Declaration of Compliance with the German Corporate Governance Code
Declaration by the Board of Directors and the Supervisory Board of artnet AG on the recommendations of the "Government Commission of the German Corporate Governance Code" in accordance with Section 161 of the German Stock Corporation Act
The Board of Directors and the Supervisory Board of artnet AG hereby declare in accordance with Section 161 of the German Stock Corporation Act (Aktiengesetz – AktG) that the recommendations of the German Commission of the "German Corporate Governance Code" as amended on June 6, 2008 – published in the electronic Federal Gazette (Bundesanzeiger) on August 8, 2008 – are generally complied with. The following recommendations are not applied:
1. No. 3.8 para. 2 "If the company takes out a D&O (directors' and officers' liability insurance) policy for the Management Board and Supervisory Board, a suitable deductible shall be agreed."
artnet AG does not believe that the due care and diligence that the members of its Board of Directors and Supervisory Board exercise in discharging their duties could be increased further by agreeing a deductible. For this reason, artnet AG does not intend to change existing D&O insurance policies that do not provide for such a deductible.
2. No. 4.2.1 "The Management Board shall be comprised of several persons and have a Chairman or Spokesman. By-laws shall 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 Management Board resolutions (unanimity or resolution by majority vote)."
Since its constitution, the Board of Directors of artnet AG has comprised one person. By contrast, the Board of the subsidiary ArtNet Worldwide Corp. in New York, which is responsible for operations within the Group, comprises several persons. Given the relatively low management effort and expense at artnet AG and to avoid unnecessary expenditure, the Company does not see any need to increase the size of its Board of Directors. As a result, there is no need to draw up by-laws.
3. No. 5.1.2 para. 2 sent. 3 "An age limit for members of the Management Board shall be specified."
artnet AG considers a provision of this nature to be inappropriate because general age limits would unduly limit the Supervisory Board's discretionary powers when electing members of the Board of Directors.
4. No. 5.1.3 "The Supervisory Board shall issue rules of procedure."
The Supervisory Board of artnet AG comprises only three members. Previous experience of the cooperation of these members shows that rules of procedure are not necessary.
5. No. 5.3.1, No. 5.3.2, and No. 5.3.3: In these sections, the Code recommends that the Supervisory Board form committees, an Audit Committee and a Nomination Committee.
As the Supervisory Board of artnet AG comprises only three members, it does not make sense to form committees. The tasks envisaged for the Audit Committee and the Nomination Committee are undertaken jointly by the Supervisory Board as a whole.
6. No. 5.4.6 para. 2 sent. 1: "Members of the Supervisory Board shall receive fixed as well as performance-related compensation."
The articles of incorporation of artnet AG do not provide for performance-related compensation for the members of the Supervisory Board. Following a lengthy debate, the Board of Directors and the Supervisory Board reached the conclusion that performance-related compensation of Supervisory Board members is not consistent with the duties of the Supervisory Board, whose primary objective is to oversee the Board of Directors.
The Board of Directors and the Supervisory Board of artnet AG hereby declare that the recommendations of the German Commission of the "German Corporate Governance Code" as amended on June 14, 2007 – published in the electronic Federal Gazette (Bundesanzeiger) on July 20, 2007 – have generally been complied with since the last Declaration of Conformity dated December 5, 2007. The recommendations from No. 3.8 para. 2, No. 4.2.1, No. 5.1.2 para. 2 sent. 3, No. 5.1.3, No. 5.3.1, No. 5.3.2, No. 5.3.3, and No. 5.4.7 were not applied.
Berlin, December 5, 2008
The Board of Directors The Supervisory Board