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Corporate Governance – portrayed in the individual cultural and legal framework, from the standpoint of equity capital.

VIPsight is a dynamic photo archive, sorted by nations and dates, by and for those interested in CG from all over the world.

VIPsight offers, every month:
transparent and independent current information / comments / facts and figures on corporate governance locally and internationally,

  • written by local CG experts,
  • selected and structured by the Club of Florence,
  • financed by its initiator VIP and other sponsors with a background of “Equity and Advisory” interests.

VIPsight International

Article Index

VIPsight - 2nd Quarter 2019




BMW AG: One Billion Arguments

With respect to the EU antitrust proceedings, BMW will recognize a provision. This decision followed the information by the European Commission about a “Statement of objections”. The Commission is investigating whether German car manufacturers cooperated in technical working groups to restrict competition in development and rollout of emission reduction technologies.

BMW decided to contest the Commission´s allegations with all legal means if necessary. However, the statement leads BMW to believe that it is probable that the Commission will issue a significant fine. According to IFRS, this results in an obligation to recognize a provision. Therefore, following its review of the Statement of Objections, BMW will recognize a provision, which is likely to exceed 1 bn Euro. This effect will negatively impact the financial results in the first quarter of 2019.


Wirecard AG: External Investigations reveals no material impact on financial reports of Wirecard

In light of allegations by a whistleblower in Singapore and severe accusations and speculations in certain press magazines and publications, Wirecard mandated the law firm Rajah & Tann Singapore LL.P. to undertake an independent investigation into allegations relating to certain transactions and corporate governance issues of Wirecard subsidiaries in Asia.

The review did not identify inaccuracies with material impact on the financial reports of Wirecard Group. Revenue of 2.5m Euro was wrongfully recorded in 2017 which will be restated in the 2018 annual accounts and is compensated by positive restatements identified for the year 2017. Furthermore, an asset of 3m Euro was wrongfully recorded for one week in 2018 and will not be reflected in the 2018 annual accounts. In addition, draft contracts were prepared and signed on behalf of certain subsidiaries, and not fully executed. These events occurred in respect of agreements which may appear to not have underlying genuine transactions. Save for one transaction of approx. 63K Euro, none of the draft transactions were entered into respective ledgers nor did funds flow into or out of Wirecard group companies.


Commerzbank / Deutsche Bank: There goes the Politicians Dream

After careful analysis, the Management Boards of Commerzbank and Deutsche Bank have concluded that a combination of the banks would not have created sufficient benefits to offset the additional execution risks, restructuring costs and capital requirements associated with such a large-scale integration. As a result, the two banks have decided to discontinue discussions.

According to prior publications, it took the boards several weeks to get to this conclusion.


ThyssenKrupp: Is Time the Limiting Factor?

The European Commission informed that it extended the deadline for reviewing the planned joint venture deal between ThyssenKrupp and Tata Steel until June 17th, 2019.

Meanwhile, market speculations regarding the assets to be disposed in order to win antitrust approval focused on plants and activities in Belgium, the U.K., Spain.


Uniper SE: And here comes the next one…

KVIP International V L.P. requested to amend the agenda of Uniper´s AGM by adding the following item:

The Board of Management is instructed to prepare and submit to the General Meeting for resolution, as soon as possible and the latest by the date of the next AGM of the company, draft agreements and corresponding reports for the legally valid spin-off of the international power business segment for absorption into a newly formed or already existing separate legal entity selected in accordance with the duties of the Board of Management. The Board of Management is instructed to satisfy all necessary prerequisites for the implementation of the aforementioned spin-off at its reasonable discretion in accordance with this resolution.

In case that this resolution is not adopted by the required majority, KVIP proposed an alternative resolution concerning the spin-off of the operations in Sweden.

Uniper´s AGM will be held on May 22nd, 2019.









Buhlmann's Corner


About small minds and little effects

In the week after Easter, shareholders this year also practiced revolution beyond the German border.

On Tuesday, 62% of ING's shareholders voted against the discharge of the Management Board and Supervisory Board at the Annual General Meeting in the Muziekgebouw in Amsterdam. While the meeting building stands securely on piles above the water, it was apparently up to the neck of the entire board of executive and non-executives.

The Dutch ING Bank, which was rescued in 2009 and ranked 26th worldwide in terms of total assets, decided in the relevant previous year to increase the CEO's salary by 50%. Initially, the Supervisory Board agreed, but later withdrew its decision.

