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Corporate Governance
Code

Code

1 Preamble

1 Preamble

The German Corporate Governance Code (the "Code") presents essential statutory regulations for the management and supervision of listed German companies (corporate governance) and includes internationally and nationally recognised standards for good and responsible corporate governance. The Code is designed to make the German Corporate Governance system transparent and understandable. Its purpose is to strengthen the trust of international and national investors, customers, employees and the public in the management and supervision of listed German companies.

The Code clearly underlines the duty of the executive board and supervisory board to secure the continuing operation of the enterprise in accordance with the principles of the social market economy (the interests of the enterprise).

A dual board system is prescribed by law for German stock corporations:
The executive board is responsible for managing the enterprise. The members of the executive board are jointly accountable for the management of the enterprise. The chair of the executive board coordinates the work of the members of the executive board.
The supervisory board appoints, supervises and advises the executive board and is directly involved in decisions which are of fundamental importance to the enterprise. The chair 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. In enterprises with more than 500 or 2000 employees in Germany, employees are also represented on the supervisory board and in such a case make up one third or one half of the board respectively. In enterprises with more than 2000 employees, the chair of the supervisory board, who is effectively a representative of the shareholders, has a casting second vote for resolutions. The representatives elected by the shareholders and the representatives of the employees have an equal obligation to act in the interests of the enterprise.
The European Company (SE) gives enterprises in Germany the alternative of opting for the internationally recognised system of governance by a single management body (board of directors).
The form that codetermination takes in the SE is generally established by an agreement between the company management and the employees. All employees in EU member states are included.
The accounting standards of German enterprises are based on the "true and fair view" principle and are to represent a true and fair view of the actual conditions of the net assets, financial position and results of operations of the enterprise.
Recommendations of the Code are marked in the text by use of the word "shall". Companies can deviate from these recommendations, but if they do so, must disclose such deviations annually and explain the reasons for them ("comply or explain"). This makes it possible for companies to take sector and enterprise-specific requirements into account. A justified and reasoned deviation from a Code recommendation can be in the interests of good corporate governance. The Code thereby helps make 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 the term "should". The remaining passages of the Code not marked by these terms relate to descriptions of statutory regulations and explanations.
In provisions of the Code affecting not only the company itself but also its group companies, the term "enterprise" is used instead of "company".
The Code is aimed first and foremost at listed companies and companies with access to the capital market pursuant to section 161 par. 1 sentence 2 of the German Stock Corporation Act [Aktiengesetz]. It is recommended that companies without a capital market focus also observe the Code regardless.
For the corporate governance of listed credit institutions and insurance companies, specific characteristics which are not reflected in the Code arise from the respective regulatory law.
As a rule, the Code is checked once a year against the background of national and international developments and, if necessary, amended.

2 Shareholders and the General Meeting

2 Shareholders and the General Meeting

2.1 Shareholders

2.1.1 
As provided for in the articles of association and by law, shareholders exercise their rights before or during the general meeting, at which they vote.

2.1.2 
In principle, one voting right attaches to each share. There are no shares with multiple voting rights or preferential voting rights (golden shares), nor are there maximum voting rights.

2.2 General meeting

2.2.1 
The executive board submits to the general meeting the annual financial statement, the management report, the consolidated financial statement and the consolidated management report. The general meeting resolves on the appropriation of the net income and whether to approve the actions of the executive board and the supervisory board, and usually elects the auditor, and shareholders' representatives to the supervisory board.
The general meeting also decides on the content of the articles of association, in particular the object of the company and major corporate structuring measures such as inter-company agreements and changes of corporate form, the issue of new shares, convertible bonds or bonds with warrants, and the authorisation of treasury stock. The general meeting may approve or reject the system of remuneration employed for members of the executive board.

2.2.2 
Upon the issue of new shares, shareholders have in principle subscription rights proportional to their share of the share capital.

2.2.3 
Each shareholder is entitled to participate in the general meeting, to take the floor on matters on the agenda and to submit questions and proposals relating to the matters in hand.

