Declaration of Corporate Management in accordance with § 289 f HGB (German Commercial Code)

In accordance with Section 289 f HGB, TAG Immobilien AG is required to issue a Statement of Compliance (Corporate Governance), which must either be included in the management report of the annual financial statements and published or, alternatively, made publicly available on the company's website. TAG Immobilien AG hereby makes use of the second option:

1. Declaration of conformance:

As a publicly listed German corporation that according to § 264 d HGB is considered to be capital market-oriented, the corporate management of TAG Immobilien AG (‘TAG’) is determined primarily by the Stock Corporation Act, the further legal regulations under commercial and corporate law, and the stipulations of the German Corporate Governance Code (DCGK) in its latest version.

The Management Board and Supervisory Board are of the opinion that good corporate governance, which takes into consideration company- and industry-specific criteria, represents an important basis for TAG’s success. The implementation and observance of these principles are seen as central executive functions.

At least once a year, the Management Board and Supervisory Board announce in the Compliance Statement in accordance with § 161 AktG, the extent to which they have or have not complied with the Code, stating grounds for any deviations from its requirements. The Compliance Statement has been updated several times in the past. In the 2018 financial year, it was most recently approved in December 2018, and currently reads as follows:

Compliance Statement by the Management Board and Supervisory Board in accordance with Section 161 of the German Stock Corporation Act

The management and supervisory boards of TAG Immobilien AG (‘the Company’ in the following) declare that they have been, are, and will be in compliance with the recommendations of the ‘German Code of Corporate Governance’ (DCGK) Government Commission in the version of 05 May 2015 (published 12 June 2015), with the following exceptions, and with the recommendations in the DCGK version of 7 February 2017 (published 24 April 2017), with the following exceptions:

Given the reduction of the Management Board of the company to only three members with effect from 1 November 2014, the Management Board of the company has had no spokesman or Chairman since 1 November 2014. So the recommendation in Section 4.2.1 Sentence 1 of the DCGK is not followed in this regard. The Supervisory Board and Management Board are of the opinion that the tasks of the Management Board are allocated in a sufficiently detailed and appropriate way in the rules of procedure and plan for distribution of businesses, and that the full board can appropriately represent the company to the outside.

Hamburg, December 2018

Management Board and Supervisory Board of TAG Immobilien AG

 

2. Compliance Programme

TAG has a compliance programme which serves to ensure the observance of legal requirements and internal company policies, and which includes requirements for management that far exceed established legal requirements.

One component of the compliance-programme consists of the TAG Business Principles, which encourage honest and ethically correct behaviour, and which each and every employee can access on the Company’s intranet. Among other things, the Business Principles contain rules on business relationships, on non-compete obligations and conflicts of interest, as well as privacy/data protection. This area is the responsibility of the Compliance Officer appointed by the Management Board, who is directly subordinate and required to report to the Management Board.

3. Management Board and Supervisory Board

The functions of the Management Board and Supervisory Board are determined by the current ‘dual management system’ as set forth in German company law. This means that there is a strict division of personnel between the Management Board as a leadership body and the Supervisory Board as supervising entity. However, the Management Board and Supervisory Board work closely together in the interests of the Company.

The Management Board is responsible for leading the Company, and in doing so is obligated to the goal of sustainable value creation for the company. Here, the principle of overall responsibility applies, that is, the individual members of the Management Board are jointly and mutually responsible for the overall management and strategy. The strategy is determined in coordination with the Supervisory Board. Principles and details of the cooperation between the TAG Management Board and the Supervisory Board are documented in the Management Board Rules of Procedure. The Rules of Procedure and the allocation of responsibilities determine the specific responsibilities of the individual members of the board, as well as the matters reserved for the full board. Legal transactions and decisions that require the approval of the Supervisory Board are also defined in the Rules of Procedure. At present, the Management Board consists of three members.

