The Board of Management has issued the following disclosures pursuant to Section 315 (4) of the German Commercial Code (HGB):

At the Annual General Meeting on April 27, 2007, the Board of Management was authorized, with the prior approval of the Supervisory Board and without any requirement for a further resolution to be passed by the Annual General Meeting, to withdraw part of all of the purchased treasury shares. Their withdrawal may be effected by employing a simplified procedure without any capital reduction, by adapting the actuarial value of the outstanding portion of shares to that of the company’s stock capital. The withdrawal may be limited to a defined fraction of the purchased shares. If the simplified procedure is employed, the Board of Management is authorized to amend the number of outstanding shares stated in the articles of association. By a resolution of the Board of Management and the Supervisory Board with effect of March 18, 2008, the authorization was exercised to withdraw 3,000,000 shares and to reduce the company’s stock capital of € 55.0 million by € 3.0 million to € 52.0 million.

At December 31, 2008, the capital stock of MTU Aero Engines Holding AG amounted to € 52.0 million, divided into 52 million registered non-par shares. Each share is entitled to one vote.

At December 31, 2008, MTU held 3,229,055 treasury shares. No voting rights are exercised in respect of treasury shares. The articles of association of MTU Aero Engines Holding AG do not contain any restrictions concerning voting rights or the transfer of share ownership. The Board of Management has no knowledge of any agreement between shareholders that could give rise to any such restrictions.

Pursuant to the German Securities Trading Act (WpHG), any investor whose shareholding reaches, exceeds or falls below a given percentage of the voting rights, as a result of purchase or sale or in any other manner, is obliged to notify this fact to MTU and to the German Financial Supervisory Authority (BaFin). The lowest threshold at which such notification is required is 3 %. MTU has no knowledge of any direct or indirect investments exceeding 10% of the voting rights.

MTU has not issued any shares with special rights conferring powers of control on the holder.

Employees holding shares in MTU Aero Engines Holding AG exercise their control rights like any other shareholder, in strict compliance with statutory regulations and the company’s articles of association.

Members of the Board of Management are appointed by the Supervisory Board in accordance with the provisions of Section 84 of the German Stock Corporation Act (AktG). The Supervisory Board also determines the number of members in the Board of Management which, according to the articles of association, must consist of at least two members. The Supervisory Board is entitled to select one member of the Board of Management to serve as its chairman. Members of the Board of Management serve for a term of office not exceeding five years. This initial term of office may be prolonged, in the same or a different capacity, for an additional five years. Pursuant to Section 31 of the German Co-Determination Act (MitbestG), the appointment of a member of the Board of Management requires a two-thirds majority of the votes of the Supervisory Board. In default of a majority vote, the Supervisory Board’s Mediation Committee is granted a one-month period within which it must submit an alternative proposal for the appointment. If no candidate is accepted as a result of this second vote, a third voting round is held, in which the chairman of the Supervisory Board has two votes but the deputy chairman is not entitled to a second vote.

The Supervisory Board has the right to refuse the appointment of a member or chairman of the Board of Management on significant grounds – for instance gross breach of duty or incapacity to manage a business in an orderly manner.

 

All amendments to the articles of association require a resolution on the part of the Annual General Meeting, pursuant to Section 179 of the German Stock Corporation Act (AktG). Under the terms of the articles of association, such resolutions must be carried by a simple majority of the votes or, in cases where a majority of the voting stock must be represented at the meeting, by the simple majority of the voting stock – unless otherwise stipulated by the law (Section 18 (1)). The right to add amendments of a purely formal nature, for instance changes to the share capital as the result of utilization of the authorized capital, is devolved to the Supervisory Board under the terms of Section 13 of the articles of association. Amendments to the articles of association become effective on the date at which they are entered in the commercial register (Section 181 (3), of the German Stock Corporation Act – AktG).

At the Annual General Meeting on May 30, 2005, the Board of Management was authorized to increase the company’s capital stock by issuing new registered shares in return for cash contributions, or in return for non-cash contributions in the case of Authorized Capital II. At December 31, 2008, MTU Aero Engines Holding AG had available authorized capital amounting to € 24,75 million, which will remain authorized until May 29, 2010.

