Good corporate governance - Public Corporate Governance

Rules for good corporate governance for investments

At its meeting on March 28, 2019, the City of Bonn Council resolved to introduce rules for good corporate governance (Public Corporate Governance, PCG) at its associated companies.

The City of Bonn has thus made a voluntary commitment to ensure responsible corporate governance and control at its associated companies, which is primarily geared towards the common good and the public service mandate for citizens.

On the basis of the PCG that has now been adopted, this is to be achieved through new standards for increasing efficiency, transparency and control that go beyond the existing legal requirements and framework conditions for the companies

The PCG of the City of Bonn consists of two parts. The first part, the Public Corporate Governance Code, contains the basic regulations for good corporate governance as well as regulations on the interaction between the corporate bodies and in the relationship between the associated companies and the City of Bonn. In contrast, the second part, the Participations Guideline, contains regulations that specify the Public Corporate Governance Code with regard to recurring, strategically important corporate activities such as business planning, accounting and auditing, reporting and the participation report.

Public Corporate Governance of the City of Bonn

Standards for increasing the efficiency, transparency and control of shareholdings in private-law companies of the City of Bonn

(Status: February 15, 2019, adopted by the Council of the City of Bonn on March 28, 2019)

Preamble and scope of application

Due to its ownership position, the City of Bonn is obliged to ensure good, i.e. responsible, corporate governance at its associated companies, which is geared towards the economic success of the respective company itself as well as the common good and services of general interest (interests of the citizens). In addition to the task of supporting companies in fulfilling their corporate purpose and optimizing economic efficiency, it must therefore also ensure that legitimate public interests are taken into account in the management, control and monitoring of companies within the framework of the applicable legal (corporate and co-determination) provisions. These public interests include the provision of services of general interest and other, in particular economic, social, sporting and cultural services offered by the City of Bonn.

In view of this complex task, the investment management of the City of Bonn (1) has decided to draw up a guideline entitled "Public Corporate Governance of the City of Bonn" in order to further improve corporate management, monitoring and transparency. The concept of public corporate governance is understood here as a benchmark for good corporate management and control in public companies. The investment management department has drawn up this guideline on the basis of the recommended model code of the leading municipal associations in North Rhine-Westphalia from November 2009. In addition, the Public Corporate Governance Code (PCGK) of the Federal Government dated May 26, 2010 and the German Corporate Governance Code, which has required the executive bodies of listed companies in Germany to issue declarations of conformity since 2002 in accordance with Section 161 of the German Stock Corporation Act (AktG), were also used as a basis.

(1) In functional terms, investment management is to be understood as a collective term for all the tasks listed below to support the management of the municipal investments. Organizationally, this includes all municipal organizational units entrusted with the administration of the shareholdings.

The Public Corporate Governance of the City of Bonn is intended to serve this purpose,

establish and define standards for the cooperation of all parties involved (City of Bonn Council, city administration and associated companies);
to promote and support efficient cooperation between the Supervisory Board and the management;
to improve the flow of information between associated companies and management in order to facilitate the fulfillment of tasks in terms of controlling the associated companies;
to safeguard the public interest and the orientation of companies towards the common good and services of general interest by increasing transparency and control;
to increase confidence in administrative and political decisions by making them more public and verifiable.

In summary, the set of rules on public corporate governance should therefore represent a system tailored to the needs of municipal holdings that sustainably improves transparency, commitment and efficiency.

A resolution to adopt this public corporate governance of the City of Bonn means a voluntary declaration of commitment by the associated companies to recognize these guidelines and standards in principle in order to meet the increased requirements for transparency, commitment, management and control of publicly financed and supported companies.

As the majority of municipal associated companies are managed in the legal form of a limited liability company with an optional supervisory board, the Public Corporate Governance Directive is based on this legal form. The regulations apply accordingly to shareholdings in companies with a different legal form, provided there are no legal provisions to the contrary. In the case of associated companies without a supervisory board or comparable body, its tasks are performed by the shareholder; regulations that relate exclusively to the supervisory body therefore remain irrelevant.

The Council of the City of Bonn adopts the public corporate governance standards contained in the Code for the City of Bonn. The Mayor of Bonn and the respective representatives of the City of Bonn in the shareholders' meetings and supervisory boards shall work towards ensuring that these guidelines form a binding basis for all associated companies of the City of Bonn. As far as possible, the
Articles of Association, rules of procedure and other contractual agreements should be adapted accordingly.

This will ensure that the regulations, recommendations and suggestions on public corporate governance become a uniform line of action for all majority shareholdings of the City of Bonn, including their executive bodies, the Bonn City Council and the city administration. The Public Corporate Governance of the City of Bonn is recommended for use by associated companies in which the shares held by the City of Bonn amount to 50 percent or less. This applies in particular if the majority of the shares are held by regional authorities.

The Public Corporate Governance of the City of Bonn is regularly reviewed with regard to new developments and can be adapted if necessary.

By recognizing the Public Corporate Governance Code of the City of Bonn, the special requirements for the management bodies (management, supervisory board and shareholders' meeting) of public companies are highlighted. In particular, the creation of qualified supervisory structures also enables the respective responsibilities to be fulfilled in full.

Recommendations of the Public Corporate Governance Code are indicated in the text by the use of the word "shall". Companies may deviate from this, but are then obliged to disclose and justify this in an annual corporate governance report ("comply or explain"). This enables the companies to take industry or company-specific requirements into account. With these recommendations of the Public Corporate Governance Code, which go beyond the legal requirements, the companies voluntarily undertake to observe the following standards of efficiency, transparency and control in their corporate governance or to disclose any deviations from them.

The Code also contains suggestions that may be deviated from without disclosure; terms such as "should" or "may" are used for this purpose.

The Management Board and Supervisory Board must report annually to the investment management of the City of Bonn on the company's public corporate governance and in particular on any deviations from the recommendations of the Code as part of their reporting system ("Declaration of Conformity"). Comments can also be made on the Code's suggestions. This declaration is based on the current version of the Public Corporate Governance of the City of Bonn at the time of the report.

It should be expressly pointed out that a deviation from a recommendation does not per se indicate a "deficiency" in corporate management or monitoring if the reasons are given. On the contrary, the standards in the form of public corporate governance are designed to be applied flexibly and responsibly, and thus to serve as a uniform basis for all associated companies of the City of Bonn, taking into account their company-specific tasks and the associated special, individual challenges. Such decisions not to comply with the recommendations of the Code may be sensible and necessary in individual cases, but must be made transparent and justified.

For reasons of better readability, the masculine form has been chosen in the text. However, the information refers to members of both genders, unless explicit reference is made to one gender.

Part A - Public Corporate Governance Code

1 Shareholder

1.1 The City of Bonn as shareholder

1.1.1 The City of Bonn is a shareholder of the associated companies. The Council of the City of Bonn is the main body of the City of Bonn. However, the Council of the City of Bonn as a whole cannot act as a shareholder in the shareholders' meeting of direct shareholdings, but is represented by persons appointed by the Council. In principle, this is the City Treasurer or another member of the administration or, if they are unable to attend, the head of the treasury department or a representative of the investment management department. The representatives of the City of Bonn exercise their function on the basis of the resolutions of the Council.
1.1.2 The City of Bonn should only acquire a new stake in a company if its commitment to the public corporate governance of the City of Bonn is stipulated in the articles of association or by shareholder resolution. However, this only applies to a shareholding of more than 50 percent. Furthermore, this also applies to indirect shareholdings of the City of Bonn if the company that wishes to enter into a new
has already committed itself to applying the Public Corporate Governance Code.
Implementation provision: The regulation is intended to help ensure that this Code continues to apply to the entire municipal shareholding portfolio in the future.

1.2 Shareholders' meeting

1.2.1 The shareholders' meeting is the supreme body of the company. The shareholders generally exercise their shareholder rights as a whole by passing resolutions at the shareholders' meeting.
1.2.2 Certain rights and duties are assigned to the shareholders by law (amendment of the articles of association, calling in additional contributions, dissolution of the company) or must be reserved for them in the articles of association of a municipal GmbH (adoption of the annual financial statements and appropriation of profits, conclusion and amendment of company agreements within the meaning of Sections 291 and 292 para. 1 AktG, assumption of new duties of particular importance within the scope of the object of the company, establishment, acquisition and sale of companies and participations).
Implementation provision: The shareholders of a GmbH must generally pass a resolution on the adoption of the annual financial statements and the appropriation of profits by the end of the first eight months (§ 42a Para. 2 GmbHG). Intercompany agreements within the meaning of Section 291 AktG include, in particular, control and profit transfer agreements. Other intercompany agreements within the meaning of section 292 para. 1 AktG include, in particular, agreements on profit pooling, partial profit transfer agreements and operating lease or business transfer agreements.
1.2.3 Further fundamental rights and competencies are the authority to issue instructions to and monitor the management (in particular in accordance with no. 1.2.4 and 1.3.1), the relationship and structure of which must be defined in relation to the existing, identical powers of the Supervisory Board.
1.2.4 In the articles of association, the shareholders define the object of the company - as an initial strategic orientation - with regard to the company's public mandate. This represents an indispensable guideline for the management and the members of the Supervisory Board and is not at their disposal. The object of the company can only be changed with the approval of the Council.
Implementation provision: In view of the importance of the object of the company, which reflects the objectives pursued by the City of Bonn with its participation, it should be formulated as specifically as possible.

