CellaVision : Corporate Governance Report 2021

OVERALL GOVERNANCE STRUCTURE FOR CELLAVISION

CellaVision is a Swedish public limited liability company with its registered office in Lund. Apart from the par-ent company, the Group consists of five wholly-owned subsidiaries in Sweden, the USA, Canada, Japan, France and Singapore, as well as offices for local mar-ket support in the USA, Canada, Brazil, China, Japan, South Korea, Australia, Sweden, United Arab Emirates, France, Germany, the United Kingdom, Mexico, India, Thailand, Spain and Italy. The company's share is listed on NASDAQ Stockholm. CellaVision applies the Swed-ish Code of Corporate Governance (the Code) since its shares were admitted to trading in May 2010 and re-ports no deviations from the Code for 2021.

The term corporate governance normally refers to the rules and structure built up to govern and direct a limited liability company in an effective and controlled manner. Governance and control of CellaVision is divided between the shareholders at the Annual General Meeting, the Board of Directors and the President/CEO, and is regulated in legislation (including the Companies Act), the Articles of Association, the Nasdaq

Stockholm rule book for issuers and the Swedish Code of Corporate Governance. The code is available atwww.bolags- styrning.se.

In addition to legal control and governance principles, CellaVision is also influenced by several internal policy doc- uments, including instructions and rules of procedure for the President/CEO and Board of Directors, as well as internal policies and guidelines.

Shareholders

The share capital on December 31, 2021 was SEK 3,577,732 distributed among 23,851,547 shares. Each share entitles the holder to one vote and each person entitled to vote at a general meeting of shareholders may vote for the full number of shares owned and represented by her or him without limit to the vot- ing right. All shares confer an equal right to share in the compa- ny's assets and profits. CellaVision had 8,030 (9,094) share- holders on the closing date. Of these, three shareholders have direct and indirect holdings constituting at least 10 percent of the votes and capital: William Demant Invest A/S, State Street Bank and Grenlunden AB. No shares are held by the companyitself. For further information about the CellaVision share and shareholders please refer to page 21 and CellaVision's website.

Articles of Association

Articles of Association. The complete Articles of Association can be downloaded fromwww.cellavision.se.

General Meeting of Shareholders

The Articles of Association of CellaVision stipulate that the company shall develop, market and sell products in sample preparation and systems for automated digital microscopy, specializing in software applications for the medical market. The registered office of the Board is in Lund and the company's financial year is a calendar year. In other respects the Articles of Association contains provisions concerning the number of shares, number of board members and auditor and the Annual General Meeting. The Articles of Association contain no separate provisions concerning the appointment or removal of Members of the Board or concerning amendments to the

Shareholders exercise their influence over CellaVision at the General Meeting of Shareholders, which is the highest decision-making body in CellaVision. The General Meeting is called at least once a year and among other things passes reso- lutions on the treatment of the company's and Group's balance sheet and income statement including the appropriation of the company's profits, discharge from liability of the Board of Directors and President/CEO, election of the Board of Directors and auditor, fees to the Board of Directors and auditor and appointment of the Nomination Committee. Amendments to the Articles of Association require a resolution by the General

Meeting of Shareholders. To participate in the General Meeting the shareholder must be entered under his or her own name in the register of shareholders at least five business days before the Meeting and notify the intention to attend to the company at the latest on the date specified in the notice to attend. At the General Meeting the shareholder must in normal cases attend either in person or via a representative. In light of the extraordinary situation that the COVID-19 pandemic entailed, the 2021 AGM was conducted through advance voting (postal voting) in accordance with temporary legislation.

The Annual General Meeting is held in Lund during the first half of every year. In connection with the third interim report

CellaVision's shareholders are informed of the time and place of the Annual General Meeting and of their right to bring a mat- ter before the Meeting. A notice to attend the Annual General Meeting is published no earlier than six and no later than four weeks before the Meeting. An extraordinary general meeting may be held if the Board of Directors considers it necessary or if the company's auditors or shareholders holding at least 10 percent of the shares so requests.

Annual General Meeting 2021

CellaVision's Annual General Meeting was held on Thursday, April 29, 2021. Due to the COVID-19 pandemic, the meeting was conducted only by postal voting without physical participation. The postal votes represented 66 percent (39) of the total votes. Essentially, the following resolutions were passed:

• • The parent company and consolidated income statements and balance sheets were adopted. It was further resolved to distribute SEK 0.75 per share for the 2020 financial year.

• • Discharge from liability of the members of the Board of Directors and the President.

