Abstract
It is hardly possible to judge the merits of the German corporate governance system without also having a basic knowledge of German business or enterprise law and without analysing it within its wider cultural context and linguistic background. Whereas business law or enterprise law refer to all legal aspects pertaining to businesses or enterprises, the focus of this book is on corporate governance in context of primarily large companies or corporations. A distinctive feature of German companies or corporations is the particular relationship amongst the various corporate organs and the unique synthesis between corporations law and labour law. Understanding this synthesis is fundamental when the merits of the English and American one-tier system and the German two-tier system (referring to the management board and the supervisory board as the two tiers respectively) with employee participation (at supervisory board level) are analysed and compared. These aspects have often been neglected in the academic literature attempting to analyse the German corporate governance system from a traditional Anglo-American perspective.
Otto Sandrock sadly passed away shortly after the completion of this chapter.
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Notes
- 1.
In Germany, phrases like company law, corporate law and corporations law have different meanings and are often associated with specific political or academic theories. See and compare, for example, Raiser (1988), pp. 111, 122 et seq; Teubner (1988), pp. 130 et seq. For the purposes of this book these terms will be used interchangeably.
- 2.
- 3.
Großfeld (2003a), p. 154.
- 4.
- 5.
- 6.
For purposes of this book, the term codetermination (Mitbestimmung) will be used in its legal context, indicating the codetermination of employees in terms of various statutory provisions—see Chap. 5 for a closer description of the different ways in which the term codetermination is used. The term Mitbestimmung is also sometimes used in more general terms—see Windbichler (1991), p. 35. See generally Vagts (1966), pp. 23, 26 et seq.
- 7.
Raiser (1988), pp. 111, 113.
- 8.
Ibid 114.
- 9.
See especially the comprehensive exposition by Reuter (1979), pp. 509–566.
- 10.
Ibid 409–517.
- 11.
Raiser (1988), pp. 111, 118, 122 et seq.
- 12.
- 13.
- 14.
- 15.
Großfeld (2002a), p. 341.
- 16.
- 17.
Directives 2014/95/EU amending parts of Directive 2013/34/EU (Disclosure of non-financial and diversity information by certain large undertakings and groups) <http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32014L0095>.
- 18.
Inaugural ICGL Forum, ‘Key themes and issues in a globalised and internationalised world’, Muenster, Germany, 4–5 November 2013 <http://2013.icgl.org.au/>. The papers delivered at this Forum were published In a Special Issue (2015, Volume 26, Issue 1) of the European Business Law Review (2015).
- 19.
- 20.
- 21.
See S 23(5)1 AktG which provides that the articles of incorporation can only contain deviations from the prescribed provisions of the Act when it is specifically provided for.
- 22.
Bundesgesetzblatt (BGBl I 1965, 1089) (Official Journal of the Federal Republic of Germany, 1965, Part I at 1089).
- 23.
Eisenhardt and Wackerbarth (2015), p. 2.
- 24.
See in particular Hanau (1991), pp. VII–XX.
- 25.
See further Chap. 5.
- 26.
- 27.
- 28.
See in particular Chap. 2, Part 2.6.
- 29.
Vagts (1966), pp. 23, 33.
- 30.
On the basic forms of German enterprises, see Baums (1992), p. 503.
- 31.
- 32.
In particular the Joint Stock Companies Act 1837 (1 Vict c 73); Joint Stock Companies Act 1844 (7 & 8 Vict c 110) (5 September 1844); Joint Stock Companies Act 1856 (19 & 20 Vict c 47) (14 Julie 1856) and several Amendments Acts like the Joint Stock Companies Act 1862 (25 & 26 Vict c 896); Joint Stock Companies Amendment Act 1867 (30 & 31 Vict c 131; Joint Stock Companies Amendment Act 1877 (40 & 41 Vict c 26); Joint Stock Companies Amendment Act 1879 (42 & 43 Vict c 76); Joint Stock Companies Amendment Act 1880 (43 Vict c 19); Joint Stock Companies Amendment Act 1883 (46 & 47 Vict c 28); and Joint Stock Companies Amendment Act 1886 (49 Vict c 23).