1.2.5 The business policy of the associated companies must be subordinated to the objectives and the optimization and consolidation efforts of the City of Bonn within the framework of the statutory provisions and/or the provisions of the articles of association.
1.2.6 The shareholders' meeting shall take place at least once a year. It shall be convened by the management, stating the agenda, the individual items of which shall be specified as precisely as possible. The shareholders should have sufficient opportunity to prepare for the discussion and voting. Minutes must be taken of the shareholders' meeting, which must include the resolutions and the main course of the meeting. Resolutions passed by the shareholders outside the meeting must also be recorded in the minutes.
Implementation provision: To ensure adequate preparation time, the shareholders' meeting should be convened in writing at least two weeks before the date of the meeting, stating the agenda and communicating the proposed resolutions.
For reasons of proportionality, the minutes do not need to document the individual contributions of the shareholder representatives. The minutes of the meeting should be prepared within 14 working days of the meeting and sent to the shareholders digitally after being signed by the chairperson of the shareholders' meeting and the secretary. The same applies to resolutions passed by the shareholders outside the meeting. Minutes and
resolutions must be included in the business files in an orderly form.
Written resolutions, including by fax or e-mail, or resolutions passed by the shareholders by telephone (circulation procedure) are only permitted if no shareholder objects to this procedure. Resolutions passed by telephone should be avoided. If resolutions are passed by telephone, the resolution should be recorded in minutes for documentation purposes, stating the subject, time and circumstances of the resolution, the participants and the majorities.
1.2.7 In the case of companies controlled by the City of Bonn, all matters that are subject to a resolution in the shareholders' meeting and are of fundamental strategic importance should be dealt with in the City of Bonn Council, taking into account the allocation of responsibilities. Matters of fundamental strategic importance pursuant to sentence 1 are, in particular, the matters listed in Section 108 (5) no. 1 GO.

1.3 Tasks of the shareholders

1.3.1 In consultation with the Supervisory Board, the shareholders shall define strategic objectives for the company on the basis of the company's purpose. The Council of the City of Bonn must be informed of the objectives set as part of the economic planning. In addition to the economic objectives, objectives and expectations should also be clearly and measurably formulated as part of the public mandate. The status of strategy implementation should be discussed between shareholders and management at least once a year.
Implementation provision: A clear and measurable formulation of objectives and expectations can be assumed if it meets the SMART requirements (specific, measurable, achievable, realistic and time-bound).
1.3.2 In the event that the Supervisory Board is unable to act, the shareholders' meeting shall perform its duties on an interim basis. The
The shareholders shall restore the Supervisory Board's ability to act as soon as possible by means of appropriate resolutions.
Implementation provision: If a GmbH does not have a supervisory body, the shareholders must take the measures necessary to monitor the management (§ 46 No. 6 GmbHG). The appointment of a supervisory body does not release the shareholders from the obligation to monitor the management of the company themselves.

1.4 Measures to increase transparency

1.4.1 No representative of the City of Bonn who is himself a member of the Supervisory Board may participate in the resolution of the shareholders' meeting on the discharge of the Supervisory Board.
Implementation provision: This provision (cf. § 47 Para. 4 GmbHG) serves to avoid conflicts of interest in the event that the city representative at the shareholders' meeting resolves on the discharge of the Supervisory Board, of which he himself may be a member.
1.4.2 The presentation of each associated company published in the investment report must be made publicly accessible in an appropriate form on the Internet.
made accessible to the public.
Implementation provision: The website of the City of Bonn (http://www.bonn.de/) is regularly used as the publication platform.

2 Supervisory Board

2.1 Fundamentals

2.1.1 For all limited liability companies that generally do not employ more than 500 employees, the shareholders are generally free to form an (optional) supervisory board through provisions in the articles of association. However, the City of Bonn also considers itself bound by the provisions of municipal and municipal business law to only participate in companies in which a supervisory body is installed in order to ensure that the city has an appropriate influence in the management and control of the company.
Implementation provision: The fundamental requirement to establish an optional supervisory board under company law is based on the management and control requirement under municipal constitutional law (Sections 109 para. 1, 108 para. 1 no. 6 GO), which can generally only be implemented appropriately by establishing a supervisory board.
A deviation from this can generally only be considered for companies with a small volume of business or those that are founded for formal legal/tax reasons, in which - in particular taking into account the frequency of meetings of the shareholders' meeting - the shareholders offer the guarantee that sufficient management and control activities are carried out, including during the year.
2.1.2 The members of the Supervisory Board and their personal representatives - if appointed - are appointed by delegation by the shareholders or by election at the shareholders' meeting. The Supervisory Board is the most important supervisory and control body. The members of the Supervisory Board are personally responsible for exercising their mandate.
2.1.3 The articles of association should stipulate that transactions and legal acts of fundamental importance require the approval of the Supervisory Board. These include decisions or measures that fundamentally change the net assets, financial position and results of operations or the risk structure of the company. In a catalog of transactions requiring approval, further management measures can be made subject to prior approval by the Supervisory Board in the articles of association. The value limits of the catalog of responsibilities and other questions of responsibility are defined by the Supervisory Board in rules of procedure.
Implementation provision: The consent of the Supervisory Board must generally be obtained before the transaction is concluded or the legal act is carried out (consent requirement). A deviation from this should only be considered in cases where consent cannot be awaited without significant disadvantages for the company. In this case, subsequent consent (authorization) must be obtained immediately.
The main criterion for assessing the fundamental importance may be the size or subject matter of the transactions or the risk associated with them; in the case of real estate companies, the change in valuation procedures may also be taken into account. The granting of general, possibly revocable approval in advance for the performance of certain transactions and legal acts should be avoided.
2.1.4 Meetings of the Supervisory Board shall be convened by the Management Board, stating the agenda, the individual items of which shall be specified as precisely as possible. The members of the Supervisory Board should have sufficient opportunity to prepare for the discussion and voting. Minutes should be kept of the meetings of the Supervisory Board, in which the main points of the meeting are recorded in addition to the resolutions. Resolutions passed by the Supervisory Board outside of meetings should also be recorded in the minutes.
Implementation provision: The Supervisory Board should hold a meeting as required, but at least once every calendar quarter. Notwithstanding this, any member of the Supervisory Board may request that the Chairman of the Supervisory Board convene a meeting of the Supervisory Board without delay, stating the purpose and reasons.
To ensure adequate preparation time, the meeting should be convened in writing at least two weeks before the date of the meeting, stating the agenda and the proposed resolutions. The invitation may be sent in digital form or, at the request of a Supervisory Board member, in paper form. The proposed resolutions must be described or supplemented with further information (e.g. statements of facts, considerations, recommendations for action) in such a way that the Supervisory Board member can form a final opinion on the agenda item and their voting behavior on the basis of these documents. Subsequent submission of documents after the invitation has been sent out or an exclusively verbal discussion of an agenda item at the meeting is contrary to this required, appropriate preparation time, which must be granted to the Supervisory Board members in view of their personal responsibility for their decisions. If a subsequent submission of documents or an exclusively verbal discussion is unavoidable, this requires a factual justification documented in writing in the invitation documents. An objective reason is not to be assumed if the failure to prepare the documents on time is due to organizational reasons or time-related processing deficiencies.
The minutes must be prepared within 14 working days of the date of the meeting and signed by the Chairman of the Supervisory Board and the secretary. Each member must be provided with a copy of the minutes of the meeting in digital form or, if requested, in paper form. Minutes and resolutions are to be included in the business files in an orderly form.
Resolutions of the Supervisory Board may only be passed in writing, including by fax or email, or by telephone (circulation procedure) if no member objects to this procedure. Resolutions passed by telephone should be avoided. If resolutions are passed by telephone, the resolution should be recorded in minutes for documentation purposes, stating the subject matter, time and circumstances of the resolution, the participants and the majorities.

