MAGIX Investor Relations: Declaration of corporate governance (§289a HGB)

Declaration of corporate governance according to Section 289a of the German Commercial Code (HGB)

The corporate governance and corporate culture of MAGIX AG comply with the legal provisions and, apart from very few exceptions, with the additional recommendations of the German Corporate Governance Code. This Code outlines nationally and internationally acknowledged standards of responsible management and monitoring for listed stock companies. It comprises a range of additional recommendations regarding the following areas: Shareholders' Meeting, Management Board, Supervisory Board, cooperation of Managment and Supervisory Boards, transparency, accounting, and financial statements. In January 2011, the Management Board and Supervisory Board released a declaration of conformity with the recommendations of the German Corporate Governance Code in accordance with Section 161 of the German Stock Corporation Act:

I. Declaration of Conformity

Since the last declaration of conformity from January 2010, MAGIX AG has followed and continues to follow the recommendations of the "Governing Commission of the German Corporate Governance Code" in its version from June 18, 2009, or since its validity in the amended version from May 26, 2010 with the following exceptions:

Cost sharing in D&O liability insurance for the Supervisory Board (section 3.8 of the Code): The company assumes that the arrangement of cost sharing in the D&O insurance for the Supervisory Board members has no effect on behavior, and is not in a position to influence motivation and responsibility. For this reason, the D&O insurance for the Supervisory Board Members does not include cost sharing.
Taking into account the personal achievement in measuring variable compensation of members of the Management Board (section 4.2.2 of the Code): Compensation of Management Board members is dependent on their individual achievements and tasks. In measuring the variable compensation, a dependency on individual goals has not been considered. On the one hand, the areas of responsibility of Management Board members of MAGIX AG are interrelated to such an extent, making it impossible to define company goals for each area of competency. On the other, the basis for the company's success lies precisely in the collective responsibility of the Management Board.
Determination of a settlement cap during signing of Management Board contracts in the event of premature termination of the Management Board duties (section 4.2.3, paragraph 4 and 5 of the Code): A regulation of the settlement payment in the event of premature termination of Management Board duties is deemed impractical. It would contradict the principle, that contracts made for a certain duration may not be terminated at an earlier date. Additionally, such a regulation is considered inappropriate to accommodate the circumstances of the situation surrounding the particular event. Finally, the company will not be able to enforce such a limitation ex parte.
Adequate inclusion of women in the composition of the Management Board and the Supervisory Board (section 5.1.2 and 5.4.1 of the Code): In accordance with requirements of stock corporation law, it is the opinion of the Supervisory Board of MAGIX AG that filling positions in the Management Board and the Supervisory Board of MAGIX AG should be guided by whether candidates possess the skills, expertise, and experience necessary for the Board's work. Although the Supervisory Board expressly endorses diversity, it considers criteria such as the candidate's sex secondary.For this reason, an adequate inclusion of women in the Management Board is not considered a priority. Similarly, the concrete goals set out by the Supervisory Board for its own composition do not provide for an adequate inclusion of women. This aim is not taken into consideration in candidate proposals the Supervisory Board makes to the shareholders' meeting.
Age limit of the Management Board (section 5.1.2 of the Code): Due to the age structure of the Management Board of MAGIX AG, such regulation is currently deemed unnecessary.
Formation of Supervisory Board committees (section 5.3 of the Code): The Supervisory Board of MAGIX AG currently consists of three board members, making it impossible to form committees.
Definition of performance-related remuneration of the Supervisory Board (section 5.4.6 of the Code): It is the opinion of the company that the Supervisory Board will fulfill its legal obligation as an independent supervisory body better without its remuneration being linked to the success of the company, as this serves to guarantee interest neutrality.
Publication of the consolidated financial statement and interim reports within the limits set forth in the Code (section 7.1.2 of the Code): The company will publish preliminary, unaudited quarterly and annual results within the time limits set forth in the Code. With regard to the consolidated financial statement and interim reports, however, the company regards the requirements as sufficient for companies listed in the Prime Standard of the Frankfurt Stock Exchange.

