SESIÓN 539, 1 DE JULIO DE 1970 21.18 MIÉRCOLES

Pursuant to Art. 39 para. 1 of the SE Regulation, the management organ (i.e. the Management Board) of Klöckner & Co SE manages the business of the Company in its own responsibility. In respect of contents, this corre- sponds to the provisions contained in Section 76 para. 1 of the German Stock Corporation Act applicable to the Management Board of Klöck- ner & Co AG, so that the conversion will not affect the management of the Company.

(ii) Management

As is the case with a stock corporation, the principle of common manage- ment applies to the SE as well. Both legal forms provide for the opportunity to agree differently in the Articles of Association or the rules of procedure. However, it is impossible to determine that one or more members of the Management Board decide issues disputed in the Management Board against the wishes of the majority of its members (Section 77 para. 1 of the German Stock Corporation Act which is also applicable to the SE as a re- sult of the reference contained in Art. 9 para. 1 lit. (c) (ii) of the SE Regula- tion). In contrast, a veto right may be granted to one member of the Man- agement Board (usually the chairman), i.e. a right to block a majority deci- sion. In accordance with the provisions applicable to Klöckner & Co AG so far, the Articles of Association of Klöckner & Co SE do, however, not pro- vide for a veto right of the chairman or another member of the Management Board.

Unless otherwise provided for in the Articles of Association, the Manage- ment Board of SE has a quorum if at least half the members of the Man- agement Board are present or represented (Art. 50 para. 1 lit. (a) of the SE

Regulation). In principle, a resolution must be adopted with the majority of the members present or represented (Art. 50 para: 1 lit. (b) of the SE Regu- lation) and unless otherwise set out in the Articles of Association, the chairman’s vote shall be decisive in case of a tie (Art. 50 para. 2 of the SE Regulation). Neither the Articles of Association of Klöckner & Co AG nor the Articles of Association of Klöckner & Co SE contain any deviating provi- sions in this respect. As  pursuant to applicable law  the vote of the chair- man of the Management Board of a German stock corporation is not deci- sive in case of a tie, there will be a corresponding change as a result of the conversion of Klöckner & Co AG into Klöckner & Co SE.

(iii) Representation of the company

Pursuant to Section 78 para. 1 and para. 2 of the German Stock Corpora- tion Act, a stock corporation will in principle be represented – in and out of court – by the Management Board; an exemption will only apply to the rep- resentation of the company vis-à-vis members of the Management Board, with the company being represented by the Supervisory Board pursuant to Section 112 of the German Stock Corporation Act.

The representation of a stock corporation by the Management Board will in principle be effected by all members of the Management Board collectively, unless otherwise provided for in the Articles of Association (Section 78 para. 2 of the German Stock Corporation Act). The Articles of Association of a stock corporation may grant individual members of the Management Board the power to represent the company alone or together with a holder of a statutory power of attorney (Prokurist) (Section 78 para. 3 sentence 1 of the German Stock Corporation Act).

These provisions will apply accordingly to Klöckner & Co SE in its capacity as an SE having its seat in Germany due to the reference in Art. 9 para. 1 lit. (c) (ii) and (iii) respectively of the SE Regulation.

Section 7 of the Articles of Association of Klöckner & Co SE stipulates that, if the Management Board comprises one member only, then such member will represent the Company alone but that, if several persons have been appointed as members of the Management Board, the Company will be represented by two members of the Management Board acting jointly or by one member of the Management Board acting together with a holder of a statutory power of attorney. Furthermore, the Supervisory Board may authorise individual members of the Management Board to represent the Company alone and/or may exempt them from the prohibition of multiple representation set out in Section 181, second alternative of the German Civil Code (Bürgerliches Gesetzbuch  BGB). The corresponding provi- sions in the Articles of Association of Klöckner & Co SE are equivalent to the provisions of Section 6 of the Articles of Association of Klöckner & Co AG. Thus, no changes as to contents will result in this respect from the conversion into the legal form of an SE.

(iv) Size and composition of the Management Board

According to Section 76 para. 2 sentence 2 of the German Stock Corpora- tion Act, the Management Board of a German stock corporation with a

share capital exceeding three million Euro must comprise at least two indi- viduals, unless the Articles of Association stipulate that the Management Board consists of one person only. The latter is impossible if the stock cor- poration is subject to employee participation pursuant to the German Em- ployee Participation Act 1976 – as is, however, not the case of Klöck- ner & Co AG.

The Management Board of an SE with a share capital exceeding three mil- lion Euro must also comprise at least two persons, unless otherwise pro- vided for in the Articles of Association (Art. 39 para. 4 sentence 2 of the SE Regulation in conjunction with Section 16 of the German SE Implementa- tion Act). The standard rules of section 38 para. 2 sentence 2 of the Ger- man SE Employee Involvement Act which, in case that the participation of the employees of an SE is governed by the standard rules, provides that the Management Board of the SE (subject to employee participation) must comprise at least two members, one of whom will be responsible for the field of employment and social issues, are only applicable to the extent that the company was subject to employee participation on the Supervisory Board prior to conversion, or if the agreement on the involvement of the employees in the SE provides for its application. The Employee Involve- ment Agreement however, does not do so.