2.2 Tasks

2.2.1 The task of the Supervisory Board is to regularly advise and monitor the Management Board in its management of the company. The object of the monitoring is in particular the correctness, expediency and economic efficiency of the management, in particular the
- Limiting the company's activities to the tasks set out in the Articles of Association,
- compliance with the duties of care of a prudent and conscientious businessman,
- Compliance of the strategic planning of the management with the strategic guidelines of the shareholders,
- Integration of the operational business objectives into the strategic objectives of the shareholders,
- Compliance with the operational business objectives,
- Establishment and application of an effective management, control and risk management system by the management,
- Conclusion of target agreements with the management.
  It must be involved in decisions of fundamental importance to the company.
  Execution provision: expediency means the professional execution of management activities, regularity means compliance with the statutory provisions, the articles of association, the rules of procedure and instructions issued to the management by the shareholders' meeting. Efficiency is the pursuit of short, medium and long-term corporate goals by the management without taking unreasonable risks for the company.
  In addition to the original supervisory tasks, each member of the supervisory board is responsible for ensuring that the supervisory body fulfills its supervisory duties. The supervisory board of a controlling company should also monitor, to the extent permitted by law, that the management effectively exercises its participation rights in the subsidiaries and sub-subsidiaries.
  The transfer of the right to appoint and revoke members of the management from the shareholders' meeting to the supervisory body (Sections 45, 52 GmbHG), which is possible under company law, is not permitted due to the restrictions under Section 108 (5) No. 1 GO.
2.2.2 The Supervisory Board shall adopt rules of procedure.
Implementation provision: The rules of procedure should contain regulations on the frequency of meetings and on the election and voting procedures, in particular on the requirements for passing resolutions, as well as on the position and powers of the Chairman of the Supervisory Board. Furthermore, the rules of procedure should regulate the formation of committees and their work (see No. 2.4.2 of the Code).
2.2.3 Each member of the Supervisory Board should ensure, through his or her own personal and professional qualifications, that he or she is able to fulfill his or her duties and responsibilities in accordance with this Public Corporate Governance. The City of Bonn and the company support further education and training through appropriate measures.
Implementation provision: With regard to the responsibility associated with the exercise of the mandate, the investment management department shall draw up a handbook for Supervisory Board members in which their rights and duties are explained. Once this has been drawn up, it will be made available to the mandate holders.
2.2.4 Each Supervisory Board member shall ensure that they have sufficient time available to perform their mandates. Furthermore, no more than a total of five Supervisory Board mandates should be held in companies. This does not apply to chief administrative officers and elected officials/deputies.
Implementation provision: In view of the responsibility associated with the exercise of the mandate, each member of the Supervisory Board is responsible for checking their time management.
2.2.5 At regular intervals, the Supervisory Board shall review the value limits for the types of transactions and legal acts subject to approval for their expediency and practicability.
Implementation provision: Regularly means at least every two years.
2.2.6 The Supervisory Board shall regularly review the efficiency of its activities. Without prejudice to qualitative criteria to be determined by the Supervisory Board, the efficiency reviews shall focus in particular on the processes and procedures within the Supervisory Board, the flow of information between the committees and the Supervisory Board and the timely and sufficient provision of information to the Supervisory Board. To this end, the investment management department provides a standardized work aid based on the statutory regulations. Reporting on the results and recommendations for action to improve the activities of the Supervisory Board should take the form of a performance report to the shareholders.
2.2.7 The municipal representatives on the supervisory boards must carefully review the implementation of the objectives set out in the articles of association and the public purpose and, if necessary, critically scrutinize the performance of business activities.
2.2.8 They should actively support the implementation of this public corporate governance of the City of Bonn and work in their committees to ensure that the aforementioned points are implemented.

2.3 Duties and powers of the Chairman of the Supervisory Board

2.3.1 The Chairman of the Supervisory Board coordinates the work of the Supervisory Board and chairs its meetings. In addition, he represents the interests of the Supervisory Board externally. Statements by the Supervisory Board shall be made by its Chairman on behalf of the Supervisory Board under the designation "Supervisory Board of ...".
2.3.2 The Chairman of the Supervisory Board shall maintain regular contact with the Management Board, in particular with the Chairman or Spokesman of the Management Board, and discuss the strategy, business development and risk management of the company with them.
2.3.3 The Chairman of the Supervisory Board shall be informed immediately by the Management Board of important events that are of material significance for the assessment of the situation and development as well as for the management of the company. The Chairman of the Supervisory Board shall then inform the Supervisory Board and, if necessary, convene an extraordinary meeting of the Supervisory Board.
2.3.4 If no Audit Committee has been set up, the Supervisory Board or the Chairman shall issue the audit mandate to the auditor and agree the fee with the auditor. In doing so, the Chairman of the Supervisory Board should make use of the option to determine his own focal points for the audit of the financial statements and take into account the recommendations of the investment management.
2.3.5 The Chairman of the Supervisory Board shall ensure that all members of the Supervisory Board comply with the confidentiality regulations (Sections 394, 395 of the German Stock Corporation Act in conjunction with Section 52 of the German Limited Liability Companies Act and any existing provisions in the Articles of Association).
2.3.6 The Chairman of the Supervisory Board is responsible for ensuring compliance with the employment contracts of the Management Board. The main contents of the contracts (in particular the remuneration structure including pension arrangements) must be approved by the Supervisory Board.
2.3.7 The Chairman of the Supervisory Board may decide in place of the Supervisory Board in urgent matters in which an ordinary resolution cannot be passed by the Supervisory Board (including by written procedure) without significant disadvantages for the company. Before making the decision, the Chairman of the Supervisory Board should, if possible, consult with his deputy. The reasons for the urgency of the decision must be documented and the Supervisory Board must be informed immediately of the decision taken.

2.4 Formation of committees

2.4.1 Irrespective of any existing legal obligation, the Supervisory Board may, depending on the specific circumstances of the company and the number of its members, form professionally qualified committees to increase the efficiency of the Supervisory Board's work and deal with complex issues. These include, for example, issues relating to corporate strategy, investment
and financing. The respective committee chairmen report regularly to the Supervisory Board on the work of the committees.
2.4.2 Their composition as well as the tasks and competencies of the committees shall be standardized in the rules of procedure of the Supervisory Board.
Implementation provision: The procedure for appointing committee members shall take into account an appropriate representation of members of the Supervisory Board who have been elected by the City of Bonn or at the suggestion of the City of Bonn.
2.4.3 The possibility of delegating decision-making powers to individual committees of the Supervisory Board shall not be used. Rather, resolutions should generally be reserved for the Supervisory Board.
Implementation provision: Due to the importance and responsibility of the Supervisory Board, it and thus the knowledge and expertise of its members should benefit the company as much as possible. Shifting decision-making powers to committees is contrary to this (see Section 107 (3) AktG).

2.5 Composition of the Supervisory Board

2.5.1 When making appointments, the Council of the City of Bonn or the parliamentary group should ensure that the Supervisory Board always includes members who have the knowledge, skills and professional experience required to properly perform their duties and are sufficiently independent. Furthermore, the activities of the company and potential
conflicts of interest should be taken into account. The existence of the requirements specified in sentences 1 and 2 must be checked before a new appointment (appointment or re-election). Women must be taken into account in accordance with the regulations on equal opportunities (LGG).
2.5.2 Independent advice and monitoring of the Management Board by the Supervisory Board is also facilitated by the fact that no former member of the Management Board should be a member of the Supervisory Board.
2.5.3 Before being appointed or elected, the Supervisory Board member must make a declaration as to whether he or she performs advisory tasks or board functions for competitors of the company. If the Supervisory Board member performs such duties for the first time during his/her term of office, he/she must submit the declaration in accordance with sentence 1 without being requested to do so and without delay.
Implementation provision: Stock corporation law assumes that the exercise of a Supervisory Board mandate is a secondary office and that every Supervisory Board member is therefore subject to other vested interests that may lead to conflicts with their Supervisory Board activities.

2.6 Possibility of representation on the Supervisory Board

2.6.1 The members should regularly attend the Supervisory Board meetings. Deputies for Supervisory Board members should not be appointed in order to ensure the continuous work of the Board. If this is nevertheless done, the monitoring responsibility of the (first) Supervisory Board member remains in any case. Such appointed substitutes shall only be permitted in the event of prevention.
Implementation provision: In view of the importance of personal attendance, the members of the Supervisory Board should also ensure that they are able to participate fully in the meetings.
2.6.2 Absent Supervisory Board members on optional Supervisory Boards (see 2.1.1 of the Code) should only be able to participate in the passing of resolutions by the Supervisory Board and its committees by having their written vote submitted by another person authorized to participate, usually the Chairman of the Supervisory Board (voting message).
Implementation provision: Under stock corporation law, Supervisory Board members may not have their duties performed by others (see Section 111 para. 6 AktG). Therefore, a proxy is generally not compatible with the structure of a personal office. If a member is unable to attend
Therefore, it should only be possible to submit a voting message in which the messenger does not submit their own declaration, but merely transmits the absent member's voting declaration. This option should also only be used in individual cases where the member is unable to attend.

