coordination with the Corporate Governance Committee formed in 2014 to meet the information requests to be received from the stakeholders.

12. STAKEHOLDER INVOLVEMENT IN MANAGEMENT

Involvement of the stakeholders in management is not possible, since it might delay some decisions that should be taken swiftly and hinder the operations of the Company. Neither the transparency policy of our Company, nor the transparency of its activities, and the simplicity of the Company affairs require the involvement of stakeholders in management. Stakeholders are sufficiently informed about the operations of our Company with the statements announced to the public, through the website of our Company and their personal participation in general assembly meetings; and their recommendations are taken into consideration by the management as well. Recommendations made to the Company management both during and outside General Assembly meetings are examined with great care and due diligence and the relevant person is informed about the result.

13. HUMAN RESOURCES POLICY

The human resources policies of our Company are determined based on education, development, performance, skills, loyalty, and equality.

These criteria constitute the basis for both recruitment policies and career planning. Any decisions taken related to the employees or any developments that concern them are notified to the employees or their representatives.

Description and distribution of duties as well as performance and reward criteria are determined by the managers and announced to the employees.

Productivity and the criteria given above, which constitute the human resources policies, are taken into consideration in determining the wages and other benefits provided to the employees.

Safe work environment and conditions are provided for employees and such environment and conditions are continuously improved. Employees are not discriminated based on their race, religion, language or gender, human rights are respected, and the necessary measures are taken in order to protect the employees against physical, mental and emotional abuse within the Company.

Providing a safe working environment in generation Units of our Company constitute one of the most important issues for our Company. Our employees are sent to training in authorized organizations in addition to the measures defined in occupational health and safety regulations.

14.  CODES OF CONDUCT AND SOCIAL RESPONSIBILITY

The codes of conduct established by the Board of Directors have been adopted by all company employees and the measures for compliance with such codes have been taken by the Company.

Company executives and employees may not use the confidential information that is not open to public in favor of themselves or others, may not provide information, disseminate news or make comments about the Company that are false, incorrect, misleading, or unsupported. The executives may not accept direct or indirect gifts related to the Company operations and obtain unfair advantages. Information belonging to the Company that is in the nature of trade secrets is confidential and may not be disclosed.

Our Company is keen on its social responsibilities. Regulations concerning the environment, consumers, and public health as well as ethical rules are respected.

Within the framework of these rules, our Company has directed its investments towards renewable energy sources. Each of investments belonging to our Company is environment friendly. Because of this, our Company generates energy from natural and renewable energy sources that do not pollute the environment or damage the natural and historical texture of the geography. By generating energy from natural and renewable sources, our Company is both environment friendly and undertakes the mission of providing economy with natural resources of our country.

No law suits have been filed against our Company for damaging environment since its foundation. Environmental Impact Assessment reports are available for all investments of our Company.

As a result of importance and value it places on environment, our Company has taken a forested land with an area of 1,505 decares in Ankara – Kızılcahamam under protection and provided our country, the forests of which are being continuously destroyed, with a valuable forest by planting hundred thousands of trees on this land. Detailed information about our social responsibility projects is provided in the relevant sections of our annual reports.

SECTION IV – BOARD OF DIRECTORS

 15. STRUCTURE AND FORMATION OF THE BOARD OF DIRECTORS

The Board of Directors of our Company comprises of at least 7 (seven) members, elected by the General Assembly, of whom 5 (five) are nominated among Class (A) shareholders.

There is 1 (one) female member appointed in the Board of Directors of our Company.

Except for independent Board of Directors’ Members, all members of the Board of Directors are in Executive position.

The Statements of Independence of the Independent Board of Directors’ Members are provided at the end of the Report on Compliance with Governance Principles.

In principle, people with a high level of knowledge and skills, who are qualified and who have a certain level of experience and background, and in addition, who are familiar with the energy sector and has knowledge of the energy market are nominated as candidates and elected as Board of Directors’ Members. However, general principles with this regard are not included in the Articles of Association of the Company.

Even if not specified in the Articles of Association, the people nominated as Board of Directors’ member candidates are selected among those who were not convicted of violating the capital markets legislation, the insurance legislation, the banking legislation, the legislation concerning the prevention of money laundering and the legislation on lending money and/ or who were not sentenced to heavy imprisonment or imprisonment for more than five years, except for negligent offenses, even if they were pardoned, or who were not convicted for disgraceful offenses such as embezzlement, extortion, peculation, bribery, theft, forgery, swindling, breach of trust, fraudulent bankruptcy, and smuggling other than smuggling for use and consumption; or for acting in conspiracy in official tenders and buying and selling transactions or disclosing state secrets, for tax evasion or attempting to or taking part in tax evasion. Those who are nominated as Board of Directors’ members are the people with the ability to read and analyze financial statements and reports, the basic knowledge on the legal regulations, to which the Company is subject both in its daily operations and long term transactions and dispositions, and the possibility and decisiveness to participate in all the meetings projected for the period they are elected in.