2.2.4 
The chair of the meeting ensures that the items on the agenda of the general meeting are dealt with swiftly. The chair should be guided by the fact that an ordinary general meeting should not last more than 4 to 6 hours.

2.3 Invitation to the general meeting, postal votes and proxies

2.3.1 
The general meeting is to be convened by the executive board at least once a year, with details of the agenda provided. Minority shareholders are entitled to demand that a general meeting be convened and items added to the agenda. The announcement of the general meeting and the reports and documents required by law for the general meeting, including the annual report, are to be published on the company's website together with the agenda for easy access by the shareholders. The same applies to the forms required if a postal vote is available.

2.3.2
The company shall facilitate shareholders' exercise of their voting rights in person and by proxy. The executive board shall arrange the appointment of a representative to exercise shareholders' voting rights in accordance with instructions. This representative should also be available for contact during the general meeting.
The representative to exercise voting rights in accordance with instructions is only available up until the start of the general meeting of Krones AG.

2.3.3
The company should make it possible for shareholders to follow the general meeting using modern means of communication (e.g. the Internet).

3 Co-operation between the executive board and the supervisory board

3 Co-operation between the executive board and the supervisory board

3.1 
The executive board and the supervisory board work in close cooperation for the good of the enterprise.

3.2 
The executive board coordinates the enterprise's strategic approach with the supervisory board and discusses the current stage of strategy implementation with the supervisory board at regular intervals.

3.3 
For transactions of fundamental importance, the articles of association stipulate or the supervisory board stipulates - where appropriate, in individual cases as well - provisions requiring approval for such transactions to be granted by the supervisory board. Such transactions include decisions or measures which fundamentally affect the enterprise's net assets, financial position or results of operations.

3.4 
The executive board is responsible for informing the supervisory board. However, the supervisory board must in turn ensure that it is adequately informed. For this purpose, the supervisory board shall specify the executive board's information and reporting duties.
The executive board informs the supervisory board regularly, without delay and comprehensively of all issues of relevance to the enterprise with regard to strategy, planning, business developments, the risk situation, risk management and compliance. It responds to deviations in business development from previously formulated plans and targets, specifying the reasons.
The executive board's reports to the supervisory board are, as a rule, to be submitted in written form. Documents required for decisions are to be sent to the members of the supervisory board in due time before the meeting.

3.5 
Good corporate governance requires open discussion between the executive and supervisory boards as well as within the executive board and within the supervisory board. Complete confidentiality is crucial.
All board members are responsible for ensuring that the staff they employ observe the confidentiality obligation in the same manner.

3.6 
On supervisory boards with codetermination, shareholder and employee representatives can prepare the supervisory board meetings separately, if necessary together with members of the executive board.
If necessary, the supervisory board should meet without the executive board.

3.7 
In the event of a takeover offer, the executive board and supervisory board of the target company must submit a statement of their position on the offer, indicating their reasons, in order to allow shareholders to make an informed decision on the offer.
After the announcement of a takeover offer and until such time as the result is announced, the executive board may not take any actions that could prevent the offer from being successful unless such actions are permitted under statutory regulations. In making their decisions, the executive board and supervisory board are bound to act in the best interests of the shareholders and of the enterprise.
In the event of a takeover offer, the executive board should convene an extraordinary general meeting at which shareholders discuss the takeover offer and, if applicable, decide on corporate actions.

3.8
The executive board and the supervisory board comply with the rules of proper corporate governance. If they violate the due care and diligence of a prudent and conscientious director or supervisory board member, they are liable to the company for damages. In the case of business decisions, duties are not deemed to have been breached if the member of the executive board or supervisory board could reasonably have assumed, on the basis of reasonable information, that he/she was acting in the best interests of the company (business judgement rule).
An excess of 10% of the loss up to a maximum of one and a half times the fixed annual remuneration of the board member in question applies if the company concludes a D&O insurance policy for the executive and supervisory board.
A suitable excess shall be agreed in D&O insurance for the supervisory board.
There is currently no excess provided for in a D&O insurance policy concluded for the supervisory board.

