Introduction

Introduction

At BKW, corporate governance is consistently carried out in compliance with the standards of the Swiss Code of Best Practice. In addition to the relevant provisions of Swiss Corporation Law, the principles and rules governing corporate governance at BKW are contained in BKW's Articles of Incorporation, Organisational Regulations, Group Regulations, Code of Conduct and regulations governing the BKW Board Committees. These documents are regularly reviewed by the Board of Directors and revised in line with changed requirements.

Within the context of corporate governance, BKW discloses in particular its financial conditions, the organisational and management structure, risk management and other important aspects of corporate governance, in order to provide shareholders with as comprehensive a picture of BKW as possible and, in so doing, enable them to make informed investment decisions. Using a balanced combination of management and controls, BKW is also committed to managing the Company in a compliant, value-driven, sustainable manner and, by so doing, enhancing our corporate value in the interests of shareholders and other stakeholder groups such as customers, public organisations and employees.

The organisational and management structure of BKW is designed to ensure the clear assignment of responsibilities, so as to avoid any unilateral concentration of powers and prevent conflicts of interest. In line with this, the functions of Chairman of the Board of Directors and President of the Executive Board are separated. All members of the board are independent, i.e. no member of the BKW Board of Directors exercises an executive function at BKW. New members are individually nominated for election at the General Shareholders' Meeting. BKW has always had a single-class share with no voting right restrictions, i.e. each share carries one vote at the General Shareholders' Meeting. The State Council of the Canton of Berne, which represents the majority shareholder in BKW, has repeatedly declared that it acts in the same way as any other shareholder with regard to BKW. In particular, it has no intention of exploiting its shareholder status and representation on the BKW Board of Directors in order to implement its energy policy (see e.g. response to the Grunder motion dated 12 December 2007).

BKW practises an extensive and effective system of controls. The independence of the control organs within BKW is organisationally assured. BKW's internal controls system is supplemented by a Group-wide risk and assurance management system which allows management to identify risks and take the necessary steps in good time. Risk assessment is based on the Group risk map, which is periodically updated to reflect current conditions. Another key element of effective corporate governance is the individual responsibility borne by BKW's various organisational units and Group companies, as well as its employees. This is consistently promoted as an important aspect of BKW's corporate culture.

Honouring its responsibility towards the community and the environment is a key criterion for BKW's sustained success. To meet this obligation even more effectively, the Board of Directors has issued a code of conduct which all employees and members of BKW Group organs must observe. The code of conduct contains guidelines and binding rules on trustworthy, compliant conduct and is supplemented by detailed directives on specific issues.

The following statements are made in accordance with the current requirements of the Corporate Governance Information Guidelines issued by the SIX Swiss Exchange.

The published information is based on the status at 31 December 2009. Significant changes which have taken place between this date and the date on which this report was printed are listed in Section 10.