GERMANY Law and Practice Contributed by: Eva Nase and Kay-Uwe Neumann, POELLATH
requirements do not apply. In February 2025, the EU Commission announced that the scope of application will be decreased significantly. Thus, if and to what extent the directive will come into force in Germany is unclear. Further, the Act on Corporate Due Diligence Obligations in Supply Chains came into force in January 2023 and was expanded as of Janu - ary 2024, intending to implement the UN Guid - ing Principles on Business and Human Rights throughout the global supply chain. The EU Corporate Sustainability Due Diligence Direc - tive (CSDDD) came into force in July 2024 and is to be implemented into German law by July 2026. Also, in respect of this directive, the EU Commission announced that the directive will be amended in a fundamental way. In June 2021, the federal government passed the so-called Supply Chain Act ( Lieferkettensorg- faltspflichtengesetz ), which obliges companies to respect human rights as well as the environ - ment throughout the global supply chain, and to remedy violations. For this purpose, companies must establish an appropriate risk-management system and conduct a risk analysis for them - selves and suppliers. The first is ensured by the appointment of an internal officer for monitoring the system. Additionally, companies must estab - lish a procedure for filing complaints concerning human rights violations. Finally, companies must publish an annual report on their compliance containing fulfilment of their obligations under the Supply Chain Act. The law came into force on 1 January 2023, for companies in Germany with at least 3,000 employees. As of 1 January 2024, the new regulations apply for companies with at least 1,000 employees. However, the parties of the new federal govern - ment set out in a coalition agreement ( Koali-
tionsvertrag ) published on 9 April 2025 that the Supply Chain Act is to be omitted. The inten - tion is to replace the Supply Chain Act with a law on international corporate responsibility that implements the CSDDD in a low-bureaucracy and enforcement-friendly manner. It is further intended to abolish the reporting obligation under the Supply Chain Act. Furthermore, viola - tions of the existing statutory due diligence obli - gations – with the exception of massive human rights violations – are not to be sanctioned until the new law comes into force. 3. Management of the Company 3.1 Bodies or Functions Involved in Governance and Management Management Board The predominant board structure of an AG and an SE follows the two-tier corporate governance system, with a management board ( Vorstand ) managing and representing the company, and a supervisory board ( Aufsichtsrat ) supervising the management board, in each case accompanied by the third corporate body, the general meeting ( Hauptversammlung ). The management board manages the company under its own responsi - bility and at its own discretion. It is not subject to any instructions from the supervisory board or the general meeting. However, the management board is subject to the prior approval of the supervisory board for certain business transactions and measures, either foreseen in the articles of association of the company or by the supervisory board itself – eg, in the rules of procedure for the manage - ment board.
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