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2010]

The German Supervisory Board on Its Way to Professionalism

141

reporting duty of the auditor under Section 171(1)120. Additionally, the supervisory board or the audit committee of capital markets oriented companies must consist of at least one independent financial expert (Sections 100(5) and 107(4)).121

Although the new provision is comparable with Section 5.3.2 GCGC, it has more legal authority, as it is implemented in the German Stock Corporation Act. Additionally, the new provision substantiates the previous legal situation and facilitates the flow of information from the auditor to the supervisory board and the audit committee, respectively. This may increase the pressure on supervisory board and audit committee members to comply with the now enhanced monitoring obligations122. Thereby, members of both the management board and the supervisory board as well as auditors may overall become more sensitive and more conscious for issues of accounting, auditing, internal control and risk management.

III. Nomination Committee

The Code’s 2007 amendment established a new Section 5.3.3 GCGC stating that the supervisory board shall set up a “nomination committee composed exclusively of shareholder representatives which proposes suitable candidates to the Supervisory Board for recommendation to the General Meeting.” Today, all but one of the thirty largest companies listed at the German stock exchange comply with this recommendation. 123

The main advantage of such a committee is that a smaller committee can deal with personal changes more quickly and more flexibly than the supervisory board as whole. Furthermore, the nomination committee is able to monitor the composition of the supervisory board on a continuous basis, it can prepare for any necessary personal changes, and it can provide for a sophisticated succession planning.124 Overall, the

120 See, section F. III of this paper. See, Begründung zum Regierungsentwurf eines Gesetzes zur Modernisierung des Bilanzrechts (Bilanzrechtsmodernisierungsgesetz – BilMoG), Bundestagsdrucksache 16/10067, 103 (2009); Erchinger & Melcher (note 116), 97.

121

Regarding the financial expert, see, again, note 116.

122

See, generally, Arbeitskreis Externe Unternehmensrechnung (AKEU) & Arbeitskreis Externe und Interne

Überwachung

der

Unternehmen

der Schmalenbach‐Gesellschaft für

Betriebswirtschaft

e.V.

(AKEIÜ),

Anforderungen an die Überwachungsaufgaben von Aufsichtsrat und Prüfungsausschuss nach §107 Abs. 3 Satz 2 AktG i. d. F. des Bilanzrechtsmodernisierungsgesetzes, 62 DB 1279, 1280‐1282 (2009); Rolf Nonnenmacher, Klaus Pohle & Axel von Werder, Aktuelle Anforderungen an Prüfungsausschüsse, 62 DB 1447, 1450‐1454 (2009).

123

See, v. Werder & Talaulicar (note 74), 693 table 5.

124 See, generally, Manuel M. Meder, Der Nominierungsausschuss in der AG – Zur Änderung des Deutschen Corporate Governance Kodex 2007, 28 ZIP 1538 (2007); LIEDER (note 2), 763.

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