Investor Relations
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Declaration of compliance of the GK Software SE

in accordance with Section 289a HGB [German Commercial Code]

GK Software considers responsible and transparent behaviour to be absolutely essential for its long-term economic value creation. Both the Management and the Supervisory Board have therefore issued the statutory declaration of compliance in accordance with Section 161 AktG [German Stock Corporation Act]. Accordingly, monitoring compliance with the declaration is considered an important task for the Management Board and Supervisory Board. The declaration is issued every year and is available to the public on the Internet at https://investor.gk-software.com in the “Corporate Governance” section.

 

Cooperation between the Management Board and the Supervisory Board

The Management Board and the Supervisory Board have been working together for many years on a basis of trust. The Management Board reports at regular intervals to the Supervisory Board on profitability and the Group’s strategy and its implementation, and also on existing or potential risks. These reports are given during the scheduled Supervisory Board meetings, ten of which were held in the past fiscal year, and also directly through regular monthly meetings with the Chair of the Supervisory Board. Further information on this can be found in the Supervisory Board’s report. Due to the fact that it has only three members, the Supervisory Board did not form any committees. All issues are discussed and decided by the full board. The Chair of the Supervisory Board is solely authorised to conduct negotiations on personnel decisions that pertain to the Management Board, but these must be approved by the full board. No conflicts of interest arose for members of the Management Board or the Supervisory Board.

 

Transparency

GK Software deliberately chose to have its shares listed in the most stringently regulated sector at Deutsche Börse, the Prime Standard, for its flotation in the summer of 2008. The highest possible degree of transparency towards its investors and all the other participants in the capital markets has been one of the most important Company principles from the outset.

The Company will also appoint a voting proxy for the 2023 Annual General Meeting; this will allow shareholders to exercise their voting rights, even if they are unable to attend the meeting in person. All public information, such as ad-hoc announcements and press releases, financial reports or reports on the annual shareholders’ meeting, can be viewed at any time on the Company’s website.

 

Risk management

The risk-management system established by the Company is geared towards the needs of its business. It is designed to help identify risks at an early stage and to prevent or limit any risks that occur. Please see the Consolidated Report for details.

 

Statement of compliance

On 12 April 2023, the Management Board and the Supervisory Board of GK Software SE declared that, since issuing the last annual declaration of compliance in April 2022, the recommendations of the government’s German Corporate Governance Code commission had been met, apart from the exceptions noted in the declaration of April 2022, and will continue to be met with the following exceptions. The Corporate Governance Code in its 28 April 2022 version, which was valid at the time this declaration was issued, forms the basis for this declaration.

 

A. Management and supervision

I. Business management tasks of the Management Board

  • Principle 2, Recommendation A.1 The Management Board takes into account the social and environmental impacts of the Company's activities. An expansion of the corporate strategy to include these aspects is planned.
  • Principle 3, Recommendation A.2 In the interests of the Company, the candidates for management positions will be selected by the Management Board mainly on the basis of their personal skills and abilities. Only then will other objective background circumstances of the candidates be taken into account so as not to generally restrict the interests of the Company. When setting the target rate for the proportion of women at the first management level below the Management Board, the Management Board will take into account that this consists of only three members.
  • Principle 4, Recommendation A.3 The expansion of the internal monitoring system and the risk management system to include sustainability-related objectives as well as the development of processes and systems for recording and processing sustainability-related data is planned.
  • Principle 5, Recommendation A.5 A description of the essential features of the overall internal monitoring system and the risk management system as well as an opinion on the adequacy and effectiveness of these systems is not provided, as the recommendation goes beyond the information required by law and the current description of the accounting-related internal monitoring system is considered sufficient.

 

II.Function of the annual shareholders’ meeting

  • Principle 8, Recommendation A.8 In the event of a takeover offer, the Company's articles of association do not provide for the convening of an extraordinary general meeting at which the shareholders can discuss the takeover offer and, if necessary, decide on measures under company law. The Management Board will comply with the statutory provisions envisaged for these cases and shall reserve the right to summon an extraordinary shareholders’ meeting.

B. Composition of the Management Board

  • Principle 9, Recommendation B.1 When filling vacant positions on the Management Board, the Supervisory Board will mainly take into account the candidates’ personal suitability, based on their individual skills and specialist expertise, so as not to generally restrict the interests of the Company. Only then will other criteria be considered. When setting the target rate for the proportion of women on the Management Board, the Supervisory Board will essentially take into account that this consists of only two members.
  • Principle 9, Recommendation B.2 The Supervisory Board and the Management Board will jointly ensure long-term planning with regard to successors. This method will be adapted to the relevant requirements of the specific situation in each individual case and will be described in the declaration on company management for 2023. 
  • Principle 9, Recommendation B.5 There is no age limit for members of the Management Board; GK Software SE believes that the professional qualifications of the members of the Management Board are of greater significance.

