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German Law Journal

[Vol. 11 No. 02

board as of 15 February 2005.82 Under Art. 4 of that recommendation, “a sufficient number of independent non‐executive or supervisory directors should be elected to the (supervisory) board of companies to ensure that any material conflicts of interest involving directors will be properly dealt with”. If the supervisory board plays a role in the fields of nomination, remuneration and audit, there shall be nomination, remuneration and audit committees that shall consist of at least a majority of independent non‐executive or supervisory directors. To be considered independent under Art. 13.1 of the recommendation, a (supervisory) director must be “free of any business, family or other relationship, with the company, its controlling shareholder or the management of either, that creates a conflict of interest such as to impair his judgement”.

II. Independence Standards, Especially Large Shareholders

Under Section 5.4.2 GCGC, a supervisory board member is independent if she “has no business or personal relations with the company or its Management Board which cause a conflict of interests”. Accordingly, major creditors, such as banks, as well as major suppliers and major customers cannot be considered independent.83 However, representatives of the controlling shareholder are not enfolded by Section 5.4.2 GCGC, because they do not have per se a business or personal relation with the company or its management board.84

Unlike the European Commission recommended in 2005, representatives of large shareholders can be considered to be independent under the German Corporate Governance Code. This is true, because such representatives may help to overcome the large public firm’s agency problem. They align the interests of shareholders and supervisory board members, and they strengthen a company’s commitment to a shareholder wealth maximizing strategy. On the other hand, the European Commission’s argument for refusing to consider majority shareholders as independent, i.e., the protection of minority shareholders,85 is not convincing, because the interests of minority

82 Recommendation 2005/162/EC of the European Commission on the role of non‐executive or supervisory directors of listed companies and on the committees of the (supervisory) board; available at: http://eur‐ lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:052:0051:0063:EN:PDF, last accessed 22 January 2010.

83 Jan Lieder, Das unabhängige Aufsichtsratsmitglied – Zu den Änderungen des Deutschen Corporate Governance Kodex, 8 NZG 569, 570‐571 (2005).

84 Arbeitsgruppe Europäisches Gesellschaftsrecht (Group of German Experts on Company Law), Stellungnahme zum Aktionsplan der EU‐Kommission zu Corporate Governance und Gesellschaftsrecht: Allgemeine Erwägungen, kurz‐ und mittelfristige Maßnahmen, 24 ZIP 863, 869 (2003); Lieder (note 83), 571; see now also Hans Diekmann & Katja Bidmon, Das “unabhängige“ Aufsichtsratsmitglied nach dem BilMoG – insbesondere als Vertreter des Hauptaktionärs, 12 NZG 1087, 1090‐1091 (2009).

85

See, Report of the High Level Group of Company Law Experts on a Modern Regulatory Framework for Company

Law

in

Europe

as

of

4

November

2002,

59‐60,

62‐63,

available

at:

http://ec.europa.eu/internal market/company/docs/modern/report en.pdf, last accessed 23 January 2010.

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