2.7 Remuneration

2.7.1 The remuneration of Supervisory Board members should take into account the responsibility and scope of activities of the Supervisory Board members as well as the economic situation of the company. This is to be stipulated in the articles of association or approved by the shareholders' meeting (see Section 113 para. 1 AktG). The remuneration should be reviewed regularly.
Implementation provision: The total remuneration (including reimbursement of expenses and any attendance fees) should take into account the required expertise, the time required and the risks associated with the duties of the Supervisory Board member, without prejudice to the economic situation. Risk-minimizing framework conditions (e.g. by taking out D&O insurance) must be taken into account. In the case of companies that are not predominantly active on the market or that are to be regarded as outsourced administrative units, it can be assumed that there is no risk to be taken into account in the remuneration. Insofar as remuneration is granted over and above a pure reimbursement of expenses, the currently applicable secondary employment law in the public sector must be observed with regard to any existing obligations to pay compensation if the Supervisory Board member is in a public-law employment and fiduciary relationship.
2.7.2 The total remuneration of the Supervisory Board and the remuneration rates of the Supervisory Board members must be disclosed individually in the investment report; the total remuneration of the Supervisory Board must also be disclosed in the notes to the annual financial statements. This may be deviated from if two thirds of the Council of the City of Bonn so decides.
2.7.3 The remuneration paid or benefits granted by the company to the members of the Supervisory Board for services rendered personally, in particular consulting and agency services, shall be disclosed separately and individually in the notes to the annual financial statements.

2.8 Directors' and officers' liability insurance

2.8.1 The conclusion of the insurance requires the approval of the Supervisory Board or the shareholders' meeting. The conditions, in particular the sum insured, must be adapted to the risk situation of the respective company.
2.8.2 In the event of a claim, the insurance benefits may only be paid directly to the company.

2.9 Conflicts of interest

2.9.1 Each member of the Supervisory Board is obliged to act in the interests of the company. At the same time, the representatives of the City of Bonn on the Supervisory Board committees shall take into account the special interests of the City of Bonn, in particular the resolutions of the municipal committees and the City of Bonn Council, within the framework of the statutory provisions.
2.9.2 No member of the Supervisory Board may pursue personal interests in their decisions or take advantage of business opportunities to which the company is entitled.
2.9.3 Each member of the Supervisory Board shall disclose to the Supervisory Board any conflicts of interest, in particular those that may arise as a result of a consultancy or board function with customers, suppliers, lenders or other business partners of the company. In its report to the shareholders' meeting, the Supervisory Board shall provide information on any conflicts of interest that have arisen and how they were handled. Significant and not merely temporary conflicts of interest in the person of a Supervisory Board member should lead to the termination of the mandate.
Implementation provision: In contrast to specific, permanent conflicts of interest, potential conflicts of interest do not generally preclude an appointment to and activity as a member of the Supervisory Board. A corresponding regulation on the handling of conflicts of interest should be laid down in the rules of procedure.
2.9.4 Transactions, in particular service and work contracts, between the company and active Supervisory Board members and their relatives within the meaning of Section 31 (1) and (2) of the Rules of Procedure or companies with which they are personally associated should be avoided as far as possible. This also applies to transactions with former Supervisory Board members that are concluded within three years of the end of their activity. If the conclusion of such transactions is unavoidable, they must comply with customary industry standards and the conditions must be disclosed. The reasons for the unavoidability must be documented on file. Significant transactions should require the approval of the Supervisory Board.
Implementation provision: IDW Auditing Standard 255 - Related Party Transactions in the Audit of Financial Statements can provide guidance for assessing whether such a transaction exists and how it should be valued.
The materiality of transactions should be assessed on the basis of their significance and/or a (contract value) limit to be defined.
To ensure the greatest possible transparency, the term "conditions" should be interpreted broadly. In particular, this includes all obligations under the law of obligations of both contracting parties arising from the conclusion of the contract that are necessary for the fulfillment of the contract. For this reason, corresponding contracts should be concluded in writing without prejudice to civil law provisions and submitted to the Supervisory Board for its approval.

2.10 Duty of confidentiality

2.10.1 The members of the Supervisory Board are generally subject to a duty of confidentiality. If, in exceptional cases, a report to third parties is permitted, it must be ensured that confidentiality is maintained in the reports. The members of the Supervisory Board are liable to the company for damages in the event of a breach of the duty of confidentiality. In the event of a breach of the duty of confidentiality, the shareholder must examine whether the board membership of the person concerned must be terminated for the good of the company.
Supervisory Board members who have been elected or delegated to the Supervisory Board at the instigation of the City of Bonn are not subject to a duty of confidentiality with regard to the reports they are required to submit to the investment management of the City of Bonn. This does not apply to confidential information and secrets of the company, namely business and trade secrets, if their knowledge is not relevant for the purposes of the reports.

3 Management

3.1 Fundamentals

3.1.1 The management may consist of one or more persons and have a chairman or spokesman. The management is generally appointed and dismissed by the shareholders' meeting. If there are several persons, rules of procedure should regulate the allocation of responsibilities and cooperation within the Management Board, in particular with regard to representation. The rules of procedure must be approved by the Supervisory Board.
Implementation provision: In the case of several appointed managing directors, they are jointly responsible for the management of the company. They must inform each other of important events in their areas of responsibility.
3.1.2 The Management Board manages the company's business and must exercise the diligence of a prudent businessman in the affairs of the company. The management represents the company either alone, jointly or together with an authorized signatory in and out of court.
Implementation provision: In the case of a GmbH, instructions may be issued by shareholder resolution. The articles of association of a GmbH may stipulate that a supervisory body, usually the supervisory board, is authorized to issue instructions to the management. In the interests of a clear separation of responsibilities, this should only be used with restraint, especially as the entrepreneurial freedom that exists in principle
entrepreneurial freedom in favor of the management should serve to better and more economically fulfill the objectives pursued with the shareholding. The supervisory body should therefore primarily examine whether a reservation of consent (see no. 2.1.3) should be established if necessary.
3.1.3 A power of attorney for the entire business operations (Section 54 HGB, general power of attorney) may only be granted in urgent exceptional cases and for a limited period of time. As a rule, individual powers of attorney should not be granted. An exemption from the restrictions of Section 181 BGB should only be granted in justified exceptional cases on a case-by-case basis, but under no circumstances in general. Sentence 3, 2nd half-sentence does not apply to group companies if there is a compelling business need to grant a general exemption. This is
This is particularly the case if, due to the group structure, a case-by-case exemption would be disproportionate and impracticable due to its frequency.
Implementation provision: The restrictive handling of the exemption from the prohibition on self-dealing in accordance with Section 181 BGB serves to avoid conflicts of interest that could potentially arise if a managing director simultaneously acts in his own name and in the name of a third party in legal transactions.
and in the name of a third party at the same time, thereby pushing company interests into the background.
3.1.4 The management should focus on the full implementation of the company's purpose and public mandate.

3.2 Tasks and responsibilities

3.2.1 The Management Board shall actively fulfill its duties to develop strategic objectives vis-à-vis the shareholders and the Supervisory Board.
Implementation provision: The strategic orientation is aimed at fundamental entrepreneurial decisions within the framework defined by the object and purpose of the company. In particular, it includes issues such as the opening of new business areas and - related to this - issues of investment and financing. In controlling companies, the management has the additional task of carefully monitoring the subsidiaries and sub-subsidiaries.
3.2.2 The management should define clear and measurable operational targets for the implementation and realization of the corporate purpose for the company's employees.
Execution provision: A clear and measurable formulation of objectives can be assumed if it meets the SMART requirements (specific, measurable, achievable, realistic and time-bound).
3.2.3 The management ensures appropriate risk management and risk controlling, including an effective internal audit/control system in the company. The effectiveness of the risk management system must be reported to the Supervisory Board on a regular basis, at least after the end of each financial year as part of the annual financial statements.
Implementation provision: The risk management system described is basically an instrument specific to each (individual) company. In controlling companies, a group-wide risk management system should also be implemented for the overall presentation of aggregated risks.
risk management system should also be implemented.
3.2.4 Internal auditing should be perceived as an independent unit.
3.2.5 The management should implement a reporting system. It informs the Supervisory Board and investment management regularly, promptly and comprehensively, in particular on all issues relevant to the company relating to planning, business development, the risk situation and risk management. It addresses any deviations in the course of business from the established plans and targets, stating the reasons. Further details of the reporting system are set out in the Participations Directive (see Part B of this Public Corporate Governance, No. 6).
3.2.6 The management prepares the annual financial statements and management report in accordance with the provisions of the Third Book of the German Commercial Code (HGB) for large corporations and the provisions of the German Budgetary Principles Act (HGrG) and, if necessary, supplemented by other industry-specific regulations. Further details are set out in the Participation Guideline (see Part B of this Public Corporate Governance, No. 5).
3.2.7 The management should involve the investment management team in the process of preparing the business plan and the annual financial statements in good time before they are discussed by the Supervisory Board so that special features, accounting issues and effects on the municipal budget can be discussed in advance and agreements can be better implemented. The further details of the business plan
are set out in the investment guidelines (see Part B of this Public Corporate Governance, No. 4).
3.2.8 In addition, the management should actively support the investment management in the preparation of the investment report and the consolidated financial statements by providing the necessary data at an early stage. Further details are set out in the Participations Directive (see Part B of this Public Corporate Governance, No. 7).
3.2.9 The Management Board should also base its decisions on the objectives of the city as a whole and thus take public responsibility into account.
3.2.10 The management shall conduct the business and its shareholdings in accordance with the law, the articles of association and the public corporate governance of the City of Bonn.
3.2.11 The Management Board must ensure that the company's other expenses, in particular for consultations, representation and sponsoring, specialist excursions, gifts and events, are justifiable in terms of efficiency and economy.
3.2.12 The management must take sufficient measures to prevent corruption. In areas susceptible to corruption, the principle of dual control must be implemented in addition to other suitable measures. A corresponding anti-corruption and compliance guideline should be drawn up for the company (management and employees).
Implementation provision: Due to the importance of corruption prevention as a component of risk management and controlling, the unit responsible for corruption prevention should report directly to the management.
The awarding of public contracts in particular is an area that is especially susceptible to corruption due to its financial impact. In addition to strict compliance with the principle of dual control, the measures listed in the relevant MIK circular (Preventing and Combating Corruption in Public Administration) are regularly considered to prevent and minimize the risk of corruption. These measures should therefore form part of the anti-corruption and compliance guidelines to be issued.

