Corporate Governance

The SINGULUS TECHNOLOGIES AG highly values proper and responsible corporate governance within the context of the guidelines of appropriate corporate governance.

For the Executive and Supervisory Boards this means leadership and management of the company aligned for the long-term success. Corporate governance aims to safeguard a targeted and efficient cooperation between Executive Board and Supervisory Board, the respect for the interests of our shareholders and employees, the suitable handling of risks and transparency as well as a responsibility for all corporate decisions. The Executive and Supervisory Boards regard corporate governance as a process integrated into the company’s development, which is constantly progressed.

There is a close connection with regard to content between the Corporate Governance Report pursuant to Art. 3.10 of the German Corporate Governance Code in its currently amended version as of May 5, 2015 (the Code) and the Declaration of Corporate Governance pursuant to Art. 289a of the German Commercial Code (HGB). For this reason, the Executive and the Supervisory Board of the SINGULUS TECHNOLOGIES AG together make the declaration in this connection.

CORPORATE GOVERNANCE DECLARATION PURSUANT ART. 289A HGB

The Corporate Governance Declaration pursuant to Art. 289a HGB includes the declaration of conformity pursuant to Art. 161 of the Germany Stock Corporation Act (AktG) (below 1.), relevant information about the corporate governance practices exceeding legal requirements (below 2.), a description of the composition and work processes of Executive and Supervisory Board (below 3.) and the declaration pursuant to Art. 76 Para 4 and Art. 111 Para. 5 AktG and the information, whether determined targets were achieved or not as well as the respective reasons (below 4.).

The corporate governance declaration pursuant to Art. 289a HGB is part of the status report. Pursuant of Art. 317 Para.2 Sent 4 HGB, the information pursuant to Art. 289a HGB is not included in the statutory audit.

2. Relevant information with regardd to corporate governance

MANAGEMENT STRUCTURE

The SINGULUS TECHNOLOGIES AG as a German corporation is subject to German Corporate Law and is thus comprised of a two-tiered management and monitoring structure consisting of Executive Board and Supervisory Board. The Executive Board manages the company and is responsible for the company’s strategy, accounting, finances and development. It is advised and monitored by the Supervisory Board.

On the basis of the reports by the Executive Board the Supervisory Board discusses the business trends and planning, the corporate strategy and its implementation. Significant decisions by the Executive Board such as major acquisitions and financing measures are subject to the Supervisory Board’s approval according to the bylaws for the Executive Board. It issues the audit mandate for the auditor elected at the Annual General Meeting and is informed about the audit. After its own review the Supervisory Board adopts the annual reports and the consolidated financial statements.

Against the background of the Directive 2014/56/EC with regard of the amendment of the “Auditor Directive” (Directive 2006/43/EC) as well as the Regulation (EC) No. 537/2014 with regard to the specific requirements to the statutory audit of public-interest entities, the Supervisory Board has resolved a respective amendment of the bylaws for the Supervisory and Executive Boards as of January 1, 2017. The legal changes include (i) the prior approval by the Supervisory Board of non-auditing services, which are to be provided by the auditor, (ii) the requirements with regard to the qualification of members of the Supervisory Board and (iii) the selection process of auditors to be appointed in the future. On January 26, 2017 the Supervisory Board resolved guidelines, according to which certain kinds of non-auditing services in general are approved and the Board resolved the set-up of a clearing position monitoring the adherence to the guidelines. In addition, the appointment of an auditor for non-auditing services, which are not generally approved by the guidelines in advance, is subject to the approval by the Supervisory Board.

The Executive Board currently consists of two members, the Supervisory Board of three members. The SINGULUS TECHNOLOGIES AG is not subject to the Co-Determination Act. Due to the company’s size and to ensure efficient work, both boards currently only meet the legally required minimum in terms of members.

COMPLIANCE MANAGEMENT

For the Executive Board and the Supervisory Board of the SINGULUS TECHNOLOGIES AG, the adherence to extensive compliance is an essential prerequisite for a sustainable economic success. In addition to the recommendations of the Code, which the SINGULUS TECHNOLOGIES AG to a large extent follows, the Ethics Code of the SINGULUS TECHNOLOGIES Group is another relevant, company-wide applied corporate governance principle, which exceeds the legal requirements. The Ethics Code was adopted by the Executive and Supervisory Boards in spring 2014 and since then has been implemented group-wide in several steps. The relations within the company, but also with external business partners, shareholders and the public are subject of the Ethics Code. It includes binding internal rules, which are subject to high ethical and legal standards. In this context, the Ethics Code focuses on integrity in the conduct with business partners, employees, shareholders and the public.

