Germany
German corporation law, the Aktiengesetz, requires all public companies (Aktiengesellschaften) to have two boards: a management board called a Vorstand and a supervisory board called an Aufsichtsrat.
In Germany the supervisory board of large corporations is composed of 20 members, 10 of which are elected by the shareholders, the other 10 being employee representatives. The supervisory board oversees and appoints the members of the management board and must approve major business decisions.
The minimum of members a board can consist of is three, the maximum 21. The number of members has to be divisible by three, as stated in the law.
When it comes to internal elections the chairman of supervisory board, the Aufsichtsratsvorsitzender, has two votes in case of a draw.
The supervisory board, in theory, is intended to provide a monitoring role. However, the appointment of supervisory board members has not been a transparent process and has therefore led to inefficient monitoring and poor corporate governance in some cases (Monks and Minow, 2001). The discussion about whether a one-tier or a two-tier board system leads to better corporate governance is ongoing in Germany and many other countries. Improvements in corporate governance are often the result of shareholders (such as active private investors or activist investment funds) holding boards (whether one- or two-tier) of companies in which they invest to account.
Read more about this topic: Supervisory Board
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