The Board of Management is authorized until May 29, 2010 to increase the company’s capital stock by up to € 5.5 million, with the prior approval of the Supervisory Board, by issuing, either in a single step or in several steps, new registered shares in return for cash contributions.

The Board of Management is furthermore authorized until May 29, 2010 to increase the company’s capital stock by up to € 19.25 million, with the prior approval of the Supervisory Board, by issuing, either in a single step or in several steps, new registered shares in return for cash and/or non-cash contributions.

At the Annual General Meeting on May 30, 2005 the Board of Management was authorized until May 29, 2010 to issue, with the prior approval of the Supervisory Board, registered or bearer convertible bonds, bonds with warrants, certificates of beneficial interest or income bonds, or any combination of these instruments (collectively referred to as “securities”), with or without maturity date, with a total nominal value of up to € 750 million, and to grant the owners or creditors of convertible bonds and/or bonds with warrants the right or option to convert them into registered shares of the company representing a share of equity of up to € 19.25 million under the conditions established for the issue of convertible bonds or bonds with warrants. These securities may be issued in euros or – to an equivalent value – in any other legal currency, for instance that of an OECD country. They may also be issued by an affiliated company in which MTU Aero Engines Holding AG holds a direct or indirect interest. In such cases and subject to the prior approval of the Supervisory Board, the Board of Management is authorized to act as guarantor for the securities, and to grant the owners of the securities the right or option to convert them into new registered shares of MTU Aero Engines Holding AG.

At the Annual General Meeting on May 30, 2005, it was clarified that the provision made in the above-mentioned resolution authorizing affiliated companies in which MTU Aero Engines Holding AG holds a direct or indirect interest to issue securities, solely and exclusively permits such securities to be issued by group companies in the interests of securing financial resources for the benefit of the group, as defined in Section 18 of the German Stock Corporation Act.

At the Annual General Meeting on April 30, 2008, a resolution was passed by a majority of votes representing 99.8 % of the stock capital with voting rights held by those present at the meeting to accept the proposal by the Supervisory Board and Board of Management concerning the authorization to purchase and use treasury shares pursuant to Section 71 (1) item 8 of the German Stock Corporation Act (AktG) and concerning the exclusion of subscription rights. The resolution adopted by the Annual General Meeting conferred the following authorizations on the company:

a)	The company is authorized to purchase treasury shares with a par value of up to 10 percent of the company’s capital stock, as applicable on the date of the resolution, during the period from May 2, 2008 through October 30, 2009, pursuant to Section 71 (1) item 8 of the German Stock Corporation Act (AktG).
b)	The Board of Management is authorized to sell the purchased treasury shares in another manner than through the stock exchange or by means of a public offering addressed to all shareholders, on condition that the shares are sold in return for cash contributions at a price that does not lie significantly below the market price of similarly entitled MTU shares at the time of sale.
c)	The Board of Management is authorized, with the prior approval of the Supervisory Board, to sell the purchased treasury shares in another manner than through the stock exchange or by means of a public offering addressed to all shareholders if the treasury shares are sold to program participants in conjunction with the company’s Matching Stock Program and those participants are, or were, employees or officers of the company or one of its associated companies. If shares are to be issued to active or former members of the MTU Board of Management under the terms of the company’s Matching Stock Program, the Supervisory Board is authorized to transact this issue, which is not conducted through the stock exchange or by means of a public offering addressed to all shareholders. The subscription rights of existing shareholders in respect of these treasury shares are thereby effectively excluded.
d)	The Board of Management is furthermore authorized to use the purchased treasury shares as partial or complete payment in conjunction with business combinations or the acquisition, whether direct or indirect, of business, parts of business or equity investments. The subscription rights of existing shareholders in respect of these treasury shares are thereby effectively excluded.
e)	The Board of Management is also authorized, with the prior approval of the Supervisory Board, to use the purchased treasury shares to discharge obligations relating to convertible bonds, bonds with warrants, certificates of beneficial interest or income bonds (or combinations of such instruments) that the company has issued or intends to issue on the basis of the resolution passed by the Annual General Meeting on May 31, 2005. The subscription rights of existing shareholders in respect of these treasury shares are thereby effectively excluded.
f)	The Board of Management is moreover authorized, with the prior approval of the Supervisory Board and without any requirement for a further resolution to be passed by the Annual General Meeting, to withdraw part or all of the treasury shares from circulation. Their withdrawal may be effected by employing a simplified procedure without any capital reduction, by adapting the actuarial value of the outstanding portion of shares to that of the company’s stock capital. The withdrawal may be limited to a defined fraction of the purchased shares. The authorization to withdraw shares may be utilized on one or more occasions. If the simplified procedure is employed, the Board of Management is authorized to amend the number of outstanding shares stated in the articles of association.
g)	The above-stated authorizations may be exercised on one or more occasions, partially or wholly, singly or in combination. They may also be exercised by group companies as defined by Section 17 of the German Stock Corporation Act (AktG).
h)	The previous authorization to purchase treasury shares granted to the company on April 27, 2007 is revoked in favor of the new authorization which came into effect on April 30, 2008, the date on which the corresponding resolution was adopted at the Annual General Meeting. The authorization to use the treasury shares purchased under the terms of the above-mentioned earlier resolution dated April 27, 2007, remains in force.

