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Statutes

STATUTES of the Association of German Pfandbrief Banks
(Verband deutscher Pfandbriefbanken e.V.)


(as of June 2016)

1. NAME AND LEGAL STATUS

The German Pfandbrief banks have created an association of legal capacity by the name of "Verband deutscher Pfandbriefbanken".

2. SEAT AND FINANCIAL YEAR

(1) The association's seat is Berlin (Federal Republic of Germany).
(2) The financial year is the calendar year.

3. PURPOSE

(1) The association's purpose is to foster mutual professional tasks. These are in particular:
a) to protect the rights and interests of the Pfandbrief banks including public relations work in the areas of capital market, public-sector lending, property finance, ship finance and tax policy as well as participate in and discuss legal matters.
b) to support and advise the legislative bodies and government agencies on a national, European and international level in all matters concerning Pfandbrief banks;
c) to safeguard the interests of the Pfandbrief banks vis-à-vis other German, European and international professional associations;
d) to become a member of German, European and international professional associations or participate in companies regardless of their legal status inasmuch as membership or participation serves the association's purpose or the interests of the association's members.
(2) The association is not established for economic purposes; in particular, it does not perform any cartel tasks.

4. ORDINARY MEMBERS

(1) Any German bank may become an ordinary member institution of the association provided its business activities comprise Pfandbrief business within the meaning of the Pfandbrief Act ("Pfandbriefgesetz").
(2) Membership must be applied for in writing to the association. Admission of new members is decided upon by the Members' Meeting. The admitted ordinary member must pay a one-time admission fee the amount of which will be determined by the Board of Directors.
(3) Membership ends upon resignation or exclusion. A member may resign from the association only by submitting its resignation in writing to the President with a term of notice of six months to the end of the financial year.
(4) A resigning ordinary member shall continue to be obliged to pay a pro rata share of the association's costs allocated for the current fiscal year.

5. EXTRAORDINARY MEMBERS

(1) Extraordinary members of the Association can be:
No. 1: banks that seek to engage in Pfandbrief business,
No. 2: banks or financial holding companies whose interests are similar to those of ordinary members,
No. 3: consulting firms such as law firms, auditing firms or management consultants as well as
No. 4: foreign institutions such as foreign banks, foreign associations or foreign consulting companies.
(2) Admission is governed by section 4 subsection 2 with the proviso that the decision by the Members' Meeting must be preceded by a relevant proposal by the Board of Directors.
(3) Membership ends upon resignation or exclusion. Section 4 subsection 3 sentence 2 shall apply analogously.

6. RIGHTS AND DUTIES OF THE MEMBERS

(1) Ordinary and extraordinary members (member institutions) exercise their rights in matters relating to the association in the Members' Meeting. For details, see section 13 and the subsequent sections.
(2) All members shall comply with the regulations set forth in the statutes and support the association loyally in the fulfillment of its tasks.
(3) The financial obligations of the member institutions are described in section 21.
(4) Only ordinary members have a share in the association's assets. Resigned members do not have a share.
(5) Ordinary members which do not pay the full basic fee pursuant to section 20 subsection 3 letter a sentence 1 as well as extraordinary members do not take part in the meetings of the expert bodies.

7. CONSTITUTION OF THE ASSOCIATION

The bodies of the association are:
a) the President (chairman of the association),
b) the Board of Directors,
c) the Members' Meeting,
d) the Management Board.

