Declaration in accordance with Section 289f of the German Commercial Code (Handelsgesetzbuch – HGB)
CONSTITUTION OF THE COMPANY
Biotest AG is a joint stock company under German law (Aktiengesellschaft – AG). Its management, decision-making and control mechanisms are based on the Company’s Articles of Association together with the relevant statutory provisions. The current version of these is available for download on the company’s website at www.biotest.de.
Biotest AG employs a two-tier management system in accordance with statutory requirements. The Board of Management is responsible for managing the Company and the Supervisory Board for the monitoring function. The two bodies are strictly separate and distinct in terms of membership and responsibilities.
The Biotest Group is managed and monitored in accordance with high, generally accepted standards. The Company’s management principles are firmly established in all its segments and set forth the framework for strategic decisions and business policies.
The Board of Management and Supervisory Board closely follow ongoing discussions regarding corporate governance and systematically adopt the best practices. Our understanding of responsible corporate governance is based on the following principles:
- The Board of Management and the Supervisory Board work together in confidence. The Supervisory Board exercises its monitoring function efficiently and independently.
- The Company is managed with the interests of the shareholders in mind at all times.
- A responsible risk management is practiced.
- Observance of and compliance with all legal and regulatory requirements is of the highest priority.
- Timely and transparent communication, both internal and external, is assured.
The basis of cooperation is set forth in working rules. These are handed out to each employee at the start of his employment.
Management by the Board of Management
The Board of Management manages the Company on its own responsibility. It is bound to serve the Company’s interests and to increase its value with a view to sustainable performance.
It develops the Company’s strategies in coordination with the Supervisory Board and ensures their implementation.
The Board of Management manages the Company in accordance with rules of procedure, the law, the Articles of Association and its respective service contracts. The Board of Management works together with other corporate bodies and employee representatives on the basis of mutual trust for the good of the Company.
According to the Articles of Association, the Board of Management may consist of one or more members; it currently has three members. These were appointed by the Supervisory Board, which appointed one Board member as Chairman.
The Company is legally represented by two Board members or by one Board member and an authorised officer (Prokurist). The Board of Management’s rules of procedure lay down the details of how it functions as a body. These specifically include:
- the schedule of responsibilities which determines which business areas are to be managed by the Board of Management member under his/her own responsibility,
- decisions to be made by the Board of Management as a whole,
- the special duties of the Chairman of the Board of Management,
- transactions requiring Supervisory Board approval,
- regular, timely and comprehensive briefing of the Supervisory Board,
- rules regarding meetings and resolutions.
Monitoring and advising by the Supervisory Board
The Supervisory Board monitors the Board of Management and advises it regularly. The composition of the Supervisory Board is in accordance with the German One-Third Participation Act (Drittelbeteiligungsgesetz) and comprises of six members; four of the members are elected by the Annual Shareholders’ Meeting and two by employees.
OGEL GmbH, a company based in Frankfurt am Main, Germany, is entitled under the Articles of Association to appoint representatives to the Supervisory Board. See Biotest AG’s Articles of Association for details of this entitlement. As OGEL GmbH has sold all ordinary shares held by it to Tiancheng (Deutschland) Pharmaceutical Holdings AG in connection with the public takeover offer of Tiancheng dated May 18, 2017, the respective provision in the Articles of Association is planned to be cancelled at the next annual general meeting.
The Supervisory Board performs in full all tasks with which it is entrusted under the terms of statutory provisions, the Articles of Association and the German Corporate Governance Code (GCGC).
All duties and powers of the committees are laid down in the Supervisory Board’s rules of procedure. These also include most of the GCGC requirements, e.g. in respect of the professional competence of the Supervisory Board members, restrictions imposed on Supervisory Board mandates in other listed companies and the age limit.