Section 5 of the articles of association stipulates that the Supervisory Board must draw up rules of procedure for the Board of Management, including an appended list of actions that the Board of Management is only permitted to undertake with the prior approval of the Supervisory Board.

The convertible bond issued by the company in the financial year 2007 has given rise to the following agreements relating to change of control subsequent to a takeover bid:

The convertible bond with a total par value of € 180.0 million issued by MTU Aero Engines Finance B.V., Amsterdam, a limited company established under Netherlands law (bond debtor), is divided into 1,800 registered units, each with identical rights. The securities are evidenced by means of a single global certificate to bearer without interest coupons. This certificate remains deposited until the bond debtor has met all obligations arising from the securities and until MTU Aero Engines Holding AG, Munich (guarantor) has met all terms of the formal obligation.

In the event of a change of control (as defined below), the bond debtor or the guarantor will notify the bondholders of this fact through the intermediary of the depository immediately after obtaining knowledge of the change of control. A change of control is deemed to have taken place if an individual or a collectively acting group of individuals acquires a controlling interest in the guarantor. The merger of one of the guarantor’s subsidiaries with the guarantor itself and the transfer of rights from the former to the latter is under no circumstances considered to be a change of control.

Diverging from the requirements of Section 315 (4) of the German Commercial Code (HGB) and German accounting standard DRS 15a, control in the context of bond issuance conditions means:

• direct or indirect legal or commercial ownership defined by Section 22 of the German Securities Trading Act (WpHG) as a total of 50 % or more of the voting rights in the guarantor, or as defined in Section 17 of the German Stock Corporation Act (AktG), the ability to determine the affairs of the guarantor in any other manner,

or

• in the case of a takeover bid for shares of the guarantor, the existence of circumstances under which the shares already under the bidder’s control, added to the shares for which the bid has already been accepted, together entitle the bidder to 50 % or more of the voting rights in the guarantor, if at the same time the bid has become unconditional,

or

• the sale or transfer of ownership of all or substantially all assets by the guarantor to another individual or group of individuals.

“Individual” in this context refers to any natural person, society, company, association, firm, partnership, joint venture, undertaking, business combination, organization, fund, nation state or state body, irrespective of whether or not the individual in question has a separate legal personality, but excluding companies directly or indirectly affiliated with the bond debtor or the guarantor.