3.9 
The approval of the supervisory board is required before the enterprise grants loans to members of the executive or supervisory board or their relatives.

3.10 
The executive board and supervisory board shall report on corporate governance annually (corporate governance report) and shall publish this report with the corporate governance statement. The report should also respond to Code suggestions. The company shall keep previous declarations of conformity with the Code available on its website for five years.

4 Executive board

4 Executive board

4.1. Tasks and responsibilities

4.1.1 
The executive board is responsible for managing the enterprise in the interests of the enterprise, i.e. in accordance with the needs of the shareholders, its employees and all other enterprise stakeholders, with the aim of generating sustainable value.

4.1.2 
The executive board develops the enterprise's strategy, agrees this strategy with the supervisory board and ensures its implementation.

4.1.3 
The executive board ensures that all statutory provisions and the enterprise’s internal guidelines are abided by and works to ensure their observance by group companies (compliance).

4.1.4 
The executive board ensures appropriate risk management and risk controlling in the enterprise.

4.1.5 
The executive board shall consider the matter of diversity when filling management posts within the enterprise, in particular that of reasonable female representation. The executive board determines target values for the percentage of women in both management levels below the executive board.1

1The determination must be carried out for the first time by 30 September 2015; the deadlines to be determined for the first time for achieving the target values may not be longer than until 30 June 2017 (Section 25 Paragraph 1 of the Introductory Act of the German Stock Companies Act as amended by the Act for the Equal Participation of Women and Men in Leadership Positions in the Private Sector and Civil Service from 24 April 2015, Federal Law Gazette I, p. 642, 655).

4.2 Composition and remuneration

4.2.1
The executive board shall be comprised of several persons and have a chair or spokesperson. Rules of procedure shall govern the work of the executive board, in particular the allocation of duties to individual executive board members, matters reserved for the executive board as a whole and the required majority for executive board resolutions (unanimity or resolution by majority vote).
The rules of procedure for the executive board are defined in the articles of association of KRONES AG. These contain detailed instructions governing the work of the executive board. Separate written rules of procedure have therefore not to date been drawn up.

4.2.2 
The total remuneration of the individual executive board members is set by the supervisory board in plenary. If there is a committee that deals with executive board contracts, that committee submits its proposals to the plenary session of the supervisory board. The plenary session of the supervisory board decides on and regularly examines the remuneration system for the executive board.
Total remuneration for individual members of the executive board is determined by the supervisory board in plenary in the light of group payments, if any, on the basis of a performance assessment. Criteria for determining the appropriateness of remuneration include the tasks of the specific member of the executive board, his/her performance, the economic situation, the success and prospects of the enterprise and whether the sum is comparable with that at similar companies and in the light of the remuneration structure applied in the rest of the company. The supervisory board shall consider executive board remuneration in the light of the remuneration of the upper level of management and of the workforce as a whole in general and over time; the supervisory board decides how the upper level of management and relevant workforce are to be defined for the purposes of the comparison.

If the supervisory board commissions a remuneration expert to assess whether the remuneration is reasonable, it must be ensured that they are independent of the executive board and the enterprise.

4.2.3 
The total remuneration of the executive board members comprises the monetary elements, pension commitments, other guarantees, especially in the event of termination of employment, fringe benefits of all kinds and benefits from third parties guaranteed or granted in the fiscal year with regard to executive board work.

The remuneration structure is to be designed in the interests of sustainable corporate development. The monetary elements shall comprise a fixed salary and variable components. It is the responsibility of the supervisory board to ensure that the basis for assessment of variable components covers several years. Both positive and negative developments shall be reflected in the variable remuneration components. All components of remuneration must be appropriate individually and in total and may in particular not result in unreasonable risk exposure.