• • Mikael Worning, Christer Fåhraeus, Åsa Hedin, Anna Malm Bernsten, Niklas Prager, Jürgen Riedl and Stefan Wolf were re-elected as board members. Mikael Worning was re-elected as Chair of the Board. Re-election of Deloitte AB as auditor.

• • Fee to the Board of Directors, presented in the table on page 41 and in Note B6 of the annual report.

• • Principles for the Nomination Committee.

• • Remuneration report for 2020.

• • Change in the Articles of Association.

The minutes of the Annual General Meeting were presented on the website within a week of the Meeting. Material from the Meeting, such as the notice to attend, the minutes and informa- tion on the Nomination Committee is available on CellaVision'swebsite. The full resolutions of the Meeting as above are avail- able from the Company at the address Mobilvägen 12 in Lund and will be sent to any shareholder who so requests.

Nomination Committee

The main task of the Nomination Committee is to propose to the Annual General Meeting the composition of the Board of Directors, which is then decided by the Annual General Meeting. The work of the Nomination Committee starts by studying the evaluation of the work of the Board of Directors commissioned by the Board of Directors. The work of the Nomination Committee is characterized by transparency and discussion to achieve a well-balanced Board. The Nomination Committee then nominates members to the Board for the next term of office and submits proposals for remuneration to the Board of Directors and auditors and, where applicable, also for election of auditor.

Nomination Committee for the Annual General Meeting in 2022

In accordance with a resolution of the 2021 Annual General Meeting, CellaVision's Nomination Committee ahead of the 2022 Annual General Meeting shall consist of one representa-tive of each of the four largest shareholders in terms of voting rights at the end of July 2021. The Chair of the Board convenes the first meeting of the Nomination Committee and is co-opted to the meetings of the Nomination Committee. The composi- tion of the Nomination Committee was announced on October 22 in connection with the interim report for January-September 2021. The members of the Nomination Committee and the shareholders who appointed them is presented in the table below. The chair of the Nomination Committee ahead of the 2022 Annual General Meeting is Christer Fåhraeus.

In 2021 the Nomination Committee held six meetings as well as a number of email and telephone contacts. The Nomina- tion Committee proposals are presented, in addition to the press release, in the notice to attend the 2022 Annual General Meeting and are also available on the company's website together with an explanatory statement concerning the pro- posed Board of Directors.

The Nomination Committee has applied Rule 4.1 in the Swedish Code of Corporate Governance as a policy, which sets the principles for diversity on the Board. All nominations of board members are based on merit, the main purpose being to main- tain and improve the board's overall efficiency. It is CellaVision's goal to have a fair, equal and balanced representation of differ-ent genders and other diversifying factors on the board as a collective. Furthermore, the board members appointed by the

Name/Representing

Mikael Worning, styrelseordf. adjungerad. Nicklas Hansen, William Demant Invest A/S Joel Eklund, Grenlunden CEVI AB

Christer Fåhraeus, Christer Fåhraeusand comp. Daniel Klint, SEB Investment Management

Total

Voting share (31/12 2021)

19.93 % 10.02 % 9.61 % 6.55 % 46.11 %

general meeting as a group must present diversity and breadth in terms of opinions, qualifications and experience.

The assessment is that the board as a whole possesses the necessary knowledge and experience of the social and business conditions that prevail where the company's main operations are conducted, and that it exhibits sufficient diver- sity and breadth in terms of characteristics and competence. The gender distribution of the board is still uneven. A balance between the interest in continuity and the interest in an even gender distribution leads the Nomination Committee to the conclusion that an equalization of the gender distribution in the Board must take place over time.

Board of Directors

The Board of Directors and ultimately the President/CEO ad- ministers the affairs of the company on behalf of the sharehold- ers. The Board of Directors appoints the President/CEO, who is responsible for the day-to-day management of the company. The division of duties and responsibilities between the Board of Directors and the President/CEO is clarified in the Board's Rules of Procedure and the Instructions to the President/CEO.

The Board of Directors is appointed by the shareholders at the Annual General Meeting with a term of office up to and includ- ing the next Annual General Meeting. The Board of Directors manages the company on behalf of the owners by establishing goals and strategy, evaluating the operative management and ensuring that there is an effective system for follow-up and control of the established goals. It is also the responsibility of the Board to ensure that the company's information provision is correct, relevant and reliable.

The Board of Directors forms a quorum when more than half of its members are present. Under CellaVision's Articles of Association the Board of Directors must consist of a minimum of three and a maximum of nine members with a maximum of two alternates. The Board holds an inaugural meeting directly after the Annual General Meeting.

