(1) The management report is to present accurately the business development, including the business performance of the share capital company and its position, in keeping with its actual circumstances. It is to include a balanced and comprehensive analysis of the business development of the company and of its position, consistent with the scope and complexity of its business operations. The analysis is to include the key financial performance indicators most relevant to the company’s business operations and is to provide an explanation for them, referring to the amounts shown and information provided in the annual financial statements. Furthermore, the management report is to assess the company’s likely future development as well as the material opportunities and risks it faces and is to provide an explanation therefor; any assumptions on which this assessment is based are to be stated. The members of the representative body of a share capital company that issues securities (section 2 (1) of the Securities Trading Act as a domestic issuer (section 2 (14) of the Securities Trading Act) and that is not a share capital company within the meaning of section 327a are to give an assurance in a written declaration to be attached to the management report that, to the best of their knowledge, the management report accurately presents the share capital company’s business development, including its business performance and its position, in keeping with its actual circumstances, and that the material opportunities and risks within the meaning of sentence 4 have been described.
(2) The management report also is to give an indication of:
1.
a) the company’s risk management objectives and methods, including the methods used for hedging each major type of transaction for which hedge accounting is used, as well as
b) the company’s exposure to price risk, credit risk and liquidity risk as well as cash flow risk,
in each case with regard to the company’s use of financial instruments and where material for the assessment of its position or its likely future development;
2. the activities in the field of research and development; as well as
3. the existing branch offices of the company;
4. (repealed)
Where particulars are to be provided in the notes pursuant to section 160 (1) no. 2 of the Stock Corporation Act, the management report is to refer to such particulars.
(3) If the company is a large share capital company (section 267 (3)), then subsection (1) sentence 3 applies accordingly to non-financial performance indicators such as information relating to environmental matters and employee concerns, insofar as this is relevant for understanding the company’s business development or its position.
(4) Share capital companies within the meaning of section 264d are to describe in their management report the principal characteristics of their internal control process and their internal risk management system as regards the financial reporting process.