In the event of a change of control, the following agreements form part of the bond issuance conditions:

• Early repayment at the request of the bondholder
  If the bond debtor notifies the bondholders that a change of control has taken place in accordance with the bond issuance conditions, every bondholder has the right to demand that the bond debtor should proceed with repayment of part or all of the bond units held by the bondholder at par value plus accrued interest, on condition that the attached conversion rights have not yet been exercised and that the bond units have not yet been redeemed for the purposes of repayment. This demand takes the form of a repayment request, which must be received by the paying agency at least 20 days prior to the control record date.
   
• Repayment request
  The prescribed form for submitting a repayment request is that the bondholder should deliver a written request to the paying agency in person or by registered letter, enclosing a certified statement by the bondholder’s depository bank proving that he or she is the owner of the securities in question on the date of the request. Repayment requests are irrevocable.
   
• Adjustment of the conversion price due to change of control
  If, after the bond debtor or the guarantor has notified the bondholders of a change of control, bondholders exercise their conversion rights during the period up to the control record date, the conversion price shall be reduced (in certain cases after adjustment in accordance with Section 10 of the bond issuance conditions) by the following percentages:
  From February 1, 2009 to January 31, 2010 (both dates inclusive) 10,4 %
  From February 1, 2010 to January 31, 2011 (both dates inclusive) 5,2 %
  From February 1, 2011 to January 18, 2012 (both dates inclusive) 0,0 %
  
  Adjustment of the conversion price must not result in a conversion price that is lower than the proportional amount of the guarantor’s total share capital represented by each share.

The group holding company, MTU Aero Engines Holding AG, Munich has not entered into any other significant agreements with third parties or affiliated companies relating to change of control subsequent to a takeover bid.

It is possible that the group holding company might nevertheless be indirectly affected by a change of control, given that its consolidated subsidiary, MTU Aero Engines GmbH, Munich, is party to a number of agreements in the OEM business that forbid the group company to invest in programs that stand in competition to the engine programs in which it has engaged (or which involve comparable thrust categories), or that forbid the company to supply components to competing engine programs. Examples include the general collaboration agreement with Pratt & Whitney and other risk- and revenue-sharing agreements with other OEMs. In a risk- and revenue-sharing partnership (RRSP), each partner contributes its own resources – human and financial (risk) – to an engine program and in return receives a proportion of the revenues corresponding to their percentage share in the program.

Other contracts concluded by group subsidiaries in the context of both the OEM and the MRO business might also have an indirect impact on the group holding company, MTU Aero Engines Holding AG, Munich. These contracts contain change-of-control clauses that entitle the other party to terminate the agreement in the event that a third party should acquire a controlling interest in the company. A certain number of the company’s agreements, for instance, entitle the other party to terminate the agreement if one of that party’s competitors should acquire a given percentage of the company’s voting rights (usually 25 - 30 % of the capital stock or equity capital).

The company has not entered into any agreements entitling members of the Board of Management or other employees to claim compensation in the event of a takeover bid.

The compensation awarded to members of the Board of Management is made up of fixed and variable components. A more detailed description, including a table of individual members’ compensation entitlements, can be found in the “Corporate governance” section of this Annual Report. The management compensation report forms an integral part of the group management report.

In addition to information relating to past events, this report also contains forward-looking statements. Such passages can generally be identified through the use of such terms as “expect”, “estimate”, “intend”, “plan”, “anticipate”, “predict”, “will”, “believe”, “is likely to”, “might” and similar phrases, or through the fact that they are presented in the context of a strategy. Forward-looking statements relate to future expectations, developments, trends, and business strategies, and are based on analyses or predictions of MTU’s future business performance and estimates of figures that cannot be affirmed with any certainty at the present time. These forward-looking statements merely reflect MTU’s current outlook at the time the statements were made, and MTU does not accept any responsibility for updating forward-looking statements except in cases where it is a statutory requirement. The forward-looking statements contained in this report involve known and unknown risks, uncertainties, and other factors that may result in an actual future outcome based on real events, developments and performances that deviates significantly from the content of the statements presented here. These factors include changes in the general economic climate and business environment, exchange rate fluctuations, in addition to the factors enumerated in the “Risk report” section of this document.