Chair of the Board

CellaVision's Board of Directors has been chaired since 2021 by Mikael Worning. The Chair of the Board is appointed by the Annual General Meeting. The Chair of the Board organizes and leads the work of the Board, ensures that the Board regularly develops its knowledge of the company, communicates share- holders' views to the Board and is a support to the President/ CEO. The Chair of the Board and the President/CEO prepare proposed agendas for the Board meetings. It is the responsibil- ity of the Chair of the Board to verify that the Board's decisions are effectively implemented and that the work of the Board is evaluated annually and that the Nomination Committee is informed of the results of this evaluation.

The Board's Rules of Procedure

The Board of Directors adopts rules of procedure for its work annually. The current rules of procedure were adopted on April 29, 2021. In addition to that, the Rules of Procedure are revised as necessary. The Rules of Procedure include a description of the responsibilities and duties of the Board, the duties of the Chair of the Board, audit issues and specify the reports and financial information that the Board must receive before each ordinary Board meeting.

Evaluation of the work of the Board

Under the leadership of the Chair, the Board conducts an annu- al evaluation of its work. The evaluation refers to forms of work and work climate, emphasis of the Board's work and access to

Attendance and renumeration of the Board 2021

Name

Sören Mellstig* Christer Fåhraeus Mikael Worning**Anna Malm Bernsten Niklas Prager

Åsa Hedin Jürgen Riedl

Stefan Wolf

Gunnar Hansen***

Independent of the company

and need for special competence in the Board. The evaluation is used as an aid for developing the work of the Board. In accor- dance with the Swedish Code of Corporate Governance, rele- vant parts of the results are made available to the Nomination Committee.

Composition of the Board of Directors in 2021

In 2021 the Board of Directors consisted of nine members, of which two were employee representatives, with no alter- nates. At the 2021 Annual General Meeting Mikael Worning, Christer Fåhraeus, Åsa Hedin, Anna Malm Bernsten, Niklas Prager, Jürgen Riedl and Stefan Wolf were re-elected as Board Members. Mikael Worning was elected as Chair of the Board. In 2020, the Board was expanded with two Board Members appointed by the unions, Gunnar B Hansen and Markus Jonasson Kristoffersson were re-elected as Board Members appointed by the unions.

The members of the Board have great experience and com-petence in medicine and technology as well as business and international operations. The composition of the Board com- plies with the requirements of the Code regarding independent members. The information that is to be provided under point 10.2 of the Code concerning members of the Board can be found on page 45.

Independent of major shareholder

Yes Yes Yes

Audit Committee 2101-2104

Yes

Audit Committee 2104-2112

Member

Remuneration

Committee 2101-2104

Chairman

No

Remuneration

Committee 2104-2112

Member

Yes

MemberMember

Board fees, SEK t 280

Attendance at Board meetings 3/3

245

9/9

ChairmanYes Yes Yes Yes Yes Yes YesYes Yes Yes Yes Yes Yes Yes

Member

505

9/9

Chairman

Member

Chairman

Member

Markus Jonasson Kristoffersson*** Total

Member

245 265

9/9 9/9

245 225 225 - - 2 235

9/9

8/9

7/9

9/9

8/9

*Sören Mellstig was Chairman of the Board until the Annual General Meeting on april 29, 2021.**Mikael Worning was elected Chairman of the Board at the Annual General Meeting on april 29, 2021. *** Non-paid employee representative. A more detailed presentation of the Board members can be found on page 45 and on the company's websitewww.cellavision.se

Work of the Board in 2021

In 2020 CellaVision's Board of Directors held a total of nine minuted meetings, all of which were conducted as a combina- tion of physical and digital. Four of the meetings were held in connection with the approval of the year-end bulletin and the interim reports. On occasions when any member has been prevented from attending the Chair of the Board has obtained views concerning the decision in advance. Important questions during the year included recruitment of a new President and

CEO, strategy, market assessments and significant risks.

The company's President/CEO and CFO participate regularly in the Board meetings. Other senior executives participate in the Board meetings as necessary. The company's auditor participated in the February Board meeting when the year-end bulletin was approved and in the October Board meeting.

Audit Committee

Risks concerning CellaVision's financial reporting are mon- itored and evaluated by the Board's Audit Committee, whose main task is to support the Board in quality assur- ance of the financial reporting. The Audit Committee has no decision-making authority, it prepares and reports matters to the Board as a whole.

