Declaration on Corporate Governance / German Corporate Governance Code
With its internationally and nationally established standards of good and responsible corporate governance, the German Corporate Governance Code (DCGK) is intended to promote trust in the management and supervision of German listed stock corporations. UNITEDLABELS AG would like to maintain and expand the trust in its company among its shareholders, customers, suppliers, employees and the general public through openness and transparency. For these reasons, UNITEDLABELS AG largely complies with the recommendations of the German Corporate Governance Code.
The current declaration of compliance in accordance with Section 161 of the German Stock Corporation Act (Aktiengesetz-AktG) on the German Corporate Governance Code is printed at the end of this chapter and published on the company’s website at http://www.UNITEDLABELS.com/investor-relations/corporate-governance.
1) Shareholders and the Annual General Meeting
Our shareholders exercise their rights at the company’s General Meeting. The Annual General Meeting takes place in the first eight months of the financial year. The chairman of the Supervisory Board chairs the general meeting. The general meeting decides on all tasks assigned to it by law. This includes, among other things, the resolution on the appropriation of the net profit shown in the annual financial statements, the discharge of the Supervisory Board and the Management Board, the election of the auditor, the election of the members of the Supervisory Board and decisions on amendments to the articles of association. The general meeting also serves the shareholders as a platform for dialogue with the Board of Directors and the Supervisory Board.
Our goal is to make it as easy as possible for shareholders to attend the Annual General Meeting. All documents required for participation are published in advance on the Internet. In addition to the possibility of authorizing a bank, a shareholders’ association or another person, a proxy is appointed for the General Meeting, who can authorize the shareholders to exercise their voting rights in accordance with their instructions. Immediately after the Annual General Meeting, we will publish the attendance and voting results on the Internet.
2) Information on corporate governance practices
UNITEDLABELS AG maintains a code of conduct that is binding for all Group employees. It contains all standards and instructions on ethical and rule-compliant behavior among employees and towards third parties. The code of conduct aims in particular to avoid conflicts of interest, corruption and money laundering and to comply with rules on data and environmental protection.
For UNITEDLABELS AG, compliance with these standards is an essential prerequisite for qualified and transparent corporate management with the aim of strengthening and maintaining the trust of its shareholders, customers, suppliers, employees and the general public.
3) Working methods of the Management Board and Supervisory Board as well as the composition and working methods of their committees
The German Stock Corporation Act prescribes a dual management system (“two-tier Board structure”) for UNITEDLABELS AG, consisting of a Management Board and a Supervisory Board. In the dual management system, management and control are strictly separated. The UNITEDLABELS Group is managed by the Executive Board on the basis of statutory provisions and the rules of procedure adopted by the Supervisory Board. In managing the business, the Board of Directors is advised and monitored by the Supervisory Board. The Supervisory Board appoints the Board members; essential business of the Board of Directors requires its approval The Management Board and the Supervisory Board observe the rules of proper corporate governance.
The Board of Directors
The company’s Management Board is the Group’s management body and consists of one person. The Board of Directors is bound by the company’s interests and committed to increasing the company’s sustainable value. He develops the corporate strategy, also for the subsidiaries. The Management Board ensures compliance with the statutory provisions and works to ensure that the Group companies comply with them.
The Management Board works closely with the Supervisory Board for the benefit of the company. It coordinates the company’s strategic direction with the Supervisory Board and discusses the status of strategy implementation with it at regular intervals.
The Management Board informs the Supervisory Board regularly, promptly and comprehensively about all questions of planning, business development, risk situation, risk management and compliance that are relevant to the company. In doing so, it deals with deviations in the course of business from the plans and goals drawn up, stating reasons.
Management Board reports and documents required for decision-making, in particular the annual financial statements, the management report, the consolidated financial statements, the group management report and the audit report, are forwarded to the members of the Supervisory Board in good time before the meeting, usually eight days before the meeting. In addition, the chairman of the Supervisory Board and the Management Board are in constant contact outside of the Supervisory Board meetings. If necessary, the members of the Supervisory Board will be informed verbally or in writing at short notice, even outside of meetings, or they can be called to extraordinary meetings.
The Supervisory Board
The UNITEDLABELS AG Supervisory Board consists of three members who were elected by the Annual General Meeting.
The Supervisory Board appoints the members of the Management Board and represents the company vis-à-vis them. It monitors and advises the Board of Directors on the management of the company and makes decisions on all major business transactions of the company for which approval is required. He regularly discusses business development, planning and strategy. The Supervisory Board deals with the monthly information and the quarterly reports in its regular meetings. It examines the annual financial statements of UNITEDLABELS AG, the consolidated financial statements and the management report of the company and the Group with the assistance of the auditor, who reports directly to the Supervisory Board, and decides on their adoption or approval.
