Embracer : Corporate Governance Report

CORPORATE GOVERNANCE REPORT

Artwork from MAGIC THE GATHERING: THE LORD OF THE RINGS: TALES OF MIDDLE-EARTH

© & TM: MEE

MTG: TM Wizards of the Coast

Embracer Group is a global group of creative and entrepreneurial businesses in PC/console, mobile and board games and other related media. The Group has an extensive catalog of over 900 owned or controlled franchises.

With its head office based in Karlstad, Sweden, Embracer Group has a global presence through its ten operative groups:

THQ Nordic, PLAION, Coffee Stain, Amplifier Game Invest, DECA Games, Easybrain, Asmodee Group, Dark Horse Media, Freemode and Crystal Dynamics - Eidos. The Group has 106 internal game development studios and is engaging more than 11,000 employees in more than 40 countries.

B

CORPORATE GOVERNANCE REPORT 2023 / 2024 | EMBRACER GROUP AB (PUBL)

CORPORATE GOVERNANCE REPORT

1. LETTER FROM THE CHAIR OF THE BOARD

1. CORPORATE GOVERNANCE

1. BOARD OF DIRECTORS

1. SENIOR EXECUTIVES

1. CHIEF EXECUTIVE OFFICERS

EMBRACER GROUP AB (PUBL) | CORPORATE GOVERNANCE REPORT 2023 / 2024

1

LETTER FROM THE CHAIR OF THE BOARD

TURBULENT TIMES

CREATE NEW

OPPORTUNITIES

The past financial year presented new challenges and Embracer faced difficult decisions. At the same time, we took important steps to strengthen the company and lay the groundwork for a new exciting chapter in our journey - the proposed transformation of Embracer Group into three standalone publicly listed entities.

Since going public in 2016, Embracer has been on an extraordinary journey. I remember very clearly, having just joined the company as chair of the Board that same year, a conversation with Embracer co-founder and CEO, Lars Wingefors. He had a clear vision: "We are going to build something significant and long-termover time."

In the years that followed, Embracer Group grew rapidly, and today encompasses over 100 studios and some 11,000 employees across more than 40 countries, even after the recently announced divestments of parts of Saber Interactive and Gearbox Entertainment.

Already in 2016, we outlined in the prospectus for the listing at First North that the company "may in the future make other types of investments and acquisitions within the games industry where company management believes the company can add value". Since then, Embracer has successfully and deliberately established itself as a global leader in games and entertainment, expanding its footprint from PC/Console into other seg- ments, and building a portfolio that includes some of the world's most iconic franchises.

By living our values, managing key sustainability risks, and developing our business in an innovative way, we create long-term value for our investors, employees, and other stakeholders.

Our studios and companies deliver remarkable experiences to millions of gamers and fans across the globe. Our exceptional teams have built something truly sig- nificant.

EXPLORING OPTIONS TO MAXIMIZE VALUE

Still, it was clear to us that there was untapped potential in the Group. In November 2022, the Board initiated a special review to explore strategic alternatives to optimize the Group structure. As announced at the time, this could potentially lead to spinoffs. But as 2023 unfolded and market conditions soured, it became evident that our

focus had to be elsewhere, on more immediate actions. We subsequently launched a comprehensive restructuring program to achieve opex and capex reductions, address capital allocation, improve cash flows and lower net debt. The progress of the restructuring program was made more complicated by the prevailing market uncertainty as consumers and businesses have been affected by hampering macro economic factors. Today, after completing the program, we can conclude that Embracer is a much leaner company, better positioned to sustain profitable growth.

The successful implementation and completion of the restructuring program has put us in a stronger position to execute on our transformative strategic plans. The actions that were introduced as part of the program will continue to have a positive and lasting impact on the Group as a whole, as well as on each business, all the way down to studio level. Embracer has, despite notable challenges in the past year, continued to perform well and has proven its ability to make operations more efficient while improving its capital structure.

A NEW CHAPTER IS SET TO BEGIN

Turbulent times can also create new opportunities. The Board has, through the year of restructuring, continued to explore options to maximize value and create the optimal structure to unlock value in the assets that we have within Embracer. In April 2024, based on a rigorous process, we announced the intention to initiate the transformation of Embracer into three standalone publicly listed compa- nies. Our assessment is that this will optimize the Group structure, and ultimately create the best conditions for long-term value creation for shareholders and other stakeholders.

The planned structure and market focus for these respective businesses is a natural evolution for the market-leading platforms we have built in recent years.

