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Last Update: 03/12/2009
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Corporate governance of the BASF Group

Conversion of BASF Aktiengesellschaft into BASF SE

As of January 14, 2008, BASF took on the new European legal form of a European Company. A highly significant goal of the conversion into BASF SE was the strengthening of BASF’s corporate governance structure. By reducing the size of the Supervisory Board to 12 members while maintaining the equal representation of shareholders and employees and broadening the European composition of the employee representatives’ side, the future direction for a modern and efficient corporate constitution has been set. Proven structures such as the two-tier administrative system of BASF’s Board of Executive Directors and Supervisory Board will be retained in the SE.

Management and supervision in BASF SE

The legal foundations of BASF SE’s corporate constitution are primarily the SE Council Regulation of the European Union, the German SE Implementation Act and the German Stock Corporation Act. Despite these new legal foundations, the previous fundamental elements of BASF Aktiengesellschaft’s corporate constitution remain unchanged in BASF SE: these are the two-tier system consisting of BASF’s Board of Executive Directors and the Supervisory Board, the equal representation of shareholders and employees in the Supervisory Board and the shareholders’ rights of co-administration and supervision at the Annual Meeting.

Direction and management by the Board of Executive Directors

Under the two-tier administrative system of BASF SE, the Board of Executive Directors is responsible for the management of the company, and represents BASF SE in business undertakings with third parties. BASF’s Board of Executive Directors is strictly separated from the Supervisory Board: A member of the Supervisory Board cannot simultaneously be a member of the Board of Executive Directors. The Board of Executive Directors agrees on company goals and corporate strategy and manages and monitors the business units of the BASF Group through the planning and setting of the company budget, the allocation of resources and management capacities, the monitoring and decision making regarding significant individual measures, and the control of the operational management. The Board is obliged to act and decide in the company’s best interests. It is dedicated to the goal of increasing the company’s value in the long term. The decisions made by the Board of Executive Directors are based on a simple majority. In the case of a tied vote, the casting vote is given by the Chairman of the Board. However, the Chairman of the Board does not have the right to veto the decisions of the Board of Executive Directors.

The Board of Executive Directors reports to the Supervisory Board regularly, comprehensively and in a timely manner on all relevant matters concerning the company with regard to strategic planning, business development, risks and risk management. Furthermore, the Board agrees on corporate strategy with the Supervisory Board. Where required by the Statutes of BASF SE, the Board of Executive Directors must have the approval of the Supervisory Board for certain transactions before they are concluded. Such cases include the acquisition and disposal of enterprises and parts of enterprises, the issuance of bonds or comparable financial instruments provided the acquisition or disposal price or the amount of the issue in an individual case exceeds 3% of the equity reported in the last Consolidated Financial Statements of the BASF Group.
The members of the Board of Executive Directors, including their membership of the supervisory bodies or other companies, are listed under Management and Supervisory Boards. The compensation of the Board of Executive Directors is described in detail in the Compensation Report.

Directors’ and Officers’ liability insurance

BASF has taken out liability insurance that covers the activities of members of the Board of Executive Directors and the Supervisory Board (D&O insurance). The policy provides for a suitable level of deductibles.

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