Rules of Procedure for the Supervisory Board

Current Rules of Procedure of the Supervisory Board of Krones AG

Section 1

General

The Supervisory Board conducts its business in accordance with the provisions of applicable laws, the provisions of the German Corporate Governance Code, the articles of association and the Code of Conduct of KRONES AG and these Rules of Procedure. When carrying out its duties, it must work in a trusting way with the other divisions of the company for the benefit of the business.

Section 2

Chairperson, Deputy

Under the chairmanship of the oldest member of the Supervisory Board present, the Supervisory Board shall elect the Chairperson and their Deputy from among its members at its first meeting following the general meeting at which the new members of the Supervisory Board are elected. This takes place in accordance with Section 27, paragraphs 1 and 2 of the German Codetermination Act (Mitbestimmungsgesetz). If a Deputy has already been appointed, s/he shall assume the role of Chairperson until a Chairperson has been elected. A special invitation to this meeting of the Supervisory Board is not required.
The election applies to the period of office of the elected person. Should the Chairperson of the Supervisory Board or their Deputy leave their post before the expiry of their period in office, the Supervisory Board shall hold a new election without delay for the remainder of the period of office of the person who has left.
Unless expressly stipulated otherwise in these Rules of Procedure, the Deputy has the rights and obligations of the Chairperson of the Supervisory Board if the Chairperson is unable to attend. Section 29, paragraph 2 sentence 3, and Section 31, paragraph 4, sentence 3 of the German Codetermination Act remain unaffected.

Section 3

Convening of meetings

The Supervisory Board is required to hold at least two meetings every half calendar year.
The meetings of the Supervisory Board shall be convened by the Chairperson or, if s/he is unable to attend, their Deputy, with at least fourteen (14) calendar days’ notice, in writing, by telex, orally, by telephone, by fax or with the use of another common means of communication (such as e-mail). In this respect, the day that the invitations are sent out and/or the day of the oral notification of the convening of the meeting do not count. In urgent cases, the notice period for the convening may be shortened within reason.
The items on the agenda are to be included with the convening. Unless sent with the invitation, all documents relevant to decisions must be sent to the members of the Supervisory Board no later than seven (7) calendar days before the meeting of the Supervisory Board. The documents can also be sent with the use of a common electronic means of communication (such as e-mail). As regards documents concerning developments that have occurred at short notice and which are relevant to the decision-making, the provision of such documents before the meeting of the Supervisory Board remains unaffected. The agenda shall be supplemented if a member of the Supervisory Board or Executive Board so requests, stating the purpose and the reasons, no later than (5) five calendar days before the meeting of the Supervisory Board. A resolution may only be passed concerning an agenda item, the announcement of which did not occur in the correct way, as long as an objection is not immediately forthcoming from a member of the Supervisory Board member. In such a case, members of the Supervisory Board who are absent must be given the opportunity to object to the resolution or to cast their vote in writing within five (5) calendar days of the notification of the supplemented agenda. Section 3, paragraph 2, sentence 2 applies accordingly. The resolution only becomes effective after the expiry of the deadline without objection.

Section 4

Sequence of meetings and dates

The meetings of the Supervisory Board are led by the Chairperson, or, if the event of their incapacity, by their Deputy.
The Chairperson of the meeting determines the order in which the items on the agenda are discussed as well as the type, order and form of voting. S/he is able to postpone the discussion and decision-making on individual or all items on the agenda to a later meeting at the request of the Executive Board or for good cause.
The members of the Executive Board also participate in the meetings of the Supervisory Board, unless the Chairperson or the Supervisory Board determines otherwise in individual cases. If required, the members of the Executive Board can be called upon to attend the meetings of the committees based on the decision of the Chairperson of the meeting. The Supervisory Board shall also meet without the Executive Board at regular intervals.
The Chairperson decides on whether experts and persons information are called upon to advise on individual agenda items. If the auditor is called in as an expert, the Executive Board shall not participate unless the Supervisory Board or the committee deems its participation necessary.
The participation of individual members of the Supervisory Board in meetings with the use of electronic means of communication (such as via e-mail, video conference) is permitted if so decreed by the Chairperson of the Supervisory Board or if all the members of the Supervisory Board agree to it. There is no right to object to the form of participation which is decreed by the Chairperson.