8. PRESIDENT

(1) The President is elected by the Members' Meeting for a term of two years. The President may be re-elected. The President remains in office until the next election at the end of his term, unless he resigns prematurely or the Members' Meeting dismisses the President from office due to a vote of no confidence. An election by the Members' Meeting that may be required to fill a vacant position during the President's term is only valid up to the end of the current election period.
(2) The President heads the association and represents it in and out of court within the meaning of section 26 of the German Civil Code ("Bürgerliches Gesetzbuch").
(3) If the President is unavailable to fulfill his tasks for a longer period of time, the President shall appoint a member of the Board of Directors to manage the affairs of the President as his deputy. If no member has been appointed, or if the President's unavailability to fulfill his tasks lasts longer than three months, the Board of Directors shall elect a deputy from among its board members. This person shall perform the President's tasks until the next Members' Meeting.
(4) If the President's office ends during his term of office, subsection 3 sentence 2 shall apply analogously.
(5) On approval of the Board of Directors, the President may appoint one or more General Managers and one of them as Chief Executive Manager, and may conclude agreements with them concerning their employment relationship.

9. COMPOSITION OF THE BOARD OF DIRECTORS

(1) The Board of Directors comprises 14 members: the President, twelve other persons elected by the Members' Meeting for a term of two years each and the Chief Executive Manager by virtue of his office. Of the twelve persons to be elected by the Members' Meeting, not more than two may belong to an extraordinary member of the association.
(2) Only managing board members of the member institutions can be elected. Members may be re-elected.
(3) The office as elected board member of a member of the Board of Directors ends upon his leaving the member institution to which he belonged at the time of his election. If the office of an elected member ends during his term, an election shall be held to replace this person until the end of the current election period
a) either during the next Members' Meeting
b) or by order of the President, by way of voting by letter in accordance with section 15 subsection 7.

10. DUTIES OF THE BOARD OF DIRECTORS

(1) The Board of Directors shall:
a) advise and support the President, deal with fundamental questions and make suggestions;
b) form expert bodies according to section 12 inasmuch as this is not done by the Members' Meeting itself;
c) participate by approving decisions in the appointment of the General Managers, the Chief Executive Manager and the agreements concluded concerning their employment relationship (section 8 subsection 5);
d) pass the budget of the association;
e) resolve amendments of the statutes which relate only to the wording of the statutes (corrections)
f) decide on motions pursuant to section 20 subsection 3 letter a) and section 20 subsection 6.
g) determine the amount of the admission fee pursuant to section 4 subsection 2 sentence 3.
(2) The Members' Meeting may assign additional duties to the Board of Directors. Rights and duties of the President or powers of supervision over the President cannot, however, be delegated to the Board of Directors; section 8 subsection 3 remains unaffected.

11. ORGANIZATION OF THE BOARD OF DIRECTORS

(1) The President is the board's chairperson. If the President is unable to chair a board meeting, the board selects a chairperson from among the elected board members.
(2) Meetings of the Board of Directors are convened by the President or - if he is unavailable - by his deputy or by the eldest elected board member.
(3) The Board of Directors shall meet at least once every three months. Further, a meeting shall be convened if at least tree elected members of the board or five member institutions demand such a meeting.
(4) Decisions by the Board of Directors are valid only if at least seven board members are present or have voted in written or electronic form. Decisions are made by majority vote; in the event of a parity of votes, the vote of the chairperson is decisive. A written or electronic voting procedure is permissible only if no member objects to this form of voting.
(5) The chairperson may consult experts or informants from among the member institutions.

12. Expert Bodies

(1) If need be, expert bodies can be established to deal with specific topics. In general, the task of the expert bodies is limited to the submission of expert opinions on certain questions or matters. Additional powers may be granted to a expert bodies or the group's chairperson.
(2) When choosing a member to an expert body, the member‘s professional qualification for the task to be performed by the expert body shall be of prime importance. The office ends prior to a new election when the working group member leaves the member institution to which he belonged at the time. The office ends when the working group member leaves the member institution to which he belonged at the time] he joined the working group.
(3 )Board members as well as other persons belonging to member institutions may be members of expert bodies if they have not made use of the exemption possible under section 20 subsection 3 letter a).
(4) If an elected member of the Board of Directors belongs to the working group, this member chairs the working group. If this is not the case, the working group elects a chairperson from among its members. The President may attend the meetings.

