Declaration of Corporate Governance as per § 289a HGB and Corporate Governance Report

1. Declaration in conformity with section 161 of the German Stock Corporation Act

In accordance with the statutory provisions of § 161 of the German Stock Corporation Act and in compliance with the Corporate Governance Code in its currently applicable version dated May 5, 2015, the Executive Board and Supervisory Board issued the following declaration in January 2017:

“The Management and Supervisory Boards of ADLER Real Estate Aktiengesellschaft declare the following pursuant to § 161 of the German Stock Corporation Act:

ADLER Real Estate AG has since its last declaration in conformity with § 161 of the German Stock Corporation Act complied with the Recommendations of the Governmental Commission in its valid form at any one time, currently dating from May 5, 2015 (“Code”) and will also comply with the recommendations in the future with the following exceptions:

  • At variance with Section 3.8 (3) of the Code, no deductible has been stipulated with respect to the D&O insurance agreement concluded for the Supervisory Board. The Supervisory and Management Boards are of the opinion that concluding a deductible agreement would not improve incentive and performance at Adler Real Estate AG.
  • At variance with Section 5.3 of the Code, the Supervisory Board has currently not formed any committees (Section 5.3.1). No audit committee has been set up (Section 5.3.2). The duties of the audit committee are carried out by all the members of the Supervisory Board (Section 5.3.2). The Supervisory Board currently consists of the minimum number of three members prescribed by the Corporation Act. The number of Supervisory Board members is not suited to form an audit or other committees.
  • At variance with Section 5.3.3 of the Code, the Supervisory Board has not formed a nomination committee. The entire Supervisory Board nominates suitable candidates for the consideration of the shareholders at the General Meeting. The number of members of the Supervisory Board is not suited to establish a nomination committee.
  • At variance with Section 5.4.2 of the Code, Supervisory Board members may also carry out board functions or advisory duties for other major competitors of the Company. The Executive and Supervisory Boards are of the opinion that the experience gained from such activities can be used profitably for ADLER Real Estate AG.
  • Earlier Company declarations are provided in the archive Archive.

Earlier Company declarations are provided in the archive Archive.

2. Corporate Governance Report
a) Relevant information on corporate governance

In our corporate governance we act strictly in accordance with the legal requirements, the statute of ADLER Real Estate AG and the German Corporate Governance Code (DCGK), with which we comply, with the exceptions stated in our Declaration of Compliance from January 2017. Further guidance may be found in the company’s Code of Conduct.

Respect for shareholders’ interests, long-term value creation, openness and transparency of corporate communications together with a management system based on the afore-mentioned parameters, are self-evident guidelines of our corporate governance. In this context, while maintaining a strict separation of members (“dual management system“), the Executive and Supervisory Boards work closely together in the interests of the company. The provision of an adequate risk management system and ensuring compliance are an obvious concern for us.

b) Role of the Executive and Supervisory Boards together with the composition and role of their committees

The Executive Board manages the Company with shared responsibility, where the case may be, in accordance with the law and furthermore according to the Articles of Association, the code of procedure laid down by the Supervisory Board for the Executive Board, the Executive Board contracts and where appropriate the Business Allocation Plan and the Executive Board resolutions. These rules govern the Executive Board resolutions and the reporting system to the Supervisory Board determining, together with the statutes, which company measures and business transactions require the approval of the Supervisory Board.

Decisions are taken either in the context of Executive Board meetings, telephone conferences or in writing. During the reporting period there are regular board meetings held in accordance with statutory provisions. The Executive Board is in continuous contact over the management of the Company. The Executive Board is responsible for the overall business of the Company. As soon as the Executive Board consists of more than one person, this responsibility is irrespective of the management of his or her own particular division.

The chairman, deputy chairman and other members of the Supervisory Board carry out duties in accordance with legal regulations, Articles of Association and the Rules of Procedure. The Supervisory Board appoints, advises and monitors the Executive Board and is directly involved in decisions of fundamental importance to the company, in accordance with its Rules of Procedure and those of the Executive Board. It determines certain types of transactions for which the Executive Board requires the approval of the Supervisory Board. The chairman of the Supervisory Board maintains regular contact with the Executive Board and advises upon the strategy, business development and risk management of the company. In addition, the Supervisory Board is continuously informed about the progress of the business via regular meetings and individual discussions. Resolutions are adopted during Supervisory Board meetings, in telephone conferences or in writing.

The Executive Board reports to the Supervisory Board in the joint Supervisory Board meetings on the basis of written reports. The main topics of discussion in the Supervisory Board meetings constitute the direction of business, the position and profitability of the company together with the intended business policy and other core issues of corporate governance such as risk management and compliance. During the reporting period a total of six meetings were held in which all Supervisory Board members participated. In addition, the Supervisory Board is informed by the Executive Board on a regular basis by means of written quarterly reports on the progress and status of the business, the profitability of the company, the intended business policy and other core issues of corporate governance.

he Supervisory Board members are not bound by orders or instructions. A sufficient number of independent members also meets the requirements of § 100 (5) of the German Stock Corporations Act and has expertise in the areas of accounting or auditing.

In accordance with its Rules of Procedure, the Supervisory Board is authorised to set up committees. In view of the fact that the Supervisory Board of the company consists of a statutory three members, no committees have been formed. Within the scope of their activity, all members of the Supervisory Board manage the entirety of their duties with all issues relating to them being discussed and decided by the entire Supervisory Board.

c) Determining the proportion of women on the Executive Board and the Supervisory Board

With reference to the size of the board, the Supervisory Board has set a minimum target of 0% for the proportion of women on the Executive Board and the Supervisory Board.

With regard to new Supervisory and Executive Board positions to be filled, the Supervisory Board will always take into consideration the applicable requirements of the Code in its selection of suitable candidates. However, the Supervisory Board will give priority to candidates with relevant professional qualifications. The Supervisory Board is always keen to select the most appropriate candidates.”

The Management Board
Hamburg, im January 2017