Corporate Governance Declaration/German Corporate Governance Code
The following (Group) declaration on corporate governance in accordance with Sections 289f and 315d of the German Commercial Code (HGB) is an essential element of our corporate governance reporting and contains the report of the Executive Board and Supervisory Board on corporate governance in accordance with Principle 23 of the German Corporate Governance Code as amended of the DCGK of April 28, 2022, Information on key corporate governance practices as well as the working methods and composition of the supervisory board and management board, including information on the company’s corporate governance, the diversity concept for the supervisory board and management board and the legal requirements for the equal participation of women and men in management positions.
1) Declaration of compliance with the 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. UNITED LABELS AG would like to maintain and further expand the trust in its company among its shareholders, customers, suppliers, employees and the public through openness and transparency. For these reasons , UNITED LABELS AG largely complies with the recommendations of the German Corporate Governance Code.
The current declaration of compliance in accordance with Section 161 AktG with the German Corporate Governance Code is printed at the end of this chapter and published on the company’s website at the following link: https://www.unitedlabels.com/investor-relations/corporate-governance
The current declarations of compliance with the German Corporate Governance Code as well as those from previous years are permanently made publicly available on the Internet on the company’s homepage at www.unitedlabels.com/investor-relations/corporate-governance.
2) Shareholders and 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 Annual General Meeting is chaired by the Chairman of the Supervisory Board. The general meeting decides on all tasks assigned to it by law. This includes, among other things, the resolution on the use of the retained profits shown in the annual financial statements, the discharge of the Supervisory Board and the Executive Board, the election of the auditor, the election of the members of the Supervisory Board, the approval of the remuneration system and the remuneration report for members of the Executive Board and the Supervisory Board listed company as well as decisions on changes to the articles of association or measures to raise capital and reduce capital. The Annual General Meeting also serves as a platform for shareholders to engage in dialogue with the Board of Directors and the Supervisory Board.
Our goal is to make it as easy as possible for shareholders to participate in the Annual General Meeting. All documents required for participation will be published online in advance. In addition to the possibility of authorizing a credit institution, a shareholders’ association or another person, the shareholders are appointed a voting representative for the general meeting, whom shareholders can commission to exercise their voting rights in accordance with their instructions. Immediately after the Annual General Meeting, we publish the attendance and voting results on the Internet.
3) Information on corporate governance practices
Code of Conduct for Manufacturers
In order to promote compliance with ethical standards in the age of global production, the UNITED LABELS Group has developed a Code of Conduct for manufacturers. The UNITED LABELS Group includes the headquarters UNITED LABELS AG (Germany), UNITED LABELS Belgium, NV (Belgium), UNITED LABELS Comicware Ltd. (Hong Kong), UNITED LABELS 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 producing country. The entire text of the Code of Conduct is published on the Internet on the company’s homepage at www.unitedlabels.com/unternehmen/code-of-conducts .
4) How the Executive Board and Supervisory Board work and the composition and work methods of their committees
The German Stock Corporation Act prescribes a dual management system (“two-tier board structure”) for UNITED LABELS AG, consisting of a management board and a supervisory board. In the dual management system, management and control are strictly separated. The UNITED LABELS Group is managed by the Executive Board on the basis of legal provisions and the rules of procedure adopted by the Supervisory Board. In terms of management, the Executive Board is advised and monitored by the Supervisory Board. The supervisory board appoints the board members; Essential business of the Board of Directors requires his approval. The Executive Board and Supervisory Board observe the rules of proper corporate governance.
The board
The board of directors of the company is the management body of the group and consists of one person. The Board of Directors is bound to the company’s interests and is obliged to increase the sustainable value of the company. He develops the corporate strategy, including for the subsidiaries. The Executive Board ensures compliance with legal regulations and ensures that the Group companies observe them.
The Executive Board works closely with the Supervisory Board for the benefit of the company. He coordinates the strategic direction of the company with the Supervisory Board and discusses the status of strategy implementation with them at regular intervals.
The Executive Board informs the Supervisory Board regularly, promptly and comprehensively about all planning, business development, risk situation, risk management and compliance issues relevant to the company. He addresses any deviations in business development from the established plans and goals, giving reasons.