The Audit Committee consists of three members who are all independent in relation to the company and its management as well as being independent in relation to the company's major shareholders: Mikael Worning, Anna Malm Bernsten and Niklas Prager, where Niklas Prager chairs the Committee. During the year the Committee met twice. Questions dealt with are mainly internal control in the subsidiaries, risks, audit planning and governance and follow-up of operations. The company's auditor and CFO participate regularly at the Audit Committee meetings.

Remuneration Committee

The Board of Directors also has a Remuneration Committee, whose main task is to propose principles for remuneration and other conditions of employment for the President/CEO and other senior management in the Group. Ahead of each Annual General Meeting the Committee submits its proposals, in accordance with Chapter 8, Section 51 of the Swedish Compa- nies Act.

In 2021 the Remuneration Committee consisted of members of the Board Mikael Worning, Christer Fåhraeus and Åsa Hedin,

who are all independent of the company and the company management. Mikael Worning chairs the Committee. During the year the Committee held three minuted meetings, and conducted several telephone and email contacts. In addition to guidelines and principles of remuneration to the President/ CEO and other senior management during the year the Committee discussed the company's incentive program for the

President/CEO, management and other staff.

President/CEO and Executive Group Management

The President/CEO is appointed by and receives instructions from the Board of Directors. CellaVision's President and Chief Executive Officer Simon Østergaard who was appointed March 21, 2021 and for the time before Magnus Blixt as Acting

President and CEO; was responsible for the day-to-day man-agement of the company as well as strategic and operative is- sues, in accordance with the Board's guidelines and directions.

The current Instruction to the President/CEO was adopted by the Board on April 29, 2021. The President/CEO prepares information and decision-making data for the Board meet- ings and is presenter at the meetings. The Board of Directors continuously evaluates the work of the President/CEO through monitoring against goals set. Once a year a formal evaluation is made, which is discussed with the President/CEO.

Composition of the management in 2021

The President/CEO has appointed a management team to be responsible for various parts of CellaVision's business. At the end of the year, the Executive Group Management consisted of six people besides the President/CEO:

• • Chief Financial Officer (CFO)

• • VP Business Development

• • VP Human Resources

• • VP Global Marketing

• • VP Devices & Software

• • VP Reagents

Apart from VP Reagents, all the members of the Executive Group Management are at the company's head office in Lund, Sweden. The Executive Group Management holds minuted meetings at which operative issues are discussed. The Executive Group Management draws up a business plan annually, which is adopted by the Board. A more detailed pre-sentation of the President/CEO and the management team can be found on page 46. The information on the President/CEO stipulated in item 10.2 of the Code can also be found there.

Auditor

The administration of the Board of Directors and the President/ CEO and financial reporting is examined by the external auditor elected by the Annual General Meeting. The auditor is proposed by the Nomination Committee and elected by the Meeting for one year. At the 2021 Annual General Meeting Deloitte was re-elected as auditor up to and including the 2022 Annual General Meeting.

The auditor in charge is authorized public accountant Jeanette Roosberg. The task of the auditor is to audit CellaVision's annu- al accounts, accounting records and the administration by the Board of Directors and President/CEO on behalf of the share- holders. Besides the annual audit, the auditor reviews at least one interim report per year. Remuneration to the auditor is payable in accordance with the approved invoice. For amounts please see Note B7.

Remuneration

Salaries, remuneration and other benefits to the Board of Directors, President/CEO and other senior management are reported in Note B6 in the annual report. Remuneration to the Board of Directors can also be followed in the table on page 41.

Guidelines for remuneration to senior management in 2021

The Annual General Meeting 2021 resolved to approve the Board's proposal with guidelines for remuneration to senior executives in CellaVision AB as follows: "The company is to offer commercially based total remuneration that enables the recruitment and retention of senior management. The remu- neration to company management is to consist of fixed salary, benefits in kind, variable remuneration and pension. Fixed salary plus variable salary together constitute the individual's target salary.

The fixed salary is to take account of the individual's areas of responsibility and experience and be reviewed annually. The

distribution between the fixed salary and variable remunera-tion must be in proportion to the responsibility and authority of the person holding the position. The variable remuneration must always be subject to predetermined limits and be linked to predetermined and measurable performance criteria. The variable remuneration to the President/CEO must be based on individual targets established by the Board. These targets shall be linked to the company's overall targets including earnings, sales and/or cash flow. For other senior management variable remuneration is to be based on equivalent targets and targets within their own area of responsibility.