The Supervisory Board has established rules of procedure for its work, the main content of which is the regulation of the composition and responsibilities of the Supervisory Board, its calling, preparation and management of the meetings as well as the rules on committees and the quorum. Since the Supervisory Board consists of only three members and an Audit Committee consisting of only two members cannot pass its own resolutions due to the lack of a quorum, the Supervisory Board sees no need to set up an Audit Committee. Its tasks are carried out by the entire Supervisory Board. In accordance with the recommendation in Principle 11 C.1 of the German Corporate Governance Code, UNITEDLABELS AG believes that the Supervisory Board has an appropriate number of independent members, taking the ownership structure into account. Accordingly, all 3 members of the Supervisory Board belong to the group of independent members. Furthermore, as a member of the Supervisory Board, Mr. Thorsten Luig represents an independent financial expert who has special knowledge and experience in the application of accounting principles and internal control procedures from his professional practice.
The Supervisory Board does not see the need for professionally qualified committees to increase the efficiency of the Supervisory Board’s work with regard to the company and its specific circumstances, considering that it only consists of three people.
The detailed information on the work and advisory focus of the Supervisory Board in the 2020 financial year is explained in the report of the Supervisory Board, which is included in the 2020 Annual Report.
The chairman of the Supervisory Board is prepared to hold discussions with investors on topics specific to the Supervisory Board.
Self-assessment of the effectiveness of the work of the Supervisory Board
The Supervisory Board carried out the regular self-assessment of the effectiveness of the work of the Supervisory Board and its committees required by the Code. The self-assessment was carried out by the members of the Supervisory Board using a list of questions and a subsequent discussion within the Supervisory Board.
Specifications to promote equal participation of women and men in management positions
The “Law for the Equal Participation of Women and Men in Management Positions in the Private and Public Sector”, which came into force on May 1, 2015, obliges the Management and Supervisory Boards of certain companies in Germany to set targets for the proportion of women on the Supervisory Board and Board of Directors for the first time and to determine the following two management levels and to determine by when the respective proportion of women should be reached. The companies had to resolve their targets and implementation deadlines by September 30, 2015. The implementation deadline for the goals could not, by law, go beyond June 30, 2017 when they were initially set.
The UNITEDLABELS AG Supervisory Board decided on August 25, 2015 that it saw no reason to change the current composition of the Supervisory Board (three male members) and the Management Board (then two male members) by June 30, 2017. Nonetheless, the aim is to pay more attention to compliance with the quota system when appointing new members. The maintenance of this target was confirmed for the period up to July 1, 2021.
The Management Board of UNITEDLABELS AG decided on August 25, 2015 to increase the proportion of women at the first management level to 50% by the end of 2015. This resolution was implemented accordingly. As of June 30, 2017, the management level below (management group) consisted of 2 men and 2 women. Thus the objective was achieved. As a result, the Executive Board decided to keep the target for the proportion of women.
Description of the diversity concept for the composition of the Board of Management and the Supervisory Board
Beyond the objectives of the composition of the Management Board and the Supervisory Board set out in this declaration and in the Corporate Governance Report, UNITEDLABELS AG does not currently pursue a diversity concept with regard to the composition of the body authorized to represent and the Supervisory Board. The elaboration of a detailed diversity concept is currently being discussed.
For information on the remuneration report, reference is made to the statements in the group management report and the notes to the consolidated financial statements. These also contain the sample tables for the remuneration of the Board of Directors
Reportable share transactions by the Board of Management and the Supervisory Board
According to Section 19 of the Market Abuse Ordinance (MAR), members of the Management Board and the Supervisory Board as well as persons closely related to them are obliged to disclose the purchase and sale of shares in UNITEDLABELS AG or related financial instruments if the value of the transactions they have carried out within a calendar year, the sum of € 5,000 is reached or exceeded. No transactions were reported to UNITEDLABELS AG for the 2020 financial year.
Uniform, comprehensive and timely information is very important to UNITEDLABELS AG. The reporting on the business situation and the results of UNITEDLABELS AG takes place within the specified deadlines in the annual report, in the quarterly reports and in the 6-month report. UNITEDLABELS AG also takes part in press and analyst conferences.