13. MEMBERS' MEETING

(1) The Members' Meeting is the highest body of the association.
(2) Its tasks are in particular:
a) to elect the President and the members to be elected to the Board of Directors;
b) to establish expert bodies subject to section 10 subsection 1 letter b;
c) to take receipt of the annual report and accept the annual accounts;
d) to formally approve the actions of the President and the Board of Directors;
e) to authorize the President to formally approve the actions of the Management Board;
f) to determine the basic membership fee and the costs to be allocated;
g)to pass resolutions on amendments to the statutes inasmuch as they do not relate only to the wording of the statutes, and on the dissolution of the association;
h) to elect the auditors for the association's annual accounts.
i) to admit and exclude member institutions.

14. CONVENING THE MEMBERS' MEETING

(1) The ordinary Members' Meeting shall be convened once a year. The President may convene an extraordinary Members' Meeting for valid reasons. Such a meeting must be convened if one third of the member institutions or at least three elected members of the Board of Directors apply for such a meeting in writing, specifying the reasons and its purpose.
(2) The President convenes an ordinary or extraordinary Members' Meeting in writing, by fax or by e-mail, giving two weeks’ notice and informing the members of the agenda in the notice. If under the given circumstances the convening notice period is deemed to be unreasonable, the President may determine a reasonable shorter convening notice period.

15. REPRESENTATION, QUORUM AND VOTING RIGHT

(1) In the Members‘ Meeting the member institutions only be represented by their managing board members or by a General Representative or other member of the management level immediately below the management board.
2) The Members' Meeting constitutes a quorum if more than half of the member institutions and more than half of the votes are represented. When electing a President and members of the Board of Directors, when voting on amendments to the statutes, the exclusion of a member institution or the dissolution of the association, it constitutes a quorum only if more than half of the member institutions and more than three fourths of the votes are represented. The Members' Meeting can allow by a simple majority, a quorum not being required, a member institution not present for valid reasons to be represented by another member institution that is present. In the cases stated in sentence 2, where no quorum has been attained, a new Members' Meeting with the same agenda shall be convened within a period of one month; this Members' Meeting shall constitute a quorum in any case.
3)Each ordinary member institution which, pursuant to section 20 subsection 3 letter a) sentence 1, pays the full basic fee has two votes for each percentage that it contributes to the association's costs allocated to each member (section 20 subsection 3 letter b). Each member has a minimum of two votes and a maximum of 20 votes, the latter on the condition that the loss of votes due to the aforementioned permissible maximum does not represent more than half of the votes lost. For the calculation of votes, fractions of percentages are rounded up if they reach or exceed half of a full percentage, and are otherwise rounded down to the next full percentage. Reductions of the allocated amount due to special arrangements (section 20 subsection 6) remain unaffected. The calculation shall be based on the latest allocation formula effective at the time of voting. Section 20 subsection 3 letter b) sentence 3 remains unaffected.
(4) Each ordinary member which pays only half of the basic fee pursuant to section 20 subsection 3 letter a) sentence 2 or which pays only a quarter of the basic fee pursuant to section 20 subsection 3 letter a sentence 3 has one vote. Extraordinary members have no vote at the Members’ Meeting.
(5) The voting right of member institutions in liquidation is suspended in the case of matters not concerning them.
(6) Amendments to the statutes, the exclusion of a member institution and the dissolution of the association may only be resolved by a three fourths majority of the votes cast by the members with a right to vote. Other decisions by the Members' Meeting require a majority of the valid votes cast (simple majority). If in a vote the required number of votes is not attained, a decision shall be made by final ballot. For each position not yet filled after a valid election, two candidates shall be chosen for election from those with the most votes. In the event of a parity of votes between the candidates, a decision shall be made by drawing lots; the same applies in the event of a parity of votes during the final ballot itself.

