General terms and conditions

for chartered accountants and auditing companies

dated 1 January 2002

1. Scope of application

1. These terms and conditions apply for agreements between chartered accountants or auditing companies (referred to as “chartered accountants” in the following) and their clients for audits, consulting and other mandates to the extent that no other explicit written agreement exists or legal provision applies.
2. lf, in isolated cases, as an exception, contractual relations have also been established between the chartered accountant and persons other than the client, the provisions outlined in no. 9 below also apply to said third parties.

2. Scope and implementation of the mandate

1. The object of the mandate is the agreed service, not a specific economic success. The mandate is carried out according to the principles of proper professional practice. The chartered accountant is entitled to approach expert individuals for assistance in carrying out the mandate.
2. Taking into account foreign law requires an explicit written agreement, excluding in the case of business audits.
3. To the extent that it is not designed for this, the mandate does not extend to examining the question of whether the provisions of tax law or other special provisions such as the regulations on pricing, monopoly rules and operational management have been adhered to; the same applies for determining whether subsidies, allowances or other benefits can be taken advantage of. The execution of the mandate only includes audit procedures which are precisely aimed at uncovering falsifications in the books and other irregularities if there is justified reason to do so discovered during the execution of audit procedures or this is otherwise expressly agreed in writing.
4. If the legal situation changes subsequently after delivering a final professional statement, the chartered accountant is not obligated to inform the client of said changes or any resultant consequences.

3. Duty of disclosure by the client

1. The client has to ensure that the chartered accountant has all the documents required to carry out the mandate in good time without any specific requests from the chartered accountant, and that the chartered accountant is informed of all procedures and circumstances which could be of importance for the execution of the mandate. This also applies for documents, procedures and circumstances which only become known during the activity of the chartered accountant.
2. On the request of the chartered accountant, the client has to confirm the completeness of the documents submitted as well as the information and explanations given as part of a written declaration formulated by the chartered accountant.

4. Ensuring independence

The client is responsible for desisting anything that could endanger the independence of the employees of the chartered accountant. This particularly applies for offers of appointments and for offers to pay for mandates at one’s own expense.

5. Reporting and verbal information

If the chartered accountant is to present the results of his work in writing, only this written account is authoritative. For auditing mandates, the report will be produced in written form unless otherwise agreed. Verbal explanations and information from employees of the chartered accountant made outside of the scope of the mandate are always non-binding.

6. Protecting the intellectual property of the chartered accountant

The client is responsible that the expert opinion, organisational plans, drafts, drawings, charts and calculations, particularly quantity and cost calculations, produced as part of the mandate by the chartered accountant are only used for his own purposes.

7. Forwarding the professional statement of the chartered accountant

1. The forwarding of professional statements from the chartered accountant (reports, expert opinions or similar) to a third party requires the written consent of the chartered accountant to the extent that the consent to forward said documents to a specific third party does not already result from the contents of the mandate. The chartered account (as part of no. 9) is only liable towards a third party if the prerequisites named in sentence 1 exist.
2. It is not permitted to use the professional statements of the chartered accountant for advertising purposes; any infringement to this entitles the chartered accountant to cancel all incomplete contacts with the client with immediate effect.

8. Rectifying errors

1. In the case of possible errors, the client has the right to rectification and subsequent fulfilment by the chartered accountant. Only in the case of failure in rectification and subsequent fulfilment can the client demand a reduction in remuneration or reversal of the contract; if the contract is awarded by a businessperson on behalf of a business, a legal entity under public law or special funds under public law, the client can only demand the reversal of contract if the service provided is of no interest to him due to the failure in rectification and subsequent fulfilment. To the extent that claims for damages exist over and above this, no. 9 applies.
2. The demand for rectification of errors has to be made immediately in writing by the client. Claims pursuant to para. 1 that are not based on an intentional act fall under the statute of limitations after the lapsing of one year from the statutory start of the limitation period.
3. Obvious errors, such as spelling errors, mathematical errors and formal errors, which are contained within a professional statement of the chartered accountant (report, expert opinion or similar) can be corrected by the chartered accountant at any time, even with third parties. Errors which may call into question the conclusions contained within the professional statement of the chartered accountant entitle the chartered accountant to withdraw these statements, including with respect to third parties. In the circumstances mentioned above, the client is to be informed by the chartered accountant in advance if at all possible.

9. Liability

1. For statutory audits, the limitation of liability pursuant to § 323 para. 2 HGB applies.
2. Liability in the case of negligence, individual cases of damage
   If neither para. 1 applies nor an arrangement for an individual case, the liability of the chartered accountant for damages claims of all types, with the exception of damages from injury to life, body and health, is limited to € 4 million in an individual case of damage caused by negligence pursuant to § 54a para. 1 no. 2 WPO; this also applies if liability towards another person other than the client is valid. An individual case of damage also exists in respect to the same damage cause by multiple breaches of duty. A single case of damage encompasses all consequences of a breach of duty irrespective of whether the damages arose in one or multiple consecutive years. As part of this, repeated actions or omissions based on the same or a similar error source are deemed as a single breach of duty if the circumstances in question are legally or commercially related. In this case, the chartered accountant can only be subject to claims of up to € 5 million. The limitation to five times the minimum insurance amount does not apply for statutory audits.
3. Preclusive periods
   A claim for damages can only be asserted within a preclusive period of one year after the claimant obtained knowledge of the damage and of the incident giving rise to the claim, but at the latest within 5 years after the incident which gives rise to the claim. The claim expires if a complaint is not filed within a period of six months after the written rejection of the compensation and the client was informed of this consequence. The right to assert the bar of the preclusive deadline remains unaffected. Sentences 1 to 3 also apply for statutory audits with limited liability.