3.3 Remuneration

3.3.1 Total remuneration comprises the monetary remuneration components, pension commitments, other benefits, in particular in the event of termination of employment, fringe benefits of all kinds and benefits from third parties that were promised or granted in the financial year with regard to management activities. The monetary remuneration components may include both fixed and variable components. The variable components should include one-off or annually recurring components linked in particular to the sustained success of the company as well as components with a long-term incentive effect and risk character.
3.3.2 In addition to the appropriateness of the total remuneration, all remuneration components must also be appropriate in themselves. The appropriateness of the remuneration can generally be assumed if it corresponds to the applicable key points of managing director contracts of municipal shareholdings adopted by the Council of the City of Bonn.
Implementation provision: When assessing the appropriateness of the remuneration, the extent to which a company operates in monopolistic markets and is therefore only exposed to limited competition must be taken into account as a key aspect.
Commitments in the event of termination of activity as a member of the management board should take into account whether the departure from this position is for regular or extraordinary reasons.
The currently applicable key points of managing director contracts of municipal shareholdings are based on the resolution of the City of Bonn Council dated March 27, 2014 (printed matter no. 1410669).
3.3.3 A performance-related portion of the remuneration of the management shall be determined by the Supervisory Board, taking into account any Group remuneration at an appropriate level. Criteria for the appropriateness of the remuneration include, in particular, the tasks of the member of the Executive Board, his performance as well as the economic situation, the long-term success and the future prospects of the company, taking into account its municipal character.
company, taking into account its municipal peer group.
3.3.4 Members of the Management Board may only take on sideline activities, in particular Supervisory Board mandates outside the company, with the approval of the Supervisory Board.
Implementation provision: This provision is intended to prevent potential conflicts of interest in advance. It should be contractually clarified whether and to what extent the members of the management take on sideline activities that are in the interests of the company by resolution of the supervisory body, whether and to what extent they must transfer income from sideline activities and whether, when they leave the company, they must transfer the income taken on in the interests of the company.
from the company, they must resign from the sideline activities assumed in the interests of the company.
3.3.5 The remuneration/remuneration of the members of the management shall be disclosed in the investment report. It should also be noted whether the shareholders have made pension commitments. The remuneration of the members of the Management Board shall be reviewed by the supervisory body.
3.3.6 The correct handling of the remuneration of the management shall be reviewed by the auditor and confirmed in writing.
Implementation provision: The confirmation should be included in the remuneration report as part of the audit report on the annual financial statements.
3.3.7 The management boards of companies in which the City of Bonn holds a majority stake and in which it holds direct shares are formally obliged to conscientiously fulfill their obligations on the basis of the German Code of Obligations upon conclusion of the employment contract and are thus treated as public officials under criminal law, insofar as this is not already the case on the basis of Section 11 para. 1
No. 2 StGB is the case. In case of doubt, a formal commitment must be obtained.
Implementation provision: The formal obligation under the Verpflichtungsgesetz serves as a further measure to minimize the risk of corruption (see No. 3.5 of the MIK Circular "Preventing and Combating Corruption in Public Administration").

3.4 Conflicts of interest

3.4.1 Members of the management are subject to a comprehensive non-competition clause during their work for the company.
3.4.2 Members of management and employees may not demand or accept benefits or other advantages from third parties in connection with their work, either for themselves or for other persons, or grant third parties unjustified advantages. Members of the Management Board may accept invitations to conferences, receptions or social events (culture, sport, politics) - including
including customary and appropriate hospitality - if the management member's official participation in the event is in the interests of the company. Further details are to be regulated in the anti-corruption and compliance guidelines in accordance with No. 3.2.12 of this Code.
Implementation provision: The term "benefits" refers in particular to "rewards and gifts". These and "other benefits" are basically all gratuitous benefits, including services, to which there is no entitlement and which objectively involve a material or immaterial improvement (benefit). Gratuitousness also exists if there is a consideration, but this is disproportionate to the benefit granted.
In contrast, hospitality is not objectionable if an invitation is accepted in the interests of the company if it is based on the rules of social interaction, which even a member of the management cannot avoid without violating social conventions.
3.4.3 The members of the Management Board are obliged to act in the interests of the company. No member of the Management Board may pursue personal interests in their decisions and exploit business opportunities to which the company is entitled for themselves.
3.4.4 Each member of the Management Board shall disclose conflicts of interest to the Supervisory Board without delay, in particular if there are grounds for bias in accordance with Section 31 (1) and (2) of the Rules of Procedure, and inform the other members of the Management Board accordingly. Transactions, in particular service and work contracts, between the company and active members of the Management Board and their relatives within the meaning of Section 31 (1) and (2) of the Rules of Procedure must be avoided as far as possible. This also applies to transactions with former members of the Management Board that are concluded within three years of the end of their activity. If the conclusion of such transactions is unavoidable, they must comply with customary industry standards and the conditions must be disclosed. The reasons for the unavoidability must be documented on file. Significant transactions should require the approval of the Supervisory Board.
Implementation provision: IDW Auditing Standard 255 - Related Party Transactions in the Audit of Financial Statements can provide guidance for assessing whether such a transaction exists and how it should be valued.
The materiality of transactions should be assessed on the basis of their significance and/or a (contract value) limit to be defined.
To ensure the greatest possible transparency, the term "conditions" should be interpreted broadly. In particular, this includes all obligations under the law of obligations of both contracting parties arising from the conclusion of the contract that are necessary for the fulfillment of the contract. For this reason, corresponding contracts should be concluded in writing without prejudice to civil law provisions and submitted to the Supervisory Board for its approval.

3.5 Directors' and officers' liability insurance

3.5.1 If the company takes out D&O insurance for the management, a deductible commensurate with the remuneration shall be agreed in the event of a claim. A deductible of at least ten percent of the loss up to at least one and a half times the fixed annual remuneration of the management board is deemed appropriate for a full-time management board.
Implementation provision: In accordance with the provisions of the German Stock Corporation Act (Section 93 para. 2 sentence 3 AktG), the deductible for members of the management board contains a percentage, loss-related quota (ten percent of the loss), limited to an absolute, annual upper limit (one and a half times the fixed or basic annual remuneration). These are minimum values from which there is no upper limit. However, the aim of the regulation is to limit the deductible in relation to one year's losses.
3.5.2 The conclusion of the insurance requires the approval of the Supervisory Board or the shareholders' meeting. The conditions, in particular the sum insured, must be adapted to the risk situation of the respective company.
3.5.3 In the event of a claim, the insurance benefits may only be paid directly to the company.

3.6 Duration of appointment and employment

3.6.1 An appointment as Managing Director should generally be for five years. Repeated appointments or extensions of the term of office for a further five years are
years are permitted. They require a new resolution by the responsible body, which can be passed at the earliest one year before the expiry of the previous term of office.
previous term of office. However, a decision on the extension must be taken no later than three months before the end of the term of office.
Implementation provision: In the case of the initial appointment of a managing director, a shorter term of office may also be considered, provided that this is beneficial for operational reasons and thus in the interests of the company.
operational reasons and is therefore in the interests of the company.
The appointment of a member of the GmbH management can be revoked at any time, irrespective of any claims arising from the employment contract (§ 38 A0bs. 1 GmbHG). The possibility of limiting the admissibility of revocation in the articles of association to the existence of good cause (§ 38 Para. 2 GmbHG) should only be used in exceptional cases. In the event of revocation of the appointment, the possibility of termination, in particular termination of the employment contract, must be examined immediately, as termination for good cause can only take place within a period of two weeks (Section 626 (2) BGB).
The notice periods specified for extending the term of office should also be included in the respective employment contract.
3.6.2 A tendering procedure should be carried out for new appointments to management positions. The company bodies responsible for appointment and employment shall ensure a suitable procedure.

