Guidelines and Regulations

Siemens Compliance Program: Business Conduct Guidelines and other regulations

Business Conduct Guidelines

The cornerstone of compliance in any company is management’s explicit directive to all employees that laws must be obeyed and that no infractions will be tolerated. At Siemens, this directive is set out in the Business Conduct Guidelines. These guidelines call upon employees to obey the laws, and not just in general terms. They also contain precise rules concerning compliance with laws on competition and corruption (among others), in addition to rules regarding donations and gifts, avoidance of conflicts of interest in providing services, the prohibition of insider trading and the protection of company assets. The Business Conduct Guidelines spell out the corporate code of behavior and are the core of our Compliance Program, to which all Siemens employees worldwide must adhere.

The Compliance Program at Siemens also includes numerous other regulations that are applicable company-wide and that complement the Business Conduct Guidelines. Examples include the following regulations.

Anti-Public-Corruption Compliance

(Explanation of May 2, 2007 re. Section B.2 of the Siemens Business Conduct Guidelines)
As stipulated in Section B.2 of the Siemens Business Conduct Guidelines, no employee may directly or indirectly offer or grant improper advantages either in money or in kind to other individuals in connection with business dealings. Employees must avoid even the appearance of bad faith or impropriety. In particular, our Business Conduct Guidelines prohibit offering or giving anything of value to a government official.

In its letter of May 2, 2007 (Anti-public-corruption compliance), the Siemens Compliance Office explained in detail what the above-mentioned prohibitions in the Siemens Business Conduct Guidelines mean regarding anti-public-corruption compliance and what the company expects from all Siemens employees in order to ensure compliance with the Guidelines in dealings with government officials.

Code of Ethics for Financial Matters

(November 12, 2003)

The Code of Ethics for Financial Matters was introduced as a consequence of the Sarbanes-Oxley Act Section 406. It consolidates the codes of behavior established at Siemens for the proper handling of financial affairs – such as the long-established “four eyes principle” – within a single document. The Code of Ethics for Financial Matters applies not only to the CEO and the CFO but also to all employees charged with exercising commercial functions.

Corporate Donations

(October 2, 2006)

The Z Circular of October 2, 2006, has set out precise rules for corporate donations. Among other things, the Circular defines the term donation (grants of monetary and in-kind benefits with nothing obtained in exchange), the objectives and target areas, the responsibilities and authorities for granting donations, the criteria to be met in making donations, exclusionary criteria, reporting obligations, and internal and external reporting.

Payment and Bank Account Centralization

(April 12, 2007)

Proper handling of financial matters also requires compliance with company-wide Instructions for Opening Accounts and Execution of Payment Orders. All financial transactions must be documented and conducted transparently. Fiduciary accounts may be opened only in unavoidable and exceptional cases and upon completion of a written approval procedure.

To ensure the complete transparency of all financial cash flows and all payment transactions worldwide, Siemens has set out further requirements with Z Circular of April 12, 2007 as part of the restructuring of the Siemens compliance regulations. Like all cross-border payments, foreign currency payments and inter-company payments made by Siemens entities, all local payments by Siemens entities worldwide are now centrally executed via Siemens’ in-house banking solution.

The number of bank accounts is to be reduced to a minimum. The opening of new and the maintenance of existing bank accounts must be authorized by a designated company department.

Business Consulting Agreements

(February 14, 2007)
Siemens also devotes special attention to proper conduct with business consultants. Cooperation per se with such consultants is legitimate and in many cases necessary for business reasons. However, there is the risk that business consulting agreements might be misused to pass on bribes. In concluding business consulting contracts, it is therefore essential to ensure that the consultants have been carefully selected and that no agreements of questionable legal propriety are concluded with them.

For this reason, Siemens introduced company-wide Business Consultant Guidelines in fiscal 2005. Prior to the conclusion of an agreement, every consultant had to undergo a due diligence process involving checks as to whether the consultant was respectable and had not previously been the subject of legal proceedings. Consultant agreements had to be formulated using a mandatory standard text which prohibited the payment of any success-related fees and called for a precise written specification of the services to be rendered by the consultant.

In Z Circular 17/2007 of February 14, 2007, Siemens has defined an even stricter standard concerning business consulting agreements:

Siemens entities may enter into new sales-related business consulting agreements only in exceptional cases. These regulations also apply to any amendments to or renewals of sales-related business consulting agreements.In addition, as a matter of principle, no new payments of any kind may be made under any currently existing and effective business consulting agreements. This prohibition also applies to payments in connection with the cancellation or termination of such contracts.Any exceptions will require the prior written consent of two Group Executive Management members or, in the case of Regional Companies, of the relevant CEO and CFO, and in every case with the written consent of the Chief Compliance Officer of Siemens AG.Detailed regulations for implementation were issued by the Compliance Office on May 2, 2007.

Supplier @ Siemens

We have set ourselves globally binding principles and guidelines that require all employees and managers to behave in an ethical, law-abiding manner. They form the basis for our work and the way in which our employees interact with each other, our customers and our business partners.

The "Code of Conduct for Siemens Suppliers" reflects the content of the Siemens Business Conduct Guidelines. Our suppliers commit themselves to the principles of the Code of Conduct for Siemens Suppliers.