2	CORPORATE GOVERNANCE REPORT 2023 / 2024 | EMBRACER GROUP AB (PUBL)

The transformation will enable each company to better focus on their respective core strategies and offer more differentiated and distinct equity stories for existing and new shareholders.

Equally important, it will enable our entrepreneurs, creators and teams to dedicate resources in the most efficient way. And for current and future investors, it will allow greater flexibility to allocate capital between the different companies and as such target attractive market segments. All in all, we are confident that this transformative step, conditional upon the approval of our shareholders, will unlock value for all these businesses and their stakeholders.

In recent years, we have created a solid platform to build from, not the least in terms of a strong corporate culture and in our strategic sustainability work. These efforts will have tremendous long-term value, as we now look towards transforming the Group into three standalone businesses, each with its company-specific agenda but a shared sense of commitment and responsibility.

The Board has played an active role throughout these processes, and we will continue to do so through this next phase. This also involves further bolstering our governance and establishing adequate structures, to the benefit of the new businesses.

The ongoing transformation is truly an exciting moment for Embracer Group, and the next step in our efforts to build something significant and lasting for generations to come.

Kicki Wallje-Lund

Chair of the Board

EMBRACER GROUP AB (PUBL) | CORPORATE GOVERNANCE REPORT 2023 / 2024

3

CORPORATE GOVERNANCE REPORT 2023/24

CORPORATE GOVERNANCE

Embracer Group is a Swedish public limited liability company with registered office in Karlstad, Värmland, whose Series B share is listed on Nasdaq Stockholm. Embracer Group's Corporate Governance is based on the Swedish Companies Act, the Annual Accounts Act, Nasdaq Stockholm's Rule Book for Issuers and the Swedish Corporate Governance Code (the Code), as well as other applicable external laws, rules and regulations, and Embracer Group's articles of association, internal rules and regulations. This Corporate Governance Report has been prepared as part of Embracer Group's application of the Code.

CORPORATE GOVERNANCE

AT EMBRACER GROUP

Embracer Group follows the Code's principle to "comply or explain" and Embracer Group had one deviation from the Code up until the Annual General Meeting 2023, which was then removed following the resignation by Matthew Karch as director of the board. Up until the resignation Embracer Group deviated from Section 4.3 of the Code by having more than one director also working operationally within the Group.

The Corporate Governance Report is examined by Embracer Group's auditor.

Corporate governance is a system of rules, practices and processes by which Embracer Group is operated and controlled. It provides the framework for sound Corporate Governance, responsible business practice and attaining the Company's objectives and creating value in the Group. Well-functioning Corporate Governance principles assure shareholders and other stakeholders that the activities of Embracer Group are characterized by reliability, management and control, openness, clarity and good business ethics. An effective scheme of Corporate Governance for

Embracer Group can be summarized in a number of interacting components, which are described below.

The Board of Directors (the "Board") of Embracer Group is responsible for the Company's organization and the management of its business worldwide and is obliged to follow directives provided by the shareholders meet- ing. The Board may appoint committees with specific areas of responsibility and furthermore authorize such committees to decide on specific matters in accordance with instructions established by the Board. Currently, the Board has established two committees within the Board, the Audit and Sustainability Committee and the Remuneration Committee.

The Chair of the Board directs the work of the Board and monitors the Board's fulfilment of its obligations. The Board annually adopts procedures and instructions for the work of the Board, which set out the principles for work of the Board and its established committees. The CEO of Embracer Group is appointed by the Board to handle the Group's day-to-day management and to lead the Group Executive Management Team, which also includes the Group CFO & Deputy CEO, the Chief of Staff,

GOVERNANCE MODEL

Shareholders/Shareholders' Meeting

Nomination Committee

External Auditors

Embracer Group AB Board of directors

Internal Control

Rules of Procedures for the Board,

Audit and Sustainability Committee

Internal Audit

Function

Committee Instructions and Guidelines

Function

for Remuneration to Senior Executives

Remuneration committee

Company Strategy

Company Policies/Code of Conduct

Business Plan

CEO

Group Executive Management, Extended Management and Operative Groups' CEOs

THQ NORDIC

PLAION

COFFEE STAIN

AMPLIFIER

DECA GAMES

GEARBOX

GAME INVEST

EASYBRAIN

ASMODEE

DARK HORSE

FREEMODE

CRYSTAL DYNAMICS/

EIDOS MONTRÉAL

Operative Groups' management

Employees

4	CORPORATE GOVERNANCE REPORT 2023 / 2024 | EMBRACER GROUP AB (PUBL)

GOVERNANCE FRAMEWORK

Approved by

General Meeting

Board of Directors

CEO/Group Management Team

Operative Groups

Type of Governing Document

Articles of Association

Rules of Procedures incl

instructions and guidelines

Policies/Code of Conduct

Guidelines / Instructions

Instructions and other types

of governing documents

Comments

Policies are principle-based, binding and are an overall declaration of intent that expresses overall intentions and accepted practice in specific areas / process to guide decisions and achieve desired goals.

