Corporate Governance

Corporate Governance Declaration

To comply with sec. 3.10 of the German Corporate Governance Code, the Management Board and Supervisory Board shall report once a year on corporate governance in the company. The corporate governance report of United Power Technology AG also includes the declaration on corporate management required by sec. 289a of the German Commercial Code (HGB). The declaration on corporate management pursuant to sec. 289a of the German Commercial Code (HGB) comprises the declaration of conformity pursuant to sec. 161 of the German Stock Corporation Act (AktG), and descriptions of how the Management Board and Supervisory Board work, and of the composition and method of working of their committees.


The corporate governance report is also readily available in the internet at www.unitedpower.de.com/Investor Relations/Corporate Governance.

 

Explanations according to sec. 161 AktG (Declaration of Conformity)

 

On 27 April 2016 the Management Board and the Supervisory Board of United Power Technology AG (the “Company”) stated the following Declaration of Conformity pursuant to sec. 161 of the German Stock Corporation Act (AktG):


The Company complies with the recommendations of the „Government Commission German Corporate Governance Code“ in the version of the Code as of 5 May 2015 – published in the Federal Gazette on 12 June 2015 – and will comply with them in the future, with the exception of the following recommendations:


•    In the D&O insurance for the Supervisory Board, a deductible up to a certain amount has been partially agreed (deviation from no. 3.8 para. 3 of the Code). Based on economic considerations and due to the comparatively low remuneration of the Supervisory Board, the Company has decided to introduce a fixed deductible only in certain cases. A general deductible would reduce the attractiveness of Supervisory Board activities, and thus also the Company’s chances in the competition to attract qualified candidates.


•    When determining the total remuneration of the individual members of the Management Board, the relationship between the remuneration of the Management Board and that of senior management as well as the staff overall has not been taken into consideration yet (deviation from no. 4.2.2 para. 2 s. 3 of the Code). Since this recommendation has come into force on 10 June 2013 the total remuneration of the members of the Management Board has not been redetermined yet. However, the Supervisory Board will consider the implementation of this recommendation when determining the total remuneration in the future.


•    In connection with variable compensation components negative developments are not taken into account (deviation from no. 4.2.3 para. 2 s. 4 of the Code). In addition, with regard to the variable remuneration elements, subsequent amendments to the targets of success or to the comparison parameters are not excluded (deviation from no. 4.2.3 para. 2 s. 8 of the Code). Considering the relatively low performance remuneration for Management Board members, the Supervisory Board is of the opinion that neither such an exclusion nor the taking into account of negative developments is necessary.


•    The remuneration of the Management Board is not limited by fixed caps regarding the long-term share-based variable payment and the overall remuneration of the Management Board (deviation from no. 4.2.3 para. 2 s. 6 of the Code). A retroactive amendment of agreements entered into with the members of the Management Board would be, in view of the principle of contractual fidelity, not appropriate, and for the Company unilaterally not enforceable.


•    As far as pension schemes for members of the Management Board are concerned, the Supervisory Board has not yet established the level of provision aimed for in each case – also considering the length of time for which the individual has been a Management Board member – and has not taken into account the resulting annual and long-term expense for the Company (deviation from no. 4.2.3 para. 3 of the Code). Since 10 June 2013, with this recommendation coming into force, no pension commitment has been made vis-à-vis a member of the Management Board. The Supervisory Board will consider the implementation of this recommendation when making a pension commitment in the future.

•    The Supervisory Board and the Management Board members have not stipulated how to proceed in case of a premature termination of a Management Board member contract (deviation from no. 4.2.3 para. 4 of the Code). Therefore, the provisions of law apply in this case. The Company is of the opinion that the provisions of law are sufficient regarding the respective interests when it comes to the termination of a Management Board member contract and is thus an appropriate basis.


•    During the shareholders’ meeting there was not and will not be any reporting regarding a general Management Board remuneration system and any changes in such system (deviation from no. 4.2.3 para. 6 of the Code). The information in the remuneration report is insofar considered to be sufficient.