The goal of the Ethics Code is to inform all employees of the SINGULUS TECHNOLOGIES AG about the key compliance issues (competition regulations, corruption, handling of conflicts of interest, money laundering, embargo and trade restriction rules, data security, media and public affairs, workplace safety). This Ethics Code is supported by action guidelines to the Ethics Code, which amongst others includes rules regarding the granting and acceptance of gifts, and action guidelines for whistle-blower, which governs specifics with regards to reporting of misdemeanor and illegal, immoral or inappropriate activities within the SINGULUS TECHNOLOGIES Group. In case of actual or suspected compliance breaches, employees of the SINGULUS TECHNOLOGIES AG can report to their superiors or to the ombudsperson at SINGULUS TECHNOLOGIES.

During the second half of the past business year, Executive and Supervisory Board members participated in a workshop covering the topics “Liability prevention through compliance management system” and “Implementation of the compliance guidelines in practice”.

3. Composition and work processes of Executive and Supervisory Boards.

CLOSE COOPERATION OF EXECUTIVE AND SUPERVISORY BOARDS

Executive and Supervisory Boards work closely together for the benefit of the company. The Executive Board reports regularly, timely and in detail to the Supervisory Board about the relevant issues of corporate planning, the strategic development, the course of business activities and the overall situation of the Group. This holds particularly true in the economically difficult business situation, to which the SINGULUS TECHNOLOGIES Group is currently exposed to. The business year 2016 was impacted by the implemented financial restructuring. The business year started with the resolutions of the bondholders’ meeting and the extraordinary general meeting with regard to the financial restructuring and was followed by the subsequent implementation of the resolved corporate actions. In addition, in the first half of the business year 2016 the expected major order for production machines for CIGS solar cells was concluded. Accordingly, the cooperation between the Executive and Supervisory Boards was particularly pronounced. The basis of the information and monitoring activities of the Supervisory Board is the detailed monthly reporting. Additional, written and oral reports of the Executive Board, by other employees, the auditors as well as by external consultants supplement the reporting. Furthermore, the Chairman of the Supervisory Board regularly discusses the situation and the future development of the company during individual talks with the Executive Board and subsequently informs the other members of the Supervisory Board about these discussions. The reports are reviewed and discussed within the Supervisory Board and also jointly with the Executive Board. According to the bylaws of the Executive Board, significant business decisions are subject to the approval by the Supervisory Board. Overall, there were fifteen Supervisory Board meetings in the business year 2016, of which seven were meetings in present.

MEMBERS AND WORK OF THE EXECUTIVE BOARD

The Executive Board of the SINGULUS TECHNOLOGIES AG is currently comprised of two members. It is the management body of the company. In managing the company, the Executive Board is solely obligated to the interests of the company and follows the goal of a sustainable increase in the enterprise value as well as the interests of the shareholders and of the employees.

The current members of the Executive Board are Dr.-Ing. Stefan Rinck and Mr. Markus Ehret. Since April 1, 2010 Dr.-Ing. Stefan Rinck is the Chief Executive Officer, Mr. Markus Ehret is member of the Executive Board of the SINGULUS TECHNOLOGIES AG since April 19, 2010. The employment contract of Dr.-Ing. Stefan Rinck expires on August 31, 2017 and was already renewed in January for another five years, Mr. Markus Ehret’s contract has a term until December 31, 2019.

As Chief Executive Officer, Dr.-Ing. Stefan Rinck is responsible for the departments Production, Marketing & Sales, Technology, Research & Development as well as Strategy and International Operations. Mr. Markus Ehret is responsible for the areas Finance, Controlling, Investor Relations, Human Resources, Procurement and IT.

MEMBERS AND WORK OF THE SUPERVISORY BOARD

The Supervisory Board of the SINGULUS TECHNOLOGIES AG is comprised of three members. No employee representative is a member of the Supervisory Board. The cooperation of the Supervisory Board was characterized by efficiency, professional competence and trust.

The Supervisory Board is currently comprised of Dr.-Ing. Wolfhard Leichnitz, Ms. Christine Kreidl WP/StB and Dr. rer. nat. Rolf Blessing. On August 31, 2016, the ordinary general meeting of the company reappointed the aforementioned persons to the Supervisory Board. Dr.-Ing. Wolfhard Leichnitz, who has been a member of the Supervisory Board since 2009 (Chairman since 2011), was once again appointed as Chairman of the Supervisory Board in the course of the constituting Supervisory Board meeting. Ms. Christine Kreidl, WP/StB, who is a member of the Supervisory Board since 2012 (Deputy Chairwoman since June 18, 2013), was reappointed by the Supervisory Board as Deputy Chairwoman. Dr. rer. nat. Rolf Blessing is a member of the Supervisory Board since 2011. Each appointment is effective until the completion of the Annual General Meeting, which resolved about the discharge for the fourth business year after the start of the mandate, while the business year, in which the mandate starts, is not included.