3.7 Cooperation between the Management Board and the Supervisory Board

3.7.1 The Management Board and Supervisory Board work closely together for the benefit of the company, taking into account the fulfillment of the public purpose and the economic success of the
success of the company as well as the overall interests of the City of Bonn.
Implementation provision: The welfare of the company and the achievement of the economic success of the company require, in particular, compliance with the relevant laws and other mandatory regulations.
laws, other mandatory regulations and the current state of business knowledge and experience with regard to good and responsible corporate management and
responsible corporate management and supervision as well as the public corporate governance of the City of Bonn.
The duties to be observed by the Management Board and the Supervisory Board result on the one hand from individual legal requirements and the Code,
on the other hand from the general duties of loyalty and due diligence.
3.7.2 Providing the Supervisory Board with sufficient information is the joint responsibility of the Management Board and the Supervisory Board.
3.7.3 The Supervisory Board shall specify the type and scope of the information and reporting duties of the Management Board (see No. 3.2.5). These should in particular
provide for prompt reporting if unavoidable, significant additional expenses or reduced income or additional expenses for major investments are to be expected that could jeopardize the company's success.
Implementation provision: Management reports to the Supervisory Board must always be submitted in writing. An individual member of the Supervisory Board is also entitled to a report, but only to the Supervisory Board as a whole.
In principle, a threat to the company's success is to be assumed by analogous application of Section 81 (2) GO if the conditions stated therein for the mandatory adoption of supplementary budget bylaws are met.
3.7.4 Good corporate governance requires an open discussion between the Management Board and the Supervisory Board. The comprehensive preservation of confidentiality is of decisive
of crucial importance.
Implementation provision: Maintaining confidentiality is of crucial importance with regard to the Supervisory Board's advisory and monitoring duties.
Irrespective of this, however, the Management Board has an unconditional duty of openness towards the Supervisory Board.
In addition, the special information requirements of the Federal City and the legal mandate incumbent upon it within the framework of the statutory provisions (in particular Sections 394, 395 AktG, Section 113 (5) GO) must be taken into account through trusting cooperation between the corporate bodies and the investment management.
3.7.5 All board members shall ensure that the employees they engage comply with the duty of confidentiality in the same way.
3.7.6 The Management Board prepares the meetings of the Supervisory Board and its committees and generally attends the Supervisory Board meetings. The Supervisory Board may meet without the Management Board if necessary.
3.7.7 Loans from the company to members of the Management Board and the Supervisory Board and their relatives in accordance with Section 31 (1) and (2) of the Rules of Procedure should not be granted. If they are nevertheless granted in justified exceptional cases, this requires the approval of the Supervisory Board. The reasons for making use of this exception must be recorded.
Implementation provision: The restrictive approach in connection with the granting of any loans serves to avoid conflicts of interest.
3.7.8 The Management Board and Supervisory Board shall report annually to the investment management on the corporate governance of the company in a joint report. This includes, in particular, an explanation of any deviations from the recommendations of this Code (declaration of conformity). Comments can also be made on Code suggestions ("should/could" provisions).

Part B - Participation guidelines

The regulations listed under Part A - Public Corporate Governance Code describe the key standards for increasing the efficiency, transparency and control of the City of Bonn's shareholdings in companies under private law. They thus represent the overarching framework for action for all those involved, which deliberately should not and cannot have the full claim of direct, operational applicability.

Rather, this objective is to be pursued with the present Participation Guideline so that the requirements described in the aforementioned Code can be implemented in a practicable and efficient manner. In this respect, the Participation Guideline represents a working guideline that substantiates the regulations of the Public Corporate Governance Code and is binding for all parties involved. For reasons of proportionality, the participation guideline is limited in terms of its detailed explanations to essential and annually recurring work processes that are of particular importance to the respective company. In detail, these are the following activities:

Business plan,
accounting and auditing,
reporting and
participation report.

The regulations specifying the aforementioned work processes are therefore intended to ensure that they lead to a coordinated and targeted simplification of work, standardization and quality assurance and are carried out in a uniform and comprehensible manner across the company. This is achieved by defining work process-related standards and minimum requirements in the areas listed below:

Content,
processes,
responsibilities and
competencies.

4 Business plan

4.1 Scheduling and preliminary discussion

4.1.1 The business plan shall be drawn up by the management in good time before the start of the new financial year in analogous application of the provisions applicable to owner-operated companies (principle of prior notification). The business plan must be submitted to the Supervisory Board or the shareholders' meeting for resolution by the last meeting of the old financial year at the latest.
4.1.2 The draft business plan must be discussed with representatives of investment management at least two weeks before the Supervisory Board documents are sent out (business plan meeting). The company shall arrange a date for this with the investment management. The draft documents shall be made available to the investment management at least one week before the meeting.
4.1.3 The business plan, together with the medium-term financial plan, shall be sent to the investment management immediately after it has been adopted, at the latest one week after the adoption of the resolution.

4.2 Content of the business plan

4.2.1 The business plan is divided into a profit and loss plan, a net assets plan and a staffing overview. The business plan must also include a financial plan.
If possible, the plan should be broken down into divisions and should be based on any existing divisional accounts in the annual financial statements. The profit and
An explanatory section must be prepared for the profit and loss and asset plan, in which the planning basis (premises) is presented and the main influences, developments and deviations from the previous year's figures are commented on.
4.2.2 The economic and financial planning must be based on a five-year plan. This includes information on the financial year to be planned and for four further financial years.
4.2.3 On the basis of the five-year plan in accordance with no. 4.2.2, the figures of the profit plan should be presented for at least the following periods:
- Actual figures for the previous year,
- Planned figures for the current year,
- Extrapolation of the current year,
- budgeted figures for the new financial year,
- budgeted figures for the next four financial years.
The profit plan must be structured at least like the profit and loss account.
4.2.4 In addition to the planned number of positions for the new financial year, the position overview should also show the target positions and their actual staffing in the current financial year.
A suitable reporting date, usually June 30, should be selected to determine the actual staffing. The positions should be categorized separately by value, which is usually
which is usually expressed by the respective pay group on the basis of a job evaluation under collective bargaining law. Equivalent positions can be summarized in the job overview. Where appropriate, the positions can be allocated to the respective divisions for information purposes. Significant changes to the target number of positions compared to the previous year must be explained, as must any significant number of unfilled positions. Materiality is generally given if the value of individual positions is increased, new positions are created or established positions are to be eliminated. It is assumed that unfilled positions are significant if the number of unfilled positions at the
at least five percent of the target number of posts on the specified reporting date.
4.2.5 The asset plan contains the expected cash inflows and outflows for the planning period resulting from investment activities and the company's credit management.
the company. In addition to the activity-related presentation of the budgeted amounts, the planned investments must be explained in detail. In particular, the explanations must address the necessity of the respective investment measure, its financing (e.g. expected grants or investment subsidies from third parties) and the expected follow-up costs. In the case of larger investments, the profitability calculations carried out, possibly for different variants, or a reference to existing committee resolutions in this regard must be included. It is permissible to dispense with the explanations in sentences 2 to 4 for investments of minor financial significance.
4.2.6 The financial plan contains the expected cash inflows and outflows for the planning period with a supplementary presentation of the source and use of funds. The change in liquidity can be determined either directly or using the indirect method on the basis of the annual results expected according to the profit plan. If the indirect method is used, this and its presentation in the financial plan must be based on German Accounting Standard No. 21 "Statement of Cash Flows".
4.2.7 In addition to the income and asset plan, the portfolio companies should also include target agreements in the business plan. Targets are set for the performance program and the financial framework for the respective planning year. These targets must be clearly formulated and operationalized. Accordingly, the strategic objectives must also be taken into account in the financial plan. In this context, the business plan should contain statements on the performance data of the associated company.

5 Accounting and auditing

5.1 Scheduling and preliminary discussion

5.1.1 The timing of the accounting and audit must be coordinated with the investment management department in order to ensure that the consolidated financial statements of the City of Bonn are prepared in good time and that the instructions for the shareholders' meeting are obtained from the municipal committees or the City of Bonn Council. The statutory preparation and approval deadlines applicable to accounting (in particular Section 264 HGB and Section 42a GmbHG) must be observed.
5.1.2 The annual financial statements must be discussed with representatives of investment management at least two weeks before the Supervisory Board documents are sent out (annual financial statements meeting). The company shall arrange a date for this with the investment management. The auditor shall attend the preliminary meeting. The documents relating to the annual financial statements, including the draft audit report, shall be made available to the investment management at least one week before the date of the meeting.
5.1.3 The annual financial statements and management report shall be sent to the investment management immediately after their adoption, at the latest one week after their adoption. If the auditors prepare a management letter, this must also be forwarded to the investment management.

