Dr. Claus Recktenwald

Chairman of the Supervisory Board

Report by the Supervisory Board of SolarWorld AG
on Fiscal Year 2009

Dear Shareholders of SolarWorld AG, dear Employees and Friends of the SolarWorld Group,

A firm grounding, a sure eye and consistent sustainability – that’s what it was all about but not just as of year one after the financial market crisis. For SolarWorld’s eleventh fiscal year the tone was set by Corporate News like “Solar Power for the Pope”, “Best German Stock of the Decade” or “SolarWorld AG Outperforms € 1 Billion Revenue Forecast”. That also makes the Supervisory Board proud, and we feel rightly so.

In today’s composition the Supervisory Board of SolarWorld AG has existed since the founding of the company on 18 December 1998. It was reelected for another five years on 21 May 2008. This report describes its activities in fiscal year 2009. Again it subjects itself to an increased reporting duty which in turn means that the Supervisory Board made available to the auditors of the company the complete minutes of all the meetings of the Supervisory Board in the year 2009 including all the relevant attachments.

The Supervisory Board of SolarWorld AG again performed all the tasks imposed upon it by the relevant laws, the articles of association and the rules of procedure. It did so in a continuous dialogue with the Board of Management of the company which it both advised and monitored pursuant to paragraph 111 AktG (German Stock Corporation Act). At the same time the Supervisory Board was engaged in checking its own efficiency. On the whole no complaints resulted from its activities in general and the monitoring of the management in particular. This is why the Supervisory Board will propose to the Annual General Meeting that the actions of the Board of Management in fiscal year 2009 be ratified.

In the year under review the Supervisory Board had seven formal meetings, four of which were ordinary quarterly meetings. The meetings took place on 18 February, 25 February, 16 March, 11 May, 6 August, 24 November and 17 December 2009. The August meeting was part of a Group Supervisory Board Meeting which was repeated. On a regular basis at least one member of the Board of Management attended the Supervisory Board meetings, which took place only in exceptional cases without Management Board involvement. The Board of Management on its part kept the Supervisory Board informed about all Management Board meetings by submitting the written agenda and afterwards the minutes of the meeting.

In all decisions of fundamental importance to the company the Supervisory Board was involved in a direct and timely fashion. The Board of Management informs the Supervisory Board regularly both in writing and verbally, punctually and comprehensively about all the relevant questions of corporate planning and strategic development, about the earnings, asset and finance situation of the company as well as about the current business policy and the risk management system being practiced. The reporting duties pursuant to paragraph 90 AktG were complied with as much as the stipulations of the German Corporate Governance Code (GCGC).

In 2009, the work of the Supervisory Board of SolarWorld AG concentrated on the following priority issues: audit and final conference as well as balance sheet discussion with the auditors on all consolidated companies; monitoring of the accounting process, the effectiveness of the internal control system, the internal risk management system and the internal audit system as well as the audit itself, the independence of the auditors and the additional services rendered by the auditors; preliminary discussion of the quarterly figures with the Chief Financial Officer; international marketing strategy including sponsoring engagement in the sports area; approval of the consulting and representation services rendered to the group by the law firm of Schmitz Knoth Rechtsanwälte, Bonn, which is close to the Chairman of the Supervisory Board as contemplated by IAS 24; approval and addition to the rental contracts for the SolarWorld AG administration; opening up new business fields and production expansion in Freiberg/Saxony and in Korea; GPV settlement; preparation and approval of the AGM resolution on the capping of the Management Board remuneration; further integration of foreign subsidiaries; ongoing and future raw materials projects; preparation and submission of the Declaration of Compliance pursuant to paragraph 161 AktG concerning the GCGC version of 18 June 2009 as published on 5 August 2009; accompaniment and approval of the bond issue amounting to € 400 million.

In all its activities the Supervisory Board of SolarWorld AG was guided by the recommendations of the GCGC, which it and the Board of Management again completely complied with in 2009. In the same way in which the Supervisory Board in its meeting on 29 September 2008 approved the previous version of the GCGC of 6 June 2008, both for the year just ended and for the following year, it now approved the current version of the GCGC of 18 June 2009 as published on 5 August 2009 in a repeat resolution passed on 24 November 2009 and made permanently available to all shareholders pursuant to paragraph 161 AktG on the website of the company with the following wording:

“The recommendations by the ‘Government Commission on the German Corporate Governance Code’ as published by the Federal Ministry of Justice in the official section of the Electronic Federal Gazette are being complied with by the Supervisory Board to the extent that they are applicable to it.”

Following this the Board of Management of SolarWorld AG approved an equivalent GCGC Declaration of Compliance on 14 December 2009, which was also published pursuant to paragraph 161 AktG. The Supervisory Board received proof of this publication. At the same time the section “Corporate Governance Report“ in this Annual Group Report for 2009 also contains all the relevant details on Management Board remuneration, Supervisory Board compensation and GCGC implementation unless the report by the Supervisory Board also contained in the annual report already includes the information as required by section 3.10 of the GCGC.