II. Company Management and Control

Berlin-based MAGIX AG is subject to the stipulations of German stock corporation and capital market law as well as its Articles of Association. The company has a dual management and monitoring structure consisting of the Management Board and Supervisory Board. These two bodies are joined by the Shareholders' Meeting, which serves to give shareholders of the company a say in decisions that are of fundamental importance to the company. These three bodies are committed to the interests of the shareholders and the good of the company.

1. Management Board

The Management Board is responsible for running the company and conducting its business. In doing so, it is obliged to act in the company's best interest and to endeavor to increase the value of the company in the long term. The members of the Management Board are appointed by the Supervisory Board. The Supervisory Board has not specified an age limit for Management Board members. Rather, candidates are appointed based on whether they posses the knowledge, skills, and professional expertise required for carrying out the tasks of the Management Board.

The Management Board currently consists of three members. The Management Board runs the company in accordance with the law, Articles of Association, and company by-laws that it drew up with the approval of the Supervisory Board. The tasks of the Management Board members are assigned according to functional aspects.

The Management Board develops the strategic orientation of the company, discusses and coordinates it with the Supervisory Board, and ensures its implementation. It also sees to the implementation of an adequate risk management and risk controlling in the company and ensures that the Supervisory Board is informed in a regular, timely, and comprehensive manner. Certain transactions and measures of the Management Board require approval of the Supervisory Board.

Members of the Management Board shall immediately disclose any potential conflicts of interest to the Supervisory Board and inform the other members of the Management Board. Important transactions of Management Board members as well as related persons with the company require approval of the Supervisory Board as do ancillary activities exercised outside of the company.

A D&Q liability insurance has been purchased for the members of the Management Board and the Supervisory Board. The D&Q liability insurance of the Supervisory Board does not include cost sharing. The company assumes that the arrangement of cost sharing in the D&O insurance for the Supervisory Board members has no effect on behavior, and is not in a position to influence motivation and responsibility.

2. The Supervisory Board

The Supervisory Board consists of three members that are appointed by the Shareholders' Meeting in accordance with stock corporation law.

Provided the Shareholders' Meeting does not specify a shorter term of office, the members of the Supervisory Board are appointed for the period lasting until conclusion of the shareholders' meeting that decides on the formal approval for the fourth financial year after commencement of the term of office. This does not include the financial year in which the term of office commences. The by-laws of the Supervisory Board specify an age limit for Supervisory Board members. Members of the Supervisory Board should, as a rule, not be in office longer than until the conclusion of the Shareholders' Meeting which follows their seventy-fifth birthday. Appointment is based on whether candidates posses the knowledge, skills, and professional expertise required for carrying out their tasks.

The Supervisory Board advises and monitors the Management Board in management questions in accordance with the limits set by the law, Articles of Association, and company by-laws. It cooperates closely with the Management Board for the good of the company and is involved in decisions that are of fundamental importance to the company.

Due to the Supervisory Board's size of three members, it is not possible to form committees.

3. Shareholders' Meeting

Shareholders exercise their rights and voting rights in the Shareholders' Meeting. Each share grants a vote. The voting right can be exercised by a proxy. Power of attorneys that are not granted to a financial institution, an association of shareholders, or other persons listed among the equal persons in Section 135 of the German Stock Corporation Act shall be submitted in writing.

The shareholders' meeting is convened by the Management Board or, in cases provided for by the law, the Supervisory Board and takes place at the company's registered office or in a German city with more than 100,000 inhabitants. The agenda of the Shareholders' Meeting and the reports and documents required for the shareholders' meeting are published on the company's homepage. They can be mailed on request.

III. More Information on Corporate Governance at MAGIX AG

Detailed information on the activities of the Supervisory Board and the cooperation of Management and Supervisory Board can be found in the current report of the Supervisory Board, which will be published in January 2012, as well as in the corporate governance report of the company.