(7) The Members’ Meeting may, by order of the President, vote in written form by letter or by fax in respect of the admittance of new members to the association and of a supplementary election to replace office bearers of the association who resign before the end of the period of office for which they were elected. Also when making decisions of this kind, the voting right proportions are defined in accordance with section 15 subsections 3 and 4; section 32 subsection 2 of the German Civil Code is thus not applicable in this respect.

16. VOTING PROCEDURE

The members vote by secret ballot to elect the President and the members of the Board of Directors and in the event of motions of no confidence. If one fourth of the member institutions represented at the Members' Meeting demand a secret ballot, a secret ballot shall also apply in other cases, except when electing members of expert bodies.

17. EXERCISE OF FUNCTIONS

(1) All offices may only be exercised personally and are not subject to remuneration. 
(2) The office bearers, the members of the expert bodies and other working groups as well as the General Managers (section 18) shall treat all information obtained during their work for the association about the business activities of the member institutions confidentially. This also applies vis-à-vis member institutions and the association's bodies. However, the duty to observe secrecy – also towards federal or regional authorities – does not apply to summarizing documents for all member institutions or for specific groups or to facts if such a breakdown is required.

18. MANAGEMENT BOARD

(1) The Management Board appointed by the President shall conduct the association‘s business in accordance with the President‘s instructions. The Management Board may act on behalf of the association, sign for it and conclude agreements required for the association‘s business within the scope of the budget. Business activities going beyond this require the approval of the President. The Management Board appoints members to the expert bodies (section 12) and informs the Board of Directors about its appointments in due course.
(2) The annual accounts to be established by the Management Board shall be audited by the auditors elected by the Members' Meeting before being presented to the Members' Meeting.
(3) The Management Board shall participate in the Members' Meetings and, as a rule, in the meetings of the Board of Directors or the expert bodies in as much as the President or the chairperson, in agreement with the President, does not decide otherwise in certain cases. In justified cases, the Management Board may be represented by another staff member of the office.

19. MINUTES

(1) Minutes shall be taken for all sessions of the Members' Meetings and the Board of Directors  usually by one of the General Managers. These minutes shall be signed by the chairperson of the meeting and by one of the General Managers.
(2) Copies of the minutes of the Members' Meetings shall be forwarded to all member institutions; copies of the minutes of the meetings of the Board of Directors or of the expert bodies shall be forwarded to the President and the members of the Board of Directors and the relevant working group.
(3) The President shall regularly inform the member institutions of the results of the groups' discussions. The President may assign this task to the Management Board.

20. COST ALLOCATION

(1) The costs of the association and its Management Board (section 19) are shared and allocated to the members.
(2) The Board of Directors shall, in its last meeting in the financial year, adopt the association's budget for the following financial year. The President may approve extraordinary expenses within one financial year amounting to a maximum of ten percent above the budget adopted by the Board of Directors.
(3) Each ordinary member pays:
a) 1the basic fee, the amount being determined for each financial year by the Members' Meeting. 2At the request of an ordinary member whose Pfandbriefe outstanding total less than EUR 1,500,000,000.00 (in words: one billion five hundred million Euros), that member’s basic fee will be reduced by half. 3At the request of an ordinary member whose outstanding Pfandbriefe total less than EUR 500,000,000.00 (in words: five hundred million Euros), that member’s basic fee will be reduced to one quarter. If several member institutions belong to the same banking group (section 15 ff of the Stock Corporation Act (“Aktiengesetz”)), the basic fee is to be paid, upon request, by only one of these member institutions, which must then, however, pay the basic fee in full.
b) the portion of the allocation to be decided upon by the Members' Meeting corresponding to the ratio of the volume of Pfandbriefe outstanding to the volume of Pfandbriefe outstanding of all ordinary members, rounded down to full million amounts.
Where a Pfandbrief bank obtains ordinary membership during the current financial year, the volume of Pfandbriefe outstanding of this bank to be considered for the financial year of admission will only be applied on a pro rata basis. However, the calculation of the number of votes allocated to a Pfandbrief bank within the meaning of sentence 2 (section 15 subsection 3) will be governed without restriction by sentence 1.
(4) The amount of the extraordinary members’ pecuniary obligations pursuant to section 5 subsection 1 no. 1 will be determined by the Board of Directors; the amount of such pecuniary obligations will not exceed the full basic fee. Extraordinary members pursuant to section 5 subsection 1 no. 2 will pay an amount totaling half of the basic fee.
(5) For each current financial year the pro rata calculation of the basic fee pursuant to subsection 3 letter a) number 1 and of the allocation amount pursuant to subsection 3 letter b) shall be determined on the base of the final, published annual accounts of the previous financial year of each ordinary member. If not all ordinary members have yet published their annual accounts in the current financial year, the calculation shall be based on the accounts of the earlier financial year for which annual accounts of all ordinary members are available. Until such times as all ordinary members again periodically publish their annual accounts or corresponding financial statements, the calculation shall be based provisionally on the reports to the Federal German Statistical Office ("Statisti¬sches Bundesamt") that are made in each case as of the date of the previous annual accounts.
(6) In justified cases, the Board of Directors may make special arrangements about which the members must be informed by the President in the following Members' Meeting.

