19. Capital, Reserves and Retained Earnings

Authorized capital

BASF SE has only issued fully paid-up registered shares with no par value. There are no preferential voting rights or other restrictions. BASF SE does not hold any treasury shares.

In accordance with the resolution of the Annual Shareholders’ Meeting on May 3, 2019, the Board of Executive Directors was authorized, with the consent of the Supervisory Board, to increase, until May 2, 2024, on a one-off basis or in portions on a number of occasions, the company’s share capital by a total of up to €470 million by issuing new shares against contributions in cash or in kind. In principle, shareholders are entitled to a subscription right. However, the Board of Executive Directors is authorized, with the approval of the Supervisory Board, to exclude shareholders’ statutory subscription rights in the cases specified in the authorizing resolution. The Board of Executive Directors is authorized, with the consent of the Supervisory Board, to lay down the further contents of the share rights and the details of the execution of the capital increase. The total shares issued on the basis of the above authorization with the exclusion of the shareholders’ subscription right in the case of capital increases in return for contributions in cash or in kind must not exceed 10% of the share capital at the time that this authorization comes into effect or – if this value is lower – at the time of its exercise. The proportionate amount of the share capital of those shares that are to be issued on the basis of conversion or option bonds granted during the term of this authorization under the exclusion of the subscription right, must be credited against the aforementioned ceiling of 10%. This authorization has not been exercised to date.

Conditional capital

By way of a resolution of the Annual Shareholders’ Meeting of May 12, 2017, the Board of Executive Directors was authorized, with the approval of the Supervisory Board, to issue, on a one-off basis or in portions on more than one occasion, bearer or registered convertible bonds and/or bonds with warrants, or combinations of these instruments, with or without maturity limitations up to a nominal value of €10 billion until May 11, 2022. The notional interest in the share capital attributable to the BASF shares to be issued in connection with the debt instruments issued under this authorization may not exceed 10% of the share capital.

In this connection, the share capital was increased conditionally by up to €117,565,184 by issuing a maximum of 91,847,800 new registered BASF shares. The conditional capital increase will only be carried out to the extent to which holders of convertible bonds, or warrants attached to bonds with warrants issued, exercise their conversion or option rights. This authorization had not been exercised as of the end of the 2021 fiscal year.

Authorization of share buybacks

By way of a resolution of the Annual Shareholders’ Meeting of May 12, 2017, the Board of Executive Directors was authorized to buy back shares until May 11, 2022, in accordance with section 71(1) no. 8 of the German Stock Corporation Act (AktG). The buyback may not exceed 10% of the company’s share capital at the time the resolution was passed and can take place via the stock exchange, a public purchase offer addressed to all shareholders, or a public invitation to the shareholders to submit sales offers. This authorization has not been exercised.

On January 4, 2022, the Board of Executive Directors approved a share buyback program with a maximum volume of €3 billion to be implemented between January 2022 and December 2023. The share buyback program is based on the previously described authorization from May 12, 2017. A proposal to renew the authorization to buy back own shares is planned for the 2022 Annual Shareholders’ Meeting, which would authorize the continuation of the share buyback program already underway.

Subscribed capital

Subscribed capital remained unchanged year on year at €1,176 million and comprises 918,478,694 qualifying shares.

Capital reserves

Capital reserves include effects from BASF’s share program, premiums from capital increases and consideration for warrants and negative goodwill from the capital consolidation resulting from acquisitions of subsidiaries in exchange for the issue of BASF SE shares at par value.

Retained earnings

The acquisition of shares in companies that BASF already controls or that are included in the Consolidated Financial Statements as a joint arrangement is treated as a transaction between shareholders, as long as this does not lead to a change in the consolidation method. There were no material transactions of this type in 2021, as in the previous year.

Legal reserves rose by €57 million in 2021 and by €70 million in 2020 due to reclassifications from retained earnings.

Other retained earnings include, among other things, earnings generated in the past by companies included in the Consolidated Financial Statements. Because of the disposal of the pigments business on June 30, 2021, the amount of €48 million for the remeasurement of defined benefit plans, plus an additional €6 million resulting from the disposal of the operational companies held by Solenis UK International Ltd., London, United Kingdom, which had been accounted for using the equity method until that date, was reclassified, in equity, from other comprehensive income to retained earnings. Moreover, deferred taxes in the amount of –€18 million arising from an adjustment in connection with the introduction of IAS 19 were offset against retained earnings in equity.

Payment of dividends

In accordance with the resolution of the Annual Shareholders’ Meeting on April 29, 2021, BASF SE paid a dividend of €3.30 per qualifying share from the retained profit of the 2020 fiscal year. With 918,478,694 qualifying shares, this represented total dividends of €3,030,979,690.20. The remaining €914,882,378.80 in retained profits was allocated to retained earnings.