In September 2018, however, a compliance discussion with the public prosecutor's office and the regulator that lasted several years was concluded by the Board of Managing Directors with a settlement of € 775 million. More than just organisational breakdowns were established.

Anyone who first collects royalties from a breach of law and then lets ignorant owners pay the fine - by the way, in this connection the Chief Financial Officer was dismissed by the Supervisory Board with recognition and kind words - cannot actually expect any discharge. That didn't seem to have arrived at the board: until shortly before the Annual General Meeting, people were still playing poker by buying Commerzbank and moving to Frankfurt ...

VIP (only) refused to ratify the actions of the Supervisory Board (and of course refused to re-elect a Supervisory Board member in a mandate), not least because the compliance issue had been addressed since 2016 in a not conspicuous remark in the notes to the annual report. By the way, the aforementioned note 45 appeared immediately after a change of auditor - previously it was EY, now it is KPMG. These company names are interchangeable, but such changes are just as good as the proverbial brooms.

The result was not noticed except by the participants and the local press. For those concerned, the legal and economic impact is as insignificant as the public perception of the matter outside the Netherlands.

The revolutionary storm up the Rhine in the former capital of the Federal Republic of Germany was just as en passant and without consequences. For the third time Bayer invited to Bonn, for the first time with Monsanto and the boundlessly scolded glyphosate. Who cares that competitors all over the world produce and sell their herbicides on the same glyphosate basis - when the pack of American lawyers only hunts Monsanto?

The shareholders decided to hunt the Executive Board voting with a 55% majority against its discharge.  Here, too, the glass is half full and half empty - the controversial question about "how expensive will the lawsuit avalanche be" has not yet been determined.

The fact is that 2019 the ethically much more important question:

Is the pesticide dangerous?

And if so, how can it be replaced?

Has not yet become an issue after Easter. And even in a second essential question there is hesitation: are the priced in legal costs sufficient for damages, expenses, negotiation pains and management strategy. Or conversely, is the incorporation of Monsanto damaging Bayer's existing stockholder, just as it happened with the acquisition of Schering.  At Bayer, the Executive Board was hastily not discharged, the Supervisory Board received an educational finger with 33% No and ... the much more important motion for a special audit to deal with the factual issues was rejected. Opportunity missed!

Nothing happened, standing comfortably and continuing.

The first non-discharge of a DAX Supervisory Board happened at Lufthansa in 2003, the first one of a DAX Executive Board now in 2019, let's see what happens next in 2035. Without any consequences and unrecognized outside Germany, so much for the diversity of perception and decision-making.

How long will the barriers and border perceptions continue to exist ... even in Europe?

Will there then be effects on the effects? 









Deutsche Lufthansa AG: Foreign Shareholdings reach 40% Threshold

Deutsche Lufthansa informed that its share register shows a shareholding of 41.7 percent non-German shareholders. In accordance with section 4 paragraph 1 of the German Aviation Compliance Act (LuftNaSiG), the company, therefore, is authorized to buy back own shares.

However, the release added that following careful analysis, the company does not believe that there is any immediate danger of an increase in the non-German shareholdings which would endanger the company´s ability to meet the requirements for retaining its licenses, rights, and prerogatives under aviation law. Therefore, it currently does not intend to exercise its right to buy back its own shares under section 4 paragraph 1 LuftNaSiG.


Wirecard AG. Strategic Partnership with SoftBank

Wirecard and SoftBank Group have signed a binding term sheet under which an affiliate of SoftBank shall invest approximately 900m Euro in Wirecard via a convertible bond mechanism. For this purpose, Wirecard shall issue convertible bonds with a term of five years to SoftBank, convertible into 6.923.076 Wirecard shares (currently corresponding to appr. 5.6% of the common stock in issue) at 130 Euro per share. The issue is subject to approval at the AGM to be held on June 18th, 2019.

In connection with the investment, the parties also have signed a memorandum of understanding on a strategic partnership for digital payment solutions. According to the memorandum, SoftBank will also seek to support Wirecard´s geographic expansion into Japan and South Korea and shall provide collaboration opportunities within the SoftBank Group´s global portfolio in digital payments, data analytics/AI and other innovative digital financial services.


Allianz SE: Looking beyond the BREXIT?

According to a report on Sky News, Allianz is in advanced talks to buy Legal & General´s home insurance business.

In December 2018, Sky News informed that Direct Line had indicated its interest in making a 400m pound bid to buy the British insurer´s unit. The new report said that Allianz was in exclusive talks to buy the unit, which was put up for sale last year.


