Explanatory Notes to the Business of the Annual General Meeting Resolutions 1 to 4 – Approval of Financial Statements The Management Board proposes that the Annual General Meeting, after having reviewed the management report of the Management Board and the report of the independent auditor, approve: - | the consolidated accounts for the financial year ended 31 December 2021 in their entirety, showing a consolidated net loss of EUR 124.8 million ; | - | the annual accounts for the financial year ended 31 December 2021 in their entirety, showing a net loss of EUR 63.5 million ; | - | allocation of the results of the Company based on the stand-alone annual accounts of the Company prepared in accordance with Luxembourg GAAP for the financial year ended 31 December 2021 as follows: | - | Results of the financial year 2021: EUR 63.5 million | - | Losses brought forward: EUR 2,316.9 million |
Shareholders are reminded that no vote is required for resolution 1. Resolutions 5 to 7 - Discharge of Members of the Management Board The Management Board proposes that the Annual General Meeting approve that discharge be granted to each member of the Management Board, for the execution of their mandates during the financial year ended 31 December 2021. Resolutions 8 to 14 - Discharge of Current and Former Members of the Supervisory Board The Management Board proposes that the Annual General Meeting approve that discharge be granted to each current and former member of the Supervisory Board, for the execution of their mandates during the financial year ended 31 December 2021. Resolutions 15 to 19 – Reappointment of Members of the Supervisory Board The Management Board proposes that the Annual General Meeting approve and renew the mandate, as member of the Supervisory Board, of each of the following persons: Georgi Ganev, Cynthia Gordon, Victor Herrero, Carol Shen and Laura Weil. Pursuant to the German Corporate Governance Code which the Company has voluntarily elected to comply with, all proposed candidates are independent. Further, none of the proposed candidates have personal or business relationships with either the Company, the governing bodies of the Company or any shareholders with a material interest in the Company, with the exception of Georgi Ganev who is the Chief Executive Officer of Kinnevik AB (publ), whose subsidiary is a material shareholder of the Company. The mandates for each of the reappointments to the Supervisory Board shall be for a period of three years, expiring at the general meeting of shareholders that resolves on the discharge for the exercise of the Supervisory Board’s mandates for the financial year ending 31 December 2024, being the general meeting of shareholders to be held in 2025. The proposed Supervisory Board members each possess relevant knowledge, skills and professional experience to enable the Supervisory Board to fulfil its supervisory duties effectively. If the reappointments are approved, this will lead to an independent Supervisory Board in accordance within the definition of the German Corporate Governance Code and a gender and ethnically diverse Supervisory Board. The biographical information of each individual proposed for reappointment to the Supervisory Board is available on the Company’s website at https://ir.global-fashion-group.com/agm |
Resolution 20 – Reappointment of Auditor The Management Board proposes that the Annual General Meeting appoint the auditing firm Ernst & Young as independent auditor (réviseur d’entreprises agréé) to perform the independent audit of the Company regarding the financial year ending 31 December 2022. Resolution 21 - Presentation of and advisory vote on the remuneration report for the members of the Management Board and the Supervisory Board The Management Board proposes that the Annual General Meeting pass an advisory vote on the remuneration report for the members of the Management Board and the Supervisory Board. Resolution 22 - Presentation of and advisory vote on the revised remuneration policy for the members of the Management Board and the Supervisory Board The Management Board proposes that the Annual General Meeting pass an advisory vote on the remuneration policy for the members of the Management Board and the Supervisory Board. The Company has revised its remuneration policy for the Management Board and the Supervisory Board, as previously approved by the shareholders on 26 May 2021, and submits it to the advisory vote of the Annual General Meeting as required by Article 7bis of the Luxembourg law of 1 August 2019 amending the Luxembourg law of 24 May 2011 on shareholders rights and which became effective on 24 August 2019 (the “ Shareholders Rights Law ”). The proposed changes relate to the remuneration system of the members of the Supervisory Board. In consideration of the German Corporate Governance Code, the Supervisory Board has created two new committees, the Nomination Committee and the Remuneration Committee. The remuneration policy has been adjusted to distribute the fees previously payable to the Supervisory Board and its two committees (being the Audit and Sustainability Committees) amongst the members of the new committees. As a result the overall fees payable to the members of the Supervisory Board have not increased from those approved by the shareholders of the Company in 2019. The proposed changes also relate to an adjustment to the short term incentive plan of the Management Board members, with the on-target performance to be adjusted from 50% to 60% of base salary, resulting in the maximum payout opportunity to 90% of base salary based on the achievement of the short term incentive plan metrics and targets for each of the Management Board members. Further, the proposed changes include some minor factual updates to bring the Remuneration Policy in line with the Company’s Declaration of Compliance with the German Corporate Governance Code and more general technical updates, such as the extension of the term of one Management Board member. Resolution 23 – Remuneration of Members of the Supervisory Board The Management Board proposes that the Annual General Meeting approve the remuneration for the members of the Supervisory Board for the 2022 financial year as follows: Supervisory Board: | Supervisory Board | Audit Committee | Sustainability Committee | Nomination Committee | Remuneration Committee | Chairman | €40,000 | €40,000 | €20,000 | €10,000 | €25,000 | Vice Chairman | €10,000 | - | - | - | - | Member | €30,000 | €10,000 | €10,000 | €5,000 | €10,000 |
