Corporate governance of Fresenius SE & Co. KGaA

Fresenius SE's change of legal form to an SE & Co. KGaA (a partnership limited by shares with a Societas Europaea – a company incorporated under European law – as general partner) was entered in the Commercial Register in Bad Homburg v. d. H. on January 28, 2011. Fresenius Management SE is the general partner. The chart below shows the new structure.

Since the change of legal form became effective, the subscribed capital of Fresenius SE & Co. KGaA consists only of ordinary shares and was divided into 162,450,090 shares as of January 28, 2011. Each ordinary share confers one vote. Starting with the financial statements for the fiscal year 2010, the Company's annual financial statements will be adopted by resolution of the general meeting with the consent of the general partner.

The distribution of corporate responsibilities has also changed: Fresenius SE & Co. KGaA does not have its own Management Board. The Management Board of the general partner is responsible for conducting the business of the SE & Co. KGaA. Its composition is identical to that of the former Management Board of Fresenius SE. It formulates strategy, coordinates this strategy with the Supervisory Board of Fresenius SE & Co. KGaA, and sees to its implementation. It is guided solely by the best interests of Fresenius SE & Co. KGaA. The members of the Management Board of the general partner - Fresenius Management SE - are listed here.

The Supervisory Board of Fresenius SE & Co. KGaA supervises the management of the Company's business by the general partner and the latter's Management Board. It supervises business operations to ensure that corporate decisions are compliant, suitable, and financially sound. The members of the Management Board of the general partner are appointed by the Supervisory Board of Fresenius Management SE, not by the Supervisory Board of the KGaA.

The term of office of the incumbent Supervisory Board members ended with the change of legal form on January 28, 2011, so new elections for the Supervisory Board were required. In light of a priorly conducted legal review process (Statusverfahren), the Supervisory Board of Fresenius SE & Co. KGaA consists – as hitherto – of an equal number of six shareholder representatives and six employee representatives according to the provisions of the German Act on Employee Co-Determination in Case of Cross-Border Mergers (MgVG).

The Supervisory Board of Fresenius SE & Co. KGaA consists of twelve members. One half of the members of the Supervisory Board is elected by the General Meeting. A Nomination Committee submits election proposals for shareholder representatives. Its activities are aligned with the provisions of law and the Corporate Governance Code. The proposals for the members of the Supervisory Board primarily take account of the knowledge, ability, and expertise required to perform the tasks. While consideration is also given to diversity in the composition of the Supervisory Board, fixed quotas for diversity and age limits would generally limit the selection of qualified candidates in the composition of the Supervisory Board and their consideration in the election proposals.

Of the twelve members of the Supervisory Board, six are elected by the employees. The term of office of the current Supervisory Board members will end at the close of the Company's AGM in 2016. The Supervisory Board includes what it deems a sufficient number of independent members who have no business or personal relations with the Company or its Management Board that could cause a conflict of interest. The articles of association of Fresenius SE & Co. KGaA regulate the details with regard to the Supervisory Board's election, constitution, and term of office, its meetings and resolutions, and its rights and duties. They are published on our website at www.fresenius.com (to download, see Who we are - Corporate Governance).

The six shareholder representatives on the Supervisory Board of Fresenius SE & Co. KGaA were elected at the AGM on May 12, 2010. The six employee representatives were appointed provisionally by court order of the District Court in Bad Homburg vor der Höhe on January 31, 2011.

The members of the Supervisory Board of Fresenius SE & Co. KGaA and the members of the Supervisory Board of the general partner are listed under Supervisory Board Fresenius SE & Co. KGaA and Supervisory Board Fresenius Management SE.

The Supervisory Board of Fresenius SE & Co. KGaA has established its rules of procedure in accordance with clause 5.1.3 of the Code. The Chairman of the Supervisory Board is responsible for coordinating the activities of the Supervisory Board, chairing its meetings, and representing its interests externally. The Supervisory Board should convene once each calendar quarter, and must convene twice each calendar halfyear. The meetings are convened and chaired by the Chairman, or, if he is incapacitated, by a chairperson named by the Chairman. The person chairing the meeting decides the order for dealing with the items on the agenda and the form in which the voting is conducted. Unless other majorities are mandatory by law, the Supervisory Board passes its resolutions by a simple majority of the votes submitted in the voting. If a vote is tied, the Chairman casts the deciding vote or, if he does not take part in the voting, the matter is resolved by the vote of the Deputy Chairman, who is a shareholder representative.

The Supervisory Board of Fresenius SE & Co. KGaA conducts its business in accordance with the provisions of law, the articles of association of Fresenius SE & Co. KGaA, and its rules of procedure. Regular dialogue with the Management Board of the general partner – Fresenius Management SE – ensures that the Supervisory Board is well informed at all times about the Company's operating performance, corporate development, and planning and strategy. It approves all corporate planning and, taking into account the auditor's reports, approves the Group's annual financial statements. Another important part of the Supervisory Board's activities is the work conducted within the committees formed in accordance with the requirements of the German Stock Corporation Act (AktG) and the recommendations of the Code.

The members of the Supervisory Board keep themselves regularly informed, through internal and external sources, about the latest requirements with regard to their supervisory activities. With the support of the Company, the Supervisory Board at all times ensures that its members are suitably qualified, keep their professional knowledge up to date, and further develop their judgment and expertise to the extent necessary for the proper performance of their duties, including those of its committees. Information is sourced from various external experts, and representatives from the Company's specialist divisions keep the members informed about important developments, for instance about relevant new laws or changes in the U.S. GAAP and IFRS accounting and auditing standards.

The Supervisory Board of Fresenius SE & Co. KGaA has two permanent committees: the Audit Committee, consisting of five members, and the Nomination Committee, consisting of three members. The members of the committees were elected at the constitutive meeting on March 11, 2011. In accordance with the articles of association of Fresenius SE & Co. KGaA, only members of the Audit Committee receive additional compensation (Section 13 paragraph 2). There is no Personnel Committee in the KGaA because the Supervisory Board of Fresenius SE & Co. KGaA is not responsible for appointing members of the Management Board of the general partner or for their contracts. Responsibility for these personnel matters lies with the Supervisory Board of the general partner.

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