Uniper SE: Request by Cornwall GmbH & Co. KG for the convocation of an AGM

Cornwall GmbH & Co. KG, a company advised by Elliott Advisors (UK) Limited, requested the convocation of an extraordinary AGM of Uniper SE with the agenda item: “Resolution of an instruction to the Board of Management to prepare the conclusion of a legally binding domination agreement between Uniper SE as the dominated company and Fortum Oyi or one of its subsidiaries as the dominating company.” Alternatively, Cornwall requests to amend the agenda of an annual shareholders meeting still to be convocated.

According to the ad hoc announcement, the Board of Management of Uniper assesses the request and works on a statement in respect thereto.


Leoni AG: Part I, Restructuring Program

In light of the greater costs incurred due to ramp-up difficulties at the plant in Merida, persistently poor operating performance in the Wiring Systems Division and a further downturn in the market, the Board of Directors of Leoni decided that it is no longer able to maintain its outlook for fiscal 2019 presented on February 7th. The detailed guidance issued in the annual report for 2018 is therefore no longer valid, while it is still too early to provide updated new guidance. Leoni now estimates a 50m Euro burden due to Merida for 2019. In addition, anticipated performance improvements at other plants have not materialized. Overall, the company is facing a further challenging market environment, particularly in China. In addition, certain OEMs have significantly reduced their delivery expectations for the next months with respect to the Wiring Systems Division.

Furthermore, the Board of Directors decided to implement its “VALUE 21 performance and strategy program” with the objective to improve both profitability and cash flow as well as to align the Company to promising and profitable business areas. The program entails restructuring costs amounting to about 120m Euro, around half of it related to headcount and most of which expected to incur in the 2019 and 2020 financial years.

In addition, the Board of Directors has identified business areas with annual sales of up to 500 m Euro for which the Company is considering all options. Furthermore, Leoni intends to change its corporate structure into a financial holding company that is lean and geared to functions relevant to the capital market with two divisions that operate entrepreneurially and are managed on a stand-alone basis.








Deutsche Bank: Trump is back on the Agenda

U.S. president Donald Trump, and several of his relatives and companies, decided to file a lawsuit against Deutsche Bank to block it from complying with federal subpoenas issued on April 15th.  The subpoenas demand the handover of documents with information on Mr. Trump’s finances.

According to the lawsuit, the subpoenas were issued to harass Mr. Trump, while the spokespersons for the Financial Services Committee and the Intelligence Committee confirmed the position that the potential use of the U.S. financial system for illicit purposes is a very serious concern, which is why the Committee is exploring these matters, including as they may involve the president and his associates.

The potential use of the U.S. financial system for illicit purposes is a very serious concern. The Financial Services Committee is exploring these matters, including as they may involve the president and his associates, as thoroughly as possible.










Knorr-Bremse AG: The Captain leaves the Ship

On April 30th, 2019, Knorr-Bremse AG informed that its CEO Klaus Deller left the company as of the same day by mutual agreement. According to the ad hoc release, the supervisory board has already initiated the search for a successor.

According to the release, the supervisory board fully supports the successful strategy of Knorr-Bremse AG and current business is fully in line with expectations. Mr. Deller's departure is said to be due to different views regarding leadership and cooperation.


Leoni AG: Part II, Resignation of the CFO

Immediately preceding the news release regarding the restructuring program, Leoni informed via an ad hoc announcement that its CFO, Karl Gadesmann, resigned as a member of the Board of Directors immediate effect.

The CEO, Aldo Kamper, will take over his responsibilities until a new appointment is made.

Somehow one wonders why the company made two announcements.






Capital News


Deutsche Börse AG: Concrete negotiations with Refinitiv concerning the potential purchase of certain FX business units

Following current market speculations, Deutsche Börse confirmed that it is currently in concrete negotiations with Refinitiv group concerning the potential purchase of certain FX business units. The negotiations and assessments of a potential transaction are ongoing. However, the company added that the purchase price of 3.5 billion USD and the imminent signing of binding contracts mentioned in some market speculations are entirely unfounded.


RWE AG: Option to purchase RWE`s stake in Czech grid operator exercised

In mid-February, RWE acquired a majority holding in the Czech distribution system operator Innogy Grid Holding (IGH) form innogy SE. An agreement had been reached as part of the transaction with E.ON that E.ON would purchase this interest in IGH from RWE within the scope of the envisaged acquisition of Innogy SE.

