Declaration of the Board of MBB SE on the German Corporate Governance Code pursuant to Art. 161 of the Companies Act (AktG)

On 17 March 2019 the Board submitted the last declaration of conformity in accordance with section 161 AktG:

The Board of MBB SE submitted the last declaration of conformity in accordance with section 161 AktG on 17 March 2018 and complied with this declaration of conformity with the exceptions stated therein. The following declaration updates this declaration of conformity and relates to the German Corporate Governance Code (hereinafter also the “Code”) in the version dated 7 February 2017.

The Board of MBB SE hereby confirms that the recommendations of the Government Commission on the German Corporate Governance Code in consideration of the characteristics of the single-tier system of MBB SE and with the exceptions described below have been complied with and will continue to be complied with:

Characteristics of the single-tier system

As a European stock corporation (Societas Europaea – SE), the Company has a single-tier management and control structure.

The Board manages the Company, determines the basic principles governing its activities, monitors their implementation, and has the additional responsibilities and authorities set out in section 22 of the German SE Implementation Act (SEAG). The Executive Management manages the Company's business by implementing the basic principles and standards set out by the Board.

Basically, MBB SE takes those parts of the Code that used to apply to the Supervisory Board and applies them to the Board and takes those parts of the Code that used to apply to the Management Board to its Executive Management. The following exceptions apply with respect to the legal framework for the single-tier system:

Departing from No. 2.2.1 s. 1 of the Code, the Board must submit the annual financial statements and the consolidated financial statements to the Annual General Meeting, Section 48 p. 2 s. 2 SEAG.

Departing from No. 2.3.1 s. 1 and 3.7 p. 3 of the Code, the Board is responsible for convening the Annual General Meeting, Sections 48 and 22 p. 2 SEAG.

The duties of the Board of Management listed in Nos. 4.1.1 (Corporate Governance), 4.1.2 in conjunction with 3.2 half-sentence 1 (Development of the Company’s Strategic Orientation) of the Code are the responsibility of the Board, Section 22 p.1 SEAG.

The powers of the Board of Management governed by Nos. 2.3.2 s. 2 (Proxy Bound by Instructions), 3.7 p. 1 (Statement on a Takeover Bid) and 3.7 p. 2 (Conduct during a Takeover Bid), as well as 3.10 (Corporate Governance Report), 4.1.3 (Compliance) and 4.1.4 (Risk Management and Controlling) of the Code shall be the responsibility of MBB SE’s Board, Section 22 p. 6 SEAG.

Departing from Nos. 5.4.2 and 5.4.4 of the Code, members of the Board may be appointed as Executive Management, provided that the majority of the Board continues to consist of non-executive members, Section 40 p. 1 s. 2 SEAG.


Section 3.8: D&O insurance:
The D&O insurance policy for non-executive members of the Board does not provide for a deductible. We are confident that our executive bodies and employees exercise their duties with the greatest care and diligence. In light of the relatively low level of fixed remuneration paid to non-executive members of the Board, we do not consider a deductible for the Board to be appropriate. The D&O insurance for the Chief Executive Officers provides for a deductible of 10%, but the 1.5 fold of the fixed yearly compensation as a maximum.

Section 4.1.3: Whistle-blower system:
We do not consider the setup of a whistle-blower system to be applicable in view of the small number of employees and the single-layer hierarchy of the company. Should there be indications of contraventions of law, employees are able to speak in confidence to the compliance representative on Executive Management level or directly to the Board.

Section 4.2.5: Use of model tables:
In order to disclose the total remuneration of the Executive Management, the Company does not use the model tables attached to the Code. The Board considers it possible to present the total remuneration of the Executive Management in a complete and generally understandable form, even in a different form.

Section 5.1.2: Composition of Executive Management:
When appointing members of the Executive Management, the Board will follow the requirements of the German Stock Corporation Act by ensuring that candidates have the skills, knowledge and experience that are required for the work of the Executive Management. However, the Board considers criteria such as a candidate’s gender as less decisive, even though it expressly welcomes diversity.

Section 5.3: Board committees:
The Board consists of four members, so that the formation of committees would not lead to increases in efficiency. We consider the number of Board members to be adequate in light of the size of the company.

Section 5.4.1: Age limit:
An age limit is not specified for the members of the Board. In light of the age of the Board members and their remaining term of office, we do not believe that it is necessary to introduce such limit. Due to the shareholder structure, a regular limit for the term of office of Board members is not appropriate and has therefore not been specified.

Section 7.1.2: Publications:
The consolidated financial statements and interim financial reports are published in accordance with the statutory periods and those imposed by Deutsche Börse for the Prime Standard. As an industrial holding company with a focus on majority interests in small and medium-sized industrial companies, MBB SE is required to consolidate a number of individual companies as well as regularly performing first-time consolidations and deconsolidations. Therefore, adhering to the periods proposed by the German Corporate Governance Code would lead to disproportionate efforts for the company.

Berlin, March 17, 2019