Declaration of Corporate Covernance

In this declaration, the Executive Board of RATIONAL AG, also on behalf of the Supervisory Board, reports on corporate governance in accordance with section 289a (1) HGB (“Handelsgesetzbuch”, German Commercial Code).

You can find the current declaration of compliance dated February 2012 here.

You can find the archive of past declarations of compliance here.

Procedures and composition of executive bodies

RATIONAL AG is an Aktiengesellschaft (joint stock corporation) under German law. A basic principle of German corporation law is the dual system of management, comprising an Executive Board and a Supervisory Board, which both have their own autonomous areas of responsibility. The Executive Board and Supervisory Board of RATIONAL AG cooperate very closely and on a basis of trust in the management and monitoring of the Company.

The Executive Board of RATIONAL AG can consist of one or more persons. Currently the Executive Board has four members. The assignment of division responsibility to the individual members is detailed in the executive organization chart.

You can find the current members of the Executive Board here.

The members of the Executive Board bear joint responsibility for the overall management of the Company. They cooperate closely together and regularly exchange information about important actions and procedures falling within their divisions. The individual members of the Executive Board are themselves responsible for the divisions assigned on the basis of Executive Board resolutions. The Executive Board generally reaches decisions in meetings, which should be held weekly. Every member of the Executive Board can call a meeting by giving notice of the item on the agenda; likewise every member can require a topic to be included in the agenda for a meeting. The Executive Board reaches decisions in meetings by a simple majority of votes cast, and other than in meetings by a simple majority of its members.

The Supervisory Board advises and monitors the Executive Board in the management of the Company. It is involved in strategy and planning as well as in all matters of fundamental importance for the Company. For significant business transactions – such as the annual planning and major investments – the rules of procedure for the Executive Board include a right of veto by the Supervisory Board. The Chairman of the Supervisory Board coordinates the work in the Supervisory Board, chairs its meetings, and looks after the interests of the Board in its external dealings.

The Executive Board keeps the Supervisory Board comprehensively informed in good time, verbally and in writing, and in regular meetings about planning, business development, and the position of the Company, including risk management. In the case of significant events, an extraordinary meeting of the Supervisory Board is convened if necessary. For its work, the Supervisory Board has set itself rules of procedure.

Composition of the Supervisory Board

Under the articles of association, the Supervisory Board of RATIONAL AG has three members, who are elected by the shareholders. The periods of office are identical. The Board includes a sufficient number of independent members who – besides their capacity as shareholders – have no significant business or personal relationship with the Company or its Executive Board. The term of office of the Supervisory Board is five years. The current term of office will terminate with the ordinary General Meeting of Shareholders in 2014. Because of its size, the Supervisory Board has not formed any committees. All duties are discharged and decisions taken by the plenary group.

The Executive Board and Supervisory Board are obliged to act in the corporate interests of RATIONAL AG. In the past fiscal year, no conflicts of interest occurred that had to be immediately disclosed to the Supervisory Board. The Executive Board held no Supervisory Board mandates in listed joint stock corporations not forming part of the Group.

You can find the current members of the Supervisory Board here.

You can find the Report by the Supervisory Board here.

Corporate governance practices

Responsible, sustainable, and socially aware actions have always been a basic element of the corporate culture of RATIONAL AG. This also includes integrity in dealings with customers, employees, business partners, shareholders and the public.

By compliance, RATIONAL understands adherence to legislation, laws and the articles of association, together with observance of other internal regulations. In addition, RATIONAL AG continued to develop its own corporate governance in fiscal year 2011 and largely complies with the guidance of the Code in its current version as amended on May 26, 2010. There are no other voluntary commitments to comply with external codes and regulations. The Company has equipped itself with a comprehensive philosophy and has management principles that are set down in writing. The corporate philosophy stresses the self-image of the Company, its executive bodies and employees. It can be found on the RATIONAL website under “Company / Philosophy / The RATIONAL Philosophy.” There are also recommendations on how to behave in dealings with customers, partners and colleagues.