Corporate Governance

On 1 July 2009, the Federal Cabinet adopted the "Public Corporate Governance Code" (PCGC). It is specifically directed at enterprises in which the Federal Republic holds a majority stake and formulates good corporate governance standards in the form of recommendations designed to make the governance and supervision of these enterprises more transparent and comprehensible.

The PCGC primarily refers to limited liability companies. Legal entities incorporated under public law such as KfW are encouraged to follow the PCGC unless specific legal provisions require otherwise.

Legal entities following the PCGC are obliged to report on corporate governance on a yearly basis. Constituent parts include in particular the report on the individualised disclosure of allowances for its bodies (so called “Allowances Report”) and a joint declaration of the enterprise's management and supervisory body confirming that the recommendations of the PCGC are met, including a disclosure and comprehensive explanatory statement on potential discrepancies (so called “Declaration of Conformity”).

At the end of 2009, the Executive Board and the Board of Supervisory Directors of KfW decided to implement the PCGC and to adapt KfW's rules and standards accordingly. The recommendations of the PCGC were applied as far as permitted by KfW's particular corporate structure and organisation laid down in KfW's legal provisions and standards. From 1 January 2011, the statutes of KfW oblige the Executive Board and the Board of Supervisory Directors to issue an annual Corporate Governance Report including an Allowances Report and a Declaration of Conformity affirming compliance with the recommendations of the PCGC and to publish the report permanently on the Internet.

The Executive Board and the Board of Supervisory Directors issued the first Corporate Governance Report concerning the year 2010. The complete report is published as part of KfW's Annual Report and Financial Report. According to the statutes, all Corporate Governance Reports will be published including the Declaration of Conformity and the Allowances Report.

If enterprises in which the Federal Republic holds a majority stake operate a group under uniform management, the PCGC adresses to the group management as well. Consequently, the PCGC is also applied to (large) group enterprises of KfW (KfW IPEX-Bank and DEG) and implemented accordingly, while deviations from the Code are explained. Their Corporate Governance Reports can be downloaded here as well.