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Corporate Governance and Compliance

As an internationally active Group, STADA is subject to a wide range of legal framework conditions. Adherence to these conditions forms the foundation of responsible, sustainable and successful corporate governance – because unlawful behavior or even the appearance of a breach of the law can damage the reputation and market position of the Company in a lasting manner and cause significant financial loss. For this reason, the principles of transparent, responsible and value-oriented corporate governance determine the actions of STADA’s Executive and Supervisory Boards. Furthermore, in addition to legal requirements and further regulations such as the German Corporate Governance Code, for instance, the regulatory framework in which the Company operates encompasses the provisions of its Internal Control and Risk Management System, the STADA Code of Conduct and corporate policies on specific topics derived from it.

STADA’s Code of Conduct, its Corporate Governance Report including the Declaration of Compliance from the Executive and Supervisory Boards, as well as the Corporate Governance Declaration for STADA Arzneimittel AG and the Group are published here on the STADA Company website.

 

STADA's Code Of Conduct

STADA’s Code of Conduct and corporate policies not only serve the Company itself, but also its employees in particular as guidance for proper behavior when confronting legal or ethical challenges in their daily work. They also help to prevent corrupt behavior, among other things. The Code of Conduct contains binding behavioral guidelines on topics such as anti-corruption, fair competition, social aspects regarding tolerance and respect as well as dealing with the media. In order to familiarize employees with the content of the Code of Conduct, they are instructed by a compliance officer, for example, in the context of an interactive e-learning seminar including practical examples. Special guidelines also exist for cooperation with members of the medical care profession and serve as a behavioral measure for appropriately dealing with, for instance, gifts, invitations and similar items, thus preventing any sort of misconduct.

An updated and expanded version of the Code of Conduct was published in financial year 2018. The Code of Conduct is valid for all employees as well as for the members of the STADA Arzneimittel AG Executive Board and for all national and international subsidiaries controlled directly or indirectly by STADA. In this updated version, better consideration is taken of the local circumstances of international subsidiaries.

In financial year 2019, internal communication measures regarding compliance issues and the values of STADA are to be further expanded and stepped up at a global level, e.g. through regular newsletters and intranet contributions.

 

Compliance Management

In order to ensure compliance with applicable law, STADA implemented a comprehensive Compliance Management System comprising the main areas of anti-corruption, competition law, export control, money laundering and data protection.

A key component of the Compliance Management System at STADA is the Corporate Compliance Office, which acts as an independent and objective advisor. Its function is to protect the Company from damage to its financial position and reputation, to safeguard STADA’s management and employees from personal liability and to prevent the occurrence of competitive disadvantages. It pursues internal and external indications, clarifies issues while taking into account the principle of proportionality, issues recommendations on the optimization of intra-Group processes and regularly conducts exchanges of information with other corporate departments, particularly with Internal Auditing and Risk Management. Additionally, an Ombudsman is available to employees as well as business partners and other third parties as a neutral and independent contact person for reporting suspicious cases. Here on the company website you can found the contact details of the Ombudsmann. His task is to receive confidential information and, with the consent of the information provider or anonymously, to forward it to the Compliance Office.

There are separate compliance departments that manage the topic locally in a decentralized manner and act as contact persons onsite. They support the Corporate Compliance Office and maintain an intensive dialog with it.

Through a regular review of the existing Compliance Management System, it is continuously optimized and the international exchange between compliance officers is intensified. In financial year 2017, an expanded reporting system from the subsidiaries to the Compliance Office was set up. As part of this system, disclosures from subsidiaries regarding individual compliance topics are collected and evaluated in order to, in turn, derive new optimization measures from them. At the same time, an assessment and systematic review of the situation at individual locations regarding their positioning within the area of compliance (“Readiness Assessment”) has taken place since 2016 – with the goal of gradually strengthening the Group-wide compliance organization. In financial year 2018, the focus was particularly on the “readiness” of individual locations in terms of implementing the General Data Protection Regulation (GDPR) that recently came into force.

 

Internal Control and Risk Management System

Further, STADA’s Internal Control and Risk Management System, which is designed to ensure the responsible handling of risks, represents the basis for responsible corporate governance. It puts the Executive Board in a position to recognize Group-wide risks and market tendencies so that it can immediately react to relevant changes in the risk profile. In this regard, all departments are connected to the Risk Management System, thus allowing for comprehensive risk monitoring, including the monitoring of potential risks from non-financial areas. 

The Internal Control and Risk Management System is subject to the annual audit, as well as to audits by Internal Auditing at regular intervals. The Internal Auditing department also supports the Executive Board as an independent body outside of daily business operations by evaluating Group-wide internal procedures and processes from an objective perspective and with the necessary distance. The goal is to optimize business processes, reduced costs, realize efficiency increases and to achieve internally determined goals by way of improved internal controls (see “Opportunities and Risk Report – Internal Control and Risk Management System for the Group accounting process [report in accordance with Sections 289 (5), 315 (2) No. 5 HGB]”). 

 

Environment, Health and Safety (EHS)

Good corporate governance not only means that decisions and actions are in line with legal regulatory frameworks. Good corporate governance also means going above and beyond legal requirements and putting in place measures that drive sustainable and responsible business.

In financial year 2018, STADA established the central department “Corporate EHS”. With the aim of minimizing EHS risks and optimizing the underlying processes, its key tasks are to define Group-wide EHS requirements, to support their implementation at a local level and to subsequently monitor their application.

During the reporting period, the focus of the newly-established Corporate EHS department was to create a Group-wide guideline on the topic of EHS&S (Environment, Health and Safety & Sustainability) as a first step and to support the implementation of this guideline after its entry into effect. At the same time, a global system began to be developed that describes, in the form of standard operating procedures, the EHS requirements placed by headquarters on locations. The implementation phase should be completed by the end of March 2019. Whilst the review of this implementation is expected to begin in financial year 2020, the process should begin from April 2019, using relevant key figures on environment and employment security.

STADA is also increasingly placing the same expectations on its business partners as it does on itself. For this reason, in 2015, STADA created a social compliance questionnaire based on the Business Social Compliance Index (BSCI), with which, as a first step, the Company asked key direct Asian suppliers about working conditions and ethical standards, among other things.

In financial year 2018, the Social Compliance Questionnaire underwent a review by the new Corporate EHS department of its structure and plausibility as well as the themes being queried. As part of an update to the questionnaire planned for the first quarter of 2019, the first stage will be to review it in light of the optimization needs identified in the query. Secondly, the questionnaire will be expanded to include questions on issues such as environmental management systems and occupational and workplace safety. Following on from this, STADA’s direct suppliers and manufacturers will be gradually surveyed and evaluated once again using the updated questionnaire.