GERMANY Law and Practice Contributed by: Eva Nase and Kay-Uwe Neumann, POELLATH
• the German Commercial Code ( Handelsge- setzbuch or HGB); • the Reorganisation of Companies Act ( Umwandlungsgesetz or UmwG); • the German Securities Acquisition and Takeo - ver Act ( Wertpapiererwerbs- und Übernah- megesetz or WpÜG); • the Market Abuse Regulation ( Marktmiss- brauchsverordnung or MAR); and • the Securities Trade Act ( Wertpapierhan- delsgesetz or WpHG). Beyond this, the German Corporate Governance Code (Deutscher Corporate Governance Kodex or DCGK) sets out further corporate governance rules for listed companies, which differentiate between recommendations and suggestions. In 2020, the DCGK introduced the category of prin - ciples which precede the recommendations and suggestions regarding a certain subject matter and outline the fundamentals of the applicable law. In 2022, the DCGK was amended, substantiating some ESG aspects as well as the guidelines on internal controlling in response to new legislation on financial integrity. Moreover, non-governmental regulations such as applicable listing rules enacted by the stock exchanges also establish corporate governance requirements. Certain industry sectors (eg, banks) are subject to further regulation with respect to, inter alia, their corporate governance. 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares Shares of an AG, SE and, less commonly, a KGaA may be listed on a stock exchange. The primary
source for corporate governance requirements concerning listed AGs and KGaAs, as well as (to a lesser degree) SEs, is the AktG, as it differ - entiates between rules for listed and non-listed companies. Its requirements are mandatory. The HGB, WpHG, WpÜG, the European and German Securities Prospectus rules (the Euro - pean WPVO and the German WpPG), the Stock Exchange Act ( Börsengesetz or BörsG) and the MAR provide for further mandatory regulation in relation to, inter alia, listed companies’ corporate governance. To promote a high corporate governance stand - ard, the DCGK contains corporate governance standards in the form of recommendations and suggestions for listed companies with a two- tier corporate governance system; however, the rules of the DCGK shall also be applied corre - spondingly by listed companies with a single- tier corporate governance system (see 3.1 Bod- ies or Functions Involved in Governance and Management ). The DCGK is not enacted by the legislature, but by the German Corporate Gov - ernance Commission and is therefore not a stat - ute or an ordinance, but rather “soft law” , so the standards set in the DCGK are principally volun - tary. Recommendations shall be complied with and, if not, deviations have to be explained and disclosed (the principle of “comply or explain” ) in a declaration of compliance ( Entsprechenser- klärung ), to be resolved upon annually by the responsible corporate governance bodies of the listed company. The declaration of compliance is to be included in the declaration on corporate governance, which itself is part of the management report. The issuance of the declaration of compliance is obligatory. Deviations from suggestions are allowed without disclosure. In practice, listed companies seek to comply with the standards
296 CHAMBERS.COM
Powered by FlippingBook