The Supervisory Board continued to refrain from forming an audit committee or other committees in the fiscal year 2016, because according to its assessment there is neither an increase in efficiency to be expected nor an improved handling of complex issues nor a more efficient or improved execution of tasks of the Supervisory Board in connection with issues about accounting principles, risk management or the audit. In addition, corporate law provides that decision-making Supervisory Board committees have to have at least three Supervisory Board members. For this reason, a delegation of tasks is not reasonable, either.

In order to more flexibly set the tenure of the members of the Supervisory Board, the ordinary general meeting on August 31, 2016 amended Art. 9 No. 9.2 Sent. 1 of the bylaws of the company as follows: “As long as the general meeting does not resolve a shorter tenure with respect to the appointment of individual members of the entire Supervisory Board, the members of the Supervisory Board are appointed until the conclusion of the ordinary general meeting, which resolves the discharge for the fourth business year after the start of the tenure.” Accordingly, in the future members of the Supervisory Board can also be appointed for shorter tenures.

The Supervisory Board met in fifteen meetings in the business year 2016. The Supervisory Board regularly reviews the efficiency of its work. For detailed information about the work of the Supervisory Board in the business year 2016 please refer to the Report of the Supervisory Board on pages 8 to 17 of the Annual Report.

There were no advisory or other services and work contracts in place between the members of the Supervisory Board and the company in the past business year.

All members of the Supervisory Board are independent in the meaning of the Code. No conflicts of interests of members of the Supervisory Board arose during the period under review.

4. Reporting pursuant to Art. 289a Para. 2 No. 4 HGB

As an exchange-listed and non-codetermination stock corporation, the SINGULUS TECHNOLOGIES AG is obligated to define specific targets for the company with regard to the so-called women’s quota and to resolve these targets by September 30, 2015 as well as publish them as part of the status report for the business year. The target for the Supervisory Board and the Executive Board has to be determined by the Supervisory Board pursuant to Art. 111 Para. 5 AktG and the targets for the management levels below these boards by the Executive Board pursuant to Art. 76 Para. 4 AktG. The first-time targets may not exceed the period until June 30, 2017.

Within the time limit, the Supervisory Board has set a target for the women’s quota with regard to the Executive and Supervisory Boards and determined a deadline for the targets by June 30, 2017. At the time of the determination and also currently the Executive Board of the SINGULUS TECHNOLOGIES AG is comprised of two members with no female members. The Supervisory Board did not plan changes in the composition of the Executive Board nor an increase of the number of members before June 30, 2017 and thus set the target for the women’s quota at 0 %. At the time of the determination and also currently the Supervisory Board of the SINGULUS TECHNOLOGIES AG is comprised of three members with one female member. The Supervisory Board intended to maintain a women’s quota of 33 % and therefore determined the target for the women’s quota of the Supervisory Board to 33 %.

The Executive Board has already employed women in management positions for years, if they have the professional and personal qualifications. Accordingly, two of the four authorized representatives of the SINGULUS TECHNOLOGIES AG are female. The Executive Board has set targets for the share of women at the first management level below the Executive Board to 30 % (currently: approx. 31 %) and to the second management level below the Executive Board to 20 % (currently: approx. 17 %) by June 30, 2017.

5. Additional corporate governance information

TRANSPARENCY AND COMMUNICATIONS

The Executive Board publishes potentially share price-relevant information concerning the SINGULUS TECHNOLOGIES AG immediately unless the company is being exempt in individual cases. All adhoc announcements published in 2016 as well as the insider information required to be published pursuant to Art. 17 MAR after taking effect of the Market Abuse Regulation (EC) 596/2014 on July 3, 2016 (“MAR”) are accessible on the company’s website. In addition, the company keeps an insider register pursuant to Art. 18 MAR, which includes all people with access to insider information. These persons are regularly informed in detail about the resulting legal obligations.

The SINGULUS TECHNOLOGIES AG makes sure that the shareholders of the company are able to gain timely and extensive access about the situation of the company through the information provided on its internet website. The SINGULUS TECHNOLOGIES AG reports about its business trends and the financial and earnings situation to its shareholders four times during the business year. All financial reports, current company presentations, the corporate calendar as well as ad-hoc announcements, Directors’ Dealings_ pursuant to Art. 19 MAR and voting right announcements pursuant to Art. 21ff. WpHG are published under www.singulus.de in the segment Investor Relations. To improve transparency and to support the stock price the SINGULUS TECHNOLOGIES AG held several analyst conferences and numerous one-on-one discussions with investors.

Also, all reports and documents concerning corporate governance including the declaration of conformity to the German Corporate Governance Code, an internet link to the full text of the code itself and the articles of the SINGULUS TECHNOLOGIES AG as well as the invitations to the Annual General Meetings and resolution results can be accessed through SINGULUS TECHNOLOGIES’ website under “Investor Relations”.