In addition, information is provided through press releases or ad hoc reports, insofar as this is required by law. All reports and communications can be viewed on the Internet at www.UNITEDLABELS.com/investor-relations. The planned dates of the main recurring events and publications – such as the general meeting, the annual report and interim financial reports – are compiled in a financial calendar, which is published sufficiently early and can be found on the company’s website at http://www.UNITEDLABELS.com/investor- relations / financial calendar is available.
UNITEDLABELS AG has established compliance structures for its current company size and will continue to develop these in view of growing requirements from the regulatory environment and with a view to corporate development.
Violations of applicable law and internal guidelines are appropriately sanctioned.
UNITEDLABELS AG has created the mandatory insider directory and the persons affected have been informed of the legal obligations and sanctions. Further information on these structures is not provided in the corporate governance report.
Corporate Governance on the internet
The current declarations of compliance with the German Corporate Governance Code as well as those of the past years are published on the company’s website at www.UNITEDLABELS.com/investor-relations/corporate-governance.
Code of Conduct for Manufacturers
In order to promote compliance with ethical standards in the age of global production, the UNITEDLABELS Group has developed a Code of Conduct for manufacturers. The UNITEDLABELS-Group comprises the headquarters UNITEDLABELS AG (Germany), UNITEDLABELS Belgium, N.V. (Belgium), UNITEDLABELS Comicware Ltd. (Hong Kong), UNITEDLABELS Ltd. (England), House of Trends europe GmbH (Germany), Open Mark United Labels GmbH (Germany) and Elfen-Service GmbH (Germany). The code of conduct is based on the conventions of the International Labor Organization (ILO) and the United Nations as well as on the national legislation of the respective production country. The entire wording of the Code of Conduct is published on the company’s website at www.UNITEDLABELS.com/unternehmen/code-of-conducts.
Declaration dated March 2021 by the Management Board and the Supervisory Board of UNITEDLABELS Aktiengesellschaft in accordance with Section 161 of the German Stock Corporation Act (AktG) on German Corporate Governance.
This declaration follows on from the declaration of February 2020, which was subject to the German Corporate Governance Code in the version of February 7, 2017. The current declaration is subject to the German Corporate Governance Code in the version dated December 16, 2019.
The Management Board and the Supervisory Board of UNITEDLABELS Aktiengesellschaft declare that the recommendations of the “Government Commission on the German Corporate Governance Code” published by the Federal Ministry of Justice and Consumer Protection in the official section of the Federal Gazette have been and will be complied with in the past. Insofar as it relates to the past, the following declaration refers to the recommendations of the Government Commission on the German Corporate Governance Code in the version of February 7, 2017, published in the Federal Gazette on April 24, 2017 and May 19, 2017 (corrected Version) (“ Code 2017 ”) and, insofar as it relates to the present and future, to the recommendations of the “ Government Commission on the German Corporate Governance Code ” in the version of December 16, 2019, published in the Federal Gazette on May 20, 2020 (“ Code 2019 ‘or’ Code ‘).
Furthermore, the Management Board and the Supervisory Board declare that the recommendations of the “Government Commission on the German Corporate Governance Code” have only been deviated from as follows and are likely to be deviated from in the future:
Management and Supervision
Principle 5 – Recommendation A.2
UNITEDLABELS AG does not disclose the principles of the compliance management system and there is no whistleblower system for employees or third parties.
Composition of the Board of Directors
Principle 9: – Recommendation B.1
The DCGK recommends paying attention to diversity in the composition of the Executive Board. Since the Board consists of only one member, diversity cannot be achieved. In any expansion of the composition of the Management Board, the Supervisory Board will also include diversity in its considerations.
Principle 9 – Recommendation B.2
UNITEDLABELS AG deviates from this recommendation.
Principle 9 – Recommendation B.5
UNITEDLABELS AG deviates from this recommendation.
Composition of the Supervisory Board
Principle 11 – Recommendation C.2:
The DCGK recommends setting age limits for the members of the Management Board and the Supervisory Board.
In addition, the Supervisory Board should name specific goals for its composition and develop a competence profile for the entire committee. For its composition, the Supervisory Board should take into account the company’s international activities, potential conflicts of interest, the number of independent Supervisory Board members within the meaning of principle 11, an age limit to be specified for members of the Supervisory Board and a standard limit to be specified for the length of membership on the Supervisory Board as well as diversity (Diversity) adequately. Proposals by the Supervisory Board to the Annual General Meeting should take these goals into account and at the same time aim to fill in the competence profile for the entire body. The implementation status is to be published in the corporate governance report.
