Corporate Governance

On 1^st October 2002, the new Austrian Corporate Governance Code took effect.  This Code primarily applies to Austrian stock listed companies and covers the basic principles of efficient and transparent corporate control and management common in international business practice.  It is based on the provisions of Austrian corporation law, securities law and capital markets law as well as on the OECD principles of Corporate Governance.

It is not in the form of a statute law, but in the form of a set of rules to which companies may comply at their own discretion.  Besides important legal requirements, the Code contains regulations that are commonly used on an international level.  Non-compliance with these practices must be explained and justified.  Compliance by companies is "voluntary.”

The Austrian Code of Corporate Governance encompasses the following categories of rules:

1. Legal Requirement (L):  this rule refers to mandatory legal requirements.

2. Comply or Explain (C):  this rule is to be followed; any deviation must be explained and the reasons stated in order to be in compliance with the Code.

3. Recommendation (R):  the nature of this rule is a recommendation; non-compliance with this rule requires neither disclosure nor explanation.

Andritz endorses compliance with the Austrian Corporate Governance Code.  It regards the Code as an essential means to implement responsible management and control of Andritz which is directed toward creating added value.  Implementation of and compliance with the Code will promote and intensify the confidence of shareholders, investors, customers, employees, suppliers, representatives of the media, and other stakeholders in the company.  The Managing Board and the Supervisory Board, as well as the entire staff of Andritz, are committed to meeting the Code.

Andritz explains the deviations from the following C-rules as follows:

Rule 38:  Andritz AG Articles of Association do not stipulate an age limit for its Managing Board members.  Appointment of Managing Board members is solely contingent on personal and professional qualifications.

Rule 42:  Andritz AG will not institute a strategy committee of its own.  Andritz AG’s Supervisory Board is composed of experts in different fields who hold constructive sessions at regular intervals, to discuss, inter alia, strategic alignment.  In this framework, the Supervisory Board is also involved in all strategic decisions of the Managing Board as a consultative body.

Rule 61:  As the Internet - in contrast to the annual report - allows constant and continuous update of information, Andritz has decided to publish all information requested under rule 61 on its website and to update it if necessary.  

Rule 69:  Andritz AG is of the opinion that the notifications of share by backs and sales by members of the Managing Board and Supervisory Board, which it is obliged to make to the Financial Market Supervisory Authority and the Vienna Stock Exchange pursuant to Article 91a of the Stock Exchange Act, represents a comprehensive, lawful means of ensuring equal treatment for all shareholders.

The complete Corporate Governance Code can be accessed and downloaded from the Andritz website (www.andritz.com).  The website also contains the statement on the meeting of the Code with explanations to deviations.