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What is a European Company / SE?
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Why is BASF to be converted into an SE?
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What are the advantages of the conversion?
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What are the consequences of the conversion for employees, shareholders, employee representatives and the supervisory board?
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How does the formation process work and when will the company name be changed to BASF SE?
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Where will the registered office of BASF SE be located in the future?
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What will the future corporate governance of BASF SE look like?
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What are the effects of the conversion on the stock exchange listing of the BASF shares?
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Are the reporting obligations of an SE different from those of an AG?
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What will the corporate governance structure of BASF AG be like after the conversion?
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Does the conversion also entail disadvantages and risks for the company?
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In which manner will the employees be informed of the proposed conversion?
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Does the conversion of BASF AG into BASF SE have any effect on the “plus” share purchase program for employees?
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What is the schedule for the conversion?
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What is a European Company / SE?
A Societas Europaea (SE), also referred to as "Europe Inc." or "Europa AG", is a legal form under the laws of the European Union. Since the end of the year 2004, this legal form is provided by the EU to enable companies to establish public limited-liability companies within the member states, which are governed by a largely uniform body of law.
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Why is BASF to be converted into an SE?
Over the last 10 years, BASF has aligned its European structures based on the future requirements and making them more competitive. The conversion into an SE is the consistent next step and the visible expression of a Europe put into practice at the entrepreneurial level.
As the leading global chemical company, BASF expressly endorses its home market Europe, which is the basis of its global activities.
With the conversion of BASF Aktiengesellschaft into an SE, BASF makes a contribution to the continuing European integration and thus promotes and supports the European idea. With its decision to become an SE, BASF sets a clear signal of support for this new legal form and the European idea embodied in it and thus takes a leading role in the chemical industry. In this respect, it is also an expression of BASF's responsibility towards society as a whole.
By the integration of the European employees in the supervisory board and the continuity of the culture of co-determination, BASF endorses social partnership all over Europe. The SE is a contemporary and modern legal form. It facilitates a further development and strengthening of the corporate governance. A supervisory board consisting of twelve members complies much better. The quality of co-determination remains unchanged while discussions and decision-making processes will be optimized.
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What are the advantages of the conversion?
The SE is a contemporary and modern legal form. The reduction of the number of members of the supervisory board to twelve, while maintaining the quality of co-determination, makes an important contribution in this regard.
The conversion into an SE further enables the European employees to become more involved in the participation of employees in the company then this would be possible in the purely national legal form of a stock corporation (Aktiengesellschaft). By the integration of the European employees in the supervisory board and the continuity of the culture of co-determination, BASF endorses social partnership all over Europe.
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What are the consequences of the conversion for employees, shareholders, employee representatives and the supervisory board?
In general, the conversion of BASF AG into an SE does not lead to any changes. For all contractual partners of BASF, merely the name changes.
For the employees, the conversion into an SE does not have any effects. As before, their employment contracts are being continued with BASF or the respective BASF subsidiary. The existing operating agreements (Betriebsvereinbarungen) and collective labor agreements (Tarifverträge) also remain in force in accordance with the provisions of the respective agreement. The existing employee representative bodies remain in place, the same applies with regard to entrepreneurial co-determination on the level of the subsidiaries. Further, there are no other measures intended or planned as a consequence of the conversion, which would affect the situation of the employees.
The rights of the shareholders in the general meeting of BASF AG or SE, respectively (including, for instance, the right to speak and to put questions and the right to vote) do not change as a consequence of the conversion into an SE. The organisation and conduction of the general meeting as well as the voting procedure is largely governed by the national law provisions applicable to public limited-liability companies, in this case the German Stock Corporation Act (Aktiengesetz).
In general, the conversion has no effects on the rights of the employee representatives on the supervisory board. The details of the co-determination on the supervisory board will be determined in an agreement on the involvement of employees which will be negotiated between the management of the company and a special negotiating body of the employees.
With regard to the rights and obligations of the supervisory board, no changes occur as a consequence of the conversion of BASF AG into an SE. The supervisory board, too, is largely governed by the provisions of the German Stock Corporation Act.