- 33.
See Scott (1912).
- 34.
- 35.
See Niedostadek (2004).
- 36.
- 37.
Deutsches Aktieninstitut [DAI], DAI-Factbook, 1-1 (statute of 5 April 2013).
- 38.
Statistisches Bundesamt, Statistisches Jahrbuch 2010, Umsatzsteuer 2008, 617.
- 39.
- 40.
See du Plessis et al. (2007), p. 6.
- 41.
- 42.
See Sect. 6.2.2.
- 43.
Bundesgerichtshof in Zivilsachen.
- 44.
See Sect. 6.3.1.1.
- 45.
Bundesgesetzblatt (BGBl I 1965, 1089) (Official Journal of the Federal Republic of Germany, 1965, Part I at 1089).
- 46.
Reichsgesetzblatt (RGBl 1892, 477) (Official Journal of the former Reich, 1992 at 477).
- 47.
See Sect. 6.3.2.
- 48.
That is the place where those companies maintain their main administrative headquarters.
- 49.
See Sect. 6.3.3.1.
- 50.
See Sect. 6.3.3.2.
- 51.
Statistisches Bundesamt, ‘Gewerbeanzeigen August 2015’, <https://www.destatis.de/DE/Publikationen/Thematisch/UnternehmenHandwerk/Gewerbeanzeigen/Gewerbeanzeigen2020500151084.pdf?__blob=publicationFile>.
- 52.
For details, see Sect. 6.4.1.
- 53.
For details, see Sect. 6.5.
- 54.
- 55.
Proposal for a Directive of the European Parliament and of the Council on single-member private limited liability companies <http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2014:212:FIN>.
- 56.
A “normal SE” is an SE with operations and more than 5 employees. In contrast to that, “empty SEs” are SEs with operations but without employees, “Shelf SEs” (a great number of which have been incorporated) are SEs with neither operations nor employees—see Sect. 6.4.5.
- 57.
For details, see Sect. 6.4.5.
- 58.
- 59.
du Plessis (1996), pp. 44–46.
- 60.
Until 2012 large Dutch companies had to adopt a two-tier board system, but under current Dutch law they have a choice between a unitary or a two-tier board system.
- 61.
Saenger (2015a), p. 293, para 571.
- 62.
Rühmkorf (2015), pp. 73 et seq.
- 63.
Jungmann (2006), pp. 426, 437.
- 64.
BGH, 03 Mar 1991 – II ZR 188/89, BGHZ 114, 127, 129 et seq; affirmed by BGH, 15 Nov 1993 – II ZR 197/93, BGHZ 126, 340, 340 et seq. Both judgements (with further bibliography) described the function of the supervisory board as follows: ‘According to S 111 AktG the supervisory board is primarily responsible for monitoring the management. This control does not only relate to completed issues, but also to points of principles of the future business policy; [the control] is not limited to a review of legality, but must include the management’s expediency and thrift. Monitoring functions understood in this regard can only be effectively exercised by regular discussions with the management board and its ongoing consultancy; therefore, counselling is the leading instrument of a future-oriented management supervision.’ See Lutter and Kremer (1992), pp. 87 et seq for further details of these judgements. For questions of the supervisory board’s liability in this regard see Buchta and van Kann (2003), pp. 1665 et seq.
- 65.
See s 198A(1) of the Corporations Act 2001. See further AWA Ltd v Daniels (t/a Deloitte Haskins & Sells & Ors) (1992) 10 ACLC 933.
- 66.
