As of 2006, Terna has adopted the new Corporate Governance Code for listed companies published by Borsa Italiana in March 2006 and already since 2007 has approved the updates to the Corporate Governance system in place within the Company to meet its commitments arising therefrom, that were implemented also with respect to the updates of the Governance Code published in March 2010, and up to the approval date of the 2011 draft Financial statements, as illustrated here below.

Therefore, the Corporate Governance system in place at Terna is in line with the principles of the March 2006 edition of the Governance Code, updated in March 2010 (hereinafter “Governance Code”), with CONSOB recommendations in this respect and, more generally, with international best practices.

This Corporate Governance system is mainly based on creating value for shareholders, taking into account the social meaning of the Group’s activities and the resulting need to adequately consider all stakeholders in the performance of those activities.

Since 2004, the year the Company’s shares were listed on the Italian Stock Exchange, Terna provides, with an appropriate annual Report, information regarding the development of its Corporate Governance system with respect to the provisions of the Governance Code.

Furthermore, already as part of the annual report for 2008, Terna provides with its report on Corporate Governance a special section where it provides the information envisaged in Article 123-bis of Legislative Decree no. 58/98 (Consolidated Law on Finance).

This Report on the corporate governance was drafted - taking into account the indications by Borsa Italiana with the support of Assonime - also with the specific references in the provisions of the Consolidated Law on Finance and supplemented with an appropriate attachment that illustrates the main characteristics of the existing risk management and internal control systems with regard to the financial informative note.

Failure to comply with certain provisions of the Governance Code is explained in the section of the report that concerns the relative practice of governance otherwise applied by the Company.

All the information included in the report, unless otherwise specified, was updated on the basis of information available as of the date of the Report’s approval.

With regard to amendments to the Governance Code published in December 2011 by the Corporate Governance Committee promoted by Borsa Italiana, ABI, Ania, Assogestioni, Assonime and Confindustria, this Report supplies information that the Committee deems must be provided during 2012 with respect to succession plans of executive directors. Information on acceptance of the remaining provisions of the 2011 edition of the Governance Code will be given in subsequent fiscal years based on the timetable for the adjustments provided for by the transitional rule. Therefore, all references to the recommendations of the Governance Code, if not otherwise specified, must be construed as referring to the Governance Code of listed companies published by Borsa Italiana in 2006, as amended in March 2010.