10. Supplementary provisions for auditing mandates

1. A subsequent change or abridgement to the financial statements or management report audited and provided with an audit opinion requires the written approval of the chartered accountant, even if it is not to be published. If the chartered accountant has not provided an audit opinion, the client is permitted to refer to the audit carried out by the chartered accountant in the management report or in another area intended for the general public only with the written consent of the chartered accountant and in the wording authorised by him or her.
2. If the chartered accountant withdraws the audit opinion, the audit opinion may no longer be used. If the client has already used the audit opinion, he has to announce the withdrawal of the opinion on the request of the chartered accountant.
3. The client has the right to five report copies. Any further copies are to be invoiced additionally.

11. Supplementary provisions for assistance in tax matters

1. The chartered accountant is entitled, both when advising in individual tax issues as well as in the case of ongoing advice, to take the facts named by the client, particularly figures, as correct and complete; this also applies for accounting mandates. However, the chartered accountant is to inform the client of any incorrectness he determines.
2. The tax advisory mandate does not encompass the actions required to adhere to deadlines, unless the chartered accountant has expressly taken on this mandate. In this case, the client has to provide the chartered accountant with all important documents, particularly tax assessment notices, for adhering to the deadlines, ahead of time so that the chartered accountant has appropriate time to process the documents.
3. If there is no other written agreement, ongoing tax advisory services comprise the following activities which become due during the contractual period:
   1. Preparing the annual tax returns for income tax, corporation tax and trade tax as well as wealth tax returns, based on the annual financial statements to be provided by the client and other documents and evidence required for taxation purposes
   2. Examining the tax assessment notices for the taxes named in a)
   3. Negotiations with the financial authorities in connection with the tax returns and assessment notices named in a) and b).
   4. Participation in external tax audits and assessments of the results of external tax audits with regards to the taxes named in a)
   5. Participation in objection and appeal proceedings with regards to the taxes named in a).
   The chartered accountant takes material published legal decisions and administrative interpretations into account in the aforementioned work.
4. If the chartered account receives a lump-sum fee for the ongoing tax advisory services, the activities named in para. 3 d) and e) are to be invoiced separately unless otherwise agreed in writing.
5. The processing of special individual issues of income tax, corporation tax, trade tax, assessed valuations and wealth tax as well as all questions regarding VAT, wage tax, other taxes and contributions take place based on a specific mandate. This also applies for
   1. the processing of one-off taxation matters, e.g. in the field of inheritance tax, capital transfer tax, property acquisition tax,
   2. the participation and representation in proceedings in courts of the financial and administration jurisdiction as well as in criminal tax matters and
   3. advisory and expert work in connection with a conversion of legal form, mergers, capital increases and reductions, restructuring, the entry and exit of a shareholder, sales of a business, liquidation and similar.
6. To the extent that the preparation of the annual VAT return is undertaken as an additional activity, this does not include examining possible special accounting prerequisites as well as the question of whether all possible VAT benefits have been exhausted. No guarantee is made for the complete recording of documents for asserting pre-tax deductions.

12. Professional discretion towards third parties, privacy

1. According to the stipulations of the applicable laws, the chartered accountant is obligated to maintain secrecy about all facts which become known to him or as part of his mandate for the client, irrespective of whether it relates to the client himself or his business connections, unless the client releases him from this duty.
2. The chartered accountant may only hand over reports, expert opinions and other written statements about the results of his mandate to third parties with the consent of the client.
3. The chartered accountant is authorised to process personal information entrusted to him for the purpose intended by the client or have this processed by third parties.

13. Default of acceptance and a lack of cooperation from the client

The chartered accountant is authorised to cancel the contract with immediate effect if the customer is late with the acceptance of the services offered by the chartered accountant or the client desists the cooperation incumbent on him according to no. 3 or otherwise. This shall not affect the chartered accountant’s claim to compensation for additional expenses incurred as a result of the client’s default or failure to cooperate as well as for damage caused, even if the chartered accountant does not exercise his right to terminate the contract.

14. Remuneration

1. In addition to his payable fees or remuneration, the chartered accountant also has a right to have expenses refunded; VAT is charged additionally. The chartered accountant is entitled to request reasonable sums of advance payments relating to remuneration and reimbursement of outlays and make the rendering of his services dependent on the full satisfaction of his claims. Multiple clients are jointly liable.
2. Offsetting against claims of the chartered accountant for remuneration and reimbursement of outlays is only permitted in the case of undisputed or legally valid claims.

15. The filing and provision of documents

1. As part of execution of the mandate, the chartered accountant keeps documents given to him and produced by himself as well as any correspondence relating to the mandate for 10 years.
2. After satisfying all claims from the mandate, the chartered accountant has to provide all documents on the request of the client which he has received from or for this mandate in relation to the work. However this does not apply for correspondence between the chartered accountant and his client, and for correspondence which the client already holds in original form or as a certified copy. The chartered accountant is permitted to make and retain certified copies or photocopies of documents which he returns to the client.

16. Applicable law

German law applies for the mandate, its execution and the resultant claims.

In case of discrepancy between the English and German versions, the German version shall prevail.