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How does the formation process work and when will the company name be changed to BASF SE?
First, it is necessary that our shareholders grant their approval to the conversion at the annual general meeting on April 26, 2007. After the general meeting, starting in June 2007, negotiations will be conducted between the management of the company and the employees with regard to their involvement in the SE. For this purpose, a special negotiating body of the employees will be established which, generally, comprises employee representatives from all European countries. After the conclusion of the negotiations (presumably in December 2007), the conversion can be filed with the commercial register for registration. With the registration of the conversion in the commercial register, the company name will change to BASF SE. We expect this to happen at the beginning of 2008.
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Where will the registered office of BASF SE be located in the future?
As before, BASF SE will have its registered office in Ludwigshafen. The board of executive directors and the supervisory board expressly declare their commitment to this place of business at which the company has its historic roots.
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What will the future corporate governance of BASF SE look like?
As is presently the case at BASF AG, BASF SE will have a two-tier corporate governance structure, consisting of the board of executive directors and the supervisory board. On the supervisory board, the employees will continue to be represented on a parity basis, that is with half of the board members. However, the SE allows for a reduction of the total number of supervisory board members, to twelve members.
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What are the effects of the conversion on the stock exchange listing of the BASF shares?
The conversion does not affect the stock exchange trading of the BASF shares. After the conversion into BASF SE, BASF shareholders will still be able to trade their shares on all stock exchanges on which the BASF shares are currently listed. No admission to stock market trading is required for the BASF SE share, since the conversion does neither lead to a liquidation nor to a re-formation of the company. As a result of the conversion, the current shareholders of BASF AG will automatically become shareholders of BASF SE upon the taking effect of the conversion into an SE. As is currently the case with the BASF AG shares, the shares of BASF SE will be included in the Dax.
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Are the reporting obligations of an SE different from those of an AG?
In general, there will be no changes regarding the financial reporting and other reporting obligations. The reporting obligations are the same ones that apply to a German stock corporation. In addition, the reporting requirements of the stock exchanges at which our shares are listed continue to apply unchanged.
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What will the corporate governance structure of BASF AG be like after the conversion?
The corporate governance structure of BASF AG will not change as a consequence of the conversion into an SE. The corporate bodies of BASF SE will continue to be – as is presently the case in the AG – the general meeting of shareholders as well as the board of executive directors and the supervisory board (so-called two-tier management system). No use will be made in the course of the conversion of the opportunity to change to a one-tier management system consisting of an administrative board instead of a board of executive directors and a supervisory board. However, the SE allows for a reduction of the total number of members of the supervisory board, to twelve members. The quality of co-determination remains unchanged.
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Does the conversion also entail disadvantages and risks for the company?
The new legal form of an SE entails no disadvantages or risks for BASF.
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In which manner will the employees be informed of the proposed conversion?
BASF has informed its employees as well as the public in general of the proposed conversion in a press release published on February 27, 2007.
In addition, we provided the most important information regarding the proposed conversion on a special page on the Intranet and the Internet. We have further designated contact persons to whom any questions arising may be addressed.
In accordance with applicable legal requirements, an information letter with detailed information regarding the proposed conversion and the effects of the conversion on the employees and the employee representative bodies will be prepared in the middle of March. In this letter, the employees will further be requested to appoint their representatives for the special negotiating body. The information letter will be sent to all employee representative bodies involved as well as to all employees who are not organized in employee representative bodies in all EU member states and EEA signatory states concerned.
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Does the conversion of BASF AG into BASF SE have any effect on the “plus” share purchase program for employees?
No. The conversion of BASF AG into BASF SE has no effect on the “plus” share purchase program for employees. German stock corporation law, which forms the basis for the program, continues to apply following the conversion into a European Company.
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What is the schedule for the conversion?
March 16, 2007 Invitation to Annual Meeting with detailed information about the conversion  April 26, 2007 Resolution of Annual Meeting regarding the conversion Mid-June, 2007 Beginning of negotiations on employee participation Mid-December, 2007 Conclusion of negotiations on employee participation Q1, 2008 Registration of BASF SE in the commercial register
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