Remuneration shall comply with set upper limits both overall and for the variable components. The variable components shall be based on detailed and relevant comparison parameters. Changing performance targets or the comparison parameters retroactively shall not be admissible.

In the case of pension commitments, the supervisory board shall set the target ratio of pension payments to pay – including after the end of membership of the executive board – and the annual and long-term costs of this for the enterprise.

In concluding executive board contracts, care should be taken to ensure that payments including fringe benefits made to an executive board member upon early termination of his or her contract do not exceed the value of two years' remuneration (severance payment cap) and cover no more than the remaining term of the contract. No payments are made to a member of the executive board whose contract is terminated for cause. The severance payment cap should be calculated on the basis of the total remuneration for the past full financial year and if appropriate also the expected total remuneration for the current financial year.

Payments promised in the event of early termination of an executive board member's contract due to a change of control should not exceed 150% of the severance payment cap.

The chair of the supervisory board shall outline the salient points of the remuneration system once and subsequently any changes thereto to the general meeting.

4.2.4 
The total remuneration of each executive board member is published alongside his or her name, broken down into fixed and variable components. The same applies to benefits that have been guaranteed to an executive board member for early or contractual termination of his/her board work or that have been altered during the financial year. Remuneration is not disclosed if the general meeting passes a resolution to this effect with a two thirds majority.

4.2.5
Publication is in the notes to the financial statement or in the management report. A remuneration report in the management report sets out the salient aspects of the remuneration system for the members of the executive board. The report shall be clear and easily understandable. 
The remuneration report shall also include information on the nature of the fringe benefits provided by the company. 

Each remuneration report for financial years commencing after 31 December 2013 shall also disclose the following information for each member of the executive board:

payments including fringe benefits granted for the year under review, and, in the event of variable components, also the possible maximum and minimum remuneration;
the total received for the year under review comprising fixed salary, short-term variable remuneration and long-term variable remuneration with a breakdown by year of receipt;
the costs in or for the year under review for retirement pension and any other pension benefits.

The template tables in the appendix shall be used for this information.

In addition to ambiguities in the interpretation, there are also doubts whether the additional use of model tables promotes the remuneration report's clarity and general comprehensibility desired by the enterprise in compliance with accounting requirements.

4.3 Conflicts of interest

4.3.1 
Members of the executive board have an obligation to act in the interests of the enterprise. They must not pursue personal interests in their decisions, are subject to an extensive restraint on competition throughout their career with the enterprise and must not use business opportunities intended for the enterprise for themselves.

4.3.2 
Members of the executive board and employees may not, in connection with their work, demand or accept unfair advantages from third parties either for themselves or for other persons, nor may they grant third parties unfair advantages.

4.3.3 
Each member of the executive board shall disclose conflicts of interest to the supervisory board without delay and inform the other members of the executive board thereof. Any and all transactions between the enterprise and the members of the executive board or related parties or enterprises of those board members must comply with accepted industry standards. In the event of transactions with members of the executive board, the supervisory board represents the company. Major transactions with persons affiliated with a member of the executive board or undertakings may only be carried out with the supervisory board's consent.

4.3.4 
Members of the executive board shall only take on ancillary activities, especially supervisory board appointments outside the enterprise, with the approval of the supervisory board.

5 Supervisory board

5 Supervisory board

5.1. Tasks and responsibilities

5.1.1 

It is the task of the supervisory board to regularly advise and supervise the executive board in the management of the enterprise. The supervisory board is to be involved in decisions of fundamental importance to the enterprise.

5.1.2 
The supervisory board appoints and dismisses the members of the executive board. The executive board shall also consider the matter of diversity when appointing the executive board members. The supervisory board determines target values for the percentage of women in the executive board.2 In cooperation with the executive board, it shall ensure a long-term succession planning. The supervisory board can delegate to committees preparations for the appointment of executive board members and the negotiation of the terms and conditions of an employment contract including remuneration.
The maximum possible appointment period of five years should not be the standard term for the first contract. A member may only be re-appointed earlier than one year before the end of the appointment period and the current appointment cancelled simultaneously under special circumstances. An age limit for members of the executive board shall be specified.

