Corporate Governance Report incl. declaration on Corporate Governance

Corporate Governance stands for responsible, transparent corporate management and control geared towards long-term value creation. The Executive Board and Supervisory Board report annually on the Corporate Governance of the Company in accordance with the requirements of the German Corporate Governance Code (DCGK). The following statements are also to be understood as a Declaration of Corporate Governance in accordance with Section 289f of the German Commercial Code (HGB). Among other things, the declaration includes the Declaration of Conformity with the German Corporate Governance Code (GCGC) in accordance with section 161 of the German Stock Corporation Act (AktG), relevant information on corporate governance practices and a description of the working methods of the Executive Board and Supervisory Board.

Declaration of Conformity pursuant to section 161 AktG to the GCGC

On September 9, 2019 the Executive Board and Supervisory Board of MeVis Medical Solutions AG have published the current Declaration of Conformity to the German Corporate Governance Code in the version of February 7, 2017.

Bodies of the Company

The Executive Board, Supervisory Board and shareholders' meeting are the bodies of the Company according to law and statutes. As a public company, the MeVis Medical Solutions AG has a dual management system, which is characterized by a clear separation between the Executive Board, as the management body and the Supervisory Board as the supervisory body.

Executive Board and its Procedures

The Executive Board manages the Company on its own responsibility with the aim of creating sustainable value. It runs the Company in accordance with the statutory provisions, the Company's articles of association and the rules of procedure for the Executive Board, and works in good faith with the other executive bodies. The Executive Board sets out the corporate objectives and strategies and, based on them, determines the corporate policy.

Currently, the Executive Board of MeVis Medical Solutions AG consists of one person, Mr. Marcus Kirchhoff, with contract duration until March 2021. An expansion of the Executive Board is currently neither planned nor foreseen. Therefore, the Supervisory Board has specified the target for the percentage of women on the Executive Board to 0 % until December 31, 2020. For any future appointments of Executive Board members, the Supervisory Board will of course include qualified women early in the selection process for potential candidates.

The Executive Board is responsible for the management of the Company. Important decisions of the Executive Board are always recorded in minutes. At least once a month, internal coordination takes place between the Management Board and the middle management level. The Supervisory Board has issued rules of procedure for the Executive Board, which documents all the rules of procedure and transactions that require approval.

The Supervisory Board and its Procedures

The Supervisory Board consists of three members, elected by the shareholders, pursuant to the Company's statutes and convenes at least twice in the half year. The members of the Executive Board generally take part in the meetings of the Supervisory Board and report verbally and in writing on the individual items on the agenda, and answer the Supervisory Board members' questions. The members of the Supervisory Board also discuss certain matters outside the official Supervisory Board meetings or pass resolutions by circulation. The Supervisory Board has issued itself rules of procedure and regularly reviews the efficiency of its activities. On an annual basis the Supervisory Board report sums up the activities in the past fiscal year. The Executive Board and the Supervisory Board work closely together in the interests of the Company.

Objectives regarding the composition of the Supervisory Board

Pursuant to Section 5.4.1 GCGC, the Supervisory Board must specify concrete objectives regarding its composition, which are reviewed at regular intervals and which will be taken into account when proposing candidates at the Annual General Meeting either in regular elections and in replacement elections of the Supervisory Board:

  • The members of the Supervisory Board should, generally speaking, offer the knowledge, skills and relevant experience necessary in order to properly perform their duties and be sufficiently independent. The individual skills and knowledge of the members can complement each other to obtain this objective.
  • Members of the Supervisory Board should not serve past the end of the Annual General Meeting following their 75th birthday.
  • A member of the Supervisory Board who also serves on the management board of a publicly traded company may not serve on more than five supervisory boards of publicly traded companies not affiliated with the group of the company in which the member of the Supervisory Board serves on the management board or in supervisory bodies of companies with similar requirements.
  • No more than two former members of the Company's Executive Board may be members of the Supervisory Board.
  • The Supervisory Board should include at least one member who is particularly qualified for handling the Company's international activities. International experience can be gathered, for example, during periods spent abroad or by working for an international company.
  • The Supervisory Board must include at least one member who has expert knowledge in accounting or auditing (Section 100 (5) AktG).

