The German Supervisory Board on Its Way to Professionalism
opted for the one‐tier system. It is not clear how this data has to be interpreted with regard to the purpose of using the SE in order to avoid employee codetermination as well as the particular flexibility and other advantages of the SE compared to the German stock corporation.195 Nevertheless, all aspects considered together increase the pressure on the German dual board system to open up towards an option between those two models,
although the 67th proposal196.
German Legal Association’s Biannual Meeting in 2008 opposed this
Overall, there is
a tendency towards a one‐tier board system with regard to small and
medium‐sized companies, whereas publicly held corporations listed on the stock exchange frequently implement a dual board system including a management board and a supervisory board. From an economic point of view, the option to choose between both models would help to structure corporate governance systems more efficiently, because enterprises could choose one of those board systems in accordance with their size, ownership structure, industry and other particularities. That would decrease transaction costs, and it may lead to a more efficient management and supervision.197 At the same time, companies could make use of the particular strengths and avoid specific weaknesses of each system by choosing the model that fits best with their economic needs.
This paper has shown how the efficiency of the German supervisory board has been significantly improved in the last decade. These legal changes made the supervisory board climb to a higher position of power. In particular, the supervisory board is now significantly involved in the decision‐making process on a company’s overall strategic concept and on management decisions of fundamental importance. This emphasizes the future‐oriented monitoring obligation of the supervisory board, which gained much more importance in the last decade. For the same reason, it strengthened the supervisory board’s capability to monitor the management board more efficiently. Furthermore, the new provisions increased the flow of information from the management board to the supervisory board, and they facilitated the monitoring efficiency of every single supervisory board member. In addition, several important changes improved the cooperation of supervisory board and auditors. This increased the level of information of the supervisory board and its members, and it made them more sensitive and more conscious for issues of a company’s accounting
See e.g., Baums (note 191), 4‐6.
196 Business Law Resolution No. 19 has been rejected, see VERHANDLUNGEN DES 67. DEUTSCHEN JURISTENTAGES, Vol. 2/2, N242 (Ständige Deputation des Deutschen Juristentages ed., 2009)
See, Hopt (note 157), 1051.