| 2. |
Shareholders and General Meeting |
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| 2.1 |
Shareholders |
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| 2.1.1 |
In the context of the possibilities provided for in the Articles of Association, the shareholders of Mühlbauer Holding AG & Co. KGaA shall exercise their rights before or during the Annual General Meeting and, in so doing, exercise their vote. |
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| 2.1.2 |
Every Company share is granting one vote. The owner of the share no. 1 is also entitled to send one third of all the members of the Supervisory Board of the shareholders onto the Supervisory Board. There are no shares with majority voting rights or preferential rights (“golden shares”) or highest voting rights. |
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| 2.2 |
General Meeting |
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| 2.2.1 |
The personally liable shareholder shall present the annual report and the Group financial statements at the General Meeting, which shall decide on the adoption of the annual report, the dividend distribution, and the discharge of the personally liable shareholder and the Supervisory Board. In addition it elects the shareholder representatives on the Supervisory Board who are to be elected at the General Meeting, and as a rule also the auditor.
In addition, the General Meeting decides on
- alterations to the constitution,
- important Company matters such as in particular Company contracts and reorganisation,
- the issue of new shares or of convertible bonds and option bonds and
- authorisation to purchase its own shares.
It can resolve the approval of the personally liable shareholder’s system of remuneration. |
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| 2.2.2
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When new shares are issued the shareholders have in principle a rights issue which corresponds to their share of the capital stock. |
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| 2.2.3 |
Every shareholder of the Mühlbauer Holding AG & Co. KGaA is entitled to attend the General Meeting, to speak there about items on the agenda, to ask relevant questions, and to make relevant requests. |
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| 2.2.4 |
In the interest of all shareholders the chairman shall ensure that the General Meeting proceeds smoothly and speedily. The chairman shall take measures for an ordinary General Meeting to be concluded after 4 to 6 hours. |
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| 2.3 |
Invitation to the General Meeting, absentee vote, proxy |
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| 2.3.1
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The personally liable shareholder shall convene the General Meeting at least once a year, stating the agenda. Shareholder minorities are entitled to request the convention of a General Meeting and the extension of the agenda.
The company will not only display the reports and documents required by law for the Annual General Meeting, including the Annual Report, and forward these to the shareholders on request, but publish these on the company’s internet presence, together with the invitation to and the agenda of the Annual General Meeting. The same applies to the forms for a postal vote, insofar as the personally liable shareholder makes use of the authority he has been granted for this purpose. After the Annual General Meeting, the results of the vote will also be published on the internet presence.
At the end of the General Meeting the results of the voting will also be published on the Internet page. |
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| 2.3.2 |
The Company shall announce to all domestic and foreign financial service providers and to all shareholders and shareholders’ associations the convention of the General Meeting together with the documents of the convention by electronic means if the approval requirements are fulfilled. |
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| 2.3.3
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The Mühlbauer Holding AG & Co. KGaA shall make it easy for shareholders to execute personally their rights, shall support them in absentee vote and in the representation of their voting rights, and shall appoint a representative for the execution of their voting rights in accordance with their instructions. He shall also be available during the Annual General Meeting. |
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| 2.3.4 |
In utilising his authority to enable the shareholders of the limited partnership to follow the Annual General Meeting by means of modern communication media (e.g. internet), the decision of the personally liable shareholder is based on the extent to which the expense and effort involved are in an appropriate ratio to the benefit for the shareholders of the limited partnership. |
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| 3. |
Cooperation between the personally liable shareholder and the Supervisory Board |
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| 3.1 |
The personally liable shareholder and the Supervisory Board shall cooperate closely for the benefit of the Enterprise. |
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| 3.2 |
The personally liable shareholder shall vote with the Supervisory Board on the strategic orientation of the Company and shall discuss the state of the execution of the strategy with them at regular intervals. |
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| 3.3 |
Where transactions of significant importance are concerned, agreement reservations in favour of the Supervisory Board are laid down in the constitution. These include decisions or measures which exceed predetermined reference figures and considerably alter the situation of the Enterprise with regard to its property, finances, or profits. |
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| 3.4 |
The personally liable shareholder and the Supervisory Board shall regard the Supervisory Board’s information supply as a joint task and as an important element of their cooperation.