Given its current composition, the Supervisory Board believes that it has largely fulfilled These goals. The diversity of the Supervisory Board is mainly reflected in the varying professional careers and activities as well as the varying experiences of the individual members, who complement each other very well in their entirety. 

At this point it is mentioned that the Supervisory Board consists of three members who are employed by Varex Imaging Corporation. Varex Imaging Corporation holds the majority of shares in the Company through Varex Imaging Deutschland AG. The control and profit and loss transfer agreement with the Company was also transferred to Varex Imaging Deutschland AG in the course of the spin-off. Accordingly, there are no longer any independent members of the Supervisory Board. In the Company's view, the complete composition of the Supervisory Board with members attributable to the majority shareholder is appropriate given the Company's integration into the Varex Group.

Currently the Supervisory Board consists of three members with a 33 % female representation. The members have been elected until the Annual General Meeting in 2021. Personnel changes are currently neither planned nor foreseen. At the next regular Supervisory Board election in 2021, the aim is that the Supervisory Board should consist of at least 30 % women and 30 % men.

Corporate Governance Practices

Corporate governance of MeVis Medical Solutions AG, as a listed German stock corporation, is dictated first and foremost by the German Stock Corporation Act and the recommendations of the current Corporate Governance Code.

Being a manufacturer of medical software products, the statutory provisions of the German Medical Devices Act (MPG), the European directive on medical products (93/42/EEC), the Canadian Medical Devices Regulation (SOR/98-282), the Australian Therapeutic Goods Act (TGA), the Korean Good Manufacturing Practice (KGMP) and the US Code of Federal Regulations (21 CFR Part 820 - Quality System Regulation) as well as the requirements of the ISO 13485 standard (Medical devices - Quality management systems - Requirements for regulatory purposes) apply to the Company. Quality and quality management are cornerstones of our corporate governance. The quality management system is geared toward meeting our quality objectives as well as the quality requirements and expectations of our customers in relation to safety and performance, handling, availability, efficiency and punctuality. 

The Company's quality management system is certified to EN ISO 13485:2012 + AC 2012 by the notified body MEDCERT (ID-number 0482) in the development, manufacturing, final inspection and sale of software for diagnostic evaluation of medical image data as well as intervention support. In addition, the quality management system of the Company is certified by DQS Medizinprodukte GmbH in the above mentioned areas according to EN ISO 13485:2016 in compliance with MDSAP Audit Model Edition 2 (for Australia, Canada, USA).

The management of MeVis Medical Solutions AG is also characterized by flat hierarchies with only one management level below the Executive Board, quick decision-making and team-oriented cooperation.

When filling management positions the qualification of candidates is the decisive criterion for the Executive Board of MeVis Medical Solutions AG. However, MeVis Medical Solutions AG pays attention to diversity and in particular the appropriate consideration of women when filling management positions. MeVis Medical Solutions AG welcomes efforts to increase the proportion of women in management positions and will continue to promote female employees in accordance with their qualifications and skills at all levels and in all areas of responsibility. Women currently account for 33% of the total workforce of MeVis Medical Solutions AG. Today, 30 % of the management positions at the management level below the Executive Board are occupied by women. Accordingly, we have achieved our goal of filling 30 % of management positions with women by the end of 2020.

Remuneration of Executive Bodies

MeVis Medical Solutions AG complies with the recommendations of the German Corporate Governance Code to disclose the remuneration paid to the Executive Board. The remuneration report is part of the management report and also forms part of the corporate governance report.

The members of the Supervisory Board will not receive any remuneration from the Company for fiscal years commencing after January 1, 2016. Accordingly, no Supervisory Board compensation is disclosed individually in the notes or in the management report.

Further explanations and details of the remuneration of the Executive Board and Supervisory Board are provided in the remuneration report in the notes.

Transparency

To ensure maximum possible transparency, MeVis Medical Solutions AG regularly and promptly informs the capital market, the shareholders and the general public of the Company's financial situation as well as new circumstances and events of importance.

The financial statements and any interim reports are published within the deadlines stipulated for companies listed in the General Standard of the regulated market: within a period of four months for the annual financial statements and within a period of three months in the case of the semi-annual financial reports. 