5.2 Content of the annual financial statements and the management report

5.2.1 Notwithstanding the legally required contents of the annual financial statements and the management report, the annual financial statements should generally contain the additional information listed under No. 5.2.2 to No. 5.2.6.
5.2.2 The annual financial statements must contain information on the company-specific performance data.
5.2.3 If appropriate for the company, the annual financial statements should include a segment statement. The company segments should be presented in the form of an income statement. The divisions should be agreed with the investment management if necessary.
5.2.4 The notes to the annual financial statements should explain relationships with members of the Council of the City of Bonn or the administration that qualify as related parties under the applicable accounting regulations. Furthermore, the additional disclosures resulting from the Code (see no. 2.7.2, 2.7.3) must be included in the notes.
5.2.5 In addition to the principles stated in the Code for the preparation and audit of the annual financial statements and the management report, the course of business and the expected development of the company as well as events of particular significance and indications of material risks to future development must also be disclosed and evaluated (cf. Section 289 HGB).
5.2.6 The joint report of the Management Board and the Supervisory Board on the corporate governance of the company (cf. No. 3.7.8 of the Code) should form part of the management report alongside the other reports.

5.3 Characteristics of the auditor

5.3.1 The independence of the proposed auditor must be guaranteed. To this end, the auditor must submit a self-declaration as to whether and, if so, which professional, financial or other relationships exist between the auditor and its executive bodies and audit managers on the one hand and the company and its executive body members on the other, which could give rise to doubts as to its independence.
5.3.2 The declaration should also cover the extent to which other services were provided for the company in the previous financial year, in particular in the consulting sector, or are contractually agreed for the following year.
5.3.3 An auditor or an auditing firm that audits the annual financial statements of a company may not be commissioned at the same time with consulting assignments on a strategically larger scale for the same company. In justified exceptional cases, the investment management may allow exceptions.
5.3.4 To ensure the required level of audit quality, the auditor must provide evidence of its suitability to accept the audit engagement. This is generally done by submitting at least the following documents:
- Self-declaration that there are no grounds for exclusion in accordance with Sections 123 and 124 GWB,
- Balance sheets, number of employees and total turnover for the last two financial years,
- Proof of professional liability insurance with appropriate cover of at least € 1 million,
- Reference list of the companies audited in the last two years with reference to the main activity of the company for which the audit assignment is to be accepted,
- Proof of comprehensive knowledge of new municipal financial management, in particular in the auditing of companies in NRW,
- Evidence of any quality controls carried out (peer review; cf. sections 57a, 57g WPO).
5.3.5 The submission of documents to assess the economic, financial and technical capability (documents in accordance with no. 5.3.4 with the exception of the self-declaration of non-existence of grounds for exclusion) may be waived in individual cases and only if the capability of the proposed auditor is virtually assured by the previous acceptance of audit engagements in the City of Bonn group. A strict standard of judgment must be applied when making use of this exception.

5.4 Reasons for exclusion and bias, duty to report

5.4.1 The Supervisory Board shall agree with the auditor that the Chairman of the Supervisory Board shall be informed immediately of any grounds for disqualification or partiality arising during the audit, unless these cannot be eliminated.
5.4.2 The Supervisory Board shall agree that the auditor shall report without delay on all findings and events of significance for the tasks of the Supervisory Board that arise during the performance of the audit.
5.4.3 The Supervisory Board shall agree that the auditor shall inform it or make a note in the audit report if, during the audit, it discovers an inaccuracy in the declaration of compliance with the Code issued by the Management Board and Supervisory Board.
5.4.4 The auditor shall take part in the Supervisory Board's deliberations on the annual financial statements and report on the key findings of its audit.

5.5 Other framework conditions of the final audit

5.5.1 The subject of the engagement is the audit of the financial statements for one financial year as a rule. The scope of the audit is determined in accordance with the statutory provisions (in particular Sections 317 ff. HGB and Section 53 HGrG) and the provisions of the articles of association as well as the professional standards applicable to the auditor (IDW auditing standards). The audit engagement may be extended by one financial year at a time up to four times.
5.5.2 The auditor should be changed after a maximum of five years of uninterrupted auditing activity. A change of the auditing firm as a whole is required; a change of the auditor auditing the financial statements (internal rotation) is not sufficient.
5.5.3 The procedure for selecting the auditor is based, if available, on the company-specific award and procurement regulations. Otherwise, the selection procedure must be carried out taking into account the contract value in accordance with the applicable budgetary and procurement regulations for public clients. When changing audit firms, at least three, usually five to seven auditors or audit firms must be invited to submit a corresponding offer.

5.6 Sending of documents, publication in the Amtsblatt

5.6.1 Once the annual financial statements and management report have been prepared and audited, the annual financial statements should be sent to the investment management department within five months of the end of the financial year so that they can be adopted by the shareholders' meeting within eight months of the end of the financial year once all preparatory work has been completed.
5.6.2 After the audited annual financial statements and management report have been adopted, the company must publish the following in the Amtsblatt of the City of Bonn without prejudice to the publication obligations under commercial and company law:
- the resolution on the adoption of the annual financial statements together with their result,
- the result of the audit of the annual financial statements and the management report,
- the resolution on the appropriation of the net profit for the year or the treatment of the net loss for the year.
5.6.3 At the same time as the announcement, the annual financial statements and management report must be made available for inspection until the following annual financial statements are adopted (cf. Section 108 para. 3 no. 1 letter c) GO).

6 Reporting

6.1 General information and objectives of the reporting system

6.1.1 In its function as a key controlling and management tool, the central objective of the reporting system is the timely provision of information relevant to decision-making for the benefit of the respective company and the investment management.
6.1.2 From a functional perspective, the reporting system for the City of Bonn Group consists of scheduled reports (quarterly reports), ad hoc reports and special reports (risk report and corporate social responsibility report) without prejudice to the investment report in accordance with No. 7.
6.1.3 Reporting is carried out on the basis of standardized forms which, if not already available, are provided by the investment management. It should primarily be possible to develop the reports automatically from the accounting system or other data collections.
6.1.4 The key information resulting from the reports should be clarified by means of comparative figures and key figures.

6.2 Quarterly reporting

6.2.1 The objective of quarterly reporting as a scheduled type of reporting is to identify significant deviations from target/actual figures and the reasons for these deviations as early as during the course of the year on the basis of the (interim) income statements. On this basis, it also serves to prepare an annual forecast of business development, which also shows the expected development of the annual result.
6.2.2 In accordance with Section 90 AktG, the quarterly reports are made up of the following components:

o (Interim) profit and loss account based on the minimum breakdown under commercial law with at least the following columns:
- Budget figures for the current financial year,
- Accumulated actual figures for the past quarters in the current financial year,
- forecast/projection for the current financial year developed from the cumulative actual figures,
- absolute and relative deviation of the forecast annual result from the originally planned annual result,
- planned and actual figures for the financial year preceding the current financial year.
o Deviation analysis for the (interim) income statement in the form of explanations of significant target/actual deviations and deviations between expected and planned annual results,
o List of possible countermeasures to ensure compliance with the planned annual result (only in the event of an expected deterioration in the annual result),
o Liquidity report as at the reporting date with the following minimum content:
- Current liquidity status of the company,
- liquidity forecast for the end of the financial year,
- disclosure of strategic liquidity reserves,
o if applicable, (interim) values of key figures in accordance with no. 6.1.4.
6.2.3 For the annual forecast to be prepared as part of the quarterly reporting, the forecast values must always be seasonally adjusted, taking into account previous
seasonally appropriate distribution. A formal quartering or halving of the annual figures, in particular the budget figures, should be avoided.
6.2.4 The quarterly reports must be prepared by the management in a timely manner, generally within four weeks of the end of the reporting period. In the case of a
(direct and indirect) shareholding of the City of Bonn of 25 percent or less, half-yearly reporting is sufficient.
6.2.5 Due to the high degree of data up-to-dateness, the reports are to be prepared in text form after their preparation in accordance with No. 6.2.4, primarily by using electronic means of communication (e.g. e-mail).
communication options (e.g. e-mail) without delay and without prejudice to reporting to the responsible corporate body.