2 Refer to footnote 1.

5.1.3
The supervisory board shall issue rules of procedure for its work.
The rules of procedure for the executive board are defined in the articles of association of KRONES AG. These contain detailed instructions governing the work of the supervisory board. Separate written rules of procedure have therefore not to date been drawn up.

5.2 Tasks and Authorities of the Chairman of the Supervisory Board 

The chair of the supervisory board is elected by the supervisory board among its members. They coordinate work in the supervisory board, chair its meetings and attend to the affairs of the supervisory board in external relations.
The chair of the supervisory board shall not hold the chair of the audit committee.
Between meetings, the chair of the supervisory board shall maintain regular contact with the executive board or the chair or spokesperson thereof, with which/whom he or she shall discuss issues of strategy, planning, business development, risk, risk management and compliance for the enterprise. The chair of the supervisory board will be informed without delay by the chair or spokesperson of the executive board of important events of significance to the assessment of the enterprise's situation or development or for the management of the enterprise. The chair of the supervisory board shall then inform the supervisory board and, if required, convene an extraordinary meeting of the supervisory board.

5.3 Formation of committees

5.3.1 
In line with the enterprise's specific circumstances and the number of employees, the supervisory board shall form professionally qualified committees. Each committee chairperson reports regularly to the supervisory board on the work of his or her committee.

5.3.2 
The supervisory board shall set up an audit committee which - unless another committee is responsible - in particular handles monitoring of the accounting process; the effectiveness of the internal monitoring system, the risk management system and the internal audit system; the audit of the annual financial statements, in particular the impartiality of the auditor, additional services provided by the auditor, the appointment of auditor, the definition of the focuses of the audit and the fee agreement; and compliance. The chair of the audit committee shall have specialist knowledge of and experience in the application of accounting principles and internal control processes. He or she shall be independent and may only be a former member of the company executive board if his/her appointment ended at least two years previously.


5.3.3
The supervisory board shall set up a nomination committee composed exclusively of shareholder representatives to appoint suitable candidates for the election of supervisory board members for the supervisory board's recommendation to the general meeting.
Krones AG does not currently have a nomination committee.


5.4 Composition and remuneration

5.4.1
The supervisory board must be comprised of members who together have all the necessary knowledge, skills and specialist experience to carry out supervisory board duties correctly and in full. 
The supervisory board shall state specific objectives for its composition which, in line with the specific situation of the enterprise, take account of the international business of the enterprise, potential conflicts of interest, the number of independent supervisory board members pursuant to 5.4.2, a specified age limit for supervisory board members and a specified regulatory limit for the seniority in the supervisory board, as well as diversity. For listed enterprises to which the Codetermination Act, the Coal and Steel Codetermination Act or the Codetermination Supplementary Act applies, the supervisory board consists of at least 30 percent of women and at least 30 percent of men.3 For the other enterprises covered by the Equality Act, the supervisory board determines target values for the percentage of women.4 

3 The minimum percentage of each 30 percent of women and men in the supervisory board must be considered when reelections and secondments become necessary as of 1 January 2016 for allocating individual or multiple supervisory board seats (Section 25 Paragraph 2 of the Introductory Act of the German Stock Companies Act as amended by the Act for the Equal Participation of Women and Men in Leadership Positions in the Private Sector and Civil Service from 24 April 2015, Federal Law Gazette I, p. 642, 656).
The determination must be carried out for the first time by 30 September 2015; the deadlines to be determined for the first time for achieving the target values may not be longer than until 30 June 2017 (Section 25 Paragraph 4 of the Introductory Act of the German Stock Companies Act as amended by the Act for the Equal Participation of Women and Men in Leadership Positions in the Private Sector and Civil Service from 24 April 2015, Federal Law Gazette I, p. 642, 656).