See FRC, The UK Approach to Corporate Governance (October 2010) <http://www.frc.org.uk/Our-Work/Publications/Corporate-Governance/The-UK-Approach-to-Corporate-Governance.aspx>; and ASX Corporate Governance Council, Corporate Governance Principles and Recommendations (2014). See also Review of the Role and Effectiveness of Non-Executive Directors (Higgs Report) (January 2003) < http://webarchive.nationalarchives.gov.uk/20090609003228/http://www.berr.gov.uk/files/file23012.pdf>.
- 67.
See Tricker (1994), pp. 44–45.
- 68.
See Comparative Study of Corporate Governance Codes Relevant to the European Union and its Members (January 2002) at 4–5; Government Commission, German Corporate Governance Code (also referred to as the GCGC) (2015) <http://www.dcgk.de//files/dcgk/usercontent/en/download/code/2015-05-05_Corporate_Governance_Code_EN.pdf> at 1; Owen (2008), pp. 21, 22.
- 69.
See Berrar (2001), pp. 2181, 2185, 2186.
- 70.
- 71.
Röller (1994), p. 334. See generally Gerhard Cromme, ‘Status and Development of Corporate Governance in Germany’ address delivered at 7th German Corporate Governance Code Conference, Berlin, 27 July 2008 <http://www.dcgk.de/files/dcgk/usercontent/en/download/2008/080627_Cromme_Konferenz_en.pdf> at 1. See also Bericht der Regierungskommission Deutscher Corporate Governance Kodex an die Bundesregierung, November 2010, available at <http://zip-online.de/volltext.html?id=2a38a4a9316c49e5a833517c45d31070> at 10, para 1.1.3.
- 72.
See e.g. Weil et al. (2002), pp. 4, 5.
- 73.
With regard to the strength and weaknesses of the one-tier model see also Jungmann (2006), pp. 426, 458–462.
- 74.
Jungmann (2006), pp. 426, 461.
- 75.
Cf Hartmann (2003), pp. 18, 31.
- 76.
Therefore it is, for example, traditionally the task of the supervisory board to institute actions against management board members, see also in detail Saenger (2015b), pp. 13, 19 et seq.
- 77.
Owen (2003), pp. 167, 168.
- 78.
Böckli (2009), pp. 270–272.
- 79.
Röller (1994), p. 334.
- 80.
Baums (1995), p. 15.
- 81.
Martin (2003), p. 952.
- 82.
- 83.
For a very good and realistic overview of the aims and objectives of comparative research in the area of corporate governance, see Mäntysaari (2005), pp. 9 et seq.
- 84.
Davies (2000), p. 135, para 135.
- 85.
Roe (1993), pp. 1927, 1979, 1980.
- 86.
- 87.
Vagts (1966), pp. 76–78, 87, 88.
- 88.
Baums (1992), pp. 516 and 523.
- 89.
- 90.
- 91.
See Report of the Committee of Inquiry on Industrial Democracy (Bullock Report – Minority Report) 174 para 17, 177 para 36 and 189–91 (Appendix B); Wedderburn of Charlton, ‘Companies and Employees: Common Law or Social Dimension?’ [1993] LQR 230–38; Hadden (1977), pp. 447, 448; Côté (1973), pp. 276, 277. Also see Preamble to the 1st Draft Fifth Dir (1972 Bulletin of the European Communities (Supplement 10/72) 6–7); ‘Explanatory Memorandum’ [1972] Bulletin of the European Communities (Supplement 10/72) 33.
- 92.
Bericht der Regierungskommission Deutscher Corporate Governance Kodex an die Bundesregierung, November 2010, available at <http://zip-online.de/volltext.html?id=2a38a4a9316c49e5a833517c45d31070> at 9, 10, para 1.1.3.
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du Plessis, J.J., Großfeld, B., Saenger, I., Sandrock, O. (2017). An Overview of German Business or Enterprise Law and the One-Tier and Two-Tier Board Systems Contrasted. In: German Corporate Governance in International and European Context. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-54198-2_1
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