Policies can be accompanied by Guidelines / instructions which detail the processes etc. that appear in the poli- cies. Recipients of instructions are typically all employees and / or other representatives of the Company, but a specific instruction may also be aimed at a specific specified recipient / recipient group.

Policies and instructions can be further detailed in other types of governing documents, such as routine descriptions, action plans, guidelines, descriptions, manuals and tutorials, which can refer to all employees or be function-basedand local.

Each Operative Group CEO is responsible to identify and implement guidelines and instructions to meet the Group Policy requirements as deemed necessary. If assistance is needed, support is provided from the parent company.

Legal & Governance, the Chief Strategic Partnerships Offi- cer, interim Chief Strategy Officer, the CEO of Coffee Stain and the CEO of Asmodee Group.

The Extended Management Team consists of functions such as the Group Finance Function, Group Legal, Governance and Compliance Function, Group M&A Function, Sustainability Function and other functions implemented to manage Embracer Group.

The Group CFO & Deputy CEO is responsible for leading the Extended Management Team. The Chief of Staff, Legal & Governance is responsible for managing and handling the forums where the operative group CEOs and the Extended Management Team meet. The Chief of Staff, Legal & Governance is also responsible for assisting the CEO in bridging the relationship between the operative group CEOs and the Extended Management Team.

Embracer Group has eleven operative group CEOs. The operative group CEOs Forum consist of eleven CEOs who each head up one of the operative groups plus the Group CEO, Group CFO & Deputy CEO, Chief of Staff, Legal & Governance, Chief Strategic Partnerships Officer and interim Chief Strategy Officer.

Within Embracer Group's decentralized business model the operative group CEOs are responsible for the day-to-day management of the operative groups, with support from the Group Executive Management Team and the Extended Management Team. While the business model is decentralized the governance model is implemented from parent company level to ensure a coherent model that aims to implement Embracer Group's values and gov- ernance, including financial reporting and internal control.

An integral part of Embracer Group's governance model is the governance framework adopted for policies, guidelines and instructions which is briefly described in the chart above. Currently Embracer Group has 17 Group policies in use:

• AI Policy
• Anti Corruption Policy
• Code of Conduct
• Corporate Governance Policy
• Delegation of Authority
• Enterprise Risk Management and Internal Control Policy
• HR Policy
• Information Policy
• Information Security Policy
• Insider Policy
• IT Policy
• Privacy Policy
• Related Party Transaction Policy
• Supplier Code of Conduct
• Tax Policy
• Trade Compliance Policy
• Treasury Policy

In addition, Embracer Group's internal guidelines and instructions provide support and guidance in the integration of our Group policies. At present date Embracer Group has 17 Group guidelines and instructions:

• Accounting Principles and Guidelines
• AI Image Guideline
• Authorization Instruction
• Business Continuity Plan
• Employee Handbook
• Enterprise Risk Management and Internal Control Guideline
• Financial Manual
• Guidelines for Non-Audit Services performed by the External Auditor of Embracer Group
• Insider Q&A
• Instruction for Cash Management and Liquidity

EMBRACER GROUP AB (PUBL) | CORPORATE GOVERNANCE REPORT 2023 / 2024

5

• IP Guideline
• M&A Guidelines
• Onboarding and Offboarding Guidelines
• Password Guidelines
• Privacy Guideline
• Smarter Business Framework
• Whistleblowing Guidelines

General Meeting of shareholders

Pursuant to the Swedish Companies Act (2005:551), the shareholders' meeting is the Embracer Group's highest decision-making body. At a shareholders' meeting, shareholders exercise their voting rights on key issues such as the adoption of income statements and balance sheets, appropriation of Embracer Group's profit, discharge from liability of Board members and the CEO, and election of the Board and external auditors, and amendments to the articles of association. Embracer Group does not apply any special arrangements to the function of the shareholder meeting, either based on the provisions of the articles of association or any shareholders' agreements known to the Company. The annual general meeting ("AGM") is held within six months after the end of the financial year. In addition to the AGM, extraordinary general meetings may be convened when required.

