Update of the Declaration of Compliance with the German Corporate Governance Code by the Board of Directors and Supervisory Board of artnet AG within Section 161 of the Aktiengesetz (AktG—German Public Limited Companies Act)
As a rule, artnet AG complies with the recommendations of the German Corporate Governance Code as published in the official section of the electronic federal gazette, in the version dated May 15, 2012. artnet AG will continue to comply with these recommendations in the future.
The following recommendations are not applied:
1. Number 3.8, paragraph 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 to 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. Number 4.2.1, sentence 1: "The Board of Directors shall be comprised of several people and have a chairman or spokesman."
Since its establishment, the Board of Directors of artnet AG has been comprised of one person. By contrast, the management of the subsidiary Artnet Worldwide Corporation in New York, which is largely responsible for operations within the Group, is comprised of several people. To date, the Company has not increased the size of its Board of Directors for cost reasons.
3. Number 5.1.2, paragraph 2, sentence 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.
See annex for by-laws.
4. Number 5.3.1., Number 5.3.2., Number 5.3.3., Number 5.3.4., and Number 5.3.5: In these sections, the Code recommends that the Supervisory Board form an Audit Committee and a Nomination Committee.
As the Supervisory Board of artnet AG is comprised of only three members, it does not make sense to form committees. The tasks envisioned for the Audit Committee and the Nomination Committee are undertaken jointly by the Supervisory Board as a whole.
5. Number 5.4.1, paragraph 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 and requirements for diversity would unduly limit the shareholders’ discretionary powers when selecting members of the Supervisory Board.
6. Number 7.1.2, sentence 3: “The Consolidated Financial Statements shall be publicly accessible within 90 days of the end of the financial year; interim reports shall be publicly accessible within 45 days of the end of the reporting period.”
The consolidated financial statements will not be published within the 90-day period recommended in the German Corporate Governance Code. However, they will be published within the four-month period specified in Section 37v (1) of the WpHG and Section 325 (4) of the HGB. As a result of the Group’s international structure, both the careful preparation and the conscientious consolidation of the separate financial statements take a substantial amount of time. Earlier publication would have caused the quality of the consolidated financial statements to suffer. In the future, artnet AG intends to publish its consolidated financial statements within the recommended period, as was done in the past.
Berlin, April 2, 2013
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 Jacob Pabst 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.