IFRIC 19

In November 2009, the IASB issued IFRIC 19 „Extinguishing Financial Liabilities with Equity Instruments“. The Interpretation has yet to be endorsed by the European Union and incorporated into European law.

The Interpretation specifies that a borrower who issues equity instruments to a creditor to extinguish all or part of a financial liability shall treat these equity instruments as „consideration paid“ in accordance with IAS 39.41. The borrower entity shall remove a financial liability (or part of a financial liability) from its statement of financial position. The borrower shall measure the equity instruments issued to the creditor at fair value unless that fair value cannot be reliably measured. If the fair value of the equity instruments issued cannot be reliably measured, then the equity instruments shall be measured to reflect the fair value of the financial liability extinguished. The difference between the carrying amount of the financial liability (or part of a financial liability) extinguished, and the consideration paid, shall be recognised in profit or loss.

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IFRS 2

In June 2009, the IASB published its amendments to IFRS 2 „Share-based Payment“. The amendments were endorsed by the European Union in March 2010 and incorporated into European law.

The amendments relate to the accounting of „group-settled share-based payment transactions“ as part of which a subsidiary receives goods or services that are paid for by the parent or another group entity. The amendment clarifies that the goods or services shall be accounted for irrespective of which group entity settles the obligation and regardless of whether the settlement is made in cash or by means of equity interests. The amendments to IFRS 2 also incorporate the guidance contained in IFRIC 8 and 11, which were thus withdrawn by the IASB.

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IFRIC 17

In November 2008 IFRIC issued IFRIC 17 „Distributions of Non-cash Assets to Owners“. IFRIC 17 was endorsed by the European Union and incorporated into European law in November 2009.

This Interpretation relates to the recognition and measurement of liabilities from distributions of non-cash assets (e.g. items of property, plant and equipment) and addresses the issue of accounting for any difference between the carrying amount of the assets distributed and the carrying amount of the dividend payable when an entity settles the dividend payable.

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Basel

We pointed out that there were indeed differing opinions at an international level as to the risk associated with the fair value option. Moreover, the Paper was not aimed at imposing additional restrictions with regard to risk management or the application of the fair value option. Rather, the intention was to highlight the necessity of enhancing risk management in light of the latest developments connected with the „fvo“. In any case, the assumption is that credit institutions have a powerful and consistent system of risk management in place. It was pointed out that the Paper was not aimed at restricting options granted by IAS 39 with regard to the application of „fair value“. However, one also conceded that this intention could indeed have been expressed more unequivocally in the Basel document.

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Insider dealings

Pursuant to Section 15 of the Securities Trading Act (Wertpapierhandelsgesetz – WpHG), in the version of the Investor Protection Enhancement Act (Anlegerschutzverbesserungsgesetz – AnSVG) of 30 October 2004, an issuer of financial instruments that are admitted to trading on an organised market within Germany, or for which an application for admission has been lodged, is required to disclose immediately any inside information that is of direct relevance to that issuer.

Inside information within the meaning of Section 13 WpHG refers to concrete information about non-public circumstances, i.e. circumstances not known within the public domain, which relate to one or several issuers of insider securities or to the insider securities themselves and could possibly have a significant effect on the exchange or market price of the insider securities if they were to be made public.

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Notifications under WpHG

Pursuant to Section 15a (1) sentence 1 WpHG, the notification must be issued within 5 working days. The notification is to be submitted to us and the issuer. The duty to provide a notification always arises upon conclusion of the transaction (conclusion of a contract). Within this context, the transaction constituting an obligation is the sole area of focus. Owing to the fact that the interval between the date of the transaction and the date on which the notification was furnished exceeded the specified period of 5 days, we have to assume that the notification did not occur within the required time frame. However, up to now your conduct regarding notifications has been beyond reproach.

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Financial Conglomerates Directive

In the opinion of Germany’s MTG representatives, the wording of Article 3(7), first subparagraph, second sentence of the Financial Conglomerates Directive is ambiguous. Germany’s position is that, for the purposes of identification, the wording “der dem von der Gruppe gehaltenen aggregierten proportionalen Anteil entspricht” (i.e. “aggregated proportional interest held by the group”) is to be understood as the effective shareholding. In Germany’s opinion, this can be deduced from the fact that the regulation is aimed explicitly at shares of group companies, i.e. it does not encompass shares of external non-group entities.

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UCITS

Please note that German laws governing activities other than distribution/marketing in accordance with Annex II of the UCITS Directive, an area that is of specific relevance to securities supervision, apply without exception and must be observed as part of your activities in the Federal Republic of Germany, even if this fact has not been expressly stated. For your information, please be advised that in Germany unsolicited calls directed at persons with private telephone connections, i.e. cold-calling, are deemed contra bonos mores, i.e. contrary to good morals, within the competitive environment. Therefore, such activities are expressly prohibited by law, cf. Section 1 of the Unfair Competition Act (Gesetz gegen den unlauteren Wettbewerb – UWG).

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Securities Trading Act

Pursuant to Article 6 b (3) of Directive 2001/107/EC and Section 13(3) InvG, you are hereby advised that, in accordance with Section 13(4) sentence 3 InvG, the statutory provisions set out in Sections 9(2), 9(4) and 9(5) InvG, as well as the provisions of Section 37, Section 44(1), Section 44c and Section 49 of the Banking Act (Gesetz über das Kreditwesen – KWG) and the provisions of Sections 31 to 33(1) no. 1, Sections 34b to 36a as well as Sections 37d to 37g of the Securities Trading Act (Wertpapierhandelsgesetz –WpHG) must be observed in the interests of the general good in the host Member State, i.e. Germany (see enclosure).

This does not affect the relevant provisions of the Investment Act (Investmentgesetz – InvG) governing the distribution/marketing of foreign investment units; these provisions shall apply in their entirety (cf. Division 3 InvG).

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