The personally liable shareholder shall inform the Supervisory Board regularly, topically, and fully about all the questions involving planning, Enterprise development, risk situation, and risk management, that are relevant to the Enterprise. He shall deal with deviations in the course of business from the plans laid down and the targets, stating the reasons therefor.
The Supervisory Board has closely defined the personally liable shareholder’s obligations with regard to information and reports. Reports to the Supervisory Board by the personally liable shareholder are usually to be presented in the form of a text. Documents that are essential for decision-making, especially the annual report, the Group financial statements, and the auditor’s report, are to be passed on to the members of the Supervisory Board as soon as possible before the Meeting. |
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| 3.5
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The personally liable shareholder and the Supervisory Board are jointly of the opinion that an open discussion between the personally liable shareholder and the Supervisory Board both in the management and on the Supervisory Board is an absolute essential for good Enterprise management. They shall therefore make use of all the possibilities for discussion openly and cooperatively. The complete maintenance of confidentiality in such matters is of great importance.
All the members of the Management Board and the Supervisory Board are under obligation to maintain it, and they also guarantee that the members of staff whom they have let into the secrets will also observe their obligation to maintain confidentiality in the same way. |
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| 3.6 |
If necessary, the Supervisory Board shall meet without the personally liable shareholder and without the mangement. |
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| 3.7 |
In the event of a take-over offer for the Company, the personally liable shareholder and the Supervisory Board shall state their opinions thereto, giving their reasons, so that the shareholders can make their decision about the offer in full awareness of the facts.
After the announcement of a take-over offer, the personally liable shareholder shall not undertake any activities – other than those of the usual business transactions – through which the success of the offer might be prevented unless he has been empowered to do so by the General Meeting or the Supervisory Board has agreed thereto. The personally liable shareholder and the Supervisory Board are tied in their decisions to the best interests of the shareholders and the Company.
In the eventualities mentioned above, the personally liable shareholder shall convene an extraordinary General Meeting in which the shareholders can discuss the take-over offer and if necessary decide on company-judicial measures. |
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| 3.8 |
The personally liable shareholder and the Supervisory Board shall observe the rules concerning the proper running of the Company. If they violate the due care of a proper, conscientious manager or member of the Supervisory Board by their own fault, they shall be liable for compensation to the Company. In the case of business decisions an infringement of duty is not present if the personally liable shareholder or the member of the Supervisory Board could reasonable believe, based on appropriate information, that he was acting in the best interest of the Company (Business Judgment Rule).
The Company has an insurance policy to cover any damages caused by the executives of the Mühlbauer Group in their activity (D&O insurance), which also covers the members of the Management Board and the Supervisory Board. |
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| 3.9
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The Enterprise shall not grant any credits to members of the Management Board or the Supervisory Board or to their relations without the approval of the Supervisory Board. |
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| 3.10 |
The personally liable shareholder and the Supervisory Board shall report annually in the Group’s financial statements about the Company’s Corporate Governance (Corporate Governance Report), and shall represent therein any deviations from the recommendations of the Codex of the Government Commission German Corporate Governance giving their explanations.