The Chairman of the Supervisory Board and the Vice Chairman of the Supervisory Board shall be entitled to their fee as Chairman and Vice Chairman respectively, along with the fee for being a member of the Supervisory Board. Resolution 24 – Restatement and renewal of the authorised capital of the Company, waiver of the preferential subscription right of existing shareholders where expressly provided in the special report of the Management Board dated 6 May 2022 and amendment of articles 6.1 and 6.2 of the articles of association of the Company The Management Board proposes that the Annual General meeting acknowledges the special report of the management board dated 6 May 2022 and approves a restatement and renewal of the authorised capital of the Company. The Management Board has utilised some, but not all, of the previously authorised capital on a number of occasions, in the best interests of the Company and its shareholders and now wishes to restate and renew the Company’s authorised capital. The Management Board would like to draw attention to the importance of the Company being able to act quickly and have flexibility in increasing the share capital of the Company, according to the needs of the Company. The protracted procedure of convening an extraordinary general meeting in order to offer shares to shareholders on a pre-emptive basis, as well as the resulting publicity and costs involved in convening such an extraordinary general meeting, may be incompatible with the Company’s needs and could result in missed opportunities for the Company. As a result of the above, the Management Board proposes that the Annual General Meeting approves an increase of the Company’s authorised capital by 8,000,000 common shares to a total of 219,142,339 common shares, with the authorised capital lasting for a period of five (5) years from the date of the Annual General Meeting with the possibility to issue up to 122,757,339 new common shares without reserving a preferential subscription rights to the existing shareholders of the Company. The Management Board also notes that the authorisation to issue up to 122,757,339 new common shares without reserving a preferential subscription rights to the shareholders will allow the Management Board to, among other things, convert or grant the right to convert any present or future convertible instruments, including the 3,750 convertible bonds issued by the Company in March 2021 (to the extent that such convertible bonds are outstanding), into shares issued by the Company, satisfy the Company’s obligations under its management incentive plans and to use the authorised capital for general corporate purposes, including but not limited to, raising funds required to meet the Company’s financing and refinancing needs without delay and seizing opportunities in potential merger & acquisition transactions by enabling the Company to acquire shares and other assets on the best possible terms at short notice. Without prejudice to the generality of the foregoing, the current intention of the Management Board is to use the additional authorised capital for the purposes of satisfying future management incentive schemes. The proposed authorised capital shall apply to rights, options, warrants, convertible instruments and other securities, restricted stock units, or other equity-based awards or rights to subscribe to or receive shares issued prior to the date of the Annual General Meeting as well as apply, to the extent not used yet, to rights issued thereupon and in the future, notably under any existing or future management incentive scheme or other contractual documentation entered into by the Company. Finally, as a consequence of the above, articles 6.1 and 6.2 of the Company’s articles of association shall be amended and shall read as follows: “6.1 The Company's authorised capital, excluding the issued share capital, is set at two million one hundred ninety one thousand four hundred twenty-three euro and thirty nine cents (EUR 2,191,423.39) represented by two hundred nineteen million one hundred forty-two thousand three hundred thirty nine (219,142,339) common shares having a nominal value of one cent (EUR 0.01) each. 6.2 During a period of five (5) years from the date of any resolutions to create, renew or increase the authorised capital pursuant to this article, the management board with the consent of the supervisory board, is hereby authorised to issue common shares, rights, options, warrants, convertible instruments and other securities, restricted stock units, or other equity-based awards or rights to subscribe to or receive shares or grant rights to convert instruments into shares (whether on a regulated or unregulated market), for contributions in cash and/or in kind or via a conversion of existing reserves, within the limits of the authorised capital to such persons and on such terms as set forth in the special report of the management board dated 6 May 2022 as may be amended from time to time on the authorised capital and specifically to proceed with the issue of up to one hundred twenty-two million seven hundred fifty-seven thousand three hundred thirty nine (122,757,339) common shares without reserving a preferential right to subscribe to the shares issued for the existing shareholders subject to the limitations set forth in the special report of the management board dated 6 May 2022 as may be amended from time to time and it being understood, that any issuance of such instruments will reduce the available authorised capital accordingly.” |