Other rules relate to:
- the selection and duties of the Supervisory Board Chairman and Deputy Chairman,
- the convening of meetings,
- decision-making during meetings and outside meetings in writing or by telephone,
- the obligation to maintain confidentiality and mandatory disclosure of conflicts of interest
The Supervisory Board has set up three committees in order to increase its efficiency:
Preparation of recommendations and motions for the Supervisory Board as a whole, monitoring resolution implementation, recommendations for Supervisory Board candidates
Dr. Cathrin Schleussner (Chairwoman)
Personnel and Remuneration Committee
Board of Management appointments and remuneration
Preparation of recommendations and motions with regard to new contracts for the Supervisory Board as a whole
|Rolf Hoffmann (Chairman)
(until Feb. 28, 2018)
(since March 13, 2018)
Preliminary review of the annual financial statements and the independence of the external auditors of the annual and consolidated financial statements.
In March 2016 the Supervisory Board has reviewed the efficiency of its work with the support of an experienced expert.
Specification to promote the participation of women in executive positions pursuant to Sections 76 Paragraph 4 and 111 Paragraph 5 of the German Stock Corporation Act (Aktiengesetz - AktG)
Promotion of women in executive positions
An adequate representation of women in the workforce and, in particular, among the executives, provides an important added value to the Biotest group. In connection with the “German Act on the Equal Participation of Women and Men in Executive Positions in the Private Economy and the Public Service”, Biotest AG set target figures for the participation of women in executive positions, which are to be met by June 30, 2022.
Women on the supervisory board
The supervisory board of Biotest AG is composed of six members, four of whom represent the shareholders, and two of whom represent the employees. On June 30, 2017, two of the six representatives were women, which results in a proportion of 33%. In August 2017, the supervisory board was re-elected. The supervisory board is now composed of two women, as representatives of the shareholders, and one woman as a representative of the employees. By that proportion of 50% of the seats on the supervisory board by each men and women, the company has exceeded the statutory minimum proportion of 30% of women.
Women on the management board
In the fiscal year 2017, no women were represented in the management board. This is in line with the fixed percentage of 0%, as the management board members in office were appointed for a period beyond December 31, 2017. By June 30, 2022, the proportion of women on the management board is to increase to 25%.
Women at the first and second management level
The management board of Biotest AG has set a target figure of 20% for the participation of women at the first of management level by June 30, 2022; this means that the proportion of 16% as of June 30, 2017 is to be increased further. The target figure as of June 30, 2017 at that management level was 17%. The failure to reach the target figure mainly resulted from a lack of applications by female candidates for the vacancies. The target figure for the second management level was set at 30% by June 30, 2022. As of June 30, 2017, the proportion of women at that management level was 32%. The target figure as of June 30, 2017 at that management level was 38%. The failure to reach the target figure mainly resulted from the fact that vacancies could not be adequately filled by female executives. The targeted measures regarding the promotion of women in executive positions have, therefore, not yet had the desired effect. The proportion of women at Biotest AG (465 female employees) as of December 31, 2017 was 41%.
Collaboration between the Board of Management and Supervisory Board
The Board of Management informs the Supervisory Board regularly, promptly and fully of all relevant matters with regard to planning, business development, risk position and risk management.
It must provide a monthly report on the Company’s business and earnings position, including plan and target variances together with an explanation. Certain business transactions, such as the acquisition and disposal of participations in other companies, fundamental changes in the corporate organisation or business strategy and capital increases or decreases require the prior approval of the Supervisory Board.
Supervisory Board members are provided with all decision-relevant documents, including the annual financial statements, consolidated financial statements and the auditor’s report timely prior to each meeting.
Members of the Board of Management attend meetings of the Supervisory Board in an advisory capacity, unless, in individual instances, the Supervisory Board or its Chairman decides otherwise.
Management and control of Group companies
The Group’s affiliated companies are corporations that may differ in legal form depending on their domicile. The companies are managed by a Board of Management or a comparable institution. Shareholders’ meetings set the guidelines for the respective company's strategy and make key investment and business decisions.
In principle, Group management approval is required for all key business decisions at the affiliate level.
Compliance in the Biotest Group
Biotest defines Compliance as a series of internal corporate policies and procedures that are undertaken by a company and that promote the prevention, detection, and resolution of conduct or practices that are illegal or that do not conform to the company's ethical and business standards.