Declarations of conformity regarding the Code, which are no longer up to date, will be made available on the company's website for five years. |
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| 4. |
The personally liable shareholder |
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| 4.1 |
Tasks and competence |
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| 4.1.1 |
The personally liable shareholder shall manage the company under his own responsibility in the interests of the company, i.e. taking into consideration the concerns of the shareholders, his employees and other groups (stakeholders) associated with the company, with the goal of achieving sustained value added. |
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| 4.1.2
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The personally liable shareholder shall develop the strategic organisation of the Company, agree on it with the Supervisory Board, and shall see that it is put into practice. |
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| 4.1.3 |
The personally liable shareholder ensures that all provisions of law and the enterprise’s internal policies are abided by and works to achieve their compliance by group companies (compliance). |
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| 4.1.4 |
The personally liable shareholder shall see that there is a suitable risk management and risk controlling in the Company. |
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| 4.1.5 |
When filling executive positions in the company, the personally liable shareholder shall take into account diversity. The focus here is on the technical qualification of the candidates (men and women). |
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| 4.2 |
Composition and remuneration of the Board of Directors of the Mühlbauer Aktiengesellschaft |
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| 4.2.1 |
The Board of Directors of the Mühlbauer Aktiengesellschaft consists of several persons and has one chairman. By-laws govern the work of the Management Board, in particular the allocation of duties among individual Management Board members, matters reserved for the Management Board as a whole, and the required majority for the Management Board resolutions (unanimity or resolution by majority vote). |
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| 4.2.2 |
The Supervisory Board of the Mühlbauer Aktiengesellschaft determines the total compensation of the individual members of Management (members of the Board of Directors), resolves the compensation system for the Management and regularly reviews it.
The remuneration of the members of the Management Board shall be determined by the Supervisory Board, taking into consideration any Group payments at a suitable level. Criteria for the suitability of the remuneration are in particular the tasks of each member of the Board of Directors, his personal achievements, the achievements of the Board, and the financial situation, the success, and the future prospects of the Company, paying special attention to its comparable surroundings. |
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| 4.2.3 |
The total remuneration of the members of the Board of Directors may comprise monetary and non-monetary remuneration. Monetary remuneration consists of fixed and variable components. All the remuneration components are appropriate both in themselves and also as a whole.
If variable remuneration components with long-term incentive effect and risk character in the form of company shares are granted, they will be related to previously determined high-quality company targets as well as relevant comparison parameters. There is no subsequent amendment of the success targets or the comparison parameters. For extraordinary, unforeseen developments a possibility of limitation (Cap) is agreed by the Supervisory Board.
In concluding Management Board contracts, care is taken to ensure that payments made to a Management Board member on premature termination of his contract without serious cause do not exceed the value of two years’ compensation (severance payment cap) and compensate no more than the remaining term of the contract. The severance payment cap shall be calculated on the basis of the total compensation for the past full financial year and if appropriate also the expected total compensation for the current financial year.
Payments promised in the event of premature termination of a Management Board member’s contract due to a change of control should not exceed 150% of the severance payment cap. |
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| 4.2.4 |
The total remuneration of the Management for assuming its responsibilities for Mühlbauer Holding AG & Co. KGaA and the subsidiary companies will be disclosed exclusively in 'Notes to Consolidated Financial Statement' as a total. It will be accounted for components, which are both performance-oriented and not performance-oriented, and for components with a long-term incentive effect or according to the relevant international accounting principles. |
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| 4.2.5 |
In general only the information on management remuneration required by law will be published. |
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| 4.3 |
Conflicting interests |
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| 4.3.1 |
Members of the Management Board of the Mühlbauer Aktiengesellschaft are subject to a comprehensive ban on competition during their employment by the Company. |
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| 4.3.2 |
Members of the Management Board and members of the staff of the Mühlbauer Aktiengesellschaft may not demand or accept any payments or advantages of any kind from a third party in connection with their work either for themselves or for other persons, nor may they grant to a third party any unjustifiable advantages. |
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| 4.3.3 |
Members of the Management Board of the Mühlbauer Aktiengesellschaft are under obligation to the Company interests. No member of the Management Board may pursue personal interests when taking decisions nor make use of business opportunities which belong to the Company for his own purposes. |
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| 4.3.4 |
Every member of the Management Board of the Mühlbauer Aktiengesellschaft should immediately inform the Supervisory Boards of the Mühlbauer Aktiengesellschaft and the Mühlbauer Holding AG & Co. KGaA of any conflict of interests, and also inform the other members of the Management Board thereof. All the business transactions between the Mühlbauer Aktiengesellschaft and the Company on the one hand and the members of the Management Board and persons with close personal links to them or companies that have close personal links to them on the other hand must comply with the standards that are common in this industry. Important business transactions as defined in the constitution must be approved by the Supervisory Board. |
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| 4.3.5 |
Sideline activities that are not legally compulsory subject to approval may assume of members of the Management Board except as contractual arrangement without approval of the Supervisory Board. |
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| 5.5. |
Supervisory Board |
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| 5.1 |
Tasks and competence |
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| 5.1.1 |
It is the responsibility of the Supervisory Board regularly to give advice and to supervise the personally liable shareholder in the management of the Enterprise. It must be consulted in decisions that are of basic significance for the Enterprise. |
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5.1.2 |
The Supervisory Board and the personally liable shareholder shall jointly take care of the long-term plans for succession in the management field within the limits of jurisdiction and constitution and also shall take care of diversity regarding its composition. The focus is on technical aspects of the aspirants (women and men). However, in contrast to the Supervisory Board of a public limited company, the Supervisory Board of a partnership limited by shares does not have the competence to nominate the personally liable shareholder or the management of the company, nor may it relieve the personally liable shareholder or the management from office. It does not hold a direct decision-making competence with regard to the filling of management positions in the participation companies.
