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6. Scope of consolidation; subsidiaries and affiliates

The consolidated financial statements include all subsidiaries, joint ventures and associates. Subsidiaries are those companies in which Bayer AG directly or indirectly has a majority of the voting rights or from which it is able to derive the greater part of the economic benefit and bears the greater part of the risk by virtue of its power to govern corporate financial and operating policies, generally through an ownership interest of more than 50%. Special-purpose entities (SPEs) are consolidated even when Bayer AG holds 50% or less of the voting rights or shares if the substance of the economic relationship indicates that the SPE is controlled by Bayer AG. Inclusion of a company’s accounts in the consolidated financial statements begins when Bayer AG starts to exercise control over the company and ceases when it is no longer able to do so.

Joint ventures are companies over which the Bayer Group exercises joint control with a third party. A company is generally deemed a joint venture if voting rights are divided equally between two stockholders or the company is established on the basis of a joint venture agreement.

Associates over which Bayer AG exerts significant influence, generally through an ownership interest between 20% and 50%, are accounted for by the equity method.

Subsidiaries that do not have a material impact on the Group’s financial position or results of operations, either individually or in aggregate, are recognized in the consolidated financial statements at amortized cost.