The rights and duties of individual employees in the Biotest Group are governed by Biotest's Code of Ethics and Business Conduct (Code of Conduct) that is published on the Biotest website and in the national compliance manuals and are comprehensively set out on the Intranet and regularly updated. The most essential content and messages of the Code of Conduct have been summarised in a leaflet which was or will be distributed to all employees and relevant business partners in electronic and physical form.
In 2017, Biotest Group continued to strengthen its Compliance measures to mitigate the risk of violations of Compliance rules. The Legal, IT and Compliance department collaborated closely to enhance the international Compliance system and to take local Compliance rules into account. Further Compliance measures have been an up-date of the Compliance manual, new standard contracts as well as a new Group guideline on donations and sponsoring.
Physical trainings on the Code of Conduct are obligatory for all new employees and if there are material amendments of the Code of Conduct. The Compliance department also trains all relevant departments on the content of the Compliance manual. This training is being followed up by electronic tests of the employees.
Biotest does inform all distributors and agents on amendments of the Code of Conduct. These business partners confirm receipt of the Code and undertake to follow its rules. There are regular information events on compliance issues and the code of ethics and conduct for distributors and agents.
Biotest AG is a member of the “Verein Arzneimittel und Kooperation im Gesundheitswesen e.V.” (AKG = Pharmaceuticals and Cooperation in Healthcare Association) based in Berlin, Germany. This voluntary self-regulating organisation was established by German-based pharmaceutical companies to guard against potentially corruptive and anti-competitive practices and, if necessary, to impose punishments for such practices.
Biotest AG has put in place a compliance system to implement and specify the requirements under the Code of Conduct for day-to-day cooperation with business partners and in particular with health care professionals (HCPs) or health care organisations (HCOs) such as hospitals, doctors and other medical specialists. Its particular concern is to combat the risk of corruption in connection with pharmacotherapy. Transactions involving Biotest AG and HCPs or HCOs with potential compliance risks are subject to the prior written approval of the Compliance Department. This applies for instance to trainings that are financially supported by Biotest, expert meetings, lectures and observational studies.
Biotest implemented an electronic system to secure that payments to creditors are made in a compliant manner and to archive all data which have to be published in connection with benefits to healthcare professionals and healthcare organisations. In accordance with the Transparency Rule of the AKG (§ 28 of the AKG Code), Biotest does publish on its website all cash-equivalent benefits to HCPs or HCOs on an annual basis. A whistle-blower hotline has been established at a law firm.
The compliance systems were also gradually implemented in Biotest AG’s affiliated companies, whereby national compliance manuals were prepared and updated on the basis of the national code and Biotest AG’s compliance manual. Even the Biotest Code of Ethics and Business Conduct is mandatory for the affiliates.
Transparency and financial accounting
The Biotest Group is committed to regular, open and timely communication with institutional investors and analysts, private shareholders, employees and other stakeholders.
We regularly share information with shareholders, all of whom are treated equally in terms of the information provided to them. All new developments are communicated without delay by means of press releases and ad hoc announcements, annual and interim financial reports, and presentations to analysts’ and investors’ conferences. This information, together with the financial calendar and information about the Annual Shareholders’ Meeting, can be viewed or downloaded from our website.
Information is also published with regard to directors’ dealings and voting rights announcements, along with all information which must be published under corporate law.
The annual consolidated financial statements and interim financial reports for the first three, six and nine months of each financial year are prepared by the Board of Management. These statements are prepared on the basis of the International Accounting Standards (IAS) adopted and published by the International Accounting Standards Board (IASB) or the International Financial Reporting Standards (IFRS) as applicable in the EU as well as the interpretations of the Standing Interpretations Committee (SIC) or the International Financial Reporting Interpretations Committee (IFRIC).
Biotest AG’s single entity financial statements, on which dividend payments are based, are drawn up in accordance with the provisions of the German Commercial Code (HGB).
Annual Shareholders’ Meeting
The Annual Shareholders’ Meeting is the Company’s supreme governing body and is of central importance to the dialogue between shareholders and the Board of Management and Supervisory Board. By providing comprehensive information ahead of the Annual Shareholders’ Meeting we ensure that shareholders are able to make full use of their rights.
