Code Section 161 of the German Stock Corporation Act (AktG) (2017 - 2020)

04.12.2018

Declaration of compliance pursuant to section 161 of the German Stock Corporation Act (AktG) of Maschinenfabrik Berthold HERMLE AG on the recommendations of the Government Commission on the German Corporate Governance code.

The Management Board and the Supervisory Board stated that apart from various individual points the recommendations of the government commission are not complied with. This is justified in that Maschinenfabrik Berthold Hermle AG conducts its operations in accordance with the principles of open information policy that it has put in place to date, which were implemented as part of the rules of procedure of the Management Board and the Supervisory Board. In that respect, the mandatory requirements were complied with in full.

The Management Board and the Supervisory Board hold the view there are various reasons for not implementing recommendations of the Corporate Governance Code that extend beyond this. The recommendations set out in 2.3 have not been complied with because to ordinary shares of
Hermle AG with voting rights are not listed on the stock exchange. The recommendations set out in 3. and 4 will not be complied with because the valid mandatory regulations combined with the rules of procedure are considered adequate by the Management Board and the Supervisory Board. In addition, the “external experts” cited in the Code have not been incorporated. Furthermore, we believe that the Code regulations in 5. are geared towards international major DAX-listed Groups but not, however, to an SME with a limited number of ordinary shareholders who, in part, are represented personally in the supervisory committees. The recommendations set out in Item 6. will not be complied with either because the mandatory regulations are adequate. In addition, various topics are provided for here that are also irrelevant to Hermle because of the composition of the group of preference shareholders. The recommendations set out in Item 7. will not be complied with because similarly irrelevant fields such as share options are provided for but these are associated with cost reasons. Overall, in view of the relative lower market capitalisation of the company, the shareholder structure, the very lean and therefore efficient company organisation to date as well as the additional costs associated with full implementation, Hermle has decided in favour of a merely very limited implementation of the GCGC.

However, Hermle complies with various individual regulations of the Code, which are stated below:

3.10.: Publication of the declaration of compliance on the website for 5 years
4.2.1.: Management Board made up of several persons
7.1.1: Disclosures to shareholders and third parties