GERMANY Law and Practice Contributed by: Eva Nase and Kay-Uwe Neumann, POELLATH
consists of executive and non-executive board mem - bers. The administrative board is responsible for the management and supervision of all material company matters ( Oberleitung ) as well as the determination of guidelines for the SE’s business, and appoints man - aging directors ( Geschäftsführende Direktoren ), who are responsible for the day-to-day management of the company. The managing directors may be members of the administrative board if and to the extent that the majority of the members of the administrative board continue to be non-executive. The administrative board is entitled to issue internally binding instruc - tions to the managing directors. General Partner The peculiarity of a KGaA is that the general partner is responsible for the management. The general partner, being a shareholder of the KGaA, may be one or more natural persons or, more common in practice, a capital company itself – eg, a GmbH, AG or SE. The corporate governance system of such a capital company is to be differentiated from the corporate governance of the KGaA. The corporate governance of the general partner com - pany follows the principles applicable to the corporate form that company takes. In any case, the KGaA has a supervisory board that is responsible for the supervi - sion of the management, but in the case of a capital company as general partner it is not responsible for the appointment, dismissal or service contracts of the management of the general partner, nor for the deter - mination of the financial statements. The general meeting of an AG, SE and KGaA has no corporate governance powers. Managing Directors A GmbH generally has managing directors ( Geschäfts- führer ) and the shareholders’ meeting ( Gesellschaf- terversammlung ), but no statutorily required supervis - ing body. The managing directors are responsible for the management and representation of the company. In principle, they decide autonomously.
However, the shareholders’ meeting is – in contrast to the situation in an AG – the supreme decision-making body of the GmbH, and has the authority to issue internally binding instructions to the managing direc - tors. In a GmbH, a voluntary supervisory or advisory board may be implemented. Apart from this, a super - visory board is to be installed only in the case of code - termination (see 3.1 Board Structure ). 2.2 Types of Decisions Management Board In an AG and a two-tier system SE, the management board responsible for the management of the compa - ny decides on any and all business transactions and measures within and outside the ordinary course of business under its own responsibility and discretion. However, material measures within and measures outside the ordinary course of business are subject to the prior approval of the supervisory board. For this purpose, applicable law provides that a catalogue containing those approval rights has to be estab - lished, either by the general meeting in the articles of association or, alternatively and – in practice – more relevant, by the supervisory board itself in the rules of procedure for the management board, which is an important part of supervising the management board. Besides the supervision of the management board, the supervisory board is responsible for: • the appointment and dismissal of the members of the management board; • their service contracts; and • the review and determination of the financial state - ments. Administrative Board In a single-tier system SE, the administrative board is responsible for fundamental management issues, such as long-term business goals, the organisational structure, and the strategy and general guidelines of the SE, as well as the budgeting, whereas the man - aging directors are “only” responsible for the day-to- day management. The administrative board has the authority to issue internally binding instructions to the managing directors.
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