Further Statutory Disclosures
In the corporate governance declaration, we report on the principles of management and corporate governance in accordance with Principle 23 of the German Corporate Governance Code and Section 289 et seq. of the German Commercial Code (HGB). The declaration contains the Declaration of Conformity, information on corporate governance practices, a description of how the Management Board and Supervisory Board work and key corporate governance structures. The corporate governance declaration, which is not included in the audit conducted by the auditor of the annual financial statements pursuant to Section 317 (2) (6) HGB, has been published on the Investor Relations website and does not form part of the management report.
Corporate governance is the responsible management and supervision of a company.
With balanced corporate governance, the Management Board and the Supervisory Board wish to safeguard Vonovia SE’s competitiveness, strengthen the trust of the capital market and the general public in the company and sustainably increase the company’s value.
As a major real estate company, we are aware of the particular significance of our entrepreneurial actions for society at large. As a result, we are also committed to the main aims and principles of the Institute for Corporate Governance of the German housing industry. It supplements the corporate governance principles to include housing-specific aspects and is committed to even greater transparency, an improved image and a more competitive real estate sector.
The Management Board has looked at the appropriateness of the internal control system that has been set up and has evaluated its effectiveness. Within this context, the Management Board verified, also based on discussions with the Internal Audit department, that the technical and organizational safeguards put in place for control purposes are suitable for the purposes of ensuring that the company is protected from material damage resulting from financial losses, fraudulent acts or mismanagement in all key matters. Among other things, the standards set out in the German Corporate Governance Code, based on the most recent publications from 2022, serve as the benchmark here. Ultimately, the Management Board has no reason to believe that the internal control system is not appropriate and effective in all key aspects.
Based on findings from internal or external audits, we make continuous improvements to our internal control system. Another component of our internal control system is regular monitoring, on the basis of which any weak points identified are eliminated. Any weak points identified in the internal control system on the basis of the investigations against individuals who are largely former employees, of which Vonovia was notified on March 7, 2023, will also be eliminated in a timely manner. Initial internal investigations have, however, revealed that the allegations made in the context of the investigations are based exclusively on collusion between the defendants, meaning that existing, otherwise effective control mechanisms can be circumvented.*
Subscribed Capital and Shares
The share capital of Vonovia SE as of December 31, 2022 amounted to € 795.8 million (previous year: € 776.6 million), divided into 795,849,997 no-par-value shares with a notional interest in the share capital of € 1.00 per share. All shares carry the same rights and obligations. Each share grants one vote at the Annual General Meeting and is decisive for the share held by shareholders in the company’s profits. The rights and obligations of the shareholders result in detail from the provisions of the German Stock Corporation Act, in particular from Article 9 (1c) (ii) of the SE Regulation in conjunction with Sections 12, 53a et seq., 118 et seq. and 186 of the German Stock Corporation Act. There are no shares with special rights conferring powers of control.
Shareholdings in the Capital Exceeding 10.0% of the Voting Rights
Pursuant to Section 33 (1) of the German Securities Trading Act (WpHG), shareholders who exceed or fall below the threshold of 10.0% of the voting rights of a listed company, among other criteria, must notify the company and the German Federal Financial Supervisory Authority (BaFin) without delay. These notifications are published by Vonovia SE in accordance with Section 40 of the German Securities Trading Act (WpHG). Direct or indirect shareholdings in the share capital of Vonovia SE that exceed the threshold of 10.0% of the voting rights have been reported by Norges Bank, which has its registered headquarters in Oslo. As of December 31, 2022, Norges Bank had a direct shareholding of 14.6%.
Authority of the Management Board to Issue or Repurchase Shares
At the Annual General Meeting on April 29, 2022, the decision was taken to cancel Authorized Capital 2021 and to create the new Authorized Capital 2022 in the amount of € 233,000,000.00, under which, in accordance with Article 5 of the Articles of Association, the Management Board is authorized until 2027 to increase total equity on one or more occasions by issuing up to 233,000,000 new shares (“Authorized Capital 2022”). The “Conditional Capital 2021” was created to serve the authorization passed by the Annual General Meeting on April 16, 2021 to issue convertible bonds, bonds carrying option rights, participating rights, and participating bonds. On the basis of the resolution of this Annual General Meeting, the share capital is conditionally increased by up to € 282,943,649.00 through the issuing of 282,943,649 new no-par-value registered shares carrying dividend rights. The conditional capital increase will only be implemented to the extent that the holders, i.e. creditors, of the debt instruments set out in the capital increase resolution on Conditional Capital 2021 may demand conversion into shares and are served instead of payment.
The authority to acquire own shares arises from Article 9 (1) (c) (ii) SE Regulation in conjunction with Sections 71 et seq. AktG and, as of the reporting date, from the authorization passed by the Annual General Meeting on April 29, 2022. The Management Board is authorized, with the approval of the Supervisory Board, until April 28, 2027 to acquire and use own shares in the company up to a total of 10% of the share capital of the company existing at the time of the resolution or – if this value is lower – at the time the authorization is exercised, in accordance with the conditions granted, while observing the principle of equal treatment (Article 9 (1c) (ii) of the SE Council Regulation in conjunction with Section 53a AktG). The shares acquired on the basis of this authorization, together with other shares in the company that it has already acquired and still holds or that are attributable to it in accordance with Sections 71a et seq. AktG, may at no time exceed 10% of the respective share capital of the company.
Appointment and Removal from Office of Members of the Management Board and Amendments to the Articles of Association
Members of the Management Board are appointed and removed from office by the Supervisory Board in accordance with Art. 9 (1), Art. 39 (2) SE Regulation and Sections 84 and 85 AktG. The Supervisory Board appoints members of the Management Board for a maximum period of six years in accordance with the Articles of Association of Vonovia SE. Reappointment or extension of the term of office, in each case for a maximum of six years, is permissible. The Articles of Association of Vonovia SE further stipulate in Section 8 (1) that the Management Board shall consist of at least two members. It may appoint a member of the Management Board as Chairperson of the Management Board and a Deputy Chairperson. Pursuant to Art. 59 of the SE Regulation, the Annual General Meeting adopts resolutions on amendments to the Articles of Association. In accordance with Art. 17 (4) of the Articles of Association, amendments to the Articles of Association require a majority of two thirds of the votes cast or, if at least half of the share capital is represented, a simple majority of the votes cast, unless mandatory statutory provisions require a different majority.
Change of control clauses and compensation agreements in the event of a takeover bid
The main agreements of Vonovia SE that are subject to a change of control relate primarily to financing agreements. In the event of a change of control, these provide for the right of termination and early repayment on the part of the lender, as is customary. Under certain circumstances, a change of control would have an impact on the bonds, promissory note loans and mortgages issued by Vonovia SE and on the existing credit lines and loan agreements concluded by Vonovia SE or Group companies with banks. The relevant terms and conditions comprise standard market agreements that grant the creditors the right of early termination or conversion in the event of a change of control pursuant to these terms and conditions. The employment contracts of the members of the Management Board also contain provisions in the event of a change of control. In the event of early termination of duties due to a change of control, the members of the Management Board are entitled to benefits.