1 Preamble

This German Corporate Governance Codex (the "Code") presents essential statutory regulations for the management and supervision of German exchange-listed companies (corporate governance) and includes internationally and nationally recognised standards for good and responsible corporate governance. The Code aims at making the German Corporate Governance system transparent and understandable. Its purpose is to promote the trust of international and national investors, customers, employees and the public in the management and supervision of exchange-listed German corporations.

The Code clarifies the rights of shareholders, who provide the company with the required equity capital and who bear the entrepreneurial risk.
A dual board system is prescribed by law for German stock corporations:

The Management Board is responsible for independently managing the enterprise. The members of the Management Board are jointly accountable for the management of the enterprise. The chairman of the Management Board coordinates the work of the members of the Management Board.

The Supervisory Board appoints, supervises and advises the Management Board and is directly involved in decisions which are of fundamental importance to the enterprise. The chairman of the Supervisory Board coordinates the work of the Supervisory Board.

The members of the Supervisory Board are elected by the shareholders at the General Meeting. For enterprises with more than 500 or 2000 employees respectively in Germany, employees are represented in the Supervisory Board, with one third or, respectively one half, of which then consisting of employee representatives. For enterprises with more than 2000 employees, the chairman of the Supervisory Board, who is practically always a representative of the shareholders, has a deciding second vote for resolutions. Both the representatives elected by the shareholders and representatives of the employees are equally obligated to act in the enterprise's interest.
Alternatively the European Company (SE) gives enterprises in Germany the possibility of opting for the internationally widespread system of governance by a single body (board of directors).
The form that codetermination takes in the SE is established generally by agreement between the company management and the employee side. All employees in the EU member states are included.

In practice the dual board system, also established in other continental European countries, and the single-board system are converging because of the intensive interaction of the management board and the supervisory board in the dual-board system. Both systems are equally successful.

The accounting standards of German enterprises are oriented on the true and fair view principle and represent a true and fair picture of the actual conditions of the asset, financial and profit situation of the enterprise.

Recommendations of the Code are marked in the text by use of the word "shall". Companies can deviate from them but are then obligated to disclose this annually. This makes it possible for companies to take sector and enterprise-specific requirements into account. The Code thereby contributes to making the German corporate constitution more flexible and more self-regulating. Furthermore, the Code contains suggestions which can be deviated from without disclosure; for this the Code uses terms such as "should" or "can". The remaining passages of the Code not marked by these terms contain provisions that enterprises are compelled to observe under applicable law.

In provisions of the Code affecting not only the company itself but also its group companies, the term "enterprise" is used instead of "company".

Primarily, the Code is intended for listed corporations. It is recommended that non listed companies also observe the Code.

As a rule, the Code will be checked once a year against the background of national and international developments and, if necessary, adjusted.