The management of the Mühlbauer Holding AG & Co. KGaA is incumbent on the personally liable shareholder. As the Supervisory Board does not have any influence on the management, there is no question of the duration of the nomination nor of age-limits. |
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| 5.1.3 |
The Supervisory Board has given itself a set of Regulations for Work. |
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| 5.2
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Responsibility and authorisation of the Chairman of the Supervisory Board
The Chairman of the Supervisory Board shall coordinate the work in the Supervisory Board, moderate its meetings and represents the Supervisory Board to outsiders.
As long as the Supervisory Board of the Mühlbauer Holding AG & Co. KGaA only consists of three members, no committees shall be formed.
The Chairman of the Supervisory Board shall keep in regular contact with the personally liable shareholder and advise him on the Enterprise’s strategy, the Enterprise’s development and the risk management. The Chairman of the Supervisory Board is to be informed immediately by the personally liable shareholder of important events which have considerable significance for the assessment of the situation and the development and also for the management of the Enterprise. The Chairman of the Supervisory Board shall then inform the Supervisory Board and convene an extraordinary General Meeting if necessary. |
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| 5.3 |
Formation of Committees
As there are only three members on the Supervisory Board of the Mühlbauer Holding AG & Co. KGaA no committees shall be formed. If necessary the formation of committees shall be discussed. |
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| 5.4 |
Composition and Remuneration |
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| 5.4.1 |
The Supervisory Board is composed so that its members, as a group, hold all the knowledge, abilities and technical experience required to properly perceive its responsibilities.
The Supervisory Board shall specify concrete objectives regarding its composition that take into account the international activities of the company, potential conflicts of interest, an age limit to be defined for the members of the Supervisory Board and diversity under consideration of the specific situation of the company. The company’s Supervisory Board currently only consists of three members of which only two must be appointed by the Annual General Meeting. In accordance with the Articles of Association, the third member is appointed to the Supervisory Board by the owner of share no. 1. Against this background, the Supervisory Board develops criteria in respect of its composition that a potential new member must predominantly fulfil. In so doing, the focus is on technical aspects and not on an age limit or quota or a breakdown of Supervisory Board seats into a certain number for women and a certain number for men.
Recommendation by the Supervisory Board to the relevant election bodies shall take into account the respective criteria. A publication of the criteria and their implementation status in the Corporate Governance Report is currently not planned.