Management reports and documents required for decisions, in particular the annual financial statements, the management report, the consolidated financial statements, the group management report and the audit report, are sent to the members of the Supervisory Board as early as possible before the meeting, usually eight days before the meeting. In addition, the Chairman of the Supervisory Board and the Executive Board are in constant contact outside of the Supervisory Board meetings. If necessary, the members of the Supervisory Board are informed verbally or in writing at short notice outside of meetings or can be called to extraordinary meetings.
The supervisory board
The supervisory board of UNITED LABELS AG consists of three members who were elected by the general meeting.
The Supervisory Board appoints the members of the Executive Board and represents the company towards them. It monitors and advises the Board of Directors on the management of the company and decides on all of the company’s significant transactions for which approval is required. He regularly discusses business development, planning and strategy. The Supervisory Board discusses the monthly information and quarterly reports at its regular meetings. It examines the annual financial statements of UNITED LABELS AG, the consolidated financial statements and the management report of the company and the group with the involvement of the auditor, who reports directly to the Supervisory Board, and decides on their approval or approval.
The Supervisory Board has adopted a set of rules of procedure for its work, which can be viewed at https://www.unitedlabels.com/investor-relations/geschaeftsregulation-supervisory-council/ and whose essential content lies in the regulation of the composition and responsibilities of the Supervisory Board, its convening, Preparation and management of meetings as well as regulations regarding committees and quorum exist.
Since the Supervisory Board only consists of three members, the Supervisory Board assumes the tasks of an audit committee and records these under separate agenda items.
UNITED LABELS AG believes that the Supervisory Board includes an appropriate number of independent members. According to the Supervisory Board’s assessment, two members are to be viewed as independent.
At the Annual General Meeting on June 11, 2021, Dr. David Strack, Mr. Volker Deck and Mr. Albert Hirsch were elected to the supervisory board. The election of the Supervisory Board members took place with effect from June 15, 2021 until the end of the Annual General Meeting, which decides on the discharge for the second financial year after the start of the term of office, i.e. on the discharge for the 2023 financial year. The fiscal year in which the term of office begins is not included.
Supervisory Board member Volker Deck has resigned from his Supervisory Board mandate with effect from the end of the Annual General Meeting on July 5, 2023. At the Annual General Meeting on July 5, 2023, Ms. Silvia Lubitz was elected as a member of the Supervisory Board with effect from the end of the Annual General Meeting on July 5, 2023 for the period until the end of the Annual General Meeting that decides on the discharge for the 2023 financial year.
The Supervisory Board does not see the need for technically qualified committees with regard to the company and its specific circumstances, considering that it only consists of three people.
The Supervisory Board has neither specified specific objectives for the composition of the Supervisory Board nor developed a competency profile for the entire board. There is also no reporting in the form of a qualification matrix.
The detailed information on the work and advisory priorities of the Supervisory Board in the 2023 financial year is explained in the report of the Supervisory Board, which is included in the 2023 annual report. The Chairman of the Supervisory Board is willing, within appropriate limits, to hold discussions with investors on Supervisory Board-specific topics.
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 as required by the Code. The self-assessment was last carried out in February 2024 using a questionnaire by the members of the Supervisory Board and a subsequent discussion within the Supervisory Board.
5) Provisions to promote equal participation of women and men in leadership positions
The “Law for the Equal Participation of Women and Men in Management Positions in the Private and Public Sectors” (FüPoG), which came into force on May 1, 2015, required the management and supervisory boards of certain companies in Germany to set target figures for the proportion of women on supervisory boards for the first time. Board of Directors and the following two management levels and to determine by when the respective proportion of women should be achieved. The companies had to decide on their target figures and implementation deadlines by September 30, 2015. When the goals were first set, the deadline for implementing the goals was not allowed to go beyond June 30, 2017. The “Law to supplement and amend the regulations for the equal participation of women and men in management positions in the private sector and in the public service (Second Management Positions Act – FüPoG II), which came into force in 2015, came into force on August 12, 2021 FüPoG further developed. Companies now have to justify why they have set the goal of not appointing women to the board of directors.