A curriculum vitae of the respective candidate, which provides information on relevant knowledge, skills and experience, should also be attached to proposals made by the Supervisory Board to the Annual General Meeting. This should – supplemented by an overview of the main activities in addition to the Supervisory Board mandate – be published annually updated for all Supervisory Board members on the company’s website.
The composition of the Supervisory Board must be based on the company’s interests and must ensure effective monitoring and advice to the Management Board. The Supervisory Board therefore selects the candidates for nominations to the Annual General Meeting solely on the basis of professional and personal competence and experience; other characteristics such as gender or national affiliation as well as age were and are of no importance for these nominations for reasons of equal opportunities. In addition to these selection criteria, the company considers the aspects named in the Code to be fundamentally worth considering and the Supervisory Board will include them in its decision at the time of the respective election proposals, taking into account the then given company-specific situation, but a stipulation can be made on this for the reasons mentioned, even taking into account the small number of Supervisory Board mandates to be filled.
Since, for these reasons, neither specific objectives for the composition of the Supervisory Board have been specified, nor a competence profile has been drawn up for the entire committee, the relevant statements on the status of implementation in the Corporate Governance Report in accordance with Principle 10 & 11 DCGK are also omitted.
With regard to the attachment of a curriculum vitae to the candidate proposal of the Supervisory Board and the publication of the curriculum vitae of all Supervisory Board members together with an overview of the main activities in addition to the Supervisory Board mandate, the Management Board and the Supervisory Board take the view that with the fulfillment of the statutory submission obligations in the convocation of the Annual General Meeting and in the appendix a comprehensive picture of the Supervisory Board candidates and members is already given. The publication of résumés would also inappropriately interfere with the right to informational self-determination of the Supervisory Board candidates and members.
Working method of the Supervisory Board
Principle 14 – Recommendation D.2:
The DCGK recommends the formation of professionally qualified committees depending on the specific circumstances of the company and the number of its members. The Supervisory Board consists of only three members. It has therefore not formed any committees. The Supervisory Board does not see the need for professionally qualified committees to increase the efficiency of the Supervisory Board’s work with regard to the company and its specific circumstances, considering that it only consists of three people.
Principle 14 – Recommendation D.3:
Since the Supervisory Board consists of only three members and an audit committee consisting of only two members cannot pass its own resolutions due to the lack of a quorum, the Supervisory Board sees no need to set up an audit committee. Its tasks are carried out by the entire Supervisory Board.
Principle 14 – Recommendation D.5:
The Supervisory Board consists of only three members. These are chosen exclusively by the shareholders. The Supervisory Board therefore sees no need to set up a nomination committee.
Transparency and external reporting
Principle 21 – Recommendation F.2
The recommendation of the DCGK stipulates that the consolidated financial statements should be publicly accessible within 90 days of the end of the financial year and the interim reports within 45 days of the end of the reporting period. Since the company gives priority to the quality of the financial reports over compliance with the aforementioned deadlines, this may result in the company not being able to comply with the publication deadlines recommended by the German Corporate Governance Code. Instead, the consolidated financial statements and interim reports are published within the statutory deadlines set by Deutsche Börse for the Prime Standard.
Remuneration of the Board of Directors and the Supervisory Board
Principle 23 – Recommendation G1
The German Corporate Governance Code 2020 contains with regard to the compensation in the area of G.I. Compared to the previous version of the Code, new recommendations on the remuneration of the Management Board. The current remuneration system for the sole director Peter Boder does not fully comply with the new regulations and the company therefore declares a deviation in point G.I. as a precaution, even if the existing Management Board contract is protected.
In particular, the current remuneration system does not fully comply with the following of these recommendations: G.3 (peer group comparison of executive Board salaries), G.4 (comparison of executive Board salaries with top management), G.8 (exclusion of subsequent changes to goals), G.11 sentence 2 (Possibility of reclaiming or withholding the variable remuneration by the Supervisory Board), G.16 (offsetting the remuneration for external Supervisory Board mandates).
In accordance with its statutory obligation, the Supervisory Board of UNITEDLABELS Aktiengesellschaft will resolve a new remuneration system for the Executive Board and submit it to the 2021 Annual General Meeting for approval, which should also be taken into account in future Executive Board contracts in particular.
Principle 24 – Recommendation G.17.
The recommendation of the DCGK stipulates that the remuneration of the Supervisory Board should also take into account the chairmanship and membership in the committees.
The amount of the remuneration of the members of the Supervisory Board is finally regulated in Section 10 of the Articles of Association. There are still no committees, so that the chairmanship and membership in the committees are not taken into account in the remuneration of the Supervisory Board.
Muenster, March 2021
The Management Board The Supervisory Board