Notice of the AGM, as well as an extraordinary general meeting ("EGM") at which the matter of amendment to the articles of association is to be addressed, shall be issued not earlier than six weeks and not later than four weeks prior to the general meeting. Notices of other EGMs shall be issued not earlier than six weeks and not later than three weeks prior to the EGM. In accordance with Embracer Group's articles of association, notices of AGMs and EGMs are made by an announcement in the Post- och Inrikes Tidningar (the Swedish Official Gazette) and by making the notice available on Embracer Group's website. Simultaneously, an announcement with information that the notice has been issued is to be published in Svenska Dagbladet. Documents related to proposals, proxy voting, postal voting and the minutes recorded at a general meeting are published on the website. The AGM 2024 will take place on September 19, 2024.

Right to attend shareholders' meetings

All shareholders who are directly registered in the share register maintained by Euroclear Sweden AB six banking days prior to the shareholders' meeting (record date) and who have notified Embracer Group of their intention to participate (with potential assistants) at the shareholders' meeting no later than the date stated in the notice have the right to attend the shareholders' meeting and vote for the number of shares they hold. In addition to notifying Embracer Group, shareholders whose shares are nominee registered through a bank or other nominee must request that their shares are temporarily registered in their own names in the register of shareholders maintained by Euroclear Sweden AB, in order to be entitled to participate in the general meeting. Shareholders should inform their nominees well in advance of the record date. Voting registrations made by nominees not later than four banking days prior to the general meeting will be taken into account. Shareholders may attend the shareholder meeting in person or by proxy and

may also be accompanied by a maximum of two assistants. Shareholders can normally register for the shareholders' meeting in several different ways stated in the notice.

Shareholder initiatives

Any shareholder of Embracer Group who wishes to have a matter dealt with at a general meeting must submit a written request to the Board to that effect. The matter will be dealt with at a general meeting if the request has been received by Embracer Group no later than seven weeks prior to the general meeting, or after such date, if it still is in due time for the matter to be included in the notice of the general meeting.

Authorization to issue shares

The AGM 2023 authorized the Board, on one or more occasions for the period before the next AGM, by applying or disapplying shareholders' preferential rights, to resolve to issue new shares in the Company, although, not more than 10 percent of the total number of shares in Embracer Group on the date of the AGM. As of the date of this annual report the Board has issued 10,496,254 of B shares under the authorization. Thus, 123,448,606 B shares may be issued pursuant to the authorization.

Authorization to resolve on repurchase of own shares The AGM 2023 authorized the Board, on one or more occasions for the period up until the next AGM, to resolve on repurchase of own B shares, up to a maximum number of B shares that the Company's holding of own shares corresponds to no more than one tenth of all shares in the Company. As of the date of this annual report the Board has repurchased no B shares under the authori- zation. Thus 133,944,860 B shares may be repurchased pursuant to the authorization.

The share and shareholders

Embracer Group's B shares are traded at the regulated market Nasdaq Stockholm. Information about Embracer shares and major shareholders is provided on pages 79-85 of the annual report 2023/24. Lars Wingefors AB, directly or indirectly, hold shares that represent one tenth or more of the votes for all shares in Embracer Group.

Embracer Group does not hold any own shares.

Nomination Committee

The AGM 2023 adopted principles for appointment of a Nomination Committee, including the tasks of the Nomination Committee and the procedure for appointing its members. The principles that apply until the general meeting resolves otherwise, state that, the Nomination Commit- tee, comprises each of the Embracer Group's five largest shareholders in terms of votes on the last business day of November 2023. The Chair of the board shall convene the first meeting of the Nomination Committee and shall also be an adjunct to the Nomination Committee.

The Nomination Committee applies rule 4.1 of the Swedish Code of Corporate Governance as diversity policy, entailing that the Board shall, with regards to the Company's business, phase of development and other relevant circumstances, have an appropriate composition of Board members elected by the general meeting that

6	CORPORATE GOVERNANCE REPORT 2023 / 2024 | EMBRACER GROUP AB (PUBL)

From left to right: Bernt Ingman, Cecilia Driving, Jacob Jonmyren, Lars Wingefors, Kicki Wallje Lund, Cecilia Qvist and Yasmina Brihi. David Gardner is not present in the picture.

collectively display diversity and breadth in respect of skills, experience and background, and to strive for an equal gender distribution.

The Nomination Committee's proposal for the Board and Auditor will be presented no later than in connection with the publication of the notice to the AGM.