The Supervisory Board of UNITED LABELS AG decided on June 15, 2021 that it would adhere to the previous target for the proportion of women of 0% regarding the composition of the Supervisory Board and the composition of the Supervisory Board by June 30, 2026 with regard to the equal participation of women and men Board also sticks to the target of 0%. Nevertheless, the aim is to pay greater attention to compliance with the quota regulation when appointing new members to the bodies. The composition of the Supervisory Board and Executive Board reflects the objectives.
the board of UNITED LABELS AG decided to increase the proportion of women at the first management level to 50% and to maintain this target until June 30, 2026. As of December 31, 2022, the management level (management group) consisted of four women and one man. The objective was therefore achieved.
6) Description of the diversity concept for the composition of the Executive Board and Supervisory Board
Beyond the goals for the composition of the Executive Board and Supervisory Board described in this declaration, UNITED LABELS AG does not currently pursue a diversity concept with regard to the composition of the authorized representative body and the Supervisory Board.
7) Remuneration of board members
The remuneration system presented to and approved by the Annual General Meeting in accordance with Section 87a Paragraph 1 and 2 Sentence 1 AktG, the remuneration reports for the last financial years with the auditor’s note and the last remuneration resolution in accordance with Section 113 Paragraph 3 AktG are published in the Investor Relations section under the following link : https://www.unitedlabels.com/investor-relations/verguetungssysteme-und-verguetungsberichten/
8) transparency
Uniform, comprehensive and timely information is very important to UNITED LABELS AG. Reporting on the business situation and results of UNITED LABELS AG is carried out within the specified deadlines in the annual report, in the quarterly reports and in the 6-month report. UNITED LABELS AG also takes part in press and analyst conferences.
Furthermore, information is provided through press releases or ad hoc reports, to the extent required by law. All reports and notices 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, annual report and interim financial reports – are compiled in a financial calendar, which is published sufficiently early and on the company’s website at http://www.unitedlabels.com/investor-relations/ financial calendar is available.
UNITED LABELS 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 company development.
Violations of applicable law and internal guidelines will be appropriately sanctioned.
Declaration of compliance from the Executive Board and Supervisory Board of UNITEDLABELS Aktiengesellschaft
in accordance with Section 161 AktG of the German Corporate Governance Code
The Executive Board and Supervisory Board of UNITED LABELS 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 generally been complied with in the past and will be complied with in the future. The following statement refers to the recommendations of the ‘Government Commission on the German Corporate Governance Code’ in the version dated April 28, 2022, published in the Federal Gazette on June 27, 2022 (‘Code 2022’ or ‘Code’).
Furthermore, the Executive 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:
A. Management and supervision
Recommendation A.1
According to the new recommendation A.1, the board of directors should identify and evaluate the risks and opportunities for the company associated with social and environmental factors as well as the ecological impacts of the company’s activities. Environmental and social goals should also be adequately taken into account in the corporate strategy. Corporate planning should include appropriate financial and sustainability-related goals.
The Executive Board and Supervisory Board generally recognize sustainability aspects as important and take them into account appropriately in their work for the company. However, the recommendations mentioned are vague and any statement about whether they are followed is therefore subject to considerable uncertainty. The Executive Board and the Supervisory Board therefore declare a deviation in this respect as a precautionary measure.
Recommendation A.3
According to the newly introduced recommendation A.3, the internal control system and the risk management system should also cover sustainability-related goals, if not already required by law. This should include the processes and systems for collecting and processing sustainability-related data.
The design of the internal control system and the risk management system is currently based on the legal requirements. Due to the size of the company, sustainability-related goals that go beyond these legal requirements are not yet covered by the internal control system and the risk management system.
Recommendation A.4
There is no whistleblower system for employees or third parties. Due to the size of the company and an open corporate culture, the formal establishment of a whistleblower system is not considered necessary.
Recommendation A.5
According to the newly introduced recommendation A.5, the management report should describe the key features of the internal control system and the risk management system and should comment on the appropriateness and effectiveness of these systems.
The company has an internal control system and risk management system. However, the recommendations regarding the information in the management report go well beyond the legal requirements. The company is currently following the legal requirements with regard to the management report and considers these to be sufficient.
B. Composition of the Board of Directors
Recommendation B.1
The Code recommends paying attention to diversity in the composition of the Board of Directors. Since the board only consists of one member, diversity cannot be achieved. The Supervisory Board will also include the aspect of diversity in its considerations when expanding the composition of the Board of Directors.
