Statement on Corporate Governance

pursuant to Section 289 a of the German Commercial Code (HGB) with the Declaration of Conformity by the Executive Board and the Supervisory Board of Phoenix Solar AG in respect of the German Corporate Governance Code pursuant to Section 161 of the German Securities Trading Act (AktG)

In accordance with Section 289 a of the German Commercial Code, Phoenix Solar AG is obliged to submit a statement on corporate governance which is either included and published in the management report as part of the annual report or, alternatively, made available to the public on the company’s website.

Phoenix Solar AG has elected the latter option.

As a German company listed on the stock exchange, corporate governance at Phoenix Solar AG is determined first and foremost by the German Stock Corporation Act and, beyond this, by the recommendations of the German Corporate Governance Code in the respectively valid version.

Collaboration between the Executive Board and the Supervisory Board
The Executive Board and the Supervisory Board constitute the dual board system of management and control of Phoenix Solar AG. They work closely together to ensure a responsible opportunity and risk management with the aim of raising the enterprise value on a sustainable basis. In this task, the two functions of “management” and “supervision” are clearly separated.

The members of the Executive Board manage the company under their own responsibility and cooperatively. The basis for their cooperation is a set of bylaws. The Executive Board develops the corporate strategy and decides on measures for its implementation at the operational level. A clear allocation of tasks which accords with the schedule of responsibilities determines the competences of the individual members of the Executive Board. The Executive Board informs the Supervisory Board regularly within an appropriate period of time and extensively about all issues pertaining to the development of business, the strategy and planning, risk management and compliance with laws and defined codes of conduct. The Supervisory Board is informed immediately in the event of important occurrences which could exert a major impact on the company.

The Supervisory Board, which consists of six members, supervisors and advises the Executive Board in the management of the company. The Supervisory Board has laid down a set of bylaws as the basis for collaboration. The Supervisory Board agrees the strategy developed by the Executive Board and keeps itself informed of the status of strategy implementation, the financial and investment planning of the next financial year and of medium-term planning. Apart from the regular meetings, the Chairman of the Supervisory Board engages in ongoing dialogue with the Chairman of the Executive Board on the issues of strategy, business development and risk management.

The Committees of the Supervisory Board
In order to organise its work as efficiently and effectively as possible, the Supervisory Board of Phoenix Solar AG has formed three consultative committees in accordance with its bylaws. Each of these committees met in the financial year ended. The frequency of meetings depended on the requirements for fulfilling the respective tasks. The regulations applicable to the Supervisory Board are also binding on the committees. Reports on the work of the committees are regularly made to the Supervisory Board.

The Audit Committee has three members: Prof. Dr. Thomas Zinser (Committee Chairman), Oliver Gosemann and Dr. Patrick Schweisthal. Among other duties, the committee is tasked with defining the key audit areas in respect of the annual financial statements with the independent auditor and with the discussion of the interim report. The regulations set out under the GCGC requiring the Chairman of the committee to have expert knowledge and experience in the application of accounting principles and internal control procedures are fulfilled in the person of Prof. Dr. Thomas Zinser who is a tax consultant.

The Personnel Committee, similarly made up of three persons, is responsible for agreeing goals in the context of the performance-based compensation of the members of the Executive Board and for ascertaining the extent to which goals had been achieved. In addition, the committee draws up the Executive Board member contracts and put forward proposals for long-term succession planning for the Executive Board. One of the tasks and responsibilities of the Committee in 2011 was to submit proposals to the Supervisory Board for successor candidates to take over as Chief Financial Officer from Sabine Kauper. The Personnel Committee is made up of the following members: J. Michael Fischl (Committee Chairman), Dr. Torsten Hass and Prof. Dr. Klaus Hofle.

The Nomination Committee is made up of the following members: J. Michael Fischl (Committee Chairman), Prof. Dr. Klaus Hofle and Prof. Dr. Thomas Zinser.

Joint Declaration of Conformity by the Executive Board and the Supervisory Board of Phoenix Solar AG on the German Corporate Governance Code

The Executive Board and the Supervisory Board of Phoenix Solar AG herewith declare that, since the last Declaration of Conformity dated 18 March 2011, Phoenix Solar AG complies and has complied with the recommendations of the Government Commission’s German Corporate Governance Code in the version dated 26 May 2010, to the exception of the following:

Changing performance targ ets or the comparison parameters retroactively shall be excluded in the variable compensation components
(in accordance with Code Item 4.2.3)
From the standpoint of Phoenix Solar AG, adjusting performance targets and/or comparison parameters can be both expedient and justifiable in exceptional situations given that the market environment is characterised by a dynamic pace of development.

The Audit Committee is also tasked in particular with addressing issues of compliance
(in accordance with Code Item 5.3.2)
Compliance issues are dealt with by the Personnel Committee because of the experience of the Chairman of the Supervisory Board who is also Chairman of this committee.

Preparation of Supervisory Board meetings and decisions by committees
(in accordance with Code Item 5.3.5)
In view of the size of Phoenix Solar AG, the Supervisory Board does not currently deem it necessary to have its meetings prepared by committees.

Deadline for the publication of the consolidated financial statements
(in accordance with Code Item 7.1.2)
The company’s high quality requirements preclude a publication of the consolidated financial statements within the 90-day period. The financial statements will be published on the company’s website a few days after the Supervisory Board meeting which adopts them.

Sulzemoos, 16 March 2012
Phoenix Solar Aktiengesellschaft

On behalf of the Executive Board
Dr. Andreas Hänel
(Chief Executive Officer)

On behalf of the Supervisory Board
J. Michael Fischl
(Chairman of the Supervisory Board)