GERMANY Law and Practice Contributed by: Eva Nase and Kay-Uwe Neumann, POELLATH
Administrative Board A single-tier corporate governance system with one board primarily known in other jurisdictions is only allowed in Germany within an SE. The board is called the administrative board ( Verwal- tungsrat ), and consists of executive and non- executive board members. 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 managing directors ( Geschäftsführende Direk- toren ), 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 admin - istrative board is entitled to issue internally bind- ing instructions 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 govern - ance of the KGaA. The corporate governance of the general part - ner company follows the principles applicable to the corporate form that company takes. The KGaA has in any case a supervisory board that is responsible for the supervision of the manage - ment, but in the case of a capital company as general partner it is responsible for neither the appointment, dismissal and service contracts of
the management of the general partner nor for the determination 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 ( Geschäftsführer ) and the shareholders’ meet - ing ( Gesellschafterversammlung ), but no statu- torily required supervising 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 con - trast 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 directors. In a GmbH, a volun - tary supervisory or advisory board may be imple - mented. Apart from this, a supervisory board is to be installed only in the case of codetermina - tion (see 4.1 Board Structure ). 3.2 Decisions Made by Particular Bodies Management Board In an AG and a two-tier system SE, the manage - ment board responsible for the management of the company decides on any and all business transactions and measures within and outside the ordinary course of business under its own responsibility and discretion. However, mate - rial 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 cata - logue containing those approval rights has to be established, either by the general meeting in the articles of association or, alternatively and – in practice – more relevant, by the supervi - sory board itself in the rules of procedure for the
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