Pursuant to Section 6 para. (1) of the Articles of Association of Klöck- ner & Co SE, the Management Board of Klöckner & Co SE will comprise one or several members; the exact number will be determined by the Su- pervisory Board. This corresponds to the provision already contained in Section 5 para. (1) of the Articles of Association of Klöckner & Co AG. Sub- ject to any agreement to the contrary regarding the involvement of employ- ees, no changes will result from the conversion of Klöckner & Co AG into Klöckner & Co SE with respect to the size and composition of the Man- agement Board as Klöckner & Co AG is not subject to employee participa- tion on the Supervisory Board.

(v) Appointment and removal of the Management Board/term of office Pursuant to Section 84 para. 1 of the German Stock Corporation Act, the Supervisory Board of a stock corporation will appoint members of the Man- agement Board for a term of no more than five years. A person may be reap-pointed or his term be extended for another term of no more than five years. According to Section 84 para. 3 of the German Stock Corporation Act, the Supervisory Board may revoke an appointment of a member of the Management Board for good cause.

In deviation from the provisions applicable to stock corporations, Art. 46 para. 1 of the SE Regulation stipulates that members of SE executive bod- ies will be appointed for a term set out in the Articles of Association, with such term lasting no longer than six years, however. Reappointments are permissible pursuant to Art. 46 para. 2 of the SE Regulation, but are subject to the restrictions set out in the Articles of Association, if any. Furthermore, German stock corporation law will be applicable to Klöckner & Co SE in its capacity as an SE having its seat in Germany due to the reference con- tained in Art. 9 para. 1 lit. (c) (ii) of the SE Regulation.

The members of the Management Board of Klöckner & Co SE will be ap- pointed and removed by the Supervisory Board of Klöckner & Co SE in ac- cordance with Art. 39 para. 2 of the SE Regulation. Thus, there is no differ- ence in respect of contents compared to Klöckner & Co AG.

Concerning the term of office of the members of the Management Board, Section 6 para. (4) of the Articles of Association of Klöckner & Co SE pro- vides that members of the Management Board will be appointed for a term of no more than five years, and may be reappointed once or several times. Thus, no changes as to contents will result in this respect from the conver- sion into the legal form of an SE.

(vi) Principles regarding remuneration of members of the Management Board, prohibition to compete, granting of loans to members of the Management Board

The Management Board of Klöckner & Co SE will be subject to the same provisions as the management of Klöckner & Co AG with respect to the remuneration, the granting of loans and the prohibition to compete. Sec- tions 87 et seq. of the German Stock Corporation Act, Section 285 para. 1 no. 9 lit. (a), 314 para. 1 no. 6 lit. (a) of the German Commercial Code (Handelsgesetzbuch – HGB) will also be applicable to an SE having its seat in Germany due to the reference in Art. 9 para. 1 lit. (c) (ii) of the SE Regu- lation.

(vii) Reports submitted to the Supervisory Board

The reporting obligations of the Management Board of an SE vis-à-vis the Supervisory Board are similar to the reporting obligations of the Manage- ment Board of a stock corporation vis-à-vis its Supervisory Board.

Pursuant to Section 90 para. 1 sentence 1 of the German Stock Corpora- tion Act, the Management Board of a stock corporation must report to the Supervisory Board with respect to the following:

 the intended business policy and other fundamental issues concern- ing the business planning (in particular the financial, investment and staff planning), with the obligation to comment on deviations between the actual development and the goals pursued, as reported previ- ously, as well as to give reasons for such deviations;

 the company’s profitability, in particular the profits generated by share-holders’ equity;

 the state of business, in particular turnover and the situation of the company;

 transactions which may significantly affect the company’s profitability or liquidity.

If the company is a parent company within the meaning of Section 290 para. 1, para. 2 of the German Commercial Code (HGB), the report must also include subsidiaries and joint ventures within the meaning of Section 310 para. 1 of the German Commercial Code (Section 90 para. 1 sentence 2 of the German Stock Corporation Act). Further-more, the chairman of the

Supervisory Board must be notified of other important issues which the Management Board becomes aware of, with such important issues includ- ing transactions entered into by an affiliated company which might funda- mentally affect the position of the company (Section 90 para. 1 sentence 3 of the German Stock Corporation Act). The re-ports must be made regularly (Section 90 para. 2 of the German Stock Corporation Act).

Moreover, the Supervisory Board of a stock corporation may – pursuant to Section 90 para. 3 of the German Stock Corporation Act – at any time re- quest a report by the Management Board on issues concerning the com- pany, its both legal and business relations with affiliated companies as well as on business transactions entered into by such companies, which may fundamentally influence the situation of the company. Such a report may also be requested by a single member of the Supervisory Board, with the report being prepared, however, for the Supervisory Board as a body. The reports by the Management Board must be prepared with due care and must give a true representation of the situation. They shall be made in due time and usually in text form (Section 90 para. 4 of the German Stock Cor- poration Act). Each member of the Supervisory Board is entitled to acquaint himself with the report (Section 90 para. 5 sentence 1 of the German Stock CorporationAct).