The Annual Shareholders’ Meeting passes its resolutions with a simple majority of votes cast and, in cases where a capital majority is required, with a simple majority of the share capital represented – unless stipulated otherwise by law or the Articles of Association.
The most important information and details regarding the Annual Shareholders’ Meeting are published on our website. The manuscript of the address given by the Chairman of the Board of Management and the accompanying presentation are also timely accessible via the website.
DECLARATION OF COMPLIANCE
Declaration of the Board of Management and the Supervisory Board of Biotest AG on the recommendations of the German Corporate Governance Code in accordance with Section 161 of the German Stock Corporation Act (AktG)
Since the last Declaration of Compliance dated 21 March 2017, which referred to the German Corporate Governance Code in the version dated 5 May 2015, Biotest AG has complied with all recommendations of the German Corporate Governance Code in the version dated 5 May 2015 and in the version dated 7 February 2017 with the following exceptions:
Biotest AG continues to not follow the recommendation in Section 3.8 para 3 of the German Corporate Governance Code to set a deductible on D&O insurance for the members of the Supervisory Board in the amount prescribed in Section 93 para 2 sentence 3 of the AktG for members of the Board of Management. As explained in the last Declaration of Compliance a deductible equivalent to the deductible for members of the Board of Management would be out of proportion to the current remuneration levels for Supervisory Board duties. Biotest AG has set in its view an appropriate deductible for its Supervisory Board members.
The recommendation set forth in Section 4.2.3 para 2 of the German Corporate Governance Code requires that an upper limit be set for the remuneration amount in total and variable remuneration components for the Board of Management. The contracts entered into with Board of Management members do not contain any explicit upper limit amount of each and every remuneration component. All remuneration components, however, are individually capped so that an upper limit amount is implied. Therefore, the Supervisory Board is of the opinion that it is not necessary to additionally set an explicit upper limit amount for the remuneration in total.
The recommendation set forth in Section 4.2.3 para 3 requires the Supervisory Board to determine the targeted level of benefits – also based on the length of time served on the Board of Management – and to take into account the annual expense for the Company derived from this. The Board of Management members are included in the company pension scheme of Biotest AG. They each have been given an individual commitment. The corresponding benefits are not derived from a pre-defined level of benefits so that the recommendation set forth in Section 4.2.3 para 3 is currently not complied with. The Supervisory Board does not intend at the present time to change what it considers to be an appropriate pension system for the Board of Management members of Biotest AG.
Biotest did not follow the recommendation set forth in Section 5.3.3 of the German Corporate Governance Code to form an own supervisory board nomination committee, which consists exclusively of members representing the shareholders and nominates qualified candidates for the supervisory board to propose to the general meeting for the appointment of supervisory board members. The tasks of such a nomination committee are assumed by Biotest's Governance Committee.
Section 5.4.1 para 2 sentence 1, 2 of the German Corporate Governance Code requires that the Supervisory Board sets specific targets with regard to its composition that take into account the international activities of the company, potential conflicts of interest, the number of independent Supervisory Board members within the meaning of Section 5.4.2 of the German Corporate Governance Code, a defined age limit for Supervisory Board members and a regular limit of length of membership as well as diversity, all in light of the Company's specific situation. Biotest AG has partially not followed the recommendations.
The reasons which were presented in the last Declarations of Compliance are still valid. Biotest AG complies with the rules set out by the Law on Equal Participation of Women and Men in Private-Sector and Public-Sector Management Positions dated 24. April 2015. Since 2004 the quota for female members of the supervisory board accounts for at least 30%.
The Supervisory Board of Biotest AG has already set a specific target for the maximum age of its members. The Company's international activities were covered by the previous Chairman of the Supervisory Board, who was Italian citizen. Tan Yang elected as substitute member is a citizen of New Zealand. The goal that at least two out of four representatives of the shareholders in the Supervisory Board shall be independent, has been and is fulfilled. For the other two positions, the propositions of the largest groups of shareholders were taken into account. An internal analysis found that the setting of specific targets for the composition of the Supervisory Board is not necessary under the existing specific circumstances and shareholder structure.