As far as compliance with the GCGC recommendations by the Supervisory Board of SolarWorld AG is concerned the coordination of the strategic alignment of the company and the regular discussion of the state of strategy implementation were dealt with in the context of the consistently practiced exchange of information with the Management Board (section 3.2 GCGC). In this process the provision of information to the Supervisory Board is seen as a joint task of the Management Board and the Supervisory Board (section 3.4 GCGC). Especially the Chairman of the Board of Management was regularly informed by the Supervisory Board of the company about its own activities and was integrated into these as much as possible. Clashes of interest as defined by section 5.5 GCGC did not occur in the process. The Supervisory Board also considers itself to be independent as defined in section 5.4.2 GCGC. To the extent that mandatory approvals were required as defined in section 5.5.4 GCGC these were invariably obtained.

The tasks described by the new Accounting Law Modernization Act with regard to accounting and auditing are performed by the three-member Supervisory Board itself. To the extent that the law demands in this context that at least one member of the Supervisory Board be independent and have experience in the areas of accounting and auditing, the Supervisory Board as a whole declares itself to be sufficiently qualified. In the first instance it is enough for only one member of the Supervisory Board to have expertise in the field of accounting or alternatively in the field of auditing. This applies to all members of the Supervisory Board as fully qualified lawyers, who have all specialized in business law. In addition, the necessary expertise is simply taken for granted in the case of “long-standing members of audit committees“. As all three Supervisory Board members have been involved in the annual auditing of the financial statements of the SolarWorld Group since 18 December 1998, i.e. for more than ten years, no further explanation is needed at this juncture.

The audit company BDO Deutsche Warentreuhand Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Bonn, which was appointed by the Supervisory Board on the instructions of the Annual General Meeting of 20 May 2009 to again audit the financial statements and the consolidated annual financial statements of SolarWorld AG for fiscal year 2009 first renewed its declaration of independence as defined in section 7.2.1 GCGC, thus confirming that no business, financial, personal or other relationships existed between the auditor and his organizations and chief auditors on the one hand and the company and its organization members on the other hand that might give rise to doubts about the auditor’s independence. It was also ascertained that none of the auditors involved in the audit had exceeded the seven-year overall limit for the authorization of issuing unqualified audit certificates, to be applicable to the entire group.

The report to be given by the Supervisory Board on the result of the examination of its own efficiency should according to paragraph 171 Sec. 2 AktG also include the statement on which committees it has formed. As, however, the Supervisory Board of SolarWorld AG is limited to three members the extensive formation of committees was also superfluous in fiscal year 2009. To the extent that paragraph 175 Sec. 2 AktG requires an explanatory report on the information pursuant to paragraph 289 Sec. 4, paragraph 315 Sec. 4 of the German Commercial Code (HGB) the Supervisory Board adopts the relevant report of the Board of Management fully subscribing to the statements made in it. The management and consolidated management reports affected by this were also audited by BDO Deutsche Warentreuhand Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Bonn, which extended the audit to the accounting as well. The annual financial statements for the fiscal year ending on 31 December 2009 drawn up by the Management Board according to the HGB accounting rules and the management report for SolarWorld AG were awarded the unqualified auditor’s certificate by BDO on 12 March 2010. At the same time the auditor also gave his unqualified auditor’s certificate to the consolidated management report and the consolidated annual financial statements of SolarWorld AG, which pursuant to paragraph 315a HGB was again drawn up on the basis of the international reporting standards IFRS.

After its own examination of the annual financial statements, the consolidated financial statements, the management report and the consolidated management report the Supervisory Board approved the audit result presented by the auditor. It did not see any reasons for objections. Previously it had discussed the audit priorities with the auditors in a meeting on 17 December 2009 and had met with the auditors for a final conference on 24 February 2010. Both meetings took place in the presence of the Chief Financial Officer of SolarWorld AG. In the balance sheet meeting on 15 March 2010 further details in conjunction with the unqualified auditor’s certificates awarded on 12 March 2010 were finally discussed. Here again no doubts concerning the correctness of the results produced by the auditors were raised, which is why a further investigation was not required. In the balance sheet meeting the Supervisory Board then also approved the financial statements and the consolidated financial statements. The financial statements are hence adopted. The Supervisory Board also adopted the proposal of the Board of Management regarding the appropriation of the balance sheet profit.

In the year 2009 the Board of Management and the entire workforce of the SolarWorld Group again produced outstanding work – and did so worldwide. The Supervisory Board offers heartfelt thanks combined with its respect and appreciation.

Bonn, 15 March 2010

For the Supervisory Board
Dr. Claus Recktenwald
Chairman