 

C. Composition of the Supervisory Board

I. General requirements

  • Principle 11, Recommendation C.1 The election and therefore the composition of the Supervisory Board of GK Software SE is not decided by the Supervisory Board, but by the Company’s Annual General Meeting. The Supervisory Board aims at successful cooperation between its members and constructive cooperation with the Management Board. The nominations submitted by the Supervisory Board at the annual shareholders’ meeting will take into account the geographical distribution and the degree of complexity of the business activities of GK Software. Criteria such as age, origin or gender of the candidates are not primary factors in considerations. When setting the target rate for the proportion of women on the Supervisory Board, the Supervisory Board will essentially take into account that this consists of only three members.  Due to the size of the Supervisory Board, no qualification matrix regarding the implementation of the competence profile is disclosed in the Corporate Governance Statement.
  • Principle 11, Recommendation C.2 There is no obligatory age limit for the members of the Supervisory Board as particularly the older members of the Supervisory Board enrich the board with their wealth of experience and their professional qualifications are of greater significance.

 

II. Independence of the members of the Supervisory Board

  • Principle 12, Recommendation C.7 In special situations, such as proposals for the necessary appointment of members to the Supervisory Board by a court, the Management Board will, in the best interest of the Company, also propose candidates who do not meet the criteria of the Code as regards independence. The Company does not see any restrictions of independence for the Supervisory Board members who have served on this board for more than twelve years.
  • Principle 12, Recommendation C.10 In special situations, such as proposals for the necessary appointment of members to the Supervisory Board, who at the same time are to be appointed as Chairpersons of the Supervisory Board by a court, the Management Board will, in the best interest of the Company, also propose candidates who do not meet the criteria of the Code as regards independence. 

 

D. How the Supervisory Board operates

I. Rules of procedure

  • Recommendation D.1 The rules of procedure for the Supervisory Board are not made public.

 

II. Cooperation within the Supervisory Board and with the Management Board

  • Principle 14, Recommendation D.2 The Supervisory Board of GK Software SE does not form any committees as, due to its size (the Supervisory Board consists of three members), meetings attended by all members of the Supervisory Board are the most efficient way to guarantee that consistent and extensive information is provided to all members of the Supervisory Board. All questions can be discussed and answered appropriately when the full board meets.
  • Principle 15, Recommendation D.3 See explanation for the deviation from Recommendation D.2.
  • Principle 15, Recommendation D.4 See explanation for the deviation from Recommendation D.2.

 

III. Meetings and decision-making

  • Recommendation D.6 The Supervisory Board usually meets together with the members of the Management Board, as both boards believe that the flow of information and the discussion of subjects that concern the Company can be best handled this way.
  • Recommendation D.10 See explanation for the deviation from Recommendation D.2.

 

F. Transparency and external reporting

  • Recommendation F.2 The consolidated accounts will not be published within 90 days of the end of the fiscal year, but – in keeping with the current guidelines of Deutsche Börse AG – after four months. The interim reports will not be presented after 45 days, but – in keeping with the current guidelines of Deutsche Börse AG – after two months. GK Software SE believes that the periods of time stipulated by Deutsche Börse AG are sufficient to provide shareholders with detailed information.

G. Remuneration of the Management Board and the Supervisory Board

I. Remuneration of the Management Board

  • Recommendation G.1 It is not possible to precisely determine the relative share that the fixed remuneration on the one hand and short-term variable and long-term variable elements of remuneration on the other hand have in the overall target remuneration. Whereas the ratio of fixed remuneration and maximum short-term variable remuneration has been clearly defined, the long-term variable remuneration is paid out solely in the form of share options; however, the value these shares will have on the date of issue cannot be determined at the time the option is exercised.
    The remuneration system stipulates the correlation between the achievement of the previously agreed performance criteria and the variable remuneration. However, the Supervisory Board reserves the right to consider the Company’s overall situation when assessing the targets that have actually been achieved in terms of overall target achievement.
  • Recommendation G.6 The variable remuneration that results from achieving long-term targets does not exceed the proportion resulting from short-term targets pro forma. However, it is deliberately assumed that the instruments for the remuneration of long-term goals (share options) with a growth value such as the company represents, have an inherent value lever - even if not exactly determinable - which can and should lead to the remuneration of the long-term goals clearly exceeding that for the short-term goals.
  • Recommendation G.10 The members of the Management Board are not expected to invest the variable remuneration granted to them mainly in Company shares, because the long-term remuneration is already paid out solely in the form of share options.
  • Recommendation G.11 In justified cases, there is no possibility for the Supervisory Board at GK Software to withhold or reclaim any variable remuneration earned. In such cases, mutual agreement will be sought with the members of the Management Board.
  • Recommendation G.13 In principle, the Supervisory Board endeavours to follow recommendation G.13 of the GCGC. In the case of the intended termination of the contract of the Chair of the Management Board, Mr Rainer Gläss, in the course of the corporate transaction, the Supervisory Board was unable to achieve a different result due to the legal and contractual obligations it entered into for the company by concluding the Management Board contract. Moreover, in the opinion of the Supervisory Board, compliance with the recommendation makes the conclusion of Management Board contracts of more than three years unattractive for potential candidates and, in addition, is associated with higher annual costs in our estimation.
  • Recommendation G.15 For those members of the Management Board, who hold supervisory board positions within the Group, the remuneration is not currently taken into account in their salaries as the decisions were made before the corresponding rules of the Code were adopted and the additional responsibility associated with this is compensated. When making future decisions, the Supervisory Board plans to ensure that the remuneration for supervisory board positions within the Group is taken into account in the salaries.