Section 5

Passing of resolutions

The resolutions of the Supervisory Board are generally passed at the meetings. Absent members of the Supervisory Board may participate in the passing of resolutions at a meeting by arranging for their written vote to be submitted by another member of the Supervisory Board; this also applies to the second vote which is cast by the Chairperson of the Supervisory Board. The written voting can also take place by telex, by fax, or with the help of any other customary means of communication (e.g., by e-mail, etc.).
If so decreed by the Chairperson of the Supervisory Board or if all members agree, resolutions can also be passed in the resolution procedure in writing, by telex, orally, by telephone, by fax or with the use of other common means of communication (such as by e-mail, video conference) or as a combination of the above-mentioned forms. There is no right to object to the form of the passing of resolutions which is decreed by the Chairperson. The following paragraphs 3 and 4 and Section 6 apply accordingly.
The Supervisory Board shall be quorate if at least half of its members participate in the passing of the resolutions. Members participating or linked by telephone or other electronic means of communication (notably by video conference) or absent members who cast their vote in accordance with Section 5, paragraph 2 as well as members who abstain from voting during the resolution-taking process shall be considered to have taken part in the passing of the resolutions in this respect.
Resolutions are passed with a simple majority of the votes cast unless a different majority is stipulated by law. In this respect, abstentions are considered to be votes not cast. If, despite repeated rounds of voting, there is a tie in votes during the course of the passing of a resolution, the Chairperson has the casting vote. This also applies to resolutions pursuant to Section 5, paragraph 2.
On behalf of the Supervisory Board, the Chairperson of the Supervisory Board is authorized to make the declarations of intent necessary for the implementation of the resolutions of the Supervisory Board and, if applicable, its committees.

Section 6

Minutes of meetings and resolutions

Minutes are to be compiled of the meetings of the Supervisory Board. These minutes can also be prepared by a minute taker appointed by the chairperson of the meeting, who, unless a member of the Supervisory Board objects, does not have to be a member of the Supervisory Board. The minutes must be signed by the chairperson of the respective meeting. The minutes must state the place and day of the meeting, the participants, the items on the agenda, the essential content of the negotiations, the meeting and discussion as well as the resolutions of the Supervisory Board. The minutes are to be forwarded to each member of the Supervisory Board within three (3) calendar weeks of the meeting in writing.
Resolutions that have not been passed at meetings in accordance with Section 5, paragraph 2 are recorded and signed in a set of minutes by the Chairperson of the Supervisory Board or, if s/he is unable to attend, by their Deputy. A copy of the minutes is to be forwarded to each member within three (3) calendar weeks of the determining of the outcome of the resolution.
The minutes in accordance with Section 6, paragraphs 1 and 2 are considered approved if no member of the Supervisory Board who took part in the resolution objects to the version of the minutes in text form within three (3) calendar weeks of them being sent to the Chairperson of the Supervisory Board.
The resolutions passed by the Supervisory Board can be recorded verbatim at the meeting and immediately signed by the chairperson of the meeting as part of the minutes. Insofar as resolutions at the meeting are recorded separately in this form, an objection is only possible at the meeting.

Section 7

Confidentiality obligation

The members of the Supervisory Board must maintain confidentiality vis-à-vis third parties regarding any facts that become known to them during their work as members of the Supervisory Board, the disclosure of which could have an adverse effect on the interests of the company or an affiliated company. The members of the Supervisory Board also ensure that the employees and consultants they appoint also comply with the confidentiality obligation in the same way. This obligation continues to exist after their period in office has ended. In particular, the voting, the course of the debate, statements and personal remarks made by individual members of the Supervisory Board are subject to the confidentiality obligation. Persons who legally participate in meetings of the Supervisory Board in accordance with Section 109, German Stock Corporation Act must be expressly obliged to maintain confidentiality.
If a member of the Supervisory Board considers it necessary to pass on information that could consist of confidential information or secrets, the Chairperson of the Supervisory Board must be informed accordingly in advance. If the Chairperson of the Supervisory Board does not agree to the disclosure, the other members of the Supervisory Board must be informed and an immediate statement must be made. The member of the Supervisory Board in question is obliged to maintain confidentiality about the associated facts until this statement is made.
Upon leaving office, the members of the Supervisory Board are obliged to immediately surrender all documents to the company such as documents, correspondence, minutes of meetings, records and the like that relate to the affairs of the company and are in their possession. This obligation also extends to duplicates and their photographs as well as to recordings on data carriers (USB storage media, CDs, etc.). If documents in the above sense are stored electronically, the departing member of the Supervisory Board must delete them. The members of the Supervisory Board have no right to the retention of such documents.