Proposals submitted by the supervisory board to the appointment bodies shall take account of these objectives. The objectives of the supervisory board and their level of implementation shall be stated in the corporate governance report. 

For its recommendations for the election of new supervisory board members to the general meeting, the supervisory board shall make sure that the respective candidate can muster the time expenditure that is to be expected. 

When proposing candidates to the general meeting, the supervisory board shall disclose any and personal and/or business relationships of each candidate with the enterprise, the executive bodies of the company or major company shareholders.

This disclosure recommendation is limited to circumstances that would, in the assessment of the supervisory board, be considered by an objective shareholder as significant when deciding how to vote.

The supervisory board is of the opinion that the requirements of paragraphs 5 and 6 are not clear and vague in their details and that it could violate the privacy of the persons concerned.

A major shareholder as defined in this recommendation is any shareholder that directly or indirectly holds over 10% of voting shares in the company. 

5.4.2 
The supervisory board shall have what it judges a reasonable number of independent members. A supervisory board member is in particular not to be considered independent for the purposes of this recommendation if he or she has a personal or business relationship with the company, with executive bodies of the company, with a shareholder with a controlling interest or an associated enterprise of that shareholder, and that relationship could constitute a significant and not merely temporary conflict of interests. The supervisory board shall have no more than two former members of the executive board. Supervisory board members shall exercise no directorships or similar positions or advisory tasks for any of the enterprise's major competitors.

5.4.3 
Elections to the supervisory board shall be held on an individual basis. The deadline for an application for the legal appointment of a supervisory board member shall be the next annual general meeting. Proposed candidates for the supervisory board chair shall be announced to the shareholders.

5.4.4 
Executive board members may not join the company supervisory board within two years of the end of their executive board term unless they are proposed for election by shareholders holding over 25% of the voting rights in the company. In the latter case, the move to become chair of the supervisory board shall be an exception to be approved by the general meeting.

5.4.5 
Each member of the supervisory board must ensure that he or she has sufficient time to fulfil their commission. No member of the executive board of a listed company shall hold any more than a total of three supervisory board roles in listed companies outside the group or in the supervisory bodies of companies outside the group with comparable requirements.
The members of the supervisory board undertake the training and professional development measures required for the fulfilment of their tasks. Reasonable support for these measures shall be provided by the company.

5.4.6
Remuneration for the members of the supervisory board is specified by resolution of the general meeting or in the articles of association. 

Work as chair or deputy chair of the supervisory board and chairmanship or membership of committees shall also be taken into account.

Remuneration does not take particular account of chairmanship of supervisory board committees.

The members of the supervisory board receive remuneration commensurate with their functions and with the situation of the company. Any performance-related remuneration guaranteed to the members of the supervisory board shall be designed to further the enterprise's long-term development. 

The remuneration of members of the supervisory board shall be listed individually in the notes to the financial statements or in the management report, broken down into its component parts. 

Remuneration paid by the enterprise to the members of the supervisory board or advantages extended for services rendered personally, in particular, advisory or agency services, shall also be listed separately in the corporate governance report. 

5.4.7 
If during a financial year a member of the supervisory board only attends half of the meetings of the supervisory board and of the committees to which they belong or fewer, this shall be noted in the supervisory board report. Participation also includes telephone or video conferences, but that should not be the rule.

5.5 Conflicts of interest

5.5.1 
Each member of the supervisory board is bound to work in the enterprise's interests. No member of the supervisory board may pursue personal interests in their decisions or use business opportunities intended for the enterprise for themselves.

5.5.2 
Each member of the supervisory board shall inform the supervisory board of any conflicts of interest, in particular those resulting from a consultant or directorship function for clients, suppliers, lenders or other third parties.

5.5.3 
In its report, the supervisory board shall inform the general meeting of any conflicts of interest which have occurred and how the conflicts are being dealt with. Material conflicts of interest and those which are not merely temporary in respect of the person of a supervisory board member shall result in the termination of their appointment.