•    Pursuant to no. 4.3.3 s. 4 of the Code, important transactions with persons closely associated with a member of the Management Board shall only be carried out with the consent of the Supervisory Board. Since the Supervisory Board has not yet decided on such a right to reserve approval, a deviation from no. 4.3.3 s. 4 of the Code is declared preventively.


•    There is no general age limit for Management Board members (deviation from no. 5.1.2 para. 2 s. 3 of the Code). The Supervisory Board does not consider strict age limits as a rule appropriate. In the opinion of the Company, it is not plausible why qualified persons with comprehensive experience in career and life shall not be eligible for the Management Board only because of their age.


•    The Supervisory Board has not established any committees (deviation from no. 5.3 of the Code). Due to the fact that the Supervisory Board only consists of three members and thus has a small size, the Company does not consider the establishment of committees necessary and, beyond this, is of the opinion that all items falling within the scope of responsibilities of the Supervisory Board should be discussed and decided by the full Supervisory Board.


•    Pursuant to no. 5.4.1 para. 2 of the Code, the Supervisory Board shall set specific objectives with regard to its composition that take into account the company-specific situation, the international scope of the company’s business, potential conflicts of interest, the number of independent members of the Supervisory Board pursuant to no. 5.4.2 of the Code, a set age limit for members of the Supervisory Board to be specified and a regular limit of length of membership to be specified for the members as well as diversity. Pursuant to no. 5.4.1 para. 3 of the Code, proposals issued by the members of the Supervisory Board to the responsible corporate electoral bodies shall take those objectives into account and the objective target shall be reported on in the Corporate Governance Report. In the interest of the Company, the Supervisory Board will in each individual case solely base its nomination proposals to the shareholders’ meeting on the skills, abilities and professional expertise. In this regard, the Company deviates from no. 5.4.1 para. 2 and 3 of the Code.


•    When proposing a person for election as Supervisory Board member to the Annual General Meeting, the Supervisory Board does not intend to disclose the private and business relationships of such a candidate with the Company, its representative bodies and any significant shareholder (deviation from no. 5.4.1 para. 5 of the Code). In the Company’s opinion, the recommendation of the Code does not specify clearly which relationships of a candidate to what extent must be disclosed in order to comply with the recommendation. In the interests of legal certainty with respect to future elections to the Supervisory Board, the Management Board and Supervisory Board have decided to declare a deviation from the recommendation. The Company is of the opinion that the disclosure requirements of the German Stock Corporation Act are sufficient to meet the informational needs of the shareholders.


•    Pursuant to no. 5.4.6 para. 1 s. 2 of the Code the exercising of the chair and deputy chair positions in the Supervisory Board as well as the chair and membership in committees shall be considered with regard to the compensation of the members of the Supervisory Board. Since the Supervisory Board of the Company did not form any committees, the Company deviates from the recommendation of no. 5.4.6 para. 1 s. 2 of the Code.


•    Apart from regularly assessing the efficiency, the Supervisory Board does not carry out any other additional efficiency assessments on a regular basis (deviation from no. 5.6 of the Code) as the Company is convinced of its efficiency considering the size of the Supervisory Board and the size of the Company.


•    Last year, the Company has not met the deadline of 90 days after the end of the financial year for the publication of its consolidated financial statements (deviation from no. 7.1.2 s. 4 of the Code) and will not meet this deadline this year either. As a young and international company, the Company places emphasis on applying utmost care in preparing its first consolidated financial statements as a listed company. Additionally, the required translations from Chinese make the preparations of the financial statements time-consuming.


Information on the practice of Corporate Governance: Principles of Corporate Governance and economic management
The management and governing bodies of United Power Technology AG are committed to the principles of good and responsible corporate governance. The Company’s aim is to gain and maintain the trust of its shareholders, customers and employees by managing the Company in a transparent and responsible manner and through close and constructive co-operation between the Supervisory Board and Management Board. Our company serves a dual purpose of both generating substantial profits and growth and thus shareholder value and also playing a key role in the field of portable generators.


The Company’s system of internal control is designed to ensure the achievement of business objectives in operations, financial reporting integrity and compliance with applicable laws and regulations. The system of internal control can only provide reasonable but not absolute assurance that the financial statements do not contain a material misstatement or loss. The Company assists the Management Board with respect to its duty to identify, evaluate, and manage the significant risks faced by the Company. The Company implements the Management Board’s policies and procedures to mitigate such risks by (i) identifying and assessing the risks the Company faces and (ii) designing, operating and monitoring a system of internal controls to mitigate and control such risks.