21. USE OF SURPLUSES

If the association’s profit and loss statement shows a surplus, it will be carried forward to the next financial year.

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22. DISSOLUTION OF THE ASSOCIATION

The dissolution of the association can only be decided upon by the Members’ Meeting with the majority stipulated in section 15 subsection 6. Unless the Members’ Meeting decides otherwise, the President and a further member of the Board of Directors appointed by him become liquidators authorized to act jointly for the association. Sentence 2 shall apply analogously in the event that the association is dissolved for another reason or loses its legal capacity.   

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23. USE OF ASSETS UPON DISSOLUTION

(1) In the event of the association’s liquidation, the ongoing business is first to be concluded, the association’s receivables collected, the remaining assets converted into money and all the association’s creditors satisfied. The association’s subsequently remaining assets (residual assets) will then be divided into two parts – Fund I and Fund II. a) Fund I contains, in the case of a winding-up resolution in the year 2011, sixty (60) percent of the residual assets. This share will be reduced in each subsequent calendar year up to the year 2030 by three (3) percent of the residual assets in each case. In the case of a winding-up resolution from January 1, 2030 onwards, the residual assets in their entirety will fall to the sole remaining Fund II. b) Depending on the amount of the share in Fund I, Fund II contains the remaining residual assets. In the case of a winding-up resolution from January 1, 2030 onwards, Fund II will contain the association’s residual assets in their entirety. (2) Fund I will be divided among those ordinary members of the association which became ordinary members of the association prior to January 1, 2005; the assets will be divided among them in proportion to the membership fees (basic fees, costs etc.) paid by them since the beginning of their respective memberships up to December 31, 2004, taking into consideration any ordinary members absorbed by them through merger, legal succession or in another way. 
(3) Fund II will be divided among all ordinary members of the association (including those already participating in Fund I); the assets will be divided among them in proportion to the costs paid by the respective ordinary member pursuant to section 20 subsection 3 letter b) from the 2005 financial year onwards, taking into consideration any ordinary members absorbed by them through merger, legal succession or in another way. 

(4) In the event that the association is dissolved and the association’s purpose is largely to be taken over by another legal person, the Members’ Meeting can, in derogation from this section 23, decide by a majority of three quarters of the ordinary members’ votes cast to transfer the association’s assets in their entirety or in part to that legal person. 

(5) In the event that the association is to be dissolved and the association’s purpose is largely to be taken over by another legal person, the Members’ Meeting can, moreover, decide by a simple majority of the votes cast to transfer the association’s accounting books and records to that legal person provided the latter undertakes to observe any statutory duties to preserve records.

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