BASF Report 2021 Corporate Governance – Corporate Governance Report 162 Corporate Governance Report Corporate governance refers to the entire system for managing and supervising a company. This includes its organization, values, corporate principles and guidelines as well as internal and external control and monitoring mechanisms. Effective and transparent corporate governance ensures that BASF is managed and supervised responsibly with a focus on value creation. It fosters the confidence of our investors, the financial markets, our customers and other business partners, employees, and the public in BASF. The fundamental elements of BASF SE’s corporate governance of company management, the Board of Executive Directors agrees be made via a simple majority. In the case of a tied vote, the casting system are: its two-tier system, with a transparent and effective on the corporate goals and strategic direction of the BASF Group as vote is given by the chair of the Board. However, the chair of the separation of company management and supervision between well as its individual business areas; determines the company’s Board does not have the right to veto the decisions of the Board of BASF’s Board of Executive Directors and the Supervisory Board; the internal organization; and decides on the composition of manage- Executive Directors. Members of the Board of Executive Directors equal representation of shareholders and employees on the Super- ment on the levels below the Board. It also manages and monitors are authorized to make decisions individually in their assigned areas visory Board; and the shareholders’ rights of co-administration and BASF Group business by planning and setting the corporate of responsibility. supervision at the Annual Shareholders’ Meeting. budget, allocating resources and management capacities, monitor- ing and making decisions on significant individual measures, and The Board can set up Board committees to consult and decide on Board of Executive Directors supervising operational management. individual issues such as proposed material acquisitions or dives- titures; these must include at least three members of the Board of At a glance The Board’s actions and decisions are geared toward the com- Executive Directors. For the preparation of important decisions, pany’s best interests. It is committed to the goal of sustainably such as those on acquisitions, divestitures, investments and ▪ Responsible for company management and represents BASF SE increasing the company’s value. Among the Board’s responsibilities personnel, the Board has various commissions at the level below in business with third parties is the preparation of the Consolidated and Separate Financial State- the Board. Independently of the affected business area, these com- ▪ Sets goals and strategic direction ments of BASF SE and reporting on the company’s financial and missions carefully assess the planned measures and evaluate the ▪ Strictly separate from the Supervisory Board nonfinancial performance. Furthermore, it must ensure that the associated opportunities and risks. Based on this information, they company’s activities comply with the applicable legislation and report and make recommendations to the Board. regulatory requirements, as well as internal corporate directives. This includes the establishment of appropriate systems for control, com- The Board of Executive Directors informs the Supervisory Board Direction and management by the Board of Executive pliance and risk management as well as establishing a company-wide regularly, without delay and comprehensively, of all issues important Directors compliance culture with undisputed standards. to the company with regard to planning, business development, risk situation, risk management and compliance. Furthermore, the Board The Board of Executive Directors is responsible for the management Decisions that are reserved for the Board as a whole by law, through of Executive Directors coordinates the company’s strategic orienta- of the company, and represents BASF SE in business undertakings the Board of Executive Directors’ Rules of Procedure or through tion with the Supervisory Board. with third parties. BASF’s Board of Executive Directors is strictly resolutions adopted by the Board, are made at regularly held Board separated from the Supervisory Board, which monitors the Board of meetings called by the chair of the Board of Executive Directors. The Statutes of BASF SE and the Supervisory Board have defined Executive Directors’ activities and decides on its composition. Board decisions are based on detailed information and analyses certain transactions that require the Board of Executive Directors to A member of the Board of Executive Directors cannot simulta- provided by the business areas and specialist units, and, if deemed obtain the Supervisory Board’s approval prior to their conclusion. neously be a member of the Supervisory Board. As the central duty necessary, by external consultants. Board decisions can generally Such cases include the acquisition and disposal of enterprises and