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ANNUAL GENERAL MEETING GEARED TO SHAREHOLDERS
The German Stock Corporation Act provides that shareholders
can exercise their rights at an Annual General Shareholders’
Meeting in person or appoint a proxy to vote on their behalf.
SAP wishes to actively encourage as many shareholders as
possible to vote. In 2003, therefore, SAP gave its shareholders
the option for the first time of having their voting rights exercised
by a proxy who is provided by the Company and who is
bound to carry out their voting instructions.
SAP is also one of the first German stock
corporations with bearer shares to enable its shareholders
to follow the Annual General Shareholders’ Meeting, including
the general debate, via the Internet. Investors may also
submit online instructions, until the voting begins, on how
their votes are to be cast.
IMPLEMENTATION OF THE SARBANES-OXLEY ACT SAP
is listed on the New York Stock Exchange, so it is bound by
U.S. financial market legislation as well as the German Stock
Corporation Act. The Sarbanes-Oxley Act, which came into
force in the United States in July 2002, is designed to improve
investor protection and restore investors’ confidence in the
integrity of the financial markets. SAP responded promptly to
the new law and implemented numerous measures to fulfill
the new requirements on corporate governance and reporting
for listed companies. SAP’s corporate governance efforts in
2003 focused on its duties under the Sarbanes-Oxley Act. In December 2002, SAP fulfilled one of the
main recommendations of the U.S. Securities and Exchange
Commission (SEC) for complying with the Sarbanes-Oxley Act
by setting up a Disclosure Committee. The committee evaluates
information for its relevance to the financial markets,
ensures duties of disclosure are met, and thus supports the
internal audit of financial reporting. The Disclosure Committee
met eight times in 2003.
One of the main requirements of the Sarbanes-
Oxley Act is the establishment and monitoring of internal
audit processes to ensure that public disclosure is correct
and complete. The Company’s management must therefore
submit an annual report stating its responsibilities for setting
up and maintaining the internal audit processes as well as for
assessing their effectiveness. In 2003, SAP expanded the documentation
of its internal audits and began to implement a
software solution, which it developed to help meet the extensive
documentation requirements of the Sarbanes-Oxley Act.
SAP also introduced a certification procedure
that requires the management board members of SAP’s subsidiaries,
as well as all members of the Executive Board and
Extended Management Board, to confirm to the CEO and CFO
that they have acted properly in their business dealings. This process underpins the certificates that the Sarbanes-Oxley Act
requires the CEO and CFO submit. The certificates document
the Company’s correct, complete, and proper financial reporting
and the effectiveness of the internal audit in the Form 20-F
annual report.
The Audit Committee plays an important role
in implementing the requirements of the Sarbanes-Oxley Act.
In addition to its duties under the German Stock Corporation
Act, the Audit Committee prepares the Supervisory Board’s
recommendation concerning the independent public accountant
to be elected, monitors the commissioning of the independent
public accountant with audit and non-audit services,
receives anonymous complaints from employees about
accounting and auditing practices, and examines information
about possible cases of fraud. The Sarbanes-Oxley Act requires
the annual report to indicate whether any member of the
Audit Committee could be considered a “finance expert.” The
SEC defines this as a person with knowledge and experience of
auditing, accounting, internal audits, and the work of audit
committees. Wilhelm Haarmann meets these criteria and thus
is the “finance expert” on SAP’s Audit Committee. |
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