Pension conditions must be commercial in relation to market conditions applicable to others holding equivalent positions and must be based on defined contribution plan solutions. The retirement age is to be 65 years. Severance pay for a member of the management can be payable in an amount equivalent to a maximum of 12 months' salary. The total of the fixed salary during the period of notice and severance pay may not exceed an amount equivalent to two years' fixed salary for the member of management. No separate board fee is payable to a member of management holding a position as member or alternate in a group company board of directors.

The Board of Directors may deviate from these guidelines if there are special grounds for this in an individual case.

Long-term incentive program for senior management CellaVision currently has two long-term programs from the years 2019 and 2021.

The company has an ongoing program from 2019. The program ended on December 31, 2021 and payment will be made in 2022. The outcome is estimated at SEK 1.0 million (excluding social security contributions) based on six senior executives that are included in the program.

Furthermore, the company has an incentive program for senior management from 2021. In the event of a maximum outcome, the company's costs for the incentive program, which runs from January 1, 2021 to December 31, 2023, would amount to SEK 1.4 million (excluding social costs), based on an unchanged salary level and that six senior executives participate in the incentive program.

Principles for long-term incentive program for senior management

According to the AGM resolution from 2021 regarding the prin-ciples for a long-term incentive program for senior manage-

ment, the outcome of the program depends on how the annual average growth of the company's earnings per share develops. Maximum remuneration is paid if the annual average growth of the company's earnings per share over a period of three years starting on January 1, year one and ending on December 31, year three amounts to at least 15 percent annually.

The costs for any future incentive program are calculated according to the same principles as the incentive program which runs from January 1, 2021 to December 31, 2023. To take part in the outcome of an incentive program, the senior executive must be employed by the company as of December 31, year three. Any payment will be made in the fourth year (for example, if the incentive program runs from January 1, 2021 to December 31, 2023, then any payment will be made in 2024).

The decision means that the company, given that the profitabil- ity and sales targets set by the Board at the beginning of the year have been achieved, allocates 30 percent of yearly salary for the CEO, 2 monthly salary for VP Global Sales and 3 monthly salaries for other senior executives participating in the incen- tive program during the period.

Staff incentive program

The Board approved an incentive program for staff in 2020 that ran from January 1, 2021 to December 31, 2021. Eligible staff were those who were not senior management, or covered by other incentive programs and who consequently were not eligi-ble for the incentive program for senior management resolved by the 2021 Annual General Meeting.

The decision meant that the employee receive 0.5 of a monthly salary in the case of maximum outcome. The size of the share depended on the company's performance and sales in 2021.

To participate in the incentive program the employee had to have been employed for at least six months in 2021 and be employed on December 31, 2021. For the 2021 program, the threshold values in the established profitability and sales tar- gets were reached to 41 percent. Thus, the bonus program for staff entailed a cost of SEK 2.1 million for the year.

Proposed guidelines for remuneration to senior management in 2022

The Board of Directors proposes the following guidelines for remuneration to senior management in 2022, as in last year's proposal: "The company is to offer commercially based total remuneration that enables the recruitment and retention of se- nior management. The remuneration to company management is to consist of fixed salary, benefits in kind, variable remuner-ation and pension. Fixed salary plus variable salary together constitutes the individual's target salary.

The fixed salary is to take account of the individual's areas of responsibility and experience and be reviewed annually. The distribution between the fixed salary and variable remunera-tion must be in proportion to the responsibility and authority of the person holding the position. The variable remuneration must always be subject to predetermined limits and be linked to predetermined and measurable performance criteria. The variable remuneration to the President/CEO must be based on individual targets established by the Board. These targets shall be linked to the company's overall targets including earnings, sales and/or cash flow. For other senior management variable remuneration is to be based on equivalent targets and targets within their own area of responsibility.

Pension conditions must be commercial in relation to market conditions applicable to others holding equivalent positions and must be based on defined contribution plan solutions. The retirement age is to be 65 years.

Severance pay for a member of the management can be payable in an amount equivalent to a maximum of 12 months' salary. The total of the fixed salary during the period of notice and severance pay may not exceed an amount equivalent to two years' fixed salary for the member of management. No separate board fee is payable to a member of management holding a position as member or alternate in a group company board of directors.

The Board of Directors may deviate from these guidelines if there are special grounds for this in an individual case.

The Board's report on internal controls and risk management referring to financial reporting

This report on internal control referring to financial report- ing is submitted by the Board of CellaVision and has been drawn up in accordance with the Swedish Code of Corporate

Governance.

Background

Under the Companies Act and the Swedish Code of Corporate Governance the Board is responsible for internal control.

Control environment

The basis of internal control is the overall control environment.

A good control environment builds on an organization with clear decision lines where responsibility and authority are