16. NUMBERS, STRUCTURES, AND INDEPENDENCE OF THE COMMITTEES ESTABLISHED WITHIN THE STRUCTURE OF THE BOARD OF DIRECTORS

The Board of Directors of our Company was held on June 24, 2014 and delegated the duties of Early Detection and Assessment of Risk, which were previously performed by the Corporate Governance Committee of the Board of Directors to the Early Detection and Assessment of Risk Committee established within the Board pursuant to the amendments made to the Capital Market Board Communiqué Serial IV No 56 on the Determination and Implementation of Corporate Governance Principles.

 Accordingly, the said committees were formed as follows:

The duties of the Nomination Committee and the Remuneration

Committee have been fulfilled by the Corporate Governance Committee. The working principles and procedures of the committees were reviewed, put into writing, and published.

Under the Corporate Governance Principles Communiqué (Serial II-17.1) Article 11, it was decided to establish an “Investor Relations Department” and assign Cenk Eren who holds “Corporate Governance Rating License” as the department manager under direct supervision of the General Manager.

The Audit Committee was held 5 times during 2022 reporting period. Four of these meetings were held in relation with the auditing and acceptance of the Financial Reports; a report in the direction of accepting the financial statements was prepared and submitted to the Board of Directors.

Responsibility for solo financial statements of all companies under consolidation as well as consolidating these financial statements belong to the Finance department of Ayen Enerji A.Ş. Responsibility for auditing financial works processes that require audits as per risk assessment studies by the Audit Coordination Management and senior management belongs to the Audit Coordination Management. Furthermore, consolidated financial statements prepared annually by Ayen Enerji A.Ş. are also subject to independent audit.

The other meeting was held concerning the principles and procedures of the Audit Committee conduct and the adopted principles and procedures were reported to the Board of Directors.

The Corporate Governance Committee held 2 meeting during the 2022 reporting period.

17. PRINCIPLES OF OPERATION OF THE BOARD OF DIRECTORS

Board of Directors meetings are held whenever the business activities of the Company require. Since the members of the Board of Directors are often together, the procedure regarding the call for meeting is not applied and active participation in the meetings is achieved whenever necessary. The Board of Directors is informed in detail about the operations of the Company during monthly performance meetings.

• Each member has 1 (one) voting right in the Board of Directors.
• Resolutions are taken by simple majority of those attending the meeting.
• The Board of Directors met 17 times in 2022 reporting period, majority participation by the members was achieved and the resolutions were passed by unanimous vote.
• No dissenting votes were cast during the meetings held by the Board of Directors within the 2022 reporting period.
• No related party transactions or material transactions, which needed to be submitted to the General Assembly for approval due to lack of approval by Independent Board of Directors’ Members took place within 2022 reporting period.

18. RISK MANAGEMENT AND INTERNAL CONTROL MECHANISM

Our Company is subject to the legislation and regulations of the Ministry of Energy and Natural Resources and the Energy Market Regulatory Authority with respect to its operations since it is engaged in generating energy. The investment and operating expenses as well as other operations of the Company are inspected by these organizations. In addition, enterprises holding licenses are subjected to independent audit by the Energy Market Board.

The risks detected within the structure of the Group are explained in detail below.

•  Operational risks

Risks originating from clients

The entire amount of the electricity generated by the Yamula HEPP is sold to Türkiye Elektrik Ticaret ve Taahhüt A.Ş. (TETAŞ). TETAŞ provides a purchase guarantee for the electricity generated.

The energy prices are collected within 30 days following delivery based on the foreign exchange rate effective on the date of payment and a regular cash fl ow can be ensured as a result.

Electricity generated by the Akbük Wind Power Plant, Mordoğan Wind Power Plant, Korkmaz Wind Power Plant, Çaypınar Wind Plant, and Büyükdüz HEPP is marketed by our subsidiary Ayen Elektrik Ticaret A.Ş.

Our Çaypınar WPP facility will generate power within scope of YEKDEM, which will continue until the end of 2030.

Electricity Energy generated by AYEN AS Energji SHA is marketed in European Energy Markets at existing market conditions via AYEN Energy Trading SHA in Albania, AYEN Energy Trading d.o.o. in Serbia, and Ayen Energjia d.o.o in Slovenia.

Electricity sales prices are determined by taking the unit prices set in compliance with the Electricity Market Balancing and Settlement Regulation (DUY) and rates set by TEDAŞ.

