Declaration of Compliance pursuant to § 161 of the German Stock Corporation Law on the observance of the Government Commission German Corporation Governance Code.
The Personally Liable Shareholder and the Supervisory Board of the Mühlbauer Holding AG & Co. KGaA (hereinafter referred to as the “Company”) declare that all recommendations of the Government Commission German Corporate Governance Code of May 15, 2012 published in the official part of the Federal Bulletin on June 15, 2012 (“Code 2012”) have been and shall be observed with the following exceptions:
Deductible for D&O insurance
The D&O insurance for the Supervisory Board does not include a deductible. A deductible would restrict opportunities for acquiring members for the Supervisory Board with extensive entrepreneurial experience and the Company is of the opinion that such deductible would not increase the motivation and sense of responsibility of the members of the Supervisory Board (Code 2012 section 3.8 paragraph 3).
Diversity regarding to the filling of management positions
When filling management positions in the Company and the companies associated with it (hereinafter referred to as the "Mühlbauer Group"), the Company attaches importance to diversity. However, the focus here is on the technical qualification of the candidates (men and women) (Code 2012 Section 4.1.5).
Disclosure and explanation of the remuneration of the Management
The Chairman of the Supervisory Board will not disclose any information on the Company's remuneration system and possible modifications to the Annual Sharholders' Meeting (Code 2012 section 4.2.3 paragraph 6).
The Company, due to the legal structure of the KGaA, does not have a Managing Board, but a Personally Liable Shareholder, the Mühlbauer Holding AG & Co. Verwaltungs KG (hereinafter referred to as "Verwaltungs KG"), whose personally liable shareholder is in turn the Mühlbauer Beteiligungs AG. The Company shall not pay any remuneration to the Verwaltungs KG. An explication of the remuneration schemes, as well as an individualized explanation on the nature of the remuneration of the Personally Liable Shareholder or details on the fringe benefits paid by the Company are therefore not possible (Code 2012 sections 4.2.4 and 4.2.5)
The Verwaltungs KG shall be reimbursed - according to § 7 Section 7 of the Articles of Association of the Company - for all expenses that may arise and are related to management activities according to § 10 of the Articles of Association of the Company. The expenses to be reimbursed include those expenses of the Mühlbauer Beteiligungs AG resulting from its function as an unlimited partner of the Personally Liable Shareholder, especially the remunerations paid by the Mühlbauer Beteiligungs AG to its members of the Management Board. Only the Supervisory Board of the Mühlbauer Beteiligungs AG decides on those remunerations. The Supervisory Board of the Company is not responsible for it. This applies in the same way for the members of the Management Board of the Mühlbauer AG, whose remunerations are stipulated by the Supervisory Board of the Mühlbauer AG.
However, the total amount of remuneration of the member of the management bodies of the Mühlbauer AG and the Mühlbauer Beteilungs AG (hereinafter referred to as the "Management") for the performance of their tasks in the Mühlbauer Group shall be provided in the notes to the Consolidated Financial Statements as information for the shareholders. They will be accounted for as components which are linked to financial success and as components with a long-term incentive effect or according to the relevant international accounting principles.
According to the law, the Personally Liable Shareholder may not do any business in business lines of the Company for his/her own account or the account of a third party, nor be member of the Management Board or CEO or personally liable shareholder of a similar company without express permission of the Supervisory Board. Any secondary activities out of the scope of application of this compulsive statutory reservation of consent may be taken by the Personally Liable Shareholder even without previous approval of the Supervisory Board. The interests of the corporation and the expectations towards responsible decisions of the Management are preserved sufficiently by the legally compulsory regulations and other contractual obligations of the Management (Codex 2012 section 4.3.5).
Formation of Supervisory Board committees
As long as the Supervisory Board of the Mühlbauer Holding AG & Co. KGaA only consists of three members, no committees shall be formed (Code 2012 Section 5.2 paragraph 2, 5.3.1 clause 1, 5.3.2 clause 1 and 2, 5.3.3).
The composition of the Supervisory Board
Referring to Code 2012 section 5.4.1 paragraph 2, the Supervisory Board shall specify concrete objectives regarding its composition that take into account the international activities of the Company, potential conflicts of interest, an age limit to be defined for the members of the Supervisory Board and diversity under consideration of the specific situation of the Company. Considering the fact that the Supervisory Board of the company only consists of three members, of which only two are elected by the Annual General Meeting, is not reasonable, in the opinion of the Supervisory Board, to mention any concrete objectives regarding its composition before the date of new elections to the Supervisory Board. As a consequence, such objectives shall not be published in the Corporate Governance Report. However, the Supervisory Board will take a decision about convenient candidates for the Supervisory Board in a timely manner before the next election to the Supervisory Board. For the selection of the candidates, the focus will be on technical aspects. There will neither be an age limit nor a quota or a certain number of seats for female and male members. In the opinion of the company, neither the age nor the gender of a person are criteria that allow for the drawing of conclusions as to whether or not a Supervisory Board mandate can be appropriately or successfully perceived.
As far as the composition of the Supervisory Board is concerned, we put the emphasis on a professional counseling and monitoring of the Management Board. Members of the Supervisory Board may also be suitable, even if they do not satisfy the criteria for independence in the sense of section 5.4.2 paragraph 1 in the German Corporate Governance Code (Code 2012 section 5.4.2).
The Personally Liable Shareholder is responsible for drawing up the half-year and quarterly reports in accordance with the respective legal provisions. They are drawn up within a tight schedule. For this reason no discussions about the half-year and any quarterly financial reports are made between the Personally Liable Shareholder and the Supervisory Board prior to the publications (Code 2012 section 7.1.2 clause 2).
The Annual Report should be publicly available within 90 days after the end of the business year. Due to organizational internal reasons, the Annual Report 2011 was not published until April 2012 (Code 2012 section 7.1.2 clause 4).
Roding, November 30, 2012
Supervisory Board Personally Liable Shareholder