Instone Real Estate : Conversion Report of the Management Board

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CONVERSION REPORT

of the Management Board of

INSTONE REAL ESTATE GROUP AG

concerning the conversion into the

legal form of a European company (Societas Europaea, SE) under

INSTONE REAL ESTATE GROUP SE

of 23 April 2021

• presented under item 10 of the agenda of the Annual General Meeting of Instone Real Estate Group AG on 9 June 2021 -

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Table of contents

1	Introduction...................................................................................................................	1
2	Instone Real Estate Group AG .....................................................................................	2
2.1	Registered office, head office, financial year and purpose of the company.......................	2
2.2	Business activity .............................................................................................................	3
	2.2.1	Business activities...............................................................................................	3
	2.2.2 Group structure and equity investments...............................................................	3
	2.2.3	Key performance indicators of the Instone Group ................................................	3
2.3	Management Board and representation of the company, Supervisory Board ...................	4
2.4	Share capital and stock market listing .............................................................................	4
2.5	Authorised capital ...........................................................................................................	4
2.6	Contingent capital...........................................................................................................	5
2.7	Ownership structure........................................................................................................	5
2.8	Number of employees and corporate co-determination....................................................	6
2.9	German Corporate Governance Code.............................................................................	6
3	Overview of the key economic and legal aspects for the conversion........................	6
3.1	Key reasons for the conversion.......................................................................................	6
3.2	Alternatives to the conversion .........................................................................................	6
3.3	Costs of the conversion...................................................................................................	7
4	Comparison of the structural elements, especially the legal position of the
shareholders of the company and of Instone Real Estate Group SE.....................................	7
4.1	Background ....................................................................................................................	7
4.2	General regulations ........................................................................................................	8
	4.2.1	Legal personality.................................................................................................	8
	4.2.2 Share capital, structure of the shares ..................................................................	8

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	4.2.3 Registered office of the company and possibility for its cross-border relocation	.... 8
	4.2.4	Disclosure obligations .........................................................................................	9
4.3	Formation of the company ..............................................................................................	9
4.4	Legal relationships of the company and the shareholders................................................	9
4.5	Constitution of the company............................................................................................	9
	4.5.1	Choice of one-tier or two-tier system ...................................................................	9
	4.5.2	Management Board...........................................................................................	10
	4.5.3	Supervisory board.............................................................................................	14
	4.5.4	Annual general meeting ....................................................................................	18
	4.5.5 Annual financial statements, consolidated financial statements..........................	24
	4.5.6 Measures to raise or to reduce share capital .....................................................	24

4.5.7 Annulment of resolutions of the annual general meeting and of the approved

	annual financial statements, special audit due to impermissible undervaluation.............	25
	4.5.8 Winding up and annulment of the company .......................................................	25
	4.5.9	Affiliated companies ..........................................................................................	25
	4.5.10 Regulations on criminal penalties and administrative fines...............................	25
	4.5.11 German Corporate Governance Code .............................................................	26
4.6	Process for the conversion into Instone Real Estate Group SE......................................	26
	4.6.1	Preparation of the terms of conversion ..............................................................	26
	4.6.2	Conversion audit ...............................................................................................	27
	4.6.3	Disclosure.........................................................................................................	28
	4.6.4 Annual general meeting of the company............................................................	28
	4.6.5 Arrangements for employee involvement...........................................................	28
	4.6.6 Entry of the conversion in the commercial register.............................................	33

4.6.7 Appointment of the SE's first Management Board; continuity of office of the

Supervisory Board ........................................................................................................

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5 Explanation of the terms of conversion and of the first Articles of Association of Instone Real Estate Group SE as well as of the effects for the shareholders and employees

	.....................................................................................................................................	35
5.1	Explanation of the terms of conversion..........................................................................	35
	5.1.1 Conversion of the company into Instone Real Estate Group SE (section 1 of the
	terms of conversion) .....................................................................................................	35
	5.1.2 Entry into effect of the conversion (section 2 of the terms of conversion)............	36
	5.1.3 Company name, registered office, Articles of Association and share capital of
	Instone Real Estate Group SE (section 3 of the terms of conversion) ............................	36
	5.1.4 Continuing application of resolutions of the Annual General Meeting of the
	company (section 4 of the terms of conversion).............................................................	38
	5.1.5 Two-tier management system of Instone Real Estate Group SE (section 5 of the
	terms of conversion) .....................................................................................................	38
	5.1.6 Management Board of Instone Real Estate Group SE (section 6 of the terms of
	conversion)...................................................................................................................	38
	5.1.7 Supervisory Board of Instone Real Estate Group SE (section 7 of the terms of
	conversion)...................................................................................................................	39
	5.1.8 Information on the procedure relating to employee involvement at Instone Real
	Estate Group SE (section 8 of the terms of conversion).................................................	39
	5.1.9 Other impacts of the conversion on the employees and their representative bodies
	(section 9 of the terms of conversion)............................................................................	39
	5.1.10 Auditor of the financial statements and first financial year (section 10 of the terms
	of conversion) ...............................................................................................................	40
	5.1.11 Special rights and special advantages (section 11 of the terms of conversion) . 40
	5.1.12 Costs of the conversion (section 12 of the terms of conversion).......................	40
5.2	Explanation of the Articles of Association of Instone Real Estate Group SE ...................	40
	5.2.1 Legal form, company name, registered office and financial year (article 1).........	41
	5.2.2 Purpose of the company (article 2) ....................................................................	41
	5.2.3 Notices and the transmission of information (article 3) .......................................	41
	5.2.4 Share capital (article 4) .....................................................................................	42

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5.2.5 Form of shares and certification (article 5)	......................................................... 42
5.2.6	Authorised Capital (article 6) .............................................................................	42
5.2.7 Authorised Capital 2021 (article 6a)...................................................................	43
5.2.8	Contingent Capital (article 7) .............................................................................	43
5.2.9	Two-tier management system (article 8) ............................................................	43

5.2.10 Composition, adoption of resolutions and rules of procedure of the Management

Board (article 9) ............................................................................................................	43
5.2.11	Management (article 10)..................................................................................	45
5.2.12	Representation of the company (article 11)......................................................	45
5.2.13	Composition and election of the Supervisory Board (article 12)........................	46
5.2.14	Chair and Deputy Chair of the Supervisory Board, committees (article 13).......	46
5.2.15	Remuneration of the Supervisory Board (article 14).........................................	47
5.2.16	Meetings of the Supervisory Board (article 15).................................................	48

5.2.17 Adoption of resolutions of the Supervisory Board and minutes of the meetings

(article 16) ....................................................................................................................	48
5.2.18 Representation of the Supervisory Board (article 17) .......................................	49
5.2.19 Powers of the Supervisory Board (article 18) ...................................................	49
5.2.20 Venue and convening of the Annual General Meeting (article 19).....................	49
5.2.21 Chair of the Annual General Meeting (article 20)..............................................	50
5.2.22	Voting (article 21) ............................................................................................	50
5.2.23 Audio and video transmission (article 22) ........................................................	51
5.2.24 Annual financial statements (article 23) ...........................................................	51
5.2.25 Appropriation of the profit (article 24)...............................................................	51
5.2.26 Place of jurisdiction (article 25)........................................................................	52
5.2.27 Formation, formation expenses and costs of the conversion (article 26)...........	52
5.2.28	Severability clause (article 27).........................................................................	52

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