Board of Directors

The Board is the highest decision-making body after the shareholders' meeting and is ultimately responsible for Embracer Group's organization, administration, long-term development and strategy. In accordance with the Swed- ish Companies Act (2005:551) this means that the Board is responsible for establishing targets and strategies, ensuring that procedures and systems are in place for the evaluation of set targets, continuously evaluating Embracer Group's financial position and performance, and evaluating the executive management. The Board is also responsible for ensuring that the annual accounts and interim reports are prepared on time. The Board shall further ensure that Embracer Group complies with applicable laws and regula- tions, the Code, Nasdaq Stockholm's Rulebook for Issuers, Embracer Group's articles of association and internal rules and instructions.

Composition

The Board members, including the Chair of the Board, are elected annually at the AGM for the period until the end of the next AGM and an EGM can also elect new board mem- bers. According to Embracer Group's articles of association,

the Board must consist of at least three members and at most ten members with no deputy members. The articles of association of Embracer Group contain no specific clauses governing the appointment or dismissal of Board members or regarding amendment of the articles of association.

The Board represents a mix of both important qualifications and valuable experiences within areas of strategic importance to Embracer Group. The Board also has a variety of geographical and cultural backgrounds, share the same mindset, has a firm commitment and a strong engagement. After the election at the AGM 2023, the composition of the Board's members is 50 percent women and 50 percent men, which exceeds the Swed- ish Corporate Governance Board's aspiration for each gender to represent a share of at least 40 percent of the Board of Directors. For a presentation of the Board mem- bers, see pages 14-15.

Conflicts of interest

The Board members shall inform the Chair of the Board immediately if they find themselves in a conflict of interest situation. A Board member with a conflict of interest in relation to any matter to be dealt with by the Board may not participate in the discussions or decisions regarding such matter.

Board meetings

In accordance with the Rules of Procedure for the Board, the Board is expected to hold at least five meetings per year at venues to be agreed by the Board, in addition to the

EMBRACER GROUP AB (PUBL) | CORPORATE GOVERNANCE REPORT 2023 / 2024

7

inaugural meeting. The Board meets the statutory auditor at least once a year without the CEO or any other member of the Group Executive Management Team present. The Group CFO and the Chief of Staff, Legal & Governance, who is the secretary of the Board, also attend Board meetings.

Board work and matters for the Board

The Board is responsible for the organization of Embracer Group and the management of its business worldwide. The Board continuously monitors Embracer Group's per- formance, evaluates Embracer Group's strategic direction and business plan as well as other aspects such as adherence to Embracer Group's Code of Conduct.

Sustainability is an integral part of Embracer Group's strategy and the Board and Audit and Sustainability Committee monitors Embracer Group's efforts in that area.

The Chair of the Board is elected by the AGM and has special responsibility for the management of the Board's work and to ensure that the Board's work is well organized and effectively implemented. The Board follows written Rules of Procedure, which are reviewed annually and adopted at the inaugural Board meeting each year or at another board meeting, if necessary. The Rules of Procedure outline the distribution of the Board's duties including the specific role and duties of the Chair, instructions for the division of duties between the Board and the CEO, and the reporting procedure for financial information to the Board. The Board has also adopted specific instructions for the Board Committees, which are linked to the Rules of Pro- cedure. Certain matters that have not been expressly allocated to the Board are delegated to the Board Committees or the CEO as set out in the procedures and instructions for the work of the Board and CEO.

The Board meets according to an annual schedule that is established in advance. Besides these meetings, additional meetings can be arranged to handle questions that cannot be submitted to an ordinary meeting.

To ensure that the Board has good visibility of the Group's operations, the CEO submits a report on the busi- ness, including reporting from the operative group's at all ordinary Board meetings. At the ordinary Board meetings, the CFO also reports on the financials and governance of Embracer Group, including relevant matters relating to trea- sury, hedging, risk management, insurance, compliance and sustainability, as appropriate. The Chief of Staff, Legal

• Governance also reports on certain matters at the ordi- nary Board meetings, including governance, compliance, legal matters, IT and HR. In addition, the Board discusses specific strategic topics of relevance and the Board Com- mittees report on their work. At each Board meeting the Board is also presented with a number of decision items for consideration and approval as set out in the Rules of Procedure for the Board. The Board is also provided with a monthly financial report including items on operations and financials and receives any additional information depend- ing on the specific matter at hand.
  Besides the Board meetings, the Chair of the Board and the CEO continuously discuss the management of Embracer Group.

Evaluation of the work of the Board and the CEO

The Board conducts an annual survey of its work performed during the year. The survey covers areas such as the climate at Board meetings and the allocation of time spent on different topics, the work of the Board committees, the efficiency of the work of the Board, Board leader­ship and relations

8	CORPORATE GOVERNANCE REPORT 2023 / 2024 | EMBRACER GROUP AB (PUBL)