The execution of the agreement with E.ON triggered a right of first refusal for the co-shareholders in IGH, i.e. the Macquarie Infrastructure and Real Assets /MIRA) managed consortium of investors, which has been exercised. Therefore, the MIRA managed consortium will acquire the stake under the terms and conditions applicable if RWE sold it to a third party, which would be E.ON in the present case.

Completion is subject to merger control proceedings and the transfer of RWE´s stake in Innogy to E.ON. The purchase price is approx. 1.8 bn Euro.


Deutsche Bank AG: Merger Plan B

According to the Financial Times, the asset management arm of Deutsche Bank, DWS Group GmbH & Co. KGaA, and UBS are in so-called “serious” merger talks.

According to the newspaper, the talks have been going on for several months. If the deal were to materialize, the combined business is expected to have assets of approx. 1.4 trillion Euro under management. In an earlier report, Bloomberg already indicated that UBS was evaluating options for its asset management business, including a partial sale or merger.


Merck KGaA: Delivered a “Superior Proposal” for Versum

In February, Merck commenced a cash Tender Offer to acquire all outstanding shares of Versum Materials, Inc. (NYSE: VSM) for $48 per share. Two months later, the initiative resulted in a definitive agreement to acquire Versum for $53 per share in cash.

The agreed-upon price reflects an enterprise value (EV) for Versum of approximately €5.8 bn Euro, implying an EV/2019 EBITDA multiple of approximately 13.7x based upon consensus estimates and a pro forma multiple of 11.6x including 75m Euro of identified annual run-rate cost synergies.

Versum’s Board of Directors has unanimously determined that this business combination constitutes a “Superior Proposal” as defined in Versum’s previously announced merger agreement with Entegris, Inc., and Versum has terminated the merger agreement with Entegris concurrently with the execution of the definitive agreement with Merck.

The transaction is expected to close in the second half of 2019, subject to the approval of Versum stockholders at a Versum special meeting, regulatory clearances and the satisfaction of other customary closing conditions.


Steinhoff International Holdings N.V.: Impairment of Goodwill and Intangible Assets

Just in time for the planned release of its audited financial statements for 2017 and 2018, Steinhoff informed on April 30th that it undertook a review of the carrying value of the Group´s goodwill and intangible assets. While the value of these assets was disclosed as being approximately 9 bn Euro as at September 2017 in the Group´s interim statement for the period ending March 31st, 2018, it now has been determined that the goodwill and intangible assets are to be further impaired by approximately 1.8 bn Euro to approximately 7.2 bn Euro. The amendment will feature in the 2017 Group financial statement, the audit of which is currently in progress. The publication of this statement is scheduled for May 7th, 2019.

This conclusion follows a reassessment of the value of the goodwill and intangible assets of Mattress Firm Inc. as at September 2017 which included consideration of the pre-Chapter 11 trading performance.


CECONOMY AG: Reorganization and Efficiency Program

The Management Board and Supervisory Board of CECONOMY AG as well as the Management Board and Advisory Board of Media-Saturn-Holding GmbH, a majority shareholding of CECONOMY, approved a reorganization and efficiency program, which aims at streamlining the group's processes, structures, and business activities and reducing costs. The optimization and restructuring particularly focus on central functions and administrative units in Germany. The program also includes reviewing the business activities of smaller portfolio companies. As a result of the program, CECONOMY expects expenses of around 150 – 170 m Euro in financial year 2018/19 and additional approx. 20m Euro of non-cash expenses, which relate to the write-down of assets due to portfolio measures. The expenses related to changes on the top management level of 34m Euro were already booked in the first quarter of 2018/19 and are not included in the aforementioned costs of the reorganization and efficiency program.

The expected sustainable annual savings run-rate form the implementation of the program amount to 110 – 130 m Euro.


Delticom AG: KPMG needs more Time

Delticom AG informed that the preparation of its annual financial statements and consolidated financial statements as of December 31, 2018, continues to be delayed and will not be completed by the end of April. Accordingly, the finalization of KPMG's audit of the financial statements will also be postponed. As soon as it has been determined when the financial statements will be prepared and audited and approved by the Supervisory Board, Delticom will set and announce a date for the publication of the Annual Report and the Annual General Meeting.

In a prior release, the company stated in March that in the course of the preparation and audit of the financial statements, it became apparent that Delticom and KPMG were too optimistic with regard to the time required for such work.