German Corporate Governance Code

3. Cooperation between Management Board and Supervisory Board

3.1 The Management Board and Supervisory Board cooperate closely to the benefit of the company.
3.2 The Management Board coordinates the company’s strategic approach with the Supervisory Board and discusses the current state of strategy implementation with the Supervisory Board at regular intervals.
3.3 The Articles of Association or – if applicable also in the case of individual transactions – the Supervisory Board stipulate that transactions of fundamental importance are subject to approval by the Supervisory Board. They include decisions or measures that fundamentally change the company’s net assets, financial status or results of operations.
3.4 The Management Board is responsible for keeping the Supervisory Board informed. Nevertheless, the Supervisory Board must itself ensure that it obtains sufficient information. The Supervisory Board shall therefore specify the Management Board’s information and reporting duties in greater detail.

The Management Board informs the Supervisory Board regularly, without delay and comprehensively about all issues that are relevant to the company regarding strategy, planning, business development, the risk situation, risk management and compliance. The Management Board addresses departures in the current business development from its existing projections and targets, indicating the reasons for any such departures.

The Management Board’s reports to the Supervisory Board are, as a rule, to be submitted in text form. Wherever possible, documents required for decisions are sent to the members of the Supervisory Board in good time before the meeting.

3.5 Good corporate governance requires an open dialogue between the Management Board and Supervisory Board as well as between the members of these individual Boards. Comprehensive observance of confidentiality is of paramount importance in this regard.

All Board members ensure that the employees used by them in support functions comply with the obligation of confidentiality in the same way.
3.6 In Supervisory Boards governed by co-determination, shareholder representatives and employee representatives can prepare Supervisory Board meetings separately, involving members of the Management Board, if needed.

If necessary, the Supervisory Board shall meet without the Management Board.
3.7 In the event of a takeover offer, the Management Board and Supervisory Board of the target corporation must issue a statement of their reasoned position, enabling the shareholders to make an informed decision on the offer.

After the announcement of a takeover offer, the Management Board must not – until publication of the result – take any actions that could prevent the success of the offer, unless such actions are permitted under applicable law. In making their decisions, the Management Board and Supervisory Board are bound to observe the best interests of the shareholders and the company.

In the event of a takeover offer, the Management Board should convene an Extraordinary General Meeting at which shareholders will discuss the takeover offer and, if appropriate, decide on corporate actions. 
3.8 The members of the Management Board and Supervisory Board comply with the rules of proper corporate management. If they violate the duty of due care and diligence of a prudent and conscientious manager or Supervisory Board member, they will be held liable to the corporation for damages. However, a business decision is not regarded as a violation of duty if the member of the Management Board or Supervisory Board could reasonably presume that he or she was acting on an informed basis in the best interests of the corporation (business judgement rule).

If the corporation takes out a D&O (directors’ and officers’ liability insurance) policy for the Management Board, a deductible of at least 10% of the loss up to at least the amount of one and a half times the fixed annual remuneration of the Management Board member must be agreed.

A similar deductible shall be agreed in any D&O policy for the Supervisory Board.
3.9 Extending loans from the company to members of the Management Board or Supervisory Board or their relatives requires the approval of the Supervisory Board.
3.10 The Management Board and Supervisory Board shall report annually on Corporate Governance (Corporate Governance Report), and shall publish this report in connection with the Corporate Governance Statement. Comments should be provided on the suggestions made in the Code. The corporation shall keep previous Declarations of Conformity with the Code available on its website for a period of five years.
  convenience translation