6.3 Ad hoc reporting

6.3.1 Ad hoc reporting is an unscheduled, event-driven type of reporting that recurs at irregular intervals.
6.3.2 The objective of ad hoc reporting is to provide the investment managementwith timely information on special matters that are so urgent or significant that reporting via the
important that it is not possible to wait for reporting via scheduled reports (quarterly reports) or any special reports and
insofar as these provide for corresponding reporting in the sense of the following regulations.
6.3.3 Particular urgency and importance within the meaning of no. 6.3.2 is generally given if, due to the facts of the case, significant financial effects are to be
financial effects are to be expected, fundamental changes to business activities are planned and decisions of fundamental importance are to be made at short notice. These
conditions are met in particular in the following circumstances:
a) Expansion or restriction of entrepreneurial business activities, e.g. due to changes in business areas,
b) Entering into and implementing major investment projects,
c) entering into or giving up significant shareholdings,
d) changes in the legal relationships of subsidiaries,
e) special business transactions with a significant impact on profitability or liquidity.
6.3.4 A particular urgency or significance within the meaning of no. 6.3.2 also exists if operational problems arise whose consequences are likely to have a significant impact, particularly in the local or regional area.
are likely to be the subject of publicity and discussion, particularly in the local or national press. The following cases in particular can be assumed to have a probable public impact:
a) the problems lead to considerable restrictions in the range of operational services,
b) significant risks are realized in the context of the operational service provision process or their realization is imminent with a high degree of probability, in particular
- quality and safety-related risks,
- technical risks,
- emission and immission risks (environmental risks),
- legal risks.
c) The problems could lead to a considerable loss of reputation for the company,
d) considerable additional costs or significant delays in major investment projects arise,
e) other problems that are of importance to the city as a whole due to their political significance.
6.3.5 In addition to a comprehensive presentation of the facts and problems, the ad hoc report must include, in particular, information on the financial and potential publicity consequences.
possible publicity consequences, proposals for action, any existing scope for discretion or assessment and the extent to which these have been utilized, as well as other important information relevant to the decision. If the company has further supplementary or explanatory information on the reportable facts (e.g. prepared press releases or planned language regulations), these should be attached to the ad hoc reports.
6.3.6 The ad hoc reports must be prepared immediately after the reasons relevant to the reporting become known and, once they have been prepared, must be sent to the investment management without delay and without prejudice to the reporting to the responsible corporate body. As a rule, the reports should be transmitted in text form, primarily using electronic means of communication (e.g. e-mail). If compliance with the text form is not possible or only possible with disproportionate effort, taking into account the reporting deadline, reporting by telephone is also permissible.
6.3.7 If there are any uncertainties or doubts regarding the necessity of a report, in particular with regard to the existence of any reportable facts
or doubts, a consultation with the investment management must be carried out immediately. If, despite the coordination pursuant to sentence 1, the ambiguities and doubts
doubts cannot be resolved by mutual agreement or dispelled in the short term, reporting must be carried out in cases of doubt.

6.4 Risk reporting

6.4.1 Risk reporting as a special type of report serves to disclose existing entrepreneurial risks which, due to the lack of a requirement to record them in the current bookkeeping and accounting
accounting and financial reporting, in particular those that do not arise from the scheduled reports. The aim of this disclosure is to ensure that new or changing risks are dealt with appropriately by means of an appropriate corporate risk culture and taking into account the company's specific risk-bearing capacity in the sense of an early warning system to prevent or limit the occurrence of risks that could jeopardize the company as a going concern.
6.4.2 Risk reporting is carried out during the year in the form of difference reports and an annual overall risk management report.
6.4.3 The annual overall risk management report as a complete report contains at least information on the aspects listed below:
- Changes in the risk portfolio since the last overall report was prepared, in particular on newly added, reassessed or discontinued
  individual risks and the reasons for the changes,
- Presentation of the situation of all individual risks, taking into account their probability of occurrence and amount of loss (after management measures taken), also in comparison to the previous year (risk matrix),
- List of all recorded gross risks with the respective risk number, risk keyword, risk area and risk officer (risk list),
- List for the clear and systematic presentation of the results of risk identification, assessment and management, consisting of the risk number, risk keyword, risk officer and the assessment of the risks, broken down into actual and potential management measures (risk atlas),
- Detailed information on the individual risks inventoried, in particular statistical information (risk number, risk categorization and information on risk communication), the risk designation, the assessed gross and net risk (according to control measures taken) as well as possible target control measures (risk recording sheet).
6.4.4 The risk management change reports contain at least information on the following aspects:
- Changes in the risk portfolio since the last report on differences was prepared, in particular on newly added, reassessed or discontinued
  individual risks and the reasons for the change,
- Assignment of the newly added and reassessed individual risks to an updated risk matrix, taking into account their probability of occurrence and amount of loss (after management measures have been taken),
- Detailed information on the newly added, reassessed or eliminated individual risks in risk recording sheets.
6.4.5 The annual overall report on risk management must be prepared by the Management Board in a timely manner, generally within two months of the end of the financial year.
financial year. The reports on risk management differences must be prepared immediately after the respective individual risk becomes known. Immediate reporting may be waived if the changes that have occurred are only of minor relevance to the company's risk situation.
6.4.6 Due to the importance of reporting for the city's risk position, the risk reports must be prepared in text form in accordance with no. 6.4.5, primarily by
electronic means of communication (e.g. e-mail), to the investment management department without delay and without prejudice to reporting to the responsible corporate body.

6.5.1 Reporting on corporate social responsibility (CSR report) as a special type of report serves to provide an aggregated presentation of the measures with which the reporting company has attempted, on the basis of its business activities, to meet its responsibility in terms of sustainable management for the effects it has on the environment and society.
6.5.2 The CSR report shall be divided into three focus areas: economic, environmental and social responsibility. For each of the focus areas
the following aspects as a minimum:
- Economic responsibility
  In the area of economic responsibility, the basic ethical values and standards that underlie day-to-day business dealings in order to fulfill social expectations, such as compliance with ILO core labor standards, fair business practices or a serious local commitment, must be specified.
  local commitment.
- Ecological responsibility
  In the area of ecological responsibility, measures that contribute to the preservation of natural resources, for example through the economical use of natural resources, increased energy efficiency or sustainable climate and environmental protection measures, should be mentioned in particular.
- Social responsibility
  In the area of social responsibility, measures are to be named in particular that address the justified social concerns of employees in the sense of an employee-oriented social policy, for example occupational safety measures, health management and the preservation of jobs.
6.5.3 The explanations should be underpinned with suitable key figures, taking into account the regulation according to No. 6.1.4.
6.5.4 The CSR report must be prepared as an annual report by the management in a timely manner, generally within two months of the end of the financial year.
6.5.5 For the purpose of prompt analysis, in particular of the optimization potential to be identified, the CSR report shall be prepared in text form after its preparation in accordance with No. 6.5.4, primarily by
the use of electronic communication options (e.g. e-mail), without delay and without prejudice to reporting to the responsible corporate body.

7 Investment report

7.1 Scheduling and set-up process

7.1.1 The information and data required for inclusion in the investment report are provided by the companies to the investment management department. The timing of the data delivery is determined in consultation with the shareholdings management.
7.1.2 The annual financial statements and management reports of the respective companies as well as the corresponding audit reports of the auditors regularly form the basis of information for the investment report.
7.1.3 Two copies of the audit report on the company's annual financial statements and, if applicable, the consolidated financial statements must be made available to the investment management no later than two weeks after their preparation. This also applies to any subsidiaries.

7.2 Basic information

7.2.1 The following basic information - individualized for each company - is included and explained in the investment report:
- General company data and shareholding structure of the company,
- Object, purpose and objectives of the company,
- Compliance with public objectives,
- Direct and indirect shareholdings of the company,
- Composition of the executive bodies and management,
- Effects on the municipal budget.
7.2.2 If, in accordance with the objective of the investment report, the investment management or the company deems it necessary to provide further information in order to present the investment company appropriately, this can also be included in the investment report. This includes, for example
- Economic circumstances and business activities of the company,
- important company contracts.
7.2.3 The publication of additional information that goes beyond the statutory scope of regulation (Sections 117 GO, 52 GemHVO) is not permitted if internal company data is available in order to maintain confidentiality.

7.3 Accounting information

7.3.1 A detailed presentation and analysis of the company's net assets, financial position and results of operations as at the reporting date of December 31 is required to provide an overview of the company's financial situation.
7.3.2 The numerical presentation of the net assets, financial position and results of operations is based on a three-year comparison in which the main company-specific balance sheet figures and income and expense items are compared. The structure follows the minimum balance sheet and income statement structure under commercial law. In addition to the numerical presentation, supplementary notes on the income and expense structure and the income statement must be included.
7.3.3 The most important financial ratios, in particular the equity ratio, debt ratio, investment volume, investment and cash intensity, as well as their development over several years, are also stated.
their multi-year development are also disclosed.

7.4 Information on business development and performance data

7.4.1 Based on the respective management report, the main events of the financial year and the assessment of the future development of the company, in particular with regard to opportunities and existing risks, must be described.
7.4.2 The individually significant operating performance resulting from the object of the company in the financial year is shown as performance data. They can be presented in verbal form or in series of figures.
7.4.3 In the case of significant investments, the performance data must also be explained with the aid of key figures.

7.5 Information on employees and remuneration of company bodies

7.5.1 The average number of employees must be stated separately by group (management, civil servants, employees, trainees, interns/assistants) in comparison with the figures for the previous financial years.
7.5.2 The remuneration of the management must be disclosed. The provisions of the Code apply to publication.
7.5.3 The remuneration of the members of the Supervisory Board must also be disclosed. The same applies to members of a committee, advisory board or similar body.