The invoice amounts are paid within 7 business days following the date of delivery of the invoice by the Market Operator (PMUM). Any delays in payments are calculated pursuant to the delay provisions applied by PMUM and collected against invoice.

In addition, according to the Renewable Energy Law No. 5346, the power generation enterprises based on Renewable Sources are given a purchase guarantee of 7.3 USD/cent for the unit kWh energy they generate for 10 years, and 9.4 USD/cent for generation plants that use domestic additives.

In addition, Ayen Elektrik Ticaret sells the electricity bought from Ayen Enerji A.Ş. to eligible consumers through bilateral agreements. The average collection period for the invoices is 15 days. Ayen Elektrik Ticaret uses Letters of Guarantee and other such instruments to guarantee the collections from the energy sold. Any delays in payments are calculated pursuant to the delay provisions applied by PMUM and collected against invoice.

Risks originating from the product

Electricity generation risks that may arise on the source level are mitigated by diversity of our current portfolio and by bilateral supply agreements of our trade company.

Ensuring security of supply for electricity is the responsibility of the relevant governmental agencies and distribution companies.

Risks arising from external factors

We have a unit operating within the structure of the Group to maintain our competitive advantage and to perform price analysis. The credibility of potential clients is analyzed and supply and sales agreements are made on the basis of a risk classification. This way we aim to create a long termed relationship with our clients where we can maintain our competitive advantage.

Operational Risks or Damages on Stakeholders and Environment

We consider that work safety, health, and environmental supervision constitute integral and vibrant parts of our complete operation and we lay particular emphasis on implementation of work safety, health, and environment measures.

We act in accordance with all applicable laws, regulations, and other legislation in all countries we operate.

We give particular importance to equip all of our employees with necessary work safety, health, and environment training. We aim at constant improvement of our work safety, health, and environmental protection performance.

Legal risks

All legal outcomes are assessed by the senior management prior to start the procedures for main operations. The Group conducts all of its operations with assistance from its legal consultants to avoid any legal risks that may be imposed.

Our Company has made provisions for our pending lawsuits.

19. STRATEGIC GOALS OF THE COMPANY

The mission of our Company is “to sustain Ayen Group’s place in the growing energy sector, to build-up its position by playing a role in feasible and efficient energy investments and to keep being an effective part of the sector” while the vision is “While giving priority to natural and renewable sources, to bring all energy resources to country’s economy, using advanced technologies”

The projects, which are set forth as a result of attentive works performed by our project team, working within the framework of this mission of our Company are submitted to the management in the form of a report. These reports are evaluated with all their aspects, and taking into consideration the rights of the shareholders, approval is given for those that are found appropriate to be put into practice. The projects implemented are subjected to monthly performance evaluations and analysis on the targeted and actual generation, cost, profitability, and liquidity are realized.

20. FINANCIALRIGHTSGRANTEDTOTHEBOARDOFDIRECTORS

Benefits provided to Senior Executives in the 2022 financial year are described in the annotations of the Consolidated Financial Statements subjected to independent audit.

The Board of Directors’ Members of our Company, excluding Independent Members, do not receive any remuneration for their Board of Directors’ Membership.

Ayen Enerji A.Ş. Remuneration Policy for the Board of Directors’ Members and Senior Executives of Ayen Enerji A.Ş. Remuneration Policy covers a description of the remuneration policy for the Board of Directors’ Members and senior executives of Ayen Enerji A.Ş. within the framework of regulations set out by the Capital Market Board.

Excluding Independent Members, the General Assembly may decide on the remuneration and the amount of remuneration to the Board of Directors’ Members.

The General Assembly shall determine the amount of remuneration to be paid to Independent Board of Directors’ Members in a manner to ensure their independency. No performance-based or stock optionbased remuneration method shall apply for the remuneration to be paid to Independent Board of Directors’ Members.

The remuneration to be paid to Senior Executives shall be fixed and determined on the basis of the relevant executive’s fitness for her/ his position in terms of her/his level of knowledge and experience, her/his experience, and her/his performance in delivering the vision, mission, and strategic goals of the Company as well as helping the shareholders achieve their common goals, in addition to a fixed remuneration. The remuneration of senior executives and committee members, who are not Board of Directors’ Members, shall be set by the Corporate Governance Committee within the framework of our Remuneration Principles and determined by the Board of Directors.

Our Company may not lend any monies or extend any loans to any Board of Directors’ Member or Senior Executive nor may it allow any Board of Directors’ Member or Senior Executive obtain any personal loans through any third person or give any collaterals in favor of them such as a surety.

Our Company has not lent any money or extended any loans to any Board of Directors’ Member or executive.