Recommendation B.2
UNITED LABELS AG deviates from this recommendation. Since the Supervisory Board believes that the Executive Board remains well-staffed, there is currently no need to ensure long-term succession planning.
Recommendation B.5
UNITED LABELS AG deviates from this recommendation. There is no maximum age for the board of directors. The suitability test should continue to be carried out regardless of age in the future. An age limit is also not considered appropriate taking into account the prohibition of discrimination.
C. Composition of the Supervisory Board
Recommendations C.1/C.2 :
In addition, the supervisory board should specify specific goals for its composition and develop a competency profile for the entire board. The status of implementation should be disclosed in the form of a qualification matrix in the corporate governance declaration. This should also provide information about the appropriate number of independent shareholder representatives and the names of these members in the opinion of the shareholder representatives on the Supervisory Board.
In the opinion of the Executive Board and the Supervisory Board, the composition of the Supervisory Board must be aligned with the company’s interests and must ensure effective monitoring and advice to the Executive Board. The Supervisory Board therefore selects the candidates for nominations to the Annual General Meeting solely based on their professional and personal competence and experience. Other characteristics such as gender or national affiliation as well as age were and are irrelevant for these nominations for reasons of equal opportunities. In addition to these selection criteria, the company considers the aspects mentioned in the Code to be fundamentally worth taking into account and the Supervisory Board will include them in its decision at the time of the respective election proposals, taking into account the company-specific situation at that time. However, this cannot be determined for the reasons mentioned, also taking into account the small number of supervisory board mandates to be filled.
For these reasons, no specific objectives are specified for the composition of the Supervisory Board, nor is a competency profile developed for the entire board. For the same reasons, reporting in the form of a qualification matrix is not carried out.
The code recommends setting age limits for members of the supervisory board and disclosing them in the corporate governance statement. The suitability test should continue to be carried out regardless of age in the future. An age limit is also not considered appropriate taking into account the prohibition of discrimination.
Recommendation C.14
With regard to the attachment of a CV to the Supervisory Board’s candidate proposal and the publication of CVs 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 are of the opinion that with the fulfillment of the statutory submission obligations in the notice of the general meeting as well as in the appendix or A comprehensive picture of the supervisory board candidates and members is provided in the notes to the annual and consolidated financial statements. The publication of CVs would also inappropriately interfere with the right to informational self-determination of supervisory board candidates and members.
D. Working methods of the supervisory board
Recommendation D.2/D.3:
The Code recommends forming technically qualified committees depending on the specific circumstances of the company and the number of its members. The supervisory board only consists of three members. He therefore did not form any committees. The Supervisory Board does not see the need for technically 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.
Recommendation D.4:
The supervisory board consists of only three members. These are elected exclusively by the shareholders. The Supervisory Board therefore sees no need to set up a nomination committee.
F. Transparency and external reporting
Recommendation F.2
The recommendation of the Code 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 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. Rather, the consolidated financial statements and interim reports are published within the statutory deadlines set by Deutsche Börse for the Prime Standard.
G. Remuneration of the Executive Board and Supervisory Board
Recommendation G1
With regard to remuneration in the GI area, the Code contains a number of recommendations on the remuneration of the Executive Board. The current remuneration system in relation to the sole board member Peter Boder does not fully comply with the new regulations and the company is therefore declaring a deviation in point GI as a precautionary measure, even if the existing board contract is grandfathered.
In particular, the current remuneration system does not fully comply with the following 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 variable remuneration by the supervisory board), G.16 (crediting remuneration for external supervisory board mandates).
, the Supervisory Board of UNITED LABELS Aktiengesellschaft has decided on a new remuneration system for the Executive Board, which was approved by the 2021 Annual General Meeting and which should also be taken into account in particular for future Executive Board contracts concluded. The remuneration system submitted for approval to the 2021 Annual General Meeting and the resolution are published at https://www.unitedlabels.com/investor-relations/haupttreffen/.
Recommendation G.17
The Code’s recommendation stipulates that, among other things, the chairmanship and membership of the committees should also be taken into account when remunerating the Supervisory Board. The amount of remuneration for the members of the Supervisory Board is conclusively regulated in Section 10 of the Articles of Association. There are still no committees, so the chairmanship and membership in the committees are not taken into account in the remuneration of the Supervisory Board.
Münster, March 2024
The board The supervisory board
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