Section 8

General rules regarding committees

The Supervisory Board of KRONES AG has two committees. One committee for “Audit and Risk Management” and one “Standing Committee”.
The Supervisory Board is able to create additional committees subsequent to resolution. The tasks, competences and procedures of the committees are determined by the Supervisory Board.
If permitted by law, the decision-making competences of the Supervisory Board can also be transferred to the committees by resolution. The passing of resolutions in the committees then takes place according to Section 5 and 6. A committee shall be quorate if at least three members of the committee participate in the passing of the resolutions.
The committees can make recommendations to the Supervisory Board.
Unless a shorter term of office was determined during the election by the Supervisory Board, the term of office of the members of a committee corresponds to their term of office as a member of the Supervisory Board.
The regulations agreed to in these Rules of Procedure apply accordingly to the internal order of the committees, unless specified otherwise below.
The committees must report to the Supervisory Board concerning their work on a regular basis.
Members of the Supervisory Board who do not belong to the committee have the right to participate in meetings of the committees if the Chairperson of the Supervisory Board does not determine otherwise.

Section 9

Audit and Risk Management Committee

The Audit and Risk Management Committee consists of the Chairperson of the Supervisory Board, their Deputy as well as two members of the Supervisory Board elected on the recommendation of the shareholder representatives of the Supervisory Board and two members of the Supervisory Board elected on the recommendation of the staff representatives of the Supervisory Board. The chairperson of the Audit and Risk Management Committee must be independent of the company, the Executive Board and any controlling shareholder of the company. The Chairperson of the Supervisory Board shall not chair the Audit and Risk Management Committee.
One member each of the Audit and Risk Management Committee must have expertise in the field of accounting and at least one other member of the Audit and Risk Management Committee must have expertise in the field of auditing. The expertise in the field of accounting shall consist of special knowledge and experience in the application of accounting principles and internal control and risk management systems, and the expertise in the field of auditing shall consist of special knowledge and experience in the auditing of financial statements. Accounting and auditing also include sustainability reporting and its audit. The Chairperson of the Audit and Risk Management Committee shall be an appropriate expert in at least one of the two fields. The members of the Audit and Risk Management Committee as a whole must be familiar with the sector in which the company operates.
The Audit and Risk Management Committee prepares the decision of the Supervisory Board concerning the approval of the annual financial statements and management report of Krones AG and concerning the approval of the consolidated financial statements and management report of the Krones AG Group. It is responsible for a preliminary review of the annual financial statements, the management report, the consolidated financial statements, the group management report and the proposal regarding the appropriation of profits. The auditor shall participate in the Audit and Risk Management Committee’s consultations on these submissions and report on the material findings of their audit, in particular material weaknesses of the internal control and risk management system related to the financial reporting process. The Audit and Risk Management Committee discusses the audit reports and findings of the auditor with the auditor and makes recommendations to the Supervisory Board in this regard.
The Audit and Risk Management Committee also supports the Supervisory Board in issues relating to the monitoring of the accounting process, the effectiveness of the internal control system, the risk management system and the internal audit system, the compliance and the auditing of the financial statements, in particular the selection and monitoring of requisite independence of the auditor, the quality of the audit and the additional services provided by the auditor, the granting of the audit order to the auditor, the determination of the focus of the audit and the fee agreement. The Audit and Risk Management Committee may make recommendations or proposals to ensure the integrity of the financial reporting process. In order to fulfil its duties, it may exercise the special rights of inspection and examination to which the Supervisory Board is entitled pursuant to section 111 (2) of the German Stock Corporation Act (AktG).
The Audit and Risk Management Committee shall discuss with the auditor the assessment of the audit risk, the audit strategy and audit planning as well the audit results. The Chairperson of the Audit and Risk Management Committee shall regularly discuss the progress of the audit with the auditor and report thereon to the Committee. The Audit and Risk Management Committee shall consult with the auditor at regular intervals, also without the Executive Board.
The Audit and Risk Management Committee presents a reasoned recommendation for the election of the auditor to the Supervisory Board, for their proposal to the general meeting, which in the case that the audit mandate is put out to tender must comprise at least two proposals and one preference. Before submitting the proposal for election, the Audit and Risk Management Committee shall, instead of the Supervisory Board, obtain a declaration from the proposed auditor as to whether and, if so, which business, financial, personal or other relationships exist between the audit firm and its executive bodies and audit managers on the one hand and the company, its group companies and the members of its executive bodies on the other hand, which could give rise to doubt as to the independence of the auditor. This statement shall include the extent to which other services have been performed for the company and its group companies in the past financial year or have been contractually agreed for the following year, in particular in the consultancy sector. The Audit and Risk Management Committee shall assess the quality of the audit at regular intervals.
Each member of the Audit and Risk Management Committee may, through the Chairperson of the Committee, obtain information directly from the heads of those central departments of the company which are responsible in the company for the tasks concerning the Audit Committee pursuant to Section 9, paragraph (3) and paragraph (4). The Chairperson of the Committee shall communicate the information obtained to all members of the Audit and Risk Management Committee. If information is obtained pursuant to sentence 1, the Executive Board shall be informed thereof without delay.

