GERMANY Trends and Developments Contributed by: Stephan Waldhausen, Moritz Pellmann, Justus Anacker and Cristina Hajek Gross, Freshfields PartG mbB
shields board members from liability where decisions are made (i) on an adequate information basis, (ii) in the best interests of the company and (iii) in good faith and free from conflicts of interest. Beyond this, board members must also ensure that the company has an adequate compliance framework and a credible pro - cess for investigating and addressing indications of misconduct or control failures. To meet this standard, boards should systematically embed the following questions into their decision- making processes. • Is our business judgement based on adequate information? • Where AI-generated inputs are used, have we observed the applicable AI governance principles? • Have underlying assumptions been critically reviewed and checked for plausibility? • Is external (independent) professional advice required to ensure the adequacy of the information basis or to provide guidance on an unclear legal framework?
• Have all relevant business opportunities (including alternative scenarios) and risks for each of the rel - evant decision options been adequately assessed and balanced against each other? • Are board members subject to potential conflicts of interest? • Are we aware of the burden of proof and, if so, is there a proper documentation process in place, laying out that the BJR requirements are met (also taking into account the aspects mentioned in the aforementioned points)? In a high-stakes environment, governance is meas - ured by action, not intention. Boards that can clearly demonstrate how and why decisions were made are not only better protected under the law, but also more effective in practice. Embedding disciplined decision- making processes, robust compliance structures and credible investigation and response mechanisms is essential to managing liability risks, maintaining cred - ibility and ensuring that board decisions stand up to scrutiny.
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