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2010]

The German Supervisory Board on Its Way to Professionalism

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the new provision is convincing, as it increases the flow of information from the auditors to the supervisory board, and as it heightens the supervisory board members’ sense of responsibility with regard to accounting and auditing.

C. Law on Transparency and Disclosure

The Law on Transparency and Disclosure as of 19 July 200249 marks the second important amendment of the German stock corporation law in the last decade. In particular, the new law established the German Corporate Governance Code (GCGC)50 and committed both the management board and the supervisory board to disclose whether they comply with the Code’s recommendations or not (Section 161). Furthermore, the new provisions increased the flow of information from the management board to the supervisory board, they increased the future‐oriented monitoring capability of the supervisory board, and they facilitated the monitoring efficiency of every single supervisory board member.

As a whole, the 2002 amendments were aimed at strengthening the supervisory board’s position of power within the company, in particular vis‐à‐vis the management board. The supervisory board became more involved in the decision‐making process with regard to a company’s overall strategic concept and fundamental management decisions.51 In particular, the supervisory board was obligated to establish a checklist with measures of fundamental importance to be taken by the management board that the supervisory board shall approve (Section 111(4)). With regard to the flow of information, now the management board has to point out deviations of the actual business development from previously formulated plans and targets, indicating the reasons therefore of follow‐up reporting in Section 90(1). Furthermore, the GCGC characterizes the cooperation between management board and supervisory board as follow:

“3.1 The Management Board and Supervisory Board cooperate closely to the benefit of the enterprise.

“3.2 The Management Board coordinates the enterprise’s strategic approach with the Supervisory Board and discusses the current state of strategy implementation with the Supervisory Board in regular intervals.

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Bundesgesetzblatt I, 2681; as to the politics of this Act see, Cioffi (note 1), 555‐556.

50 German Corporate Governance Code as of 16 February 2002 (original version), available at: http://www.corporate‐governance‐code.de/eng/download/DCG K E old.pdf, last accessed 23 January 2010.

51 See generally, Werner Gleißner, Die strategische Positionierung im Urteil des Aufsichtsrats, 6 DER AUFSICHTSRAT (AR) 39 (2009).

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