Insider information concerning the company is published immediately in accordance with Article 17 (1) of the Market Abuse Regulation (EU) No. 596/2014 (MAR). Shareholders and potential investors can obtain timely information about current events and new developments on the Internet. All press releases and ad-hoc announcements of MeVis Medical Solutions AG are published on the company's website. Up to and including 2019, MeVis Medical Solutions AG participated in at least one analyst conference per year. Material and in part recurring events are published in the financial calendar on the company's website.

Compliance

Compliance describes the adherence to legal, internal and contractual regulations in companies. The entirety of the principles and measures for observing certain rules and thus avoiding violations of rules is referred to as a compliance management system.

For MeVis Medical Solutions AG, compliance with laws, internal guidelines and fair dealings with colleagues, business partners and competitors is an indispensable basis for successful business. It currently has a compliance management system in place which is commensurate with the size of the Company and its risk situation. This is the responsibility of the compliance officer, who reports directly to the Executive Board.

The internally introduced Compliance Policy is binding for all employees, gives them an orientation for responsible conduct in everyday business and is intended to protect them from making the wrong decisions. The policy is published on the company's intranet, employees and managers are continuously informed and sensitized about compliance and can also seek advice from the Compliance Officer at any time.

In addition, MeVis Medical Solutions AG has also been linked to the external whistleblower system already in place within the Varex Group. This gives employees the opportunity to provide protected information on legal violations within the company.

Annual General Meeting and Shareholders

The Annual General Meeting of MeVis Medical Solutions AG is convened at least once a year. Each share entitles the holder to one vote in the voting at the Annual General Meeting. Every shareholder who registers in due time is entitled to participate in the Annual General Meeting or has the possibility to have his voting rights exercised by a bank, a shareholders' association, the proxies appointed by MeVis Medical Solutions AG and bound by instructions or any other authorised representative.

The invitation to the Annual General Meeting as well as the reports and information required for the adoption of resolutions are published in accordance with the provisions of the German Stock Corporation Act and made available on the company's website.

Risk Management

For MeVis Medical Solutions AG, dealing with risks in a responsible manner is a key element of good corporate governance. The Executive Board has installed an appropriate risk management and risk control system in the Company in order to identify, evaluate, monitor and control the risks arising from operating activities at an early stage. The Executive Board informs the Supervisory Board regularly about the current status of significant risks. The risk management system is continuously reviewed in accordance with the latest developments and adjusted where necessary. Further details and information on risk management can be found in the risk report of the annual financial report.

Accounting and Auditing

MeVis Medical Solutions AG prepares its statutory financial statements and management report in accordance with the German Commercial Code (HGB). The Company also prepares individual IFRS financial statements in accordance with International Financial Reporting Standards (IFRS). The half-year financial report and the interim financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU.

The financial statements are prepared by the Executive Board and reviewed by the Supervisory Board. The Supervisory Board engaged PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Bremen, as the auditors elected by the Annual General Meeting for the fiscal year 2017/2018, to audit the statutory financial statements for the fiscal year 2017/2018 and the Executive Board engaged them to audit the individual IFRS financial statements. This approach ensures that no conflicts of interest affect the work of the auditors.

The audits of the financial statements for the fiscal year 2016/2017 were also conducted by PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Bremen, in accordance with the generally accepted standards for the audit of financial statements promulgated by the German Institute of Public Auditors (IDW).

Directors' Dealings

In accordance with Article 19 of the Market Abuse Regulation (EU) No. 596/2014 (MAR), the members of the Executive Board and the Supervisory Board of the Company as well as persons closely related to them are required to disclose own dealings (directors' dealings) in shares and debt instruments of MeVis Medical Solutions AG or related financial instruments (e.g. derivatives) traded on the financial markets if the value of the transactions reaches or exceeds € 5,000 in a calendar year. The Company publishes any such notifications on its website without delay. In the period under review, the company received no notifications of directors' dealings. As of the balance sheet date, neither the member of the Executive Board nor the members of the Supervisory Board held shares in MeVis Medical Solutions AG.

MeVis Medical Solutions AG

Executive Board

January 2020