Section 5.4.1 para 2 sentence 1 of the German Corporate Governance Code in the version dated 7 February 2017 now recommends the preparation of a qualification profile for the Supervisory Board. Biotest AG does not follow this recommendation insofar as for the election in May 2017 qualification profiles for the future chairman of the Supervisory Board and the chairman of the audit committee were prepared. For the other two positions of the shareholder representatives, the propositions of the largest shareholder groups were taken into account. The determination of a qualification profile for the entire Supervisory Board was therefore unnecessary.
Section 5.4.1. para. 4 sentence 1 of the German Corporate Governance Code recommends proposals of the Supervisory Board to the general meeting to take into account targets regarding the composition of the entire Supervisory Board as set forth under Section 5.4.1 para. 2 sentence 1, 2. However, due to the deviation from the recommendation to prepare specific targets for the composition of the entire Supervisory Board, these targets cannot be taken into account when making proposals to the competent election body or to the General Meeting. Thus, Biotest AG does not follow this recommendation.
Biotest AG does not follow the recommendation laid out in Section 5.4.1 para. 4 sentence 1 of the German Corporate Governance Code in the version dated 7 February 2017 insofar only partially as for the past election qualification profile were only determined for the chairman of the Supervisory Board and the chairman of the audit committee, but not for the remaining positions. For these, the suggestions of the two major groups of shareholders were taken into consideration.
For reasons of the deviation from Section 5.4.1 para. 2 sentence 1, 2 of the German Corporate Governance Code corresponding reporting in the Corporate Governance Report is not possible. An exception is therefore declared in respect of 5.4.1 para. 4 sentence 2 of the German Corporate Governance Code and Section 5.4.1 para. 4 sentence 3 of the German Corporate Governance Code in the version dated 7 February 2017.
Under Section 5.4.6 para 2 of the German Corporate Governance Code performance–based remuneration is to be paid to Supervisory Board members based on the sustained performance of the company. This is generally understood as a multi-year basis for calculating performance-based remuneration. Biotest AG does not comply with this recommendation. Pursuant to Section 16 para 1 sentence b of the Articles of Association the Supervisory Board members receive an annual variable remuneration for each past financial year based on the amount of the dividend paid. Biotest AG is of the opinion that the currently determined variable remuneration of the Supervisory Board is appropriate with regard to the calculation basis and amount. In the event that the Company comes to the conclusion in its regularly scheduled review of the remuneration system that the performance-based remuneration should be adjusted, the recommendation set forth in Section 5.4.6 para 2 of the German Corporate Governance Code will be incorporated into its analysis.
Section 6.2 of the German Corporate Governance Code in the version dated 5 May 2015 requires that shares or related financial instruments held by the Board of Management and the Supervisory Board members are now disclosed separately in the Corporate Governance Report by the Board of Management and the Supervisory Board, if it directly or indirectly holds more than 1% of the shares issued. Dr. Schleussner, member of the Supervisory Board, controls OGEL GmbH, which, to the knowledge of the Company, held approx. 50.61% of the issued ordinary shares of the Company until the takeover of the shares by Tiancheng (Germany) Pharmaceutical Holdings AG. The combined total of the shares held by other members of the Supervisory Board as well as by Board of Management members is below 1% of the ordinary shares issued by the Company. The Company did not consider it necessary to disclose the information separately. Section 6.2 has been removed from the German Corporate Governance Code in the version dated 7 February 2017. The Government Commission considered additional reporting obligations redundant.
Biotest AG further declares to comply with the recommendations of the German Corporate Governance Code in the version dated 7 February 2017 except for the prescribed deviations.
Dreieich, 13 March 2018
|For the Board of Management
||For the Supervisory Board|
|Dr. Bernhard Ehmer||Dr. Michael Ramroth||Dr. Georg Floß||Rolf Hoffmann|
In addition to this latest version, earlier versions of the Declaration of Compliance can also be viewed on and downloaded from the Biotest website. The Corporate Governance Report and the report on the remuneration of the Board of Management and the Supervisory Board are included in the 2017 Annual Report.