5.5.4 
Advisory and other service or works agreements between a member of the supervisory board and the company require the supervisory board's approval.

5.6 
Efficiency audit
The supervisory board shall examine the efficiency of its activities on a regular basis.

6 Transparency

6 Transparency

6.1 

The company will treat all shareholders equally under the same conditions with respect to information. It shall make all major new facts which have been made known to the financial analysts and similar addressees available to the shareholders without delay.

6.2
Beyond the statutory obligation to report and disclose transactions in company shares without delay, ownership of shares in the company or related financial instruments by members of the executive board or supervisory board shall also be reported if these directly or indirectly exceed 1% of the shares issued by the company. If the entire holdings of all members of the executive board and supervisory board exceed 1% of the shares issued by the company, such total holdings shall be reported separately for the executive board and supervisory board in the corporate governance report.

The shareholdings of members of the executive board and of the supervisory board of KRONES AG are not disclosed in the corporate governance report.

6.3 
Within the framework of ongoing public relations work, the issue dates of all important regular publications (including the annual report and interim financial reports) and the dates of the general meeting, press and analyst conferences shall be published on the company's website with reasonable prior notice in a "financial calendar".

7 Reporting and Audit of the Annual Financial Statements

7 Reporting and Audit of the Annual Financial Statements

7.1 Accounting

7.1.1 

Shareholders and third parties receive most of their information from the consolidated financial statements and the consolidated management report. They also receive information in the course of the financial year through a half-year financial report and, in the first and second six months of the year, from interim reports or quarterly financial reports. The consolidated financial statement and the condensed consolidated financial statement in the half-year financial report and the quarterly financial report are drawn up in accordance with internationally recognised accounting principles.

7.1.2
The consolidated financial statements are drawn up by the executive board and examined by the auditor and by the supervisory board. The executive board shall discuss semi-annual and possible quarterly financial reports with the supervisory board prior to publication. The Financial Reporting Enforcement Panel and the German Federal Financial Supervisory Authority are also authorised to check that the consolidated financial statements comply with the applicable accounting regulations (enforcement). 
The consolidated financial statements shall be available to the public within 90 days of the end of the financial year; interim reports shall be available to the public within 45 days of the end of the reporting period.
The deadline for publication of the consolidated financial statements of Krones AG is not currently observed.

7.1.3 
The corporate governance report shall contain specific information on company stock option programmes and similar securities-based incentive systems where this information is not already contained in the annual financial statement, consolidated financial statement or remuneration report.

7.1.4 
Notes on relationships with shareholders considered to be "related parties" pursuant to the applicable accounting regulations shall be provided in the consolidated financial statements.

7.2 Audit of Annual Financial Statements

7.2.1 
Prior to submitting a proposal for election, the supervisory board or the audit committee shall obtain a statement from the intended auditor on whether, and where applicable which, professional, financial, personal or other relationships exist between the auditor and its executive bodies and head auditors on the one hand and the enterprise and the members of its executive bodies on the other that could cast doubt on its impartiality. This statement shall include the extent to which other services were performed for the enterprise in the past financial year or have been agreed upon under contract for the following year, in particular in the field of consultancy.
The supervisory board shall agree with the auditor that the chair of the supervisory board or of the audit committee is to be informed immediately of any grounds for disqualification or prejudice occurring during the audit, unless such grounds are immediately eliminated.

7.2.2 
The supervisory board commissions the auditor to carry out the audit and concludes the fee agreement with the auditor.

7.2.3 
The supervisory board shall arrange for the auditor to report immediately on all facts and events of significance to the work of the supervisory board that emerge or arise during the conduct of the audit.
The supervisory board shall arrange for the auditor to inform it and/or note in the auditor's report if, during the conduct of the audit, the auditor comes across facts indicating that the statement on the Code made by the executive board and supervisory board is incorrect.

7.2.4 
The auditor takes part in the supervisory board's deliberations on the annual financial statements and consolidated financial statements and reports on the key findings of the audit.

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