Section 10

Standing Committee

The “Standing Committee” consists of the Chairperson of the Supervisory Board, their Deputy as well as one member of the Supervisory Board elected on the recommendation of the shareholder representatives of the Supervisory Board and one member of the Supervisory Board elected on the recommendation of the staff representatives of the Supervisory Board. The “Standing Committee” is chaired by the Chairperson of the Supervisory Board or, in their absence, their Deputy.
The “Standing Committee” prepares all the relevant decisions of the Supervisory Board that were not prepared by the Audit and Risk Management Committee. In particular, it prepares the personnel decisions taken by the Supervisory Board, such as:

The appointment and dismissal of members of the Executive Board (Section 84, German Stock Corporation Act).
The conclusion, amendment and termination of the employment contracts with the members of the Executive Board; determination of appropriate remuneration for the members of the Executive Board which is geared towards sustainable corporate development (Section 87 (1), German Stock Corporation Act).
The reduction of the remuneration if the payments subsequently become unreasonable due to a deterioration in the company's situation (Section 87 (2), German Stock Corporation Act).
Other representation of the company towards member of the Executive Board (Section 112, German Stock Corporation Act).
Approval of the Supervisory Board for transactions which may only be carried out with its consent.
Consent to secondary activities (including taking on appointments to supervisory boards outside the group) and to exemptions of members of the Executive Board from the non-competition clause (Section 88, German Stock Corporation Act).
Consent to granting loans to members of the Executive Board or Supervisory Board as well as other persons named in Sections 89 and 115, German Stock Corporation Act.
Approval of contracts with members of the Supervisory Board (Section 114, German Stock Corporation Act).
Report of the Supervisory Board to the general meeting (Section 171 (2), German Stock Corporation Act).
Decisions of the Supervisory Board on corporate governance issues, in particular the decision of the Supervisory Board concerning the declaration of the German Corporate Governance Code (Section 161, German Stock Corporation Act)
Preparation of the decisions of the Supervisory Board concerning the strategy of Krones AG and the Krones AG Group.

The responsibility for passing resolutions on these matters remains with the Supervisory Board.

Section 11

Composition of the Supervisory Board

In the case of proposals from the Supervisory Board for the election of members of the Supervisory Board by the general meeting, care should be taken to ensure that the Supervisory Board only includes members who have the necessary knowledge and skills to be able to properly carry out their tasks, have several years of professional and specialist experience. The Supervisory Board includes at least one member who has expertise in the field of accounting and at least one other member who has expertise in the field of auditing; the members as a whole must be familiar with the sector in which the company operates.
As a rule, members of the Supervisory Board should not hold office for longer than the end of the general meeting following their seventieth (70th) year of life. In exceptional cases, a member of the Supervisory Board may be elected for a period that does not last longer than the end of the fourth ordinary general meeting following their seventieth (70th) year of life.
Anyone who is a member of the executive board of a listed company and already holds two supervisory board appointments at listed companies that are not affiliated companies within the meaning of Section 15 et seq., German Stock Corporation Act, may not be proposed as a member of the Supervisory Board.

Section 12

Conflicts of interest

The members of the Supervisory Board are committed to upholding the interests of the company. When making decisions, they may neither pursue personal interests nor take advantage of business opportunities available in the company or at its affiliates.
Each member of the Supervisory Board must immediately disclose to the Supervisory Board any potential conflicts of interest, in particular those that may arise as a result of consulting or board functions at customers, suppliers, lenders or other business partners. The procedure for the disclosure must be agreed with the Chairperson of the Supervisory Board.
In its report to the general meeting, the Supervisory Board shall provide information about any conflicts of interest that have arisen and how they were handled.
Material conflicts of interest and those which are not merely temporary in respect of the person of a Supervisory Board member shall result in the immediate termination of their appointment by resignation.

Section 13

Reporting requirements

Each member of the Supervisory Board is obliged to comply with the obligations of the Market Abuse Regulation (MMVO) which apply to them, and to provide the company with all the information that it requires in order to comply with its obligations according to the MMVO. Each member of the Supervisory Board shall also ensure that the obligations according to the MMVO are observed by persons who are considered to be closely related to them in terms of the relevant regulations.

Section 14

Self-evaluation

The Supervisory Board regularly reviews the efficiency of its work and that of its committees. In this respect, it is able to call in external consultants for support.

Section 15

Entry into effect; revisions

These Rules of Procedure enter into effect on 24 October 2023.
Any change, supplementation or cancellation of these Rules of Procedure requires a resolution by the Supervisory Board.