The tasks of the Management Board also include informing the Supervisory Board on a regular basis – promptly and comprehensively – about all material aspects of the development of the business, about important business transactions, as well as about the current earnings position, including the risk position and risk management. This reporting takes place regularly in the context of the Supervisory Board meetings, which are held at least four times per year. Additionally, the Supervisory Board is informed regularly and monthly regarding business developments, and any special circumstances are directly communicated to the Chair of the Supervisory Board. The development of the business, the collaboration with the Supervisory Board, and any decisions made by the Supervisory Board are regularly reported as part of the Annual Financial Statements, and in the Supervisory Board Report and Group Management Report it contains. Furthermore, once a year a separate report is drawn up on the topic of corporate governance, which is published as part of the Annual Report.

The Supervisory Board, as the top decision-making body in the company, appoints and dismisses members of the Management Board, determines the compensation system for the members of the Management Board, as well as total annual compensation, including the variable compensation components oriented toward the success of the company, for the members of the Management Board. In accordance with company bylaws, the Supervisory Board consists of six members, four of whom are elected by the shareholders, along with two members who are labour representatives. Internal cooperation on the Supervisory Board is regulated by the bylaws of the Supervisory Board. The Supervisory Board is regularly informed by the Management Board about potential risks; this briefing shall occur at least four times per year in written form. In the context of this reporting, the Management Board relies on the risk management system that applies throughout the TAG group of companies.

Furthermore, the Supervisory Board has established committees. There is an Audit Committee, whose responsibilities comprise the preparation and audit of the Annual Financial Statements and, in particular, the risk management system including compliance; as well as a Personnel Committee, which prepares personnel decisions for the Supervisory Board. The two committees prepare the decisions for the entire Supervisory Board, and their functions are regulated in the bylaws. The current members of the committees and the further details regarding the actual work of the Supervisory Board and its committees can be found in the Supervisory Board report, which is a regular component of the annual report.

Beyond this, the Supervisory Board has set specific targets and competences for its composition in accordance with the recommendation of the German Corporate Governance Code. For example, particular expertise in accounting and auditing, as well as skills and experience pertaining to the German real-estate market and the capital market should be represented on the Supervisory Board, and its composition should include no more than two former members of the Management Board, and at least two independent members. For further details, please refer to the Corporate Governance Report, which is part of the Annual Report.

4. Equal participation of women and men in leadership positions

In 2015, the Supervisory Board and the Management Board set quotas in accordance with the law for the equal participation of women and men in leadership positions in the public and private sector. In view of its composition up until 23 May 2018, the Supervisory Board had approved a quota of 0% and maintained this in 2018 as well. Although it in principle strives to increase the ratio of women, it cannot, with the DCGK in mind, pre-empt the Annual General Meeting’s decision and make an early determination given the competency profile set for the selection of candidates by the DCGK. As a result of Prof. Dr. Kristin Wellner joining the TAG Supervisory Board on 23 May 2018, women now account for 25% of the total number of shareholder representatives on the Supervisory Board and approximately 17% of the total Supervisory Board. The election of Prof. Wellner has therefore led to the stipulated gender quota being exceeded.

Meanwhile, the women’s ratio on the Management Board is around 33%. The Management Board in turn has set a minimum target ratio of 40% for the first and second management tiers at the company. These target rates are currently all met or even exceeded, as far as the first and second management tier are concerned, with a women’s ratio of around 48% at 31 December 2018.

5. Diversity concept

TAG has not drawn up (section 289 f (5) HGB) a separate, formal diversity concept for the company’s executive bodies as defined in section 289 f (2) no. 6 HGB. The company is of the opinion that its internal provisions regarding the equal participation of women and men in leadership positions are sufficient. Besides, as described in section 3 of this Statement, the Supervisory Board has elaborated the goals and prerequisites as well as the decisive competencies for the composition of the Supervisory Board, and will consider these when selecting new candidates, so that the required areas of competence are covered, and the personal qualifications are ensured. There are age limits for both Boards (Supervisory Board 75 years; Management Board 67 years). In the opinion of the Supervisory Board, any further alignment of the selection of members of governing bodies based on the gender and educational or professional backgrounds of the individual members constitutes an impractical pre-determination. The Management Board and the Supervisory Board feel their composition is diverse and appropriate in terms of qualifications and competencies.

Hamburg, February 2019
TAG Immobilien AG
The Management Board