The reporting obligations of the Management Board vis-à-vis the Supervi- sory Board of an SE having its seat in Germany are similar. According to Art. 41 of the SE Regulation, the Management Board of the SE must report to the Supervisory Board at least every three months on the progress and foresee-able development of the business of an SE. In addition to such regular in-formation, the Management Board shall promptly pass the Su- pervisory Board any information on events likely to have an appreciable ef- fect on the SE (Art. 41 para. 2 of the SE Regulation).

The Supervisory Board of the SE may require the Management Board to pro-vide any information necessary in order for the Supervisory Board to fulfil its supervisory function (Art. 41 para. 3 sentence 1 of the SE Regula- tion). Furthermore, Section 18 of the German SE Implementation Act stipu- lates with respect to an SE having its seat in Germany – supplementary to Art. 41 para. 3 of the SE Regulation – that each member of the Supervisory Board may request information of any kind from the Management Board; such information being provided to the Supervisory Board as a body. Ac- cording to Art. 41 para. 4 of the SE Regulation, the Supervisory Board may under-take or arrange for any investigations necessary for the performance of its duties. Each member of the Supervisory Board is entitled to examine all in-formation submitted to the Supervisory Board (Art. 41 para. 5 of the SE Regulation).

When comparing the provisions contained in German stock corporation law to the provisions applicable to an SE having its seat in Germany, no fun- damental changes result with respect to contents. The reporting obligations of the Management Board of Klöckner & Co AG are therefore similar to those of the Management Board of Klöckner & Co SE, so that the conver- sion does not lead to fundamental changes.

(viii) Duties of the Management Board in case of loss, overindebtedness and illiquidity

The duties of the management applicable in case of a loss, overindebted- ness and illiquidity of a stock corporation as set out in Section 92 of the German Stock Corporation Act will also be applicable to the Management Board of an SE having its seat in Germany due to the reference in Art. 9 para. 1 lit. (c) (ii) of the SE Regulation. Therefore, there will not be any dif- ferences due to the conversion of Klöckner & Co AG into Klöckner & Co SE in this respect.

(ix) Duty of care and responsibility

According to Section 93 para. 2 of the German Stock Corporation Act, the members of the Management Board of a stock corporation who violate their duties to have an obligation to pay damages to the company as joint and several debtors (Gesamtschuldner) in order to compensate for the damage thus caused. Pursuant to Section 93 para. 1 sentence 1 of the German Stock Corporation Act, members of the Management Board must act with the care taken by a prudent business manager when conducting the busi- ness of the company. However, a breach of obligations will not be given if the respective member of the Management Board could reasonably, at the time of taking the business decision acting on the basis of appropriate in- formation, assume that he was acting for the benefit of the company (Sec- tion 93 para. 1 sentence 2 of the German Stock Corporation Act; this provi- sion is also known as “business judgment rule”). Members of the Manage- ment Board are furthermore subject to an obligation of secrecy (Section 93 para. 1 sentence 3 of the German Stock Corporation Act).

This applies accordingly to the members of the Management Board of an SE having its seat in Germany due to the reference contained in Art. 51 of the SE Regulation: Pursuant to Art. 51 of the SE Regulation, the members of the Management Board of an SE will be liable – in accordance with the provisions applicable to stock corporations in the state in which the seat of the SE is situated – for the loss or damage sustained by the SE following any breach on their part of their legal, statutory or other obligations inherent in their duties. Art. 49 of the SE Regulation contains an SE-specific provi- sion on secrecy. Accordingly, members of the Management Board of an SE must not divulge – even after they have ceased to hold office – any infor- mation concerning the SE, the disclosure of which might be prejudicial to the company’s interests, except where such disclosure is required or per- mitted un-der national law provisions applicable to stock corporations or is in the public interest.

The conversion of Klöckner & Co AG into Klöckner & Co SE will therefore not lead to any changes regarding the applicable duty of care and the re- sponsibility of the Management Board.

(x) Liability for abusing the influence over the company

Pursuant to Section 117 of the German Stock Corporation Act, it is prohib- ited to induce a member of the Management Board or Supervisory Board, a holder of a statutory power of attorney or a holder of a commercial power of

attorney (Handlungsbevollmächtigter) of a stock corporation to use his in- fluence over the company in order to damnify the company or its share- holders. This prohibition is also applicable to an SE having its seat in Ger- many (Art. 51 and respectively Art. 9 para. 1 lit. (c) (ii) of the SE Regulation in conjunction with Section 117 of the German Stock Corporation Act), so that in this respect no changes will result from the conversion of Klöck- ner & Co AG into Klöckner & Co SE.