Our employee policies are described within the management report of the annual report. As a listed company, a reputable international auditor audits our accounts and we disclose significantly more information to our shareholders than required by law. Furthermore, we are using third-party experts to additionally advise and audit other parts of the business. We are consistently working on improve all aspects of our operations, including occupational health and safety, sales and distribution and our conduct as a corporate citizen.


Targets regarding the proportion of women in the Management Board, the Supervisory Board and the two management levels below the Management Board
The new German law governing equal participation of women and men in management positions in the private sector and the public sector sets out the obligation to regularly set targets for the number of women in the Management Board, the Supervisory Board and the two management positions below the Management Board. A report is to be made on the achievement of the targets set after the expiry of each deadline for implementation of the targets.


The Supervisory of the Company determined that the target figure for the proportion of women in the Management Board shall be zero. This target for the proportion of women in the Management Board shall be maintained up to 30 June 2017. Furthermore, the Supervisory Board determined that the target for the proportion of women in the Supervisory Board shall be zero up to 30 June 2017.


The Management Board of the Company determined that the target for the proportion of women in the two management levels below the Management Board shall be zero to 30 June 2017.


Shareholders and Annual General Meeting
The shareholders exercise their rights at the Annual General Meeting where they exercise their voting rights. The Annual General Meeting takes place within the first eight months of each financial year in accordance with the German Stock Corporation Act and with the Company’s Articles of Association. All shares are pari passu equal to one vote at the Annual General Meeting. Shares with multiple voting rights or preference shares as well as maximum-voting rights do not exist. Shareholders have the option of exercising their voting rights at the Annual General Meeting in person, through a representative of their choice or through the Company’s proxy representative. In the invitation to the Annual General Meeting, there are particular explanations about the conditions of participation, voting rules (also for assignees) and shareholder rights. The applicable documents, including the annual financial statements and agenda, which are legally required for the Annual General Meeting, are published under www.unitedpower.de.com/en. Subsequent to the Annual General Meeting, the attendance and voting results are published there as well.


Management Board and Supervisory Board


Management Board
In accordance with the laws for German stock corporations, United Power Technology AG has a dual board structure consisting of the Management Board and the Supervisory Board, each possessing its own competences. The system is characterised by a personnel separation between Management and Supervisory bodies. The Management Board is in charge of self-responsibly managing the Company, whereas the Supervisory Board is responsible for supervising and advising the Management Board. A member of the Management Board cannot be a Supervisory Board member at the same time and vice versa. The two boards work closely together in the best interest of the Company.
The Management Board of United Power Technology AG currently comprises three members, Mr Xu Wu, Mr Zhong Dong Huang and Mr Jiayang Zhong (as of 11 April, 2016). The Company’s key activities and financial performance are regularly circulated to the management team and the Supervisory Board. In addition, the General Management meets on a regular basis to discuss and make fundamental decisions. Before being appointed as member of the Management Board, Mr Jiayang Zhong also attended these meetings in his Financial Director function. The working relationship between the Management Board and the Supervisory Board is described in the report of the Supervisory Board within the annual report.


United Power Technology AG presents the remuneration of the members of the Management Board individually in the remuneration report, which is part of the management report.


Supervisory Board
The Supervisory Board of United Power Technology AG comprises three members, Mr Wei Song, Mr Hubertus Krossa and Mr Brian Krolicki. The Supervisory Board is responsible for supervising and advising the Management Board as well as for the election of the members of the Management Board, the determination of their remuneration as well as the review and approval of the annual financial statements and consolidated financial statements. The Chairman of the Supervisory Board maintains frequent contact with the members of the Management Board to discuss issues of particular importance.


In particular, the Supervisory Board looked into the financial reporting process, the effectiveness of the internal risk management system (RMS) and internal control systems (ICS), the effectiveness of internal audit systems and the auditing process and conducted interviews with key personnel in the finance department. The close and confident working relationship between the Management Board and the Supervisory Board is described in detail in the report of the Supervisory Board within the annual report.