The members of the Supervisory Board shall perceive the training and further education measures necessary for the fulfilment of their responsibilities independently. In so doing they shall receive appropriate support from the company. |
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| 5.4.2
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For a professional counseling and monitoring of the Management Board by the Supervisory Board, the Supervisory Board shall be equipped with competent members. This is particularly true for experts and persons which already maintain relations to the company or to the relevant sector and therefore possess detailed knowledge about company's strategy, policy and operations. The Supervisory Board shall not have more than two former members of the Management Board of Mühlbauer AG. Members of the Supervisory Board shall not exercise any organ functions or counselling work for important competitors of the Company. |
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| 5.4.3 |
Elections for the Supervisory Board are individual elections. Requests for a judicial appointment of a member of the Supervisory Board is limited to the next General Meeting. Proposals for possible candidates for the Chairman of the Supervisory Board will be made known to the shareholders. |
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| 5.4.4 |
The relevant corporate body will decide individually in case that the representative of the generally liable shareholder or a member of the Management Board of Mühblauer AG intends to become a member of the Supervisory Board or the chairman of a committee within the Supervisory Board. No particular reasons need to be given to the General Meeting for such an intention. |
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| 5.4.5 |
Every member of the Supervisory Board shall make sure that he has sufficient time to perform his services. A member of the Supervisory Board who is also a Member of the Management Board in a Company listed on a stock exchange shall not accept a total of more than three directorships in companies listed outside the Group or in supervisory committees of associations with assimilable demands. |
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5.4.6
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The remuneration of the members of the Supervisory Board is set down in the Constitution. It takes into account the responsibility and the amount of work of the members of the Supervisory Board and also the Enterprise’s financial situation and success. The Chairman and the Vice-Chairman of the Supervisory Board are taken into consideration in that the Chairman receives twice the basic remuneration and the Vice-Chairman one and a half times the basic remuneration.
The members of the Supervisory Board shall receive a fixed remuneration.
The remuneration of the members of the Supervisory Board shall be listed individualized, in its component parts in the Corporate Governance Report. Payments made to members of the Supervisory Board by the Enterprise or advantages granted to them for personally provided services, especially counseling and mediation services, shall be individually stated in separate lists in the notes to the Group’s financial statements. |
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| 5.4.7 |
If a member of the Supervisory Board attends fewer than half of the meetings of the Supervisory Board in one year, this shall be noted in the Supervisory Board’s report. |
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| 5.5 |
Conflicting interests |
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| 5.5.1
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Every member of the Supervisory Board is under obligation to serve the Enterprise’s interests. In taking decisions she may not pursue for his own ends either personal interests or business opportunities which belong to the Enterprise. |
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| 5.5.2 |
Every member of the Supervisory Board should inform the Supervisory Board of conflicts of interests, especially of those which could arise through the counseling or organ-functioning of clients, suppliers, lenders, or other business partners. Conflicts of interests should be avoided as far as possible, and where they are inevitable they should be solved in the Enterprise’s favour. |
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| 5.5.3 |
In its report to the General Meeting the Supervisory Board shall tell of conflicts of interest that have occurred and the treatment they have received. Important and not merely temporary conflicts of interest in the person of a member of the Supervisory Board should result in the termination of his services. |
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| 5.5.4 |
Any counseling or other service or working contract between a member of the Supervisory Board and the Company must have the approval of the Supervisory Board. |
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| 5.6
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Efficiency test
The Supervisory Board shall regularly test its work and the efficiency thereof. |
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| 6. |
Transparency |
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| 6.1 |
The personally liable shareholder shall immediately publish insider information that affect the company, if not exempted from the publication requirement in isolated cases. |
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| 6.2 |
As soon as the Company discovers that somebody has through purchase, sale, or in any other way obtained, exceeded, or fallen short of 3, 5, 10, 15, 20, 25, 30, 50 or 75 % of the voting rights of the Company, this shall be published by the Company without delay. |
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| 6.3 |
The Company shall pass on information to all shareholders, all investors, and all financial analysts of the Mühlbauer Holding AG & Co. KGaA openly, equally, and fairly. It shall make available to the shareholders without delay any new facts which have been made known to the financial analysts and comparable addressees. |
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| 6.4 |
In order to pass information on to the shareholders and investors simultaneously and smoothly, the Mühlbauer Holding AG & Co. KGaA shall use suitable communication media such as the Internet. |
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| 6.5 |
Information which the Mühlbauer Holding AG & Co. KGaA publishes in other countries because of the regulations regarding the capital market there, shall also be announced in this country without delay. |
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| 6.6 |
Beyond the statutory obligation to report and disclose dealings in shares of the company without delay, the ownership of shares in the company or related financial instruments by the personally liable shareholder, Management Board and Supervisory Board members will be stated, if it is directly or indirectly greater than 1 % of the shares issued by the Company. If the total ownership of the personally liable shareholder and the members of the Management Board and the Supervisory Board exceeds 1 % of the shares issued by the Company, the total ownership shall be given separately for the personally liable shareholder, the Management Board and the Supervisory Board.
