Declaration of Compliance with the German Corporate Governance Code
Corporate governance declaration (Section 289a of the HGB)
The corporate governance declaration (Section 289a of the HGB) includes the declaration of conformity, information on management practices and a description of how the Board of Directors and Supervisory Boards work.
Declaration of conformity
The Board of Directors and Supervisory Board resolved the following declaration within the meaning of Section 161 of the AktG:
- that the recommendations of the Government Commission of the "German Corporate Governance Code" as amended on May 26, 2010 – published in the electronic Federal Gazette (elektronischer Bundesanzeiger) on July 2, 2010 – are generally complied with. The following recommendations are not applied:
1. No. 3.8 para. 3 "A similar deductible must be agreed upon in any D&O policy for the Supervisory Board."
artnet AG does not believe that the due care and diligence that the members of its 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 sent. 1 "The Board of Directors shall be comprised of several persons and have a Chairman or Spokesman."
Since its constitution, the Board of Directors of artnet AG has comprised one person. By contrast, the management of the subsidiary Artnet Worldwide Corp. in New York, which is largely 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 currently does not see any need to increase the size of its Board of Directors.
3. No. 5.1.2 para. 2 sent. 3 "An age limit for members of the Board of Directors 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 selecting members of the Board of Directors.
4. No. 5.1.3 "The Supervisory Board shall issue Terms of Reference."
The Supervisory Board of artnet AG comprises only three members. Previous experience of the cooperation of these members shows that Terms of Reference 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. 5.4.1 para 2: “ The Supervisory Board shall specify concrete objectives regarding its composition which, whilst considering the specifics of the enterprise, take into account ... an age limit to be specified for the members of the Supervisory Board ....”
artnet AG considers a provision of this nature to be inappropriate because general age limits would unduly limit the shareholders’ discretionary powers when selecting members of the Supervisory Board.
7. 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 Government Commission of the "German Corporate Governance Code" as amended on May 26, 2010 – published in the electronic Federal Gazette (elektronischer Bundesanzeiger) on July 2, 2010 – have generally been complied with since the last Declaration of Conformity dated December 30, 2010. The recommendations from No. 3.8 para. 3, No. 4.2.1 sent. 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, No. 5.4.1 para. 2 and No. 5.4.6 para. 2 sent. 1 were not applied.
Berlin, December 2, 2011
The Board of Directors The Supervisory Board
Information on management practices applied
The company uses all of the management practices prescribed by law. There are no other standards which apply company-wide, such as ethical standards, working or social standards.
Board of Directors and Supervisory Boards manner of working
The Board of Directors member Hans Neuendorf manages the operating business. The department heads report to the Board of Directors.
The Supervisory Board appoints the members of the Board of Directors. The Supervisory Board decides how many members the Board of Directors should have, whether there should be a Chairperson, appoints these members and resolves whether deputy members or a Deputy Chairperson should be appointed. The Supervisory Board has issued for the Board of Directors a list of transactions requiring approval.
A Board of Directors comprising one member has been tried and trusted in the past. The Board of Directors participates in all of the Supervisory Board’s meetings, to the extent that this is desired by the Supervisory Board, and reports in writing and verbally on the individual agenda items and proposed resolutions and answers questions from the individual members of the Supervisory Board.
The members of the Supervisory Board are informed of the proposed resolutions together with the invitation. Resolutions may be passed on unannounced agenda items if none of the members of the Supervisory Board object.
The Supervisory Board did not establish any committees.
The Supervisory Board has specified concrete objectives regarding its composition. Taking the entrepreneurial situation into account, these targets must also consider the company’s international activities, potential conflicts of interest and diversity.
The possibility of passing resolutions by circulating written voting papers is only seldom used, and then only in particularly urgent cases. The possibility of holding Supervisory Board meetings using telephone conference calls is used regularly as a result of the physical distance between the members of the Supervisory Board.
The Chairman of the Supervisory Board discusses the Supervisory Board’s activities once per year in his report to shareholders and in the General Meeting.
In particular, the Chairman of the Supervisory Board regularly talks to the Board of Directors and discusses current issues with the Board. Outside the meetings, the Board of Directors informs the Chairman of the Supervisory Board of current developments both verbally and in writing.