The Annual General Meeting of the SINGULUS TECHNOLOGIES AG is usually held during the first half of the year. Notwithstanding this, during the business year 2016 the ordinary general meeting of the SINGULUS TECHNOLOGIES AG only took place on August 31, 2016. The reason for this was that the company decided to await the implementation of the measures for the bond restructuring and the reorganization of the capital structure, which was resolved by the bondholders’ meeting on February 15, 2016 and the extraordinary general meeting on February 16, 2016. Since these corporate actions have resulted in a profound change in the shareholder structure, the former bondholders, who had become shareholders in the meantime, were given the opportunity to participate in the Annual General Meeting due to the postponement of the meeting until August 2016 and also to take part in the then upcoming appointments to the Supervisory Board and of auditors. The deadline of eight months after the conclusion of the fiscal year for holding an annual general meeting pursuant to Art. 175 Para. 1 Sent. 2 AktG was complied with.

With the use of electronic forms of communication, in particular the internet and email, the Executive Board facilitates the shareholders’ participation in the Annual General Meeting and enables them to exercise their voting rights by representatives. In addition, the Executive Board may allow the shareholders to exercise the voting rights in written form and through electronic media without having to participate in the Annual General Meeting in person. All reports, annual financial reports and other documents, which have to be provided to the Annual General Meeting, as well as the agenda of the Annual General Meeting and counter-motions, if applicable, can be downloaded via the internet.

ACCOUNTING PRINCIPLES AND AUDIT OF FINANCIAL ACCOUNTS

The consolidated financial statements and the interim reports of the SINGULUS TECHNOLOGIES Group are drawn up in accordance with the International Financial Reporting Standards (“IFRS”) applicable in the European Union as well as in accordance with the commercial law regulations pursuant to Art. 315a Para. 1 HGB. The individual financial statements of the SINGULUS TECHNOLOGIES AG are drawn up according to HGB and AktG principles as well as supplementary requirements according to the bylaws. The annual financial statements and consolidated statements for the business year 2016 drawn up by the Executive Board were audited by the auditor KPMG AG, Frankfurt am Main. The Supervisory Board reviewed the statements and the audit and adopted them. Important aspects were discussed with the Supervisory Board and the reports were approved by the board before publication.

Interim reports are published within 45 days after the respective end of the quarter. The consolidated financial statements and the annual financial statements are made publicly accessible within 90 days after the end of the respective business year. Half-year and quarterly financial reports are not subject to an audit.

The Annual Report for the business year 2016 and the interim reports are published on SINGULUS TECHNOLOGIES AG’s website.

COMPENSATION OF EXECUTIVE AND SUPERVISORY BOARD MEMBERS

Similar to the past years, SINGULUS TECHNOLOGIES individually reports the fixed and variable components of the compensation as well as the compensation components with long-term incentives for the members of the Executive Board. In addition, also the contributions to pensions, which are based on a defined contribution scheme, are disclosed individually. The details are set forth in the Compensation Report, which is part of the Status Report and supplements this Corporate Governance Report. The Compensation Report lays out the compensation and the compensation scheme for the Executive Board in detail and also explains the design of the compensation components with long-term incentives. In addition, the remuneration of the members of the Supervisory Board is stated individually. The Compensation Report can be found on pages 92 to 103 of this Annual Report.

SHAREHOLDINGS AS WELL AS REPORTABLE SECURITIES' DEALINGS OF EXECUTIVE AND SUPERVISORY BOARD MEMBERS

1. Shareholdings of Executive and Supervisory Board members

No member of the Executive or Supervisory Board holds directly or indirectly a share of the nominal capital of the company exceeding 1 %.

The following members of the Executive and Supervisory Board held directly or indirectly shares in the SINGULUS TECHNOLOGIES AG as of December 31, 2016:

December 31, 2016 December 31, 2015
Supervisory Board
Dr.-Ing. Wolfhard Leichnitz 245 39.344
Executive Board
Dr.-Ing. Stefan Rinck, CEO 122 19.619
Dipl.-Oec. Markus Ehret, CFO 43 7.000

The sitting members of the Executive and Supervisory Boards did not hold subscription rights through stock options or convertible bonds as of December 31, 2016.

2. Directors’ Dealings

Pursuant to Art. 15a WpHG old version and since July 3, 2016 pursuant to Art. 19 MAR, members of the Executive and Supervisory Boards or related parties were and are obligated to report transactions in shares (since July 3, 2016: also debt securities) of the company or in associated derivatives or other related financial instruments, if the total volume of the transactions made within a calendar year meets or exceeds (since July 3, 2016: exceeds) a total of EUR 5,000. The company was not notified of any relevant transactions for the business year 2016.

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