All aforementioned information will be included in the Corporate Governance Report. |
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| 6.7 |
In the course of the current publicity work the Mühlbauer Holding AG & Co. KGaA publish the dates of the important recurring publications (including the Annual Report, interim financial reports) and the date of the General Meeting in a “financial calendar” with sufficient advance notice. |
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| 6.8 |
All the information published by the Company about the enterprise shall also be accessible on the Internet page. Publication shall be in English as well. |
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| 7. |
Accounting and Auditing |
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| 7.1 |
Accounting |
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| 7.1.1
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Information shall be passed on to the shareholders and third parties by the Enterprise by means of the Group’s financial statements. During the financial year they are additionally informed by means of a half-year financial report and, in the first and second halves, by interim reports or quarterly financial reports. The Consolidated Financial Statements and the Condensed Consolidated Financial Statements in the half-year financial report and the quarterly financial report are prepared under observance of internationally recognised accounting principles namely IFRS. |
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| 7.1.2 |
The Group’s financial statements shall be prepared by the personally liable shareholder and by the auditor together with the Supervisory Board. No discussions about half-year and any quarterly financial reports are made with the personally liable shareholder prior to publication. In addition the audit committee for the financial accounting or the 'Bundesanstalt für Finanzdienstleistungsaufsicht' (German Federal Financial Supervisory Agency) are authorized to audit the compliance of the consolidated financial statement with the relevant accounting principles (enforcement). The Group’s financial statements should be publicly available within 90 days after the end of the business year, and the interim reports within 45 days after the end of the period covered by the report. |
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| 7.1.3 |
The Corporate Governance Report contains basic principles about stock option programmes and similar investment-orientated incentive systems of the Company. |
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| 7.1.4 |
The Mühlbauer Holding AG & Co. KGaA shall publish a list of those third-party companies in which it has a share which is of not inconsiderable significance for the Company. The following are to be stated: name and registered office of the company, amount of the share, amount of the equity capital and the result of the previous business year. |
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| 7.1.5 |
In the Group’s financial statements, a definition is given of relationships to shareholders who are to be qualified as related persons in the sense of the applicable statutory accounting requirements. |
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| 7.2 |
Auditing |
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| 7.2.1 |
When making their selection the Supervisory Board shall take care that the auditor is independent. Before announcing their selected nominee the Supervisory Board shall obtain a statement from the designated auditor about whether any – and if so what kind of – business, financial, personal, or other relationships exist between the auditor and his organs and investigators on the one hand and the Mühlbauer Holding AG & Co. KGaA and their organ members on the other hand, which might give reason to doubt his independence. This statement must also contain information about the extent to which other services have been performed for the Enterprise in the previous business year, especially in the counselling sector, and also the extent to which such services have been contractually agreed for the following year.
The Supervisory Board shall agree with the auditor that the Chairman of the Supervisory Board is to be informed immediately of any possible reasons for the disqualification or bias of the auditor which might occur during the investigation unless these are eliminated immediately. |
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| 7.2.2
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The Supervisory Board shall give the auditor the job of investigating the Company’s accounts and shall agree with him on a fee. |
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| 7.2.3 |
The Supervisory Board shall agree that the auditor shall report immediately on all the findings and events that are important for the Supervisory Board’s work which should arise during the execution of the auditing work.
The Supervisory Board shall agree that the auditor shall inform them or make a note in his auditor’s report if he should during his work establish facts which result in an inaccuracy of the statement on the Code made by the personally liable shareholder and the Supervisory Board. |
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| 7.2.4 |
The auditor shall participate in the meetings of the Supervisory Board which refer to the annual report and the Group’s financial statements and shall report on the important results of his investigations. |