Directors’ dealings
Pursuant to section 15a of the German Securities Trading Act (WpHG), members of the Management Board and the Supervisory Board, other key employees as well as related people, must immediately declare any purchase or disposal of shares in United Power Technology AG to the Federal Financial Supervisory Authority (BaFin) as long as the total consideration is larger than EUR 5,000 within one calendar year. In 2015, such a purchase or disposal of shares in the Company did not occur and, hence, where not declared to the Federal Financial Supervisory Authority.


As at the date of preparation of this report the members of the Management Board directly or indirectly hold 38.56% and taking into consideration the imputation regulations pursuant to WpHG in total 57.55% of the shares and voting rights in United Power Technology AG. At this date, the members of the Supervisory Board directly or indirectly hold in total 19.03% and taking into consideration the imputation regulations pursuant to WpHG in total 57.55% of the shares in United Power Technology AG.


Accounting and auditing
The annual consolidated financial statements of United Power Technology AG are prepared pursuant to the International Financial Reporting Standards (IFRS) and the individual financial statements of United Power Technology AG are prepared according to the German accounting rules and the German Commercial Code (HGB). Crowe Kleeberg Audit GmbH Wirtschaftspruefungsgesellschaft was appointed by the Annual General Meeting as auditor and has audited the consolidated and annual financial statements. The auditors attended the Supervisory Board’s meeting, when the annual and consolidated financial statements were approved, and reported on the main results of their audit.


Corporate Compliance
Compliance with the relevant statutory provisions for its operations and internal company policies (hereinafter also referred to as ‘Corporate Compliance’) is an essential part of United Power Technology AG’s corporate governance and it is one of the key duties of all business areas to ensure the compliance with the prevailing policies in the individual areas of responsibility.


The Company has adopted a code of business conduct and ethics (the “Code of Conduct”), which provides guidance about doing business with integrity and professionalism. The Code of Conduct addresses issues that include fraud, conflicts of interest, corporate opportunities, protection of intellectual property, transactions in the Company’s securities, use of the Company’s assets, and relationships with customers and third parties. Any violation of the Code of Conduct is reported to the management team, which will subsequently report such violation to the Audit Committee.


In addition to the Code of Conduct, the Company has employee manuals/policies, which are communicated to all employees. All employees are required to sign an agreement on compliance with the Group’s Code of Conduct and ethics when they join the Group. Departures from the Group’s approved policies and procedures are prohibited and sanction will be imposed for non-compliance.
All business activities in China are carried out in strict compliance with Chinese laws and international conventions.

Risk Management
United Power Technology AG’s risk management policies are described in detail in the chapter ‘Risk Report’. They are designed in accordance with statutory provisions to detect significant risks early, so that appropriate measures can be taken in order to minimise, diversify, transfer or avoid risks thus ensuring the continuity of the Group. The risk management process is supported through the controlling and auditing functions.


Avoiding conflicts of interest
In the year under review, conflicts of interest of Management Board members or Supervisory Board members were not reported to the Supervisory Board, which is responsible in this case.


Transparency
Shareholders and other interested parties can obtain information about United Power Technology AG’s standing and business development through financial reports (annual and interim reports), press conferences on financial statements, analyst and press interviews, press releases and/or ad hoc announcements and through attending the Annual General Meeting. Current information is permanently available and may be obtained from the Company’s webpage under www.unitedpower.de.com/en, providing all relevant information both in German and English. Apart from extensive information about the United Power Technology AG Group and regarding the United Power Technology AG share, the webpage contains the Company calendar providing an overview about all important events.

Eschborn, 27 April 2016
United Power Technology AG

Supervisory Board        Management Board
 

 

Corporate Governance Declaration // Archive

 

Corporate Goverance Declaration / May 2015/ (Download, PDF 0.1 MB)

Corporate Goverance Declaration / April 2014/ (Download, PDF 0.1 MB)

Corporate Goverance Declaration / April 2013/ (Download, PDF 0.1 MB)
Corporate Goverance Declaration / March 2012 / (Download, PDF 0.6 MB)